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EXHIBIT 4.11
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7% CUMULATIVE CONVERTIBLE
PREFERRED STOCK
REGISTRATION RIGHTS AGREEMENT
Dated as of April 22, 1998
by and among
CHESAPEAKE ENERGY CORPORATION
AND
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MORGAN STANLEY & CO. INCORPORATED
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.
J.P. MORGAN SECURITIES INC.
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This 7% Cumulative Convertible Preferred Stock Registration Rights
Agreement (this "AGREEMENT") is made and entered into as of April 22, 1998 by
and among Chesapeake Energy Corporation, an Oklahoma corporation (the
"COMPANY"), and Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"),
Morgan Stanley & Co. Incorporated, Bear, Stearns & Co. Inc., Lehman Brothers
Inc. and J.P. Morgan Securities Inc. (each an "INITIAL PURCHASER" and,
collectively, the "INITIAL PURCHASERS"), each of whom has agreed to purchase
shares of the Company's 7% Cumulative Convertible Preferred Stock (the
"SHARES") pursuant to the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated
April 17, 1998 (the "PURCHASE AGREEMENT"), by and among the Company and the
Initial Purchasers. In order to induce the Initial Purchasers to purchase the
Shares, the Company has agreed to provide the registration rights set forth in
this Agreement. The execution and delivery of this Agreement is a condition to
the obligations of the Initial Purchasers set forth in Section 2 of the
Purchase Agreement. Capitalized terms used herein but not defined have the
respective meanings set forth in the Certificate of Designation for the 7%
Cumulative Convertible Preferred Stock (the "CERTIFICATE OF DESIGNATION") and
the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
ACT: The Securities Act of 1933, as
amended.
AFFILIATE: As defined in Rule 144 of the Act.
BUSINESS DAY: Any day on which the New York Stock
Exchange is open for trading and which is not a legal United States holiday.
CERTIFICATED SECURITIES: Definitive certificates of Shares.
CLOSING DATE: The date hereof.
COMMON STOCK: Common Stock, $.01 par value per
share, of the Company.
COMMISSION: The Securities and Exchange
Commission.
EFFECTIVENESS DEADLINE: As defined in Section 3(a) hereof.
EXCHANGE ACT: The Securities Exchange Act of 1934,
as amended.
EXEMPT RESALES: The transactions in which the Initial
Purchasers propose to sell the Shares to certain "qualified institutional
buyers," as such term is defined in Rule 144A under the Act.
FILING DEADLINE: As defined in Section 3(a) hereof.
HOLDERS: As defined in Section 2 hereof.
PERSON: Any individual, corporation,
partnership, joint venture, trust, estate, unincorporated organization or
government or any agency or political subdivision thereof.
PROSPECTUS: The prospectus included in a
Registration Statement at the time such Registration Statement is declared
effective, as amended or supplemented by any prospectus supplement and by all
other amendments thereto, including post-effective amendments, all material
incorporated by reference into such Prospectus and any information previously
omitted in reliance upon Rule 430A of the Act.
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RECOMMENCEMENT DATE: As defined in Section 5(b) hereof.
REGISTRATION DEFAULT: As defined in Section 4 hereof.
RULE 144: Rule 144 promulgated under the Act.
SHARES: The 4,600,000 shares of 7% Cumulative
Convertible Preferred Stock of the Company being issued pursuant to the
Purchase Agreement.
SHELF REGISTRATION STATEMENT: As defined in Section 3 hereof.
SUSPENSION NOTICE: As defined in Section 5(b) hereof.
TRANSFER RESTRICTED SECURITIES: The Shares and the shares of Common
Stock issuable upon conversion or redemption of the Shares, upon original
issuance thereof and at all times subsequent thereto, until, in the case of any
such Shares or shares of Common Stock, (a) the date on which such Shares or
shares of Common Stock have been disposed of in accordance with the Shelf
Registration Statement, (b) the date on which such Shares or shares of Common
Stock are distributed to the public pursuant to Rule 144 or are saleable
pursuant to Rule 144 (or similar provisions then in effect) under the Act or
(c) the date on which such Shares or shares of Common Stock cease to be
outstanding.
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities
(each, a "HOLDER") whenever such Person owns Transfer Restricted Securities.
SECTION 3. SHELF REGISTRATION
(a) Shelf Registration. As soon as practicable after the Closing
Date but in no event later than 60 days after the Closing Date (such 60th day,
the "FILING DEADLINE"), the Company shall file with the Commission a shelf
registration statement pursuant to Rule 415 under the Act (the "SHELF
REGISTRATION STATEMENT"), relating to all Transfer Restricted Securities, and
shall use its best efforts to cause such Shelf Registration Statement to become
effective on or prior to 180 days after the Closing Date (such 180th day, the
"EFFECTIVENESS DEADLINE").
