1
EXHIBIT 4.6
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$225,000,000
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
among
CHESAPEAKE ENERGY CORPORATION,
CHESAPEAKE EXPLORATION LIMITED PARTNERSHIP,
as Borrower,
BEAR STEARNS CORPORATE LENDING INC.,
as Syndication Agent,
UNION BANK of CALIFORNIA, N.A.,
as Administrative Agent and Collateral Agent,
BNP PARIBAS
and
TORONTO DOMINION (TEXAS), INC.,
as Co-Documentation Agents
and
The Several Lenders
from Time to Time Parties Hereto,
Dated as of June 11, 2001
BEAR, STEARNS & CO. INC.,
as Sole Lead Arranger and Sole Bookrunner
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TABLE OF CONTENTS
<Table>
SECTION 1. DEFINITIONS.....................................................................................1
1.1. Defined Terms.......................................................................................1
1.2. Other Definitional Provisions......................................................................20
SECTION 2. AMOUNT AND TERMS OF REVOLVING COMMITMENTS......................................................21
2.1. Revolving Commitments..............................................................................21
2.2. Procedure for Revolving Loan Borrowing.............................................................21
2.3. Commitment Fees, etc...............................................................................22
2.4. Termination or Reduction of Revolving Commitments..................................................22
2.5. L/C Commitment.....................................................................................23
2.6. Procedure for Issuance of Letter of Credit.........................................................23
2.7. Fees and Other Charges.............................................................................24
2.8. L/C Participations.................................................................................24
2.9. Reimbursement Obligation of the Borrower...........................................................25
2.10. Obligations Absolute..............................................................................25
2.11. Letter of Credit Payments.........................................................................27
2.12. Applications......................................................................................27
2.13. Borrowing Base and Collateral Value Determination.................................................27
SECTION 3. GENERAL PROVISIONS APPLICABLE TO REVOLVING LOANS AND LETTERS OF CREDIT........................28
3.1. Optional Prepayments...............................................................................28
3.2. Mandatory Prepayments..............................................................................28
3.3. Conversion and Continuation Options................................................................30
3.4. Limitations on Eurodollar Tranches.................................................................31
3.5. Interest Rates and Payment Dates...................................................................31
3.6. Computation of Interest and Fees...................................................................32
3.7. Inability to Determine Interest Rate...............................................................32
3.8. Pro Rata Treatment and Payments....................................................................32
3.9. Requirements of Law................................................................................34
3.10. Taxes.............................................................................................35
3.11. Indemnity.........................................................................................36
3.12. Change of Lending Office..........................................................................37
3.13. Replacement of Lenders............................................................................37
3.14. Evidence of Debt..................................................................................38
3.15. Illegality........................................................................................38
SECTION 4. REPRESENTATIONS AND WARRANTIES.................................................................38
4.1. Financial Condition................................................................................39
</Table>
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<Table>
4.2. No Change..........................................................................................39
4.3. Corporate Existence; Compliance with Law...........................................................39
4.4. Power; Authorization; Enforceable Obligations......................................................40
4.5. No Legal Bar.......................................................................................40
4.6. Litigation.........................................................................................40
4.7. No Default.........................................................................................40
4.8. Ownership of Property; Liens.......................................................................40
4.9. Intellectual Property..............................................................................41
4.10. Taxes.............................................................................................41
4.11. Federal Regulations...............................................................................41
4.12. Labor Matters.....................................................................................41
4.13. ERISA.............................................................................................42
4.14. Investment Company Act; Other Regulations.........................................................42
4.15. Subsidiaries......................................................................................42
4.16. Use of Proceeds...................................................................................42
4.17. Environmental Matters.............................................................................42
4.18. Accuracy of Information, etc......................................................................43
4.19. Security Documents................................................................................44
4.20. Solvency..........................................................................................44
4.21. Senior Debt Limit.................................................................................44
4.22. Proved Developed Properties.......................................................................44
4.23. Subsidiary Guarantors.............................................................................44
SECTION 5. CONDITIONS PRECEDENT...........................................................................44
5.1. Conditions to Initial Extension of Credit..........................................................44
5.2. Conditions to Each Extension of Credit.............................................................47
SECTION 6. AFFIRMATIVE COVENANTS..........................................................................47
6.1. Financial Statements...............................................................................47
6.2. Certificates; Other Information....................................................................48
6.3. Payment of Obligations.............................................................................50
6.4. Maintenance of Existence; Compliance...............................................................50
6.5. Maintenance of Property; Insurance.................................................................51
6.6. Inspection of Property; Books and Records; Discussions.............................................51
6.7. Notices............................................................................................51
6.8. Environmental Laws.................................................................................52
6.9. Collateral Coverage and Guarantees.................................................................53
6.10. Further Assurances................................................................................53
SECTION 7. NEGATIVE COVENANTS.............................................................................54
7.1. Financial Condition Covenants......................................................................54
7.2. Indebtedness.......................................................................................54
7.3. Liens .............................................................................................55
</Table>
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<Table>
7.4. Fundamental Changes................................................................................57
7.5. Disposition of Property............................................................................57
7.6. Restricted Payments................................................................................58
7.7. Investments........................................................................................59
7.8. Optional Payments and Modifications of Certain Debt Instruments....................................60
7.9. Transactions with Affiliates.......................................................................61
7.10. Sales and Leasebacks..............................................................................61
7.11. Changes in Fiscal Periods.........................................................................61
7.12. Negative Pledge Clauses...........................................................................61
7.13. Clauses Restricting Subsidiary Distributions......................................................61
7.14. Take-or-Pay Contracts.............................................................................61
7.15. Lines of Business.................................................................................62
7.16. Senior Debt Limit.................................................................................62
SECTION 8. EVENTS OF DEFAULT.....................................................................................62
SECTION 9. THE AGENTS ...........................................................................................65
9.1. Appointment........................................................................................65
9.2. Delegation of Duties...............................................................................65
9.3. Exculpatory Provisions.............................................................................65
9.4. Reliance by Agents.................................................................................65
9.5. Notice of Default..................................................................................66
9.6. Non-Reliance on Agents and Other Lenders...........................................................66
9.7. Indemnification....................................................................................67
9.8. Agent in Its Individual Capacity...................................................................67
9.9. Successor Administrative Agent.....................................................................67
9.10. Agents Generally..................................................................................68
9.11. The Lead Arranger.................................................................................68
SECTION 10. MISCELLANEOUS .......................................................................................68
10.1. Amendments and Waivers............................................................................68
10.2. Notices...........................................................................................69
10.3. No Waiver; Cumulative Remedies....................................................................70
10.4. Survival of Representations and Warranties........................................................70
10.5. Payment of Expenses and Taxes.....................................................................71
10.6. Successors and Assigns; Participations and Assignments............................................72
10.7. Adjustments; Set-off..............................................................................74
10.8. Counterparts......................................................................................75
10.9. Severability......................................................................................75
10.10. Integration......................................................................................75
10.11. GOVERNING LAW....................................................................................75
10.12. Submission To Jurisdiction; Waivers..............................................................75
10.13. Acknowledgments..................................................................................76
</Table>
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<Table>
10.14. Releases of Guarantees and Liens; Designation of Subsidiaries....................................76
10.15. Confidentiality..................................................................................77
10.16. WAIVERS OF JURY TRIAL............................................................................77
10.17. Delivery of Addenda..............................................................................77
10.18. Special Provisions...............................................................................77
10.19. Limitation on Interest...........................................................................78
</Table>
ANNEX:
A Pricing Grid
SCHEDULES:
1.1A Commitments
1.1B Mortgaged Property
4.1(b) Certain Hedging Transactions
4.4 Consents, Authorizations, Filings and Notices
4.6 Litigation
4.15(a) Subsidiaries
4.15(b) Outstanding Subscriptions, Options, Warrants, Calls, Rights etc.
Relating to Capital Stock of the Company or any Subsidiary
4.17(d) Environmental Matters
4.19 Mortgage Filing Jurisdictions
5.1(j) Existing Mortgages
7.2(d) Existing Indebtedness
7.3(f) Existing Liens
7.7(m) Investments
EXHIBITS:
A Form of Guarantee Agreement
B Form of Compliance Certificate
C Form of Closing Certificate
D Form of Mortgage
E Form of Assignment and Acceptance
F Form of Legal Opinion of Commercial Law Group, P.C.
G Form of Exemption Certificate
H Form of Revolving Note
I Form of Addendum
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SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of June 11,
2001, among CHESAPEAKE EXPLORATION LIMITED PARTNERSHIP, an Oklahoma limited
partnership (the "Borrower"), CHESAPEAKE ENERGY CORPORATION, an Oklahoma
corporation (the "Company"), BEAR STEARNS CORPORATE LENDING INC., as syndication
agent (in such capacity, the "Syndication Agent"), UNION BANK OF CALIFORNIA,
N.A., as administrative agent and collateral agent (in such capacities, the
"Administrative Agent"), and the several banks and other financial institutions
or entities from time to time parties to this Agreement (the "Lenders") and
BEAR, STEARNS & CO. INC., as sole lead arranger and sole bookrunner (in such
capacity, the "Lead Arranger").
WITNESSETH:
WHEREAS, the Company and the Borrower wish to amend and restate the
Amended and Restated Credit Agreement, dated as of May 30, 2000 (as amended, the
"Existing Credit Agreement") to obtain a $225,000,000 senior secured revolving
credit facility in order to finance, among other things, (a) the repurchase of a
portion of the outstanding 7-7/8% senior notes due 2004 of the Company (the
"7-7/8% Notes"), including any accrued interest thereon and tender or redemption
premiums payable in connection therewith, and (b) the payment of certain related
fees and expenses; and
WHEREAS, the Lenders are willing to amend and restate the Existing
Credit Agreement as set forth herein.
NOW, THEREFORE, in consideration of the premises set forth, the parties
hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1. Defined Terms. As used in this Agreement, the terms listed in this
Section 1.1 shall have the respective meanings set forth in this Section 1.1.
"Acquisition": the acquisition by the Company, through its wholly-owned
subsidiary, Chesapeake Merger 2000, Inc., of all the outstanding common stock of
Gothic Energy Corporation pursuant to the Acquisition Agreement.
"Acquisition Agreement": that certain Agreement and Plan of Merger,
dated September 8, 2000 among the Company, Chesapeake Merger 2000, Inc. and
Gothic Energy Corporation.
"Addendum": an instrument, substantially in the form of Exhibit I, by
which a Lender becomes a party to this Agreement as of the Closing Date.
"Additional Extensions of Credit": as defined in Section 10.1.
"Adjusted Consolidated Net Tangible Assets": as defined in the 8-1/2%
Note Indenture and the 7-7/8% Note Indenture.
"Adjustment Date": as defined in the Pricing Grid.
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"Administrative Agent": as defined in the recitals to this Agreement.
"Affiliate": as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. For purposes of this definition, "control" of a Person means the
power, directly or indirectly, either to (a) vote 20% or more of the securities
having ordinary voting power for the election of directors (or persons
performing similar functions) of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise.
"Agents": the collective reference to the Syndication Agent, the Lead
Arranger and the Administrative Agent, which term shall include, for purposes of
Section 9 only, the Issuing Lender.
"Aggregate Exposure": with respect to any Lender at any time, an amount
equal to (a) until the Closing Date, the aggregate amount of such Lender's
Revolving Commitments at such time and (b) thereafter, the amount of such
Lender's Revolving Commitment then in effect or, if the Revolving Commitments
have been terminated, the amount of such Lender's Revolving Extensions of Credit
then outstanding.
"Aggregate Exposure Percentage": with respect to any Lender at any
time, the ratio (expressed as a percentage) of such Lender's Aggregate Exposure
at such time to the Aggregate Exposure of all Lenders at such time.
"Agreement": this Second Amended and Restated Credit Agreement, as
amended, supplemented or otherwise modified from time to time.
"Applicable Margin": for each Type of Revolving Loan, the rate per
annum set forth under the relevant column heading below:
<Table>
<Caption>
Base Rate Loans Eurodollar Loans
--------------- ----------------
1.25% 2.25%
</Table>
; provided, that, on and after the first Adjustment Date (as defined in the
Pricing Grid) occurring after the date which is six months after the Closing
Date, the Applicable Margin with respect to each Type of Revolving Loan will be
determined pursuant to the Pricing Grid.
"Application": an application, in such form as the Issuing Lender may
specify from time to time, requesting the Issuing Lender to open a Letter of
Credit.
"Approved Fund": with respect to any Lender that is a fund that invests
in commercial loans, any other fund that invests in commercial loans and is
managed or advised by the same investment advisor as such Lender or by an
Affiliate of such investment advisor.
"Assignee": as defined in Section 10.6(c).
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"Assignment and Acceptance": an Assignment and Acceptance,
substantially in the form of Exhibit E.
"Assignor": as defined in Section 10.6(c).
"Available Revolving Commitment": as to any Lender at any time, an
amount equal to the excess, if any, of (a) such Lender's Revolving Commitment
then in effect over (b) such Lender's Revolving Extensions of Credit then
outstanding.
"Base Rate": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greater of (a) the Reference
Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on
such day plus 0.50%. For purposes hereof: "Reference Rate" shall mean the rate
of interest per annum publicly announced from time to time by the Administrative
Agent as its "reference rate" (the Reference Rate not being intended to be the
lowest rate of interest charged by the Administrative Agent in connection with
extensions of credit to debtors). Any change in the Base Rate due to a change in
the Reference Rate or the Federal Funds Effective Rate shall be effective as of
the opening of business on the effective day of such change in the Reference
Rate or the Federal Funds Effective Rate, respectively.
"Base Rate Loans": Revolving Loans the rate of interest applicable to
which is based upon the Base Rate.
"Benefited Lender": as defined in Section 10.7(a).
"Board": the Board of Governors of the Federal Reserve System of the
United States (or any successor).
"Borrower": as defined in the preamble to this Agreement.
"Borrowing Base": at any time, the amount of the "Borrowing Base" as
determined in accordance with Section 2.13, as reduced by the Borrower pursuant
to Section 3.2.
"Borrowing Date": any Business Day specified by the Borrower as a date
on which the Borrower requests the Lenders to make Revolving Loans hereunder.
"Borrowing Base Deficiency": as defined in Section 3.2(b).
"Borrowing Base Deficiency Notice": as defined in Section 3.2(b).
"Business": as defined in Section 4.17(b).
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City or Los Angeles, California are
authorized or required by law to close, provided, that with respect to notices
and determinations in connection with, and payments of principal and interest
on, Eurodollar Loans, such day is also a day for trading by and between banks in
Dollar deposits in the interbank eurodollar market.
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"Capital Lease Obligations": as to any Person, the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP and, for the purposes of
this Agreement, the amount of such obligations at any time shall be the
capitalized amount thereof at such time determined in accordance with GAAP.
"Capital Stock": any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation) and any
and all warrants, rights or options to purchase any of the foregoing, including,
without limitation, any preferred stock.
"Cash Equivalents": (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition; (b)
certificates of deposit, time deposits, eurodollar time deposits or overnight
bank deposits having maturities of six months or less from the date of
acquisition issued by any Lender or by any commercial bank organized under the
laws of the United States or any state thereof having combined capital and
surplus of not less than $500,000,000; (c) commercial paper of an issuer rated
at least A-1 by Standard & Poor's Ratings Services ("S&P") or P-1 by Moody's
Investors Service, Inc. ("Moody's"), or carrying an equivalent rating by a
nationally recognized rating agency, if both of the two named rating agencies
cease publishing ratings of commercial paper issuers generally, and maturing
within six months from the date of acquisition; (d) repurchase obligations of
any Lender or of any commercial bank satisfying the requirements of clause (b)
of this definition, having a term of not more than 7 days, with respect to
securities issued or fully guaranteed or insured by the United States
government; (e) securities with maturities of one year or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory
of the United States, by any political subdivision or taxing authority of any
such state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision,
taxing authority or foreign government (as the case may be) are rated at least A
by S&P or A by Moody's; (f) securities with maturities of six months or less
from the date of acquisition backed by standby letters of credit issued by any
Lender or any commercial bank satisfying the requirements of clause (b) of this
definition; (g) open market commercial paper, maturing within 270 days after the
acquisition thereof, which has the highest or second highest credit rating given
by either S&P or Moody's, or (h) shares of money market mutual or similar funds
which invest exclusively in assets satisfying the requirements of clauses (a)
through (g) of this definition.
"Closing Date": the date on which the conditions precedent set forth in
Section 5.1 shall have been satisfied, which date is June 11, 2001.
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral": all property of the Loan Parties, now owned or hereafter
acquired, upon which a Lien is purported to be created by any Security Document.
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"Collateral Coverage Ratio": at any time, the ratio of (a) the
Collateral Value to (b) the greater of (i) the Borrowing Base and (ii) the sum
of (A) the Total Revolving Extensions of Credit then outstanding and (B) during
the period commencing on the Extension Date and ending on the date on which the
Outstanding 7-7/8% Note Amount is equal to or less than $10,000,000, the
Outstanding 7-7/8% Note Amount.
"Collateral Deficiency Date": as defined in Section 3.2(a)
"Collateral Value": on any date, the net present value (using a 10%
discount rate) of the projected future revenues attributable to the portion of
the reserves categorized as "Producing" under the Definitions for Oil and Gas
Reserves promulgated by the Society of Petroleum Engineers (or any generally
recognized successors), of the Mortgaged Properties, as determined from time to
time in accordance with Section 2.13; provided, that the Collateral Value shall
not exceed the sum of (a) the net present value (as so determined) of the
Mortgaged Properties owned by the Borrower and (b) the lesser of (i) the net
present value (as so determined) of the Mortgaged Properties owned by the
Guarantors and (ii) an amount equal to 25% of the amount described in clause (a)
above.
"Commitment Fee Rate": 0.50% per annum; provided that, on and after the
first Adjustment Date occurring on the date which is six months after the
Closing Date, the Commitment Fee Rate will be determined pursuant to the Pricing
Grid.
"Commonly Controlled Entity": an entity, whether or not incorporated,
that is under common control with the Company within the meaning of Section 4001
of ERISA or is part of a group that includes the Company and that is treated as
a single employer under Section 414 of the Code.
"Company": as defined in the preamble to this Agreement.
"Company Report": as defined in Section 6.2(e).
"Compliance Certificate": a certificate duly executed by a Responsible
Officer substantially in the form of Exhibit B.
"Conduit Lender": any special purpose entity organized and administered
by any Lender for the purpose of making Revolving Loans otherwise required to be
made by such Lender and designated by such Lender in a written instrument,
subject to the consent of the Administrative Agent and the Borrower (which
consent shall not be unreasonably withheld); provided, that the designation by
any Lender of a Conduit Lender shall not relieve the designating Lender of any
of its obligations to fund a Revolving Loan under this Agreement if, for any
reason, its Conduit Lender fails to fund any such Revolving Loan, and the
designating Lender (and not the Conduit Lender) shall have the sole right and
responsibility to deliver all consents and waivers required or requested under
this Agreement with respect to its Conduit Lender; and provided, further, that
no Conduit Lender shall (a) be entitled to receive any greater amount pursuant
to Sections 3.9, 3.10, 3.11 or 10.5 than the designating Lender would have been
entitled to receive in respect of the extensions of credit made by such Conduit
Lender or (b) be deemed to have any Revolving Commitment.
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"Confidential Information Memorandum": the Confidential Information
Memorandum dated May 2001 and furnished to the Lenders.
"Consolidated EBITDA": for any period, Consolidated Net Income for such
period plus, without duplication and to the extent reflected as a charge in the
statement of such Consolidated Net Income for such period, the sum of (a) income
tax expense, (b) Consolidated Interest Expense, (c) depletion, depreciation and
amortization expense, (d) any extraordinary charges or losses determined in
accordance with GAAP, and (e) any other non-cash charges, non-cash expenses or
non-cash losses of any Loan Party for such period (excluding any such charge,
expense or loss incurred in the ordinary course of business that constitutes an
accrual of or reserve for cash charges for any future period), provided that
cash payments made during such period or in any future period in respect of such
non-cash charges, expenses or losses (other than any such excluded charge,
expense or loss as described above) shall be subtracted from Consolidated Net
Income in calculating Consolidated EBITDA for the period in which such payments
are made, and minus, to the extent included in the statement of such
Consolidated Net Income for such period, the sum of (a) interest income, (b) any
extraordinary income or gains determined in accordance with GAAP and (c) any
other non-cash income (excluding any items that represent the reversal of any
accrual of, or cash reserve for, anticipated cash charges in any prior period
that are described in the parenthetical to clause (e) above), all as determined
on a consolidated basis in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio": for any period, the ratio
of (a) Consolidated EBITDA for such period to (b) Consolidated Fixed Charges for
such period.
"Consolidated Fixed Charges": for any period, the sum (without
duplication) of (a) Consolidated Interest Expense for such period, (b) scheduled
payments made during such period on account of principal of Indebtedness of any
Loan Party (other than any payments of principal in respect of the 7-7/8% Notes)
and (c) all dividends (other than dividends payable in common stock) declared by
the Company and attributable to such period. For purposes of this Agreement, a
dividend is "attributed" to the fiscal quarter immediately preceding the quarter
in which such dividend is actually declared by the Company.
"Consolidated Interest Expense": for any period, the sum of (a) all
interest, commitment fees and loan fees in respect of Indebtedness (including
that attributable to Capital Lease Obligations) of any Loan Party deducted in
determining Consolidated Net Income for such period, together with all interest
capitalized or deferred during such period and not deducted in determining
Consolidated Net Income for such period, plus (b) all fees, expenses and charges
in respect of letters of credit issued for the account of any Loan Party
deducted in determining Consolidated Net Income for such period, together with
all such fees, expenses and charges in respect of letters of credit capitalized
or deferred during such period and not deducted in determining Consolidated Net
Income for such period, all as determined on a consolidated basis in accordance
with GAAP. Revenues and expenses derived from Hedge Agreements related to
interest rates or dividend rates will be treated as adjustments to interest
expense for purposes of this definition.
"Consolidated Net Income": for any period, the consolidated net income
(or loss) of the Loan Parties, determined on a consolidated basis in accordance
with GAAP; provided that
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there shall be excluded (a) the income (or deficit) of any Person accrued prior
to the date it becomes a Subsidiary of the Company or is merged into or
consolidated with the Company or any of its Subsidiaries, (b) the income (or
deficit) of any Person (other than a Subsidiary of the Company) in which the
Company or any of its Subsidiaries has an ownership interest, except to the
extent that any such income is actually received by the Company or such
Subsidiary in the form of dividends or similar distributions and (c) the
undistributed earnings of any Subsidiary of the Company to the extent that the
declaration or payment of dividends or similar distributions by such Subsidiary
is not at the time permitted by the terms of any Contractual Obligation (other
than under any Loan Document) or Requirement of Law applicable to such
Subsidiary.
"Continuing Directors": the directors of the Company on the Closing
Date and each other director, if, in each case, such other director's nomination
for election to the board of directors of the Company is recommended by at least
66-2/3% of the then Continuing Directors.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Current Ratio": as at the last day of any period, the ratio of (a)(i)
the current assets of the Loan Parties plus (ii) the Unused Borrowing Base to
(b) the current liabilities of the Loan Parties, all determined on a
consolidated basis in accordance with GAAP. For purposes of this definition,
current liabilities shall exclude current maturities of long term debt and
current maturities of the Revolving Loans.
"Default": any of the events specified in Section 8, whether or not any
requirement for the giving of notice, the lapse of time, or both, has been
satisfied.
"Derivatives Counterparty": as defined in Section 7.6.
"Designated Lender": as defined in Section 5.1(a).
"Determination Date": as defined in Section 2.13.
"Disposition": with respect to any Property, any sale, lease, sale and
leaseback, assignment, conveyance, transfer or other disposition thereof. The
terms "Dispose" and "Disposed of" shall have correlative meanings.
"Dollars" and "$": dollars in lawful currency of the United States.
"8-1/8% Note Indenture": the Indenture, dated as of April 6, 2001,
among the Company, certain subsidiary guarantors and the United States Trust
Company of New York, as Trustee, pursuant to which the 8-1/8% Notes were issued.
"8-1/2% Note Indenture": the Indenture, dated as of March 15, 1997,
among the Company, certain subsidiary guarantors and the United States Trust
Company of New York, as Trustee, pursuant to which the 8-1/2% Notes were issued.
"8-1/8% Notes": the 8-1/8% senior notes of the Company due 2011.
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"8-1/2% Notes": the 8-1/2% senior notes of the Company due 2012.
"Engineering Reports": as defined in Section 6.2(e).
"Environmental Laws": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements of Law
(including common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the environment,
as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Estimated ACNTA": as defined in Section 6.2(f).
"Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal fraction) of reserve requirements in effect on such day
(including basic, supplemental, marginal and emergency reserves under any
regulations of the Board or other Governmental Authority having jurisdiction
with respect thereto) dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board) maintained by a member bank of the Federal Reserve
System.
"Eurodollar Base Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate per annum determined on the
basis of the rate for deposits in Dollars for a period equal to such Interest
Period commencing on the first day of such Interest Period appearing on Page
3750 of the Dow Jones Markets screen as of 9:00 A.M., London time, two Business
Days prior to the beginning of such Interest Period. In the event that such rate
does not appear on Page 3750 of the Dow Jones Markets screen (or otherwise on
such screen), the "Eurodollar Base Rate" shall be determined by reference to
such other comparable publicly available service for displaying eurodollar rates
as may be selected by the Administrative Agent or, in the absence of such
availability, by reference to the rate at which the Administrative Agent is
offered Dollar deposits at or about 9:00 A.M., New York City time, two Business
Days prior to the beginning of such Interest Period in the interbank eurodollar
market where its eurodollar and foreign currency and exchange operations are
then being conducted for delivery on the first day of such Interest Period for
the number of days comprised therein.
"Eurodollar Loans": Revolving Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest Period
pertaining to a Eurodollar Loan, a rate per annum determined by the
Administrative Agent for such day in accordance with the following formula
(rounded upward to the nearest 1/100th of 1%):
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Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Tranche": the collective reference to Eurodollar Loans the
then current Interest Periods with respect to all of which begin on the same
date and end on the same later date (whether or not such Eurodollar Loans shall
originally have been made on the same day).
"Evaluation Date": (a) in the case of the Borrowing Base, December 31
of each year, and in the case of the Collateral Value, March 31, 2001, December
31, 2001 and thereafter each June 30 and December 31 of each year, (b) the
Extension Request Date (unless such date occurs within 90 days of another
Evaluation Date in which case the Extension Request Date shall not be an
Evaluation Date), (c) such other dates as the Majority Lenders, at their option,
determine pursuant to a notice executed by the Majority Lenders that the
Borrowing Base and the Collateral Value shall be redetermined and (d) such other
dates as the Borrower shall request; provided, that the Borrower shall not be
entitled to request that a date be an "Evaluation Date" more than once during
any six month period beginning January 1 and July 1.
"Event of Default": any of the events specified in Section 8, provided
that any requirement for the giving of notice, the lapse of time, or both, has
been satisfied.
"Excess Amount": as defined in Section 7.5.
"Exchange Act": as defined in Section 8(k).
"Existing Credit Agreement": as defined in the recitals to this
Agreement.
"Exiting Lenders": as defined in Section 5.1(n).
"Extension Date": as to any requested extension of the Revolving
Termination Date pursuant to Section 2.1(c), the date on which the conditions to
such extension set forth in such Section are satisfied.
"Extension Request Date": as defined in Section 2.1(c).
"Existing Mortgages": the collective reference to each existing deed of
trust, mortgage, chattel mortgage, security agreement, financing statement and
other security documents delivered pursuant to the Existing Credit Agreement and
listed on Schedule 5.1(j).
"Federal Funds Effective Rate": for any day, the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for the day of such transactions received by the Administrative Agent
from three federal funds brokers of recognized standing selected by it.
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"Funding Office": the office of the Administrative Agent specified in
Section 10.2 or such other office as may be specified from time to time by the
Administrative Agent as its funding office by written notice to the Borrower and
the Lenders.
"GAAP": generally accepted accounting principles in the United States
as in effect from time to time except that for purposes of Section 7.1, GAAP
shall be determined on the basis of such principles in effect on the date hereof
and consistent with those used in the preparation of the most recent audited
financial statements referred to in Section 4.1(b). In the event that any
Accounting Change (as defined below) shall occur and such change results in a
change in the method of calculation of financial covenants, standards or terms
in this Agreement, then the Company and the Administrative Agent agree to enter
into negotiations in order to amend such provisions of this Agreement so as to
equitably reflect such Accounting Changes with the desired result that the
criteria for evaluating the Company's financial condition shall be the same
after such Accounting Changes as if such Accounting Changes had not been made.
Until such time as such an amendment shall have been executed and delivered by
the Company, the Borrower, the Administrative Agent and the Majority Lenders,
all financial covenants, standards and terms in this Agreement shall continue to
be calculated or construed as if such Accounting Changes had not occurred.
"Accounting Changes" refers to changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants or, if applicable, the SEC.
"Governmental Authority": any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization (including the National Association of Insurance Commissioners).
"GPC Notes": the 11-1/8% Senior Secured Notes due 2005 of Gothic
Production Corporation, an Oklahoma corporation.
"Group Members": the collective reference to the Company, the Borrower
and their respective Subsidiaries.
"Guarantee Agreement": the Guarantee Agreement to be executed and
delivered by the Company and each Subsidiary Guarantor, substantially in the
form of Exhibit A.
"Guarantee Obligation": as to any Person (the "guaranteeing person"),
any obligation of (a) the guaranteeing person or (b) another Person (including
any bank under any letter of credit) to induce the creation of which the
guaranteeing person has issued a reimbursement, counterindemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "primary obligations")
of any other third Person (the "primary obligor") in any manner, whether
directly or indirectly, including any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to advance or
supply funds (1) for the purchase or payment of any such primary obligation or
(2) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the
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net worth or solvency of the primary obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (iv) otherwise to assure or hold harmless the owner
of any such primary obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business. The
amount of any Guarantee Obligation of any guaranteeing person shall be deemed to
be the lower of (a) an amount equal to the stated or determinable amount of the
primary obligation in respect of which such Guarantee Obligation is made and (b)
the maximum amount for which such guaranteeing person may be liable pursuant to
the terms of the instrument embodying such Guarantee Obligation, unless such
primary obligation and the maximum amount for which such guaranteeing person may
be liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the Company or the
Borrower in good faith.
"Guarantors": the collective reference to the Company and the
Subsidiary Guarantors.
"Hedge Agreement": any (a) agreement providing for options, swaps,
floors, caps, collars, forward sales or forward purchases involving interest
rates, commodities or commodity prices, equities, currencies, bonds, or indexes
based on any of the foregoing, (b) option, futures or forward contract traded on
an exchange, and (c) other derivative agreement or other similar agreement or
arrangement.
"Indebtedness": of any Person at any date, without duplication, (a) all
indebtedness of such Person for borrowed money, (b) all obligations of such
Person for the deferred purchase price of property or services (other than
current trade payables incurred in the ordinary course of such Person's business
and other obligations to the extent such obligations may be satisfied at such
Person's sole discretion by the issuance of common stock of such Person), (c)
all obligations of such Person evidenced by notes, bonds, debentures or other
similar instruments, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (e) all Capital Lease Obligations of such Person, (f)
all obligations of such Person, contingent or otherwise, as an account party or
applicant under or in respect of acceptances, letters of credit, surety bonds or
similar arrangements, (g) all Guarantee Obligations of such Person in respect of
obligations of the kind referred to in clauses (a) through (g) above, (h) all
obligations of the kind referred to in clauses (a) through (g) above secured by
(or for which the holder of such obligation has an existing right, contingent or
otherwise, to be secured by) any Lien on property (including accounts and
contract rights) owned by such Person, whether or not such Person has assumed or
become liable for the payment of such obligation, (i) liabilities with respect
to payments received in consideration of oil, gas, or other minerals yet to be
acquired or produced at the time of payment (including obligations under
"take-or-pay" contracts to deliver gas in return for payments already received
and the undischarged balance of any production payment created by such Person or
for the creation of which such Person directly or indirectly received payment),
and (j) for the purposes of Sections 7.2 and 8(e) only, all obligations of such
Person in respect of Hedge Agreements. The Indebtedness of any Person
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shall include the Indebtedness of any other entity (including any partnership in
which such Person is a general partner) to the extent such Person is liable
therefor as a result of such Person's ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness expressly provide that such Person is not liable therefor.
"Indemnified Liabilities": as defined in Section 10.5.
"Indemnitee": as defined in Section 10.5.
"Indentures": the collective reference to (i) the 7-7/8% Note
Indenture, (ii) the 8-1/2% Note Indenture and (iii) the 8-1/8% Note Indenture.
"Independent Report": as defined in Section 6.2(e).
"Initial Engineering Report": the collective reference to the following
engineering reports concerning oil and gas properties of the Company and its
Subsidiaries: (i) Report dated December 31, 2000 prepared by Lee Keeling and
Associates, (ii) Report dated December 31, 2000 prepared by Williamson Petroleum
Consultants, Inc.; (iii) Report dated December 31, 2000 prepared by Ryder Scott
Company; and (iv) Report dated December 31, 2000 prepared by the Company's
employee engineers.
"Insolvency": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Intellectual Property": the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including
copyrights, copyright licenses, patents, patent licenses, trademarks, trademark
licenses, technology, know-how and processes, and all rights to sue at law or in
equity for any infringement or other impairment thereof, including the right to
receive all proceeds and damages therefrom.
"Interest Payment Date": (a) as to any Base Rate Loan, the last day of
each March, June, September and December to occur while such Base Rate Loan is
outstanding and the final maturity date of such Base Rate Loan, (b) as to any
Eurodollar Loan having an Interest Period of three months or less, the last day
of such Interest Period, (c) as to any Eurodollar Loan having an Interest Period
longer than three months, each day that is three months, or a whole multiple
thereof, after the first day of such Interest Period and the last day of such
Interest Period and (d) as to any Eurodollar Loan, the date of any repayment or
prepayment made in respect thereof.
"Interest Period": as to any Eurodollar Loan, (a) initially, the period
commencing on the borrowing or conversion date, as the case may be, with respect
to such Eurodollar Loan and ending one, two, three or six months thereafter, as
selected by the Borrower in its notice of borrowing or notice of conversion, as
the case may be, given with respect thereto; and (b) thereafter, each period
commencing on the last day of the next preceding Interest Period applicable to
such Eurodollar Loan and ending one, two, three or six months thereafter, as
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selected by the Borrower by irrevocable notice to the Administrative Agent no
later than 8:00 A.M., Los Angeles, California time, three Business Days prior to
the last day of the then current Interest Period with respect thereto; provided
that, all of the foregoing provisions relating to Interest Periods are subject
to the following:
(i) if any Interest Period would otherwise end on a day that
is not a Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless the result of such extension would
be to carry such Interest Period into another calendar month in which
event such Interest Period shall end on the immediately preceding
Business Day;
(ii) the Borrower may not select an Interest Period that would
extend beyond the Revolving Termination Date;
(iii) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month; and
(iv) the Borrower shall select Interest Periods so as not to
require a payment or prepayment of any Eurodollar Loan during an
Interest Period for such Eurodollar Loan.
