Document:

exv10w2

Exhibit 10.2

MASTER SERVICE CONTRACT

Between

CHESAPEAKE OPERATING, INC.

and any present or future subsidiaries or

affiliates named directly or indirectly by

Chesapeake Operating, Inc.

(herein collectively “Company”),

P.O. Box 18496,

Oklahoma City, OK

73154

and

Dawson Geophysical Company,

and any present or future subsidiaries or

affiliates named directly or indirectly by

Dawson Geophysical Company,

(herein collectively “Contractor”),

508 West Wall, Suite 800,

Midland, TX

79701

On this 18th day of December, 2003

 

 

Table of Contents

	 	 	 	 	 
	1.

	 	Definitions Page	 	 
	2.

	 	Agreement	 	4
	3.

	 	Labor, Equipment, Materials, Supplies and Services	 	5
	4.

	 	Reports to be furnished by Contractor	 	7
	5.

	 	Independent Contractor Relationship	 	7
	6.

	 	Insurance	 	8
	7.

	 	Indemnity	 	11
	8.

	 	Taxes	 	14
	9.

	 	Audit	 	15
	10.

	 	Laws, Rules and Regulations	 	15
	11.

	 	Force Majeure	 	16
	12.

	 	Assignments	 	16
	13.

	 	Termination of Work	 	16
	14.

	 	Government Regulations	 	17
	15.

	 	Insolvency of Contractor	 	17
	16.

	 	Contractor Employees under Louisiana Worker’s Compensation	 	18
	17.

	 	Complete Agreement	 	18
	18.

	 	Time of the Essence	 	19
	19.

	 	Exhibits	 	19
	20.

	 	Insurance Exhibit A	 	 

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Glossary of Terms

Additional Insured — A person or organization not automatically included as an insured under an
insurance policy, but for whom insured status is arranged, usually by endorsement. A named
insured’s impetus for providing additional insured status to others may be a desire to protect the
other party because of a close relationship with that party or to comply with a contractual
agreement requiring the named insured to do so.

Borrowed Servant/Alternate Employer — An endorsement that provides those scheduled as alternate
employers with primary Workers’ Compensation and Employers Liability coverage as if they were an
insured in the policy. This endorsement is commonly used when a temporary help supplier (the
insured) is required by its customer (the alternate employer) to protect the alternate employer
from claims brought by the insured’s employees.

Endorsement — A provision added to a policy, usually being written in on the printed page. It may
also be in the form of a rider.

Indemnify — To make compensation to an entity, person, or insured for incurred hurt, loss, or
damage.

Indemnity — Restoration to the victim of a loss up to the amount of the loss.

Waiver of Subrogation — The voluntary relinquishment by an insurer of the right to collect from
another party for damages paid on behalf of the insured. The waiver of subrogation condition in
current liability policies is referred to as “transfer of rights of recovery.”

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WITNESSETH THAT,

     WHEREAS, Company in the Course of operations regularly and customarily enters into contracts
with independent Contractors for the performance of service relating thereto; and

     WHEREAS, Company desires, as a matter of company policy, to establish and maintain an approved
list of Contractors and to offer work or contracts only to those Contractors who are included on
such approved list; and

     WHEREAS, Contractor represents that it has adequate equipment in good working order and fully
trained personnel capable of efficiently operating such equipment and performing services for
Company.

     NOW, THEREFORE, IN CONSIDERATION of the mutual promises, conditions and agreements herein
contained, the sufficiency of which is hereby acknowledged, and the specifications and special
provisions set forth in the exhibits attached hereto and made a part hereof, the parties hereto
mutually agree as follows:

	1.0	 	AGREEMENT

	 	1.1	 	Upon execution of this Agreement and compliance with its terms, Company agrees that
the name of Contractor shall be added to the Company’s approved list of Contractors and
this Agreement shall remain in force and effect until canceled by either party by giving
the other party ten (10) days notice in writing at the respective address of either party.
If current work extends past ten (10) days, then cancellation shall not be effective until
work is completed. This Agreement shall control and govern any and all performance of
services and/or supply of materials and equipment by Contractor for Company, under
subsequent written purchase orders, work orders, supplemental agreements or oral
instructions, hereinafter collectively called an “Order”. Upon acceptance of any Order by
Contractor and without the necessity of any reference therein, this Agreement shall become
an integral part of the Order. Agreements or stipulations in any such Order not in
conformity with the terms and provisions hereof shall be null and void. No waiver by
Company of any of the terms, provisions or conditions hereof shall be effective unless
said waiver shall be in writing and signed by an authorized officer of Company.
	 
