424B3 1 tm2125916-7_424b3.htm 424B3 tm2125916-7_424b3 - none - 115.2975596s
  Filed Pursuant to Rule 424(b)(3)
 Registration No. 333-259252
[MISSING IMAGE: lg_vineenergy-4clr.jpg]
LETTER TO STOCKHOLDERS OF VINE ENERGY INC.
Dear Stockholders of Vine Energy Inc.:
On August 10, 2021, Chesapeake Energy Corporation, an Oklahoma corporation (“Chesapeake”), Hannibal Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Chesapeake (“Merger Sub Inc.”), Hannibal Merger Sub, LLC, a Delaware limited liability company and a wholly owned subsidiary of Chesapeake (“Merger Sub LLC” and, together with Merger Sub Inc., the “Merger Subs”), Vine Energy Inc., a Delaware corporation (“Vine”), and Vine Energy Holdings LLC, a Delaware limited liability company (“Holdings”), entered into an Agreement and Plan of Merger (the “merger agreement”), under which, upon the terms and subject to the conditions set forth therein, Merger Sub Inc. will be merged with and into Vine (the “First Merger”) and, as a result, the separate existence of Merger Sub Inc. shall cease and Vine shall continue its existence under the laws of the State of Delaware as the surviving corporation and as a wholly owned subsidiary of Chesapeake (in such capacity, the “surviving corporation”) and immediately after the First Merger, the surviving corporation will be merged with and into Merger Sub LLC (the “Second Merger” and, together with the First Merger, the “merger” or the “integrated mergers”) and, as a result, the separate existence of the surviving corporation shall cease and Merger Sub LLC shall continue its existence under the laws of the State of Delaware as the surviving company and as a wholly owned subsidiary of Chesapeake (in such capacity, the “surviving company”).
If the First Merger is completed, the Vine stockholders (as defined below) will receive, in exchange for each share of Class A common stock, par value $0.01 per share of Vine (“Vine Class A common stock”), held immediately prior to the First Merger, $1.20 in cash, without interest (the “cash consideration”), and 0.2486 shares (the “exchange ratio”) of Chesapeake’s common stock, par value $0.01 per share (“Chesapeake common stock”) (such shares the “share consideration” and, together with the cash consideration, the “merger consideration”). The board of directors of Vine (the “Vine board”) has unanimously approved the merger agreement and recommends that Vine stockholders vote in favor of adopting the merger agreement.
Based on the closing price of Chesapeake’s common stock on August 10, 2021, the last trading day before the public announcement of the signing of the merger agreement, the value of the per share merger consideration payable to holders of Vine Class A common stock upon completion of the merger was approximately $15.00. Based on the closing price of Chesapeake’s common stock on September 29, 2021, the last practicable date before the date of filing of this joint proxy statement/prospectus, the value of the merger consideration payable to holders of Vine Class A common stock upon completion of the merger was approximately $1.257 billion. The value of the merger consideration to be received in exchange for each share of Chesapeake common stock will fluctuate with the market value of Chesapeake common stock until the transaction is complete. Chesapeake common stock is quoted on the Nasdaq Global Select Market under the symbol “CHK,” and Vine Class A common stock is quoted on the New York Stock Exchange under the symbol “VEI.” Following the completion of the merger, it is anticipated that persons who were shareholders of Chesapeake and stockholders of Vine immediately prior to the merger will own approximately 84% and 16%, respectively, of the combined company following the merger (without giving effect to the exercise of outstanding Chesapeake warrants).
The merger cannot be completed without approval of the proposal to adopt the merger agreement by the affirmative vote of holders of a majority of the outstanding shares of Vine Class A common stock and Vine Class B common stock, par value $0.01 per share (“Vine Class B common stock” and, together with Vine Class A common stock, “Vine common stock”, and such holders, the “Vine stockholders”), voting together as a single class and entitled to vote thereon. Because of this, Vine is holding a special meeting of its stockholders on November  1, 2021 to vote on the proposal necessary to complete the merger. At the special meeting, Vine stockholders will also be asked to approve the non-binding compensation advisory proposal and the adjournment proposal, both of which are not a condition to the consummation of the merger. Information about the special meeting, the merger, the merger agreement, and the other business to be considered by Vine stockholders at the special meeting is contained in this proxy statement/prospectus. The board of directors of Vine (the “Vine board”) has fixed the close of business on September 22, 2021 as the record date for the determination of Vine stockholders entitled to notice of, and to vote at, the special meeting (the “Vine record date”). Any stockholder entitled to attend and vote at the special meeting is entitled to appoint a proxy to attend and vote on such stockholder’s behalf. Such proxy need not be a holder of Vine common stock. We urge you
 

to carefully read this proxy statement/prospectus and the annexes and documents incorporated by reference herein. You should also carefully consider the risks that are described in the “Risk Factors” section beginning on page 18.
In connection with the execution of the merger agreement, certain funds affiliated with Blackstone Inc. and certain members of Vine management (the “Legacy Vine Holders”), which beneficially own an aggregate of 54,819,256 shares of Vine common stock (consisting of 20,600,721 shares of Vine Class A common stock and 34,218,535 shares of Vine Class B common stock), entered into the merger support agreement with Chesapeake and Vine (the “merger support agreement”), pursuant to which the Legacy Vine Holders have agreed to vote their shares (i) in favor of the matters to be submitted to Vine’s stockholders in connection with the merger and (ii) against specific actions that could reasonably be expected to impede, interfere with, delay, discourage, postpone or adversely affect the transactions contemplated by the merger, subject to the terms and conditions set forth in the merger support agreement. Each Legacy Vine Holder also granted an irrevocable proxy to Chesapeake or any executive officer of Chesapeake designated by Chesapeake in writing to act for and on such stockholder’s behalf, and in such stockholder’s name, place and stead, solely in the event that such stockholder fails to comply in any material respect with its obligations under the merger support agreement in a timely manner, to vote such stockholder’s shares and grant all written consents with respect thereto and to represent such stockholder at any stockholder meeting held for the purpose of voting on the adoption of the merger agreement. As of the Vine record date, the Legacy Vine Holders hold and are entitled to vote in the aggregate approximately 72.8% of the issued and outstanding shares of Vine common stock entitled to vote at the Vine special meeting. Accordingly, as long as the Vine board does not change its recommendation with respect to such proposal, approval of the merger proposal at the Vine special meeting is assured. In the event that the Vine board changes its recommendation to its stockholders to approve and adopt the merger agreement, the voting obligation of the Legacy Vine Holders under the merger support agreement will be reduced to the number of shares equal to 35% of the outstanding shares of Vine’s common stock. For more information, please see the section entitled “Vine Special Meeting — Voting and Support Agreement with Blackstone Inc. and Vine Management” beginning on page 36.
The Vine board has unanimously determined that the merger agreement and the transactions contemplated thereby, including the merger, are fair to, and in the best interests of, the Vine stockholders, approved and declared advisable the merger agreement and the transactions contemplated thereby, including the merger, and directed that the merger agreement be submitted to Vine stockholders for adoption at a meeting of such stockholders, and unanimously recommends that Vine stockholders vote “FOR” the proposal to adopt the merger agreement and the transactions contemplated thereby, including the merger.
Your vote is very important regardless of the number of shares of Vine common stock that you own.
Whether or not you plan to attend the special meeting, please submit your proxy as soon as possible by following the instructions on the accompanying proxy card to make sure that your shares are represented at the special meeting. If your shares are held in the name of a broker, bank or other nominee, please follow the instructions on the voting instruction form furnished by the broker, bank or other nominee. You must provide voting instructions by filling out the voting instruction form in order for your shares to be voted.
In light of public health concerns regarding the ongoing COVID-19 pandemic and in consideration of medical and governmental recommendations and orders limiting the number of persons that may gather at public events, the special meeting will be held in a virtual meeting format only. You will not be able to attend the special meeting physically in person. Thank you for your continued support, interest and investment in Vine.
Sincerely,
[MISSING IMAGE: sg_ericdmarsh-bw.jpg]
Eric D. Marsh
President, Chief Executive Officer and Chairman of the Board
Vine Energy Inc.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued under the accompanying proxy statement/prospectus or passed upon the adequacy or accuracy of the disclosure in this document. Any representation to the contrary is a criminal offense.
The proxy statement/prospectus is dated October 1, 2021 and is first being mailed to stockholders of Vine on or about October 1, 2021.

 
[MISSING IMAGE: lg_vineenergy-4clr.jpg]
NOTICE OF THE SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD VIRTUALLY VIA THE INTERNET ON November 1, 2021
To the Stockholders of Vine Energy Inc.:
On behalf of Vine Energy Inc. (“Vine”) and the Board of Directors of Vine (the “Vine board”), I am pleased to invite you to a special meeting of stockholders of Vine (the “Vine special meeting”), which will be held virtually via the Internet on November 1, 2021, at 9:00 a.m., Central Time, to consider and vote on the following proposals:

to adopt the Agreement and Plan of Merger, dated August 10, 2021 (as it may be amended from time to time, the “merger agreement”), by and among Chesapeake Energy Corporation (“Chesapeake”), Hannibal Merger Sub, Inc., a wholly owned subsidiary of Chesapeake (“Merger Sub Inc.”), Hannibal Merger Sub, LLC, a wholly owned subsidiary of Chesapeake (“Merger Sub LLC” and, together with Merger Sub Inc., the “Merger Subs”), Vine, and Vine Energy Holdings LLC (“Holdings”) (the “merger proposal”);

to approve, by a non-binding advisory vote, certain compensation that may be paid or become payable to Vine’s named executive officers that is based on or otherwise relates to the merger contemplated by the merger agreement (the “non-binding compensation advisory proposal”); and

to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to adopt the merger agreement (the “adjournment proposal”).
In light of public health concerns regarding the ongoing COVID-19 pandemic, the Vine special meeting will be held in a virtual meeting format only, via live webcast, and there will not be a physical meeting location. You will be able to attend the Vine special meeting online, access Vine’s stock list and vote your shares electronically at the meeting by visiting https://web.lumiagm.com/294405445 (the “Vine special meeting website”).
Approval of the merger proposal by the affirmative vote of holders of a majority of the outstanding shares of Vine Class A common stock, par value $0.01 per share (the “Vine Class A common stock”), and Vine Class B common stock, par value $0.01 per share (“Vine Class B common stock” and, together with Vine Class A common stock, “Vine common stock,” and such holders, the “Vine stockholders”), voting together as a single class and entitled to vote thereon, is required to approve the merger proposal. Vine stockholders will also be asked to approve the non-binding compensation advisory proposal and the adjournment proposal, both of which are not conditions to the consummation of the merger. Vine does not intend to transact any other business at the Vine special meeting or any adjournment or postponement thereof. The record date for the Vine special meeting has been set as September 22, 2021. Only Vine stockholders of record as of the close of business on such record date are entitled to notice of, and to vote at, the Vine special meeting or any adjournments and postponements of the Vine special meeting. For additional information regarding the Vine special meeting, see the section entitled “Special Meeting of Vine Stockholders” beginning on page 35 of the proxy statement/prospectus accompanying this notice.
The Vine board unanimously recommends that holders of Vine common stock vote “FOR” the merger proposal and “FOR” the non-binding compensation advisory proposal and “FOR” the adjournment proposal.
The Vine stockholder proposals are described in more detail in the accompanying proxy statement/prospectus, which you should read carefully and in its entirety before you vote. A copy of the merger agreement is attached as Annex A to the accompanying proxy statement/prospectus.
 

 
PLEASE SUBMIT YOUR PROXY AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE VINE SPECIAL MEETING VIA THE VINE SPECIAL MEETING WEBSITE. IF YOU LATER DESIRE TO REVOKE OR CHANGE YOUR PROXY FOR ANY REASON, YOU MAY DO SO IN THE MANNER DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS. FOR FURTHER INFORMATION CONCERNING THE PROPOSALS BEING VOTED UPON, USE OF THE PROXY AND OTHER RELATED MATTERS, YOU ARE URGED TO READ THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS.
Your vote is very important. Approval of the merger proposal by the Vine stockholders is a condition to the consummation of the merger and requires the affirmative vote of a majority of the outstanding shares of Vine common voting entitled to vote on the proposal. Approval of the non-binding compensation advisory proposal requires the affirmative vote of a majority of the shares of Vine common stock present in person or represented by proxy at the special meeting and entitled to vote on the proposal. Approval of the adjournment proposal requires the affirmative vote of a majority of the shares of Vine common stock present in person or represented by proxy at the special meeting and entitled to vote on the proposal. Vine stockholders are requested to complete, date, sign and return the enclosed proxy in the envelope provided, which requires no postage if mailed in the United States, or to submit their proxies by the Internet. Simply follow the instructions provided on the enclosed proxy card. Abstentions, broker non-votes and a failure to submit a proxy or vote via the Vine special meeting website will have the same effect as a vote “AGAINST” the merger proposal.
Vine Energy Inc.
[MISSING IMAGE: sg_ericdmarsh-bw.jpg]
Eric D. Marsh
President, Chief Executive Officer and Chairman of the Board
 

 
TABLE OF CONTENTS
Page
ii
ii
iv
1
17
18
30
31
32
34
35
41
43
81
111
115
122
129
139
143
144
145
146
148
148
A-1
B-1
C-1
D-1
E-1
F-1
G-1
 
i

 
REFERENCES TO ADDITIONAL INFORMATION
This proxy statement/prospectus incorporates by reference important business and financial information about Chesapeake Energy Corporation (“Chesapeake”) from other documents that are not included in or delivered with this proxy statement/prospectus, including documents that Chesapeake has filed with the U.S. Securities and Exchange Commission (the “SEC”). This information, and information included in the annexes attached hereto regarding Vine Energy Inc. (“Vine”), is available to you without charge upon your request. For a listing of documents incorporated by reference into this proxy statement/prospectus or attached to this proxy statement/prospectus, see the sections entitled “Where You Can Find More Information” and“Information Incorporated By Reference,” each beginning on page 148.
You may request copies of this proxy statement/prospectus and any of the documents incorporated by reference into this proxy statement/prospectus or attached to this proxy statement/prospectus, without charge, upon written or oral request from Chesapeake or Vine at the following addresses and telephone numbers:
Chesapeake Energy Corporation
6100 North Western Avenue
Oklahoma City, Oklahoma 73118 Attention: Corporate Secretary
Telephone: (405) 848-8000
Vine Energy Inc.
5800 Granite Parkway, Suite 550
Plano, Texas 75024
Attention: Corporate Secretary
Telephone: (469) 606-0540
To obtain timely delivery of these documents before the special meeting of stockholders of Vine (the “Vine special meeting”), Vine stockholders must request the information no later than October 25, 2021, which is five business days before the date of the Vine special meeting.
You may also obtain any of the documents incorporated by reference into this proxy statement/prospectus or attached to this proxy statement/prospectus free of charge through the SEC’s website at www.sec.gov. In addition, you may obtain copies of these documents, free of charge, from Chesapeake by accessing Chesapeake’s website at http://www.chk.com under the “Investors” link and then under the heading “SEC Filings” or from Vine by accessing Vine’s website at http://www.vineenergy.com under the “Investors” link and then under the heading “SEC filings.”
In addition, if you have questions about the merger or this proxy statement/prospectus, would like additional copies of this proxy statement/prospectus or need to obtain proxy cards or other information related to the proxy solicitation, contact D.F. King & Co., Inc., the proxy solicitor for Vine, toll-free at (866) 387-7321, or banks and brokers can call collect at (212) 269-5550 or by emailing vine@dfking.com. You will not be charged for any of these documents that you request.
About This Proxy Statement/Prospectus
This document, which forms part of a registration statement on Form S-4 filed with the SEC by Chesapeake (File No. 333-259252), constitutes a prospectus of Chesapeake under Section 5 of the Securities Act of 1933, as amended (the “Securities Act”) with respect to the shares of common stock of Chesapeake, par value $0.01 per share (“Chesapeake common stock”), to be issued to the holders (the “Vine stockholders”) of shares of Class A common stock, par value $0.01 per share, of Vine (“Vine Class A common stock”) pursuant to the Agreement and Plan of Merger, dated as of August 10, 2021 (as amended from time to time, the “merger agreement”), by and among Chesapeake, Hannibal Merger Sub, Inc. (“Merger Sub Inc.”), Hannibal Merger Sub, LLC (“Merger Sub LLC”), Vine and Vine Energy Holdings LLC (“Holdings”).
This document also constitutes a notice of meeting and proxy statement of Vine under Section 14(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Chesapeake has supplied all information contained or incorporated by reference herein relating to Chesapeake, and Vine has supplied all information contained herein or attached hereto relating to Vine. Chesapeake and Vine have both contributed to the information relating to the merger and the merger agreement contained in this proxy statement/prospectus.
 
ii

 
You should rely only on the information contained in, attached to or incorporated by reference herein in connection with any vote, the giving or withholding of any proxy or any investment decision in connection with the merger agreement. Chesapeake and Vine have not authorized anyone to provide you with information that is different from that contained in, attached to or incorporated by reference herein. This proxy statement/prospectus is dated October 1, 2021, and you should not assume that the information contained in this proxy statement/prospectus is accurate as of any date other than such date unless otherwise specifically provided herein. Further, you should not assume that the information incorporated by reference herein or attached hereto is accurate as of any date other than the date of the incorporated or attached document. Neither the mailing of this proxy statement/prospectus to stockholders of Vine, nor the issuance by Chesapeake of shares of Chesapeake common stock pursuant to the merger agreement, will create any implication to the contrary.
All currency amounts referenced in this proxy statement/prospectus are in U.S. dollars.
All references in this statement/prospectus to (i) “Chesapeake” refer to Chesapeake Energy Corporation, an Oklahoma corporation; (ii) “Merger Sub Inc.” refer to Hannibal Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Chesapeake; (iii) “Merger Sub LLC” refer to Hannibal Merger Sub, LLC, a Delaware limited liability company and a wholly owned subsidiary of Chesapeake; (iv) “Merger Subs” refer to Merger Sub LLC together with Merger Sub Inc.; (v) “Holdings” refer to Vine Energy Holdings LLC, a Delaware limited liability company; (vi) “merger agreement” refer to the Agreement and Plan of Merger, dated as of August 10, 2021, by and among Chesapeake, Merger Sub Inc., Merger Sub LLC, Vine and Holdings; (vii) “First Merger” refer to the merger of Merger Sub Inc. with and into Vine upon the terms and subject to the conditions set forth in the merger agreement; (viii) “surviving corporation” refer to Vine after the First Merger, as a result of which the separate existence of Merger Sub Inc. shall cease and Vine shall continue its existence under the laws of the State of Delaware as the surviving corporation and as a wholly owned subsidiary of Chesapeake; (ix) “Second Merger” refer to the merger of the surviving corporation with and into Merger Sub LLC immediately after the First Merger upon the terms and subject to the conditions set forth in the merger agreement; (x) “surviving company” refer to Merger Sub LLC after the Second Merger, as a result of which the separate existence of the surviving corporation shall cease and Merger Sub LLC shall continue its existence under the laws of the State of Delaware as the surviving company and as a wholly owned subsidiary of Chesapeake; (xi) “merger” or “integrated mergers” refer to the First Merger together with the Second Merger; (xii) “Vine Class A common stock” refer to Class A common stock, par value $0.01 per share, of Vine; (xiii) “Vine Class B common stock” refer to Class B common stock, par value $0.01 per share, of Vine; (xiv) “Vine common stock” refer to Vine Class A common stock together with Vine Class B common stock; (xv) “Vine stockholders” refer to holders of Vine common stock; (xvi) “Chesapeake common stock” refer to common stock, par value $0.01 per share, of Chesapeake; (xvii) “Vine board” or “Vine board of directors” refer to the board of directors of Vine; (xviii) “Chesapeake board” or “Chesapeake board of directors” refer to the board of directors of Chesapeake; (xix) “Vine special meeting” refer to the meeting of the Vine stockholders in connection with the merger, as may be adjourned or postponed from time to time; (xx) “cash consideration” refer to $1.20 in cash, without interest, that will be paid to eligible Vine stockholders in connection with the merger in exchange for each share of Vine Class A common stock outstanding; (xxi) “exchange ratio” refer to 0.2486 shares; (xxii) “share consideration” refer to 0.2486 shares of Chesapeake common stock that will be issued to eligible Vine stockholders in connection with the merger in exchange for each share of Vine Class A common stock outstanding; and (xxiii) “merger consideration” refer to the cash consideration and share consideration, taken together.
 
iii

 
Questions and Answers about The Merger and The Vine Special Meeting
The following are answers to certain questions that you may have regarding the Vine special meeting. This section may not provide all the information that might be important to you in determining how to vote. Additional important information is also contained in the annexes to, and the documents incorporated by reference in, this proxy statement/prospectus.
Why am I receiving this proxy statement/prospectus?
A.
You are receiving this proxy statement/prospectus because Chesapeake, the Merger Subs, Vine and Vine Holdings have entered into the merger agreement, pursuant to which, on the terms and subject to the satisfaction or, to the extent permitted by applicable law, waiver of the conditions included in the merger agreement, Chesapeake has agreed to acquire Vine by means of the merger and your vote is required in connection with the merger. The closing date of the merger is referred to herein as the “closing date.” The merger agreement, which governs the terms of the merger, is attached to this proxy statement/prospectus as Annex A.
The merger agreement must be adopted by the Vine stockholders in accordance with the General Corporation Law of the State of Delaware (the “DGCL”) and the amended and restated certificate of incorporation and amended and restated bylaws of Vine (the “Vine organizational documents”) in order for the merger to be consummated. Vine is holding the Vine special meeting to obtain that approval. Vine stockholders will also be asked to vote on a non-binding advisory proposal to approve certain compensation that may be paid or become payable to Vine’s named executive officers that is based on or otherwise relates to the merger. Your vote is very important. We encourage you to submit a proxy to have your shares of Vine common stock voted as soon as possible.
Q:
When and where will the Vine special meeting take place?
A:
The Vine special meeting will be held virtually via the Internet on November 1, 2021 at 9:00 a.m., Central Time.
In light of the public health concerns regarding the ongoing COVID-19 pandemic, the Vine special meeting will be held in a virtual meeting format only, via live webcast, and there will not be a physical meeting location. You will be able to attend the Vine special meeting online, access Vine’s stock list and vote your shares electronically at the meeting by visiting https://web.lumiagm.com/294405445. To attend the meeting on the Vine special meeting website, please follow the instructions provided on the enclosed proxy card and the Vine special meeting website.
Q:
What matters will be considered at the special meeting?
A:
The Vine stockholders are being asked to consider and vote on:

a proposal to adopt the merger agreement (the “merger proposal”);

a proposal to approve, by a non-binding advisory vote, certain compensation that may be paid or become payable to Vine’s named executive officers that is based on or otherwise relates to the merger (the “non-binding compensation advisory proposal”); and

a proposal to approve the adjournment of the Vine special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to adopt the merger agreement (the “adjournment proposal”).
Q:
Is my vote important?
A:
Yes. Your vote is very important. The merger cannot be completed unless the merger proposal is approved by the affirmative vote of a majority of the outstanding shares of Vine common stock entitled to vote on the merger proposal. You will also be asked to approve the non-binding compensation advisory proposal and the adjournment proposal, both of which are not a condition to the consummation of the merger. Only Vine stockholders as of the close of business on the Vine record date are entitled to vote at the Vine special meeting. The Vine board unanimously recommends that the Vine stockholders
 
iv

 
vote “FOR” the merger proposal, “FOR” the non-binding compensation advisory proposal and “FOR” the adjournment proposal.
Q:
If my shares of Vine common stock are held in “street name” by my broker, bank or other nominee, will my broker, bank or other nominee automatically vote those shares for me?
A:
If your shares are held through a broker, bank or other nominee, you are considered the “beneficial holder” of the shares held for you in what is known as “street name.” The “record holder” of such shares is your broker, bank or other nominee, and not you. If this is the case, this proxy statement/prospectus has been forwarded to you by your broker, bank or other nominee. If you hold your shares in “street name,” you must provide your broker, bank or other nominee with instructions on how to vote your shares. Otherwise, your broker, bank or other nominee cannot vote your shares on any of the proposals to be considered at the Vine special meeting. A so called “broker non-vote” occurs when a broker, bank or other nominee holding shares for a beneficial owner has discretionary authority to vote on one or more proposals to be voted on at a meeting of stockholders but does not vote on a particular proposal because the nominee does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner of the shares.
Under the current New York Stock Exchange (the “NYSE”) rules, brokers, banks or other nominees do not have discretionary authority to vote on any of the proposals at the Vine special meeting. Because the only proposals for consideration at the Vine special meeting are nondiscretionary proposals, it is not expected that there will be any broker non-votes at the Vine special meeting. However, if there are any broker non-votes, they will have (i) the same effect as a vote “AGAINST” the merger proposal, (ii) no effect on the non-binding compensation advisory proposal and (iii) no effect on the adjournment proposal.
Q:
What Vine stockholder vote is required for the approval of the merger proposal, the non-binding compensation advisory proposal and the adjournment proposal?
A:
The merger proposal. Approval of the merger proposal requires the affirmative vote of a majority of the outstanding shares of Vine common stock entitled to vote on the proposal. Abstentions, a failure to submit a proxy or vote (whether in attendance at the meeting or not) and broker non-votes will have the same effect as a vote “AGAINST” the merger proposal.
The non-binding compensation advisory proposal. Approval of the non-binding compensation advisory proposal requires the affirmative vote of a majority of the shares of Vine common stock present in person or represented by proxy at the Vine special meeting and entitled to vote on the proposal. Abstentions and a failure to vote while in attendance at the meeting will have the same effect as a vote “AGAINST” the non-binding compensation advisory proposal. Broker non-votes and a failure to vote without attending the meeting or submitting a proxy will have no effect on the outcome of the vote on the non-binding compensation advisory proposal, assuming a quorum is present. As an advisory vote, this proposal is not binding upon Vine, the Vine board, Chesapeake or the Chesapeake board, and approval of this proposal is not a condition to completion of the merger.
The adjournment proposal. Approval of the adjournment proposal requires the affirmative vote of a majority of the shares of Vine common stock present in person or represented by proxy at the Vine special meeting and entitled to vote on the proposal. Abstentions and a failure to vote while in attendance at the meeting will have the same effect as a vote “AGAINST” the adjournment proposal. Broker non-votes and a failure to vote without attending the meeting or submitting a proxy will have no effect on the outcome of the vote on the adjournment proposal, assuming a quorum is present. If Vine stockholders approve the adjournment proposal, subject to the terms of the merger agreement, Vine could adjourn the Vine special meeting and use the additional time to solicit additional proxies, including soliciting proxies from Vine stockholders who have previously voted. Vine does not intend to call a vote on the adjournment proposal if the merger proposal is approved at the Vine special meeting.
Virtual attendance at the Vine special meeting constitutes present in person for purposes of the quorum requirement under the amended and restated bylaws of Vine (“Vine’s bylaws”).
 
v

 
Q:
Who will count the votes?
A:
The votes at the Vine special meeting will be counted by American Stock Transfer & Trust Company, LLC, which will serve as an independent inspector of elections.
Q:
What will Vine stockholders receive if the merger is completed?
A:
Immediately prior to the effective time of the First Merger (the “effective time”), each Class B unit representing a limited liability company interest in Holdings (individually, a “Holdings Unit”), and each corresponding share of Vine’s Class B common stock, issued and outstanding at such time, shall be converted into Vine Class A common stock and each Holdings Unit and each corresponding share of Vine Class B common stock shall be cancelled and cease to exist. As a result of the merger, each eligible share of Vine Class A common stock issued and outstanding immediately prior to the effective time of the merger will be automatically converted into the right to receive the merger consideration consisting of $1.20 in cash, without interest, and 0.2486 shares of Chesapeake’s common stock.
Vine stockholders will not be entitled to receive any fractional shares of Chesapeake common stock in the merger, and no Vine stockholders will be entitled to receive dividends, voting rights or any other rights in respect of any fractional shares of Chesapeake common stock. Each holder of shares of Vine Class A common stock exchanged pursuant to the merger who would otherwise have been entitled to receive a fraction of a share of Chesapeake common stock (after taking into account all certificates and book-entry shares delivered by such holder) will receive, in lieu thereof, cash (without interest) in an amount equal to the product of (i) such fractional part of a share of Chesapeake common stock multiplied by (ii) the volume weighted average price of Chesapeake common stock for the five consecutive trading days ending immediately prior to the closing date as reported by Bloomberg, L.P. For additional information regarding the merger consideration, see the section entitled “The Merger Agreement — Effect of the Merger on Capital Stock; Merger Consideration” beginning on page 43.
Q:
What will holders of Vine equity awards receive in the merger?
A:
Vine Rollover Restricted Stock Unit Awards
At the effective time, each outstanding award of restricted stock units in respect of Vine common stock (each, a “Vine restricted stock unit award”) granted pursuant to Vine’s 2021 Long-Term Incentive Plan, as may be amended from time to time (“Vine’s stock plan”), other than as provided below, shall be canceled and converted into an award of restricted stock units in respect of Chesapeake common stock (each, a “Chesapeake restricted stock unit award”) in respect of that number of whole shares of Chesapeake common stock (rounded to the nearest whole share) equal to the product of (i) the total number of shares of Vine common stock subject to such Vine restricted stock unit award immediately prior to the effective time multiplied by (ii) the sum of (A) the exchange ratio plus (B) a fraction, (x) the numerator of which is the cash consideration and (y) the denominator of which is the closing price per share on the Nasdaq Global Select Market of Chesapeake common stock on the last trading date prior to the closing date. Each Chesapeake restricted stock unit award corresponding to a Vine restricted stock unit award outstanding as of August 10, 2021 shall (unless otherwise provided in the merger agreement) be subject to substantially the same terms and conditions as applied to the corresponding Vine restricted stock unit award immediately prior to the effective time, except that any performance-based vesting condition that applied to the Vine restricted stock unit award immediately prior to the effective time will be treated as having been attained based on the target level of performance, so that such Chesapeake restricted stock unit award will remain solely subject to the time-based vesting requirements in effect for the Vine restricted stock unit award immediately prior to the effective time.
Vine Settlement Restricted Stock Unit Awards
At the effective time, each outstanding Vine restricted stock unit award granted pursuant to the Vine stock plan prior to August 10, 2021 and that fully vests at the effective time or as a result of a termination of employment at or immediately after the effective time, in either case pursuant to its terms as in effect as of the date of the merger agreement shall fully vest and be converted into the right to receive
 
vi

 
the merger consideration (net of applicable withholding taxes) in respect of each share of Vine common stock subject to such Vine restricted stock unit award immediately prior to the effective time.
For additional information regarding the treatment of Vine equity awards, see the section entitled “The Merger Agreement — Treatment of Vine Equity Awards in the Merger” beginning on page 83.
Q:
What equity stake will Vine stockholders hold in Chesapeake immediately following the merger?
A:
Based on the number of issued and outstanding shares of Chesapeake and Vine common stock as of September 29, 2021, and the exchange ratio of 0.2486 shares of Chesapeake common stock for each share of Vine Class A common stock, holders of shares of Vine common stock as of immediately prior to the effective time of the merger would hold, in the aggregate, approximately 16% of the issued and outstanding shares of Chesapeake common stock immediately following the effective time of the merger (without giving effect to the exercise of outstanding Chesapeake warrants or any shares of Chesapeake common stock held by Vine stockholders prior to the merger). The exact equity stake of Vine stockholders in Chesapeake immediately following the effective time of the merger will depend on the number of shares of Chesapeake common stock and Vine common stock issued and outstanding immediately prior to the effective time of the merger, as provided in the section entitled “The Merger Agreement — Effect of the Merger on Capital Stock; Merger Consideration” beginning on page 82.
Q:
How does the Vine board recommend that I vote?
A:
The Vine board unanimously recommends that Vine stockholders vote “FOR” the merger proposal, “FOR” the non-binding compensation advisory proposal and “FOR” the adjournment proposal. For additional information regarding how the Vine board recommends that Vine stockholders vote, see the section entitled “The Merger — Recommendation of the Vine Board of Directors and Vine’s Reasons for the Merger” beginning on page 56.
Q:
Why are Vine stockholders being asked to vote on executive officer compensation?
A:
The SEC has adopted rules that require Vine to seek a non-binding advisory vote on certain compensation that may be paid or become payable to Vine’s named executive officers that is based on or otherwise relates to the merger. For additional information regarding the non-binding compensation advisory proposal, see the section entitled “Vine Stockholder Proposals — Non-Binding Compensation Advisory Proposal” beginning on page 41. Vine urges its stockholders to read the section entitled “The Merger — Interests of Vine’s Directors and Executive Officers in the Merger” beginning on page 43.
Q:
Who is entitled to vote at the Vine special meeting?
A:
The Vine board has fixed September 22, 2021 as the record date for the Vine special meeting. All holders of record of shares of Vine common stock as of the close of business on the Vine record date are entitled to receive notice of, and to vote at, the Vine special meeting. As of the Vine record date, there were 75,259,256 shares of Vine common stock issued and outstanding. Attendance at the Vine special meeting, which will be held virtually and hosted on the Vine special meeting website, is not required to vote. Instructions on how to vote your shares by proxy without virtually attending the Vine special meeting are provided in this section below.
Q:
How many votes do I have?
A:
Each Vine stockholder of record is entitled to one vote for each share of Vine common stock held of record by him or her as of the close of business on the Vine record date.
Q:
What constitutes a quorum for the Vine special meeting?
A:
A quorum is the minimum number of stockholders necessary to hold a valid meeting. The presence at the Vine special meeting, in person or by proxy, of the holders of a majority of the outstanding shares of Vine common stock entitled to vote at the meeting constitutes a quorum. Virtual attendance at the Vine special meeting constitutes presence in person for purposes of the quorum requirement under Vine’s bylaws. If you submit a properly executed proxy card, even if you do not vote for one or more proposals or vote to “ABSTAIN” in respect of one or more proposals, your shares of Vine common stock will
 
vii

 
be counted for purposes of calculating whether a quorum is present for the transaction of business at the Vine special meeting. Broker non-votes, if any, will be treated as present for purposes of determining the presence of a quorum at the Vine special meeting. However, because the only proposals for consideration at the Vine special meeting are nondiscretionary proposals, it is not expected that there will be any broker non-votes at the Vine special meeting.
Whether or not a quorum is present, the chairman of the meeting or holders of a majority of the outstanding shares of Vine common stock who are present in person or by proxy and entitled to vote at the Vine special meeting may adjourn the meeting from time to time, without notice other than by announcement at the meeting, to another date, place, if any, and time until a quorum is present. If the adjournment is for more than 30 days or if after the adjournment, a new record date is fixed for the adjourned meeting, Vine will provide a notice of the adjourned meeting to each stockholder of record entitled to vote at the Vine special meeting.
Q:
What will happen to Vine as a result of the merger?
A:
As a result of the merger, the separate corporate existence of Vine will cease, and Merger Sub LLC will continue as the surviving company in the merger and as a wholly owned subsidiary of Chesapeake. Furthermore, shares of Vine Class A common stock will no longer be publicly traded and will be delisted from the NYSE.
Q:
Do any of the officers or directors of Vine have interests in the merger that may differ from or be in addition to my interests as a Vine stockholder?
A:
In considering the recommendation of the Vine board that Vine stockholders vote to approve the merger proposal and the non-binding compensation advisory proposal, Vine stockholders should be aware that, aside from their interests as stockholders of Vine, some of Vine’s directors and executive officers have interests in the merger that may be different from, or in addition to, the interests of Vine stockholders generally. The Vine board was aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement and the transactions contemplated therein, in approving the merger, and in recommending the approval of the merger proposal and the non-binding compensation advisory proposal. For more information and quantification of these interests, please see “The Merger — Interests of Vine’s Directors and Executive Officers in the Merger.”
Q:
I own shares of Vine common stock. What will happen to those shares as a result of the merger?
A:
If the First Merger is completed, your shares of Vine common stock will be converted into the right to receive the merger consideration. All such shares of Vine common stock when so converted, will cease to be outstanding and will automatically be cancelled. Immediately prior to the effective time each Holdings Unit, and each corresponding share of Vine Class B common stock issued and outstanding at such time, shall be converted into Vine Class A common stock and each Holdings Unit and each corresponding share of Vine Class B common stock shall be cancelled and cease to exist. At the effective time, each issued and outstanding share of Vine Class A common stock, will automatically be converted into the right to receive the merger consideration. For additional information, see the section entitled “The Merger Agreement — Effect of the Merger on Capital Stock; Merger Consideration” beginning on page 82.
Q:
Where will the Chesapeake common stock that Vine stockholders receive in the merger be publicly traded?
A:
Assuming the merger is completed, the shares of Chesapeake common stock that Vine stockholders receive in the merger will be listed and traded on the Nasdaq Global Select Market, or such other Nasdaq market on which shares of Chesapeake common stock are then listed.
Q:
What happens if the merger is not completed?
A:
If the merger proposal is not approved by Vine stockholders or if the merger is not completed for any other reason, Vine stockholders will not receive any merger consideration in connection with the merger, and their shares of Vine common stock will remain outstanding. Vine will remain an independent public company and Vine Class A common stock will continue to be listed and traded on the NYSE. Additionally, if the merger proposal is not approved by Vine stockholders or if the merger is not
 
