EXHIBIT 10.4
WARRANT AGREEMENT
BETWEEN
GOTHIC ENERGY CORPORATION
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY
AS WARRANT AGENT
DATED AS OF JANUARY 23, 1998
TABLE OF CONTENTS
Page
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1. Appointment of Warrant Agent...................................... 1
2. Warrant Certificates.............................................. 1
3. Execution of Warrant Certificates................................. 2
4. Registration and Countersignature................................. 2
5. Transfer and Exchange of Warrants................................. 3
6. Registration of Transfers and Exchanges........................... 4
7. Terms of Warrants; Exercise of Warrants........................... 8
8. Payment of Taxes.................................................. 10
9. Mutilated or Missing Warrant Certificates......................... 10
10. Reservation of Warrants Shares.................................... 11
11. Public Equity Offering of Common Stock; Obtaining Stock Exchange
Listings................................................ 11
12. Adjustment of Number of Warrant Shares Issuable................... 12
13. Fractional Interests.............................................. 20
14. Notices to Warrant Holders........................................ 20
15. Notices to the Company and Warrant Agent.......................... 22
16. Supplements and Amendments........................................ 22
17. Concerning the Warrant Agent...................................... 23
18. Change of Warrant Agent........................................... 25
19. Identity of Transfer Agent........................................ 26
20. Registration Rights............................................... 26
21. Successors........................................................ 26
22. Termination....................................................... 26
23. Governing Law..................................................... 26
24. Benefits of This Agreement........................................ 27
25. Counterparts...................................................... 27
26. Headings.......................................................... 27
Exhibit A Form of Warrant Certificate
Exhibit B Certificate
Exhibit C Legends
Exhibit D Transferee Letter
Warrant Agreement (the "Agreement"), dated as of January 23, 1998,
between Gothic Energy Corporation, an Oklahoma corporation (together with any
successors and assigns (the "Company") and American Stock Transfer & Trust
Company, a New York corporation, as Warrant Agent (the "Warrant Agent").
WHEREAS, the Company proposes to issue and sell pursuant to a
Securities Purchase Agreement (the "Purchase Agreement'), dated as of January
23, 1998, among the Company and the Purchasers named therein (the "Purchasers"),
up to $45,000,000 in aggregate liquidation value of its Senior Redeemable
Preferred Stock, Series A, par value $.05 per share (the "Preferred Stock"),
along with warrants (each a "Warrant," and collectively, the "Warrants") for the
purchase of up to 1,430,000 shares of its Common Stock, par value $.01 per share
(the "Common Stock," and the shares of Common Stock issuable upon exercise of
the Warrants being referred to herein as the "Warrant Shares") and Additional
Warrants (as hereinafter defined), constituting up to 50% of the Company's fully
diluted Common Stock;
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company and the Warrant Agent is willing to act in connection with the issuance,
transfer, exchange and exercise of Warrants as provided herein; and
WHEREAS, the holders of Warrants and Warrant Shares shall, from time to
time, have certain rights and obligations with respect thereto as set forth in
the Common Stock Registration Rights Agreement, dated as of January 23, 1998,
among the Company and the Purchasers.
NOW, THEREFORE, in consideration of the premises and mutual agreements herein,
the Company and the Warrant Agent hereby agree as follows:
Section 1. Appointment of Warrant Agent. The Company hereby appoints
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the Warrant Agent to act as agent for the Company in accordance with the
instructions hereinafter set forth in this Agreement, and the Warrant Agent
hereby accepts such appointment.
Section 2. Warrant Certificates. The Warrants will initially be
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issued either in global form (the "Global Warrants"), substantially in the form
of Exhibit A hereto (including the footnote thereto), or in registered form as
definitive warrant certificates (the "Definitive Warrants"). Any certificates
(the "Warrant Certificates") evidencing the Global Warrants or the Definitive
Warrants to be delivered pursuant to this Agreement shall be substantially in
the form set forth in Exhibit A hereto. Such Global Warrants shall represent
such of the outstanding Warrants as shall be specified therein and each shall
provide that it shall represent the aggregate amount of outstanding Warrants
from time to time endorsed thereon and that the aggregate amount of outstanding
Warrants represented thereby may from time to time be reduced or increased, as
appropriate, provided that the issuance of Additional Warrants (as defined in
the Purchase Agreement) on each date set forth in Section 5.5 of the Purchase
Agreement shall require the issuance of a new Global Warrant or Definitive
Warrant with respect to the
Additional Warrants issued on such date. Any endorsement of a Global Warrant to
reflect the amount of any increase or decrease in the amount of outstanding
Warrants represented thereby shall be made by the Warrant Agent and Depositary
(as defined below) in accordance with instructions given by the holder thereof.
The Depository Trust Company shall act as the Depositary with respect to the
Global Warrants until a successor shall be appointed by the Company. Upon
written request, a Warrant holder may receive from the Depositary and Warrant
Agent Definitive Warrants as set forth in Section 6 below.
Section 3. Execution of Warrant Certificates. Warrant Certificates
---------------------------------
shall be signed on behalf of the Company by its Chairman of the Board or its
President, Chief Executive Officer, Chief Operating Officer, Chief Financial
Officer or a Vice President and by its Secretary or an Assistant Secretary under
its corporate seal. Each such signature upon the Warrant Certificates may be in
the form of a facsimile signature of the present or any future Chairman of the
Board, President, Chief Executive Officer, Chief Operating Officer, Chief
Financial Officer, a Vice President, Secretary or Assistant Secretary and may be
imprinted or otherwise reproduced on the Warrant Certificates and for that
purpose the Company may adopt and use the facsimile signature of any person who
shall have been Chairman of the Board, President, Vice President, Secretary or
Assistant Secretary, notwithstanding the fact that at the time the Warrant
Certificates shall be countersigned and delivered or disposed of such person
shall have ceased to hold such office. The seal of the Company may be in the
form of a facsimile thereof and may be impressed, affixed, imprinted or
otherwise reproduced on the Warrant Certificates.
In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been countersigned by the Warrant Agent, or
disposed of by the Company, such Warrant Certificates nevertheless may be
countersigned and delivered or disposed of as though such person had not ceased
to be such officer of the Company; and any Warrant Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Warrant Certificate, shall be a proper officer of the Company to sign such
Warrant Certificate, although at the date of the execution of this Warrant
Agreement any such person was not such officer.
Warrant Certificates shall be dated the date of countersignature by the
Warrant Agent.
Section 4. Registration and Countersignature. The Warrants shall be
---------------------------------
numbered and shall be registered on the books of the Company maintained at the
principal office of the Warrant Agent in the Borough of Manhattan, City of New
York (the "Warrant Register") as they are issued.
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Warrant Certificates shall be manually countersigned by the Warrant
Agent and shall not be valid for any purpose unless so countersigned. The
Warrant Agent shall, upon written instructions of the Chairman of the Board, the
President, Chief Executive Officer, Chief Operating Officer, Chief Financial
Officer, a Vice President, the Secretary or an Assistant Secretary of the
Company, initially countersign and deliver Warrants entitling the holders
thereof to purchase not more than the number of Warrant Shares referred to
above in the first recital hereof and shall thereafter countersign and deliver
Warrants as otherwise provided in this Agreement.
The Company and the Warrant Agent may deem and treat the registered
holders (the "Holders") of the Warrant Certificates as the absolute owners
thereof (notwithstanding any notation of ownership or other writing thereon made
by anyone) for all purposes, and neither the Company nor the Warrant Agent shall
be affected by any notice to the contrary.
Section 5. Transfer and Exchange of Warrants. The Warrant Agent shall
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from time to time, subject to the limitations of Section 6, register the
transfer of any outstanding Warrants upon the records to be maintained by it for
that purpose, upon surrender thereof duly endorsed or accompanied (if so
required by it) by a written instrument or instruments of transfer in form
satisfactory to the Warrant Agent, duly executed by the registered Holder or
Holders thereof or by the duly appointed legal representative thereof or by a
duly authorized attorney. Subject to the terms of this Agreement, each Warrant
Certificate may be exchanged for another certificate or certificates entitling
the Holder thereof to purchase a like aggregate number of Warrant Shares as the
certificate or certificates surrendered then entitle each Holder to purchase.
Any Holder desiring to exchange a Warrant Certificate or Warrant Certificates
shall make such request in writing delivered to the Warrant Agent, and shall
surrender, duly endorsed or accompanied (if so required by the Warrant Agent) by
a written instrument or instruments of transfer in form satisfactory to the
Warrant Agent, the Warrant Certificate or Warrant Certificates to be so
exchanged.
Upon registration of transfer, the Warrant Agent shall countersign and
deliver by certified or first class mail a new Warrant Certificate or Warrant
Certificates to the persons entitled thereto. The Warrant Certificates may be
exchanged at the option of the Holder thereof, when surrendered at the office or
agency of the Company maintained for such purpose, which initially will be the
corporate trust office of the Warrant Agent in New York, New York for another
Warrant Certificate, or other Warrant Certificates of different denominations,
of like tenor and representing in the aggregate the right to purchase a like
number of Warrant Shares.
