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EXHIBIT 99.02
OGE ENERGY CORP.
DESCRIPTION OF COMMON STOCK
The following statements are summaries of certain provisions of the
Restated Certificate of Incorporation of OGE Energy Corp. (the "Company") and
are subject to the detailed provisions thereof. Such summaries do not purport to
be complete, and reference is made to the Company's Restated Certificate of
Incorporation (which is filed as Exhibit 3.01 to the Company's Form 10-K for the
year ended December 31, 1996, File No. 1-12579) for a full and complete
statement of such provisions.
AUTHORIZED SHARES
Under the Company's Restated Certificate of Incorporation, the Company
is authorized to issue 125,000,000 shares of Common Stock, par value $.01 per
share (the "Common Stock"), of which approximately 77,863,370 shares were
outstanding on September 30, 2000.
The Company also is authorized to issue 5,000,000 shares of preferred
stock, par value $.01 per share (the "Preferred Stock"). As discussed below
under the caption "Rights to Purchase Series A Preferred Stock," the Company has
created a series of Preferred Stock designated as "Series A Preferred Stock" and
the number of shares constituting such series is 1,250,000. No shares of such
Series A Preferred Stock and no shares of any other Preferred Stock are
currently outstanding. Preferred Stock may be issued in the future in such
series as may be designated by the Company's Board of Directors. In creating any
such series, the Company's Board of Directors has the authority to fix the
rights and preferences of each series with respect to, among other things, the
dividend rate, redemption provisions, liquidation preferences, sinking fund
provisions, conversion rights and voting rights.
DIVIDEND RIGHTS
Subject to the prior payment in full of all accrued and unpaid
dividends on the Series A Preferred Stock and the possible prior rights of
holders of other Preferred Stock that may be issued in the future, holders of
the Company's Common Stock are entitled to receive such dividends as may be
declared from time to time by the Board of Directors of the Company out of funds
legally available therefor. The funds required by the Company to enable it to
pay dividends on its Common Stock are expected to be derived principally from
dividends paid by Oklahoma Gas and Electric Company, the Company's principal
subsidiary ("OG&E"), on OG&E's common stock. The Company's ability to receive
dividends on OG&E's common stock is subject to the prior rights of the holders
of OG&E preferred stock and the covenants of OG&E's certificate of incorporation
and its debt instruments limiting the ability of OG&E to pay dividends.
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Under OG&E's certificate of incorporation if any shares of Preferred
Stock, Cumulative Preferred Stock or $25 Preferred Stock are outstanding, unless
the capital represented by the OG&E common stock (including premiums on capital
stock and retained earnings accounts) is 25% or more of total capital (which
also includes debt maturing more than one year after date of issue), dividends
(other than dividends payable in OG&E common stock) or distributions on, or
acquisitions for value of, OG&E common stock may not exceed 75% of net income
for the preceding twelve-month period after deducting dividends accruing on OG&E
preferred stock during the period, and if the capital represented by the OG&E
common stock is less than 20%, may not exceed 50% of such net income. No portion
of the retained earnings of OG&E is presently restricted by this provision.
OG&E's certificate of incorporation further provides that no dividend may be
declared or paid on the OG&E common stock until all amounts required to be paid
or set aside for any sinking fund for the redemption or purchase of OG&E
Cumulative Preferred Stock, par value $25 per share, have been paid or set
aside. Currently, no shares of Preferred Stock, Cumulative Preferred Stock or
$25 Preferred Stock are outstanding.
VOTING RIGHTS
Each holder of Common Stock and each holder of Series A Preferred Stock
that may be issued in the future is entitled to one vote per share upon all
matters upon which shareowners have the right to vote. The Board of Directors of
the Company has the authority to fix conversion and voting rights for any new
series of Preferred Stock (including the right to elect directors upon a failure
to pay dividends), provided that no share of Preferred Stock can have more than
one vote per share. Notwithstanding the foregoing, if any Series A Preferred
Stock is issued in the future and if and when dividends payable on such Series A
Preferred Stock that may be issued in the future shall be in default for six
full quarterly dividends and thereafter until all defaults shall have been paid,
the holders of the Series A Preferred Stock, voting separately as one class, to
the exclusion of the holders of Common Stock, will be entitled to elect two (2)
directors of the Company.
