chk032620088-k_capstock.htm
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): March 26, 2008
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):
*
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
*
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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*
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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Section
8 – Other Events
Item
8.01 Other Events.
We
are
filing the following in order to amend our Registration Statement on Form 8-B
(No. 001-13726), filed on December 12, 1996, with respect to our common stock
. The Form 8-B was most recently amended by our Current Report on
Form 8-K filed on August 13, 2001. The following supersedes the
descriptions contained in such prior filings.
DESCRIPTION
OF CAPITAL STOCK
Set
forth
below is a description of our capital stock. However, this
description is not complete and is qualified by reference to our certificate
of
incorporation (including our certificates of designation) and
bylaws. Copies of our certificate of incorporation (including our
certificates of designation) and bylaws are available from us upon
request. These documents have also been filed with the Securities and
Exchange Commission.
Authorized
Capital Stock
Our
authorized capital stock consists of 750,000,000 shares of common stock, par
value $.01 per share, and 20,000,000 shares of preferred stock, par value $.01
per share.
Common
Stock
Holders
of our common stock are entitled to one vote for each share held of record
on
all matters submitted to a vote of shareholders. Subject to
preferences that may be applicable to any outstanding preferred stock, holders
of our common stock are entitled to receive ratably such dividends as may be
declared by the board of directors out of funds legally available for dividends.
In the event of our liquidation or dissolution, holders of our common stock
are
entitled to share ratably in all assets remaining after payment of liabilities
and the liquidation preference of any outstanding preferred stock.
Holders
of our common stock have no preemptive rights and have no rights to convert
their common stock into any other securities.
Preferred
Stock
Our
board
of directors has the authority, without further shareholder approval, to issue
shares of preferred stock from time to time in one or more series, with such
voting powers or without voting powers, and with such designations, preferences
and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions, as shall be set forth in the
resolutions providing therefor. As of March 26, 2008, our authorized
preferred stock consisted of shares that are
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unissued
and undesignated as to series;
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issued
and designated as 4.125% Cumulative Convertible Preferred Stock,
5.00%
Cumulative Convertible Preferred Stock (Series 2005), 4.50% Cumulative
Convertible Preferred Stock, 5.00% Cumulative Convertible Preferred
Stock
(Series 2005B), and 6.25% Mandatory Convertible Preferred Stock;
and
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unissued
and designated as Series A Junior Participating Preferred
Stock. This series is described below under "—Share Rights
Plan."
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While
providing desirable flexibility for possible acquisitions and other corporate
purposes, and eliminating delays associated with a shareholder vote on specific
issuances, the issuance of preferred stock could adversely affect the voting
power of holders of common stock, as well as dividend and liquidation payments
on both common and preferred stock. It also could have the effect of delaying,
deferring or preventing a change in control.
Anti-Takeover
Provisions
Our
certificate of incorporation and bylaws and the Oklahoma General Corporation
Act
include a number of provisions which may have the effect of encouraging persons
considering unsolicited tender offers or other unilateral takeover proposals
to
negotiate with our board of directors rather than pursue non-negotiated takeover
attempts. These provisions include a classified board of directors,
authorized blank check preferred stock, restrictions on business combinations
and the availability of authorized but unissued common stock.
Classified
Board of
Directors. Our certificate of incorporation and bylaws contain provisions
for a staggered board of directors with only one-third of the board standing
for
election each year. Directors can only be removed for cause. A
staggered board makes it more difficult for shareholders to change the majority
of the directors.
Oklahoma
Business Combination
Statute. Section 1090.3 of the Oklahoma General Corporation Act prevents
an "interested shareholder" from engaging in a "business combination" with
an
Oklahoma corporation for three years following the date the person became an
interested shareholder, unless:
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prior
to the date the person became an interested shareholder, the board
of
directors of the corporation approved the transaction in which the
interested shareholder became an interested shareholder or approved
the
business combination;
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upon
consummation of the transaction that resulted in the interested
shareholder becoming an interested shareholder, the interested shareholder
owns stock having at least 85% of all voting power of the corporation
at
the time the transaction commenced, excluding stock held by directors
who
are also officers of the corporation and stock held by certain employee
stock plans; or
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on
or subsequent to the date of the transaction in which the person
became an
interested shareholder, the business combination is approved by the
board
of directors of the corporation and authorized at a meeting of
shareholders by the affirmative vote of the holders of two-thirds
of all
voting power not attributable to shares owned by the interested
shareholder.
