As filed with the Securities and Exchange Commission on February 15, 2002
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
CHESAPEAKE ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
Oklahoma 73-1395733
(State of incorporation or organization) (I.R.S. Employer Identification No.)
6100 North Western Avenue
Oklahoma City, Oklahoma 73118
(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
6.75% Cumulative Convertible Preferred Stock New York Stock Exchange
If this Form relates to the registration of a class of If this Form relates to
the registration of a class of securities pursuant to Section 12(b) of the
Exchange Act securities pursuant to Section 12(g) of the Exchange and is
effective pursuant to General Instruction A.(c), Act and is effective pursuant
to General Instruction check the following box. ? A.(d), check the following
box. ?
Securities Act registration statement file number to which this form
relates: N/A
Securities to be registered pursuant to Section 12(g) of the Act: None
Item 1. Description of Registrant's Securities to be Registered
The securities to be registered consist of 6.75% Cumulative Convertible
Preferred Stock, par value $.01 per share (the "Preferred Stock") of Chesapeake
Energy Corporation (the "Registrant"). The Registrant hereby incorporates by
reference herein the description of the terms, rights and preferences of the
Preferred Stock set forth under the caption "Description of the Preferred Stock"
in the Prospectus forming a part of the Registrant's registration statement on
Form S-3 (No. 333-76546). Such Prospectus was filed with the Commission by the
Registrant pursuant to Rule 424(b)(3) under the Securities Act of 1933 on
January 30, 2002.
Item 2. Exhibits
The following exhibits are filed pursuant to the Instruction to Item 2:
------------------- ----------------------------------------------------------
Exhibit No. Description
------------------- ----------------------------------------------------------
------------------- ----------------------------------------------------------
1. Registrant's Restated Certificate of Incorporation,
including Registrant's Certificate of Designation of 6.75%
Cumulative Convertible Preferred Stock.
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------------------- ----------------------------------------------------------
2. Registrant's Bylaws. Incorporated herein by reference to
Exhibit 3.2 to Registrant's registration statement on
Form S-3 (No. 333-76546).
3. Rights Agreement dated July 15, 1998 between Registrant and
UMB Bank, N.A., as Rights Agent. Incorporated herein by
reference to Exhibit 1 to Registrant's registration
statement on Form 8-A filed July 16, 1998. Amendment No. 1
to Rights Agreement dated September 11, 1998. Incorporated
herein by reference to Exhibit 10.3 to Chesapeake's
quarterly report on Form 10-Q for the quarter ended
September 30, 1998.
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereto duly authorized.
CHESAPEAKE ENERGY CORPORATION
By: /s/ Aubrey K. McClendon
----------------------------------
Aubrey K. McClendon, Chairman and
Chief Executive Officer
Date: February 15, 2002
EXHIBIT 1
RESTATED CERTIFICATE OF INCORPORATION
OF
CHESAPEAKE ENERGY CORPORATION
TO THE SECRETARY OF STATE OF THE STATE OF OKLAHOMA:
Chesapeake Energy Corporation (the "Corporation"), a corporation organized
and existing under and by virtue of the Oklahoma General Corporation Act (the
"Act"), for the purpose of restating its certificate of incorporation, does
hereby submit the following:
A. The name of the Corporation is Chesapeake Energy Corporation. The name
under which the Corporation was originally incorporated was Chesapeake
Oklahoma Corporation.
B. The original Certificate of Incorporation of the Corporation was filed with
the Secretary of State of Oklahoma on November 19, 1996 (as amended from
time to time, the "Certificate of Incorporation").
C. This Restated Certificate of Incorporation was duly adopted in accordance
with the provisions of Section 1080 of the Act after being adopted by the
directors and only restates and integrates, but does not further amend, the
provisions of the Certificate of Incorporation as amended and supplemented
as of this date, there being no discrepancy between those provisions and the
provisions hereof.
D. The Certificate of Designations of Series A Junior Participating Preferred
Stock of the Corporation, filed with the Secretary of State of Oklahoma on
July 17, 1998, and attached hereto as Exhibit "A," will remain in full force
and effect.
E. The Certificate of Incorporation is hereby restated to read in its entirety
as follows:
ARTICLE I
Name
The name of the Corporation is:
CHESAPEAKE ENERGY CORPORATION
ARTICLE II
Registered Office and Agent
The address of the Corporation's registered office in the State of Oklahoma
is 735 First National Building, 120 North Robinson, Oklahoma City, Oklahoma
73102. The Corporation's registered agent at such address is The Corporation
Company.
ARTICLE III
Purposes
The nature of the business and the purpose of the Corporation shall be to
engage in any lawful act or activity and to pursue any lawful purpose for which
a corporation may be formed under the Oklahoma General Corporation Act (the
"Act"). The Corporation is authorized to exercise and enjoy all powers, rights
and privileges which corporations organized under the Act may have as in force
from time to time, including, without limitation, all powers, rights and
privileges necessary or convenient to carry out the purposes of the Corporation.
ARTICLE IV
Capital Stock
The total number of shares of capital stock which the Corporation shall have
authority to issue is Three Hundred Sixty Million (360,000,000) shares,
consisting of Ten Million (10,000,000) shares of Preferred Stock, par value
$0.01 per share, and Three Hundred Fifty Million (350,000,000) shares of Common
Stock, par value $0.01 per share. The preferences, qualifications, limitations,
restrictions and the special or relative rights in respect of the shares of each
class are as follows:
Section 1. Preferred Stock. The Preferred Stock may be issued from time to
time in one or more series. All shares of Preferred Stock shall be of equal rank
and shall be identical, except in respect of the matters that may be fixed and
determined by the Board of Directors as hereinafter provided, and each share of
each series shall be identical with all other shares of such series, except as
to the date from which dividends are cumulative. The Board of Directors hereby
is authorized to cause such shares to be issued in one or more series and with
respect to each such series prior to the issuance thereof to fix and determine
the designation, powers, preferences and rights of the shares of each such
series and the qualifications, limitations or restrictions thereof.
The authority of the Board of Directors with respect to each series shall
include, but not be limited to, determination of the following:
A. The number of shares constituting a series, the distinctive designation
of a series and the stated value of the series, if different from the par value;
B. Whether the shares of a series are entitled to any fixed or determinable
dividends, the dividend rate (if any) on the shares, whether the dividends are
cumulative and the relative rights of priority of dividends on shares of that
series;
C. Whether a series has voting rights in addition to the voting rights
provided by law and the terms and conditions of such voting rights;
D. Whether a series will have or receive conversion or exchange privileges
and the terms and conditions of such conversion or exchange privileges;
Dividends on outstanding shares of Preferred Stock shall be paid or set
apart for payment before any dividends shall be paid or declared or set apart
for payment on the common shares with respect to the same dividend period.
If upon any voluntary or involuntary liquidation, dissolution or winding up
of the Corporation the assets available for distribution to holders of shares of
Preferred Stock of all series shall be insufficient to pay such holders the full
preferential amount to which they are entitled, then such assets shall be
distributed ratably among the shares of all series in accordance with the
respective preferential amounts (including unpaid cumulative dividends, if any)
payable with respect thereto.
Section 2. Common Stock. The Common Stock shall be subject to the express
terms of the Preferred Stock and any series thereof. Each share of Common Stock
shall be equal to every other share of Common Stock. The holders of shares of
Common Stock shall be entitled to one vote for each share of such stock upon all
matters presented to the shareholders. Shares of Common Stock authorized hereby
shall not be subject to preemptive rights. The holders of shares of Common Stock
now or hereafter outstanding shall have no preemptive right to purchase or have
offered to them for purchase any of such authorized but unissued shares. The
holders of shares of Common Stock now or hereafter outstanding shall have no
preemptive right to purchase or have offered to them for purchase any shares of
Preferred Stock, Common Stock or other equity securities issued or to be issued
by the Corporation.
Subject to the preferential and other dividend rights applicable to the
Preferred Stock, the holders of shares of Common Stock shall be entitled to
receive such dividends (payable in cash, stock or otherwise) as may be declared
on the Common Stock by the Board of Directors at any time or from time to time
out of any funds legally available therefor.
In the event of any voluntary or involuntary liquidation, distribution or
winding up of the Corporation, after distribution in full of the preferential
and/or other amounts to be distributed to the holders of shares of Preferred
Stock, the holders of shares of Common Stock shall be entitled to receive all of
the remaining assets of the Corporation available for distribution to its
shareholders, ratably in proportion to the number of shares of Common Stock held
by them.
ARTICLE V
Limitation of Director Liability
A director of the Corporation shall not be personally liable to the
Corporation or its shareholders for damages for breach of fiduciary duty as a
director, except for personal liability for: (i) acts or omissions by such
director not in good faith or which involve intentional misconduct or a knowing
violation of law; (ii) the payment of dividends or the redemption or purchase of
stock in violation of Section 1053 of the Act; (iii) any breach of such
director's duty of loyalty to the Corporation or its shareholders; or (iv) any
transaction from which such director derived an improper personal benefit.
ARTICLE VI
Certain Stock Purchases
Section 1. Certain Definitions. For the purposes of this Article VI:
"Continuing Director" means any member of the Board of Directors of the
Corporation (the "Board") who is unaffiliated with the Interested Shareholder
and was a member of the Board prior to the time that the Interested Shareholder
became an Interested Shareholder, and any successor of a Continuing Director who
is unaffiliated with the Interested Shareholder and is recommended to succeed a
Continuing Director by a majority of Continuing Directors then on the Board.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means in the case of stock, the highest closing sale
price during the 30-day period ending on the date in question of a share of such
stock on a principal United States securities exchange registered under the
Exchange Act on which such stock is listed or in the national market system
maintained by the National Association of Securities Dealers, Inc., or, if the
stock is not listed on any such exchange or designated as a national market
system security, the highest closing bid quotation with respect to a share of
such stock during the 30-day period ending on the date in question on the
National Association of Securities Dealers, Inc. Automated Quotations system or
any system then in use, or if no such quotations are available, the fair market
value on the date in question of a share of such stock as determined by the
Board in good faith.
"Interested Shareholder" shall have the meaning ascribed to such term under
Section 1090.3 of the Act.
Section 2. Vote Required for Certain Stock Purchases.
A. Any direct or indirect purchase by the Corporation, or any subsidiary of
the Corporation, of any capital stock from a person or persons known by a
majority of the Continuing Directors of the Corporation to be an Interested
Shareholder who has beneficially owned such capital stock for less than three
years prior to the date of such purchase, or any agreement in respect thereof,
at a price in excess of the Fair Market Value shall require the affirmative vote
of no less than 66 2/3% of the votes cast by the holders, voting together as a
single class, of all then outstanding shares of capital stock, excluding for
this purpose the votes by the Interested Shareholder, unless a greater vote
shall be required by law.
B. Such affirmative vote shall not be required for a purchase or other
acquisition of securities of the same class made on substantially the same terms
to all holders of such securities and complying with the applicable requirements
of the Exchange Act, and the rules and regulations thereunder (or any subsequent
provisions replacing the Exchange Act, rules or regulations). Furthermore, such
affirmative vote shall not be required for any purchase effected on the open
market and not the result of a privately-negotiated transaction.
Section 3. Powers of Continuing Directors. The Continuing Directors of the
Corporation shall have the power and duty to determine for the purposes of this
Article VI, on the basis of information known to them after reasonable inquiry,
whether a person is an Interested Shareholder, and the number of shares of
capital stock owned beneficially by any person.
ARTICLE VII
Board of Directors
Section 1. Management by Board of Directors. The business and affairs of
the Corporation shall be under the direction of the Board of Directors.
Section 2. Number of Directors. Subject to the addition of any directors
elected by a class of preferred stock as provided in Section 3 of this Article
VII, the number of directors which shall constitute the whole board shall not be
less than three nor more than nine, and shall be determined by resolution
adopted by a vote of two-thirds (2/3) of the entire board, or at an annual or
special meeting of shareholders by the affirmative vote of sixty-six and
two-thirds percent (66 2/3%) of the outstanding stock entitled to vote. No
reduction in number shall have the effect of removing any director prior to the
expiration of his term.