The Company's Restated Certificate of Incorporation also contains "fair
price" provisions, which require the approval by the holders of at least 80% of
the voting power of the Company's outstanding Voting Stock (as defined below) as
a condition for mergers, consolidations, sales of substantial assets, issuances
of capital stock and certain other business combinations and transactions
involving the Company and any substantial (10% or more) holder of the Company's
Voting Stock unless the transaction is either approved by a majority of the
members of the Company's Board of Directors who are unaffiliated with the
substantial holder or certain minimum price and procedural requirements are met.
The provisions summarized in the foregoing sentence may be amended only by the
approval of the holders of at least 80% of the voting power of the Company's
outstanding Voting Stock. The Company's Voting Stock consists of all outstanding
shares of the Company entitled to vote generally in the election of directors
and currently consists of the Common Stock.
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The Voting Stock of the Company does not have cumulative voting rights
for the election of directors. Subject to the rights of the holders of the
Series A Preferred Stock (if any are issued) to elect directors under certain
circumstances, the Company's Restated Certificate of Incorporation and By-Laws
contain provisions stating that: (1) the Board of Directors shall be divided
into three classes as nearly equal in number as possible with staggered terms of
office so that only approximately one-third of the directors are elected at each
annual meeting of shareowners; (2) directors may be removed only with the
approval of the holders of at least 80% of the voting power of the shares of the
Company generally entitled to vote; (3) any vacancy on the Board of Directors
shall be filled only by the remaining directors then in office, though less than
a quorum; (4) advance notice of introduction by shareowners of business at
annual shareowner meetings and of shareowner nominations for the election of
directors shall be given and that certain information be provided with respect
to such matters; (5) shareowner action may be taken only at an annual meeting of
shareowners or a special meeting of shareowners called by the President or the
Board of Directors; and (6) the foregoing provisions may be amended only by the
approval of the holders of at least 80% of the voting power of the shares
generally entitled to vote. These provisions, along with the "fair price"
provisions discussed above and the Rights described below, may deter attempts to
change control of the Company (by proxy contest, tender offer or otherwise) and
will make more difficult a change in control of the Company that is opposed by
the Company's Board of Directors.
LIQUIDATION RIGHTS
Subject to the prior rights of the holders of the Series A Preferred
Stock that may be issued in the future and the possible prior rights of holders
of other Preferred Stock that may be issued in the future in the event of
liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary, the holders of the Common Stock are entitled to receive the
remaining assets and funds pro rata, according to the number of shares of Common
Stock held.
OTHER PROVISIONS
The Board of Directors may allot and issue shares of Common Stock for
such consideration, not less than the par value thereof, as it may from time to
time determine. No holder of Common Stock has the preemptive right to subscribe
for or purchase any part of any new or additional issue of stock or securities
convertible into stock. The Common Stock of the Company is not subject to
further calls or to assessment by the Company.
RIGHTS TO PURCHASE SERIES A PREFERRED STOCK
On August 7, 1995, the Board of Directors of the Company declared a
dividend of one preferred stock purchase right (a "Right" or "Rights") for each
outstanding share of Common Stock of the Company. As a result of the two-for-one
stock split paid on June 15, 1998, one-half a Right automatically trades with
each share of Common Stock. The Board of Directors of the Company subsequently
determined it to be in the best interests of the Company and its
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shareholders to amend and restate the Company's Rights Agreement to extend
its term to December 11, 2010 and to change the Purchase Price to $130.00. If
and when the Rights become exercisable, each Right will entitle the holder of
record to purchase from the Company one one-hundredth of a share of Series A
Preferred Stock, par value $.01 per share ("Series A Preferred Stock") of the
Company, at a price of $130 per one one-hundredth of a share (the "Purchase
Price"), although the price and the securities to be purchased are subject to
adjustment as described below. The description and terms of the Rights are
set forth in an Amended and Restated Rights Agreement dated October 10, 2000
(the "Rights Agreement") between the Company and ChaseMellon Shareholder
Services LLC, as Rights Agent (the "Rights Agent").
Initially, (i) the Rights will not be exercisable, (ii) certificates
will not be sent to shareowners, (iii) the Rights will be evidenced by the
Common Stock certificates, (iv) the Rights will automatically trade with the
Common Stock, (v) the Rights will be transferred with and only with such Common
Stock certificates, (vi) new Common Stock certificates will contain a notation
incorporating the Rights Agreement by reference and (vii) the surrender for
transfer of any certificates for Common Stock outstanding will also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificate.
