UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 4, 2013 (January 29, 2013)
CHESAPEAKE ENERGY CORPORATION
(Exact name of Registrant as specified in its Charter)
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Oklahoma
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1-13726
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73-1395733
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(State or other jurisdiction of incorporation)
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(Commission File No.)
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(IRS Employer Identification No.)
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6100 North Western Avenue, Oklahoma City, Oklahoma
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73118
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(Address of principal executive offices)
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(Zip Code)
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(405) 848-8000
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(Registrant’s telephone number, including area code)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Section 5 – Corporate Governance and Management
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On January 29, 2013, the Compensation Committee (the “Committee”) of the Board of Directors of Chesapeake Energy Corporation (the “Company”) granted annual long-term incentive awards to the Company’s executive officers pursuant to its Amended and Restated Long Term Incentive Plan. Half of each executive’s long-term incentive award was in the form of performance share units and the other half was equally divided between restricted stock and stock options. The grants of performance share units and restricted stock are consistent with the Company’s prior practice; however, for 2013, the Committee determined to add stock options as an element of long-term incentive compensation. The grants of restricted stock and stock options will vest ratably over a three-year period, consistent with the performance period of the performance share units. The stock option awards have an exercise price equal to the closing price of the Company’s common stock on the grant date.
Also on January 29, 2013, the Committee approved retention awards in the form of time-vested stock options for certain of the Company’s executive officers, including the following named executive officers: Domenic J. Dell’Osso, Jr., the Company’s Executive Vice President and Chief Financial Officer, Steven C. Dixon, the Company’s Executive Vice President – Operations and Geosciences and Chief Operating Officer, and Martha A. Burger, the Company’s Senior Vice President – Human and Corporate Resources. Mr. Dell’Osso, Mr. Dixon and Ms. Burger received retention awards of 300,000, 360,000 and 150,000 stock options, respectively. These stock option awards have an exercise price equal to the closing price of the Company’s common stock on the grant date, and vest one-third on each of the third, fourth and fifth anniversaries of the grant date. The options are subject to accelerated vesting if the executive is terminated (other than for cause) during the vesting period; however, no accelerated vesting will occur if the executive retires or voluntarily resigns prior to vesting.
The forms of stock option, retention stock option and restricted stock award agreements are attached to this Form 8-K as Exhibits 10.1, 10.2 and 10.3, respectively.
Section 9 – Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits.
(d)
Exhibits. See "Exhibit Index" attached to this Current Report on Form 8-K, which is incorporated by reference herein.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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CHESAPEAKE ENERGY CORPORATION
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By:
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/s/ JENNIFER M. GRIGSBY
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Jennifer M. Grigsby
Senior Vice President, Treasurer and Corporate Secretary
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Date: February 4, 2013
EXHIBIT INDEX
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Exhibit No.
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Document Description
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10.1
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Form of
Nonqualified
Stock Option Agreement
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10.2
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Form of Retention Nonqualified Stock Option Agreement
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10.3
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Form of Restricted Stock Award Agreement
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Exhibit 10.1
NONQUALIFIED STOCK OPTION AGREEMENT FOR
CHESAPEAKE ENERGY CORPORATION
LONG TERM INCENTIVE PLAN
THIS NONQUALIFIED STOCK OPTION AGREEMENT (the "Option Agreement"), made as of the grant date set forth on the Notice of Grant of Stock Options and Option Agreement attached to this Option Agreement (the "Notice") at Oklahoma City, Oklahoma by and between the participant named on the Notice (the "Participant") and Chesapeake Energy Corporation (the "Company"):
W I T N E S S E T H:
WHEREAS, the Participant is an Employee, and it is important to the Company that the Participant be encouraged to remain an Employee; and
WHEREAS, in recognition of such facts, the Company desires to provide to the Participant an opportunity to purchase shares of the common stock of the Company, as hereinafter provided, pursuant to the Chesapeake Energy Corporation Amended and Restated Long Term Incentive Plan effective as of October 1, 2004, as amended from time to time (the "Plan").
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the Participant and the Company hereby agree as follows:
1.
Grant of Stock Option
.
The Company hereby grants to the Participant a nonqualified stock option (the "Stock Option") to purchase all or any part of the number of shares of its common stock, par value $.01 (the "Stock"), as set forth on the Notice, under and subject to the terms and conditions of this Option Agreement and the Plan, which is incorporated herein by reference and made a part hereof for all purposes and a copy of which has been made available to the Participant. The purchase price for each share to be purchased hereunder shall be the option price set forth on the Notice (the "Option Price"). Any capitalized terms used but not defined in this Option Agreement have the same meanings given to them in the Plan.
2.
Times of Exercise of Stock Option
.
