Chesapeake Energy 2000 Annual Report Download - page 105

dividends in cash. Dividends are cumulative and will accrue from the date of issuance and are payable quarterly in
arrears.
At any time prior to April 30, 2000, the Series B Preferred Stock may have been redeemed at the option of
Gothic Energy in whole or in part, at 105% of the liquidation preference payable in cash out of the net proceeds from
a public or private offering of any equity security, plus accrued and unpaid dividends (whether or not declared),
which shall also be paid in cash. At any time on or after April 30, 2000, the Series B Preferred Stock may have been
redeemed at the option of Gothic Energy in whole or in part, in cash at a redemption price equal to the liquidation
preference.
Gothic Energy is required to redeem the Series B Preferred Stock on June 30, 2008 at a redemption price equal
to the liquidation preference payable in cash or, at the option of Gothic Energy, in shares of common stock valued at
the fair market value at the date of such redemption.
Except as required by Oklahoma law, the holders of Series B Preferred Stock are not entitled to vote on any
matters submitted to a vote of the stockholders of Gothic Energy.
The Series B Preferred Stock is convertible at the option of the holders on or after April 30, 2000 into the
number of fully paid and non-assessable shares of common stock determined by dividing the liquidation preference
by the higher of (i) $2.04167 or (ii) the fair market value on the date the Series B Preferred Stock is converted.
Notwithstanding the foregoing, no holder or group shall be able to convert any shares of Series B Preferred Stock to
the extent that the conversion of such shares would cause such holder or group to own more than 19.9% of the
outstanding common stock of Gothic Energy.
The Series B Preferred Stock, all of which was owned by Chesapeake prior to the Merger, remains outstanding.
As part of the Merger, the terms of the Series B Preferred Stock were amended to provide for noncumulative cash
dividends of $80 per share per annum if, as and when declared by the Board of Directors, optional redemption rights
permitting Gothic Energy to redeem the shares at any time or from time to time, and mandatory redemption for
cash on June 30, 2008. The amendment also eliminated conversion rights.
Other Warrants
In connection with past financing arrangements and as compensation for consulting and professional services,
Gothic Energy has issued other warrants to purchase its common stock.
A summary of the status of Gothic Energy's warrants as of December 31, 1997, 1998, 1999 and 2000, and
changes during the years ended December 31, 1998, 1999 and 2000 is presented below:
The following table summarizes information about Gothic Energy's warrants, which were outstanding, and
those which were exercisable, as of December 31, 2000:
-94-
Number
Outstanding Weighted
Average Price Number
Exercisable Weighted Average Exercise Price
Balance at December 31, 1997 11,404,531 $2.54 11,404,531 $2.54
Warrants granted 5,940,024 1.06
Balance at December 31, 1998 17,344,555 $2.00 17,344,555 $2.00
Warrants exercised/expired (2,639,246) 0.20
Balance at December 31, 1999 14,705,309 $2.33 14,705,309 $2.33
Warrants exercised/expired (1,233,121) 2.20
Warrants adjusted for antidilution 524,109
Balance at December 31, 2000 13,996,297 $2.40 13,996,297 $2.40
Warrants Outstanding Warrants Exercisable
Price Number Weighted Weighted Number Weighted
Range Outstanding Average Life Average Price Exercisable Average Price
$1.78 $3.00 13,996,297 1.1 years $2.40 13,996,297 $2.40