The Company shall use its best efforts to keep the Shelf Registration
Statement required by this Section 3(a) continuously effective, supplemented
and amended as required by and subject to the provisions of Section 5(a) hereof
to the extent necessary to ensure that it is available for sales of Transfer
Restricted Securities by the Holders thereof entitled to the benefit of this
Section 3(a), and to ensure that it conforms with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
announced from time to time, for the shorter of (i) two years (as extended
pursuant to Section 5(b)) following the Closing Date or (ii) the date on which
all Transfer Restricted Securities covered by such Shelf Registration Statement
have been sold pursuant thereto.
(b) Provision by Holders of Certain Information in Connection with
the Shelf Registration Statement. No Holder of Transfer Restricted Securities
may include any of its Transfer Restricted Securities in the Shelf Registration
Statement pursuant to this Agreement unless such Holder furnishes to the
Company in writing, within 20 days after receipt of a request therefor, the
information specified in Item 507 or 508 of Regulation S-K, as applicable, of
the Act for use in connection with the Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein. No Holder of Transfer
Restricted Securities shall be entitled to liquidated damages pursuant to
Section 4 hereof unless such Holder shall have timely provided all such
information. Each selling Holder agrees to promptly furnish additional
information required to be disclosed in order to make the information
previously furnished to the Company by such Holder not materially misleading.
SECTION 4. LIQUIDATED DAMAGES
If the Shelf Registration Statement (i) is not filed with the
Commission on or prior to the Filing Deadline, (ii) has not been declared
effective by the Commission on or prior to the Effectiveness Deadline, or (iii)
is filed and declared effective but shall thereafter cease to be effective or
fail to be usable for its intended purpose (other than as a result of
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a Suspension Notice) without being succeeded (a) within five Business Days by a
post-effective amendment to such Shelf Registration Statement or a supplement
to the Prospectus under Rule 424 of the Act or that cures such failure and that
is itself declared effective within ten days of filing such post-effective
amendment to the Shelf Registration Statement or (b) within 20 days by the
filing of an Exchange Act report incorporated by reference in such Shelf
Registration Statement that cures such failure (each such event referred to in
clauses (i) through (iii), a "REGISTRATION DEFAULT"), then the Company hereby
agrees to pay to each Holder of Transfer Restricted Securities affected thereby
liquidated damages in an amount equal to one-half of one percent (0.5%) per
annum of the liquidation preference amount of the Transfer Restricted
Securities held by such holder during the first 90-day period immediately
following the occurrence of the first such Registration Default, increasing by
an additional one-half of one percent (0.5%) per annum of the liquidation
preference amount of such Transfer Restricted Securities during each subsequent
90-day period, up to a maximum amount of liquidated damages equal to two
percent (2.0%) per annum of the liquidation preference of such Transfer
Restricted Securities, which provision for liquidated damages will continue
until such Registration Default has been cured; provided that the Company shall
in no event be required to pay liquidated damages for more than one
Registration Default at any given time. Notwithstanding anything to the
contrary set forth herein, (1) upon filing of the Shelf Registration Statement,
in the case of (i) above, (2) upon the effectiveness of the Shelf Registration
Statement, in the case of (ii) above, or (3) upon the filing of a (a)
post-effective amendment to the Shelf Registration Statement or a Prospectus
supplement or (b) an Exchange Act report that causes the Shelf Registration
Statement to again be declared effective or made usable, in the case of (iii)
above, the liquidated damages payable with respect to the Transfer Restricted
Securities as a result of such clause (i), (ii) or (iii), as applicable, shall
cease.
All accrued liquidated damages shall be paid to the Holders entitled
thereto, in the manner provided for the payment of dividends, on each Dividend
Payment Date as more fully set forth in the Certificate of Designation.
Notwithstanding the fact that any Shares and/or shares of Common Stock for
which liquidated damages are due cease to be Transfer Restricted Securities,
all obligations of the Company to pay liquidated damages with respect to any
such Shares and/or shares of Common Stock shall survive until such time as all
such obligations shall have been satisfied in full.