After, and only after, the conditions of Section 11 hereof have been satisfied, the Participant shall be eligible to exercise the Stock Option pursuant to the vesting schedule set forth on the Notice (the "Vesting Schedule"). If the Participant is employed continuously as an Employee at all times prior to any of the exercisable dates specified on the Notice (the "Exercisable Dates"), then the Participant shall be entitled, subject to the applicable provisions of the Plan and this Option Agreement having been satisfied, to exercise the Stock Option and purchase on or after the applicable Exercisable Date, on a cumulative basis, the number of shares of Stock as set forth on the Notice.
3.
Term of Stock Option
.
Subject to earlier termination as hereafter provided, the Stock Option shall expire at the close of business on the expiration date set forth on the Notice and may not be exercised after such expiration date; provided, however, in no event shall the term of the Stock Option be longer than ten years from the Date of Grant.
4.
Nontransferability of Stock Option
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The Stock Option is not transferable otherwise than by will or the laws of descent and distribution, and the Stock Option may be exercised, during the lifetime of the Participant, only by the Participant. More particularly (but without limiting the generality of the foregoing), the Stock Option may not be transferred (except as provided above), assigned, pledged or hypothecated in any way, shall not be assignable by operation of law and shall not be subject to execution, attachment or similar process. Any attempted transfer, assignment, pledge, hypothecation or other disposition of, or the levy of execution, attachment or similar process upon, the Stock Option contrary to the provisions hereof shall be null and void and without effect, shall give no right to any purported transferee and may, in the Committee's sole discretion, result in the forfeiture of the Stock Option.
5.
Employment
.
So long as the Participant shall be employed continuously as an Employee, the Stock Option shall not be affected in any manner that is adverse to the Participant by any change of duties or position. Nothing in the Plan or in this Option Agreement shall confer upon the Participant any right to continue in such employment, or interfere in any way with the right of the Company to terminate Participant’s employment at any time. Unless vesting is accelerated pursuant to the terms of Section 6, unvested Stock Options will be cancelled upon the Participant’s termination of employment.
6.
Acceleration of Otherwise Unexercisable Stock Option on Death, Disability, Retirement or Involuntary Termination
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The Committee, in its sole discretion, may accelerate the vesting of Stock Options for which the applicable Exercisable Date(s) has not yet occurred upon Participant’s termination of employment if such termination occurs by reason of (i) Disability, (ii) death, or (iii) retirement or involuntary termination (as defined by the Committee).
7.
Period for Exercise Upon Termination of Employment
. With respect to shares subject to the Stock Option for which the applicable Exercisable Date(s) has occurred or for which the Committee has accelerated vesting in accordance with Section 6, the Participant, or the representative of a deceased Participant, shall have the right to purchase such shares within twelve months of such date of termination of employment.
8.
Method of Exercising Stock Option
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(a)
Procedures for Exercise
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The manner of exercising the Stock Option shall be by written or electronic notice to the Secretary of the Company at the time the Stock Option, or part thereof, is to be exercised, and in any event prior to the expiration of the Stock Option. Such notice shall state the election to exercise the Stock Option, the number of shares of Stock to be purchased upon exercise, the form of payment to be used, and if submitted in written form shall be signed by the person so exercising the Stock Option.
(b)
Form of Payment of Option Price
.
Payment of the Option Price for shares of Stock purchased under this Option Agreement shall accompany the
Participant's notice of exercise, together with payment for any applicable withholding taxes. Payment of the Option Price shall be made (i) in cash or by check, bank draft or money order payable to the Company; (ii) by tendering, by either actual delivery of shares or by attestation, shares of Stock acceptable to the Committee having a Fair Market Value as of the day of exercise equal to the amount of the Option Price; (iii) by instructing the Company to withhold a number of shares from such exercise having a Fair Market Value as of the day of exercise equal to the amount of the Option Price; (iv) a combination of the approaches contained in clauses (i), (ii) and (iii); or (v) by irrevocably authorizing a broker-dealer to sell shares of Stock (or a sufficient portion of the shares) acquired upon exercise of the Stock Option and remit to the Company a sufficient portion of the sale proceeds to pay the entire Option Price and any tax withholding resulting from such exercise.
(c)
Further Information
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In the event the Stock Option is exercised, pursuant to the foregoing provisions of this Section 8, by any person other than the Participant due to the death of the Participant, such notice shall also be accompanied by appropriate proof of the right of such person to exercise the Stock Option. The notice so required shall be given by personal delivery to the Secretary of the Company or by registered or certified mail, addressed to the Company, Attn: Secretary, at 6100 North Western Avenue, Oklahoma City, Oklahoma 73118, and it shall be deemed to have been given when it is so personally delivered or when it is deposited in the United States mail in an envelope addressed to the Company, as aforesaid, properly stamped for delivery as a registered or certified letter.