"Investments": as defined in Section 7.7.
"Issuing Lender": Union Bank of California, N.A., in its
capacity as issuer of any Letter of Credit. The Administrative Agent may, with
the consent of the Borrower and the relevant Lender, appoint such Lender
hereunder as the Issuing Lender in place of or in addition to Union Bank of
California, N.A.
"L/C Commitment": $75,000,000.
"L/C Fee Payment Date": the last day of each March, June,
September and December and the last day of the Revolving Commitment Period.
"L/C Obligations": at any time, an amount equal to the sum of
(a) the aggregate then undrawn and unexpired amount of the then outstanding
Letters of Credit and (b) the aggregate amount of drawings under Letters of
Credit that have not then been reimbursed pursuant to Section 2.9.
"L/C Participants": the collective reference to all the
Lenders other than the Issuing Lender.
"Lead Arranger": as defined in the recitals to this Agreement.
"Lender Affiliate": (a) any Affiliate of any Lender, (b) any
Person that is administered or managed by any Lender and that is engaged in
making, purchasing, holding or otherwise investing in commercial loans and
similar extensions of credit in the ordinary course of its business and (c) with
respect to any Lender which is a fund that invests in commercial loans and
similar extensions of credit, any other fund that invests in commercial
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loans and similar extensions of credit and is managed or advised by the same
investment advisor as such Lender or by an Affiliate of such Lender or
investment advisor.
"Lenders": as defined in the preamble hereto; provided, that
unless the context otherwise requires, each reference herein to the Lenders
shall be deemed to include any Conduit Lender.
"Letters of Credit": as defined in Section 2.5(a).
"Lien": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any
conditional sale or other title retention agreement and any capital lease having
substantially the same economic effect as any of the foregoing).
"Loan Documents": this Agreement, the Security Documents, the
Guarantee Agreement and the Notes.
"Loan Parties": each Group Member that is a party to a Loan
Document.
"Majority Lenders": at any time, the holders of more than 50%
of the Total Revolving Commitments then in effect or, if the Revolving
Commitments have been terminated, the Total Revolving Extensions of Credit then
outstanding.
"Material Adverse Effect": a material adverse effect on (a)
the business, property, operations, condition (financial or otherwise), results
of operations or prospects of the Company and its Subsidiaries taken as a whole
or (b) the validity or enforceability of this Agreement or any of the other Loan
Documents or the rights or remedies of the Agents or the Lenders hereunder or
thereunder.
"Materials of Environmental Concern": any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum products or
any hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Law, including asbestos, polychlorinated
biphenyls and urea-formaldehyde insulation.
"Mortgaged Properties": the properties listed on Schedule
1.1B, as to which the Administrative Agent for the benefit of the Lenders shall
be granted a Lien pursuant to the Mortgages.
"Mortgages": each of the mortgages and deeds of trust made by
any Loan Party in favor of, or for the benefit of, the Administrative Agent for
the benefit of the Lenders, substantially in the form of Exhibit D (with such
changes thereto as shall be advisable under the law of the jurisdiction in which
such mortgage or deed of trust is to be recorded), including, without
limitation, the Existing Mortgages.
"Multiemployer Plan": a Plan that is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
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"Net Cash Proceeds": in connection with any Disposition, the
proceeds thereof in the form of cash and Cash Equivalents (including any such
proceeds received by way of deferred payment of principal pursuant to a note or
installment receivable or purchase price adjustment receivable or by the
Disposition of any non-cash consideration received in connection therewith or
otherwise, but only as and when received) of such Disposition, net of attorneys'
fees, accountants' fees, investment banking fees, amounts required to be applied
to the repayment of Indebtedness secured by a Lien expressly permitted hereunder
on any asset that is the subject of such Disposition (other than any Lien
pursuant to a Security Document) and other customary fees and expenses actually
incurred in connection therewith and net of taxes paid or reasonably estimated
to be payable as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements).
"9-1/8% Notes": the 9-1/8% senior notes of the Company due
2006.
"9-5/8% Notes": the 9-5/8% senior notes of the Company due
2005.
"Non-Excluded Taxes": as defined in Section 3.10(a).
"Non-Executing Person": as defined in Section 5.1(a).
"Non-U.S. Lender": as defined in Section 3.10(d).
"Notes": the collective reference to any promissory note
evidencing Revolving Loans.
"Obligations": the unpaid principal of and interest on
(including interest accruing after the maturity of the Revolving Loans and
Reimbursement Obligations and interest accruing after the filing of any petition
in bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to the Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) the Revolving Loans, the
Reimbursement Obligations and all other obligations and liabilities of the
Borrower and the other Loan Parties to any Agent or to any Lender, whether
direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in connection
with, this Agreement, any other Loan Document, the Letters of Credit or any
other document made, delivered or given in connection herewith or therewith,
whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses (including all fees, charges and disbursements of
counsel to any Agent or to any Lender that are required to be paid by the
Borrower and the other Loan Parties pursuant hereto) or otherwise.
"Other Taxes": any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement or any other
Loan Document.
"Outstanding 7-7/8% Note Amount": as of any date, the
principal amount of the 7-7/8% Notes outstanding as of such date.
"Participant": as defined in Section 10.6(b).
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"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (or any successor).
"Person": an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of whatever
nature.
"Plan": at a particular time, any employee benefit plan that
is covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5)
of ERISA.
"Pricing Grid": the pricing grid attached hereto as Annex A.
"Pro Forma Balance Sheet": as defined in Section 4.1(a).
"Projections": as defined in Section 6.2(c).
"Properties": as defined in Section 4.17(a).
"Property": any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible, including, without limitation, Capital Stock.
"Proved Developed Properties": as defined in the 8-1/8% Note
Indenture.
"Rating Agencies": the collective reference to S&P and Moody's
(each as defined in the definition of Cash Equivalents).
"Reference Lenders": the Administrative Agent and two other
Lenders approved by the Required Lenders from time to time, which shall
initially be BNP Paribas and Toronto Dominion (Texas), Inc.
"Refinancing": the collective reference to the repurchase of
all of the outstanding 9-1/8% Notes, 9-5/8% Notes and the GPC Notes and the
release of all related liens, financed in part by the proceeds from the sale of
the 8-1/8% Notes and by borrowings under the Existing Credit Agreement.
"Register": as defined in Section 10.6(d).
"Regulation U": Regulation U of the Board as in effect from
time to time.
"Reimbursement Obligation": the obligation of the Borrower to
reimburse the Issuing Lender pursuant to Section 2.9 for amounts drawn under
Letters of Credit.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.
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"Reportable Event": any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty day notice
period is waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of
PBGC Reg. Section 4043.
"Required Lenders": at any time, the holders of more than 75%
of the Total Revolving Commitments then in effect or, if the Revolving
Commitments have been terminated, the Total Revolving Extensions of Credit then
outstanding.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Responsible Officer": the chief executive officer, president,
chief financial officer or treasurer of the Company or the Borrower, but in any
event, with respect to financial matters, the chief financial officer or
treasurer of the Company or the Borrower.
"Restricted Payments": as defined in Section 7.6.
"Revolving Commitment": as to any Lender, the obligation of
such Lender, if any, to make Revolving Loans and participate in Letters of
Credit in an aggregate principal and/or face amount not to exceed the amount set
forth under the heading "Revolving Commitment" opposite such Lender's name on
Schedule 1.1A or in the Assignment and Acceptance pursuant to which such Lender
became a party hereto, as the same may be changed from time to time pursuant to
the terms hereof. The amount of the Total Revolving Commitments as of the
Closing Date is $225,000,000.
"Revolving Commitment Period": the period from and including
the Closing Date to the Revolving Termination Date.
"Revolving Extensions of Credit": as to any Lender at any
time, an amount equal to the sum of (a) the aggregate principal amount of all
Revolving Loans held by such Lender then outstanding and (b) such Lender's
Revolving Percentage of the L/C Obligations then outstanding.
"Revolving Loans": as defined in Section 2.1(a).
"Revolving Percentage": as to any Lender at any time, the
percentage which such Lender's Revolving Commitment then constitutes of the
Total Revolving Commitments (or, at any time after the Revolving Commitments
shall have expired or terminated, the percentage which the aggregate principal
amount of such Lender's Revolving Extensions of Credit then outstanding
constitutes of the aggregate principal amount of the Revolving Extensions of
Credit then outstanding).
"Revolving Termination Date": September 30, 2003, as extended
pursuant to Section 2.1.
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"SEC": the Securities and Exchange Commission, any successor
thereto and any analogous Governmental Authority.
"Security Documents": the collective reference to the
Mortgages and all other security documents hereafter delivered to the
Administrative Agent granting a Lien on any property of any Person to secure the
obligations and liabilities of any Loan Party under any Loan Document.
"Senior Debt Limit": at any time, the lesser of (a) the
maximum amount of Indebtedness that the Company and its Subsidiaries may incur
and secure at such time pursuant to clause (i) of the definition of "Permitted
Indebtedness" and clause (ii) of the definition of "Permitted Liens" under the
8-1/8% Note Indenture minus the amount of Indebtedness (other than Indebtedness
under this Agreement) that the Company or any of its Subsidiaries have incurred
and/or secured by Liens at such time that counts against the restrictions on the
maximum amount of Indebtedness referred to in this clause (a) and (b) 15% of the
Adjusted Consolidated Net Tangible Assets at such time.
"Senior Debt Limit Reporting Event": at any date, the
occurrence and continuation of any of the following events: (i) the Senior Debt
Limit as of the end of the most recent fiscal quarter for which the
Administrative Agent has received a Compliance Certificate pursuant to Section
6.2(b) is less than $275,000,000, (ii) to the best of the Company's knowledge,
the Senior Debt Limit at such date is less than $275,000,000 or (iii) with
respect to the period commencing on the first day of each fiscal year of the
Company and ending on the date a Compliance Certificate with respect to the end
of the immediately preceding fiscal year of the Company is delivered pursuant to
Section 6.2(b), 15% of the Estimated ACNTA is less than $275,000,000.
"7-7/8% Note Indenture": the Indenture, dated as of March 15,
1997, among the Company, certain subsidiary guarantors and the United States
Trust Company of New York, as Trustee, pursuant to which the 7-7/8% Notes were
issued.
"7-7/8% Notes": the 7-7/8% senior notes of the Company due
2004.
"Single Employer Plan": any Plan that is covered by Title IV
of ERISA, but that is not a Multiemployer Plan.
"Solvent": when used with respect to any Person, means that,
as of any date of determination, (a) the amount of the "present fair saleable
value" of the assets of such Person will, as of such date, exceed the amount of
all "liabilities of such Person, contingent or otherwise", as of such date, as
such quoted terms are determined in accordance with applicable federal and state
laws governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater
than the amount that will be required to pay the liability of such Person on its
debts as such debts become absolute and matured, (c) such Person will not have,
as of such date, an unreasonably small amount of capital with which to conduct
its business, and (d) such Person will be able to pay its debts as they mature.
For purposes of this definition, (i) "debt" means liability on a "claim", and
(ii) "claim" means any (x) right to payment, whether or not such a right is
reduced to judgment, liquidated,
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unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured or (y) right to an equitable remedy for
breach of performance if such breach gives rise to a right to payment, whether
or not such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured or unmatured, disputed, undisputed, secured or unsecured.
"Specified Change of Control": a "Change of Control" (or any
other defined term having a similar purpose) as defined in any instrument
governing any Indebtedness of the Company or any of its Subsidiaries including,
without limitation, the Indentures.
"Subsidiary": as to any Person, a corporation, partnership,
limited liability company or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such other
ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other managers of
such corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer
to a Subsidiary or Subsidiaries of the Company.
"Subsidiary Guarantor": each Subsidiary of the Company (other
than the Borrower and, subject to Section 6.9, Chesapeake Energy Marketing,
Inc., Chesapeake Canada Corporation and Carmen Acquisition Corp.); provided,
that, for purposes of Section 7.2(b) and 7.7(g), Chesapeake Canada Corporation
shall be deemed to be a Subsidiary Guarantor.
"Syndication Agent": as defined in the preamble to this
Agreement.
"Synthetic Purchase Agreement": any agreement pursuant to
which any Group Member is or may become obligated to make (a) any payment in
connection with the purchase by any third party from a Person other than a Group
Member of any Capital Stock of any Group Member or (b) any payment (except as
otherwise expressly permitted by Section 7.6) the amount of which is determined
by reference to the price or value at any time of any such Capital Stock or
Indebtedness; provided, that no phantom stock or similar plan providing for
payments only to current or former directors, officers or employees of any Group
Member (or to their heirs or estates) shall be deemed to be a Synthetic Purchase
Agreement.
"Total Revolving Commitments": at any time, the aggregate
amount of the Revolving Commitments then in effect.
"Total Revolving Extensions of Credit": at any time, the
aggregate amount of the Revolving Extensions of Credit of the Lenders
outstanding at such time.
"Transferee": any Assignee or Participant.
"Type": as to any Revolving Loan, its nature as a Base Rate
Loan or a Eurodollar Loan.
"United States": the United States of America.
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"Unrestricted Subsidiary Investment": (a) in connection with
the designation of a Subsidiary Guarantor or any newly created or acquired
Subsidiary as an "Unrestricted Subsidiary" under the 8-1/8% Note Indenture, an
amount equal to the greater of (x) the book value (determined in accordance with
GAAP) at the date of such designation of the aggregate Investments made by the
Company and its other Subsidiary Guarantors in such Subsidiary Guarantor or
newly created or acquired Subsidiary and (y) the fair market value of such
Investments in such Subsidiary Guarantor or newly created or acquired Subsidiary
at the time of such designation and (b) in connection with the designation of an
"Unrestricted Subsidiary" as a "Restricted Subsidiary" under the 8-1/8% Note
Indenture and a Subsidiary Guarantor hereunder, an amount equal to the lesser of
(x) the book value (determined in accordance with GAAP) at the date of such
designation of the aggregate Investments made by the Company and its other
Subsidiary Guarantors in such Subsidiary and (y) the fair market value of such
Investments in such Subsidiary at the time of such designation.
"Unused Borrowing Base": at any time, the excess of the
Borrowing Base at such time over the Total Revolving Extensions of Credit at
such time.
"Utilization Percentage": as defined in the Pricing Grid.
1.2. Other Definitional Provisions. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in the other Loan Documents or any certificate or other document made
or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto, (i)
accounting terms relating to any Group Member not defined in Section 1.1 and
accounting terms partly defined in Section 1.1, to the extent not defined, shall
have the respective meanings given to them under GAAP, (ii) the words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation", (iii) the word "incur" shall be construed to mean incur, create,
issue, assume, become liable in respect of or suffer to exist (and the words
"incurred" and "incurrence" shall have correlative meanings), and (iv) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, Capital Stock, securities, revenues, accounts, leasehold
interests and contract rights, and (v) references to agreements or other
Contractual Obligations shall, unless otherwise specified, be deemed to refer to
such agreements or Contractual Obligations as amended, supplemented, restated or
otherwise modified from time to time.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
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SECTION 2. AMOUNT AND TERMS OF REVOLVING COMMITMENTS
2.1. Revolving Commitments. (a) Subject to the terms and conditions
hereof, each Lender severally agrees to make revolving credit loans ("Revolving
Loans") to the Borrower from time to time during the Revolving Commitment Period
in an aggregate principal amount at any one time outstanding which, when added
to such Lender's Revolving Percentage of the L/C Obligations then outstanding,
does not exceed such Lender's Revolving Commitment; provided, that, after giving
effect thereto, (i) the aggregate amount of Revolving Extensions of Credit then
outstanding shall not exceed the lesser of (A) Senior Debt Limit at such time
and (B) the Borrowing Base then in effect and (ii) if (A) the requested
Revolving Extension of Credit is to be made on or after the Extension Date and
(B) the Outstanding 7-7/8% Note Amount shall be greater than $10,000,000, the
Outstanding 7-7/8% Note Amount does not exceed the lesser of (x) the Available
Revolving Commitment and (y) the Unused Borrowing Base. During the Revolving
Commitment Period, the Borrower may use the Revolving Commitments by borrowing,
prepaying and reborrowing the Revolving Loans, in whole or in part, all in
accordance with the terms and conditions hereof. The Revolving Loans may from
time to time be Eurodollar Loans or Base Rate Loans, as determined by the
Borrower and notified to the Administrative Agent in accordance with Sections
2.2 and 3.3.
(b) The Borrower shall repay all outstanding Revolving Loans
on the Revolving Termination Date.
(c) If, on or prior to August 31, 2003, the Company repays,
redeems or repurchases at least 50% of its 7-7/8% Notes outstanding immediately
prior to the Closing Date, the Borrower may make a single election to extend the
Revolving Termination Date to the date that is the fourth anniversary of the
Closing Date (with such extension to be effective on the Extension Date);
provided, that no such extension shall be effective unless the following
conditions are satisfied (i) the Borrower shall deliver a notice to the
Administrative Agent at least 30 but no more than 45 days prior to the Extension
Date (the date such notice is delivered, the "Extension Request Date") of its
intention to extend the Revolving Termination Date, (ii) on the Extension Date,
each of (x) the Unused Borrowing Base and (y) the Available Revolving
Commitments of the Lenders are not less than an amount equal to the sum of (A)
the Outstanding 7-7/8% Note Amount as of the Extension Date and (B) $50,000,000,
(iii) no Default or Event of Default shall have occurred and be continuing on
the Extension Date or after giving effect to such extension of the Revolving
Termination Date, (iv) each of the representations and warranties made by any
Loan Party in or pursuant to the Loan Documents shall be true and correct as of
the Extension Date as if made on such date and (v) the Borrower delivers a
certificate of a Responsible Officer on the Extension Date reasonably
satisfactory in form and substance to the Administrative Agent certifying that
the conditions set forth in clauses (ii), (iii) and (iv) have been fulfilled.
2.2. Procedure for Revolving Loan Borrowing. The Borrower may borrow
under the Revolving Commitments during the Revolving Commitment Period on any
Business Day, provided that the Borrower shall give the Administrative Agent
irrevocable notice (which notice must be received by the Administrative Agent
prior to 8:00 A.M., Los Angeles, California time, (a) three Business Days prior
to the requested Borrowing Date, in the case of Eurodollar Loans, or (b) on the
day of the requested Borrowing Date, in the case of Base Rate Loans), specifying
(i)
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the amount and Type of Revolving Loans to be borrowed, (ii) the requested
Borrowing Date and (iii) in the case of Eurodollar Loans, the respective amounts
of each such Type of Revolving Loan and the respective lengths of the initial
Interest Period therefor. Any Revolving Loans made on the Closing Date shall
initially be Base Rate Loans and unless otherwise agreed by the Syndication
Agent in its sole discretion, no Revolving Loan may be made as, converted into
or continued as a Eurodollar Loan having an Interest Period in excess of one
month prior to the date that is 60 days after the Closing Date. Each borrowing
under the Revolving Commitments shall be in an amount equal to $2,500,000 or
whole multiples of $500,000 in excess thereof (or, if the lesser of (x) the then
Available Revolving Commitments of the Lenders and (y) the Unused Borrowing Base
then in effect, is less than $2,500,000, such lesser amount). Upon receipt of
any such notice from the Borrower, the Administrative Agent shall promptly
notify each Lender thereof. Each Lender will make the amount of its pro rata
share of each borrowing available to the Administrative Agent for the account of
the Borrower at the Funding Office prior to 10:00 a.m., Los Angeles, California
time, on the Borrowing Date requested by the Borrower in funds immediately
available to the Administrative Agent. Such borrowing will then be made
available to the Borrower by the Administrative Agent crediting the account of
the Borrower on the books of such office with the aggregate of the amounts made
available to the Administrative Agent by the Lenders and in like funds as
received by the Administrative Agent.
2.3. Commitment Fees, etc. (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a commitment fee for the
period from and including the Closing Date to the last day of the Revolving
Commitment Period, computed at the Commitment Fee Rate on the average daily
amount of such Lender's Revolving Percentage of the Unused Borrowing Base during
the period for which payment is made, payable quarterly in arrears on the last
day of each March, June, September and December and on the Revolving Termination
Date, commencing on September 30, 2001.
(b) The Borrower agrees to pay to the Administrative Agent the
fees in the amounts and on the dates previously agreed to in writing by the
Borrower and the Administrative Agent.
(c) The Borrower agrees to pay to the Syndication Agent and
the Lead Arranger the fees in the amounts and on the dates previously agreed to
in writing by the Borrower and the Syndication Agent and the Lead Arranger.
2.4. Termination or Reduction of Revolving Commitments. The Borrower
shall have the right, upon not less than three Business Days' notice to the
Administrative Agent, to terminate the Revolving Commitments or, from time to
time, to reduce the amount of the Revolving Commitments; provided that no such
termination or reduction of Revolving Commitments shall be permitted if, after
giving effect thereto and to any prepayments of the Revolving Loans made on the
effective date thereof, (i) the Total Revolving Extensions of Credit would
exceed the lesser of the Borrowing Base and the Total Revolving Commitments or
(ii) if (A) such termination or reduction occurs on or after the Extension Date
and (B) the Outstanding 7-7/8% Note Amount shall be greater than $10,000,000,
the Outstanding 7-7/8% Note Amount would exceed the lesser of (x) the Unused
Borrowing Base and (y) the Available Revolving Commitments of the Lenders. Any
such reduction shall be in an amount equal to $1,000,000, or
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a whole multiple thereof, and shall reduce permanently the Revolving Commitments
then in effect.
2.5. L/C Commitment. (a) Subject to the terms and conditions hereof,
the Issuing Lender, in reliance on the agreements of the other Lenders set forth
in Section 2.8(a), agrees to issue letters of credit ("Letters of Credit") for
the account of the Borrower on any Business Day during the Revolving Commitment
Period in such form as may be approved from time to time by the Issuing Lender;
provided that the Issuing Lender shall have no obligation to issue any Letter of
Credit if, after giving effect to such issuance, (i) the L/C Obligations would
exceed the L/C Commitment, (ii) the Total Revolving Extensions of Credit then
outstanding would exceed (A) the Senior Debt Limit at such time or (B) the
Borrowing Base then in effect, (iii) the Available Revolving Commitments of the
Lenders would be less than the greater of (A) zero or (B) the Unused Borrowing
Base, or (iv) if (x) the Letter of Credit is requested to be issued on or after
the Extension Date and (y) the Outstanding 7-7/8% Note Amount shall be greater
than $10,000,000, the Outstanding 7-7/8% Note Amount would exceed the lesser of
(A) the Available Revolving Commitments of the Lenders and (B) the Unused
Borrowing Base. Each Letter of Credit shall (i) be denominated in Dollars, and
(ii) expire no later than the earlier of (x) the first anniversary of its date
of issuance and (y) the date that is five Business Days prior to the Revolving
Termination Date, provided that any Letter of Credit with a one-year term may
provide for the renewal thereof for additional one-year periods (which shall in
no event extend beyond the date referred to in clause (y) above). All Letters of
Credit outstanding under the Existing Credit Agreement as of the Closing Date
shall be deemed to be issued and outstanding under this Agreement as of the
Closing Date.
(b) The Issuing Lender shall not at any time be obligated to
issue any Letter of Credit hereunder if such issuance would conflict with, or
cause the Issuing Lender or any L/C Participant to exceed any limits imposed by,
any applicable Requirement of Law.
2.6. Procedure for Issuance of Letter of Credit. The Borrower may from
time to time request that the Issuing Lender issue a Letter of Credit by
delivering to the Issuing Lender at its address for notices specified herein an
Application therefor (including by telecopy), completed to the satisfaction of
the Issuing Lender, and such other certificates, documents and other papers and
information as the Issuing Lender may request at least three Business Days
before the date on which the Borrower desires the Issuing Lender to issue such
Letter of Credit. Upon receipt of any Application, the Issuing Lender will
notify the Administrative Agent of the amount, the beneficiary and the requested
expiration of the requested Letter of Credit, and upon receipt of confirmation
from the Administrative Agent that after giving effect to the requested
issuance, the (i) Total Revolving Extensions of Credit would not exceed the (A)
Senior Debt Limit at such time or (B) Borrowing Base then in effect, (ii)
Available Revolving Commitments of the Lenders would not be less than zero and
(iii) if (x) such issuance is requested on or after the Extension Date and (y)
the Outstanding 7-7/8% Note Amount is greater than $10,000,000 at such time, the
Outstanding 7-7/8% Note Amount shall not exceed the lesser of the Available
Revolving Commitments of the Lenders and the Unused Borrowing Base, the Issuing
Lender will process such Application and the certificates, documents and other
papers and information delivered to it in connection therewith in accordance
with its customary procedures and shall promptly issue the Letter of Credit
requested thereby (but in no event shall the Issuing Lender be required to issue
any Letter of Credit earlier than three Business Days after its receipt of the
Application therefor
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and all such other certificates, documents and other papers and information
relating thereto) by issuing the original of such Letter of Credit to the
beneficiary thereof or as otherwise may be agreed to by the Issuing Lender and
the Borrower. The Issuing Lender shall furnish a copy of such Letter of Credit
to the Borrower (with a copy to the Administrative Agent) promptly following the
issuance thereof. The Issuing Lender shall promptly furnish to the
Administrative Agent, which shall in turn promptly furnish to the Lenders,
notice of the issuance of each Letter of Credit (including the amount thereof).
2.7. Fees and Other Charges. (a) The Borrower will pay a fee on all
outstanding Letters of Credit at a per annum rate equal to the Applicable Margin
then in effect with respect to Eurodollar Loans, shared ratably among the
Lenders and payable quarterly in arrears on each L/C Fee Payment Date after the
issuance date (but in no event less than $500 per annum). In addition, the
Borrower shall pay to the Issuing Lender for its own account a fronting fee at a
rate equal to 0.125% per annum times the face amount of such Letter of Credit
(but in no event less than $250 per annum). The letter of credit fee and the
letter of credit fronting fee will be calculated on the face amount of each
Letter of Credit outstanding on each day at the above-applicable rates and will
be due and payable in arrears on each L/C Fee Payment Date.
(b) In addition to the foregoing fees, the Borrower shall pay
or reimburse the Issuing Lender for such normal and customary costs and expenses
as are incurred or charged by the Issuing Lender in issuing, negotiating,
effecting payment under, amending or otherwise administering any Letter of
Credit.
2.8. L/C Participations. (a) The Issuing Lender irrevocably agrees to
grant and hereby grants to each L/C Participant, and, to induce the Issuing
Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably
agrees to accept and purchase and hereby accepts and purchases from the Issuing
Lender, on the terms and conditions set forth below, for such L/C Participant's
own account and risk an undivided interest equal to such L/C Participant's
Revolving Percentage in the Issuing Lender's obligations and rights under and in
respect of each Letter of Credit issued hereunder and the amount of each draft
paid by the Issuing Lender thereunder. Each L/C Participant unconditionally and
irrevocably agrees with the Issuing Lender that, if a draft is paid under any
Letter of Credit for which the Issuing Lender is not reimbursed in full by the
Borrower in accordance with the terms of this Agreement, such L/C Participant
shall pay to the Administrative Agent upon demand of the Issuing Lender an
amount equal to such L/C Participant's Revolving Percentage of the amount of
such draft, or any part thereof, that is not so reimbursed. The Administrative
Agent shall promptly forward such amounts to the Issuing Lender.
(b) If any amount required to be paid by any L/C Participant
to the Administrative Agent for the account of the Issuing Lender pursuant to
Section 2.8(a) in respect of any unreimbursed portion of any payment made by the
Issuing Lender under any Letter of Credit is paid to the Administrative Agent
for the account of the Issuing Lender within three Business Days after the date
such payment is due, such L/C Participant shall pay to the Administrative Agent
for the account of the Issuing Lender on demand an amount equal to the product
of (i) such amount, times (ii) the daily average Federal Funds Effective Rate
during the period from and including the date such payment is required to the
date on which such payment is immediately available to the Issuing Lender, times
(iii) a fraction the numerator of which is the
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number of days that elapse during such period and the denominator of which is
360. If any such amount required to be paid by any L/C Participant pursuant to
Section 2.8(a) is not made available to the Administrative Agent for the account
of the Issuing Lender by such L/C Participant within three Business Days after
the date such payment is due, the Issuing Lender shall be entitled to recover
from such L/C Participant, on demand, such amount with interest thereon
calculated from such due date at the rate per annum applicable to Base Rate
Loans. A certificate of the Issuing Lender submitted to any L/C Participant with
respect to any amounts owing under this Section shall be conclusive in the
absence of manifest error.
(c) Whenever, at any time after the Issuing Lender has made
payment under any Letter of Credit and has received from any L/C Participant its
pro rata share of such payment in accordance with Section 2.8(a), the
Administrative Agent or the Issuing Lender receives any payment related to such
Letter of Credit (whether directly from the Borrower or otherwise, including
proceeds of collateral applied thereto by the Issuing Lender), or any payment of
interest on account thereof, the Administrative Agent or the Issuing Lender, as
the case may be, will distribute to such L/C Participant its pro rata share
thereof; provided, however, that in the event that any such payment received by
Administrative Agent or the Issuing Lender, as the case may be, shall be
required to be returned by the Administrative Agent or the Issuing Lender, such
L/C Participant shall return to the Administrative Agent for the account of the
Issuing Lender the portion thereof previously distributed by the Administrative
Agent or the Issuing Lender, as the case may be, to it.
2.9. Reimbursement Obligation of the Borrower. The Borrower agrees to
reimburse the Issuing Lender on the Business Day on which the Issuing Lender
notifies the Borrower of the date and amount of a draft presented under any
Letter of Credit and paid by the Issuing Lender for the amount of (a) such draft
so paid and (b) any taxes, fees, charges or other costs or expenses incurred by
the Issuing Lender in connection with such payment. Each such payment shall be
made to the Issuing Lender at its address for notices referred to herein in
Dollars and in immediately available funds. Interest shall be payable on any
such amounts from the date on which the relevant draft is paid until payment in
full at the rate set forth in (i) until the Business Day next succeeding the
date of the relevant notice, Section 3.5(b) and (ii) thereafter, Section 3.5(c).
Each drawing under any Letter of Credit shall (unless an event of the type
described in clause (i) or (ii) of Section 8(f) shall have occurred and be
continuing with respect to the Borrower, in which case the procedures specified
in Section 2.8 for funding by L/C Participants shall apply) constitute a request
by the Borrower to the Administrative Agent for a borrowing pursuant to Section
2.2 of Base Rate Loans in the amount of such drawing (and the minimum borrowing
amount in such Section shall not apply to such borrowing). The Borrowing Date
with respect to such borrowing shall be the first date on which a borrowing of
Revolving Loans could be made, pursuant to Section 2.2, if the Administrative
Agent had received a notice of such borrowing at the time the Administrative
Agent receives notice from the relevant Issuing Lender of such drawing under
such Letter of Credit.
2.10. Obligations Absolute. (a) The Borrower's obligations under
Section 2.9 shall be absolute and unconditional under any and all circumstances
and irrespective of any setoff, counterclaim or defense to payment that the
Borrower may have or have had against the Issuing Lender, any beneficiary of a
Letter of Credit or any other Person. The Borrower also agrees with the Issuing
Lender that the Issuing Lender shall not be responsible for, and the Borrower's
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Reimbursement Obligations under Section 2.9 shall not be affected by, among
other things, the validity or genuineness of documents or of any endorsements
thereon, even though such documents shall in fact prove to be invalid,
fraudulent or forged, or any dispute between or among the Borrower and any
beneficiary of any Letter of Credit or any other party to which such Letter of
Credit may be transferred or any claims whatsoever of the Borrower against any
beneficiary of such Letter of Credit or any such transferee. The Issuing Lender
shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors or
omissions found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct of
the Issuing Lender. The Borrower agrees that any action taken or omitted by the
Issuing Lender under or in connection with any Letter of Credit or the related
drafts or documents, if done in the absence of gross negligence or willful
misconduct and in accordance with the standards of care specified in the Uniform
Commercial Code of the State of New York, shall be binding on the Borrower and
shall not result in any liability of the Issuing Lender to the Borrower.
(b) The Issuing Lender is authorized and instructed to accept
and pay drafts and demands for payment under any Letter of Credit without
requiring, and without responsibility for, any determination as to the existence
of any event giving rise to said draft, either at the time of acceptance or
payment or thereafter. The Issuing Lender is under no duty to determine the
proper identity of anyone presenting such a draft or making such a demand
(whether by tested telex or otherwise) as the officer, representative or agent
of any beneficiary under any Letter of Credit, and payment by the Issuing Lender
to any such beneficiary when requested by any such purported officer,
representative or agent is hereby authorized and approved. The Borrower agrees
to hold the Issuing Lender and each other Lender harmless and indemnified
against any liability or claim in connection with or arising out of the subject
matter of this section, WHICH INDEMNITY SHALL APPLY WHETHER OR NOT ANY SUCH
LIABILITY OR CLAIM IS IN ANY WAY OR TO ANY EXTENT CAUSED, IN WHOLE OR IN PART,
BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY ANY LENDER, provided only that
no Lender shall be entitled to indemnification for that portion, if any, of any
liability or claim which is proximately caused by its own individual gross
negligence or willful misconduct, as determined in a final judgment.
(c) If the maturity of any Letter of Credit is extended by its
terms or by law or governmental action, if any extension of the maturity or time
for presentation of drafts or any other modification of the terms of any Letter
of Credit is made at the request of the Borrower, or if the amount of any Letter
of Credit is increased at the request of the Borrower, this Agreement shall be
binding upon the Loan Parties with respect to drafts and property covered
thereby, and with respect to any action taken by the Issuing Lender, the Issuing
Lender's correspondents, or any Lender in accordance with such extension,
increase or other modification.
(d) If any Letter of Credit provides that it is transferable,
the Issuing Lender shall have no duty to determine the proper identity of anyone
appearing as transferee of such Letter of Credit, nor shall the Issuing Lender
be charged with responsibility of any nature or character for the validity or
correctness of any transfer or successive transfers, and payment by the Issuing
Lender to any purported transferee or transferees as determined by the Issuing
Lender is hereby authorized and approved, and the Borrower further agrees to
hold the Issuing Lender and each other Lender harmless and indemnified against
any liability or claim in connection with or
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arising out of the foregoing, WHICH INDEMNITY SHALL APPLY WHETHER OR NOT ANY
SUCH LIABILITY OR CLAIM IS IN ANY WAY OR TO ANY EXTENT CAUSED, IN WHOLE OR IN
PART, BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY ANY LENDER, provided only
that no Lender shall be entitled to indemnification for that portion, if any, of
any liability or claim which is proximately caused by its own individual gross
negligence or willful misconduct, as determined in a final judgment.
