EXHIBIT 4.6.1
UNION BANK OF CALIFORNIA, N.A.
4200 LINCOLN PLAZA
500 NORTH AKARD
DALLAS, TEXAS 75201
December 11, 2002
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 that 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 ONEOK Resources Company for $300,000,000
cash (subject to customary adjustments) by causing a Subsidiary
Guarantor to purchase all of the outstanding capital stock of ONEOK
Resources Company, a wholly owned subsidiary of ONEOK, Inc.,
substantially in accordance with the Stock Purchase Agreement by and
between ONEOK, Inc., as seller, and Chesapeake Beta Corp., as buyer,
dated as of November 25, 2002 (the "ONEOK Acquisition").
o Borrower intends to (a) sell (in one or more transactions)
substantially all of its oil and gas properties located in the
Permian Basin for cash consideration and/or (b) exchange (in
one or more transactions) such properties for oil and gas
properties located in or adjacent to the mid-continent
(Kansas, Oklahoma and Texas Panhandle) basins for aggregate
consideration of at least $100,000,000 (including cash
received from any sales plus the associated value of any
properties exchanged (as determined by the applicable exchange
contract or Company's Board of Directors, if such value is not
specified therein)) (the "Permian Basin Disposition").
o Company intends to issue new Senior Notes in the aggregate
face amount of up to $200,000,000, providing (a) for an
interest rate at the then prevailing market rate of interest,
(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 9% Senior Notes due 2012 and 8.375%
Senior Notes due 2008 (the "New Notes").
o Prior to or contemporaneously with the issuance of the New
Notes, Company intends to issue additional Common Stock (the
"New Common 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 ONEOK Acquisition and (ii) waive any
violations of Section 7.7 of the Credit Agreement resulting therefrom;
provided that (1) at the time of the ONEOK Acquisition, no Default or
Event of Default has occurred that is continuing, (2) the ONEOK
Acquisition shall be approved by the Board of Directors of Company, (3)
ONEOK Resources Company shall become a Subsidiary Guarantor under the
Credit Agreement pursuant to Section 6.9(b) thereof or shall be merged
into a Subsidiary Guarantor (with such Subsidiary Guarantor being the
continuing or surviving entity), (4) the ONEOK Acquisition shall be
consummated on or before April 30, 2003, (5) immediately following the
consummation of the ONEOK Acquisition, Company and Borrower shall
deliver to Administrative Agent a certificate signed by a Responsible
Officer certifying that after giving effect to the ONEOK Acquisition
and the inclusion of ONEOK Resources Company as a Subsidiary Guarantor
(i) no Default or Event of Default exists that is continuing and (ii)
all representations and warranties contained in Section 4 of the Credit
Agreement are true and correct, and (6) except as otherwise provided
herein, nothing in this Letter Agreement shall allow any
Group Member to make any other new Investments not allowed pursuant to
Section 7.7 of the Credit Agreement; and
(b) (i) consent to the issuance of the New Notes, (ii) waive
any violations of Section 7.2 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
that 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 April 30, 2003, (4) the face amount
of the New Notes divided by the sum of (x) the face amount of the New
Notes plus (y) the aggregate sales price of the New Common Stock shall
not exceed 62.50%, (5) the net proceeds of the New Notes shall be used
to consummate the ONEOK Acquisition with any remaining funds (or all of
such funds should the ONEOK Acquisition fail to close) used to repay
outstanding Indebtedness of any Group Member or to pay the purchase
price of oil and gas properties acquired by a Group Member or to pay
development costs with respect to oil and gas properties owned by a
Group Member, and (6) except as otherwise provided herein, nothing in
this Letter Agreement shall allow any Group Member to incur any other
new Indebtedness not allowed pursuant to Section 7.2 of the Credit
Agreement; and
(c) (i) consent to the Permian Basin Disposition, (ii) waive
any violations of Section 7.5 of the Credit Agreement resulting
therefrom, and (iii) agree that provisions of Section 7.5(e) of the
Credit Agreement shall not apply to any Net Cash Proceeds of the
Permian Basin Disposition; provided that (1) at the time of the Permian
Basin Disposition, no Default or Event of Default has occurred that is
continuing, (2) the Permian Basin Disposition shall be approved by the
Board of Directors of Company, (3) after giving effect to the Permian
Basis Disposition, Company and Borrower shall be in compliance with the
provisions of Section 6.9(a) of the Credit Agreement, (4) any Net Cash
Proceeds of the Permian Basin Disposition shall be used to repay
outstanding Indebtedness of any Group Member or to pay the purchase
price of oil and gas properties acquired by a Group Member or to pay
development costs with respect to oil and gas properties owned by a
Group Member, and (5) except as otherwise provided herein, nothing in
this Letter Agreement shall allow any Group Member to make any other
dispositions not allowed pursuant to Section 7.5 of the Credit
Agreement.