9.
Acceleration of Stock Option Upon Fundamental Transaction or Change of Control
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In accordance with the terms of the Plan, any unvested Stock Options subject to this Agreement shall become fully exercisable upon the closing of a Fundamental Transaction or Change of Control.
10.
Participant Misconduct; Compensation Recovery
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(a) Notwithstanding anything in the Plan or this Agreement to the contrary, the Committee shall have the authority to determine that in the event of serious misconduct by the Participant (including violations of employment agreements, confidentiality or other proprietary matters) or any activity of a Participant in competition with the business of the Company or any Subsidiary or Affiliated Entity, the Stock Options may be cancelled, in whole or in part, whether or not vested. The determination of whether a Participant has engaged in serious misconduct or any activity in competition with the business of the Company or any Subsidiary or Affiliated Entity shall be determined by the Committee in good faith and in its sole discretion. This Section 10 shall have no effect and be deleted from this Agreement following a Change of Control.
(b) The Award made pursuant to this Agreement is subject to recovery pursuant to the Company’s compensation recovery policy then in effect. To the extent required by applicable laws, rules, regulations or securities exchange listing requirements and the Company’s compensation recovery policy then in effect, the Company shall have the right, and shall take all actions necessary, to recover shares of the Company’s common stock received by the Participant pursuant to the exercise of a Stock Option granted under this Award.
11.
Securities Law Restrictions
.
The Stock Option shall be exercised and Stock issued only upon compliance with the Securities Act of 1933, as amended (the "Act"), and any other applicable securities law, or pursuant to an exemption therefrom. If deemed necessary by the Company to comply with the Act or any applicable laws or regulations relating to the sale of securities, the Participant, at the time of exercise and as a condition imposed by the Company, shall represent, warrant and agree that the shares of Stock subject to the Stock Option are being purchased for investment and not with any present intention to resell the same and without a view to distribution, and the Participant shall, upon the request of the Company, execute and deliver to the Company an agreement to such effect. The Participant acknowledges that any stock certificate representing Stock purchased under such circumstances will be issued with a restricted securities legend.
12.
Payment of Withholding Taxes
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A Participant must pay the amount of taxes required to be withheld by law upon the exercise of the Stock Option in cash
or by instructing the Company to withhold a number of shares from such exercise having a Fair Market Value as of the day of exercise equal to the amount of the withholding taxes due to the Company.
13.
Notices
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All notices or other communications relating to the Plan and this Option Agreement as it relates to the Participant shall be in electronic or written form. If in writing, such notices shall be deemed to have been made (a) if personally delivered in return for a receipt, (b) if mailed, by regular U.S. mail, postage prepaid, by the Company to the Participant at his last known address evidenced on the payroll records of the Company, or (c) if provided electronically, provided to Participant at his e-mail address specified in the Company’s or its Affiliated Entity’s records or as otherwise specified pursuant to and in accordance with the Committee’s applicable administrative procedures.
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Amendments
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This Option Agreement may be amended by a written agreement signed by the Company and the Participant; provided, that the Committee may modify the terms of this Option Agreement without the consent of the Participant in any manner that is not adverse to the Participant.
15.
Binding Effect and Governing Law
. This Agreement shall be (i) binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and assigns, subject to the limitations on transferability of Section 4 and except as may be limited by the Plan and (ii) governed and construed under the laws of the State of Oklahoma.
16.
Captions
. The captions of specific provisions of this Agreement are for convenience and reference only, and in no way define, describe, extend or limit the scope of this Agreement or the intent of any provision hereof.
17.
Counterparts; Entire Agreement
. This Option Agreement may be accepted by the required form of acceptance established by the Committee pursuant to the Notice, which may include deemed acceptance. If execution of the Notice is the required form of acceptance established by the Committee, then such execution may be in any number of identical counterparts, each of which shall be deemed an original for all purposes, but all of which taken together shall form but one agreement. This Option Agreement, together with the Notice, shall constitute the entire agreement between the parties.
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Chesapeake Energy Corporation
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Notice of Grant of Stock
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ID:
73-1395733
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Options and Option Agreement
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6100 N. Western Avenue
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Oklahoma City, OK 73118
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<NAME>
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Option Number:
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<ADDRESS>
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Plan:
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LTIP
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<ADDRESS>
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ID:
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Effective
<
date
>
, you have been granted a Nonqualified Stock Option to buy
<
•
>
shares of Chesapeake Energy Corporation (the Company) stock at $
<
•
>
per share (the “Option Price”). The expiration date of the Stock Option granted pursuant to this Notice shall be
<
date
>
.
