Section 1 – Registrant's Business and Operations

Item 1.01 Entry into a Material Definitive Agreement

Based on its annual review of director compensation, on June 10, 2005, Chesapeake Energy Corporation’s Board of Directors approved the annual compensation of its non-employee directors effective July 1, 2005 as follows: (1) $25,000 annual retainer to be paid in quarterly installments on the first business day of each calendar quarter; (2) $10,000 and $2,500 payable for each board meeting attended in person and telephonically, respectively, not to exceed $60,000 per year for board meetings attended; and (3) 12,500 restricted shares of Chesapeake’s common stock to be issued on the first business day in July of each year. One-quarter (1/4) of each restricted stock award will vest immediately upon award with the remaining three-quarters (3/4) of the award to vest ratably over the next three years following the date of the award.

In addition, on June 10, 2005, the Compensation Committee of the Board of Directors set the annual base salaries of, and awarded cash bonuses to, Chesapeake’s named executive officers, effective July 1, 2005. The new base salaries and the cash bonuses, respectively, are as follows: Aubrey K. McClendon $950,000 and $625,000; Tom L. Ward $950,000 and $625,000; Marcus C. Rowland $575,000 and $350,000; Martha A. Burger $480,000 and $250,000; and Michael A. Johnson $360,000 and $140,000.

On June 10, 2005, at the Company’s annual meeting of shareholders, the Company’s shareholders voted to adopt the Long Term Incentive Plan (the “LTIP”) and the Founder Well Participation Program (the "FWP Program"). The LTIP and the FWP Program appear as Exhibit A and Exhibit B, respectively, to the definitive proxy statement for the meeting, which was filed with the Securities and Exchange Commission on April 29, 2005. The description of the LTIP under the caption "Plan Features" on pages 8-12 of the proxy statement, a part of the discussion of Voting Item 2—Proposal to Adopt the Long Term Incentive Plan, is incorporated by reference herein, and the description of the FWP Program under the caption "Program Features" on pages 15-16 of the proxy statement, a part of the discussion of Voting Item 3—Proposal to Approve the Founder Well Participation Program, is incorporated by reference herein.

The shareholders' approval of the LTIP included approval of outstanding options to purchase an aggregate of 200,000 shares of common stock granted under the LTIP to the Company's non-employee directors on October 1, 2004, January 3, 2005 and April 1, 2005. The terms of the options are described under "Burn Rate and New Plan Benefits" on page 12 of the proxy statement and are incorporated herein by reference.

Also on June 10, 2005, the Board of Directors approved amendments to the existing employment agreements between the Company and each of Aubrey K. McClendon, the chairman and chief executive officer, and Tom L. Ward, the president and chief operating officer, and authorized the Company to execute and deliver the Fourth Amended and Restated Employment Agreements with Messrs. McClendon and Ward. Copies of the agreements are filed herewith as Exhibits 10.2.1 and 10.2.2. The amendments effected include the following:

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