No service charge shall be made for any exchange or registration of
transfer of Warrant Certificates, but the Company may require payment of a sum
sufficient to cover any
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stamp or other tax or other governmental charge that is imposed in connection
with any such exchange or registration of transfer.
Section 6. Registration of Transfer and Exchanges.
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(a) Transfer and Exchange of Definitive Warrants. When
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Definitive Warrants are presented to the Warrant Agent with a request:
(i) to register the transfer of the Definitive Warrants;
or
(ii) to exchange such Definitive Warrants for an equal
number of Definitive Warrants of other authorized denominations, the Warrant
Agent shall register the transfer or make the exchange as requested if its
requirements under this Agreement are met; provided, however, that the
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Definitive Warrants presented or surrendered for registration of transfer or
exchange:
(x) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Warrant Agent, duly executed
by the Holder thereof or by such Holder's attorney, duly authorized in writing;
and
(y) in the case of Warrants (the "Restricted
Warrants") which constitute Restricted Securities (as such term is defined in
Rule 144(a)(3) of the Securities Act of 1933, as amended (the "Securities
Act")), such Warrants shall be accompanied, in the reasonable discretion of the
Company, by the following additional information and documents, as applicable,
however, it being understood that the Warrant Agent need not determine which
clause (A) through (C) below is applicable:
(A) if such Restricted Warrant is being delivered to
the Warrant 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 B hereto); or
(B) if such Restricted Warrant is being transferred to
a qualified institutional buyer (as defined in Rule 144A under the Act, a "QIB")
in accordance with Rule 144A under the Act or pursuant to an exemption from
registration in accordance with Rule 144 under the Securities Act or Regulation
S under the Securities Act or pursuant to an effective registration statement
under the Securities Act, a certification to that effect (in substantially the
form of Exhibit B hereto) and, with respect to transfers pursuant to Rule 144 or
Regulation S, an opinion of counsel reasonably acceptable to the Company and the
Warrant Agent to the effect that such transfer does not require registration
under the Securities Act; or
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(C) if such Restricted Warrant is being transferred in
reliance on another exemption from the registration requirements of the
Securities Act, a certification to that effect (in substantially the form of
Exhibit B hereto) and an opinion of counsel reasonably acceptable to the Company
and to the Warrant Agent to the effect that such transfer does not require
registration under the Securities Act.
(b) Restrictions on Transfer of a Definitive Warrant for a
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Beneficial Interest in a Global Warrant. A Definitive Warrant may not be
---------------------------------------
exchanged for a beneficial interest in a Global Warrant except upon satisfaction
of the requirements set forth below. Upon receipt by the Warrant Agent of a
Definitive Warrant, duly endorsed or accompanied by appropriate instruments of
transfer, in form satisfactory to the Warrant Agent, together with:
(A) if such Definitive Warrant constitutes a Restricted
Warrant, certification, substantially in the form of Exhibit B hereto, that such
Definitive Warrant is being transferred to a QIB in accordance with Rule 144A
under the Securities Act; and
(B) written instructions directing the Warrant Agent to make,
or to direct the Depositary to make, an endorsement on the Global Warrant to
reflect an increase in the aggregate amount of the Warrants represented by the
Global Warrant, then the Warrant Agent shall cancel such Definitive Warrant and
cause, or direct the Depositary to cause, in accordance with the standing
instructions and procedures existing between the Depositary and the Warrant
Agent, the number of Warrant Shares represented by the Global Warrant to be
increased accordingly. If no Global Warrant is then outstanding, the Company
shall issue and the Warrant Agent shall countersign a new Global Warrant in the
appropriate amount.
(c) Transfer and Exchange of Global Warrants. The transfer and
----------------------------------------
exchange of Global Warrants or beneficial interests therein shall be effected
through the Depositary, in accordance with this Warrant Agreement (including the
restrictions on transfer set forth herein) and the procedures of the Depositary
therefor.
(d) Transfer of a Beneficial interest in a Global Warrant for a
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Definitive Warrant.
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(i) Any person having a beneficial interest in a Global Warrant
may upon request exchange such beneficial interest for a Definitive Warrant.
Upon receipt by the Warrant Agent of written instructions or such other form of
instructions as is customary for the Depositary from the Depositary or its
nominee on behalf of any person having a beneficial interest in a Global Warrant
and upon receipt by the Warrant Agent of
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a written order or such other form of instructions as is customary for the
Depositary or the person designated by the Depositary as having such a
beneficial interest containing registration instructions and, in the case of a
beneficial interest in Restricted Warrants, the following additional information
and documents, however, it being understood that the Warrant Agent need not
determine which clause (A) through (C) below is applicable;
(A) if such beneficial interest is being transferred to the
person designated by the Depositary as being the beneficial owner, a
certification from such person to that effect (in substantially the form of
Exhibit B hereto); or
(B) if such beneficial interest is being transferred to a QIB
in accordance with Rule 144A under the Securities Act or pursuant to an
exemption from registration in accordance with Rule 144 or Regulation S under
the Securities Act or pursuant to an effective registration statement under the
Securities Act, a certification to that effect from the transferee or transferor
(in substantially the form of Exhibit B hereto) and, with respect to transfers
pursuant to Rule 144 or Regulation S, an opinion of counsel reasonably
acceptable to the Company and the Warrant Agent to the effect that such transfer
does not require registration under the Securities Act, or
(C) if such beneficial interest is being transferred in
reliance on another exemption from the registration requirements of the
Securities Act, a certification to that effect from the transferee or transferor
(in substantially the form of Exhibit B hereto) and an opinion of counsel from
the transferee or transferor reasonably acceptable to the Company and to the
Warrant Agent to the effect that such transfer does not require registration
under the Securities Act,
then the Warrant Agent will cause, in accordance with the standing instructions
and procedures existing between the Depositary and the Warrant Agent, the
aggregate amount of the Global Warrant to be reduced and, following such
reduction, the Company will execute and, upon receipt of an authentication order
in the form of an officers' certificate signed by the Chief Executive Officer,
the President or any Vice President and the Chief Financial Officer, the
Treasurer, the Secretary or any Assistant Secretary of the Company (an
"Officers' Certificate"), the Warrant Agent will countersign and deliver to the
transferee a Definitive Warrant.
(ii) Definitive Warrants issued in exchange for a beneficial
interest in a Global Warrant pursuant to this Section 6(d) shall be registered
in such names and in such authorized denominations as the Depositary, pursuant
to instructions from its direct or indirect participants or otherwise, shall
instruct the Warrant Agent in writing, provided such designation is in
accordance with this Section 6(d). The Warrant Agent shall deliver such
Definitive Warrants to the persons in whose names such Definitive Warrants are
registered.
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(e) Restrictions on Transfer and Exchange of Global Warrants.
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Notwithstanding any other provisions of this Warrant Agreement (other than the
provisions set forth in subsection (f) of this Section 6), a Global Warrant may
not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(f) Authentication of Definitive Warrants in Absence of Depositary.
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If at any time:
(i) the Depositary for the Global Warrants notifies the Company
that the Depositary is unwilling or unable to continue as Depositary for the
Global Warrant and a successor Depositary for the Global Warrant is not
appointed by the Company within 90 days after delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the Warrant
Agent in writing that it elects to cause the issuance of Definitive Warrants
under this Warrant Agreement,
then the Company will execute, and the Warrant Agent, upon receipt of an
Officers' Certificate requesting the countersignature and delivery of Definitive
Warrants, will countersign and deliver Definitive Warrants, in an aggregate
number equal to the aggregate number of Warrants represented by the Global
Warrant, in exchange for such Global Warrant.
(g) Legends.
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(i) Except as permitted by the following paragraph (ii), each
Warrant Certificate evidencing the Global Warrants and the Definitive Warrants
(and all warrants issued in exchange therefor or substitution thereof) shall
bear a legend substantially as set forth in Exhibit C.
(ii) Upon any sale or transfer of a Warrant pursuant to Rule 144
under the Securities Act or an effective registration statement under the
Securities Act:
(A) in the case of any Warrant that is a Definitive Warrant,
the Warrant Agent shall permit the Holder thereof to exchange such Restricted
Warrant for a Definitive Warrant that does not bear the legend set forth in
Exhibit C and rescind any related restriction on the transfer of such Warrant;
and
(B) any such warrant represented by a Global Warrant shall
not be subject to the provisions set forth in (i) above (such sales or transfers
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being subject only to the provisions of Section 6(c) hereof); provided, however,
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that with respect to any request for an exchange of a Warrant that is
represented by a Global Warrant for a Definitive Warrant that does not bear the
legend set forth in Exhibit C, which request is made in reliance upon Rule 144,
the Holder thereof shall certify in writing to the Warrant Agent that such
request is being made pursuant to Rule 144 (such certification to be
substantially in the form of Exhibit B hereto) and shall obtain an opinion of
counsel, reasonably acceptable to the Company and the Warrant Agent, to the
effect that such transfer does not require registration under the Securities
Act.