	 	1.2	 	This Agreement does not obligate Company to request services from Contractor nor does
it obligate Contractor to accept orders for services from Company.

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	 	1.3	 	This Agreement is effective as of the first date of service, whether prior to and
after the date of execution of this Agreement, and supersedes all previous contracts.

	2.0	 	LABOR, EQUIPMENT, MATERIALS, SUPPLIES AND SERVICES

	 	2.1	 	When notified by Company either verbally or by written work order, of the services
and/or equipment desired, Contractor shall commence furnishing same at the agreed upon
time, and continue such operations diligently and without delay, in strict conformity with
the specifications and requirements contained herein and such work orders.
	 
	 	2.2	 	Contractor shall not employ in any work for Company any employee whose employment
violates any labor, employment or other applicable laws. Contractor shall not employ in
any work for Company any employee who is a minor.
	 
	 	2.3	 	All work or services rendered or performed by Contractor shall be done with due
diligence, in a good and workmanlike manner, using skilled, competent and experienced
workmen and supervisors. Contractor shall attempt to minimize disturbance to the surface
of the land and all crops and other vegetation thereon. Liability for any subsequent
requirements for surface damages, erosional or pollution repair or prevention which has
not been caused by the negligence or other fault of Contractor shall rest solely with
Company, which liability shall survive the termination of this Agreement. Contractor
warrants full, clear and unrestricted title to all materials and equipment supplied by
Contractor in performance of any Order free and clear of any and all liens, security
interests, encumbrances and claims of others. Any portion of the work found defective or
unsuitable and all damages resulting therefrom shall be removed, replaced or corrected by
Contractor without additional cost or risk to Company. Contractor agrees to inspect all
materials and equipment furnished by Company directly employed in the course of operations
conducted hereunder and shall notify Company of any apparent defects therein before using
such materials and equipment. Should Contractor use such materials and equipment without
notifying Company of any defect, Contractor shall be deemed to have assumed all risk and
liability for any mishap that may occur in operations conducted hereunder by reason of
failure or defects in such materials and equipment. Contractor shall not be liable for
claims due solely to latent defects.
	 
	 	2.4	 	Contractor agrees to maintain his equipment in good operating condition at all times.

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	 	2.5	 	Confidentiality. The Contractor recognizes that the nature of the Contractor’s
services are such that the Contractor will have access to information which is of a
confidential nature, which is of great value to the Company and which is the foundation
upon which the Company’s business is predicated. The Contractor agrees not to disclose to
any person other than Company’s employees or the Company’s legal counsel nor use for any
purpose, other than the performance of this Agreement, any information, data or material
(regardless of the form) which is: (a) provided, disclosed or delivered to the Contractor
by Company, any officer, director, employee, agent, attorney, accountant, Contractor 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 or any business activity conducted by the Company; or (b) produced, developed,
obtained or prepared by the Contractor (whether or not such information was developed in
the performance of this Agreement), with respect to the Company or any of the Company’s
assets, oil and gas prospects, business activities, officers, directors, employee,
borrowers or customers. On request by Company, the Company will be entitled to a copy of
any such documents or such information in the possession of the Contractor. The Contractor
also agrees that the provisions of this paragraph will survive the termination, expiration
or cancellation of this Agreement and that on termination, expiration or cancellation of
this Agreement, the Contractor will deliver to the Company all of the information, data
and material containing such information.
	 
	 	2.6	 	Conflict of Interest. Company employees are prohibited from engaging in
activities with vendors that promote the employee’s interests ahead of Company or
otherwise create a conflict of interest. Examples of activities prohibited by Company
follow.

	 	•	 	Accepting cash from a vendor in any amount;
	 
	 	•	 	Accepting gifts or services from a vendor that obligates an employee to a
vendor. Any gift accepted by a Company employee valued at more than $100 must be
reported by the employee to Company management;
	 
	 	•	 	Soliciting or accepting kickbacks, bribes, payments or loans from a vendor;
	 
	 	•	 	Holding a financial interest in a vendor (other than a financial interest in
a publicly traded corporation whose securities are quoted and traded in the
public securities market);
	 
	 	•	 	Divulging confidential or proprietary information about Company that is not
integral to the product or service provided by the vendor;

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	 	•	 	Accepting discounts (other than those available to the general public)
on personal purchases from a vendor;
	 
	 	•	 	Circumventing or otherwise failing to comply with Company’s established
policies governing the competitive bidding process;
	 
	 	•	 	Any activity that takes unfair advantage of a vendor through concealment,
abuse or privileged or confidential information, misrepresentation or fraudulent
behavior or cooperation with a vendor to take unfair advantage of another party.