Section 3. Classes of Directors; Election by Shareholders; Vacancies. The
directors shall be divided into three classes, designated Class I, Class II and
Class III. Each class shall consist, as nearly as may be possible, of one-third
of the total number of directors constituting the entire Board of Directors. The
term of the initial Class I directors shall terminate on the date of the 1997
annual meeting of shareholders, the term of the initial Class II directors shall
terminate on the date of the 1998 annual meeting of shareholders and the term of
the initial Class III directors shall terminate on the date of the 1999 annual
meeting of shareholders. At each annual meeting of shareholders beginning in
1997, successors to the class of directors whose term expires at that annual
meeting shall be elected for a three-year term. If the number of directors is
changed, any increase or decrease shall be apportioned among the classes so as
to maintain the number of directors in each class as nearly equal as possible,
and any additional directors of any class elected to fill a vacancy resulting
from an increase in such class shall hold office for a term that shall coincide
with the remaining term of that class, but in no case will a decrease in the
number of directors shorten the term of any incumbent director. A director shall
hold office until the annual meeting for the year in which his term expires and
until his successor shall be elected and shall qualify, subject, however, to
prior death, resignation, retirement, disqualification or removal from office.
Any vacancy on the Board of Directors, however resulting, may be filled by a
majority of the directors then in office, even if less than a quorum, or by a
sole remaining director. Any director elected to fill a vacancy shall hold
office for a term that shall coincide with the term of the class to which such
director shall have been elected. No election of directors need be by written
ballot.
Notwithstanding the foregoing, whenever the holders of any one or more
classes or series of Preferred Stock issued by the Corporation shall have the
right, voting separately by class or series, to elect directors at an annual or
special meeting of shareholders, the election, term of office, filling of
vacancies and other features of such directorships shall be governed by the
terms of the Certificate of Designation attributable to such Preferred Stock or
the resolution or resolutions adopted by the Board of Directors pursuant to
Section 2 of this Article VII applicable thereto, and such directors so elected
shall not be divided into classes pursuant to this Article VII unless expressly
provided by such terms.
ARTICLE VIII
Indemnity
Section 1. Third Party Claims. The Corporation shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
Corporation) by reason of the fact that he is or was a director, officer,
employee or agent of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture or other enterprise against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding,
if he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interest of the Corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe that his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or its
equivalent shall not of itself create a presumption that the person did not act
in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interest of the Corporation and with respect to any criminal
action or proceeding had reasonable cause to believe that his conduct was
unlawful.
Section 2. Derivative Claims. The Corporation shall indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit, if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interest of the Corporation; except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation unless and only to the extent that the
court in which such action or suit was brought shall determine, upon
application, that despite the adjudication of liability, but in the view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper.
Section 3. Expenses. Expenses, including fees and expenses of counsel,
incurred in defending a civil, criminal, administrative or investigative action,
suit or proceeding may be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of the director, officer, employee or agent to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the Corporation as authorized herein.
Section 4. Insurance. The Corporation may purchase (upon resolution duly
adopted by the Board of Directors) and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the Corporation,
or is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability.
Section 5. Reimbursement. To the extent that a director, officer, employee
or agent of, or any other person entitled to indemnity hereunder by, the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to herein or in defense of any claim, issue
or matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.
Section 6. Enforcement. Every such person shall be entitled, without demand
by him upon the Corporation or any action by the Corporation, to enforce his
right to such indemnity in an action at law against the Corporation. The right
of indemnification and advancement of expenses hereinabove provided shall not be
deemed exclusive of any rights to which any such person may now or hereafter be
otherwise entitled and specifically, without limiting the generality of the
foregoing, shall not be deemed exclusive of any rights pursuant to statute or
otherwise, of any such person in any such action, suit or proceeding to have
assessed or allowed in his favor against the Corporation or otherwise, his costs
and expenses incurred therein or in connection therewith or any part hereof.
ARTICLE IX
Amendments; Bylaws; Control Shares Act; Written Consent
Section 1. Amendments to Certificate of Incorporation. Notwithstanding
anything contained in this Certificate of Incorporation to the contrary, the
affirmative vote of the holders of at least sixty-six and two-thirds percent (66
2/3%) of the issued and outstanding stock having voting power, voting together
as a single class, shall be required to amend, repeal or adopt any provision
inconsistent with Articles V, VI, VII, VIII and this Article IX of this
Certificate of Incorporation.
Section 2. Bylaws. Prior to the receipt of any payment for any of the
Corporation's stock, the Bylaws of the Corporation shall be adopted, amended or
repealed by the Incorporator. Thereafter, in furtherance and not in limitation
of the powers conferred by statute, the Board of Directors is expressly
authorized to adopt, repeal, alter, amend or rescind the Bylaws of the
Corporation. In addition, the Bylaws of the Corporation may be adopted,
repealed, altered, amended or rescinded by the affirmative vote of the holders
of sixty-six and two-thirds percent (66 2/3%) of the outstanding stock of the
Corporation entitled to vote thereon.
Section 3. Control Shares Act. The Corporation shall not be subject to the
Oklahoma Control Shares Act as codified at Sections 1145-1155 of the Act. This
election shall be effective on the date of filing this Certificate.
Section 4. Action By Written Consent. Any action required or permitted to be
taken at a meeting of the shareholders may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by the holders of outstanding stock having not
less than the minimum number of votes which would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were
present and voted. Prompt notice of the taking of corporate action without a
meeting by less than unanimous written consent shall be given to those
shareholders who have not consented in writing.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed
by its Chairman of the Board and Chief Executive Officer and attested to by its
Secretary this 13th day of August, 2001.
CHESAPEAKE ENERGY CORPORATION,
an Oklahoma corporation
By /s/ Aubrey K. McClendon
-----------------------------------------
Aubrey K. McClendon
Chairman of the Board and
Chief Executive Officer
ATTEST:
/s/ Patricia J. Murano
------------------------------------
Patricia J. Murano, Assistant Secretary
CERTIFICATE OF DESIGNATION
OF
6.75% CUMULATIVE CONVERTIBLE PREFERRED STOCK OF CHESAPEAKE ENERGY CORPORATION
Pursuant to Section 1032(G) of the Oklahoma General Corporation Act
CHESAPEAKE ENERGY CORPORATION, an Oklahoma corporation (the "Company"), does
hereby certify that the following resolution was duly adopted by action of the
Board of Directors of the Company, with the provisions thereof fixing the number
of shares of the series and the dividend rate being set by action of the Board
of Directors of the Company:
RESOLVED that pursuant to the authority expressly granted to and vested in
the Board of Directors of the Company by the provisions of Article IV, Section 1
of the Certificate of Incorporation of the Company, as amended from time to time
(the "Certificate of Incorporation"), and pursuant to Section 1032(G) of the
Oklahoma General Corporation Act, the Board of Directors hereby creates a series
of preferred stock of the Company and hereby states that the voting powers,
designations, preferences and relative, participating, optional or other special
rights of which, and qualifications, limitations or restrictions thereof (in
addition to the provisions set forth in the Certificate of Incorporation which
are applicable to the preferred stock of all classes and series), shall be as
follows:
1. Designation and Amount; Ranking. (a) There shall be created from the
10,000,000 shares of preferred stock, par value $0.01 per share, of the Company
authorized to be issued pursuant to the Certificate of Incorporation, a series
of preferred stock, designated as the "6.75% Cumulative Convertible Preferred
Stock," par value $0.01 per share (the "Preferred Stock"), and the number of
shares of such series shall be 3,000,000. Such number of shares may be decreased
by resolution of the Board of Directors; provided that no decrease shall reduce
the number of shares of Preferred Stock to a number less than that of the shares
of Preferred Stock then outstanding plus the number of shares issuable upon
exercise of options or rights then outstanding.
(b) The Preferred Stock will, with respect to dividend rights or rights upon
the liquidation, winding-up or dissolution of the Company rank (i) senior to all
Junior Stock, (ii) on a parity with all Parity Stock and (iii) junior to all
Senior Stock.
2. Definitions. As used herein, the following terms shall have the
following meanings:
(a) "Accrued Dividends" shall mean, with respect to any share of Preferred
Stock, as of any date, the accrued and unpaid dividends on such share from and
including the most recent Dividend Payment Date (or the Issue Date, if such date
is prior to the first Dividend Payment Date) to but not including such date.
(b) "Accumulated Dividends" shall mean, with respect to any share of
Preferred Stock, as of any date, the aggregate accumulated and unpaid dividends
on such share from the Issue Date until the most recent Dividend Payment Date on
or prior to such date. There shall be no Accumulated Dividends with respect to
any share of Preferred Stock prior to the first Dividend Payment Date.
(c) "Affiliate" shall have the meaning ascribed to it, on the date hereof,
under Rule 405 of the Securities Act of 1933, as amended.
(d) "Board of Directors" shall mean the Board of Directors of the Company
or, with respect to any action to be taken by the Board of Directors, any
committee of the Board of Directors duly authorized to take such action.
(e) "Business Day" shall mean any day other than a Saturday, Sunday or other
day on which commercial banks in The City of New York are authorized or required
by law or executive order to close.
(f) "Change of Control" shall mean any of the following events: (i) the
sale, lease or transfer, in one or a series of related transactions, of all or
substantially all of the Company's assets (determined on a consolidated basis)
to any Person or group (as such term is used in Section 13(d)(3) of the Exchange
Act), other than to Permitted Holders; (ii) the adoption of a plan the
consummation of which would result in the liquidation or dissolution of the
Company; (iii) the acquisition, directly or indirectly, by any Person or group
(as such term is used in Section 13(d)(3) of the Exchange Act), other than
Permitted Holders, of beneficial ownership (as defined in Rule 13d-3 under the
Exchange Act) of more than 50% of the aggregate voting power of the Voting Stock
of the Company; provided, however, that the Permitted Holders beneficially own
(as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, in the aggregate a lesser percentage of the total voting power of
the Voting Stock of the Company than such other Person or group and do not have
the right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the Board of Directors (for the purposes of
this definition, such other Person or group shall be deemed to beneficially own
any Voting Stock of a specified corporation held by a parent corporation, if
such other Person or group is the beneficial owner (as defined above), directly
or indirectly, of more than 35% of the voting power of the Voting Stock of such
parent corporation and the Permitted Holders beneficially own (as defined in
this proviso), directly or indirectly, in the aggregate a lesser percentage of
the voting power of the Voting Stock of such parent corporation and do not have
the right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the Board of Directors of such parent
corporation); or (iv) during any period of two consecutive years, individuals
who at the beginning of such period composed the Board of Directors of the
Company (together with any new directors whose election by such Board of
Directors or whose nomination for election by the shareholders of the Company
was approved by a vote of 66 2/3% of the directors of the Company then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors of the Company then in
office. For purposes of this definition of "Change of Control," the term
"Permitted Holders" means Aubrey K. McClendon and Tom L. Ward and their
respective Affiliates.
(g) "Change of Control Date" shall mean the date on which the Change of
Control event occurs.
(h) "Conversion Price" shall mean $7.70, subject to adjustment as set forth
in Section 7(c).
(i) "Common Stock" shall mean the common stock, par value $0.01 per share,
of the Company, or any other class of stock resulting from successive changes or
reclassifications of such common stock consisting solely of changes in par
value, or from par value to no par value, or as a result of a subdivision,
combination, or merger, consolidation or similar transaction in which the
Company is a constituent corporation.
(j) "DTC" or "Depository" means The Depository Trust Company.
(k) "Dividend Payment Date" shall mean February 15, May 15, August 15 and
November 15 of each year, commencing February 15, 2002.
(l) "Dividend Record Date" shall mean February 1, May 1, August 1 and
November 1 of each year.
(m) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
(n) "Holder" or "holder" shall mean a holder of record of the Preferred
Stock.
(o) "Issue Date" shall mean November 13, 2001, the original date of issuance
of the Preferred Stock.
(p) "Junior Stock" shall mean all classes of common stock of the Company and
the Series A Junior Participating Convertible Preferred Stock and each other
class of capital stock or series of preferred stock established after the Issue
Date, by the Board of Directors, the terms of which do not expressly provide
that such class or series ranks senior to or on parity with the Preferred Stock
as to dividend rights or rights upon the liquidation, winding-up or dissolution
of the Company.
(q) "Liquidation Preference" shall mean, with respect to each share of
Preferred Stock, $50.