SECTION 5. SHELF REGISTRATION PROCEDURES
(a) Procedures. In connection with the Shelf Registration
Statement, the Company shall:
(i) use its best efforts to effect such registration to permit
the sale of the Transfer Restricted Securities being sold in
accordance with the intended method or methods of distribution
thereof (as indicated in the information furnished to the
Company pursuant to Section 3(b) hereof), and pursuant thereto
the Company will prepare and file with the Commission a Shelf
Registration Statement relating to the registration on any
appropriate form under the Act, which form shall be available
for the sale of the Transfer Restricted Securities in accordance
with the intended method or methods of distribution thereof
(including, without limitation, one or more underwritten
offerings) within the time periods and otherwise in accordance
with the provisions hereof. The Company shall not be permitted
to include in the Shelf Registration Statement any securities
other than the Transfer Restricted Securities;
(ii) use its best efforts to contact all Holders of Transfer
Restricted Securities and notify each Holder of its right to
include its Transfer Restricted Securities in such Shelf
Registration Statement;
(iii) use its best efforts to keep such Shelf Registration
Statement continuously effective and provide all requisite
financial statements for the period specified in Section 3 of
this Agreement. Upon the occurrence of any event that would
cause any such Shelf Registration Statement or the Prospectus
contained therein (i) to contain an untrue statement of a
material fact or omit to state any material fact necessary to
make the statements therein not misleading or (ii) not to be
effective and usable for resale of Transfer Restricted
Securities during the period required by this Agreement, the
Company shall file promptly (A) an appropriate amendment to such
Shelf Registration Statement curing such defect, and, if
Commission review is required, use its best efforts to cause
such amendment to be declared effective as soon as practicable,
(B) a supplement pursuant to Rule 424 under the Act curing such
defect or (C) an Exchange Act report incorporated by reference
curing such defect;
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(iv) prepare and file with the Commission such amendments and
post-effective amendments to the Shelf Registration Statement as
may be necessary to keep such Shelf Registration Statement
effective for the applicable period set forth in Section 3
hereof, cause the Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 under the Act, and to comply fully with
Rules 424, 430A and 462, as applicable, under the Act in a
timely manner; and comply with the provisions of the Act with
respect to the disposition of all Transfer Restricted Securities
covered by such Shelf Registration Statement during the
applicable period in accordance with the intended method or
methods of distribution by the sellers thereof set forth in such
Shelf Registration Statement or supplement to the Prospectus;
(v) advise the Holders and underwriters, if any, promptly and,
if requested by such Persons, confirm such advice in writing,
(A) when the Shelf Registration Statement or any Prospectus
supplement or post- effective amendment has been filed, and,
with respect to the Shelf Registration Statement or any post-
effective amendment thereto, when the same has become effective,
(B) of any request by the Commission for amendments to the Shelf
Registration Statement or amendments or supplements to the
Prospectus or for additional information relating thereto, (C)
of the issuance by the Commission of any stop order suspending
the effectiveness of the Shelf Registration Statement under the
Act or of the suspension by any state securities commission of
the qualification of the Transfer Restricted Securities for
offering or sale in any jurisdiction, or the initiation of any
proceeding for any of the preceding purposes, (D) of the
existence of any fact or the happening of any event that makes
any statement of a material fact made in the Shelf Registration
Statement, the Prospectus, any amendment or supplement thereto
or any document incorporated by reference therein untrue, or
that requires the making of any additions to or changes in the
Shelf Registration Statement in order to make the statements
therein not misleading, or that requires the making of any
additions to or changes in the Prospectus in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading. If at any time the
Commission shall issue any stop order suspending the
effectiveness of the Shelf Registration Statement, or any state
securities commission or other regulatory authority shall issue
an order suspending the qualification or exemption from
qualification of the Transfer Restricted Securities under state
securities or Blue Sky laws, the Company shall use its best
efforts to obtain the withdrawal or lifting of such order at the
earliest possible time;
(vi) subject to Section 5(a)(iii), if any fact or event
contemplated by Section 5(a)(v)(D) above shall exist or have
occurred, prepare a post-effective amendment or supplement to
the Shelf Registration Statement or related Prospectus or any
document incorporated therein by reference or file any other
required document so that, as thereafter delivered to the
purchasers of Transfer Restricted Securities, the Prospectus
will not contain an untrue statement of a material fact or omit
to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading;
(vii) upon the request of counsel for the Holders and
underwriters, if any, furnish to such counsel before filing with
the Commission, copies of any Shelf Registration Statement or
any Prospectus included therein or any amendments or supplements
to any such Shelf Registration Statement or Prospectus
(including all documents incorporated by reference after the
initial filing of such Shelf Registration Statement), which
