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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D/A
Under the Securities Exchange Act of 1934
(Amendment No. 2)*
GOTHIC ENERGY CORPORATION
(Name of Issuer)
(a) COMMON STOCK, PAR VALUE $.01 PER SHARE
(b) COMMON STOCK PURCHASE WARRANTS
(Title of Class of Securities)
(a) 383 482 106 (Common Stock)
(b) 383 482 114W (Warrants)
(CUSIP Number)
JOSEPH M. RINALDI
STRATUM GROUP, L.P.
650 FIFTH AVENUE
NEW YORK, NEW YORK 10019
TEL. NO.: (212) 641-1500
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
MAY 15, 1996
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box [ ].
Check the following box if a fee is being paid with the statement [ ]. (A
fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent
of the class of securities described in Item 1; and (2) has filed no
amendment subsequent thereto reporting beneficial ownership of five percent
or less of such class.) (See Rule 13d-7).
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SCHEDULE 13D/A
CUSIP Nos.
(a) 383 482 106 (Common Stock)
(b) 383 482 114W (Warrants)
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
STRATUM GROUP, L.P.
I.R.S. IDENTIFICATION NO. 13-3792279
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
N/A
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
STATE OF DELAWARE
7 SOLE VOTING POWER
NUMBER OF 1,000,000*
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 0
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 1,000,000
WITH
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,000,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.0%
14 TYPE OF REPORTING PERSON
PN
[FN]
* The Amended Warrant has no voting rights. The Amended Warrant provides
that the holder thereof has no right to vote any shares of Common
Stock until the Amended Warrant is exercised and such shares of Common
Stock are received by the holder. See Item 5(b) of this Amendment.
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Stratum Group, L.P., a Delaware limited partnership, hereby
amends the statement on Schedule 13D, dated June 2, 1995 (the "Original
Statement"), filed by Stratum Group, L.L.C. (predecessor in interest to
Stratum Group, L.P.), as amended and supplemented by Amendment No. 1
thereto (collectively, the "Original Schedule 13D"), in respect of the
Common Stock (as defined below) and warrants to purchase Common Stock of
Gothic Energy Corporation, a Delaware corporation, as set forth in this
Amendment No. 2 to the Original Schedule 13D (this "Amendment"). This
Amendment No. 2 supplements and, to the extent inconsistent therewith,
amends the information set forth in the Original Schedule 13D.
Item 1. Security and Issuer.
The class of equity securities to which this statement relates
is the Common Stock, par value $.01 per share (the "Common Stock"), and
Common Stock Purchase Warrants, in each case, of Gothic Energy Corporation,
a Delaware corporation (the "Company"). The principal executive offices of
the Company are located at 5727 South Lewis Avenue, Suite 700, Tulsa,
Oklahoma 74105.
Item 2. Identity and Background.
The name of the person filing this Amendment is Stratum Group,
L.P., a Delaware limited partnership ("Stratum", which term shall include,
as appropriate, Stratum Group, L.L.C.).
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Stratum is the successor by merger to Stratum Group, L.L.C., a Delaware
limited liability company, which filed the Original Statement.
The principal business and the principal office address of
Stratum is 650 Fifth Avenue, New York, New York 10019. The name, business
address, title and present principal occupation or employment (including
the name, principal business and address of the employer) of (a) the
general partner of Stratum, (b) each person controlling the general partner
of Stratum, and (c) each executive officer and director of any corporation
or other person ultimately in control of the general partner of Stratum,
are set forth on Schedule A hereto.
Stratum is engaged principally in the business of secured
lending to prospective clients for acquisition and development of oil and
gas reserves in the United States of America and Canada, with collateral
consisting essentially of properties being acquired or developed.
During the last five years, neither Stratum, nor, to the best
of its knowledge, any other person controlling Stratum listed on Schedule A
attached hereto, nor, to the best of its knowledge, any of the persons
listed on Schedule A attached hereto, has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or has
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject
to a judgment, decree or final order enjoining future
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violations of, or prohibited or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
On May 15, 1996, the Company issued amended Warrant No. 1A (the
"Amended Warrant") to Stratum, in exchange for Amended Warrant No. 1 and
Amended Warrant No. 2 (collectively, the "Old Warrants"). The Old Warrants
were issued by the Company to Stratum on February 7, 1996 in exchange for
Warrant No. 1 and Warrant No. 2, each of which was originally issued to
Stratum Group, L.L.C., on June 2, 1995.
The Old Warrants had amended the original Warrants to add
demand registration rights whereby the holders of the Old Warrants and, if
the same were exercised, the holders of the shares of Common Stock issued
therefor, could demand that the Company register all or any part of the Old
Warrants and/or the shares of Common Stock issuable upon the exercise of
the Old Warrants, as the case may be, under the Securities Act of 1933, as
amended (the "Securities Act"), at certain times, under certain
circumstances and subject to certain conditions.
The Amended Warrant amended the Old Warrants by changing the
exercise price of each of the Old Warrants to $3.25 per share of Common
Stock from the previously existing exercise price of $3.50 and $4.00 per
share of Common Stock, respectively. The Amended Warrant now represents
the right to purchase from the
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Company up to 1,000,000 shares of Common Stock (which were previously
represented, in the aggregate, by the Old Warrants) at an exercise price of
$3.25 per share of Common Stock. None of the other provisions of the Old
Warrants was amended in any material respect by or in the Amended Warrant.
The Amended Warrant is attached to this Amendment as Exhibit 1.
Neither the Amended Warrant nor the shares of Common Stock of
the Company into which the Amended Warrant is exercisable (collectively the
"Securities") have been registered under the Securities Act. The terms of
the Amended Warrant entitle the holder thereof, and, if exercised, the
holders of the shares of Common Stock issued therefor, to demand that the
Company register all or any part of the Securities under the Securities Act
at certain times, under certain circumstances and subject to certain
conditions, and to participate in registrations by the Company, on its own
behalf or on behalf of the Company's security holders, of the Company's
securities if the registration form proposed to be used may be used for the
registration of the Securities.
The exercise price of the Amended Warrant, and the number of
shares of Common Stock of the Company which may be purchased upon the
exercise thereof, is subject to change or adjustment in certain
circumstances, including issuances of shares of Common Stock (or the
granting of any right to purchase shares of Common Stock) at prices which
are below the market price of shares of Common Stock, rights, options or
warrants to
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purchase Common Stock or securities convertible into Common Stock, payment
of stock dividends or distributions, or subdivisions, combinations or
consolidations.
Unless previously exercised, the right to exercise the Amended
Warrant for shares of Common Stock expires at 4:00 p.m., New York time, on
June 2, 2000.
The aggregate exercise price of the Amended Warrant, if the
Amended Warrant is exercised, is currently expected by Stratum to be funded
through its working capital.
Item 4. Purpose of Transaction.
