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EXHIBIT 10.1.9
CHESAPEAKE ENERGY CORPORATION
2001 EXECUTIVE OFFICER STOCK OPTION PLAN
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CHESAPEAKE ENERGY CORPORATION
2001 EXECUTIVE OFFICER STOCK OPTION PLAN
Table of Contents
<Table>
ARTICLE I - PURPOSE............................................................................................... 1
Section 1.1 Purpose................................................................................ 1
Section 1.2 Establishment.......................................................................... 1
Section 1.3 Shares Subject to the Plan............................................................. 1
ARTICLE II - DEFINITIONS.......................................................................................... 1
ARTICLE III - ADMINISTRATION...................................................................................... 2
Section 3.1 Administration of the Plan; the Committee.............................................. 2
Section 3.2 Committee to Make Rules and Interpret Plan............................................. 3
ARTICLE IV - GRANT OF OPTIONS..................................................................................... 3
ARTICLE V - ELIGIBILITY........................................................................................... 3
ARTICLE VI - STOCK OPTIONS........................................................................................ 3
Section 6.1 Grant of Options....................................................................... 3
Section 6.2 Conditions of Options.................................................................. 3
ARTICLE VII - STOCK ADJUSTMENTS................................................................................... 4
ARTICLE VIII - GENERAL............................................................................................ 5
Section 8.1 Amendment or Termination of Plan....................................................... 5
Section 8.2 Acceleration of Otherwise Unexercisable Stock Options on Death, Disability or
Other Special Circumstances............................................................ 5
Section 8.3 Nonassignability....................................................................... 5
Section 8.4 Withholding Taxes...................................................................... 6
Section 8.5 Amendments to Options.................................................................. 6
Section 8.6 Regulatory Approval and Listings....................................................... 6
Section 8.7 Right to Continued Employment.......................................................... 6
Section 8.8 Reliance on Reports.................................................................... 6
Section 8.9 Construction........................................................................... 6
Section 8.10 Governing Law.......................................................................... 6
ARTICLE IX - ACCELERATION OF OPTIONS UPON CORPORATE EVENT......................................................... 6
Section 9.1 Procedures for Acceleration and Exercise............................................... 6
Section 9.2 Certain Additional Payments by the Company............................................. 7
</Table>
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ARTICLE I
PURPOSE
SECTION 1.1 Purpose. This Stock Option Plan is established by
Chesapeake Energy Corporation (the "Company") to create incentives which are
designed to motivate Executive Officers to put forth maximum effort toward the
success and growth of the Company and to enable the Company to attract and
retain experienced individuals who by their position, ability and diligence are
able to make important contributions to the Company's success. Toward these
objectives, the Plan provides for the granting of Options to Executive Officers
on the terms and subject to the conditions set forth in the Plan.
SECTION 1.2 Establishment. The Plan is effective as of April 15, 2001
and for a period of 10 years from such date. The Plan will terminate on April
14, 2011; however, it will continue in effect until all matters relating to the
exercise of Options and administration of the Plan have been settled.
SECTION 1.3 Shares Subject to the Plan. Subject to Articles IV, VII and
IX of this Plan, shares of stock covered by Options shall consist of Four
Million (4,000,000) shares of Common Stock.
ARTICLE II
DEFINITIONS
SECTION 2.1 "Board" means the Board of Directors of the Company.
SECTION 2.2 "Code" means the Internal Revenue Code of 1986, as amended.
Reference in the Plan to any Section of the Code shall be deemed to include any
amendments or successor provisions to such Section and any regulations under
such Section.
SECTION 2.3 "Committee" means the Special Stock Option Committee of the
Board, which is a committee designated by the Board consisting of not less than
two members of the Board who meet the definition of "non-employee directors"
pursuant to Rule 16b-3, or any successor rule, promulgated under Section 16 of
the Exchange Act.
SECTION 2.4 "Common Stock" means the common stock, par value $.01 per
share, of the Company and, after substitution, such other stock as shall be
substituted therefor as provided in Article VII or Article IX of the Plan.
SECTION 2.5 "Date of Grant" means the date on which the granting of an
Option is authorized by the Committee or such later date as may be specified by
the Committee in such authorization.
SECTION 2.6 "Disability" has the meaning set forth in Section 22(e)(3)
of the Code.
SECTION 2.7 "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
SECTION 2.8 "Executive Officer" means any employee of the Company, a
Subsidiary or a partnership or limited liability company which the Company
controls who is subject to the provisions of Section 16 of the Exchange Act with
respect to the Common Stock.