2.11. Letter of Credit Payments. If any draft shall be presented for
payment under any Letter of Credit, the Issuing Lender shall promptly notify the
Borrower of the date and amount thereof. The responsibility of the Issuing
Lender to the Borrower in connection with any draft presented for payment under
any Letter of Credit shall, in addition to any payment obligation expressly
provided for in such Letter of Credit, be limited to determining that the
documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are substantially in conformity with such
Letter of Credit.
2.12. Applications. To the extent that any provision of any Application
related to any Letter of Credit is inconsistent with the provisions of this
Section 2, the provisions of this Section 2 shall apply.
2.13. Borrowing Base and Collateral Value Determination. (a) During the
period from the Closing Date to the first Determination Date, the Borrowing Base
shall be $225,000,000. As of the Closing Date, the Collateral Value shall be
determined by the Required Lenders based on the reports delivered pursuant to
Section 5.1(d) and the average of the applicable price assumptions used by the
Reference Lenders in evaluating their oil and gas loans generally as determined
by the Administrative Agent and such determination of the Collateral Value shall
remain in effect until the Collateral Value is redetermined in accordance with
this Section 2.13; provided, that each Lender that is a party to this Agreement
shall be deemed to approve the Collateral Value as of the Closing Date as
calculated by the Administrative Agent and furnished prior to the Closing Date
to the Lenders.
(b) Within 45 days after receiving the relevant Engineering
Reports with respect to any Evaluation Date and the respective accompanying
reports and information thereto required to be furnished pursuant to Section
6.2(e), or as promptly thereafter as practicable, the Required Lenders (or, in
the case of any increase in the Borrowing Base, all the Lenders) shall agree
upon an amount for the Collateral Value or the Borrowing Base, as the case may
be, as applicable with respect to such Evaluation Date, and the Administrative
Agent shall by notice to the Borrower designate such amounts as the new
Collateral Value and, if applicable, Borrowing Base, respectively, which
designation shall take effect immediately on the date of such notice (herein
called a "Determination Date") and shall remain in effect until but not
including the next date as of which the Collateral Value or the Borrowing Base,
as the case may be, are redetermined. If the Borrower does not furnish all such
information, reports and data by the date specified in Section 6.2(e), the
Administrative Agent may nonetheless designate the Collateral Value or the
Borrowing Base, as the case may be, at any amount which the Required Lenders
determine and may redesignate the Collateral Value or the Borrowing Base, as the
case may be, from time to time thereafter in a similar manner until each Lender
receives all information, reports and data, whereupon the Required Lenders shall
designate the Collateral Value or the Borrowing Base, as the case may be, as
described above. The Required Lenders shall determine
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the Collateral Value based on the reports delivered pursuant to Section 6.2(e)
and the average of the applicable price assumptions used by the Reference
Lenders in evaluating their oil and gas loans generally as determined by the
Administrative Agent and such determination of the Collateral Value shall take
into account the net present value of the reserves projected to be produced on
or prior to the next scheduled Evaluation Date. The Required Lenders shall
determine the amount of the Borrowing Base based (i) upon the total debt of the
Company and its Subsidiaries and upon the loan value which they in their
discretion assign to the various oil and gas properties of the Company and its
Subsidiaries at such time and (ii) based upon such other credit factors
(including, without limitation, (A) the assets, liabilities, cash flow, hedged
and unhedged exposure to price, agreements affecting reserves, business,
properties, prospects, production history of reserves, nature of the ownership
of the reserves, Liens affecting properties, management and ownership of the
Company and its Subsidiaries, (B) foreign exchange rate changes and interest
rate changes, (C) the general policies of the Required Lenders from time to time
with respect to the prices used in evaluating their oil and gas loans generally
and (D) the Collateral) as they in their discretion deem significant. It is
expressly understood that the Lenders and the Administrative Agent have no
obligation to agree upon or designate the Collateral Value or the Borrowing Base
at any particular amount.
(c) Until the termination of the Revolving Commitment Period,
the Borrower may, during the 15-day period beginning on each Determination Date,
reduce the Borrowing Base from the amount designated by the Administrative Agent
to any lesser amount by delivering a notice during such period to the
Administrative Agent to that effect, with such reduction to be effective as of
the date such notice is received by the Administrative Agent and shall continue
in effect until such time as the Borrowing Base is redetermined in accordance
with Section 2.13(b).
SECTION 3. GENERAL PROVISIONS APPLICABLE TO REVOLVING LOANS
AND LETTERS OF CREDIT
3.1. Optional Prepayments. The Borrower may at any time and from time
to time prepay the Revolving Loans, in whole or in part, without premium or
penalty, upon irrevocable notice delivered to the Administrative Agent at least
three Business Days prior thereto in the case of Eurodollar Loans and at least
one Business Day prior thereto in the case of Base Rate Loans, which notice
shall specify the date and amount of prepayment and whether the prepayment is of
Eurodollar Loans or Base Rate Loans; provided, that if a Eurodollar Loan is
prepaid on any day other than the last day of the Interest Period applicable
thereto, the Borrower shall also pay any amounts owing pursuant to Section 3.11.
Upon receipt of any such notice the Administrative Agent shall promptly notify
each Lender thereof. If any such notice is given, the amount specified in such
notice shall be due and payable on the date specified therein, together with
(except in the case of Revolving Loans that are Base Rate Loans) accrued
interest to such date on the amount prepaid. Partial prepayments of Revolving
Loans shall be in an aggregate principal amount of $1,000,000 or a whole
multiple thereof.
3.2. Mandatory Prepayments. (a) If at any time (the "Collateral
Deficiency Date"), the Collateral Coverage Ratio is less than 2.0 to 1.0, the
Borrower shall either:
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(i) Give notice to the Administrative Agent that it elects to
reduce the Borrowing Base and prepay the Revolving Loans to the extent
necessary to comply with the Collateral Coverage Ratio at such time
whereupon the Borrowing Base shall be so reduced with immediate effect
and the Borrower shall make such prepayment on or before the date that
is 30 days after the related Collateral Deficiency Date and to the
extent such prepayment of the aggregate principal amount of Revolving
Loans then outstanding is insufficient to result in compliance with the
Collateral Coverage Ratio, the Borrower shall, to the extent of such
insufficiency, replace outstanding Letters of Credit and/or deposit an
amount in cash in a cash collateral account established with the
Administrative Agent for the benefit of the Lenders on terms and
conditions satisfactory to the Administrative Agent; or
(ii) certify to the Administrative Agent that the Borrower has
good and defensible title, free of any Liens, to Proved Developed
Properties in an amount which, if subject to one or more Mortgages,
would result in the Borrower being in compliance with such Collateral
Coverage Ratio, and provide to each Lender the same information
regarding such Proved Developed Properties as would be required for an
evaluation of the Collateral Value attributable thereto by the Required
Lenders under Section 2.13. Within 10 days after such certification,
the Required Lenders shall either (x) determine that such properties,
if subject to a Mortgage, would result in the Borrower being in
compliance with such Collateral Coverage Ratio, in which case, the
Borrower shall within 20 days of such certification, and in any event,
no later than within 30 days of the Collateral Deficiency Date, deliver
a Mortgage (or a satisfactory amendment to an Existing Mortgage) to the
Administrative Agent with respect to each such Proved Developed
Property, executed and delivered by a duly authorized officer of each
party thereto and accompanied by such other documentation as the
Administrative Agent shall reasonably request (including, without
limitation, legal opinions in form and substance satisfactory to the
Administrative Agent relating thereto) or (y) determine that such
properties, if subject to a Mortgage, would not result in the Borrower
being in compliance with such Collateral Coverage Ratio, in which case,
the Borrower shall make the prepayments specified in subsection (i) of
this Section 3.2(a) within 30 days of the Collateral Deficiency Date.
(b) If at any time (A) the sum of (x) the Total Revolving
Extensions of Credit and (y) with respect to the period commencing on the
Extension Date and ending on the date on which the Outstanding 7-7/8% Note
Amount is equal to or less than $10,000,000, the Outstanding 7-7/8% Note Amount,
exceeds (B) the Borrowing Base at such time (such excess, the "Borrowing Base
Deficiency") the Administrative Agent shall give notice thereof to the Borrower
(a "Borrowing Base Deficiency Notice") and within 30 days after the date of such
Borrowing Base Deficiency Notice, the Borrower shall either:
(i) Give notice to the Administrative Agent that it elects to
prepay the Revolving Loans in an amount at least equal to the Borrowing
Base Deficiency whereupon the Borrower shall make such prepayment on or
before the date that is 60 days after the date of the Borrowing Base
Deficiency and, to the extent such prepayment of the aggregate
principal amount of Revolving Loans then outstanding is less than such
Borrowing Base Deficiency, the Borrower shall, to the extent of such
shortfall, replace outstanding Letters
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of Credit and/or deposit an amount in cash in a cash collateral account
established with the Administrative Agent for the benefit of the
Lenders on terms and conditions satisfactory to the Administrative
Agent; or
(ii) Give notice to the Administrative Agent that it elects to
prepay the Revolving Loans in an aggregate amount equal to the
Borrowing Base Deficiency (or, to the extent such prepayments of the
aggregate principal amount of Revolving Loans then outstanding are less
than the Borrowing Base Deficiency, replace outstanding Letters of
Credit and/or deposit an amount in cash in a cash collateral account
established with the Administrative Agent for the benefit of the
Lenders on terms and conditions satisfactory to the Administrative
Agent) in six consecutive equal monthly installments, whereupon the
Borrower shall pay the first such installment 30 days after the date of
the Borrowing Base Deficiency and the next five such installments on
the same day of each consecutive month thereafter; or
(iii) (A) certify to the Administrative Agent that the
Borrower has good and defensible title, free of any Liens, to oil and
gas properties not included in the determination of the Borrowing Base
then in effect in an amount which, if taken into account in such
determination, would eliminate the Borrowing Base Deficiency, and (B)
provide to each Lender the same information regarding such properties
as would be required for an evaluation of the value attributable
thereto by the Required Lenders under Section 2.13 in calculating the
Borrowing Base. Within 30 days after such certification, if the
Required Lenders shall determine that taking into account such
properties in the determination of the Borrowing Base would not be
sufficient to result in the elimination of the Borrowing Base
Deficiency, the Borrower shall either (x) make the prepayments
specified in subsection (i) of this Section 3.2(b) immediately or (ii)
make the installment prepayments specified in subsection (ii) of this
Section 3.2(b) with the first such installment due immediately.
(c) The Total Revolving Commitments shall be reduced by an
amount equal to any Excess Amount and shall be accompanied by prepayment of the
Revolving Loans to the extent, if any, that the Total Revolving Extensions of
Credit exceed the Total Revolving Commitments as so reduced, provided that if
the aggregate amount of Revolving Loans then outstanding is less than the amount
of such Excess Amount (because L/C Obligations constitute a portion of the Total
Revolving Extensions of Credit), the Borrower shall, to the extent of the
balance of such Excess Amount, replace outstanding Letters of Credit and/or
deposit an amount in cash in a cash collateral account established with the
Administrative Agent for the benefit of the Lenders on terms and conditions
satisfactory to the Administrative Agent.
3.3. Conversion and Continuation Options. (a) The Borrower may elect
from time to time to convert Eurodollar Loans to Base Rate Loans by giving the
Administrative Agent prior irrevocable notice of such election by 8:00 A.M., Los
Angeles, California time, three Business Days' preceding the day on which such
conversion is to occur, provided that any such conversion of Eurodollar Loans
may only be made on the last day of an Interest Period with respect thereto. The
Borrower may elect from time to time to convert Base Rate Loans to Eurodollar
Loans by giving prior irrevocable notice to the Administrative Agent by 8:00
A.M., Los Angeles, California time, three Business Days' prior to such
conversion (which notice shall
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specify the length of the initial Interest Period therefor), provided that no
Base Rate Loan may be converted into a Eurodollar Loan when any Event of Default
has occurred and is continuing and the Administrative Agent or the Majority
Lenders have determined in its or their sole discretion not to permit such
conversions. Upon receipt of any such notice the Administrative Agent shall
promptly notify each Lender thereof.
(b) Any Eurodollar Loan may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrower giving irrevocable notice to the Administrative Agent, in accordance
with the applicable provisions of the term "Interest Period" set forth in
Section 1.1, of the length of the next Interest Period to be applicable to such
Eurodollar Loans, provided that no Eurodollar Loan may be continued as such when
any Event of Default has occurred and is continuing and the Administrative Agent
has or the Majority Lenders have determined in its or their sole discretion not
to permit such continuations, and provided, further, that if the Borrower shall
fail to give any required notice as described above in this paragraph or if such
continuation is not permitted pursuant to the preceding proviso such Eurodollar
Loans shall be automatically converted to Base Rate Loans on the last day of
such then expiring Interest Period. Upon receipt of any such notice the
Administrative Agent shall promptly notify each Lender thereof.
3.4. Limitations on Eurodollar Tranches. Notwithstanding anything to
the contrary in this Agreement, all borrowings, conversions and continuations of
Eurodollar Loans hereunder and all selections of Interest Periods hereunder
shall be in such amounts and be made pursuant to such elections so that, (a)
after giving effect thereto, the aggregate principal amount of the Eurodollar
Loans comprising each Eurodollar Tranche shall be equal to $2,500,000 or a whole
multiple of $500,000 in excess thereof and (b) no more than five Eurodollar
Tranches shall be outstanding at any one time.
3.5. Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall
bear interest for each day during each Interest Period with respect thereto at a
rate per annum equal to the Eurodollar Rate determined for such day plus the
Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate per
annum equal to the Base Rate plus the Applicable Margin.
(c) (i) If all or a portion of the principal amount of any
Revolving Loan or Reimbursement Obligation shall not be paid when due (whether
at the stated maturity, by acceleration or otherwise), such overdue amount shall
bear interest at a rate per annum equal to (x) in the case of the Revolving
Loans, the rate that would otherwise be applicable thereto pursuant to the
foregoing provisions of this Section plus 2% or (y) in the case of Reimbursement
Obligations, the rate applicable to Base Rate Loans plus 2%, and (ii) if all or
a portion of any interest payable on any Revolving Loan or Reimbursement
Obligation or any commitment fee or other amount payable hereunder shall not be
paid when due (whether at the stated maturity, by acceleration or otherwise),
such overdue amount shall bear interest at a rate per annum equal to the rate
then applicable to Base Rate Loans plus 2%, in each case, with respect to
clauses (i) and (ii) above, from the date of such non-payment until such amount
is paid in full (as well after as before judgment).
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(d) Interest shall be payable in arrears on each Interest
Payment Date, provided that interest accruing pursuant to paragraph (c) of this
Section shall be payable from time to time on demand.
3.6. Computation of Interest and Fees. (a) Interest and fees payable
pursuant hereto shall be calculated on the basis of a 360-day year for the
actual days elapsed, except that, with respect to Base Rate Loans the rate of
interest on which is calculated on the basis of the Reference Rate, the interest
thereon shall be calculated on the basis of a 365- (or 366-, as the case may be)
day year for the actual days elapsed. The Administrative Agent shall as soon as
practicable notify the Borrower and the Lenders of each determination of a
Eurodollar Rate. Any change in the interest rate on a Revolving Loan resulting
from a change in the Base Rate or the Eurocurrency Reserve Requirements shall
become effective as of the opening of business on the day on which such change
becomes effective. The Administrative Agent shall as soon as practicable notify
the Borrower and the Lenders of the effective date and the amount of each such
change in interest rate.
(b) Each determination of an interest rate by the
Administrative Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Borrower and the Lenders in the absence of
manifest error. The Administrative Agent shall, at the request of the Borrower,
deliver to the Borrower a statement showing the quotations used by the
Administrative Agent in determining any interest rate pursuant to Section
3.5(a).
3.7. Inability to Determine Interest Rate. If prior to the first day of
any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by reason
of circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the Eurodollar Rate for such Interest Period, or
(b) the Administrative Agent shall have received notice from
the Majority Lenders that the Eurodollar Rate determined or to be determined for
such Interest Period will not adequately and fairly reflect the cost to such
Lenders (as conclusively certified by such Lenders) of making or maintaining
their affected Revolving Loans during such Interest Period, the Administrative
Agent shall give telecopy or telephonic notice thereof to the Borrower and the
Lenders as soon as practicable thereafter. If such notice is given (x) any
Eurodollar Loans requested to be made on the first day of such Interest Period
shall be made as Base Rate Loans, (y) any Revolving Loans that were to have been
converted on the first day of such Interest Period to Eurodollar Loans shall be
continued as Base Rate Loans and (z) any outstanding Eurodollar Loans shall be
converted, on the last day of the then-current Interest Period, to Base Rate
Loans. Until such notice has been withdrawn by the Administrative Agent, no
further Eurodollar Loans shall be made or continued as such, nor shall the
Borrower have the right to convert Revolving Loans to Eurodollar Loans.
3.8. Pro Rata Treatment and Payments. (a) Each borrowing by the
Borrower from the Lenders hereunder, each payment by the Borrower on account of
any commitment fee and any reduction of the Revolving Commitments of the Lenders
shall be made pro rata according to the Revolving Percentages of the Lenders.
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(b) Each payment (including each prepayment) by the Borrower
on account of principal of and interest on the Revolving Loans shall be made pro
rata according to the respective outstanding principal amounts of the Revolving
Loans then held by the Lenders.
(c) All payments (including prepayments) to be made by the
Borrower hereunder, whether on account of principal, interest, fees or
otherwise, shall be made without setoff or counterclaim and shall be made prior
to 10:00 A.M., Los Angeles, California time, on the due date thereof to the
Administrative Agent, for the account of the Lenders, at the Funding Office, in
Dollars and in immediately available funds. The Administrative Agent shall
distribute such payments to the Lenders promptly upon receipt in like funds as
received. If any payment hereunder (other than payments on the Eurodollar Loans)
becomes due and payable on a day other than a Business Day, such payment shall
be extended to the next succeeding Business Day. If any payment on a Eurodollar
Loan becomes due and payable on a day other than a Business Day, the maturity
thereof shall be extended to the next succeeding Business Day unless the result
of such extension would be to extend such payment into another calendar month,
in which event such payment shall be made on the immediately preceding Business
Day. In the case of any extension of any payment of principal pursuant to the
preceding two sentences, interest thereon shall be payable at the then
applicable rate during such extension.
(d) Unless the Administrative Agent shall have been notified
in writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available to the Administrative
Agent by the required time on the Borrowing Date therefor, such Lender shall pay
to the Administrative Agent, on demand, such amount with interest thereon at a
rate equal to the daily average Federal Funds Effective Rate for the period
until such Lender makes such amount immediately available to the Administrative
Agent. A certificate of the Administrative Agent submitted to any Lender with
respect to any amounts owing under this paragraph shall be conclusive in the
absence of manifest error. If such Lender's share of such borrowing is not made
available to the Administrative Agent by such Lender within three Business Days
of such Borrowing Date, the Administrative Agent shall also be entitled to
recover such amount with interest thereon at the rate per annum applicable to
Base Rate Loans, on demand, from the Borrower.
(e) Unless the Administrative Agent shall have been notified
in writing by the Borrower prior to the date of any payment due to be made by
the Borrower hereunder that the Borrower will not make such payment to the
Administrative Agent, the Administrative Agent may assume that the Borrower is
making such payment, and the Administrative Agent may, but shall not be required
to, in reliance upon such assumption, make available to the Lenders their
respective pro rata shares of a corresponding amount. If such payment is not
made to the Administrative Agent by the Borrower within three Business Days
after such due date, the Administrative Agent shall be entitled to recover, on
demand, from each Lender to which any amount which was made available pursuant
to the preceding sentence, such amount with interest thereon at the rate per
annum equal to the daily average Federal Funds Effective Rate. Nothing herein
shall be deemed to limit the rights of the Administrative Agent or any Lender
against the Borrower.
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(f) Notwithstanding anything in this Section 3.8 to the
contrary, in the event that the Revolving Loans shall have become due and
payable, and the Revolving Commitments shall have been terminated, pursuant to
Section 8, any amounts received by the Administrative Agent from the Loan
Parties or their Subsidiaries or from the Collateral in respect of the
Borrower's Obligations shall be applied in the following order of priority:
(i) First, to reimburse the Administrative Agent for its fees,
costs and expenses pursuant to the Loan Documents;
(ii) Second, to repay unpaid interest accrued on the Revolving
Loans;
(iii) Third, to repay the outstanding principal of the
Revolving Loans and to cash collateralize outstanding Letters of Credit
(as contemplated pursuant to Section 8);
(iv) Fourth, to repay any other outstanding Obligations; and
(v) Fifth, once all Obligations (whether or not contingent)
have been indefeasibly paid in full, to the Borrower.
3.9. Requirements of Law. (a) If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof or compliance
by any Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority made subsequent to
the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever
with respect to this Agreement, any Letter of Credit, any Application
or any Eurodollar Loan made by it, or change the basis of taxation of
payments to such Lender in respect thereof (except for Non-Excluded
Taxes covered by Section 3.10 and changes in the rate of tax on the
overall net income of such Lender);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender that is not
otherwise included in the determination of the Eurodollar Rate
hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount that such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit, or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay such Lender,
upon its demand, any additional amounts necessary to compensate such Lender for
such increased cost or reduced amount receivable. If any Lender becomes entitled
to claim any additional amounts pursuant to this paragraph, it shall promptly
notify the Borrower (with a copy to the Administrative Agent) of the event by
reason of which it has become so entitled.
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(b) If any Lender shall have determined that the adoption of
or any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under or in respect of any Letter of
Credit to a level below that which such Lender or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's or such corporation's policies with respect to capital adequacy)
by an amount deemed by such Lender to be material, then from time to time, after
submission by such Lender to the Borrower (with a copy to the Administrative
Agent) of a written request therefor, the Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender or such corporation
for such reduction.
(c) A certificate as to any additional amounts payable
pursuant to this Section submitted by any Lender to the Borrower (with a copy to
the Administrative Agent) shall be conclusive in the absence of manifest error.
The obligations of the Borrower pursuant to this Section shall survive the
termination of this Agreement and the payment of the Revolving Loans and all
other amounts payable hereunder.
3.10. Taxes. (a) All payments made by the Borrower under this Agreement
shall be made free and clear of, and without deduction or withholding for or on
account of, any present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority, excluding
net income taxes and franchise taxes (imposed in lieu of net income taxes)
imposed on any Agent or any Lender as a result of a present or former connection
between such Agent or such Lender and the jurisdiction of the Governmental
Authority imposing such tax or any political subdivision or taxing authority
thereof or therein (other than any such connection arising solely from such
Agent or such Lender having executed, delivered or performed its obligations or
received a payment under, or enforced, this Agreement or any other Loan
Document). If any such non-excluded taxes, levies, imposts, duties, charges,
fees, deductions or withholdings ("Non-Excluded Taxes") or Other Taxes are
required to be withheld from any amounts payable to any Agent or any Lender
hereunder, the amounts so payable to such Agent or such Lender shall be
increased to the extent necessary to yield to such Agent or such Lender (after
payment of all Non-Excluded Taxes and Other Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement, provided, however, that the Borrower shall not be required to
increase any such amounts payable to any Lender with respect to any Non-Excluded
Taxes (i) that are attributable to such Lender's failure to comply with the
requirements of paragraph (d) or (e) of this Section or (ii) that are United
States withholding taxes imposed on amounts payable to such Lender at the time
such Lender becomes a party to this Agreement, except to the extent that such
Lender's assignor (if any) was entitled, at the time of assignment, to receive
additional amounts from the Borrower with respect to such Non-Excluded Taxes
pursuant to this paragraph.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
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(c) Whenever any Non-Excluded Taxes or Other Taxes are payable
by the Borrower, as promptly as possible thereafter the Borrower shall send to
the Administrative Agent for its own account or for the account of the relevant
Agent or Lender, as the case may be, a certified copy of an original official
receipt received by the Borrower showing payment thereof. If the Borrower fails
to pay any Non-Excluded Taxes or Other Taxes when due to the appropriate taxing
authority or fails to remit to the Administrative Agent the required receipts or
other required documentary evidence, the Borrower shall indemnify the Agents and
the Lenders for any incremental taxes, interest or penalties that may become
payable by any Agent or any Lender as a result of any such failure.
(d) Each Lender (or Transferee) that is not a "U.S. Person" as
defined in Section 7701(a)(30) of the Code (a "Non-U.S. Lender") shall deliver
to the Borrower and the Administrative Agent (or, in the case of a Participant,
to the Lender from which the related participation shall have been purchased)
two copies of either U.S. Internal Revenue Service Form W-8BEN or Form W-89ECI,
or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest", a statement substantially in the form of
Exhibit G and a Form W-8BEN, or any subsequent versions thereof or successors
thereto, properly completed and duly executed by such Non-U.S. Lender claiming
complete exemption from, or a reduced rate of, U.S. federal withholding tax on
all payments by the Borrower under this Agreement and the other Loan Documents.
Such forms shall be delivered by each Non-U.S. Lender on or before the date it
becomes a party to this Agreement (or, in the case of any Participant, on or
before the date such Participant purchases the related participation). In
addition, each Non-U.S. Lender shall deliver such forms promptly upon the
obsolescence or invalidity of any form previously delivered by such Non-U.S.
Lender. Each Non-U.S. Lender shall promptly notify the Borrower at any time it
determines that it is no longer in a position to provide any previously
delivered certificate to the Borrower (or any other form of certification
adopted by the U.S. taxing authorities for such purpose). Notwithstanding any
other provision of this paragraph, a Non-U.S. Lender shall not be required to
deliver any form pursuant to this paragraph that such Non-U.S. Lender is not
legally able to deliver.
(e) A Lender that is entitled to an exemption from or
reduction of non-U.S. withholding tax under the law of the jurisdiction in which
the Borrower is located, or any treaty to which such jurisdiction is a party,
with respect to payments under this Agreement shall deliver to the Borrower
(with a copy to the Administrative Agent), at the time or times prescribed by
applicable law or reasonably requested by the Borrower, such properly completed
and executed documentation prescribed by applicable law as will permit such
payments to be made without withholding or at a reduced rate, provided that such
Lender is legally entitled to complete, execute and deliver such documentation
and in such Lender's judgment such completion, execution or submission would not
materially prejudice the legal position of such Lender.
(f) The agreements in this Section shall survive the
termination of this Agreement and the payment of the Revolving Loans and all
other amounts payable hereunder.
3.11. Indemnity. The Borrower agrees to indemnify each Lender and the
Administrative Agent and to hold each Lender and the Administrative Agent
harmless from any loss or expense that such Lender may sustain or incur as a
consequence of (a) default by the
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Borrower in making a borrowing of, conversion into or continuation of Eurodollar
Loans after the Borrower has given a notice requesting the same in accordance
with the provisions of this Agreement, (b) default by the Borrower in making any
prepayment of or conversion from Eurodollar Loans after the Borrower has given a
notice thereof in accordance with the provisions of this Agreement or (c) the
making of a prepayment of Eurodollar Loans on a day that is not the last day of
an Interest Period with respect thereto. Such indemnification may include an
amount equal to the excess, if any, of (i) the amount of interest that would
have accrued on the amount so prepaid, or not so borrowed, converted or
continued, for the period from the date of such prepayment or of such failure to
borrow, convert or continue to the last day of such Interest Period (or, in the
case of a failure to borrow, convert or continue, the Interest Period that would
have commenced on the date of such failure) in each case at the applicable rate
of interest for such Eurodollar Loans provided for herein (excluding, however,
the Applicable Margin included therein, if any) over (ii) the amount of interest
(as reasonably determined by such Lender) that would have accrued to such Lender
on such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank eurodollar market. A certificate as to any
amounts payable pursuant to this Section submitted to the Borrower by any Lender
shall be conclusive in the absence of manifest error. This covenant shall
survive the termination of this Agreement and the payment of the Revolving Loans
and all other amounts payable hereunder.
3.12. Change of Lending Office. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 3.9 or 3.10(a)
with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Revolving Loans affected by such event
with the object of avoiding the consequences of such event; provided, that such
designation is made on terms that, in the sole judgment of such Lender, cause
such Lender and its lending office(s) to suffer no economic, legal or regulatory
disadvantage, and provided, further, that nothing in this Section shall affect
or postpone any of the obligations of the Borrower or the rights of any Lender
pursuant to Section 3.9 or 3.10(a).
3.13. Replacement of Lenders. The Borrower shall be permitted to
replace any Lender that (a) requests reimbursement for amounts owing pursuant to
Section 3.9 or 3.10(a) or (b) defaults in its obligation to make Revolving Loans
hereunder, with a replacement financial institution; provided that (i) such
replacement does not conflict with any Requirement of Law, (ii) no Event of
Default shall have occurred and be continuing at the time of such replacement,
(iii) prior to any such replacement, such Lender shall have taken no action
under Section 3.12 so as to eliminate the continued need for payment of amounts
owing pursuant to Section 3.9 or 3.10(a), (iv) the replacement financial
institution shall purchase, at par, all Revolving Loans and other amounts owing
to such replaced Lender on or prior to the date of replacement, (v) the Borrower
shall be liable to such replaced Lender under Section 3.11 if any Eurodollar
Loan owing to such replaced Lender shall be purchased other than on the last day
of the Interest Period relating thereto, (vi) the replacement financial
institution, if not already a Lender, shall be reasonably satisfactory to the
Administrative Agent, (vii) the replaced Lender shall be obligated to make such
replacement in accordance with the provisions of Section 10.6 (provided that the
Borrower shall be obligated to pay the registration and processing fee referred
to therein), (viii) until such time as such replacement shall be consummated,
the Borrower shall pay all additional amounts (if any) required pursuant to
Section 3.9 or 3.10(a), as the case may be, and (ix) any
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such replacement shall not be deemed to be a waiver of any rights that the
Borrower, the Administrative Agent or any other Lender shall have against the
replaced Lender.
3.14. Evidence of Debt. (a) Each Lender shall maintain in accordance
with its usual practice an account or accounts evidencing indebtedness of the
Borrower to such Lender resulting from each Revolving Loan of such Lender from
time to time, including the amounts of principal and interest payable and paid
to such Lender from time to time under this Agreement.
(b) The Administrative Agent, on behalf of the Borrower, shall
maintain the Register pursuant to Section 10.6(d), and a subaccount therein for
each Lender, in which shall be recorded (i) the amount of each Revolving Loan
made hereunder and any Note evidencing such Revolving Loan, the Type of such
Revolving Loan and each Interest Period applicable thereto, (ii) the amount of
any principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) both the amount of any sum received
by the Administrative Agent hereunder from the Borrower and each Lender's share
thereof.
(c) The entries made in the Register and the accounts of each
Lender maintained pursuant to Section 3.14(a) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Revolving
Loans made to the Borrower by such Lender in accordance with the terms of this
Agreement.
(d) The Borrower agrees that, upon the request to the
Administrative Agent by any Lender, the Borrower will execute and deliver to
such Lender a promissory note of the Borrower evidencing any Revolving Loan of
such Lender, substantially in the form of Exhibit H, with appropriate insertions
as to date and principal amount.
3.15. Illegality. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert Base Rate Loans to Eurodollar Loans shall forthwith be canceled and (b)
such Lender's Revolving Loans then outstanding as Eurodollar Loans, if any,
shall be converted automatically to Base Rate Loans on the respective last days
of the then current Interest Periods with respect to such Revolving Loans or
within such earlier period as required by law. If any such conversion of a
Eurodollar Loan occurs on a day which is not the last day of the then current
Interest Period with respect thereto, the Borrower shall pay to such Lender such
amounts, if any, as may be required pursuant to Section 3.11.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into this
Agreement and to make the Revolving Loans and issue or participate in the
Letters of Credit, the Company and the Borrower hereby jointly and severally
represent and warrant to each Agent and each Lender that:
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4.1. Financial Condition. (a) The unaudited pro forma consolidated
balance sheet of the Company and its consolidated Subsidiaries as at December
31, 2000 (including the notes thereto) (the "Pro Forma Balance Sheet"), copies
of which have heretofore been furnished to each Lender, has been prepared giving
effect (as if such events had occurred on such date) to (i) the consummation of
the Acquisition, (ii) the Refinancing, (iii) the Revolving Loans to be made on
the Closing Date and the use of proceeds thereof and (iv) the payment of fees
and expenses in connection with the foregoing. The Pro Forma Balance Sheet has
been prepared based on the best information available to the Company as of the
date of delivery thereof, and presents fairly on a pro forma basis the estimated
financial position of Company and its consolidated Subsidiaries as at December
31, 2000, assuming that the events specified in the preceding sentence had
actually occurred at such date.
(b) The audited consolidated balance sheets of the Company as
at December 31, 1998, December 31, 1999 and December 31, 2000, and the related
consolidated statements of operations and of cash flows for the fiscal years
ended on such dates, reported on by and accompanied by an unqualified report
from PriceWaterhouseCoopers, present fairly the consolidated financial condition
of the Company as at such dates, and their respective consolidated results of
operations and consolidated cash flows for the respective fiscal years then
ended. The unaudited consolidated balance sheets of the Company, respectively,
as at March 31, 2001, and the related unaudited consolidated statements of
operations and cash flows for the three-month period ended on such date, present
fairly the consolidated financial condition of the Company as at such date, and
its consolidated results of operations and consolidated cash flows for the
three-month period then ended (subject to normal year-end audit adjustments).
All such financial statements, including the related schedules and notes
thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by the aforementioned firm
of accountants and disclosed therein). Except as set forth on Schedule 4.1(b),
no Group Member has any material Guarantee Obligations, contingent liabilities
or liabilities for taxes, or any long-term leases or unusual forward or
long-term commitments, including any interest rate or foreign currency swap or
exchange transaction or other obligation in respect of derivatives, that are not
reflected in the most recent financial statements referred to in this paragraph.
During the period from December 31, 2000, to and including the date hereof there
has been no Disposition by the Company of any material part of its business or
property.
4.2. No Change. Since December 31, 2000, there has been no development
or event that has had or could reasonably be expected to have a Material Adverse
Effect.
4.3. Corporate Existence; Compliance with Law. Each Group Member (a) is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has the power and authority, and the legal
right, to own and operate its property, to lease the property it operates as
lessee and to conduct the business in which it is currently engaged, (c) is duly
qualified as a foreign corporation and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of property or the conduct
of its business requires such qualification and (d) is in compliance with all
Requirements of Law except to the extent that the failure to comply therewith
could not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.
