EXHIBIT 4.6.1
UNION BANK OF CALIFORNIA, N.A.
4200 LINCOLN PLAZA
500 NORTH AKARD
DALLAS, TEXAS 75201
November 2, 2001
Chesapeake Energy Corporation
Chesapeake Exploration Limited Partnership
6100 North Western Avenue
Oklahoma City, Oklahoma 73118
Re: Second Amended and Restated Credit Agreement dated as of June 11, 2001
(as amended, supplemented or restated, the "Credit Agreement"), by and
among Chesapeake Exploration Limited Partnership, an Oklahoma limited
partnership ("Borrower"), Chesapeake Energy Corporation, an Oklahoma
corporation ("Company"), Bear Stearns Corporate Lending Inc., as
syndication agent ("Syndication Agent"), Union Bank of California,
N.A., as administrative agent and collateral agent ("Administrative
Agent"), and the several banks and other financial institutions or
entities from time to time parties thereto ("Lenders")
Ladies and Gentlemen:
Reference is hereby made to the Credit Agreement. Terms which are
defined in the Credit Agreement and not otherwise defined herein are used herein
with the meanings given them in the Credit Agreement.
Borrower and Company have informed Administrative Agent and Lenders
that they intend to enter into the following transactions (collectively, the
"Proposed Transactions"):
o Company intends to acquire RAM Energy, Inc. by merging Carmen
Acquisition Corp. (a Subsidiary of Company) with RAM Energy,
Inc. (the "RAM Acquisition") in consideration for the issuance
of Capital Stock of Company and the unsecured commitment by
Company to make cash payments of up to $10,000,000 over a
period of time not to exceed three years pursuant to the terms
of the related merger agreement (the "RAM Cash Payments"). In
connection with the RAM Acquisition, Company intends to
purchase all of the outstanding 11 1/2% Senior Notes due 2008
(the "RAM Notes") issued by RAM Energy, Inc. from the holders
thereof for cash (the "RAM Note Purchases").
o Company intends to acquire Sapient Energy Corp. for
$132,000,000 cash (subject to customary adjustments) by
merging a Subsidiary of Company with Sapient Energy Corp. (the
"Sapient Acquisition").
o Borrower intends to acquire certain oil and gas properties
from Apache Corporation for $41,000,000 cash (subject to
customary adjustments) (the "Apache Acquisition").
o Company intends to issue new Senior Notes in the aggregate
face amount of up to $250,000,000, providing (a) for an
interest rate at the then prevailing market rate of interest,
but not more than 8 3/8%, (b) for a maturity date of not
sooner than seven years from the date of issuance, and (c) for
covenants, mandatory prepayments, defaults, and events of
default no more restrictive than Company's 8 1/8% Notes (the
"New Notes").
o Company intends to issue new Cumulative Convertible Perpetual
Preferred Stock in the aggregate face amount of at least
$125,000,000 but not more than $150,000,000 plus a 15% over
allotment with a coupon not to exceed 7 1/2% (the "New
Preferred Stock").