(h) Cancellation and/or Adjustment of a Global Warrant. At such
--------------------------------------------------
time as all beneficial interests in a Global Warrant have either been exchanged
for Definitive Warrants, redeemed, repurchased or canceled, such Global Warrant
shall be returned to or retained and canceled by the Warrant Agent. At any time
prior to such cancellation, if any beneficial interest in a Global Warrant is
exchanged for Definitive Warrants, redeemed, repurchased or canceled, the number
of Warrants represented by such Global Warrant shall be reduced and an
endorsement shall be made on such Global Warrant by the Warrant Agent to reflect
such reduction.
(i) Obligations with Respect to Transfers and Exchanges of
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Definitive Warrants.
-------------------
(i) To permit registrations of transfers and exchanges in
accordance with the terms of this Agreement, the Company shall execute, and the
Warrant Agent shall countersign, Definitive Warrants and Global Warrants.
(ii) All Definitive Warrants and Global Warrants issued upon
any registration, transfer or exchange of Definitive Warrants or Global Warrants
shall be the valid obligations of the Company, entitled to the same benefits
under this Warrant Agreement as the Definitive Warrants or Global Warrants
surrendered upon the registration of transfer or exchange.
(iii) Prior to due presentment for registration of transfer of
any Warrant, the Warrant Agent and the Company may deem and treat the person in
whose name any Warrant is registered as the absolute owner of such Warrant, and
neither the Warrant Agent nor the Company shall be affected by notice to the
contrary.
Section 7. Terms of Warrants; Exercise Warrants. Subject to the terms of
------------------------------------
this Agreement, each Warrant Holder shall have the right, which may be exercised
commencing on or after the Exercisability Date (as defined below) and until 5:00
P.M., New York City time, on the fifth anniversary of the date of original
issuance of a Warrant or Additional Warrant (with respect to any Warrant or
Additional Warrant, respectively, the "Expiration Date"), to receive
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from the Company the number of fully paid and non-assessable Warrant Shares
which the Holder may at the time be entitled to receive on exercise of such
Warrants and payment of the Exercise Price (as defined below) then in effect for
such Warrant Shares. Each Warrant not exercised prior to the Expiration Date
shall become void and all rights thereunder and all rights in respect thereof
under this Agreement shall cease as of such time. No adjustments as to dividends
will be made upon exercise of the Warrants.
"Exercisability Date" shall mean January 23, 1998.
The initial price per share at which Warrant Shares shall be
purchasable upon exercise of Warrants (the `Exercise Price") shall be the lesser
of (a) $2.75 per share or (b) the average of the daily closing bid prices (as
defined in Section 12(d)) for each Business Day during the period commencing 5
Business Days before the date of exercise and ending on the date one day prior
to such date, to be reset to $.01 on March 31, 1998, as provided in Section 2.1
of the Purchase Agreement, in the event the Preferred Stock remains outstanding
on that date, in each case subject to adjustment as provided herein. A Warrant
may be exercised upon surrender at the office or agency of the Company
maintained for such purpose, which initially will be the corporate trust office
of the Warrant Agent in New York, New York, of the certificate or certificates
evidencing the Warrants to be exercised with the form of election to purchase on
the reverse thereof duly filled in and signed, which signature shall be
guaranteed by a participant in a recognized Signature Guarantee Medallion
Program, and upon payment to the Company of the Exercise Price, as adjusted as
herein provided, for the number of Warrant Shares in respect of which such
Warrants are then exercised. Payment of the aggregate Exercise Price shall be
made in cash or by certified or official bank check to the order of the Company
in New York Clearing House Funds.
Subject to the provisions of Section 6 hereof, upon such surrender of
Warrants and payment of the Exercise Price, the Company shall issue and cause to
be delivered with all reasonable dispatch to or upon the written order of the
Holder and in such name or names as the Warrant Holder may designate a
certificate or certificates for the number of Warrant Shares issuable upon the
exercise of such Warrants together with cash as provided in Section 13;
provided, however, that if any consolidation, merger or lease or sale of assets
is proposed to be effected by the Company as described in subsection (j) of
Section 12 hereof, or a tender offer or an exchange offer for shares of Common
Stock of the Company shall be made, upon such surrender of Warrants and payment
of the Exercise Price as aforesaid, the Company shall, as soon as possible, but
in any event not later than three days, other than a Saturday or Sunday or a day
on which banking institutions in the State of New York are not open for business
("Business Day") thereafter, issue and cause to be delivered the full number of
Warrant Shares issuable upon the exercise of such Warrants in the manner
described in this sentence together with cash as provided in Section 13. Such
certificate or certificates shall be deemed to have been issued and any person
so named therein shall be deemed to have become a holder of record of such
Warrant Shares as of the date of the surrender of such Warrants and payment of
the Exercise Price.
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The Warrants shall be exercisable, at the election of the Holders
thereof, either in full or from time to time in part and, in the event that a
certificate evidencing Warrants is exercised in respect of fewer than all of the
Warrant Shares issuable on such exercise at any time prior to the date of
expiration of the Warrants, a new certificate evidencing the remaining Warrant
or Warrants will be issued, and the Warrant Agent is hereby irrevocably
authorized to countersign and to deliver the required new Warrant Certificate or
Warrant Certificates pursuant to the provisions of this Section 7 and of Section
3 hereof, and the Company, whenever required by the Warrant Agent, will promptly
supply the Warrant Agent with Warrant Certificates duly executed on behalf of
the Company for such purpose.
All Warrant Certificates surrendered upon exercise of Warrants
shall be canceled by the Warrant Agent. Such canceled Warrant Certificates shall
then be disposed of by the Warrant Agent in a manner consistent with the Warrant
Agent's customary procedure for such disposal and in a manner reasonably
satisfactory to the Company.
The Warrant Agent shall keep copies of this Agreement available for
inspection by the Holders during normal business hours at its office. The
Company shall supply the Warrant Agent from time to time with such numbers of
copies of this Agreement as the Warrant Agent may request.
Section 8. Payment of Taxes. The Company will pay all documentary
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stamp taxes attributable to the initial issuance of Warrant Shares upon the
exercise of Warrants; provided, however, that the Company shall not be required
to pay any tax or taxes which may be payable in respect of any transfer involved
in the issue of any Warrant Certificates or any certificates for Warrant Shares
in a name other than that of the registered Holder of a Warrant Certificate
surrendered upon the exercise of a Warrant, and the Company shall not be
required to issue or deliver such Warrant Certificates unless or until the
person or persons requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
Section 9. Mutilated or Missing Warrant Certificates. In case any
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of the Warrant Certificates shall be mutilated, lost, stolen or destroyed, the
Company may in its discretion issue and the Warrant Agent may countersign, in
exchange and substitution for and upon cancellation of the mutilated Warrant
Certificate, or in lieu of and substitution for the Warrant Certificate lost,
stolen or destroyed, a new Warrant Certificate of like tenor and representing an
equivalent number of Warrants, but only upon receipt of evidence satisfactory to
the Company and the Warrant Agent of such loss, theft or destruction of such
Warrant Certificate and indemnity, if requested, also satisfactory to them.
Applicants for such substitute Warrant Certificates shall also comply with such
other reasonable regulations and pay such other reasonable charges as the
Company or the Warrant Agent may prescribe.
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Section 10. Reservation of Warrant Shares. The Company will at all
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times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Common Stock or its authorized and
issued Common Stock held in its treasury, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon exercise of Warrants, the
maximum number of shares of Common Stock which may then be deliverable upon the
exercise of all outstanding Warrants.
The Company or, if appointed, the transfer agent for the Common Stock
(the "Transfer Agent") and every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of any of the rights of
purchase aforesaid will be irrevocably authorized and directed at all times to
reserve such number of authorized shares as shall be required for such purpose.
The Company will keep a copy of this Agreement on file with the Transfer Agent
and with every subsequent transfer agent for any shares of the Company's capital
stock issuable upon the exercise of the rights of purchase represented by the
Warrants. The Warrant Agent is hereby irrevocably authorized to requisition
from time to time from such Transfer Agent the stock certificates required to
honor outstanding Warrants upon exercise thereof in accordance with the terms of
this Agreement. The Company will supply such Transfer Agent with duly executed
certificates for such purposes and will provide or otherwise make available any
cash which may be payable as provided in Section 13. The Company will furnish
such Transfer Agent a copy of all notices of adjustments and certificates
related thereto transmitted to each Holder pursuant to Section 14 hereof.
The Company covenants that all Warrant Shares which may be issued upon
exercise of Warrants will, upon payment of the Exercise Price therefor and
issue, be validly authorized and issued, fully paid, non-assessable, free of
preemptive rights and free from all taxes, liens, charges and security interests
with respect to the issuance thereof. The Company will take no action to
increase the par value of the Common Stock to an amount in excess of the
Exercise Price, and the Company will not enter into any agreements inconsistent
in any material respect with the rights of Holders hereunder. The Company will
use its reasonable best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
necessary to enable the Company to perform its obligations under this Agreement.
