UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-A

 

 

FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES

PURSUANT TO SECTION 12(b) OR 12(g) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

 

Gastar Exploration USA, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   38-3531640
(State of incorporation or organization)   (I.R.S. Employer Identification No.)
1331 Lamar Street, Suite 650
Houston, Texas
  77010
(Address of principal executive offices)   (Zip Code)

Securities to be registered pursuant to Section 12(b) of the Act:

 

Title of each class

to be so registered

 

Name of each exchange on which

each class is to be registered

10.75% Series B Cumulative Preferred Stock   NYSE MKT LLC

 

 

If this form relates to the registration of a class of securities pursuant to Section 12(b) of the Exchange Act and is effective pursuant to General Instruction A.(c), check the following box.   x

If this form relates to the registration of a class of securities pursuant to Section 12(g) of the Exchange Act and is effective pursuant to General Instruction A.(d), check the following box.   ¨

Securities Act registration statement file number to which this form relates: 333-174552.

Securities to be registered pursuant to Section 12(g) of the Act: None.

 

 

 


Item 1. Description of Registrant’s Securities to be Registered.

This Registration Statement relates to the registration under the Securities Exchange Act of 1934, as amended, of shares of 10.75% Series B Cumulative Preferred Stock, par value $0.01 per share (the “ Series B Preferred Stock ”), of Gastar Exploration USA, Inc., a Delaware corporation (the “ Registrant ”). The description of the Series B Preferred Stock to be registered hereunder is set forth under the caption “Description of Series B Preferred Stock” in the Registrant’s Prospectus Supplement with respect to the Series B Preferred Stock (the “ Prospectus Supplement ”) filed pursuant to Rule 424(b) promulgated under the Securities Act of 1933, as amended, relating to the Registrant’s Registration Statement on Form S-3 (File No. 333-174552), which became effective as of June 8, 2011. The Prospectus Supplement, including the description of the Series B Preferred Stock therein, shall be deemed to be incorporated herein by reference.


Item 2. Exhibits.

 

3.1    Amended and Restated Certificate of Incorporation of Gastar Exploration USA, Inc, filed with the Secretary of State of the State of Delaware on October 25, 2013 (incorporated by reference to the Registrant’s Form 8-K Current Report on Form 8-K dated October 28, 2013 (File No. 000-35211)).
3.2    Second Amended and Restated Bylaws of Gastar Exploration USA, Inc., dated October 25, 2013 (incorporated by reference to the Registrant’s Form 8-K Current Report on Form 8-K dated October 25, 2013 (File No. 000-35211)).
3.3    Certificate of Designation of Rights and Preferences of 8.625% Series A Cumulative Preferred Stock (incorporated by reference to Exhibit 3.3 of the Registrant’s Form 8-A filed on June 20, 2011. File No. 001-35211).
3.4    Certificate of Designation of Rights and Preferences of 10.75% Series B Cumulative Preferred Stock, dated October 31, 2013.
4.1    Form of Certificate representing 10.75% Series B Cumulative Preferred Stock.


SIGNATURE

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereto duly authorized.

 

  GASTAR EXPLORATION USA, INC.

Date: November 1, 2013

  By:  

/s/ J. Russell Porter

 

Name:     J. Russell Porter

 

Title:       President


EXHIBIT INDEX

 

3.1    Amended and Restated Certificate of Incorporation of Gastar Exploration USA, Inc, filed with the Secretary of State of the State of Delaware on October 25, 2013 (incorporated by reference to the Registrant’s Form 8-K Current Report on Form 8-K dated October 28, 2013 (File No. 000-35211)).
3.2    Second Amended and Restated Bylaws of Gastar Exploration USA, Inc., dated October 25, 2013 (incorporated by reference to the Registrant’s Form 8-K Current Report on Form 8-K dated October 25, 2013 (File No. 000-35211)).
3.3    Certificate of Designation of Rights and Preferences of 8.625% Series A Cumulative Preferred Stock (incorporated by reference to Exhibit 3.3 of the Registrant’s Form 8-A filed on June 20, 2011. File No. 001-35211).
3.4    Certificate of Designation of Rights and Preferences of 10.75% Series B Cumulative Preferred Stock, dated October 31, 2013.
4.1    Form of Certificate representing 10.75% Series B Cumulative Preferred Stock.

Exhibit 3.4

GASTAR EXPLORATION USA, INC.

CERTIFICATE OF DESIGNATION OF RIGHTS AND PREFERENCES

10.75% SERIES B CUMULATIVE PREFERRED STOCK

(Pursuant to Section 151 of the General Corporation Law of the State of Delaware)

Gastar Exploration USA, Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware, as amended (the “ DGCL ”), in accordance with Section 151 of the DGCL, does hereby certify that:

1. The name of the corporation is Gastar Exploration USA, Inc. (the “ Corporation ”).

2. The Amended and Restated Certificate of Incorporation of the Corporation (as may be amended from time to time, the “ Certificate of Incorporation ”) was filed with the Secretary of State of the State of Delaware on October 25, 2013.

3. Pursuant to the authority conferred upon the Board of Directors of the Corporation by the Certificate of Incorporation, and pursuant to the provisions of Sections 103 and 151(g) of the DGCL, said Board of Directors, by unanimous written consent on October 25, 2013, adopted a resolution establishing the rights, preferences, privileges and restrictions of, and the number of shares comprising, the Corporation’s 10.75% Series B Cumulative Preferred Stock, which resolution is as follows:

RESOLVED , that, pursuant to authority given by Article IV of the Certificate of Incorporation (which authorized 40,000,000 shares of preferred stock, par value $0.01 per share), a new series of preferred stock in the Corporation, having the rights, preferences, privileges and restrictions, and the number of shares constituting such series and the designation of such series, set forth below be, and it hereby is, authorized by the Board of Directors of the Corporation as follows:

Section 1. Number of Shares and Designation . This series of Preferred Stock shall be designated as 10.75% Series B Cumulative Preferred Stock, par value $0.01 per share (the “ Series B Preferred Stock ”), and the number of shares that shall constitute such series shall be 10,000,000.

Section 2. Definitions . For purposes of the Series B Preferred Stock and as used in this Certificate, the following terms shall have the meanings indicated:

Alternative Conversion Consideration ” shall have the meaning set forth in Section 6(d) of this Certificate.

Alternative Form Consideration ” shall have the meaning set forth in Section 6(d) of this Certificate.


Business Day ” shall mean any day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open.

Bylaws ” shall mean the amended and restated bylaws of the Corporation, as may be amended from time to time.

Call Date ” shall mean the date fixed for redemption of the Series B Preferred Stock and specified in the notice to holders required under paragraph (e) of Section 5 hereof as the Call Date.

Certificate ” shall mean this Certificate of Designations of Rights and Preferences of the Series B Preferred Stock.

Change of Control Conversion Date ” shall have the meaning set forth in Section 6(j) of this Certificate.

Change of Control Conversion Right ” shall have the meaning set forth in Section 6(a) of this Certificate.