viii

 
completed for any other reason, Chesapeake will not issue shares of Chesapeake common stock to Vine stockholders. If the merger agreement is terminated under specified circumstances, Vine may be required to pay Chesapeake a termination fee. For a more detailed discussion of the termination fee and related provisions, see “The Merger Agreement — Termination” beginning on page 108.
Q:
What happens if the non-binding compensation advisory proposal is not approved by Vine stockholders?
A:
This vote is advisory and non-binding, and the merger is not conditioned or dependent upon the approval of the non-binding compensation advisory proposal by Vine stockholders. However, Vine and Chesapeake value the opinions of Vine stockholders and Chesapeake expects to consider the outcome of the vote, along with other relevant factors, when considering future executive compensation, assuming the merger is completed. Because the executive compensation to be paid in connection with the merger is based on the terms of the merger agreement as well as the contractual arrangements between Vine and its named executive officers, subject to the contractual conditions applicable thereto, such compensation will be payable, regardless of the outcome of this advisory vote if the merger proposal is approved. However, Vine seeks the support of its stockholders and believes that stockholder support is appropriate because Vine has a comprehensive executive compensation program designed to link the compensation of its named executive officers with Vine’s performance and the interests of Vine stockholders.
Q:
What is a proxy and how can I vote my shares by attending the Vine special meeting virtually?
A:
A proxy is a legal designation of another person to vote the stock you own. Shares of Vine common stock held directly in your name as the stockholder of record as of the close of business on September 22, 2021, the Vine record date, may be voted at the Vine special meeting to be held virtually on the Vine special meeting website. If you choose to attend the Vine special meeting via the Vine special meeting website, you will need to provide valid, government-issued photo identification. If you are a beneficial owner of Vine common stock but not the stockholder of record of such shares of Vine common stock, you will also need proof of stock ownership to be admitted to the Vine special meeting to be held virtually on the Vine special meeting website. A recent brokerage statement or a letter from a broker, bank or other nominee are examples of proof of ownership. Please note that if your shares are held in “street name” by a broker, bank or other nominee and you wish to vote at the Vine special meeting via the Vine special meeting website, you will not be permitted to vote at the special meeting unless you first obtain a legal proxy issued in your name from the record owner and present it to the inspector of election with your ballot at the Vine special meeting. To request a legal proxy, contact your broker, bank or other nominee holder of record. It is suggested you do so in a timely manner to ensure receipt of your legal proxy prior to the Vine special meeting.
Failure to provide the appropriate documentation may delay your admission to or prevent you from attending the Vine special meeting virtually on the Vine special meeting website. The Vine special meeting will commence promptly at the scheduled time and Vine stockholders may not be admitted to the virtual meeting following the start of the Vine special meeting.
Q:
How can I vote my shares without attending the Vine special meeting virtually?
A:
If you are a stockholder of record of Vine common stock as of the close of business on September 22, 2021, the Vine record date, you can submit your proxy by the Internet or mail by following the instructions provided in the enclosed proxy card. Please note that if you are a beneficial owner, you must vote by submitting voting instructions to your broker, bank or other nominee, or otherwise by following instructions provided by your broker, bank or other nominee. Submitting a proxy by Internet may be available to beneficial owners, but beneficial owners will need to refer to the instruction form provided by your broker, bank or other nominee to validly submit a proxy.
Q:
What is the difference between holding shares as a holder of record and as a beneficial owner?
A:
If your shares of Vine common stock are registered directly in your name with Vine’s transfer agent, American Stock Transfer & Trust Company, LLC, you are considered the stockholder of record with respect to those shares, and access to proxy materials is being provided directly to you. If your shares are held in a stock brokerage account or by a broker, bank or other nominee, then you are considered the
 
ix

 
beneficial owner of those shares, which are considered to be held in “street name.” Access to proxy materials is being provided to you by your broker, bank or other nominee who is considered the stockholder of record with respect to those shares.
Q:
What should I do if I receive more than one set of voting materials?
A:
You may receive more than one set of voting materials relating to the Vine special meeting if you hold shares of Vine common stock in “street name” and also directly in your name as a holder of record or otherwise or if you hold shares of Vine common stock in more than one brokerage account.
Direct holders (holders of record).   For shares of Vine common stock held directly, complete, sign, date and return the proxy card (or submit your proxy by the Internet as provided on the proxy card) or otherwise follow the voting instructions provided in this proxy statement/prospectus in order to ensure that a proxy is validly submitted for all of your shares of Vine common stock.
Shares instreet name.”   For shares of Vine common stock held in “street name” through a broker, bank or other nominee, follow the instructions provided by your broker, bank or other nominee to validly submit a proxy for your shares.
Q:
If a holder of shares gives a proxy, how will the shares of Vine common stock covered by the proxy be voted?
A:
If you provide a proxy, regardless of whether you provide that proxy by the Internet or completing and returning the applicable enclosed proxy card, the individuals named on the enclosed proxy card will vote your shares of Vine common stock in the way that you indicate when providing your proxy in respect of the shares of Vine common stock held by you. When completing the Internet process or the proxy card, you may specify whether your shares of Vine common stock should be voted “FOR” or “AGAINST,” or “ABSTAIN” from voting on, all, some or none of the specific items of business to come before the Vine special meeting.
Q:
How will my shares of Vine common stock be voted if I return a blank proxy?
A:
If you sign, date and return your proxy and do not indicate how you want your shares of Vine common stock to be voted, then your shares of Vine common stock will be voted “FOR” the merger proposal, “FOR” the non-binding compensation advisory proposal and “FOR” the adjournment proposal, in accordance with the recommendation of the Vine board.
Q:
Can I change my vote after I have submitted my proxy?
A:
Yes. If you are a stockholder of record of Vine common stock as of the close of business on the Vine record date, whether you submit a proxy by the Internet or mail, you can change or revoke your proxy before it is voted at the Vine special meeting to be held virtually on the Vine special meeting website in one of the following ways:

submit a new proxy card bearing a later date;

submit a new proxy by the Internet at a later time;

give written notice of your revocation to Vine’s corporate secretary at 5800 Granite Parkway, Suite 550, Plano, Texas 75024 stating that you are revoking your proxy; or

vote at the Vine special meeting virtually on the Vine special meeting website. Please note that your virtual attendance at the Vine special meeting will not alone serve to revoke your proxy. Instead, you must vote your shares via the Vine special meeting website.
If you are a beneficial owner of Vine common stock as of the close of business on the Vine record date, you must follow the instructions of your broker, bank or other nominee to revoke or change your voting instructions.
 
x

 
Q:
Where can I find the voting results of the special meeting?
A:
Within four business days following certification of the final voting results, Vine intends to file the final voting results of its special meeting with the SEC in a Current Report on Form 8-K.
Q:
If I do not favor the merger as a Vine stockholder, what are my rights?
A:
Under Delaware law, if the merger is completed, holders of Vine common stock who do not vote in favor of the merger proposal, who have not validly waived appraisal rights and who otherwise comply with the requirements and procedures of Section 262 of the DGCL may exercise their rights of appraisal, which generally entitle stockholders to receive a cash payment equal to the fair value of their Vine common stock exclusive of any element of value arising from the accomplishment or expectation of the merger, as determined by the Delaware Court of Chancery. The “fair value” could be higher or lower than, or the same as, the merger consideration. For a more detailed description of the appraisal rights available to Vine stockholders and the procedures required to exercise appraisal rights, see “The Merger — Appraisal Rights” beginning on page 76. A copy of the full text of Section 262 of the DGCL is attached as Annex D to this proxy statement/prospectus.
Q:
Are there any risks that I should consider as a Vine stockholder in deciding how to vote?
A:
Yes. You should read and carefully consider the risk factors set forth in the section entitled “Risk Factors” beginning on page 18. You also should read and carefully consider the risk factors of Chesapeake and Vine contained in the documents that are incorporated by reference into this proxy statement/prospectus or attached to this proxy statement/prospectus.
Q:
What happens if I sell my shares before the special meeting?
A:
The record date for Vine stockholders entitled to vote at the Vine special meeting is earlier than the date of the Vine special meeting. If you transfer your shares of Vine common stock after the Vine record date but before the Vine special meeting, you will, unless special arrangements are made, retain your right to vote at the Vine special meeting but will have transferred the right to receive the merger consideration to the person to whom you transferred your shares of Vine common stock.
Q:
What are the material U.S. federal income tax consequences of the integrated mergers to Vine stockholders?
A:
As discussed more fully under the Section titled “Material U.S. Federal Income Tax Consequences of the Integrated Mergers,” subject to the qualifications and limitations discussed thereunder, the integrated mergers will qualify as a “reorganization” within the meaning of Section 368(a) of the U.S. Internal Revenue Code of 1986, as amended (the “Code”) for U.S. federal income tax purposes. However, it is not a condition to Chesapeake’s obligation or Vine’s obligation to complete the transactions that the integrated mergers, taken together, qualify as a “reorganization.” Moreover, neither Chesapeake nor Vine intends to request any ruling from the U.S. Internal Revenue Service (the “IRS”) regarding any matters relating to the integrated mergers, and, consequently, there can be no assurance that the IRS will not assert, or that a court would not sustain, a position to the contrary to any of the positions set forth below. If the IRS were to challenge the “reorganization” status of the integrated mergers successfully or the form or structure of the integrated mergers was changed in a manner such that it did not qualify as a “reorganization,” the holders of Vine Class A common stock could be subject to additional U.S. federal income tax in connection with their receipt of Chesapeake common stock in the integrated mergers, as discussed in more detail in the section entitled “Material U.S. Federal Income Tax Consequences of the Integrated Mergers — Tax Consequences if the Integrated Mergers Do Not Qualify as a “Reorganization” Described in Section 368(a) of the Code” beginning on page 114.
If the integrated mergers, taken together, qualify as a reorganization, then U.S. holders (as defined in the section entitled “Material U.S. Federal Income Tax Consequences of the Integrated Mergers” beginning on page 111) of shares of Vine Class A common stock generally will not recognize any realized loss but will recognize any realized gain as a result of the integrated mergers equal to the lesser of (i) the excess, if any, of (A) the sum of the fair market value of Chesapeake common stock (including any fractional share of Chesapeake common stock deemed received and redeemed for cash, as discussed in “Material U.S. Federal Income Tax Consequences of the Integrated Mergers — Tax Consequences if
 
xi

 
the Integrated Mergers, Taken Together, Qualify as a “Reorganization” Described in Section 368(a) of the Code — Receipt of Cash Upon the Deemed Sale of a Fractional Share” beginning on page 113) and the amount of cash consideration (excluding the amount of any cash in lieu of a fractional share of Chesapeake common stock) received by such U.S. holder pursuant to the integrated mergers over (B) such U.S. holder’s adjusted tax basis in the Vine common stock surrendered pursuant to the integrated mergers and (ii) the amount of cash consideration (excluding the amount of any cash in lieu of a fractional share of Chesapeake common stock) received by such U.S. holder pursuant to the integrated mergers. The material U.S. federal income tax consequences of the integrated mergers are discussed in more detail in the section entitled “Material U.S. Federal Income Tax Consequences of the Integrated Mergers” beginning on page 111.
TAX MATTERS ARE COMPLICATED AND THE TAX CONSEQUENCES OF THE INTEGRATED MERGERS WILL DEPEND ON THE FACTS OF YOUR OWN SITUATION. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES OF THE INTEGRATED MERGERS TO YOU IN YOUR PARTICULAR CIRCUMSTANCES.
Q:
When is the merger expected to be completed?
A:
Chesapeake and Vine are working to complete the merger as quickly as possible. Subject to the satisfaction or, to the extent permitted by applicable law, waiver of the conditions described in the section entitled “The Merger Agreement — Conditions to the Completion of the Merger” beginning on page 106, including the approval of the merger proposal by Vine stockholders at the Vine special meeting, the transaction is expected to be completed in the fourth quarter of 2021. However, neither Chesapeake nor Vine can predict the actual date on which the merger will be completed, nor can the parties ensure that the merger will be completed, because in certain respects completion is subject to conditions beyond either company’s control.
Q:
If I am a Vine stockholder, how will I receive the merger consideration to which I am entitled?
A:
If you are a holder of certificates that represent eligible shares of Vine Class A common stock (the “Vine common stock certificates”), a notice advising you of the effectiveness of the merger and a letter of transmittal and instructions for the surrender of your Vine common stock certificates will be mailed to you as soon as practicable after the effective time of the merger. After receiving proper documentation from you, the exchange agent will send to you (i) a statement reflecting the aggregate whole number of shares of Chesapeake common stock (which will be in uncertificated book-entry form) that you have a right to receive pursuant to the merger agreement and (ii) a check in the amount equal to (x) the cash consideration plus (y) cash payable in lieu of any fractional shares of Chesapeake common stock and dividends and other distributions on the shares of Chesapeake common stock that you have a right to receive pursuant to the merger agreement.
If you are a holder of book-entry shares representing eligible shares of Vine Class A common stock (the “Vine book-entry shares”) which are held through the Depository Trust Company (“DTC”), the exchange agent will transmit to DTC or its nominees as soon as reasonably practicable on or after the closing date, the stock consideration, the cash consideration, cash in lieu of any fractional shares of Chesapeake common stock and any dividends and other distributions on the shares of Chesapeake common stock issuable as stock consideration or cash consideration, in each case, that DTC has the right to receive.
If you are a holder of record of Vine book-entry shares which are not held through DTC, the exchange agent will deliver to you, as soon as practicable after the effective time of the merger, (i) a notice advising you of the effectiveness of the merger, (ii) a statement reflecting the aggregate whole number of shares of Chesapeake common stock (which will be in uncertificated book-entry form) that you have a right to receive pursuant to the merger agreement and (iii) a check in the amount equal to (x) the cash consideration plus (y) cash payable in lieu of any fractional shares of Chesapeake common stock and dividends and other distributions on the shares of Chesapeake common stock that you have a right to receive pursuant to the merger agreement.
 
xii

 
No interest will be paid or accrued on any amount payable for shares of Vine common stock eligible to receive the merger consideration pursuant to the merger agreement.
For additional information on the exchange of Vine common stock for the merger consideration, see the section entitled “The Merger Agreement — Payment for Securities; Exchange” beginning on page 83.
Q:
If I am a holder of Vine common stock certificates, do I need to send in my stock certificates at this time to receive the merger consideration?
A:
No. Please DO NOT send your Vine common stock certificates with your proxy card. You should carefully review and follow the instructions set forth in the letter of transmittal, which will be mailed to you, regarding the surrender of your stock certificates.
Q:
If I am a Vine stockholder, will the shares of Chesapeake common stock issued in the merger receive a dividend?
A:
After the completion of the merger, the shares of Chesapeake common stock issued in connection with the merger will carry with them the right to receive the same dividends on shares of Chesapeake common stock as the shares of Chesapeake common stock held by all other holders of such shares, for any dividend the record date for which occurs after the merger is completed.
Any future Chesapeake dividends will remain subject to approval by the Chesapeake board and other considerations.
Q:
Who will solicit and pay the cost of soliciting proxies?
A:
Vine has retained D.F. King & Co., Inc. to assist in the solicitation process. Vine estimates it will pay D.F. King & Co., Inc. a base fee of approximately $14,500, in addition to the reimbursement of certain costs and expenses, for these services. Vine also has agreed to indemnify D.F. King & Co., Inc. against various liabilities and expenses that relate to or arise out of its solicitation of proxies (subject to certain exceptions).
Q:
What is “householding”?
A:
To reduce the expense of delivering duplicate proxy materials to stockholders who may have more than one account holding a corporation’s common stock but who share the same address, a corporation may adopt a procedure approved by the SEC called “householding.” Under this procedure, certain holders of record who have the same address and last name will receive only one copy of proxy materials until such time as one or more of these stockholders notifies such corporation that they want to receive separate copies. Vine has not elected to institute householding in connection with the Vine special meeting.
Q:
What should I do now?
A:
You should read this proxy statement/prospectus carefully and in its entirety, including the annexes, and return your completed, signed and dated proxy card by mail in the enclosed postage-paid envelope or submit your voting instructions by the Internet as soon as possible so that your shares of Vine common stock will be voted in accordance with your instructions.
Q:
Where can I find more information about Chesapeake, Vine and the merger?
A:
You can find out more information about Chesapeake, Vine and the merger by reading this proxy statement/prospectus, including the attachments hereto, and, with respect to Chesapeake, from various sources described in the sections entitled “Where You Can Find More Information” and “Information Incorporated by Reference” beginning on page 148.
Q:
Who can answer my questions about the Vine special meeting or the transactions contemplated by the Merger Agreement, including the merger and the non-binding compensation advisory proposal?
A:
If you have questions about the Vine special meeting, the merger, the non-binding compensation advisory proposal, how to submit your proxy, or if you need additional copies of this proxy statement/
 
xiii

 
prospectus or documents incorporated by reference herein or attached hereto, the applicable enclosed proxy card or voting instructions, you should contact:
Vine Energy Inc.
5800 Granite Parkway, Suite 550
Plano, Texas 75024
Attention: Director — Investor Relations
(469) 605-2480
IR@VineEnergy.com
D.F. King & Co., Inc.
48 Wall Street, 22nd floor
New York, NY 10005
Call Toll-Free: (866) 387-7321
Banks and Brokers Call: (212) 269-5550
vine@dfking.com
 
xiv

 
SUMMARY
This summary highlights selected information included in this proxy statement/prospectus and does not contain all of the information that may be important to you. You should read this proxy statement/prospectus and its annexes carefully and in their entirety and the other documents to which Chesapeake and Vine refer before you decide how to vote with respect to the proposals to be considered and voted on at the Vine special meeting.
In addition, Chesapeake incorporates by reference important business and financial information about Chesapeake into this proxy statement/prospectus and Vine attaches important business and financial information about Vine to this proxy statement/prospectus, as further described in the sections entitled “Where You Can Find More Information” and “Information Incorporated By Reference” each beginning on page 148. You may obtain the information incorporated by reference into this proxy statement/prospectus or attached to this proxy statement/prospectus without charge by following the instructions in the sections entitled “Where You Can Find More Information” and “Information Incorporated By Reference” each beginning on page 148. Each item in this summary includes a page reference directing you to a more complete description of that item in this proxy statement/prospectus.
Information About the Companies (page 34)
Chesapeake Energy Corporation
6100 North Western Avenue
Oklahoma City, Oklahoma 73118
Phone: (405) 848-8000
Chesapeake is an independent exploration and production company engaged in the acquisition, exploration and development of properties to produce oil, natural gas and NGLs from underground reservoirs. Chesapeake owns a large and geographically diverse portfolio of onshore U.S. unconventional natural gas and liquids assets, including interests in approximately 7,500 oil and natural gas wells. Chesapeake’s natural gas resource plays are the Marcellus Shale in the northern Appalachian Basin in Pennsylvania and the Haynesville/Bossier Shales in northwestern Louisiana. Chesapeake’s liquids-rich resource plays are the Eagle Ford Shale in South Texas and the Brazos Valley and the stacked play in the Powder River Basin in Wyoming. Chesapeake’s corporate headquarters are located in Oklahoma City, Oklahoma and Chesapeake common stock trades on the Nasdaq Global Select Market under the ticker symbol “CHK.”
Hannibal Merger Sub, Inc.
c/o Chesapeake Energy Corporation
6100 North Western Avenue
Oklahoma City, Oklahoma 73118
Phone: (405) 848-8000
Hannibal Merger Sub, Inc., or Merger Sub Inc., is a direct, wholly owned subsidiary of Chesapeake. Upon the completion of the First Merger, Merger Sub Inc. will cease to exist. Merger Sub Inc. was incorporated in Delaware on August 6, 2021, for the sole purpose of effecting the First Merger.
Hannibal Merger Sub, LLC
c/o Chesapeake Energy Corporation
6100 North Western Avenue
Oklahoma City, Oklahoma 73118
Phone: (405) 848-8000
Hannibal Merger Sub, LLC, or Merger Sub LLC, is a direct, wholly owned subsidiary of Chesapeake. Upon the completion of the Second Merger, Merger Sub LLC will continue its existence as the surviving company. Merger Sub LLC was formed in Delaware on August 6, 2021, for the sole purpose of effecting the Second Merger.
Vine Energy Inc.
5800 Granite Parkway, Suite 550
 
1

 
Plano, Texas 75024
Phone: (615) 771-6701
Vine is an energy company focused on the development of natural gas properties in the stacked Haynesville and Mid-Bossier shale plays in the Haynesville Basin of Northwest Louisiana. Vine’s corporate headquarters are located in Plano, Texas and shares of Vine Class A common stock trade on the NYSE under the ticker symbol “VEI.”
The Merger and the Merger Agreement (page 43)
The terms and conditions of the merger are contained in the merger agreement, which is attached to this document as Annex A and is incorporated by reference herein in its entirety. Chesapeake and Vine encourage you to read the merger agreement carefully and in its entirety, as it is the legal document that governs the merger.
The Chesapeake board of directors and the Vine board of directors each has unanimously approved and adopted the merger agreement and the transactions contemplated by the merger agreement. Pursuant to the terms and subject to the satisfaction, or to the extent permitted by applicable law, waiver of the conditions included in the merger agreement, Chesapeake has agreed to acquire Vine by means of a merger of Merger Sub Inc. with and into Vine, with Vine surviving the merger as a wholly owned subsidiary of Chesapeake.
Effect of the Merger on Capital Stock; Merger Consideration (page 43)
At the effective time of the First Merger, by virtue of the First Merger and without any action on the part of Chesapeake, Merger Sub Inc., Vine, or any holder of any securities of Chesapeake, Merger Sub Inc. or Vine, each share of Vine Class A common stock issued and outstanding immediately prior to the effective time of the First Merger (excluding any excluded shares (as such term is defined below), any unvested Vine restricted stock awards and any Vine appraisal shares (as such term is defined below)) will be converted into the right to receive from Chesapeake the following consideration (collectively, the “merger consideration”): (A) $1.20 in cash, without interest (the “cash consideration”), and (B) that number of fully-paid and nonassessable shares of Chesapeake common stock equal to the exchange ratio. The “exchange ratio” means 0.2486.
All such shares of Vine Class A common stock, when so converted in accordance with the terms of the merger agreement, will cease to be outstanding and will automatically be canceled and cease to exist. Each holder of a share of Vine Class A common stock that was outstanding immediately prior to the effective time of the First Merger (excluding any excluded shares, any unvested Vine restricted stock awards and any Vine appraisal shares) will cease to have any rights with respect thereto, except the right to receive the merger consideration, any dividends or other distributions paid with respect to that portion of the merger consideration that consists of Chesapeake common stock following the effective time and any cash to be paid in lieu of any fractional shares of Chesapeake common stock.
All shares of Vine common stock held by Vine as treasury shares or by Chesapeake or the Merger Subs immediately prior to the effective time of the First Merger and, in each case, not held on behalf of third parties (collectively, the “excluded shares”) will automatically be canceled and cease to exist as of the effective time of the First Merger, and no consideration will be delivered in exchange for excluded shares.
The exchange ratio will be equitably adjusted to reflect the effect of any change in the number of shares of Vine Class A common stock or Chesapeake common stock or securities convertible or exchangeable into or exercisable for shares of Vine Class A common stock or Chesapeake common stock (in each case issued and outstanding after August 10, 2021 and before the effective time of the First Merger) by reason of any stock split, reverse stock split, stock dividend, subdivision, reclassification, recapitalization, combination, exchange of shares or the like.
Treatment of Vine Equity Awards in the Merger (page 83)
At the effective time, each Vine restricted stock unit award that is not accelerated by its terms by reason of the merger shall be cancelled and converted into a number Chesapeake restricted stock unit awards equal
 
2

 
to the product of (i) the total number of shares of Vine common stock subject to such Vine restricted stock unit award immediately prior to the effective time multiplied by (ii) the sum of (A) the exchange ratio plus (B) a fraction, (x) the numerator of which is the cash consideration and (y) the denominator of which is the closing price per share on the Nasdaq Global Select Market of Chesapeake common stock on the last day of trading date prior to the closing date, rounded to the nearest whole share.
Immediately following the effective time, each converted Chesapeake restricted stock unit award otherwise will continue to be governed by the same terms and conditions (including vesting and forfeiture) as were applicable to the corresponding Vine restricted stock unit award immediately prior to the effective time, except that any performance-based vesting condition that applied to a Vine restricted stock unit award immediately prior to the effective time will be treated as having been attained at the target level, so that such converted Chesapeake restricted stock unit award will remain solely subject to the time-based vesting requirements in effect for the corresponding Vine restricted stock unit award immediately prior to the effective time.
Risk Factors (page 18)
The merger and an investment in Chesapeake common stock involve risks, some of which are related to the transactions contemplated by the merger agreement. You should carefully consider the information about these risks set forth under the section entitled “Risk Factors” beginning on page 18, together with the other information included, attached to or incorporated by reference in this proxy statement/prospectus, particularly the risk factors contained in Chesapeake’s Annual Reports on Form 10-K, Chesapeake’s and Vine’s Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings Chesapeake makes with the SEC. Vine stockholders should carefully consider the risks set out in that section before deciding how to vote with respect to the merger proposal, the non-binding compensation advisory proposal and the adjournment proposal to be considered and voted on at the Vine special meeting. For additional information, see the sections entitled “Where You Can Find More Information” and “Information Incorporated by Reference” each beginning on page 148.
Merger Support Agreement with Blackstone Inc. and Vine Management
In connection with the execution of the merger agreement, certain funds affiliated with Blackstone Inc. and Vine management (the “Legacy Vine Holders”), which beneficially own an aggregate of 54,819,256 shares of Vine common stock (consisting of 20,600,721 shares of Vine Class A common stock and 34,218,535 shares of Vine Class B common stock), entered into a support agreement with Chesapeake and Vine (the “merger support agreement”), pursuant to which the Legacy Vine Holders have agreed to vote their shares (i) in favor of the matters to be submitted to Vine’s stockholders in connection with the merger and (ii) against specific actions that could reasonably be expected to impede, interfere with, delay, discourage, postpone or adversely affect the transactions contemplated by the merger, subject to the terms and conditions set forth in the merger support agreement. Each Legacy Vine Holder also granted an irrevocable proxy to Chesapeake or any executive officer of Chesapeake designated by Chesapeake in writing to act for and on such stockholder’s behalf, and in such stockholder’s name, place and stead, solely in the event that such stockholder fails to comply in any material respect with his, her or its obligations under the merger support agreement in a timely manner, to vote such stockholder’s shares and grant all written consents with respect thereto and to represent such stockholder at any stockholder meeting held for the purpose of voting on the adoption of the merger agreement. As of September 22, 2021 (the “Vine record date”), the Legacy Vine Holders hold and are entitled to vote in the aggregate approximately 72.8% of the issued and outstanding shares of Vine common stock entitled to vote at the Vine special meeting. Accordingly, as long as the Vine board does not change its recommendation with respect to such proposal, approval of the merger proposal at the Vine special meeting is assured. In the event that the Vine board changes its recommendation to its stockholders to approve and adopt the merger agreement, the voting obligation of the Legacy Vine Holders under the merger support agreement will be reduced to the number of shares equal to 35% of the outstanding shares of Vine’s common stock. For more information, please see the section entitled “Vine Special Meeting — Voting and Support Agreement with Blackstone Inc. and Vine Management” beginning on page 36.
Recommendation of the Vine Board of Directors and Vine’s Reasons for the Merger (page 56)
The Vine board unanimously recommends that you vote “FOR” the merger proposal, “FOR” the non-binding compensation advisory proposal and “FOR” the adjournment proposal. For the factors
 
3

 
considered by the Vine board in reaching this decision and additional information on the recommendation of the Vine board, see the section entitled “The Merger — Recommendation of the Vine Board of Directors and Vine’s Reasons for the Merger” beginning on page 56.
Opinion of Vine’s Financial Advisor (page 59)
On August 10, 2021, Houlihan Lokey Capital, Inc. (“Houlihan Lokey”) verbally rendered its opinion to the Vine board (which was subsequently confirmed in writing by delivery of Houlihan Lokey’s written opinion addressed to the Vine board dated August 10, 2021), as to the fairness, from a financial point of view, to the holders of Vine Class A common stock (other than Vine and its subsidiaries and Chesapeake and its affiliates (the “Excluded Persons”)) of the merger consideration.
Houlihan Lokey’s opinion was directed to the Vine board (in its capacity as such) and only addressed the fairness, from a financial point of view, to the holders of Vine Class A common stock (other than the Excluded Persons) of the merger consideration and did not address any other aspect or implication of the transaction or any other agreement, arrangement or understanding. The summary of Houlihan Lokey’s opinion in this proxy statement/prospectus is qualified in its entirety by reference to the full text of its written opinion, which is attached as Annex C to this proxy statement/prospectus and describes the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Houlihan Lokey in connection with the preparation of its opinion. However, neither Houlihan Lokey’s opinion nor the summary of its opinion and the related analyses set forth in this proxy statement/prospectus are intended to be, and do not constitute, advice or a recommendation to the Vine board, any security holder of Vine or any other person as to how to act or vote with respect to any matter relating to the merger.
For further information, see the section of this proxy statement/prospectus entitled “The Merger — Opinion of Vine’s Financial Advisor” beginning on page 59 and the full text of the written opinion of Houlihan Lokey attached as Annex C to this proxy statement/prospectus.
Special Meeting of Vine Stockholders (page 35)
Date, Time, Place and Purpose of the Vine Special Meeting
The Vine special meeting will be held virtually via the Internet on November 1, 2021, at 9:00 a.m., Central Time. The purpose of the Vine special meeting is to consider and vote on the merger proposal, the non-binding compensation advisory proposal and the adjournment proposal. Approval of the merger proposal is a condition to the obligation of Vine and Chesapeake to complete the merger. Approval of the non-binding compensation advisory proposal and the adjournment proposal are not a condition to the obligation of either Vine or Chesapeake to complete the merger.
In light of the public health concerns regarding the ongoing COVID-19 pandemic, the Vine special meeting will be held in a virtual meeting format only, via live webcast, and there will not be a physical meeting location. The eligible Vine stockholders will be able to attend the Vine special meeting online and vote their shares electronically at the meeting by visiting the Vine special meeting website.
Record Date and Outstanding Shares of Vine Voting Stock
Only holders of record of issued and outstanding shares of Vine common stock, as of the close of business on the Vine record date are entitled to notice of, and to vote at, the Vine special meeting or any adjournment or postponement of the Vine special meeting.
As of the close of business on the Vine record date, there were 75,259,256 shares of Vine common stock issued and outstanding and entitled to vote at the Vine special meeting. You may cast one vote for each share of Vine common stock that you held as of the close of business on the Vine record date.
A complete list of Vine stockholders entitled to vote at the Vine special meeting will be available for inspection at Vine’s principal office at 5800 Granite Parkway, Suite 550, Plano, Texas 75024 during regular business hours beginning with the tenth day prior to the Vine special meeting and continuing through the Vine special meeting and during the Vine special meeting. A complete list of the Vine stockholders entitled to vote at the Vine special meeting will also be posted on the Vine special meeting website during the same period.
 
4

 
Quorum; Abstentions and Broker Non-Votes
A quorum of Vine stockholders is necessary for Vine to hold a valid meeting. The presence at the special meeting of the holders of a majority of the outstanding shares of Vine common stock entitled to vote at the meeting, present in person or represented by proxy, constitutes a quorum. Virtual attendance at the Vine special meeting constitutes presence in person for purposes of the quorum requirements under Vine’s bylaws.
If you submit a properly executed proxy card, even if you do not vote for the proposal or vote to “ABSTAIN” in respect of the proposal, your shares of Vine common stock will be counted for purposes of calculating whether a quorum is present for the transaction of business at the Vine special meeting. Vine common stock held in “street name” with respect to which the beneficial owner fails to give voting instructions to the broker, bank or other nominee, and Vine common stock with respect to which the beneficial owner otherwise fails to vote, will not be considered present at the Vine special meeting for the purpose of determining the presence of a quorum. A broker non-vote occurs when a broker, bank or other nominee holding shares for a beneficial owner has discretionary authority to vote on one or more proposals to be voted on at a meeting of stockholders but does not vote on a particular proposal because the nominee does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner of the shares. It is expected that there will not be any broker non-votes at the Vine special meeting. However, if there are any broker non-votes, the shares will be considered present and entitled to vote at the Vine special meeting for the purpose of determining the presence of a quorum.
As of the Vine record date, the Legacy Vine Holders hold and are entitled to vote in the aggregate approximately 72.8% of the issued and outstanding shares of Vine common stock entitled to vote at the Vine special meeting. Accordingly, as long as the Vine board does not change its recommendation with respect to such proposal, approval of the merger proposal at the Vine special meeting is assured.
Executed but unvoted proxies will be voted in accordance with the recommendations of the Vine board.
Required Vote to Approve the Merger Proposal
Approval of the merger proposal requires the affirmative vote of a majority of the outstanding shares of Vine common stock entitled to vote on the proposal. Abstentions, a failure to submit a proxy or vote (whether in attendance at the meeting or not) and broker non-votes will have the same effect as a vote “AGAINST” the merger proposal.
The merger proposal is described in the section entitled “Vine Stockholder Proposals” beginning on page 41.
Required Vote to Approve the Non-Binding Compensation Advisory Proposal
Approval of the non-binding compensation advisory proposal requires the affirmative vote of a majority of the shares of Vine common stock present in person or represented by proxy at the Vine special meeting and entitled to vote on the proposal. Abstentions and a failure to vote while in attendance at the meeting will have the same effect as a vote “AGAINST” the non-binding compensation advisory proposal. Broker non-votes and a failure to vote without attending the meeting or submitting a proxy will have no effect on the outcome of the vote on the non-binding compensation advisory proposal, assuming a quorum is present.
The non-binding compensation advisory proposal is described in the section entitled “Vine Stockholder Proposals” beginning on page 41.
Required Vote to Approve the Adjournment Proposal
Approval of the adjournment proposal requires the affirmative vote of a majority of the shares of Vine common stock present in person or represented by proxy at the Vine special meeting and entitled to vote on the proposal. Abstentions and a failure to vote while in attendance at the meeting will have the same effect as a vote “AGAINST” the adjournment proposal. Broker non-votes and a failure to vote without attending
 
5

 
the meeting or submitting a proxy will have no effect on the outcome of the vote on the adjournment proposal, assuming a quorum is present.
The adjournment proposal is described in the section entitled “Vine Stockholder Proposals” beginning on page 41.
Voting by Vine’s Directors, Executive Officers and the Legacy Vine Holders
As of the close of business on September 29, 2021, the latest practicable date prior to the date of this proxy statement/prospectus, Vine directors and executive officers, and their affiliates (including the Legacy Vine Holders), as a group, owned and were entitled to vote 54,819,256 shares of Vine common stock, or approximately 72.8% of the total outstanding shares of Vine common stock, based on 75,259,256 shares of Vine common stock outstanding on that date. For more information regarding the security ownership of Vine directors and executive officers, please see “Share Ownership of Directors, Executive Officers and Certain Beneficial Owners of Vine — Vine’s Directors and Executive Officers” beginning on page 139.
Vine currently expects that all of its directors and executive officers will vote their shares “FOR” the merger proposal, “FOR” the non-binding compensation advisory proposal and “FOR” the adjournment proposal.
Adjournment
If a quorum is not present or if there are not sufficient votes for the approval of the merger proposal, Vine expects that the Vine special meeting will be adjourned by the person presiding over the Vine special meeting, as permitted by Vine’s bylaws, to solicit additional proxies in accordance with the merger agreement. At any subsequent reconvening of the Vine special meeting, all proxies will be voted in the same manner as the manner in which such proxies would have been voted at the original convening of the Vine special meeting, except for any proxies that have been validly revoked or withdrawn prior to the subsequent reconvening of the Vine special meeting.
Board of Directors and Management of Chesapeake Following Completion of the Merger (page 76)
Upon closing of the merger, Chesapeake’s board and executive management will remain unchanged. Additionally, Chesapeake will continue to be headquartered in Oklahoma City, Oklahoma.
Interests of Vine’s Directors and Executive Officers in the Merger (page 43)
In considering the recommendation of the Vine board of directors, Vine stockholders should be aware that the directors and executive officers of Vine have certain interests in the merger that may be different from, or in addition to, the interests of Vine stockholders generally. The Vine board of directors was aware of these interests and considered them, among other matters, in making its recommendation that Vine stockholders vote to approve the merger proposal.
These interests include the following:

the executive officers of Vine have arrangements with Vine that provide for certain severance payments or benefits, accelerated vesting of certain equity-based awards and other rights and other payments or benefits upon completion of the merger and/or if their employment or service is terminated under certain circumstances following the completion of the merger; and

executive officers and directors of Vine have rights to indemnification, advancement of expenses and directors’ and officers’ liability insurance that will survive the completion of the merger.
The Vine board was aware of these additional interests by their directors and executive officers and considered these potential interests, among other matters, in evaluating and negotiating the merger agreement and the merger, in approving the merger agreement and in recommending the merger proposal, the non-binding compensation advisory proposal and the adjournment proposal. For a further discussion of the interests of Vine directors and executive officers in the merger, see “The Merger — Interests of Vine’s Directors and Executive Officers in the Merger” beginning on page 43.
 