Borrower and Company have requested that Administrative Agent and
Lenders consent to certain of the Proposed Transactions. Accordingly, subject to
the terms and provisions hereof, Administrative Agent and Lenders hereby:
(a) (i) consent to the RAM Note Purchases, (ii) waive any
violations of the Credit Agreement resulting therefrom, and (iii) agree
that such RAM Note Purchases shall be permitted in addition to the
Investments otherwise permitted pursuant to Section 7.7 of the Credit
Agreement; provided that (1) at the time of each RAM Note Purchase, no
Default or Event of Default has occurred which is continuing, (2) the
RAM Note Purchases shall be approved by the Board of Directors of
Company, (3) the aggregate cash purchase price for all RAM Note
Purchases paid to the holders thereof pursuant to this Letter Agreement
(and the Letter Agreement dated September 10, 2001 among Borrower,
Company, Administrative Agent, and certain Lenders) shall not exceed
$90,000,000 (excluding accrued interest paid in connection with such
purchases) and must occur on or before March 31, 2002, (4) the
Subsidiary surviving the RAM Acquisition shall not be merged or
consolidated with or into any Subsidiary of Company prior to the
purchase by Company of all of the outstanding RAM Notes, (5) Company
shall not resell any RAM Notes purchased by Company, and (6) except as
otherwise provided herein, nothing in this Letter Agreement shall allow
any Person to make any other new Investments not allowed pursuant to
Section 7.7 of the Credit Agreement; and
(b) (i) consent to the RAM Cash Payments, (ii) waive any
violations of the Credit Agreement resulting therefrom, and (iii) agree
that such RAM Cash Payments shall
be permitted in addition to the Indebtedness otherwise permitted
pursuant to Section 7.2 of the Credit Agreement; provided that (1) at
the time of each RAM Cash Payment, no Default or Event of Default has
occurred which is continuing, (2) the RAM Cash Payments shall be
approved by the Board of Directors of Company, (3) the aggregate amount
of all RAM Cash Payments paid to the holders thereof pursuant to this
Letter Agreement shall not exceed $10,000,000 plus interest thereon at
up to six percent (6%) per annum, (4) the Subsidiary surviving the RAM
Acquisition shall become a Subsidiary Guarantor under the Credit
Agreement pursuant to Section 6.9(b) thereof, and (5) except as
otherwise provided herein, nothing in this Letter Agreement shall allow
any Person to incur any other new Indebtedness not allowed pursuant to
Section 7.2 of the Credit Agreement; and
(c) (i) consent to the Sapient Acquisition and (ii) waive any
violations of the Credit Agreement resulting therefrom; provided that
(1) at the time of the Sapient Acquisition, no Default or Event of
Default has occurred which is continuing, (2) the Sapient Acquisition
shall be approved by the Board of Directors of Company, (3) the
Subsidiary surviving the Sapient Acquisition shall become a Subsidiary
Guarantor under the Credit Agreement pursuant to Section 6.9(b)
thereof, (4) the Sapient Acquisition shall be consummated on or before
January 31, 2002 and (5) except as otherwise provided herein, nothing
in this Letter Agreement shall allow any Person to make any other new
Investments not allowed pursuant to Section 7.7 of the Credit
Agreement; and
(d) (i) consent to the issuance of the New Notes, (ii) waive
any violations of the Credit Agreement resulting therefrom, and (iii)
agree that such New Notes shall be permitted in addition to the
Indebtedness otherwise permitted pursuant to Section 7.2 of the Credit
Agreement; provided that (1) at the time of the issuance of the New
Notes, no Default or Event of Default has occurred which is continuing,
(2) the issuance of the New Notes shall be approved by the Board of
Directors of Company, (3) the issuance of the New Notes shall be
consummated on or before December 31, 2001, and (4) except as otherwise
provided herein, nothing in this Letter Agreement shall allow any
Person to incur any other new Indebtedness not allowed pursuant to
Section 7.2 of the Credit Agreement; and
(e) (i) consent to the payment of cash dividends in respect of
the New Preferred Stock in the aggregate face amount not to exceed
$150,000,000 plus a 15% over allotment (the "New Preferred Dividends"),
(ii) waive any violations of the Credit Agreement resulting therefrom,
and (iii) agree that such New Preferred Dividends shall be permitted in
addition to the Restricted Payments otherwise permitted pursuant to
Section 7.6 of the Credit Agreement; provided that (1) at the time of
the declaration of such New Preferred Dividends, no Default or Event of
Default has occurred which is continuing, (2) the payment of the New
Preferred Dividends shall be declared by the Board of Directors of
Company, and (3) nothing in this Letter Agreement shall allow any
Person to make any
other new Restricted Payments not allowed pursuant to Section 7.6 of
the Credit Agreement.