Separate certificates representing the Rights will be distributed as
soon as practicable after the "Distribution Date," which is the close of
business on the earlier of:
(i) the tenth day after a public announcement (or, if earlier, the
date a majority of the Board of Directors of the Company
becomes aware) that a person or group of affiliated or
associated persons acquired, or obtained the right to acquire,
beneficial ownership of Common Stock or other securities of
the Company representing 20% or more of the voting power of
all securities of the Company then outstanding generally
entitled to vote for the election of directors ("Voting
Power") (such person or group being called an "Acquiring
Person" and such date of first public announcement being
called the "Stock Acquisition Date"), or
(ii) the tenth day after the commencement of, or public
announcement of an intention to commence, a tender or exchange
offer the consummation of which would result in the ownership
of 20% or more of the outstanding Voting Power (the earlier of
the dates in clause (i) or (ii) being called the "Distribution
Date").
As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Company's Common Stock as of the close of business on
the Distribution Date, and such separate certificates alone will evidence the
Rights from and after the Distribution Date.
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Even if they have acquired, or obtained the right to acquire,
beneficial ownership of 20% or more of the Voting Power of the Company, each of
the following persons (an "Exempt Person") will not be deemed to be an Acquiring
Person: (i) OG&E, the Company, any subsidiary of the Company, any employee
benefit plan or employee stock plan of the Company or of any subsidiary of the
Company or of OG&E; and (ii) any person who becomes an Acquiring Person solely
by virtue of a reduction in the number of outstanding shares of Common Stock,
unless and until such person shall become the beneficial owner of, or make a
tender offer for any additional shares of Common Stock.
The holders of the Rights are not required to take any action until the
Rights become exercisable. The Rights are not exercisable until the Distribution
Date. The Rights will expire at the close of business on December 11, 2010,
unless earlier redeemed or exchanged by the Company as described below.
In order to protect the value of the Rights to the holders, the
Purchase Price and the number of shares of Series A Preferred Stock (or other
securities or property) issuable upon exercise of the Rights are subject to
adjustment from time to time (i) in the event of a stock dividend on, or
subdivision, combination or reclassification of, the Company's Common Stock or
Series A Preferred Stock, (ii) upon the grant to holders of the Series A
Preferred Stock of certain rights or warrants to subscribe for Series A
Preferred Stock or convertible securities at less than the current market price
of the Series A Preferred Stock or (iii) upon the distribution to holders of the
Series A Preferred Stock of evidences of indebtedness or assets (excluding
dividends payable in Series A Preferred Stock) or of subscription rights or
warrants (other than those referred to above).
These adjustments are called anti-dilution provisions and are intended
to ensure that a holder of Rights will not be adversely affected by the
occurrence of such events. With certain exceptions, the Company is not required
to adjust the Purchase Price until cumulative adjustments require a change of at
least 1% in the Purchase Price.
In the event (i) any Person (other than an Exempt Person) becomes an
Acquiring Person (except pursuant to an offer for all outstanding shares of
Common Stock that the independent directors determine prior to the time such
offer is made to be fair to and otherwise in the best interest of the Company
and its shareowners) or (ii) any Exempt Person who is the beneficial owner of
20% or more of the outstanding Voting Power of the Company fails to continue to
qualify as an Exempt Person, then each holder of record of a Right, other than
the Acquiring Person, will thereafter have the right to receive, upon payment of
the Purchase Price, Common Stock (or, in certain circumstances, cash, property
or other securities of the Company) having a market value at the time of the
transaction equal to twice the Purchase Price. Rights are not exercisable
following such event, however, until such time as the Rights are no longer
redeemable by the Company as set forth below. Any Rights that are or were at any
time, on or after the Distribution Date, beneficially owned by an Acquiring
Person shall become null and void.
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For example, at an exercise price of $130 per Right, each Right not
owned by an Acquiring Person (or by certain related parties) following an event
set forth in the preceding paragraph would entitle its holder to purchase $260
worth of Common Stock (or other consideration, as noted above) for $130.
Assuming that the Common Stock had a per share value of $20 at such time, the
holder of each valid Right would be entitled to purchase 13 shares of Common
Stock for $130.
Subject to certain limited exceptions, after the Rights have become
exercisable, if (i) the Company is acquired in a merger or other business
combination (in which any shares of the Company's Common Stock are changed into
or exchanged for other securities or assets) or (ii) more than 50% of the assets
or earning power of the Company and its subsidiaries (taken as a whole) are sold
or transferred in one or a series of related transactions, the Rights Agreement
provides that proper provision shall be made so that each holder of record of a
Right will have the right to receive, upon payment of the Purchase Price, that
number of shares of common stock of the acquiring company having a market value
at the time of such transaction equal to two times the Purchase Price.