6

 
Conditions to the Completion of the Merger (page 106)
Mutual Conditions
The respective obligations of each of the parties to the merger agreement to consummate the merger are subject to the satisfaction at or prior to the effective time of the following conditions, any or all of which may be waived jointly by the parties, in whole or in part, to the extent permitted by applicable law:

Vine Stockholder Approval.   The merger proposal must have been approved in accordance with applicable law and the Vine organizational documents, as applicable.

Regulatory Approval.   All waiting periods (and any extensions thereof) applicable to the transactions contemplated by the merger agreement under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and any commitment to, or agreement with, any governmental entity not to close the transactions contemplated by the merger agreement before a certain date, must have expired or been terminated.

No Injunctions or Restraints.   Any governmental entity (including any antitrust authority) having jurisdiction over any party to the merger agreement must not have issued, entered, enacted or promulgated any law, order, decree, ruling, injunction or other action that is in effect (whether temporary, preliminary or permanent) restraining, enjoining, making illegal or otherwise prohibiting the consummation of the transactions contemplated by the merger agreement.

Effectiveness of the Registration Statement.   The registration statement, of which this proxy statement/ prospectus forms a part, must have been declared effective by the SEC under the Securities Act and must not be the subject of any stop order or proceedings seeking a stop order.

Nasdaq Listing.   The shares of Chesapeake common stock issuable to holders of Vine common stock pursuant to the merger agreement must have been authorized for listing on the Nasdaq Global Select Market, upon official notice of issuance.
Additional Conditions to the Obligations of Chesapeake and the Merger Subs
The obligations of Chesapeake and the Merger Subs to consummate the merger are subject to the satisfaction at or prior to the effective time of the following conditions, any or all of which may be waived exclusively by Chesapeake, in whole or in part, to the extent permitted by applicable law:

certain representations and warranties of Vine set forth in the merger agreement regarding organization, standing and power, capital structure, authority and absence of certain changes or events must have been true and correct as of August 10, 2021 and must be true and correct as of the closing date, as though made on and as of the closing date (except, with respect to certain representations and warranties regarding capital stock, for any de minimis inaccuracies) (except that representations and warranties that speak as of a specified date or period of time must have been true and correct only as of such date or period of time);

certain other representations and warranties of Vine set forth in the merger agreement relating to capital structure must have been true and correct in all material respects as of August 10, 2021 and must be true and correct in all material respects as of the closing date, as though made on and as of the closing date (except that representations and warranties that speak as of a specified date or period of time must have been true and correct in all material respects only as of such date or period of time);

all other representations and warranties of Vine set forth in the merger agreement must have been true and correct as of August 10, 2021 and must be true and correct as of the closing date, as though made on and as of the closing date (except that representations and warranties that speak as of a specified date or period of time must have been true and correct only as of such date or period of time), except where the failure of such representations and warranties to be so true and correct (without regard to qualification or exceptions contained therein as to “materiality,” “in all material respects” or “Vine material adverse effect”) would not reasonably be expected to have, individually or in the aggregate, a Vine material adverse effect;
 
7

 

Vine must have performed, or complied with, in all material respects, all agreements and covenants required to be performed or complied with by it under the merger agreement at or prior to the effective time;

Chesapeake must have received a certificate of Vine signed by an executive officer of Vine, dated as of the closing date, confirming that the conditions in the four bullets above have been satisfied; and

100% of the Holdings Units issued and outstanding as of immediately prior to the effective time must have been converted into Vine Class A common stock, and each Holdings Unit, together with each corresponding share of Vine Class B common stock, must have been canceled and no longer be outstanding.
Additional Conditions to the Obligations of Vine
The obligation of Vine to consummate the merger is subject to the satisfaction at or prior to the effective time of the following conditions, any or all of which may be waived exclusively by Vine, in whole or in part, to the extent permitted by applicable law:

certain representations and warranties of Chesapeake and the Merger Subs set forth in the merger agreement regarding organization, standing and power, capital structure, authority and absence of certain changes or events must have been true and correct as of August 10, 2021 and must be true and correct as of the closing date, as though made on and as of the closing date (except, with respect to certain representations and warranties regarding capital stock, for any de minimis inaccuracies) (except that representations and warranties that speak as of a specified date or period of time must have been true and correct only as of such date or period of time);

certain other representations and warranties of Chesapeake set forth in the merger agreement relating to capital structure must have been true and correct in all material respects as of August 10, 2021 and must be true and correct in all material respects as of the closing date, as though made on and as of the closing date (except that representations and warranties that speak as of a specified date or period of time must have been true and correct in all material respects only as of such date or period of time);

all other representations and warranties of Chesapeake and the Merger Subs set forth in the merger agreement must have been true and correct as of August 10, 2021 and must be true and correct as of the closing date, as though made on and as of the closing date (except that representations and warranties that speak as of a specified date or period of time must have been true and correct only as of such date or period of time), except where the failure of such representations and warranties to be so true and correct (without regard to qualification or exceptions contained therein as to “materiality,” “in all material respects” or “Chesapeake material adverse effect”) that would not reasonably be expected to have, individually or in the aggregate, a Chesapeake material adverse effect;

Chesapeake, Merger Sub Inc. and Merger Sub LLC each must have performed, or complied with, in all material respects, all agreements and covenants required to be performed or complied with by them under the merger agreement at or prior to the effective time; and

Vine must have received a certificate of Chesapeake signed by an executive officer of Chesapeake, dated as of the closing date, confirming that the conditions in the four bullets above have been satisfied.
No Solicitation (page 93)
No Solicitation by Vine
Vine has agreed that, from and after August 10, 2021, Vine and its officers and directors will and will cause Vine’s subsidiaries and its and their controlled affiliates and other representatives to cease, and cause to be terminated, any negotiations with any person conducted prior to August 10, 2021 by Vine or any of its subsidiaries, their respective controlled affiliates or representatives with respect to any proposal or offer that constitutes, or could reasonably be expected to lead to, a competing proposal. Promptly following the execution and delivery of the merger agreement, Vine agreed, and agreed to cause each of its subsidiaries and
 
8

 
its and their respective controlled affiliates and representatives, to immediately cease and cause to be terminated any existing solicitation of, or discussions or negotiations with, any person (other than Chesapeake and its representatives) relating to any competing proposal made prior to August 10, 2021 and any access any such persons may have to any physical or electronic data room relating to any potential competing proposal.
Vine has also agreed that, from and after August 10, 2021, Vine and its officers and directors will not, and will cause Vine’s subsidiaries and its and their respective controlled affiliates and other representatives not to, directly or indirectly:

initiate, solicit, propose, endorse, knowingly encourage, or knowingly facilitate any inquiry regarding, the submission or announcement by any person (other than Chesapeake or its subsidiaries) of, or the making of any, proposal or offer that constitutes, or could reasonably be expected to lead to, a competing proposal;

engage in, continue or otherwise participate in any discussions or negotiations with any person with respect to, relating to, or in furtherance of a competing proposal or any inquiry, proposal or offer that could reasonably be expected to lead to a competing proposal;

furnish any material non-public information regarding Vine or its subsidiaries to any person (other than Chesapeake and its subsidiaries) in connection with, for the purpose of soliciting, initiating, knowingly encouraging or knowingly facilitating, or in response to any competing proposal or any inquiry, proposal or offer that could reasonably be expected to lead to a competing proposal;

approve, adopt, recommend, agree to enter into, or propose to approve, adopt, recommend, agree to or enter into, any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement, option agreement, joint venture agreement, partnership agreement or other agreement (other than an acceptable confidentiality agreement (as defined below)) relating to a competing proposal (an “alternative acquisition agreement”);

submit any competing proposal to the vote of Vine stockholders; or

resolve or agree to take any of the actions described above.
From and after August 10, 2021, Vine has agreed to promptly (and in any event within 36 hours) notify Chesapeake in writing of the receipt by Vine of any competing proposal or any proposal or offer with respect to (or that could reasonably be expected to lead to) a competing proposal made on or after August 10, 2021, any request for information or data relating to Vine or any of its subsidiaries made by any person in connection with (or that could reasonably be expected to lead to) a competing proposal or any request for discussions or negotiations with Vine or a representative of Vine relating to (or that could reasonably be expected to lead to) a competing proposal, and Vine will notify Chesapeake of the identity of the person making or submitting such request, proposal or offer and provide to Chesapeake (i) a copy of any such request, proposal or offer made in writing provided to Vine or any of its subsidiaries or any of its and their respective representatives or (ii) if any such request, proposal or offer is not made in writing, a written summary of such request, proposal or offer (including the material terms and conditions thereof), in each case together with copies of any proposed transaction agreements. Thereafter Vine has agreed to keep Chesapeake reasonably informed in writing on a current basis (and in any event within one business day) regarding the status of any such requests, proposals or offers (including any amendments or changes thereto) and will reasonably apprise Chesapeake of the status of any such negotiations. Without limiting the foregoing, Vine has agreed to notify Chesapeake if Vine determines to engage in discussions or negotiations concerning a competing proposal.
No Solicitation by Blackstone, Inc. and the Legacy Vine Holders
Pursuant to the merger agreement, any violation of the solicitation restrictions outlined above that is at the request or on behalf of Blackstone, Inc. will be deemed a breach of such solicitation restrictions by Vine. Additionally, pursuant to the merger support agreement, each Legacy Vine Holder has agreed to comply with the solicitation restrictions applicable to Vine as if it were party to the merger agreement.
 
9

 
No Solicitation Exceptions
Prior to the time the merger proposal has been approved by Vine stockholders, Vine and its representatives may (i) provide information in response to a request therefor by a person who has made an unsolicited bona fide written competing proposal after August 10, 2021 that did not result from a breach (other than a de minimis breach) of the applicable section of the merger agreement if Vine receives from the person so requesting such information an executed confidentiality agreement on terms not less restrictive to the other party than those contained in the confidentiality agreement (the “Confidentiality Agreement”) dated as of June 11, 2021 between Chesapeake and Vine (an “acceptable confidentiality agreement”), it being understood that such acceptable confidentiality agreement need not prohibit the making, or amendment, of a competing proposal and shall not prohibit compliance by Vine with the terms of the merger agreement, and Vine will promptly disclose (and, if applicable, provide copies of) any such information provided to such person to Chesapeake to the extent not previously provided to Chesapeake; or (ii) engage or participate in any discussions or negotiations with any person who has made such an unsolicited bona fide written competing proposal after August 10, 2021 that did not result from a breach (other than a de minimis breach) of the applicable section of the merger agreement, if and only to the extent that:

prior to taking any action described in clause (i) or (ii) above, the Vine board determines in good faith after consultation with its outside legal counsel that failure to take such action in light of the competing proposal would be inconsistent with the Vine board’s fiduciary duties under applicable law; and

in each such case referred to in clause (i) or (ii) above, the Vine board has determined in good faith based on the information then available and after consultation with its financial advisors and outside legal counsel that such competing proposal either constitutes a superior proposal (as defined in the merger agreement) or is reasonably likely to result in a superior proposal.
Change of Recommendation (page 93)
Restrictions on Change of Recommendation
Subject to certain exceptions described below, the Vine board, including any committee of the Vine board, may not:

withhold, withdraw, qualify or modify, or publicly propose or announce any intention to withhold, withdraw, qualify or modify, in a manner adverse to Chesapeake or the Merger Subs, its recommendation that Vine stockholders approve the merger proposal;

fail to include its recommendation that Vine stockholders approve the merger proposal in this proxy statement/prospectus;

fail to publicly announce, within ten business days after a tender offer or exchange offer relating to the equity securities of Vine shall have been commenced by any third party other than Chesapeake and its affiliates (and in no event later than one business day prior to the date of the Vine special meeting, as it may be postponed or adjourned in accordance with the terms of the merger agreement), a statement disclosing that the Vine board recommends rejection of such tender or exchange offer (for the avoidance of doubt, the taking of no position or a neutral position by the Vine board in respect of the acceptance of any such tender offer or exchange offer as of the end of such period shall constitute a failure to publicly announce that the Vine board recommends rejection of such tender or exchange offer);

if requested by Chesapeake fail to issue, within ten business days after a competing proposal is publicly announced (and in no event later than one business day prior to the date of the Vine special meeting, as it may be postponed or adjourned in accordance with the terms of the merger agreement), a press release reaffirming its recommendation that Vine stockholders approve the merger proposal;

approve, recommend or declare advisable (or publicly propose to do so) any competing proposal;

approve, adopt, recommend, agree to or enter into, or propose or resolve to approve, adopt, recommend, agree to or enter into, any alternative acquisition agreement;
 
10

 

cause or permit Vine to enter into an alternative acquisition agreement; or

publicly propose to take any of the actions described above.
Any of the actions described in the eight bullets directly above is referred to herein as a “change of recommendation.”
Permitted Recommendation Change in Connection with a Superior Proposal
Prior to the time the merger proposal has been approved by Vine stockholders, in response to a bona fide written competing proposal from a third party that has not been withdrawn, was received after August 10, 2021, was not solicited at any time following the execution of the merger agreement and did not result from a breach (other than a de minimis breach) of the obligations set forth in the applicable section of the merger agreement, the Vine board may effect a change of recommendation; provided, however, that such change of recommendation may not be made unless and until:

the Vine board determines in good faith after consultation with its financial advisors and outside legal counsel that such competing proposal is a superior proposal;

the Vine board determines in good faith, after consultation with its outside legal counsel, that failure to effect a change of recommendation in response to such superior proposal would be inconsistent with the fiduciary duties owed by the Vine board to the stockholders of Vine under applicable law;

Vine provides Chesapeake written notice of such proposed action three business days in advance, which notice will set forth in writing that the Vine board intends to take such action and will include the identity of the person making such competing proposal and a copy of such proposal and a draft of the definitive agreement to be entered into in connection therewith (or, if not in writing, the material terms and conditions thereof);

during the three business day period commencing on the date of Chesapeake’s receipt of the notice specified in the immediately preceding clause (subject to any applicable extensions), Vine negotiates (and causes its officers, employees, financial advisors, outside legal counsel and other representatives to negotiate) in good faith with Chesapeake (to the extent Chesapeake wishes to negotiate) to make such adjustments, amendments or revisions to the terms of the merger agreement so that the competing proposal that is the subject of the notice specified in the immediately preceding clause ceases to be a superior proposal;

at the end of the three business day period, prior to taking action to effect a change of recommendation, the Vine board takes into account any adjustments, amendments or revisions to the terms of the merger agreement proposed by Chesapeake in writing, and determines in good faith after consultation with its financial advisors and outside legal counsel, that the competing proposal remains a superior proposal and that the failure to effect a change of recommendation in response to such superior proposal would be inconsistent with the fiduciary duties of the directors under applicable law; provided that if there is any material development with respect to such competing proposal, Vine shall, in each case, be required to deliver to Chesapeake an additional notice consistent with that described in the third bullet above and a new negotiation period under the third bullet above shall commence (except that the original three business day notice period referred to in the third bullet above shall instead be equal to the longer of (i) one business day and (ii) the period remaining under the first and original three business day notice period above, during which time Vine shall be required to comply with the requirements of the fourth bullet above and this bullet anew with respect to such additional notice (but substituting the time periods therein with the foregoing extended period)); and

in the case of Vine terminating the merger agreement to enter into a definitive agreement with respect to a superior proposal, Vine shall have paid, or caused the payment of, the termination fee.
Permitted Recommendation Change in Connection with Intervening Events
Prior to the time the merger proposal has been approved by Vine stockholders, in response to an intervening event (as defined below) that occurs or arises after August 10, 2021 and that did not arise from
 
11

 
or in connection with a material breach of the merger agreement by Vine, the Vine board may effect a change of recommendation; provided, however, that such change of recommendation may not be made unless and until:

the Vine board determines in good faith after consultation with its financial advisors and outside legal counsel that an intervening event has occurred;

the Vine board determines in good faith, after consultation with its financial advisors and outside legal counsel, that failure to effect a change of recommendation in response to such intervening event would be inconsistent with the fiduciary duties of the directors under applicable law;

Vine provides Chesapeake written notice of such proposed action and the basis of such proposed action three business days in advance, which notice will set forth in writing that the Vine board intends to take such action and includes the reasons therefor and a reasonable description of the facts and circumstances of the intervening event;

during the three business day period commencing on the date of Chesapeake’s receipt of the notice described in the immediately preceding clause (subject to any applicable extensions), Vine negotiates (and causes its officers, employees, financial advisors, outside legal counsel and other representatives to negotiate) in good faith with Chesapeake (to the extent Chesapeake wishes to negotiate) to make such adjustments, amendments or revisions to the terms of the merger agreement as would permit the Vine board not to effect a change of recommendation in response thereto; and

at the end of the three business day period, prior to taking action to effect a change of recommendation, the Vine board takes into account any adjustments, amendments or revisions to the terms of the merger agreement proposed by Chesapeake in writing, and determines in good faith after consultation with its financial advisors and outside legal counsel, that the failure to effect a change of recommendation in response to such intervening event would be inconsistent with the fiduciary duties of the directors under applicable law.
Definition of Intervening Event
An “intervening event” is a development, event, effect, state of facts, condition, occurrence or change in circumstance that materially affects the business or assets of Vine and its subsidiaries (taken as a whole) that occurs or arises after August 10, 2021 that was not known to or reasonably foreseeable by the Vine board as of August 10, 2021; provided, however, that in no event shall (i) the receipt, existence or terms of an actual or possible competing proposal or superior proposal, (ii) any effect relating to Chesapeake or any of its subsidiaries that does not amount to a Material Adverse Effect, individually or in the aggregate, (iii) any change, in and of itself, in the price or trading volume of shares of Vine common stock or Chesapeake common stock (it being understood that the underlying facts giving rise or contributing to such change may be taken into account in determining whether there has been an intervening event, to the extent otherwise permitted by this definition), (iv) the fact that Vine or any of its subsidiaries exceeds (or fails to meet) internal or published projections or guidance or any matter relating thereto or of consequence thereof (it being understood that the underlying facts giving rise or contributing to such change may be taken into account in determining whether there has been an intervening event, to the extent otherwise permitted by this definition) or (v) conditions (or changes in such conditions) in the oil and gas exploration and production industry (including changes in commodity prices, general market prices and political or regulatory changes affecting the industry or any changes in applicable law), constitute an intervening event.
Definition of Competing Proposal
A “competing proposal” means any contract, proposal, offer or indication of interest relating to any transaction or series of related transactions (other than transactions only with Chesapeake or any of its subsidiaries) involving, directly or indirectly:

any acquisition (by asset purchase, stock purchase, merger, or otherwise) by any person or group of any business or assets of Vine or any of its subsidiaries (including capital stock of or ownership interest in any subsidiary) that generated 25% or more of Vine’s and its subsidiaries’ assets (by fair market value), net revenue or earnings before interest, taxes, depreciation and amortization for the preceding 12 months, or any license, lease or long-term supply agreement having a similar economic effect;
 
12

 

any acquisition by any person resulting in, or proposal or offer, which if consummated would result in, any person becoming the beneficial owner of directly or indirectly, in one or a series of related transactions, 25% or more of the total voting power or of any class of equity securities of Vine or those of any of its subsidiaries, or 25% or more of the consolidated total assets (including, without limitation, equity securities of its subsidiaries); or

any merger, amalgamation, consolidation, division, tender offer, exchange offer, deSPAC transaction, share exchange, business combination, recapitalization, liquidation, dissolution or similar transaction involving Vine or any of its subsidiaries.
Definition of Superior Proposal
A “superior proposal” means an unsolicited bona fide competing proposal after August 10, 2021 by any person or group (other than Chesapeake or any of its affiliates) to acquire, directly or indirectly, (a) businesses or assets of Vine or any of its subsidiaries (including capital stock of or ownership interest in any subsidiary) that account for 50% or more of the fair market value of such assets or that generated 50% or more of Vine’s and its subsidiaries’ net revenue or earnings before interest, taxes, depreciation and amortization for the preceding 12 months, respectively, or (b) 50% or more of the total voting power or of any class of equity securities of Vine or those of any of its subsidiaries, in each case whether by way of merger, amalgamation, share exchange, tender offer, exchange offer, recapitalization, consolidation, sale of assets or otherwise, that in the good faith determination of the Vine board:

if consummated, would result in a transaction more favorable to Vine’s stockholders (in their capacity as such) than the First Merger (after taking into account the time likely to be required to consummate such proposal and any adjustments or revisions to the terms of the merger agreement offered by Chesapeake in response to such proposal or otherwise); and

is reasonably likely to be consummated on the terms proposed, in each case taking into account any legal, financial, regulatory and stockholder approval requirements, including the sources, availability and terms of any financing, financing market conditions and the existence of a financing contingency, the likelihood of termination, the timing of closing, the identity of the person or persons making the proposal and any other aspects considered relevant by the Vine board.
Termination (page 108)
Termination Rights
Chesapeake and Vine may terminate the merger agreement and abandon the merger and the other transactions prior to the effective time by mutual written consent of Chesapeake and Vine.
The merger agreement may also be terminated by either Chesapeake or Vine prior to the effective time in any of the following situations:

if any governmental entity having jurisdiction over any party to the merger agreement has issued, entered, enacted or promulgated any law, order, decree, ruling or injunction or taken any other action permanently restraining, enjoining, making illegal or unlawful, or otherwise prohibiting the consummation of the transactions contemplated by the merger agreement and such law, order, decree, ruling or injunction or other action has become final and nonappealable, provided that the right to terminate the merger agreement as described in this bullet will not be available to any party whose material breach of any material covenant or agreement under the merger agreement has been the primary cause of or resulted in the action or event described in this bullet occurring;

if the merger has not been consummated on or before 5:00 p.m. central time on February 10, 2022 (such date, the “outside date”) (except that, if at such time, all of the closing conditions set forth above, except for certain closing conditions relating to regulatory approval, have been satisfied or are capable of being satisfied at such time, the outside date will be automatically extended to June 24, 2022), provided that the right to terminate the merger agreement as described in this bullet will not be available to any party whose material breach of any material covenant or agreement under the merger agreement has been the cause of or resulted in the failure of the merger to occur on or before such date;
 
13

 

in the event of a breach by the other party of any representation, warranty, covenant or other agreement contained in the merger agreement which would give rise to the failure of an applicable closing condition (and such violation or breach is not curable prior to the outside date, or if curable prior to the outside date, has not been cured by the earlier of (i) 30 days after the giving of written notice to the breaching party of such breach and (ii) two business days prior to the outside date) (a “terminable breach”), so long as the terminating party is not then in terminable breach of any representation, warranty, covenant or other agreement contained in the merger agreement; or

if the Vine stockholders do not approve the merger proposal upon a vote held at a duly held Vine special meeting, or at any adjournment or postponement of the Vine special meeting.
In addition, the merger agreement may be terminated by Chesapeake if prior to, but not after, the approval of the merger proposal by Vine stockholders, the Vine board has effected a change of recommendation (whether or not such change of recommendation is permitted by the merger agreement).
In addition, the merger agreement may be terminated by Vine in order to enter into a definitive agreement with respect to a superior proposal; provided, however, that (i) Vine shall not have breached any of its obligations under the applicable section of the merger agreement relating to non-solicitation by Vine (other than a de minimis breach), (ii) such definitive agreement with respect to such superior proposal shall be entered into substantially concurrently with the termination of the merger agreement as described in this paragraph and (iii) Vine shall pay the termination fee (as described below) concurrently with such termination.
Termination Fee (page 108)
Termination Fee Payable by Vine
The merger agreement requires Vine to pay Chesapeake a termination fee of $45 million if:

Chesapeake terminates the merger agreement due to a change of recommendation;

Vine terminates the merger agreement to enter into a definitive agreement with respect to a superior proposal;

Chesapeake or Vine terminates the merger agreement due to a failure to consummate the merger before the applicable outside date or due to failure to obtain Vine stockholder approval at a time when Chesapeake would have been entitled to terminate the merger agreement due to a change of recommendation; or

(i) (A) Chesapeake or Vine terminates the merger agreement due to the failure to obtain Vine stockholder approval or the failure to consummate the merger before the applicable outside date at a time when the merger agreement could have been terminated due to the failure to obtain Vine stockholder approval, and on or before the date of any such termination a competing proposal was publicly announced or publicly disclosed and not publicly withdrawn at least five business days prior to the Vine special meeting or (B) Vine terminates the merger agreement due to a failure to consummate the merger by the outside date at a time when Chesapeake would be permitted to terminate the merger agreement due to a Vine terminable breach or Chesapeake terminates the merger agreement due to a Vine terminable breach and following the execution of the merger agreement and on or before the date of any such termination a competing proposal has been announced, disclosed and not withdrawn at least five business days prior to the date of such termination and (ii) within 12 months after the date of such termination, Vine enters into a definitive agreement with respect to a competing proposal (or publicly approves or recommends to the Vine stockholders or otherwise does not oppose, in the case of a tender or exchange offer, a competing proposal) or consummates a competing proposal. For purposes of this paragraph, any reference in the definition of competing proposal to “25%” will be deemed to be a reference to “50%.”
Certain Limitations and Other Agreements related to the Termination Fee
In connection with the provisions of the merger agreement regarding the termination fee payable by Vine, Vine and Chesapeake have agreed that (i) in no event will Chesapeake be entitled to receive more than
 
14

 
one payment of the termination fee and (ii) Chesapeake may simultaneously pursue a grant of specific performance and payment of the termination fee, but if the termination fee becomes payable, then upon the payment of the termination fee, Vine shall have no further liability of any kind to Chesapeake in respect of the merger agreement or the transactions contemplated thereby, except liability for fraud, or a willful or material breach of the merger agreement.
Appraisal Rights (page 76)
If the merger is completed, Vine stockholders will be entitled to appraisal rights under Section 262 of the DGCL, provided they satisfy the special criteria and conditions set forth in Section 262 of the DGCL. Shares of Vine common stock held by stockholders that do not vote for approval of the merger, do not validly waive appraisal rights and properly exercise and perfect appraisal rights in respect of such shares pursuant to, and in accordance with, the provisions of Section 262 of the DGCL (the “Vine appraisal shares”) will not be converted into the right to receive the merger consideration, but will be entitled only to those rights as are granted by Section 262 of the DGCL, and at the effective time all Vine appraisal shares will no longer be outstanding and will automatically be cancelled and cease to exist. A copy of the full text of Section 262 of the DGCL is attached as Annex D to this proxy statement/prospectus.
Material U.S. Federal Income Tax Consequences of the Integrated Mergers (page 111)
As discussed more fully under the Section titled “Material U.S. Federal Income Tax Consequences of the Integrated Mergers,” subject to the qualifications and limitations discussed thereunder, the integrated mergers will qualify as a “reorganization” within the meaning of Section 368(a) of the Code for U.S. federal income tax purposes. However, it is not a condition to Chesapeake’s obligation or Vine’s obligation to complete the transactions that the integrated mergers, taken together, qualify as a “reorganization.” Moreover, neither Chesapeake nor Vine intends to request any ruling from the IRS regarding any matters relating to the integrated mergers, and, consequently, there can be no assurance that the IRS will not assert, or that a court would not sustain, a position to the contrary to any of the positions set forth below. If the IRS were to challenge the “reorganization” status of the integrated mergers successfully or the form or structure of the integrated mergers was changed in a manner such that it did not qualify as a “reorganization,” the holders of Vine common stock could be subject to additional U.S. federal income tax in connection with their receipt of Chesapeake common stock in the integrated mergers, as discussed in more detail in the section entitled “Material U.S. Federal Income Tax Consequences of the Integrated Mergers — Tax Consequences if the Integrated Mergers Do Not Qualify as a “Reorganization” Described in Section 368(a) of the Code” beginning on page 114.
If the integrated mergers, taken together, qualify as a reorganization, then U.S. holders (as defined in the section entitled “Material U.S. Federal Income Tax Consequences of the Integrated Mergers” beginning on page 111) of shares of Vine common stock generally will not recognize any realized loss but will recognize any realized gain as a result of the integrated mergers equal to the lesser of (i) the excess, if any, of (A) the sum of the fair market value of Chesapeake common stock (including any fractional share of Chesapeake common stock deemed received and redeemed for cash, as discussed in “Material U.S. Federal Income Tax Consequences of the Integrated Mergers — Tax Consequences if the Integrated Mergers, Taken Together, Qualify as a “Reorganization” Described in Section 368(a) of the Code — Receipt of Cash Upon the Deemed Sale of a Fractional Share” beginning on page 113) and the amount of cash consideration (excluding the amount of any cash in lieu of a fractional share of Chesapeake common stock) received by such U.S. holder pursuant to the integrated mergers over (B) such U.S. holder’s adjusted tax basis in the Vine common stock surrendered pursuant to the integrated mergers and (ii) the amount of cash consideration (excluding the amount of any cash in lieu of a fractional share of Chesapeake common stock) received by such U.S. holder pursuant to the integrated mergers. The material U.S. federal income tax consequences of the integrated mergers are discussed in more detail in the section entitled “Material U.S. Federal Income Tax Consequences of the Integrated Mergers” beginning on page 111.
TAX MATTERS ARE COMPLICATED AND THE TAX CONSEQUENCES OF THE INTEGRATED MERGERS WILL DEPEND ON THE FACTS OF YOUR OWN SITUATION. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES AS A RESULT OF THE INTEGRATED MERGERS TO YOU IN YOUR PARTICULAR CIRCUMSTANCES.
 
15

 
Comparison of Rights of Shareholders of Chesapeake and Stockholders of Vine (page 129)
Chesapeake is incorporated under the laws of the State of Oklahoma, and Vine is incorporated under the laws of the State of Delaware. Upon completion of the merger, the certificate of incorporation and bylaws of Chesapeake in effect immediately prior to the effective time of the merger will continue to be the certificate of incorporation and bylaws of Chesapeake. As a result of the merger, the rights of Vine stockholders who receive shares of Chesapeake common stock will be governed by the Oklahoma General Corporation Act (the “OGCA”), Chesapeake’s second amended and restated certificate of incorporation (“Chesapeake’s charter”) and Chesapeake’s second amended and restated bylaws (“Chesapeake’s bylaws”). The key differences are described in the section entitled “Comparison of Rights of Shareholders of Chesapeake and Stockholders of Vine” beginning on page 129.
Listing of Chesapeake Shares; Delisting and Deregistration of Vine Shares (page 76)
If the merger is completed, the shares of Chesapeake common stock to be issued in the merger will be listed for trading on the Nasdaq Global Select Market or such other Nasdaq market on which shares of Chesapeake common stock are then listed, shares of Vine common stock will be delisted from the NYSE and deregistered under the Exchange Act, and Vine will no longer be required to file periodic reports with the SEC pursuant to the Exchange Act.
Litigation Relating to the Merger (page 80)
In September 2021, an individual claiming to be a Vine shareholder (“Plaintiff”) filed a lawsuit in the United States District Court for the Southern District of New York challenging the merger and the disclosures made in connection with the merger. The lawsuit, styled Gaines Myer v. Vine Energy Inc. et al., Case No. 1:21-cv-07742 (S.D.N.Y.) (the “Lawsuit”), is brought against Vine and its board of directors, the Merger Subs and Chesapeake. The Lawsuit alleges that the defendants named therein (collectively, the “Defendants”) violated Sections 14(a) and 20(a) of the Exchange Act in connection with the Registration Statement. Plaintiff seeks, among other things, to enjoin Defendants from proceeding with or consummating the merger. Additional lawsuits arising out of the merger may also be filed in the future.
Defendants cannot predict the outcome of this or any other lawsuit that might be filed subsequent to the date of the filing of this Registration Statement, nor can Defendants predict the amount of time and expense that will be required to resolve such litigation. Defendants believe the Lawsuit is without merit.
 
16

 
COMPARISON OF PER SHARE MARKET PRICE
The following table sets forth the closing sale price per share of Chesapeake common stock and Vine Class A common stock as reported on the Nasdaq Global Select Market and the NYSE, respectively, on August 10, 2021, the last trading day before the public announcement of the execution of the merger agreement, and on September 29, 2021, the last practicable trading day prior to the mailing of this proxy statement/prospectus. The table also shows the estimated implied value of the merger consideration proposed for each share of Vine common stock as of the same two dates. This implied value was calculated by multiplying the closing price of a share of Chesapeake common stock on the relevant date by the exchange ratio of 0.2486 shares of Chesapeake common stock for each share of Vine Class A common stock, and adding the $1.20 cash consideration.
Chesapeake
Common Stock
Vine Class A
Common Stock
Implied Per Share
Value of Merger
Consideration(1)
August 10, 2021
$ 55.50 $ 14.88 $ 15.00(2)
September 29, 2021
$ 60.86 $ 16.27 $ 16.33
(1)
Includes cash consideration of $1.20 per share of Vine common stock.
(2)
Represents a premium of 0.8% to the closing price of the shares of Vine common stock on August 10, 2021, the last trading day before the public announcement of the execution of the merger agreement.
Holders of Chesapeake common stock and Vine Class A common stock are encouraged to obtain current market quotations for Chesapeake common stock and Vine Class A common stock and to review carefully the other information contained in, attached to or incorporated by reference into this proxy statement/prospectus. No assurance can be given concerning the market price of Chesapeake common stock before or after the effective date of the merger. For additional information, see the sections entitled “Where You Can Find More Information” and “Information Incorporated By Reference,” each beginning on page 148.
 