Shares will become fully vested as provided below (the “Vesting Schedule”):
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Shares
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Exercisable Date
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<
•
>
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<
date
>
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<
•
>
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<
date
>
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<
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<
date
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Deemed Acceptance
. You are required to accept the terms and conditions set forth in this Notice, the Option Agreement and the Plan, all of which are made a part of this document, within 90 days following the Grant Date (the “Acceptance Period”) in order for you to receive the Options granted to you hereunder. If you wish to decline this grant, you must expressly reject this Notice and the Option Agreement prior to the end of the Acceptance Period. For your benefit, if you have not rejected this Notice and the Option Agreement prior to the end of the Acceptance Period, you will be deemed to have automatically accepted this grant and all the terms and conditions set forth in this Notice, the Option Agreement and the Plan. Any capitalized terms used but not defined in this Notice have the same meanings given to them in the Option Agreement or the Plan.
Exhibit 10.2
RETENTION NONQUALIFIEDSTOCK OPTION AGREEMENT FOR
CHESAPEAKE ENERGY CORPORATION
LONG TERM INCENTIVE PLAN
THIS RETENTION NONQUALIFIED STOCK OPTION AGREEMENT (the "Option Agreement"), made as of the grant date set forth on the Notice of Grant of Stock Options and Option Agreement attached to this Option Agreement (the "Notice") at Oklahoma City, Oklahoma by and between the participant named on the Notice (the "Participant") and Chesapeake Energy Corporation (the "Company"):
W I T N E S S E T H:
WHEREAS, the Participant is an Employee, and it is important to the Company that the Participant be encouraged to remain an Employee; and
WHEREAS, in recognition of such facts, the Company desires to provide to the Participant an opportunity to purchase shares of the common stock of the Company, as hereinafter provided, pursuant to the Chesapeake Energy Corporation Amended and Restated Long Term Incentive Plan effective as of October 1, 2004, as amended from time to time (the "Plan").
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the Participant and the Company hereby agree as follows:
1.
Grant of Stock Option
.
The Company hereby grants to the Participant a nonqualified stock option (the "Stock Option") to purchase all or any part of the number of shares of its common stock, par value $.01 (the "Stock"), as set forth on the Notice, under and subject to the terms and conditions of this Option Agreement and the Plan, which is incorporated herein by reference and made a part hereof for all purposes and a copy of which has been made available to the Participant. The purchase price for each share to be purchased hereunder shall be the option price set forth on the Notice (the "Option Price"). Any capitalized terms used but not defined in this Option Agreement have the same meanings given to them in the Plan.
2.
Times of Exercise of Stock Option
.
After, and only after, the conditions of Section 11 hereof have been satisfied, the Participant shall be eligible to exercise the Stock Option pursuant to the vesting schedule set forth on the Notice (the "Vesting Schedule"). If the Participant is employed continuously as an Employee at all times prior to any of the exercisable dates specified on the Notice (the "Exercisable Dates"), then the Participant shall be entitled, subject to the applicable provisions of the Plan and this Option Agreement having been satisfied, to exercise the Stock Option and purchase on or after the applicable Exercisable Date, on a cumulative basis, the number of shares of Stock as set forth on the Notice.
3.
Term of Stock Option
.
Subject to earlier termination as hereafter provided, the Stock Option shall expire at the close of business on the expiration date set forth on the Notice and may not be exercised after such expiration date; provided, however, in no event shall the term of the Stock Option be longer than ten years from the Date of Grant.
4.
Nontransferability of Stock Option
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The Stock Option is not transferable otherwise than by will or the laws of descent and distribution, and the Stock Option may be exercised, during the lifetime of the Participant, only by the Participant. More particularly (but without limiting the generality of the foregoing), the Stock Option may not be transferred (except as provided above), assigned, pledged or hypothecated in any way, shall not be assignable by operation of law and shall not be subject to execution, attachment or similar process. Any attempted transfer, assignment, pledge, hypothecation or other disposition of, or the levy of execution, attachment or similar process upon, the Stock Option contrary to the provisions hereof shall be null and void and without effect, shall give no right to any purported transferee and may, in the Committee's sole discretion, result in the forfeiture of the Stock Option.
5.
Employment
.
So long as the Participant shall be employed continuously as an Employee, the Stock Option shall not be affected in any manner that is adverse to the Participant by any change of duties or position. Nothing in the Plan or in this Option Agreement shall confer upon the Participant any right to continue in such employment, or interfere in any way with the right of the Company to terminate Participant’s employment at any time. Unless vesting is accelerated pursuant to the terms of Section 6, unvested Stock Options will be cancelled upon the Participant’s termination of employment.
6.
Acceleration of Otherwise Unexercisable Stock Option on Death, Disability or Involuntary Termination; Cancellation on Retirement
.