	 	 	 	In order to help ensure that these standards of conduct for dealings with vendors are met,
Company has established a Vendor Protection Line with an independent party. If Contractor
becomes aware of or suspects an employee of the Company has violated the guidelines for
fair dealings set out in this contract, Contractor agrees to report the matter by calling
the Vendor Protection Line at 1-800-576-5262 (organization code #30076). The caller will
remain anonymous, and the details of the call will be immediately forwarded to a senior
member of Company management, who will investigate the reported violation.

	3.0	 	REPORTS TO BE FURNISHED BY CONTRACTOR

	 	3.1	 	The quantity, description and condition of the materials and supplies and/or services
furnished shall be verified and checked by Contractor, and all delivery tickets shall be
properly certified as to receipt by Contractor’s representative. Contractor must obtain
approval of Company’s representative for materials and supplies for which Contractor is to
be reimbursed by Company.
	 
	 	3.2	 	Contractor shall orally report to Company, as soon as practicable, followed by an
appropriate written report, all accidents or occurrences resulting in death or injuries to
Contractor’s employees or third parties, or damage to property of Company or third parties
arising out of or during the course of work to be performed hereunder. Contractor shall
furnish Company with a copy of all reports made by Contractor to Contractor’s insurer or
governmental authorities or to other parties of such accidents and occurrences.
	 
	 	3.3	 	Contractor shall supply a written report to Company regarding Contractor’s safety
reports and/or safety policy upon request.

	4.0	 	INDEPENDENT CONTRACTOR RELATIONSHIP

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	 	 	In the performance of any work by Contractor for Company, Contractor shall be deemed to be an
independent Contractor, with the authority and right to direct and control all of the details
of the work, Company being interested only in the results obtained. However, all work
contractor related shall meet the approval of Company and shall be subjected to the general
right of inspection. Company shall have no right or authority to supervise or give instructions
to the employees, agents, or representative of Contractor, and such employees, agents or
representatives at all times shall be under the direct and sole supervision and control of
Contractor. Any suggestions, advice or directions given by Company or its employees to
Contractor or its employees shall in no way establish or be evidence of an intent to create a
master and servant or principal and agent relationship between Company and Contractor. It is
the understanding and intention of the parties hereto that no relationship of master and
servant or principal and agent shall exist between Company and the employees, agents, or
representatives of Contractor, and that all work or services covered hereby shall be performed
at the sole risk of Contractor.

	5.0	 	INSURANCE

	 	5.1	 	At any and all times during the term of this Contract, Contractor shall at
Contractor’s expense maintain, with an insurance company or companies authorized to do
business in the state where the work is to be performed or through a self-insurance
program, insurance coverages of the kind and in the minimum amounts as follows:

	 	(a)	 	Workers’ Compensation, including coverage for occupational disease, and
Employer’s Liability Insurance covering all employees in compliance with all
applicable state and federal law. This insurance shall be in an amount not less than:
	 
	 	 	 	Workers’ Compensation: Statutory
	 
	 	 	 	If Contractor is a sole proprietor, Contractor must make the following election:

	 	______	 	I elect to be excluded from Workers’ Compensation coverage as a Sole
Proprietor under state law. I further certify that I will provide an
insurance certificate evidencing Workers’ Compensation insurance is in
place should I hire other parties to perform any services on my behalf for
Company.
	 
	 	______	 	I elect to be covered under Workers’ Compensation insurance as a Sole
Proprietor. A Certificate of

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	 	 	 	  Insurance evidencing Workers’ Compensation coverage is enclosed.

	 	(b)	 	Employer’s Liability Insurance in the limits described in Exhibit “A”
attached hereto for each accident, occurrence, or disease covering claims by the
agents, servants or employees of Contractor.
	 
	 	(c)	 	Insurance provided in (a) and (b) above shall include a “Borrowed
Servant/Alternate Employer Endorsement”, providing for claims brought against Company
or Company barges or other vessels, in rem or in personam, by any agent, servant or
employee of Contractor as a “borrowed servant” to be treated as a claim against
Contractor.
	 