A “ Change of Ownership or Control ” shall be deemed to have occurred when, after any share of Series B Preferred Stock is originally issued by the Corporation, each of the following has occurred and is continuing: (1)(i) a “person,” “group” or “entity” (within the meaning of Sections 13(d) and 14(d) of the Exchange Act), becomes the ultimate “beneficial owner” (as such term is defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person or group shall be deemed to have beneficial ownership of all shares of Voting Stock that such person or group has the right to acquire regardless of when such right is first exercisable), directly or indirectly, of Voting Stock representing more than 50% of the total voting power of the total Voting Stock of either the Corporation or the Parent; (ii) either the Corporation or the Parent sells, transfers or otherwise disposes of all or substantially all of its assets; or (iii) of the consummation of a merger or share exchange of either the Corporation or the Parent with another entity where the applicable entity’s stockholders immediately prior to the merger or share exchange would not beneficially own, immediately after the merger or share exchange, securities representing 50% or more of the outstanding Voting Stock of the entity issuing cash or securities in the merger or share exchange (without consideration of the rights of any class of stock to elect directors by a separate group vote), or where members of the Board of Directors of the applicable entity immediately prior to the merger or share exchange would not, immediately after the merger or share exchange, constitute a majority of the Board of Directors of the entity issuing cash or securities in the merger or share exchange; and (2) following the closing of any transaction referred above, neither the Corporation nor the acquiring or surviving entity has a class of common stock (or ADRs representing such securities) subject to a National Market Listing. Notwithstanding the foregoing, neither the Delaware Migration nor the Downstream Merger shall constitute a Change of Ownership or Control.

Common Stock ” shall mean the shares of common stock of the Corporation.

Common Stock Conversion Consideration ” shall have the meaning set forth in Section 6(a) of this Certificate.

 

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Common Stock Price ” shall have the meaning set forth in Section 6(k) of this Certificate.

Conversion Consideration ” shall have the meaning set forth in Section 6(d) of this Certificate.

Conversion Rate ” shall have the meaning set forth in Section 6(a) of this Certificate.

Delaware Migration ” shall mean the continuance of the Parent as a Delaware corporation.

Dividend Default ” shall have the meaning set forth in paragraph (b) of Section 3 hereof.

Dividend Payment Date ” shall have the meaning set forth in paragraph (a) of Section 3 hereof.

Dividend Periods ” shall mean monthly dividend periods commencing on the first day of each calendar month and ending on and including the day preceding the first day of the next succeeding Dividend Period; provided , however , that any Dividend Period during which any Series B Preferred Stock shall be redeemed pursuant to Section 5 hereof shall end on and include the Call Date only with respect to the Series B Preferred Stock being redeemed.

Dividend Rate ” shall mean the dividend rate accruing on the Series B Preferred Stock, as applicable from time to time pursuant to the terms hereof.

Dividend Record Date ” shall have the meaning set forth in paragraph (a) of Section 3 hereof.

Downstream Merger ” shall mean the merger of the Parent with and into the Corporation whereby the Common Stock outstanding immediately prior to the merger will be cancelled and new Common Stock will be issued solely to the holders of the then outstanding Parent Common Stock and a number of shares of Common Stock equal to or greater than the Share Cap (as may be adjusted pursuant to clause (ii) of paragraph (a) of Section 6 and any pro rata adjustments for any Shares Splits) is reserved for issuance upon exercise of the Change of Ownership or Control Conversion Right.

Exchange Act ” shall mean the U.S. Securities Exchange Act of 1934, as amended.

Exchange Cap ” shall have the meaning set forth in Section 6(c) of this Certificate.

Gastar USA Board ” shall mean the board of directors of the Corporation or any committee of members of the board of directors authorized by such board to perform any of its responsibilities with respect to the Series B Preferred Stock.

Junior Shares ” shall have the meaning set forth in paragraph (a)(iii) of Section 8 hereof.

Listing Default ” shall have the meaning set forth in paragraph (c) of Section 3 hereof.

 

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Market Value ” of a given security shall mean the average of the daily Trading Price per share of such security for the ten consecutive Trading Days immediately prior to the date in question.

NASDAQ Stock Market ” shall mean any of The NASDAQ Global Market, The NASDAQ Capital Market or The NASDAQ Global Select Market.

National Market Listing ” shall mean the listing or quotation, as applicable, of securities on or in the New York Stock Exchange, the NYSE MKT LLC, a NASDAQ Stock Market or any comparable national securities exchange or national securities market.

Parent ” shall mean Gastar Exploration Ltd, a corporation subsisting under the Business Corporations Act (Alberta) (and after the Delaware Migration, the DGCL) and the owner of all of the Common Stock as of the date of the filing of this Certificate with the Secretary of State of the State of Delaware.

Parent Board ” shall mean the Board of Directors of the Parent.

Parent Common Stock ” shall mean the common shares of the Parent, which are listed on the NYSE MKT LLC under the symbol “GST.”

Parity Shares ” shall have the meaning set forth in paragraph (b) of Section 8 hereof. Shares of Series A Preferred Stock shall be Parity Shares for all purposes of the Series B Preferred Stock except as may otherwise be expressly set forth herein.

Penalty Rate ” shall mean 12.75% per annum.

Person ” shall mean any individual, firm, partnership, limited liability company, corporation or other entity, and shall include any successor (by merger or otherwise) of such entity.

A “ Quarterly Dividend Default ” shall occur if the Corporation fails to pay cash dividends on the Series B Preferred Stock in full during any Dividend Period within a Quarterly Dividend Period; provided , that only one Quarterly Dividend Default may occur during each Quarterly Dividend Period and only four Quarterly Dividend Defaults may occur during any calendar year.

Quarterly Dividend Period ” shall mean quarterly dividend periods commencing on January 1, April 1, July 1 and October 1 of each year and ending on and including the day preceding the next succeeding Quarterly Dividend Period.

Reorganization Transactions ” shall mean the Delaware Migration and the Downstream Merger.

SEC ” shall have the meaning set forth in Section 10 hereof.

Securities Act ” shall mean the U.S. Securities Act of 1933, as amended.

Senior Shares ” shall have the meaning set forth in paragraph (a) of Section 8 hereof.

 

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Series A Preferred Stock ” shall mean the Corporations 8.625% Series A Cumulative Preferred Stock.

Series B Preferred Stock ” shall have the meaning set forth in Section 1 hereof.

set apart for payment ” shall be deemed to include, without any further action, the following: the recording by the Corporation in its accounting ledgers of any accounting or bookkeeping entry that indicates, pursuant to an authorization by the Gastar USA Board and a declaration of dividends or other distribution by the Corporation, the initial and continued allocation of funds to be so paid on any series or class of shares of stock of the Corporation; provided , however , that if any funds for any class or series of Junior Shares or any class or series of Parity Shares are placed in a separate account of the Corporation or delivered to a disbursing, paying or other similar agent, then “set apart for payment” with respect to the Series B Preferred Stock shall mean irrevocably placing such funds in a separate account or irrevocably delivering such funds to a disbursing, paying or other similar agent.

Share Cap ” shall have the meaning set forth in Section 6(a) of this Certificate.

Share Split ” shall have the meaning set forth in Section 6(b) of this Certificate.

Stated Rate ” shall mean 10.75% per annum.

Trading Day ” shall mean, if a security is listed or admitted to trading on the NASDAQ Stock Market, the New York Stock Exchange, the NYSE MKT LLC or another national securities exchange or national securities market, a full day on which the NASDAQ Stock Market, the New York Stock Exchange, the NYSE MKT LLC or such other national securities exchange or national securities market on which the security is traded is open for business and on which trades may be made thereon.

Trading Price ” of a security on any Trading Day (excluding any after-hours trading as of such date) shall mean:

(a) the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and ask prices, regular way, in either case as reported by the principal consolidated transaction reporting system with respect to securities listed or admitted to trading or quoted on the NYSE MKT LLC, or if such security is not listed or admitted to trading or quoted on the NYSE MKT LLC, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange or national securities market on or in which such security is listed or admitted to trading;

(b) if such security is not listed on, admitted to trading or quoted on the NYSE MKT LLC or a national securities exchange or national securities market on that date, the last price quoted by Interactive Data Corporation for that security on the date, or if Interactive Data Corporation is not quoting such price, a similar quotation service selected by the Corporation;

(c) if such security is not so quoted, the average mid-point of the last bid and ask prices for such security on that date from at least two dealers recognized as market-makers for such security selected by the Corporation for this purpose; or

 

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(d) if such security is not so quoted, the average of the last bid and ask prices for such security on that date from a dealer engaged in the trading of such securities selected by the Corporation for such purpose.