Stock Options for which the applicable Exercisable Date(s) have not yet occurred upon Participant’s termination of employment shall automatically vest if such termination occurs by reason of (i) Disability, (ii) death, (iii) termination by the Company other than for Cause, as that term is defined under the then existing employment agreement between the Participant and the Company, or (iv) termination by the Participant for Good Reason, as that term is defined under the then existing employment agreement between the Participant and the Company. Notwithstanding any provision to the contrary in any agreement between the Participant and the Company, unvested Stock Options will be cancelled upon the Participant’s voluntary termination of employment, other than for Good Reason, including by means of retirement or resignation.
7.
Period for Exercise Upon Termination of Employment
. With respect to shares subject to the Stock Option for which the applicable Exercisable Date(s) has occurred or for which the Committee has accelerated vesting in accordance with Section 6, the Participant, or the representative of a deceased Participant, shall have the right to purchase such shares within twelve months of such date of termination of employment.
8.
Method of Exercising Stock Option
.
(a)
Procedures for Exercise
.
The manner of exercising the Stock Option shall be by written or electronic notice to the Secretary of the Company at the time the Stock Option, or part thereof, is to be exercised, and in any event prior to the expiration of the Stock Option. Such notice shall state the election to exercise the Stock Option, the number of shares of Stock to be purchased upon exercise, the form of payment to be used, and if submitted in written form shall be signed by the person so exercising the Stock Option.
(b)
Form of Payment of Option Price
.
Payment of the Option Price for shares of Stock purchased under this Option Agreement shall accompany the Participant's notice of exercise, together with payment for any applicable withholding taxes. Payment of the Option Price shall be made (i) in cash or by check, bank draft or money order payable to the Company; (ii) by tendering, by either actual delivery of shares or by attestation, shares of Stock acceptable to the Committee having a Fair Market Value as of the day of exercise equal to the amount of the Option Price; (iii) by instructing the Company to withhold a number of shares from such exercise having a Fair Market Value as of the day of exercise equal to the amount of the Option Price; (iv) a combination of the approaches contained in clauses (i), (ii) and (iii); or (v) by irrevocably authorizing a broker-dealer to sell shares of Stock (or a sufficient portion of the shares) acquired upon exercise of the Stock Option and remit to the Company a sufficient portion of the sale proceeds to pay the entire Option Price and any tax withholding resulting from such exercise.
(c)
Further Information
.
In the event the Stock Option is exercised, pursuant to the foregoing provisions of this Section 8, by any person other than the Participant due to the death of the Participant, such notice shall also be accompanied by appropriate proof of the right of such person to exercise the Stock Option. The notice so required shall be given by personal delivery to the Secretary of the Company or by registered or certified mail, addressed to the Company, Attn: Secretary, at 6100 North Western Avenue, Oklahoma City, Oklahoma 73118, and it shall be deemed to have been given when it is so personally delivered or when it is deposited in the United States mail in an envelope addressed to the Company, as aforesaid, properly stamped for delivery as a registered or certified letter.
9.
Acceleration of Stock Option Upon Fundamental Transaction or Change of Control
.
In accordance with the terms of the Plan, any unvested Stock Options subject to this Agreement shall become fully exercisable upon the closing of a Fundamental Transaction or Change of Control.
10.
Participant Misconduct; Compensation Recovery
.
(a) Notwithstanding anything in the Plan or this Agreement to the contrary, the Committee shall have the authority to determine that in the event of serious misconduct by the Participant (including violations of employment agreements, confidentiality or other proprietary matters) or any activity of a Participant in competition with the business of the Company or any Subsidiary or Affiliated Entity, the Stock Options may be cancelled, in whole or in part, whether or not vested. The determination of whether a Participant has engaged in serious misconduct or any activity in competition with the business of the Company or any Subsidiary or Affiliated Entity shall be determined by the Committee in good faith and in its sole discretion. This Section 10 shall have no effect and be deleted from this Agreement following a Change of Control.
(b) The Award made pursuant to this Agreement is subject to recovery pursuant to the Company’s compensation recovery policy then in effect. To the extent required by applicable laws, rules, regulations or securities exchange listing requirements and the Company’s compensation recovery policy then in effect, the Company shall have the right, and shall take all actions necessary, to recover shares of the Company’s common stock received by the Participant pursuant to the exercise of a Stock Option granted under this Award.
11.
Securities Law Restrictions
.
The Stock Option shall be exercised and Stock issued only upon compliance with the Securities Act of 1933, as amended (the "Act"), and any other applicable securities law, or pursuant to an exemption therefrom. If deemed necessary by the Company to comply with the Act or any applicable laws or regulations relating to the sale of securities, the Participant, at the time of exercise and as a condition imposed by the Company, shall represent, warrant and agree that the shares of Stock subject to the Stock Option are being purchased for investment and not with any present intention to resell the same and without a view to distribution, and the Participant shall, upon the request of the Company, execute and deliver to the Company an agreement to such effect. The Participant acknowledges that any stock certificate representing Stock purchased under such circumstances will be issued with a restricted securities legend.