	 	(d)	 	Comprehensive or Commercial General Liability Insurance, on an “Occurrence”
form unless otherwise agreed to in writing by Company, including operations of
Independent Contractors; Contractual Liability; Products and Completed Operations;
Explosion, Collapse and Underground Property Damage Hazards; Pollution Liability; and
Underground Resources with a combined single limit for Bodily Injury, Personal Injury
and Property Damage liability in an amount no less than those limits described in
Exhibit “A” attached hereto.
	 
	 	(e)	 	Automobile Liability Insurance covering all owned, non-owned and hired
vehicles with a combined single limit for Bodily Injury and Property Damage liability
in an amount not less than those limits described in Exhibit “A” attached hereto.
	 
	 	(f)	 	Property Insurance and/or Rig Physical Damage Insurance on an “All Risk” or
other form satisfactory to Company, covering the insurable value of all Contractor’s
property and in amounts of insurance sufficient to comply with the minimum
coinsurance requirements of the policies.
	 
	 	(g)	 	The amounts of insurance required in this section 5.1 may be satisfied by
the purchase of separate Primary and Umbrella (or Excess) Liability policies which
when combined together provide the total limits of insurance specified.
	 
	 	(h)	 	Contractor further agrees to provide additional amounts or kinds of
insurance as may be reasonably deemed necessary from time to time in accordance with
the ongoing nature of operations, and

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	 	 	 	changes in exposure to loss, to the extent the insurance is commercially
available.

	 	5.2	 	Prior to commencing work for Company, Contractor shall obtain from its insurers a
waiver of subrogation against Company and any operator or customer for whom Company is
performing operations or services in all of the insurance policies set forth in this
Section, to include all insurance carried by Contractor protecting against loss of or
damage to its property and equipment employed in the performance of this Agreement whether
the same be set forth in this Section or not.
	 
	 	5.3	 	All such insurance shall be carried in a company or companies acceptable to Company
and shall be maintained in full force and effect during the term of this Contract, and
shall not be canceled, altered, or amended without thirty (30) days prior written notice
having first been furnished Company. Company shall be named an additional insured on all
Contractor required insurance with the sole exception of worker’s compensation. To the
extent to which Contractor incurs and/or assumes liability hereunder, or agrees to
indemnify Company, (I) all Contractor required insurance shall be primary to any insurance
of Company that may apply to such occurrence, accident or claim and (II) no “other
insurance” provision shall be applicable to Company and its affiliated, subsidiary and/or
interrelated companies, by virtue of having been named an additional insured or loss payee
under any policy of insurance.
	 
	 	5.4	 	Certificates of insurance acceptable to Company evidencing the coverage required by
Company shall be provided by Contractor to Company prior to commencement of performance of
services or the delivery of materials and equipment under this Agreement or an Order.
	 
	 	5.5	 	In the event Contractor is a self-insurer and Company has consented to Contractor
being a self-insurer as to any one or more of the risks as to which coverage is herein
required, evidence of such consent must be in writing and approved by a representative of
Company authorized to enter into such consent agreement.
	 
	 	5.6	 	These requirements shall be conditions precedent to the payment of any sums that may
be due Contractor.

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	6.0	 	INDEMNITY

	 	6.1	 	It is agreed between Company and Contractor that certain responsibilities and
liabilities for personal injuries and property damage arising out of the performance of
this Agreement should be allocated between them in order to avoid protracted litigation
between Company and Contractor along with the associated legal expenses and so that
insurance or self-insurance may be arranged by each party as necessary to protect them
against these exposures to loss. The following sets out the specifics of the agreements
between Company and Contractor as to the allocation of the responsibilities and
liabilities.
	 
	 	6.2	 	Contractor agrees to protect, defend, indemnify and hold harmless Company, its
officers, directors, employees or their invitees, and any working interest owner or
non-operator for whom Company is obligated to perform services, from and against all
claims, demands, and causes of action of every kind and character without limit and
without regard to the cause or causes thereof or the negligence or fault (active or
passive) of any party or parties including the sole, joint or concurrent negligence of
Company, any theory of strict liability and defect of premises, or the unseaworthiness of
any vessel (whether or not preexisting the date of this Contract), arising in connection
herewith in favor of Contractor’s employees, Contractor’s contractors or their employees,
or Contractor’s invitees on account of bodily injury, death or damage to property.
	 
	 	6.3	 	Company agrees to protect, defend, indemnify and hold harmless Contractor, its
officers, directors and employees or their invitees, from and against all claims, demands,
and causes of action of every kind and character without limit and without regard to the
cause or causes thereof or the negligence or fault (active or passive) of any party or
parties including the sole, joint or concurrent negligence of Contractor, any theory of
strict liability, any professional liability, and defect of premises, or the
unseaworthiness of any vessel (whether or not preexisting the date of this Contract),
arising in connection herewith in favor of Company’s employees, Company’s contractors
(other than Contractor herein) or their employees, or Company’s invitees on account of
bodily injury, death or damage to property.
	 