The original Warrants were issued to Stratum by the Company in
connection with, and as partial consideration for, the secured loan
financing provided by Stratum to Gothic Energy of Texas, Inc., an Oklahoma
corporation and a wholly-owned subsidiary of the Company ("Gothic Texas"),
which closed on June 2, 1995 (the "Financing"). On December 6, 1995,
Stratum contributed and assigned certain documents (including the loan
agreement) with respect to the Financing, but not the original Warrants, to
its wholly-owned subsidiary Stratum Group Energy Capital L.P., a Delaware
limited partnership ("Stratum Capital").
On January 30, 1996, Gothic Texas prepayed the entire unpaid
and accrued principal and interest then outstanding under the Loan
Agreement (the "Prepayment"). In connection with the Prepayment, the
Company was released from its obligations under the Pledge Agreement
described in the Original Statement, the
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Pledge Agreement was terminated by the Company and Stratum and all of the
650,000 shares of Pledged Common Stock and the additional 304,128 shares of
Common Stock pledged to Stratum pursuant to the terms of the Pledge
Agreement were returned to the Company by Stratum.
The Securities were acquired, and are being held, by Stratum
for investment. Subject to the terms of the Amended Warrant and applicable
law, Stratum may sell, pledge or otherwise dispose of all or portion of the
Amended Warrant in the open market, in privately negotiated transactions,
through a public offering or otherwise. If the market conditions are
suitable, Stratum may exercise the Amended Warrant pursuant to the terms
thereof for shares of Common Stock of the Company.
Except as set forth above, none of Stratum, or, to the best of
its knowledge, any person controlling Stratum named in Schedule A attached
hereto, or, to the best of its knowledge, any of the other persons named in
Schedule A attached hereto, has any plan or proposals which relate to or
would result in any of the transactions described in subparagraphs (a)
through (j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Company.
(a) Assuming complete exercise of the Amended Warrant, Stratum
would acquire 1,000,000 shares of Common Stock, whereupon Stratum, after
giving effect to such exercise, would beneficially own approximately 8.0%
of the outstanding Common Stock of the
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Company (based on 12,369,991 shares of Common Stock outstanding as of May
13, 1996).
Except as set forth in this Item 5(a), neither Stratum, nor, to
the best of its knowledge, any other person controlling Stratum named in
Schedule A attached hereto, nor, to the best of its knowledge, any of the
other persons named in Schedule A attached hereto, beneficially owns any
shares of Common Stock of the Company.
(b) Until the exercise of the Amended Warrant, Stratum will
have no power (shared or otherwise) to vote or dispose of any shares of
Common Stock. Upon the full exercise of all of the Amended Warrant,
Stratum will have sole power to vote and to dispose of 1,000,000 shares of
Common Stock.
(c) No transactions in the shares of Common Stock have been
effected since March 16, 1996 by Stratum, or, to the best of its knowledge,
any other person controlling Stratum named in Schedule A attached hereto,
or, to the best of its knowledge, any of the other persons named in
Schedule A attached hereto.
(d) Inapplicable.
(e) Inapplicable.
Item 6. Contracts, Arrangement, Understandings
or Relationships with Respect to
Securities of the Company.
Except for the Amended Warrant, as described above, to the best
knowledge of Stratum, there are no contracts, arrangements, understandings
or relationships (legal or otherwise)
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between the persons enumerated in Item 2 and Schedule A, and any other
person, with respect to any securities of the Company, including, but not
limited to, transfer or voting of any of the securities, finder's fees,
joint ventures, loan or option arrangements, puts or calls, guarantees of
profits, division of profits or loss, or the giving or withholding of
proxies; provided, however, that from time to time Stratum may pledge and
grant security interests in the Securities to persons or entities that
provide financing to Stratum.
Item 7. Material to be Filed as Exhibits.
Exhibit 1: Warrant No. 1A, dated as of May 15, 1996, to
purchase 1,000,000 shares of Common Stock of the
Company.
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SIGNATURE
After reasonable inquiry and to the best knowledge and belief
of the undersigned, the undersigned certifies that the information set
forth in this Amendment is true, complete and correct.
Date: June 5, 1996
STRATUM GROUP, L.P.
By: /s/ Joseph M. Rinaldi
Name: Joseph M. Rinaldi
Title: President and Chief
Executive Officer
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SCHEDULE A
CONTROLLING PERSONS OF
STRATUM GROUP, L.P.
The name, business address, title and present principal
occupation or employment (including the name, principal business and
address of the employer) of (a) the general partner of Stratum Group, L.P.
("Stratum"), (b) each person controlling the general partner of Stratum,
and (c) each executive officer and director of any corporation or other
person ultimately in control of Stratum, are set forth below.
(A) General Partner of Stratum.
The general partner of Stratum is Stratum Finance, L.L.C., a
Delaware limited liability company ("Finance"). The principal business and
principal office address of Finance is 650 Fifth Avenue, New York, New York
10019. The principal business of Finance is to act as the general partner
of Stratum.
(B) Controlling Persons of Finance.
Finance has seven members: Energy Investment Partners, a New
York general partnership, and Joseph M. Rinaldi, Richard E. Bani, John C.
Alvarado, Curt S. Taylor and Betsy D. Cotton, each of whom is a natural
person and a citizen of the United States of America.
The principal business and office address of Energy Investment
Partners is 375 Park Avenue, 17th Floor, New York, New
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York 10152. The principal business of Energy Investment Partners is
holding an investment in Finance and Group.
The business address of each natural person member of Finance
is Stratum Group, L.P., 650 Fifth Avenue, New York, New York 10019. The
principal occupation or employment of each natural person member of Finance
is as follows:
Name Present Principal Occupation, Including
Name and Address of Employer*
Joseph M. Rinaldi President and Chief Executive Officer
of Stratum
Richard E. Bani Chief Financial Officer and Senior Vice
President of Stratum
John C. Alvarado Senior Vice President of Stratum
Curt S. Taylor Senior Vice President of Stratum
Betsy D. Cotton Senior Vice President of Stratum
______________________
* Same address as director's or officer's business address.
Finance has no directors and no executive officers. Finance is
managed by its three Member Managers: (1) Energy Investment Partners,
which has four votes, (2) the Chief Executive Officer of Stratum, currently
Mr. Joseph M. Rinaldi, who has one vote, and (3) a member appointed by the
natural person members of Finance, currently Mr. Richard E. Bani, who has
one vote. All information required by Item 2 of Schedule 13D with respect
to Messrs. Rinaldi and Walker is set forth above in this Section (B).
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Energy Investment Partners has three general partners: SGLLC
Partners, L.P., SGLLC Partners Offshore, L.P. and The Beacon Group Energy
Investment Fund, L.P.
(1) SGLLC Partners, L.P., a Delaware limited
partnership ("SGLLC").
SGLLC's principal business and principal office address is 375
Park Avenue, New York, New York 10152. The principal business of SGLLC is
holding an indirect investment interest in Group.
The sole general partner of SGLLC is SG-GP, L.L.C., a Delaware
limited liability company ("SG-GP"). SG-GP's principal business and
principal office address is 375 Park Avenue, New York, New York 10152. The
principal business of SG-GP is to serve as the general partner of SGLLC and
SGLLC Partners Offshore, L.P.