12.
Payment of Withholding Taxes
.
A Participant must pay the amount of taxes required to be withheld by law upon the exercise of the Stock Option in cash
or by instructing the Company to withhold a number of shares from such exercise having a Fair Market Value as of the day of exercise equal to the amount of the withholding taxes due to the Company.
13.
Notices
.
All notices or other communications relating to the Plan and this Option Agreement as it relates to the Participant shall be in electronic or written form. If in writing, such notices shall be deemed to have been made (a) if personally delivered in return for a receipt, (b) if mailed, by regular U.S. mail, postage prepaid, by the Company to the Participant at his last known address evidenced on the payroll records of the Company, or (c) if provided electronically, provided to Participant at his e-mail address specified in the Company’s or its Affiliated Entity’s records or as otherwise specified pursuant to and in accordance with the Committee’s applicable administrative procedures.
14
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Amendments
.
This Option Agreement may be amended by a written agreement signed by the Company and the Participant; provided, that the Committee may modify the terms of this Option Agreement without the consent of the Participant in any manner that is not adverse to the Participant.
15.
Binding Effect and Governing Law
. This Agreement shall be (i) binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and assigns, subject to the limitations on transferability of Section 4 and except as may be limited by the Plan and (ii) governed and construed under the laws of the State of Oklahoma.
16.
Captions
. The captions of specific provisions of this Agreement are for convenience and reference only, and in no way define, describe, extend or limit the scope of this Agreement or the intent of any provision hereof.
17.
Counterparts; Entire Agreement
. This Option Agreement may be accepted by the required form of acceptance established by the Committee pursuant to the Notice, which may include deemed acceptance. If execution of the Notice is the required form of acceptance established by the Committee, then such execution may be in any number of identical counterparts, each of which shall be deemed an original for all purposes, but all of which taken together shall form but one agreement. This Option Agreement, together with the Notice, shall constitute the entire agreement between the parties.
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Chesapeake Energy Corporation
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Notice of Grant of Stock
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ID:
73-1395733
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Options and Option Agreement
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6100 N. Western Avenue
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Oklahoma City, OK 73118
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<NAME>
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Option Number:
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<ADDRESS>
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Plan:
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LTIP
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<ADDRESS>
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ID:
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Effective
January 29, 2013,
you have been granted a Nonqualified Stock Option to buy
<
•
>
shares of Chesapeake Energy Corporation (the Company) stock at $
18.97
per share (the “Option Price”). The expiration date of the Stock Option granted pursuant to this Notice shall be
January 29, 2023
.
Shares will become fully vested as provided below (the “Vesting Schedule”):
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Shares
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Exercisable Date
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<
•
>
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January 29, 2016
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<
•
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Deemed Acceptance
. You are required to accept the terms and conditions set forth in this Notice, the Option Agreement and the Plan, all of which are made a part of this document, within 90 days following the Grant Date (the “Acceptance Period”) in order for you to receive the Options granted to you hereunder. If you wish to decline this grant, you must expressly reject this Notice and the Option Agreement prior to the end of the Acceptance Period. For your benefit, if you have not rejected this Notice and the Option Agreement prior to the end of the Acceptance Period, you will be deemed to have automatically accepted this grant and all the terms and conditions set forth in this Notice, the Option Agreement and the Plan. Any capitalized terms used but not defined in this Notice have the same meanings given to them in the Option Agreement or the Plan.
Exhibit 10.3
RESTRICTED STOCK AWARD AGREEMENT FOR
CHESAPEAKE ENERGY CORPORATION
LONG TERM INCENTIVE PLAN
THIS RESTRICTED STOCK AWARD AGREEMENT (the “Agreement”) entered into as of the grant date set forth on the attached Notice of Grant of Award and Award Agreement (the “Notice”), by and between Chesapeake Energy Corporation, an Oklahoma corporation (the “Company”), and the participant named on the Notice (the “Participant”);
W I T N E S S E T H:
WHEREAS, the Participant is an Employee or Consultant, and it is important to the Company that the Participant be encouraged to remain an Employee or Consultant; and
WHEREAS, the Company has previously adopted the Chesapeake Energy Corporation Amended and Restated Long Term Incentive Plan effective as of October 1, 2004, as amended from time to time (the “Plan”); and
WHEREAS, the Company has awarded the Participant shares of Common Stock under the Plan, as set forth on the Notice, subject to the terms and conditions of this Agreement; and
NOW, THEREFORE, in consideration of the premises and the mutual promises and covenants herein contained, the Participant and the Company agree as follows:
1.