17

 
RISK FACTORS
In addition to the other information contained in, attached to or incorporated by reference into this proxy statement/prospectus, including the matters addressed in the section entitled “Cautionary Statement Regarding Forward-Looking Statements,” Vine stockholders should carefully consider the following risks before deciding how to vote with respect to the merger proposal, the non-binding compensation advisory proposal and the adjournment proposal to be considered and voted on at the Vine special meeting. In addition, Vine stockholders should also read and consider the risks associated with each of the businesses of Chesapeake and Vine because these risks will also affect the combined company. These risks can be found in Chesapeake’s Annual Reports on Form 10-K, Chesapeake’s and Vine’s Quarterly Reports on Form 10-Q and other filings Chesapeake makes with the SEC, in each case either attached to or incorporated by reference into this proxy statement/prospectus. Vine stockholders should also read and consider the other information in this proxy statement/prospectus and the other documents incorporated by reference into this proxy statement/prospectus or attached to this proxy statement/prospectus. For additional information, see the sections entitledWhere You Can Find More InformationandInformation Incorporated By Reference,each beginning on page 148.
Risks Relating to the Merger
Because the exchange ratio is fixed and because the market price of Chesapeake common stock will fluctuate, Vine stockholders cannot be certain of the precise value of the merger consideration they will receive in the merger.
If the merger is completed, at the effective time of the merger, each issued and outstanding eligible share of Vine common stock will be converted into the right to receive the merger consideration. The exchange ratio for the merger consideration is fixed at 0.2486 shares of Chesapeake common stock for each share of Vine common stock (with certain exceptions described in this proxy statement/prospectus), and there will be no adjustment to the merger consideration for changes in the market price of Chesapeake common stock or Vine common stock prior to the completion of the merger.
If the merger is completed, there will be a time lapse between each of the date of this proxy statement/prospectus, the date on which Vine stockholders vote to approve the merger proposal and the date on which Vine stockholders entitled to receive the merger consideration actually receive the merger consideration. The market value of shares of Chesapeake common stock will fluctuate, possibly materially, during and after these periods as a result of a variety of factors, including general market and economic conditions, changes in Chesapeake’s business, operations and prospects, regulatory considerations and any impact of the ongoing COVID-19 pandemic. Such factors are difficult to predict and in many cases may be beyond the control of Chesapeake and Vine. The actual value of any merger consideration received by Vine stockholders at the completion of the merger will depend on the market value of the shares of Chesapeake common stock at that time. Consequently, at the time Vine stockholders decide whether to approve the merger proposal, they will not know the actual market value of any merger consideration they will receive when the merger is completed. For additional information about the merger consideration, see the section entitled “The Merger Agreement — Effect of the Merger on Capital Stock; Merger Consideration” beginning on page 82.
The merger may not be completed and the merger agreement may be terminated in accordance with its terms. Failure to complete the merger could negatively impact the price of shares of Chesapeake and Vine’s common stock, as well as their respective future businesses and financial results.
The merger is subject to a number of conditions that must be satisfied, including the approval by Vine stockholders of the merger proposal, or, to the extent permitted by applicable law, waived, prior to the completion of the merger. These conditions are described in the section entitled “The Merger Agreement — Conditions to the Completion of the Merger” beginning on page 106. These conditions to the completion of the merger, some of which are beyond the control of Chesapeake and Vine, may not be satisfied or waived in a timely manner or at all, and, accordingly, the merger may be delayed or may not be completed.
In addition, if the merger is not completed by February 10, 2022, or, in certain instances, on or before June 24, 2022, either Chesapeake or Vine may choose not to proceed with the merger by terminating the merger agreement, and the parties can mutually decide to terminate the merger agreement at any time, before
 
18

 
or after Vine stockholder approval. Further, either Chesapeake or Vine may elect to terminate the merger agreement in certain other circumstances as further detailed in the section entitled “The Merger Agreement — Termination.”
If the transactions contemplated by the merger agreement are not completed for any reason, Chesapeake’s and Vine’s respective ongoing businesses, financial condition and financial results may be adversely affected. Without realizing any of the benefits of having completed the transactions, Chesapeake and Vine will be subject to a number of risks, including the following:

Chesapeake and Vine may be required to pay their respective costs relating to the transactions, which are substantial, such as legal, accounting, financial advisory and printing fees, whether or not the transactions are completed;

Vine may owe a termination fee of $45 million to Chesapeake, as further described below;

time and resources committed by Chesapeake’s and Vine’s management to matters relating to the transactions could otherwise have been devoted to pursuing other beneficial opportunities;

Chesapeake and Vine may experience negative reactions from financial markets, including negative impacts on the prices of their common stock, including to the extent that the current market prices reflect a market assumption that the transactions will be completed;

Chesapeake and Vine may experience negative reactions from employees, customers or vendors; and

since the merger agreement restricts the conduct of Vine’s and Chesapeake’s businesses prior to completion of the merger, Vine or Chesapeake may not have been able to take certain actions during the pendency of the merger that would have benefitted it as an independent company and the opportunity to take such actions may no longer be available. For a description of the restrictive covenants to which Chesapeake and Vine are subject, see the section entitled “The Merger Agreement — Interim Operations of Vine and Chesapeake Pending the Merger” beginning on page 89.
If the merger agreement is terminated and the Vine board seeks another merger or business combination, Vine may not be able to find a party willing to offer equivalent or more attractive consideration than the consideration Chesapeake has agreed to provide in the merger. Further, such other merger or business combination may not be completed. If the merger agreement is terminated under specified circumstances, Vine may be required to pay Chesapeake a termination fee of $45 million. For a description of these circumstances, see the section entitled “The Merger Agreement — Termination” beginning on page 108. In addition, any delay in completing the merger may significantly reduce the synergies and other benefits that Chesapeake expects that the combined company may achieve if the merger is completed within the expected timeframe.
The synergies attributable to the merger may vary from expectations.
Chesapeake may fail to realize the anticipated benefits and synergies expected from the merger, which could adversely affect Chesapeake’s business, financial condition and operating results. The success of the merger will depend, in significant part, on Chesapeake’s ability to successfully integrate the acquired business, grow the revenue of the combined company and realize the anticipated strategic benefits and synergies from the combination. Chesapeake believes that the addition of Vine will complement Chesapeake’s growth strategy by providing operational and financial scale, increasing free cash flow and enhancing Chesapeake’s corporate rate of return. However, achieving these goals requires, among other things, realization of the targeted cost synergies expected from the merger. This growth and the anticipated benefits of the transactions may not be realized fully or at all, or may take longer to realize than expected. Actual operating, technological, strategic and revenue opportunities, if achieved at all, may be less significant than expected or may take longer to achieve than anticipated. If Chesapeake is not able to achieve these objectives and realize the anticipated benefits and synergies expected from the merger within the anticipated timing or at all, Chesapeake’s business, financial condition and operating results may be adversely affected.
Vine stockholders will have a reduced ownership and voting interest in the combined company after the merger compared to their current ownership in Vine and will exercise less influence over the combined company’s management.
Currently, Vine stockholders have the right to vote in the election of the Vine board and the power to approve or reject any matter requiring stockholder approval under Delaware law and the Vine organizational
 
19

 
documents. Upon completion of the merger, each Vine stockholder who receives shares of Chesapeake common stock in the merger will become a shareholder of Chesapeake with a percentage ownership of Chesapeake that is smaller than such Vine stockholder’s current percentage ownership of Vine. Based on the number of issued and outstanding shares of Chesapeake common stock and Vine common stock as of September 29, 2021 and the exchange ratio of 0.2486, after the merger Vine stockholders are expected to become owners of approximately 16% of the outstanding shares of Chesapeake common stock, on a fully-diluted basis, without giving effect to any shares of Chesapeake common stock held by Vine stockholders prior to the completion of the merger. Even if all former Vine stockholders voted together on all matters presented to Chesapeake shareholders from time to time, the former Vine stockholders would exercise significantly less influence over the management and policies of Chesapeake post-merger than they now have over the management and policies of Vine.
Chesapeake and Vine are subject to risks related to health epidemics and pandemics, including the ongoing COVID-19 pandemic, and it is difficult to predict what effect, if any, this might have on the merger.
Chesapeake and Vine each face various risks related to public health issues, including epidemics, pandemics and other outbreaks, including the ongoing COVID 19 pandemic. The actual and potential effects of COVID 19 include, but are not limited to, its impact on general economic conditions, trade and financing markets, changes in customer behavior and continuity in business operations, all of which create significant uncertainty. In addition, the pandemic has resulted in governmental authorities implementing significant and varied measures to contain the spread of COVID 19, including travel bans and restrictions, quarantines, shelter in place and stay at home orders and business shutdowns. Governmental authorities may enact additional restrictions, or tighten existing measures if COVID 19 continues to spread. These measures, as well as the COVID 19 pandemic broadly, may have a negative effect on the businesses of Chesapeake or Vine prior to the consummation of the merger, and it is difficult to predict what effect the COVID 19 pandemic may have on the merger.
Required regulatory approvals may not be received, may take longer than expected to be received or may impose conditions that are not presently anticipated or cannot be met.
Completion of the merger is conditioned upon the expiration or termination of any waiting period applicable to the merger under the HSR Act. Although each party has agreed to use its reasonable best efforts to ensure the prompt expiration or termination of any applicable waiting period under the HSR Act and to respond to and comply with any request for information from any governmental entity charged with enforcing, applying, administering or investigating the HSR Act or any other antitrust laws, there can be no assurance that HSR clearance will be obtained and that the other conditions to completing the merger will be satisfied. In addition, the governmental authorities from which the regulatory approvals are required may impose conditions on the completion of the merger or require changes to the terms of the merger agreement or other agreements to be entered into in connection with the merger agreement. Notwithstanding the foregoing, under no circumstances will Chesapeake be required to take certain actions, including, among others, disposing of assets; terminating existing relationships, contractual rights or obligations; terminating any venture or other arrangement; creating new relationships, contractual rights or obligations; and making other changes or restructurings. Chesapeake and Vine cannot provide any assurance that these approvals will be obtained or that there will not be any adverse consequences to Chesapeake’s or Vine’s businesses resulting from the failure to obtain these governmental approvals or from conditions that could be imposed in connection with obtaining these governmental approvals.
Completion of the merger is also conditioned upon the authorization for listing of Chesapeake common stock to be issued in connection with the merger on the Nasdaq Global Select Market, or such other Nasdaq market on which shares of Chesapeake common stock are then listed. Although Chesapeake has agreed to use its reasonable best efforts to take all action reasonably necessary to obtain the requisite stock exchange approval, there can be no assurance that such approval will be obtained or that the other conditions to completing the merger will be satisfied.
Such conditions or changes and the process of obtaining regulatory approvals could have the effect of delaying or impeding consummation of the merger or of imposing additional costs or limitations on Chesapeake or Vine following completion of the merger, any of which might have an adverse effect on
 
20

 
Chesapeake or Vine following completion of the merger and may diminish the anticipated benefits of the merger. For additional information about the regulatory approvals process, see “The Merger — Regulatory Approvals” and “The Merger Agreement — HSR and Other Regulatory Approvals” beginning on pages 75 and 101, respectively.
If the integrated mergers, taken together, do not qualify as a “reorganization” under Section 368(a) of the Code, the Vine stockholders may be subject to additional U.S. federal income tax in connection with their receipt of Chesapeake common stock in the integrated mergers.
As discussed more fully under the Section titled “Material U.S. Federal Income Tax Consequences of the Integrated Mergers,” subject to the qualifications and limitations discussed thereunder, the integrated mergers will qualify as a “reorganization” within the meaning of Section 368(a) of the Code for U.S. federal income tax purposes. However, it is not a condition to Chesapeake’s obligation or Vine’s obligation to complete the transactions that the integrated mergers, taken together, qualify as a “reorganization.” Moreover, neither Chesapeake nor Vine intends to request any ruling from the IRS regarding any matters relating to the integrated mergers, and, consequently, there can be no assurance that the IRS will not assert, or that a court would not sustain, a position to the contrary to any of the positions set forth in this proxy statement/prospectus. If the IRS were to challenge the “reorganization” status of the integrated mergers successfully or the form or structure of the integrated mergers was changed in a manner such that it did not qualify as a “reorganization,” the holders of Vine common stock could be subject to additional U.S. federal income tax in connection with their the receipt of Chesapeake common stock in the integrated mergers, as discussed in more detail in the section entitled “Material U.S. Federal Income Tax Consequences of the Integrated Mergers — Tax Consequences if the Integrated Mergers Do Not Qualify as a “Reorganization” Described in Section 368(a) of the Code” beginning on page 114.
Chesapeake and Vine will be subject to business uncertainties while the merger is pending, which could adversely affect their respective businesses.
Uncertainty about the effect of the merger on employees, industry contacts and business partners may have an adverse effect on Chesapeake or Vine. These uncertainties may impair Chesapeake’s or Vine’s ability to attract, retain and motivate key personnel until the merger is completed and for a period of time thereafter and could cause industry contacts, business partners and others that deal with Chesapeake or Vine to seek to change their existing business relationships with Chesapeake or Vine, respectively. Employee retention at Vine may be particularly challenging during the pendency of the merger, as employees may experience uncertainty about their roles with Chesapeake following the merger. In addition, the merger agreement restricts Chesapeake and Vine from entering into certain corporate transactions and taking other specified actions without the consent of the other party. These restrictions may prevent Chesapeake and Vine from pursuing attractive business opportunities that may arise prior to the completion of the merger. For a description of the restrictive covenants to which Chesapeake and Vine are subject, see the section entitled “The Merger Agreement — Interim Operations of Vine and Chesapeake Pending the Merger” beginning on page 89.
The merger agreement limits Vine’s ability to pursue alternatives to the merger, which may discourage certain other companies from making favorable alternative transaction proposals and, in specified circumstances, could require Vine to pay Chesapeake a termination fee.
The merger agreement contains provisions that may discourage a third party from submitting a competing proposal to Vine that might result in greater value to Vine stockholders than the merger or, in the event that a third party competing proposal is made, a third party may propose to pay a lower per share price to acquire Vine than it might otherwise have proposed to pay. These provisions include a general prohibition on Vine soliciting or, subject to certain exceptions relating to the exercise of fiduciary duties by the Vine board, entering into discussions with any third party regarding any competing proposal. The merger agreement further provides that under specified circumstances, including after a change of recommendation by the Vine board and a subsequent termination of the merger agreement by Chesapeake in accordance with its terms, Vine may be required to pay Chesapeake a cash termination fee in the amount of $45 million. For additional information, see the sections entitled “The Merger Agreement — No Solicitation; Change of Recommendation” and “The Merger Agreement — Termination” beginning on pages 93 and 108, respectively.
 
21

 
Uncertainties associated with the merger may cause a loss of management personnel and other key employees, which could adversely affect the future business and operations of the combined company.
Chesapeake and Vine are dependent on the experience and industry knowledge of their officers and other key employees to execute their business plans. Each company’s success until the merger and the combined company’s success after the merger will depend in part upon the ability of Chesapeake and Vine to retain key management personnel and other key employees. Current and prospective employees of Chesapeake and Vine may experience uncertainty about their roles within the combined company following the merger, which may have an adverse effect on the ability of each of Chesapeake and Vine to attract or retain key management and other key personnel. Accordingly, no assurance can be given that the combined company will achieve the same success attracting or retaining key management personnel and other key employees as each of Chesapeake and Vine have independently achieved prior to the merger.
Directors and executive officers of Vine may have interests in the merger that are different from, or in addition to, the interests of Vine stockholders.
Directors and executive officers of Vine may have interests in the merger that are different from, or in addition to, the interests of Vine stockholders generally. These interests include, among others, the treatment of outstanding equity and equity-based awards pursuant to the merger agreement, potential severance and other benefits upon a qualifying termination in connection with the merger and rights to ongoing indemnification and insurance coverage. These interests are described in more detail in the section entitled “The Merger — Interests of Vine’s Directors and Executive Officers in the Merger.” The Vine board was aware of and carefully considered these interests of its directors and officers, among other matters, during its deliberations on the merits, terms and structure of the merger, overseeing the negotiation of the merger, approving the merger agreement and the transactions contemplated thereby, including the merger, and in making its recommendation that Vine stockholders vote “FOR” the merger proposal, “FOR” the non-binding compensation advisory proposal and “FOR” the adjournment proposal.
Chesapeake and Vine will incur significant transaction and merger-related costs in connection with the merger, which may be in excess of those anticipated by Chesapeake or Vine.
Each of Chesapeake and Vine has incurred and expects to continue to incur a number of non-recurring costs associated with negotiating and completing the merger, combining the operations of the two companies and achieving desired synergies. These fees and costs have been, and will continue to be, substantial. The substantial majority of non-recurring expenses will consist of transaction costs related to the merger and include, among others, employee retention costs, fees paid to financial, legal and accounting advisors, severance and benefit costs and filing fees.
Chesapeake and Vine will also incur transaction fees and costs related to the integration of the companies, which may be substantial. Moreover, each company may incur additional unanticipated expenses in connection with the merger and the integration, including costs associated with any stockholder litigation related to the merger. Although Chesapeake and Vine each expect that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, should allow Chesapeake and Vine to offset integration-related costs over time, this net benefit may not be achieved in the near term, or at all. For additional information, see the risk factor entitled “The integration of Vine into Chesapeake may not be as successful as anticipated, and Chesapeake may not achieve the intended benefits or do so within the intended timeframe” beginning on page 25.
The costs described above, as well as other unanticipated costs and expenses, could have a material adverse effect on the financial condition and operating results of the combined company following the completion of the merger.
Completion of the merger may trigger change in control or other provisions in certain agreements to which Vine or its subsidiaries is a party.
The completion of the merger may trigger change in control or other provisions in certain agreements to which Vine or its subsidiaries is a party. If Chesapeake and Vine are unable to negotiate waivers of those provisions, the counterparties may exercise their rights and remedies under such agreements, potentially
 
22

 
terminating the agreement or seeking monetary damages. Additionally, even if Chesapeake and Vine are able to negotiate waivers, the counterparties may require a fee for such waivers or seek to renegotiate the agreements on terms less favorable to the combined company.
Chesapeake and its subsidiaries will have substantial indebtedness after giving effect to the merger, which may limit Chesapeake’s financial flexibility and adversely affect its financial results.
Under the merger agreement, Vine’s outstanding senior notes will remain outstanding. As of June 30, 2021, the aggregate principal amount of such outstanding senior notes was approximately $950 million. As of June 30, 2021, Chesapeake had total long-term debt of approximately $1.2 billion, consisting primarily of the amounts outstanding under its credit facility and its senior unsecured notes.
Chesapeake’s pro forma indebtedness as of June 30, 2021, assuming consummation of the merger had occurred on such date and Vine’s senior notes remain outstanding, would have been approximately $2.2 billion, representing an increase in comparison to Chesapeake’s indebtedness on a recent historical basis. Any increase in Chesapeake’s indebtedness could have adverse effects on its financial condition and results of operations, including:

increasing the difficulty of Chesapeake to satisfy its debt obligations, including any repurchase obligations that may arise thereunder;

diverting a portion Chesapeake’s cash flows to service its indebtedness, which could reduce the funds available to it for operations and other purposes;

increasing Chesapeake’s vulnerability to general adverse economic and industry conditions;

placing Chesapeake at a competitive disadvantage compared to its competitors that are less leveraged and, therefore, may be able to take advantage of opportunities that Chesapeake would be unable to pursue due to its indebtedness;

limiting Chesapeake’s ability to access the capital markets to raise capital on favorable terms;

impairing Chesapeake’s ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, general corporate or other purposes; and

increasing Chesapeake’s vulnerability to interest rate increases, as its borrowings under its revolving credit facility are at variable interest rates.
Chesapeake believes that the combined company will have flexibility to repay, refinance, repurchase, redeem, exchange or otherwise terminate large portions of its outstanding debt obligations. However, there can be no guarantee that Chesapeake would be able to execute such refinancings on favorable terms, or at all, and a high level of indebtedness increases the risk that Chesapeake may default on its debt obligations, including from the debt obligations of Vine. Chesapeake’s ability to meet its debt obligations and to reduce its level of indebtedness depends on its future performance. Chesapeake’s future performance depends on many factors independent of the merger, some of which are beyond its control, such as general economic conditions and oil and natural gas prices. Chesapeake may not be able to generate sufficient cash flows to pay the interest on its debt, and future working capital, borrowings or equity financing may not be available to pay or refinance such debt.
Lawsuits may be filed against Vine, Chesapeake, Merger Sub and the members of the Vine board in connection with the merger. An adverse ruling in any such lawsuit could result in an injunction preventing the completion of the merger and/or substantial costs to Chesapeake and Vine.
Securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered into acquisition, merger or other business combination agreements like the merger agreement. Even if such a lawsuit is without merit, defending against these claims can result in substantial costs and divert management time and resources. An adverse judgment could result in monetary damages, which could have a negative impact on Chesapeake’s and Vine’s respective liquidity and financial condition.
One of the conditions to the closing of the merger is that no injunction by any governmental entity having jurisdiction over Chesapeake, Vine or Merger Sub has been entered and continues to be in effect and
 
23

 
no law has been adopted, in either case, that prohibits the closing of the merger. Consequently, if a plaintiff is successful in obtaining an injunction prohibiting completion of the merger, that injunction may delay or prevent the merger from being completed within the expected timeframe, or at all, which may adversely affect Chesapeake’s and Vine’s respective business, financial position and results of operations.
Additionally, there can be no assurance that any of the defendants in any potential future lawsuits will be successful in the outcome of such lawsuits. The defense or settlement of any lawsuit or claim that remains unresolved at the time the merger is completed may adversely affect Chesapeake’s or Vine’s business, financial condition, results of operations and cash flows.
Shares of Chesapeake common stock received by Vine stockholders as a result of the merger will have different rights from shares of Vine common stock.
Upon completion of the merger, Vine stockholders will no longer be stockholders of Vine, and Vine stockholders who receive the merger consideration will become Chesapeake shareholders, and their rights as Chesapeake shareholders will be governed by the terms of Chesapeake’s charter and bylaws. There will be important differences between the current rights of Vine stockholders and the rights to which such stockholders will be entitled as Chesapeake shareholders. For a discussion of the different rights associated with shares of Chesapeake common stock as compared to Vine common stock, see the section entitled “Comparison of Rights of Shareholders of Chesapeake and Stockholders of Vine” beginning on page 129.
The exclusive forum provision contained in Chesapeake’s charter could limit its shareholders’ ability to obtain a favorable judicial forum for disputes with Chesapeake or its directors, officers or other employees.
Chesapeake’s charter provides that, unless Chesapeake consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of Chesapeake, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of Chesapeake to Chesapeake or its shareholders, (iii) any action asserting a claim against Chesapeake or any director or officer or other employee of Chesapeake arising pursuant to any provision of the OGCA or Chesapeake’s charter or bylaws or (iv) any action asserting a claim against Chesapeake or any director or officer or other employee of Chesapeake governed by the internal affairs doctrine shall be the state courts located within the State of Oklahoma (or, if no such state court has jurisdiction, the United States Court for the Western District of Oklahoma). Unless Chesapeake consents in writing to the selection of an alternative forum, the sole and exclusive forum for claims under the Securities Act is the federal district courts of the United States of America.
The enforceability of similar choice of forum provisions in other companies’ governing documents has been challenged in legal proceedings, and it is possible that, in connection with claims arising under federal securities laws or otherwise, a court could find the exclusive forum provision contained in Chesapeake’s charter to be inapplicable or unenforceable.
This exclusive forum provision may limit the ability of a shareholder, including a former Vine stockholder who becomes a Chesapeake shareholder after the merger is completed, to bring a claim in a judicial forum of its choosing for disputes with Chesapeake or its directors, officers or other employees, which may discourage lawsuits against Chesapeake and its directors, officers and other employees. Alternatively, if a court were to find this exclusive forum provision inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings described above, Chesapeake may incur additional costs associated with resolving such matters in other jurisdictions, which could negatively affect Chesapeake’s business, results of operations and financial condition. In addition, shareholders who do bring a claim in a state or federal court located within the State of Oklahoma could face additional litigation costs in pursuing any such claim, particularly if they do not reside in or near Oklahoma. In addition, state courts of the State of Oklahoma (or the United States Court for the Western District of Oklahoma, as applicable) may reach different judgments or results than would other courts, including courts where a shareholder would otherwise choose to bring the action, and such judgments or results may be more favorable to Chesapeake than to its shareholders.
 
24

 
Chesapeake or Vine may waive one or more of the closing conditions without re-soliciting stockholder approval.
Chesapeake or Vine may determine to waive, in whole or in part as permitted by applicable law, one or more of the conditions to closing the merger prior to Chesapeake or Vine, as the case may be, being obligated to consummate the merger. Each of Chesapeake and Vine currently expects to evaluate the materiality of any waiver and its effect on its respective stockholders in light of the facts and circumstances at the time and to determine whether any amendment of this proxy statement/prospectus or any re-solicitation of proxies is required in light of such waiver. Any determination whether to waive any condition to the merger, re-solicit stockholder approval or amend or supplement this proxy statement/prospectus as a result of a waiver will be made by Chesapeake or Vine at the time of such waiver based on the facts and circumstances as they exist at that time.
Risk Relating to Chesapeake Following the Merger
The integration of Vine into Chesapeake may not be as successful as anticipated, and Chesapeake may not achieve the intended benefits or do so within the intended timeframe.
The merger involves numerous operational, strategic, financial, accounting, legal, tax and other risks, potential liabilities associated with the acquired business, and uncertainties related to design, operation and integration of Vine’s internal control over financial reporting. Difficulties in integrating Vine into Chesapeake may result in Vine performing differently than expected, operational challenges, or the failure to realize anticipated expense-related efficiencies. Potential difficulties that may be encountered in the integration process include, among others:

the inability to successfully integrate the business of Vine into Chesapeake in a manner that permits Chesapeake to achieve the full revenue and cost savings anticipated from the merger;

complexities associated with managing the larger, more complex integrated business;

not realizing anticipated operating synergies;

integrating personnel from the two companies and the loss of key employees;

potential unknown liabilities and unforeseen expenses, delays or regulatory conditions associated with the merger;

integrating relationships with industry contacts and business partners;

performance shortfalls as a result of the diversion of management’s attention caused by completing the merger and integrating Vine’s operations into Chesapeake; and

the disruption of, or the loss of momentum in, ongoing business or inconsistencies in standards, controls, procedures and policies.
Additionally, the success of the merger will depend, in part, on Chesapeake’s ability to realize the anticipated benefits and cost savings from combining Chesapeake’s and Vine’s businesses, including operational and other synergies that Chesapeake believes the combined company will achieve, discussed in more detail under the heading “The Merger — Chesapeake’s Rationale for the Merger” beginning on page 56. The anticipated benefits and cost savings of the merger may not be realized fully or at all, may take longer to realize than expected or could have other adverse effects that Chesapeake does not currently foresee.
Chesapeake’s results may suffer if it does not effectively manage its expanded operations following the merger.
The success of the merger will depend, in part, on Chesapeake’s ability to realize the anticipated benefits and cost savings from combining Chesapeake’s and Vine’s businesses, including the need to integrate the operations and business of Vine into its existing business in an efficient and timely manner, to combine systems and management controls and to integrate relationships with customers, vendors, industry contacts and business partners.
The anticipated benefits and cost savings of the merger may not be realized fully or at all, may take longer to realize than expected or could have other adverse effects that Chesapeake does not currently
 
25

 
foresee. Some of the assumptions that Chesapeake has made, such as the achievement of operating synergies, may not be realized. There could also be unknown liabilities and unforeseen expenses associated with the merger that were not discovered in the due diligence review conducted by each company prior to entering into the merger agreement.
The unaudited pro forma condensed combined financial information and Vine’s unaudited forecasted financial information included in this proxy statement/prospectus are presented for illustrative purposes only and do not represent the actual financial position or results of operations of the combined company following the completion of the merger. Future results of Chesapeake or Vine may differ, possibly materially, from the unaudited pro forma condensed combined financial information and Vine’s unaudited forecasted financial information presented in this proxy statement/prospectus.
The unaudited pro forma condensed combined financial statements and Vine’s unaudited forecasted financial information contained in this proxy statement/prospectus are presented for illustrative purposes only, contain a variety of adjustments, assumptions and preliminary estimates and do not represent the actual financial position or results of operations of Chesapeake and Vine prior to the merger or that of the combined company following the merger. Specifically, the unaudited pro forma condensed combined financial statements do not reflect the effect of any potential acquisitions or divestitures that may occur prior to or subsequent to the completion of the merger, integration costs or any changes in Chesapeake’s debt to capitalization ratio following the completion of the merger. For additional information, see the section entitled “Unaudited Pro Forma Condensed Combined Financial Statements” beginning on page 115. In addition, the merger and post-merger integration process may give rise to unexpected liabilities and costs, including costs associated with the defense and resolution of transaction-related litigation or other claims. Unexpected delays in completing the merger or in connection with the post-merger integration process may significantly increase the related costs and expenses incurred by Chesapeake. The actual financial positions and results of operations of Chesapeake and Vine prior to the merger and that of the combined company following the merger may be different, possibly materially, from the unaudited pro forma condensed combined financial statements or Vine’s unaudited forecasted financial information included in this proxy statement/prospectus. In addition, the assumptions used in preparing the unaudited pro forma condensed combined financial statements and Vine’s unaudited forecasted financial information included in this proxy statement/prospectus may not prove to be accurate and may be affected by other factors. Any significant changes in the market price of Chesapeake common stock may cause a significant change in the purchase price used for Chesapeake’s accounting purposes and the unaudited pro forma condensed combined financial statements contained in this proxy statement/prospectus.
The merger may not be accretive, and may be dilutive, to Chesapeake’s earnings per share, which may negatively affect the market price of Chesapeake common stock.
Because shares of Chesapeake common stock will be issued in the merger, it is possible that, although Chesapeake currently expects the merger to be accretive to earnings per share, the merger may be dilutive to Chesapeake’s earnings per share, which could negatively affect the market price of Chesapeake common stock.
In connection with the completion of the merger, based on the number of issued and outstanding shares of Vine common stock as of September 22, 2021 and the number of outstanding Vine equity awards currently estimated to be payable in Chesapeake common stock following the merger, Chesapeake will issue approximately 19,134,592 shares of Chesapeake common stock. The issuance of these new shares of Chesapeake common stock could have the effect of depressing the market price of Chesapeake common stock, through dilution of earnings per share or otherwise. Any dilution of, or delay of any accretion to, Chesapeake’s earnings per share could cause the price of shares of Chesapeake common stock to decline or increase at a reduced rate.
Furthermore, former Vine stockholders and current Chesapeake shareholders may not wish to continue to invest in the additional operations of the combined company, or for other reasons may wish to dispose of some or all of their interests in the combined company, and as a result may seek to sell their shares of Chesapeake common stock following, or in anticipation of, completion of the merger. These sales (or
 
26

 
the perception that these sales may occur), coupled with the increase in the outstanding number of shares of Chesapeake common stock, may affect the market for, and the market price of, Chesapeake common stock in an adverse manner.
If the merger is completed and shareholders of Chesapeake, including former Vine stockholders, sell substantial amounts of Chesapeake common stock in the public market following the consummation of the merger, the market price of Chesapeake common stock may decrease. These sales might also make it more difficult for Chesapeake to raise capital by selling equity or equity-related securities at a time and price that it otherwise would deem appropriate.
The market price of Chesapeake common stock will continue to fluctuate after the merger and may decline if the benefits of the merger do not meet the expectations of financial analysts.
Upon completion of the merger, holders of Vine common stock who receive merger consideration will become holders of shares of Chesapeake common stock. The market price of Chesapeake common stock may fluctuate significantly following completion of the merger and holders of Vine common stock could lose some or all of the value of their investment in Chesapeake common stock. In addition, the stock market has recently experienced significant price and volume fluctuations which could, if such fluctuations continue to occur, have a material adverse effect on the market for, or liquidity of, the Chesapeake common stock, regardless of Chesapeake’s actual operating performance.
The market price of Chesapeake common stock may be affected by factors different from those that historically have affected Vine common stock or Chesapeake common stock.
Upon completion of the merger, holders of Vine common stock who receive the merger consideration will become holders of Chesapeake common stock. The business of Chesapeake differs from that of Vine in certain respects, and, accordingly, the financial position or results of operations and/or cash flows of Chesapeake after the merger, as well as the market price of Chesapeake common stock, may be affected by factors different from those currently affecting the financial position or results of operations and/or cash flows of Vine and Chesapeake as independent standalone companies. In particular, following the completion of the merger, Vine will be part of a larger company, which means that decisions affecting Vine may be made in respect of the larger combined business as a whole rather than the Vine business individually. For a discussion of the businesses of Chesapeake and Vine and of some important factors to consider in connection with those businesses, see the section entitled “Information About the Companies” beginning on page 34 and the documents incorporated by reference into or attached to this proxy statement/prospectus, including, in particular, in the sections entitled “Risk Factors” in Chesapeake’s Annual Report on Form 10-K for the year ended December 31, 2020, Chesapeake’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021 and Vine’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021.
Following the completion of the merger, Chesapeake may incorporate Vine’s hedging activities into Chesapeake’s business, and Chesapeake may be exposed to additional commodity price risks arising from such hedges.
To mitigate its exposure to changes in commodity prices, Vine hedges natural gas prices from time to time, primarily through the use of certain derivative instruments. If Chesapeake assumes Vine’s existing derivative instruments or if Vine enters into additional derivative instruments prior to the completion of the merger, Chesapeake will bear the economic impact of the contracts following the completion of the merger. Vine has agreed to use commercially reasonable efforts to assist Chesapeake in the amendment, assignment, termination or novation of any of Vine’s existing derivative contracts. Actual natural gas prices may differ from the combined company’s expectations and, as a result, such derivative instruments may have a negative impact on Chesapeake’s business.
The combined company may record goodwill and other intangible assets that could become impaired and result in material non-cash charges to the results of operations of the combined company in the future.
The merger will be accounted for as an acquisition by Chesapeake in accordance with GAAP. Under the acquisition method of accounting, the assets and liabilities of Vine and its subsidiaries will be recorded, as of completion of the merger, at their respective fair values and added to those of Chesapeake. The
 
27

 
reported financial condition and results of operations of Chesapeake for the periods after completion of the merger will reflect Vine balances and results after completion of the merger but will not be restated retroactively to reflect the historical financial position or results of operations of Vine and its subsidiaries for periods prior to the merger. For additional information, see the section entitled “Unaudited Pro Forma Condensed Combined Financial Statements” beginning on page 115.
Under the acquisition method of accounting, the total purchase price will be allocated to Vine’s tangible assets and liabilities and identifiable intangible assets based on their fair values as of the date of completion of the merger. The excess of the purchase price over those fair values will be recorded as goodwill. Chesapeake and Vine expect that the merger may result in the creation of goodwill based upon the application of the acquisition method of accounting. To the extent goodwill or intangibles are recorded and the values become impaired, the combined company may be required to recognize material non-cash charges relating to such impairment. The combined company’s operating results may be significantly impacted from both the impairment and underlying trends in the business that triggered the impairment.
The combined company may not be able to retain customers or suppliers, and customers or suppliers may seek to modify contractual obligations with the combined company, either of which could have an adverse effect on the combined company’s business and operations. Third parties may terminate or alter existing contracts or relationships with Chesapeake or Vine as a result of the merger.
As a result of the merger, the combined company may experience impacts on relationships with customers and suppliers that may harm the combined company’s business and results of operations. Certain customers or suppliers may seek to terminate or modify contractual obligations following the merger whether or not contractual rights are triggered as a result of the merger. There can be no guarantee that customers and suppliers will remain with or continue to have a relationship with the combined company or do so on the same or similar contractual terms following the merger. If any customers or suppliers seek to terminate or modify contractual obligations or discontinue their relationships with the combined company, then the combined company’s business and results of operations may be harmed. If the combined company’s suppliers were to seek to terminate or modify an arrangement with the combined company, then the combined company may be unable to procure necessary supplies or services from other suppliers in a timely and efficient manner and on acceptable terms, or at all.
Vine also has contracts with vendors, landlords, licensors and other business partners which may require Vine to obtain consents from these other parties in connection with the merger. If these consents cannot be obtained, the combined company may suffer a loss of potential future revenue, incur costs and/or lose rights that may be material to the business of the combined company. In addition, third parties with whom Chesapeake or Vine currently have relationships may terminate or otherwise reduce the scope of their relationship with either party in anticipation of the merger. Any such disruptions could limit the combined company’s ability to achieve the anticipated benefits of the merger. The adverse effect of any such disruptions could also be exacerbated by a delay in the completion of the merger or by a termination of the merger agreement.
The financial forecasts relating to Chesapeake and Vine prepared in connection with the merger may not be realized, which may adversely affect the market price of Chesapeake common stock following the completion of the merger.
This proxy statement/prospectus includes certain financial forecasts considered by Chesapeake and Vine in connection with their respective businesses. None of the financial forecasts prepared by Vine or Chesapeake were prepared with a view towards public disclosure or compliance with the published guidelines of the SEC, Financial Accounting Standards Board or the American Institute of Certified Public Accountants. These forecasts are inherently based on various estimates and assumptions that are subject to the judgment of those preparing them and, in the view of Vine’s and Chesapeake’s management, were prepared on a reasonable basis, reflecting the best available estimates and judgments as of the date they were prepared. These forecasts are also subject to significant economic, competitive, industry and other uncertainties and contingencies, all of which are difficult or impossible to predict and many of which are beyond the control of Vine and Chesapeake. The financial forecasts are not fact and should not be relied upon as being necessarily indicative of future results and readers are cautioned not to place undue reliance on
 
28

 
the information provided. Important factors that may affect the actual results of Vine or Chesapeake and cause the internal financial forecasts to not be achieved include risks and uncertainties relating to Vine’s or Chesapeake’s businesses, industry performance, the regulatory environment, general business and economic conditions and other factors described under the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 32.
In addition, the financial forecasts reflect assumptions that are subject to change and do not reflect revised prospects for Vine’s and Chesapeake’s businesses, changes in general business or economic conditions or any other transaction or event that has occurred or that may occur and that was not anticipated at the time the financial forecasts were prepared. In addition, since such financial forecasts cover multiple years, the information by its nature becomes less predictive with each successive year. There can be no assurance that Vine’s or Chesapeake’s financial condition or results of operations will be consistent with those set forth in such forecasts.
Declaration, payment and amounts of dividends, if any, distributed to shareholders of Chesapeake will be uncertain.
Although Chesapeake has paid cash dividends on Chesapeake common stock in the past, the Chesapeake board may determine not to declare dividends in the future or may reduce the amount of dividends paid in the future. Any payment of future dividends will be at the discretion of the Chesapeake board and will depend on Chesapeake’s results of operations, financial condition, cash requirements, future prospects and other considerations that the Chesapeake board deems relevant.
 
29

 
Risks Relating to Chesapeake’s Business
You should read and consider risk factors specific to Chesapeake’s businesses that will also affect the combined company after the completion of the merger. These risks are described in Part I, Item 1A of Chesapeake’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, and in Part II, Item 1A of Chesapeake’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021, and in other documents that are incorporated by reference herein. For the location of information incorporated by reference in this proxy statement/prospectus, see the section entitled “Where You Can Find More Information” beginning on page 148.
 
30

 
Risks Relating to Vine’s Business
You should read and consider risk factors specific to Vine’s businesses that will also affect the combined company after the completion of the merger. These risks are described in the “Risk Factors” section of Vine’s Final Prospectus filed with the SEC on March 19, 2021, which is attached hereto as Annex E, and Part II, Item 1A of Vine’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, which is attached hereto as Annex F. For the location of information attached to this proxy statement/prospectus, see the section entitled “Where You Can Find More Information” beginning on page 148.
 