The managing member of SG-GP is Energy Fund GP, Inc., a
Delaware corporation ("EFGP"). EFGP's principal business and principal
office address is 375 Park Avenue, New York, New York 10152. The principal
business of EFGP is to serve as managing member or general partner of SG-GP
and related entities. The name, business address, present principal
occupation or employment and citizenship of each executive officer and
director of EFGP is as follows (all of the natural persons listed below are
citizens of the United States of America):
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Present Principal Occupation,
Name and Including Name and Address
Business Address Title at EFGP of Employee*
Geoffrey Boisi Director and President Partner, The Beacon Group
375 Park Avenue
New York, NY 10152
John MacWilliams Director and Managing Partner, The Beacon Group
375 Park Avenue Director
New York, NY 10152
Preston Miller Director and Managing Partner, The Beacon Group
375 Park Avenue Director
New York, NY 10152
Harold Pote Director and Managing Partner, The Beacon Group
375 Park Avenue Director
New York, NY 10152
Faith Rosenfeld Director and Managing Partner, The Beacon Group
375 Park Avenue Director
New York, NY 10152
Robert Semmens Director and Managing Partner, The Beacon Group
375 Park Avenue Director
New York, NY 10152
David Remington Director and Managing Partner, The Beacon Group
375 Park Avenue Director
New York, NY 10152
Thomas Mendell Director and Managing Partner, The Beacon Group
375 Park Avenue Director
New York, NY 10152
Frank Murray Director and Managing Partner, The Beacon Group
375 Park Avenue Director
New York, NY 10152
______________________
* Same as director's or officer's business address.
(2) SGLLC Partners Offshore, L.P., a Delaware
limited partnership ("Offshore").
Offshore's principal business and principal office address is
375 Park Avenue, New York, New York 10152. The principal business of
Offshore is holding an indirect investment interest in Group. All
information required by Item 2 of Schedule 13D with respect to the
controlling persons of Offshore
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is identical to that of SGLLC and is set forth above in paragraph (1) of
this Section B.
(3) The Beacon Group Energy Investment Fund,
L.P., a limited partnership ("Fund").
Fund's principal business and principal office address is 375
Park Avenue, New York, New York 10152. The principal business of Fund is
to engage in energy-related investments.
The sole general partner of the Fund is Beacon Energy
Investors, L.L.C., a Delaware limited liability company ("Investors").
Investor's principal business and principal office address is 375 Park
Avenue, New York, New York 10152. The principal business of Investors is
to serve as the general partner of the Fund.
All information required by Item 2 of Schedule 13D with respect
to the controlling persons of Investors is identical to that of SG-GP and
is set forth above in paragraph (1) of this Section B.
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EXHIBIT INDEX
Exhibit Description Page
1 Warrant No. 1A, dated as of May 15, 1996,
to purchase 1,000,000 shares of Common Stock
of the Company.
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Exhibit 1
Execution Copy
SEE LEGEND ON PAGE 19 HEREOF. SUCH LEGEND
SHALL APPEAR ON THIS WARRANT CERTIFICATE
UNTIL THE WARRANTS ARE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNLESS
GOTHIC ENERGY CORPORATION DETERMINES
OTHERWISE IN COMPLIANCE WITH APPLICABLE LAW.
GOTHIC ENERGY CORPORATION
Warrants for the Purchase of Shares of
Common Stock of Gothic Energy Corporation
No. 1A 1,000,000 Warrants
FOR VALUE RECEIVED, GOTHIC ENERGY CORPORATION, a Delaware
corporation (the "Company"), hereby certifies that Stratum Group, L.P., a
Delaware limited partnership (successor by merger to Stratum Group, L.L.C.,
a Delaware limited liability company), or permitted assigns (the "Holder")
is entitled, subject to the provisions of this warrant certificate (this
"Warrant Certificate") representing 1,000,000 warrants (the "Warrants"), to
purchase from the Company, at the times specified herein, 1,000,000 fully
paid and non-assessable shares of common stock of the Company, $0.01 par
value, at a purchase price per share equal to the Exercise Price (as
hereinafter defined). The number of shares of Common Stock to be received
upon the exercise of a Warrant and the price to be paid for a share of
Common Stock are subject to adjustment from time to time as hereinafter set
forth.
(a) Definitions. The following terms, as used herein, have
the following meanings:
"Common Stock" means the common stock, $0.01 par value, of the
Company, and capital stock of any class or classes into which such Common
Stock or any such other class may thereafter be changed or reclassified.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
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"Exercise Price" means $3.25 per Warrant Share, such Exercise
Price to be adjusted from time to time as provided herein.
"Expiration Date" means 4:00 p.m., New York time, on June 2,
2000.
"Securities" means the Warrant Shares and the Warrants,
collectively.
"Securities Act" means the Securities Act of 1933, as amended.
"Stratum Group" means Stratum Group, L.P., a Delaware limited
partnership (successor by merger to Stratum Group, L.L.C., a Delaware
limited liability company).
"Warrant Shares" means the shares of Common Stock deliverable
upon exercise of the Warrants, as adjusted from time to time.
(b) Vesting, Exercise and Duration of Warrants.
(1) The Holder of this Warrant Certificate shall have the
right to exercise 1,000,000 Warrants in whole or in part (but not as to a
fractional Warrant Share) at any time, or from time to time until the
Expiration Date or, if such day is a day on which banking institutions in
The City of New York are authorized by law to close, then on the next
succeeding day that shall not be such a day, by presentation and surrender
hereof to the Company with the Purchase Form annexed hereto duly executed
and accompanied by proper payment of the Exercise Price for the number of
Warrant Shares specified in such form, all subject to the terms and condi-
tions hereof.
(2) The Exercise Price must be paid in U.S. dollars in cash,
bank cashier's check or bank draft payable to the order of the Company.
Upon receipt by the Company of this Warrant Certificate and the Purchase
Form, together with the applicable Exercise Price, at the Company's office
designated for such purpose, in proper form for exercise, the Holder shall
be deemed to be the holder of record of the Warrant Shares, notwithstanding
that the stock transfer books of the Company shall then be closed or that
certificates representing such Warrant Shares shall not then be actually
delivered to the Holder. The Company shall pay any and all documentary,
stamp or similar issue or transfer taxes of the United States, or any state
thereof payable in respect of the issue or delivery of the Warrant Shares.
The Company shall not be required, however, to pay any tax or other charge
imposed in connection with any transfer involved in the issue of any
certificate for Warrant Shares, and in such case the Company shall not be
required to issue or deliver any stock certificate until such tax or other
charge has been paid or it has been established to the Company's
satisfaction that no tax or other charge is due.
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If the Holder exercises the Warrants in part, this Warrant
Certificate shall be surrendered by Holder to the Company and a new Warrant
Certificate of the same tenor and for the unexercised number of Warrants
which was not surrendered shall be executed by the Company. The Company
shall register the new Warrant Certificate in such name or names as may be
directed in writing by the Holder and deliver the new Warrant Certificate
to the person or persons entitled to receive the same.