Transfer Agent ” means American Stock Transfer & Trust Company, LLC, or such other agent or agents of the Corporation as may be designated by the Gastar USA Board or its duly authorized designee as the transfer agent, registrar and dividend disbursing agent for the Series B Preferred Stock.

Voting Preferred Stock ” shall have the meaning set forth in Section 9 hereof.

Voting Stock ” shall mean stock of any class or kind having the power to vote generally for the election of directors.

Section 3. Dividends .

(a) Holders of issued and outstanding Series B Preferred Stock shall be entitled to receive, when and as declared by the Gastar USA Board out of funds of the Corporation legally available for the payment of distributions, cumulative preferential cash dividends at a rate per annum equal to the Dividend Rate of the $25.00 per share stated liquidation preference of the Series B Preferred Stock. Except as otherwise provided in paragraphs (b), (c), (d) and (e) of this Section 3, the Dividend Rate shall be equal to the Stated Rate. Such dividends shall accrue and accumulate on each issued and outstanding share of the Series B Preferred Stock on a daily basis from (but excluding) the first day of the Dividend Period during which such share is issued, and shall be payable monthly in equal amounts in arrears on the last calendar day of each Dividend Period except for Series B Preferred Stock issued on or prior to December 16, 2013, for which an initial partial dividend payment for dividends accrued from the initial date of issuance of such first share of Series B Preferred Stock shall be payable at the end of the first full Dividend Period (each such day being hereinafter called a “ Dividend Payment Date ”); provided , that (i) Series B Preferred Stock issued during any Dividend Period after the Dividend Record Date for such Dividend Period shall only begin to accrue dividends on the first day of the next Dividend Period; and provided , further , that (ii) if any Dividend Payment Date is not a Business Day, then the dividend that would otherwise have been payable on such Dividend Payment Date may be paid on the next succeeding Business Day with the same force and effect as if paid on such Dividend Payment Date, and no interest or additional dividends or other sums shall accrue on the amount so payable from such Dividend Payment Date to such next succeeding Business Day. Any dividend payable on the Series B Preferred Stock for any partial Dividend Period shall be prorated and computed on the basis of a 360-day year consisting of twelve 30-day months. Dividends shall be payable to holders of record as they appear in the stock records of the Corporation at the close of business on the applicable record date, which shall be the tenth day preceding the applicable Dividend Payment Date, or such other date designated by the Gastar USA Board or an officer of the Corporation duly authorized by the Gastar USA Board for the payment of dividends that is not more than 30 nor less than ten days prior to such Dividend Payment Date (each such date, a “ Dividend Record Date ”).

 

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(b) Upon the occurrence of four accumulated, accrued and unpaid Quarterly Dividend Defaults, whether consecutive or non-consecutive (a “ Dividend Default ”), then:

(i) the Dividend Rate shall increase to the Penalty Rate, commencing on the first day after the Dividend Payment Date on which a Dividend Default occurs and for each subsequent Dividend Payment Date thereafter until such time as the Corporation has paid all accumulated accrued and unpaid dividends on the Series B Preferred Stock in full and has paid accrued dividends for all Dividend Periods during the two most recently completed Quarterly Dividend Periods in full in cash, at which time the Dividend Rate shall revert to the Stated Rate;

(ii) on the next Dividend Payment Date following the Dividend Payment Date on which a Dividend Default occurs, and continuing until such time as the Corporation has paid all accumulated accrued and unpaid dividends on the Series B Preferred Stock in full and has paid accrued dividends for all Dividend Periods during the two most recently completed Quarterly Dividend Periods in full in cash, the Corporation shall pay all dividends on the Series B Preferred Stock, including all accumulated accrued and unpaid dividends, on each Dividend Payment Date either in cash or, if not paid in cash, by issuing to the holders thereof (A) if the Common Stock is then subject to a National Market Listing, freely tradeable Common Stock with a value equal to the amount of dividends being paid, calculated based on the then current Market Value of the Common Stock, plus cash in lieu of any fractional Common Share, or (B) if the Common Stock is not then subject to a National Market Listing, at the option of the Corporation, (x) additional Series B Preferred Stock with a value equal to the amount of dividends being paid, calculated based on the stated $25.00 liquidation preference per share of the Series B Preferred Stock, plus cash in lieu of any fractional Series B Preferred Stock, or (y) if (1) the Parent Common Stock is then subject to a National Market Listing and Parent owns a majority of the Voting Stock of Gastar USA (and dividends on any such additional Series B Preferred Stock shall accrue upon issuance at the Penalty Rate and accumulate until such time as the Dividend Rate shall revert to the Stated Rate in accordance with subparagraph (i) of this paragraph (b)), (2) the Parent consents to such issuance and (3) to the extent permitted under the applicable securities laws and the rules of the national exchange on which such shares are listed, freely tradeable shares of Parent Common Stock with a value equal to the amount of dividends being paid, calculated based on the then current Market Value of the Parent Common Stock, as applicable, plus cash in lieu of any fractional shares of Parent Common Stock;

(iii) until such time as the Dividend Rate reverts to the Stated Rate pursuant to subparagraph (i) of this paragraph (b) the holders of Series B Preferred Stock will have the voting rights described in Section 9 hereof; and

(iv) to the extent that the Corporation determines a shelf registration statement to cover resales of Common Stock or Series B Preferred Stock is required in connection with the issuance of, or for resales of, such Common Stock or Series B Preferred Stock issued as payment of a dividend, the Corporation will use its commercially reasonable efforts to file and maintain the effectiveness of such a shelf registration statement until such time as all shares of such stock have been resold thereunder or such shares are eligible for resale pursuant to Rule 144(b)(1) under the Securities Act.

 

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Following any Dividend Default that has been cured by the Corporation as provided above in subparagraph (i) of this paragraph (b), if the Corporation subsequently fails to pay cash dividends on the Series B Preferred Stock in full for any Dividend Period, such subsequent failure shall constitute a separate Dividend Default, and the foregoing provisions of this paragraph (b) shall immediately apply until such subsequent Dividend Default is cured as so provided.

(c) Once the Series B Preferred Stock becomes initially eligible for National Market Listing, if the Corporation fails to maintain a National Market Listing for the Series B Preferred Stock for 180 consecutive days or longer (a “ Listing Default ”), then:

(i) the Dividend Rate shall increase to the Penalty Rate, commencing on the day after the Listing Default and continuing until such time as the Corporation has cured the Listing Default by again subjecting the Series B Preferred Stock to a National Market Listing, at which time the Dividend Rate shall revert to the Stated Rate; and

(ii) until such time as the Dividend Rate reverts to the Stated Rate pursuant to subparagraph (i) of this paragraph (c) the holders of Series B Preferred Stock will have the voting rights described in Section 9 hereof.

Following any Listing Default that has been cured by the Corporation as provided in subparagraph (i) of this paragraph (c), if the Series B Preferred Stock subsequently cease to be subject to a National Market Listing, such event shall constitute a separate Listing Default, and the foregoing provisions of subparagraphs (i) and (ii) of this paragraph (c) shall immediately apply until such time as the Series B Preferred Stock are again subject to a National Market Listing.

(d) If the Parent and the Corporation fail to consummate the Reorganization Transactions prior to June 30, 2014, the Dividend Rate shall increase to the Penalty Rate, commencing on July 1, 2014 and for each subsequent Dividend Payment Date thereafter until such time as the Reorganization Transactions are consummated.

(e) Notwithstanding any provision herein to the contrary, if a Change of Ownership or Control occurs prior to the consummation of the Reorganization Transactions, (i) the Holders of Series B Preferred Shares shall not have a Change of Control Conversion Right and (ii) the Dividend Rate shall increase to the Penalty Rate, commencing on the first day after the date on which the Change of Ownership or Control occurred and for each subsequent Dividend Payment Date thereafter.