	 	6.4	 	Contractor agrees to protect, defend, indemnify and hold harmless Company, its
officers, directors, employees or their invitees, and any working interest owner or
non-operator for whom Company is performing services, from and against all claims,
demands, and causes of action of every kind and character arising from the acts of
Contractor in favor of third

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	 	 	 	parties and persons not employed or contracted by Contractor or Company on account of
bodily injury, death or damage to property.
	 
	 	6.5	 	Company agrees to protect, defend, indemnify and hold harmless Contractor, its
officers, directors, employees or their invitees from and against all claims, demands, and
causes of action of every kind and character arising from the acts of Company in favor of
third parties and persons not employed or contracted by Contractor or Company on account
of bodily injury, death or damage to property.
	 
	 	6.6	 	Contractor represents and warrants that it owns or has the right to use and construct
any and all equipment, tools, materials, computer software or hardware, data, trade
secrets and know-how used by Contractor in connection with services provided to Company.
Contractor represents and warrants that such use does not violate or infringe on any
patents issued or applied for or licenses of third parties. Contractor further represents
and warrants that such use does not constitute, directly or indirectly, the theft or
misappropriation of any third parties’ trade secrets. The indemnities of paragraphs 6.2
and 6.4 shall apply to any violations of the warranties and representations of this
paragraph. In addition to such indemnities, Contractor agrees to indemnify and hold
Company harmless from any and all claims, demands, and causes of action of every kind and
character in favor of or made by a patentee, licensee, or claimant of any rights or
priority to such tool or equipment, or the use or construction thereof, that may result
from or arise out of furnishing or use of any such tool or equipment by Contractor in
connection with the work
	 
	 	6.7	 	Each party shall notify the other party immediately of any claim, demand, or suit
that may be presented to or served upon it by any party arising out of or as a result of
work performed pursuant hereto, affording such other party full opportunity to assume the
defense of such claim, demand, or suit and to protect itself under the obligations of this
Section. Each party covenants and agrees to support this indemnity agreement by available
liability insurance coverage as set forth in Paragraphs 5.1 (a) through (e) above. In the
event that this Contract is subject to the indemnity limitations of any applicable State
law, and so long as that law is in force, then it is agreed that the above obligations to
indemnify are limited to the extent allowed by law. Additionally, the parties agree that:

	 	(a)	 	In the event that this Agreement is subject to the indemnity limitations of
Act 427 of the 1982 Louisiana Legislature, and so long as that act is in force,
provisions 6.2, 6.3, 6.4 and 6.5 herein shall not be applicable to the services
performed in the State of Louisiana. In lieu thereof, each party agrees to defend,
indemnify, save and hold

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	 	 	 	the other party harmless from and against all claims and causes of action to the
extent such arise out of the indemnifying party’s negligence, gross negligence,
strict liability or breach of contract.
	 
	 	(b)	 	In the event that this Agreement is subject to the indemnity limitations of
Chapter 127 of the Texas Civil Practices and Remedies Code, and so long as such
limitations are in force, then it is agreed that the above obligations to indemnify
are limited to the extent allowed by law, and each party covenants and agrees to
support this indemnity agreement by equal amounts of liability insurance coverage,
with limits of insurance required of each party equal to those specifically set forth
in Paragraphs 5.1 (a) through (e) above. In the event that this contract is subject
to any other applicable state indemnity limitation, it is agreed that the above
obligations to indemnify are limited to the extent allowed by law.
	 
	 	(c)	 	In the event that this Agreement is subject to the indemnity limitations in
New Mexico Statutes, Sec. 56-7-2, and so long as that act is in force, provisions
6.2, 6.3, 6.4 and 6.5 herein shall not be applicable to the services performed in the
State of New Mexico. In lieu thereof, each party agrees to defend, indemnify, save
and hold the other party harmless from and against all claims and causes of action to
the extent such arise out of the indemnifying party’s negligence, gross negligence,
strict liability or breach of contract.

	 	6.8	 	In claims against any person or entity indemnified under this Section 6 by an
employee of the Contractor, anyone directly or indirectly employed by them or anyone for
whose acts they may be liable, the indemnification obligation under this Section 6 shall
not be limited by a limitation on amount or type of damages, compensation or benefits
payable by or for the Contractor under Workers’ or Workmen’s Compensation acts, disability
benefit acts or other employee benefit acts.
	 