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4.4. Power; Authorization; Enforceable Obligations. Each Loan Party has
the power and authority, and the legal right, to make, deliver and perform the
Loan Documents to which it is a party and, in the case of the Borrower, to
obtain extensions of credit hereunder. Each Loan Party has taken all necessary
organizational action to authorize the execution, delivery and performance of
the Loan Documents to which it is a party and, in the case of the Borrower, to
authorize the extensions of credit on the terms and conditions of this
Agreement. No consent or authorization of, filing with, notice to or other act
by or in respect of, any Governmental Authority or any other Person is required
in connection with the transactions contemplated hereby and the extensions of
credit hereunder or with the execution, delivery, performance, validity or
enforceability of this Agreement or any of the Loan Documents, except (i)
consents, authorizations, filings and notices described in Schedule 4.4, which
consents, authorizations, filings and notices have been obtained or made and are
in full force and effect and (ii) the filings referred to in Section 4.19. Each
Loan Document has been duly executed and delivered on behalf of each Loan Party
thereto. This Agreement constitutes, and each other Loan Document upon execution
will constitute, a legal, valid and binding obligation of each Loan Party
thereto, enforceable against each such Loan Party in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
4.5. No Legal Bar. The execution, delivery and performance of this
Agreement and the other Loan Documents, the issuance of Letters of Credit, the
borrowings hereunder and the use of the proceeds thereof will not violate any
Requirement of Law or any Contractual Obligation of the Company, the Borrower or
any of their respective Subsidiaries and will not result in, or require, the
creation or imposition of any Lien on any of their respective properties or
revenues pursuant to any Requirement of Law or any such Contractual Obligation
(other than the Liens created by the Security Documents). No Requirement of Law
or Contractual Obligation applicable to the Company, the Borrower or any of
their respective Subsidiaries could reasonably be expected to have a Material
Adverse Effect.
4.6. Litigation. No litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending or, to the knowledge
of the Company or the Borrower, threatened by or against the Company, the
Borrower or any of their respective Subsidiaries or against any of their
respective properties or revenues (a) with respect to any of the Loan Documents
or any of the transactions contemplated hereby or thereby or (b) that, except as
set forth on Schedule 4.6, could reasonably be expected to have a Material
Adverse Effect.
4.7. No Default. Neither the Company, the Borrower nor any of their
respective Subsidiaries is in default under or with respect to any of its
Contractual Obligations in any respect that could reasonably be expected to have
a Material Adverse Effect. No Default or Event of Default has occurred and is
continuing.
4.8. Ownership of Property; Liens. Each Group Member has good and
defensible title to all of its material properties and assets, free and clear of
all Liens other than Liens permitted under Section 7.3 and of all impediments to
the use of such properties and assets in such Group Member's business, except
that no representation or warranty is made with respect to any oil, gas or
mineral property or interest to which no proved oil or gas reserves are properly
attributed.
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Except for Liens permitted under Section 7.3, each Group Member will
respectively own in the aggregate, in all material respects, the net interests
in production attributable to all material wells and units owned by the Group
Members. The ownership of such properties shall not in the aggregate in any
material respect obligate such Group Member to bear the costs and expenses
relating to the maintenance, development and operations of such properties in an
amount materially in excess of the working interest of such properties. Each
Group Member has paid all royalties payable under the oil and gas leases to
which it is operator, except those contested in accordance with the terms of the
applicable joint operating agreement or otherwise contested in good faith by
appropriate proceedings and with respect to which reserves in conformity with
GAAP have been provided on the books of the Company, the Borrower or its
Subsidiaries, as the case may be.
4.9. Intellectual Property. The Company, the Borrower and each of their
respective Subsidiaries owns, or is licensed to use, all Intellectual Property
necessary for the conduct of its business as currently conducted. No material
claim has been asserted and is pending by any Person challenging or questioning
the use of any Intellectual Property or the validity or effectiveness of any
Intellectual Property, nor does the Company or the Borrower know of any valid
basis for any such claim. The use of Intellectual Property by the Company, the
Borrower and their respective Subsidiaries does not infringe on the rights of
any Person in any material respect.
4.10. Taxes. Each of the Company, the Borrower and each of their
respective Subsidiaries has filed or caused to be filed all Federal, state and
other material tax returns that are required to be filed and has paid all taxes
shown to be due and payable on said returns or on any assessments made against
it or any of its property and all other taxes, fees or other charges imposed on
it or any of its property by any Governmental Authority (other than any the
amount or validity of that are currently being contested in good faith by
appropriate proceedings and with respect to which reserves in conformity with
GAAP have been provided on the books of the Company, the Borrower or its
Subsidiaries, as the case may be); no tax Lien has been filed, and, to the
knowledge of the Company and the Borrower, no claim is being asserted, with
respect to any such tax, fee or other charge.
4.11. Federal Regulations. No part of the proceeds of any Revolving
Loans, and no other extensions of credit hereunder, will be used for "buying" or
"carrying" any "margin stock" within the respective meanings of each of the
quoted terms under Regulation U as now and from time to time hereafter in effect
or for any purpose that violates the provisions of the Regulations of the Board.
If requested by any Lender or the Administrative Agent, the Borrower will
furnish to the Administrative Agent and each Lender a statement to the foregoing
effect in conformity with the requirements of FR Form G-3 or FR Form U-1, as
applicable, referred to in Regulation U.
4.12. Labor Matters. Except as, in the aggregate, could not reasonably
be expected to have a Material Adverse Effect: (a) there are no strikes or other
labor disputes against any Group Member pending or, to the knowledge of the
Company or the Borrower, threatened; (b) hours worked by and payment made to
employees each Group Member have not been in violation of the Fair Labor
Standards Act or any other applicable Requirement of Law dealing with such
matters; and (c) all payments due from any Group Member on account of employee
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health and welfare insurance have been paid or accrued as a liability on the
books of the relevant Group Member.
4.13. ERISA. Neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. No termination of a Single Employer Plan has occurred, and no Lien
in favor of the PBGC or a Plan has arisen, during such five-year period. The
present value of all accrued benefits under each Single Employer Plan (based on
those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits by a material amount. Neither the Company nor any Commonly Controlled
Entity has had a complete or partial withdrawal from any Multiemployer Plan that
has resulted or could reasonably be expected to result in a material liability
under ERISA, and neither the Company nor any Commonly Controlled Entity would
become subject to any material liability under ERISA if the Company or any such
Commonly Controlled Entity were to withdraw completely from all Multiemployer
Plans as of the valuation date most closely preceding the date on which this
representation is made or deemed made. No such Multiemployer Plan is in
Reorganization or Insolvent.
4.14. Investment Company Act; Other Regulations. No Loan Party is an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. No Loan
Party is subject to regulation under any Requirement of Law (other than
Regulation X of the Board) that limits its ability to incur Indebtedness.
4.15. Subsidiaries. Except as disclosed to the Administrative Agent by
the Borrower in writing from time to time after the Closing Date, (a) Schedule
4.15(a) sets forth the name and jurisdiction of incorporation of each Subsidiary
and, as to each such Subsidiary, the percentage of each class of Capital Stock
owned by any Loan Party and (b) except as set forth on Schedule 4.15(b), there
are no outstanding subscriptions, options, warrants, calls, rights or other
agreements or commitments (other than stock options granted to employees or
directors and directors' qualifying shares) of any nature relating to any
Capital Stock of the Company or any Subsidiary. As of the Closing Date,
Chesapeake Energy Marketing, Inc. and Carmen Acquisition Corp. are "Unrestricted
Subsidiaries" under the 8-1/8% Note Indenture.
4.16. Use of Proceeds. The proceeds of the Revolving Loans shall be
used for general corporate purposes, including the refinancing of the Existing
Credit Agreement, the purchase of a portion of the outstanding 7-7/8% Notes
including any accrued interest thereon and tender or redemption premiums payable
in connection therewith, and to pay related fees and expenses. The Letters of
Credit shall be used for the general corporate purposes of the Borrower and its
Subsidiaries.
4.17. Environmental Matters. (a) The facilities and properties owned,
leased or operated by any Group Member (the "Properties") do not contain, and
have not previously contained, any Materials of Environmental Concern in amounts
or concentrations or under
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circumstances that constitute or constituted a violation of, or could give rise
to liability under, any Environmental Law.
(b) No Group Member has received or is aware of any notice of
violation, alleged violation, non-compliance, liability or potential liability
regarding environmental matters or compliance with Environmental Laws with
regard to any of the Properties or the business operated by any Group Member
(the "Business"), nor does the Company or the Borrower have knowledge or reason
to believe that any such notice will be received or is being threatened.
(c) Materials of Environmental Concern have not been
transported or disposed of from the Properties in violation of, or in a manner
or to a location that could give rise to liability under, any Environmental Law,
nor have any Materials of Environmental Concern been generated, treated, stored
or disposed of at, on or under any of the Properties in violation of, or in a
manner that could give rise to liability under, any applicable Environmental
Law.
(d) Except as set forth on Schedule 4.17(d), no judicial
proceeding or governmental or administrative action is pending or, to the
knowledge of the Company and the Borrower, threatened, under any Environmental
Law to which any Group Member is or will be named as a party with respect to the
Properties or the Business, nor are there any consent decrees or other decrees,
consent orders, administrative orders or other orders, or other administrative
or judicial requirements outstanding under any Environmental Law with respect to
the Properties or the Business.
(e) There has been no release or threat of release of
Materials of Environmental Concern at or from the Properties, or arising from or
related to the operations of any Group Member in connection with the Properties
or otherwise in connection with the Business, in violation of or in amounts or
in a manner that could give rise to liability under Environmental Laws.
(f) Except as set forth on Schedule 4.17(f), the Properties
and all operations at the Properties are in compliance, and have in the last
five years been in compliance, with all applicable Environmental Laws, and there
is no contamination at, under or about the Properties or violation of any
Environmental Law with respect to the Properties or the Business.
(g) No Group Member has assumed any liability of any other
Person under Environmental Laws.
4.18. Accuracy of Information, etc. No statement or information
contained in this Agreement, any other Loan Document, the Confidential
Information Memorandum or any other document, certificate or statement furnished
by or on behalf of any Loan Party to the Administrative Agent or the Lenders, or
any of them, for use in connection with the transactions contemplated by this
Agreement or the other Loan Documents, contained as of the date such statement,
information, document or certificate was so furnished (or, in the case of the
Confidential Information Memorandum, as of the date of this Agreement), any
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements contained herein or therein not misleading. The
projections and pro forma financial information contained in the materials
referenced above are based upon good faith estimates and assumptions believed
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by management of the Company to be reasonable at the time made, it being
recognized by the Lenders that such financial information as it relates to
future events is not to be viewed as fact and that actual results during the
period or periods covered by such financial information may differ from the
projected results set forth therein by a material amount. There is no fact known
to any Loan Party that could reasonably be expected to have a Material Adverse
Effect that has not been expressly disclosed herein, in the other Loan
Documents, in the Confidential Information Memorandum or in any other documents,
certificates and statements furnished to the Administrative Agent and the
Lenders for use in connection with the transactions contemplated hereby and by
the other Loan Documents.
4.19. Security Documents. Each of the Mortgages is effective to create
in favor of the Administrative Agent, for the benefit of the Lenders, a legal,
valid and enforceable Lien on the Mortgaged Properties described therein and
proceeds thereof, and when the Mortgages (or amendments to the relevant Existing
Mortgages as contemplated by Section 5.1(j)) are filed in the offices specified
on Schedule 4.19, each such Mortgage shall constitute a fully perfected Lien on,
and security interest in, all right, title and interest of the Loan Parties in
the Mortgaged Properties and the proceeds thereof, as security for the
Obligations (as defined in the relevant Mortgage), in each case prior and
superior in right to any other Person.
4.20. Solvency. Each Loan Party is, and after giving effect to the
incurrence of all Indebtedness and obligations being incurred in connection
herewith will be, and will continue to be, Solvent.
4.21. Senior Debt Limit. The aggregate amount of Revolving Extensions
of Credit outstanding at any time does not exceed the Senior Debt Limit at such
time.
4.22. Proved Developed Properties. Each of the Mortgaged Properties is
a Proved Developed Property.
4.23. Subsidiary Guarantors. Each "Restricted Subsidiary" (other than
Chesapeake Canada Corporation) under the 8-1/8% Note Indenture is a Subsidiary
Guarantor.
SECTION 5. CONDITIONS PRECEDENT
5.1. Conditions to Initial Extension of Credit. The agreement of each
Lender to make the initial extension of credit requested to be made by it is
subject to the satisfaction of, among other things, the following conditions
precedent (the date upon which all such conditions precedent shall be satisfied,
the "Closing Date").
(a) Credit Agreement; Guarantee Agreement. The Syndication
Agent and the Administrative Agent shall have received (i) this Agreement, or,
in the case of the Lenders, an Addendum, executed and delivered by each Agent,
the Company, the Borrower and each Person listed on Schedule 1.1A, and (ii) the
Guarantee Agreement, executed and delivered by the Company and each Subsidiary
Guarantor.
In the event that any one or more Persons listed on Schedule
1.1A have not executed and delivered an Addendum on the date scheduled to be the
Closing Date (each such Person being referred to herein as a "Non-Executing
Person"), the condition referred to in clause
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(i) above shall nevertheless be deemed satisfied if on such date the Borrower
and the Syndication Agent shall have designated one or more Persons (the
"Designated Lenders") to assume, in the aggregate, all of the Revolving
Commitments that would have been held by the "Non-Executing Persons" subject to
each such Designated Lender's consent and its execution and delivery of an
Addendum. Schedule 1.1A shall automatically be deemed to be amended to reflect
the respective Revolving Commitments of the Designated Lenders and the omission
of the Non-Executing Persons as Lenders hereunder.
(b) Approvals. All governmental and third party approvals
necessary or, in the discretion of the Syndication Agent and the Administrative
Agent, advisable in connection with the transactions contemplated hereby and the
continuing operations of the Company and its subsidiaries shall have been
obtained and be in full force and effect, and all applicable waiting periods
shall have expired without any action being taken or threatened by any competent
authority which would restrain, prevent or otherwise impose adverse conditions
on the transactions contemplated hereby.
(c) Lien Searches. The Syndication Agent and the
Administrative Agent shall have received the results of a recent lien search in
the central filing office (and, to the extent requested by the Syndication Agent
or the Administrative Agent, the local filing offices) of each of the
jurisdictions where assets of the Loan Parties are located, and such search
shall reveal no liens on any of the assets of the Loan Parties except for liens
permitted by Section 7.3 or discharged on or prior to the Closing Date pursuant
to documentation satisfactory to the Syndication Agent and the Administrative
Agent.
(d) Reports; Officer's Certificate. The Company shall have
delivered to the Syndication Agent and the Administrative Agent, prior to the
Closing Date, (i) reports satisfying the requirements of the definition of
Adjusted Consolidated Net Tangible Assets in order to calculate such amount as
of March 31, 2001, (ii) the Initial Engineering Reports and (iii) a certificate
of the chief financial officer or the treasurer of the Company certifying (A)
the calculation of Adjusted Consolidated Net Tangible Assets as of March 31,
2001, (B) that the liens securing the Collateral are permitted under the
Indentures, (C) the calculation of the Senior Debt Limit as of March 31, 2001,
and (D) the calculation of the Collateral Value as of March 31, 2001, which
certificate shall attach all reports and appraisals used to make such
calculations.
(e) Environmental Audit. The Syndication Agent and the
Administrative Agent shall be satisfied with the environmental condition of the
real property owned or leased by the Company and its subsidiaries.
(f) Fees. The Lenders and the Agents shall have received all
fees required to be paid, and all expenses for which invoices have been
presented (including the reasonable fees and expenses of legal counsel), on or
before the Closing Date. All such amounts will be paid with proceeds of
Revolving Loans made on the Closing Date and will be reflected in the funding
instructions given by the Borrower to the Syndication Agent and Administrative
Agent on or before the Closing Date.
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(g) Closing Certificate. The Syndication Agent and
Administrative Agent shall have received a certificate of each Loan Party, dated
the Closing Date, substantially in the form of Exhibit C, with appropriate
insertions and attachments.
(h) Legal Opinions. The Syndication Agent and Administrative
Agent shall have received the following executed legal opinions:
(i) the legal opinion of Commercial Law Group, P.C., counsel
to the Company and its Subsidiaries, substantially in the form of
Exhibit F; and
(ii) the legal opinion of Thompson & Knight and such other
special and local counsel as may be required by the Syndication Agent
or the Administrative Agent.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Syndication Agent or
Administrative Agent may reasonably require.
(i) Filings, Registrations and Recordings. Each document
(including any Uniform Commercial Code financing statement) required by the
Security Documents or under law or reasonably requested by the Syndication Agent
or the Administrative Agent to be filed, registered or recorded in order to
create in favor of the Administrative Agent, for the benefit of the Lenders, a
perfected Lien on the Collateral described therein, prior and superior in right
to any other Person (other than with respect to Liens expressly permitted by
Section 7.3), shall be in proper form for filing, registration or recordation.
(j) Mortgages, etc. (i) The Administrative Agent shall have
received a Mortgage (together with any other documents requested to be delivered
thereunder) to be filed in each county in which the Mortgaged Properties are
located or satisfactory amendments to each Existing Mortgage, executed and
delivered by a duly authorized officer of each party thereto. The aggregate
Collateral Value of such Mortgaged Properties as of the Closing Date shall be
sufficient to cause the Collateral Coverage Ratio to be at least 2.0 to 1.0 on
the Closing Date. Upon receipt of the Mortgages, the Administrative Agent will
be responsible for, and arrange for, the recording thereof.
(ii) If requested by the Syndication Agent and the
Administrative Agent, the Syndication Agent and the Administrative
Agent shall have received (A) copies of all material contracts relating
to the Mortgaged Properties and (B) copies of satisfactory legal
opinions as to the Borrower's rights to the Mortgaged Properties
(addressed, if requested, to the Syndication Agent, the Administrative
Agent and each of the Lenders).
(k) Solvency Certificate. Each of the Lenders shall have
received and shall be satisfied with a solvency certificate of the chief
financial officer or treasurer of the Company which shall document the solvency
of the Company and its subsidiaries after giving effect to the transactions
contemplated hereby.
(l) Insurance. The Syndication Agent and Administrative Agent
shall have received insurance certificates satisfying the requirements of this
Agreement.
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(m) Approval by Majority Lenders. The amendments to the
Existing Credit Agreement effected pursuant to this Agreement shall have been
approved by the Majority Lenders under and as defined in the Existing Credit
Agreement.
(n) Exiting Lenders. The Administrative Agent shall have
received evidence satisfactory to it that (i) all Loans (as defined in the
Existing Credit Agreement) of the Lenders (as defined in the Existing Credit
Agreement) which will not execute and deliver an Addendum (and will not have a
Revolving Commitment hereunder) with respect to this Agreement ("Exiting
Lenders") shall have been or shall concurrently be repaid in full, together with
any accrued interest thereon and any accrued fees payable to such Exiting
Lenders under the Existing Credit Agreement to but excluding the Closing Date,
and (ii) the commitments under the Existing Credit Agreement of such Exiting
Lenders shall have been or shall concurrently be terminated.
5.2. Conditions to Each Extension of Credit. The agreement of each
Lender to make any extension of credit requested to be made by it on any date
(including its initial extension of credit) is subject to the satisfaction of
the following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by any Loan Party in or pursuant to the Loan
Documents shall be true and correct on and as of such date as if made on and as
of such date.
(b) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the extensions
of credit requested to be made on such date.
(c) Senior Debt Limit. In the event that at such date, a
Senior Debt Limit Reporting Event has occurred and is continuing or the
Administrative Agent otherwise requests, the Administrative Agent shall have
received, and be satisfied with, a certificate of the chief financial officer or
treasurer of the Borrower setting forth the calculations required to determine
the Senior Debt Limit at such time (which certificate shall attach satisfactory
reports and appraisals supporting such calculation including, without
limitation, copies of the reports and appraisals prepared by independent
petroleum engineers and appraisers in connection with the determination of
Adjusted Consolidated Net Tangible Assets pursuant to the Indentures as of the
last day of the most recently ended fiscal year of the Company).
Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such extension of credit that the conditions contained in this
Section 5.2 have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
The Company and the Borrower hereby jointly and severally
agree that, so long as the Revolving Commitments remain in effect, any Letter of
Credit remains outstanding or any Revolving Loan or other amount is owing to any
Lender or Agent hereunder, each of the Company and the Borrower shall and shall
cause each of its Subsidiaries to:
6.1. Financial Statements. Furnish to the Administrative Agent and each
Lender:
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(a) as soon as available, but in any event within 90 days
after the end of each fiscal year of the Company, (i) a copy of the audited
consolidated balance sheet of the Company and its consolidated Subsidiaries as
at the end of such year and the related audited consolidated statements of
operations and cash flows for such year, setting forth in each case in
comparative form the figures for the previous year, reported on without a "going
concern" or like qualification or exception, or qualification arising out of the
scope of the audit, by PricewaterhouseCoopers or another of the five nationally
recognized firms, or other independent certified public accountants selected by
the Company and acceptable to the Syndication Agent and (ii) the unaudited
consolidating balance sheets of the Company and its consolidated Subsidiaries as
at the end of such fiscal year and the related unaudited consolidating
statements of operations and cash flows for such year setting forth in each case
in comparative form the figures for the previous year certified by a Responsible
Officer as being fairly stated in all material respects;
(b) as soon as available, but in any event not later than 45
days after the end of each of the first three quarterly periods of each fiscal
year of the Company, the unaudited consolidated and consolidating balance sheet
of the Company and its consolidated Subsidiaries as at the end of such quarter
and the related unaudited consolidated and consolidating statements of
operations and cash flows for such quarter and the portion of the fiscal year
through the end of such quarter, setting forth in each case in comparative form
the figures for the previous year, certified by a Responsible Officer as being
fairly stated in all material respects (subject to normal year-end audit
adjustments); and
All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
6.2. Certificates; Other Information. Furnish to the Administrative
Agent who will forward to each Lender (or, in the case of clause (g), to the
relevant Lender):
(a) concurrently with the delivery of the financial statements
referred to in Section 6.1(a), a certificate of the independent certified public
accountants reporting on such financial statements stating that in making the
examination necessary therefor no knowledge was obtained of any Default or Event
of Default, except as specified in such certificate;
(b) concurrently with the delivery of any financial statements
pursuant to Section 6.1, (i) a certificate of a Responsible Officer stating
that, to the best of each such Responsible Officer's knowledge, each Loan Party
during such period has observed or performed all of its covenants and other
agreements, and satisfied every condition, contained in this Agreement and the
other Loan Documents to which it is a party to be observed, performed or
satisfied by it, and that such Responsible Officer has obtained no knowledge of
any Default or Event of Default except as specified in such certificate and (ii)
in the case of quarterly or annual financial statements, a Compliance
Certificate (A) containing all information and calculations necessary for
determining compliance by each Group Member with the provisions of this
Agreement (including, without limitation, Section 7.1) referred to therein as of
the last day of the fiscal quarter or fiscal year of the Company, as the case
may be, and, if applicable, for determining the
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Applicable Margins and Commitment Fee Rate, (B) certifying the calculation of
the Senior Debt Limit as of the last day of the fiscal quarter or fiscal year of
the Company, as the case may be, and attaching copies of reports and appraisals
utilized in connection with such calculation, (C) certifying the value of the
oil and gas properties of the Company and its Subsidiaries over which a Lien has
been created pursuant to Section 7.3(k) and such certificate shall set forth
such calculation based on the applicable Engineering Reports delivered pursuant
to Section 6.2(e) and the average of the applicable price assumptions used by
the Reference Lenders in the most recent determination of the Collateral Value
pursuant to Section 2.13 and (D) certifying whether or not a Senior Debt Limit
Reporting Event has occurred and is continuing;
(c) as soon as available, and in any event no later than 90
days after the end of each fiscal year of the Company, a detailed consolidated
budget for the following fiscal year (including a projected consolidated balance
sheet of the Company and its Subsidiaries as of the end of the following fiscal
year, the related consolidated statements of projected cash flow, projected
changes in financial position and projected income), and, as soon as available
but not more than once per fiscal quarter of the Company, significant revisions,
if any, of such budget and projections with respect to such fiscal year
(collectively, the "Projections"), which Projections shall in each case be
accompanied by a certificate of a Responsible Officer stating that such
Projections are based on reasonable estimates, information and assumptions and
that such Responsible Officer has no reason to believe that such Projections are
incorrect or misleading in any material respect;
(d) within five days after the same are sent, copies of all
financial statements and reports that the Company or the Borrower sends to the
holders of any class of its debt securities or public equity securities and,
within five days after the same are filed, copies of all financial statements
and reports that the Company or the Borrower may make to, or file with, the SEC;
(e) within (i) 120 days of each Evaluation Date occurring on
December 31, (ii) 75 days of each other Evaluation Date that is not the
Extension Request Date and (iii) within 30 days of the Evaluation Date that is
the Extension Request Date, one or more engineering reports, prepared by the
Company's engineers and certified by a Responsible Officer as to the accuracy
and completeness thereof (each, a "Company Report") or, in the case of each
Evaluation Date occurring on December 31, prepared with respect to not less than
70% of the reserve volume of the Company and its Subsidiaries (but in any event,
not less than 100% of the reserve volume used in the determination of the
Collateral Value with respect to such Evaluation Date) by independent petroleum
engineers chosen by the Company and acceptable to the Majority Lenders (each
such report, an "Independent Report", the Independent Reports collectively with
the Company Reports, the "Engineering Reports") together with all other
information, reports and data which the Administrative Agent or the Syndication
Agent has requested in connection therewith, which shall set forth for each oil
and gas property or interest of the Company and its Subsidiaries the separate
categories of proved developed producing reserves, proved developed nonproducing
reserves and proved undeveloped reserves attributable to such properties
together with a projection of the rate of production with respect thereto as of
the date that is (A) with respect to any Evaluation Date that is December 31 and
June 30, such Evaluation Date and (B) with respect to any other Evaluation Date,
the last day of the fiscal quarter immediately preceding such Evaluation Date
for which the Engineering Reports so required may be reasonably prepared, which
report(s), in any case, shall distinguish (or shall be delivered together
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with a certificate from an appropriate officer of the Borrower which
distinguishes) those properties treated in the report which are Collateral, from
those properties treated in the report which are not Collateral. Each
Engineering Report shall be satisfactory to the Administrative Agent and the
Syndication Agent and, without limitation, shall (i) contain sufficient
information to enable the Borrower to meet the reporting requirements concerning
oil and gas reserves contained in Regulations S-K and S-X promulgated by the SEC
and to ascertain projected future production attributable to the portion of the
reserves of the Mortgaged Properties categorized as "Producing" under the
Definitions for Oil and Gas Reserves promulgated by the Society of Petroleum
Engineers (or any generally recognized successors), (ii) take into account any
"over-produced" status under gas balancing arrangements, and (iii) contain
information and analysis comparable in scope to that contained in the Initial
Engineering Report. Accompanying each Engineering Report, the Borrower shall
deliver a report reflecting the occurrence of the following events since the
date of the most recent Engineering Report: (i) all property sales and pending
property sales identifying the property and sale price therefor, (ii) all
property purchases and pending property purchases identifying the property and
the purchase price therefor, and (iii) changes in the categories of proved
developed producing reserves, proved developed nonproducing reserves and proved
undeveloped reserves attributable to each oil and gas property or interest of
the Company and its Subsidiaries;
(f) as soon as available after the end of each fiscal year of
the Company, and in any event prior to the first extension of credit hereunder
during the succeeding new fiscal year, a certificate of a Responsible Officer
setting forth an estimate (the "Estimated ACNTA") of the Adjusted Consolidated
Net Tangible Assets as of the last day of the fiscal year of the Company most
recently ended based on the projected proved oil and gas reserves of the Company
and its Restricted Subsidiaries as of the last day of such fiscal year of the
Company, such projection to be prepared using the reserve reports delivered in
connection with the calculation of the Senior Debt Limit as of the last day of
the fiscal quarter of the Company ended on September 30 of the relevant fiscal
year of the Company most recently ended and the price assumptions to be used in
the preparation of the independent petroleum engineer reports and appraisals to
be delivered in connection with the determination of Adjusted Consolidated Net
Tangible Assets pursuant to the Indentures as of the last day of such recently
ended fiscal year; and
(g) promptly, such additional financial and other information
as any Lender may from time to time reasonably request.
6.3. Payment of Obligations. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of the relevant Group Member.
6.4. Maintenance of Existence; Compliance. (a) (i) Preserve, renew and
keep in full force and effect its corporate existence and (ii) take all
reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of its business, except, in each case, as
otherwise permitted by Section 7.4 and except, in the case of clause (ii) above,
to the extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect; and (b) comply with all Contractual Obligations and
Requirements of Law except to the
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extent that failure to comply therewith could not, in the aggregate, reasonably
be expected to have a Material Adverse Effect.
6.5. Maintenance of Property; Insurance. (a) Each Group Member will (i)
do or cause to be done all things reasonably necessary to preserve and keep in
good repair, working order and efficiency (ordinary wear and tear excepted) all
of the properties owned by each Group Member, including without limitation, all
equipment, machinery and facilities, and (ii) make all the reasonably necessary
repairs, renewals and replacements so that at all times the state and condition
of the properties owned by each Group Member will be fully preserved and
maintained, except to the extent a portion of such properties are oil and gas
properties no longer capable of producing hydrocarbons in economically
reasonable amounts.
(b) Each Group Member will promptly pay and discharge or cause
to be paid and discharged all delay rentals, royalties, expenses and
indebtedness accruing under, and perform or cause to be performed each and every
act, matter or thing required by, each and all of the assignments, deeds,
leases, sub-leases, contracts and agreements affecting its interests in its
properties and will do all other things necessary to keep unimpaired each Group
Member's rights with respect thereto and prevent any forfeiture thereof or a
default thereunder, except to the extent a portion of oil and gas properties is
no longer capable of producing hydrocarbons in economically reasonable amounts.
(c) Each Group Member will operate its properties or cause or
use commercially reasonably efforts to cause such properties to be operated in a
careful and efficient manner in accordance with the practices of the industry
and in compliance with all applicable contracts and agreements and in compliance
in all material respects with all laws; and
(d) Maintain with financially sound and reputable insurance
companies insurance on all its property in at least such amounts and against at
least such risks (but including in any event general liability) as are usually
insured against in the same general area by companies engaged in the same or a
similar business and in any case no less comprehensive in scope than that
maintained by the Company and its Subsidiaries as of the Closing Date.
6.6. Inspection of Property; Books and Records; Discussions. Keep
proper books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities and permit
representatives of any Lender (coordinated through the Administrative Agent) to
visit and inspect any of its properties and examine and make abstracts from any
of its books and records at any reasonable time and as often as may reasonably
be desired and to discuss the business, operations, properties and financial and
other condition of the Group Members with officers and employees of the Group
Members and with their independent certified public accountants.
6.7. Notices. Promptly give notice to the Administrative Agent and each
Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of any Group Member or (ii) litigation, investigation or proceeding
that may exist at any time between
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any Group Member and any Governmental Authority, that in either case, if not
cured or if adversely determined, as the case may be, could reasonably be
expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting any Group Member
(i) in which the amount involved is $5,000,000 or more and not covered by
insurance, (ii) in which injunctive or similar relief is sought or (iii) which
relates to any Loan Document;
(d) the following events, as soon as possible and in any event
within 30 days after the Borrower knows or has reason to know thereof: (i) the
occurrence of any Reportable Event with respect to any Plan, a failure to make
any required contribution to a Plan, the creation of any Lien in favor of the
PBGC or a Plan or any withdrawal from, or the termination, Reorganization or
Insolvency of, any Multiemployer Plan or (ii) the institution of proceedings or
the taking of any other action by the PBGC or the Borrower or any Commonly
Controlled Entity or any Multiemployer Plan with respect to the withdrawal from,
or the termination, Reorganization or Insolvency of, any Plan; and
(e) any development or event that has had or could reasonably
be expected to have a Material Adverse Effect.
Each notice pursuant to this Section 6.7 shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action the Company, the Borrower or the relevant
Subsidiary proposes to take with respect thereto.
6.8. Environmental Laws. (a) Comply in all material respects with, and
ensure compliance in all material respects by all tenants and subtenants, if
any, with, all applicable Environmental Laws, and obtain and comply in all
material respects with and maintain, and ensure that all tenants and subtenants
obtain and comply in all material respects with and maintain, any and all
licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws as well as all contractual obligations and
agreements with respect to environmental remediation or other environmental
matters.
(b) Conduct and complete all investigations, studies, sampling
and testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws.
(c) Promptly furnish to the Administrative Agent all written
notices of violation, orders, claims, citations, complaints, penalty
assessments, suits or other proceedings received by any Group Member, or of
which it has notice, pending or threatened against any Group Member, by any
governmental authority with respect to any alleged violation of or
non-compliance in any material respect with any Environmental Laws or any
permits, licenses or authorizations in connection with its ownership or use of
its properties or the operation of its business.
(d) Promptly furnish to the Administrative Agent all requests
for information, notices of claim, demand letters, and other notifications,
received by any Group Member in connection with its ownership or use of its
properties or the conduct of its business, relating to potential responsibility
which could if adversely determined result in fines or liability of a
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material amount with respect to any investigation or clean-up of Hazardous
Material at any location.
6.9. Collateral Coverage and Guarantees. (a) Maintain a Collateral
Coverage Ratio at all times of at least 2.0 to 1.0 in accordance with the
provisions set forth in Section 3.2(a).
(b) Subject to Section 10.14(b), with respect to any new
Subsidiary created or acquired after the Closing Date by any Group Member
(which, for the purposes of this paragraph (b), shall include any existing
Subsidiary that ceases to be an "Unrestricted Subsidiary" under the 8-1/8% Note
Indenture), promptly (i) cause such new Subsidiary (A) to become a party to the
Guarantee Agreement and (B) to deliver to the Administrative Agent a certificate
of such Subsidiary, substantially in the form of Exhibit C, with appropriate
insertions and attachments, and (ii) if requested by the Administrative Agent,
deliver to the Administrative Agent legal opinions relating to the matters
described above, which opinions shall be in form and substance, and from
counsel, reasonably satisfactory to the Administrative Agent.
(c) Cause, in the event that after the date hereof the Company
or any of its Subsidiaries make Investments in Chesapeake Canada Corporation or
any of its Subsidiaries in an aggregate outstanding amount at any time exceeding
$30,000,000, Chesapeake Canada Corporation and each such Subsidiary (A) to
become a party to the Guarantee Agreement and (B) to deliver to the
Administrative Agent a certificate of Chesapeake Canada Corporation and each
such Subsidiary, substantially in the form of Exhibit C, with appropriate
insertions and attachments, and (ii) if requested by the Administrative Agent,
deliver to the Administrative Agent legal opinions relating to the matters
described above, which opinions shall be in form and substance, and from
counsel, reasonably satisfactory to the Administrative Agent.
