chk01072009_1021.htm


    Exhibit
10.2.1


      SECOND
AMENDED AND RESTATED

      EMPLOYMENT
AGREEMENT

      


          THIS
AGREEMENT is made effective December 31, 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 Amended and Restated
Employment Agreement dated effective January 1, 2008 (the “Prior
Agreement”).

      


          WHEREAS, the
Board of Directors has determined that it is in the best interests of the
Company to modify the Executive’s employment arrangement in order to: (a)
maximize the Executive’s incentive to remain an employee and officer of the
Company; and (b) temporarily reduce the Executive’s minimum stock ownership
threshold in order to permit the Executive sufficient time to increase his
holdings of the Company’s stock given the forced liquidation of a majority of
the Executive’s stock holdings in October 2008.

      


          WHEREAS, as a
result of the Executive’s extraordinary contribution to the joint venture
transactions that were consummated by the Company during 2008 and increased the
Company’s intrinsic value by at least $10 billion, the Board of Directors has
also determined that it is in the best interests of the Company to grant to the
Executive an incentive award in the form of a credit against the joint interest
billings issued in connection with the FWP Program (as hereafter defined) with a
proportionate clawback provision in the event the Executive resigns or is
terminated for Cause during the next five (5) years.

      


          WHEREAS, the
Executive and the Board of Directors have agreed that the foregoing incentive
award should be conditioned on the following for the initial five year term of
this Agreement: (a) an agreement by the Executive not to resign or commit an act
which would give rise to a termination for Cause by the Company; and (b) that
the Executive’s salary and semi-annual bonuses will be frozen at current levels
and not exceed the amounts for calendar year 2008.

      


          WHEREAS, the
Company and the Executive desire to amend and restate the Prior Agreement in its
entirety to incorporate the foregoing and other 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.

      


      
        	 	
                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.

              


      

      


      
        	 	
                2.2

              	
                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.

              


      

      


      
        	 	
                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. Any activity by the Executive that is expressly permitted by
      this Agreement will not violate such policies and
    procedures.

              


      

      


      
        	 	
                2.4

              	
                Stock
      Investment.  The Executive agrees to hold shares of the
      Company’s common stock having an aggregate Investment Value (as hereafter
      defined) greater than the designated percentage of the compensation paid
      to the Executive under paragraphs 4.1 and 4.2 of this Agreement during
      such calendar year.   The designated percentage will be two
      hundred percent (200%) for calendar year 2009 and five hundred percent
      (500%) for the remaining term of this Agreement.  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 including, without
      implied limitation, shares of common stock held by Chesapeake Investments,
      an Oklahoma Limited Partnership or owned beneficially through the
      Executive’s retirement plans.  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, the price paid by the Executive for
      such shares; (b) for shares acquired 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 each
      share acquired prior to the date of this Agreement, the amount equal to
      the greater of (i) the amount determined under clause (a) or (b) as
      applicable, or (ii) 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 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 to 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.

      


      
        	
                 
      

              	
                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 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 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.

              


      

      


      
        	
                 
      

              	
                3.2

              	
                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 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”).

              


      

      


      
        	
                 
      

              	
                3.3

              	
                FWP
      Program.  The Executive or the designated Founder
      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.

              


      

      


      
        	
                 
      

              	
                3.4

              	
                Non Active
      Investments.  The foregoing restriction in clause (c) of
      this paragraph 3 will not prohibit the following activities 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.

              


      

      


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

      


      
        	
                 
      

              	
                4.1

              	
                Base
      Salary.  A base salary (the "Base Salary"), at 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 January 1, 2009, and continuing during the term of
      this Agreement.  The Executive agrees that the Base Salary will
      not exceed Nine Hundred Seventy-Five Thousand Dollars ($975,000.00) prior
      to the Executive Termination Date (as hereafter
  defined).