	 	6.9	 	If it is judicially determined that the monetary limits of insurance required
hereunder or of the indemnity voluntarily assumed under this Article which Contractor
agrees will be supported either by equal liability insurance or voluntarily self-insured,
in part or whole, exceeds the maximum limits permitted under such law, it is agreed that
said insurance requirements or indemnity shall automatically be amended to conform to the
maximum monetary limits permitted under such law.
	 
	 	6.10.	 	The indemnity provisions of this Agreement shall apply to any and all work
performed, services rendered or material supplied by Contractor on behalf

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	 		 	of Company whether Company is acting in the capacity of an operator, non-operator or
working interest owner.
	 
	 	6.11	 	Contractor shall be liable at all times for damages to or destruction of Contractor’s
equipment and materials, regardless of how such damage or destruction occurs. Company
shall be under no liability to reimburse Contractor for any such loss or damage thereto.
Contractor shall protect, defend, indemnify and hold harmless Company from any and all
damage or loss thereof, regardless of the negligence or fault (active or passive) of any
party or parties including the sole, joint or concurrent negligence of Company, any theory
of strict liability and defect of premises or the unseaworthiness of any vessel (whether
or not preexisting the date of this Contract), arising in connection herewith in favor of
Contractor, Contractor’s contractors, or Contractor’s invitees.
	 
	 	6.12	 	Any defense and indemnity by either party under these provisions shall include, but
not be limited to, the cost of defense of any claim, including attorney fees.

	7.	 	TAXES AND CLAIMS

	 	7.1	 	Contractor agrees to pay all taxes, licenses, and fees levied or assessed on
Contractor in connection with or incident to the performance of this Agreement by any
governmental agency and unemployment compensation insurance, old age benefits, social
security, or any other taxes upon the wages of contractor, its agents, employees, and
representatives. Contractor agrees to require the same agreements and be liable for any
breach of such agreements by any of its sub-contractors.
	 
	 	7.2	 	Contractor agrees to reimburse Company on demand for all such taxes or governmental
charges, State or Federal, that Company may be required or deem it necessary to pay on
account of employees of Contractor or its sub-contractors. Contractor agrees to furnish
Company with the information required to enable it to make the necessary reports and to
pay such taxes or charges. At its election, Company is authorized to deduct all sums so
paid for such taxes and governmental charges from such amounts as may be or become due to
Contractor hereunder.
	 
	 	7.3	 	Contractor agrees to pay all claims for labor, materials, services, and supplies
furnished by Contractor hereunder and agrees to allow no lien or charge to be fixed upon
property of Company or the party for whom Company is performing services. Contractor
agrees to indemnify, protect, defend, and hold Company harmless from and against all such
claims or indebtedness incurred by Contractor in connection with the services as

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	 	 	 	provided hereunder. It is agreed that Company shall have the right to pay any such claims
or indebtedness out of any money due or to become due to Contractor hereunder.
Notwithstanding the foregoing, Company agrees that it will not pay any such claim or
indebtedness as long as same is being actively contested by Contractor and Contractor has
taken all actions necessary (including the posting of a bond when appropriate) to protect
the property interests of Company and any other party affected by such claim or
indebtedness.
	 
	 	7.4	 	Before Company makes payments to Contractor, Company may require Contractor to
furnish proof that there are no unsatisfied claims for labor, materials, equipment, and
supplies or for injuries to persons or property not covered by insurance.

	8.	 	AUDIT
	 
	 	 	Contractor shall maintain, and shall cause any of Contractor’s subcontractors to maintain, a
true and correct set of records pertaining to services performed in compliance with any Order
and all transactions related thereto, and retain all such records for a period of not less than
two (2) years after completion of services performed. Company may, at its expense, require
Contractor, or any of Contractor’s subcontractors, at any time within said two year period to
furnish sufficient evidence, with documentary support, to enable Company to verify the
correctness and accuracy of payments to Contractor or such subcontractors. Within the time
limit herein established, Company may, following written notice to Contractor or such
subcontractor, employ an independent firm of public accountants to examine accounts, invoices,
tickets and other documents exclusively related to services performed hereunder, or pursuant to
any other Order previously executed between the parties hereto, in order to verify the accuracy
and compliance with this provision; provided that said accountants shall agree not to disclose
to Company any information secured in the course of such audit which does not bear on its above
mentioned purposes.