The limitations set forth in clauses (a) and (c) above shall not be deemed to
restrict Investments otherwise allowed under clause (n) of Section 7.7 of the
Credit Agreement.
Company hereby agrees (a) to consummate the issuance of the New
Preferred Stock in the aggregate face amount of at least $125,000,000 on or
before December 31, 2001 and (b) that the failure to consummate the issuance of
such New Preferred Stock shall constitute an Event of Default under the Credit
Agreement.
In consideration of this Letter Agreement, provided that Majority
Lenders are signatory to this Letter Agreement on or before 2:00 p.m., Dallas,
Texas time on the date hereof, Borrower will pay to Administrative Agent, for
the account of each Lender, an amendment fee determined by multiplying .075%
times such Lender's Revolving Commitment, which shall be due and payable on the
date hereof.
The Credit Agreement is hereby ratified and confirmed in all respects.
Except as expressly set forth above, the execution, delivery and effectiveness
of this Letter Agreement shall not operate as a waiver of any right, power or
remedy of Administrative Agent or Lenders under the Credit Agreement, the Notes,
or any other Loan Document, nor constitute a waiver of any provision of the
Credit Agreement, the Notes, or any other Loan Document.
By its execution below, each Guarantor hereby (i) consents to the
provisions of this Letter Agreement and the transactions contemplated herein,
(ii) ratifies and confirms the Guarantee Agreement dated as of June 11, 2001
made by it for the benefit of Administrative Agent and Lenders and the other
Loan Documents executed pursuant to the Credit Agreement, (iii) agrees that all
of its respective obligations and covenants thereunder shall remain unimpaired
by the execution and delivery of this Letter Agreement and the other documents
and instruments executed in connection herewith, and (iv) agrees that the
Guarantee Agreement and such other Loan Documents shall remain in full force and
effect.
This Letter Agreement is a "Loan Document" as defined and described in
the Credit Agreement and all of the terms and provisions of the Credit Agreement
relating to Loan Documents shall apply hereto. This Letter Agreement may be
executed in multiple counterparts, all of which shall constitute one Letter
Agreement. This Letter Agreement may be validly executed by facsimile or other
electronic transmission.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
Please execute a copy of this Letter Agreement in the space provided
below to evidence your agreement to and acknowledgment of the foregoing.
Very truly yours,
UNION BANK OF CALIFORNIA, N.A.
Administrative Agent, Collateral Agent
and Lender
By: /s/ CARL STUTZMAN
-----------------------------------------
Name: Carl Stutzman
Title: Senior Vice President and Manager
By: /s/ SEAN MURPHY
-----------------------------------------
Name: Sean Murphy
Title: Assistant Vice President
ACKNOWLEDGED AND AGREED
to as of the date first written above:
BORROWER:
CHESAPEAKE EXPLORATION LIMITED PARTNERSHIP
By: Chesapeake Operating, Inc., its general partner
By: /s/ MARTHA A. BURGER
------------------------------------
Name: Martha A. Burger
Title: Treasurer
GUARANTORS:
CHESAPEAKE ENERGY CORPORATION
By: /s/ MARTHA A. BURGER
------------------------------------
Name: Martha A. Burger
Title: Treasurer
THE AMES COMPANY, INC.
By: /s/ MARTHA A. BURGER
------------------------------------
Name: Martha A. Burger
Title: Treasurer
ARKOMA PITTSBURG HOLDING CORPORATION
By: /s/ MARTHA A. BURGER
------------------------------------
Name: Martha A. Burger
Title: Treasurer
CHESAPEAKE ACQUISITION CORPORATION
By: /s/ MARTHA A. BURGER
------------------------------------
Name: Martha A. Burger
Title: Treasurer
CHESAPEAKE ENERGY LOUISIANA CORPORATION
By: /s/ MARTHA A. BURGER
------------------------------------
Name: Martha A. Burger
Title: Treasurer
CHESAPEAKE OPERATING, INC.