6.10. Further Assurances. From time to time execute and deliver, or
cause to be executed and delivered, such additional mortgages, deeds of trust,
chattel mortgages, security agreements, financing statements, reports (including
reports of the type described in Section 6.2(e)), instruments, legal opinions,
certificates or documents (including, without limitation, documents of the type
described in Section 5.1(j)(ii)), all in form and substance satisfactory to the
Administrative Agent, and take all such actions as may be requested hereunder
(including, without limitation, in order to comply with Section 6.9) or as the
Administrative Agent may reasonably request for the purposes of implementing or
effectuating the provisions of this Agreement and the other Loan Documents
(including, without limitation, Section 6.9), or of more fully perfecting or
renewing the rights of the Administrative Agent and the Lenders with respect to
the Collateral (or with respect to any additions thereto or replacements or
proceeds thereof or with respect to any other property or assets hereafter
acquired by the Borrower or any Subsidiary which may be deemed to be part of the
Collateral) pursuant hereto or thereto. Upon the exercise by the Administrative
Agent or any Lender of any power, right, privilege or remedy pursuant to this
Agreement or the other Loan Documents which requires any consent, approval,
recording qualification or authorization of any Governmental Authority, the
Company and the Borrower will execute and deliver, or will cause the execution
and delivery of, all applications, certifications, instruments and other
documents and papers that the Administrative Agent or such Lenders may be
required to obtain from the Company, the Borrower or any of their respective
Subsidiaries for such governmental consent, approval, recording, qualification
or authorization.
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SECTION 7. NEGATIVE COVENANTS
The Company and the Borrower hereby jointly and severally
agree that, so long as the Revolving Commitments remain in effect, any Letter of
Credit remains outstanding or any Revolving Loan or other amount is owing to any
Lender or Agent hereunder, each of the Company and the Borrower shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly:
7.1. Financial Condition Covenants.
(a) Current Ratio. Permit the Current Ratio at the end of any
fiscal quarter of the Company (beginning with the quarter ended September 30,
2001) to be less than 1.0 to 1.0.
(b) Consolidated Fixed Charge Coverage Ratio. Permit the
Consolidated Fixed Charge Coverage Ratio for any period of four consecutive
fiscal quarters of the Company (beginning with the quarter ended September 30,
2001) to be less than 2.5 to 1.0.
7.2. Indebtedness. Create, issue, incur, assume, become liable in
respect of or suffer to exist any Indebtedness, except:
(a) Indebtedness of any Loan Party pursuant to any Loan
Document;
(b) Indebtedness (i) of the Borrower to the Company or to any
Subsidiary, (ii) of the Company or any Subsidiary Guarantor to the Borrower
(except in the event that there has been an acceleration of the maturity of any
Obligation) or to any other Subsidiary, (iii) of any Subsidiary (other than the
Borrower or a Subsidiary Guarantor) to any Subsidiary (other than the Borrower
or a Subsidiary Guarantor), and (iv) subject to Section 7.7(g), of any
Subsidiary (other than the Borrower or a Subsidiary Guarantor) to the Borrower
or any Subsidiary Guarantor;
(c) Guarantee Obligations incurred in the ordinary course of
business by the Borrower and the Company or any of its Subsidiaries of
obligations of the Borrower, any Subsidiary Guarantor and, subject to Section
7.7(g), of any Subsidiary (other than the Borrower or a Subsidiary Guarantor);
(d) Indebtedness outstanding on the date hereof and listed on
Schedule 7.2(d) and any refinancings, refundings, renewals or extensions thereof
(without increasing, or shortening the maturity of, the principal amount
thereof);
(e) Indebtedness (including, without limitation, Capital Lease
Obligations) secured by Liens permitted by Section 7.3(g) in an aggregate
principal amount not to exceed $50,000,000 at any one time outstanding;
(f) Indebtedness under the Indentures as of the Closing Date
and any refinancings, refundings, renewals or extensions thereof (without
increasing, or shortening the maturity of, the principal amount thereof);
(g) Hedge Agreements entered into with the purpose and effect
of fixing prices on oil or gas expected to be produced by Group Members,
provided that at all times: (1) no such
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contract has, or fixes a price for, a term of more than thirty six months; (2)
the aggregate monthly production covered by all such contracts for such month of
production (determined, in the case of contracts that are not settled on a
monthly basis, by a monthly proration acceptable to the Administrative Agent)
for any single month does not exceed 80% of Group Members' aggregate Projected
Oil and Gas Production anticipated to be sold in the ordinary course of Group
Members' businesses for such month, and (3) each such contract is with a
counterparty or has a guarantor of the obligation of the counterparty who
(unless such counterparty is a Lender or one of its Affiliates) is a nationally
recognized, well-capitalized hedging counterparty or is an investment
grade-rated industry participant. As used in this subsection, the term
"Projected Oil and Gas Production" means the projected production of oil or gas
(measured by volume unit or BTU equivalent, not sales price) for the term of the
contracts or a particular month, as applicable, from properties and interests
owned by any Group Member which are located in or offshore of the United States
and Canada and which have attributable to them proved oil or gas reserves, after
deducting projected production from any properties or interests sold or under
contract for sale that had been included in such report and after adding
projected production from any properties or interests that had not been
reflected in such report but that are reflected in a separate or supplemental
report meeting the requirements of Section 6.2(e) and which is otherwise
satisfactory to the Administrative Agent;
(h) Hedge Agreements entered into by a Group Member with the
purpose and effect of fixing interest rates on a principal amount of
Indebtedness of such Group Member that is accruing interest at a variable rate,
provided that the aggregate notional amount of such contracts never exceeds 75%
of the anticipated outstanding principal balance of the Indebtedness to be
hedged by such contracts or an average of such principal balances calculated
using a generally accepted method of matching interest swap contracts to
declining principal balances, and the floating rate index of each such contract
generally matches the index used to determine the floating rates of interest on
the corresponding indebtedness to be hedged by such contract; and the fixed rate
index of each such contract generally matches the interest on the corresponding
obligation to be hedged by such contract; provided further that each such
contract is with a counterparty or has a guarantor of the obligation of the
counterparty who (unless such counterparty is a Lender or one of its
Affiliates)) is a nationally recognized, well-capitalized hedging counterparty;
(i) Indebtedness of Chesapeake Energy Marketing, Inc. in an
aggregate principal amount at any one time outstanding not to exceed
$15,000,000;
(j) liabilities with respect to accrued revenues and royalties
due to others during the period the payment thereof has been properly suspended
in accordance with applicable agreements and applicable law; and
(k) additional Indebtedness of the Company or any of its
Subsidiaries in an aggregate principal amount (for the Company and all
Subsidiaries) not to exceed $25,000,000 at any one time outstanding.
7.3. Liens. Create, incur, assume or suffer to exist any Lien upon any
of its property, whether now owned or hereafter acquired, except for:
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(a) Liens for taxes not yet due or that are being contested in
good faith by appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of the Company or its Subsidiaries,
as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business that
are not overdue for a period of more than 30 days or that are being contested in
good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business that, in the aggregate,
are not substantial in amount and that do not in any case materially detract
from the value of the property subject thereto or materially interfere with the
ordinary conduct of the business of the Borrower or any of its Subsidiaries;
(f) Liens in existence on the date hereof listed on Schedule
7.3(f), securing Indebtedness permitted by Section 7.2(d), provided that no such
Lien is spread to cover any additional property after the Closing Date and that
the amount of Indebtedness secured thereby is not increased;
(g) Liens securing Indebtedness of the Company or any other
Subsidiary incurred pursuant to Section 7.2(e) to finance the acquisition of
fixed or capital assets, provided that (i) such Liens shall be created
substantially simultaneously with the acquisition of such fixed or capital
assets, (ii) such Liens do not at any time encumber any property other than the
property financed by such Indebtedness and (iii) the amount of Indebtedness
secured thereby is not increased;
(h) Liens created pursuant to the Security Documents;
(i) any interest or title of a lessor under any lease entered
into by the Company or any other Subsidiary in the ordinary course of its
business and covering only the assets so leased;
(j) Liens on accounts receivable and cash of Chesapeake Energy
Marketing, Inc. securing Indebtedness permitted by Section 7.2(i);
(k) Liens on oil and gas properties (that are not Collateral)
of the Company and its Subsidiaries the aggregate value of which does not
exceed, at any time, $50,000,000 securing Indebtedness under any Hedge Agreement
with any Lender or any Affiliate thereof (not otherwise secured under Section
7.2(l)); and
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(l) the issuance of letters of credit or any pledge of cash to
secure the obligations of the Company and its Subsidiaries with respect to any
Hedge Agreement (not otherwise secured under Section 7.2(k)) not to exceed at
any time, an amount equal to $75,000,000 in the aggregate;
provided, that, none of the Liens created pursuant to paragraphs (a) to (l)
(other than paragraph (h)) of this Section 7.3 shall constitute Liens securing
Indebtedness permitted under Section 4.9(i) of each of the 8-1/2% Note Indenture
and the 7-7/8% Note Indenture so long as such Indentures remain in effect.
7.4. Fundamental Changes. Enter into any merger, consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or Dispose of, all or substantially all of its
property or business, except that:
(a) any Subsidiary of the Borrower may be merged or
consolidated with or into the Borrower (provided that the Borrower shall be the
continuing or surviving entity) or with or into any Subsidiary of the Borrower
that is a Subsidiary Guarantor (provided that the Subsidiary Guarantor shall be
the continuing or surviving entity) or, subject to Section 7.7(g), with or into
any other Subsidiary of the Borrower;
(b) any Subsidiary of the Borrower may Dispose of any or all
of its assets (upon voluntary liquidation or otherwise) to the Borrower or any
Subsidiary of the Borrower that is a Subsidiary Guarantor or, subject to Section
7.7(g), any other Subsidiary of the Borrower;
(c) any Subsidiary of the Company (other than the Borrower and
its Subsidiaries) may be consolidated with or into the Company (provided that
the Company shall be the continuing or surviving entity) or with or into any
Subsidiary Guarantor (other than the Borrower or any of its Subsidiaries)
(provided that the Subsidiary Guarantor shall be the continuing or surviving
entity) or, subject to Section 7.7(g), any Subsidiary (other than the Borrower
or any of its Subsidiaries and any Subsidiary Guarantor); and
(d) any Subsidiary of the Company (other than the Borrower and
its Subsidiaries) may dispose of any or all of its assets (upon voluntary
liquidation or otherwise) to the Company or any Subsidiary Guarantor (other than
the Borrower or any of its Subsidiaries) or, subject to Section 7.7(g), any
Subsidiary (other than the Borrower or any of its Subsidiaries and any
Subsidiary Guarantor)
7.5. Disposition of Property. Dispose of any of its property, whether
now owned or hereafter acquired, or, in the case of any Subsidiary, issue or
sell any shares of such Subsidiary's Capital Stock to any Person, except:
(a) the Disposition of obsolete or worn out property in the
ordinary course of business;
(b) inventory (including oil and gas sold as produced and
seismic data) which is sold in the ordinary course of business on ordinary trade
terms;
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(c) interests in oil and gas properties, or portions thereof,
to which no proved reserves of oil, gas or other liquid or gaseous hydrocarbons
are properly attributed;
(d) Dispositions permitted by Section 7.4(b) or 7.4(d); and
(e) other property which is sold for fair consideration to a
Person who is not an Affiliate not to exceed, in the aggregate with respect to
all sales of property after the date of this Agreement, $100,000,000; provided
that to the extent the aggregate Net Cash Proceeds of all such Dispositions
after the date of this Agreement exceeds $25,000,000 (i) so long as no Default
or Event of Default shall have occurred and be continuing, the amount of such
excess shall be placed in a segregated account (and, in the case of proceeds of
Proved Developed Properties, subject to a perfected, first-priority Lien to
secure the Obligations) and within four months following the receipt of such
proceeds by the Group Member, shall be either applied to permanently repay
outstanding Indebtedness of any Group Member or to pay the purchase price of
proved oil and gas properties acquired by a Group Member or to pay development
costs with respect to proved oil and gas properties then owned by a Group
Member, or (ii) if a Default or Event of Default shall have occurred and be
continuing at the time of such Disposition, the amount of such excess (any such
excess, the "Excess Amount") shall be applied in accordance with Section 3.2(c).
The value of sales under this clause (e) shall be the applicable sale price.
7.6. Restricted Payments. Declare or pay any dividend (other than
dividends payable solely in common stock of the Person making such dividend) on,
or make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any Capital Stock of any Group Member (or enter into or be party
to, or make any payment under, any Synthetic Purchase Agreement with respect to
any such Capital Stock if the purchase, redemption, defeasance, retirement or
other acquisition thereof by the Company and its Subsidiaries would otherwise be
prohibited under this Section 7.6), whether now or hereafter outstanding, or
make any other distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of the Company, the Borrower or
any Subsidiary, or enter into any derivatives or other transaction with any
financial institution, commodities or stock exchange or clearinghouse (a
"Derivatives Counterparty") obligating any Group Member to make payments to such
Derivatives Counterparty as a result of any change in market value of any such
Capital Stock (collectively, "Restricted Payments"), except that:
(a) any Subsidiary of the Company may pay cash dividends or
distributions on its Capital Stock to the Company or any of its
Subsidiaries;
(b) so long as no Default or Event of Default shall have
occurred and be continuing or would result therefrom, the Company may
purchase the Company's common stock or common stock options from
present or former officers or employees of any Group Member upon the
death, disability or termination of employment of such officer or
employee, provided, that the aggregate amount of payments under this
clause (b) after the date hereof shall not exceed $5,000,000; and
(c) so long as no Default or Event of Default shall have
occurred and be continuing or would result therefrom at the time such
dividends are declared, the
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Company may pay cash dividends on its Capital Stock not to exceed an
amount equal to $10,000,000 for each fiscal year of the Company.
7.7. Investments. Make any advance, loan, extension of credit (by way
of guaranty or otherwise) or capital contribution to, or purchase any Capital
Stock, bonds, notes, debentures or other debt securities of, or any assets
constituting a business unit of, or make any other investment in, any Person
(all of the foregoing, "Investments"), except:
(a) extensions of trade credit in the ordinary course of
business;
(b) investments in Cash Equivalents;
(c) Guarantee Obligations permitted by Section 7.2;
(d) loans and advances to employees of any Group Member of the
Company in the ordinary course of business (including for travel,
entertainment and relocation expenses) in an aggregate amount for all
Group Members not to exceed $1,000,000 at any one time outstanding;
(e) the purchase of the outstanding 7-7/8% Notes and 8-1/2%
Notes, provided, that the aggregate purchase price of such 8-1/2% Notes
purchased shall not exceed $20,000,000;
(f) intercompany Investments by any Group Member in the
Borrower or any Person that, prior to such Investment, is a Subsidiary
Guarantor (and, in the case of Investments by the Borrower or any of
its Subsidiaries, a Subsidiary of the Borrower);
(g) intercompany Investments by the Company or any of its
Subsidiaries in any Person, that, prior to such Investment, is a
Subsidiary but not a Subsidiary Guarantor (including, without
limitation, Guarantee Obligations with respect to obligations of any
such Subsidiary, loans made to any such Subsidiary and Investments
resulting from mergers with or sales of assets to any such Subsidiary)
plus any Unrestricted Subsidiary Investments in connection with the
designation of a Subsidiary Guarantor or any newly created or acquired
Subsidiary as an "Unrestricted Subsidiary" under the 8-1/8% Note
Indenture (minus any Unrestricted Subsidiary Investment in connection
with the designation of a Subsidiary that is not a Subsidiary Guarantor
as a "Restricted Subsidiary" under the 8-1/8% Note Indenture and a
Subsidiary Guarantor hereunder) in an aggregate outstanding amount
(valued at cost) not to exceed at any time, together with any
Investment pursuant to paragraph (l) of this Section that results in
the creation or acquisition of a Subsidiary that is not a Subsidiary
Guarantor or the acquisition of assets by, or the contribution or
transfer of assets to, a Subsidiary that is not a Subsidiary Guarantor,
$15,000,000 in the aggregate (except to the extent the Investment is
made in the form of the common stock of the Company);
(h) loans and advances to Chesapeake Canada Corporation;
(i) acquisitions of oil and gas properties and gas exploration
and extraction assets and assets directly related thereto and
acquisitions of all the Capital Stock of any Person
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whose assets consist of oil and gas properties and gas exploration and
extraction assets and assets directly related thereto the consideration
for which is in the form of cash or Capital Stock of the Company;
provided, that any such acquisition shall not be permitted hereunder
without prior consent of the Majority Lenders if the aggregate value of
the consideration payable in connection with such acquisition is equal
to or greater than an amount equal to $50,000,000 (except to the extent
such consideration is in the form of the common stock of the Company);
(j) the entry into operating agreements, processing
agreements, farm-out agreements, development agreements, area of mutual
interest agreements, contracts for the transportation or exchange of
oil and natural gas, unitization agreements, pooling arrangements,
joint bidding agreements, service contracts, or other similar customary
agreements, transactions, properties, interests or arrangements, in
each case made or entered into in the ordinary course of business as
conducted by the Company and its Subsidiaries as of the Closing Date;
(k) Investments pursuant to the employment agreements between
each of Aubrey K. McClendon and Tom L. Ward and the Company as are in
effect as of the Closing Date;
(l) Investments resulting from Indebtedness permitted under
Section 7.2(b)
(m) Investments set forth on Schedule 7.7(m); and
(n) in addition to Investments otherwise expressly permitted
by this Section, Investments by the Company or any of its Subsidiaries
(including, without limitation, joint ventures and partnerships) in an
aggregate outstanding amount at any time (valued at cost) not to exceed
$25,000,000 during the term of this Agreement (except to the extent
such consideration is in the form of the common stock of the Company).
7.8. Optional Payments and Modifications of Certain Debt Instruments.
(a) Make or offer to make any optional or voluntary payment, prepayment,
repurchase or redemption of or otherwise optionally or voluntarily defease or
segregate funds with respect to Indebtedness under the 8-1/8% Note Indenture and
unless permitted under Section 7.7(e), the 8-1/2% Note Indenture or enter into
any derivative or other transaction with any Derivatives Counterparty obligating
the Company, the Borrower or any Subsidiary to make payments to such Derivatives
Counterparty as a result of any change in market value of any such Indebtedness;
(b) amend, modify, waive or otherwise change, or consent or agree to any
amendment, modification, waiver or other change to, any of the terms of
Indebtedness under the Indentures (other than any such amendment, modification,
waiver or other change that (i) would extend the maturity or reduce the amount
of any payment of principal thereof or reduce the rate or extend any date for
payment of interest thereon and (ii) does not involve the payment of a consent
fee); or (c) enter into or be party to, or make any payment under, any Synthetic
Purchase Agreement with respect to any Indebtedness the making or offering to
make of any optional or voluntary payment or prepayment thereon, or any
repurchase or redemption thereof, or the optional or voluntary defeasance or
segregation of funds with respect thereto, the Company and its Subsidiaries are
otherwise prohibited from doing under this Section 7.8.
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7.9. Transactions with Affiliates. Enter into any transaction,
including any purchase, sale, lease or exchange of property, the rendering of
any service or the payment of any management, advisory or similar fees, with any
Affiliate (other than the Company, the Borrower or any Subsidiary Guarantor)
unless such transaction is (a) otherwise permitted under this Agreement, (b) in
the ordinary course of business of the relevant Group Member, and (c) upon fair
and reasonable terms no less favorable to the relevant Group Member, than it
would obtain in a comparable arm's length transaction with a Person that is not
an Affiliate.
7.10. Sales and Leasebacks. Enter into any arrangement with any Person
providing for the leasing by any Group Member of real or personal property that
has been or is to be sold or transferred by such Group Member to such Person or
to any other Person to whom funds have been or are to be advanced by such Person
on the security of such property or rental obligations of such Group Member
(including, without limitation, any Sale/Leaseback Transaction as defined in
each of the 8-1/2% Note Indenture and the 7-7/8% Note Indenture).
7.11. Changes in Fiscal Periods. Permit the fiscal year of the Company
to end on a day other than December 31 or change the Company's method of
determining fiscal quarters.
7.12. Negative Pledge Clauses. Enter into or suffer to exist or become
effective any agreement that prohibits or limits the ability of any Group Member
to create, incur, assume or suffer to exist any Lien upon any of its property or
revenues, whether now owned or hereafter acquired, other than (a) this Agreement
and the other Loan Documents, (b) the Indentures, (c) any agreements governing
any purchase money Liens or Capital Lease Obligations otherwise permitted hereby
(in which case, any prohibition or limitation shall only be effective against
the assets financed thereby) and (d) any agreements governing Indebtedness
permitted under Section 7.2(i) (in which case, any prohibition or limitation
shall only be effective against the assets of Chesapeake Energy Marketing,
Inc.).
7.13. Clauses Restricting Subsidiary Distributions. Enter into or
suffer to exist or become effective any consensual encumbrance or restriction on
the ability of any Subsidiary of the Company or the Borrower to (a) make
Restricted Payments in respect of any Capital Stock of such Subsidiary held by,
or pay any Indebtedness owed to, the Company, the Borrower or any other
Subsidiary of the Company or the Borrower, as the case may be, (b) make loans or
advances to, or other Investments in, the Company or the Borrower or any other
Subsidiary of the Company or the Borrower, as the case may be, or (c) transfer
any of its assets to the Company or the Borrower or any other Subsidiary of the
Company or the Borrower, as the case may be, except for such encumbrances or
restrictions existing under or by reason of (i) any restrictions existing under
the Loan Documents, (ii) any restrictions with respect to a Subsidiary imposed
pursuant to an agreement that has been entered into in connection with the
Disposition of all or substantially all of the Capital Stock or assets of such
Subsidiary and (iii) any restrictions under the 8-1/8% Note Indenture applicable
to Chesapeake Energy Marketing, Inc. and Carmen Acquisition Corp. so long as
such entities remain "Unrestricted Subsidiaries" thereunder.
7.14. Take-or-Pay Contracts. No Group Member will enter into any
"take-or-pay" contract or other contract or arrangement for the purchase of
goods or services which obligates it to pay for such goods or service regardless
of whether they are delivered or furnished to it.
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7.15. Lines of Business. Enter into any business, either directly or
through any Subsidiary, except for the marketing, exploration and extraction of
oil and gas which constitutes the business the Company and its Subsidiaries are
engaged in as of the date of this Agreement.
7.16. Senior Debt Limit. Permit the Total Revolving Extensions of
Credit at any time to exceed the Senior Debt Limit at such time.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) the Borrower shall fail to pay any principal of any
Revolving Loan or Reimbursement Obligation when due in accordance with the terms
hereof; or the Borrower shall fail to pay any interest on any Revolving Loan or
Reimbursement Obligation, or any other amount payable hereunder or under any
other Loan Document, within five days after any such interest or other amount
becomes due in accordance with the terms hereof; or
(b) any representation or warranty made or deemed made by any
Loan Party herein or in any other Loan Document or that is contained in any
certificate, document or financial or other statement furnished by it at any
time under or in connection with this Agreement or any such other Loan Document
shall prove to have been inaccurate in any material respect on or as of the date
made or deemed made; or
(c) (i) any Loan Party shall default in the observance or
performance of any agreement contained in Section 6.2(e), clause (i) or (ii) of
Section 6.4(a) (with respect to the Company and the Borrower only), Section
6.7(a), 6.9 or Section 7 of this Agreement or (ii) a "default" under and as
defined in any Mortgage shall have occurred and be continuing; or
(d) any Loan Party shall default in the observance or
performance of any other agreement contained in this Agreement or any other Loan
Document (other than as provided in paragraphs (a) through (c) of this Section),
and such default shall continue unremedied for a period of 30 days after notice
to the Borrower from the Administrative Agent; or
(e) any Group Member (i) defaults in making any payment of any
principal of any Indebtedness (including any Guarantee Obligation, but excluding
the Revolving Loans) on the scheduled or original due date with respect thereto;
or (ii) defaults in making any payment of any interest on any such Indebtedness
beyond the period of grace, if any, provided in the instrument or agreement
under which such Indebtedness was created; or (iii) defaults in the observance
or performance of any other agreement or condition relating to any such
Indebtedness or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition exist, the effect
of which default or other event or condition is to cause, or to permit the
holder or beneficiary of such Indebtedness (or a trustee or agent on behalf of
such holder or beneficiary) to cause, with the giving of notice if required,
such Indebtedness to become due prior to its stated maturity or to become
subject to a mandatory offer to purchase by the obligor thereunder or (in the
case of any such Indebtedness constituting a Guarantee Obligation) to become
payable; provided, that a default, event or condition described in clause (i),
(ii) or (iii) of this paragraph (e) shall not at any time constitute
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an Event of Default unless, at such time, one or more defaults, events or
conditions of the type described in clauses (i), (ii) and (iii) of this
paragraph (e) shall have occurred and be continuing with respect to Indebtedness
the outstanding principal amount of which exceeds in the aggregate $5,000,000;
or
(f) (i) any Group Member shall commence any case, proceeding
or other action (A) under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization or
relief of debtors, seeking to have an order for relief entered with respect to
it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B) seeking
appointment of a receiver, trustee, custodian, conservator or other similar
official for it or for all or any substantial part of its assets, or any Group
Member shall make a general assignment for the benefit of its creditors; or (ii)
there shall be commenced against any Group Member any case, proceeding or other
action of a nature referred to in clause (i) above that (A) results in the entry
of an order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days; or (iii) there
shall be commenced against any Group Member any case, proceeding or other action
seeking issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets that results in the
entry of an order for any such relief that shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days from the entry
thereof; or (iv) any Group Member shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in clause (i), (ii), or (iii) above; or (v) any Group Member shall
generally not, or shall be unable to, or shall admit in writing its inability
to, pay its debts as they become due; or
(g) (i) any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Plan, (ii) any "accumulated funding deficiency" (as defined in
Section 302 of ERISA), whether or not waived, shall exist with respect to any
Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Company or any Commonly Controlled Entity, (iii) a Reportable Event shall occur
with respect to, or proceedings shall commence to have a trustee appointed, or a
trustee shall be appointed, to administer or to terminate, any Single Employer
Plan, which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Majority Lenders, likely to result
in the termination of such Plan for purposes of Title IV of ERISA, (iv) any
Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the
Borrower or any Commonly Controlled Entity shall, or in the reasonable opinion
of the Majority Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or
(vi) any other event or condition shall occur or exist with respect to a Plan;
and in each case in clauses (i) through (vi) above, such event or condition,
together with all other such events or conditions, if any, could, in the sole
judgment of the Majority Lenders, reasonably be expected to have a Material
Adverse Effect; or
(h) one or more judgments or decrees shall be entered against
any Group Member involving in the aggregate a liability (not paid or fully
covered by insurance as to which the relevant insurance company has acknowledged
coverage) of $5,000,000 or more, and all such judgments or decrees shall not
have been vacated, discharged, stayed or bonded pending appeal within 30 days
from the entry thereof; or
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(i) any of the Security Documents shall cease, for any reason,
to be in full force and effect, or any Loan Party or any Affiliate of any Loan
Party shall so assert, or any Lien created by any of the Security Documents with
respect to Mortgaged Properties with an aggregate value in excess of $5,000,000
shall cease to be enforceable and of the same effect and priority purported to
be created thereby; or
(j) the guarantee contained in Section 2 of the Guarantee
Agreement shall cease, for any reason, to be in full force and effect or any
Loan Party or any Affiliate of any Loan Party shall so assert; or
(k) (i) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), shall become, or obtain rights (whether by means or warrants,
options or otherwise) to become, the "beneficial owner" (as defined in Rules
13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of more
than 35% of the outstanding common stock of the Company; (ii) the board of
directors of the Company shall cease to consist of a majority of Continuing
Directors; (iii) the Company shall cease to own and control, of record and
beneficially, directly or indirectly, 100% of each class of outstanding Capital
Stock of the Borrower and each Guarantor free and clear of all Liens; (iv) a
Specified Change of Control shall occur; or (v) neither Aubrey K. McClendon nor
Tom Ward shall be executive officers of the Company;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower,
automatically the Revolving Commitments shall immediately terminate and the
Revolving Loans hereunder (with accrued interest thereon) and all other amounts
owing under this Agreement and the other Loan Documents (including all amounts
of L/C Obligations, whether or not the beneficiaries of the then outstanding
Letters of Credit shall have presented the documents required thereunder) shall
immediately become due and payable, and (B) if such event is any other Event of
Default, either or both of the following actions may be taken: (i) with the
consent of the Majority Lenders, the Administrative Agent may, or upon the
request of the Majority Lenders, the Administrative Agent shall, by notice to
the Borrower declare the Revolving Commitments to be terminated forthwith,
whereupon the Revolving Commitments shall immediately terminate; and (ii) with
the consent of the Majority Lenders, the Administrative Agent may, or upon the
request of the Majority Lenders, the Administrative Agent shall, by notice to
the Borrower, declare the Revolving Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement and the other Loan
Documents (including all amounts of L/C Obligations, whether or not the
beneficiaries of the then outstanding Letters of Credit shall have presented the
documents required thereunder) to be due and payable forthwith, whereupon the
same shall immediately become due and payable. With respect to all Letters of
Credit with respect to which presentment for honor shall not have occurred at
the time of an acceleration pursuant to this paragraph, the Borrower shall at
such time deposit in a cash collateral account opened by the Administrative
Agent an amount equal to the aggregate then undrawn and unexpired amount of such
Letters of Credit. Amounts held in such cash collateral account shall be applied
by the Administrative Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay other
Obligations of the Borrower hereunder and under the other Loan Documents. After
all such Letters of Credit shall have expired or been fully drawn upon, all
Reimbursement Obligations
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shall have been satisfied and all other Obligations of the Borrower hereunder
and under the other Loan Documents shall have been paid in full, the balance, if
any, in such cash collateral account shall be returned to the Borrower (or such
other Person as may be lawfully entitled thereto). Except as expressly provided
above in this Section, presentment, demand, protest and all other notices of any
kind are hereby expressly waived by the Borrower.
SECTION 9. THE AGENTS
9.1. Appointment. Each Lender hereby irrevocably designates and
appoints each Agent as the agent of such Lender under this Agreement and the
other Loan Documents, and each such Lender irrevocably authorizes such Agent, in
such capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to such Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, no Agent shall have any duties or responsibilities,
except those expressly set forth herein, or any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against any Agent.
9.2. Delegation of Duties. Each Agent may execute any of its duties
under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. No Agent shall be responsible for the
negligence or misconduct of any agents or attorneys in-fact selected by it with
reasonable care.
9.3. Exculpatory Provisions. Neither any Agent nor any of their
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except to the extent that any of the foregoing are found by
a final and nonappealable decision of a court of competent jurisdiction to have
resulted from its or such Person's own gross negligence or willful misconduct)
or (ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by any Loan Party or any officer
thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agents under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
for any failure of any Loan Party a party thereto to perform its obligations
hereunder or thereunder. The Agents shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Loan Party or to
request an additional Evaluation Date unless instructed in writing by the
Majority Lenders.
9.4. Reliance by Agents. Each Agent shall be entitled to rely, and
shall be fully protected in relying, upon any instrument, writing, resolution,
notice, consent, certificate, affidavit, letter, telecopy, telex or teletype
message, statement, order or other document or
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conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including counsel to the Company or the Borrower), independent
accountants and other experts selected by such Agent. The Administrative Agent
may deem and treat the payee of any Note as the owner thereof for all purposes
unless a written notice of assignment, negotiation or transfer thereof shall
have been filed with the Administrative Agent. Each Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
the Majority Lenders (or, if so specified by this Agreement, all Lenders) as it
deems appropriate or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense that may be incurred by it by
reason of taking or continuing to take any such action. The Agents shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement and the other Loan Documents in accordance with a request of the
Majority Lenders (or, if so specified by this Agreement, all Lenders), and such
request and any action taken or failure to act pursuant thereto shall be binding
upon all the Lenders and all future holders of the Revolving Loans. Upon receipt
by the Administrative Agent from the Borrower of any communication calling for
action on the part of the Lenders or upon notice from any other Lender to the
Administrative Agent of any Default or Event of Default, the Administrative
Agent shall promptly notify each other Lender thereof.
9.5. Notice of Default. No Agent shall be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder unless
such Agent has received notice from a Lender, the Company or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the
Administrative Agent receives such a notice, the Administrative Agent shall give
notice thereof to the Lenders. The Administrative Agent shall take such action
with respect to such Default or Event of Default as shall be reasonably directed
by the Majority Lenders (or, if so specified by this Agreement, all Lenders or
any other instructing group of Lenders specified by this Agreement); provided
that unless and until the Administrative Agent shall have received such
directions, the Administrative Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interests of the
Lenders.
9.6. Non-Reliance on Agents and Other Lenders. Each Lender expressly
acknowledges that neither the Agents nor any of their respective officers,
directors, employees, agents, attorneys-in-fact or affiliates have made any
representations or warranties to it and that no act by any Agent hereafter
taken, including any review of the affairs of a Loan Party or any affiliate of a
Loan Party, shall be deemed to constitute any representation or warranty by any
Agent to any Lender. Each Lender represents to the Agents that it has,
independently and without reliance upon any Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and their
affiliates and made its own decision to make its Revolving Loans hereunder and
enter into this Agreement. Each Lender also represents that it will,
independently and without reliance upon any Agent or any other Lender, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigation as it deems necessary to inform itself as to the business,
operations, property,
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financial and other condition and creditworthiness of the Loan Parties and their
affiliates. Except for notices, reports and other documents expressly required
to be furnished to the Lenders by the Administrative Agent hereunder, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
property, condition (financial or otherwise), prospects or creditworthiness of
any Loan Party or any affiliate of a Loan Party that may come into the
possession of the Administrative Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates.
9.7. Indemnification. The Lenders agree to indemnify each Agent WHICH
INDEMNITY SHALL APPLY WHETHER OR NOT ANY SUCH LIABILITY OR CLAIM IS IN ANY WAY
OR TO ANY EXTENT CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION
OF ANY KIND BY THE AGENT, in its capacity as such (to the extent not reimbursed
by the Company or the Borrower within ten days after demand and without limiting
the obligation of the Company or the Borrower to do so), ratably according to
their respective Aggregate Exposure Percentages in effect on the date on which
indemnification is sought under this Section (or, if indemnification is sought
after the date upon which the Revolving Commitments shall have terminated and
the Revolving Loans shall have been paid in full, ratably in accordance with
such Aggregate Exposure Percentages immediately prior to such date), from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever that may at any time (whether before or after the payment of the
Revolving Loans) be imposed on, incurred by or asserted against such Agent in
any way relating to or arising out of, the Revolving Commitments, this
Agreement, any of the other Loan Documents or any documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
or any action taken or omitted by such Agent under or in connection with any of
the foregoing (whether arising in contract or in tort or otherwise and including
any violation or noncompliance with any Environmental Laws by any Person or any
liabilities or duties of any Person with respect to Hazardous Materials found in
or released into the environment), provided that no Lender shall be liable for
the payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements that are
found by a final and nonappealable decision of a court of competent jurisdiction
to have resulted from such Agent's gross negligence or willful misconduct. The
agreements in this Section shall survive the payment of the Revolving Loans and
all other amounts payable hereunder. As used in this Section the term "Agent"
shall refer not only to the Person designated as such in Section 1.1 but also to
each director, officer, agent, attorney, employee, representative and Affiliate
of such Person.