31

 
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement/prospectus, and the documents to which Chesapeake and Vine refer you in this proxy statement/prospectus, as well as oral statements made or to be made by Chesapeake and Vine, include certain “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements, other than statements of historical fact, included in this proxy statement/prospectus that address activities, events or developments that Chesapeake or Vine expects, believes or anticipates will or may occur in the future are forward-looking statements. Words such as “estimate,” “project,” “predict,” “believe,” “expect,” “anticipate,” “potential,” “create,” “intend,” “could,” “may,” “foresee,” “plan,” “will,” “guidance,” “look,” “outlook,” “goal,” “future,” “assume,” “forecast,” “build,” “focus,” “work,” “continue” or the negative of such terms or other variations thereof and words and terms of similar substance used in connection with any discussion of future plans, actions, or events identify forward-looking statements. However, the absence of these words does not mean that the statements are not forward-looking. These forward-looking statements include, but are not limited to, statements regarding the merger, pro forma descriptions of the combined company and its operations, including pro forma financial statements and related adjustments and pro forma reserves, integration and transition plans, synergies, opportunities and anticipated future performance. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements included in this proxy statement/prospectus. These include:

the risk that the merger agreement may be terminated in accordance with its terms and that the merger may not be completed;

the possibility that Vine stockholders may not approve the merger proposal;

the risk that the parties may not be able to satisfy the conditions to the completion of the merger in a timely manner or at all;

any impact of the ongoing COVID-19 pandemic or any governmental restrictions or other responses thereto on the pending merger, including the Vine special meeting of stockholders to be held virtually on the Vine special meeting website;

the risk that the merger may not be accretive, and may be dilutive, to Chesapeake’s earnings per share, which may negatively affect the market price of Chesapeake shares;

the possibility that Chesapeake and Vine will incur significant transaction and other costs in connection with the merger, which may be in excess of those anticipated by Chesapeake or Vine;

the risk that the combined company may be unable to achieve operational or corporate synergies or that it may take longer than expected to achieve those synergies;

the risk that Chesapeake may fail to realize other benefits expected from the merger;

the risk of any litigation relating to the merger;

the risk that any announcements relating to, or the completion of, the merger could have adverse effects on the market price of Chesapeake common stock;

the risk related to disruption of management time from ongoing business operations due to the merger;

the risk that the merger and its announcement and/or completion could have an adverse effect on the ability of Chesapeake and Vine to retain customers and retain and hire key personnel and maintain relationships with their suppliers and customers;

the risk that Chesapeake may be unable to complete, or may experience a delay in completing, any other pending or future acquisitions; and

the risks to their operating results and businesses generally.
Such factors are difficult to predict and in many cases may be beyond the control of Chesapeake and Vine. Chesapeake’s and Vine’s forward-looking statements are based on assumptions that Chesapeake and Vine, respectively, believe to be reasonable but that may not prove to be accurate. Consequently, all of the forward-looking statements Chesapeake and Vine make in this proxy statement/prospectus are qualified
 
32

 
by the information contained in, attached to or incorporated by reference herein, including the information contained under this heading and the information detailed in Chesapeake’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2021 and June 30, 2021, Current Reports on Form 8-K and other filings Chesapeake makes with the SEC, which are incorporated herein by reference, and in Vine’s Final Prospectus filed with the SEC on March 19, 2021 and Vine’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021, which are attached to this proxy statement/prospectus. For additional information, see the sections entitled “Risk Factors,” “Where You Can Find More Information” and “Information Incorporated By Reference” beginning on pages 18, 148 and 148, respectively.
Chesapeake and Vine undertake no obligation to update any forward-looking statements or to publicly release the result of any revisions to any such forward-looking statements that may be made to reflect events or circumstances that occur, or which they become aware of, except as required by applicable law or regulation. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.
 
33

 
Information About the Companies
Chesapeake Energy Corporation
6100 North Western Avenue
Oklahoma City, Oklahoma 73118
Phone: (405) 848-8000
Chesapeake is an independent exploration and production company engaged in the acquisition, exploration and development of properties to produce oil, natural gas and NGLs from underground reservoirs. Chesapeake owns a large and geographically diverse portfolio of onshore U.S. unconventional natural gas and liquids assets, including interests in approximately 7,400 oil and natural gas wells. Chesapeake’s natural gas resource plays are the Marcellus Shale in the northern Appalachian Basin in Pennsylvania and the Haynesville/Bossier Shales in northwestern Louisiana. Chesapeake’s liquids-rich resource plays are the Eagle Ford Shale in South Texas and the Brazos Valley and the stacked play in the Powder River Basin in Wyoming. Chesapeake’s corporate headquarters are located in Oklahoma City, Oklahoma and Chesapeake common stock trades on the Nasdaq Global Select Market under the ticker symbol “CHK.”
Hannibal Merger Sub, Inc.
c/o Chesapeake Energy Corporation
6100 North Western Avenue
Oklahoma City, Oklahoma 73118
Phone: (405) 848-8000
Hannibal Merger Sub, Inc., or Merger Sub Inc., is a direct, wholly owned subsidiary of Chesapeake. Upon the completion of the First Merger, Merger Sub Inc. will cease to exist. Merger Sub Inc. was incorporated in Delaware on August 6, 2021, for the sole purpose of effecting the First Merger.
Hannibal Merger Sub, LLC
c/o Chesapeake Energy Corporation
6100 North Western Avenue
Oklahoma City, Oklahoma 73118
Phone: (405) 848-8000
Hannibal Merger Sub, LLC, or Merger Sub LLC, is a direct, wholly owned subsidiary of Chesapeake. Upon the completion of the Second Merger, Merger Sub LLC will continue its existence as the surviving company. Merger Sub LLC was formed in Delaware on August 6, 2021, for the sole purpose of effecting the Second Merger.
Vine Energy Inc.
5800 Granite Parkway, Suite 550
Plano, Texas 75024
Phone: (615) 771-6701
Vine is an energy company focused on the development of natural gas properties in the stacked Haynesville and Mid-Bossier shale plays in the Haynesville Basin of Northwest Louisiana. Vine’s corporate headquarters are located in Plano, Texas and shares of Vine Class A common stock trade on the NYSE under the ticker symbol “VEI.”
 
34

 
SPECIAL MEETING OF VINE STOCKHOLDERS
This proxy statement/prospectus is being provided to the Vine stockholders as part of a solicitation of proxies by the Vine board for use at the special meeting to be held at the time and place specified below and at any properly convened meeting following an adjournment or postponement thereof. This proxy statement/prospectus provides Vine stockholders with information they need to know to be able to vote or instruct their vote to be cast at the special meeting.
Date, Time and Place
The Vine special meeting will be held virtually via the Internet on November 1, 2021, at 9:00 a.m., Central Time.
In light of the public health concerns regarding the ongoing COVID-19 pandemic, the Vine special meeting will be held in a virtual meeting format only, via live webcast, and there will not be a physical meeting location. You will be able to attend the Vine special meeting online and vote your shares electronically at the meeting by visiting the Vine special meeting website. To attend the meeting on the Vine special meeting website, please follow the instructions provided on the enclosed proxy card and the Vine special meeting website.
Purpose of the Vine Special Meeting
The purpose of the Vine special meeting is to consider and vote on:

the merger proposal;

the non-binding compensation advisory proposal; and

the approval of the adjournment proposal.
Vine will transact no other business at the Vine special meeting.
Recommendation of the Vine Board of Directors
The Vine board unanimously recommends that Vine stockholders vote:

FOR” the merger proposal;

FOR” the non-binding compensation advisory proposal; and

FOR” the adjournment proposal.
For additional information on the recommendation of the Vine board, see the section entitled “Vine Stockholder Proposals” and “The Merger — Recommendation of the Vine Board of Directors and Vine’s Reasons for the Merger” beginning on pages 41 and 56, respectively.
Record Date and Outstanding Shares of Vine Common Stock
Only holders of record of issued and outstanding shares of Vine common stock as of the close of business on September 22, 2021, the record date for the Vine special meeting, are entitled to notice of, and to vote at, the Vine special meeting or any adjournment or postponement of the Vine special meeting.
As of the close of business on the Vine record date, there were 75,259,393 shares of Vine common stock issued and outstanding and entitled to vote at the Vine special meeting. You may cast one vote for each share of Vine common stock that you held as of the close of business on the Vine record date.
A complete list of Vine stockholders entitled to vote at the Vine special meeting will be available for inspection at Vine’s principal office at 5800 Granite Parkway, Suite 550, Plano, Texas 75024 during regular business hours beginning with the tenth day prior to the Vine special meeting and continuing through the Vine special meeting and during the Vine special meeting on November 1, 2021. A complete list of Vine stockholders entitled to vote at the Vine special meeting will also be posted on the Vine special meeting website during the same period.
 
35

 
Voting and Support Agreement with Blackstone Inc. and Vine Management
In connection with the execution of the merger agreement, the Legacy Vine Holders, which beneficially own an aggregate of 54,819,256 shares of Vine common stock entered into the merger support agreement, pursuant to which the Legacy Vine Holders have agreed to vote their shares (i) in favor of the matters to be submitted to Vine’s stockholders in connection with the Merger and (ii) against specific actions that could reasonably be expected to impede, interfere with, delay, discourage, postpone or adversely affect the transactions contemplated by the Merger, subject to the terms and conditions set forth in the merger support agreement. Each Legacy Vine Holder also granted an irrevocable proxy to Chesapeake or any executive officer of Chesapeake designated by Chesapeake in writing to act for and on such stockholder’s behalf, and in such stockholder’s name, place and stead, solely in the event that such stockholder fails to comply in any material respect with his, her or its obligations under the merger support agreement in a timely manner, to vote such stockholder’s shares and grant all written consents with respect thereto and to represent such stockholder in any stockholder meeting held for the purpose of voting on the adoption of the merger agreement. As of the Vine record date, the Legacy Vine Holders held and are entitled to vote in the aggregate approximately 72.8% of the issued and outstanding shares of Vine common stock entitled to vote at the Vine special meeting.
Accordingly, as long as the Vine board does not change its recommendation with respect to such proposal, approval of the merger proposal at the Vine special meeting is assured. In the event that the Vine board has changed its recommendation to its stockholders to approve and adopt the merger agreement, the Legacy Vine Holders' voting obligation will be reduced to the number of shares equal to 35% of the outstanding shares of Vine’s common stock.
Quorum; Abstentions and Broker Non-Votes
A quorum of Vine stockholders is necessary to hold a valid meeting. The presence at the special meeting of the holders of a majority of the outstanding shares of Vine common stock entitled to vote at the meeting, present in person or represented by proxy, constitutes a quorum. Virtual attendance at the Vine special meeting constitutes presence in person for purposes of the quorum requirements under Vine’s bylaws. If you submit a properly executed proxy card, even if you do not vote for one or more of the proposals or vote to “ABSTAIN” in respect of one or more of the proposals, your shares of Vine common stock will be counted for purposes of determining whether a quorum is present for the transaction of business at the Vine special meeting.
Vine common stock held in “street name” with respect to which the beneficial owner fails to give voting instructions to the broker, bank or other nominee, and Vine common stock with respect to which the beneficial owner otherwise fails to vote, will not be considered present and entitled to vote at the Vine special meeting for the purpose of determining the presence of a quorum.
A broker non-vote occurs when a broker, bank or other nominee holding shares for a beneficial owner has discretionary authority to vote on one or more proposals to be voted on at a meeting of stockholders but does not vote on a particular proposal because the nominee does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner of the shares. Under the current rules of the NYSE, brokers, banks or other nominees do not have discretionary authority to vote on any of the proposals to be considered at the Vine special meeting. Because the only proposals for consideration at the Vine special meeting are nondiscretionary proposals, it is not expected that there will be any broker non-votes at the Vine special meeting. However, if there are any broker non-votes, the shares will be considered present and entitled to vote at the Vine special meeting for the purpose of determining the presence of a quorum.
Executed but unvoted proxies will be voted in accordance with the recommendations of the Vine board.
Required Votes
Approval of the merger proposal requires the affirmative vote of a majority of the outstanding shares of Vine common stock entitled to vote on the proposal. Abstentions, a failure to submit a proxy or vote
 
36

 
(whether in attendance at the meeting or not) and broker non-votes will have the same effect as a vote “AGAINST” the merger proposal.
Approval of the non-binding compensation advisory proposal requires the affirmative vote of a majority of the shares of Vine common stock present in person or represented by proxy at the Vine special meeting and entitled to vote on the proposal. Abstentions and a failure to vote while in attendance at the meeting will have the same effect as a vote “AGAINST” the non-binding compensation advisory proposal. Broker non-votes and a failure to vote without attending the meeting or submitting a proxy will have no effect on the outcome of the vote on the non-binding compensation advisory proposal, assuming a quorum is present.
Approval of the adjournment proposal requires the affirmative vote of a majority of the shares of Vine common stock present in person or represented by proxy at the Vine special meeting and entitled to vote on the proposal. Abstentions and a failure to vote while in attendance at the meeting will have the same effect as a vote “AGAINST” the adjournment proposal. Broker non-votes and a failure to vote without attending the meeting or submitting a proxy will have no effect on the outcome of the vote on the adjournment proposal, assuming a quorum is present.
The merger proposal, the non-binding compensation advisory proposal and the adjournment proposal are described in the section entitled “Vine Stockholder Proposals” beginning on page 41.
Methods of Voting
Vine stockholders, whether holding shares directly as stockholders of record or beneficially in “street name,” may submit a proxy on the Internet by going to the web address provided on the enclosed proxy card and following the instructions for Internet voting or by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided.
Vine stockholders of record may vote their shares in person by ballot at the Vine special meeting or may submit their proxies:

by the Internet until 11:59 p.m., Central Time, on October 31, 2021; or

by completing, signing and returning your proxy or voting instruction card via mail. If you vote by mail, your proxy card must be received by 11:59 p.m., Central Time, on October 31, 2021.
Vine stockholders who hold their shares in “street name” by a broker, bank or other nominee should refer to the proxy card, voting instruction form or other information forwarded by their broker, bank or other nominee for instructions on how to vote their shares or submit a proxy.
Voting Virtually on the Vine Special Meeting Website
Shares held directly in your name as stockholder of record may be voted virtually on the Vine special meeting website at the Vine special meeting. If you choose to vote your shares at the Vine special meeting, you will need proof of identification. Even if you plan to attend the Vine special meeting, the Vine board recommends that you submit a proxy to vote your shares in advance as described below so that your vote will be counted if you later decide not to attend the Vine special meeting.
If you are a beneficial holder, you will receive separate voting instructions from your broker, bank or other nominee explaining how to submit a proxy or vote your shares. Please note that if your shares are held in “street name” by a broker, bank or other nominee and you wish to vote at the Vine special meeting to be held virtually on the Vine special meeting website, you will not be permitted to vote at the Vine special meeting unless you first obtain a legal proxy issued in your name from the record owner. You are encouraged to request a legal proxy from your broker, bank or other nominee promptly as the process can be lengthy.
Voting by Proxy
Whether you hold your shares of Vine common stock directly as the stockholder of record or beneficially in “street name,” you may submit a proxy without attending the Vine special meeting. You can submit a proxy by the Internet or mail by following the instructions provided in the enclosed proxy card.
 
37

 
Questions About Voting
If you have any questions about how to vote or direct a vote in respect of your shares of Vine common stock, you may contact D.F. King & Co., Inc., Vine’s proxy solicitor, toll-free at (866) 387-7321, or banks and brokers can call collect at (212) 269-5550 or by emailing vine@dfking.com.
Revocability of Proxies
If you are a stockholder of record of Vine, whether you submit your proxy by the Internet or mail, you can change or revoke your proxy before it is voted at the meeting in one of the following ways:

submit a new proxy card bearing a later date;

submit a new proxy by the Internet at a later time;

give written notice before the meeting to Vine’s corporate secretary at 5800 Granite Parkway, Suite 550, Plano, Texas 75024 stating that you are revoking your proxy; or

attend the Vine special meeting and vote your shares virtually on the Vine special meeting website. Please note that your virtual attendance at the meeting on the Vine special meeting website alone will not serve to revoke your proxy.
Proxy Solicitation Costs
The enclosed proxy card is being solicited on behalf of the Vine board. In addition to solicitation by mail, Vine’s directors, officers and employees may solicit proxies in person, by phone or by electronic means. These persons will not be specifically compensated for conducting such solicitation.
Vine has retained D.F. King & Co., Inc. to assist in the solicitation process. Vine estimates it will pay D.F. King & Co., Inc. a base fee of approximately $14,500, in addition to the reimbursement of certain costs and expenses, for these services. Vine also has agreed to indemnify D.F. King & Co., Inc. against various liabilities and expenses that relate to or arise out of its solicitation of proxies (subject to certain exceptions).
Vine will ask brokers, banks and other nominees to forward the proxy solicitation materials to the beneficial owners of shares of Vine common stock held of record by such nominee holders. Vine will reimburse these nominee holders for their customary clerical and mailing expenses incurred in forwarding the proxy solicitation materials to the beneficial owners.
Adjournment
Whether or not a quorum is present, the chairman of the meeting or holders of a majority of the outstanding shares of Vine common stock who are present in person or by proxy and entitled to vote at the special meeting may adjourn the meeting from time to time, without notice other than by announcement at the meeting, to another date, place, if any, and time until a quorum is present. Even if a quorum is present, the special meeting may also be adjourned in order to provide more time to solicit additional proxies in favor of adoption of the merger agreement if sufficient votes are cast in favor of the adjournment proposal. If the adjournment is for more than 30 days or if after the adjournment, a new record date is fixed for the adjourned meeting, Vine will provide a notice of the adjourned meeting to each stockholder of record entitled to vote at the meeting.
In addition, the merger agreement provides that Vine (i) will be required to adjourn or postpone the Vine special meeting to the extent necessary to ensure that any legally required supplement or amendment to this proxy statement/prospectus are provided to the Vine stockholders or if, as of the time the Vine special meeting is scheduled, there are insufficient shares of Vine common stock represented to constitute a quorum necessary to conduct business at the Vine special meeting, and (ii) may adjourn or postpone the Vine special meeting with the written consent of Chesapeake, if, as of the time for which the Vine special meeting is scheduled, there are insufficient shares of Vine common stock represented (either in person or by proxy) to obtain the approval of the merger proposal. However, unless Chesapeake and Vine otherwise agree, the Vine special meeting will not be adjourned or postponed to a date that is more than ten business days after the date for which the Vine special meeting was previously scheduled or to a date on or after two
 
38

 
business days prior to the end date or if such adjournment or postponement would require the setting of a new Vine record date (as defined under “The Merger Agreement — Termination — Termination Rights” beginning on page 108).
If a sufficient number of shares of Vine common stock is present in person or represented by proxy and vote in favor of the merger proposal at the special meeting such that the merger proposal is approved, Vine does not anticipate that it will adjourn or postpone the special meeting. Virtual attendance at the special meeting will constitute presence in person for the purpose of determining the presence of a quorum for the transaction of business at the special meeting.
Appraisal Rights in the Merger
Under Delaware law, if the merger is completed, holders of Vine common stock who do not vote in favor of the adoption of the merger proposal, who have not validly waived appraisal rights and who otherwise comply with the requirements and procedures of Section 262 of the DGCL will be entitled to seek appraisal for, and obtain payment in cash for the judicially determined fair value of, their shares of Vine common stock, in lieu of receiving the merger consideration. The “fair value” could be higher or lower than, or the same as, the merger consideration. A copy of the full text of Section 262 of the DGCL is included as Annex D to this proxy statement/prospectus. Vine stockholders are encouraged to read Section 262 of the DGCL carefully and in its entirety. Moreover, due to the complexity of the procedures for exercising the right to seek appraisal, Vine stockholders who are considering exercising that right are encouraged to seek the advice of legal counsel. Failure to comply with Section 262 of the DGCL may result in loss of the right of appraisal. For more information, see “The Merger — Appraisal Rights” beginning on page 76.
Other Information
The matters to be considered at the Vine special meeting are of great importance to the Vine stockholders. Accordingly, you are urged to read and carefully consider the information contained in, attached to or incorporated by reference into this proxy statement/prospectus and submit your proxy by the Internet or complete, date, sign and promptly return the enclosed proxy card in the enclosed postage-paid envelope. If you submit your proxy by the Internet, you do not need to return the enclosed proxy card.
Assistance
If you need assistance in completing your proxy card or have questions regarding the Vine special meeting, contact:
D.F. King & Co., Inc.
48 Wall Street, 22nd floor
New York, NY 10005
Call Toll-Free: (866) 387-7321
Banks and Brokers Call: (212) 269-5550
vine@dfking.com
Vote of Vine’s Directors, Executive Officers and the Legacy Vine Holders
As of the close of business on September 29, 2021, the latest practicable date prior to the date of this proxy statement/prospectus, Vine directors and executive officers, and their affiliates (including the Legacy Vine Holders), as a group, owned and were entitled to vote 54,819,256 shares of Vine common stock, or approximately 72.8% of the total outstanding shares of Vine common stock, based on 75,259,256 shares of Vine common stock outstanding on that date. For more information regarding the security ownership of Vine directors and executive officers, please see “Share Ownership of Directors, Executive Officers and Certain Beneficial Owners of Vine — Vine’s Directors and Executive Officers” beginning on page 139.
Vine currently expects that all of its directors and executive officers will vote their shares “FOR” the merger proposal, “FOR” the non-binding compensation advisory proposal and “FOR” the adjournment proposal.
 
39

 
Attending the Vine Special Meeting Virtually on the Vine Special Meeting Website
You are entitled to attend the Vine special meeting only if (i) you were a stockholder of record of Vine at the close of business on the Vine record date, (ii) you hold a valid proxy for the Vine special meeting or (iii) you held your shares of Vine beneficially in the name of a broker, bank or other nominee as of the Vine record date and you hold a valid proxy from the record holder thereof for the Vine special meeting.
If you were a stockholder of record of Vine at the close of business on the Vine record date and wish to attend the Vine special meeting virtually on the Vine special meeting website, you should be prepared to present government-issued photo identification for admittance. If you do not provide photo identification or comply with the other procedures outlined above upon request, you might not be admitted to the Vine special meeting.
If a broker, bank or other nominee is the record owner of your shares of Vine common stock, you will need to have proof that you are the beneficial owner as of the Vine record date to be admitted to the Vine special meeting. A recent statement or letter from your broker, bank or other nominee confirming your ownership as of the Vine record date, or presentation of a valid proxy from a broker, bank or other nominee that is the record owner of your shares, would be acceptable proof of your beneficial ownership.
Results of the Vine Special Meeting
Within four business days following the Vine special meeting, Vine intends to file the final voting results with the SEC on a Current Report on Form 8-K. If the final voting results have not been certified within that four business day period, Vine will report the preliminary voting results on a Current Report on Form 8-K at that time and will file an amendment to the Current Report on Form 8-K to report the final voting results within four days of the date that the final results are certified.
VINE STOCKHOLDERS SHOULD CAREFULLY READ THIS PROXY STATEMENT/PROSPECTUS IN ITS ENTIRETY FOR MORE DETAILED INFORMATION CONCERNING THE MERGER PROPOSAL, THE NON-BINDING COMPENSATION ADVISORY PROPOSAL AND THE ADJOURNMENT PROPOSAL.
 
40

 
Vine Stockholder Proposals
Merger Proposal
In the merger proposal, Vine is asking its stockholders to adopt the merger agreement.
It is a condition to completion of the merger that Vine stockholders approve the merger proposal. As a result of the merger, immediately prior to the effective time each Holdings Unit, and each corresponding share of Vine Class B common stock, issued and outstanding at such time, will be converted into Vine Class A common stock and each Holdings Unit and each corresponding share of Vine Class B common stock will be cancelled and cease to exist. At the effective time, each issued and outstanding share of Vine Class A common stock, will automatically be converted into the right to receive the merger consideration consisting of $1.20 in cash, without interest, and 0.2486 shares of Chesapeake’s common stock, subject to certain exceptions as further described in the sections entitled “The Merger Agreement — Effect of the Merger on Capital Stock; Merger Consideration” and “The Merger — Appraisal Rights” beginning on pages 82 and 76, respectively.
The approval by the Vine stockholders of this proposal is required by the DGCL and is a condition to the consummation of the merger.
Approval of the merger proposal requires the affirmative vote of a majority of the outstanding shares of Vine common stock entitled to vote on the proposal. Abstentions, a failure to submit a proxy or vote (whether in attendance at the meeting or not) and broker non-votes will have the same effect as a vote “AGAINST” the merger proposal.
The Vine board unanimously recommends a vote “FOR” the merger proposal.
Non-Binding Compensation Advisory Proposal
Vine is also asking its stockholders to approve the non-binding compensation advisory proposal.
As required by Section 14A of the Exchange Act and the applicable SEC rules issued thereunder, which were enacted pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, Vine is required to provide its stockholders the opportunity to vote to approve, on a non-binding, advisory basis, certain compensation that may be paid or become payable to Vine’s named executive officers that is based on or otherwise relates to the merger, as described in the section entitled “The Merger — Interests of Vine’s Directors and Executive Officers in the Merger — Quantification of Potential Payments to Vine’s Named Executive Officers in Connection with the Merger” beginning on page 45. Accordingly, Vine stockholders are being provided the opportunity to cast an advisory vote on such payments.
As an advisory vote, this proposal is not binding upon Vine or the Vine board or Chesapeake or the Chesapeake board, and approval of this proposal is not a condition to completion of the merger and is a vote separate and apart from the merger proposal. Accordingly, you may vote to approve the merger proposal and vote not to approve the non-binding compensation advisory proposal and vice versa. Because the executive compensation to be paid in connection with the merger is based on the terms of the merger agreement as well as the contractual arrangements with Vine’s named executive officers, such compensation will be payable, regardless of the outcome of this advisory vote, only if the merger proposal is approved (subject only to the contractual conditions applicable thereto). However, Vine seeks the support of its stockholders and believes that stockholder support is appropriate because Vine has a comprehensive executive compensation program designed to link the compensation of its executives with Vine’s performance and the interests of Vine stockholders. Accordingly, holders of shares of Vine common stock are being asked to vote on the following resolution:
RESOLVED, that the stockholders of Vine Energy Inc. approve, on an advisory, non-binding basis, certain compensation that may be paid or become payable to the named executive officers of Vine Energy Inc. that is based on or otherwise relates to the merger, as disclosed pursuant to Item 402(t) of Regulation S-K under the heading “The Merger — Interests of Vine’s Directors and Executive Officers in the Merger — Quantification of Potential Payments to Vine’s Named Executive Officers in Connection with the Merger,” in
 
41

 
the proxy statement/prospectus of Vine Energy Inc. with respect to the special meeting of stockholders to be held on November 1, 2021.
Approval of the non-binding compensation advisory proposal requires the affirmative vote of a majority of the shares of Vine common stock present in person or represented by proxy at the Vine special meeting and entitled to vote on the proposal. Abstentions and a failure to vote while in attendance at the meeting will have the same effect as a vote “AGAINST” the non-binding compensation advisory proposal. Broker non-votes and a failure to vote without attending the meeting or submitting a proxy will have no effect on the outcome of the vote on the non-binding compensation advisory proposal, assuming a quorum is present.
The Vine board unanimously recommends a vote “FOR” the non-binding compensation advisory proposal.
The Adjournment Proposal
In the adjournment proposal, Vine is asking its stockholders to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to adopt the merger agreement.
If Vine stockholders approve the adjournment proposal, subject to the terms of the merger agreement, Vine could adjourn the special meeting and use the additional time to solicit additional proxies, including soliciting proxies from Vine stockholders who have previously voted. Vine does not intend to call a vote on the adjournment proposal if the merger proposal is approved at the special meeting.
Approval of the adjournment proposal requires the affirmative vote of a majority of the shares of Vine common stock present in person or represented by proxy at the Vine special meeting and entitled to vote on the proposal. Abstentions and a failure to vote while in attendance at the meeting will have the same effect as a vote “AGAINST” the adjournment proposal. Broker non-votes and a failure to vote without attending the meeting or submitting a proxy will have no effect on the outcome of the vote on the adjournment proposal, assuming a quorum is present.
The Vine board unanimously recommends a vote “FOR” the adjournment proposal.
 
42

 
THE MERGER
This discussion of the merger is qualified in its entirety by reference to the merger agreement, which is attached to this proxy statement/prospectus as Annex A and incorporated by reference herein in its entirety. You should read the entire merger agreement carefully as it is the legal document that governs the merger.
Transaction Structure
Pursuant to the terms and subject to the satisfaction, or to the extent permitted by applicable law, waiver of the conditions included in the merger agreement, Chesapeake has agreed to acquire Vine by means of a merger of Merger Sub Inc. with and into Vine, with Vine surviving the merger as a wholly owned subsidiary of Chesapeake. Following such merger, Vine will be merged with and into Merger Sub LLC, with Merger Sub LLC surviving the merger as a wholly owned subsidiary of Chesapeake.
Effect of the Merger on Capital Stock; Merger Consideration
At the effective time of the First Merger, by virtue of the First Merger and without any action on the part of Chesapeake, Merger Sub Inc., Vine, or any holder of any securities of Chesapeake, Merger Sub Inc. or Vine, each share of Vine Class A common stock issued and outstanding immediately prior to the effective time of the First Merger (excluding any excluded shares (as such term is defined below), any unvested Vine restricted stock awards and any Vine appraisal shares) will be converted into the right to receive from Chesapeake the following consideration (collectively, the “merger consideration”): (A) $1.20 in cash, without interest (the “cash consideration”), and (B) that number of fully-paid and nonassessable shares of Chesapeake common stock equal to the exchange ratio. The “exchange ratio” means 0.2486.
All such shares of Vine Class A common stock, when so converted in accordance with the terms of the merger agreement, will cease to be outstanding and will automatically be canceled and cease to exist. Each holder of a share of Vine Class A common stock that was outstanding immediately prior to the effective time of the First Merger (excluding any excluded shares, any unvested Vine restricted stock awards and any Vine appraisal shares) will cease to have any rights with respect thereto, except the right to receive the merger consideration, any dividends or other distributions paid with respect to that portion of the merger consideration that consists of Chesapeake common stock following the effective time and any cash to be paid in lieu of any fractional shares of Chesapeake common stock.
All shares of Vine common stock held by Vine as treasury shares or by Chesapeake or the Merger Subs immediately prior to the effective time of the First Merger and, in each case, not held on behalf of third parties (collectively, the “excluded shares”) will automatically be canceled and cease to exist as of the effective time of the First Merger, and no consideration will be delivered in exchange for excluded shares.
In the event of any change in the number of shares of Vine Class A common stock or Chesapeake common stock or securities convertible or exchangeable into or exercisable for shares of Vine Class A common stock or Chesapeake common stock (in each case issued and outstanding after August 10, 2021 and before the effective time of the First Merger) by reason of any stock split, reverse stock split, stock dividend, subdivision, reclassification, recapitalization, combination, exchange of shares or the like, the exchange ratio will be equitably adjusted to reflect the effect of such change.
Interests of Vine’s Directors and Executive Officers in the Merger
In considering the recommendation of the Vine board that you vote to adopt the merger agreement, you should be aware that certain directors and executive officers of Vine may have interests in the merger that are different from, or in addition to, the interests of Vine stockholders generally. The Vine board was aware of and considered these interests when it unanimously (i) adopted the merger agreement, (ii) approved and determined that it is in the best interests of Vine to consummate the merger and the other transactions contemplated by the merger agreement and execute and deliver the merger agreement and perform its obligations thereunder, and (iii) resolved to recommend the approval of the merger agreement by Vine stockholders.
 
43

 
Treatment of Restricted Stock Unit Awards
Each of Vine’s executive officers and certain of its directors hold unvested restricted stock units (“RSUs”) denominated in shares of Vine common stock under Vine’s equity compensation plans. At the effective time of the merger, each unvested award of RSUs in respect of Vine common stock that is outstanding immediately prior to the effective time of the merger (other than the Accelerated RSUs, as defined below) shall be converted into a number of time-based RSUs in respect of Chesapeake common stock (rounded to the nearest whole share) equal to the product of (A) the total number of shares of Vine common stock subject to such award immediately prior to the effective time of the merger multiplied by (B) the sum of the exchange ratio and the Parent Stock Cash Equivalent (as defined below), with performance-based RSUs converted based on the target number of shares of Vine common stock subject to each performance-based RSU. For this purpose, “Parent Stock Cash Equivalent” means the per share cash consideration divided by the closing price per share on the Nasdaq Global Select Market of Chesapeake common stock on the last trading date prior to Closing. Following the effective time, the converted RSUs will be subject to the same terms and conditions (including time-based and termination related vesting conditions) that were applicable to such restricted stock units under the applicable Vine stock plan and award agreement immediately prior to the effective time, except for performance conditions, if any, that will be deemed to have been attained based on the target level of performance. For Vine’s executive officers, such converted RSUs will vest if the officer incurs a “covered qualifying termination” upon or within 12 months following the merger as described below under “Executive Employment Agreements.”
The following table sets forth the number of RSUs held by Vine’s executive officers as of August 27, 2021:
Name
Unvested RSUs(1) (#)
Estimated Value(2) ($)
Eric D. Marsh
507,142 7,454,987
David M. Elkin
271,428 3,989,992
Wayne B. Stoltenberg
235,714 3,464,996
Jonathan C. Curth
67,858 997,513
(1)
For performance-based restricted stock units, represents the target number of RSUs.
(2)
For this purpose, the per share value of Vine’s common stock is assumed to be $14.70, which is the average of the closing price of Vine’s common stock over the first five trading days following the announcement of the merger.
Certain RSUs (the “Accelerated RSUs”), including those held by two of our directors, will become vested in full as of the effective time of the merger. The following table sets forth the number of RSUs held by Vine’s directors as of August 27, 2021:
Name
Unvested RSUs (#)
Estimated Value(1) ($)
Charles M. Sledge
28,571 419,994
H. Paulett Eberhart
10,714 157,496
(1)
For this purpose, the per share value of Vine’s common stock is assumed to be $14.70, which is the average of the closing price of Vine’s common stock over the first five trading days following the announcement of the merger.
Executive Employment Agreements
Vine is party to employment agreements with each of its executive officers that provides them with benefits if their employment is terminated by Vine for a reason other than “cause,” death or disability, or if the executive terminates employment for “good reason,” in each case, within 12 months following a change in control of Vine (such as the merger) (each of which is referred to as a covered termination). The severance benefits that the executive officers are eligible to receive pursuant to their respective employment agreements (and, with respect to long-term equity awards, the applicable award agreements) include the following:
 
44

 
(i) any earned but unpaid annual bonus for the year preceding the year of termination, (ii) a lump sum payment equal to 2 times (2.5 times, for Mr. Marsh) the sum of the executive’s base salary and target bonus for the year of termination, (iii) a lump sum payment equal to the pro-rata target bonus for the year in which the termination occurs, (iv) payment or reimbursement of the incremental cost of continued health benefits for the executive and his eligible dependents for a period of 18 months (24 months, for Mr. Marsh) and (v) full accelerated vesting of the executive’s outstanding unvested RSUs.
Under the employment agreements, “good reason” means any of the following events or conditions that occur without the executive’s written consent and remain in effect after notice has been provided by the executive to Vine of such event and the expiration of a 30-day cure period: (i) reduction in the executive’s annual base salary or target annual bonus opportunity, other than a general reduction in base salary and/or target bonus that affects all similarly-situated executives in substantially the same proportions; (ii) a material diminution in the executive’s duties, authorities or responsibilities, including removal from the position(s) set forth in the executive’s employment agreement; or (iii) the relocation of the executive’s primary work location by more than 50 miles from its then current location.
Under the employment agreements, “cause” means (i) willful misconduct in the performance of the executive’s reasonable and customary duties to Vine; (ii) willful failure to perform the executive’s reasonable and customary duties to Vine or to follow the lawful directives of the Vine board of directors (or any executive to which the executive reports), which failure the executive fails to cure, if curable, within 15 days after receipt of a written notice of such breach; (iii) any violation by the executive of any fiduciary duties owed by him to Vine; (iv) conviction of, or pleading guilty or nolo contendere to, a felony or any crime involving moral turpitude; (v) embezzlement, fraud, theft, malfeasance, dishonesty or misappropriation of Vine’s property; or (vi) material breach of the executive’s employment agreement or any other agreement with Vine, or material violation of Vine’s code of conduct or other written policy as in effect from time to time, including policies related to discrimination, harassment, retaliation, performance of illegal or unethical activities, or ethical misconduct, and which breach the executive fails to cure or take substantial steps to cure, if curable (as reasonably determined by the Vine board of directors), within 15 days after receipt of a written notice of such breach.
Executive Cash Awards
Mr. Marsh and Mr. Stoltenberg are each party to a cash award agreement with Vine Management Services LLC, under which they were granted cash incentive awards in the amount of $4,221,000 and $511,875, respectively. These awards generally vest on September 10, 2023 (the fourth anniversary of the date of grant), subject to each executive’s continued employment through such date. Upon a change of control (such as the merger), the cash incentives awards will immediately vest in full.
Quantification of Potential Payments to Vine’s Named Executive Officers in Connection with the Merger
The information below sets forth the information required by Item 402(t) of the SEC’s Regulation S-K regarding compensation that is based on, or otherwise relates to, the merger for each “named executive officer” of Vine. The plans or arrangements pursuant to which such payments would be made (other than the merger agreement), consist of the executives’ employment agreements and the respective equity awards specifying the terms and conditions of each such award. With respect to Vine’s named executive officers, no changes were made in the terms and conditions of their employment agreements or the equity awards, other than as specified in the merger agreement and described in the section entitled “The Merger Agreement — Treatment of Vine Equity Awards in the Merger” beginning on page 83. Throughout this discussion, the following individuals are referred to collectively as the named executive officers of Vine:

Eric D. Marsh — President, Chief Executive Officer and Chairman of the Board

David M. Elkin — Executive Vice President and Chief Operating Officer

Wayne B. Stoltenberg — Vice President and Chief Financial Officer

Jonathan C. Curth — Executive Vice President, General Counsel and Corporate Secretary
The potential payments in the table below are based on the following assumptions:
 
45

 

the closing date of the merger is August 27, 2021, which is the latest practicable date prior to this filing, and used solely for purposes of this golden parachute compensation disclosure;

the named executive officers of Vine are terminated without “cause” immediately following the assumed closing date of the merger; and

the per share value of Vine’s common stock is $14.70, which is the average of the closing price of Vine’s common stock over the first five trading days following the announcement of the merger.
The amounts shown are estimates of amounts that would be payable to the named executive officers based on multiple assumptions that may or may not actually occur, including assumptions described in this proxy statement. Some of the assumptions are based on information not currently available and, as a result, the actual amounts received by a named executive officer may differ materially from the amounts shown in the following table.
The following tables, footnotes and discussion describe double-trigger benefits for the named executive officers, except where noted. For purposes of this discussion, “double-trigger” refers to benefits that require two conditions, which are the completion of the merger as well as a covered termination within three years following the completion of the merger.
Golden Parachute Compensation
Name
Cash(1) ($)
Equity(2) ($)
Perquisites/Benefits(3) ($)
Total ($)
Eric D. Marsh
8,316,508 7,454,987 1,732 15,773,228
David M. Elkin
1,581,855 3,989,992 29,014 5,600,860
Wayne B. Stoltenberg
1,842,286 3,464,996 28,016 5,335,298
Jonathan C. Curth
1,346,712 997,513 29,014 2,373,239
(1)
The amounts reflect (i) estimated payment of the lump-sum cash severance that would be provided to the named executive officer under the terms of his employment agreement if the named executive officer were to experience a qualifying termination for purposes of his employment agreement on the closing date of the merger in the amount of $3,623,026 for Mr. Marsh, $1,387,925 for Mr. Elkin, $1,200,000 for Mr. Stoltenberg and $1,200,000 for Mr. Curth, which amounts represent a lump sum severance payment equal to two times current eligible compensation for Messrs. Elkin, Stoltenberg and Curth and two and one-half times current eligible compensation for Mr. Marsh, (ii) for each executive, a pro-rata target annual bonus for the year of termination in the amount of $472,482 for Mr. Marsh, $193,930 for Mr. Elkin, $130,411 for Mr. Stoltenberg and $146,712 for Mr. Curth, and (iii) for Mr. Marsh and Mr. Stoltenberg, each executive’s cash incentive bonus, which accelerates in full upon the consummation of the merger, in the amount of $4,221,000 for Mr. Marsh and $511,875 for Mr. Stoltenberg.
(2)
The amounts reflect the aggregate payment that each named executive officer would receive with respect to Vine equity awards subject to accelerated vesting in connection with the merger, as described above in “— Interests of Vine’s Directors and Executive Officers in the Merger — Executive Employment Agreements” above.
(3)
Includes payment or reimbursement of the incremental cost of continued health benefits for the executive and his eligible dependents for a period of 18 months (24 months, for Mr. Marsh).
Share Ownership
As described below under “Share Ownership of Directors, Executive Officers and Certain Beneficial Owners of Vine” and “The Merger Agreement — Effect of the Merger on Capital Stock; Merger Consideration,” executive officers and directors of Vine beneficially own shares of Vine common stock, which will be entitled to receive the merger consideration in respect of each share of Vine common stock beneficially owned by them.
 