The Plan
. The Plan, a copy of which has been made available to the Participant, is hereby incorporated by reference herein and made a part hereof for all purposes, and when taken with this Agreement shall govern the rights of the Participant and the Company with respect to the Award (as defined below). Any capitalized terms used but not defined in this Agreement have the same meanings given to them in the Plan.
2.
Grant of Award
. The Company hereby awards to the Participant the number of shares of Common Stock set forth on the Notice, on the terms and conditions set forth herein and in the Plan (the “Award”).
3.
Terms of Award
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(a)
Escrow of Shares
. A certificate, or book-entry equivalent representing the shares of Common Stock subject to the Award (the “Restricted Stock”) shall be issued in the name of the Participant and shall be escrowed with the Secretary of the Company (the “Escrow Agent”) subject to removal of the restrictions placed thereon or forfeiture pursuant to the terms of this Agreement.
(b)
Vesting
. The shares of Restricted Stock will vest based on the Participant’s continuous employment with or service to the Company, a Subsidiary or Affiliated Entity in accordance with the vesting schedule set forth on the Notice. Once vested pursuant to the terms of this Agreement, the Restricted Stock shall be deemed “Vested Stock.”
(c)
Voting Rights and Dividends
. Subject to the restrictions on transfer and forfeiture set forth in this Agreement, the Participant will have customary rights of a shareholder attributable to the shares of Restricted Stock issued in an Award pursuant to this Agreement, including the rights to vote and to receive dividends on the shares. Participant appoints the Company to be Participant’s agent to receive for Participant dividends on shares based on record dates that occur while the shares are subject to restriction under this Agreement. The Company will transmit such dividends, net of required taxes pursuant to section 7, to or for the account of Participant in such manner as the Company determines; provided that the Participant is an Employee or Consultant as of the dividend payment date.
(d)
Vested Stock - Removal of Restrictions
. Upon Restricted Stock becoming Vested Stock, all restrictions shall be removed from the Stock and the Secretary of the Company shall deliver to the Participant shares either in certificate form or via D.W.A.C. (delivery/withdrawal at custodian) representing such Vested Stock free and clear of all restrictions, except for any applicable securities laws restrictions or restrictions pursuant to the Company’s Insider Trading Policy.
(e)
Forfeiture
. Restricted Stock that does not become Vested Stock pursuant to the terms of this Agreement shall be absolutely forfeited and the Participant shall have no future interest therein of any kind whatsoever. In the event the Participant’s employment with or service to the Company, a Subsidiary or an Affiliated Entity terminates prior to all shares of Restricted Stock becoming Vested Stock, then such unvested shares of Restricted Stock shall be absolutely forfeited on the date of termination and the Participant shall have no further interest therein of any kind whatsoever. The Committee may, in its discretion, accelerate the vesting of the Restricted Stock in the event of the Participant’s death, Disability or termination due to special circumstances (as determined by the Committee in its sole discretion).
4.
Fundamental Transaction;
Change of Control
. In accordance with the terms of the Plan, all Restricted Stock that becomes Vested Stock upon the occurrence of a Fundamental Transaction or a Change of Control shall be delivered to the Participant in certificate form or via D.W.A.C. free and clear of all restrictions, except for any applicable securities law restrictions.
5.
Subsidiary Change of Control or Fundamental Transaction
. If (a) the Participant is an employee of a Subsidiary or an Affiliated Entity (each a “CHK Entity”), upon the occurrence of a Fundamental Transaction or a Change of Control of such CHK Entity (as if the terms Fundamental Transaction or Change of Control defined under the Plan applied to such CHK Entity), and (b) immediately following and in connection with such Fundamental Transaction or Change of Control the Participant is not an employee of the Company or a CHK Entity (other than by reason of the Participant’s resignation, death or Disability), then all restrictions on outstanding Restricted Stock shall lapse and the provisions of Section 4 of this Agreement shall apply.
6.
Nontransferability of Award
. Restricted Stock is not transferable other than by will or the laws of descent and distribution. Any attempted sale, assignment, transfer, pledge, hypothecation or other disposition of, or the levy of execution, attachment or similar process upon, Restricted Stock contrary to the provisions hereof shall be void and ineffective, shall give no right to any purported transferee, any may, at the sole discretion of the Committee, result in forfeiture of the Restricted Stock involved in such attempt.
7.
Withholding
. The Company may make such provision as it may deem appropriate for the withholding of any applicable federal, state or local taxes that it determines it may be obligated to withhold or pay in connection with the vesting of the Restricted Stock or any election made by the Participant. Required withholding taxes as determined by the Company associated with this Award must be paid in cash unless the Committee requires the Participant to pay such withholding taxes by directing the Company to withhold from the Award the number of shares of Common Stock having a Fair Market Value on the date of vesting equal to the amount of required withholding taxes. The Company in its sole discretion may also withhold any required taxes from dividends paid on the Restricted Stock.