documents will be subject to the review and comment of such
counsel in connection with such sale, if any, for a period of at
least five Business Days, and the Company will not file any such
Shelf Registration Statement or Prospectus or any amendment or
supplement to any such Shelf Registration Statement or
Prospectus (including all such documents incorporated by
reference) to which such Persons shall reasonably object within
five Business Days after the receipt thereof. Any such Person
shall be deemed to have reasonably objected to such filing if
such Registration Statement, amendment, Prospectus or
supplement, as applicable, as proposed to be filed, contains an
untrue statement of a material fact or omits to state any
material fact necessary to make the statements therein not
misleading or fails to comply with the applicable requirements
of the Act;
(viii) upon the request of any Holder or underwriter, if any,
provide copies of any document filed with the Commission that is
incorporated by reference into the Shelf Registration Statement
or Prospectus
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to such Holder or underwriter, and make the Company's
representatives available for discussion of such document and
other customary due diligence matters;
(ix) make available at reasonable times for inspection by the
Holders and underwriters, if any, and any attorney or accountant
retained by such Holders or underwriters, if any, all financial
and other records, pertinent corporate documents of the Company
and cause the Company's officers and employees to supply all
information reasonably requested by any such Holder,
underwriters, attorney or accountant in connection with the
Shelf Registration Statement or any post-effective amendment
thereto subsequent to the filing thereof and prior to its
effectiveness;
(x) if requested by any Holder or underwriter, if any, promptly
include in the Shelf Registration Statement or Prospectus,
pursuant to a supplement or post-effective amendment, if
necessary, such information as such Holder or underwriter may
reasonably request to have included therein, including, without
limitation, information relating to the "Plan of Distribution"
of the Transfer Restricted Securities; and make all required
filings of such Prospectus supplement or post-effective
amendment as soon as practicable after the Company is notified
of the matters to be included in such Prospectus supplement or
post-effective amendment;
(xi) upon the request of any Holder or underwriter, if any,
furnish such Holder or underwriter, if any, without charge, at
least one copy of the Shelf Registration Statement, as first
filed with the Commission, and of each amendment thereto;
(xii) deliver to each Holder and underwriter, if any, without
charge, as many copies of the Prospectus (including each
preliminary prospectus) and any amendment or supplement thereto
as such Holder or underwriter reasonably may request; the
Company hereby consents to the use (in accordance with law) of
the Prospectus and any amendment or supplement thereto by each
Holder and each underwriter, if any, in connection with the
offering and the sale of the Transfer Restricted Securities
covered by the Prospectus or any amendment or supplement
thereto;
(xiii) upon the request of any Holder or underwriter, if any,
enter into such agreements (including underwriting agreements)
and make such representations and warranties and take all such
other actions in connection therewith in order to expedite or
facilitate the disposition of the Transfer Restricted Securities
pursuant to the Shelf Registration Statement as may be
reasonably requested by such Holder or underwriter in connection
with any sale or resale pursuant to the Shelf Registration
Statement and in such connection, the Company shall:
(A) upon request of any such Holder or underwriter
furnish (or in the case of paragraphs (2) and (3) below, use its
best efforts to cause to be furnished) to each Holder or
underwriter upon the effectiveness of the Shelf Registration
Statement:
(1) a certificate, dated such date, signed on behalf of
the Company by the Chairman of the Board or President and
Financial Officer of the Company, confirming, as of the date
thereof, the matters set forth in Sections 6(v), 9(a) and 9(b)
of the Purchase Agreement and such other similar matters as such
Person may reasonably request;
(2) an opinion, dated the date of effectiveness of the
Shelf Registration Statement, of counsel for the Company
covering matters similar to those set forth in paragraph (e) of
Section 9 of the Purchase Agreement and such other matter as
such Holder or underwriter may reasonably request, and in any
event including a statement to the effect that such counsel has
participated in conferences with officers and other
representatives of the Company, representatives of the
independent public accountants for the Company and has
considered the matters required to be stated therein and the
statements contained therein, although such counsel has not
independently verified the accuracy, completeness or fairness of
such statements; and that such counsel advises that, on the
basis of the foregoing (relying as to materiality to the extent
such counsel deems appropriate upon the statements of officers
and other representatives of the Company and without independent
check or verification), no facts came to such counsel's
attention that caused such counsel to believe that the Shelf
Registration Statement and any
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post-effective amendment thereto, at the time such Shelf
Registration Statement or any post-effective amendment thereto
became effective, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading, or that the Prospectus contained in such Shelf
Registration Statement, as of its date, contained an untrue
statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
Without limiting the foregoing, such counsel may state further