Upon surrender of this Warrant Certificate in conformity with
the foregoing provisions, the Company shall transfer to the Holder of this
Warrant Certificate appropriate evidence of ownership of any shares of
Common Stock or other securities or property (including any money) to which
the Holder is entitled, registered or otherwise placed in, or payable to
the order of, such name or names as may be directed in writing by the
Holder, and shall deliver such evidence of ownership and any other
securities or property (including any money) to the person or persons
entitled to receive the same, together with an amount in cash in lieu of
any fraction of a share as provided in paragraph (f) below.
(c) Restrictive Legend. Any shares of Common Stock issued
pursuant to exercise of any Warrants shall bear the following legend,
unless such shares of Common Stock have been registered under the
Securities Act or unless the Company determines otherwise in compliance
with applicable law:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR SECURITIES LAWS OF ANY STATE AND NEITHER THE SECURITIES NOR
ANY INTEREST THEREIN MAY BE SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREUNDER."
(d) Reservation of Shares. The Company hereby agrees that at
all times there shall be reserved for issuance and delivery upon exercise
of the Warrants such number of its authorized but unissued shares of its
Common Stock or other securities of the Company from time to time issuable
upon exercise of the Warrants as will be sufficient to permit the exercise
in full of the Warrants. All such shares shall be duly authorized and,
when issued upon such exercise, shall be validly issued, fully paid and
non-assessable, free and clear of all liens, security interests, charges
and other encumbrances or restrictions on sale and free and clear of all
preemptive or similar rights.
(e) Fractional Shares. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of any
Warrant. With respect to any fraction of a share called for upon any
exercise hereof, the Company shall pay to the Holder an amount
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in cash equal to such fraction multiplied by the current market value (as
defined in paragraph (h)(5) herein) of such share.
(f) Exchange, Transfer, Assignment or Loss of Warrant
Certificate. The Company will, from time to time, register the transfer of
any outstanding Warrant Certificate upon its records. Each taker and
holder of this Warrant Certificate by taking or holding the same, consents
and agrees that prior to any transfer of this Warrant Certificate, the
holder hereof shall give written notice to the Company of such holder's
intention to effect such transfer. Each such notice shall describe the
manner and circumstances of the proposed transfer in sufficient detail.
The Company shall register such transfer upon surrender of such Warrant
Certificate to the Company for transfer, accompanied by appropriate
instruments of transfer duly executed by the holder or the holder's duly
authorized attorney. Upon any such registration of transfer, a new Warrant
Certificate shall be issued in the name of the transferee, and the
surrendered Warrant Certificate shall be cancelled. Each Warrant
Certificate evidencing the transferred Warrants shall bear, unless the same
has been registered under the Securities Act, the restrictive legend set
forth in paragraph (c) herein.
Upon receipt by the Company of evidence satisfactory to
it (in the exercise of its reasonable discretion) of the loss, theft,
destruction or mutilation of this Warrant Certificate, and (in the case of
loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Warrant Certificate, if mutilated,
the Company shall execute and deliver a new Warrant Certificate of like
tenor and date. Any such new Warrant Certificate executed and delivered
shall constitute an additional contractual obligation on the part of the
Company, whether or not the warrant so lost, stolen, destroyed or mutilated
shall be at any time enforceable by anyone. The provisions of this
paragraph (f) are exclusive and shall preclude (to the extent lawful) all
other rights or remedies with respect to the replacement of mutilated,
lost, stolen, or destroyed Warrant Certificates.
(g) Rights of the Holder. Prior to the exercise of any
Warrant, the Holder shall not, by virtue hereof, be entitled to any rights
of a shareholder of the Company, including, without limitation, the right
to vote, to give or withhold consent to any corporate action of the
Company, to receive dividends or other distributions, to exercise any
preemptive or similar right or to receive any notice of meetings of
shareholders or any notice of any proceedings of the Company except as may
be specifically provided for herein.
(h) Anti-Dilution Provisions. The Exercise Price in
effect at any time, and the number of Warrant Shares which may be purchased
upon the exercise hereof, shall be subject to change or adjustment as
follows:
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(1) In case the Company shall (i) pay a dividend or make
other distribution on its Common Stock in shares of Common
Stock, (ii) subdivide its outstanding Common Stock, (iii) com-
bine its outstanding Common Stock into a smaller number of
shares of Common Stock, or (iv) issue by reclassification of
its Common Stock (whether pursuant to a merger or consolidation
or otherwise) any other shares representing common equity of
the Company, then the Exercise Price for the Warrants in effect
immediately prior thereto shall be adjusted so that the holder
of the Warrant Certificate surrendered for exercise after the
record date fixing shareholders to be affected by such event
shall be entitled to purchase the number of Warrant Shares
which he would have owned or have been entitled to receive
after the happening of any of the events described above, had
such Warrants been exercised immediately prior to such record
date. An adjustment made pursuant to this clause (1) shall
become effective immediately after the record date in the case
of a dividend and shall become effective immediately after the
effective date in the case of a subdivision, combination or
reclassification.
(2) In case the Company shall issue shares of Common
Stock to any Person, or rights, options or warrants to any
Persons entitling such Persons to subscribe for or purchase
shares of Common Stock, at a price per share less than the
current market price per share of Common Stock (as defined in
subparagraph (h)(5) below) as of the issue date such shares of
Common Stock or rights, options or warrants to any such Person,
the Exercise Price to be in effect after such issuance or date
shall be determined by multiplying the Exercise Price in effect
immediately prior to such issue date by a fraction, the
numerator of which shall be the number of shares of Common
Stock outstanding on the date of issuance of such shares of
Common Stock or rights, options or warrants plus the number of
shares of Common Stock which the aggregate offering price of
the total number of shares of Common Stock so offered would
purchase at such current market price, and the denominator of
which shall be the number of shares of Common Stock outstanding
on the date of issuance of such shares of Common Stock or
rights, options or warrants plus the number of additional
shares of Common Stock offered for subscription or purchase.
Such adjustment shall be made successively whenever any such
Common Stock or rights, options or warrants are issued, and
shall become effective immediately after such issue date. In
determining whether any shares of Common Stock or any rights,
options or warrants entitle the holders to subscribe for or
purchase shares of Common Stock at less than such current
market price, and in determining the aggregate offering price
of such shares of Common Stock, there shall be taken into
account any consideration received by the Company for such
shares of Common Stock or such rights, options or warrants, the
value of such consideration, if other than cash, to be
determined by the Board of Directors. For the purposes of this
subparagraph (2), the issuance of rights, options or warrants
to subscribe for or purchase securities convertible into Common
Stock shall be deemed to be the
<PAGE>
<PAGE> 6
issuance of rights, options or warrants to purchase the shares
of Common Stock into which such securities are convertible at
an aggregate offering price equal to the aggregate offering
price of such securities plus the minimum aggregate amount (if
any) payable upon conversion of such securities into shares of
Common Stock.