	9.	 	LAWS, RULES AND REGULATIONS

	 	9.1	 	Company and Contractor respectively agree to comply with all laws, rules, and
regulations, which are now or may become applicable to operations covered by this
Agreement or arising out of the performance of such operations. If either party is
required to pay any fine or penalty resulting from the other party’s failure to comply
with such laws, rules, or regulations, the party failing to comply shall immediately
reimburse the other for any such payment.

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	 	9.2	 	In the event any provision of this Agreement is inconsistent with or contrary to any
applicable law, rule, or regulation, or if any provision of this Agreement is found by a
court of competent jurisdiction to be invalid or unenforceable, that provision will be
deemed to be modified to the extent required to comply with said law, rule, or regulation,
or to make it valid and enforceable, and this contract as so modified, shall remain in
full force and effect. If said provision cannot be so modified, it shall be deemed deleted
and the remainder of the Agreement shall continue and remain in full force and effect.
	 
	 	9.3	 	This Agreement shall be governed, construed and interpreted in accordance with the
laws of Oklahoma.

	10.0	 	FORCE MAJEURE
	 
	 	 	Except for the duty to make payments hereunder when due, and the indemnification provisions
under this Contract, neither Company nor Contractor shall be responsible to the other for any
delay, damage or failure caused by or occasioned by a Force Majeure Event. As used in this
Contract, “Force Majeure Event” includes: acts of God, action of the elements, warlike action,
insurrection, revolution or civil strife, piracy, civil war or hostile action, strikes, acts of
public enemies, federal or state laws, rules and regulations of any governmental authorities
having jurisdiction in the premises or of any other group, organization or informal association
(whether or not formally recognized as a government); acute and unusual labor or material or
equipment shortages, or any other causes (except financial) beyond the control of either party.
Delays due to the above causes, or any of them, shall not be deemed to be a breach of or
failure to perform under this Contract. Neither Company nor Contractor shall be required
against its will to adjust any labor or similar disputes except in accordance with applicable
law.

	11.0	 	ASSIGNMENTS
	 
	 	 	Company and Contractor agree that neither will assign nor delegate this Agreement or any of the
work or services required hereunder, except for work normally performed by contractors, and not
to assign any sum that may accrue to Contractor hereunder, without prior written consent of the
other party. If any assignment by Company is made that significantly alters Contractor’s
financial burden, Contractor’s compensation shall be adjusted to give effect to any change in
Contractor’s operating costs.

	12.0	 	TERMINATION OF WORK

	 	12.1	 	Termination by Contractor: Contractor may terminate any subcontract for the same
reasons and under the same circumstances and procedures with

16

 

	 	 	 	respect to Company as Company may terminate with respect to Contractor under this
Contract. In the event of such termination by the Contractor for any reason which is not
the fault of Contractor, sub-contractors or their agents or employees or other persons
performing portions of the Work under contract with Contractor, Contractor shall be
entitled to recover from Company payment for work executed and for proven loss with
respect to materials, equipment, tools, and construction equipment and machinery,
including reasonable overhead, profit and damages.
	 
	 	12.2	 	Termination by Company: If Contractor persistently or repeatedly fails or neglects to
carry out its obligations in accordance with this Agreement and fails within seven days
after receipt of written notice to commence and continue correction of such default or
neglect with diligence and promptness, Company may, after seven days following receipt by
Contractor of an additional written notice and without prejudice to any other remedy
Company may have, terminate the contract and finish Contractor’s obligations by whatever
method Company may deem expedient. If the unpaid balance of the contract sum exceeds the
expense of finishing Contractor’s obligations, such excess shall be paid to Contractor,
but if such expense exceeds such unpaid balance, Contractor shall pay the difference to
Company.
	 
	 	12.3	 	The foregoing paragraph shall in no way limit Company’s right to terminate Contractor
without additional compensation in the event of Contractor’s breach of this Contract.

	13.0	 	GOVERNMENT REGULATIONS

	 	The following regulations, where required by law, are incorporated in the agreement by
reference as if fully set out:
	 
	 	(1)	 	The Equal Opportunity Clause prescribed in 41 CFR 60-1.4;
	 
	 	(2)	 	The Affirmative Action Clause prescribed in 41 CFR 60-250.4 regarding veterans and
veterans of the Vietnam era;
	 
	 	(3)	 	The Affirmative Action Clause for handicapped workers prescribed in 41 CFR 60-741.4;
	 
	 	(4)	 	The Certification of Compliance with Environmental Laws prescribed in 40 CFR 15.20.

