Exhibit 10.1.12.1

 

STOCK OPTION AGREEMENT

UNDER CHESAPEAKE ENERGY CORPORATION

2002 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

 

THIS 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 a director of the Company, and it is important to
the Company that the Participant be encouraged to remain a director of the
Company; 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
2002 Non-Employee Director Stock Option Plan” (the “Plan”), a copy of which has
been provided to the Participant; and

 

WHEREAS, any capitalized terms used but not defined herein have the same
meanings given them in 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:

 

Section 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. The purchase price for each share to be
purchased hereunder shall be the option price set forth on the Notice (the
“Option Price”).

 

Section 2. Times of Exercise of Stock Option. On and after the Date of Grant,
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 a cumulative basis, the number of shares of Stock
subject to the Stock Option set forth on the Notice.

 

Section 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. At all times during the period commencing with the date the
Stock Option is granted to the Participant and ending on the earlier of the
expiration of the Stock Option or the date which is three years prior to the
date the Stock Option is exercised, the Participant must be serving as a
director of the Company.

 

Section 4. Limited Transferability of Stock Option. Except as provided
hereafter, the Stock Option is not transferable, and the Stock Option may be
exercised, during the lifetime of the Participant, only by the Participant. A
Participant may transfer all or a portion of the Stock Option to (i) the
ex-spouse of the Participant pursuant to the terms of a qualified domestic
relations order, (ii) the spouse, children or grandchildren of the Participant
(“Immediate Family Members”), (iii) a trust or trusts for the exclusive benefit
of such Immediate Family Members, or (iv) a partnership in which such Immediate
Family Members are the only partners. In addition, (x) there may be no
consideration for any such transfer, and (y) any subsequent transfer of a
transferred Stock Option is prohibited except by will or the laws of descent and
distribution. However, no such transfer of a Stock Option by a Participant shall
be effective to bind the Company unless the Company has been furnished with
written notice of such transfer and an authenticated copy of the will and/or
such other evidence as the Committee may deem necessary to establish the
validity of the transfer and the acceptance by the transferee of the terms and
conditions of the Stock Option. Following transfer, any transferred Stock Option
shall continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer,

 

October 28, 2004

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provided that, with the exception of Sections 6.2, 6.3(c) and 6.3(e) of the
Plan, the term “Participant” shall be deemed to refer to the transferee. Any
other attempted assignment, transfer, pledge, hypothecation or other disposition
of, or the levy of execution, attachment or similar process upon, the Stock
Option contrary to the provisions of the Plan and this Option Agreement 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.

 

Section 5. Right to Continued Board Membership. Nothing in the Plan or in this
Option Agreement shall confer upon the Participant any right to remain on the
Board of the Company.

 

Section 6. Exercise of Stock Option After a Participant’s Termination. A
Participant who ceases to be a director, the transferee of the Stock Option
transferred by such Participant in accordance with the terms of this Option
Agreement or the personal representative of a deceased Participant shall
automatically have the right to exercise the Stock Option and purchase all or
any part of the shares subject to the Stock Option on the date of the
Participant’s termination of membership on the Board until the earlier of (a)
three years after termination of the Participant’s service on the Board or (b)
the expiration of the Stock Option unless the Participant is terminated for
cause. If a Participant’s membership on the Board is terminated for cause, the
Stock Option will expire thirty days after such termination.

 

Section 7. Method of Exercising Stock Option.

 

(a) Procedures for Exercise. The manner of exercising the Stock Option shall be
by written 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 shall be signed by the person so exercising the Stock
Option.

 

(b) Form of Payment. Payment in full 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 shall be made (i) in
cash or by check, bank draft or money order payable to the order of 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; or (iii) a combination
thereof. In addition to the foregoing, the Committee may permit the Participant
to elect to pay the Option Price by irrevocably authorizing a third party 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 7, by any person other than 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 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.

 

Section 8. 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.

 

Section 9. 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

 

October 28, 2004

 

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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.

 

Section 10. Payment of Withholding Taxes. A Participant must pay the amount of
taxes required by law upon the exercise of the Stock Option in cash.

 

Section 11. Notices. All notices or other communications relating to the Plan
and this Option Agreement as it relates to the Participant shall be in writing
and shall be delivered personally or mailed (U.S. Mail) by the Company to the
Participant at the then current address as maintained by the Company or such
other address as the Participant may advise the Company in writing.

 

October 28, 2004

 

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