(3) In case the Company shall distribute to all holders
of shares of its Common Stock (whether pursuant to a merger or
consolidation or otherwise) evidence of its indebtedness or
assets (including securities issued by the Company or by any
other entity, but excluding (x) any shares referred to in
subparagraph (h)(1) above, and (y) any shares of Common Stock
or rights, options or warrants referred to in subpara-
graph (h)(2) above), then in each such case the Exercise Price
to be in effect after such distribution shall be determined by
multiplying the Exercise Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be
the current market price per share of Common Stock (as defined
in subparagraph (h)(5) below) less the then fair market value
(as determined by the Board of Directors, whose determination
shall be conclusive) of the portion of the assets or evidences
of indebtedness so distributed applicable to one share of
Common Stock, and the denominator of which shall be such
current market price per share of Common Stock (as defined in
subparagraph (h)(5) below) as of the date of such distribution.
Such adjustment shall become effective immediately after the
record date for the determination of shareholders entitled to
receive such distribution.
(4) In case the Company shall issue shares of Common
Stock to any holders of shares of Common Stock pursuant to any
dividend reinvestment or similar plan at a price less than the
current market price per share of Common Stock (as defined in
subparagraph (h)(5) below) on the date of issuance of such
shares pursuant to such dividend reinvestment or similar plan,
then in each such case the Exercise Price to be in effect after
the date of issuance of such shares shall be determined by
multiplying the Exercise Price in effect immediately prior to
such issuance by a fraction whose numerator shall be the number
of shares of Common Stock outstanding on such date of issuance
plus the number of shares of Common Stock which the aggregate
purchase price of shares being purchased on such date of issu-
ance pursuant to such dividend reinvestment or similar plan
would purchase at such current market price, and whose
denominator shall be the number of shares of Common Stock
outstanding on the date of issuance of such shares plus the
number of additional shares of Common Stock so issued pursuant
to such dividend reinvestment plan. Such adjustment shall be
made whenever such shares are issued and shall be effective as
of the date immediately after such date of issuance.
(5) For the purpose of any computation under sub-
paragraphs (h)(2), (3) and (4) above, the current market price
per share of Common Stock at any date
<PAGE>
<PAGE> 7
shall be deemed to be the average of the daily Closing Prices
for 30 consecutive Trading Days (as defined below) immediately
preceding the day in question, after appropriate adjustment for
stock distribution, subdivisions, combinations or
reclassifications occurring within the said 30-day period. The
term "Closing Price" on any day shall mean the reported last
sale price per share of Common Stock on such day or, in case no
such sale takes place on such day, the average of the reported
closing bid and asked prices, in each case on the principal
national securities exchange on which the Common Stock is
listed or admitted to trading, or, if the Common Stock is not
listed or admitted to trading on any national securities
exchange, the average of the closing bid and asked prices in
the over-the-counter market as reported by the National
Association of Securities Dealers' Automated Quotation System,
or, if not so reported, as reported by the National Quotation
Bureau, Incorporated, or any successor thereof, or, if not so
reported, the average of the closing bid and asked prices as
furnished by any member of the National Association of
Securities Dealers, Inc. selected from time to time by the
Company for that purpose; and the term "Trading Day" shall mean
a day on which the principal national securities exchange on
which the Common Stock is listed or admitted to trading is open
for the transaction of business or, if the Common Stock is not
listed or admitted to trading on any national securities
exchange, a Monday, Tuesday, Wednesday, Thursday, or Friday on
which banking institutions in the City of New York, New York
are not authorized or obligated by law or executive order to
close.
(6) Upon the expiration of any rights, options, warrants
or conversion or exchange privileges, if any thereof shall not
have been exercised, the Exercise Price and the number of
shares of Common Stock purchasable upon the exercise of the
Warrants shall, upon such expiration, be readjusted and shall
thereafter, upon any future exercise, be such as they would
have been had they been originally adjusted (or had the
original adjustment not been required, as the case may be) as
if (A) the only shares of any class or series of Common Stock
so issued were the shares of such class or series of Common
Stock, if any, actually issued or sold upon the exercise of
such rights, options, warrants or conversion or exchange rights
and (B) such shares of such class or series of Common Stock, if
any, were issued or sold for the consideration actually
received by the Company upon such exercise plus the
consideration, if any, actually received by the Company for
issuance, sale or grant of all such rights, options, warrants
or conversion or exchange rights whether or not exercised;
provided that no such readjustment shall have the effect of
increasing the Exercise Price by an amount, or decreasing the
number of shares purchasable upon exercise of the Warrants by a
number, in excess of the amount or number of the adjustment
initially made in respect to the issuance, sale or grant of
such rights, options, warrants or conversion or exchange
rights.
<PAGE>
<PAGE> 8
(7) In the event that at any time, as a result of an
adjustment made pursuant to subparagraphs (h)(1) and (3) above,
the Holder shall become entitled to receive any shares of the
capital stock of the Company other than Common Stock,
thereafter the number of such other shares so receivable upon
exercise of the Warrants 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 Common Stock
contained in subparagraphs (h)(1) to (5), inclusive, above,
subparagraph (h)(8) or (9) below, and the provisions of this
Warrant Certificate with respect to the Common Stock shall
apply on like terms to any such other shares.
(8) In case:
(i) the Company shall authorize the issuance to
all holders of its Common Stock of rights or warrants to
subscribe for or purchase shares of its Common Stock or
of any other subscription rights or warrants; or
(ii) the Company shall authorize the distribution
to all holders of its Common Stock (whether pursuant to a
merger or consolidation or otherwise) of evidences of its
indebtedness or assets (other than dividends paid in or
distributions of the Company's capital stock for which
the Exercise Price shall have been adjusted pursuant to
subparagraph (h)(1) above; or
(iii) of any capital reorganization or reclas-
sification of the Common Stock (other than a change in
par value of the Common Stock) or of any consolidation or
merger to which the Company is a party and for which
approval of any stockholders of the Company is required
(other than a consolidation or merger in which the
Company is the continuing corporation and that does not
result in any reclassification or change of the Common
Stock outstanding), or of the conveyance or transfer of
the properties and assets of the Company substantially as
an entirety; or
(iv) of the voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or
(v) the Company proposes to take any action (other
than actions of the character described in
subparagraph (h)(1) above) that would require an
adjustment of the Exercise Price pursuant to this
paragraph (h);
then the Company shall cause to be mailed by registered mail to
the Holder, at the earliest practicable time (and in any event
not less than 20 days prior to the applicable record or
effective date hereinafter specified), a notice stating (A) the
date as of which the holders of Common Stock of record to be
entitled to receive
<PAGE>
<PAGE> 9
any such rights, options, warrants or distributions are to be
determined, or (B) the date on which any such consolidation,
merger, conveyance, transfer, dissolution, liquidation or
winding-up is expected to become effective, and the date as of
which it is expected that holders of Common Stock of record
shall be entitled to exchange their shares of Common Stock for
securities or other property, if any, deliverable upon such
reorganization, reclassification, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding-up.
(9) Whenever reference is made in this paragraph (h) to
the issue of shares of Common Stock, the term "Common Stock"
shall include any equity securities of any class of the Company
hereinafter authorized which shall not be limited to a fixed
sum or percentage in respect of the right of the holders
thereof to participate in dividends or distributions of assets
upon the voluntary or involuntary liquidation, dissolution or
winding-up of the Company.