Section 11. Public Equity Offering of Common Stock; Obtaining Stock
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Exchange Listings. The Company covenants and agrees with the Warrant Agent, for
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the benefit of each Warrant Holder, that at any time while the Warrants are
outstanding, the Company will not make
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a Public Equity offering (as defined below) of any class of its common stock
other than the Common Stock. In the event that, at any time during the period in
which the Warrants are exercisable, the Common Stock is not listed on any
principal securities exchanges or markets within the United States of America,
the Company will use its best efforts to permit the Warrant Shares to be
designated PORTAL securities in accordance with the rules and regulations
adopted by the National Association of Securities Dealers, Inc. relating to
trading in the Private Offerings, Resales and Trading through Automated Linkages
market.
"Public Equity Offering' means a public offering by the Company of
shares of its common stock pursuant to an effective registration statement filed
with the Securities and Exchange Commission (other than a public offering on a
registration statement on Form S-4 or S-8 or similar form).
Section 12. Adjustment of Number of Warrant Shares Issuable. The
-----------------------------------------------
number of shares of Common Stock issuable upon the exercise of each Warrant (the
"Exercise Rate") is subject to adjustment from time to time upon the occurrence
of the events enumerated in this Section 12.
(a) Adjustment for Change in Capital Stock. If the Company:
--------------------------------------
(1) pays a dividend or makes a distribution on its Common
Stock in shares of its Common Stock or other capital stock of the Company; or
(2) subdivides, combines or reclassifies its outstanding
shares of Common Stock;
then the Exercise Rate in effect immediately prior to such action shall be
proportionately adjusted so that the Holder of any Warrant thereafter exercised
may receive the aggregate number and kind of shares of capital stock of the
Company which such Holder would have owned immediately following such action if
such Warrant had been exercised immediately prior to such action.
The adjustment shall become effective immediately after the record date
in the case of a dividend or distribution (the "Time of Determination") and
immediately after the effective date in the case of a subdivision, combination
or reclassification.
If after an adjustment a Holder of a Warrant upon exercise of it may
receive shares of two or more classes of capital stock of the Company, the board
of directors of the Company shall determine the allocation of the adjusted
Exercise Price between the classes of capital stock. After such allocation, the
exercise privilege and the Exercise Price of each class of capital stock shall
thereafter be subject to adjustment on terms comparable to those applicable to
Common Stock in this Section 12.
-12-
Such adjustment shall be made successively whenever any event
listed above shall occur.
(b) Adjustment for Certain Issuances of Common Stock. If the
------------------------------------------------
Company issues or sells shares of its Common Stock or distributes any rights,
options or warrants to any Person entitling them to purchase shares of Common
Stock, or securities convertible into or exchangeable for Common Stock, at a
price per share less than the Current Market Value at the Time of Determination,
the Exercise Rate shall be adjusted in accordance with the formula:
E' = E x O + N
---------
O + N x P
---------
M
where:
E' = the adjusted Exercise Rate.
E = the Exercise Rate immediately prior to the Time of Determination
for any such issuance, sale or distribution.
O = the number of Fully Diluted Shares (as defined below) outstanding
immediately prior to the Time of Determination for any such issuance,
sale or distribution.
N = the number of additional shares of Common Stock issued, sold or
issuable upon exercise of such rights, options or warrants.
P = the price received in the case of any issuance or sale of Common
Stock or rights, options or warrants inclusive of the exercise price per
share of Common Stock upon exercise of such rights, options or warrants.
M = the Current Market Value per share of Common Stock on the Time of
Determination for any such issuance, sale or distribution.
-13-
The adjustment shall be made successively whenever any such rights,
options or warrants are issued and shall become effective immediately after the
record date for the determination of stockholders entitled to receive the
rights, options or warrants. Notwithstanding the foregoing, the Exercise Rate
shall not be subject to adjustment in connection with (i) the issuance of any
shares of Common Stock upon exercise of any such rights, options, warrants or
convertible securities which have previously been the subject of an adjustment
under this Agreement for which the required adjustment has been made and (ii)
the exercise of the Warrants or any rights, options or warrants outstanding on
the date hereof and described in the Memorandum (as defined in the Purchase
Agreement). If at the end of the period during which any such rights, options,
warrants or convertible securities are exercisable, not all rights, options,
warrants or convertible securities shall have been exercised, the Warrant shall
be immediately readjusted to what it would have been if "N" in the above formula
had been the number of shares actually issued.
(c) Adjustment for Other Distribution. If the Company distributes
---------------------------------
to all holders of its Common Stock (i) any evidences of indebtedness of the
Company or any of its subsidiaries, (ii) any assets of the Company or any of its
subsidiaries (other than cash dividends or other cash distributions or
distributions from current or retained earnings other than any Extraordinary
Cash Dividend), or (iii) any rights, options or warrants to acquire any of the
foregoing or to acquire any other securities of the Company, the Exercise Rate
shall be adjusted in accordance with the formula:
E' = E x M
-------
M - F
where:
E' the adjusted Exercise Rate.
E the current Exercise Rate on the record date mentioned below.
M the Current Market Value per share of Common Stock on the record
date mentioned below.
F the fair market value on the record date mentioned below of the
indebtedness, assets, rights, options or warrants distributable in respect
of one share of Common Stock.
-14-
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the distribution.
If an adjustment is made pursuant to clause (iii) above of this subsection (c)
as a result of the issuance of rights, options or warrants and at the end of the
period during which any such rights, options or warrants are exercisable, not
all such rights, options or warrants shall have been exercised, the Warrant
shall be immediately readjusted as if "F" in the above formula was the fair
market value on the record date of the indebtedness or assets actually
distributed upon exercise of such rights, options or warrants divided by the
number of shares of Common Stock outstanding on the record date.
This subsection does not apply to rights, options or warrants
referred to in subsection (b) of this Section 12.
(d) Current Market Value; Extraordinary Cash Dividend. "Current
-------------------------------------------------
Market Value" per share of Common Stock or of any other security (herein
collectively referred to as a "Security") at any date shall be:
(1) if the security is not registered under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), (i) the value of the
Security determined in good faith by the board of directors of the Company and
certified in a board resolution, based on the most recently completed arm's
length transaction between the Company and a person other than an Affiliate of
the Company and the closing of which occurs on such date or shall have occurred
within the six months preceding such date or (ii) if no such transaction shall
have occurred on such date or within such six-month period, the value of the
Security most recently determined as of a date within the six months preceding
such date by the board of directors of the Company if the transaction is for
less than $500,000 and is not with an Affiliate and by an independent Financial
Expert in all other instances, or
(2) if the Security is registered under the Exchange Act, the
average of the daily closing bid prices (as defined below) for each Business Day
during the period commencing 15 Business Days before such date and ending on the
date one day prior to such date or, if the Security has been registered under
the Exchange Act for less than 15 consecutive Business Days before such date,
then the average of the daily closing bid prices for all of the Business Days
before such date for which daily closing bid prices are available. If the
closing bid price is not determinable for at least 10 Business Days in such
period, the Current Market Value of the Security shall be determined as if the
Security was not registered under the Exchange Act.
-15-
The "closing bid price" for any Security on each Business Day means:
(A) if such Security is listed or admitted to trading on any securities exchange
or market the closing price, regular way, on such day on the principal exchange
or market on which such Security is traded, or if no sale takes place on such
day, the average of the closing bid and asked prices on such day, (a) if such
Security is not then listed or admitted to trading on any securities exchange or
market, the last reported sale price on such day, or if there is no such last
reported sale price on such day, the average of the closing bid and the asked
prices on such day, as reported by a reputable quotation source designated by
the Company or (C) if neither clause (A) nor (B) is applicable, the average of
the reported high bid and low asked prices on such day, as reported by a
reputable quotation service, or a newspaper of general circulation in the
Borough of Manhattan, City of New York, customarily published on each Business
Day, designated by the Company. If there are no such prices on a Business Day,
then the market price shall not be determinable for such Business Day.
"Independent Financial Expert" shall mean (a) CIBC Xxxxxxxxxxx Corp.
(or any successor) or (b) another nationally recognized investment banking firm
reasonably acceptable to the Warrant Agent (i) that does not (and whose
directors, officers, employees and Affiliates do not) have a direct or indirect
material financial interest in the Company, (ii) that has not been, and, at the
----
time it is called upon to serve as an Independent Financial Expert under this
Agreement is not (and none of whose directors, officers, employees or Affiliates
is) a promoter, director or officer of the Company, (iii) that has not been
retained by the Company for any purpose, other than to perform an equity
valuation, within the preceding twelve months and (iv) that, in the reasonable
judgment of the board of directors of the Company (certified by a board
resolution), is otherwise qualified to serve as an independent financial
advisor. Any such person may receive customary compensation and indemnification
by the Company for opinions or services it provides as an Independent Financial
Expert.