(r) "Market Value" shall mean the average closing price of the Common Stock
for a five consecutive trading day period on the NYSE (or such other national
securities exchange or automated quotation system on which the Common Stock is
then listed or authorized for quotation or, if the Common Stock is not so listed
or authorized for quotation, an amount determined in good faith by the Board of
Directors to be the fair value of the Common Stock).
(s) "NYSE" shall mean the New York Stock Exchange, Inc.
(t) "Officer" means the Chairman of the Board of Directors, the President,
any Vice President, the Treasurer, the Secretary or any Assistant Secretary of
the Company.
(u) "Officers' Certificate" means a certificate signed by two Officers.
(v) "Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Transfer Agent. The counsel may be an employee of or counsel
to the Company or the Transfer Agent.
(w) "Parity Stock" shall mean any class of capital stock or series of
preferred stock established after the Issue Date by the Board of Directors, the
terms of which expressly provide that such class or series will rank on parity
with the Preferred Stock as to dividend rights or rights upon the liquidation,
winding-up or dissolution of the Company.
(x) "Person" shall mean any individual, corporation, general partnership,
limited partnership, limited liability partnership, joint venture, association,
joint-stock company, trust, limited liability company, unincorporated
organization or government or any agency or political subdivision thereof.
(y) "Purchase Agreement" shall mean that certain Purchase Agreement with
respect to the Preferred Stock, dated as of November 6, 2001 among the Company,
Credit Suisse First Boston Corporation, Bear, Stearns & Co. Inc., Lehman
Brothers Inc. and Salomon Smith Barney Inc.
(z) "Registration Rights Agreement" means the Registration Rights Agreement
dated November 6, 2001 among the Company, Credit Suisse First Boston
Corporation, Bear, Stearns & Co. Inc., Lehman Brothers Inc. and Salomon Smith
Barney Inc. with respect to the Preferred Stock.
(aa) "SEC" or "Commission" shall mean the Securities and Exchange
Commission.
(bb) "Securities Act" means the Securities Act of 1933, as amended.
(cc) "Senior Stock" shall mean each class of capital stock or series of
preferred stock established after the Issue Date by the Board of Directors, the
terms of which expressly provide that such class or series will rank senior to
the Preferred Stock as to dividend rights or rights upon the liquidation,
winding-up or dissolution of the Company.
(dd) "Shelf Registration Statement" shall mean a shelf registration
statement filed with the SEC to cover resales of Transfer Restricted Securities
by holders thereof, as required by the Registration Rights Agreement.
(ee) "Transfer Agent" shall mean UMB Bank, N.A., the Company's duly
appointed transfer agent, registrar and conversion and dividend disbursing agent
for the Preferred Stock. The Company may, in its sole discretion, remove the
Transfer Agent with 10 days' prior notice to the Transfer Agent; provided, that
the Company shall appoint a successor Transfer Agent who shall accept such
appointment prior to the effectiveness or such removal.
(ff) "Transfer Restricted Securities" shall mean each share of Preferred
Stock (or the shares of Common Stock into which such share of Preferred Stock is
convertible) until (i) the date on which such security or its predecessor has
been effectively registered under the Securities Act and disposed of in
accordance with the Shelf Registration Statement or (ii) the date on which such
security or predecessor is distributed to the public pursuant to Rule 144 under
the Securities Act or is saleable pursuant to Rule 144(k) under the Securities
Act.
(gg) "Voting Rights Triggering Event" shall mean the failure of the Company
to pay dividends on the Preferred Stock with respect to six or more quarterly
periods (whether or not consecutive).
(hh) "Voting Stock" shall mean, with respect to any Person, securities of
any class or classes of Capital Stock in such Person entitling the holders
thereof (whether at all times or only so long as no senior class of stock has
voting power by reason of contingency) to vote in the election of members of the
Board of Directors or other governing body of such Person. For purposes of this
definition, "Capital Stock" shall mean, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated) of
corporate stock or partnership interests and any and all warrants, options and
rights with respect thereto (whether or not currently exercisable), including
each class of common stock and preferred stock of such Person.
3. Dividends.
(a) The holders of shares of the outstanding Preferred Stock shall be
entitled, when, as and if declared by the Board of Directors out of funds of the
Company legally available therefor, to receive cumulative cash dividends at the
rate per annum of 6.75% per share on the Liquidation Preference (equivalent to
$3.375 per annum per share, payable quarterly in arrears (the "Dividend Rate").
The Dividend Rate may be increased in the circumstances described in Section
3(b) below. Dividends payable for each full dividend period will be computed by
dividing the Dividend Rate by four and shall be payable in arrears on each
Dividend Payment Date (commencing February 15, 2002) for the quarterly period
ending immediately prior to such Dividend Payment Date, to the holders of record
of Preferred Stock at the close of business on the Dividend Record Date
applicable to such Dividend Payment Date. Such dividends shall be cumulative
from the most recent date as to which dividends shall have been paid or, if no
dividends have been paid, from the Issue Date (whether or not in any dividend
period or periods there shall be funds of the Company legally available for the
payment of such dividends) and shall accrue on a day-to-day basis, whether or
not earned or declared, from and after the Issue Date. Dividends payable for any
partial dividend period shall be computed on the basis of actual days elapsed
over a 360-day year consisting of twelve 30-day months. Accumulations of
dividends on shares of Preferred Stock shall not bear interest.
(b) If (i) by January 12, 2002, the Shelf Registration Statement has not
been filed with the Commission, (ii) by May 12, 2002, the Shelf Registration
Statement has not been declared effective by the Commission or (iii) after the
Shelf Registration Statement has been declared effective, (A) the Shelf
Registration Statement thereafter ceases to be effective or (B) the Shelf
Registration Statement or the related prospectus ceases to be usable (in each
case, subject to the exceptions described below) in connection with resale of
Transfer Restricted Securities during the period that any Transfer Restricted
Securities remain outstanding (each such event referred to in clauses (i), (ii)
and (iii), a "Registration Default"), additional dividends shall accrue on the
Preferred Stock at the rate of .50% per annum (resulting in a Dividend Rate of
7.25% per annum during the continuance of a Registration Default), from and
including the date on which any such Registration Default shall occur to but
excluding the date on which all Registration Defaults have been cured. At all
other times, dividends shall accumulate on the Preferred Stock at the Dividend
Rate as described in Section 3(a).
A Registration Default referred to in clause (iii) of Section 3(b) shall be
deemed not to have occurred and be continuing in relation to the Shelf
Registration Statement or the related prospectus if (i) such Registration
Default has occurred solely as a result of (x) the filing of a post-effective
amendment to the Shelf Registration Statement to incorporate annual audited
financial information with respect to the Company where such post-effective
amendment is not yet effective and needs to be declared effective to permit
Holders to use the related prospectus or (y) other material events, with respect
to the Company that would need to be described in the Shelf Registration
Statement or the related prospectus and (ii) in the case of clause (y), the
Company is proceeding promptly and in good faith to amend or supplement such
Shelf Registration Statement and related prospectus to describe such events;
provided, however, that in any case if such Registration Default referred to in
clause (iii) of Section 3(b) occurs for a continuous period in excess of 30
days, additional dividends as described in Section 3(b) shall be payable in
accordance therewith from the day such Registration Default occurs until such
Registration Default is cured.
(c) No dividend will be declared or paid upon, or any sum set apart for the
payment of dividends upon, any outstanding share of the Preferred Stock with
respect to any dividend period unless all dividends for all preceding dividend
periods have been declared and paid or declared and a sufficient sum set apart
for the payment of such dividend, upon all outstanding shares of Preferred
Stock.
(d) No dividends or other distributions (other than a dividend or
distribution payable solely in shares of Parity Stock or Junior Stock (in the
case of Parity Stock) or Junior Stock (in the case of Junior Stock) and other
than cash paid in lieu of fractional shares) may be declared, made or paid, or
set apart for payment upon, any Parity Stock or Junior Stock, nor may any Parity
Stock or Junior Stock be redeemed, purchased or otherwise acquired for any
consideration (or any money paid to or made available for a sinking fund for the
redemption of any Parity Stock or Junior Stock) by or on behalf of the Company
(except by conversion into or exchange for shares of Parity Stock or Junior
Stock (in the case of Parity Stock) or Junior Stock (in the case of Junior
Stock)), unless full Accumulated Dividends shall have been or contemporaneously
are declared and paid, or are declared and a sum sufficient for the payment
thereof is set apart for such payment, on the Preferred Stock and any Parity
Stock for all dividend payment periods terminating on or prior to the date of
such declaration, payment, redemption, purchase or acquisition. Notwithstanding
the foregoing, if full dividends have not been paid on the Preferred Stock and
any Parity Stock, dividends may be declared and paid on the Preferred Stock and
such Parity Stock so long as the dividends are declared and paid pro rata so
that the amounts of dividends declared per share on the Preferred Stock and such
Parity Stock will in all cases bear to each other the same ratio that
accumulated and unpaid dividends on the shares of Preferred Stock and such other
Parity Stock bear to each other.
(e) Holders of shares of Preferred Stock shall not be entitled to any
dividends on the Preferred Stock, whether payable in cash, property or stock, in
excess of full cumulative dividends. No interest, or sum of money in lieu of
interest, shall be payable in respect of any dividend payment or payments on the
Preferred Stock which may be in arrears.
(f) The holders of shares of Preferred Stock at the close of business on a
Dividend Record Date will be entitled to receive the dividend payment on those
shares on the corresponding Dividend Payment Date notwithstanding the subsequent
conversion thereof or the Company's default in payment of the dividend due on
that Dividend Payment Date. However, shares of Preferred Stock surrendered for
conversion during the period between the close of business on any Dividend
Record Date and the close of business on the day immediately preceding the
applicable Dividend Payment Date must be accompanied by payment of an amount
equal to the dividend payable on the shares on that Dividend Payment Date. A
holder of shares of Preferred Stock on a Dividend Record Date who (or whose
transferee) tenders any shares for conversion on the corresponding Dividend
Payment Date will receive the dividend payable by the Company on the Preferred
Stock on that date, and the converting holder need not include payment in the
amount of such dividend upon surrender of shares of Preferred Stock for
conversion. Except as provided above with respect to a voluntary conversion
pursuant to Section 7, the Company shall make no payment or allowance for unpaid
dividends, whether or not in arrears, on converted shares or for dividends on
the shares of Common Stock issued upon conversion.
4. Change of Control.
(a) Upon the occurrence of a Change of Control, each holder of Preferred
Stock shall, in the event that the Market Value for the period ending on the
Change of Control Date is less than the Conversion Price, have a one-time option
(the "Change of Control Option") to convert all of such holder's outstanding
shares of Preferred Stock into fully paid and nonassessable shares of Common
Stock at an adjusted Conversion Price equal to the greater of (i) the Market
Value for the period ending on the Change of Control Date and (ii) $4.0733. The
Change of Control Option must be exercised, if at all, during the period of not
less than 30 days nor more than 60 days commencing on the third Business Day
after notice of a Change in Control has been given by the Company in accordance
with Section 4(b). In lieu of issuing the shares of Common Stock issuable upon
conversion in the event of a Change of Control, the Company may, at its option,
make a cash payment equal to the Market Value for each share of such Common
Stock otherwise issuable determined for the period ending on the Change of
Control Date. Notwithstanding the foregoing, upon the occurrence of a Change of
Control in which (i) each holder of Common Stock receives consideration
consisting solely of common stock of the successor, acquiror or other third
party (and cash paid in lieu of fractional shares) that is listed on a national
securities exchange or quoted on the NASDAQ National Market and (ii) all the
Common Stock has been exchanged for, converted into or acquired for common stock
of the successor, acquiror or other third party (and cash in lieu of factional
shares), and the Preferred Stock becomes convertible solely into such common
stock, the Conversion Price will not be adjusted as described in this Section
4(a).
(b) In the event of a Change of Control (other than a Change of Control
described in the last sentence of Section 4(a)), notice of such Change of
Control shall be given, within five Business Days of the Change of Control Date,
by the Company by first-class mail to each record holder of shares of Preferred
Stock, at such holder's address as the same appears on the books of the Company.