SECTION 2.9 "Fair Market Value" means, as of any date, (i) if the
principal market for the Common Stock is a national securities exchange or the
Nasdaq stock market, the closing price of the Common Stock on that date on the
principal exchange on which the Common Stock is then listed or admitted to
trading; or (ii) if sale prices are not available or if the principal market for
the Common Stock is not a national securities exchange and the Common Stock is
not quoted on the Nasdaq stock market, the average of the highest bid and lowest
asked prices for the Common Stock on such day as reported on the Nasdaq OTC
Bulletin Board Service or by the National Quotation Bureau, Incorporated or a
comparable service. If the day is not a business day, and as a result, clauses
(i) and (ii) are inapplicable, the Fair Market Value of the Common Stock shall
be determined as of the last preceding business day. If clauses (i) and (ii) are
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otherwise inapplicable, the Fair Market Value of the Common Stock shall be
determined in good faith by the Committee.
SECTION 2.10 "Nonqualified Stock Option" means an option to purchase
shares of Common Stock which is not an incentive stock option within the meaning
of Section 422(b) of the Code.
SECTION 2.11 "Option" means a Nonqualified Stock Option granted under
Article VI of the Plan.
SECTION 2.12 "Option Agreement" means any written instrument that
establishes the terms, conditions, restrictions, and/or limitations applicable
to an Option in addition to those established by this Plan and by the
Committee's exercise of its administrative powers.
SECTION 2.13 "Participant" means an Executive Officer to whom an Option
has been granted by the Committee under the Plan.
SECTION 2.14 "Plan" means the Chesapeake Energy Corporation 2001
Executive Officer Stock Option Plan.
SECTION 2.15 "Subsidiary" shall have the same meaning set forth in
Section 424 of the Code.
ARTICLE III
ADMINISTRATION
SECTION 3.1 Administration of the Plan; the Committee. The Plan shall
be administered by the Committee. If the Committee does not exist, or for any
other reason determined by the Board, the Board may take any action under the
Plan that would otherwise be the responsibility of the Committee.
Unless otherwise provided in the by-laws of the Company or resolutions
adopted from time to time by the Board establishing the Committee, the Board may
from time to time remove members from, or add members to, the Committee.
Vacancies on the Committee, however caused, shall be filled by the Board. The
Committee shall hold meetings at such times and places as it may determine. A
majority of the Committee shall constitute a quorum, and the acts of a majority
of the members present at any meeting at which a quorum is present shall be the
valid acts of the Committee. Any action which may be taken at a meeting of the
Committee may be taken without a meeting if all the members of the Committee
consent to the action in writing.
Subject to the provisions of the Plan, the Committee shall have
exclusive power to:
(a) Select the Executive Officers to participate in the Plan.
(b) Determine the time or times when Options will be granted.
(c) Determine the number of shares of Common Stock subject to
any Option, all the terms, conditions (including performance
requirements), restrictions and/or limitations, if any, of an Option,
including the time and conditions of exercise or vesting, and the terms
of any Option Agreement, which may include the waiver or amendment of
prior terms and conditions or acceleration of the vesting or exercise
of an Option under certain circumstances determined by the Committee.
(d) Determine whether Options will be granted singly or in
combination.
(e) Take any and all other action it deems necessary or
advisable for the proper operation or administration of the Plan.
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SECTION 3.2 Committee to Make Rules and Interpret Plan. The Committee
in its sole discretion shall have the authority, subject to the provisions of
the Plan, to establish, adopt, or revise such rules and regulations and to make
all such determinations relating to the Plan as it may deem necessary or
advisable for the administration of the Plan. The Committee reserves the right
to modify outstanding Options and awards unilaterally in any manner that is not
adverse to the Option holder. The Committee's interpretation of the Plan or any
Options granted pursuant hereto and all decisions and determinations by the
Committee with respect to the Plan shall be final, binding, and conclusive on
all parties.
ARTICLE IV
GRANT OF OPTIONS
The Committee may, from time to time, grant Options to one or more
Participants, provided, however, that:
(a) Any shares of Common Stock related to Options which
terminate by expiration, forfeiture, cancellation or otherwise without
the issuance of shares of Common Stock shall be available again for
grant under the Plan.
(b) Common Stock delivered by the Company upon exercise of an
Option under the Plan will be issued shares which have been reacquired
by the Company (i.e., treasury shares).