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The
statute defines a "business combination" to include:
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any
merger or consolidation involving the corporation and an interested
shareholder;
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any
sale, lease, exchange, mortgage, pledge, transfer or other disposition
to
or with an interested shareholder of 10% or more of the assets of
the
corporation;
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subject
to certain exceptions, any transaction which results in the issuance
or
transfer by the corporation of any stock of the corporation to an
interested shareholder;
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any
transaction involving the corporation which has the effect of increasing
the proportionate share of the stock of any class or series or voting
power of the corporation owned by the interested
shareholder;
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the
receipt by an interested shareholder of any loans, guarantees, pledges
or
other financial benefits provided by or through the corporation;
or
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any
share acquisition by the interested shareholder pursuant to Section
1090.1
of the Oklahoma General Corporation
Act.
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For
purposes of Section 1090.3, the term "corporation" also includes the
corporation's majority-owned subsidiaries.
In
addition, Section 1090.3 defines an "interested shareholder," generally, as
any
person that owns stock having 15% or more of all voting power of the
corporation, any person that is an affiliate or associate of the corporation
and
owned stock having 15% or more of all voting power of the corporation at any
time within the three-year period prior to the time of determination of
interested shareholder status, and any affiliate or associate of such
person.
Stock
Purchase Provisions.
Our certificate of incorporation includes a provision which requires the
affirmative vote of two-thirds of the votes cast by the holders, voting together
as a single class, of all then outstanding shares of capital stock, excluding
the votes by an interested shareholder, to approve the purchase of any of our
capital stock from the interested shareholder at a price in excess of fair
market value, unless the purchase is either (1) made on the same terms offered
to all holders of the same securities or (2) made on the open market and not
the
result of a privately negotiated transaction.
Share
Rights Plan
The
Rights. On July 7, 1998,
our board of directors declared a dividend distribution of one preferred stock
purchase right for each outstanding share of common stock. The
distribution was paid on July 27, 1998 to the shareholders of record on that
date. Each right entitles the registered holder to purchase from us
one one-thousandth of a share of Series A Junior Participating Preferred Stock
(the "Series A Preferred Stock") at a price of $25.00, subject to
adjustment.
The
following is a summary of these rights. The full description and
terms of the rights are set forth in a rights agreement with Computershare
Trust
Company, N.A., formerly UMB Bank, N.A., as rights agent. Copies of
the rights agreement and the certificate of designation for the Series A
Preferred Stock are available free of charge. This summary
description of the rights and the Series A Preferred Stock does not purport
to
be complete and is qualified in its entirety by reference to all the provisions
of the rights agreement and the certificate of designation for the Series A
Preferred Stock.
Initially,
the rights attached to all certificates representing shares of our outstanding
common stock, and no separate rights certificates were
distributed. The rights will separate from our common stock and the
distribution date will occur upon the earlier of:
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ten
days following the date of public announcement that a person or group
of
persons has become an acquiring person;
or
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ten
business days (or a later date set by the board of directors prior
to the
time a person becomes an acquiring person) following the commencement
of,
or the announcement of an intention to make, a tender offer or exchange
offer upon consummation of which the offeror would, if successful,
become
an acquiring person.
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The
earlier of these dates is called the distribution date.
The
term
"acquiring person" means any person who or which, together with all of its
affiliates and associates, is the beneficial owner of 15% or more of our
outstanding common stock, but does not include:
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us
or any of our subsidiaries or employee benefit
plans;
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Aubrey
K. McClendon, his spouse, lineal descendants and ascendants, heirs,
executors or other legal representatives and any trusts established
for
the benefit of the foregoing or any other person or entity in which
the
foregoing persons or entities are at the time of determination the
direct
record and beneficial owners of all outstanding voting securities
(each a
"McClendon shareholder"); or
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any
person that is not a McClendon shareholder, but who or which is the
beneficial owner of common stock beneficially owned by a McClendon
shareholder (a "second tier shareholder"), but only if the shares
of
common stock otherwise beneficially owned by a second tier shareholder
("second tier holder shares") do not exceed the sum of (A) the holder's
second tier holder shares held on March 3, 2006 and (B) 1% of the
shares
of our common stock then outstanding (collectively, "exempt
persons").