              


      

      


      
        	
                 
      

              	
                4.2

              	
                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.  The cash bonuses to be paid by
      the Company under this paragraph for any calendar year during the term of
      this Agreement and prior to the Executive Termination Date will not exceed
      the Executive’s cash bonus compensation for calendar year 2008, grants
      which approximate One Million Nine Hundred Fifty Thousand Dollars
      ($1,950,000.00).

              


      

      


      
        	
                 
      

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

              


      

      


      
        	
                 
      

              	
                4.4

              	
                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.

              


      

      


      
        	
                 
      

              	
                4.5

              	
                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.

              


      

      


      
        	
                 
      

              	
                4.6

              	
                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.

              


      

      


      
        	
                 
      

              	
                4.7

              	
                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
      preparation and other business services for the Executive’s (and the
      Executive’s immediate family members’) personal
      businesses,  investments and activities. Beginning January 1,
      2009, the Executive agrees to pay to the Company as a partial
      reimbursement an amount equal to: (a) direct cash compensation for each
      Company employee primarily designated to provide services under this
      paragraph (consisting of cash salaries, cash bonuses, 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 will not be required to be reimbursed in whole or part under
      this paragraph.

              


      

      


      
        	
                 
      

              	
                4.8

              	
                2008 Incentive
      Award.  The Company hereby grants to the Executive,
      effective as of the date of this Agreement, an incentive award in the
      amount of Seventy-five Million Dollars ($75,000,000.00) to be used,
      applied and recouped in accordance with the terms of this paragraph (the
      “Incentive Award”).  The amount of the Incentive Award, less any
      applicable federal and state tax withholding amounts, will be granted to
      the Executive as a deposit for credit against joint interest billings
      issued by the Company with respect to the Executive’s interest in wells
      acquired through participation in the FWP Program, well participation
      provisions similar to the FWP Program under prior employment agreements
      between the Company and the Executive and the Prior Interests (the “IA JIB
      Credit”).  The Executive may assign the IA JIB Credit to any
      Founder Affiliate (as defined in the FWP Program) subject to any
      conditions herein, may designate the application of the IA JIB Credit to
      all or part of any unpaid joint interest billing issued by the Company to
      the Executive or a Founder Affiliate and may not use the IA JIB Credit for
      any other purpose prior to December 31, 2014.  Any unused
      portion of the IA JIB Credit existing on December 31, 2014, will be
      disbursed to the Executive on written request by the
      Executive.  If, prior to the Executive Termination Date (as
      hereafter defined), the Executive is terminated by the Company for Cause
      in accordance with paragraph 6.1.2 of this Agreement or the Executive
      terminates this Agreement in violation of paragraph 6.2 of this Agreement,
      the IA JIB Credit will be recouped from the Executive by the Company as
      follows:  (a) any of the IA JIB Credit that has not been applied
      to a joint interest billing as of the effective date of the foregoing
      termination will be automatically forfeited and no consideration will be
      paid or earned by the Executive as a result of such forfeiture; (b) the
      Executive will within one hundred eighty (180) days after the effective
      date of the foregoing termination pay to the Company in immediately
      available funds an amount equal to the lesser of the following (1) the
      aggregate amount of any IA JIB Credit applied to joint interest billings
      issued by the Company plus any federal or state taxes withheld by the
      Company for the benefit of the Executive from the Incentive Award or (2)
      the original Seventy-five Million Dollar ($75,000,000.00) amount of the
      Incentive Award multiplied by a percentage equal to (i) the number of full
      calendar months remaining between the effective date of the foregoing
      termination and the Executive Termination Date, divided by (ii) sixty
      (60).  The foregoing right of recoupment will only apply to a
      termination of this Agreement under paragraph 6.1.2 or a termination in
      violation of paragraph 6.2, each as expressly provided in the foregoing
      sentence, and will not apply to any other termination of this Agreement
      including, without implied limitation, an Executive FC Termination (as
      hereafter defined) under paragraph 6.2 of this Agreement or any
      termination under paragraphs 6.3, 6.4 or
6.5.