that such counsel assumes no responsibility for, and has not
independently verified the accuracy, completeness or fairness of
the financial statements, notes and schedules and other
financial data included in the Shelf Registration Statement or
the related Prospectus; and
(3) a customary comfort letter, dated as of the date of
effectiveness of the Shelf Registration Statement from the
Company's independent accountants, in the customary form and
covering matters of the type customarily covered in comfort
letters to underwriters in connection with underwritten
offerings, and affirming the matters set forth in the comfort
letters delivered pursuant to Section 9(i) of the Purchase
Agreement; and
(B) deliver such other documents and certificates as may
be reasonably requested by such Holder or underwriter to
evidence compliance with the matters set forth in clause (A)
above and with any customary conditions contained in any
agreement entered into by the Company pursuant to this clause
(xiii);
(xiv) prior to any public offering of Transfer Restricted
Securities, cooperate with the Holders, underwriters, if any,
and their respective counsel in connection with the registration
and qualification of the Transfer Restricted Securities under
the securities or Blue Sky laws of such jurisdictions as such
Persons may request and do any and all other acts or things
necessary or advisable to enable the disposition in such
jurisdictions of the Transfer Restricted Securities covered by
the Shelf Registration Statement; provided, however, that the
Company shall not be required to register or qualify as a
foreign corporation where it is not now so qualified or to take
any action that would subject it to the service of process in
suits or to taxation, other than as to matters and transactions
relating to the Shelf Registration Statement, in any
jurisdiction where it is not now so subject;
(xv) in connection with any sale of Transfer Restricted
Securities that will result in such securities no longer being
Transfer Restricted Securities, cooperate with the Holders to
facilitate the timely preparation and delivery of certificates
(including global certificates registered in the name of Cede &
Co. as nominee for The Depository Trust Company) representing
Transfer Restricted Securities to be sold and not bearing any
restrictive legends; and, in the case of certificated Transfer
Restricted Securities, to register such Transfer Restricted
Securities in such denominations and such names as the Holders
may request at least two Business Days prior to such sale of
Transfer Restricted Securities;
(xvi) list all shares of Common Stock covered by the Shelf
Registration Statement on any securities exchange on which the
Common Stock is then listed;
(xvii) use its best efforts to cause the disposition of the
Transfer Restricted Securities covered by the Shelf Registration
Statement to be registered with or approved by such other
governmental agencies or authorities as may be required to
enable the seller or sellers thereof to consummate the
disposition of such Transfer Restricted Securities, subject to
the provision contained in clause (xiv) above;
(xviii) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make
generally available to its security holders with regard to the
Shelf Registration Statement, as soon as practicable, a
consolidated earnings statement meeting the requirements of Rule
158 (which need not be audited) covering a twelve-month period
beginning after the effective date of the Shelf Registration
Statement (as such term is defined in paragraph (c) of Rule 158
under the Act);
(xix) if underwritten, make appropriate officers of the Company
available to the underwriters for meetings with prospective
purchasers of the Transfer Restricted Securities and prepare and
present to
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potential investors customary "road show" material in a manner
consistent with other new issuances of other securities similar
to the Transfer Restricted Securities; and
(b) Restrictions on Holders. Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of (i) the notice referred to
in Section 5(a)(v)(C), (ii) any notice from the Company of the existence of any
fact of the kind described in Section 5(a)(v)(D) hereof or (iii) any notice
from the Company that (a) sales under any Registration Statement contemplated
by this Agreement would require the disclosure of material information which
the Company has a bona fide business purpose for preserving as confidential, or
(b) such disclosure would impede the Company's ability to consummate a material
transaction (in each case, a "SUSPENSION NOTICE"), such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement until (A) such Holder has received copies of
the supplemented or amended Prospectus contemplated by Section 5(a)(vi) hereof,
or (B) such Holder is advised in writing by the Company that the use of the
Prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the Prospectus (in
each case, the "RECOMMENCEMENT DATE"), provided, that any suspension pursuant
to clause (iii) above shall not exceed 60 days in any twelve-month period.
Each Holder receiving a Suspension Notice hereby agrees that it will either (x)
destroy any Prospectuses, other than permanent file copies, then in such
Holder's possession which have been replaced by the Company with more recently
dated Prospectuses or (y) deliver to the Company (at the Company's expense) all
copies, other than permanent file copies, then in such Holder's possession of
the Prospectus covering such Transfer Restricted Securities that was current at
the time of receipt of the Suspension Notice. The time period regarding the
effectiveness of the Shelf Registration Statement set forth in Section 3 hereof
shall be extended by a number of days equal to the number of days in the period
from and including the date of delivery of the Suspension Notice to the date of
delivery of the Recommencement Date.
