EXHIBIT 10.2.1
SIXTH AMENDED AND RESTATED EMPLOYMENT AGREEMENT THIS AGREEMENT is made effective January 1, 2007, 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 Amended and Restated Employment Agreement dated effective July 1, 1998 as amended by the First Amendment to Amended and Restated Employment Agreement dated December 31, 1998, as further amended by the Second Amended and Restated Employment Agreement dated January 1, 2001, as further amended by the Third Amended and Restated Employment Agreement dated January 1, 2004, as further amended by the Fourth Amended and Restated Employment Agreement dated July 1, 2005, and as further amended by the Fifth Amended and Restated Employment Agreement dated July 1, 2006 (together the “Prior Agreements”); WHEREAS, the Company and the Executive desire to amend and restate the Prior Agreements in their entirety to reflect the foregoing and other changes to the arrangement between the Company and the Executive. 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 that 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 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. 2.1 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. 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
2.2
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. 2.3 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. 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 -2the exercise of stock options, the grant of restricted stock, the conversion of preferred stock or other than through open market purchases, the fair market value of the common stock on the date the option was exercised, the stock was issued or the stock was acquired through the conversion of preferred stock, or the date such stock was 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 subsequent stock splits. This paragraph will become null and void 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 paragraphs 3.1, 3.2 and 3.3 of this Agreement 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 limitations in this paragraph 3 will not prohibit an investment by the Executive in publicly traded securities. 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 that 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
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 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 of the interest in oil and gas is incidental to the ownership of the surface estate or (b) royalty, overriding royalty, working interests or interests in oil and gas received by gift or inheritance. Existing Interests. The Executive has in the past conducted oil and gas activities individually and through Chesapeake Investments, an Oklahoma Limited Partnership, and other entities owned or controlled by the -3Executive (collectively, the “Executive Affiliates”). The Executive will be 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 on oil and gas leases or interests which the Executive or Executive Affiliates owned or had the right to acquire as of the date of this Agreement or which the Executive or the Executive Affiliates acquired from the Company under the Prior agreements (collectively, the “Prior Interests”). To the extent that the oil and gas 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 Founder Well Participation Program (the “FWP Program”).
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3.3
Company’s Activities. The Executive or the designated Executive Affiliate will be permitted to participate in the FWP Program. The Executive hereby agrees that the right to participate in the Company’s wells after the date of this Agreement will be under the FWP Program and the Executive waives any right to participate under the Prior Agreements subsequent to the date of this Agreement. The parties hereto agree the FWP Program cannot be amended or modified without the prior written consent of the Board of Directors and the Executive.
4.
Executive’s Compensation. The Company agrees to compensate the Executive as follows: 4.1 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 semi-monthly installments, beginning January 1, 2007 during the term of this Agreement. Bonus. In addition to the Base Salary described at paragraph 4.