(f) The Corporation shall at all times keep reserved a sufficient number of Series B Preferred Stock for the payment of any accumulated accrued and unpaid dividends on the Series B Preferred Stock as described in paragraph (b)(ii) of this Section 3, and if a dividend is paid in shares of stock an amount equal to the aggregate par value of the shares issued shall be designated as capital in respect of such shares in accordance with Section 154 of the DGCL.

(g) No dividend on the Series B Preferred Stock will be declared by the Corporation or paid or set apart for payment by the Corporation at such time as the terms and provisions of Senior Shares or any agreement of the Corporation, including any agreement relating to its

 

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indebtedness, prohibit such declaration, payment or setting apart for payment or provide that such declaration, payment or setting apart for payment would constitute a breach thereof or a default thereunder, or if such declaration, payment or setting aside of funds is restricted or prohibited under the DGCL or other applicable law; provided , however , notwithstanding anything to the contrary contained herein, dividends on the Series B Preferred Stock shall continue to accrue and accumulate regardless of whether: (i) any or all of the foregoing restrictions exist; (ii) the Corporation has earnings or profits; (iii) there are funds legally available for the payment of such dividends; or (iv) such dividends are authorized by the Gastar USA Board. Accrued and unpaid dividends on the Series B Preferred Stock will accumulate as of the Dividend Payment Date on which they first become payable or on the date of redemption of the Series B Preferred Stock, as the case may be.

(h) Except as provided in the next two sentences, if any Series B Preferred Stock are outstanding, no dividends (other than in Common Stock or Junior Shares ranking junior to the Series B Preferred Stock as to dividends and upon liquidation) will be declared or paid or set apart for payment on any Parity Shares or Junior Shares, unless all accumulated accrued and unpaid dividends are contemporaneously declared and paid in cash or declared and a sum of cash sufficient for the payment thereof set apart for such payment on the Series B Preferred Stock for all past Dividend Periods with respect to which full dividends were not paid on the Series B Preferred Stock either in cash or in Common Stock, Series B Preferred Stock or Parent Common Stock. Notwithstanding the foregoing sentence, dividends may be declared, paid and set apart for payment on shares of Series A Preferred Stock (either in cash or in Common Stock, Series A Preferred Stock or Parent Common Stock) for all accumulated accrued and unpaid dividends on such Series A Preferred Stock, if immediately following such declaration, payment or setting apart for payment of such dividends on the Series A Preferred Stock, dividends are declared, paid and set apart for payment on shares of Series B Preferred Stock (either in cash or in Common Stock, Series B Preferred Stock or Parent Common Stock) for all accumulated accrued and unpaid dividends on such Series B Preferred Stock (or the Corporation shall have taken all action to cause the foregoing to occur), provided that if the dividend on Series A Preferred Stock referred to in this sentence shall consist of (i) cash, Common Stock or Parent Common Stock, such immediately following dividend on Series B Preferred Stock shall be of the same form and proportion of consideration or security as such dividend on Series A Preferred Stock or (ii) Series A Preferred Stock, such immediately following dividend on Series B Preferred Stock shall consist of Series B Preferred Stock. When dividends are not paid in full (or a sum sufficient for such full payment is not so set apart for payment) upon the Series B Preferred Stock and upon all Parity Shares, all dividends declared, paid or set apart for payment upon the Series B Preferred Stock and all such Parity Shares shall be declared and paid pro rata or declared and set apart for payment pro rata so that the amount of dividends declared per share of Series B Preferred Stock and per share of such Parity Shares shall in all cases bear to each other the same ratio that accumulated dividends per share of Series B Preferred Stock and such other Parity Shares (which shall not include any accumulation in respect of unpaid dividends for prior dividend periods if such other Parity Shares do not bear cumulative dividends) bear to each other. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on Series B Preferred Stock which may be in arrears, whether at the Stated Rate or at the Penalty Rate.

 

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(i) Except as provided in paragraph (h) of this Section 3, unless all accumulated accrued and unpaid dividends on the Series B Preferred Stock are contemporaneously declared and paid in cash or in Common Stock, Series B Preferred Stock or Parent Common Stock or declared and a sum of cash or shares sufficient for the payment thereof is set apart for payment for all past Dividend Periods with respect to which full dividends were not paid on the Series B Preferred Stock either in cash or in Common Stock, Series B Preferred Stock or Parent Common Stock, no dividends (other than in Common Stock or Junior Shares ranking junior to the Series B Preferred Stock as to dividends and upon liquidation) may be declared or paid or set apart for payment upon the Common Stock or any Junior Shares or Parity Shares, nor shall any Common Stock or any Junior Shares or Parity Shares be redeemed, purchased or otherwise acquired directly or indirectly for any consideration (or any monies be paid to or made available for a sinking fund for the redemption of any such stock) by the Corporation (except by conversion into or exchange for Junior Shares or by redemption, purchase or acquisition of stock under any employee benefit plan of the Corporation).

(j) Holders of Series B Preferred Stock shall not be entitled to any dividend, whether payable in cash, property or shares, in excess of all accumulated accrued and unpaid dividends on the Series B Preferred Stock as described in this Section 3. Any dividend payment made on the Series B Preferred Stock shall first be credited against the earliest accumulated accrued and unpaid dividend due with respect to such shares which remains payable at the time of such payment.

Section 4. Liquidation Preference .

(a) Subject to the rights of the holders of Senior Shares and Parity Shares, in the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, before any payment or distribution of the assets of the Corporation (whether capital or surplus) shall be made to or set apart for the holders of Junior Shares, as to the distribution of assets on any liquidation, dissolution or winding up of the Corporation, each holder of the Series B Preferred Stock shall be entitled to receive an amount of cash equal to $25.00 per share of Series B Preferred Stock plus an amount in cash equal to all accumulated accrued and unpaid dividends thereon (whether or not earned or declared) to the date of final distribution to such holders. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of the Series B Preferred Stock shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on any other shares of any class or series of Parity Shares as to the distribution of assets on any liquidation, dissolution or winding up of the Corporation, then such assets, or the proceeds thereof, shall be distributed among the holders of Series B Preferred Stock and any such other Parity Shares ratably in accordance with the respective amounts that would be payable on such Series B Preferred Stock and any such other Parity Shares if all amounts payable thereon were paid in full. For the purposes of this Section 4, none of (i) a consolidation or merger of the Corporation with one or more corporations or other entities, (ii) a sale, lease or transfer of all or substantially all of the Corporation’s assets or (iii) a statutory share exchange shall be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation.

(b) Subject to the rights of the holders of Senior Shares and Parity Shares upon liquidation, dissolution or winding up, upon any liquidation, dissolution or winding up of the

 

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Corporation, after payment shall have been made in full to the holders of the Series B Preferred Stock, as provided in this Section 4, any other series or class or classes of Junior Shares shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Series B Preferred Stock shall not be entitled to share therein.

Section 5. Redemption .

(a) The Series B Preferred Stock shall not be redeemable by the Corporation prior to November 15, 2018, except following a Change of Ownership or Control as provided in paragraph (b) of this Section 5. On and after November 15, 2018, the Corporation may redeem the Series B Preferred Stock, in whole at any time or from time to time in part, at the option of the Corporation, for cash, at a redemption price of $25.00 per Share of Series B Preferred Stock, plus the amounts indicated in paragraph (c) of this Section 5.

(b) Following a Change of Ownership or Control, the Corporation (or the acquiring entity) will have the right to redeem the Series B Preferred Stock, in whole but not in part, within 90 days after the date on which the Change of Ownership or Control has occurred, for cash, at a redemption price equal to $25.00 per share, plus accumulated accrued and unpaid dividends to, but not including, the date of redemption.