(c) The Committee shall, in its sole discretion, determine the
manner in which fractional shares arising under this Plan shall be
treated.
(d) Upon the exercise of any Option, the Company shall issue
and deliver to the Participant who exercised the Option a certificate
representing the number of shares of Common Stock purchased thereby.
ARTICLE V
ELIGIBILITY
Subject to the provisions of the Plan, the Committee shall, from time
to time, select from the Executive Officers those to whom Options shall be
granted and shall establish in the related Option Agreements the terms,
conditions, restrictions and/or limitations, if any, applicable to the Options
in addition to those set forth in the Plan and the administrative rules and
regulations issued by the Committee.
ARTICLE VI
STOCK OPTIONS
SECTION 6.1 Grant of Options. The Committee may, from time to time,
subject to the provisions of the Plan and such other terms and conditions as it
may determine, grant Nonqualified Stock Options to Executive Officers. Each
grant of an Option shall be evidenced by an Option Agreement executed by the
Company and the Participant, and shall contain such terms and conditions and be
in such form as the Committee may from time to time approve, subject to the
requirements of Section 6.2.
SECTION 6.2 Conditions of Options. Each Option so granted shall be
subject to the following conditions:
(a) Exercise Price. The Option Agreement for each Option shall
state the exercise price which shall be set by the Committee on the
Date of Grant. No Option shall be granted at an exercise price which is
less than the Fair Market Value of the Common Stock on the Date of
Grant, except that Options for the purchase of up to ten percent (10%)
of the shares subject to the Plan may be granted at an exercise price
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which is not less than eighty-five percent (85%) of the Fair Market
Value of the Common Stock on the Date of Grant.
(b) Form of Payment. The payment of the exercise price of an
Option shall be subject to the following:
(i) The full exercise price for shares of Common
Stock purchased upon the exercise of any Option
shall be paid at the time of such exercise
(except that, in the case of an exercise
arrangement approved by the Committee and
described in clause (iii) below, payment may be
made as soon as practicable after the exercise).
(ii) The exercise price shall be payable in cash
(including a check acceptable to the Committee,
bank draft or money order) or by tendering, by
either actual delivery of shares or by
attestation, shares of Common Stock acceptable to
the Committee and valued at Fair Market Value as
of the day of exercise, or any combination
thereof, as determined by the Committee.
(iii) The Committee may permit a Participant to elect
to pay the exercise price upon the exercise of an
Option by irrevocably authorizing a third party
to sell shares of Common Stock (or a sufficient
portion of the shares) acquired upon exercise of
the Option and remit to the Company a sufficient
portion of the sale proceeds to pay the entire
exercise price and any tax withholding resulting
from such exercise.
(c) Exercise of Options. Options granted under the Plan shall
be exercisable, in whole or in such installments and at such times, and
shall expire at such time, as shall be provided by the Committee in the
Option Agreement. Exercise of an Option shall be by written notice
stating the election to exercise in the form and manner determined by
the Committee. Every share of Common Stock acquired through the
exercise of an Option shall be deemed to be fully paid at the time of
exercise and payment of the exercise price.
(d) Other Terms and Conditions. Among other conditions that
may be imposed by the Committee, if deemed appropriate, are those
relating to (i) the period or periods and the conditions of
exercisability of any Option; (ii) the minimum periods during which
Participants must be employed by the Company or its Subsidiaries, or
must hold Options before they may be exercised; (iii) the minimum
periods during which shares acquired upon exercise must be held before
sale or transfer shall be permitted; (iv) the maximum period that
Participants will be allowed to be inactively employed or on a leave of
absence before their vesting is suspended until they return to active
employment; (v)conditions under which such Options or shares may be
subject to forfeiture; (vi) the frequency of exercise or the minimum or
maximum number of shares that may be acquired at any one time and (vii)
the achievement by the Company of specified performance criteria.
(e) Application of Funds. The proceeds received by the Company
from the sale of Common Stock issued upon the exercise of Options will
be used for general corporate purposes.
(f) Shareholder Rights. No Participant shall have any rights
as a shareholder with respect to any share of Common Stock subject to
an Option prior to the purchase of such share of Common Stock by
exercise of the Option.