(10) Notwithstanding any provision to the contrary in
this paragraph (h), the Exercise Price in effect at any time,
and the number of Warrant Shares which may be purchased upon
the exercise hereof, shall not be subject to change or
adjustment in either of the following cases:
(A) In case the Company shall issue shares of
Common Stock to any Person, or rights, options or
warrants to any Persons entitling such Persons to
subscribe for or purchase shares of Common Stock, at a
price per share at least equal to or greater than the
current market price per share of Common Stock (as
defined in subparagraph (h)(5) above) as of the issue
date such shares of Common Stock or rights, options or
warrants to any such Person; or
(B) In case the Company purchases any assets (an
"Asset Purchase") and provides all or some of the
consideration for such Asset Purchase in shares of Common
Stock; provided, however, that any asset so purchased by
the Company is purchased at a price which is at or below
the fair market value of such asset; and provided,
further, that any shares of Common Stock provided as
consideration by the Company any such Asset Purchase is
issued at a price or valued at a price at least equal to
or greater than the current market price per share of
Common Stock (as defined in subparagraph (h) (5) above)
as of the date of issuance of such shares of Common
Stock.
(i) Officers' Certificate. Whenever any adjustment in
the Exercise Price is made, the Company shall forthwith (A) file in the
custody of its Secretary or an Assistant Secretary at its principal office,
a statement describing the adjustment and the method of calculation used,
together with an opinion rendered by an independent firm of public
<PAGE>
<PAGE> 10
accountants of recognized standing, who may be the Company's regularly
engaged auditors, that such adjustment was properly calculated in
accordance with the provisions of paragraph (h) and (B) cause a copy of
such statement to be mailed to the Holder.
(j) Consolidation, Merger, or Sale of Assets. In case
of any consolidation of the Company with, or merger of the Company into,
any other Person, any merger of another Person into the Company (other than
a merger which does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock of the
Company) or any sale or transfer of all or substantially all of the assets
of the Company, the Holder of this Warrant Certificate shall have the right
thereafter to exercise the Warrants for the kind and amount of securities,
cash and other property receivable upon such consolidation, merger, sale or
transfer by a holder of the number of shares of Common Stock of the Company
for which the Warrants may have been exercised immediately prior to such
consolidation, merger, sale or transfer, assuming such holder of Common
Stock of the Company (i) is not a Person with which the Company consoli-
dated or into which the Company merged or which merged into the Company or
to which such sale or transfer was made, as the case may be ("constituent
Person"), or an Affiliate of a constituent Person and (ii) failed to
exercise his rights of election, if any, as to the kind or amount of
securities, cash and other property receivable upon such consolidation,
merger, sale or transfer (provided that if the kind or amount of
securities, cash and other property receivable upon such consolidation,
merger, sale or transfer is not the same for each share of Common Stock of
the Company held immediately prior to such consolidation, merger, sale or
transfer by other than a constituent Person or an Affiliate thereof and in
respect of which such rights of election shall not have been exercised
("non-electing share"), then for the purpose of this Section the kind and
amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by each non-electing share shall be
deemed to be the kind and amount so receivable per share by a plurality of
the nonelecting shares). Adjustments for events subsequent to the
effective date of such a consolidation, merger and sale of assets shall be
as nearly equivalent as may be practicable to the adjustments provided for
in this Warrant Certificate. In any such event, effective provisions shall
be made in the certificate or articles of incorporation of the resulting or
surviving corporation, in any contract of sale, conveyance, lease or
transfer, or otherwise so that the provisions set forth herein for the
protection of the rights of Warrant holders shall thereafter continue to be
applicable; and any such resulting or surviving corporation shall expressly
assume the obligation to deliver, upon exercise, such shares of stock,
other securities, cash and property. The provisions of this paragraph (j)
shall similarly apply to successive consolidations, mergers, sales, leases
or transfers.
(k) Listing on Securities Exchange and Governmental
Requirements. (1) The Company shall list the Warrant Shares on each
national securities exchange on which any Common Stock may at any time be
listed, subject to official notice of issuance upon the exercise of the
Warrants, and shall maintain, so long as any other shares of its Common
Stock shall be so listed, such listing of all shares of Common Stock from
time to
<PAGE>
<PAGE> 11
time issuable upon the exercise of the Warrants; and the Company shall so
list on each national securities exchange, and shall maintain such listing
of, any other shares of capital stock of the Company issuable upon the
exercise of the Warrants if and so long as any shares of capital stock of
the same class shall be listed on such national securities exchange by the
Company. The Company shall list the Warrants on each national securities
exchange on which any warrants to purchase Common Stock may at any time be
listed and shall maintain, so long as any other warrants to purchase Common
Stock shall be so listed, such listing of all Warrants. Any such listing
shall be at the Company's expense.
(2) If any Warrant Shares require registration or
approval of any governmental authority before the Warrant Shares may be
validly and lawfully issued, the Company will, in good faith and with
reasonable dispatch after surrender of the Warrant Certificate to the
Company, secure such registration or approval; provided that in no event
shall Warrant Shares be issued, and the Company shall have the authority to
suspend the exercise of any or all Warrants to purchase Warrant Shares
requiring such registration or approval, until such registration or
approval shall have been obtained. All Warrants as to which exercise is
requested during such suspension shall be exercisable at the Exercise Price
and upon the other conditions in effect on the date of exercise. If any
such period of suspension continues past the Expiration Date, the Company
shall recognize, upon the removal of such suspension, the exercise of all
Warrants for which the certificates representing such Warrants with the
exercise forms duly completed and executed had been received on or before
the Expiration Date.
(l) Required Registration and Qualification of
Securities.
(1) (a) The Holder may, at any time or from time to
time, in each case on or after June 2, 1996 and before the Expiration Date,
make a written request for registration under the Securities Act of all or
part of the Securities (a "Demand Registration"). Such request will
specify the number of Securities proposed to be sold and will also specify
the intended method of disposition thereof. A registration will not count
as a Demand Registration until it has become effective under the Securities
Act and, if applicable, the Exchange Act.
(b) Notwithstanding the provisions of subparagraph
(l)(1)(a) above, the Company shall not be obligated to effect:
(i) any Demand Registration at the
request of the Holder if the Current Market Price
(as defined below in this Section (l)(1)(b)) per
share of Common Stock as of the date of the
Holder's request for Demand Registration is below
$3.00 (the "Strike Price"). For the purpose of any
computation under this sub-paragraph, the "Current
Market Price" per share of Common Stock at any date
shall be deemed to be the average of the daily
Closing Prices (as such term is defined in
subparagraph (h)(5) above)
<PAGE>
<PAGE> 12
for 10 consecutive Trading Days (as such term is defined in
subparagraph (h)(5) above) immediately preceding the day in
question. The Strike Price will be appropriately adjusted for
stock issuances, stock distributions, subdivisions,
combinations or reclassifications in accordance with the
applicable provisions of paragraph (h) above (except that, for
the purpose of any computation under this sub-paragraph,
references to Exercise Price in paragraph (h) above shall be
deemed to be references to Strike Price);
(ii) any Demand Registration at the
request of the Holder during the period from the
time of the public announcement by the Company of a
public offering of Common Stock registered under
the Securities Act (an "Active Public Offering"),
to the time when such Active Public Offering has
either been (a) closed or (b) terminated or
otherwise withdrawn or not acted upon; provided
further that if the time period between the public
announcement of any Active Public Offering and any
of the events specified in clause (b) above exceeds
150 calendar days, the Holder may, at the Holder's
option, make a request for Demand Registration to
the Company and such request will be acted upon and
honored by the Company; or
(iii) more than one Demand
Registration in any year (as defined below) with
respect to the Securities. For the purposes of
this subparagraph (iii), a "year" commences on June
2 of that year (starting June 2, 1996) and ends on
June 1 of the following year (ending June 1, 2000).