To the extent that insufficient shares of Common Stock are available
for the exercise in full of the Rights, holders of Rights will receive upon
exercise shares of Common Stock to the extent available and then other
securities of the Company, including units of shares of Series A Preferred Stock
with terms substantially comparable to those of the Common Stock, property, debt
securities, or cash, in proportions determined by the Company, so that the
aggregate value received is equal to twice the Purchase Price. The Company,
however, shall not be required to issue any cash, property or debt securities
upon exercise of the Rights to the extent their aggregate value would exceed the
amount of cash the Company would otherwise be entitled to receive upon exercise
in full of the then exercisable Rights.
No fractional shares of Series A Preferred Stock or Common Stock will
be required to be issued upon exercise of the Rights and, in lieu thereof, a
payment in cash may be made to the holder of such Rights equal to the same
fraction of the current market value of a share of Series A Preferred Stock or,
if applicable, Common Stock.
At any time until the earlier of (i) ten days after the Stock
Acquisition Date (subject to extension by the Board of Directors) or (ii) the
date the Rights are exchanged pursuant to the Rights Agreement, the Company may
redeem the Rights in whole, but not in part, at a price of $0.01 per Right (the
"Redemption Price"). Immediately upon the action of the Board of Directors of
the Company authorizing redemption of the Rights, the right to exercise the
Rights will terminate, and the only right of the holders of Rights will be to
receive the Redemption Price without any interest thereon.
At any time after any Person becomes an Acquiring Person, the Board of
Directors may, at its option, exchange all or part of the outstanding Rights
(other than Rights held by the
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Acquiring Person and certain related parties) for shares of Common Stock at
an exchange ratio of two shares of Common Stock per Right (subject to certain
anti-dilution adjustments). The Board may not effect such an exchange,
however, at any time any Person or group owns 50% or more of the Voting Power
of the Company. Immediately after the Board orders such an exchange, the
right to exercise the Rights shall terminate and the holders of Rights shall
thereafter only be entitled to receive shares of Common Stock at the
applicable exchange ratio.
Under presently existing federal income tax law, the issuance of the
Rights is not taxable to the Company or to shareowners and will not change the
way in which shareowners can presently trade the Company's shares of Common
Stock. If the Rights should become exercisable, shareowners, depending on then
existing circumstances, may recognize taxable income.
The Rights Agreement may be amended by the Board of Directors of the
Company. After the Distribution Date, however, the provisions of the Rights
Agreement may be amended by the Board only to cure any ambiguity, to make
changes which do not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person or an affiliate or associate of
an Acquiring Person), or to shorten or lengthen any time period under the Rights
Agreement; provided, however, that no amendment to adjust the time period
governing redemption shall be made at such time as the Rights are not
redeemable. In addition, no supplement or amendment may be made which changes
the Redemption Price, the final expiration date, the Purchase Price or the
number of one one-hundredths of a share of Series A Preferred Stock for which a
Right is exercisable, unless at the time of such supplement or amendment there
has been no occurrence of a Stock Acquisition Date and such supplement or
amendment does not adversely affect the interests of the holders of Right
Certificates (other than an Acquiring Person or an associate or affiliate of an
Acquiring Person).
Until a right is exercised, the holder, as such, will have no rights as
a shareholder of the Company, including, without limitation, the right to vote
or to receive dividends.
The Rights may have certain anti-takeover effects. The Rights will
cause substantial dilution to a person or group that attempts to acquire the
Company on terms not approved by the Board of Directors and, accordingly, will
make more difficult a change of control that is opposed by the Company's Board
of Directors. However, the Rights should not interfere with a proposed change of
control (including a merger or other business combination) approved by a
majority of the Board of Directors since the Rights may be redeemed by the
Company at $.01 per Right at any time until ten days after the Stock Acquisition
Date (subject to extension by the Board of Directors). Thus, the Rights are
intended to encourage persons who may seek to acquire control of the Company to
initiate such an acquisition through negotiations with the Board of Directors.
Nevertheless, the Rights also may discourage a third party from making a partial
tender offer or otherwise attempting to obtain a substantial equity position in,
or seeking to obtain control of, the Company. To the extent any potential
acquirors are deterred by the Rights, the Rights may have the effect of
preserving incumbent management in office.
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This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement, which is
filed as an Exhibit to the Company's Report on Form 8-K dated October 26, 2000
(File No. 1-12579), and is incorporated herein by reference.
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