(c) Upon any redemption of Series B Preferred Stock pursuant to this Section 5, the Corporation shall, subject to the next sentence, pay any accumulated accrued and unpaid dividends in arrears for any Dividend Period ending on or prior to the Call Date. If the Call Date falls after a Dividend Record Date and prior to the corresponding Dividend Payment Date, then each holder of Series B Preferred Stock at the close of business on such Dividend Record Date shall be entitled to the dividend payable on such shares on the corresponding Dividend Payment Date notwithstanding the redemption of such shares before such Dividend Payment Date. Except as provided above, the Corporation shall make no payment or allowance for unpaid dividends, whether or not in arrears, on Series B Preferred Stock called for redemption.

(d) If all accumulated accrued and unpaid dividends on the Series B Preferred Stock and any other class or series of Parity Shares of the Corporation have not been paid in cash, Common Stock, Series B Preferred Stock (or, with respect to any Parity Shares, in Parity Shares) or Parent Common Stock declared and set apart for payment in cash, Common Stock, Series B Preferred Stock (or, with respect to any Parity Shares, in Parity Shares) or Parent Common Stock, the Series B Preferred Stock shall not be redeemed under this Section 5 in part and the Corporation shall not purchase or acquire Series B Preferred Stock, otherwise than (i) pursuant to a purchase or exchange offer made on the same terms to all holders of Series B Preferred Stock and Parity Shares or (ii) in exchange for Junior Shares.

(e) Notice of the redemption of any Series B Preferred Stock under this Section 5 shall be mailed by first class mail to each holder of record of Series B Preferred Stock to be redeemed at the address of each such holder as shown on the Corporation’s records, not less than 30 nor more than 60 days prior to the Call Date. Neither the failure to mail any notice required by this paragraph (e), nor any defect therein or in the mailing thereof, to any particular holder, shall affect the sufficiency of the notice or the validity of the proceedings for redemption with

 

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respect to the other holders. Any notice mailed in the manner herein provided shall be conclusively presumed to have been duly given on the date mailed whether or not the holder receives the notice. Each such mailed notice shall state, as appropriate: (1) the Call Date; (2) the number of Series B Preferred Stock to be redeemed and, if fewer than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (3) the redemption price per Share of Series B Preferred Stock (determined as set forth in paragraph (a) or (b) of this Section 5, as applicable) plus accumulated accrued and unpaid dividends through the Call Date (determined as set forth in paragraph (c) of this Section 5); (4) if any shares are represented by certificates, the place or places at which certificates for such shares are to be surrendered; (5) that dividends on the shares to be redeemed shall cease to accrue on such Call Date except as otherwise provided herein; and (6) any other information required by law or by the applicable rules of any exchange or national securities market upon which the Series B Preferred Stock may be listed or admitted for trading. Notice having been mailed as aforesaid, from and after the Call Date (unless the Corporation shall fail to make available an amount of cash necessary to effect such redemption within 90 days), (i) except as otherwise provided herein, dividends on the Series B Preferred Stock so called for redemption shall cease to accrue, (ii) said shares shall no longer be deemed to be outstanding, and (iii) all rights of the holders thereof as holders of Series B Preferred Stock shall cease (except the right to receive cash payable upon such redemption, without interest thereon, upon surrender and endorsement of their certificates if so required and to receive any dividends payable thereon).

(f) The Corporation’s obligation to provide cash in accordance with the preceding subsection shall be deemed fulfilled if, on or before the Call Date, the Corporation shall irrevocably deposit funds necessary for such redemption, in trust, with a bank or trust company that has, or is an affiliate of a bank or trust company that has, capital and surplus of at least $50 million, with irrevocable instructions that such cash be applied to the redemption of the Series B Preferred Stock so called for redemption, in which case the notice to holders of the Series B Preferred Stock will (i) state the date of such deposit, (ii) specify the office of such bank or trust company as the place of payment of the redemption price and (iii) require such holders to surrender the certificates, if any, representing such shares at such place on or about the date fixed in such redemption notice (which may not be later than the Call Date) against payment of the redemption price (including all accumulated accrued and unpaid dividends to the Call Date, determined as set forth in paragraph (c) of this Section 5). No interest shall accrue for the benefit of the holders of Series B Preferred Stock to be redeemed on any cash so set aside by the Corporation. Subject to applicable escheat laws, any such cash unclaimed at the end of six months from the Call Date shall revert to the general funds of the Corporation after which reversion the holders of such shares so called for redemption shall look only to the general funds of the Corporation for the payment of such cash.

(g) As promptly as practicable after the surrender in accordance with said notice of the certificates, if any, for any such shares so redeemed (properly endorsed or assigned for transfer, if the Corporation shall so require and if the notice shall so state), such shares shall be exchanged for any cash (without interest thereon) for which such shares have been redeemed. If fewer than all the outstanding Series B Preferred Stock are to be redeemed, shares to be redeemed shall be selected by the Corporation from outstanding Series B Preferred Stock not previously called for redemption by lot or pro rata (as nearly as may be). If fewer than all the Series B Preferred Stock represented by any certificate are redeemed, then new certificates representing the unredeemed shares shall be issued without cost to the holder thereof.

 

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Section 6. Conversion Rights .

(a) Upon the occurrence of a Change of Ownership or Control after the date of consummation of the Reorganization Transactions, each holder of Series B Preferred Stock will have the right (unless, prior to the Change of Control Conversion Date (defined below), the Corporation has provided or provides irrevocable notice of its election to redeem the Series B Preferred Stock as described in Section 5 above, in which case such holder will only have the right with respect to the shares of Series B Preferred Stock not called for redemption (unless the Corporation defaults in the payment of the redemption price and accumulated and unpaid dividends in which case such holder will again have a conversion right with respect to the shares of Series B Preferred Stock subject to such default in payment)) to convert some or all of the Series B Preferred Stock held by such holder (the “ Change of Control Conversion Right ”) on the Change of Control Conversion Date into a number of shares of Common Stock per share of Series B Preferred Stock (the “ Common Stock Conversion Consideration ”), which is equal to the lesser of:

(i) the quotient obtained by dividing (i) the sum of the Liquidation Preference plus the amount of any accumulated and unpaid dividends (whether or not declared) to, but not including, the Change of Control Conversion Date (unless the Change of Control Conversion Date is after a record date for any Series B Preferred Stock dividend payment and prior to the corresponding Series B Preferred Stock dividend payment date, in which case no additional amount for such accumulated and unpaid dividend will be included in this sum and such accumulated and unpaid dividend will be paid to the holder of record) by (ii) the Common Stock Price (defined below) (such quotient, the “ Conversion Rate ”); and

(ii) 11.5207 shares of Common Stock per share of Series B Preferred Stock (the “ Share Cap ”) (assuming a ratio of one share of Common Stock is issued in the Downstream Merger for each share of then outstanding Parent Common Stock, provided, however , that if pursuant to the terms of the Downstream Merger the ratio of shares of new Common Stock issued to the holders of Parent Common Stock in exchange therefor is other than one share of Common Stock for each share of Parent Common Stock, the Share Cap shall be the number of shares of Common Stock equal to the product obtained by multiplying (x) the Share Cap per share in effect immediately prior to the Downstream Merger by (y) the number of shares of Common Stock issued in the Downstream Merger for one share of Parent Common Stock), subject to certain further adjustments described below.