ARTICLE VII
STOCK ADJUSTMENTS
Subject to the provisions of Article IX of this Plan, in the event that
the shares of Common Stock, as presently constituted shall be changed into or
exchanged for a different number or kind or shares of stock or other securities
of
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the Company or of another corporation (whether by reason of merger,
consolidation, recapitalization, reclassification, stock split, combination of
shares or otherwise), or if the number of such shares of Common Stock shall be
increased through the payment of a stock dividend, or a dividend on the shares
of Common Stock or rights or warrants to purchase securities of the Company
shall be made, then there shall be substituted for or added to each share
available under and subject to the Plan as provided in Section 1.3 hereof, and
each share then subject or thereafter subject or which may become subject to
Options under the Plan, the number and kind of shares of stock or other
securities into which each outstanding share of Common Stock shall be so changed
or for which each such share shall be exchanged or to which each such share
shall be entitled, as the case may be, on a fair and equivalent basis in
accordance with the applicable provisions of Section 424 of the Code; provided,
however, in no such event will such adjustment result in a modification of any
Option as defined in Section 424(h) of the Code. In the event there shall be any
other change in the number or kind of the outstanding shares of Common Stock, or
any stock or other securities into which the Common Stock shall have been
changed or for which it shall have been exchanged, then if the Committee shall,
in its sole discretion, determine that such change equitably requires an
adjustment in the shares available under and subject to the Plan, or in any
Option theretofore granted or which may be granted under the Plan, such
adjustments shall be made in accordance with such determination, except that no
adjustment of the number of shares of Common Stock available under the Plan or
to which any Option relates that would otherwise be required shall be made
unless and until such adjustment either by itself or with other adjustments not
previously made would require an increase or decrease of at least 1% of the
number of shares of Common Stock available under the Plan or to which any Option
relates immediately prior to the making of such adjustment (the "Minimum
Adjustment"). Any adjustment representing a change of less than such minimum
amount shall be carried forward and made as soon as such adjustment together
with other adjustments required by this Article VII and not previously made
would result in a Minimum Adjustment. Notwithstanding the foregoing, any
adjustment required by this Article VII which otherwise would not result in a
Minimum Adjustment shall be made with respect to shares of Common Stock relating
to any Option immediately prior to exercise of such Option.
No fractional shares of Common Stock or units of other securities shall
be issued pursuant to any such adjustment, and any fractions resulting from any
such adjustment shall be eliminated in each case by rounding downward to the
nearest whole share.
ARTICLE VIII
GENERAL
SECTION 8.1 Amendment or Termination of Plan. The Board may suspend or
terminate the Plan at any time. In addition, the Board may, from time to time,
amend the Plan in any manner in accordance with applicable federal or state laws
or regulations.
SECTION 8.2 Acceleration of Otherwise Unexercisable Stock Options on
Death, Disability or Other Special Circumstances. The Committee, in its sole
discretion, may permit (i) a Participant who terminates employment due to a
Disability, (ii) the personal representative of a deceased Participant, or (iii)
any other Participant who terminates employment upon the occurrence of special
circumstances (as determined by the Committee) to purchase all or any part of
the shares subject to any unvested Option on the date of the Participant's
termination of employment due to a Disability, death or special circumstances,
or as the Committee otherwise so determines. With respect to Options which have
already vested at the date of such termination or the vesting of which is
accelerated by the Committee in accordance with the foregoing provision, the
Participant or the personal representative of a deceased Participant shall have
the right to exercise such vested Options within such period(s) as the Committee
shall determine.
SECTION 8.3 Nonassignability. Options are not transferable otherwise
than by will or the laws of descent and distribution. Any attempted transfer,
assignment, pledge, hypothecation or other disposition of, or the levy of
execution, attachment or similar process upon, any Option contrary to the
provisions hereof shall be void and ineffective, shall give no right to any
purported transferee, and may, at the sole discretion of the Committee, result
in forfeiture of the Option involved in such attempt.
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SECTION 8.4 Withholding Taxes. A Participant must pay to the Company
the amount of taxes required by law upon the exercise of an Option in cash.
SECTION 8.5 Amendments to Options. The Committee may at any time
unilaterally amend the terms of any Option Agreement, whether or not the Option
granted thereunder is presently exercisable or vested, to the extent it deems
appropriate; provided, however, that any such amendment which is adverse to the
Participant shall require the Participant's consent.