By: /s/ MARTHA A. BURGER
------------------------------------
Name: Martha A. Burger
Title: Treasurer
CHESAPEAKE OPERATING, INC., as General Partner of
Chesapeake Panhandle Limited Partnership
By: /s/ MARTHA A. BURGER
------------------------------------
Name: Martha A. Burger
Title: Treasurer
CHESAPEAKE ROYALTY COMPANY
By: /s/ MARTHA A. BURGER
------------------------------------
Name: Martha A. Burger
Title: Treasurer
CHESAPEAKE OPERATING, INC., as General Partner of
Chesapeake-Staghorn Acquisition L.P.
By: /s/ MARTHA A. BURGER
------------------------------------
Name: Martha A. Burger
Title: Treasurer
CHESAPEAKE OPERATING, INC., as General Partner of
Chesapeake Louisiana, L.P.
By: /s/ MARTHA A. BURGER
------------------------------------
Name: Martha A. Burger
Title: Treasurer
CHESAPEAKE OPERATING, INC., as General Partner of
Chesapeake Exploration Limited Partnership
By: /s/ MARTHA A. BURGER
------------------------------------
Name: Martha A. Burger
Title: Treasurer
GOTHIC ENERGY CORPORATION
By: /s/ MARTHA A. BURGER
------------------------------------
Name: Martha A. Burger
Title: Treasurer
GOTHIC PRODUCTION CORPORATION
By: /s/ MARTHA A. BURGER
------------------------------------
Name: Martha A. Burger
Title: Treasurer
NOMAC DRILLING CORPORATION
By: /s/ MARTHA A. BURGER
------------------------------------
Name: Martha A. Burger
Title: Treasurer
LENDERS:
BANK OF OKLAHOMA, N.A.
By: /s/ JOHN N. HUFF
--------------------------------------
Name: John N. Huff
Title: Vice President
BANK OF SCOTLAND
By: /s/ JOSEPH FRATUS
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Name: Joseph Fratus
Title: Vice President
BEAR STEARNS CORPORATE LENDING INC.
By: /s/ VICTOR F. BULZACCHELLI
--------------------------------------
Name: Victor F. Bulzacchelli
Title: Managing Director
BNP PARIBAS
By: /s/ A. DAVID DODD
--------------------------------------
Name: A. David Dodd
Title: Vice President
By: /s/ LARRY ROBINSON
--------------------------------------
Name: Larry Robinson
Title: Vice President
COMERICA BANK - TEXAS
By: /s/ PETER L. SELZIK
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Name: Peter L. Selzik
Title: Corporate Banking Officer
COMPASS BANK
By: /s/ KATHLEEN J. BOWEN
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Name: Kathleen J. Bowen
Title: Vice President
CREDIT AGRICOLE INDOSUEZ
By:
--------------------------------------
Name:
Title:
NATEXIS BANQUES POPULAIRES
By:
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Name:
Title:
NATIONAL BANK OF CANADA, NEW YORK BRANCH
By: /s/ DOUG CLARK
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Name: Doug Clark
Title: Vice President
By: /s/ RANDALL K. WILHOIT
--------------------------------------
Name: Randall K. Wilhoit
Title: Vice President
RZB FINANCE LLC
By: /s/ F. DIETER BEINTREXLER
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Name: F. Dieter Beintrexler
Title: President
By: /s/ ASTRID WILKE
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Name: Astrid Wilke
Title: Vice President
SUMITOMO MITSUI BANKING CORPORATION
By: /s/ DAVID A. BUCK
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Name: David A. Buck
Title: Senior Vice President
TORONTO DOMINION (TEXAS), INC.
By:
--------------------------------------
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION
By: /s/ M. WARD POLZIN
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Name: M. Ward Polzin
Title: Vice President
WASHINGTON MUTUAL BANK, FA
By: /s/ MARK M. ISENSEE
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Name: Mark M. Isensee
Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ BERNARD WEYMULLER
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Name: Bernard Weymuller
Title: Senior Vice President