Each such notice shall state (i) that a Change of Control has occurred; (ii) the
last day on which the Change of Control Option may be exercised (the "Expiration
Date") pursuant to the terms hereof; (iii) the name and address of the Transfer
Agent; and (iv) the procedures that holders must follow to exercise the Change
of Control Option.
(c) On or before the Expiration Date, each holder of shares of Preferred
Stock wishing to exercise the Change of Control Option shall surrender the
certificate or certificates representing the shares of Preferred Stock to be
converted, in the manner and at the place designated in the notice described in
Section 4(b), and on such date the cash or shares of Common Stock due to such
holder shall be delivered to the Person whose name appears on such certificate
or certificates as the owner thereof and the shares represented by each
surrendered certificate shall be returned to authorized but unissued shares.
Upon surrender (in accordance with the notice described in Section 4(b)) of the
certificate or certificates representing any shares to be so converted (properly
endorsed or assigned for transfer, if the Company shall so require and the
notice shall so state), such shares shall be converted by the Company at the
adjusted Conversion Price, if applicable, as described in Section 4(a).
(d) The rights of holders of Preferred Stock pursuant to this Section 4 are
in addition to, and not in lieu of, the rights of holders of Preferred Stock
provided for in Section 7 hereof.
5. Voting.
(a) The shares of Preferred Stock shall have no voting rights except as set
forth below or as otherwise required by Oklahoma law from time to time:
(i) If and whenever at any time or times a Voting Rights Triggering Event
occurs, then the holders of shares of Preferred Stock, voting as a single class
with any other preferred stock or preference securities having similar voting
rights that are exercisable (the "Voting Rights Class"), will be entitled at the
next regular or special meeting of stockholders of the Company to elect two
additional directors of the Company, unless the Board of Directors is comprised
of fewer than six directors at such time, in which case the Voting Rights Class
shall be entitled to elect one additional director. Upon the election of any
such additional directors, the number of directors that compose the Board of
Directors shall be increased by such number of additional directors.
(ii) Such voting rights may be exercised at a special meeting of the holders
of the shares of the Voting Rights Class, called as hereinafter provided, or at
any annual meeting of stockholders held for the purpose of electing directors,
and thereafter at each such annual meeting until such time as all dividends in
arrears on the shares of Preferred Stock shall have been paid in full, at which
time or times such voting rights and the term of the directors elected pursuant
to Section 5(a)(i) shall terminate.
(iii) At any time when such voting rights shall have vested in holders of
shares of the Voting Rights Class, an Officer of the Company may call, and, upon
written request of the record holders of shares representing at least
twenty-five percent (25%) of the voting power of the shares then outstanding of
the Voting Rights Class, addressed to the Secretary of the Company, shall call a
special meeting of the holders of shares of the Voting Rights Class. Such
meeting shall be held at the earliest practicable date upon the notice required
for annual meetings of stockholders at the place for holding annual meetings of
stockholders of the Company, or, if none, at a place designated by the Board of
Directors. Notwithstanding the provisions of this Section 5(a)(iii), no such
special meeting shall be called during a period within the 60 days immediately
preceding the date fixed for the next annual meeting of stockholders in which
such case, the election of directors pursuant to Section 5(a)(i) shall be held
at such annual meeting of stockholders.
(iv) At any meeting held for the purpose of electing directors at which the
holders of the Voting Rights Class shall have the right to elect directors as
provided herein, the presence in person or by proxy of the holders of shares
representing more than fifty percent (50%) in voting power of the then
outstanding shares of the Voting Rights Class shall be required and shall be
sufficient to constitute a quorum of such class for the election of directors by
such class. The affirmative vote of the holders of shares of Preferred Stock
constituting a majority of the shares of Preferred Stock present at such
meeting, in person or by proxy, shall be sufficient to elect any such director.
(v) Any director elected pursuant to the voting rights created under this
Section 5(a) shall hold office until the next annual meeting of stockholders
(unless such term has previously terminated pursuant to Section 5 (a)(ii)) and
any vacancy in respect of any such director shall be filled only by vote of the
remaining director so elected by holders of the Voting Rights Class, or if there
be no such remaining director, by the holders of shares of the Voting Rights
Class at a special meeting called in accordance with the procedures set forth in
this Section 5, or, if no such special meeting is called, at the next annual
meeting of stockholders. Upon any termination of such voting rights, the term of
office of all directors elected pursuant to this Section 5 shall terminate.
(vi) So long as any shares of Preferred Stock remain outstanding, unless a
greater percentage shall then be required by law, the Company shall not, without
the affirmative vote or consent of the holders of at least 66 2/3% of the
outstanding Preferred Stock voting or consenting, as the case may be, separately
as one class, (i) create, authorize or issue any class or series of Senior Stock
(or any security convertible into Senior Stock) or (ii) amend the Certificate of
Incorporation so as to affect adversely the specified rights, preferences,
privileges or voting rights of holders of shares of Preferred Stock.
(vii) In exercising the voting rights set forth in this Section 5(a), each
share of Preferred Stock shall be entitled to one vote.
(b) The Company may authorize, increase the authorized amount of, or issue
any shares of Parity Stock or Junior Stock, without the consent of the holders
of Preferred Stock, and in taking such actions the Company shall not be deemed
to have affected adversely the rights, preferences, privileges or voting rights
of holders of shares of Preferred Stock.
6. Liquidation Rights.
(a) In the event of any liquidation, winding-up or dissolution of the
Company, whether voluntary of involuntary, each holder of shares of Preferred
Stock shall be entitled to receive and to be paid out of the assets of the
Company available for distribution to its stockholders the Liquidation
Preference plus Accumulated Dividends and Accrued Dividends thereon in
preference to the holders of, and before any payment or distribution is made on,
any Junior Stock, including, without limitation, on any Common Stock.
(b) Neither the sale, conveyance, exchange or transfer (for cash, shares of
stock, securities or other consideration) of all or substantially all the assets
or business of the Company (other than in connection with the liquidation,
winding-up or dissolution of its business) nor the merger or consolidation of
the Company into or with any other Person shall be deemed to be a liquidation,
winding-up or dissolution, voluntary or involuntary, for the purposes of this
Section 6.
(c) After the payment to the holders of the shares of Preferred Stock of
full preferential amounts provided for in this Section 6, the holders of
Preferred Stock as such shall have no right or claim to any of the remaining
assets of the Company.
(d) In the event the assets of the Company available for distribution to the
holders of shares of Preferred Stock upon any liquidation, winding-up or
dissolution of the Company, whether voluntary or involuntary, shall be
insufficient to pay in full all amounts to which such holders are entitled
pursuant to Section 6(a), no such distribution shall be made on account of any
shares of Parity Stock upon such liquidation, dissolution or winding-up unless
proportionate distributable amounts shall be paid on account of the shares of
Preferred Stock, ratably, in proportion to the full distributable amounts for
which holders of all Preferred Stock and of any Parity Stock are entitled upon
such liquidation, winding-up or dissolution.
7. Conversion.
(a) Each holder of Preferred Stock shall have the right, at its option,
exercisable at any time and from time to time from the Issue Date to convert,
subject to the terms and provisions of this Section 7, any or all of such
holder's shares of Preferred Stock. In such case, the shares of Preferred Stock
shall be converted into such whole number of fully paid and nonassessable shares
of Common Stock as is equal, subject to Section 7(g), to the product of the
number of shares of Preferred Stock being so converted multiplied by the
quotient of (i) the Liquidation Preference divided by (ii) the Conversion Price
(as defined below) then in effect. The Conversion Price initially shall be
$7.70, subject to adjustment as set forth in Section 7(c).
The conversion right of a holder of Preferred Stock shall be exercised by
the holder by the surrender to the Company of the certificates representing
shares to be converted at any time during usual business hours at its principal
place of business or the offices of its duly appointed Transfer Agent to be
maintained by it, accompanied by written notice to the Company in the form of
Exhibit B that the holder elects to convert all or a portion of the shares of
Preferred Stock represented by such certificate and specifying the name or names
(with address) in which a certificate or certificates for shares of Common Stock
are to be issued and (if so required by the Company or its duly appointed
Transfer Agent) by a written instrument or instruments of transfer in form
reasonably satisfactory to the Company or its duly appointed Transfer Agent duly
executed by the holder or its duly authorized legal representative and transfer
tax stamps or funds therefor, if required pursuant to Section 7(i). Immediately
prior to the close of business on the date of receipt by the Company or its duly
appointed Transfer Agent of notice of conversion of shares of Preferred Stock,
each converting holder of Preferred Stock shall be deemed to be the holder of
record of Common Stock issuable upon conversion of such holder's Preferred Stock
notwithstanding that the share register of the Company shall then be closed or
that certificates representing such Common Stock shall not then be actually
delivered to such holder. Upon notice from the Company, each holder of Preferred
Stock so converted shall promptly surrender to the Company, at any place where
the Company shall maintain a Transfer Agent, certificates representing the
shares so converted, duly endorsed in blank or accompanied by proper instruments
of transfer. On the date of any conversion, all rights with respect to the
shares of Preferred Stock so converted, including the rights, if any, to receive
notices, will terminate, except only the rights of holders thereof to (i)
receive certificates for the number of whole shares of Common Stock into which
such shares of Preferred Stock have been converted and cash, in lieu of any
fractional shares as provided in Section 7(f); and (ii) exercise the rights to
which they are entitled as holders of Common Stock.
(b) If the last day for the exercise of the conversion right shall not be a
Business Day, then such conversion right may be exercised on the next preceding
Business Day.
(c) The Conversion Price shall be subject to adjustment as follows:
(i) In case the Company shall at any time or from time to time (A) pay a
dividend (or other distribution) payable in shares of Common Stock on any class
of capital stock (which, for purposes of this Section 7(c) shall include,
without limitation, any dividends or distributions in the form of options,
warrants or other rights to acquire capital stock) of the Company (other than
the issuance of shares of Common Stock in connection with the payment of
dividends on or the conversion of Preferred Stock); (B) subdivide the
outstanding shares of Common Stock into a larger number of shares; (C) combine
the outstanding shares of Common Stock into a smaller number of shares; (D)
issue any shares of its capital stock in a reclassification of the Common Stock;
or (E) pay a dividend or make a distribution to all holders of shares of Common
Stock (other than a dividend or distribution subject to Section 7(c)(ii))
pursuant to a stockholder rights plan, "poison pill" or similar arrangement and
excluding dividends payable on the Preferred Stock then, and in each such case,
the Conversion Price in effect immediately prior to such event shall be adjusted
(and any other appropriate actions shall be taken by the Company) so that the
holder of any share of Preferred Stock thereafter surrendered for conversion
shall be entitled to receive the number of shares of Common Stock that such
holder would have owned or would have been entitled to receive upon or by reason
of any of the events described above, had such share of Preferred Stock been
converted into shares of Common Stock immediately prior to the occurrence of
such event. An adjustment made pursuant to this Section 7(c)(i) shall become
effective retroactively (x) in the case of any such dividend or distribution, to
the day immediately following the close of business on the record date for the
determination of holders of Common Stock entitled to receive such dividend or
distribution or (y) in the case of any such subdivision, combination or
reclassification, to the close of business on the day upon which such corporate
action becomes effective.