9.8. Agent in Its Individual Capacity. Each Agent and its affiliates
may make loans to, accept deposits from and generally engage in any kind of
business with any Loan Party as though such Agent were not an Agent. With
respect to its Revolving Loans made or renewed by it and with respect to any
Letter of Credit issued or participated in by it, each Agent shall have the same
rights and powers under this Agreement and the other Loan Documents as any
Lender and may exercise the same as though it were not an Agent, and the terms
"Lender" and "Lenders" shall include each Agent in its individual capacity.
9.9. Successor Administrative Agent. The Administrative Agent may
resign as Administrative Agent upon 10 days' notice to the Lenders and the
Borrower. If the
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Administrative Agent shall resign as Administrative Agent under this Agreement
and the other Loan Documents, then the Majority Lenders shall appoint from among
the Lenders a successor agent for the Lenders, which successor agent shall
(unless an Event of Default under Section 8(a) or Section 8(f) with respect to
the Borrower shall have occurred and be continuing) be subject to approval by
the Borrower (which approval shall not be unreasonably withheld or delayed),
whereupon such successor agent shall succeed to the rights, powers and duties of
the Administrative Agent, and the term "Administrative Agent" shall mean such
successor agent effective upon such appointment and approval, and the former
Administrative Agent's rights, powers and duties as Administrative Agent shall
be terminated, without any other or further act or deed on the part of such
former Administrative Agent or any of the parties to this Agreement or any
holders of the Revolving Loans. If no successor agent has accepted appointment
as Administrative Agent by the date that is 10 days following a retiring
Administrative Agent's notice of resignation, the retiring Administrative
Agent's resignation shall nevertheless thereupon become effective and the
Lenders shall assume and perform all of the duties of the Administrative Agent
hereunder until such time, if any, as the Majority Lenders appoint a successor
agent as provided for above. The Syndication Agent may, at any time, by notice
to the Lenders and the Administrative Agent, resign as Syndication Agent
hereunder, whereupon the duties, rights, obligations and responsibilities of the
Syndication Agent hereunder shall automatically be assumed by, and inure to the
benefit of, the Administrative Agent, without any further act by the Syndication
Agent, the Administrative Agent or any Lender. After any retiring Administrative
Agent's resignation as Administrative Agent or any retiring Syndication Agent's
resignation as Syndication Agent, the provisions of this Section 9 shall inure
to the Administrative Agent's or the Syndication Agent's benefit, as the case
may be, as to any actions taken or omitted to be taken by it while it was
Administrative Agent or Syndication Agent, as the case may be, under this
Agreement and the other Loan Documents.
9.10. Agents Generally. Except as expressly set forth herein, no Agent
shall have any duties or responsibilities hereunder in its capacity as such.
9.11. The Lead Arranger. Each of the Lead Arranger and the
Co-Documentation Agents, in its capacity as such, shall have no duties or
responsibilities, and shall incur no liability, under this Agreement and other
Loan Documents.
SECTION 10. MISCELLANEOUS
10.1. Amendments and Waivers. Neither this Agreement, any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 10.1. The
Majority Lenders and each Loan Party to the relevant Loan Document may, or, with
the written consent of the Majority Lenders, the Administrative Agent and each
Loan Party to the relevant Loan Document may, from time to time, (a) enter into
written amendments, supplements or modifications hereto and to the other Loan
Documents for the purpose of adding any provisions to this Agreement or the
other Loan Documents or changing in any manner the rights of the Lenders or of
the Loan Parties hereunder or thereunder or (b) waive, on such terms and
conditions as the Majority Lenders or the Administrative Agent, as the case may
be, may specify in such instrument, any of the requirements of this Agreement or
the other Loan Documents or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such amendment,
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supplement or modification shall (i) forgive the principal amount or extend the
final scheduled date of maturity of any Revolving Loan, reduce the stated rate
of any interest or fee payable hereunder (except (x) in connection with the
waiver of applicability of any post-default increase in interest rates, which
waiver shall be effective with the consent of the Majority Lenders and (y) that
any amendment or modification of defined terms used in the financial covenants
in this Agreement shall not constitute a reduction in the rate of interest or
fees for purposes of this clause (i)) or extend the scheduled date of any
payment thereof, or increase the amount or extend the expiration date of any
Lender's Revolving Commitment, in each case without the written consent of each
Lender directly affected thereby; (ii) eliminate or reduce the voting rights of
any Lender under this Section 10.1 without the written consent of such Lender;
(iii) reduce any percentage specified in the definition of Required Lenders,
Majority Lenders, consent to the assignment or transfer by the Borrower of any
of its rights and obligations under this Agreement and the other Loan Documents,
release all or substantially all of the Collateral or release all or
substantially all of the Guarantors from their obligations under the Guarantee
Agreement, in each case without the written consent of all Lenders; (iv) (A)
increase the Borrowing Base without the consent of all Lenders, (B) reduce the
Borrowing Base or change the Collateral Value, in each case, without the consent
of the Required Lenders or (C) otherwise amend or waive any other provision of
Section 2.13 or 3.2 without the consent of the Required Lenders; (v) amend,
modify or waive any provision of Section 9 without the written consent of each
Agent adversely affected thereby; or (vi) amend, modify or waive any provision
of Sections 2.5 to 2.12 without the written consent of the Issuing Lender. Any
such waiver and any such amendment, supplement or modification shall apply
equally to each of the Lenders and shall be binding upon the Loan Parties, the
Lenders, the Agents and all future holders of the Revolving Loans. In the case
of any waiver, the Loan Parties, the Lenders and the Agents shall be restored to
their former position and rights hereunder and under the other Loan Documents,
and any Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon.
10.2. Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed as follows in the case of the Company, the Borrower and the
Agents, and as set forth in an administrative questionnaire delivered to the
Administrative Agent in the case of the Lenders, or to such other address as may
be hereafter notified by the respective parties hereto:
Company: 6100 North Western Avenue
Oklahoma City, Oklahoma 73118
Attention: Treasurer
Telecopy: (405) 879-9587
Telephone: (405) 848-8000
The Borrower: 6100 North Western Avenue
Oklahoma City, Oklahoma 73118
Attention: Treasurer
Telecopy: (405) 879-9587
Telephone: (405) 848-8000
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With a copy to: Commercial Law Group, P.C.
2725 Oklahoma Tower
210 Park Avenue
Oklahoma City, Oklahoma 73102
Attention: C. Ray Lees, Esq.
Telecopy: (405) 232-5533
Telephone: (405) 232-3001
The Administrative Agent: Union Bank of California, N.A.
500 North Akard
4200 Lincoln Center
Dallas, Texas 75201
Attention: Randall L. Osterberg
Telecopy: (214) 922-4209
Telephone: (214) 922-4200
With a copy to: Union Bank of California, N.A.
1980 Saturn Drive
Monterey Park, California 91754
Attention: Commercial Loan and
Agency Services
Telecopy: (323) 720-2780
Telephone: (323) 720-2581
The Syndication Agent: Bear Stearns Corporate Lending Inc.
245 Park Avenue
New York, NY 10167
Attention: Victor Bulzacchelli
Telecopy: (212) 272-5446
Telephone: (212) 272-3042
provided that any notice, request or demand to or upon any Agent, the Issuing
Lender or the Lenders shall not be effective until received.
10.3. No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of any Agent or any Lender, any right, remedy,
power or privilege hereunder or under the other Loan Documents shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.
10.4. Survival of Representations and Warranties. All representations
and warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement
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delivered pursuant hereto or in connection herewith shall survive the execution
and delivery of this Agreement and the making of the Revolving Loans and other
extensions of credit hereunder.
10.5. Payment of Expenses and Taxes. The Company and the Borrower
hereby jointly and severally agree (a) to pay or reimburse each Agent for all
its out-of-pocket costs and expenses incurred in connection with the
development, preparation and execution of, and any amendment, supplement or
modification to, this Agreement and the other Loan Documents and any other
documents prepared in connection herewith or therewith, and the consummation and
administration of the transactions contemplated hereby and thereby, including
the reasonable fees and disbursements of counsel to such Agent and filing and
recording fees and expenses, with statements with respect to the foregoing to be
submitted to the Borrower prior to the Closing Date (in the case of amounts to
be paid on the Closing Date) and from time to time thereafter on a quarterly
basis or such other periodic basis as such Agent shall deem appropriate, (b) to
pay or reimburse each Lender and Agent for all its costs and expenses incurred
in connection with the enforcement or preservation of any rights under this
Agreement, the other Loan Documents and any such other documents, including the
fees and disbursements of counsel (including the allocated fees and expenses of
in-house counsel) to each Lender and of counsel to such Agent, (c) to pay,
indemnify, and hold each Lender and Agent harmless from, any and all recording
and filing fees and any and all liabilities with respect to, or resulting from
any delay in paying, stamp, excise and other taxes, if any, that may be payable
or determined to be payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions contemplated by, or
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, this Agreement, the other Loan Documents and any such other
documents, and (d) to pay, indemnify, and hold each Lender and Agent and their
respective officers, directors, employees, affiliates, agents and controlling
persons (each, an "Indemnitee") harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever with respect
to the execution, delivery, enforcement, performance and administration of this
Agreement, the other Loan Documents and any such other documents, including any
of the foregoing relating to the use of proceeds of the Revolving Loans or the
violation of, noncompliance with or liability under, any Environmental Law
applicable to the operations of any Group Member or any of the Properties and
the reasonable fees and expenses of legal counsel in connection with claims,
actions or proceedings by any Indemnitee against any Loan Party under any Loan
Document (all the foregoing in this clause (d), collectively, the "Indemnified
Liabilities"), WHICH INDEMNITY SHALL APPLY WHETHER OR NOT ANY SUCH LIABILITY OR
CLAIM IS IN ANY WAY OR TO ANY EXTENT CAUSED, IN WHOLE OR IN PART, BY ANY
NEGLIGENT ACT OR OMISSION OF ANY KIND BY ANY LENDER OR AGENT, provided, that the
Borrower shall have no obligation hereunder to any Indemnitee with respect to
Indemnified Liabilities to the extent such Indemnified Liabilities are found by
a final and nonappealable decision of a court of competent jurisdiction to have
resulted from the gross negligence or willful misconduct of such Indemnitee.
Without limiting the foregoing, and to the extent permitted by applicable law,
each of the Company and the Borrower agrees not to assert and to cause its
Subsidiaries not to assert, and hereby waives and agrees to cause its
Subsidiaries to waive, all rights for contribution or any other rights of
recovery with respect to all claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature, under or
related to Environmental Laws, that any of them might have by statute or
otherwise against any Indemnitee. All amounts due under this Section 10.5 shall
be payable not later than
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10 days after written demand therefor. Statements payable by the Borrower
pursuant to this Section 10.5 shall be submitted to the Treasurer (Telephone No.
(405) 848-8000) (Telecopy No. (405) 879-9587), at the address of the Borrower
set forth in Section 10.2, or to such other Person or address as may be
hereafter designated by the Borrower in a written notice to the Administrative
Agent. The agreements in this Section 10.5 shall survive repayment of the
Revolving Loans and all other amounts payable hereunder.
10.6. Successors and Assigns; Participations and Assignments. (a) This
Agreement shall be binding upon and inure to the benefit of the Company, the
Borrower, the Lenders, the Administrative Agent, all future holders of the
Revolving Loans and their respective successors and assigns, except that the
Borrower may not assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of each Lender.
(b) Any Lender other than any Conduit Lender may, without the
consent of the Borrower, in accordance with applicable law, at any time sell to
one or more banks, financial institutions or other entities (each, a
"Participant") participating interests in any Revolving Loan owing to such
Lender, any Revolving Commitment of such Lender or any other interest of such
Lender hereunder and under the other Loan Documents. In the event of any such
sale by a Lender of a participating interest to a Participant, such Lender's
obligations under this Agreement to the other parties to this Agreement shall
remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Revolving
Loan for all purposes under this Agreement and the other Loan Documents, and the
Borrower and the Administrative Agent shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and obligations under
this Agreement and the other Loan Documents. In no event shall any Participant
under any such participation have any right to approve any amendment or waiver
of any provision of any Loan Document, or any consent to any departure by any
Loan Party therefrom, except to the extent that such amendment, waiver or
consent would reduce the principal of, or interest on, the Revolving Loans or
any fees payable hereunder, or postpone the date of the final maturity of the
Revolving Loans, in each case to the extent subject to such participation. The
Borrower agrees that if amounts outstanding under this Agreement and the
Revolving Loans are due or unpaid, or shall have been declared or shall have
become due and payable upon the occurrence of an Event of Default, each
Participant shall, to the maximum extent permitted by applicable law, be deemed
to have the right of setoff in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement, provided that, in purchasing such participating interest, such
Participant shall be deemed to have agreed to share with the Lenders the
proceeds thereof as provided in Section 10.7(a) as fully as if it were a Lender
hereunder. The Borrower also agrees that each Participant shall be entitled to
the benefits of Sections 3.9, 3.10 and 3.11 with respect to its participation in
the Revolving Commitments and the Revolving Loans outstanding from time to time
as if it was a Lender; provided that, in the case of Section 3.10, such
Participant shall have complied with the requirements of said Section and
provided, further, that no Participant shall be entitled to receive any greater
amount pursuant to any such Section than the transferor Lender would have been
entitled to receive in respect of the amount of the participation transferred by
such transferor Lender to such Participant had no such transfer occurred.
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(c) Any Lender other than any Conduit Lender (an "Assignor")
may, in accordance with applicable law, at any time and from time to time assign
to any Lender, or any Lender Affiliate or any Approved Fund or, with the consent
of the Borrower, the Issuing Lender and the Administrative Agent (which, in each
case, shall not be unreasonably withheld or delayed), to an additional bank,
financial institution or other entity (an "Assignee") all or any part of its
rights and obligations under this Agreement and the other Loan Documents
pursuant to an Assignment and Acceptance, executed by such Assignee, such
Assignor and any other Person whose consent is required pursuant to this
paragraph, and delivered to the Administrative Agent (with a copy to the
Syndication Agent and in the case of an assignment hereunder that does not
require the consent of the Borrower, the Borrower) for its acceptance and
recording in the Register; provided that unless otherwise agreed by the
Borrower, the Issuing Lender and the Administrative Agent (x) no such assignment
to an Assignee (other than any Lender or any Lender Affiliate) shall be in an
aggregate principal amount of less than $1,000,000 (except in the case of an
assignment of all of a Lender's interests under this Agreement) and (y) after
giving effect to such assignment the Assignor's Revolving Commitments shall be
not less than $1,000,000 (except in the case of an assignment of all of a
Lender's interests under this Agreement). For purposes of the proviso contained
in the preceding sentence, the amount described therein shall be aggregated in
respect of each Lender and its Lender Affiliates, if any. Upon such execution,
delivery, acceptance and recording, from and after the effective date determined
pursuant to such Assignment and Acceptance, (x) the Assignee thereunder shall be
a party hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder with a Revolving
Commitment and/or Revolving Loans as set forth therein, and (y) the Assignor
thereunder shall, to the extent provided in such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all of an Assignor's rights and obligations
under this Agreement, such Assignor shall cease to be a party hereto).
Notwithstanding any provision of this Section 10.6, the consent of the Borrower
shall not be required for any assignment that occurs when an Event of Default
pursuant to Section 8(f) (with respect to the Borrower) shall have occurred and
be continuing. Notwithstanding the foregoing, any Conduit Lender may assign at
any time to its designating Lender hereunder without the consent of the Borrower
or the Administrative Agent any or all of the Revolving Loans it may have funded
hereunder and pursuant to its designation agreement and without regard to the
limitations set forth in the first sentence of this Section 10.6(c).
(d) The Administrative Agent shall, on behalf of the Borrower,
maintain at its address referred to in Section 10.2 a copy of each Assignment
and Acceptance delivered to it and a register (the "Register") for the
recordation of the names and addresses of the Lenders and the Revolving
Commitment of, and the principal amount of the Revolving Loans owing to, each
Lender from time to time. The entries in the Register shall be conclusive, in
the absence of manifest error, and the Borrower, each other Loan Party, the
Administrative Agent and the Lenders shall treat each Person whose name is
recorded in the Register as the owner of the Revolving Loans and any Notes
evidencing the Revolving Loans recorded therein for all purposes of this
Agreement. Any assignment of any Revolving Loan, whether or not evidenced by a
Note, shall be effective only upon appropriate entries with respect thereto
being made in the Register (and each Note shall expressly so provide). Any
assignment or transfer of all or part of a Revolving Loan evidenced by a Note
shall be registered on the Register only upon surrender for registration of
assignment or transfer of the Note evidencing such Revolving Loan,
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accompanied by a duly executed Assignment and Acceptance, and thereupon one or
more new Notes shall be issued to the designated Assignee.
(e) Upon its receipt of an Assignment and Acceptance executed
by an Assignor, an Assignee and any other Person whose consent is required by
Section 10.6(c), the Administrative Agent shall (i) promptly accept such
Assignment and Acceptance and (ii) record the information contained therein in
the Register on the effective date determined pursuant thereto.
(f) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this Section 10.6 concerning assignments
relate only to absolute assignments and that such provisions do not prohibit
assignments creating security interests, including any pledge or assignment by a
Lender to any Federal Reserve Bank in accordance with applicable law.
(g) The Borrower, upon written notice from a Lender, agrees to
issue Notes to any Lender requiring Notes to facilitate transactions of the type
described in paragraph (f) above.
(h) Each of the Company, the Borrower, each Lender and the
Administrative Agent hereby confirms that it will not institute against a
Conduit Lender or join any other Person in instituting against a Conduit Lender
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding under any state bankruptcy or similar law, for one year and one day
after the payment in full of the latest maturing commercial paper note issued by
such Conduit Lender; provided, however, that each Lender designating any Conduit
Lender hereby agrees to indemnify, save and hold harmless each other party
hereto for any loss, cost, damage or expense arising out of its inability to
institute such a proceeding against such Conduit Lender during such period of
forbearance.
10.7. Adjustments; Set-off. (a) Except to the extent that this
Agreement expressly provides for payments to be allocated to a particular Lender
or to the Lenders, if any Lender (a "Benefited Lender") shall receive any
payment of all or part of the Obligations owing to it, or receive any collateral
in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant
to events or proceedings of the nature referred to in Section 8(f), or
otherwise), in a greater proportion than any such payment to or collateral
received by any other Lender, if any, in respect of the Obligations owing to
such other Lender, such Benefited Lender shall purchase for cash from the other
Lenders a participating interest in such portion of the Obligations owing to
each such other Lender, or shall provide such other Lenders with the benefits of
any such collateral, as shall be necessary to cause such Benefited Lender to
share the excess payment or benefits of such collateral ratably with each of the
Lenders; provided, however, that if all or any portion of such excess payment or
benefits is thereafter recovered from such Benefited Lender, such purchase shall
be rescinded, and the purchase price and benefits returned, to the extent of
such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, without prior notice to the
Company or the Borrower, any such notice being expressly waived by the Company
and the Borrower to the extent permitted by applicable law, upon any amount
becoming due and payable by the Company or the Borrower hereunder (whether at
the stated maturity, by acceleration or otherwise), to set off and
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appropriate and apply against such amount any and all deposits (general or
special, time or demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Lender or any branch or agency thereof to or for the credit or the
account of the Company or the Borrower, as the case may be. Each Lender agrees
promptly to notify the Borrower and the Administrative Agent after any such
setoff and application made by such Lender, provided that the failure to give
such notice shall not affect the validity of such setoff and application.
10.8. Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery of an executed signature page of this Agreement by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof. A set of the copies of this Agreement signed by all the
parties shall be lodged with the Borrower and the Administrative Agent.
10.9. Severability. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.10. Integration. This Agreement and the other Loan Documents
represent the entire agreement of the Company, the Borrower, the Agents and the
Lenders with respect to the subject matter hereof and thereof, and there are no
promises, undertakings, representations or warranties by any Agent or any Lender
relative to subject matter hereof not expressly set forth or referred to herein
or in the other Loan Documents.
10.11. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.12. Submission To Jurisdiction; Waivers. Each of the Company and the
Borrower hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any judgment
in respect thereof, to the non-exclusive general jurisdiction of the
courts of the State of New York, the courts of the United States for
the Southern District of New York, and appellate courts from any
thereof;
(b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court or
that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;
81
76
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to the Company or the Borrower, as the case may be at its
address set forth in Section 10.2 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall
limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this Section any special, exemplary, punitive or
consequential damages.
10.13. Acknowledgments. Each of the Company and the Borrower hereby
acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents;
(b) no Agent or Lender has any fiduciary relationship with or
duty to the Company or the Borrower arising out of or in connection
with this Agreement or any of the other Loan Documents, and the
relationship between the Agents and Lenders, on one hand, and the
Company and the Borrower, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Lenders or among the Company, the
Borrower and the Lenders.
10.14. Releases of Guarantees and Liens; Designation of Subsidiaries.
(a) Notwithstanding anything to the contrary contained herein or in any other
Loan Document, the Administrative Agent is hereby irrevocably authorized by each
Lender (without requirement of notice to or consent of any Lender except as
expressly required by Section 10.1) to take any action requested by the Borrower
having the effect of releasing any Collateral or guarantee obligations (i) to
the extent necessary to permit consummation of any transaction not prohibited by
any Loan Document or that has been consented to in accordance with Section 10.1
or (ii) at such time as the Revolving Loans, the Reimbursement Obligations and
the other obligations under the Loan Documents (other than obligations under or
in respect of Hedge Agreements) shall have been paid in full, the Revolving
Commitments have been terminated and no Letters of Credit shall be outstanding,
the Collateral shall be released from the Liens created by the Security
Documents, and the Security Documents and all obligations (other than those
expressly stated to survive such termination) of the Administrative Agent and
each Loan Party under the Security Documents shall terminate, all without
delivery of any instrument or performance of any act by any Person.
(b) Notwithstanding anything to the contrary contained herein
or in any other Loan Document, in the event that, after the Closing Date, the
Borrower shall designate a
82
77
Subsidiary Guarantor or any newly created or acquired Subsidiary as an
"Unrestricted Subsidiary" under the 8-1/8% Note Indenture, and so long as the
Unrestricted Subsidiary Investment resulting from such designation is permitted
under Section 7.7(g) (and a Responsible Officer has certified in writing thereto
to the Administrative Agent), the Administrative Agent is hereby irrevocably
authorized by each Lender (without requirement of notice to or consent of any
Lender except as expressly required by Section 10.1) to take any action
requested by the Borrower having the effect of releasing any guarantee
obligations of any such Guarantor Subsidiary or newly created or acquired
Subsidiary that has been so designated.
10.15. Confidentiality. Each Agent and each Lender agrees to keep
confidential all non-public information provided to it by any Loan Party
pursuant to this Agreement that is designated by such Loan Party as
confidential; provided that nothing herein shall prevent any Agent or any Lender
from disclosing any such information (a) to any Agent, any other Lender or any
Lender Affiliate, (b) subject to an agreement to comply with the provisions of
this Section, to any actual or prospective Transferee or any direct or indirect
counterparty to any Hedge Agreement (or any professional advisor to such
counterparty), (c) to its employees, directors, agents, attorneys, accountants
and other professional advisors or those of any of its affiliates, (d) upon the
request or demand of any Governmental Authority, (e) in response to any order of
any court or other Governmental Authority or as may otherwise be required
pursuant to any Requirement of Law, (f) if requested or required to do so in
connection with any litigation or similar proceeding, (g) that has been publicly
disclosed, (h) to the National Association of Insurance Commissioners or any
similar organization or any nationally recognized rating agency that requires
access to information about a Lender's investment portfolio in connection with
ratings issued with respect to such Lender, or (i) in connection with the
exercise of any remedy hereunder or under any other Loan Document.
10.16. WAIVERS OF JURY TRIAL. THE COMPANY, THE BORROWER, THE AGENTS AND
THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
AND FOR ANY COUNTERCLAIM THEREIN.
10.17. Delivery of Addenda. Each initial Lender shall become a party to
this Agreement by delivering to the Administrative Agent an Addendum duly
executed by such Lender.
10.18. Special Provisions. (a) From and after the Closing Date, (i)
each Exiting Lender shall cease to be a party to this Agreement, (ii) no Exiting
Lender shall have any obligations or liabilities under this Agreement with
respect to the period from and after the Closing Date and, without limiting the
foregoing, no Exiting Lender shall have any Revolving Commitment under this
Agreement or any participation on any Letter of Credit outstanding hereunder and
(iii) no Exiting Lender shall have any rights under the Existing Credit
Agreement, this Agreement or any other Loan Document (other than rights under
the Existing Credit Agreement expressly stated to survive the termination of the
Existing Credit Agreement and the repayment of amounts outstanding thereunder).
83
78
(b) The Lenders (which are Lenders under the Existing Credit
Agreement) hereby waive any requirements for notice of prepayment, minimum
amounts of prepayments of Revolving Credit Loans (as defined in the Existing
Credit Agreement), ratable reductions of the commitments of the Lenders under
the Existing Credit Agreement and ratable payments on account of the principal
or interest of any Loan (as defined in the Existing Credit Agreement) under the
Existing Credit Agreement to the extent such prepayment, reductions or payments
are required pursuant to subsection 5.1(n).
(c) The Lenders hereby authorize the Administrative Agent and
the Borrower to request borrowings from the Lenders, to make prepayments of
Loans (as defined in the Existing Credit Agreement) and to reduce commitments
under the Existing Credit Agreement among the Revolving Lenders (as defined in
the Existing Credit Agreement) in order to ensure that, upon the effectiveness
of this Agreement, the Revolving Loans of the Lenders shall be outstanding on a
ratable basis in accordance with their respective Revolving Percentages and that
the Revolving Commitments shall be as set forth on Schedule 1.1A hereto and no
such borrowing, prepayment or reduction shall violate any provisions of the
Existing Credit Agreement or this Agreement. The Lenders hereby confirm that,
from and after the Closing Date, all participations of the Lenders in respect of
Letters of Credit outstanding hereunder pursuant to subsection 2.8(a) shall be
based upon the Revolving Percentages of the Lenders (after giving effect to this
Agreement).
(d) The Borrower hereby terminates, effective as of the
Closing Date, in full the commitments under the Existing Credit Agreement of the
Exiting Lenders.
10.19. Limitation on Interest. The Lenders, the Loan Parties and any
other parties to the Loan Documents intend to contract in strict compliance with
applicable usury law from time to time in effect. In furtherance thereof such
Persons stipulate and agree that none of the terms and provisions contained in
the Loan Documents shall ever be construed to create a contract to pay, for the
use, forbearance or detention of money, interest in excess of the maximum amount
of interest permitted to be charged by applicable law from time to time in
effect. No Loan Party nor any present or future guarantors, endorsers, or other
Persons hereafter becoming liable for payment of any Obligation shall ever be
liable for unearned interest thereon or shall ever be required to pay interest
thereon in excess of the maximum amount that may be lawfully charged under
applicable law from time to time in effect, and the provisions of this section
shall control over all other provisions of the Loan Documents which may be in
conflict or apparent conflict herewith. The Lenders expressly disavow any
intention to charge or collect excessive unearned interest or finance charges in
the event the maturity of any Obligation is accelerated. If (a) the maturity of
any Obligation is accelerated for any reason, (b) any Obligation is prepaid and
as a result any amounts held to constitute interest are determined to be in
excess of the legal maximum, or (c) any Lender or any other holder of any or all
of the Obligations shall otherwise collect moneys which are determined to
constitute interest which would otherwise increase the interest on any or all of
the Obligations to an amount in excess of that permitted to be charged by
applicable law then in effect, then all sums determined to constitute interest
in excess of such legal limit shall, without penalty, be promptly applied to
reduce the then outstanding principal of the related Obligations or, at such
Lender's or holder's option, promptly returned to the Borrower or the other
payor thereof upon such determination. In determining whether or not the
interest paid or payable, under any specific circumstances, exceeds the maximum
amount
84
79
permitted under applicable law, the Lenders and the Loan Parties (and any other
payors thereof) shall to the greatest extent permitted under applicable law, (i)
characterize any non-principal payment as an expense, fee or premium rather than
as interest, (ii) exclude voluntary prepayments and the effects thereof, and
(iii) amortize, prorate, allocate, and spread the total amount of interest
throughout the entire contemplated term of the instruments evidencing the
Obligations in accordance with the amounts outstanding from time to time
thereunder and the maximum legal rate of interest from time to time in effect
under applicable law in order to lawfully charge the maximum amount of interest
permitted under applicable law.
85
80
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
CHESAPEAKE ENERGY CORPORATION
By: /s/ Martha A. Burger
----------------------------------------
Name: Martha A. Burger
Title: Treasurer
CHESAPEAKE EXPLORATION LIMITED PARTNERSHIP
By: Chesapeake Operating, Inc., its general
partner
By: /s/ Martha A. Burger
----------------------------------------
Name: Martha A. Burger
Title: Treasurer
86
BEAR, STEARNS & CO. INC., as Sole Lead
Arranger and Sole Bookrunner
By: /s/ KEITH C. BARNISH
------------------------------------------
Name: Keith C. Barnish
Title: Senior Managing Director
BEAR STEARNS CORPORATE LENDING INC.,
as Syndication Agent and as a Lender
By: /s/ KEITH C. BARNISH
------------------------------------------
Name: Keith C. Barnish
Title: Senior Managing Director
87
UNION BANK OF CALIFORNIA, N.A., as
Administrative Agent, Collateral Agent
and as a Lender
By: /s/ RANDALL OSTERBERG
------------------------------------------
Name: Randall Osterberg
Title: Senior Vice President
88
Annex A
PRICING GRID FOR REVOLVING LOANS
AND COMMITMENT FEES
(IN BASIS POINTS)
<Table>
<Caption>
Utilization Applicable Margin for Applicable Margin for
Pricing Level Percentage Eurodollar Loans Base Rate Loans Commitment Fee Rate
------------- ----------- --------------------- --------------------- -------------------
I > or = to 75.0 225.0 125.0 50.0
II > or = to 50.0 200.0 100.0 50.0
III > or = to 25.0 175.0 75.0 37.5
IV <25.0 150.0 50.0 30.0
</Table>
The Applicable Margin for Revolving Loans and the Commitment Fee Rate shall be
adjusted, on and after the first Adjustment Date (as defined below) occurring
after the date which is six months after the Closing Date, based on changes from
time to time in the percentage which the Total Revolving Extensions of Credit
then constitute of the Borrowing Base then in effect (the "Utilization
Percentage"), with such adjustments to become effective on such date as the
changes in the Utilization Percentage shall occur (the "Adjustment Date"). On
each Adjustment Date, the Applicable Margin for Revolving Loans and the
Commitment Fee Rate shall be adjusted to be equal to the Applicable Margins and
Commitment Fee Rate opposite the Pricing Level determined to exist on such
Adjustment Date. The Administrative Agent shall give notice promptly to the
Borrower and the Lenders of changes in the Pricing Level.
In the event that (i) either Rating Agency has in effect a rating for the
Facility of B1/B+ or lower, as the case may be, then each of the Applicable
Margins for Eurodollar Loans and Base Rate Loans shall be increased by 25.0
basis points for all Pricing Levels; and (ii) either Rating Agency has in effect
a rating for the Facility of Baa3/BBB- or higher, as the case may be, then each
of the Applicable Margins for Eurodollar Loans and Base Rate Loans shall be
decreased by 25.0 basis points for all Pricing Levels. In the event that there
exists at any time a split rating between the ratings of either Rating Agency
for the Facility so that one Rating Agency has a rating in effect for the
Facility described in clause (i) of the previous sentence and the other Rating
Agency has a rating in effect for the Facility described in clause (ii) of the
previous sentence, then the Applicable Margins shall be determined in accordance
with the lower rating then in effect. If the ratings established by either of
the Rating Agencies shall be changed (other than as a result of a change in the
rating system of either Rating Agency), such change shall be effective as of the
date on which it is first announced by the applicable Rating Agency. Each change
in the Applicable Margin pursuant to this paragraph shall apply during the
period commencing on the effective date of such change and ending on the date
immediately preceding the effective date of the next such change.
As used herein, the following rules shall govern the
determination of Pricing Levels on each Adjustment Date:
89
"Pricing Level I" shall exist on an Adjustment Date if the
Utilization Percentage on such date is greater than or equal to 75%.
"Pricing Level II" shall exist on an Adjustment Date if the
Utilization Percentage on such date is greater than or equal to 50%.
"Pricing Level III" shall exist on an Adjustment Date if the
Utilization Percentage on such date is greater than or equal to 25%.
"Pricing Level IV" shall exist on an Adjustment Date if the
Utilization Percentage on such date is less than 25%.
