Exhibit 10.2.1
AMENDED AND RESTATED
EMPLOYMENT
AGREEMENT
THIS AGREEMENT is made effective
January 1, 2008, between CHESAPEAKE ENERGY CORPORATION, an
Oklahoma corporation (the “Company”), and AUBREY K.
McCLENDON, an individual (the “Executive”).
W I T N E S S E T H:
WHEREAS, the Company and the
Executive entered into that certain Employment Agreement dated
effective October 1, 2007, (the “Prior
Agreement”);
WHEREAS, the Company and the
Executive desire to amend and restate the Prior Agreement in its
entirety to reflect the changes to the employment arrangement
between the Company and the Executive.
NOW THERFORE, 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 that might impose
similar such fiduciary obligations 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 the
objective of achieving the most profitable operation of the Company
and the Company’s affiliated entities consistent with
developing and maintaining a quality business operation.
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2.1
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Specific Duties
. During the term of this Agreement
the Executive: (a) will serve as Chairman of the Board and
Chief Executive Officer for the Company; (b) will be nominated
for election or appointed to serve as a director of the Company;
(c) will be appointed as an officer of one (1) or more of
the Company’s subsidiaries; and (d) may be nominated for
election or appointed to serve as a director of one (1) or
more of the Company’s subsidiaries. The Executive agrees to
use the Executive’s best efforts to perform all of the
services required to fully and faithfully execute the offices and
positions to which the Executive is appointed and such other
services as may be reasonably directed by the Board of Directors of
the Company in accordance with this Agreement.
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2.2
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Modifications
. The precise duties to be performed
by the Executive may be extended or curtailed in the discretion of
the Board of Directors of the Company. However, except for
termination for Cause (as hereinafter defined under paragraph 6.1.2
of this Agreement), the failure of the Executive to be elected, be
reelected or serve as a director of the Company during the term of
this Agreement, the removal of the Executive as a member of the
board of directors of the Company, the withdrawal of the
designation of the Executive as Chairman of the Board and Chief
Executive Officer of the Company or the assignment of the
performance of duties incumbent on the foregoing offices to other
persons without the prior written consent of the Executive will
constitute termination without Cause by the Company.
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2.3
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Rules and
Regulations . From time
to time, the Company may issue policies and procedures applicable
to employees and the Executive including an Employment Policies
Manual. The Executive agrees to comply with such policies and
procedures, except to the extent such policies are inconsistent
with this Agreement. Such policies and procedures may be
supplemented, modified, changed or adopted without notice in the
sole discretion of the Company at any time. In the event of a
conflict between such policies and procedures and this Agreement,
this Agreement will control unless compliance with this Agreement
will violate any law or regulation applicable to the Company or its
affiliated entities. Any activity by the Executive that is
expressly permitted by this Agreement will not violate such
policies and procedures.
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2.4
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Stock Investment
. During the term of this Agreement,
the Executive agrees to hold shares of the Company’s common
stock having an aggregate Investment Value (as hereafter defined)
greater than five hundred percent (500%) of the compensation
paid to the Executive under paragraphs 4.1 and 4.2 of this
Agreement during such calendar year. Any shares of common stock
acquired by the Executive prior to the date of this Agreement and
still owned by the Executive during the term of this Agreement may
be used to satisfy the requirement to own common stock. For
purposes of this paragraph, the “Investment Value” of
each share of stock will be as follows: (a) for shares
purchased in the open market after the date of this Agreement the
price paid by the Executive for such shares; (b) for shares
acquired after the date of this Agreement through the exercise of
stock options, the grant of restricted stock or the conversion of
other securities other than through open market purchases, the fair
market value of the common stock on the date the option is
exercised, the restricted stock vests, or the stock is acquired
through the conversion of another security or the date such stock
is otherwise acquired; and (c) for shares acquired prior to
the date of this Agreement, the closing price for the
Company’s stock on the New York Stock Exchange (the
“NYSE”) on the date of this Agreement adjusted
for
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subsequent stock splits. This
paragraph will automatically become null and void without notice or
action by either party if the Company’s common stock ceases
to be listed on the NYSE, the National Association of Securities
Dealers Automated Quotation System or other national exchange. The
Company has no obligation to sell or to purchase from the Executive
any of the Company’s stock in connection with this paragraph
2.4 and has made no representations or warranties regarding the
Company’s stock, operations or financial
condition.