	14.	 	INSOLVENCY OF CONTRACTOR
	 
	 	 	In the event Contractor shall be adjudged bankrupt, make a general assignment for the benefit
of creditors, or if a receiver shall be appointed on account of Contractor’s insolvency, or in
the event Contractor does not correct or, if immediate correction is not possible, commence and
diligently continue action to

17

 

	 	 	correct, any default of Contractor to comply with any of the provisions or requirements of this
Agreement and all Orders within ten (10) days after written notice by Company, Company may, by
written notice to Contractor, without prejudice to any other rights or remedies which Company
may have, refuse to allow further performance of services by Contractor. Company may complete
the performance of services by such means as Company selects and Contractor shall be
responsible for any additional costs incurred by Company in so doing. Any amounts due
Contractor for services performed by Contractor in full compliance with the terms of this
Agreement and any Order prior to cessation of the performance of services shall be subject to
setoff of Company’s additional costs of completing the performance of services and other
damages incurred by Company as a result of Contractor’s default. Waiver by Company of any
default of Contractor shall not be considered to be a waiver by Company of any provision of
this Agreement or of any subsequent default by Contractor.
	 
	15.	 	CONTRACTOR’S EMPLOYEES UNDER LOUISIANA WORKERS’ COMPENSATION ACT
	 
	 	 	In all cases where Contractor’s employees (defined to include Contractor’s direct, borrowed,
special, or statutory employees) are covered by the Louisiana Workers’ Compensation Act. La.
R.S. 23:1021 et seq Company and Contractor agree that all work and operations performed by
Contractor and its employees pursuant to the Agreement are an integral part of and are
essential to the ability of Company to generate Company’s goods, products and services for
purposes of La. R.S. 23:1061 (A)(1). Furthermore, Company and Contractor agree that Company is
the statutory employer of Contractor’s employees for purposes of La. R.S. 23:1061 (A)(3).
Irrespective of Company’s status as the statutory employer or special employer (as defined in
La. R.S. 23:1031 (C)) of Contractor’s employees, Contractor shall remain primarily responsible
for the payment of Louisiana Workers’ Compensation benefits to its employees, and shall not be
entitled to seek contribution for any such payments from Company.
	 
	16.	 	COMPLETE AGREEMENT
	 
	 	 	This Agreement contains the entire agreement of the parties and supersedes any and all prior
negotiations or understandings, whether written or oral. No subsequent variance from, amendment
to or modification of this Agreement shall be binding upon Company unless it is in writing,
expressly provides that it is intended as a variance, amendment or modification and is executed
by an authorized officer of Company.

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	17.	 	TIME OF THE ESSENCE
	 
	 	 	Time is of the essence in this Agreement. In the event of a cessation of the performance of
services in compliance with any Order or in the event of Contractor’s failure of timely
performance or delay in delivery of materials and equipment, Company may immediately cancel the
Order without further obligation to Contractor.
	 
	18.	 	EXHIBITS
	 
	 	 	The following Exhibits and Riders are attached hereto and made a part of this Agreement for all
purposes:
	 
	 	 	Exhibit A — Required Limits of Insurance
	 
	 	 	Exhibit B — Contractor’s Certificates of Insurance

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement upon the date shown in
several counterparts, each of which shall be considered as an original; however, the effective date
shall be the date upon which services are first provided by Contractor, whether before or after the
date first shown above.

	 	 	 	 	 
	COMPANY:

CHESAPEAKE OPERATING, INC.

 	 
	By:  	/s/
Martha A. Burger 	 
	Title:  	Treasurer / Senior V.P. of Human Resources	 
	Date: 12-30-03 	 
	 
	CONTRACTOR:

Dawson Geophysical Company

 	 
	By:  	/s/ C.Ray Tobias
 	 
	Title:     	Executive Vice President 	 
	Date:       12/18/03 	 
	 

19exv10w3

Exhibit 10.3

Summary of Non-Employee Director Compensation

     Effective January 27, 2009, each non-employee director of Dawson Geophysical Company (the
“Company”) will receive monthly compensation of $2,000. Each non-employee director also will
receive a fee of $2,000 for each regular Board of Directors meeting. In addition, the chairman of
the Audit Committee will receive an additional fee of $500 per month. Each non-employee director
also will receive a grant of the Company’s common stock worth $36,000 annually. The Company also
reimburses the reasonable expenses incurred by its directors in attending meetings and other
company business.

     Directors who are also full-time officers or employees of the Company receive no additional
compensation for serving as directors.

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