90
SCHEDULE 1.1A
COMMITMENTS
<Table>
<Caption>
NAME OF LENDER REVOLVING COMMITMENT
Bank of Oklahoma, N.A. $10,000,000
Bank of Scotland 17,500,000
Bear Stearns Corporate Lending Inc. 25,000,000
BNP Paribas 22,500,000
Comerica Bank-Texas 17,500,000
Compass Bank 10,000,000
Credit Agricole Indosuez 17,500,000
Natexis Banque BFCE 7,500,000
National Bank of Canada, New York Branch 10,000,000
RZB Finance LLC 10,000,000
Sumitomo Mitsui Banking Corporation 5,000,000
Toronto Dominion (Texas), Inc. 22,500,000
Union Bank of California, N.A. 25,000,000
U.S. Bank National Association 7,500,000
Washington Mutual Bank, FA 17,500,000
-----------
TOTAL REVOLVING COMMITMENT $225,000,000
</Table>
91
SCHEDULE 1.1B
Mortgaged Property
92
CHESAPEAKE ENERGY CORP
1ST QTR RESERVES W/BANK PRICING CASE
AS OF 4/1/2001
<Table>
<Caption>
DISC NET
PROP DATAROOM INCOME
LEASE NAME NUM AREA COUNTY ST TWN RANGE SEC WI NRI M$------
=========================================================================================================================
ATOKA #1-34 110653 ANADARKO DEEP BECKHAM OK 11N 25W 34 0.000000 0.000000 0.0
BAKER #1-28 114270 ANADARKO DEEP BECKHAM OK 11N 25W 28 0.067368 0.058920 638.1
ELK CITY HSC UNIT 113099 ANADARKO DEEP BECKHAM OK 10N 21W 13 0.047425 0.047305 686.4
ALCOTT #1-4 110672 ANADARKO DEEP CADDO OK 5N 9W 4 0.368842 0.306050 6513.1
BIG BITSCHE #2-4 112494 ANADARKO DEEP CADDO OK 5N 9W 4 0.019650 0.013281 1.1
BODE FRANCES #1-24 114347 ANADARKO DEEP CADDO OK 6N 11W 24 0.162254 0.128617 28.8
BRENT #1 114343 ANADARKO DEEP CADDO OK 5N 11W 24 0.561448 0.410025 1207.8
BRUNA #20-9 115221 ANADARKO DEEP CADDO OK 6N 10W 20 1.000000 0.722559 197.7
CYRUS, CH 114745 ANADARKO DEEP CADDO OK 6N 10W 20 1.000000 0.875000 352.7
DAVE #1-1 191818 ANADARKO DEEP CADDO OK 5N 9W 1 0.376147 0.271096 11.5
DELLA #1-9 (PDP) 110534 ANADARKO DEEP CADDO OK 5N 9W 9 0.634375 0.528680 4528.4
DELLA #2-9 (PDP) 112182 ANADARKO DEEP CADDO OK 5N 9W 9 0.604375 0.503387 4774.3
EMMONS, LELA I #1-1 114741 ANADARKO DEEP CADDO OK 5N 9W 1 0.228634 0.201291 1585.7
ERWIN #1-5 112189 ANADARKO DEEP CADDO OK 5N 9W 5 0.363653 0.310003 1056.0
GISH #1 115195 ANADARKO DEEP CADDO OK 6N 10W 19 1.000000 0.875000 214.8
GISH #2 114746 ANADARKO DEEP CADDO OK 6N 10W 19 1.000000 0.875000 243.6
MCKENNA, JP UNIT B (ORRI) 117568 ANADARKO DEEP CADDO OK 5N 9W 4 0.000000 0.000000 0.0
NOVOTNY JOSIE 114748 ANADARKO DEEP CADDO OK 6N 11W 24 0.807500 0.695159 480.7
NOVOTNY JOSIE A 114749 ANADARKO DEEP CADDO OK 6N 11W 24 0.884400 0.763557 76.3
RIGNEY, JAMES A (S/2) 117585 ANADARKO DEEP CADDO OK 5N 9W 12 0.250000 0.218750 28.3
ROBERTSON #2-10 112084 ANADARKO DEEP CADDO OK 5N 9W 10 0.355111 0.310689 3026.6
ROLAND #19-3 115222 ANADARKO DEEP CADDO OK 6N 10W 19 1.000000 0.875000 1689.6
SCHOOL LAND A 117587 ANADARKO DEEP CADDO OK 5N 9W 13 0.250000 0.216796 248.6
SMITH, ROSA 114750 ANADARKO DEEP CADDO OK 6N 10W 20 1.000000 0.722559 723.8
THOMPSON #19-7 115225 ANADARKO DEEP CADDO OK 6N 10W 19 0.737500 0.568769 157.8
THORNE UNIT #10-1,2 (ORRI) 117658 ANADARKO DEEP CADDO OK 5N 9W 10 0.000000 0.000000 0.0
WAGNER, HC UNIT A 117589 ANADARKO DEEP CADDO OK 5N 9W 12 0.250000 0.218750 16.1
WAGNER, HC UNIT B 117590 ANADARKO DEEP CADDO OK 5N 9W 12 0.000000 0.000000 0.0
YOUNG, WS (COMMINGLE) 114752 ANADARKO DEEP CADDO OK 6N 10W 19 1.000000 0.875000 2099.7
COTTONWOOD CREEK ABCKBN UNIT 112240 ANADARKO DEEP CARTER OK 4S 1W 32 0.300000 0.247077 5902.0
AGAN, ML 1 113070 ANADARKO DEEP CUSTER OK 12N 16W 23 0.250000 0.237342 30.8
CROSSWHITE 1 113098 ANADARKO DEEP CUSTER OK 12N 16W 23 0.250000 0.237787 196.8
DEPUTY #1-21 113119 ANADARKO DEEP CUSTER OK 12N 16W 21 0.406250 0.353906 498.1
DEPUTY #2-21 113870 ANADARKO DEEP CUSTER OK 12N 16W 21 0.417500 0.363397 1715.4
DEPUTY #3-21 110057 ANADARKO DEEP CUSTER OK 12N 16W 21 0.453214 0.394748 170.0
DEPUTY #4-21 112287 ANADARKO DEEP CUSTER OK 12N 16W 21 0.563750 0.485564 2964.7
EDDIE #1-31 153099 ANADARKO DEEP CUSTER OK 13N 16W 31 1.000000 0.775618 710.3
MEACHAM #1-23 113035 ANADARKO DEEP CUSTER OK 12N 16W 23 0.250000 0.230389 408.8
MEACHAM #1-24 112773 ANADARKO DEEP CUSTER OK 12N 16W 24 0.160017 0.137592 244.8
PENNER #1-22 113113 ANADARKO DEEP CUSTER OK 12N 16W 22 0.500000 0.416016 369.1
SIMMONS 3-21 112915 ANADARKO DEEP CUSTER OK 12N 19W 21 0.196839 0.149745 190.8
SIMMONS 4-21 113022 ANADARKO DEEP CUSTER OK 12N 19W 21 0.197533 0.150265 360.9
</Table>
Page 1 of 28
93
CHESAPEAKE ENERGY CORP
1ST QTR RESERVES W/BANK PRICING CASE
AS OF 4/1/2001
<Table>
<Caption>
DISC NET
PROP DATAROOM INCOME
LEASE NAME NUM AREA COUNTY ST TWN RANGE SEC WI NRI M$------
============================================================================================================================
SIMMONS 5-21 110062 ANADARKO DEEP CUSTER OK 12N 19W 21 0.348238 0.264115 912.2
SIMMONS 6-21 110670 ANADARKO DEEP CUSTER OK 12N 19W 21 0.000000 0.000000 0.0
SNIDER A-1 113114 ANADARKO DEEP CUSTER OK 12N 16W 22 0.500000 0.416016 1342.9
TEETERS #1-12 119544 ANADARKO DEEP CUSTER OK 15N 14W 12 0.540374 0.405961 228.5
VALENTINE #1-29 119546 ANADARKO DEEP CUSTER OK 15N 17W 29 0.250000 0.188242 121.8
WEIGAND #1-31 111147 ANADARKO DEEP CUSTER OK 13N 16W 31 0.452534 0.358881 207.3
WILLIAMS 3-31 110249 ANADARKO DEEP CUSTER OK 13N 16W 31 0.422278 0.332570 559.2
NIGHT #1-16 119908 ANADARKO DEEP GRADY OK 5N 8W 16 0.659479 0.490682 14005.2
SEIBOLD A #1-16 191969 ANADARKO DEEP GRADY OK 5N 8W 16 0.965951 0.755825 61.3
SHELL FEE #1-25 390000 ANADARKO DEEP HEMPHILL TX 25 1.000000 0.690000 1846.8
JACOBS 1-14 114008 ANADARKO DEEP ROGER MILLS OK 15N 22W 14 0.000000 0.000805 0.6
NAOMI #1-14 113990 ANADARKO DEEP ROGER MILLS OK 15N 22W 14 0.024099 0.015788 22.9
NAOMI #2-14 114006 ANADARKO DEEP ROGER MILLS OK 15N 22W 14 0.000000 0.000789 1.5
NAOMI #3-14 114007 ANADARKO DEEP ROGER MILLS OK 15N 22W 14 0.019962 0.015896 7.8
YOXSIMER TRUST 1-14 113998 ANADARKO DEEP ROGER MILLS OK 15N 22W 14 0.018846 0.014934 8.6
ALICE #1-31 110490 ANADARKO DEEP WASHITA OK 9N 19W 31 0.124926 0.096193 400.1
ALICE #2-31 112107 ANADARKO DEEP WASHITA OK 9N 19W 31 0.124926 0.096193 894.7
ANN #3-31 112133 ANADARKO DEEP WASHITA OK 9N 19W 31 0.124926 0.096193 661.4
BANKS-HUDDLE #1-33 111046 ANADARKO DEEP WASHITA OK 9N 19W 33 0.266078 0.208191 1782.4
CHENAULT 6 #1 113073 ANADARKO DEEP WASHITA OK 9N 19W 6 0.015549 0.015578 54.2
CLUCK 3-32 112277 ANADARKO DEEP WASHITA OK 9N 19W 32 0.293400 0.228748 3615.1
GUTHRIE 1-34 112298 ANADARKO DEEP WASHITA OK 11N 19W 34 0.163906 0.133174 1050.2
HAGGARD #5-20 113103 ANADARKO DEEP WASHITA OK 10N 20W 20 0.044922 0.044922 357.0
HAGGARD 20 #3 113100 ANADARKO DEEP WASHITA OK 10N 20W 20 0.013672 0.021484 274.8
HAGGARD 20 #4 113102 ANADARKO DEEP WASHITA OK 10N 20W 20 0.044922 0.044922 13.4
HINKLE 28 #1 113104 ANADARKO DEEP WASHITA OK 10N 20W 28 0.096371 0.098169 76.1
MELVIN #1-28 113109 ANADARKO DEEP WASHITA OK 10N 20W 28 0.037151 0.047002 246.0
STROBEL #2-32 111074 ANADARKO DEEP WASHITA OK 9N 19W 32 0.323400 0.252137 3363.5
STROBEL #32-1 110272 ANADARKO DEEP WASHITA OK 9N 19W 32 0.323400 0.252137 2256.6
STROBEL #4-32 153122 ANADARKO DEEP WASHITA OK 9N 19W 32 0.283400 0.220951 37.5
ANADARKO DEEP 78759.6
BASE #1-31 113071 ANADARKO SHELF BLAINE OK 15N 1W 31 0.678503 0.604604 325.9
BERNHARDT #1-34 110789 ANADARKO SHELF BLAINE OK 17N 11W 34 0.000000 0.000000 0.0
BERRY #1-32 ORRI 110347 ANADARKO SHELF BLAINE OK 20N 11W 32 0.000000 0.062500 2.5
HAIGLER GAS UNIT 28-2 115831 ANADARKO SHELF BLAINE OK 18N 12W 28 0.737813 0.618964 3093.9
LOOKABAUGH #2-31 113107 ANADARKO SHELF BLAINE OK 15N 1W 31 0.678503 0.604604 97.7
LOOKABAUGH A-1 113108 ANADARKO SHELF BLAINE OK 15N 10W 31 0.678503 0.604604 42.1
MAIB #1-6 112218 ANADARKO SHELF BLAINE OK 13N 12W 6 0.320000 0.240000 1114.3
MUNCY UNIT 1 113110 ANADARKO SHELF BLAINE OK 14N 11W 13 0.857700 0.738556 502.3
MUNCY UNIT 2 113111 ANADARKO SHELF BLAINE OK 14N 11W 13 0.859091 0.739773 4.6
OLD WOMAN UNIT 1 113112 ANADARKO SHELF BLAINE OK 14N 11W 1 0.637948 0.517217 205.9
PATTERSON D 16-3 112509 ANADARKO SHELF BLAINE OK 17N 11W 16 0.980219 0.851792 26.5
</Table>
Page 2 of 28
94
CHESAPEAKE ENERGY CORP
1ST QTR RESERVES W/BANK PRICING CASE
AS OF 4/1/2001
<Table>
<Caption>
DISC NET
PROP DATAROOM INCOME
LEASE NAME NUM AREA COUNTY ST TWN RANGE SEC WI NRI M$------
==========================================================================================================================
RICHARDSON UNIT #34-1 117640 ANADARKO SHELF BLAINE OK 17N 11W 34 0.349610 0.298947 73.2
SPOTTED CORN 1-19 111033 ANADARKO SHELF BLAINE OK 18N 12W 19 0.250046 0.203163 1264.1
STRACK 1-34 110292 ANADARKO SHELF BLAINE OK 17N 11W 34 0.487305 0.415950 4.9
TERNEUS #1-27 110368 ANADARKO SHELF BLAINE OK 14N 12W 27 1.000000 0.803359 2037.1
THUNDER #1-13 111011 ANADARKO SHELF BLAINE OK 14N 11W 13 0.885287 0.762330 5168.5
WIGGINGTON 1-31 113118 ANADARKO SHELF BLAINE OK 15N 10W 31 0.658503 0.587682 906.4
WILEY GAS UNIT 2-33 112552 ANADARKO SHELF BLAINE OK 18N 12W 33 0.980000 0.857500 165.4
HAMBY #2-4 110197 ANADARKO SHELF CANADIAN OK 11N 9W 4 0.994180 0.754760 1947.1
IDA MCEVOY #5-21 110755 ANADARKO SHELF CANADIAN OK 13N 9W 21 0.960000 0.798042 711.0
REGINA #1-33 110955 ANADARKO SHELF CANADIAN OK 13N 9W 33 0.970000 0.833984 255.1
BARNES UNIT 115054 ANADARKO SHELF DEWEY OK 18N 19W 33 0.423637 0.370682 45.9
BERRYMAN B 115015 ANADARKO SHELF ELLIS OK 17N 23W 11 0.934523 0.817708 277.6
BERRYMAN B 11-16 115214 ANADARKO SHELF ELLIS OK 17N 23W 11 0.989305 0.865642 286.4
BERRYMAN B 32-09 115211 ANADARKO SHELF ELLIS OK 17N 23W 32 0.989229 0.862352 186.9
BERRYMAN D 17-13 CG 115213 ANADARKO SHELF ELLIS OK 17N 23W 17 0.781250 0.601563 264.2
BERRYMAN E 13-2 115042 ANADARKO SHELF ELLIS OK 17N 23W 13 0.000000 0.069047 30.5
BERRYMAN F 115017 ANADARKO SHELF ELLIS OK 17N 23W 16 0.581250 0.508594 244.8
BERRYMAN 3-15 115040 ANADARKO SHELF ELLIS OK 17N 23W 15 0.000000 0.044825 14.3
BERRYMAN 5-15 116919 ANADARKO SHELF ELLIS OK 17N 23W 15 0.000000 0.044825 24.7
BERRYMAN JAMES UNIT 115013 ANADARKO SHELF ELLIS OK 17N 23W 15 0.817784 0.679896 66.2
BERRYMAN JAMES UNIT E 115016 ANADARKO SHELF ELLIS OK 17N 23W 13 0.725740 0.607679 19.5
BERRYMAN JEROME B 115021 ANADARKO SHELF ELLIS OK 17N 23W 32 0.577111 0.504972 139.2
BERRYMAN JEROME D-1 115022 ANADARKO SHELF ELLIS OK 17N 23W 17 0.342812 0.275338 132.5
BERRYMAN-JOHNSTON 1-19 110816 ANADARKO SHELF ELLIS OK 17N 23W 19 0.757521 0.635261 536.6
BRYANT 1-3 110931 ANADARKO SHELF ELLIS OK 19N 21W 3 0.045868 0.066127 51.5
COOK JOHN 115170 ANADARKO SHELF ELLIS OK 20N 21W 34 0.194739 0.186706 1.7
DORIS 2-3 111014 ANADARKO SHELF ELLIS OK 22N 21W 3 0.937497 0.766884 886.0
EDGAR 1 115168 ANADARKO SHELF ELLIS OK 19N 25W 2 0.129645 0.132465 48.9
G C 1-2 110965 ANADARKO SHELF ELLIS OK 19N 21W 2 0.731948 0.612381 1644.0
MITCHELL 2-25 115456 ANADARKO SHELF ELLIS OK 17N 21W 25 0.579337 0.490385 103.0
MITCHELL UNIT #1 115026 ANADARKO SHELF ELLIS OK 17N 23W 25 0.402051 0.351795 61.0
MORGAN (MORROW) 115163 ANADARKO SHELF ELLIS OK 19N 21W 3 0.039672 0.060819 182.2
NUTTAL PRICE 115028 ANADARKO SHELF ELLIS OK 17N 22W 29 0.477012 0.410758 201.2
R.C. 1-13 TK 113026 ANADARKO SHELF ELLIS OK 17N 24W 13 0.977598 0.724346 211.0
REEVES, GC #1-2 115164 ANADARKO SHELF ELLIS OK 19N 21W 2 0.434059 0.379801 299.2
RUTHIE 1-22 110888 ANADARKO SHELF ELLIS OK 20N 23W 22 0.765000 0.573750 488.9
SHREWDER 1-22 115470 ANADARKO SHELF ELLIS OK 17N 23W 22 0.856721 0.716212 251.5
STATION 19-1 114206 ANADARKO SHELF ELLIS OK 17N 23W 19 0.554743 0.461361 1185.0
STEGMAIER #2-34 111051 ANADARKO SHELF ELLIS OK 20N 21W 34 0.149427 0.147140 138.0
TOMALENE 115171 ANADARKO SHELF ELLIS OK 19N 21W 3 0.000000 0.026106 7.2
ANN #1 117167 ANADARKO SHELF WOODWARD OK 20N 21W 34 0.037357 0.049079 109.6
STEGMAIER #1-34 117166 ANADARKO SHELF WOODWARD OK 20N 21W 34 0.149427 0.147141 179.9
</Table>
Page 3 of 28
95
CHESAPEAKE ENERGY CORP
1ST QTR RESERVES W/BANK PRICING CASE
AS OF 4/1/2001
<Table>
<Caption>
DISC NET
PROP DATAROOM INCOME
LEASE NAME NUM AREA COUNTY ST TWN RANGE SEC WI NRI M$------
=========================================================================================================================
ANADARKO SHELF 26267.6
ADAMS UNIT C 33-1 116983 ARKOMA LATIMER OK 6N 19E 33 0.484375 0.423535 29.8
ADAMS UNIT C 33-2 116984 ARKOMA LATIMER OK 6N 19E 33 0.533612 0.466617 144.4
ALFRED PARKER #1-27 190109 ARKOMA LATIMER OK 5N 17E 27 0.014043 0.012288 1.5
ALFRED PARKER #2-27L A190111 ARKOMA LATIMER OK 5N 17E 27 0.004213 0.003686 1.2
ALFRED PARKER #2-27U B190111 ARKOMA LATIMER OK 5N 17E 27 0.004213 0.003686 2.4
ALFRED PARKER #3-27 190113 ARKOMA LATIMER OK 5N 17E 27 0.188197 0.141477 124.2
ARKANSAS-KRAFT 25-1 116985 ARKOMA LATIMER OK 6N 19E 25 1.000000 0.812896 33.8
BARNES "A" #1-9 190040 ARKOMA LATIMER OK 4N 20E 9 0.072754 0.062655 449.8
BARNES #2-9 110230 ARKOMA LATIMER OK 4N 20E 9 0.302917 0.229630 438.9
BENGALIA 1-32 173845 ARKOMA LATIMER OK 5N 20E 32 0.964601 0.767065 536.7
BERKLEY HILLS #2-15L A190046 ARKOMA LATIMER OK 4N 20E 10 0.000000 0.000000 0.0
BERKLEY HILLS #2-15U B190046 ARKOMA LATIMER OK 4N 20E 10 0.000000 0.000000 0.0
BLUE MOUNTAIN UNIT 22-1 116989 ARKOMA LATIMER OK 4N 17E 22 0.300000 0.243750 332.7
BOBCAT RIDGE 1-8 171634 ARKOMA LATIMER OK 4N 20E 8 0.415303 0.324243 1055.0
BOBCAT RIDGE UNIT 1-30 116990 ARKOMA LATIMER OK 5N 20E 30 0.738252 0.600299 404.0
BORNE #1-12 190042 ARKOMA LATIMER OK 4N 20E 12 0.004683 0.003943 0.2
CAUDRON #1-26 190100 ARKOMA LATIMER OK 5N 17E 26 0.000000 0.000000 0.0
CAUDRON #2-26 190102 ARKOMA LATIMER OK 5N 17E 26 0.000141 0.000123 0.0
CAUDRON #3-26 190105 ARKOMA LATIMER OK 5N 17E 26 0.744692 0.591309 76.6
CAUDRON #5-26 190107 ARKOMA LATIMER OK 5N 17E 26 0.623909 0.530450 1289.1
CAUDRON 7-26 (LOWER) A190004 ARKOMA LATIMER OK 5N 17E 26 0.276285 0.216794 40.9
CAUDRON 7-26 (UPPER) B190004 ARKOMA LATIMER OK 5N 17E 26 0.276285 0.216794 40.9
CECIL 19-1 116991 ARKOMA LATIMER OK 6N 20E 19 0.867581 0.703863 1737.9
CHRISTINE 1-2 172275 ARKOMA LATIMER OK 4N 20E 2 0.900957 0.704215 2050.1
CINDY UNIT 21-1 116992 ARKOMA LATIMER OK 5N 20E 21 0.984375 0.800781 2678.0
CLEAR CREEK 2-29 173817 ARKOMA LATIMER OK 5N 20E 29 0.781117 0.614721 386.6
CLEAR CREEK UNIT 29-1 112544 ARKOMA LATIMER OK 5N 20E 29 0.000000 0.000000 0.0
CLEAR CREEK UNIT 3-29 111047 ARKOMA LATIMER OK 5N 20E 29 0.946989 0.743157 3355.3
COLEMAN #35-1 190129 ARKOMA LATIMER OK 5N 20E 35 0.476562 0.362324 1626.6
COLLEGE #2-18 190010 ARKOMA LATIMER OK 5N 19E 18 0.000000 0.000000 0.0
COMMISSIONER 1-14 110202 ARKOMA LATIMER OK 5N 19E 14 0.341434 0.278850 2087.2
COX 8-1 116996 ARKOMA LATIMER OK 5N 20E 8 0.203467 0.176080 12.5
DARBY #1-23 190077 ARKOMA LATIMER OK 5N 17E 23 0.008667 0.007584 1.0
DARBY #3-23L A190079 ARKOMA LATIMER OK 5N 17E 23 0.406914 0.336839 132.1
DARBY #3-23U B190079 ARKOMA LATIMER OK 5N 17E 23 0.406914 0.336839 31.8
DARBY #4-23 190081 ARKOMA LATIMER OK 5N 17E 23 0.000000 0.000000 0.0
DARBY #5-23L A190083 ARKOMA LATIMER OK 5N 17E 23 0.406914 0.326665 724.4
DARBY #5-23U B190083 ARKOMA LATIMER OK 5N 17E 23 0.000000 0.000000 0.0
DEAR 8-1 116998 ARKOMA LATIMER OK 5N 20E 8 0.203467 0.176083 249.4
DEVILS HOLLOW #1-13 190044 ARKOMA LATIMER OK 4N 20E 13 0.053594 0.037751 7.6
DIAMOND UNIT 30-2 116999 ARKOMA LATIMER OK 2N 19E 30 0.525947 0.442334 732.6
</Table>
Page 4 of 28
96
CHESAPEAKE ENERGY CORP
1ST QTR RESERVES W/BANK PRICING CASE
AS OF 4/1/2001
<Table>
<Caption>
DISC NET
PROP DATAROOM INCOME
LEASE NAME NUM AREA COUNTY ST TWN RANGE SEC WI NRI M$------
==========================================================================================================================
DIPPING-VAT-1-4 112577 ARKOMA LATIMER OK 4N 20E 4 0.012056 0.008936 12.7
DOLLINS #1-6 190143 ARKOMA LATIMER OK 6N 22E 6 0.200000 0.150625 34.5
DUNAGAN "A" #1-13 190069 ARKOMA LATIMER OK 5N 17E 13 0.003906 0.003418 3.5
DUNAGAN "A" #2-13 190071 ARKOMA LATIMER OK 5N 17E 13 0.003906 0.003418 0.3
DUNAGAN "A" #3-13 190073 ARKOMA LATIMER OK 5N 17E 13 0.004048 0.003542 0.3
EAST OKLA A&M COLLEGE UT 117000 ARKOMA LATIMER OK 6N 19E 31 0.577217 0.496607 100.8
EAVES #3-6 117282 ARKOMA LATIMER OK 6N 22E 6 0.990000 0.738777 225.0
EAVES 1-6 117280 ARKOMA LATIMER OK 6N 22E 6 0.000000 0.001227 0.6
EAVES 2-6 117281 ARKOMA LATIMER OK 6N 22E 6 0.000000 0.001227 5.1
EAVES 4-6 117283 ARKOMA LATIMER OK 6N 22E 6 0.000000 0.001227 1.1
FABRO #1-24 190085 ARKOMA LATIMER OK 5N 17E 24 0.022656 0.019440 0.4
FABRO #2-24 190087 ARKOMA LATIMER OK 5N 17E 24 0.006797 0.005832 0.6
FABRO #3-24 190089 ARKOMA LATIMER OK 5N 17E 24 0.023185 0.019869 5.3
FABRO #4-24 190091 ARKOMA LATIMER OK 5N 17E 24 0.007930 0.006804 2.8
FREE 4-11 117193 ARKOMA LATIMER OK 6N 21E 11 0.000000 0.016284 38.1
FREE 1-11 SENWSE 117190 ARKOMA LATIMER OK 6N 21E 11 0.000000 0.016284 28.7
FREE 2-11 117191 ARKOMA LATIMER OK 6N 21E 11 0.000000 0.016284 38.9
FREE 3-11 117192 ARKOMA LATIMER OK 6N 21E 11 0.183473 0.167546 678.4
FREE UNIT 5-11 SENWNE A117194 ARKOMA LATIMER OK 6N 21E 11 0.000000 0.016284 0.0
FREE UNIT 5-11 SENWNE B117194 ARKOMA LATIMER OK 6N 21E 11 0.000000 0.016284 25.4
GALLAGHER #4-14 117209 ARKOMA LATIMER OK 6N 21E 14 0.014458 0.016937 34.3
GALLAGHER 1-13 CS/25/2NW 117201 ARKOMA LATIMER OK 6N 21E 13 0.000000 0.008917 23.6
GALLAGHER 2-13 117202 ARKOMA LATIMER OK 6N 21E 13 0.000000 0.008917 7.1
GALLAGHER 2-14 117206 ARKOMA LATIMER OK 6N 21E 14 0.000000 0.004648 5.7
GALLAGHER 2-14 117207 ARKOMA LATIMER OK 6N 21E 14 0.000000 0.004648 4.9
GALLAGHER 3-13 117203 ARKOMA LATIMER OK 6N 21E 13 0.000000 0.008917 20.1
GALLAGHER 3-14 117208 ARKOMA LATIMER OK 6N 21E 14 0.000000 0.004648 6.5
GALLAGHER 5-13 117205 ARKOMA LATIMER OK 6N 21E 13 0.000000 0.008917 12.3
GALLAGHER UT #4-13 117204 ARKOMA LATIMER OK 6N 21E 13 0.052734 0.053741 74.2
GALLAGHER WM 6-14 C SE 117211 ARKOMA LATIMER OK 6N 21E 14 0.000000 0.004648 2.1
GEORGE #4-36 117389 ARKOMA LATIMER OK 7N 22E 36 0.040000 0.057229 176.6
GOLDEN #2-10 113375 ARKOMA LATIMER OK 4N 20E 10 0.094265 0.072733 77.7
H&H CATTLE "A" #1-31 112638 ARKOMA LATIMER OK 5N 20E 31 0.235347 0.177893 2.6
HENLEY #1-25 190093 ARKOMA LATIMER OK 5N 17E 25 0.023438 0.020508 25.9
HENLEY #2-25 190096 ARKOMA LATIMER OK 5N 17E 25 0.000000 0.000000 0.0
HENLEY #3-25 190098 ARKOMA LATIMER OK 5N 17E 25 0.046875 0.038086 13.3
HILL 2-A-25 117370 ARKOMA LATIMER OK 7N 22E 25 0.188471 0.162062 276.3
HILL HENRY A 1-25 NE SW SE 117369 ARKOMA LATIMER OK 7N 22E 25 0.188471 0.166776 101.3
HILL, HENRY "A" #3-25 117371 ARKOMA LATIMER OK 7N 22E 25 0.188469 0.162062 197.2
HILL, HENRY "A" #4-25 190151 ARKOMA LATIMER OK 7N 22E 25 0.188469 0.162062 90.8
HILL, HENRY "A" #5-25 190153 ARKOMA LATIMER OK 7N 22E 25 0.188469 0.162062 107.2
HILL, HENRY "A" #6-25 190155 ARKOMA LATIMER OK 7N 22E 25 0.188469 0.162062 97.0
</Table>
Page 5 of 28
97
CHESAPEAKE ENERGY CORP
1ST QTR RESERVES W/BANK PRICING CASE
AS OF 4/1/2001
<Table>
<Caption>
DISC NET
PROP DATAROOM INCOME
LEASE NAME NUM AREA COUNTY ST TWN RANGE SEC WI NRI M$------
==========================================================================================================================
JAMES #1-17 190034 ARKOMA LATIMER OK 4N 19E 17 0.043191 0.034358 97.2
JANKOWSKY 18-1 117003 ARKOMA LATIMER OK 6N 20E 18 1.000000 0.812500 286.7
KIAMICHI #1-6 110170 ARKOMA LATIMER OK 4N 20E 6 0.273111 0.197810 36.8
LABOR UNIT #1-6 117285 ARKOMA LATIMER OK 6N 22E 6 0.000000 0.000855 0.2
LAMB #1-10 112719 ARKOMA LATIMER OK 4N 20E 14 0.152355 0.111707 29.4
LAWLESS UNIT 1-1 117005 ARKOMA LATIMER OK 4N 19E 1 0.000000 0.000000 0.0
LAWLESS, E.M. #1-12 190032 ARKOMA LATIMER OK 4N 19E 12 0.000000 0.000000 0.0
LAWRENCE 14-1 117006 ARKOMA LATIMER OK 5N 19E 14 0.816328 0.665854 34.5
LERBLANC #1-36 190119 ARKOMA LATIMER OK 5N 17E 36 0.000000 0.000000 0.0
LERBLANC #2-36 190121 ARKOMA LATIMER OK 5N 17E 36 0.026694 0.022217 8.5
LEWIS 2-4 117267 ARKOMA LATIMER OK 6N 22E 4 0.015693 0.026726 31.5
LEWIS 4-4 117269 ARKOMA LATIMER OK 6N 22E 4 0.366709 0.316587 1380.2
LEWIS #5-4 117270 ARKOMA LATIMER OK 6N 22E 4 0.015693 0.026726 41.4
LEWIS 1-4 SE NW SE 117266 ARKOMA LATIMER OK 6N 22E 4 0.015693 0.026726 13.0
LEWIS 3-4 117268 ARKOMA LATIMER OK 6N 22E 4 0.015693 0.026726 14.9
LEWIS UNIT #6-4 117271 ARKOMA LATIMER OK 6N 22E 4 0.015693 0.026726 6.4
LUCKY STRIKE #1-5 190036 ARKOMA LATIMER OK 4N 20E 5 0.045558 0.039141 2.4
LUCKY STRIKE #2-5 190038 ARKOMA LATIMER OK 4N 20E 5 0.045558 0.038392 206.4
MABRY 1-13 SE NW NW 117318 ARKOMA LATIMER OK 6N 22E 13 0.000000 0.006836 7.4
MABRY 3-13 117319 ARKOMA LATIMER OK 6N 22E 13 0.000000 0.006836 3.2
MABRY 4-13 117320 ARKOMA LATIMER OK 6N 22E 13 0.445500 0.379420 654.0
MABRY 5-13 117321 ARKOMA LATIMER OK 6N 22E 13 0.000000 0.006836 6.5
MABRY 6-13 117322 ARKOMA LATIMER OK 6N 22E 13 0.000000 0.006836 0.0
MABRY A J UNIT 31-1 117007 ARKOMA LATIMER OK 5N 19E 31 0.955441 0.775441 1793.8
MAXEY 5-1 117008 ARKOMA LATIMER OK 5N 20E 5 0.340573 0.284400 181.3
MCCABE 1-14 110250 ARKOMA LATIMER OK 5N 19E 14 0.615735 0.502874 5319.6
MCFERRAN, RUTH #1-26 190157 ARKOMA LATIMER OK 7N 22E 26 0.683625 0.547633 78.2
MCKEE #3-1 117163 ARKOMA LATIMER OK 6N 21E 1 0.000000 0.003772 8.9
MCKEE #4-1 117164 ARKOMA LATIMER OK 6N 21E 1 0.031266 0.034128 62.5
MCKEE #5-1 117165 ARKOMA LATIMER OK 6N 21E 1 0.000000 0.003863 2.6
MCKEE 1-1 NENWNE 117161 ARKOMA LATIMER OK 6N 21E 1 0.000000 0.007552 9.0
MCKEE 2-1 117162 ARKOMA LATIMER OK 6N 21E 1 0.000000 0.007552 16.3
MCKEE 5-1 117009 ARKOMA LATIMER OK 5N 20E 5 0.340573 0.284400 95.4
MCKEE 6-1 117166 ARKOMA LATIMER OK 6N 21E 1 0.000000 0.007552 4.1
MCKEE 7-1 SESW 117167 ARKOMA LATIMER OK 6N 21E 1 0.000000 0.007552 0.9
MOSE WATTS UNIT 36-1 117010 ARKOMA LATIMER OK 4N 17E 36 0.555318 0.456694 495.3
MOSE WATTS UNIT 36-2 117011 ARKOMA LATIMER OK 4N 17E 36 0.555318 0.456694 10.7
NICHOLSON-1-22-A-OBO 112806 ARKOMA LATIMER OK 5N 20E 27 0.238135 0.179242 88.9
NORMAN UNIT 34-1 117012 ARKOMA LATIMER OK 5N 20E 34 0.328125 0.266602 398.5
PARKS "B" #4-27 190145 ARKOMA LATIMER OK 6N 22E 27 0.458496 0.333799 286.4
PATTERSON UNIT 27-1 117013 ARKOMA LATIMER OK 4N 17E 27 0.426172 0.348315 64.3
PETTESON #35-1 190131 ARKOMA LATIMER OK 5N 20E 35 0.000000 0.000000 0.0
</Table>
Page 6 of 28
98
CHESAPEAKE ENERGY CORP
1ST QTR RESERVES W/BANK PRICING CASE
AS OF 4/1/2001
<Table>
<Caption>
DISC NET
PROP DATAROOM INCOME
LEASE NAME NUM AREA COUNTY ST TWN RANGE SEC WI NRI M$------
==========================================================================================================================