46

 
Indemnification and Insurance
The merger agreement provides that the executive officers and directors of Vine and its subsidiaries will have the right to indemnification and continued coverage under “tail” directors’ and officers’ liability insurance policies for at least six years following the effective time of the merger, but Chesapeake will not be required to pay annual premiums in excess of 300% of the last annual premium paid by Vine prior to the date of the merger agreement.
Background of the Merger
The Vine board and Vine management, in the ordinary course and consistent with their fiduciary duties, continually evaluate Vine’s operations with a focus on generating long-term value for the company by leveraging assets to create efficiencies, growing free cash flow and returning capital to stockholders. In connection with such evaluation, the Vine board and Vine management also review and assess potential strategic alternatives available to Vine, including mergers and acquisition transactions and liability management. As part of such assessment, Vine management makes contact from time to time with financial and strategic parties, including other public and private exploration and production companies.
The Chesapeake board and Chesapeake management periodically review opportunities to acquire assets or companies in the oil and gas industry that meet Chesapeake’s strategic and financial objectives. As part of such reviews, Chesapeake management has contacts from time to time with financial and strategic parties, including other public and private exploration and production companies.
On May 24, 2021, Eric Marsh, Chairman of the Vine board and Vine’s President and Chief Executive Officer, and Mike Wichterich, Chairman of the Chesapeake board and Chesapeake’s interim Chief Executive Officer, had an introductory telephone call to discuss their respective views on certain issues facing the oil and gas industry generally, activity in the Haynesville basin and the possibility of a business combination between Vine and Chesapeake (the “Potential Transaction”). Messrs. Marsh and Wichterich agreed that each company would initially use public data to evaluate the viability of a Potential Transaction.
On May 27, 2021, David Foley and Angelo Acconcia, each a member of the Vine board and a Senior Managing Director at Blackstone (as defined below), Vine’s majority stockholder, held a call with Mr. Wichterich to discuss the Potential Transaction and the desire of each company to conduct basic due diligence on one another.
Beginning in late May 2021, Vine management engaged in a due diligence process in respect of Chesapeake, including a review of bankruptcy court filings and other publicly available information relating to Chesapeake. In parallel, Chesapeake engaged in a due diligence process in respect of Vine, including Vine’s debt obligations, the Tax Receivable Agreement (“TRA”), dated as of March 17, 2021, between Vine and certain Blackstone-controlled affiliates, together with the Legacy Vine Holders, and other publicly available information relating to Vine.
On June 4, 2021, Messrs. Marsh and Wichterich had a telephone call during which they updated one another on their respective companies’ progress on due diligence and continued interest in considering a Potential Transaction. Shortly thereafter, Messrs. Wichterich, Foley and Acconcia had a telephone call during which they discussed a continued interest in pursuing the Potential Transaction.
On June 9, 2021, Messrs. Wichterich and Foley had a telephone call to discuss each party’s progress on evaluating the Potential Transaction.
On the morning of June 11, 2021, Messrs. Wichterich, Foley and Acconcia had a telephone call during which they discussed a continued interest in pursuing the Potential Transaction.
Later on June 11, 2021, Messrs. Marsh and Wichterich agreed that there was sufficient interest from both companies to pursue the Potential Transaction and decided that the parties should enter into a confidentiality agreement and begin exchanging confidential due diligence materials.
On June 11, 2021, Vine and Chesapeake entered into the Confidentiality Agreement. The Confidentiality Agreement subjected each of Vine and Chesapeake to a customary standstill obligation regarding the other party but permitted each party to submit a confidential, non-public proposal or counterproposal for a
 
47

 
negotiated transaction to the other party. Following execution of the Confidentiality Agreement, over the next eight weeks, representatives from Vine and Chesapeake management and/or their respective legal and financial advisors also had telephone calls to discuss the Potential Transaction, including potential business strategies that the combined company could pursue, each party’s progress on due diligence and the potential timing and terms of the Potential Transaction. Vine and Chesapeake management were also provided with certain information in a virtual data room in order to conduct preliminary structuring, financial and operational due diligence regarding the Potential Transaction.
On June 14, 2021, Vine management contacted Vine’s regular outside counsel, Kirkland & Ellis LLP (“Kirkland”), to represent Vine in connection with the Potential Transaction. Kirkland subsequently confirmed that there were no existing conflicts of interest.
On June 16, 2021, the Vine board held a telephonic meeting with representatives from Vine management and Kirkland present. Vine management updated the Vine board on the current status of discussions with potential partners, including Chesapeake, and the various financial, operational and structuring due diligence workstreams in progress. Representatives from Kirkland reviewed with the Vine board certain legal considerations in connection with the Potential Transaction, including approvals that would be required for the Potential Transaction and the Vine board’s fiduciary duties under applicable law. Vine management also discussed with the Vine board the potential engagement of Citigroup Global Markets Inc. (“Citi”) as Vine’s financial advisor in connection with the Potential Transaction and related process given, among other things, Citi’s industry experience, reputation and familiarity with Vine and its business.
On June 17, 2021, Blackstone engaged Weil, Gotshal & Manges LLP (“Weil”) to act as its counsel in connection with the Potential Transaction.
Also on June 17, 2021, Messrs. Wichterich and Foley had a telephone call during which they updated one another on their respective parties’ continued interest in considering the Potential Transaction. Mr. Foley also informed Mr. Wichterich of Vine’s engagement of Citi as Vine’s financial advisor.
Also on June 17, 2021, a representative of Company A contacted Mr. Foley to indicate an interest in pursuing discussions regarding a strategic transaction with Vine. Mr. Foley directed such representative of Company A to discuss with Mr. Marsh and Citi its interest in a potential transaction.
On June 22, 2021, Vine and Company A entered into a mutual confidentiality agreement (the “Company A NDA”). The Company A NDA subjected each of Vine and Company A to a customary standstill obligation regarding the other party but permitted each party to submit a confidential, non-public proposal or counterproposal for a negotiated transaction to the other party.
On June 26, 2021, Mr. Wichterich and members of the Vine board exchanged emails regarding Chesapeake’s and Vine’s progress in evaluating the Potential Transaction.
On June 28, 2021, the Vine board held a telephonic meeting with representatives from management and Kirkland present in order to discuss, among other things, the establishment of a special committee of independent directors (the “Special Committee”) in connection with exploring potential transactions. Representatives from Kirkland discussed with the Vine board the rationale for the formation of a special committee, given the potential for conflicts arising between Vine and the Legacy Vine Holders from the TRA, and the process necessary to establish the Special Committee. The Vine board determined to further consider the formation of the Special Committee and designated Mr. Sledge and Ms. Eberhart, the independent members of the Vine board, to investigate this possibility further.
Also on June 28, 2021, Chesapeake engaged J.P. Morgan Securities LLC (“J.P. Morgan”) as its financial advisor with respect to the Potential Transaction.
On July 1, 2021, the Vine board held a telephonic meeting with representatives from Vine management, Kirkland and Citi to further discuss the appointment and related processes of a Special Committee, given the potential for conflicts arising between Vine and the Legacy Vine Holders from the TRA.
On July 2, 2021, the Vine board held a telephonic meeting with representatives from Vine management and Citi to discuss potential benefits and other considerations relating to a potential transaction with Chesapeake or Company A.
 
48

 
During the week of July 5, 2021, the Special Committee engaged Gibson, Dunn & Crutcher LLP (“Gibson Dunn”) to act as its general corporate counsel and Morris, Nichols, Arsht & Tunnell LLP (“Morris Nichols”) to act as its Delaware counsel.
On July 6, 2021, the Vine board held a telephonic meeting with representatives from Vine management, Kirkland and PricewaterhouseCoopers LLP (“PwC”) present. Representatives from Kirkland and PwC provided an overview of the TRA, including the potential magnitude of the payments required to be made by Vine to the Legacy Vine Holders pursuant to the terms of the TRA in connection with a change of control transaction. PwC refreshed the Vine board on its previous analysis of the TRA performed in anticipation of the Vine initial public offering. Mr. Sledge also provided the Vine board with an update regarding the potential formation of the Special Committee and the selection process for legal and financial advisors to the Special Committee. Vine management also provided an update regarding the status of information sharing with two potential counterparties, Chesapeake and Company A.
On July 13, 2021, Mr. Wichterich sent a letter to Mr. Marsh expressing Chesapeake’s continued interest in pursuing a combination of Chesapeake and Vine through Chesapeake’s acquisition of the outstanding shares of Vine common stock at a zero percent premium to Vine’s five-day volume-weighted average exchange ratio, with payment consisting of a combination of cash (10%) and shares of Chesapeake common stock (90%), with Vine stockholders representing approximately 13.8% of Chesapeake after giving effect to the Potential Transaction. Among other things, the letter indicated Chesapeake’s belief that a combination of the two companies would present Chesapeake and Vine with several strategic and financial benefits, which would benefit their respective stockholders, including the combination of Chesapeake’s and Vine’s contiguous and complementary core acreage positions, strengthening of the combined company’s asset base and balance sheet and increased ability to generate free cash flows to provide stable growth for the combined company.
On July 15, 2021, by written consent, the Vine board formally established, authorized and empowered the Special Committee, comprised of Mr. Sledge and Ms. Eberhart, to (i) review, evaluate and analyze any potential transactions with Chesapeake or Company A (or other parties), (ii) recommend to the Vine board whether to approve, if applicable, a potential transaction, (iii) determine whether a potential strategic transaction is fair to, and in the best interests of, Vine’s excluded stockholders (which refers to stockholders other than the Legacy Vine Holders), (iv) negotiate (on behalf of Vine) the terms and conditions of any payment under, or any amendment or termination of, the TRA, and (v) perform such other functions as the Vine board may assign to the Special Committee from time to time. In addition, the Vine board resolved that a potential transaction would not be approved by the Vine board unless such transaction was also approved by the Special Committee.
On July 17, 2021, Gibson Dunn on behalf of the Special Committee contacted Houlihan Lokey to discuss Houlihan Lokey’s potential engagement to act as the Special Committee’s independent financial advisor in evaluating potential strategic alternatives for Vine pursuant to the Special Committee’s mandate, including the Potential Transaction based on, among other things, Houlihan Lokey’s industry experience and performance and, if requested, undertaking an analysis to enable it, subject to Houlihan Lokey’s internal approvals, to render a fairness opinion in connection with any such potential transaction. On July 23, 2021, Houlihan Lokey provided information regarding its relationships with Blackstone, Chesapeake and Company A. The Special Committee verbally confirmed its intention to retain Houlihan Lokey on July 26, 2021, and Vine later engaged Houlihan Lokey as its financial advisor.
On July 23, 2021, the Vine board held a telephonic meeting with representatives from Vine management, Kirkland and Citi present to discuss the current status of discussions regarding a potential business combination transaction, including Vine’s receipt of a letter from Chesapeake, dated July 22, 2021, regarding the Potential Transaction. Citi discussed with the Vine board the financial terms set forth in Chesapeake’s July 22 letter, which contemplated a merger of Vine and Chesapeake based on an “at market” valuation for Vine. The Vine board, with the assistance of Vine management, discussed the status of Vine’s due diligence review of Chesapeake and the need for additional information in order to evaluate the proposal. Citi also provided an update regarding Vine’s discussions with Company A, noting that Company A was trailing Chesapeake’s progress on due diligence at such time. The Vine board directed Citi to discuss with Company A the status of its due diligence process and to inform Chesapeake regarding Vine’s request for further information to evaluate the proposal.
 
49

 
On July 26, 2021, at the direction of the Vine board, representatives of Vine management contacted Potter Anderson & Corroon LLP (“Potter Anderson”) to request that Potter Anderson act as Vine’s Delaware counsel. Potter Anderson subsequently confirmed that there were no existing conflicts of interest.
Also on July 26, 2021, Chesapeake management and J.P. Morgan contacted Latham & Watkins LLP (“Latham”) to request that Latham act as Chesapeake’s legal advisor with respect to the Potential Transaction. Latham subsequently confirmed that there were no existing conflicts of interest.
On July 27, 2021, Mr. Wichterich sent another letter to Mr. Marsh expressing Chesapeake’s continued interest in pursuing a combination of Chesapeake and Vine. The letter proposed a combination of the companies through Chesapeake’s acquisition of the outstanding shares of Vine common stock at an enterprise value of Vine of $2.297 billion, which included Vine’s net debt as of April 30, 2021, estimated make whole costs on Vine’s existing term loan and Vine’s net working capital deficit as of March 31, 2021, excluding Vine’s derivative instruments. The valuation further assumed that the TRA would be terminated at or prior to the closing of the Potential Transaction. The consideration payable to Vine stockholders would consist of a combination of cash (10%) and shares of Chesapeake common stock (90%).
On July 28, 2021, the Vine board held a telephonic meeting with representatives from Vine management, Kirkland and Citi present. The meeting was called to discuss Chesapeake’s proposal and the current status of Vine’s due diligence review of Chesapeake and its business. Citi provided an overview of the primary components of Chesapeake’s proposal, and the Vine board and Citi discussed certain considerations regarding such proposal. The Vine board also engaged in an extensive discussion regarding the potential for a business combination with other parties, including Company A, and whether to continue with Vine’s standalone plan. The Vine board noted that Chesapeake’s proposal targeted signing a definitive agreement for the Potential Transaction by Chesapeake’s quarterly earning’s announcement on or about August 10, 2021. The Vine board determined to continue expedited discussions with Chesapeake, taking into consideration, among other reasons, the value provided by Chesapeake’s proposal, the relative degrees of interest of other parties in Vine’s assets and business, the ability of potential counterparties to transact in a timely manner and concerns regarding the potential impact that market rumors could have on the Potential Transaction. The Vine board determined to revisit the prospect of potential alternative transactions with selected counterparties at subsequent meetings of the Vine board.
On July 29, 2021, the Special Committee held meetings to discuss the Potential Transaction, alternatives to the Potential Transaction, the status of the TRA, including its potential amendment or waiver, due diligence updates and the engagement of advisors to the Special Committee.
On July 29, 2021, representatives from Chesapeake, Vine, Blackstone and Houlihan Lokey held a due diligence conference call to discuss certain financial, technical and operational due diligence items, as well as the Potential Transaction.
Also on July 29, 2021, representatives of Vine management held discussions with representatives from the Special Committee and Vine’s and the Special Committee’s respective financial advisors regarding certain financial and technical matters pertaining to Vine’s business operations.
Additionally on July 29, 2021, representatives of Chesapeake contacted Richards, Layton & Finger, P.A. (“RLF”) to request that RLF act as Chesapeake’s Delaware counsel with respect to the Potential Transaction. RLF subsequently confirmed that there were no existing conflicts of interest.
On July 29, 2021 and July 30, 2021, representatives from Kirkland and Latham held several calls to discuss the Potential Transaction, legal documentation, due diligence and other ancillary matters.
On July 30, 2021, at the direction of the Vine board, Kirkland sent an initial draft of the merger agreement to Chesapeake and Chesapeake’s counsel, Latham. The draft contemplated, among other things: (i) a reverse subsidiary merger with Vine surviving the transaction as a wholly owned subsidiary of Chesapeake; (ii) representations and warranties and interim operating covenants customary for a transaction in which the target’s stockholders receive less than 20% of the acquiror’s common stock; (iii) a limited no-shop provision applicable to Vine that would allow each of the Vine board and Special Committee, under certain circumstances, to change its recommendation and terminate the transaction in the event of a superior proposal or intervening event; (iv) a placeholder for a termination fee payable by each party under certain
 
50

 
circumstances, including a superior proposal; (v) that Legacy Vine Holders, as significant stockholders of Vine, would enter into a support agreement in connection with the signing of the merger agreement, (vi) the execution of an amendment to the TRA by Vine and the Legacy Vine Holders and (vii) following completion of the Potential Transaction, the addition of a new director to Chesapeake’s board. Over the course of the following two weeks, Vine, the Special Committee, the Legacy Vine Holders and Chesapeake, and their respective legal counsel, continued their due diligence efforts and continued to negotiate the terms of the merger agreement and ancillary documentation.
Also on July 30, 2021, the Special Committee held a telephonic meeting with representatives from Gibson Dunn and Houlihan Lokey to discuss, among other things, the Potential Transaction, alternatives to the Potential Transaction, recent stock-for-stock transactions in the oil & gas industry and the status of the TRA, including its potential amendment or waiver.
On July 31, 2021, Chesapeake management held a conference call with representatives of Latham and J.P. Morgan to discuss the initial draft of the merger agreement, due diligence matters and other considerations regarding the Potential Transaction.
Between August 1, 2021 and August 10, 2021, Chesapeake, Vine and their respective financial and legal advisors completed their business and legal due diligence on Vine and Chesapeake, respectively.
On August 2, 2021, the Vine board held a telephonic meeting with representatives from Vine management, Kirkland and Citi present to discuss the status of due diligence and discussions with Chesapeake. Vine management indicated that the due diligence process with Chesapeake, and discussions regarding the terms of a Potential Transaction, continued to progress.
Also on August 2, 2021, Chesapeake management held a conference call with representatives of Latham and J.P. Morgan to further discuss the initial draft of the merger agreement.
On August 3, 2021, the Vine board held a brief telephonic meeting with representatives from Vine management, Kirkland and Houlihan Lokey present to discuss the status of due diligence and the draft merger agreement with Chesapeake. Representatives from Kirkland indicated that they expected to receive Chesapeake’s markup of the merger agreement shortly.
Also on August 3, 2021, Chesapeake management held a call with representatives of Latham to discuss certain financing matters relating to the Potential Transaction, including the incorporation of Vine’s existing indebtedness into Chesapeake’s financial structure.
Later on August 3, 2021, Latham sent a revised draft of the merger agreement to Kirkland, which contemplated, among other things, the following key terms: (i) the addition of certain restrictions on the conduct of Vine’s business, and the removal of certain restrictions on the conduct of Chesapeake’s business, prior to closing of the Potential Transaction; (ii) the addition of certain restrictions on the ability of Vine and its management and representatives to solicit or pursue competing proposals prior to closing of the Potential Transaction; (iii) the removal of the additional Chesapeake board seat; (iv) replacement of the “hell or high water” antitrust covenant with a less onerous covenant on Chesapeake; (v) clarification that in the event of a Vine change in recommendation, the merger support agreement would not terminate, but rather, the obligations of the Legacy Vine Holders to vote in favor of the Potential Transaction would be reduced to 37.5% of Vine’s outstanding common stock; and (vi) a termination fee equal to 4.5% of Vine’s equity value.
On August 4, 2021, Weil provided an initial draft of the registration rights agreement (the “registration rights agreement”) to Kirkland, pursuant to which Chesapeake would provide the Legacy Vine Holders with registration rights in respect of the shares of Chesapeake common stock to be received by such parties as merger consideration.
Also on August 4, 2021, Blackstone, in discussions with the Special Committee, tentatively agreed to amend the TRA such that the change of control payment to the Legacy Vine Holders thereunder would be waived for no consideration upon the closing of the Potential Transaction (the “TRA Payment Waiver”).
On the afternoon of August 4, 2021, the Vine board held an informal telephonic discussion with representatives from Vine management and Kirkland present to discuss the status of the negotiations with
 
51

 
Chesapeake and the Special Committee process. Representatives from Kirkland discussed certain key points reflected in the revised draft of the merger agreement received from Latham and agreed to provide a more fulsome update in respect of the terms of the Potential Transaction at that evening’s meeting of the Vine board. The Vine board also discussed the potential dissolution of the Special Committee given the agreement upon the TRA Payment Waiver and the Vine board’s view that there was no longer a material risk of a conflict of interest between the Legacy Vine Holders that are party to the TRA, on the one hand, and other stockholders of Vine, on the other hand. In light of the potential dissolution of the Special Committee, Vine management and the Vine board also discussed the potential engagement of Houlihan Lokey by Vine, rather than the Special Committee.
In addition, on August 4, 2021, in light of the potential dissolution of the Special Committee, members of the Vine board contacted Houlihan Lokey to discuss delivering a fairness opinion to the Vine board, as opposed to the Special Committee, in connection with the Potential Transaction. Vine thereafter engaged Houlihan Lokey as its financial advisor.
On the evening of August 4, 2021, the Vine board held a telephonic meeting with representatives from Vine management, Kirkland, Houlihan Lokey and Citi present to discuss the Potential Transaction. Citi discussed with the Vine board certain financial aspects of the Potential Transaction. The Vine board discussed the strategic rationale for the Potential Transaction and certain factors in favor of consummating the Potential Transaction, including (i) the fact that Vine stockholders receiving stock in the Potential Transaction would share in any potential synergies, (ii) the potential benefits to Vine and its stockholders as shareholders of Chesapeake, including increased liquidity and size, (iii) the mutually advantageous asset profiles of each company providing relative diversification within the industry, (iv) the long-term potential for dividends for Vine stockholders and that the nature of the consideration provided in the Potential Transaction would allow Vine stockholders to benefit from the combined company’s value on a pro forma basis, (v) the pro forma company’s relatively lower leverage upon consummation of the merger in comparison to other industry participants, (vi) that Vine’s significant stockholder, Blackstone, was in favor of the Potential Transaction and (vii) that the Vine board could change its recommendation in certain circumstances and Vine could terminate the Potential Transaction in favor of a superior proposal. The Vine board also discussed certain mitigating factors, including (a) the need for continued due diligence, (b) Chesapeake’s recent emergence from bankruptcy, (c) the incrementally higher leverage to which the combined company would be subject relative to Chesapeake on a standalone basis, (d) the limitations on the Vine board’s ability to change its recommendation and (e) the potential termination fee payable by Vine. After discussion, the Vine board directed Citi to request a higher exchange ratio and incrementally lower cash consideration. The Vine board then discussed the revised transaction documents, including the merger agreement, with representatives from Kirkland.
On August 5, 2021, the Chesapeake board held a virtual meeting, at which Chesapeake management and representatives of J.P. Morgan, Latham and RLF were present. During the meeting, representatives of Latham provided the Chesapeake board with a review of its fiduciary duties in respect of the Potential Transaction under applicable law and a summary of the status of negotiations on the merger agreement and ancillary transaction documents. Members of Chesapeake management and representatives of J.P. Morgan provided the Chesapeake board with an update on the status of negotiations with Vine regarding valuation, and reviewed the potential benefits, synergies and other strategic opportunities that the Potential Transaction provided.
Also on August 5, 2021, the Vine board, by unanimous written consent, formally approved the dissolution of the Special Committee based on its view that in light of the agreed TRA Payment Waiver there was no longer a material risk of a conflict of interest between Vine stockholders and the Legacy Vine Holders party to the TRA.
Additionally, on August 5, 2021, the Vine board held a telephonic meeting with representatives from Vine management, Kirkland, Citi and Houlihan Lokey present. At the meeting, the Vine board discussed the implied valuation of Vine common stock based on latest market data, the status of the definitive transaction documentation and updates regarding the due diligence process. Citi updated the Vine board on its recent discussions with Chesapeake, as directed by the Vine board, regarding the Vine board’s request for an improved proposal from Chesapeake. After discussion, the Vine board determined to request a higher premium than reflected in Chesapeake’s current proposal and that it would agree to the removal of the
 
52

 
additional Chesapeake board seat in order to obtain a higher premium. Representatives of Vine management reviewed with the Vine board the status of ongoing due diligence, indicating that such due diligence was progressing as expected. The Vine board and representatives of Kirkland also discussed the transaction documents. The Vine board determined not to send revised drafts of the definitive transaction documentation to Chesapeake or its representatives until the Vine board received a response from Chesapeake regarding Vine’s request for a higher premium.
On August 6, 2021, representatives of Vine management and Chesapeake management held a telephonic meeting to discuss various legal, business and operational due diligence matters. Another telephonic meeting was held immediately thereafter to discuss due diligence matters specifically related to Vine’s technology and seismic licenses. Representatives of Vine’s legal and financial advisors also attended these telephonic meetings.
Later on August 6, 2021, representatives of Chesapeake and Citi held a telephonic meeting regarding Chesapeake’s perspective on valuation and its consideration of a revised proposal reflecting a premium not to exceed 2.5% over Vine’s then 20-day volume-weighted average stock price as of market close on August 6, 2021, yielding an implied exchange ratio of 0.2700.
Also on August 6, 2021, representatives of Chesapeake and Blackstone discussed Chesapeake’s desire that the merger agreement feature a 60-day lockup of securities held by the Legacy Vine Holders, subject to standard terms.
Additionally, on August 6, 2021, the Vine board held a telephonic meeting with representatives from Vine management, Kirkland, Citi and Houlihan Lokey present to discuss Chesapeake’s updated proposal. Citi discussed with the Vine board the premium proposed by Chesapeake in its revised proposal, which reflected a premium of approximately 2.5% based on the closing stock prices of both companies on August 6, 2021, with the final exchange ratio to be determined closer to signing the Potential Transaction, and that Chesapeake proposed decreasing the cash consideration portion from 10% to 8% of the total merger consideration. After further review and discussion, the Vine board authorized sending the draft merger agreement, registration rights agreement and merger support agreement to Latham that evening.
Thereafter, on August 6, 2021, Kirkland provided a revised draft of the merger agreement to Latham. The revised draft, among other things, (i) included certain structural changes designed to preserve the tax treatment of the Potential Transaction, (ii) provided that Chesapeake was entitled to a termination fee of 2.5% of Vine’s equity value in the event Vine entered into a definitive agreement with respect to a superior acquisition proposal, but continued to provide a termination right in the event of such superior proposal, and (iii) provided that the obligations of the Legacy Vine Holders to vote in favor of the Potential Transaction would only apply to a maximum of 25%, rather than 37.5% as previously proposed by Chesapeake, of Vine’s outstanding common stock in the event that the Vine board changed its recommendation. Kirkland also sent initial drafts of the registration rights agreement and the merger support agreement to Latham.
On August 7, 2021, Kirkland provided a draft of the TRA amendment, which included the TRA Payment Waiver, to Latham.
Also on August 7, 2021, the Vine board held a telephonic meeting with representatives from Vine management, Kirkland, Citi and Houlihan Lokey present to discuss the status of the negotiations on the Potential Transaction and drafts of the definitive transaction documents. Citi updated the Vine board on its discussions with Chesapeake, as directed by the Vine board, regarding the Vine board’s request for an increase in the stock portion of the total merger consideration, indicating that Chesapeake had agreed in principle to increasing the stock portion of the total merger consideration up to 92%. Additionally, the Vine board discussed that the parties had agreed to a 60-day lockup of securities to be received in the Potential Transaction by the Legacy Vine Holders, subject to customary terms. In addition, the Vine board discussed the status of the definitive transaction documentation and representatives of Vine management conveyed that disclosure schedules were expected to be sent to Chesapeake later that day.
Later on August 7, 2021, the Vine board held a second telephonic meeting with representatives from Vine management, Kirkland, Citi and Houlihan Lokey present. At the meeting, Citi updated the Vine board regarding financial aspects of the Potential Transaction and certain related matters, including updated financial terms of the Potential Transaction, Vine management’s updated projections and the change in
 
53

 
Vine’s and Chesapeake’s stock prices since the Vine board’s meeting on August 6, 2021. Representatives of Houlihan Lokey also reviewed with the Vine board Houlihan Lokey’s preliminary financial analyses of Vine and the Potential Transaction. Representatives of Kirkland also provided an update regarding the status of legal negotiations.
On August 8, 2021, the Chesapeake board held a virtual meeting, at which Chesapeake management and representatives of J.P. Morgan and Latham were present. During the meeting, representatives of Latham provided the Chesapeake board with a summary of the terms of the current draft of the merger agreement and an update on the status of open legal points. Members of Chesapeake management and representatives of J.P. Morgan provided the Chesapeake board with an update on the status of negotiations with Vine regarding valuation and the exchange ratio, as well as expectations on timing of the Potential Transaction.
Also on August 8, 2021, Latham shared a revised draft of the registration rights agreement with Kirkland and Weil, and on August 9, 2021, Vine, Chesapeake and Blackstone reached agreement on the terms of the registration rights agreement, subject to finalization of the merger agreement.
Additionally, on August 8, 2021, Chesapeake shared a draft of the press release with Vine, which the Vine management team subsequently discussed with Citi and members of the Vine board.
Thereafter on August 8, 2021, Messrs. Wichterich, Foley and Acconcia had a telephone call to discuss the preparation and contents of a joint press release in anticipation of the parties’ announcement of the transactions contemplated by the merger agreement.
On the morning of August 9, 2021, Latham sent a revised draft of the merger agreement to Kirkland, which reflected, among other things, the following key terms: (i) the Second Merger, pursuant to which Vine, as the surviving company following the First Merger, would be merged with and into Merger Sub LLC, with Merger Sub LLC surviving the Second Merger as a wholly owned subsidiary of Chesapeake; (ii) the obligation of Vine to “force the vote” regardless of any change in recommendation with respect to the Potential Transaction by the Vine board; (iii) the right of Chesapeake to control and direct any proceedings with any antitrust authority with respect to the Potential Transaction; (iv) a termination fee equal to 3.5% of Vine’s equity value; and (v) the obligation of Vine to use reasonable best efforts to cooperate with any evaluation, analysis or due diligence of existing indebtedness of Vine or any of its subsidiaries in connection with the Potential Transaction.
Throughout the course of the day on August 9, 2021, and into the early morning hours of August 10, 2021, Kirkland and Latham exchanged multiple drafts of the merger agreement, the TRA amendment and the merger support agreement. The primary open points in such drafts related to (i) the per share cash consideration, (ii) the exchange ratio, (iii) the terms of the Vine board’s recommendation and related support from the Legacy Vine Holders, and (iv) superior proposal termination rights (and related termination fees).
Also on August 9, 2021, the Vine board held a telephonic meeting with representatives from Vine management, Kirkland and Citi present to discuss the status of the definitive transaction documentation and Chesapeake’s revised proposal, including that Chesapeake had proposed a decrease in both the per share cash consideration and implied stock consideration through a lowered exchange ratio in order to reflect an “at market” transaction given fluctuations in Vine’s and Chesapeake’s stock prices since August 6, 2021. The Vine board determined to seek an increase in the per share cash consideration and exchange ratio to ensure the Potential Transaction would reflect a premium to Vine’s market price.
Later on August 9, 2021, representatives of Chesapeake communicated to representatives of Vine that Chesapeake’s proposal would be based on an “at market” valuation for Vine as of the close of market on August 10, 2021.
On the morning of August 10, 2021, the Vine board held a brief telephonic meeting with representatives from Vine management and Kirkland present to discuss the status of the definitive transaction documents and requested that Kirkland work towards finalizing documents for a potential post-market signing that day.
On August 10, 2021, Latham sent a revised draft of the merger agreement to Kirkland. Among other things, the draft merger agreement reflected the following key terms: (i) consideration for each share of Vine
 
54

 
common stock issued and outstanding immediately prior to the effective time of $1.18 in cash, without interest, and 0.2508 shares of Chesapeake common stock; (ii) the ability of Vine to terminate the merger agreement in order to enter into a definitive agreement with respect to a superior proposal; (iii) a termination fee equal to 4.0% of Vine’s equity value; (iv) the right of Chesapeake to control and direct any proceedings with any antitrust authority with respect to the Potential Transaction; and (v) the extension of the outside date for the consummation of the Potential Transaction by an additional six months if all conditions to closing other than the termination or expiration of applicable regulatory waiting periods are satisfied or capable of being satisfied as of the outside date.
Also on August 10, 2021, Latham and Kirkland continued to exchange drafts of, and finalized, the merger agreement, the registration rights agreement, the merger support agreement and the TRA amendment.
After the close of market on August 10, 2021, members of the Vine board, Messrs. Marsh and Foley, held a call with Messrs. Wichterich and Dell’Osso of Chesapeake to discuss a final proposal on value. During the discussion, the parties tentatively agreed to a total implied value of $15.00 per outstanding share of Vine common stock, with 92% of the merger consideration payable in shares of Chesapeake common stock and 8% payable in cash, based on an exchange ratio of 0.2486 shares of Chesapeake common stock and $1.20 in cash for each outstanding share of Vine common stock.
In the evening of August 10, 2021, the Chesapeake board held a virtual meeting, with members of Chesapeake management and representatives of J.P. Morgan and Latham in attendance. Members of the Chesapeake board, Chesapeake management and representatives of J.P. Morgan discussed the Potential Transaction, including the financial terms thereof and related financial and operational matters. Representatives of Latham then reviewed with the Chesapeake board a summary of the key provisions of the current drafts of the merger agreement and ancillary agreements, highlighting changes since the August 8 Chesapeake board meeting. Throughout these presentations and discussions, members of the Chesapeake board asked questions of members of Chesapeake management and the representatives of J.P. Morgan and Latham present at such meeting. Following additional discussion, the Chesapeake board unanimously (i) determined that the merger agreement (including the cash and stock consideration payable thereunder) and the transactions contemplated thereby (including the merger and the related share issuance), were fair to, advisable and in the best interests of Chesapeake and its shareholders, (ii) approved the merger agreement and the transactions contemplated thereby, and (iii) approved certain related matters, including the preparation and filing with the SEC of a Registration Statement on Form S-4.
Later that evening, the Vine board held a telephonic meeting to consider the final terms of the Potential Transaction with representatives from Vine management, Kirkland, Citi and Houlihan Lokey present. Members of Vine management reviewed the final proposed terms for the Potential Transaction, which included a total implied valuation of $15.00 per outstanding share of Vine common stock, with 92% of the merger consideration payable in shares of Chesapeake common stock and 8% in cash, based on an exchange ratio of 0.2486 shares of Chesapeake common stock and $1.20 in cash for each outstanding share of Vine common stock. The Vine board discussed the results of the due diligence processes that had been undertaken and confirmed with Vine management that Vine’s due diligence review had been completed to its satisfaction. The Vine board also further discussed the proposed merger consideration. Representatives from Kirkland then reviewed with the Vine board its fiduciary duties in respect of the Potential Transaction under applicable law. The Vine board then reviewed, with the assistance of representatives from Kirkland, the key terms of the merger agreement and related definitive transaction documentation. The Vine board then engaged in further discussion regarding the expected benefits of the Potential Transaction with Chesapeake, including (i) the potential increased value to Vine stockholders relative to Vine on a standalone basis through, among other things, the potential for increased trading liquidity, trading prices and payment of dividends, (ii) the potential cost savings that would accrue to Vine stockholders from the Potential Transaction, (iii) the increased liquidity and enterprise size of the combined company, and (iv) the combined company’s attractive asset profile in the Haynesville basin. Representatives from Houlihan Lokey then reviewed with the Vine board its financial analyses regarding the Potential Transaction and, thereafter, rendered Houlihan Lokey’s oral opinion (subsequently confirmed by the delivery of a written opinion dated as of August 10, 2021), to the effect that, as of such date, based on and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Houlihan
 