SECTION 8.6 Regulatory Approval and Listings. The Company shall use its
best efforts to file with the Securities and Exchange Commission as soon as
practicable following the date this Plan is effective, and keep continuously
effective and usable, a Registration Statement on Form S-8 with respect to
shares of Common Stock subject to Options hereunder. Notwithstanding anything
contained in this Plan to the contrary, the Company shall have no obligation to
issue or deliver certificates representing shares of Common Stock evidencing
Options prior to:
(a) the obtaining of any approval from, or satisfaction of any
waiting period or other condition imposed by, any governmental agency
which the Committee shall, in its sole discretion, determine to be
necessary or advisable;
(b) the listing of such shares on any exchange on which the
Common Stock may be listed; and
(c) the completion of any registration or other qualification
of such shares under any state or federal law or regulation of any
governmental body which the Committee shall, in its sole discretion,
determine to be necessary or advisable.
SECTION 8.7 Right to Continued Employment. Participation in the Plan
shall not give any Participant any right to remain in the employ of the Company
or any Subsidiary or any partnership or limited liability company controlled by
the Company. Further, the adoption of this Plan shall not be deemed to give any
Executive Officer or any other individual any right to be selected as a
Participant or to be granted an Option.
SECTION 8.8 Reliance on Reports. Each member of the Committee and each
member of the Board shall be fully justified in relying or acting in good faith
upon any report made by the independent public accountants of the Company and
its Subsidiaries and upon any other information furnished in connection with the
Plan by any person or persons other than the Committee or Board member. In no
event shall any person who is or shall have been a member of the Committee or of
the Board be liable for any determination made or other action taken or any
omission to act in reliance upon any such report or information or for any
action taken, including the furnishing of information, or failure to act, if in
good faith.
SECTION 8.9 Construction. The titles and headings of the sections in
the Plan are for the convenience of reference only, and in the event of any
conflict, the text of the Plan, rather than such titles or headings, shall
control.
SECTION 8.10 Governing Law. The Plan shall be governed by and construed
in accordance with the laws of the State of Oklahoma except as superseded by
applicable federal law.
ARTICLE IX
ACCELERATION OF OPTIONS UPON CORPORATE EVENT
SECTION 9.1 Procedures for Acceleration and Exercise. If the Company
shall, pursuant to action by the Board, at any time propose to dissolve or
liquidate or merge into, consolidate with, or sell or otherwise transfer all or
substantially all of its assets to another corporation and provision is not made
pursuant to the terms of such transaction for the assumption by the surviving,
resulting or acquiring corporation of outstanding Options under the Plan, or for
the substitution of new options therefor, the Committee shall cause written
notice of the proposed transaction to be given to each Participant no less than
forty days prior to the anticipated effective date of the proposed transaction,
and the Participant's Option shall become 100% vested. Prior to a date specified
in such notice, which shall be not more than
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ten days prior to the anticipated effective date of the proposed transaction,
each Participant shall have the right to exercise his or her Option to purchase
any or all of the Common Stock then subject to such Option. Each Participant, by
so notifying the Company in writing, may, in exercising his or her Option,
condition such exercise upon, and provide that such exercise shall become
effective immediately prior to the consummation of the transaction, in which
event such Participant need not make payment for the Common Stock to be
purchased upon exercise of such Option until five days after receipt of written
notice by the Company to such Participant that the transaction has been
consummated. If the transaction is consummated, each Option, to the extent not
previously exercised prior to the date specified in the foregoing notice, shall
terminate on the effective date such transaction is consummated. If the
transaction is abandoned, (i) any Common Stock not purchased upon exercise of
such Option shall continue to be available for purchase in accordance with the
other provisions of the Plan and (ii) to the extent that any Option not
exercised prior to such abandonment shall have vested solely by operation of
this Section 9.1, such vesting shall be deemed voided as of the time such
acceleration otherwise occurred pursuant to Section 9.1, and the vesting
schedule set forth in the Participant's Option Agreement shall be reinstituted
as of the date of such abandonment.
SECTION 9.2 Certain Additional Payments by the Company. The Committee
may, in its sole discretion, provide in any Option Agreement for certain
payments by the Company in the event that acceleration of vesting of any Option
under the Plan is subject to the excise tax imposed by Section 4999 of the Code
or any interest or penalties with respect to such excise tax (such excise tax,
interest and penalties, collectively, the "Excise Tax"). An Option Agreement may
provide that the Participant shall be entitled to receive a payment (a "Gross-Up
Payment") in an amount such that after payment by the Participant of all taxes
(including any interest or penalties imposed with respect to such taxes),
including any Excise Tax, imposed upon the Gross-Up Payment, the Participant
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
such acceleration of vesting of any Option.
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