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The
rights agreement provides that, until the distribution date, the rights will
be
transferred with and only with the common stock. Until the
distribution date (or earlier redemption or expiration of the rights), new
common stock certificates issued after July 27, 1998, upon transfer or new
issuance of common stock, will contain a notation incorporating the rights
agreement by reference. Until the distribution date or earlier redemption or
expiration of the rights, the surrender for transfer of any certificate for
common stock, outstanding as of July 27, 1998, even without a notation or a
copy
of a summary of the rights being attached, will also constitute the transfer
of
the rights associated with the common stock represented by the certificate.
As
soon as practicable following the distribution date, separate certificates
evidencing the rights will be mailed to holders of record of the common stock
as
of the close of business on the distribution date and these separate rights
certificates alone will evidence the rights.
The
rights are not exercisable until the distribution date. The rights
will expire on July 27, 2008.
The
purchase price payable, and the number of one one-thousandths of a share of
Series A Preferred Stock or other securities or property issuable, upon exercise
of the rights are subject to adjustment from time to time to prevent
dilution:
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in
the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Series A Preferred
Stock;
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upon
the grant to holders of the Series A Preferred Stock of certain rights
or
warrants to subscribe for or purchase shares of Series A Preferred
Stock
at a price, or securities convertible into Series A Preferred Stock
with a
conversion price, less than the then current market price of the
Series A
Preferred Stock; or
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upon
the distribution to holders of the Series A Preferred Stock of evidences
of indebtedness or assets (excluding regular periodic cash dividends
paid
or dividends payable in Series A Preferred Stock) or of subscription
rights or warrants (other than those referred to
above).
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The
number of outstanding rights and the number of one one-thousandths of a share
of
Series A Preferred Stock issuable upon exercise of each right are also subject
to adjustment in the event of a stock split of the common stock or a stock
dividend on the common stock payable in the common stock or subdivisions,
consolidations or combinations of the common stock occurring, in any such case,
prior to the distribution date.
In
the
event that following the date of public announcement that a person has become
an
acquiring person, we are acquired in a merger or other business combination
transaction or more than 50% of our consolidated assets or earning power is
sold, proper provision will be made so that each holder of a right will
thereafter have the right to receive, upon the exercise of the right at the
then
current exercise price of the right, that number of shares of common stock
of
the acquiring company which at the time of such transaction will have a market
value of two times the exercise price of the right (the "flip-over
right").
In
the
event that a person, other than an exempt person, becomes an acquiring person,
proper provision will be made so that each holder of a right, other than the
acquiring person and its affiliates and associates, will thereafter have the
right to receive upon exercise that number of shares of common stock, or, if
applicable, cash, other equity securities or property of us, having a market
value equal to two times the purchase price of the rights (the "flip-in
right"). Any rights that are or were at any time owned by an
acquiring person will then become void.
With
certain exceptions, no adjustment in the purchase price will be required until
cumulative adjustments require an adjustment of at least 1% in the purchase
price. Upon exercise of the rights, no fractional shares of Series A
Preferred Stock will be issued other than fractions which are integral multiples
of one one-hundredth of a share of Series A Preferred Stock. Cash
will be paid in lieu of fractional shares of Series A Preferred Stock that
are
not integral multiples of one one-hundredth of a share of Series A Preferred
Stock.
At
any
time prior to the earlier to occur of (1) 5:00 p.m., Oklahoma City, Oklahoma
time on the tenth day after the stock acquisition date or (2) the expiration
of
the rights, we may redeem the rights in whole, but not in part, at a price
of
$0.01 per right; provided, that (a) if the board of directors authorizes
redemption on or after the time a person becomes an acquiring person, then
the
authorization must be by board approval and (b) the period for redemption may,
upon board approval, be extended by amending the rights
agreement. Board approval means the approval of a majority of our
directors. Immediately upon any redemption of the rights described in this
paragraph, the right to exercise the rights will terminate and the only right
of
the holders of rights will be to receive the redemption price.