(ii) In case the Company shall at any time or from time to time issue to
all holders of its Common Stock rights, options or warrants entitling the
holders thereof to subscribe for or purchase shares of Common Stock (or
securities convertible into or exchangeable for shares of Common Stock) at a
price per share less than the Market Value for the period ending on the date of
issuance (treating the price per share of any security convertible, or
exchangeable or exercisable into Common Stock as equal to (A) the sum of the
price paid to acquire such security convertible, exchangeable or exercisable
into Common Stock plus any additional consideration payable (without regard to
any anti-dilution adjustments) upon the conversion, exchange or exercise of such
security into Common Stock divided by (B) the number of shares of Common Stock
into which such convertible, exchangeable or exercisable security is initially
convertible, exchangeable or exercisable), other than (I) issuances of such
rights, options or warrants if the holder of Preferred Stock would be entitled
to receive such rights, options or warrants upon conversion at any time of
shares of Preferred Stock into Common Stock and (II) issuances that are subject
to certain triggering events (until such time as such triggering events occur),
then, and in each such case, the Conversion Price then in effect shall be
adjusted by dividing the Conversion Price in effect on the day immediately prior
to the record date of such issuance by a fraction (y) the numerator of which
shall be the sum of the number of shares of Common Stock outstanding on such
record date plus the number of additional shares of Common Stock issued or to be
issued upon or as a result of the issuance of such rights, options or warrants
(or the maximum number into or for which such convertible or exchangeable
securities initially may convert or exchange or for which such options, warrants
or other rights initially may be exercised) and (z) the denominator of which
shall be the sum of the number of shares of Common Stock outstanding on such
record date plus the number of shares of Common Stock which the aggregate
consideration for the total number of such additional shares of Common Stock so
issued (or into or for which such convertible or exchangeable securities may
convert or exchange or for which such options, warrants or other rights may be
exercised plus the aggregate amount of any additional consideration initially
payable upon the conversion, exchange or exercise of such security) would
purchase at the Market Value for the period ending on the date of conversion;
provided, that if the Company distributes rights or warrants (other than those
referred to above in this subparagraph (c)(ii)) pro rata to the holders of
Common Stock, so long as such rights or warrants have not expired or been
redeemed by the Company, (y) the holder of any Preferred Stock surrendered for
conversion shall be entitled to receive upon such conversion, in addition to the
shares of Common Stock then issuable upon such conversion (the "Conversion
Shares"), a number of rights or warrants to be determined as follows: (i) if
such conversion occurs on or prior to the date for the distribution to the
holders of rights or warrants of separate certificates evidencing such rights or
warrants (the "Distribution Date"), the same number of rights or warrants to
which a holder of a number of shares of Common Stock equal to the number of
Conversion Shares is entitled at the time of such conversion in accordance with
the terms and provisions applicable to the rights or warrants and (ii) if such
conversion occurs after the Distribution Date, the same number of rights or
warrants to which a holder of the number of shares of Common Stock into which
such Preferred Stock was convertible immediately prior to such Distribution Date
would have been entitled on such Distribution Date had such Preferred Stock been
converted immediately prior to such Distribution Date in accordance with the
terms and provisions applicable to the rights and warrants, and (z) the
Conversion Price shall not be subject to adjustment on account of any
declaration, distribution or exercise of such rights or warrants.
(iii) In case the Company shall at any time or from time to time (A) make a
pro rata distribution to all holders of shares of its Common Stock consisting
exclusively of cash (excluding any cash portion of distributions referred to in
clause (E) of paragraph (c)(i) above, or cash distributed upon a merger or
consolidation to which paragraph (g) below applies), that, when combined
together with (x) all other such all-cash distributions made within the
then-preceding 12 months in respect of which no adjustment has been made and (y)
any cash and the fair market value of other consideration paid or payable in
respect of any tender offer by the Company or any of its subsidiaries for shares
of Common Stock concluded within the then-preceding 12 months in respect of
which no adjustment pursuant to this Section 7(c) has been made, in the
aggregate exceeds 15% of the Company's market capitalization (defined as the
product of the Market Value for the period ending on the record date of such
distribution times the number of shares of Common Stock outstanding on such
record date) on the record date of such distribution; (B) complete a tender or
exchange offer by the Company or any of its subsidiaries for shares of Common
Stock that involves an aggregate consideration that, together with (I) any cash
and other consideration payable in a tender or exchange offer by the Company or
any of its subsidiaries for shares of Common Stock expiring within the
then-preceding 12 months in respect of which no adjustment pursuant to this
Section 7(c) has been made and (II) the aggregate amount of any such all-cash
distributions referred to in clause (A) above to all holders of shares of Common
Stock within the then-preceding 12 months in respect of which no adjustments
have been made, exceeds 15% of the Company's market capitalization on the
expiration of such tender offer; or (C) make a distribution to all holders of
its Common Stock consisting of evidences of indebtedness, shares of its capital
stock other than Common Stock or assets (including securities, but excluding
those dividends, rights, options, warrants and distributions referred to in
paragraphs (c)(i), (c)(ii) above or this (c)(iii)), then, and in each such case,
the Conversion Price then in effect shall be adjusted by dividing the Conversion
Price in effect immediately prior to the date of such distribution or completion
of such tender or exchange offer, as the case may be, by a fraction (x) the
numerator of which shall be the Market Value for the period ending on the record
date referred to below, or, if such adjustment is made upon the completion of a
tender or exchange offer, on the payment date for such offer, and (y) the
denominator of which shall be such Market Value less the then fair market value
(as determined by the Board of Directors of the Company) of the portion of the
cash, evidences of indebtedness, securities or other assets so distributed or
paid in such tender or exchange offer, applicable to one share of Common Stock
(but such denominator shall not be less than one); provided, however, that no
adjustment shall be made with respect to any distribution of rights to purchase
securities of the Company if the holder of shares of Preferred Stock would
otherwise be entitled to receive such rights upon conversion at any time of
shares of Preferred Stock into shares of Common Stock unless such rights are
subsequently redeemed by the Company, in which case such redemption shall be
treated for purposes of this Section 7(c)(iii) as a dividend on the Common
Stock. Such adjustment shall be made whenever any such distribution is made or
tender or exchange offer is completed, as the case may be, and shall become
effective retroactively to a date immediately following the close of business on
the record date for the determination of stockholders entitled to receive such
distribution.
(iv) In the case the Company at any time or from time to time shall take any
action affecting its Common Stock (it being understood that the issuance or sale
of shares of Common Stock (or securities convertible into or exchangeable for
shares of Common Stock, or any options, warrants or other rights to acquire
shares of Common Stock) to any Person at a price per share less than the
Conversion Price then in effect shall not be deemed such an action), other than
an action described in any of Section 7(c)(i) through Section 7(c)(iii),
inclusive, or Section 7(g), then the Conversion Price shall be adjusted in such
manner and at such time as the Board of Directors of the Company in good faith
determines to be equitable in the circumstances (such determination to be
evidenced in a resolution, a certified copy of which shall be mailed to the
holders of the Preferred Stock).
(v) Notwithstanding anything herein to the contrary, no adjustment under
this Section 7(c) need be made to the Conversion Price unless such adjustment
would require an increase or decrease of at least 1% of the Conversion Price
then in effect. Any lesser adjustment shall be carried forward and shall be made
at the time of and together with the next subsequent adjustment, if any, which,
together with any adjustment or adjustments so carried forward, shall amount to
an increase or decrease of at least 1% of such Conversion Price.
(vi) The Company reserves the right to make such reductions in the
Conversion Price in addition to those required in the foregoing provisions as it
considers advisable in order that any event treated for Federal income tax
purposes as a dividend of stock or stock rights will not be taxable to the
recipients. In the event the Company elects to make such a reduction in the
Conversion Price, the Company will comply with the requirements of Rule 14e-1
under the Exchange Act, and any other securities laws and regulations thereunder
if and to the extent that such laws and regulations are applicable in connection
with the reduction of the Conversion Price.
(d) If the Company shall take a record of the holders of its Common Stock
for the purpose of entitling them to receive a dividend or other distribution,
and shall thereafter (and before the dividend or distribution has been paid or
delivered to stockholders) legally abandon its plan to pay or deliver such
dividend or distribution, then thereafter no adjustment in the Conversion Price
then in effect shall be required by reason of the taking of such record.
(e) Upon any increase or decrease in the Conversion Price, then, and in each
such case, the Company promptly shall deliver to each holder of Preferred Stock
a certificate signed by an authorized officer of the Company, setting forth in
reasonable detail the event requiring the adjustment and the method by which
such adjustment was calculated and specifying the increased or decreased
Conversion Price then in effect following such adjustment.
(f) No fractional shares or securities representing fractional shares of
Common Stock shall be issued upon the conversion of any shares of Preferred
Stock, whether voluntary or mandatory. If more than one share of Preferred Stock
shall be surrendered for conversion at one time by the same holder, the number
of full shares of Common Stock issuable upon conversion thereof shall be
computed on the basis of the aggregate Liquidation Preference of the shares of
Preferred Stock so surrendered. If the conversion of any share or shares of
Preferred Stock results in a fraction, an amount equal to such fraction
multiplied by the last reported sale price of the Common Stock on the NYSE (or
on such other national securities exchange or automated quotation system on
which the Common Stock is then listed for trading or authorized for quotation
or, if the Common Stock is not then so listed or authorized for quotation, an
amount determined in good faith by the Board of Directors to be the fair value
of the Common Stock) at the close of business on the trading day next preceding
the day of conversion shall be paid to such holder in cash by the Company.
(g) In the event of any reclassification of outstanding shares of Common
Stock (other than a change in par value, or from par value to no par value, or
from no par value to par value), or in the event of any consolidation or merger
of the Company with or into another Person or any merger of another Person with
or into the Company (other than a consolidation or merger in which the Company
is the resulting or surviving Person and which does not result in any
reclassification or change of outstanding Common Stock), or in the event of any
sale or other disposition to another Person of all or substantially all of the
assets of the Company (computed on a consolidated basis) (any of the foregoing,
a "Transaction"), each share of Preferred Stock then outstanding shall, without
the consent of any holder of Preferred Stock, become convertible at any time, at
the option of the holder thereof, only into the kind and amount of securities
(of the Company or another issuer), cash and other property receivable upon such
Transaction by a holder of the number of shares of Common Stock into which such
share of Preferred Stock could have been converted immediately prior to such
Transaction, after giving effect to any adjustment event. The provisions of this
Section 7(g) and any equivalent thereof in any such securities similarly shall
apply to successive Transactions. The provisions of this Section 7(g) shall be
the sole right of holders of Preferred Stock in connection with any Transaction
and such holders shall have no separate vote thereon.
(h) The Company shall at all times reserve and keep available for issuance
upon the conversion of the Preferred Stock such number of its authorized but
unissued shares of Common Stock as will from time to time be sufficient to
permit the conversion of all outstanding shares of Preferred Stock, and shall
take all action required to increase the authorized number of shares of Common
Stock if at any time there shall be insufficient unissued shares of Common Stock
to permit such reservation or to permit the conversion of all outstanding shares
of Preferred Stock.
(i) The issuance or delivery of certificates for Common Stock upon the
conversion of shares of Preferred Stock shall be made without charge to the
converting holder of shares of Preferred Stock for such certificates or for any
tax in respect of the issuance or delivery of such certificates or the
securities represented thereby, and such certificates shall be issued or
delivered in the respective names of, or in such names as may be directed by,
the holders of the shares of Preferred Stock converted; provided, however, that
the Company shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any such certificate in
a name other than that of the holder of the shares of Preferred Stock converted,
and the Company shall not be required to issue or deliver such certificate
unless or until the Person or Persons requesting the issuance or delivery
thereof shall have paid to the Company the amount of such tax or shall have
established to the reasonable satisfaction of the Company that such tax has been
paid.
8. Mandatory Conversion.
(a) At any time on or after November 20, 2004, the Company shall have the
right, at its option, to cause the Preferred Stock, in whole but not in part, to
be automatically converted into that number of whole shares of Common Stock for
each share of Preferred Stock equal to the quotient of (i) the Liquidation
Preference divided by (ii) the Conversion Price then in effect, with any
resulting fractional shares of Common Stock to be settled in accordance with
Section 7(f). The Company may exercise its right to cause a mandatory conversion
pursuant to this Section 8(a) only if the closing price of the Common Stock
equals or exceeds 130% of the Conversion Price then in effect for at least 20
trading days in any consecutive 30-day trading period on the NYSE (or such other
national securities exchange or automated quotation system on which the Common
Stock is then listed or authorized for quotation or, if the Common Stock is not
so listed or authorized for quotation, an amount determined in good faith by the
Board of Directors to be the fair value of the Common Stock), including the last
trading day of such 30-day period, ending on the trading day prior to the
Company's issuance of a press release announcing the mandatory conversion as
described in Section 8(b).
(b) To exercise the mandatory conversion right described in Section 8(a),
the Company must issue a press release for publication on the Dow Jones News
Service prior to the opening of business on the first trading day following any
date on which the conditions described in Section 8(a) are met, announcing such
a mandatory conversion. The Company shall also give notice by mail or by
publication (with subsequent prompt notice by mail) to the holders of Preferred
Stock (not more than four Business Days after the date of the press release) of
the mandatory conversion announcing the Company's intention to convert the
Preferred Stock. The conversion date will be a date selected by the Company (the
"Mandatory Conversion Date") and will be no more than five days after the date
on which the Company issues the press release described in this Section 8(b).