3. Other Activities . Except
for the activities (the “Permitted Activities”)
permitted under this paragraph or approved by the Board of
Directors, the Executive will not: (a) engage in activities
which require such substantial services on the part of the
Executive that the Executive is unable to perform the duties
assigned to the Executive in accordance with this Agreement;
(b) serve as an officer or director of any publicly held
entity; or (c) directly or indirectly invest in, participate
in or acquire an interest in any oil and gas business, including,
without limitation, (i) producing oil and gas,
(ii) drilling, owning or operating oil and gas leases or
wells, (iii) providing services or materials to the oil and
gas industry, (iv) marketing or refining oil or gas, or
(v) owning any interest in any corporation, partnership,
company or entity which conducts any of the foregoing activities.
The Executive is not restricted from maintaining or making
investments, or engaging in other businesses, enterprises or civic,
charitable or public service functions if such activities,
investments, businesses or enterprises do not result in a violation
of clauses (a) through (c) of this paragraph 3.
Notwithstanding the foregoing, the Executive will be permitted to
participate in the following activities and such activities will be
deemed to be approved by the Company, if such activities are
undertaken in strict compliance with this Agreement.
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3.1
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Surface Interests and
Gifts . The foregoing
restriction in clause (c) will not prohibit the ownership of
(a) the interests in oil and gas described therein where the
Executive acquires, owns or previously owned the surface of the
land covered in whole or in part by such interest in oil and gas
and the ownership, operation, development or use of the interest in
oil and gas is incidental to the ownership of the surface estate or
(b) interests or interests in oil and gas received by gift or
inheritance. For purposes of this paragraph 3.1: (y) interests
in oil and gas means any interest in oil and gas including, without
implied limitation, any mineral interest, royalty interest,
overriding royalty interest, working interest, net profits
interest, production payment or similar interest in the production
of oil and gas; and (z) the interests in oil and gas permitted
to be owned under this paragraph 3.1 are not required to be
acquired simultaneously with the acquisition of the surface estate,
but may be acquired at any time the Executive owns any interest in
the surface estate.
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3.2
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Existing Interests
. The Executive has in the past
conducted oil and gas activities individually, through Chesapeake
Investments, an Oklahoma Limited Partnership, and through other
entities owned or controlled by the Executive (collectively, the
“Executive Affiliates”). The Executive will
be
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permitted to continue to conduct
oil and gas activities (including participation in new wells)
directly or through the Executive Affiliates , but only to
the extent such activities are conducted with respect to oil and
gas leases or interests in oil and gas which the Executive or
Executive Affiliates (a) owned or had the right to acquire as
of the date of this Agreement, (b) acquired or held in
accordance with paragraph 3.1 of this Agreement or
(c) acquired from the Company under the FWP Program (as
hereinafter defined), prior employment agreements or any other
written agreement between the Executive, the Company or the
Company’s affiliated entities (collectively, the “Prior
Interests”). To the extent Prior Interests or activities
covered by this paragraph 3.2 are operated by the Company, the
Executive agrees to pay any costs or expenses with respect to the
Prior Interests in accordance with the terms of the Founder Well
Participation Program (the “FWP Program”).
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3.3
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FWP Program
. The Executive or the designated
Executive Affiliate will be permitted to participate in the FWP
Program in accordance with its terms. The parties hereto agree the
FWP Program cannot be modified or amended without the prior written
consent of the Board of Directors and the Executive.
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3.4
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Non-Active
Investments . The
foregoing restriction in clause (c) of this paragraph 3 will
not prohibit the following activity by the Executive or the
Executive’s affiliates: (a) an investment in the
securities of a publicly listed company; (b) investment or
trading in commodities, currencies, financial instruments or other
derivatives (including, without implied limitation, short
positions, long positions or positions in options) whether on an
exchange, by private contract or in the over-the-counter market;
(c) an investment in non public entities which own de minimis
passive interests in E&P Activities (as hereafter defined)
which are incidental to such entity’s primary non E&P
business activity; and (d) an investment in an investment
fund, hedge fund, limited partnership or other passive investment
entity (i) which does not actively engage in E&P
Activities; and (ii) for which the Executive does not directly
or indirectly provide input, advice or management to such entity,
the sponsor of such entity or any portfolio company of such entity.
For purposes of this Agreement the term E&P Activities means
the specific activities listed in sub clauses (i) or
(ii) of clause (c) of paragraph 3 of this
Agreement.
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4. Executive’s
Compensation . The Company agrees to compensate the Executive
as follows:
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4.1
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Base Salary
. A base salary (the “Base
Salary”), in an annual rate of not less than Nine Hundred
Seventy-Five Thousand Dollars ($975,000.00), will be paid to the
Executive in equal bi-weekly installments, beginning July 1,
2007 during the term of this Agreement.
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4.2
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Bonus . . In addition to the Base Salary described in
paragraph 4.1 of this Agreement, the Company may periodically pay
bonus compensation to the Executive. Except as expressly provided
in this Agreement, any bonus compensation will be awarded in the
absolute discretion of the Company in such amounts and at such
times as the Compensation Committee of the Board of Directors of
the Company may determine.