Our
board
of directors may amend the terms of the rights without the consent of the
holders of the rights at any time and from time to time provided that any
amendment does not adversely affect the interests of the holders of the rights.
In addition, during any time that the rights are subject to redemption, the
terms of the rights may be amended by the approval of a majority of the
directors, including an amendment that adversely affects the interests of the
holders of the rights, without the consent of the holders of
rights.
Until
a
right is exercised, a holder will have no rights as a shareholder, including,
without limitation, the right to vote or to receive dividends. While
the distribution of the rights will not be taxable to us or our shareholders,
shareholders may, depending upon the circumstances, recognize taxable income
in
the event that the rights become exercisable for Series A Preferred Stock,
or
other consideration.
The
Series A Preferred Stock.
Each one-thousandth of a share of the Series A Preferred Stock (a "preferred
share fraction") that may be acquired upon exercise of the rights will be
nonredeemable and junior to any other shares of preferred stock that we may
issue.
Each
preferred share fraction will have a minimum preferential quarterly dividend
rate of $0.01 per preferred share fraction but will, in any event, be entitled
to a dividend equal to the per share dividend declared on the common
stock.
In
the
event of liquidation, the holder of a preferred share fraction will receive
a
preferred liquidation payment equal to the greater of $0.01 per preferred share
fraction or the per share amount paid in respect of a share of common
stock.
Each
preferred share fraction will have one vote, voting together with the common
stock. The holders of preferred share fractions, voting as a separate class,
will be entitled to elect two directors if dividends on the Series A Preferred
Stock are in arrears for six fiscal quarters.
In
the
event of any merger, consolidation or other transaction in which shares of
common stock are exchanged, each preferred share fraction will be entitled
to
receive the per share amount paid in respect of each share of common
stock.
The
rights of holders of the Series A Preferred Stock to dividends, liquidation
and
voting, and in the event of mergers and consolidations, are protected by
customary anti-dilution provisions.
Because
of the nature of the Series A Preferred Stock's dividend, liquidation and voting
rights, the economic value of one preferred share fraction that may be acquired
upon the exercise of each right should approximate the economic value of one
share of our common stock.
Shareholder
Action
Except
as
otherwise provided by law or in our certificate of incorporation or bylaws,
the
approval by holders of a majority of the shares of common stock present in
person or represented by proxy at a meeting and entitled to vote is sufficient
to authorize, affirm, ratify or consent to a matter voted on by
shareholders. Our bylaws provide that all questions submitted to
shareholders will be decided by a plurality of the votes cast, unless otherwise
required by law, our certificate of incorporation, stock exchange requirements
or any certificate of designation. The Oklahoma General Corporation
Act requires the approval of the holders of a majority of the outstanding stock
entitled to vote for certain extraordinary corporate transactions, such as
a
merger, sale of substantially all assets, dissolution or amendment of the
certificate of incorporation. Our certificate of incorporation
provides for a vote of the holders of two-thirds of the issued and outstanding
stock having voting power, voting as a single class, to amend, repeal or adopt
any provision inconsistent with the provisions of the certificate of
incorporation limiting director liability and stock purchases by us, and
providing for staggered terms of directors and indemnity for
directors. The same vote is also required for shareholders to amend,
repeal or adopt any provision of our bylaws.
Under
Oklahoma law, shareholders may take actions without the holding of a meeting
by
written consent or consents signed by the holders of a sufficient number of
shares to approve the transaction had all of the outstanding shares of our
capital stock entitled to vote thereon been present at a meeting. If
shareholder action is taken by written consent, the rules and regulations of
the
Securities and Exchange Commission require us to send each shareholder entitled
to vote on the matter, but whose consent was not solicited, an information
statement containing information substantially similar to that which would
have
been contained in a proxy statement.
Transfer
Agent and Registrar
Computershare
Trust Company, N.A. is the transfer agent and registrar for our common stock
and
preferred stock.
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 |
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Senior
Vice President, Treasurer and Corporate Secretary |
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Date:
March 26, 2008