SECTION 6. REGISTRATION EXPENSES
(a) All expenses incident to the Company's performance of or
compliance with this Agreement will be borne by the Company, regardless of
whether a Shelf Registration Statement required by this Agreement becomes
effective, including without limitation: (i) all registration and filing fees
and expenses; (ii) all fees and expenses of compliance with federal securities
and state Blue Sky or securities laws; (iii) all expenses of printing
(including printing certificates for the Common Stock to be issued upon
conversion of the Shares and printing of Prospectuses), messenger and delivery
services and telephone; (iv) all fees and disbursements of counsel for the
Company and not more than one counsel for the Holders of Transfer Restricted
Securities as described in Section 6(b) below; (v) all application and filing
fees in connection with listing the Common Stock on a national securities
exchange pursuant to the requirements hereof; and (vi) all fees and
disbursements of independent certified public accountants of the Company
(including the expenses of any special audit and comfort letters required by or
incident to such performance).
The Company will, in any event, bear its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expenses of any annual
audit and the fees and expenses of any Person, including special experts,
retained by the Company.
(b) In connection with the Shelf Registration Statement required by
this Agreement, the Company will reimburse the Initial Purchasers and the
Holders selling Transfer Restricted Securities pursuant to the "Plan of
Distribution" contained in the Shelf Registration Statement, for the reasonable
fees and disbursements of not more than one counsel, who shall be Andrews &
Kurth L.L.P., unless another firm shall be chosen by the Holders of a majority
in liquidation preference of the Transfer Restricted Securities for whose
benefit such Shelf Registration Statement is being prepared.
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SECTION 7. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless each Holder,
its directors, its officers and each Person, if any, who controls such Holder
(within the meaning of Section 15 of the Act and Section 20 of the Exchange
Act), from and against any and all losses, claims, damages, liabilities,
judgments, (including without limitation, any legal or other expenses incurred
in connection with investigating or defending any matter, including any action
that could give rise to any such losses, claims, damages, liabilities or
judgments) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Shelf Registration Statement, preliminary
prospectus or Prospectus (or any amendment or supplement thereto) provided by
the Company to any Holder or any prospective purchaser of registered Shares or
registered shares of Common Stock 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 judgments are caused by an untrue statement or
omission or alleged untrue statement or omission that is based upon information
relating to any of the Holders furnished in writing to the Company by any of
the Holders.
(b) Each Holder of Transfer Restricted Securities agrees, severally
and not jointly, to indemnify and hold harmless the Company and its directors
and officers, and each person, if any, who controls (within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act) the Company, to the
same extent as the foregoing indemnity from the Company set forth in section
(a) above, but only with reference to information relating to such Holder
furnished in writing to the Company by such Holder expressly for use in the
Shelf Registration Statement. In no event shall any Holder, its directors, its
officers or any Person, if any, who controls such Holder be liable or
responsible for any amount in excess of the amount by which the total amount
received by such Holder with respect to its sale of Transfer Restricted
Securities pursuant to the Shelf Registration Statement exceeds (i) the amount
paid by such Holder for such Transfer Restricted Securities and (ii) the amount
of any damages that such Holder, its directors, its officers or any Person, if
any, who controls such Holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission.
(c) In case any action shall be commenced involving any Person in
respect of which indemnity may be sought pursuant to Section 7(a) or 7(b) (the
"INDEMNIFIED PARTY"), the indemnified party shall promptly notify the Person
against whom such indemnity may be sought (the "INDEMNIFYING PERSON") in
writing and the indemnifying party shall assume the defense of such action,
including the employment of counsel reasonably satisfactory to the indemnified
party and the payment of all fees and expenses of such counsel, as incurred
(except that in the case of any action in respect of which indemnity may be
sought pursuant to both Sections 7(a) and 7(b), a Holder shall not be required
to assume the defense of such action pursuant to this Section 7(c), but may
employ separate counsel and participate in the defense thereof, but the fees
and expenses of such counsel, except as provided below, shall be at the expense
of the Holder). Any indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of the indemnified party
unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to
any such action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified party).
In any such case, the indemnifying party shall not, in connection with any one
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys
(in addition to any local counsel) for all indemnified parties and all such
fees and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by a majority of the Holders, in the case of the parties
indemnified pursuant to Section 7(a), and by the Company, in the case of
parties indemnified pursuant to Section 7(b). The indemnifying party shall
indemnify and hold harmless the indemnified party from and against any and all
losses, claims, damages, liabilities and judgments by reason of any settlement
of any action (i) effected with its written consent or (ii) effected without
its written consent if the settlement is entered into more than twenty business
days after the indemnifying party shall have received a request from the
indemnified party for reimbursement for the fees and expenses of counsel (in
any case where such fees and expenses are at the expense of the indemnifying
party) and, prior to the date of such settlement, the indemnifying party shall
have failed to comply with such reimbursement request. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement or compromise of, or consent to the entry of judgment with
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respect to, any pending or threatened action in respect of which the
indemnified party is or could have been a party and indemnity or contribution
may be or could have been sought hereunder by the indemnified party, unless
such settlement, compromise or judgment (i) includes an unconditional release
of the indemnified party from all liability on claims that are or could have
been the subject matter of such action and (ii) does not include a statement as
to or an admission of fault, culpability or a failure to act, by or on behalf
of the indemnified party.