(c) In addition to any information required by applicable law or regulation,
the press release and notice of a mandatory conversion described in Section 8(b)
shall state, as appropriate: (i) the Mandatory Conversion Date; (ii) the number
of shares of Common Stock to be issued upon conversion of each share of
Preferred Stock; (iii) the number of shares of Preferred Stock to be converted;
and (iv) that dividends on the Preferred Stock to be converted will cease to
accrue on the Mandatory Conversion Date.
(d) On and after the Mandatory Conversion Date, dividends will cease to
accrue on the Preferred Stock called for a mandatory conversion pursuant to
Section 8(a) and all rights of holders of such Preferred Stock will terminate
except for the right to receive the whole shares of Common Stock issuable upon
conversion thereof and cash, in lieu of any fractional shares of Common Stock in
accordance with Section 7(f). The dividend payment with respect to the Preferred
Stock called for a mandatory conversion pursuant to Section 8(a) on a date
during the period between the close of business on any Dividend Record Date to
the close of business on the corresponding Dividend Payment Date will be payable
on such Dividend Payment Date to the record holder of such share on such
Dividend Record Date if such share has been converted after such Dividend Record
Date and prior to such Dividend Payment Date. Except as provided in the
immediately preceding sentence with respect to a mandatory conversion pursuant
to Section 8(a), no payment or adjustment will be made upon conversion of
Preferred Stock for Accrued Dividends or for dividends with respect to the
Common Stock issued upon such conversion.
(e) The Company may not authorize, issue a press release or give notice of
any mandatory conversion pursuant to Section 8(a) unless, prior to giving the
conversion notice, all Accumulated Dividends on the Preferred Stock for periods
ended prior to the date of such conversion notice shall have been paid in cash.
(f) In addition to the mandatory conversion right described in Section 8(a),
if there are less than 250,000 shares of Preferred Stock outstanding, the
Company shall have the right, at any time on or after November 20, 2006, at its
option, to cause the Preferred Stock to be automatically converted into that
number of whole shares of Common Stock equal to the quotient of (i) the
Liquidation Preference divided by (ii) the lesser of (A) the Conversion Price
then in effect and (B) the Market Value for the period ending on the second
trading day immediately prior to the Mandatory Conversion Date, with any
resulting fractional shares of Common Stock to be settled in cash in accordance
with Section 7(f). The provisions of clauses (b), (c), (d) and (e) of this
Section 8 shall apply to any mandatory conversion pursuant to this clause (f);
provided that (i) the Mandatory Conversion Date described in Section 8(b) shall
not be less than 15 days nor more than 30 days after the date on which the
Company issues a press release pursuant to Section 8(b) announcing such
mandatory conversion and (ii) the press release and notice of mandatory
conversion described in Section 8(c) will not state the number of shares of
Common Stock to be issued upon conversion of each share of Preferred Stock.
9. Consolidation, Merger and Sale of Assets.
(a) The Company, without the consent of the holders of any of the
outstanding Preferred Stock, may consolidate with or merge into any other Person
or convey, transfer or lease all or substantially all its assets to any Person
or may permit any Person to consolidate with or merge into, or transfer or lease
all or substantially all its properties to, the Company; provided, however, that
(a) the successor, transferee or lessee is organized under the laws of the
United States or any political subdivision thereof; (b) the shares of Preferred
Stock will become shares of such successor, transferee or lessee, having in
respect of such successor, transferee or lessee the same powers, preferences and
relative participating, optional or other special rights and the qualification,
limitations or restrictions thereon, the Preferred Stock had immediately prior
to such transaction; and (c) the Company delivers to the Transfer Agent an
Officers' Certificate and an Opinion of Counsel stating that such transaction
complies with this Certificate of Designation.
(b) Upon any consolidation by the Company with, or merger by the Company
into, any other person or any conveyance, transfer or lease of all or
substantially all the assets of the Company as described in Section 9(a), the
successor resulting from such consolidation or into which the Company is merged
or the transferee or lessee to which such conveyance, transfer or lease is made,
will succeed to, and be substituted for, and may exercise every right and power
of, the Company under the shares of Preferred Stock, and thereafter, except in
the case of a lease, the predecessor (if still in existence) will be released
from its obligations and covenants with respect to the Preferred Stock.
10. SEC Reports.
Whether or not the Company is required to file reports with the Commission,
if any shares of Preferred Stock are outstanding, the Company shall file with
the Commission all such reports and other information as it would be required to
file with the Commission by Sections 13(a)or 15(d) under the Exchange Act. The
Company shall supply each holder of Preferred Stock, upon request, without cost
to such holder, copies of such reports or other information.
11. Certificates.
(a) Form and Dating. The Preferred Stock and the Transfer Agent's
certificate of authentication shall be substantially in the form of Exhibit A,
which is hereby incorporated in and expressly made a part of this Certificate of
Designation. The Preferred Stock certificate may have notations, legends or
endorsements required by law, stock exchange rule, agreements to which the
Company is subject, if any, or usage (provided that any such notation, legend or
endorsement is in a form acceptable to the Company). Each Preferred Stock
certificate shall be dated the date of its authentication. The terms of the
Preferred Stock certificate set forth in Exhibit A are part of the terms of this
Certificate of Designation.
(i) Global Preferred Stock. The Preferred Stock shall be issued initially in
the form of one or more fully registered global certificates with the global
securities legend and restricted securities legend set forth in Exhibit A hereto
(the "Global Preferred Stock"), which shall be deposited on behalf of the
purchasers represented thereby with the Transfer Agent, as custodian for DTC (or
with such other custodian as DTC may direct), and registered in the name of DTC
or a nominee of DTC, duly executed by the Company and authenticated by the
Transfer Agent as hereinafter provided. The number of shares of Preferred Stock
represented by Global Preferred Stock may from time to time be increased or
decreased by adjustments made on the records of the Transfer Agent and DTC or
its nominee as hereinafter provided. With respect to shares of Preferred Stock
that are not "restricted securities" as defined in Rule 144 on a conversion
date, all shares of Common Stock distributed on such conversion date will be
freely transferable without restriction under the Securities Act (other than by
affiliates), and such shares will be eligible for receipt in global form through
the facilities of DTC.
(ii) Book-Entry Provisions. In the event Global Preferred Stock is deposited
with or on behalf of DTC, the Company shall execute and the Transfer Agent shall
authenticate and deliver initially one or more Global Preferred Stock
certificates that (a) shall be registered in the name of DTC for such Global
Preferred Stock or the nominee of DTC and (b) shall be delivered by the Transfer
Agent to DTC or pursuant to DTC's instructions or held by the Transfer Agent as
custodian for DTC.
Members of, or participants in, DTC ("Agent Members") shall have no rights
under this Certificate of Designation with respect to any Global Preferred Stock
held on their behalf by DTC or by the Transfer Agent as the custodian of DTC or
under such Global Preferred Stock, and DTC may be treated by the Company, the
Transfer Agent and any agent of the Company or the Transfer Agent as the
absolute owner of such Global Preferred Stock for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Transfer Agent or any agent of the Company or the Transfer Agent from giving
effect to any written certification, proxy or other authorization furnished by
DTC or impair, as between DTC and its Agent Members, the operation of customary
practices of DTC governing the exercise of the rights of a holder of a
beneficial interest in any Global Preferred Stock.
(iii) Certificated Preferred Stock; Certificated Common Stock. Except as
provided in this paragraph 11(a) or in paragraph 11 (c), owners of beneficial
interests in Global Preferred Stock will not be entitled to receive physical
delivery of Preferred Stock in fully registered certificated form ("Certificated
Preferred Stock"). With respect to shares of Preferred Stock that are
"restricted securities" as defined in Rule 144 on a conversion date, all shares
of Common Stock issuable on conversion of such shares on such conversion date
will be issued in fully registered certificated form ("Certificated Common
Stock"). Certificates of Certificated Common Stock will be mailed or made
available at the office of the Transfer Agent for the Preferred Stock on or as
soon as reasonably practicable after the relevant conversion date to the
converting holder.
After a transfer of any Preferred Stock or Certificated Common Stock during
the period of the effectiveness of a Shelf Registration Statement with respect
to such Preferred Stock or such Certificated Common Stock, all requirements
pertaining to legends on such Preferred
Stock (including Global Preferred Stock) or Certificated Common Stock will cease
to apply, the requirements requiring that any such Certificated Common Stock
issued to Holders be issued in certificated form, as the case may, will cease to
apply, and Preferred Stock or Common Stock, as the case may be, in global or
fully registered certificated form, in either case without legends, will be
available to the transferee of the Holder of such Preferred Stock or
Certificated Common Stock upon exchange of such transferring Holder's Preferred
Stock or Common Stock or directions to transfer such Holder's interest in the
Global Preferred Stock, as applicable.
(b) Execution and Authentication. One Officer shall sign the Preferred
Stock certificate for the Company by manual or facsimile signature.
If an Officer whose signature is on a Preferred Stock certificate no longer
holds that office at the time the Transfer Agent authenticates the Preferred
Stock certificate, the Preferred Stock certificate shall be valid nevertheless.
A Preferred Stock certificate shall not be valid until an authorized
signatory of the Transfer Agent manually signs the certificate of authentication
on the Preferred Stock certificate. The signature shall be conclusive evidence
that the Preferred Stock certificate has been authenticated under this
Certificate of Designation.
The Transfer Agent shall authenticate and deliver certificates for up to
3,000,000 shares of Preferred Stock for original issue upon a written order of
the Company signed by two Officers or by an Officer and an Assistant Treasurer
of the Company. Such order shall specify the number of shares of Preferred Stock
to be authenticated and the date on which the original issue of Preferred Stock
is to be authenticated.
The Transfer Agent may appoint an authenticating agent reasonably acceptable
to the Company to authenticate the certificates for Preferred Stock. Unless
limited by the terms of such appointment, an authenticating agent may
authenticate certificates for Preferred Stock whenever the Transfer Agent may do
so. Each reference in this Certificate of Designation to authentication by the
Transfer Agent includes authentication by such agent. An authenticating agent
has the same rights as the Transfer Agent or agent for service of notices and
demands.
(c) Transfer and Exchange. (i) Transfer and Exchange of Certificated
Preferred Stock. When Certificated Preferred Stock is presented to the Transfer
Agent with a request to register the transfer of such Certificated Preferred
Stock or to exchange such Certificated Preferred Stock for an equal number of
shares of Certificated Preferred Stock, the Transfer Agent shall register the
transfer or make the exchange as requested if its reasonable requirements for
such transaction are met; provided, however, that the Certificated Preferred
Stock surrendered for transfer or exchange:
(1) shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company and the Transfer
Agent, duly executed by the Holder thereof or its attorney duly authorized
in writing; and
(2) is being transferred or exchanged pursuant to an effective
registration statement under the Securities Act or pursuant to clause (I) or
(II) below, and is accompanied by the following additional information and
documents, as applicable:
(I) if such Certificated Preferred Stock is being delivered to the
Transfer Agent by a Holder for registration in the name of such Holder,
without transfer, a certification from such Holder to that effect in
substantially the form of Exhibit C hereto; or
(II) if such Certificated Preferred Stock is being transferred to the
Company or to a "qualified institutional buyer" ("QIB") in accordance with
Rule 144A under the Securities Act or pursuant to an exemption from
registration in accordance with Rule 144 under the Securities Act, (i) a
certification to that effect (in substantially the form of Exhibit C hereto)
and (ii) if the Company so requests, an Opinion of Counsel or other evidence
reasonably satisfactory to it as to the compliance with the restrictions set
forth in the legend set forth in paragraph 11 (c) (vii).