              


      

      


      
        	
                 
      

              	
                4.9

              	
                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: (a)   be increased at the discretion of the
      Compensation Committee of the Board of Directors of the Company except as
      expressly limited in paragraphs 4.1 and 4.2 of this Agreement and (b) not
      be reduced without the prior written consent of the Executive except as
      expressly provided herein.  The limitations under paragraph 4.1
      and 4.2 are not intended to impact the compensation under the remaining
      paragraphs of this paragraph 4. 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.

              


      

      


      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, 2013, 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.

      


      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.

      


      
        	
                 
      

              	
                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 giving 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 accordance with the Company's
      policies during the remaining term of this Agreement, but in any event
      through the then current Expiration Date; (b) continuation of the benefits
      provided by operation of paragraphs 4.4, 4.6, 4.7 and 4.8 of this
      Agreement (excepting participation in any retirement or deferred
      compensation plan maintained by the Company if such participation is
      prohibited by law) at the levels and on the terms provided on the date of
      termination hereunder during the remaining term of this Agreement, but in
      any event through the then current Expiration Date; and (c) a lump sum
      cash payment for any accrued but unused vacation through the Termination
      Date in accordance with the Company’s Employment Policies
      Manual.  For purposes of this Agreement the term "Base
      Compensation" means the Executive's current Base Salary under paragraph
      4.1 on the Termination Date plus the bonus compensation received by the
      Executive during the twelve (12) month period preceding the Termination
      Date.  Termination compensation under subsection (a) of this
      paragraph 6.1.1 will not be paid in a lump sum, but will be paid in equal
      installments during the remaining term of this Agreement in accordance
      with the Company’s payroll schedule applicable to employees as of the date
      of this Agreement (but in any event through the then current Expiration
      Date).  Any benefits under clause (b) will be subject to any
      conditions or obligations in existence on the Termination
      Date.

              


      

      


      
        	
                 
      

              	
                6.1.2

              	
                Termination for
      Cause.  The Company may terminate this Agreement for
      Cause. For purposes of this Agreement, “Cause” means: (a) the willful and
      continued failure of the Executive to perform substantially the
      Executive’s duties with the Company or one of the Company Entities (other
      than a failure resulting from incapacity due to physical or mental
      illness), after a written demand for substantial performance is delivered
      to the Executive by the Board of Directors which specifically identifies
      the manner in which the Board of Directors believes that the Executive has
      not substantially performed the Executive’s duties; or (b) the willful
      engaging by the Executive in illegal conduct, gross misconduct or a
      clearly established violation of the Company’s written policies and
      procedures, in each case which is materially and demonstrably injurious to
      the Company. For purposes of this provision, an act or failure to act, on
      the part of the Executive, will not be considered “willful” unless it is
      done, or omitted to be done, by the Executive in bad faith or without
      reasonable belief that the Executive’s action or omission was in the best
      interests of the Company.  Any act, or failure to act, based on
      authority given pursuant to a resolution duly adopted by the Board of
      Directors or based on the advice of counsel for the Company will be
      conclusively presumed to be done, or omitted to be done, by the Executive
      in good faith and in the best interests of the Company. In the event this
      Agreement is terminated for Cause, subject to paragraph 6.6 of this
      Agreement, the Company will not have any obligation to provide any further
      payments or benefits to the Executive after the effective date of such
      termination.  This Agreement will not be deemed to have
      terminated for Cause unless a written determination specifying the reasons
      for such termination is made, approved by a majority of the independent
      and disinterested members of the Board of Directors of the Company and
      delivered to the Executive.  Thereafter, the Executive will have
      the right for a period of thirty (30) days to request a Board of Directors
      meeting to be held at a mutually agreeable time and location to be
      attended by the members of the Board of Directors in person within the
      following thirty (30) days, at which meeting the Executive will have an
      opportunity to be heard. Failing such determination and opportunity for
      hearing, any termination of this Agreement will be deemed to have occurred
      without Cause.