(c) If the Holder so elects, the offering of such
Securities pursuant to such Demand Registration shall be in the form of an
underwritten offering. The Holder shall select the book-running and other
managing underwriters in connection with such offering and any additional
investment bankers and managers to be used in connection with the offering.
Such book running and other managing underwriters shall be reasonably
satisfactory to the Company.
<PAGE>
<PAGE> 13
(2) (a) If the Company or any security holder of the
Company proposes to register any securities of Company under the Securities
Act and if the registration form proposed to be used may be used for the
registration of Securities, the Company will thereupon give prompt written
notice to the Holder of its intention to proceed with the registration
(hereinafter a "Piggy-Back Registration"), and, upon the written request of
the Holder made within 30 days after the receipt of any such notice, the
Company will use its best efforts to cause all such Securities to be
included in such Incidental Registration.
(b) If at any time the Company proposes to
register any of its securities and the Securities Act shall then permit the
registration thereunder for the future sale of Securities, the Company will
give written notice to the Holder of its intention to do so (hereinafter, a
"Shelf Registration" and collectively with a Piggy Back Registration, an
"Incidental Registration") and, upon the written request of the Holder made
within 30 days after the receipt of any such notice, the Company will use
its best efforts to include among the securities which it then proposes to
register, and to cause to be registered under such laws and regulations,
all Securities specified in such request and, upon any such registration
becoming effective, the Company will give notice thereof in writing to the
Holder.
(c) the rights of the Holder to, or exercise by
the Holder of, Piggy Back Registration or Shelf Registration are in
addition to, and are not, and will not be, in any way conditioned by, the
Holder's Demand Registration rights or the exercise thereof.
(3) If a Demand Registration or an Incidental
Registration is in connection with an underwritten public offering, and if
the book-running and managing underwriters advise the Company in writing
that in their opinion the amount of securities requested to be included in
such registration exceeds the amount of such securities which can be sold
in such offering, the Company will include in such offering the amount of
securities requested to be included which in the opinion of such
underwriters can be sold as follows: (A) in the case of a Demand
Registration, the amount of Securities to be offered and sold for the
account of the Holder shall be reduced, but only after the amount of
securities, if any, to be offered and sold for the account the Company and
any other holders with registration rights who are seeking to sell in such
offering has been reduced to zero; or (B) in case of an Incidental
Registration, (i) first, all of the securities shall be included which are
proposed to be sold by the Company, and (ii) second, the Securities shall
be included which are proposed to be sold by the Holder pro rata with other
holders with registration rights who are seeking to sell in such offering.
(4) Whenever the Company is required by the provisions
of subparagraphs (l)(1) or (l)(2) above to effect the registration of any
of the Securities under the Securities Act, the Company will, at its sole
expense (except for fees of Holder's counsel, its accountants and its
underwriters, referred to in clause (i) below, in connection with such
registration) and as expeditiously as is possible:
<PAGE>
<PAGE> 14
(i) prepare and file with the Securities and Exchange
Commission (the "Commission") a registration statement with
respect to such securities (which, in the case of a Demand
Registration, will be on any form for which the Company then
qualifies and which counsel for the Company shall deem
appropriate and available for the sale of the Securities to be
registered thereunder in accordance with the intended method of
distribution thereof, and use reasonable efforts to cause such
filed registration statement to become and remain effective for
a period of not less than 90 days) and in connection with any
such registration (whether a Demand Registration or an
Incidental Registration) the Company will give the Holder, its
underwriters, if any, their respective counsel and accountants
the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or
filed with the Commission, and each amendment thereof or
supplement thereto, and will give each of them such access to
its books and records and such opportunities to discuss the
business of Company with its officers and the independent
public accountants who have certified its financial statements
as shall be necessary in the opinion of the Holder's and such
underwriters' respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act;
(ii) prepare and file with the Commission such
amendments and supplements to any such registration statement
and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective and the
prospectus current and to comply with the provisions of the
Securities Act and the Exchange Act with respect to the sale of
all securities covered by such registration statement whenever
the seller of such securities shall desire to sell the same;
(iii) furnish to the Holder such numbers of copies of
preliminary prospectuses and prospectuses and each supplement
or amendment thereto and such other documents as the Holder or
any underwriters of the Holder may reasonably request in order
to facilitate the sale or other disposition of the Securities
being sold by the Holder in conformity with (A) the
requirements of the Securities Act and (B) the Holder's
proposed method of distribution;
(iv) register or qualify the Securities covered by such
registration statement under the securities or blue sky laws of
such jurisdictions within the United States as the Holder shall
request, and do such other reasonable acts and things as may be
required of it to enable the Holder to consummate the sale or
other disposition in such jurisdictions of the Securities;
provided, however, that the Company shall not be required to
(A) qualify as a foreign corporation or consent to a general
and unlimited service of process in any such jurisdiction or
(B) qualify as a dealer in securities; and provided further
that, if the federal registration is in connection with an
underwritten offering, the Company shall not be required to
register or qualify
<PAGE>
<PAGE> 15
in any jurisdiction not included in the underwriting unless
Holder agrees to bear the resultant expense;
(v) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make
available to its security holders as soon as reasonably
practicable, but not later than sixteen (16) months after the
effective date of the registration statement, an earnings
statement covering a period of at least twelve (12) months
beginning after the effective date of the registration
statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act;
(vi) (a) notify the Holder at any time when a
prospectus relating to the registration is required to be
delivered under the Securities Act, upon discovery that, or
upon the happening of any event as a result of which, the
prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in
the light of the circumstances under which they were made, at
the request of such Holder promptly prepare and furnish to the
Holder a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such securities, such
prospectus shall not include any untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they
were made; and (b) in the event the Company shall give such
notice and the registration to which such prospectus relates is
a Demand Registration, the Company shall extend the period
during which such registration statement shall be maintained
effective as provided in subparagraph (l)(4)(i) hereof by the
number of days during the period from and including the date of
the giving of such notice to the date when the Company shall
make available to the Holder such supplemented or amended
prospectus;
(vii) after the filing of any registration statement
(whether with respect to a Demand Registration or an Incidental
Registration), the Company will promptly notify the Holder of
any stop order issued or, to the knowledge of the Company,
threatened to be issued by the Commission and take all
necessary actions required to prevent the entry of such stop
order or to remove it if entered;
<PAGE>
<PAGE> 16
(viii) The Company will enter into customary agreements
(including an underwriting agreement in customary form and satisfactory in
form and substance to the Company in its reasonable judgment) and take such
other actions as are reasonably required in order to expedite or facilitate
the sale of such Securities; and
(ix) keep the Holder advised in writing as to initiation
and progress of any registration.