The limitations set forth in clause (a) above shall not be deemed to restrict
Investments otherwise allowed under clause (n) of Section 7.7 of the Credit
Agreement. Administrative Agent is hereby authorized to take any action
requested by Company or Borrower having the effect of releasing any Collateral
that is included within the Permian Basin Disposition in order to permit the
consummation of such transaction.
In consideration of this Letter Agreement, provided that Majority
Lenders are signatory to this Letter Agreement on or before 5:00 p.m., Dallas,
Texas time on the date hereof, Borrower will pay to Administrative Agent, for
the account of each Lender signatory to this Letter Agreement on or before such
date and time, an amendment fee determined by multiplying .50% 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 (as modified by
certain Assumption Agreements) 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/ Randall Osterberg
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Name: Randall Osterberg
Title: Senior Vice President
By: /s/ Sean Murphy
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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
------------------------------------------------
Martha A. Burger
Treasurer and Sr. Vice President Human Resources
GUARANTORS:
CHESAPEAKE ENERGY CORPORATION
CHESAPEAKE OPERATING, INC.
By: /s/ Martha A. Burger
------------------------------------------------
Martha A. Burger
Treasurer and Sr. Vice President Human Resources
of each above corporation
THE AMES COMPANY, INC.
CARMEN ACQUISITION CORP.
CHESAPEAKE ACQUISITION CORPORATION
CHESAPEAKE BETA CORP.
CHESAPEAKE DELTA CORP.
CHESAPEAKE ENERGY LOUISIANA CORPORATION
CHESAPEAKE ENO ACQUISITION CORP.
CHESAPEAKE FOCUS CORP.
CHESAPEAKE KNAN ACQUISITION CORPORATION
CHESAPEAKE MOUNTAIN FRONT CORP.
CHESAPEAKE ROYALTY COMPANY GOTHIC ENERGY CORPORATION GOTHIC PRODUCTION
CORPORATION NOMAC DRILLING CORPORATION SAP ACQUISITION CORP.
By: /s/ Martha A. Burger
-----------------------------------
Martha A. Burger
Treasurer of each above corporation
CHESAPEAKE PANHANDLE LIMITED PARTNERSHIP
CHESAPEAKE-STAGHORN ACQUISITION L.P.
CHESAPEAKE LOUISIANA, L.P.
CHESAPEAKE SIGMA, L.P.
By: CHESAPEAKE OPERATING, INC., as General Partner
of each above limited partnership
By: /s/ Martha A. Burger
------------------------------------------------
Martha A. Burger
Treasurer and Sr. Vice President Human Resources
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
-----------------------------------
Name: Joseph Fratus
Title: First Vice President
BEAR STEARNS CORPORATE LENDING INC.
By: /s/ Victor Bulzacchelli
-----------------------------------
Name: Victor Bulzacchelli
Title: Authorized Signatory
BNP PARIBAS
By: /s/ David Dodd
-----------------------------------
Name: David Dodd
Title: Director
By: /s/ Polly Schott
-----------------------------------
Name: Polly Schott
Title: Vice President
COMERICA BANK - TEXAS
By: /s/ Peter L. Sefzik
-----------------------------------
Name: Peter L. Sefzik
Title: Assistant Vice President
COMPASS BANK
By: /s/ Kathleen J. Bowen
-----------------------------------
Name: Kathleen J. Bowen
Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Olivier Audemard
-----------------------------------
Name: Olivier Audemard
Title: Senior Vice President
CREDIT SUISSE FIRST BOSTON
By: /s/ James P. Moran
-----------------------------------
Name: James P. Moran
Title: Director
By: /s/ Ian W. Nautt
-----------------------------------
Name: Ian W. Nautt
Title: Associate
NATEXIS BANQUES POPULAIRES
By: /s/ Donovan C. Broussard
-----------------------------------
Name: Donovan C. Broussard
Title: Vice President
By: /s/ Daniel Payer
-----------------------------------
Name: Daniel Payer
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Doug Clark
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Name: Doug Clark
Title: Vice President
RZB FINANCE LLC
By: /s/ Pearl Geffers
-----------------------------------
Name: Pearl Geffers
Title: First Vice President
By: /s/ John A. Valisku
-----------------------------------
Name: John A. Valisku
Title: Group Vice President
SUMITOMO MITSUI BANKING CORPORATION
By: /s/ William M. Ginn
-----------------------------------
Name: William M. Ginn
Title: General Manager
TORONTO DOMINION (TEXAS), INC.
By: /s/ Debbie A. Greene
-----------------------------------
Name: Debbie A. Greene
Title: Vice President
WASHINGTON MUTUAL BANK, FA
By: /s/ Mark Isensee
-----------------------------------
Name: Mark Isensee
Title: Vice President