"Affiliate" of any specified person means any other person which
directly or indirectly through one or more intermediaries controls or is
controlled by, or is under common control with, such specified person. For the
purposes of this definition, "control" (including with correlative meanings, the
terms "controlling," "controlled by" and "under common control with") as used
with respect to any person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
person, whether through the ownership of voting securities, by agreement or
otherwise; provided, however, that beneficial ownership of at least 10% of the
-------- -------
voting securities of a person shall be deemed to be control.
-16-
"Extraordinary Cash Dividend" means any cash dividends with respect
to the Common Stock the aggregate amount of which prior to the Exercisability
Date in any fiscal year exceeds the greater of (i) 20% of the net income of the
Company and its subsidiaries for the fiscal year immediately preceding the
payment of such dividend or (ii) $250,000.
(e) When De Minimis Adjustment May Be Deferred. No adjustment in the
------------------------------------------
Exercise Rate need be made unless the adjustment would require an increase or
decrease of at least 1% in the Exercise Rate. Notwithstanding the foregoing,
any adjustments that are not made shall be carried forward and taken into
account in any subsequent adjustment, provided that no such adjustment shall be
deferred beyond the date on which a Warrant is exercised.
All calculations under this Section 12 shall be made to the nearest
cent or to the nearest 1/100th of a share, as the case may be.
(f) When No Adjustment Required. If an adjustment is made upon the
---------------------------
establishment of a record date for a distribution subject to subsections (a),
(b) or (c) hereof and such distribution is subsequently canceled, the Exercise
Rate then in effect shall be readjusted, effective as of the date when the board
of directors determines to cancel such distribution, to that which would have
been in effect if such record date had not been fixed. If an adjustment would
be required under two or more of subsections (a), (b) and (c), such adjustments
will be determined without duplication.
To the extent the Warrants become convertible into cash, no
adjustment need be made thereafter as to the amount of cash into which such
Warrants are exercisable. Interest wall not accrue on the cash.
(g) Notice of Adjustment. Whenever the Exercise Rate is adjusted, the
--------------------
Company shall provide the notices required by Section 14 hereof.
(h) Voluntary Reduction. The Company from time to time may increase
-------------------
the Exercise Rate by any amount for any period of time (including, without
limitation, permanently) if the period is at least 20 Business Days.
An increase of the Exercise Rate under this subsection (h) (other
than a permanent increase) does not change or adjust the Exercise Rate otherwise
in effect for purposes of subsections (a), (b) or (c) of this Section 12.
(i) When Issuance or Payment May Be Deferred. In any case in which
----------------------------------------
this Section 12 shall require that an adjustment in the Exercise Rate be made
effective as of a record date for a specified event, the Company may elect to
defer until the occurrence of such event
-17-
(i) issuing to the Holder of any Warrant exercised after such record date the
Warrant Shares and other capital Stock of the Company, if any, issuable upon
such exercise over and above the Warrant Shares and other capital stock of the
Company, if any, issuable upon such exercise on the basis of the Exercise Rate
prior to such adjustment, and (ii) paying to such Holder any amount in cash in
lieu of a fractional share pursuant to Section 13; provided, however, that the
-------- -------
Company shall deliver to the Warrant Agent and shall cause the Warrant Agent, on
behalf of and at the expense of the Company, to deliver to such Holder a due
xxxx or other appropriate instrument evidencing such Holder's right to receive
such additional Warrant Shares, other capital stock and cash upon the occurrence
of the event requiring such adjustment.
(j) Reorganizations. In case of any capital reorganization, other than
---------------
in the cases referred to in Sections 12(a), (b) or (c) hereof, or the
consolidation or merger of the Company with or into another corporation (other
than a merger or consolidation in which the Company is the continuing
corporation and which does not result in any reclassification of the outstanding
shares of Common Stock into shares of other stock or other securities or
property), or the sale of the property of the Company as an entirety or
substantially as an entirety (collectively such actions being hereinafter
referred to as "Reorganizations"), there shall thereafter be deliverable upon
exercise of any Warrant (in lieu of the number of shares of Common Stock
theretofore deliverable) the number of shares of stock or other securities or
property to which a holder of the number of shares of Common Stock that would
otherwise have been deliverable upon the exercise of such Warrant would have
been entitled upon such Reorganization if such Warrant had been exercised in
full immediately prior to such Reorganization. In case of any Reorganization,
appropriate adjustment, as determined in good faith by the board of directors of
the Company, whose determination shall be described in a duly adopted resolution
certified by the Company's Secretary or Assistant Secretary, shall be made in
the application of the provisions herein set forth with respect to the rights
and interests of Holders so that the provisions set forth herein shall
thereafter be applicable, as nearly as possible, in relation to any such shares
or other securities or property thereafter deliverable upon exercise of
Warrants.
The Company shall not effect any such Reorganization unless prior
to or simultaneously with the consummation thereof the successor corporation (if
other than the Company) resulting from such Reorganization or the corporation
purchasing or leasing such assets or other appropriate corporation or entity
shall (i) expressly assume, by a supplement to the Warrant Agreement or other
acknowledgment executed and delivered to the Warrant Agent the obligation to
deliver to the Warrant Agent and to cause the Warrant Agent to deliver to each
such Holder such shares of stock, securities or assets as, in accordance with
the foregoing provisions, such Holder may be entitled to purchase, and the due
and punctual performance and observance of each and every covenant, condition,
obligation and liability under this Agreement to be performed and observed by
the Company in the manner prescribed herein and (ii) enter into an agreement
providing to the Holders rights and benefits substantially similar to those
enjoyed by the Holders under the Common Stock Registration Rights Agreement of
even date herewith.
-18-
The foregoing provisions of this Section 12(j) shall apply to
successive Reorganization transactions.
(k) Form of Warrants. Irrespective of any adjustments in the number or
----------------
kind of shares purchasable upon the exercise of the Warrants, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the Warrants initially issuable
pursuant to this Agreement.
(1) Warrant Agent's Disclaimer. The Warrant Agent has no duty to
--------------------------
determine when an adjustment under this Section 12 should be made, how it should
be made or what it should be. The Warrant Agent has no duty to determine
whether any provisions of a supplemental Warrant Agreement under subsection (j)
of this Section 12 are correct. The Warrant Agent makes no representation as to
the validity or value of any securities or assets issued upon exercise of
Warrants. The Warrant Agent shall not be responsible for the Company's failure
to comply with this Section 12.
(m) Miscellaneous. For purpose of this Section 12, the term "shares of
-------------
Common Stock" shall mean (i) shares of the class of stock designated as the
Common Stock, par value $.0l per share, of the Company as of the date of this
Agreement, and (ii) shares of any other class of stock resulting from successive
changes or reclassification of such shares consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value.
For purposes of this Section 12 the term "Fully Diluted Shares" shall mean (i)
the shares of Common Stock outstanding as of a specified date, and (ii) the
shares of Common Stock into or for which rights, options, warrants or other
securities outstanding as of such date are exercisable or convertible (other
than the Warrants). For purposes of this Section 12, "Common Stock Equivalents"
means (without duplication with any other Common Stock or Common Stock
Equivalents) rights, warrants, options, convertible securities or convertible
indebtedness, exchangeable securities or exchangeable indebtedness, or other
rights, exercisable for or convertible or exchangeable into, directly or
indirectly, Common Stock, whether at the time or upon the occurrence of some
future event. In the event that at any time, as a result of an adjustment made
pursuant to this Section 12, the Holders of Warrants shall become entitled to
purchase any securities of the Company other than, or in addition to, shares of
Common Stock, thereafter the number or amount of such other securities so
purchasable upon exercise of each Warrant shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Warrant Shares contained in subsections (a)
through (m) of this Section 12, inclusive, and the provisions of Sections 6, 7,
8, 10 and 13 with respect to the Warrant Shares or the Common Stock shall apply
on like terms to any such other securities.
-19-
Section 13. Fractional Interests. The Company shall not be required to
--------------------
issue fractional Warrant Shares on the exercise of Warrants. If more than one
Warrant shall be presented for exercise in full at the same time by the same
Holder, the number of full Warrant Shares which shall be issuable upon the
exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section 13,
be issuable on the exercise of any Warrants (or specified portion thereof), the
Company shall pay an amount in cash equal to the excess of the value (as
determined by the Board of Directors in good faith) of a Warrant Share over the
Exercise Price on the day immediately preceding the date the Warrant is
presented for exercise, multiplied by such fraction.