(d) To the extent that the indemnification provided for in this
Section 7 is unavailable to an indemnified party in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and the Holders, on the other hand, from their sale
of Transfer Restricted Securities or (ii) if the allocation provided by clause
7(d)(i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
7(d)(i) above but also the relative fault of the Company on the one hand, and
of the Holders, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The
relative fault of the Company, on the one hand, and of the Holders, on the
other hand, shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company, on the one hand, or by the Holders, on the other hand, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by a
party as a result of the losses, claims, damages, liabilities and judgments
referred to above shall be deemed to include, subject to the limitations set
forth in the second paragraph of Section 6(a), any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim.
The Company and each Holder agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) were determined by pro
rata allocation (even if the Holders were treated as one entity for such
purpose) or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities or judgments referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any
matter, including any action that could have given rise to such losses, claims,
damages, liabilities or judgments. Notwithstanding the provisions of this
Section 7, no Holder or its related Indemnified Holders shall be required to
contribute, in the aggregate, any amount in excess of the amount by which the
total received by such Holder with respect to the sale of its Transfer
Restricted Securities pursuant to the Shelf Registration Statement exceeds (i)
the amount paid by such Holder for such Transfer Restricted Securities and (ii)
the amount of any damages which such Holder has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Holders'
obligations to contribute pursuant to this Section 7(d) are several in
proportion to the respective liquidation preference of Transfer Restricted
Securities held by each of the Holders hereunder and not joint.
SECTION 8. RULE 144A AND RULE 144
The Company agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding and during any period in which the
Company (i) is not subject to Section 13 or 15(d) of the Exchange Act, to make
available, upon request of any Holder of Transfer Restricted Securities, to any
Holder or beneficial owner of Transfer Restricted Securities in connection with
any sale thereof and any prospective purchaser of Transfer Restricted
Securities designated by such Holder or beneficial owner, the information
required by Rule 144(d)(4) under the Act in order to permit resales of such
Transfer Restricted Securities pursuant to Rule 144A, and (ii) is subject to
Section 13 or 15(d) of the Exchange Act, to make all filings required thereby
in a timely manner in order to permit resales of such Transfer Restricted
Securities pursuant to Rule 144 (if available).
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SECTION 9. UNDERWRITTEN REGISTRATIONS
(a) If any of the Transfer Restricted Securities covered by the
Shelf Registration Statement are to be sold in an underwritten offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a majority in
liquidation preference of such Transfer Restricted Securities included in such
offering, subject to the consent of the Company (which will not be unreasonably
withheld or delayed); provided, that any such underwritten offering shall
include a minimum of $50,000,000 in aggregate liquidation preference of
Transfer Restricted Securities.
No Holder of Transfer Restricted Securities may participate in any
underwritten registration hereunder unless such Holder (i) agrees to sell its
Transfer Restricted Securities on the basis reasonably provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
(b) Each Holder of Transfer Restricted Securities agrees, if
requested (pursuant to a timely written notice) by the managing underwriters in
an underwritten offering made pursuant to the Shelf Registration Statement, not
to effect any private sale or distribution (including a sale pursuant to Rule
144(k) and Rule 144A, but excluding non- public sales to any of its affiliates,
officers, directors, employees and controlling persons) of any of the Shares,
in the case of an underwritten offering of the Shares, or the Common Stock, in
the case of an underwritten offering of shares of Common Stock constituting
Transfer Restricted Securities, during the period beginning 10 days prior to,
and ending 90 days after, the closing date of such underwritten offering.
The foregoing provisions of Section 9(b) shall not apply to any
Holder of Transfer Restricted Securities if such Holder is prevented by
applicable statute or regulation from entering into any such agreement.
(c) If any of the Transfer Restricted Securities covered by any
Shelf Registration are to be sold in an underwritten offering, the
underwriters, their controlling persons and their respective officers,
directors, employees, representatives and agents shall be entitled to indemnity
(substantially similar to the indemnity set forth in Section 7 of this
Agreement) from the Company and the Holders, which indemnity may be set forth
in an underwriting agreement.