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4.3
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Equity Compensation
. In addition to the compensation
set forth in paragraphs 4.1 and 4.2 of this Agreement, the
Executive may periodically receive grants of stock options,
restricted stock or other equity related awards from the
Company’s various equity compensation plans, subject to the
terms and conditions thereof.
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4.4
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Benefits
. The Company agrees to extend to
the Executive retirement benefits, deferred compensation,
reimbursement of reasonable expenditures for dues, travel and
entertainment and any other benefits the Company provides to other
executives or officers from time to time on the same terms as such
benefits are provided to such individuals. The Company will also
provide the Executive the opportunity to apply for coverage under
the Company’s medical, life and disability plans, if any. If
the Executive is accepted for coverage under such plans, the
Company will provide such coverage on the same terms as is
customarily provided by the Company to the plan participants as
modified from time to time. The Company may condition any such
benefits on the Executive paying any amounts which the Company
requires other employees to pay with respect to such
benefits.
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4.5
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Vacation
. The Executive will be entitled to
take up to five (5) weeks of paid vacation each calendar year
during the term of this Agreement. Except as provided in the
Company’s general employment policies or as otherwise
provided in this Agreement, no additional compensation will be paid
for failure to take vacation and no vacation may be carried forward
from one calendar year to another.
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4.6
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Travel . For safety, security and efficiency the
Executive will utilize aircraft owned, leased or chartered by the
Company for business and personal use and will not be required to
reimburse the Company for any cost related to such use. The
Executive will: (a) not owe any additional amounts to the
Company under this paragraph for guests or family members traveling
with the Executive; and (b) pay all personal income taxes
accruing as a result of the personal use of the Company’s
aircraft by the Executive and the Executive’s immediate
family members under this paragraph.
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4.7
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Accounting Support
. The Executive will be permitted to
utilize the Company’s office facilities, computer facilities
and personnel to provide accounting services, management services,
records maintenance, tax advice, tax return
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preparation and other business
services for the Executive’s (and the Executive’s
immediate family members’) personal businesses, investments
and activities. Beginning January 1, 2007, the Executive
agrees to pay to the Company as a partial reimbursement an amount
equal to: (a) direct costs for each Company employee primarily
designated to provide services under this paragraph (consisting of
cash salaries, cash bonuses, contributions to retirement and
deferred compensation plans, un-reimbursed insurance premiums for
the benefit of the employee and the employer’s portion of
payroll taxes) multiplied by the percentage of the time such
employee spends providing such services plus (b) as indirect
costs the amount for each employee under the foregoing clause
(a) multiplied by a percentage determined by the compensation
committee of the Board of Directors and approved by the Executive.
Such amounts related to the provision of secretarial or general
administrative support for the Executive’s will not be
required to be reimbursed in whole or part under this
paragraph.
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4.5
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Compensation Review
. The compensation of the Executive
will be reviewed not less frequently than semi-annually by the
Compensation Committee of the Board of Directors of the Company.
The compensation of the Executive prescribed in paragraph 4 of this
Agreement (including benefits) may be increased at the discretion
of the Compensation Committee of the Board of Directors of the
Company, but may not be reduced without the prior written consent
of the Executive except as expressly provided herein.
Notwithstanding the foregoing, the Board of Directors may reduce
the amounts or awards under paragraph 4.2 or 4.3 of this Agreement
on a reasonable basis provided such decrease is applicable to all
executives of the Company and does not result in a proportionately
greater reduction in the amounts or awards to Executive under such
paragraphs as compared to any other executive of the Company or any
of the Company’s subsidiaries.
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5. Term . In the absence of
termination as set forth in paragraph 6 below, this Agreement will
extend for a term commencing on the effective date of this
Agreement and ending on December 31, 2012, as extended from
time to time (the “Expiration Date”). Unless the
Company provides at least thirty (30) days prior written
notice of non-extension to the Executive, on each December 31
during the term of this Agreement, the term and the Expiration Date
will be automatically extended for one (1) additional year so
that the remaining term on this Agreement will be not less than
four (4) and not more than five (5) years.
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6. Termination . This Agreement will
continue in effect until the expiration of the term set forth in
paragraph 5 of this Agreement unless earlier terminated pursuant to
this paragraph 6.
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6.1
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Termination by
Company . The Company
will have the following rights to terminate this
Agreement:
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6.1.1
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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 ninety
(90) business days after the date of such notice (the
“Termination Date”). In the event the Executive is
terminated without Cause (other than a CC Termination under
paragraph 6.3 of this Agreement), the Executive will be entitled to
the following: (a) payment of Base Compensation (as hereafter
defined) in
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