(b) The Share Cap is subject to pro rata adjustments for any share splits (including those effected pursuant to a distribution of Common Stock), subdivisions or combinations (in each case, a “Share Split”) with respect to (i) Parent Common Stock at any time prior to the consummation of the Downstream Merger and (ii) the Common Stock at any time following the Downstream Merger, as follows: the adjusted Share Cap as the result of a Share Split will be the number of shares of Common Stock that is equivalent to the product obtained by multiplying (i) the Share Cap in effect immediately prior to such Share Split by (ii) a fraction, the numerator of which is the number of shares of Parent Common Stock (if prior to the consummation of the

 

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Downstream Merger) or Common Stock (if after the consummation of the Downstream Merger) outstanding after giving effect to such Share Split and the denominator of which is the number of shares of Parent Common Stock (if prior to the consummation of the Downstream Merger) or Common Stock (if after the consummation of the Downstream Merger) outstanding immediately prior to such Share Split.

(c) For the avoidance of doubt, subject to the immediately succeeding sentence, the aggregate number of shares of Common Stock (or equivalent Alternative Conversion Consideration (defined below), as applicable) issuable in connection with the exercise of the Change of Control Conversion Right will not exceed 23,041,400 shares of Common Stock (or equivalent Alternative Conversion Consideration, as applicable), subject to increase to the extent the underwriters’ over-allotment option to purchase additional shares of Series B Preferred Stock is exercised, not to exceed 26,497,610 shares of Common Stock in total (or equivalent Alternative Conversion Consideration, as applicable) (the “ Exchange Cap ”). The Exchange Cap is subject to corresponding adjustment upon any adjustment to the Share Cap under clause (ii) of paragraph (a) of this Section 6 and any pro rata adjustments for any Share Splits on the same basis as the corresponding adjustments to the Share Cap.

(d) In the case of a Change of Ownership or Control after the date of consummation of the Reorganization Transactions pursuant to which the Common Stock will be converted into cash, securities or other property or assets (including any combination thereof) (the “ Alternative Form Consideration ”), a holder of Series B Preferred Stock will receive upon conversion of such Series B Preferred Stock the kind and amount of Alternative Form Consideration which such holder would have owned or been entitled to receive upon the Change of Ownership or Control had such holder held a number of shares of Common Stock equal to the Common Stock Conversion Consideration immediately prior to the effective time of the Change of Ownership or Control (the “ Alternative Conversion Consideration ”). The Common Stock Conversion Consideration or the Alternative Conversion Consideration, as may be applicable to a Change of Ownership or Control, is referred to herein as the “ Conversion Consideration ”.

(e) If the holders of Common Stock have the opportunity to elect the form of consideration to be received in the Change of Ownership or Control after the date of consummation of the Reorganization Transactions, the Conversion Consideration will be deemed to be the kind and amount of consideration actually received by holders of a majority of the Common Stock that voted for such an election (if electing between two types of consideration) or holders of a plurality of the Common Stock that voted for such an election (if electing between more than two types of consideration), as the case may be, and will be subject to any limitations to which all holders of Common Stock are subject, including, without limitation, pro rata reductions applicable to any portion of the consideration payable in the Change of Ownership or Control.

(f) The Corporation will not issue fractional shares of common stock upon the conversion of the Series B Preferred Stock. Instead, the Corporation will pay the cash value of such fractional shares.

(g) Within 15 days following the occurrence of a Change of Ownership or Control after the date of consummation of the Reorganization Transactions, the Corporation will provide

 

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to holders of Series B Preferred Stock a notice of occurrence of the Change of Ownership or Control that describes the resulting Change of Control Conversion Right. This notice will state the following:

(i) the events constituting the Change of Ownership or Control;

(ii) the date of the Change of Ownership or Control;

(iii) the last date on which the holders of Series B Preferred Stock may exercise their Change of Control Conversion Right;

(iv) the method and period for calculating the Common Stock Price;

(v) the Change of Control Conversion Date;

(vi) that if, prior to the Change of Control Conversion Date, the Corporation has provided or provides irrevocable notice of its election to redeem all or any portion of the Series B Preferred Stock, holders will not be able to convert Series B Preferred Stock designated for redemption and such shares will be redeemed on the related redemption date, even if such shares have already been tendered for conversion pursuant to the Change of Control Conversion Right (unless the Corporation defaults in payment of the redemption price and all accumulated and unpaid dividends);

(vii) if applicable, the type and amount of Alternative Conversion Consideration entitled to be received per share of Series B Preferred Stock;

(viii) the name and address of the paying agent and the conversion agent;

(ix) the procedures that the holders of Series B Preferred Stock must follow to exercise the Change of Control Conversion Right; and

(x) the last date on which holders of Series B Preferred Stock may withdraw shares surrendered for conversion and the procedures such holders must follow to effect such a withdrawal.

(h) The Corporation will issue a press release for publication on the Dow Jones & Company, Inc., Business Wire, PR Newswire or Bloomberg Business News (or, if these organizations are not in existence at the time of issuance of the press release, such other news or press organization as is reasonably calculated to broadly disseminate the relevant information to the public), or post a notice on its website, in any event prior to the opening of business on the first business day following any date on which the Corporation provides the notice described above to the holders of Series B Preferred Stock.

 

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(i) To exercise the Change of Control Conversion Right, the holders of Series B Preferred Stock will be required to deliver, on or before the close of business on the Change of Control Conversion Date, the certificates (if any) representing Series B Preferred Stock to be converted, duly endorsed for transfer, together with a written conversion notice completed, to our transfer agent, or, in the case of Series B Preferred Stock held in global form, comply with the applicable procedures of DTC. The conversion notice must state:

(i) the relevant Change of Control Conversion Date;

(ii) the number of shares of Series B Preferred Stock to be converted; and

(iii) that the Series B Preferred Stock is to be converted pursuant to the applicable provisions of the Series B Preferred Stock.

(j) The “ Change of Control Conversion Date” is the date the Series B Preferred Stock is to be converted, which will be a business day that is no fewer than 20 days nor more than 35 days after the date on which we provide the notice described above to the holders of Series B Preferred Stock.

(k) The “ Common Stock Price ” will be (i) if the consideration to be received in the Change of Ownership or Control by the holders of Common Stock is solely cash, the amount of cash consideration per share of Common Stock or (ii) if the consideration to be received in the Change of Ownership or Control by holders of Common Stock is other than solely cash (x) the average of the closing sale prices per share of Common Stock (or, if no closing sale price is reported, the average of the closing bid and ask prices or, if more than one in either case, the average of the average closing bid and the average closing ask prices) for the ten consecutive trading days immediately preceding, but not including, the effective date of the Change of Ownership or Control as reported on the principal U.S. securities exchange on which the Common Stock is then traded, or (y) the average of the last quoted bid prices for Common Stock in the over-the-counter market as reported by OTC Market Group Inc. or similar organization for the ten consecutive trading days immediately preceding, but not including, the effective date of the Change of Ownership or Control, if the Common Stock is not then subject to a National Market Listing.

(l) Holders of Series B Preferred Stock may withdraw any notice of exercise of a Change of Control Conversion Right (in whole or in part) by a written notice of withdrawal delivered to the transfer agent for the Series B Preferred Stock prior to the close of business on the business day prior to the Change of Control Conversion Date. The notice of withdrawal must state:

(i) the number of withdrawn shares of Series B Preferred Stock;

(ii) if certificated Series B Preferred Stock have been issued, the certificate numbers of the withdrawn shares of Series B Preferred Stock; and

(iii) the number of shares of Series B Preferred Stock, if any, which remain subject to the conversion notice.

(m) Notwithstanding the foregoing, if the Series B Preferred Stock are held in global form, the conversion notice and/or the notice of withdrawal, as applicable, must comply with applicable procedures of DTC.