Section 14. Notices to Warrant Holders. Upon any adjustment pursuant
--------------------------
to Section 12 hereof, the Company shall give prompt written notice of such
adjustment to the Warrant Agent and shall cause the Warrant Agent, on behalf of
and at the expense of the Company, within 10 days after notification is received
by the Warrant Agent of such adjustment, to mail by first class mail, postage
prepaid, to each Holder a notice of such adjustments) and shall deliver to the
Warrant Agent a certificate of the Chief Financial Officer of the Company,
accompanied by the report thereon by a firm of independent public accountants
selected by the board of directors of the Company (who may be the regular
accountants for the Company), setting forth in reasonable detail (i) the number
of Warrant Shares purchasable upon the exercise of each Warrant and the Exercise
Price of such Warrant after such adjustment(s), (ii) a brief statement of the
facts requiring such adjustment(s) and (iii) the computation by which such
adjustment(s) was made. Where appropriate, such notice may be given in advance
and included as a part of the notice required under the other provisions of this
Section 14.
In case:
(a) the Company shall authorize the issuance to all holders of shares
of Common Stock of rights, options or warrants to subscribe for or purchase
shares of Common Stock or of any other subscription rights or warrants; or
(b) the Company shall authorize the distribution to all holders of
shares of Common Stock of evidences of its indebtedness or assets; or
(c) of any consolidation or merger to which the Company is a party and
for which approval of any shareholders of the Company is required, or of the
conveyance or transfer of the properties and assets of the Company substantially
as an entirety, or of any reclassification
-20-
or change of Common Stock issuable upon exercise of the Warrants (other than a
change in par value, or from par value to no par value, or from no par value to
par value, or as a result of a subdivision or combination), or a tender offer or
exchange offer for shares of Common Stock; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(e) the Company proposes to take any action that would require an
adjustment to the Exercise Rate pursuant to Section 12;
then the Company shall give prompt written notice to the Warrant Agent and shall
cause the Warrant Agent, on behalf of and at the expense of the Company to give
to each of the registered holders of the Warrant Certificates at his or its
address appearing on the Warrant Register, at least 20 days (or 10 days in any
case specified in clauses (a) or (b) above) prior to the applicable record date
hereinafter specified, or the date of the event in the case of events for which
there is no record date, by first-class mail, postage prepaid, a written notice
stating (i) the date as of which the holders of record of shares of Common Stock
to be entitled to receive any such rights, options, warrants or distribution are
to be determined, or (ii) the initial expiration date set forth in any tender
offer or exchange offer for shares of Common Stock, or (iii) the date on which
any such consolidation, merger, conveyance, transfer, dissolution, liquidation
or winding up is expected to become effective or consummated, and the date as of
which it is expected that holders of record of shares of Common Stock shall be
entitled to exchange such shares for securities or other property, if any,
deliverable upon such reclassification, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up. The failure by the Company or
the Warrant Agent to give such notice or any defect therein shall not affect the
legality or validity of any distribution, right, option, warrant, consolidation,
merger, conveyance, transfer, dissolution, liquidation or winding up, or the
vote upon any action.
The Company shall give prompt written notice to the Warrant Agent and
shall cause the Warrant Agent, on behalf of and at the expense of the Company to
give to each Holder written notice of any determination to make a distribution
or dividend to the holders of its Common Stock of any assets (including cash),
debt securities, preferred stock, or any rights or warrants to purchase debt
securities, preferred stock, assets or other securities (other than Common
Stock, or rights, options, or warrants to purchase Common Stock) of the Company,
which notice shall state the nature and amount of such planned dividend or
distribution and the record date therefor, and shall be received by the Holders
at least 30 days prior to such record date therefor.
-21-
Nothing contained in this Agreement or in any Warrant Certificate shall
be construed as conferring upon the Holders the right to vote or to consent or
to receive notice as shareholders in respect of the meetings of shareholders or
the election of directors of the Company or any other matter, or any rights
whatsoever as shareholders of the Company.
Section 15. Notices to the Company and Warrant Agent. Any notice or
----------------------------------------
demand authorized by this Agreement to be given or made by the Warrant Agent or
by any Holder to or on the Company shall be sufficiently given or made when
received at the office of the Company expressly designated by the Company as its
office for purposes of this Agreement (until the Warrant Agent is otherwise
notified in accordance with this Section 15 by the Company), as follows:
If to the Company:
Gothic Energy Corporation
0000 Xxxxx Xxxxx Xxxxxx - Xxxxx 000
Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxx, President
With a copy to:
Xxxxxxx X. Xxxxxx, P.A.
000 Xxxxx Xxxxxxxx Xxxxxx - Xxxxx 000
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esquire
Any notice pursuant to this Agreement to be given by the Company or by
any Holder(s) to the Warrant Agent shall be sufficiently given when received by
the Warrant Agent at the address appearing below (until the Company is otherwise
notified in accordance with this Section by the Warrant Agent).
American Stock Transfer & Trust Company
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxxx
Facsimile Number: (000) 000-0000
Section 16. Supplements and Amendments. The Company and the Warrant
--------------------------
Agent may from time to time supplement or amend this Agreement without the
approval of any holders of Warrants in order to cure any ambiguity or to correct
or supplement any provision contained herein which may be defective or
inconsistent with any other provision herein, or to make any
-22-
other provisions in regard to matters or questions arising hereunder which
the Company and the Warrant Agent may deem necessary or desirable and which
shall not in any way adversely affect the interests of any holder of Warrants.
Any amendment or supplement to this Agreement that has a material adverse effect
on the interests of holders shall require the written consent of registered
holders of a majority of the then outstanding warrants. The consent of each
holder of a Warrant affected shall be required for any amendment pursuant to
which the Exercise Price would be increased or the number of Warrant Shares
purchasable upon exercise of Warrants would be decreased (not including
adjustments contemplated hereunder). The Warrant Agent shall be entitled to
receive and shall be fully protected in relying upon an officers' certificate
and opinion of counsel as conclusive evidence that any such amendment or
supplement is authorized or permitted hereunder, that it is not inconsistent
herewith, and that it will be valid and binding upon the Company in accordance
with its terms.
Section 17. Concerning the Warrant Agent. The Warrant Agent
----------------------------
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the Holders, by
their acceptance of Warrants, shall be bound:
(a) The statements contained herein and in the Warrant
Certificate shall be taken as statements of the Company, and the Warrant Agent
assumes no responsibility for the correctness of any of the same except such as
describe the Warrant Agent or any action taken by it. The Warrant Agent assumes
no responsibility with respect to the distribution of the Warrants except as
herein otherwise provided.
(b) The Warrant Agent shall not be responsible for any failure
of the Company to comply with the covenants contained in this Agreement or in
the Warrants to be complied with by the Company.
(c) The Warrant Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
(through its employees) or by or through its attorneys or agents (which shall
not include its employees) and shall not be responsible for the misconduct of
any agent appointed with due care.
(d) The Warrant Agent may consult at any time with legal
counsel satisfactory to it (who may be counsel for the Company), and the Warrant
Agent shall incur no liability or responsibility to the Company or to any Holder
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in accordance with the opinion or the advice of such counsel.
-23-
(e) Whenever in the performance of its duties under this Agreement the
Warrant Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless such evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the Chairman of the Board, the President,
Chief Financial Officer, one of the Vice Presidents, the Treasurer or the
Secretary of the Company and delivered to the Warrant Agent; and such
certificate shall be full authorization to the Warrant Agent for any action
taken or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(f) The Company agrees to pay the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent in the performance
of its duties under this Agreement upon receipt of satisfactory evidence
thereof, to reimburse the Warrant Agent for all reasonable expenses, taxes and
governmental charges and other charges of any kind and nature incurred by the
Warrant Agent (including reasonable fees and expenses of the Warrant Agent's
counsel and agents) in the performance of its duties under this Agreement, and
to indemnify the Warrant Agent and save it harmless against any and all
liabilities, including judgments, costs and counsel fees, for anything done or
omitted by the Warrant Agent in the performance of its duties under this
Agreement, except as a result of the Warrant Agent's negligence or bad faith.
(g) The Warrant Agent shall be under no obligation to institute any
action, suit or legal proceeding or to take any other action likely to involve
expense unless the Company or one or more Holders shall furnish the Warrant
Agent with reasonable security and indemnity satisfactory to the Warrant Agent
for any costs and expenses which may be incurred, but this provision shall not
affect the power of the Warrant Agent to take such action as the Warrant Agent
may consider proper, whether with or without any such security or indemnity. All
rights of action under this Agreement or under any of the Warrants may be
enforced by the Warrant Agent without the possession of any of the Warrants or
the production thereof at any trial or other proceeding relative thereto, and
any such action, suit or proceeding instituted by the Warrant Agent shall be
brought in its name as Warrant Agent, and any recovery of judgment shall be for
the ratable benefit of the Holders, as their respective rights or interests may
appear.
(h) The Warrant Agent and any stockholder, director, officer or
employee of the Warrant Agent may buy, sell or deal in any of the Warrants or
other securities of the Company or become pecuniarily interested in any
transactions in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Warrant Agent under this Agreement or such director, officer or employee.
Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company or for any other legal entity including, without
limitation, acting as Transfer Agent or as a lender to the Company or an
affiliate thereof.