              


      

      


      
        	
                 
      

              	
                6.2

              	
                Termination by
      Executive.  The Executive: (a) except as provided herein,
      may not voluntarily terminate this Agreement prior to December 31, 2013
      (the “Executive Termination Date”); (b) may terminate this Agreement after
      the Executive Termination Date by giving written notice of such
      termination to the Company at least one hundred eighty (180) days prior to
      the effective date of such termination; (c) in addition to any other
      remedy hereunder, may terminate this Agreement at any time (including
      prior to the Executive Termination Date) if the Company defaults with
      respect to a material provision of this Agreement, by giving written
      notice of such termination to the Company specifying the default by the
      Company and an effective date of such termination if the default is not
      cured at least forty-five (45) days after the date of such notice (an
      “Executive FC Termination”).  After the delivery of a notice of
      termination in accordance with this paragraph the Executive may use
      remaining accrued vacation days, or at the Company’s option, be paid for
      such days.  In the event this Agreement is terminated by the
      Executive in accordance with this paragraph the obligations of the parties
      will be controlled by paragraph 6.6 of this
  Agreement.

              


      

      


      
        	
                 
      

              	
                6.3

              	
                Termination After
      Change in Control.  If during the term of this Agreement
      there is a "Change of Control" and within three (3) years thereafter there
      is a CC Termination (as hereafter defined), then the Executive will be
      entitled to severance compensation (in addition to any other rights and
      other amounts payable to the Executive under this Agreement or otherwise
      through the date of the CC Termination) in an amount equal to three (3)
      times the Executive's Base Compensation. Unless the Executive elects
      otherwise as hereinafter provided, the severance compensation under this
      paragraph 6.3 will not be paid in a lump sum but will be paid in equal
      installments over the remaining term of this Agreement (but in any event
      through the then current Expiration Date) in accordance with the Company’s
      the payroll schedule applicable to employees as of the date of this
      Agreement.  The Executive may elect  in the notice
      under paragraph 6.3.2 of this Agreement to receive the foregoing severance
      compensation in a lump sum in lieu of the payout, such lump sum to be paid
      by the Company within ten (10) days after the CC Termination. If any
      amount under this paragraph is not paid when due, the unpaid amount will
      bear interest at the per annum rate of twelve percent
    (12%).

              


      

      


      
        	
                 
      

              	
                6.3.1

              	
                Change of
      Control.  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 30% 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 “Outstanding
      Company Voting Securities”). For purposes of this paragraph (a) 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) of this paragraph
  6.3.1.

              


      

      


      
        	
                 
      

              	
                (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, 30% 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 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.

              


      

      
        


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

                


        

      

       

      


      
        	
                 
      

              	
                6.3.2

              	
                CC
      Termination.  The term "CC Termination" means any of the
      following which occur and for which the Executive notifies the Company
      that the Executive deems such action a CC Termination under this
      paragraph:  (a) this Agreement expires in accordance with its
      terms; (b) this Agreement is not extended under paragraph 5 of this
      Agreement and the Executive resigns within one (1) year after such
      non-extension; (c) a required relocation more than 25 miles from the
      Executive’s then current place of employment; (c) a default by the Company
      under this Agreement; (d) the failure by the Company after a Change of
      Control to obtain the assumption of this Agreement, without limitation or
      reduction, by any successor to the Company or any parent corporation of
      the Company; or (e) after a Change of Control has occurred, the Executive
      agrees to remain employed by the Company for a period of three (3) months
      to assist in the transition and thereafter
  resigns.

              


      

      


      
        	
                 
      

              	
                6.4

              	
                Incapacity of
      Executive.  If the Executive suffers from a physical or
      mental condition, which in the reasonable judgment of the Company's Board
      of Directors, prevents the Executive in whole or in part from performing
      the duties specified herein for a period of four (4) consecutive months,
      the Executive may be terminated.  Although the termination will
      be deemed as a termination with Cause, the Executive will be entitled to
      the compensation provided for in paragraph 6.1.1 of this Agreement with
      Base Compensation to be reduced by any benefits payable under any
      disability plans provided to the Executive at the Company's
      expense.