 

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(n) Shares of Series B Preferred Stock as to which the Change of Control Conversion Right has been properly exercised and for which the conversion notice has not been properly withdrawn will be converted into the applicable Conversion Consideration in accordance with the Change of Control Conversion Right on the Change of Control Conversion Date, unless prior to the Change of Control Conversion Date the Corporation has provided or provides notice of its election to redeem such Series B Preferred Stock. If the Corporation elects to redeem Series B Preferred Stock that would otherwise be converted into the applicable Conversion Consideration on a Change of Control Conversion Date, such Series B Preferred Stock will not be so converted and the holders of such shares will be entitled to receive on the applicable redemption date $25.00 per preferred share plus any accumulated and unpaid dividends thereon to, but not including, the redemption date.

(o) The Corporation shall deliver amounts owing upon conversion no later than the third business day following the Change of Control Conversion Date.

(p) In connection with the exercise of any Change of Control Conversion Right, the Corporation will comply with all federal and state securities laws and stock exchange rules in connection with any conversion of Series B Preferred Stock into shares of Common Stock or other property.

(q) Except as provided in this Section 6, the Series B Preferred Stock are not convertible into or exchangeable for any other securities or property.

Section 7. Status of Acquired Shares . All Series B Preferred Stock issued and redeemed by the Corporation in accordance with Section 5 hereof, or otherwise acquired by the Corporation, shall be restored to the status of authorized but unissued shares of undesignated Preferred Stock of the Corporation.

Section 8. Ranking . Any class or series of shares of stock of the Corporation shall be deemed to rank:

(a) prior to the Series B Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, if the holders of such class or series shall be entitled to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of Series B Preferred Stock (“ Senior Shares ”);

(b) on a parity with the Series B Preferred Stock, as to the payment of dividends and as to distribution of assets upon liquidation, dissolution or winding up, whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share thereof be different from those of the Series B Preferred Stock, if the holders of such class or series and the Series B Preferred Stock shall be entitled to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of accrued and unpaid dividends per share or liquidation preferences, without preference or priority one over the other (“ Parity Shares ”); and

(c) junior to the Series B Preferred Stock, as to the payment of dividends and as to the distribution of assets upon liquidation, dissolution or winding up, if such class or series shall

 

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be the Common Stock or any other class or series of shares of stock of the Corporation now or hereafter issued and outstanding over which the Series B Preferred Stock have preference or priority in the payment of dividends and in the distribution of assets upon any liquidation, dissolution or winding up of the Corporation (“ Junior Shares ”).

Section 9. Voting Rights .

(a) The Series B Preferred Stock shall have no voting rights, except as set forth in this Section 9. In the circumstances identified in paragraphs (b) and (c) of Section 3 hereof, the number of directors then constituting the Gastar USA Board shall increase by at least two (the exact number to be fixed by the Gastar USA Board pursuant to the Bylaws), and the holders of Series B Preferred Stock, together with the holders of shares of every other series of Parity Shares upon which like voting rights have been conferred and are exercisable (any such other series, the “ Voting Preferred Stock ”), voting together as a single class regardless of series, shall be entitled to elect two directors. Such directors shall be elected at any annual meeting of stockholders or special meeting held in place thereof, or at a special meeting of the holders of the Series B Preferred Stock and the Voting Preferred Stock called as provided in paragraph (b) of this Section 9; in each instance in accordance with the Bylaws. Such voting rights shall continue until terminated as provided in paragraphs (b) and (c) of Section 3 hereof, as applicable, whereupon the terms of all persons elected as directors to the Gastar USA Board by the holders of the Series B Preferred Stock and the Voting Preferred Stock shall terminate effective immediately and the number of directors constituting the Gastar USA Board shall decrease accordingly.

(b) At any time after the voting power conferred in paragraph (a) of this Section 9 shall have been so vested in the holders of Series B Preferred Stock and the Voting Preferred Stock, the Secretary of the Corporation may, and upon the written request of any holder of Series B Preferred Stock (addressed to the Secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the Series B Preferred Stock and of the Voting Preferred Stock for the election of the two directors to be elected by them to the Gastar USA Board as herein provided, such call to be made by notice similar to that provided in the Bylaws of the Corporation for a special meeting of the stockholders or as required by law. If any such special meeting required to be called as above provided shall not be called by the Secretary within 75 days after receipt of any such request, then any holder of Series B Preferred Stock may call such meeting, upon the notice above provided, and for that purpose shall have access to the share records of the Corporation for the Series B Preferred Stock and Voting Preferred Stock. The directors elected at any such special meeting shall serve until the next annual meeting of the stockholders or special meeting held in lieu thereof and until their successors are duly elected and qualified or until such person’s earlier resignation or removal, if such term shall not have previously terminated as above provided. If any vacancy shall occur among the directors elected by the holders of the Series B Preferred Stock and the Voting Preferred Stock, a successor shall be elected by the Gastar USA Board, upon the nomination of the then-remaining director elected by the holders of the Series B Preferred Stock and the Voting Preferred Stock or the successor of such remaining director, if any, to serve until the next annual meeting of the stockholders or special meeting held in place thereof and until their successors are duly elected and qualified, if such term shall not have previously terminated as provided above.

 

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(c) The holders of the Series B Preferred Stock acknowledge that, in the event that they and any other Voting Preferred Stock submit a written request to call a special meeting of the holders of the Series B Preferred Stock and of the Voting Preferred Stock for the election of the two directors to be elected by them to the Gastar USA Board pursuant to paragraph (b) of Section 9, the existing Gastar USA Board may, pursuant to the provisions of the Bylaws, (i) increase the number of directors on the Gastar USA Board to a number that would allow the directors elected by the holders of the Common Stock or appointed by the existing Gastar USA Board to fill the newly created directorships to constitute at least a majority of the Gastar USA Board and (ii) fill those vacancies prior to any such election pursuant to paragraph (b) of Section 9.

(d) So long as any Series B Preferred Stock are outstanding, the affirmative vote of the holders of at least two-thirds of the Series B Preferred Stock and the Voting Preferred Stock at the time outstanding, acting as a single class regardless of series, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating:

(i) Any amendment, alteration or repeal of any of the provisions of the Certificate of Incorporation or these terms of the Series B Preferred Stock that materially and adversely affects the rights, preferences or voting power of the Series B Preferred Stock or the Voting Preferred Stock; provided , however , that the amendment of the provisions of the Certificate of Incorporation so as to authorize or create, or to increase the authorized amount of, the Series B Preferred Stock, any Parity Shares or any Junior Shares shall not be deemed to materially or adversely affect the rights, preferences or voting power of the Series B Preferred Stock or the Voting Preferred Stock; and provided , further , that if any such amendment, alteration or repeal would materially and adversely affect any voting powers, rights or preferences of the Series B Preferred Stock or another series of Voting Preferred Stock that are not enjoyed by some or all of the other series otherwise entitled to vote in accordance herewith, the affirmative vote of at least two-thirds of the votes entitled to be cast by the holders of all series similarly affected, similarly given, shall be required in lieu of the affirmative vote of at least two-thirds of the votes entitled to be cast by the holders of the Series B Preferred Stock and the Voting Preferred Stock otherwise entitled to vote in accordance herewith;

(ii) A statutory share exchange that affects the Series B Preferred Stock, a consolidation with or merger of the Corporation into another entity, or a consolidation with or merger of another entity into the Corporation, unless in each such case each Share of Series B Preferred Stock (i) shall remain outstanding without a material and adverse change to its terms, voting powers, preferences and rights or (ii) shall be converted into or exchanged for preferred shares of the surviving entity having preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or distributions, qualifications and terms or conditions of redemption thereof identical to that of a Share of Series B Preferred Stock (except for changes that do not materially and adversely affect the Series B Preferred Stock); provided , however , that if any such share exchange, consolidation or merger would materially and adversely affect any voting powers, rights or preferences of the Series B Preferred Stock or another series of Voting Preferred Stock that are not enjoyed by some or all of the other series otherwise entitled to vote in accordance herewith, the affirmative vote of at least two-thirds of the votes entitled to be cast by the holders of all series similarly affected, similarly given, shall be required in lieu of the