-24-
(i) The Warrant Agent shall act hereunder solely as agent, and its
duties shall be determined solely by the provisions hereof. The Warrant Agent
shall not be liable for anything which it may do or refrain from doing in
connection with this Agreement except for its own negligence or bad faith.
(j) The Warrant Agent will not incur any liability or responsibility
to the Company or to any Holder for any action taken in reliance on any notice,
resolution, waiver, consent, order, certificate, or other paper, document or
instrument reasonably believed by it to be genuine and to have been signed, sent
or presented by the proper party or parties,
(k) The Warrant Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Warrant Agent) or in respect of the validity or
execution of any Warrant (except its countersignature thereof), nor shall the
Warrant Agent by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Warrant Shares (or other
stock) to be issued pursuant to this Agreement or any Warrant, or as to whether
any Warrant Shares (or other stock) will, when issued, be validly issued, fully
paid and non-assessable, or as to the Exercise Price or the number or amount of
Warrant Shares or other securities or other property issuable upon exercise of
any Warrant.
(l) The Warrant Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the President, any Vice President or the Secretary of the
Company, and to apply to such officers for advice or instructions in connection
with its duties, and shall not be liable for any action taken or suffered to be
taken by it in good faith and without negligence in accordance with instructions
of any such officer or officers.
Section 18. Change of Warrant Agent. The Warrant Agent may resign at
-----------------------
any time and be discharged from its duties under this Agreement by giving to the
Company 30 days' notice in writing. The Warrant Agent may be removed by like
notice to the Warrant Agent from the Company. If the Warrant Agent shall resign
or be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Warrant Agent, If the Company shall fail to make such
appointment within a period of 30 days after such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Warrant Agent or by any Holder (who shall with such notice submit
his Warrant for inspection by the Company), then any Holder may apply to any
court of competent jurisdiction for the appointment of a successor to the
Warrant Agent. Pending appointment of a successor Warrant Agent, either by the
Company or by such court, the duties of the Warrant Agent shall be carried out
by the Company. Any successor Warrant Agent, whether appointed by the Company or
such a court, shall be a bank or trust company in good standing, incorporated
under the laws of the
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United States of America or any State thereof; or the District of Columbia and
having at the time of its appointment as warrant agent a combined capital and
surplus of at least $10,000,000. After appointment, the successor warrant agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Warrant Agent without further act or deed; but
the former Warrant Agent shall deliver and transfer to the successor warrant
agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for such purpose. Failure
to file any notice provided for in this Section 18, however, or any defect
therein, shall not affect the legality or validity of the resignation or removal
of the Warrant Agent or the appointment of the successor warrant agent, as the
case may be. In the event of such resignation or removal, the Company or the
successor warrant agent shall mail by first class mail, postage prepaid, to each
Holder, written notice of such removal or resignation and the name and address
of such successor warrant agent.
Section 19. Identity of Transfer Agent. Forthwith upon the appointment
--------------------------
of any new Transfer Agent for the Common Stock, or any other shares of the
Company's capital stock issuable upon the exercise of the Warrants, the Company
shall promptly file with the Warrant Agent a statement setting forth the name
and address of such Transfer Agent.
Section 20. Registration Rights. The Holder shall be entitled to all
-------------------
of the benefits of that certain Common Stock Registration Rights Agreement among
the Company and the Purchasers dated as January 23, 1998, in connection with the
Common Stock to be issued in connection with the exercise of the Warrants.
Section 21. Successors. All the covenants an provisions of this
----------
Agreement by or for the benefit of the Company, the Warrant Agent or any holder
of Warrants shall bind and inure to the benefit of their respective successors
and assigns hereunder .
Section 22. Termination. This Agreement shall terminate at 5:00 p.m.
-----------
New York City time on January 23, 2003. Notwithstanding the foregoing, this
Agreement will terminate on any earlier date if all Warrants have been exercised
pursuant to this Agreement.
Section 23. GOVERNING LAW. THIS AGREEMENT AND EACH WARRANT CERTIFICATE
-------------
ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE
STATE OF NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF SAID STATE, WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF.
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Section 24. Benefits of This Agreement. Nothing in this Agreement
--------------------------
shall be construed to give to any person or corporation other than the Company,
the Warrant Agent and the registered Holders of the Warrant Certificates any
legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the
Warrant Agent and the registered Holders of the Warrant Certificates.
Section 25. Counterparts. This Agreement may be executed in any number
------------
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 26. Headings. The headings in this Agreement are for
--------
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
-27-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
Gothic Energy Corporation
By: /s/Xxxxxxx Xxxxx
----------------
Xxxxxxx Xxxxx, President
American Stock Transfer & Trust Company,
as Warrant Agent
By: /s/Xxxxxxx Xxxxxx
-----------------
Name: Xxxxxxx Xxxxxx
Title: Vice President
-28-
EXHIBIT "A"
FORM OF WARRANT CERTIFICATE
(FACE)
(THIS SECURITY IS A GLOBAL CERTIFICATE AND IS REGISTERED IN THE NAME OF A
DEPOSITARY OR A NOMINEE OF A DEPOSITARY OR A SUCCESSOR DEPOSITARY. THIS
SECURITY IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON
OTHER THAN THE DEPOSITARY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE WARRANT AGREEMENT DATED AS OF JANUARY 23, 1998 BETWEEN THE
COMPANY AND THE WARRANT AGENT (THE "WARRANT AGREEMENT"), AND NO TRANSFER OF THIS
SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE DEPOSITARY TO
A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY
OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE WARRANT AGREEMENT. UNLESS THIS CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (A NEW
YORK CORPORATION) ("DTC") TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER
ENTITY AS TS 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.)
This paragraph is to be included only if the Warrant is in global form.
EXERCISABLE ON OR AFTER THE EXERCISABILITY DATE
AND ON OR BEFORE JANUARY 23, 2003
No. __________ __________ Warrants
WARRANT CERTIFICATE
GOTHIC ENERGY CORPORATION
This Warrant Certificate certifies that _______ or registered assigns,
is the registered holder of Warrants expiring January 23, 2003 (the "Warrants")
to purchase _______ shares of Common Stock (the "Common Stock") of Gothic Energy
Corporation, an Oklahoma corporation (the "Company"). Each Warrant entitles the
holder upon exercise to receive from the Company on or after the Exercisability
Date and on or before 5:00 p.m., New York City time, on January 23, 2003, one
fully paid and non-assessable share of Common Stock (a "Warrant Share") at the
initial exercise price (the "Exercise Price") of the lesser of (a) $2.75 per
share or (b) the average of the daily closing bid prices (as defined in Section
12(d)) for each Business Day during the period commencing 5 Business Days before
the date of exercise and ending on the date one day prior to such date, to be
reset to $.01 on March 31, 1998, as provided in Section 2.1 of the Purchase
Agreement, in the event the Preferred Stock remains outstanding on that date,
payable in lawful money of the United States of America upon surrender of this
Warrant Certificate and payment of the Exercise Price at the office or agency of
the Warrant Agent, subject only to the conditions set forth herein and in the
Warrant Agreement referred to on the reverse hereof. The Exercise Price and
number of Warrant Shares issuable upon exercise of the Warrants are subject to
adjustment. upon the occurrence of certain events as set forth in the Warrant
Agreement.
No Warrant may be exercised before the Exercisability Date or after
5:00 p.m., New York City time, on January 23, 2003 and to the extent not
exercised by such time such warrants shall become void.
This Warrant Certificate shall not be valid unless countersigned by the
Warrant Agent, as such term is used in the Warrant Agreement.
This Warrant Certificate shall be governed and construed in accordance
with the internal laws of the State of New York.
-2-
IN WITNESS WHEREOF, Gothic Energy Corporation has caused this Warrant
Certificate to be signed by its President and by its Secretary, each by a
facsimile of his signature, and has caused a facsimile of its corporate seal to
be affixed hereunto or imprinted hereon.
Dated:
Gothic Energy Corporation
By: ____________________________________
Xxxxxxx Xxxxx, President
By: ____________________________________
Xxxx Xxxxxxxxx, Secretary
Countersigned:
American Stock Transfer & Trust Company,
as Warrant Agent
By: _________________________________________
Authorized Signature
-3-
FORM OF WARRANT CERTIFICATE
(REVERSE)
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring January 23, 2003, entitling the holder on
exercise to receive shares of Common Stock of the Company (the "Common Stock"),
$.01 par value, and are issued or to be issued pursuant to a Warrant Agreement
dated as of January 23, 1998 (the "Warrant Agreement"), duly executed and
delivered by the Company to American Stock Transfer & Trust Company, as warrant
agent (the "Warrant Agent"), which Warrant Agreement is hereby incorporated by
reference in and made a part of this instrument and is hereby referred to for a
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Warrant Agent, the Company and the holders (the
words "holders" or "holder" meaning the registered holders or registered holder)
of the Warrants. A copy of the Warrant Agreement may be obtained by the holder
hereof upon written request to the Company.