              


      

      


      
        	
                 
      

              	
                6.5

              	
                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 the Company will be
      obligated to continue for twelve (12) months after the effective date of
      such termination to:  (a) pay the Base Salary payments under
      paragraph 4.1 of this Agreement; and (b) provide Accounting Support
      benefits under paragraph 4.7 of this
Agreement.

              


      

      


      
        	
                 
      

              	
                6.6

              	
                Effect of
      Termination.  The termination of this Agreement will
      terminate all obligations of the Executive to render services on behalf of
      the Company, provided that the Executive will continue to comply with the
      provisions of paragraphs 7 and 8 of this Agreement as long as they are
      applicable.  Except as otherwise provided in this paragraph 6,
      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. In the event that payments are required to be made by the
      Company under this paragraph 6, the Executive will not be required to seek
      other employment as a means of mitigating the Company’s obligations
      hereunder resulting from termination of the Executive’s employment and the
      Company’s obligations hereunder (including payment of severance benefits)
      will not be terminated, reduced or modified as a result of the Executive’s
      earnings from other employment or self-employment.  All keys,
      entry cards, credit cards, files, records, financial information,
      furniture, furnishings, equipment, supplies and other items relating to
      the Company will remain the property of the Company. The Executive will
      have the right to retain and remove all personal property and effects that
      are owned by the Executive and located in the offices of the
      Company.  All such personal items will be removed from such
      offices no later than sixty (60) days after the effective date of
      termination, 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 effective date of termination, the Executive
      will cooperate with the Company to provide for the orderly termination of
      the Executive's employment.  If prior to the Executive
      Termination Date there occurs a termination by the Company under paragraph
      6.1.2 of this Agreement or a termination by the Executive in violation of
      paragraph 6.2 of this Agreement, the Company will be entitled to
      recoupment of the Incentive Award from the Executive as provided in
      paragraph 4.8 of this Agreement.  In the event of termination
      under any other provision of this Agreement (including, without implied
      limitation, an Executive FC Termination under paragraph 6.2 of this
      Agreement or any termination under paragraphs 6.3, 6.4 or 6.5), the
      Company will not have a right of recoupment under paragraph 4.8 or
      otherwise for all or part of the Incentive Award and the Executive, and
      any assigns of the Executive, will be entitled to retain, exercise and
      utilize all of the benefits of the Incentive Award including, without
      implied limitation, to utilize or obtain a refund of the IA JIB Credit in
      accordance with paragraph 4.8.  In addition to the foregoing,
      the Executive will be entitled to continue to participate in the FWP
      Program to the extent allowed by the terms of the FWP
    Program.

              


      

      


      
        	
                 
      

              	
                6.7

              	
                Equity Compensation
      and Non-Qualified Deferred Compensation Plan Provisions.
      Notwithstanding any provision to the contrary in any option agreement,
      restricted stock agreement, plan or other agreement relating to equity
      based compensation or non-qualified deferred compensation benefits, in the
      event of a termination under paragraph 6.1.1, 6.2 (but only if the
      Executive is at least 55 years of age on the date of termination under
      paragraph 6.2), 6.4 or 6.5 of this Agreement:  (a) all units,
      stock options, incentive stock options, supplemental matching
      contributions, performance shares, stock appreciation rights and
      restricted stock held by Executive immediately prior to such termination
      will immediately become 100% vested; and (b) the Executive's right to
      exercise any previously unexercised options will not terminate until the
      latest date on which such option would expire but for Executive's
      termination of employment.  To the extent Company is unable to
      provide for one or both of the foregoing rights the Company will provide
      in lieu thereof a lump-sum cash payment equal to the difference between
      the total value of such units, stock options, incentive stock options,
      supplemental matching contributions, performance shares, stock
      appreciation rights and shares of restricted stock (the "Equity
      Compensation Rights") with the foregoing rights as of the date of
      Executive's termination of employment and the total value of the Equity
      Compensation  without the foregoing rights as of the date of the
      Executive's termination of employment.  The foregoing amounts
      will be determined by the Board of Directors in good faith after
      consultation with the Executive based on a valuation performed by an
      independent consultant selected by the Board of
  Directors.