(ii) Restrictions on Transfer of Certificated Preferred Stock for a
Beneficial Interest in Global Preferred Stock. Certificated Preferred Stock may
not be exchanged for a beneficial interest in Global Preferred Stock except upon
satisfaction of the requirements set forth below. Upon receipt by the Transfer
Agent of Certificated Preferred Stock, duly endorsed or accompanied by
appropriate instruments of transfer, in form reasonably satisfactory to the
Company and the Transfer Agent, together with written instructions directing the
Transfer Agent to make, or to direct DTC to make, an adjustment on its books and
records with respect to such Global Preferred Stock to reflect an increase in
the number of shares of Preferred Stock represented by the Global Preferred
Stock, then the Transfer Agent shall cancel such Certificated Preferred Stock
and cause, or direct DTC to cause, in accordance with the standing instructions
and procedures existing between DTC and the Transfer Agent, the number of shares
of Preferred Stock represented by the Global Preferred Stock to be increased
accordingly. If no Global Preferred Stock is then outstanding, the Company shall
issue and the Transfer Agent shall authenticate, upon written order of the
Company in the form of an Officers' Certificate, a new Global Preferred Stock
representing the appropriate number of shares.
(iii) Transfer and Exchange of Global Preferred Stock. The transfer and
exchange of Global Preferred Stock or beneficial interests therein shall be
effected through DTC, in accordance with this Certificate of Designation
(including applicable restrictions on transfer set forth herein, if any) and the
procedures of DTC therefor.
(iv) Transfer of a Beneficial Interest in Global Preferred Stock for a
Certificated Preferred Stock.
(1) Any Person having a beneficial interest in Preferred Stock that is
being transferred or exchanged pursuant to an effective registration
statement under the Securities Act or pursuant to an exemption from
registration in accordance with Rule 144 may upon request, but only with the
consent of the Company, and if accompanied by a certification from such
Person to that effect (in substantially the form of Exhibit C hereto),
exchange such beneficial interest for Certificated Preferred Stock
representing the same number of shares of Preferred Stock. Upon receipt by
the Transfer Agent of written instructions or such other form of
instructions as is customary for DTC from DTC or its nominee on behalf of
any Person having a beneficial interest in Global Preferred Stock and upon
receipt by the Transfer Agent of a written order or such other form of
instructions as is customary for DTC or the Person designated by DTC as
having such a beneficial interest in a Transfer Restricted Security only,
then, the Transfer Agent or DTC, at the direction of the Transfer Agent,
will cause, in accordance with the standing instructions and procedures
existing between DTC and the Transfer Agent, the number of shares of
Preferred Stock represented by Global Preferred Stock to be reduced on its
books and records and, following such reduction, the Company will execute
and the Transfer Agent will authenticate and deliver to the transferee
Certificated Preferred Stock.
(2) Certificated Preferred Stock issued in exchange for a beneficial
interest in a Global Preferred Stock pursuant to this paragraph 11 (c) (iv)
shall be registered in such names and in such authorized denominations as
DTC, pursuant to instructions from its direct or indirect participants or
otherwise, shall instruct the Transfer Agent. The Transfer Agent shall
deliver such Certificated Preferred Stock to the Persons in whose names such
Preferred Stock are so registered in accordance with the instructions of
DTC.
(v) Restrictions on Transfer and Exchange of Global Preferred Stock.
(1) Notwithstanding any other provisions of this Certificate of
Designation (other than the provisions set forth in paragraph 11 (c) (vi)),
Global Preferred Stock may not be transferred as a whole except by DTC to a
nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC or by
DTC or any such nominee to a successor depository or a nominee of such
successor depository.
(2) In the event that the Global Preferred Stock is exchanged for
Preferred Stock in definitive registered form pursuant to paragraph 11
(c)(vi) prior to the effectiveness of a Shelf Registration Statement with
respect to such securities, such Preferred Stock may be exchanged only in
accordance with such procedures as are substantially consistent with the
provisions of this paragraph 11 (c) (including the certification
requirements set forth in the Exhibits to this Certificate of Designation
intended to ensure that such transfers comply with Rule 144A or such other
applicable exemption from registration under the Securities Act, as the case
may be) and such other procedures as may from time to time be adopted by the
Company.
(vi) Authentication of Certificated Preferred Stock. If at any time:
(1) DTC notifies the Company that DTC is unwilling or unable to continue as
depository for the Global Preferred Stock and a successor depository for the
Global Preferred Stock is not appointed by the Company within 90 days after
delivery of such notice;
(2) DTC ceases to be a clearing agency registered under the Exchange Act;
(3) there shall have occurred and be continuing a Voting Rights Triggering
Event; or
(4) the Company, in its sole discretion, notifies the Transfer Agent in
writing that it elects to cause the issuance of Certificated Preferred Stock
under this Certificate of Designation,then the Company will execute, and the
Transfer Agent, upon receipt of a written order of the Company signed by two
Officers or by an Officer and an Assistant Treasurer of the Company requesting
the authentication and delivery of Certificated Preferred Stock to the Persons
designated by the Company, will authenticate and deliver Certificated Preferred
Stock equal to the number of shares of Preferred Stock represented by the Global
Preferred Stock, in exchange for such Global Preferred Stock.
(vii) Legend. (1) Except as permitted by the following paragraph (2) and in
paragraph 11 (a) (iii), each certificate evidencing the Global Preferred Stock,
the Certificated Preferred Stock and Certificated Common Stock shall bear a
legend in substantially the following form:
"THE SECURITY EVIDENCED HEREBY (OR ITS PREDECESSOR) (AND THE COMMON STOCK
INTO WHICH THIS SECURITY IS CONVERTIBLE) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT
OF 1933 (THE "SECURITIES ACT") AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY (OR THE
COMMON STOCK INTO WHICH THIS SECURITY IS CONVERTIBLE) IS HEREBY NOTIFIED
THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER
OF THE SECURITY EVIDENCED HEREBY (AND OF THE COMMON STOCK INTO WHICH THIS
SECURITY IS CONVERTIBLE ) AGREES FOR THE BENEFIT OF THE COMPANY THAT (A)
SUCH SECURITY (AND THE COMMON STOCK INTO WHICH THIS SECURITY IS CONVERTIBLE)
MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) TO A
PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), (3) TO THE COMPANY OR (4) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES
(1) THROUGH (4) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE
STATES OF THE UNITED STATES AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE
RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE."(1)
(2) Upon any sale or transfer of a Transfer Restricted Security (including
any Transfer Restricted Security represented by Global Preferred Stock) pursuant
to Rule 144 under the Securities Act or an effective registration statement
under the Securities Act:
(I) in the case of any Transfer Restricted Security that is a
Certificated Preferred Stock, the Transfer Agent shall permit the Holder
thereof to exchange such Transfer Restricted Security for Certificated
Preferred Stock that does not bear the legend set forth above and rescind
any restriction on the transfer of such Transfer Restricted Security; and
(II) in the case of any Transfer Restricted Security that is represented
by a Global Preferred Stock, with the consent of the Company, the Transfer
Agent shall permit the Holder thereof to exchange such Transfer Restricted
Security for Certificated Preferred Stock that does not bear the legend set
forth above and rescind any restriction on the transfer of such Transfer
Restricted Security, if the Holder's request for such exchange was made in
reliance on Rule 144 and the Holder certifies to that effect in writing to
the Transfer Agent (such certification to be in the form set forth in
Exhibit C hereto).
(viii) Cancelation or Adjustment of Global Preferred Stock. At such time as
all beneficial interests in Global Preferred Stock have either been exchanged
for Certificated Preferred Stock, converted or canceled, such Global Preferred
Stock shall be returned to DTC for cancelation or retained and canceled by the
Transfer Agent. At any time prior to such cancelation, if any beneficial
interest in Global Preferred Stock is exchanged for Certificated Preferred
Stock, converted or canceled, the number of shares of Preferred Stock
represented by such Global Preferred Stock shall be reduced and an adjustment
shall be made on the books and records of the Transfer Agent with respect to
such Global Preferred Stock, by the Transfer Agent or DTC, to reflect such
reduction.
(ix) Obligations with Respect to Transfers and Exchanges of Preferred Stock.
(1) To permit registrations of transfers and exchanges, the Company shall
execute and the Transfer Agent shall authenticate Certificated Preferred Stock
and Global Preferred Stock as required pursuant to the provisions of this
paragraph 11 (c).
(2) All Certificated Preferred Stock and Global Preferred Stock issued
upon any registration of transfer or exchange of Certificated Preferred
Stock or Global Preferred Stock shall be the valid obligations of the
Company, entitled to the same benefits under this Certificate of Designation
as the Certificated Preferred Stock or Global Preferred Stock surrendered
upon such registration of transfer or exchange.
(3) Prior to due presentment for registration of transfer of any shares
of Preferred Stock, the Transfer Agent and the Company may deem and treat
the Person in whose name such shares of Preferred Stock are registered as
the absolute owner of such Preferred Stock and neither the Transfer Agent
nor the Company shall be affected by notice to the contrary.
(4) No service charge shall be made to a Holder for any registration of
transfer or exchange upon surrender of any Preferred Stock certificate or
Common Stock certificate at the office of the Transfer Agent maintained for
that purpose. However, the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Preferred Stock
certificates or Common Stock certificates.
(5) Upon any sale or transfer of shares of Preferred Stock (including
any Preferred Stock represented by a Global Preferred Stock Certificate) or
of Certificated Common Stock pursuant to an effective registration statement
under the Securities Act, pursuant to Rule 144 under the Securities Act or
pursuant to an Opinion of Counsel reasonably satisfactory to the Company
that no legend is required:
(A) in the case of any Certificated Preferred Stock or Certificated Common
Stock, the Company and the Transfer Agent shall permit the holder
thereof to exchange such Preferred Stock or Certificated Common Stock
for Certificated Preferred Stock or Certificated Common Stock, as the
case may be, that does not bear the legend set forth in paragraph
(c)(vii) above and rescind any restriction on the transfer of such
Preferred Stock or Common Stock issuable in respect of the conversion of
the Preferred Stock; and
(1) Subject to removal upon registration under the Securities Act of 1933 or
otherwise when the security shall no longer be a Transfer Restricted
Security.
(B) in the case of any Global Preferred Stock, such Preferred Stock shall
not be required to bear the legend set forth in paragraph (c)(vii) above
but shall continue to be subject to the provisions of paragraph (c) (iv)
hereof; provided, however, that with respect to any request for an
exchange of Preferred Stock that is represented by Global Preferred
Stock for Certificated Preferred Stock that does not bear the legend set
forth in paragraph (c)(vii) above in connection with a sale or transfer
thereof pursuant to Rule 144 (and based upon an Opinion of Counsel if
the Company so requests), the Holder thereof shall certify in writing to
the Transfer Agent that such request is being made pursuant to Rule 144
(such certification to be substantially in the form of Exhibit C
hereto).
(x) No Obligation of the Transfer Agent.
(1) The Transfer Agent shall have no responsibility or obligation to any
beneficial owner of Global Preferred Stock, a member of, or a participant in
DTC or any other Person with respect to the accuracy of the records of DTC
or its nominee or of any participant or member thereof, with respect to any
ownership interest in the Preferred Stock or with respect to the delivery to
any participant, member, beneficial owner or other Person (other than DTC)
of any notice or the payment of any amount, under or with respect to such
Global Preferred Stock. All notices and communications to be given to the
Holders and all payments to be made to Holders under the Preferred Stock
shall be given or made only to the Holders (which shall be DTC or its
nominee in the case of the Global Preferred Stock). The rights of beneficial
owners in any Global Preferred Stock shall be exercised only through DTC
subject to the applicable rules and procedures of DTC. The Transfer Agent
may rely and shall be fully protected in relying upon information furnished
by DTC with respect to its members, participants and any beneficial owners.
(2) The Transfer Agent shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Certificate of Designation or under applicable law with
respect to any transfer of any interest in any Preferred Stock (including
any transfers between or among DTC participants, members or beneficial
owners in any Global Preferred Stock) other than to require delivery of such
certificates and other documentation or evidence as are expressly required
by, and to do so if and when expressly required by, the terms of this
Certificate of Designation, and to examine the same to determine substantial
compliance as to form with the express requirements hereof.