Warrants may be exercised at any time on or after the "Exercisability
Date" and on or before January 23, 2003, subject to extension as provided in the
Warrant Agreement. The holder of Warrants evidenced by this Warrant Certificate
may exercise them by surrendering this Warrant Certificate, with the form of
election to purchase set forth hereon properly completed and executed, together
with payment of the Exercise Price in cash at the office of the Warrant Agent.
In the event that upon any exercise of Warrants evidenced hereby the number of
Warrants exercised shall be less than the total number of Warrants evidenced
hereby, there shall be issued to the holder hereof or his assignee a new Warrant
Certificate evidencing the number of Warrants not exercised. No adjustment
shall be made for any dividends on any Common Stock issuable upon exercise of
this Warrant.
The Warrant Agreement provides that upon the occurrence of certain
events the number of Warrants set forth on the face hereof may, subject to
certain conditions, be adjusted. No fractions of a share of Common Stock will
be issued upon the exercise of any Warrant, but the Company will pay the cash
value thereof determined as provided in the warrant Agreement.
The holders of the Warrants are entitled to certain, registration
rights with respect to the Common Stock purchasable upon exercise thereof. Such
registration rights are set forth in the Common Stock Registration Rights
Agreement, dated as of January 23, 1998, among the Company and the parties named
therein.
-4-
Warrant Certificates, when surrendered at the office of the Warrant
Agent by the registered holder thereof in person or by legal representative or
attorney duly authorized in writing, may be exchanged, in the manner and subject
to the limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder(s) thereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, of any distribution to the
holder(s) hereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company.
-5-
FORM OF ELECTION TO PURCHASE
(TO BE EXECUTED UPON EXERCISE OF WARRANT)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive __________ shares of Common
Stock and herewith tenders payment for such shares to the order of Gothic Energy
Corporation in the amount of $__________ in accordance with the terms hereof.
The undersigned requests that a certificate for such shares be registered in the
name of _________________________, whose address is _________________________,
and that such shares be delivered to _________________________, whose address is
_________________________. If said number of shares is less than all of the
shares of Common Stock purchasable hereunder, the undersigned requests that a
new Warrant Certificate representing the remaining balance of such shares be
registered in the name of _________________________, whose address is
_________________________, and that such Warrant Certificate be delivered to
_________________________, whose address is _________________________.
Signature:
Date: __________________________________________
Signature Guaranteed:
__________________________________________
-6-
SCHEDULE OF EXCHANGES OF CERTIFICATED WARRANTS
The following exchanges of a part of this Global Warrant for certificated
Warrants have been made:
Number of
Amount of AMOUNT OF WARRANTS
DECREASE INCREASE of this Global SIGNATURE OF
IN NUMBER OF IN NUMBER OF WARRANT FOLLOWING AUTHORIZED
WARRANTS OF THIS WARRANTS OF THIS SUCH DECREASE OFFICER
DATE OF EXCHANGE GLOBAL WARRANT GLOBAL WARRANT (OR INCREASE) OF WARRANT AGENT
---------------- ---------------- ---------------- ---------------- ----------------
This is to be included only if the Warrant is in global form.
-7-
EXHIBIT "B"
CERTIFICATE TO BE DELIVERED UPON
EXCHANGE OR REGISTRATION OF RESTRICTED SECURITIES
Re: Warrants to Purchase Common Stock, par value $.01 per share (the
"Warrants"), of Gothic Energy Corporation
This Certificate relates to __________ Warrants held in book-entry or
definitive form by _________________________ (the "Transferor").
The Transferor (check applicable box):
[ ] has requested the Transfer Agent by written order to deliver in
exchange for its beneficial interest in the Global Certificate held by the
Depositary a Warrant or Warrants in definitive registered form equal to its
beneficial interest in Warrants represented by such Global Certificate (or the
portion thereof indicated above); or
[ ] has requested the Transfer Agent by written order to exchange or
register the transfer of a Warrant or Warrants.
In connection with such request, the Transferor does hereby certify that
Transferor is familiar with the Warrant Agreement (the "Agreement") relating to
the Warrants and the restrictions on transfers thereof as provided in Section 6
of such Agreement, and that the transfer of this Warrant requested hereby does
not require registration under the Securities Act (as defined below) because:
[ ] Such Warrants is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 6(a)(y)(A) of the Agreement).
[ ] Such Warrant is being transferred to a qualified institutional buyer
(as defined in Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act")), in reliance on Rule 144A or in accordance with Regulation S
under the Securities Act. If such transfer is in accordance with Regulation S,
an opinion of counsel to the effect that such transfer does not require
registration under the Securities Act accompanies this Certificate.
-8-
[ ] Such Warrant is being transferred in accordance with Rule 144 under
the Securities Act. An opinion of counsel to the effect that such transfer does
not require registration under the Securities Act accompanies this Certificate.
[ ] Such Warrant is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Securities Act,
other than Rule 144A or Rule 144 or Regulation S under the Securities Act. An
opinion of counsel to the effect that such transfer does not require
registration under the Securities Act accompanies this Certificate.
[Insert Name of Transferor]
Date: By:
------------------------------------
-9-
EXHIBIT "C"
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS
SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A)
IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE ACT)
OR (B) IT IS AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a) UNDER THE ACT)
(AN "ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS
SECURITY IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT WITHIN TWO
YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER
THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES (B) INSIDE
THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE
000X XXXXX XXX XXX, (X) XXXXXX XXX XXXXXX XXXXXX TO AN ACCREDITED INVESTOR THAT,
PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S.
BROKER-DEALER) TO THE TRUSTEE OR TRANSFER AGENT A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE WARRANT
AGENT FOR THIS SECURITY), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE ACT, (E) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE ACT (IF AVAILABLE) OR
(F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND (3) AGREES
THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND, IN CONNECTION WITH ANY TRANSFER OF
THIS SECURITY WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY, IF
THE PROPOSED TRANSFEREE IS AN ACCREDITED INVESTOR OR SUCH TRANSFER IS MADE IN
ACCORDANCE WITH CLAUSES (D) OR (E) ABOVE, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE WARRANT AGENT AND THE COMPANY SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATTON REQUIREMENTS OF THE ACT. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE
THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE ACT.
-10-
EXHIBIT "D"
TRANSFEREE LETTER OF REPRESENTATION
Gothic Energy Corporation
0000 Xxxxx Xxxxx Xxxxxx - Xxxxx 000
Xxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
In connection with our proposed purchase of Warrants to purchase
Common Stock (the "Securities") of Gothic Energy Corporation (the "Company"), we
confirm that:
1. We understand that any subsequent transfer of the Securities is
subject to certain restrictions and conditions set forth in the Warrant
Agreement dated as of January 23, 1998 relating to the Securities and the
undersigned agrees to be bound by, and not to resell, pledge or otherwise
transfer the Securities except in compliance with, such restrictions and
conditions and the Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the Securities have not been registered under
the Securities Act, and that the Securities may not be offered or sold except as
permitted in the following sentence. We agree, on our own behalf and on behalf
of any accounts for which we are acting as hereinafter stated, that if we should
sell any Securities within two years after the original issuance of the
Securities, we will do so only (A) to the Company or any subsidiary thereof, (B)
inside the United States to a "qualified institutional buyer" in compliance with
Rule 144A under the Securities Act, (C) inside the United States to an
"accredited investor" (as defined below) that, prior to such transfer, furnishes
to you a signed letter substantially in the form of this Letter, (D) outside the
United states to a foreign person in compliance with Rule 904 of Regulation S
under the Securities Act, (E) pursuant to the exemption from registration
provided by Rule 144 under the Securities Act (if available), or (F) pursuant to
an effective registration statement under the Securities Act, and we further
agree to provide to any person purchasing any of the securities from us a notice
advising such purchaser that resales of the Securities are restricted as stated
herein.
-11-
3. We understand that, on any proposed resale of any Securities, we will be
required to furnish to the Company such certifications, legal opinions and other
information as the Company may reasonably require to confirm that the proposed
sale complies with the foregoing restrictions. We further understand that the
Securities purchased by us will bear a legend to the foregoing effect.
4. We are an "accredited investor" (as defined in Rule 501(a) under the
Securities Act) and have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of our investment in
the Securities, and we and any accounts for which we are acting are each able to
bear the economic risk of our or its investment.
5. We are acquiring the Securities purchased by us for our own account or
for one or more accounts (each of which is an "accredited investor") as to each
of which we exercise sole investment discretion.
The Company is entitled to rely upon this letter and is irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceedings or official inquiry with respect to the
matters covered hereby.
Very truly yours,
__________________________________________
(Name of Purchaser)
Date: By: __________________________________________
-12-
Upon transfer the Securities would be registered in the name of the new
beneficial owner as follows:
Name: ________________________________________________________________________
Address: __________________________________________________________________
Taxpayer ID Number:
_____________________________________________________________
-13-