              


      

      


      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 will 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 a copy 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 one (1) year.  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
Entities.

      


      8.           Non-competition.  During
the Executive's employment hereunder and for the period ending six months after
the later of (i) the Executive’s termination in accordance with this Agreement
or (ii) the date amounts owing to the Executive in accordance with paragraph 6
of this Agreement cease to be due in accordance with the terms of this
Agreement, the Executive will not: (a)  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, minerals interests,
oil and gas wells or other such oil and gas exploration, development or
production activities within any spacing unit in which the Company owns an oil
an gas interest on the date of the resignation or termination of the Executive;
(b)  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; and (c) circumvent or attempt
to circumvent the foregoing agreements by any future arrangement or through the
actions of a third party. The foregoing will not prohibit the activities which
are expressly permitted by paragraph 3 of this Agreement.

       

      9.           Proprietary
Matters.  The Executive expressly understands and agrees that
any and all improvements, inventions, discoveries, processes or know-how that
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) will 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 the Company Entities.

      


      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 6, 7, 8 or 9 of this Agreement,
the arbitrator is not empowered to award total damages (including compensatory
damages) that exceed 300% 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.  The
Company will pay the costs and expenses of the arbitration including, without
implied limitation, the fees for the arbitrators.  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:

              


      

      


      
        	 	
                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: Martha A.
Burger

      


      To the
Executive:  
  Mr.
Aubrey K. McClendon

                      6902 Avondale
Drive

                      Oklahoma City,
Oklahoma  73116

      


      
        	 	
                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.

              


      

      


      
        	 	
                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.

              


      

      


      
        	 	
                11.5

              	
                Entire
      Agreement.  Except as provided in paragraph 2.3 of this
      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
    thereof.

              


      

      


      
        	 	
                11.7

              	
                Attorneys'
      Fees.  If any party institutes an action, proceeding or
      arbitration against any other party relating to the provisions of this
      Agreement or any default hereunder, the Company will be responsible for
      paying the Company’s legal fees and expenses and the Company will be
      required to reimburse the Executive for reasonable expenses and legal fees
      incurred by the Executive in connection with the resolution of such action
      or proceeding, including any costs of
appeal.

              


      

      


      
        	 	
                11.8

              	
                Supercession.  This
      Agreement is the final, complete and exclusive expression of the agreement
      between the Company and the Executive and supersedes and replaces in all
      respects any prior employment agreements (including the Prior
      Agreement).  On execution of this Agreement by the Company and
      the Executive, the relationship between the Company and the Executive
      after the effective date of this Agreement will be governed by the terms
      of this Agreement and not by any other agreements, oral or
      otherwise.

              


      

      


      
        	 	
                11.9

              	
                Section 409A
      Compliance.  This Agreement is intended to comply with
      Section 409A of the Code and will be construed in accordance with such
      intent.  To the extent that any benefit to be paid or granted
      under this Agreement is subject to Section 409A of the Code, such benefit
      will be paid or granted in a manner that will comply with Section 409A of
      the Code (including any Section 409A guidance reasonably acceptable to
      both parties).  Any provision of this Agreement that would cause
      a benefit to fail to satisfy Section 409A of the Code will have no force
      or effect until amended to comply with Section 409A of the Code (which
      amendment may be retroactive to the extent permitted by Section 409A of
      the Code).

              


      

      


      IN
WITNESS WHEREOF, the undersigned have executed this Agreement this 31st day of
December, 2008, effective the date first above written.

      


      CHESAPEAKE
ENERGY CORPORATION, an

      Oklahoma
corporation

      


      


      By:/s/ Martha A.
Burger                         
 

           Martha
A. Burger, Senior Vice

           President,
Human and Corporate Resources

      


           (the
"Company")

      


      


      


      /s/ Aubrey K.
McClendon                                


      Aubrey K.
McClendon, individually

      


           (the
"Executive")