8.
Notification of 83(b) Election
. In the event the Participant elects to make an 83(b) election with respect to this Award, the Participant must provide the Company notice of such election at the same time the election is filed with the Internal Revenue Service. The Participant must also tender to the Company payment of the required withholding taxes associated with such election. In the event the Participant makes an 83(b) election without consulting with the Company as to the payment of required withholding taxes, the Company may withhold from other payments to the Participant amounts necessary to effect the required withholding.
9.
Amendments
. This Award Agreement may be amended by a written agreement signed by the Company and the Participant; provided that the Committee may modify the terms of this Award Agreement without the consent of the Participant in any manner that is not adverse to the Participant.
10.
Securities Law Restrictions
. This Award shall be vested and common stock issued only in compliance with the Securities Act of 1933, as amended (the “Act”), and any other applicable securities law, or pursuant to an exemption therefrom. If deemed necessary by the Company to comply with the Act or any applicable laws or regulations relating to the sale of securities, the Participant at the time of vesting and as a condition imposed by the Company, shall represent, warrant and agree that the shares of Common Stock subject to the Award are being acquired for investment and not with any present intention to resell the same and without a view to distribution, and the Participant shall, upon the request of the Company, execute and deliver to the Company an agreement to such a fact. The Participant acknowledges that any stock certificate representing Common Stock acquired under such circumstances will be issued with a restricted securities legend.
11.
Participant Misconduct; Compensation Recovery
.
(a) Notwithstanding anything in the Plan or this Agreement to the contrary, the Committee shall have the authority to determine that in the event of serious misconduct by the Participant (including violations of employment agreements, confidentiality or other proprietary matters) or any activity of a Participant in competition with the business of the Company or any Subsidiary or Affiliated Entity, the Award may be cancelled, in whole or in part, whether or not vested. The determination of whether a Participant has engaged in a serious breach of conduct or any activity in competition with the business of the Company or any Subsidiary or Affiliated Entity shall be determined by the Committee in good faith and in its sole discretion. This paragraph 11 shall have no effect and be deleted from this Agreement following a Change of Control.
(b) The Award made pursuant to this Agreement is subject to recovery pursuant to the Company’s compensation recovery policy then in effect. To the extent required by applicable laws, rules, regulations or securities exchange listing requirements and the Company’s compensation recovery policy then in effect, the Company shall have the right, and shall take all actions necessary, to recover shares of the Company’s common stock awarded to the Participant pursuant to this Award.
12.
Notices
. All notices or other communications relating to the Plan and this Agreement as it relates to the Participant shall be in electronic or written form. If in writing, such notices shall be deemed to have been made (a) if personally delivered in return for a receipt, (b) if mailed, by regular U.S. mail, postage prepaid, by the Company to the Participant at his last known address evidenced on the payroll records of the Company or (c) if provided electronically, provided to Participant at his e-mail address specified in the Company’s or its Affiliated Entity’s records or as other specified pursuant to and in accordance with the Committee’s applicable administrative procedures.
13.
Binding Effect and Governing Law
. This Agreement shall be (i) binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and assigns except as may be limited by the Plan and (ii) governed and construed under the laws of the State of Oklahoma.
14.
Captions
. The captions of specific provisions of this Agreement are for convenience and reference only, and in no way define, describe, extend or limit the scope of this Agreement or the intent of any provision hereof.
15.
Counterparts
. This Agreement may be executed in any number of identical counterparts, each of which shall be deemed an original for all purposes, but all of which taken together shall form but one agreement.
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Chesapeake Energy Corporation
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Notice of Grant of Award
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ID:
73-1395733
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and Award Agreement
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6100 N. Western Avenue
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Oklahoma City, OK 73118
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<NAME>
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Award Number:
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<ADDRESS>
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Plan:
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LTIP
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<ADDRESS>
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ID:
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Effective
<date>
, you have been granted an award of
<number>
shares of Chesapeake Energy Corporation (the Company) common stock. These shares are restricted until the vest date(s) shown below.
The current total value of the award is $_____________.
The award will vest in increments on the date(s) shown.
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Shares
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Full Vest
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mm/dd/yyyy
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_____
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mm/dd/yyyy
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_____
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mm/dd/yyyy
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_____
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mm/dd/yyyy
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By your signature and the Company's signature below, you and the Company agree that this award is granted under and governed by the terms and conditions of the Company's Award Plan as amended and the Award Agreement, all of which are attached and made a part of this document.
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Chesapeake Energy Corporation
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Date
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<NAME>
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Date
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