55

 
Lokey as set forth in its opinion, the consideration to be received by the holders of Vine Class A common stock (other than Vine and its subsidiaries and Chesapeake and its affiliates) in the transaction was fair to such holders from a financial point of view. After further review and discussion regarding the terms of the Potential Transaction and related information, the Vine board unanimously resolved to approve and adopt the merger agreement, substantially as presented, the merger support agreement, the TRA amendment and the registration rights agreement, and the associated actions described in the merger agreement. The Vine board also reviewed and approved the joint press release to be released on the morning of August 11, 2021.
That evening, following discussion on certain immaterial terms of the definitive transaction documentation between Kirkland and Latham, each at the direction of the Vine board and the Chesapeake board, respectively, the respective parties to the merger agreement and other definitive transaction documentation for the Potential Transaction executed and delivered such agreements.
Prior to the open of trading on the NYSE and Nasdaq Global Select Market on the morning of August 11, 2021, Vine and Chesapeake issued a joint press release announcing the transactions contemplated by the merger agreement.
Chesapeake’s Rationale for the Merger
The merger between Chesapeake and Vine will, among other things, increase Chesapeake’s scale in the Haynesville and Mid-Bossier shale plays. In evaluating the merger, the Chesapeake board consulted with Chesapeake’s management and legal and financial advisors. The Chesapeake board determined the merger to be in the best interests of Chesapeake based on, among other factors, its belief that the merger will:
Enhance Chesapeake’s Drilling Inventory in the Haynesville and Mid-Bossier Shale Plays.   The merger will increase Chesapeake’s production footprint in the Haynesville and Mid-Bossier shale plays, where, as a result of the transaction, Chesapeake expects to add 370 premium drilling locations with a 50% or greater rate of return at $2.50 NYMEX gas price.
Create Synergies and Cost Savings.   Chesapeake expects the combination of its current operations with Vine’s complementary assets will allow the combined company to achieve operating and capital cost reductions. Chesapeake expects to use its scale, vendor relationships and the combined land position of each company to reduce per unit operating costs and costs to drill and complete wells.
Increase marketing scale of Responsibly Sourced Gas (“RSG”).   As a result of the merger, Chesapeake expects to be a leading producer of RSG in the Haynesville shale play. Chesapeake expects to benefit from the larger marketed volume of RSG with the development of new customer relationships, potentially including through the sale of RSG to Liquified Natural Gas facilities and/or their export customers. Chesapeake also expects to benefit from increased diversity in its midstream partnerships through the addition of Vine’s existing relationships.
Be Accretive on Operating Cash Flow per Share, Free Cash Flow per Share, Free Cash Flow Yield and GHG Emissions Profile.   Chesapeake expects the merger will be accretive on operating cash flow per share, free cash flow per share and free cash flow yield. Additionally, Chesapeake expects to improve its GHG emission profile through pro forma reductions in GHG emissions intensity and methane intensity.
Increase Base Dividend to Chesapeake Shareholders.    Chesapeake expects the merger to permit the combined company to increase Chesapeake’s base dividend per share post-closing, subject to approval by the Chesapeake board, providing for immediate delivery of synergies to Chesapeake shareholders. Chesapeake expects to maintain its leadership among peers on dividend yields.
Recommendation of the Vine Board and Vine’s Reasons for the Merger
On August 10, 2021, the Vine board unanimously (a) determined that the merger agreement and the transactions contemplated thereby, including the merger, are fair to, and in the best interests of, Vine and its stockholders, (b) approved and declared advisable the merger agreement and the transactions contemplated thereby, including the merger, (c) approved the execution, delivery and performance of the merger agreement and the consummation of the transactions contemplated thereby, including the merger, (d) resolved to recommend adoption of the merger agreement by the Vine stockholders, and (e) directed that the merger
 
56

 
agreement be submitted to the Vine stockholders for its adoption. The Vine board unanimously recommends that Vine stockholders vote “FOR” the merger proposal, “FOR” the non-binding compensation advisory proposal and “FOR” the adjournment proposal.
In evaluating the merger, the Vine board consulted with Vine’s senior management and outside legal and financial advisors and, in reaching its determinations and recommendations, considered several potentially positive factors that weighed in favor of the merger, including the following (not necessarily presented in order of relative importance):
Aggregate Value and Share Consideration

The fact that Vine was able to maintain a pro forma ownership of the combined company of 16% for Vine stockholders (without giving effect to the exercise of outstanding Chesapeake warrants), and the Vine board’s belief, based on Vine’s negotiations with Chesapeake and discussions with Chesapeake’s advisors, that this was the maximum exchange ratio and cash consideration that Chesapeake was willing to pay to Vine stockholders;

The fact that the majority of the consideration to be received by Vine stockholders is in the form of Chesapeake common stock, which offers Vine stockholders the opportunity to participate in the future earnings and growth potential of the combined company and the declared dividend provides Vine stockholders the immediate certainty of value;

The Vine board’s belief, after considering Vine’s strategic review process, including discussions with other bidders, that it was unlikely that other parties would be prepared to pay a higher price to acquire Vine at this time;

The TRA Payment Waiver;
Synergies and Strategic Considerations

The Vine board’s belief that Chesapeake’s strategy for immediate integration of the Vine assets will maximize a return on its investment base and value for Vine stockholders;

The expectation that the Potential Transaction will be accretive in the first year to certain key metrics, including increasing financial and operational scale while maintaining approximately 0.6x 2022E leverage ratio and having a free cash flow yield of approximately 16%, as well as maintenance of production volumes assuming a reinvestment rate of approximately 60%;

The fact that both Chesapeake and Vine are focused on investing in innovation and technology, and the Vine board’s belief that the combined company will be able to develop and implement technologies more economically and efficiently and deploy those technologies across a broader base of assets;

The Vine board’s belief that the combined company’s geographic and customer diversification, enhanced assets and stronger financial position will provide greater access to the capital markets and improve the combined company’s competitiveness;

The Vine board’s belief that the combination of Vine and Chesapeake positions the combined company as a leading producer in the Haynesville basin, including that such combined company would have a high-quality asset base and flexible balance sheet with an increased ability to return cash to its shareholders as compared to Vine on a standalone basis;
Financial Analyses and Opinion of Financial Advisor

The financial analyses of Houlihan Lokey that were provided to the Vine board in connection with the Vine board’s consideration of the Potential Transaction;

The fact that Houlihan Lokey rendered its oral opinion, subsequently confirmed by delivery of a written opinion dated August 10, 2021, to the effect that, as of that date and based on and subject to the factors, procedures, assumptions qualifications and limitations set forth therein, the exchange ratio of 0.2486 shares of Chesapeake stock and $1.20 in cash for each share of Vine Class A common stock to be received by the holders of Vine Class A common stock (other than Vine and its subsidiaries and Chesapeake and its subsidiaries) in the transaction was fair to such holders from a
 
57

 
financial point of view, as more fully described below in the section entitled “— Opinion of Vine’s Financial Advisor” beginning on page 59;
Likelihood of Completion of the Potential Transaction

The belief that the Potential Transaction will be consummated in 2021 given the limited number and customary nature of the closing conditions and Chesapeake’s affirmative obligation to take, or cause to be taken, any and all steps and undertakings in respect of requirements under applicable regulations to enable the closing of the Potential Transaction to occur as promptly as practicable;

The fact that Blackstone, which controls the Legacy Vine Holders owning approximately 73% of the outstanding shares of Vine common stock as of the date of the merger agreement, supports the Potential Transaction, as evidenced by the Legacy Vine Holders’ execution of the merger support agreement with Chesapeake;
Favorable Terms of the Merger Agreement

The Vine board’s belief that the terms of the merger agreement, taken as a whole, including the parties’ representations, warranties, covenants and conditions to closing, and the circumstances under which the merger agreement may be terminated, are reasonable;

The fact that Vine has the ability, under certain circumstances, to provide information to and engage in discussions or negotiations with a third party that makes an unsolicited acquisition proposal; and

The fact that the Vine board has the ability to terminate the merger agreement under certain circumstances, including to enter into an agreement providing for a superior proposal, subject to certain conditions (including payment of a termination fee to Chesapeake of $45 million and certain rights of Chesapeake giving it the opportunity to match such superior proposal).
The Vine board also considered and balanced against the potentially positive factors a number of uncertainties, risks and other countervailing factors in its deliberations concerning the merger and the merger agreement, including the following (not necessarily presented in order of relative importance):

The fact that the exchange ratio in the merger agreement provides for a fixed number of shares of Chesapeake common stock and, as such, Vine stockholders cannot be certain as of the Vine special meeting as to the market value of the merger consideration to be received, and the possibility that Vine stockholders could be adversely affected by a decrease in the trading price of Chesapeake common stock before the closing of the merger;

The fact that the market price of Vine common stock could be affected by many factors, including: (i) if the merger agreement is terminated, the reason or reasons for such termination and whether such termination resulted from factors adversely affecting Vine; (ii) the possibility that, if the merger agreement is terminated, possible acquirors may consider Vine to be an unattractive acquisition candidate; and (iii) the possible sale of Vine common stock by short-term investors following an announcement that the merger agreement was terminated;

The fact that Vine would be required to pay Chesapeake a termination fee of $45 million if the Vine board terminates the merger agreement under certain circumstances, including in the event Vine enters into a definitive transaction agreement with another potential acquiror in connection with a superior proposal. In addition, if the merger agreement is terminated, Vine will generally be required to pay its own expenses associated with the Potential Transaction. The Vine board considered that the amount of the termination fee is consistent with comparable transactions and believes the termination fee would not preclude other offers;

The risks and contingencies relating to the announcement and pendency of the merger, including the potential for diversion of management and employee attention and the potential effect of the combination on the businesses of both companies and the restrictions on the conduct of Vine’s business during the period between the execution of the merger agreement and the completion of the transactions contemplated thereby;
 
58

 

The potential challenges and difficulties in integrating the operations of Vine into Chesapeake, and the risk that the anticipated cost savings and operational and other synergies and benefits of the merger, might not be realized, may only be achieved over time or might take longer to realize than expected;

The fact that there are restrictions in the merger agreement on Vine’s ability to solicit competing bids to acquire it and to entertain other acquisition proposals unless certain conditions are satisfied;

The fact that the restrictions on Vine’s conduct of business prior to completion of the transaction could delay or prevent Vine from undertaking business opportunities that may arise or taking other actions with respect to its operations during the pendency of the transaction; and

The risks of the type and nature described under the sections entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” beginning on pages 18 and 32, respectively.
After taking into account the factors set forth above, as well as others, the Vine board concluded that the risks, uncertainties, restrictions and potentially negative factors associated with the Potential Transaction were outweighed by the potential benefits to Vine stockholders and that the Potential Transaction, including the merger and the transactions contemplated thereby, were in the best interests of Vine and Vine’s stockholders.
The foregoing discussion of factors considered by the Vine board is not intended to be exhaustive but summarizes the material factors considered by the Vine board. In light of the variety of factors considered in connection with the Vine board’s evaluation of the merger agreement and the Potential Transaction, the Vine board did not find it practicable to, and did not, quantify, rank or otherwise assign relative weights to the specific factors considered in reaching its determinations and recommendations. Moreover, each member of the Vine board applied his or her own personal business judgment to the process and may have given different weight to different factors. The Vine board based its recommendation on the totality of the information presented, including discussions with Vine’s senior management and outside legal and financial advisors.
In considering the recommendation of the Vine board to approve the merger agreement, Vine stockholders should be aware that the executive officers and directors of Vine have certain interests in the transaction that may be different from, or in addition to, the interests of Vine stockholders generally. See the section entitled “— Interests of Vine’s Directors and Executive Officers in the Merger” beginning on page 43.
It should be noted that this explanation of the reasoning of the Vine board and certain information presented in this section is forward-looking in nature and should be read in light of the factors set forth in “Cautionary Statement Concerning Forward-Looking Statements” beginning on page 32.
Opinion of Vine’s Financial Advisor
On August 10, 2021, Houlihan Lokey verbally rendered its opinion to the Vine board (which was subsequently confirmed in writing by delivery of Houlihan Lokey’s written opinion addressed to the Vine board dated August 10, 2021), as to the fairness, from a financial point of view, to the holders of Vine Class A common stock (other than the Excluded Persons) of the merger consideration.
Houlihan Lokey’s opinion was directed to the Vine board (in its capacity as such) and only addressed the fairness, from a financial point of view, to the holders of Vine Class A common stock (other than the Excluded Persons) of the merger consideration and did not address any other aspect or implication of the transaction or any other agreement, arrangement or understanding. The summary of Houlihan Lokey’s opinion in this proxy statement/prospectus is qualified in its entirety by reference to the full text of its written opinion, which is attached as Annex C to this proxy statement/prospectus and describes the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Houlihan Lokey in connection with the preparation of its opinion. However, neither Houlihan Lokey’s opinion nor the summary of its opinion and the related analyses set forth in this proxy statement/prospectus are intended to be, and do not constitute, advice or a recommendation to the Vine board, any security holder of Vine or any other person as to how to act or vote with respect to any matter relating to the transaction.
 
59

 
In arriving at its opinion, Houlihan Lokey, among other things:

reviewed the following agreements and documents:

Execution version dated August 10, 2021 of the merger agreement;

Execution version dated August 10, 2021 of the Tax Receivable Agreement Amendment, by and among Vine and certain members of Holdings; and

Execution version dated August 10, 2021 of the merger support agreement;

reviewed certain publicly available business and financial information relating to Vine and Chesapeake that Houlihan Lokey deemed to be relevant, including certain publicly available research analyst estimates with respect to the future financial performance of Vine and Chesapeake;

reviewed certain information relating to the historical, current and future operations, financial condition and prospects of Vine and Chesapeake made available to Houlihan Lokey by Vine, including (a) with respect to Vine, (i) certain financial projections relating to Vine for the fiscal years ending 2021 through 2025 (the “Vine Projections”), and (ii) certain reserve estimates for natural gas by reserve category, associated risking and production volume (the “Vine Reserve Information”), in each case prepared by management of Vine, and (b) with respect to Chesapeake, (i) certain financial projections relating to Chesapeake for the fiscal years ending 2021 through 2025 (the “Chesapeake Projections”), and (ii) certain reserve estimates for oil, natural gas and natural gas liquids, in each case, by reserve category, associated risking and production volume (the “Chesapeake Reserve Information” and together with the Vine Reserve Information, the “Reserve Information”), in each case, as prepared by the management of Chesapeake and as adjusted by the management of Vine, and (c) certain forecasts and estimates of potential cost savings, operating efficiencies, revenue effects and other synergies expected to result from the transactions contemplated by the merger agreement, all as prepared by the management of Vine (the “Synergies”);

reviewed certain publicly available market data regarding future oil and natural gas commodity pricing based on (a) New York Mercantile Exchange Strip pricing and (b) Wall Street research analyst consensus pricing estimates;

spoke with certain members of the management of Vine and Chesapeake and certain of their representatives and advisors regarding the respective businesses, operations, financial condition and prospects of Vine and Chesapeake, including the Reserve Information, the merger and related matters;

compared the financial and operating performance of Vine and Chesapeake with that of other public companies that Houlihan Lokey deemed to be relevant;

considered publicly available financial terms of certain transactions that Houlihan Lokey deemed to be relevant;

reviewed the current and historical market prices and trading volume for certain of Vine’s and Chesapeake’s publicly traded securities, and the current and historical market prices and trading volume of the publicly traded securities of certain other companies that Houlihan Lokey deemed to be relevant;

reviewed certain potential pro forma financial effects of the merger on Vine; and

conducted such other financial studies, analyses and inquiries and considered such other information and factors as Houlihan Lokey deemed appropriate.
Houlihan Lokey relied upon and assumed, without independent verification, the accuracy and completeness of all data, material and other information furnished, or otherwise made available, to Houlihan Lokey, discussed with or reviewed by Houlihan Lokey, or publicly available, and did not assume any responsibility with respect to such data, material and other information. In addition, management of Vine advised Houlihan Lokey, and Houlihan Lokey assumed, that each of (a) the financial projections (and adjustments thereto), (b) the Reserve Information and (c) the current reserve estimates of each of Vine and Chesapeake reviewed by Houlihan Lokey were reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of such management as to the future financial results and condition of each of Vine and Chesapeake and the other matters covered thereby, or the assumptions on
 
60

 
which they are based. Furthermore, upon the advice of the management of Vine, Houlihan Lokey assumed that the estimated Synergies reviewed by Houlihan Lokey were reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of the management of Vine and that the Synergies will be realized in the amounts and the time periods indicated thereby, and Houlihan Lokey expressed no opinion with respect to such Synergies or the assumptions on which they are based. Houlihan Lokey relied upon and assumed, without independent verification, that there had been no change in the businesses, assets, liabilities, financial condition, results of operations, cash flows or prospects of Vine or Chesapeake since the respective dates of the most recent financial statements and other information, financial or otherwise (including the Reserve Information), provided to Houlihan Lokey that would be material to Houlihan Lokey’s analyses or Houlihan Lokey’s opinion, and that there was no information or any facts that would have made any of the information reviewed by Houlihan Lokey incomplete or misleading.
Houlihan Lokey relied upon and assumed, without independent verification, that (a) the representations and warranties of all parties to the agreements reviewed by Houlihan Lokey (as described above) and all other related documents and instruments that are referred to therein are true and correct, (b) each party to all such agreements and such other related documents and instruments will fully and timely perform all of the covenants and agreements required to be performed by such party, (c) all conditions to the consummation of the merger will be satisfied without waiver thereof, and (d) the merger will be consummated in a timely manner in accordance with the terms described in such other agreements and such other related documents and instruments, without any amendments or modifications thereto. Houlihan Lokey also assumed, with the consent of Vine, that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code for U.S. federal income tax purposes. Houlihan Lokey relied upon and assumed, without independent verification, that (i) the merger will be consummated in a manner that complies in all respects with all applicable federal and state statutes, rules and regulations, and (ii) all governmental, regulatory, and other consents and approvals necessary for the consummation of the merger will be obtained and that no delay, limitations, restrictions or conditions will be imposed or amendments, modifications or waivers made that would result in the disposition of any assets of Vine, or otherwise have an effect on the merger, Vine or Chesapeake or any expected benefits of the merger that would be material to Houlihan Lokey’s analyses or opinion.
Furthermore, in connection with its opinion, Houlihan Lokey was not requested to make, and did not make, any physical inspection or independent appraisal or evaluation of any of the assets, properties or liabilities (fixed, contingent, derivative, off-balance-sheet or otherwise) of Vine, Chesapeake or any other party, nor was Houlihan Lokey provided with any such appraisal or evaluation, other than the Reserve Information. Houlihan Lokey did not estimate, and expressed no opinion regarding, the liquidation value of any entity or business. Houlihan Lokey does not conduct or provide geological, environmental or other technical assessments and are not experts in the evaluation of oil, natural gas, or natural gas liquids reserves or properties and Houlihan Lokey expressed no view or opinion as to reserve quantities, or the exploration, development or production (including, without limitation, as to the feasibility or timing thereof), of any oil, natural gas or natural gas liquids properties of either of Vine or Chesapeake. Houlihan Lokey undertook no independent analysis of any potential or actual litigation, regulatory action, possible unasserted claims or other contingent liabilities, to which Vine or Chesapeake is or may be a party or is or may be subject, or of any governmental investigation of any possible unasserted claims or other contingent liabilities to which Vine or Chesapeake is or may be a party or is or may be subject.
Houlihan Lokey was not requested to, and did not, (a) initiate or participate in any discussions or negotiations with, or solicit any indications of interest from, third parties with respect to the merger, the securities, assets, businesses or operations of Vine or any other party, or any alternatives to the merger, (b) negotiate the terms of the merger, or (c) advise the Vine board or any other party with respect to alternatives to the merger. Houlihan Lokey’s opinion is necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to Houlihan Lokey as of, the date thereof. Houlihan Lokey did not undertake, and is under no obligation, to update, revise, reaffirm or withdraw its opinion, or otherwise comment on or consider events occurring or coming to Houlihan Lokey’s attention after the date thereof. Houlihan Lokey did not express any opinion as to what the value of the Vine Class A common stock (or the Chesapeake common stock) actually will be when exchanged or issued, respectively, pursuant to the merger or the price or range of prices at which the Vine Class A common stock or the Chesapeake common stock may be purchased or sold, or otherwise be transferable, at any time. Houlihan
 
61

 
Lokey assumed that the Chesapeake common stock to be issued in the merger to holders of Vine Class A common stock will be listed on the Nasdaq Global Select Market.
Houlihan Lokey’s opinion was furnished for the use of the Vine board (in its capacity as such) in connection with its evaluation of the merger and may not be used for any other purpose without Houlihan Lokey’s prior written consent. Houlihan Lokey’s opinion was not intended to be, and does not constitute, a recommendation to the Vine board, any security holder or any other party as to how to act or vote or make any election with respect to any matter relating to, or whether to tender shares in connection with, the merger or otherwise.
In performing its analyses, Houlihan Lokey considered general business, economic, industry and market conditions, financial and otherwise, and other matters as they existed on, and could be evaluated as of, the date of its opinion. No company, transaction or business used in Houlihan Lokey’s analyses for comparative purposes is identical to Vine, Chesapeake or the proposed transaction and an evaluation of the results of those analyses is not entirely mathematical. The estimates contained in the financial forecasts prepared by the management of Vine and the implied reference range values indicated by Houlihan Lokey’s analyses are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than those suggested by the analyses. In addition, any analyses relating to the value of assets, businesses or securities do not purport to be appraisals or to reflect the prices at which businesses or securities actually may be sold, which may depend on a variety of factors, many of which are beyond the control of Vine. Much of the information used in, and accordingly the results of, Houlihan Lokey’s analyses are inherently subject to substantial uncertainty.
Houlihan Lokey’s opinion was only one of many factors considered by the Vine board in evaluating the proposed transaction. Neither Houlihan Lokey’s opinion nor its analyses were determinative of the merger consideration or of the views of the Vine board or Vine’s management with respect to the transaction or the merger consideration. Under the terms of its engagement by Vine, neither Houlihan Lokey’s opinion nor any other advice or services rendered by it in connection with the proposed transaction or otherwise, should be construed as creating, and Houlihan Lokey should not be deemed to have, any fiduciary duty to, or agency relationships with, the Vine board, Vine, Chesapeake, any security holder or creditor of Vine or Chesapeake or any other person, regardless of any prior or ongoing advice or relationships. The type and amount of consideration payable in the transaction were determined through negotiation between Vine and Chesapeake, and the decision by Vine to enter into the merger agreement was solely that of the Vine board.
Financial Analyses
In preparing its opinion to the Vine board, Houlihan Lokey performed a variety of analyses, including those described below. The summary of Houlihan Lokey’s analyses is not a complete description of the analyses underlying Houlihan Lokey’s opinion. The preparation of such an opinion is a complex process involving various quantitative and qualitative judgments and determinations with respect to the financial, comparative and other analytical methods employed and the adaptation and application of these methods to the unique facts and circumstances presented. As a consequence, neither Houlihan Lokey’s opinion nor its underlying analyses is readily susceptible to summary description. Houlihan Lokey arrived at its opinion based on the results of all analyses undertaken by it and assessed as a whole and did not draw, in isolation, conclusions from or with regard to any individual analysis, methodology or factor. While the results of each analysis were taken into account in reaching Houlihan Lokey’s overall conclusion with respect to fairness, Houlihan Lokey did not make separate or quantifiable judgments regarding individual analyses. Accordingly, Houlihan Lokey believes that its analyses and the following summary must be considered as a whole and that selecting portions of its analyses, methodologies and factors, without considering all analyses, methodologies and factors, could create a misleading or incomplete view of the processes underlying Houlihan Lokey’s analyses and opinion.
The following is a summary of the material financial analyses performed by Houlihan Lokey in connection with the preparation of its opinion and reviewed with the Vine board on August 10, 2021. The order of the analyses does not represent relative importance or weight given to those analyses by Houlihan Lokey. The analyses summarized below include information presented in tabular format. The tables alone do not constitute a complete description of the analyses. Considering the data in the tables below without
 
62

 
considering the full narrative description of the analyses, as well as the methodologies underlying, and the assumptions, qualifications and limitations affecting, each analysis, could create a misleading or incomplete view of Houlihan Lokey’s analyses.
For purposes of its analyses, Houlihan Lokey reviewed a number of financial and operating metrics, including:

Enterprise Value — equity market value plus debt outstanding plus preferred stock plus minority interests minus cash and cash equivalents;

EBITDA — the amount of the relevant company’s earnings before interest, taxes, depreciation and amortization;

LQA — the annualization of the most recently completed quarter for which financial information has been made public, which, in the case of each of Vine and Chesapeake, was June 30, 2021;

Production — average daily equivalent production of oil, natural gas liquids and natural gas, calculated by converting oil and natural gas liquids to mmcfe/d (million cubic feet of natural gas equivalents per day) at a ratio of one barrel/d (one barrel of oil per day) to six mcfe/d (six thousand cubic feet of natural gas per day);

Adjusted EBITDAX — the amount of the relevant company’s earnings before interest, taxes, depreciation, amortization and exploration expenses, adjusted for certain non-recurring items;

1P Reserves — the estimated quantities of oil, natural gas liquids and natural gas that geological and engineering data demonstrate with reasonable certainty to be commercially recoverable in future years from known reservoirs under existing economic and operating conditions, which, for clarity, includes Proved Developed Reserves and Proved Undeveloped Reserves (each described below);

3P Reserves — 1P Reserves plus the estimated quantities of oil, natural gas liquids and natural gas that geological and engineering data demonstrate to be probably and possibly commercially recoverable in future years from known reservoirs under existing economic and operating conditions;

Proved Developed Reserves — Proven reserves that can be expected to be recovered through existing wells with existing equipment and operating methods including both currently producing (“Proved Developed Producing”) and not producing (“Proved Developed Non-Producing”); and

Proved Undeveloped Reserves — Proven reserves that are expected to be recovered from new wells on undrilled acreage or from existing wells where a relatively major expenditure is required for recompletion.
Unless the context indicates otherwise, the analyses performed below were calculated using (i) the closing prices of Vine Class A common stock, Chesapeake common stock and the selected U.S. companies listed below as of August 10, 2021, (ii) historical financial and operating data for the selected companies based on publicly available information for each company as of August 10, 2021, (iii) the Enterprise Values for Vine and Chesapeake based on net debt as of June 30, 2021, and (iv) per share amounts for Vine and Chesapeake based on diluted shares outstanding as of August 10, 2021 using the treasury stock method. The calculations of 1P Reserves (a) for Vine were as estimated as of July 29, 2021 by the management of Vine, and (b) for Chesapeake were estimated by the management of Chesapeake, as adjusted by the management of Vine as of August 5, 2021. Calculations of 1P Reserves and other oil and gas reserve criteria were based on management estimates; none of which were based on SEC reserve criteria. All commodity price assumptions were based on pricing data as of August 10, 2021. Unless the context indicates otherwise, estimates of Adjusted EBITDAX for (i) the selected companies were based on mean consensus Wall Street analyst estimates (such mean consensus estimates, “Wall Street research”) available as of August 10, 2021, (ii) Vine were based on estimates provided by the management of Vine and (iii) Chesapeake were based on estimates provided by the management of Chesapeake, as adjusted by the management of Vine.
Vine Financial Analyses
Vine Selected Companies Analysis. Houlihan Lokey reviewed certain data for selected companies, with publicly traded equity securities, that Houlihan Lokey deemed relevant.
 
63

 
The financial data reviewed included:

Enterprise value as a multiple of estimated calendar year 2021 Average Daily Production;

Enterprise value as a multiple of estimated calendar year 2021 Adjusted EBITDAX; and

Enterprise value as a multiple of estimated calendar year 2022 Adjusted EBITDAX.
The selected companies included the following:

Antero Resources Corporation

Cabot Oil & Gas Corporation

Chesapeake Energy Corporation

CNX Resources Corporation

Comstock Resources, Inc.

EQT Corporation

Range Resources Corporation

Southwestern Energy Company
Taking into account the results of the selected companies analysis, Houlihan Lokey applied selected multiple ranges of $2,250/mcfepd to $2,750/mcfepd estimated calendar year 2021 average daily production, 3.75x to 4.75x estimated calendar year 2021 EBITDAX and 3.50x to 4.50x estimated calendar year 2022 EBITDAX to corresponding financial data for Vine. The selected companies analysis indicated (i) an implied per share value reference range of $15.29 to $21.83 and an implied exchange ratio reference range of 0.1918 to 0.3252 per share of Vine Class A common stock based on the selected range of multiples of estimated calendar year 2021 average daily production, (ii) an implied per share value reference range of $16.09 to $24.16 and an implied exchange ratio reference range of 0.1913 to 0.3570 per share of Vine Class A common stock based on the selected range of multiples of estimated calendar year 2021 EBITDAX and (iii) an implied per share value reference range of $17.19 to $26.16 and an implied exchange ratio reference range of 0.1936 to 0.3737 per share of Vine Class A common stock based on the selected range of multiples of estimated calendar year 2022 EBITDAX, in each case as compared to the proposed adjusted exchange ratio of 0.2486 per share of Vine Class A common stock.
Vine Selected Transactions Analysis.   Houlihan Lokey considered certain financial terms of certain transactions involving target companies that Houlihan Lokey deemed relevant.
The financial data reviewed included:

Transaction value as a multiple of LQA Production plus undeveloped acreage; and

Transaction value as a multiple of LQA EBITDAX.
The selected transactions included the following:
Date Announced
Buyer
Seller
6/2/2021 Southwestern Energy Company Indigo II Louisiana Operating LLC
6/10/2019 Comstock Resources, Inc. Covey Park Energy LLC
11/19/2018 Aethon Energy Management LLC QEP Resources, Inc.
6/29/2018 Osaka Gas USA Corporation Sabine Oil & Gas Corporation
8/1/2017 Rockcliff Energy II LLC Samson Resources II, LLC
12/20/2016 Covey Park Energy LLC
Chesapeake Energy Corporation
12/5/2016 Indigo Resources LLC
Chesapeake Energy Corporation
11/2/2016 Covey Park Energy LLC EOG Resources, Inc.
 
64

 
Date Announced
Buyer
Seller
10/31/2016 Castleton Commodities International LLC Anadarko Petroleum Corporation
7/21/2016 Ontario Teachers’ Pension Plan, Aethon Energy Management LLC, RedBird Capital Partners J-W Energy Company
4/28/2016 Indigo Minerals LLC BEUSA Energy, Inc.
3/18/2016 Covey Park Energy LLC EP Energy Corporation
8/25/2015 GeoSouthern Haynesville, LP, GSO Capital Partners LP Encana Corporation
Taking into account the results of the selected transactions analysis, Houlihan Lokey applied selected multiple ranges of $2,000/mcfepd to $2,500/mcfepd LQA Production plus undeveloped acreage of $4,000 to $5,000 per acre and 4.00x to 4.75x LQA EBITDAX to corresponding financial data for Vine. The selected transactions analysis indicated (i) an implied per share value reference range of $18.06 to $26.11 and an implied exchange ratio reference range of 0.1924 to 0.3206 per share of Vine Class A common stock based on the selected range of multiples of LQA Production plus undeveloped acreage and (ii) an implied per share value reference range of $18.14 to $24.19 and an implied exchange ratio reference range of 0.2156 to 0.3511 per share of Vine Class A common stock based on the selected range of multiples of LQA EBITDAX, as compared to the proposed adjusted exchange ratio of 0.2486 per share of Vine Class A common stock. In addition Houlihan Lokey noted that net of the liability under the Tax Receivable Agreement, the above implied per share value reference ranges were $15.71 to $23.76 and $15.79 to $21.84, respectively, and the above implied exchange ratio reference ranges were 0.1656 to 0.2904 and 0.1857 to 0.3152, respectively.
Vine Discounted Cash Flow Analyses
Corporate Discounted Cash Flow Analysis.   Houlihan Lokey performed a discounted cash flow analysis of Vine by calculating the estimated net present value of the projected unlevered, after-tax free cash flows of Vine based on the Vine Projections. Houlihan Lokey calculated terminal values for Vine by applying a range of terminal value multiples of 3.0x to 4.0x to Vine’s EBITDAX based on the Vine Projections for fiscal year 2025. The net present values of Vine’s projected future cash flows and terminal values were then calculated using weighted average cost of capital (“WACC”) discount rates ranging from 7.0% to 8.0%. The Vine discounted cash flow analysis indicated an implied per share value reference range of $19.85 to $28.07, an implied exchange ratio reference range of 0.2272 to 0.3855, as compared to the proposed adjusted exchange ratio of 0.2486 per share of Vine Class A common stock.
Net Asset Value Discounted Cash Flow Analysis.   Houlihan Lokey performed a discounted cash flow net asset value (“NAV”) analysis of Vine by calculating the estimated net present value of its estimated gas reserves in each of the 1P Reserves and 3P Reserves categories for Vine based on the Vine Reserve Information. Houlihan Lokey performed this analysis using risk adjusted discount rates (“RADR”) ranging from 10% to 50% for the 3P Reserves, depending on the reserve categories, and WACC discount rates ranging from 7.0% to 8.0% for the 1P Reserves, for each of NYMEX Strip Pricing and Consensus Pricing scenarios. Houlihan Lokey used this to derive net reserve value reference ranges. Houlihan Lokey then derived implied equity value and implied exchange ratio per share reference ranges from the resulting reserve value reference ranges and using the net debt and diluted share information described above. This analysis indicated the following per share reference ranges and implied exchange ratio reference ranges for the Vine Class A common stock:
RADR Approach
WACC Approach
Adjusted Exchange
Ratio
3P Reserves
NYMEX Strip
Pricing
3P Reserves
Consensus
Pricing
1P Reserves
NYMEX Strip
Pricing
1P Reserves
Consensus
Pricing
Implied Equity
Value Per Share
Reference
Range
$ 3.19 – $9.65 $ 4.72 – $11.54 $ 16.28 – $19.03 $ 18.28 – $21.17
 
65

 
RADR Approach
WACC Approach
Adjusted Exchange
Ratio
3P Reserves
NYMEX Strip
Pricing
3P Reserves
Consensus
Pricing
1P Reserves
NYMEX Strip
Pricing
1P Reserves
Consensus
Pricing
Implied Exchange
Ratio Reference
Range
0.0404 – 0.2056 0.0669 – 0.2309 0.2077 – 0.2660 0.2172 – 0.2756 0.2486
Chesapeake Financial Analyses
Chesapeake Selected Companies Analysis.   Houlihan Lokey reviewed certain data for selected companies, with publicly traded equity securities, that Houlihan Lokey deemed relevant.
The financial data reviewed included:

Enterprise value as a multiple of calendar year 2021 Average Daily Production;

Enterprise value as a multiple of estimated calendar year 2021 Adjusted EBITDAX; and

Enterprise value as a multiple of estimated calendar year 2022 Adjusted EBITDAX.
The selected companies included the following:

Gas Weighted

Antero Resources Corporation

Cabot Oil & Gas Corporation

CNX Resources Corporation

Comstock Resources, Inc.

EQT Corporation

Range Resources Corporation

Southwestern Energy Company

Diversified

Devon Energy Corporation

EOG Resources, Inc.

Oil Weighted

Centennial Resource Development, Inc.

Continental Resources, Inc.