 

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affirmative vote of at least two-thirds of the votes entitled to be cast by the holders of the Series B Preferred Stock and the Voting Preferred Stock otherwise entitled to vote in accordance herewith; or

(iii) The authorization, reclassification or creation of, or the increase in the authorized amount of, any shares of any class or any security convertible into or exchangeable for shares of any class ranking prior to the Series B Preferred Stock or the Voting Preferred Stock in the distribution of assets on any liquidation, dissolution or winding up of the Corporation or in the payment of dividends;

provided , however , that no such vote of the holders of Series B Preferred Stock shall be required on or after November 15, 2018, or in connection with a Change of Ownership or Control if, at or prior to the time when such amendment, alteration, repeal, share exchange, consolidation or merger is to take effect, or when the issuance of any such prior shares or convertible security is to be made, as the case may be, a deposit is made for the redemption in cash of all Series B Preferred Stock at the time outstanding as provided in paragraph (e) of Section 5 hereof for a redemption price determined under the appropriate paragraph of Section 5 hereof.

For purposes of paragraphs (c) and (d) of this Section 9, each Share of Series B Preferred Stock shall have one vote per share, except that when any other series of Voting Preferred Stock shall have the right to vote with the Series B Preferred Stock as a single class on any matter, then the Series B Preferred Stock and such other series shall have with respect to such matters one vote per $25.00 of stated liquidation preference. Except as set forth herein, the Series B Preferred Stock shall not have any relative, participating, optional or other special voting rights and powers other than as set forth herein, and the consent of the holders thereof shall not be required for the taking of any corporate action.

No amendment to these terms of the Series B Preferred Stock shall require the vote of the holders of Common Stock (except as required by law) or any series of Preferred Stock other than the Voting Preferred Stock.

Section 10. Information Rights . During any period in which the Corporation is not subject to Section 13 or 15(d) of the Exchange Act and any Series B Preferred Stock are outstanding, the Corporation shall (a) transmit by mail to all holders of Series B Preferred Stock, as their names and addresses appear in the Corporation’s record books and without cost to such holders, copies of the annual reports and quarterly reports that the Corporation would have been required to file with the Securities and Exchange Commission (the “ SEC ”) pursuant to Section 13 or 15(d) of the Exchange Act if the Corporation was subject to such sections (other than any exhibits that would have been required); and (b) promptly upon written request, supply copies of such reports to any prospective holder of Series B Preferred Stock. The Corporation shall mail the reports to the holders of Series B Preferred Stock within 15 days after the respective dates by which the Corporation would have been required to file the reports with the SEC if the Corporation were then subject to Section 13 or 15(d) of the Exchange Act, assuming the Corporation is a “non-accelerated filer” in accordance with the Exchange Act.

Section 11. Record Holders . The Corporation and the Transfer Agent shall deem and treat the record holder of any Series B Preferred Stock as the true and lawful owner thereof for all purposes, and neither the Corporation nor the Transfer Agent shall be affected by any notice to the contrary,

 

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Section 12. Sinking Fund . The Series B Preferred Stock shall not be entitled to the benefits of any retirement or sinking fund.

Section 13. Book Entry . The Series B Preferred Stock shall be issued initially in the form of one or more fully registered global certificates (“ Global Preferred Shares ”), which shall be deposited on behalf of the purchasers represented thereby with the Transfer Agent, as custodian for a securities depositary (the “ Depositary ”) that is a clearing agency under Section 17A of the Exchange Act (or with such other custodian as the Depositary may direct), and registered in the name of the Depositary or its nominee, duly executed by the Corporation and authenticated by the Transfer Agent. The number of Series B Preferred Stock represented by Global Preferred Shares may from time to time be increased or decreased by adjustments made on the records of the Transfer Agent and the Depositary as hereinafter provided. Members of, or participants in, the Depositary (“ Agent Members ”) shall have no rights under these terms of the Series B Preferred Stock with respect to any Global Preferred Shares held on their behalf by the Depositary or by the Transfer Agent as the custodian of the Depositary or under such Global Preferred Shares, and the Depositary may be treated by the Corporation, the Transfer Agent and any agent of the Corporation or the Transfer Agent as the absolute owner of such Global Preferred Shares for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Corporation, the Transfer Agent or any agent of the Corporation or the Transfer Agent from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices of the Depositary governing the exercise of the rights of a holder of a beneficial interest in any Global Preferred Shares.

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designation to be duly executed and acknowledged by J. Russell Porter its President, as of this 31 st day of October, 2013.

 

Gastar Exploration USA, Inc.
By:  

/s/ J. Russell Porter

Name:   J. Russell Porter
Title:   President

Signature Page to

Certificate of Designation

Exhibit 4.1

FORM OF

SERIES B CUMULATIVE PREFERRED GLOBAL STOCK CERTIFICATE

Gastar Exploration USA, Inc.

Incorporated under the Laws of the State of Delaware

 

CUSIP: 36729P 306

 

CERTIFICATE NUMBER: 001

  SHARES

This represents and certifies that CEDE & CO is the owner of                      fully paid and non-assessable shares of Series B Cumulative Preferred Stock of Gastar Exploration USA, Inc. (the “Company”) transferable upon the books of the Company by the holder hereof in person or by the holder’s duly authorized attorney upon surrender of this certificate properly endorsed. This certificate and the shares represented hereby are issued and shall be held subject to all of the provisions of the Amended and Restated Certificate of Incorporation and all amendments thereto and the Certificate of Designation of the Series B Cumulative Preferred Stock and all amendments thereto (copies of which are on file at the office of the Company), to which the holder hereof by acceptance hereof expressly assents.

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL IN AS MUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

TRANSFERS OF THIS GLOBAL PREFERRED STOCK SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE.

IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH REGISTRAR AND TRANSFER AGENT MAY REASONABLY REQUIRE.

DATED:                      , 2013


IN WITNESS WHEREOF, Gastar Exploration USA, Inc. has executed this Certificate as of the date set forth above.

 

GASTAR EXPLORATION USA, INC.
By:    
  Name: J. Russell Porter
  Title: President
By:    
  Name: Michael A. Gerlich
  Title: Secretary and Treasurer

 

S IGNATURE P AGE TO

G ASTAR E XPLORATION USA, I NC .

S ERIES B C UMULATIVE P REFERRED G LOBAL S TOCK C ERTIFICATE


TRANSFER AGENT’S CERTIFICATE OF AUTHENTICATION

This is one of the certificates representing shares of Preferred Stock referred to in the within mentioned Certificate of Designations.

 

American Stock Transfer & Trust Company, LLC
as Transfer Agent
By:    
  Name:     
  Title:     

 

T RANSFER A GENT S C ERTIFICATE OF A UTHENTICATION

G ASTAR E XPLORATION USA, I NC .

S ERIES B C UMULATIVE P REFERRED G LOBAL S TOCK C ERTIFICATE


REVERSE OF THE SECURITY

ASSIGNMENT

For Value Received,                                          hereby sells, assigns and transfers unto                                          (print or typewrite name, address and social security or other identifying number of assignee)                  Shares of the stock represented by this Certificate, and does hereby irrevocably constitute and appoint                                          attorney, to transfer the said stock on the books of the within named company with full power of substitution in the premises

Dated:                     

 

X    
  NOTICE: The signature to this assignment must correspond with the name as written upon the face of this certificate in every particular, without alteration or enlargement or any change whatever.

 

SIGNATURE GUARANTEED
 
NOTICE: The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations, and credit unions with membership in an approved signature guarantee medallion program), pursuant to Rule 17 Ad-15 under the Securities Exchange Act of 1934.

 

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