(d) Replacement Certificates. If a mutilated Preferred Stock certificate is
surrendered to the Transfer Agent or if the Holder of a Preferred Stock
certificate claims that the Preferred Stock certificate has been lost, destroyed
or wrongfully taken, the Company shall issue and the Transfer Agent shall
countersign a replacement Preferred Stock certificate if the reasonable
requirements of the Transfer Agent and of Section 8-405 of the Uniform
Commercial Code as in effect in the State of New York are met. If required by
the Transfer Agent or the Company, such Holder shall furnish an indemnity bond
sufficient in the judgment of the Company and the Transfer Agent to protect the
Company and the Transfer Agent from any loss which either of them may suffer if
a Preferred Stock certificate is replaced. The Company and the Transfer Agent
may charge the Holder for their expenses in replacing a Preferred Stock
certificate.
(e) Temporary Certificates. Until definitive Preferred Stock certificates
are ready for delivery, the Company may prepare and the Transfer Agent shall
countersign temporary Preferred Stock certificates. Temporary Preferred Stock
certificates shall be substantially in the form of definitive Preferred Stock
certificates but may have variations that the Company considers appropriate for
temporary Preferred Stock certificates. Without unreasonable delay, the Company
shall prepare and the Transfer Agent shall countersign definitive Preferred
Stock certificates and deliver them in exchange for temporary Preferred Stock
certificates.
(f) Cancelation. (i) In the event the Company shall purchase or otherwise
acquire Certificated Preferred Stock, the same shall thereupon be delivered to
the Transfer Agent for cancelation.
(ii) At such time as all beneficial interests in Global Preferred Stock have
either been exchanged for Certificated Preferred Stock, converted, repurchased
or canceled, such Global Preferred Stock shall thereupon be delivered to the
Transfer Agent for cancelation.
(iii) The Transfer Agent and no one else shall cancel and destroy all
Preferred Stock certificates surrendered for transfer, exchange, replacement or
cancelation and deliver a certificate of such destruction to the Company unless
the Company directs the Transfer Agent to deliver canceled Preferred Stock
certificates to the Company. The Company may not issue new Preferred Stock
certificates to replace Preferred Stock certificates to the extent they evidence
Preferred Stock which the Company has purchased or otherwise acquired.
12. Additional Rights of Holders. In addition to the rights provided to
Holders under this Certificate of Designation, Holders shall have the rights set
forth in the Registration Rights Agreement.
13. Other Provisions.
(a) With respect to any notice to a holder of shares of Preferred Stock
required to be provided hereunder, neither failure to mail such notice, nor any
defect therein or in the mailing thereof, to any particular holder shall affect
the sufficiency of the notice or the validity of the proceedings referred to in
such notice with respect to the other holders or affect the legality or validity
of any distribution, rights, warrant, reclassification, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding-up, or the vote upon
any such action. Any notice which was mailed in the manner herein provided shall
be conclusively presumed to have been duly given whether or not the holder
receives the notice.
(b) Shares of Preferred Stock issued and reacquired will be retired and
canceled promptly after reacquisition thereof and, upon compliance with the
applicable requirements of Oklahoma law, have the status of authorized but
unissued shares of preferred stock of the Company undesignated as to series and
may with any and all other authorized but unissued shares of preferred stock of
the Company be designated or redesignated and issued or reissued, as the case
may be, as part of any series of preferred stock of the Corporation, except that
any issuance or reissuance of shares of Preferred Stock must be in compliance
with this Certificate of Designation.
(c) The shares of Preferred Stock shall be issuable only in whole shares.
(d) All notice periods referred to herein shall commence on the date of the
mailing of the applicable notice.
IN WITNESS WHEREOF, the Company has caused this certificate to be signed and
attested this 13th day of November, 2001.
CHESAPEAKE ENERGY CORPORATION
By /s/ Aubrey K. McClendon
-------------------------------------
Attest:
/s/ Jennifer M. Grigsby
------------------------------------
EXHIBIT A
FORM OF PREFERRED STOCK
FACE OF SECURITY
[THE SECURITY EVIDENCED HEREBY (OR ITS PREDECESSOR) (AND THE COMMON STOCK
INTO WHICH THIS SECURITY IS CONVERTIBLE) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE
"SECURITIES ACT") AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY (OR THE COMMON STOCK
INTO WHICH THIS SECURITY IS CONVERTIBLE) IS HEREBY NOTIFIED THAT THE SELLER MAY
BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES
ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED
HEREBY (AND OF THE COMMON STOCK INTO WHICH THIS SECURITY IS CONVERTIBLE) AGREES
FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY (AND THE COMMON STOCK INTO
WHICH THIS SECURITY IS CONVERTIBLE) MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (1) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT)
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), (3) TO THE COMPANY OR (4) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (1) THROUGH
(4) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE
UNITED STATES AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED
TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS
REFERRED TO IN (A) ABOVE.](2)
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OF PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO
----------------------- (2) Subject to removal upon registration under the
Securities Act of 1933 or otherwise when the security shall no longer be a
Transfer Restricted Security.
CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO. HAS AN INTEREST HEREIN.](3)
[TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
CERTIFICATE OF DESIGNATION REFERRED TO BELOW.](3)
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE TRANSFER
AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY
REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS.
Certificate Number Number of Shares of
Convertible Preferred Stock
[ ] [ ]
CUSIP NO.: 165167404
6.75% Cumulative Convertible
Preferred Stock (par value
$0.01) (liquidation preference
$50 per share of Convertible
Preferred Stock) of Chesapeake
Energy Corporation
Chesapeake Energy Corporation, an Oklahoma corporation (the "Company"),
hereby certifies that [ ] (the "Holder") is the registered owner of [ ] fully
paid and non-assessable preferred securities of the Company designated the 6.75%
Cumulative Convertible Preferred Stock (par value $0.01) (liquidation preference
$50 per share of Preferred Stock) (the "Preferred Stock"). The shares of
Preferred Stock are transferable on the books and records of the Transfer Agent,
in person or by a duly authorized attorney, upon surrender of this certificate
duly endorsed and in proper form for transfer. The designations, rights,
privileges, restrictions, preferences and other terms and provisions of the
Preferred Stock represented hereby are issued and shall in all respects be
subject to the provisions of the Certificate of Designation dated November 13,
2001, as the same may be amended from time to time (the "Certificate of
Designation"). Capitalized terms used herein but not defined shall have the
meaning given them in the Certificate of Designation. The Company will provide a
copy of the Certificate of Designation to a Holder without charge upon written
request to the Company at its principal place of business.
Reference is hereby made to select provisions of the Preferred Stock set
forth on the reverse hereof, and to the Certificate of Designation, which select
provisions and the Certificate of Designation shall for all purposes have the
same effect as if set forth at this place.
Upon receipt of this certificate, the Holder is bound by the Certificate of
Designation and is entitled to the benefits thereunder.
Unless the Transfer Agent's Certificate of Authentication hereon has been
properly executed, these shares of Preferred Stock shall not be entitled to any
benefit under the Certificate of Designation or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Company has executed this certificate this [ ] day
of [ ], [ ].
CHESAPEAKE ENERGY CORPORATION
By---------------------------------------
Name-------------------------------------
Title-----------------------------------
TRANSFER AGENT'S CERTIFICATE OF AUTHENTICATION
These are shares of the Preferred Stock referred to in the within-mentioned
Certificate of Designation.
Dated: November 13, 2001
UMB BANK, N.A., as Transfer Agent,
By-------------------------------------
Authorized Signatory
(3) Subject to removal if not a global security.
REVERSE OF SECURITY
Cash dividends on each share of Preferred Stock shall be payable at a rate
per annum set forth in the face hereof or as provided in the Certificate of
Designation.
The shares of Preferred Stock shall be convertible into the Company's
Common Stock in the manner and according to the terms set forth in the
Certificate of Designation.
The Company will furnish without charge to each holder who so requests the
powers, designations, preferences and relative, participating, optional or other
special rights of each class of stock and the qualifications, limitations or
restrictions of such preferences and/or rights.
6
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers the shares of
Preferred Stock evidenced hereby to:
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(Insert assignee's social security or tax identification number)
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(Insert address and zip code of assignee)
and irrevocably appoints:
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agent to transfer the shares of Preferred Stock evidenced hereby on the books of
the Transfer Agent. The agent may substitute another to act for him or her.
Date:
----------------------
Signature
(Sign exactly as your name appears on the
other side of this Preferred Stock
Certificate)
Signature Guarantee:
---------------------- (4) (Signature must be guaranteed by an "eligible
guarantor institution" that is a bank, stockbroker, savings and loan
association or credit union meeting the requirements of the Transfer Agent,
which requirements include membership or participation in the Securities
Transfer Agents Medallion Program ("STAMP") or such other "signature
guarantee program" as may be determined by the Transfer Agent in addition
to, or in substitution for, STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.)
EXHIBIT B
NOTICE OF CONVERSION
(To be Executed by the Holder
in order to Convert the Preferred Stock)
The undersigned hereby irrevocably elects to convert (the "Conversion") shares
of 6.75% Cumulative Convertible Preferred Stock (the "Preferred Stock"),
represented by stock certificate No(s). ________________ (the "Preferred Stock
Certificates") into shares of common stock ("Common Stock") of Chesapeake Energy
Corporation (the "Company") according to the conditions of the Certificate of
Designation of the Preferred Stock (the "Certificate of Designation"), as of the
date written below. If shares are to be issued in the name of a person other
than the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto and is delivering herewith the Preferred Stock Certificates. No
fee will be charged to the holder for any conversion, except for transfer taxes,
if any. A copy of each Preferred Stock Certificate is attached hereto (or
evidence of loss, theft or destruction thereof).
The undersigned represents and warrants that all offers and sales by the
undersigned of the shares of Common Stock issuable to the undersigned upon
conversion of the Preferred Stock shall be made pursuant to registration of the
Common Stock under the Securities Act of 1933 (the "Act"), or pursuant to any
exemption from registration under the Act.
Any holder, upon the exercise of its conversion rights in accordance with the
terms of the Certificate of Designation and the Preferred Stock, agrees to be
bound by the terms of the Registration Rights Agreement.
Capitalized terms used but not defined herein shall have the meanings ascribed
thereto in or pursuant to the Certificate of Designation.
Date of Conversion: ------------------------
Applicable Conversion Price: ---------------
Number of shares of Preferred Stock to be Converted: ------------
Number of shares of Common Stock to be Issued: -----------------
Signature-------------------------------------
Name------------------------------------------
Address:**------------------------------------
Fax No.---------------------------------------
* The Company is not required to issue shares of Common Stock until the
original Preferred Stock Certificate(s) (or evidence of loss, theft or
destruction thereof) to be converted are received by the Company or its Transfer
Agent. The Company shall issue and deliver shares of Common Stock to an
overnight courier not later than three business days following receipt of the
original Preferred Stock Certificate(s) to be converted.
** Address where shares of Common Stock and any other payments or certificates
shall be sent by the Company.
EXHIBIT C
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR
REGISTRATION OF TRANSFER OF PREFERRED STOCK
Re: 6.75% Cumulative Convertible Preferred Stock (the "Preferred Stock") of
Chesapeake Energy Corporation (the "Company")
This Certificate relates to ____ shares of Preferred Stock held in [ ] */
book-entry or [ ] */ definitive form by _______________ (the "Transferor").
The Transferor*:
[ ] has requested the Transfer Agent by written order to deliver in exchange
for its beneficial interest in the Preferred Stock held by the depository shares
of Preferred Stock in definitive, registered form equal to its beneficial
interest in such Preferred Stock (or the portion thereof indicated above); or
[ ] has requested the Transfer Agent by written order to exchange or
register the transfer of Preferred Stock.
In connection with such request and in respect of such Preferred Stock, the
Transferor does hereby certify that the Transferor is familiar with the
Certificate of Designation relating to the above-captioned Preferred Stock and
that the transfer of this Preferred Stock does not require registration under
the Securities Act of 1933 (the "Securities Act") because */:
[ ] Such Preferred Stock is being acquired for the Transferor's own account
without transfer.
[ ] Such Preferred Stock is being transferred to the Company.
[ ] Such Preferred Stock is being transferred to a qualified institutional
buyer (as defined in Rule 144A under the Securities Act), in reliance on Rule
144A.
[ ] Such Preferred Stock is being transferred in reliance on and in
compliance with another exemption fromthe registration requirements of the
Securities Act (and based on an Opinion of Counsel if the Company so requests).
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[INSERT NAME OF TRANSFEROR]
By------------------------------------------
Date--------------------------------
*/ Please check applicable box.