Marathon Oil Corporation

Murphy Oil Corporation

Ovintiv Inc.
Taking into account the results of the selected companies analysis, Houlihan Lokey applied selected multiple ranges of $3,000/mcfepd to $3,500/mcfepd calendar year 2021 average daily production, 4.50x to 5.50x estimated calendar year 2021 EBITDAX and 4.00x to 5.00x estimated calendar year 2022 EBITDAX to corresponding financial data for Chesapeake. The selected companies analysis indicated an implied per share value reference ranges of $63.44 to $73.44, $64.30 to $77.83 and $66.78 to $82.63, respectively, per share of Chesapeake common stock based on the selected range of multiples (such per share value reference ranges were used to calculate the implied exchange ratios noted in the corresponding section of the “Vine Financial Analyses” beginning on page 63), which, when multiplied by the adjusted exchange ratio of 0.2486 resulted in implied per share value reference ranges of $15.77 to $18.26, $15.99 to $19.35 and $16.61 to
 
66

 
$20.54, respectively. Such adjusted per share value reference ranges were then added to the cash consideration of $1.20 per share to derive the implied total merger consideration reference range of $16.97 to $19.46, $17.19 to $20.55 and $17.81 to $21.74, respectively.
Chesapeake Selected Transactions Analysis.   Houlihan Lokey considered certain financial terms of certain transactions involving target companies that Houlihan Lokey deemed relevant.
The financial data reviewed included:

Transaction value as a multiple of LQA Production; and

Transaction value as a multiple of LQA EBITDAX.
The selected transactions included the following:
Date Announced
Buyer
Seller
6/8/2021 Contango Oil & Gas Company Independence Energy
6/2/2021 Southwestern Energy Company Indigo II Louisiana Operating LLC
5/6/2021 EQT Corporation ARD Operating
5/24/2021 Cabot Oil & Gas Corporation Cimarex Energy
12/21/2020 Diamondback Energy QEP Resources, Inc.
9/28/2020 Devon Energy WPX Energy
8/12/2020 Southwestern Energy Montage Resources
7/20/2020 Chevron Corporation Noble Energy
7/15/2019 Callon Petroleum Company Carrizo Oil & Gas, Inc.
6/10/2019 Comstock Resources, Inc. Covey Park Energy LLC
4/24/2019 Occidental Petroleum Anadarko Petroleum
8/27/2018 Eclipse Resources Blue Ridge Mountain Resources Inc.
6/19/2017 EQT Corporation Rice Energy Inc.
10/25/2016 EQT Corporation Republic Energy, Trans Energy Inc.
9/26/2016 Rice Energy Inc. Vantage Energy LLC, Vantage Energy II LLC
7/5/2016 Mountain Capital Management Harbinger Group Inc.
Taking into account the results of the selected transactions analysis, Houlihan Lokey applied selected multiple ranges of $3,750/mcfepd to $4,250/mcfepd LQA Production and 4.75x to 5.75x LQA EBITDAX to corresponding financial data for Chesapeake. The selected transactions analysis indicated an implied per share value reference ranges of $77.71 to $87.61 and $65.49 and $78.56, respectively, per share of Chesapeake common stock based on the selected range of multiples (such per share value reference ranges were used to calculate the implied exchange ratios in the corresponding section of the “Vine Financial Analyses” beginning on page 63), which, when multiplied by the adjusted exchange ratio of 0.2486 resulted in implied per share value reference ranges of $19.32 to $21.78 and $16.28 to $19.53, respectively. Such adjusted per share value reference ranges were then added to the cash consideration of $1.20 per share to derive the implied total merger consideration reference range of $20.52 to $22.98 and $17.48 to $20.73, respectively.
Chesapeake Discounted Cash Flow Analyses
Corporate Discounted Cash Flow Analysis.   Houlihan Lokey performed a discounted cash flow analysis of Chesapeake by calculating the estimated net present value of the projected unlevered, after-tax free cash flows of Chesapeake based on the Chesapeake Projections. Houlihan Lokey calculated terminal values for Chesapeake by applying a range of terminal value multiples of 4.0x to 5.0x to Chesapeake’s EBITDAX based on the Chesapeake Projections for fiscal year 2025. The net present values of Chesapeake’s projected future cash flows and terminal values were then calculated using WACC discount rates ranging from 7.5% to 8.5%. The Chesapeake discounted cash flow analysis indicated an implied per share value
 
67

 
reference range of $69.69 to $82.08 per share of Chesapeake common stock (such per share value reference range was used to calculate the implied exchange ratios in the corresponding section of the “Vine Financial Analyses” beginning on page 63), which, when multiplied by the adjusted exchange ratio of 0.2486 resulted in implied per share value reference ranges of $17.33 to $20.41. Such adjusted per share value reference range was then added to the cash consideration of $1.20 per share to derive the implied total merger consideration reference range of $18.53 to $21.61.
Net Asset Value Discounted Cash Flow Analysis.   Houlihan Lokey performed a discounted cash flow NAV analysis of Chesapeake by calculating the estimated net present value of its estimated oil and gas reserves in each of the 1P Reserves and 3P Reserves categories for Chesapeake based on the Chesapeake Reserve Information. Houlihan Lokey performed this analysis using RADRs ranging from 10% to 50% for the 3P Reserves, depending on the reserve categories, and WACC discount rates ranging from 7.5% to 8.5% for the 1P Reserves, for each of NYMEX Strip Pricing and Consensus Pricing scenarios. Houlihan Lokey used this to derive implied net reserve value reference ranges. Houlihan Lokey then derived implied equity value per share reference ranges from the resulting reserve value reference ranges and using the net debt and diluted share information described above. This analysis indicated the following per share reference ranges for Chesapeake common stock, and, when multiplied by the adjusted exchange ratio of 0.2486 and added to the cash consideration of $1.20 per share of Vine Class A common stock, the implied total merger consideration reference range:
RADR Approach
WACC Approach
3P Reserves
NYMEX Strip
Pricing
3P Reserves
Consensus Pricing
1P Reserves
NYMEX Strip
Pricing
1P Reserves
Consensus Pricing
Implied Equity Value Per Share Reference Range*
$ 41.10 – $49.20 $ 43.26 – $52.57 $ 67.04 – $72.60 $ 72.45 – $78.67
Implied Total Merger Consideration Reference Range
$ 11.42 – $13.43 $ 11.96 – $14.27 $ 17.87 – $19.25 $ 19.22 – $20.76
*
Such ranges were utilized to calculate the implied exchange ratios in the corresponding section of the “Vine Financial Analyses” beginning on page 63.
Has / Gets Analysis
Houlihan Lokey compared (a) the per share equity value reference ranges of Vine Class A common stock immediately prior to the First Merger (“Has”) to (b) the implied pro forma per share merger consideration reference ranges immediately subsequent to the First Merger (“Gets”) across each of its financial analyses.
Houlihan Lokey calculated the “Gets” for the Net Asset Value Discounted Cash Flow Analysis based on a “sum-of-the parts” approach, which incorporated, among other things, implied enterprise value reference ranges for Vine, implied enterprise value reference ranges for Chesapeake, the impact of certain benefits of the merger, including certain synergies, the combined company’s pro forma net debt, and other pro forma effects of the merger. Houlihan Lokey calculated the “Gets” for the Selected Companies Analysis and the Selected Transactions Analysis based, generally, on the applicable Chesapeake multiples and including the impact of certain synergies and the combined company’s pro forma net debt.
 
68

 
Has:
Gets:
Selected Companies Analysis
2021E Average Daily Production
$ 15.29 – $21.83 $ 17.60 – $20.68
2021E EBITDAX
$ 16.09 – $24.16 $ 18.01 – $22.05
2022E EBITDAX
$ 17.19 – $26.16 $ 18.49 – $23.15
Selected Transactions Analysis
LQA Average Daily Production / Acreage
$ 18.06 – $26.11* $ 20.14 – $23.25
LQA EBITDAX
$ 18.14 – $24.19 $ 18.53 – $22.47
Discounted Cash Flow Analysis – Corporate
$ 19.85 – $28.07 $ 20.07 – $23.99
Discounted Cash Flow Analysis – Net Asset Value
RADR Approach – 3P Reserves NYMEX Strip Pricing
$ 3.19 – $9.65 $ 10.58 – $13.85
RADR Approach – 3P Reserves Consensus Pricing
$ 4.72 – $11.54 $ 11.39 – $15.04
WACC Approach – 1P Reserves NYMEX Strip Pricing
$ 16.28 – $19.03 $ 19.54 – $21.55
WACC Approach – 1P Reserves Consensus Pricing
$ 18.28 – $21.17 $ 21.30 – $23.51
*
$15.71 to $23.76 net of the liability under the Tax Receivable Agreement.

$15.79 to $21.84 net of the liability under the Tax Receivable Agreement.
Other Information
Houlihan Lokey observed certain additional information that was not considered part of its financial analysis for its opinion but was noted for informational purposes, including, among other things, the following:
Implied Premiums Paid in Selected Transactions.   Houlihan Lokey compiled data with regard to the percentage premiums represented by the per share consideration paid or to be paid in 17 stock-for-stock oil and gas transactions, which percentage premia ranged from -5.0% to 35.4%, -9.3% to 30.0% and -5.8% to 32.2% for the preceding trading day and the volume weighted average price for the preceding 15 and 30 trading day periods, respectively.
Size and Valuation Multiple Observations.   Houlihan Lokey compiled data with regard to 46 public, U.S. upstream oil & gas companies with research analyst estimates for 2022 EBITDA and enterprise value in excess of $500 million, excluding minerals-focused companies as of August 1, 2021, which multiples ranged from 2.43x to 3.82x for the 25th to 75th percentile of the smallest quintile (with a median of 3.22x) to 4.26x to 4.75x for the 25th to 75th percentile of the largest quintile (with a median of 4.54x).
Miscellaneous
Houlihan Lokey was engaged by Vine to provide an opinion to the Vine board as to the fairness, from a financial point of view, to the holders of Vine Class A common stock (other than the Excluded Persons) of the merger consideration. Vine engaged Houlihan Lokey based on Houlihan Lokey’s experience and reputation. Houlihan Lokey is regularly engaged to render financial opinions in connection with mergers, acquisitions, divestitures, leveraged buyouts, and for other purposes. Pursuant to its engagement by Vine, Houlihan Lokey is entitled to an aggregate fee of $3,000,000 for its services, a portion of which became payable upon the execution of Houlihan Lokey’s engagement letter, a portion of which became payable upon the delivery of Houlihan Lokey’s opinion and the balance of which becomes payable upon the consummation or termination of the merger. No portion of Houlihan Lokey’s fee is contingent upon the successful completion of the merger. Vine has also agreed to reimburse Houlihan Lokey for certain expenses and to indemnify Houlihan Lokey, its affiliates and certain related parties against certain liabilities and expenses, including certain liabilities under the federal securities laws, arising out of or related to Houlihan Lokey’s engagement.
In the ordinary course of business, certain of Houlihan Lokey’s employees and affiliates, as well as investment funds in which they may have financial interests or with which they may co-invest, may acquire, hold or sell, long or short positions, or trade, in debt, equity, and other securities and financial instruments (including loans and other obligations) of, or investments in, Vine, Chesapeake, or any other party that
 
69

 
may be involved in the proposed transaction and their respective affiliates or security holders or any currency or commodity that may be involved in the proposed transaction.
Houlihan Lokey has in the past provided financial advisory services to certain lenders of Chesapeake in connection with Chesapeake’s chapter 11 restructuring, which was completed in February 2021, and Houlihan Lokey and/or certain of its affiliates have in the past provided and are currently providing investment banking, financial advisory and/or other financial or consulting services to Blackstone, or one or more security holders or affiliates of, and/or portfolio companies of investment funds affiliated or associated with, Blackstone (collectively, with Blackstone, the “Blackstone Group”), for which Houlihan Lokey and its affiliates have received, and may receive, compensation, including, among other things, (i) having acted as financial advisor to an affiliate of Blackstone as a lender to One Call Corp. in connection with a recapitalization transaction, which was completed in October 2019, and (ii) having acted as financial advisor to Stearns Holdings, LLC, then a member of the Blackstone Group, in connection with its sale transaction, which closed in March 2021. Houlihan Lokey and certain of its affiliates may provide investment banking, financial advisory and/or other financial or consulting services to Vine, Chesapeake, members of the Blackstone Group, other participants in the merger or certain of their respective affiliates or security holders in the future, for which Houlihan Lokey and its affiliates may receive compensation. In addition, Houlihan Lokey and certain of its affiliates and certain of its and their respective employees may have committed to invest in private equity or other investment funds managed or advised by Blackstone, other participants in the merger or certain of their respective affiliates or security holders, and in portfolio companies of such funds, and may have co-invested with members of the Blackstone Group, other participants in the merger or certain of their respective affiliates or security holders, and may do so in the future. Furthermore, in connection with bankruptcies, restructurings, distressed situations and similar matters, Houlihan Lokey and certain of its affiliates may have in the past acted, may currently be acting and may in the future act as financial advisor to debtors, creditors, equity holders, trustees, agents and other interested parties (including, without limitation, formal and informal committees or groups of creditors) that may have included or represented and may include or represent, directly or indirectly, or may be or have been adverse to, Vine, Chesapeake, members of the Blackstone Group, other participants in the merger or certain of their respective affiliates or security holders, for which advice and services Houlihan Lokey and its affiliates have received and may receive compensation.
Certain Vine Unaudited Forecasted Financial Information
Vine does not as a matter of course make public future sales, earnings, or other results. However, in connection with its evaluation of the merger, certain non-public unaudited internal financial forecasts with respect to Vine covering multiple years on a standalone basis were prepared by Vine’s management and were based upon the internal financial model that Vine has historically used in connection with strategic planning. Certain of these forecasts were provided to the Vine board and to Chesapeake in connection with their evaluations of the merger and were also provided to Vine’s financial advisors, including in connection with Houlihan Lokey’s financial analyses and opinion as described in the section entitled “ —  Opinion of Vine’s Financial Advisor” beginning on page 59 and to J.P. Morgan, Chesapeake’s financial advisor.
The accompanying prospective financial information was not prepared with a view toward public disclosure or with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information, but, in the view of Vine’s management, was prepared on a reasonable basis, reflects the best currently available estimates and judgments, and presents, to the best of Vine management’s knowledge and belief, the expected course of action and the expected future financial performance of Vine. However, this information is not fact and should not be relied upon as necessarily indicative of actual future results, and readers of this proxy statement/prospectus are cautioned not to place undue reliance on the prospective financial information.
Neither Vine’s independent auditors, nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the prospective financial information.
The summary of the unaudited forecasted financial and operating information presented below is not included in this proxy statement/prospectus to influence your decision whether to vote for or against the
 
70

 
merger proposal, but are included because these forecasts were made available to the Vine board, Chesapeake and Vine’s and Chesapeake’s respective financial advisors. The Vine forecasted financial information was prepared by and is the responsibility of Vine management.
The inclusion of this information should not be regarded as an indication that the Vine board, Vine (or any of its affiliates, officers, directors, advisors or other representatives) or any other recipient of this information considered, or now considers, it to be necessarily predictive of actual future performance or events, or that it should be construed as financial guidance, and such summary projections set forth below should not be relied on as such.
This information was prepared solely for internal use and is subjective in many respects. While presented with numerical specificity, the unaudited forecasted financial and operating information reflects numerous estimates and assumptions that are inherently uncertain and may be beyond the control of Vine’s management, including, among others, Vine’s future results, oil and gas industry activity, commodity prices, demand for crude oil and natural gas, the availability of financing to fund the exploration and development costs associated with the respective projected drilling programs, natural gas takeaway capacity and the availability of services in the areas in which Vine operates, general economic and regulatory conditions and other matters described in the sections entitled “Risk Factors,” “Cautionary Statement Regarding Forward-Looking Statements” and “Where You Can Find More Information,” beginning on pages 18, 32, and 148, respectively. The unaudited forecasted financial and operating information reflects both assumptions as to certain business decisions that are subject to change and, in many respects, subjective judgment, and thus is susceptible to multiple interpretations and periodic revisions based on actual experience and business developments. Vine can give no assurance that the unaudited forecasted financial and operating information and the underlying estimates and assumptions will be realized or that actual results will not be significantly higher or lower than forecasted. As a result, the Vine forecasted financial information summarized in this proxy statement/prospectus should not be relied on as necessarily predictive of actual future events. In addition, since the unaudited forecasted financial and operating information covers multiple years, such information by its nature becomes less predictive with each successive year. This information constitutes “forward-looking statements” and actual results may differ materially and adversely from those projected. Actual results may differ materially from those set forth below, and important factors that may affect actual results and cause the unaudited forecasted financial and operating information to not be realized include, but are not limited to, risks and uncertainties relating to its business, industry performance, the regulatory environment, general business and economic conditions and other matters described under the section of this proxy statement/prospectus titled “Risk Factors” beginning on page 18. See also “Cautionary Statement Regarding Forward-Looking Statements” and “Where You Can Find More Information” beginning on pages 32 and 148, respectively.
Certain of the measures included in this unaudited forecasted financial information are non-GAAP financial measures, including, but not limited to, Adjusted EBITDA and Adjusted Free Cash Flow. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used by Vine are not reported by all of their competitors and may not be comparable to similarly titled amounts used by other companies.
Furthermore, the unaudited forecasted financial and operating information does not take into account any circumstances or events occurring after the date it was prepared. Vine can give no assurance that, had the unaudited forecasted financial and operating information been prepared either as of the date of the merger agreement or as of the date of this proxy statement/prospectus, similar estimates and assumptions would be used. Except as required by applicable securities laws, Vine does not intend to, and disclaims any obligation to, make publicly available any update or other revision to the unaudited forecasted financial and operating information to reflect circumstances existing since its preparation or to reflect the occurrence of events, even in the event that any or all of the underlying assumptions are shown to be inappropriate, including with respect to the accounting treatment of the merger under GAAP, or to reflect changes in general economic or industry conditions. The unaudited forecasted financial and operating information does not take into account possible financial and other effects on Vine of the merger, the effect on Vine of any business or strategic decision or action that has been or will be taken as a result of the merger agreement having been executed, or the effect of any business or strategic decisions or actions which would likely have been
 
71

 
taken if the merger agreement had not been executed, but which were instead altered, accelerated, postponed or not taken in anticipation of the merger. Further, the unaudited forecasted financial and operating information does not take into account the effect on Vine of any possible failure of the merger to occur. None of Vine or its affiliates, officers, directors, advisors or other representatives has made, makes or is authorized in the future to make any representation to any Vine stockholder or Chesapeake shareholder or other person regarding Vine’s or Chesapeake’s ultimate performance compared to the information contained in the unaudited forecasted financial and operating information or that the forecasted results will be achieved. The inclusion of the unaudited forecasted financial and operating information herein should not be deemed an admission or representation by Vine or any other person that it is viewed as material information of Vine, particularly in light of the inherent risks and uncertainties associated with such forecasts.
In light of the foregoing, and considering that the special meeting will be held several months after the unaudited forecasted financial and operating information was prepared, as well as the uncertainties inherent in any forecasted information, Vine stockholders are cautioned not to place undue reliance on such information, and Vine urges all Vine stockholders to review Vine’s most recent SEC filings for a description of Vine’s reported financial results. See the section entitled “Where You Can Find More Information” beginning on page 148.
Vine’s Assumptions
The information described below in the section entitled “— Vine Unaudited Forecasted Financial Information” was based on various assumptions, including, but not limited to, using the NYMEX Strip Pricing as of July 22, 2021 through 2025 for the commodity price assumptions.
NYMEX Strip Pricing(1)
2021E
2022E
2023E
2024E
2025E
Natural Gas ($/MMBtu)
$ 3.36 $ 3.39 $ 2.88 $ 2.75 $ 2.75
(1)
The table represents Vine’s commodity pricing assumptions, which reflect actual NYMEX Strip Pricing through and as of July 22, 2021 and NYMEX forward prices available as of July 22, 2021 for the remainder of 2021 through 2025.
The Vine Unaudited Forecasted Financial Information also reflects assumptions regarding the continuing nature of ordinary course operations that may be subject to change.
Vine Unaudited Forecasted Financial Information
The following table sets forth certain summarized unaudited prospective financial and operating information with respect to Vine for the fiscal years 2021 through 2025 on a standalone basis prepared by Vine management, which was based on price assumptions for natural gas pricing based on NYMEX Strip Pricing as of July 22, 2021 described above.
Vine Standalone Financial Projection(1)
For the Year Ended December 31,
($ in millions)
2021E
2022E
2023E
2024E
2025E
Net Gas Production (MMcf/d)
998 1,009 1,068 1,077 1,139
Adjusted EBITDA(2)
$ 615 $ 683 $ 694 $ 683 $ 730
Operating Cash Flow(3)
$ 503 $ 567 $ 577 $ 565 $ 588
Adjusted Free Cash Flow(4)
$ 162 $ 200 $ 217 $ 208 $ 269
(1)
The information set forth in this table does not take into account any circumstances or events occurring after the date it was prepared. Given that the Vine special meeting will be held several months after such information was prepared, as well as the uncertainties inherent in any forecasted information, Vine stockholders are cautioned not to place undue reliance on such information.
(2)
Adjusted EBITDA (a non-GAAP measure) is defined as earnings before interest, income taxes,
 
72

 
depreciation, depletion and amortization (EBITDA), adjusted to exclude changes in fair value of unrealized derivative contracts, gains and losses from asset sales, impairment, gains or losses from early extinguishment of debt and certain other items.
(3)
Operating Cash Flow (a non-GAAP measure) is defined as Adjusted EBITDA, less cash interest and cash income tax.
(4)
Adjusted Free Cash Flow (a non-GAAP measure) is defined as Operating Cash Flow, less cash capital expenditures.
Assumptions with respect to Chesapeake
The information described below in the section entitled “— Forecasted Financial Information with respect to Chesapeake” was based on various assumptions for natural gas pricing based on NYMEX Strip Pricing as of July 22, 2021 through 2025.
NYMEX Strip Pricing(1)
2021E
2022E
2023E
2024E
2025E
Natural Gas ($/MMBtu)
$ 3.36 $ 3.39 $ 2.88 $ 2.75 $ 2.75
(1)
The table represents Vine’s commodity pricing assumptions, which reflect actual NYMEX Strip Pricing through and as of July 22, 2021 and NYMEX forward prices available as of July 22, 2021 for the remainder of 2021 through 2025.
Forecasted Financial Information with respect to Chesapeake
The following table sets forth certain summarized unaudited prospective financial and operating information with respect to Chesapeake for the fiscal years 2021 through 2025 on a standalone basis. This information reflects forecasts prepared by Chesapeake management (the “Original CHK Forecasts”) and adjusted by Vine management to reflect (i) instead of the pricing assumptions provided by Chesapeake management, the pricing assumptions used by Vine management, which are based on price assumptions for natural gas and crude oil pricing based on NYMEX Strip Pricing as of July 22, 2021 through 2025, and (ii) a 10% reduction to the type curves for certain Chesapeake acreage (such resulting forecasts, the “Adjusted CHK Forecasts”).
Chesapeake Standalone Financial Projection(1)
For the Year Ended December 31,
($ in millions)
2021E
2022E
2023E
2024E
2025E
Net Gas Production Equivalent (MMcfe/d)
2,624 2,678 2,652 2,552 2,544
Adjusted EBITDA(2)
$ 1,769 $ 2,070 $ 2,074 $ 1,910 $ 1,854
Operating Cash Flow(3)
$ 1,691 $ 1,996 $ 1,994 $ 1,803 $ 1,717
Adjusted Free Cash Flow(4)
$ 990 $ 897 $ 1,042 $ 737 $ 801
(1)
The information set forth in this table does not take into account any circumstances or events occurring after the date it was prepared. Given that the Vine special meeting will be held several months after such information was prepared, as well as the uncertainties inherent in any forecasted information, Vine stockholders and Chesapeake shareholders are cautioned not to place undue reliance on such information.
(2)
Adjusted EBITDA (a non-GAAP measure) is defined as earnings before interest, income taxes, depreciation, depletion and amortization, adjusted to exclude changes in fair value of derivative contracts, gains and losses from asset sales, impairment, gains or losses from early extinguishment of debt and certain other items.
(3)
Operating Cash Flow (a non-GAAP measure) is defined as Adjusted EBITDA, less cash interest and cash income tax.
 
73

 
(4)
Adjusted Free Cash Flow (a non-GAAP measure) is defined as Operating Cash Flow, less cash capital expenditures.
Certain Additional Information regarding Forecasted Financial Information with respect to Chesapeake
Chesapeake does not as a matter of course make public long-term forecasts or internal projections as to future performance, revenues, production, earnings or other results given, among other reasons, the uncertainty, unpredictability and subjectivity of the underlying assumptions and estimates.
The inclusion of any unaudited forecasted financial and operating information regarding Chesapeake in this proxy statement/prospectus is not intended to influence your decision whether to vote for or against the merger proposal, but are included because these forecasts were made available to the Vine board and Houlihan Lokey.
The delivery to Vine of the Original CHK Forecasts and the inclusion of the Adjusted CHK Forecasts in this proxy statement/prospectus should not be regarded as an indication that the Chesapeake board, Chesapeake, the Vine board or Vine (or any of their respective affiliates, officers, directors, advisors or other representatives) or any other recipient of this information considered, or now considers, it to be necessarily predictive of actual future performance or events, or that it should be construed as financial guidance, and such summary projections set forth below should not be relied on as such.
The Original CHK Forecasts and the Adjusted CHK Forecasts were prepared solely for use as described above and are subjective in many respects. While presented with numerical specificity, the unaudited forecasted financial and operating information reflects numerous estimates and assumptions that are inherently uncertain and may be beyond the control of Chesapeake’s management, including, among others, the matters described above preceding the presentation of Vine Forecasted Financial Information and other matters described in the sections entitled “Risk Factors.” “Cautionary Statement Regarding Forward-Looking Statements” and “Where You Can Find More Information” beginning on pages 18, 32 and 148, respectively. The Original CHK Forecasts and the Adjusted CHK Forecasts reflect both assumptions as to certain business decisions that are subject to change and, in many respects, subjective judgment, and thus is susceptible to multiple interpretations and periodic revisions based on actual experience and business developments. Neither Chesapeake nor Vine can give any assurance that the Original CHK Forecasts or the Adjusted CHK Forecasts and the underlying estimates and assumptions will be realized or that actual results will not be significantly higher or lower than forecasted. As a result, neither the Original CHK Forecasts nor the Adjusted CHK Forecasts in this proxy statement/prospectus should be relied on as necessarily predictive of actual future events. In addition, since the Original CHK Forecasts and the Adjusted CHK Forecasts cover multiple years, such information by its nature becomes less predictive with each successive year. This information constitutes “forward-looking statements” and actual results may differ materially and adversely from those projected. Actual results may differ materially from those set forth below, and important factors that may affect actual results and cause the Original CHK Forecasts and the Adjusted CHK Forecasts not be realized include, but are not limited to, risks and uncertainties relating to its business, industry performance, the regulatory environment, general business and economic conditions and other matters described under the section of this proxy statement/prospectus titled “Risk Factors” beginning on page 18. See also “Cautionary Statement Regarding Forward-Looking Statements” and “Where You Can Find More Information” beginning on pages 32 and 148, respectively.
The Chesapeake forecasted financial information included in this document, the Original CHK Forecasts and the Adjusted CHK Forecasts were not prepared with a view toward compliance with GAAP, the published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation or presentation of forecasted financial information. The Original CHK Forecasts have been prepared by and are the responsibility of Chesapeake management. The Chesapeake forecasted financial information and the Adjusted CHK Forecasts have been prepared by Vine management based on the Original CHK Forecasts, and such Adjusted CHK Forecasts are the responsibility of Vine management. Neither PricewaterhouseCoopers LLP nor Deloitte & Touche LLP has audited, reviewed, examined, compiled or applied agreed-upon procedures with respect to the Chesapeake forecasted financial information, the Original CHK Forecasts or the Adjusted CHK Forecasts and, accordingly, neither PricewaterhouseCoopers LLP nor Deloitte & Touche LLP has expressed an opinion or any other form of
 
74

 
assurance with respect thereto. The PricewaterhouseCoopers LLP report incorporated by reference into this proxy statement/prospectus and the Deloitte & Touche LLP report attached to this proxy statement/prospectus relate to Chesapeake’s and Vine’s, respectively, previously issued financial statements. Those reports do not extend to the Chesapeake forecasted financial information, the Original CHK Forecasts and the Adjusted CHK Forecasts and should not be read to do so.
Certain of the measures included in the Original CHK Forecasts and the Adjusted CHK Forecasts are non-GAAP financial measures, including, but not limited to, Adjusted EBITDA and Adjusted Free Cash Flow. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used by Chesapeake are not reported by all of their competitors and may not be comparable to similarly titled amounts used by other companies.
Furthermore, the Original CHK Forecasts and the Adjusted CHK Forecasts do not take into account any circumstances or events occurring after the dates on which they were prepared. Neither Vine nor Chesapeake can give any assurance that, had Original CHK Forecasts or the Adjusted CHK Forecasts been prepared either as of the date of the merger agreement or as of the date of this proxy statement/prospectus, similar estimates and assumptions would be used. Except as required by applicable securities laws, neither Vine nor Chesapeake intends to, and each disclaims any obligation to, make publicly available any update or other revision to the Original CHK Forecasts and the Adjusted CHK Forecasts to reflect circumstances existing since its preparation or to reflect the occurrence of events, even in the event that any or all of the underlying assumptions are shown to be inappropriate, including with respect to the accounting treatment of the merger under GAAP, or to reflect changes in general economic or industry conditions. None of Chesapeake, Vine or their respective affiliates, officers, directors, advisors or other representatives has made, makes or is authorized in the future to make any representation to any Vine stockholder or Chesapeake shareholder or other person regarding Vine’s or Chesapeake’s ultimate performance compared to the information contained in the Original CHK Forecasts and the Adjusted CHK Forecasts or that the forecasted results will be achieved. The delivery of the Original CHK Forecasts to Vine and the inclusion of the Adjusted CHK Forecasts in this proxy statement prospectus should not be deemed an admission or representation by Chesapeake or any other person that it is viewed as material information of Chesapeake, particularly in light of the inherent risks and uncertainties associated with such forecasts.
In light of the foregoing, and considering that the Vine special meeting will be held several months after the unaudited forecasted financial and operating information was prepared, as well as the uncertainties inherent in any forecasted information, stockholders are cautioned not to place undue reliance on such information, and Chesapeake urges all stockholders to review Chesapeake’s most recent SEC filings for a description of Chesapeake’s reported financial results. See the section entitled “Where You Can Find More Information” beginning on page 148.
NEITHER CHESAPEAKE NOR VINE INTENDS TO UPDATE OR OTHERWISE REVISE THE ABOVE ADJUSTED CHK FORECASTS TO REFLECT CIRCUMSTANCES EXISTING AFTER THE DATE WHEN MADE OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS, EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING SUCH ADJUSTED CHK FORECASTS ARE NO LONGER APPROPRIATE, EXCEPT AS MAY BE REQUIRED BY APPLICABLE LAW.
Regulatory Approvals
The completion of the merger is subject to the receipt of antitrust clearance in the United States. Under the HSR Act and the rules promulgated thereunder, the merger may not be completed until notification and report forms have been filed with the United States Federal Trade Commission (“FTC”) and the Antitrust Division of the United States Department of Justice (“Antitrust Division”), and the applicable waiting period (or any extensions of such waiting period) has expired or been terminated. For additional information regarding regulatory approvals in connection with the merger, see the section entitled “The Merger Agreement — HSR and Other Regulatory Approvals” beginning on page 101.
 
75

 
On August 24, 2021, Chesapeake and Vine filed their respective notification and report forms with the FTC and Antitrust Division. The statutory waiting period applicable to the merger under the HSR Act automatically expires on September 23, 2021 at 11:59 p.m. Eastern Time, unless it is terminated early or extended by a request for additional information and documentary material. Neither Chesapeake nor Vine is aware of any material governmental approvals or actions that are required for completion of the merger other than as described above. It is presently contemplated that if any such additional material governmental approvals or actions are required, those approvals or actions will be sought.
At any time after the expiration or termination of the statutory waiting period under the HSR Act, the Antitrust Division or the FTC may take action under the antitrust laws, including seeking to enjoin the completion of the merger, to rescind the merger or to conditionally permit completion of the merger subject to regulatory conditions or other remedies. In addition, non-U.S. regulatory bodies and U.S. state attorneys general could take action under the antitrust laws as they deem necessary or desirable in the public interest, including, without limitation, seeking to enjoin the completion of the merger or to rescind the merger or permitting completion subject to regulatory conditions. There can be no assurance that regulatory authorities will not impose conditions on the completion of the merger or require changes to the terms of the transaction. Private parties may also seek to take legal action under the antitrust laws under some circumstances. There can be no assurance that a challenge to the merger on antitrust grounds will not be made or, if such a challenge is made, that it would not be successful.
Board of Directors and Management of Chesapeake Following Completion of the Merger
Upon closing of the merger, the Chesapeake board of directors and executive officers will remain unchanged. Additionally, Chesapeake will continue to be headquartered in Oklahoma City, Oklahoma.
Listing of Chesapeake Shares; Delisting and Deregistration of Vine Shares
Prior to the completion of the merger, Chesapeake has agreed to take all necessary action to cause the shares of Chesapeake common stock to be issued in connection with the merger to be approved for listing on the Nasdaq Global Select Market or such other Nasdaq market on which shares of Chesapeake common stock are then listed, subject to official notice of issuance. The listing on such Nasdaq market of the shares of Chesapeake common stock to be issued in connection with the merger is also a condition to completion of the merger.
Vine will cooperate with Chesapeake and use its reasonable best efforts to take, or cause to be taken, all actions and do, or cause to be done, all things reasonably necessary, proper or advisable on its part under applicable law and the rules and policies of the NYSE to enable the delisting of Vine Class A common stock from the NYSE and the deregistration of Vine Class A common stock under the Exchange Act as promptly as practicable after the closing date (and not more than ten days after the closing date).
If the merger is completed, the shares of Chesapeake common stock to be issued in the merger will be listed for trading on the Nasdaq Global Select Market or such other Nasdaq market on which shares of Chesapeake common stock are then listed, shares of Vine Class A common stock will be delisted from the NYSE and deregistered under the Exchange Act, and Vine will no longer be required to file periodic reports with the SEC pursuant to the Exchange Act.
Accounting Treatment of the Merger
Chesapeake prepares its financial statements in accordance with GAAP. The accounting guidance for business combinations requires the use of the acquisition method of accounting for the merger, which requires the determination of the acquirer, the purchase price, the acquisition date, the fair value of assets and liabilities of the acquiree and the measurement of goodwill. Chesapeake will be treated as the acquirer for accounting purposes.
Appraisal Rights
Under Delaware law, holders of Vine common stock that have not otherwise waived appraisal rights have the right to dissent from the merger and to receive payment in cash for the fair value of their shares of
 
76

 
Vine common stock as determined by the Delaware Court of Chancery, together with interest, if any, as determined by the court, in lieu of the consideration Vine stockholders would otherwise be entitled to pursuant to the merger agreement if they follow the procedures set forth in Section 262 of the DGCL. These rights are known as appraisal rights.
Vine stockholders electing to exercise appraisal rights must comply with the provisions of Section 262 of the DGCL in order to perfect their rights. Strict compliance with the statutory procedures is required to perfect appraisal rights under Delaware law.
The following is intended as a brief summary of the material provisions of the Delaware statutory procedures required to be followed by a Vine stockholder in order to dissent from the merger and perfect appraisal rights. This summary, however, is not a complete statement of all applicable requirements and is qualified in its entirety by reference to Section 262 of the DGCL, the full text of which appears in Annex D hereto. Failure to precisely follow any of the statutory procedures set forth in Section 262 of the DGCL may result in a termination or waiver of appraisal rights. All references in this summary to a “stockholder” are to the record holder of shares of Vine common stock unless otherwise indicated. Only a holder of record of shares of common stock is entitled to demand appraisal rights for the shares registered in that holder’s name. A person having a beneficial interest in shares of common stock held of record in the name of another person, such as a bank, broker or other nominee, must act promptly to cause the record holder to follow the steps summarized below properly and in a timely manner to perfect appraisal rights. If you hold your shares of Vine common stock through a bank, broker or other nominee and you wish to exercise appraisal rights, you should consult with your bank, broker or the other nominee.
Section 262 of the DGCL requires that stockholders for whom appraisal rights are available be notified not less than 20 days before the stockholders’ meeting to vote on the merger that appraisal rights will be available. A copy of Section 262 must be included with such notice. This joint proxy statement/prospectus constitutes notice to Vine stockholders of the availability of appraisal rights in connection with the merger in compliance with the requirements of Section 262 and a copy of Section 262 is attached hereto as Annex D. If a Vine stockholder wishes to consider exercising appraisal rights, such stockholder should carefully review the text of Section 262 contained in Annex D hereto because failure to timely and properly comply with the requirements of Section 262 will result in the loss of appraisal rights under Delaware law.
If you are a record holder of shares of Vine common stock and wish to elect to demand appraisal of your shares, you must satisfy each of the following conditions:

You must deliver to Vine a written demand for appraisal of your shares before the vote with respect to the merger proposal is taken. This written demand for appraisal must be in addition to and separate from any proxy or vote abstaining from or voting against the merger proposal. Voting against or failing to vote for the adoption and approval of the merger proposal by itself does not constitute a demand for appraisal within the meaning of Section 262 of the DGCL.

You must not vote in favor of, or consent in writing to, the adoption and approval of the merger proposal. A vote in favor of the adoption and approval of the merger proposal, by proxy or in person, will constitute a waiver of your appraisal rights in respect of the shares so voted and will nullify any previously filed written demands for appraisal. A proxy which does not contain voting instructions will, unless revoked, be voted in accordance with the Vine board recommendation, which recommendation, to the extent not changed before the Vine special meeting is FOR the merger proposal. Therefore, a Vine stockholder who votes by proxy and who wishes to exercise appraisal rights must affirmatively vote against the merger proposal or abstain from voting on the merger agreement and the merger.

You must continue to hold your shares of Vine common stock through the effective date of the merger. Therefore, a stockholder who is the record holder of shares of Vine common stock on the date the written demand for appraisal is made but who thereafter transfers such shares prior to the effective date of the merger will lose any right to appraisal with respect to such shares.
If you fail to comply with any of these conditions and the merger is completed, you will be entitled to receive the merger consideration (subject to your continued ownership of the Vine common stock as of the consummation of the merger), but you will have no appraisal rights with respect to your shares of Vine
 
77