(5) In connection with any registration or qualification
of securities under subparagraphs (l)(1) or (l)(2) above, the Company
agrees to indemnify the Holder and each officer and director of Holder and
each person or entity, if any, who controls the Holder within the meaning
of Section 15 of the Securities Act, against all losses, claims, damages,
liabilities and expenses (including reasonable costs of investigation)
caused by any untrue, or alleged untrue, statement of a material fact
contained in any registration statement, preliminary prospectus, prospectus
or notification or offering circular (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) or
caused by any omission, or alleged omission, to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, except insofar as such losses, claims, damages, liabilities
or expenses are caused by any untrue statement or alleged untrue statement
or omission or alleged omission based on information furnished in writing
to the Company by the Holder expressly for use therein.
(6) Upon the exercise of the registration rights
pursuant to this paragraph (l), the Holder agrees to supply to the Company
such information as may be required by applicable law for the Company to
register or qualify the Warrants or the Warrant Shares as set forth in this
paragraph (l) and the Holder agrees to indemnify and hold harmless the
Company and each of its officers who signs such registration statement and
each person or entity, if any, who controls the Company within the meaning
of Section 15 of the Securities Act, against all losses, claims, damages or
liabilities which are caused by any untrue, or alleged untrue statement of
a material fact contained in information furnished in writing to the
Company by the Holder expressly for use therein.
(m) Reports to the Holder.
(1) The Company will supply without cost to the Holder
within fifteen days after the Company is required to file the same with the
Commission, copies of the annual reports and quarterly reports which the
Company may be required to file with the Commission pursuant to Section 13
or Section 15(d) of the Exchange Act.
(2) If the Company is not required to file such reports
with the Commission, the Company shall supply without cost to the Holder as
soon as practicable, such reports as the Company shall supply to its other
securityholders.
<PAGE>
<PAGE> 17
(n) Notices. Any notice, demand or delivery authorized
by this Warrant Certificate shall be sufficiently given or made when mailed
if sent by first-class mail, postage prepaid, addressed to the Holder or to
the Company as follows:
If to the Company: Gothic Energy Corporation
5727 South Lewis Avenue,
Suite 700, Tulsa, OK 74105
Attention: Michael Paulk
If to the Holder: Stratum Group, L.P.
650 Fifth Avenue
New York, NY 10019
Attention: Richard E. Bani
or such other address as shall have been furnished to the party giving or
making such notice, demand or delivery.
(o) APPLICABLE LAW. THIS WARRANT CERTIFICATE AND ALL RIGHTS
ARISING HEREUNDER SHALL BE CONSTRUED AND DETERMINED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, AND THE PERFORMANCE THEREOF SHALL BE
GOVERNED AND ENFORCED IN ACCORDANCE WITH SUCH LAWS.
(p) Amendments; Waivers. Any provision of this Warrant
Certificate may be amended or waived if, and only if, such amendment or
waiver is in writing and signed, in the case of an amendment, by the Holder
and the Company, or in the case of a waiver, by the party against whom the
waiver is to be effective. No failure or delay by either party in
exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other right,
power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law.
(q) Agreement of Holder. By acceptance of this Warrant
Certificate and the Warrants represented thereby the Holder hereby agrees
to be bound by the terms and conditions contained herein.
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<PAGE> 18
(r) Miscellaneous. This Warrant Certificate amends, and is
issued by the Company to Stratum Group (or permitted assigns) in exchange
for, the warrant certificate No. 1 and warrant certificate No. 2, dated as
of February 7, 1996, issued by the Company in favor of Stratum Group (or
permitted assigns) with respect to the Securities.
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<PAGE> 19
IN WITNESS WHEREOF, the Company has duly caused this Warrant
Certificate to be signed and attested by its duly authorized officers and
to be dated as of May 15, 1996.
GOTHIC ENERGY
CORPORATION
By: /s/ Michael Paulk
Name: Michael Paulk
Title: President
Attest:
By: /s/ John Rainwater
Name: John Rainwater
Title: Vice President
Assistant Secretary
Consented to and Accepted:
STRATUM GROUP, L.P.
By: /s/ Joseph M. Rinaldi
Name: Joseph M. Rinaldi
Title: CEO and President
By: /s/ Richard E. Bani
Name: Richard E. Bani
Title: SVP and CFO
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR SECURITIES LAWS OF ANY STATE AND NEITHER THE SECURITIES NOR ANY
INTEREST THEREIN MAY BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO (1) REGISTRATION IN COMPLIANCE WITH THE
SECURITIES ACT AND APPLICABLE STATE LAWS, OR (2) THE OPINION OF COUNSEL,
SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY AND ITS COUNSEL, TO THE
EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
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<PAGE> 20
ASSIGNMENT FORM
(To be executed if Holder desires to transfer a Warrant)
For Value Received, the undersigned hereby sells, assigns and
transfers to
(Please insert social security
or other identifying number.)
_____________________________
(Please print name and _______________________________________
address including zip code)
___________________________________________________________________________
___________________________________________________________________________
Warrants represented by this Warrant Certificate, and does hereby
irrevocably appoint _______________________________________________________
Attorney, to transfer such rights on the books of the Company with full
power of substitution.
Date: ________________________.
________________________________(1)
(Signature of Owner)
___________________________________
(Street Address)
___________________________________
(City) (State) (Zip Code)
_______________
(1) The signature must correspond with the name as written upon the face of
the within Warrant Certificate in every particular, without alteration or
enlargement or any change whatever.
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<PAGE> 21
EXERCISE SUBSCRIPTION FORM
(To be executed only upon exercise of Warrants)
To: Gothic Energy Corporation
The undersigned irrevocably exercises Warrants for the purchase of
___________ shares of common stock, $0.01 par value, of Gothic Energy
Corporation (the "Common Stock") at $3.50 per share of Common Stock and
herewith makes payment of $_______________________________ (such payment
being made in U.S. dollars in cash or in immediately available funds
payable to the order of Gothic Energy Corporation), all on the terms and
conditions specified in the within Warrant Certificate, surrenders this
Warrant Certificate and all right, title and interest therein to Gothic
Energy Corporation and directs that the shares of Common Stock deliverable
upon the exercise of these Warrants be registered or placed in the name and
at the address specified below and delivered thereto.
Date: ________________________.
________________________________(1)
(Signature of Owner)
___________________________________
(Street Address)
___________________________________
(City) (State) (Zip Code)
_______________
(1) The signature must correspond with the name as written upon the face of
the within Warrant Certificate in every particular, without alteration or
enlargement or any change whatever.
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<PAGE> 22
Securities and/or check to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
Any unexercised Warrants evidenced by the
within Warrant Certificate to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