SECTION 10. MISCELLANEOUS
(a) Remedies. The Company acknowledges and agrees that any failure
by the Company to comply with its obligations under Section 3 hereof may result
in material irreparable injury to the Initial Purchasers or the Holders for
which there is no adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of any such
failure, the Initial Purchasers or any Holder may obtain such relief as may be
required to specifically enforce the Company's obligations under Section 3
hereof. The Company further agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not, on or after
the date of this Agreement, enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. The Company has
not previously entered into any agreement (which has not expired or been
terminated) granting any registration rights with respect to its securities to
any Person, except as disclosed in the Purchase Agreement. The rights granted
to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's securities
under any agreement in effect on the date hereof.
(c) No Piggybacks on Shelf Registration Statement. The Company
shall not grant to any of its security holders (other than the holders of
Transfer Restricted Securities in such capacity) the right to include any of
its securities in the Shelf Registration Statement other than the Transfer
Restricted Securities.
(d) Amendments and Waivers. The provisions of this Agreement may
not be amended, modified or supplemented, and waivers or consents to or
departures from the provisions hereof may not be given unless (i) in the case
of Section 4 hereof and this Section 10(d)(i), the Company has obtained the
written consent of Holders of all outstanding Transfer Restricted Securities
and (ii) in the case of all other provisions hereof, the Company has obtained
the written consent of Holders of Shares representing a majority of the
outstanding liquidation preference of Transfer Restricted Securities (excluding
Transfer Restricted Securities held by the Company or its Affiliates).
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(e) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company, on the one
hand, and the Initial Purchasers, on the other hand, and shall have the right
to enforce such agreements directly to the extent they may deem such
enforcement necessary or advisable to protect their rights hereunder.
(f) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, to the address set forth on the records of
either the Registrar with respect to the Shares or The
Depository Trust Company, as the case may be, with a copy to
Andrews & Kurth L.L.P., 4200 Chase Tower, Houston, Texas 77002;
(ii) if to the Company: to Chesapeake Energy Corporation, 6100
North Western Avenue, Oklahoma City, Oklahoma 73118, Attention:
Corporate Secretary, with a copy to McAfee & Taft, Two
Leadership Square, 10th Floor, Oklahoma City, Oklahoma 73102,
Attention: Connie S. Stamets; and
(iii) if the Initial Purchasers: to Donaldson, Lufkin & Jenrette
Securities Corporation, 277 Park Avenue, New York, New York
10172, Attention: Syndicate Department; to Morgan Stanley & Co.
Incorporated, 1585 Broadway, New York, New York 10036,
Attention: Corporate Finance Department; to Bear, Stearns & Co.
Inc., 245 Park Avenue, New York, New York 10172, Attention:
Corporate Finance Department; to Lehman Brothers Inc., 200 Vesey
Street, New York, New York 10285, Attention: Corporate Finance
Department; and to J.P. Morgan Securities Inc., 60 Wall Street,
New York, New York 10260, Attention: Equity Capital Markets; or
in any case to such other address as the person to be notified
may have requested in writing, with a copy to Andrews & Kurth
L.L.P., 4200 Chase Tower, Houston, Texas 77002.
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if mailed;
when receipt acknowledged, if telecopied; and on the next business day, if
timely delivered to an air courier guaranteeing overnight delivery.
(g) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities; provided,
that nothing herein shall be deemed to permit any assignment, transfer or other
disposition of Transfer Restricted Securities in violation of the terms hereof
or of the Purchase Agreement or the Certificate of Designation. If any
transferee of any Holder shall acquire Transfer Restricted Securities in any
manner, whether by operation of law or otherwise, such Transfer Restricted
Securities shall be held subject to all of the terms of this Agreement, and by
taking and holding such Transfer Restricted Securities such Person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement, including the restrictions on resale
set forth in this Agreement, the Certificate of Designation and, if applicable,
the Purchase Agreement, and such Person shall be entitled to receive the
benefits hereof.
(h) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(i) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(j) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CONFLICT OF LAW RULES THEREOF.
(k) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such
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provision in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
(l) Entire Agreement. This Agreement is intended by the parties as
a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted with respect to the
Transfer Restricted Securities. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
CHESAPEAKE ENERGY CORPORATION
By: /s/ AUBREY K. McCLENDON
-----------------------------------
Name: Aubrey K. McClendon
Title: Chairman and Chief Executive
Officer
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MORGAN STANLEY & CO. INCORPORATED
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.
J.P. MORGAN SECURITIES INC.
By: DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ RALPH EADS
-------------------------------
Name: Ralph Eads
Title: Managing Director
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