QUAID GAS UNIT 7-1 117016 ARKOMA LATIMER OK 5N 19E 7 0.384944 0.256640 59.2
QUAID GAS UNIT B 32-1 117017 ARKOMA LATIMER OK 6N 19E 32 0.343750 0.252930 66.6
RAMER 2-14 117324 ARKOMA LATIMER OK 6N 22E 14 0.000000 0.014272 26.5
RAMER 3-14 117325 ARKOMA LATIMER OK 6N 22E 14 0.000000 0.014272 28.9
RAMER 4-14 117326 ARKOMA LATIMER OK 6N 22E 14 0.031250 0.038882 51.3
RAMER 5-14 117327 ARKOMA LATIMER OK 6N 22E 14 0.000000 0.014272 10.0
RETHERFORD ROY UNIT B 31-1 117018 ARKOMA LATIMER OK 4N 18E 31 0.338647 0.276435 63.8
RETHERFORD UNIT A 25-1 117019 ARKOMA LATIMER OK 4N 17E 25 0.420234 0.343766 1152.2
RETHERFORD UNIT A 30-1 117020 ARKOMA LATIMER OK 4N 18E 30 0.960737 0.759233 29.8
REUSCH UNIT 3-1 117021 ARKOMA LATIMER OK 5N 19E 3 1.000000 0.859182 264.2
REUSCH UNIT 3-2 117022 ARKOMA LATIMER OK 5N 19E 3 0.000000 0.000000 0.0
ROBERT EAVES UNIT #1-6 117284 ARKOMA LATIMER OK 6N 22E 6 0.000000 0.004133 1.0
RYAN 1-2 SENWSE 117168 ARKOMA LATIMER OK 6N 21E 2 0.000000 0.000214 0.0
RYAN 2-2 117169 ARKOMA LATIMER OK 6N 21E 2 0.000000 0.000214 0.1
RYAN 4-2 117171 ARKOMA LATIMER OK 6N 21E 2 0.000000 0.000214 0.2
RYAN 5-2 SWSENW N/A ARKOMA LATIMER OK 6N 21E 2 0.000000 0.000214 0.0
RYAN UNIT #3-2 117170 ARKOMA LATIMER OK 6N 21E 2 0.312519 0.232259 39.6
SHAW 36-1 117023 ARKOMA LATIMER OK 6N 19E 36 1.000000 0.812500 124.1
SMALLWOOD 1-3 112923 ARKOMA LATIMER OK 4N 20E 3 0.726421 0.595735 718.0
SMALLWOOD 2-3 112924 ARKOMA LATIMER OK 4N 20E 3 0.705234 0.582803 2260.6
STEVENS UNIT A 26-1 117026 ARKOMA LATIMER OK 4N 17E 26 0.846354 0.687663 859.2
STEVENS UNIT A 26-2 117027 ARKOMA LATIMER OK 4N 17E 26 0.626354 0.509013 5.0
SWART 20-1 117028 ARKOMA LATIMER OK 6N 20E 20 0.863932 0.739994 1324.9
TURNER 1-33 112983 ARKOMA LATIMER OK 5N 20E 33 0.000000 0.000000 0.0
TURNER 2-33 (Sec 33) 171491 ARKOMA LATIMER OK 4N 20E 3 0.547045 0.414106 1275.5
TURNEY 1-28 112986 ARKOMA LATIMER OK 5N 20E 28 0.000000 0.000000 0.0
USA ANDERSON PRITCHARD 25-1 117032 ARKOMA LATIMER OK 6N 18E 25 0.498437 0.441015 106.7
USA ANDERSON PRITCHARD 25-2 117033 ARKOMA LATIMER OK 6N 18E 25 0.594586 0.523505 81.6
USA-CHOC TRIBE TRUST T-3 #1 117035 ARKOMA LATIMER OK 5N 19E 4 0.000000 0.000000 0.0
USA-CHOC TRIBE TRUST T-4 2 117036 ARKOMA LATIMER OK 5N 19E 5 0.000000 0.000000 0.0
USA-J W MCTIERNAN UNIT 6-1 117039 ARKOMA LATIMER OK 5N 19E 6 0.938481 0.609708 336.0
VFW #1-29 190123 ARKOMA LATIMER OK 5N 19E 32 0.071250 0.053115 0.9
WALKER, VIRGINIA UNIT 32-1 117040 ARKOMA LATIMER OK 5N 19E 32 0.938609 0.767633 167.6
WALLACE WAYNE UT 21-2 117124 ARKOMA LATIMER OK 4N 17E 21 0.367966 0.291290 272.9
WATTS BROS "C" #1-29 190030 ARKOMA LATIMER OK 4N 18E 29 0.247872 0.182186 3.7
WATTS RANCH #1-25 190028 ARKOMA LATIMER OK 4N 17E 25 0.577644 0.428914 628.6
WHEELER ERLAINE 25-1 Csg 117042 ARKOMA LATIMER OK 5N 19E 25 0.721855 0.585662 45.4
WHEELER ERLAINE 25-1 Tbg (36- 117043 ARKOMA LATIMER OK 5N 19E 36 0.391188 0.314660 79.7
WHITE "H" #3-12 190134 ARKOMA LATIMER OK 6N 17E 12 0.412500 0.324844 7.4
WHITE "H" #4-12 190136 ARKOMA LATIMER OK 6N 17E 12 0.250000 0.185625 14.5
WHITE "J" #4-7 190139 ARKOMA LATIMER OK 6N 18E 7 0.741552 0.577137 59.4
WILLIAM GALLAHER UNIT #5 W2 N 117210 ARKOMA LATIMER OK 6N 21E 14 0.000000 0.004648 6.8
</Table>
Page 7 of 28
99
CHESAPEAKE ENERGY CORP
1ST QTR RESERVES W/BANK PRICING CASE
AS OF 4/1/2001
<Table>
<Caption>
DISC NET
PROP DATAROOM INCOME
LEASE NAME NUM AREA COUNTY ST TWN RANGE SEC WI NRI M$------
=================================================================================================================================
WILSON, MCCRABB #3-9 190141 ARKOMA LATIMER OK 6N 18E 9 0.534253 0.448720 139.9
WINDING-STAIR-2-14 113015 ARKOMA LATIMER OK 4N 20E 14 0.002725 0.002023 65.7
B & W WELLS #1-1 190159 ARKOMA LE FLORE OK 7N 23E 1 0.031248 0.023280 19.1
FORD 1-32 C NW 117440 ARKOMA LE FLORE OK 7N 23E 32 0.000000 0.006694 10.0
FORD 2-32 117441 ARKOMA LE FLORE OK 7N 23E 32 0.000000 0.006694 4.3
FORD 3-32 117442 ARKOMA LE FLORE OK 7N 23E 32 0.000000 0.006694 10.5
FORD 4-32 117443 ARKOMA LE FLORE OK 7N 23E 32 0.040625 0.038686 83.0
FORD 5-32 117444 ARKOMA LE FLORE OK 7N 23E 32 0.000000 0.006694 3.3
GOLDSBOROUGH 1-31 SE NW NE 117435 ARKOMA LE FLORE OK 7N 23E 31 0.000000 0.004290 6.6
GOLDSBOROUGH 2-31 117436 ARKOMA LE FLORE OK 7N 23E 31 0.000000 0.004290 8.7
GOLDSBOROUGH 3A-31 117437 ARKOMA LE FLORE OK 7N 23E 31 0.000000 0.004290 9.0
GOLDSBOROUGH 4-31 117438 ARKOMA LE FLORE OK 7N 23E 31 0.060302 0.051778 74.0
GOLDSBOROUGH 5A-31 117439 ARKOMA LE FLORE OK 7N 23E 31 0.000000 0.004290 5.9
HOLLIE, IDA #2-20 190161 ARKOMA LE FLORE OK 7N 23E 20 0.042009 0.034040 1.2
KANE 1-8 SE NW NW 117411 ARKOMA LE FLORE OK 6N 23E 8 0.000000 0.008759 11.5
KANE 3-8 117413 ARKOMA LE FLORE OK 6N 23E 8 0.299646 0.254110 383.5
KANE FRANCIS 2A-8 117412 ARKOMA LE FLORE OK 6N 23E 8 0.000000 0.008759 0.1
KANE UNIT #4-8 117414 ARKOMA LE FLORE OK 6N 24E 8 0.000000 0.008759 9.4
POE #1-28 190171 ARKOMA LE FLORE OK 8N 23E 28 0.237332 0.176655 11.6
REE ROY 2F-16 117415 ARKOMA LE FLORE OK 7N 23E 16 0.041473 0.037570 16.8
REED F 4A-16 117417 ARKOMA LE FLORE OK 7N 23E 16 0.098418 0.092216 84.7
REED ROY F5-16 117418 ARKOMA LE FLORE OK 7N 23E 16 0.041473 0.037570 50.6
REED ROY F3-16 117416 ARKOMA LE FLORE OK 7N 23E 16 0.041971 0.038007 15.3
REED, ROY #4-21 190163 ARKOMA LE FLORE OK 7N 23E 21 0.043213 0.034030 12.0
WATSON #2-5 190165 ARKOMA LE FLORE OK 7N 24E 5 0.031223 0.023261 1.4
PHILLIPS #1-32 190150 ARKOMA MCINTOSH OK 11N 15E 32 1.000000 0.802500 437.4
ALICE UNIT 6-1 117075 ARKOMA PITTSBURG OK 8N 16E 6 1.000000 0.801211 70.4
ARMY AMMO 23-1 117077 ARKOMA PITTSBURG OK 4N 12E 23 0.732731 0.623843 17.5
BOWMAN, PAULINE #3-21L 190000 ARKOMA PITTSBURG OK 5N 17E 21 0.233580 0.172105 136.0
BOWMAN, PAULINE #3-21U (SPIRO 190002 ARKOMA PITTSBURG OK 5N 17E 21 0.205123 0.166066 17.7
BOWMAN, PAULINE #4-21 190075 ARKOMA PITTSBURG OK 5N 17E 21 0.236141 0.172105 34.0
BOWMAN, PAULINE #4-29 190115 ARKOMA PITTSBURG OK 5N 17E 29 0.720890 0.611640 442.9
BOWMAN, PAULINE #5-29 190117 ARKOMA PITTSBURG OK 5N 17E 29 0.146964 0.123307 32.2
CABLE #1-22 153094 ARKOMA PITTSBURG OK 4N 15E 22 0.159970 0.119978 824.6
COLLINS #3L A190020 ARKOMA PITTSBURG OK 4N 16E 31 0.820472 0.645378 815.5
COLLINS #3U B190020 ARKOMA PITTSBURG OK 4N 16E 31 0.820472 0.645378 168.3
COLLINS J A UNIT 6-2 117082 ARKOMA PITTSBURG OK 3N 16E 6 0.459653 0.374358 167.8
COLLINS J A UNIT 6-3 117083 ARKOMA PITTSBURG OK 3N 16E 6 0.001562 0.034087 85.2
COLLINS J A UNIT 6-4 117084 ARKOMA PITTSBURG OK 3N 16E 6 0.001562 0.034137 67.0
DAVIS ELLIOT UNIT 31-1 117085 ARKOMA PITTSBURG OK 4N 17E 31 0.277604 0.217858 228.3
DOMINIC UNIT 35-1 117087 ARKOMA PITTSBURG OK 6N 13E 35 1.000000 0.775790 140.7
DROMGOLD #32-2 190026 ARKOMA PITTSBURG OK 3N 16E 5 0.756839 0.595757 501.6
</Table>
Page 8 of 28
100
CHESAPEAKE ENERGY CORP
1ST QTR RESERVES W/BANK PRICING CASE
AS OF 4/1/2001
<Table>
<Caption>
DISC NET
PROP DATAROOM INCOME
LEASE NAME NUM AREA COUNTY ST TWN RANGE SEC WI NRI M$------
=========================================================================================================================
FOOD UNIT 3-1 117090 ARKOMA PITTSBURG OK 5N 13E 3 1.000000 0.765580 87.7
GARRETT UNIT A 2-1 117092 ARKOMA PITTSBURG OK 3N 16E 2 0.775786 0.630439 1588.3
GARRETT UNIT B 34-1 117091 ARKOMA PITTSBURG OK 4N 16E 34 0.374882 0.298732 270.0
GIBSON WINNIE 4-1 117094 ARKOMA PITTSBURG OK 5N 13E 4 0.937500 0.745062 428.4
GODDARD JA UNIT 1-1 117098 ARKOMA PITTSBURG OK 3N 15E 1 0.641268 0.521642 508.9
GODDARD JA UNIT 1-4 117099 ARKOMA PITTSBURG OK 3N 15E 1 0.641267 0.518034 912.2
GODDARD JA UNIT 1-5 117100 ARKOMA PITTSBURG OK 3N 15E 1 0.641268 0.518034 51.9
HUNT-GARRETT UNIT 34-1 117101 ARKOMA PUTTSBURG OK 6N 13E 34 1.000000 0.754881 296.8
JAMES WALLACE UNIT 7-2 117102 ARKOMA PITTSBURG OK 3N 16E 7 1.000000 0.810867 1952.3
KING, R.A. #1-26 190048 ARKOMA PITTSBURG OK 5N 16E 26 0.062500 0.054688 88.8
KING, R.A. #2-26 190050 ARKOMA PITTSBURG OK 5N 16E 26 0.016129 0.012702 3.7
KING, R.A. #3-26 190053 ARKOMA PITTSBURG OK 5N 16E 26 0.016129 0.012702 2.5
KING, R.A. #4-26 190055 ARKOMA PITTSBURG OK 5N 16E 26 0.083077 0.064570 41.7
KING, R.A. #5-26 190057 ARKOMA PITTSBURG OK 5N 16E 26 0.000000 0.000000 0.0
LUKER #1-3 190012 ARKOMA PITTSBURG OK 3N 15E 3 0.045125 0.036479 70.4
MARY MARGARET #1-15 190014 ARKOMA PITTSBURG OK 4N 15E 15 0.000000 0.000000 0.0
MARY MARGARET #2-15 190016 ARKOMA PITTSBURG OK 4N 15E 15 0.000000 0.000000 0.0
MASSIE 19-1 117105 ARKOMA PITTSBURG OK 6N 16E 19 0.500000 0.420294 79.4
MASSIE 19-2 (ORRI) 117106 ARKOMA PITTSBURG OK 6N 16E 19 0.000000 0.022641 0.1
MCLEAN-CHOATE #1-29 190061 ARKOMA PITTSBURG OK 5N 16E 29 0.005000 0.003793 1.1
MCLEAN-CHOATE #2-29 190063 ARKOMA PITTSBURG OK 5N 16E 29 0.005000 0.003791 0.6
MCLEAN-CHOATE #4-29 190067 ARKOMA PITTSBURG OK 5N 16E 29 0.000000 0.000000 0.0
MONROE #4-28 190059 ARKOMA PITTSBURG OK 5N 16E 28 0.593541 0.440704 257.8
ORBISON 3-6 110784 ARKOMA PITTSBURG OK 6N 16E 6 0.240257 0.192989 12.2
PATRICK UNIT 30-1 117109 ARKOMA PITTSBURG OK 6N 14E 30 0.376778 0.329681 76.5
PATRICK UNIT 30-2 117108 ARKOMA PITTSBURG OK 6N 14E 30 0.407834 0.346798 64.2
ROSSO #2-5 117111 ARKOMA PITTSBURG OK 3N 16E 5 0.984476 0.767420 18.7
ROSSO UNIT 5-1 117110 ARKOMA PITTSBURG OK 3N 16E 5 0.905443 0.730574 435.7
SCOTT 6-36 114066 ARKOMA PITTSBURG OK 4N 15E 36 0.863072 0.692505 1254.6
SCOTT UNIT 36-1 117112 ARKOMA PITTSBURG OK 4N 15E 36 0.805902 0.650524 2821.1
SCOTT UNIT 36-2 117113 ARKOMA PITTSBURG OK 4N 15E 36 0.847249 0.696509 141.6
SCOTT UNIT 36-5 117114 ARKOMA PITTSBURG OK 4N 15E 36 0.845223 0.668115 123.0
SCOTT, M. #1-31 190022 ARKOMA PITTSBURG OK 4N 16E 31 0.097210 0.072767 19.6
SCOTT, M. #2-31 190024 ARKOMA PITTSBURG OK 4N 16E 31 0.094260 0.070590 26.6
STEVENS #3-26 (4N-15E) 190018 ARKOMA PITTSBURG OK 4N 15E 26 0.920523 0.693162 184.6
SZENASY UNIT 1-1 117118 ARKOMA PITTSBURG OK 3N 16E 1 0.270863 0.220077 103.1
TOMLIN UNIT 29-1 117120 ARKOMA PITTSBURG OK 4N 17E 29 0.928517 0.760279 937.3
TSCHAPPAT UNIT 3-2 117122 ARKOMA PITTSBURG OK 3N 16E 3 0.886789 0.715893 180.7
TSCHAPPAT UNIT A 3-1 117121 ARKOMA PITTSBURG OK 3N 16E 3 0.759341 0.612110 862.4
VANDEVER UNIT 19-1 117123 ARKOMA PITTSBURG OK 5N 12E 19 1.000000 0.819961 44.5
WALLACE WAYNE UT 21-1 117041 ARKOMA PITTSBURG OK 4N 17E 21 0.331990 0.269742 337.0
WATTS #1-5 117125 ARKOMA PITTSBURG OK 3N 17E 5 0.233233 0.194073 463.9
</Table>
Page 9 of 28
101
CHESAPEAKE ENERGY CORP
1ST QTR RESERVES W/BANK PRICING CASE
AS OF 4/1/2001
<Table>
<Caption>
DISC NET
PROP DATAROOM INCOME
LEASE NAME NUM AREA COUNTY ST TWN RANGE SEC WI NRI M$------
=========================================================================================================================
WATTS, MC 6-1 117126 ARKOMA PITTSBURGH OK 3N 17E 6 0.500000 0.406250 317.2
WHITE, EARL "A" #3-29 190147 ARKOMA PITTSBURGH OK 7N 18E 29 0.500053 0.423040 82.4
WILDLIFE REFUGE #1-29 190149 ARKOMA PITTSBURGH OK 7N 18E 29 0.447534 0.387517 186.2
WINNIE GIBSON 2-4 110054 ARKOMA PITTSBURGH OK 5N 13E 4 0.234348 0.184962 7.1
ZIPPERER UNIT 32-1 117127 ARKOMA PITTSBURGH OK 4N 17E 32 0.657852 0.534504 1823.1
FORT CHAFFEE #3-21 290169 ARKOMA SEBASTIAN AR 7N 31W 21 1.000000 0.870000 393.5
ARKOMA 68108.4
ANDERSON - SHRIER #2-31 218278 KANSAS GAS FINNEY KS 22S 33W 31 1.000000 0.875000 7.1
ANDERSON - SHRIER GAS UNIT 218272 KANSAS GAS FINNEY KS 22S 33W 31 1.000000 0.875000 33.3
BEACH - CORLEY #1-15 218439 KANSAS GAS FINNEY KS 25S 31W 15 0.983333 0.831767 53.6
CORN #1-15 218415 KANSAS GAS FINNEY KS 22S 32W 15 1.000000 0.846350 70.7
DAVIS #1-1 218416 KANSAS GAS FINNEY KS 22S 32W 1 1.000000 0.787206 16.9
DECHANT #1-28 218426 KANSAS GAS FINNEY KS 23S 31W 26 0.966667 0.678268 119.0
FINNUP #1A-28 217713 KANSAS GAS FINNEY KS 26S 32W 28 0.625000 0.478516 146.4
FRANCIS MARTIN #1-30 218428 KANSAS GAS FINNEY KS 23S 31W 30 0.500660 0.423737 33.1
GANO #1-21 218406 KANSAS GAS FINNEY KS 21S 33W 21 1.000000 0.791663 38.5
GARDNER #1-10 218290 KANSAS GAS FINNEY KS 24S 31W 10 1.000000 0.875000 139.1
GRAVES L W #2-15 218273 KANSAS GAS FINNEY KS 22S 33W 15 1.000000 0.875000 92.2
GREATHOUSE F.M. #1-31 218405 KANSAS GAS FINNEY KS 21S 32W 31 1.000000 0.820310 51.8
GREATHOUSE J.E. #1-32 218409 KANSAS GAS FINNEY KS 21S 32W 32 1.000000 0.820313 52.5
HICKS-BROWN #1-14 217738 KANSAS GAS FINNEY KS 25S 32W 14 1.000000 0.792969 11.8
HICKS #1-15 217734 KANSAS GAS FINNEY KS 25S 32W 15 1.000000 0.792969 101.9
HICKS #2-15 217735 KANSAS GAS FINNEY KS 25S 32W 15 1.000000 0.792969 163.1
HIPP #1-11 218411 KANSAS GAS FINNEY KS 21S 33W 11 1.000000 0.791663 32.7
HUELSKAMP #1-17 218427 KANSAS GAS FINNEY KS 23S 31W 17 0.975000 0.825293 81.3
KISNER - HORTON #2-23 218276 KANSAS GAS FINNEY KS 22S 32W 23 1.000000 0.875000 231.6
LANDGRAF C #1-26 218287 KANSAS GAS FINNEY KS 21S 32W 26 1.000000 0.875000 64.0
LEWIS #1-24 218421 KANSAS GAS FINNEY KS 22S 32W 24 1.000000 0.846350 26.0
LOPER #1-6 218422 KANSAS GAS FINNEY KS 22S 31W 6 0.983333 0.832313 60.3
MCANARNEY #1-19 218429 KANSAS GAS FINNEY KS 23S 31W 19 0.875000 0.699546 139.9
MEAIRS #1-28 218423 KANSAS GAS FINNEY KS 22S 31W 28 1.000000 0.860331 28.1
MERRILL #1-22 218431 KANSAS GAS FINNEY KS 23S 31W 22 1.000000 0.820725 14.5
ROBEL #1-5 218436 KANSAS GAS FINNEY KS 24S 31W 5 1.000000 0.756507 204.1
SCOTT #1A-22 218424 KANSAS GAS FINNEY KS 22S 31W 22 1.000000 0.841225 63.3
SOMMERS #1-17 218432 KANSAS GAS FINNEY KS 23S 31W 17 1.000000 0.805232 94.2
SPIKES #1-29 218433 KANSAS GAS FINNEY KS 23S 31W 29 1.000000 0.832540 77.4
STEVENS #1-27 218434 KANSAS GAS FINNEY KS 23S 31W 27 0.966667 0.765410 43.2
WINTERS #2-16 218425 KANSAS GAS FINNEY KS 22S 31W 16 1.000000 0.852734 4.3
YEISER A #1-4 218648 KANSAS GAS FINNEY KS 26S 34W 4 0.500000 0.437500 187.2
BAPTIST FISCHER #1-14 218201 KANSAS GAS GRANT KS 30S 38W 14 0.281250 0.281250 128.9
BAPTIST FISCHER #2-14 218202 KANSAS GAS GRANT KS 30S 38W 14 0.281250 0.281250 66.1
BAPTIST FISCHER #3-14 218203 KANSAS GAS GRANT KS 30S 38W 11 0.281250 0.281250 74.0
</Table>
Page 10 of 28
102
CHESAPEAKE ENERGY CORP
1ST QTR RESERVES W/BANK PRICING CASE
AS OF 4/1/2001
<Table>
<Caption>
DISC NET
PROP DATAROOM INCOME
LEASE NAME NUM AREA COUNTY ST TWN RANGE SEC WI NRI M$------
=========================================================================================================================
MLP ELMO #1-11 212000 KANSAS GAS GRANT KS 30S 35W 11 0.960000 0.768000 599.3
MLP STUBBS #1-11 219994 KANSAS GAS GRANT KS 30S 35W 11 0.500000 0.400000 197.8
BENGSTON #1-13 218446 KANSAS GAS HAMILTON KS 21S 41W 13 1.000000 0.861328 51.3
BENGSTON #2-13 218447 KANSAS GAS HAMILTON KS 21S 41W 13 1.000000 0.861328 56.9
BOLTZ #2A-1 218479 KANSAS GAS HAMILTON KS 22S 41W 1 1.000000 0.765625 80.1
BRADDOCK #1-2 217761 KANSAS GAS HAMILTON KS 23S 40W 2 1.000000 0.843750 167.6
BRADSHAW #2-36 218457 KANSAS GAS HAMILTON KS 22S 41W 36 1.000000 0.765625 320.5
BRADSHAW #3-26 218458 KANSAS GAS HAMILTON KS 22S 41W 26 0.812500 0.656250 206.8
BRADSHAW #3-36 210298 KANSAS GAS HAMILTON KS 22S 41W 36 0.980000 0.820750 336.6
BURTON M #2-27 218348 KANSAS GAS HAMILTON KS 22S 40W 27 1.000000 0.875000 523.6
CAMPBELL #1-15 218330 KANSAS GAS HAMILTON KS 21S 40W 15 1.000000 0.835000 146.8
DOERR #2-22 218333 KANSAS GAS HAMILTON KS 21S 40W 22 1.000000 0.835000 96.0
FECHT 1-1 212100 KANSAS GAS HAMILTON KS 23S 41W 1 0.970000 0.860593 347.8
FEDERAL #1-32 218388 KANSAS GAS HAMILTON KS 24S 40W 32 1.000000 0.025000 8.2
FOTOPOLOUS #2-22 218460 KANSAS GAS HAMILTON KS 22S 41W 22 1.000000 0.792969 232.5
FOTOPOLOUS #3-22 218473 KANSAS GAS HAMILTON KS 22S 41W 22 1.000000 0.792969 95.8
FRACK #1-14 218335 KANSAS GAS HAMILTON KS 21S 40W 14 1.000000 0.835000 54.7
FRACK #2-14 217792 KANSAS GAS HAMILTON KS 21S 40W 14 1.000000 0.835000 119.3
GASTON #2-2 218205 KANSAS GAS HAMILTON KS 23S 41W 2 1.000000 0.833333 734.1
GASTON #3-2 218207 KANSAS GAS HAMILTON KS 23S 41W 2 1.000000 0.833333 528.3
GOULD A #2-6 218463 KANSAS GAS HAMILTON KS 22S 40W 6 1.000000 0.793691 268.0
GOULD A #3-11 218465 KANSAS GAS HAMILTON KS 22S 41W 11 0.850000 0.644219 170.3
GOULD A #3-2 218483 KANSAS GAS HAMILTON KS 22S 41W 2 0.752061 0.575797 12.1
GOULD A #4-11 218466 KANSAS GAS HAMILTON KS 22S 41W 11 0.850000 0.644219 357.4
GOULD Z #1-13 218467 KANSAS GAS HAMILTON KS 22S 41W 13 1.000000 0.765625 136.8
GOULD Z #2-13 218468 KANSAS GAS HAMILTON KS 22S 41W 13 1.000000 0.765625 102.7
GRILLIOT #1-17 218336 KANSAS GAS HAMILTON KS 21S 40W 17 1.000000 0.835000 45.1
GRILLIOT #3-29 218338 KANSAS GAS HAMILTON KS 21S 40W 29 1.000000 0.835000 117.6
GROVES #1-35 217764 KANSAS GAS HAMILTON KS 22S 40W 35 0.666667 0.583333 110.8
HATCHER #1-13 218354 KANSAS GAS HAMILTON KS 22S 42W 13 1.000000 0.835000 103.5
HATCHER A #2-13 217794 KANSAS GAS HAMILTON KS 22S 42W 13 1.000000 0.835000 165.8
KINCHELOE #1-3 218373 KANSAS GAS HAMILTON KS 23S 41W 3 0.624953 0.546834 61.0
KINCHELOE #2-3 218374 KANSAS GAS HAMILTON KS 23S 41W 3 0.624953 0.546834 354.0
KINCHELOE B #2-10 218371 KANSAS GAS HAMILTON KS 23S 41W 10 1.000000 0.875000 448.9
LENSKI #2-25 210299 KANSAS GAS HAMILTON KS 22S 41W 25 0.980000 0.857500 262.7
LENSKI #3-25 210776 KANSAS GAS HAMILTON KS 22S 41W 25 1.000000 0.875000 351.2
MATTIE BURTON #3-27 212322 KANSAS GAS HAMILTON KS 22S 40W 27 0.970000 0.848750 148.9
MAXFIELD #1-7 218448 KANSAS GAS HAMILTON KS 21S 40W 7 1.000000 0.875000 21.2
MAXFIELD #2-1 210775 KANSAS GAS HAMILTON KS 23S 41W 1 0.970000 0.769180 651.3
MAXFIELD #2-7 218449 KANSAS GAS HAMILTON KS 21S 40W 7 1.000000 0.875000 106.6
MILLER M #1-23 218470 KANSAS GAS HAMILTON KS 22S 41W 23 1.000000 0.765625 205.2
MILLER M #2-23 218471 KANSAS GAS HAMILTON KS 22S 41W 23 1.000000 0.765625 413.2
</Table>
PAGE 11 OF 28
103
CHESAPEAKE ENERGY CORP
1ST QTR RESERVES W/BANK PRICING CASE
AS OF 4/1/2001
<Table>
<Caption>
DISC NET
PROP DATAROOM INCOME
LEASE NAME NUM AREA COUNTY ST TWN RANGE SEC WI NRI M$------
=========================================================================================================================
OVERTON #1-16 218392 KANSAS GAS HAMILTON KS 24S 40W 16 0.824844 0.688745 69.6
SHOUP #2-35 218482 KANSAS GAS HAMILTON KS 22S 41W 35 1.000000 0.865885 140.8
SHOUP #3-35 210770 KANSAS GAS HAMILTON KS 22S 41W 35 1.000000 0.859375 379.6
SIMMONDS #1-28 218342 KANSAS GAS HAMILTON KS 21S 40W 28 1.000000 0.835000 159.7
SIMMONDS #2-28 217791 KANSAS GAS HAMILTON KS 21S 40W 28 1.000000 0.835000 106.3
SIMON #1-10 218372 KANSAS GAS HAMILTON KS 23S 41W 10 1.000000 0.875000 67.1
SIMON #1-26 218459 KANSAS GAS HAMILTON KS 22S 41W 26 0.812500 0.601563 239.9
ST COLUMBIANS #1-12 218475 KANSAS GAS HAMILTON KS 22S 41W 12 1.000000 0.765625 233.1
ST COLUMBIANS #2-12 218474 KANSAS GAS HAMILTON KS 22S 41W 12 1.000000 0.765625 97.1
STRATE #2-14 218477 KANSAS GAS HAMILTON KS 22S 41W 14 0.750000 0.601563 285.7
STRATE #3-14 (REPLACEMENT OF 212113 KANSAS GAS HAMILTON KS 22S 41W 14 0.720000 0.577800 274.2
THIELEN #1-27 218478 KANSAS GAS HAMILTON KS 22S 41W 27 1.000000 0.792969 201.4
THUROW #2-11 210324 KANSAS GAS HAMILTON KS 23S 41W 11 0.980000 0.857500 86.5
THUROW #3-11 210748 KANSAS GAS HAMILTON KS 23S 41W 11 1.000000 0.857500 288.9
TUCKER 1-27 218481 KANSAS GAS HAMILTON KS 22S 41W 27 1.000000 0.792969 397.8
WEDEL #1-1 218480 KANSAS GAS HAMILTON KS 22S 41W 1 1.000000 0.765625 102.5
WITT #2-14 218381 KANSAS GAS HAMILTON KS 23S 41W 14 1.000000 0.859375 240.4
WOLF #1-18 218380 KANSAS GAS HAMILTON KS 23S 40W 18 1.000000 0.875000 235.8
WOLF #2-18 218383 KANSAS GAS HAMILTON KS 23S 40W 18 1.000000 0.875000 590.0
BARBEE #1-22 218305 KANSAS GAS HASKELL KS 28S 33W 22 1.000000 0.875000 196.8
BEAR #1-18 218296 KANSAS GAS HASKELL KS 28S 32W 18 0.500000 0.437500 65.6
FLORY #1-1 218306 KANSAS GAS HASKELL KS 29S 32W 1 1.000000 0.774609 90.2
HERREN #1-29 217714 KANSAS GAS HASKELL KS 30S 34W 29 0.517708 0.409932 230.4
HOMSHER #4-33 218495 KANSAS GAS HASKELL KS 30S 33W 33 0.330000 0.278850 17.5
HOMSHER #6A-33 218497 KANSAS GAS HASKELL KS 30S 33W 33 0.330000 0.278850 93.8
KELLS #1-29 218303 KANSAS GAS HASKELL KS 27S 33W 29 1.000000 0.820313 133.7
LONG #1-33 218519 KANSAS GAS HASKELL KS 30S 33W 33 0.330000 0.278850 306.3
MLP BLACK #1-2 210257 KANSAS GAS HASKELL KS 30S 34W 2 0.500000 0.393628 67.1
MLP BLACK #1-3 217804 KANSAS GAS HASKELL KS 30S 34W 3 0.500000 0.400000 93.8
MLP BLACK #2-3 217805 KANSAS GAS HASKELL KS 30S 34W 3 0.000000 0.000000 0.0
MLP BLACK #3-3 217806 KANSAS GAS HASKELL KS 30S 34W 3 0.500000 0.400000 3.3
MLP BLACK #4-3 217815 KANSAS GAS HASKELL KS 30S 34W 3 0.500000 0.400000 19.1
MLP BLACK #5-3 217821 KANSAS GAS HASKELL KS 30S 34W 3 0.500000 0.400000 46.9
MLP BLACK #6-3 217822 KANSAS GAS HASKELL KS 30S 34W 3 1.000000 0.800000 40.7
MLP BLACK #7-3 215568 KANSAS GAS HASKELL KS 30S 34W 3 0.480000 0.384000 72.1
MLP BRUNO #2-34 218541 KANSAS GAS HASKELL KS 29S 34W 34 0.500000 0.400000 41.0
MLP CLAWSON #1-34 217807 KANSAS GAS HASKELL KS 29S 34W 34 0.500000 0.400000 25.0
MLP CLAWSON #1-35 215560 KANSAS GAS HASKELL KS 29S 34W 35 0.980000 0.784000 549.3
MLP CLAWSON #2-34 217816 KANSAS GAS HASKELL KS 29S 34W 34 0.500000 0.400000 36.3
MLP CLAWSON #3-34 217825 KANSAS GAS HASKELL KS 29S 34W 34 0.500000 0.400000 21.9
MLP CLAWSON A #4-9 218546 KANSAS GAS HASKELL KS 29S 34W 9 0.500000 0.400000 201.4
MLP CLAWSON TRUST #2-35 219885 KANSAS GAS HASKELL KS 29S 34W 35 0.980000 0.784000 431.6
</Table>
Page 12 of 28
104
CHESAPEAKE ENERGY CORP
1ST QTR RESERVES W/BANK PRICING CASE
AS OF 4/1/2001
<Table>
<Caption>
DISC NET
PROP DATAROOM INCOME
LEASE NAME NUM AREA COUNTY ST TWN RANGE SEC WI NRI M$------
=========================================================================================================================
MLP KOENIG #1-28 218539 KANSAS GAS HASKELL KS 29S 34W 28 0.500000 0.400000 105.3
MLP KOENIG #2-28 217809 KANSAS GAS HASKELL KS 29S 34W 28 0.000000 0.000000 0.0
MLP LEATHERS LAND #1-10 217811 KANSAS GAS HASKELL KS 30S 34W 10 0.500000 0.400000 261.7
MLP LEATHERS LAND #2-10 217812 KANSAS GAS HASKELL KS 30S 34W 10 0.500000 0.400000 22.4
MLP LESLIE #1-26 210258 KANSAS GAS HASKELL KS 29S 34W 26 0.980000 0.784000 39.2
MLP LESLIE #2-33 217814 KANSAS GAS HASKELL KS 29S 34W 33 0.500000 0.400000 1.8
MLP PAULINE MURPHY TRUST #1-3 217832 KANSAS GAS HASKELL KS 29S 34W 34 0.500000 0.400000 212.8
MLP SANTALA #1-26 218544 KANSAS GAS HASKELL KS 29S 34W 26 0.500000 0.400000 176.6
MLP SANTALA #2-26 217841 KANSAS GAS HASKELL KS 29S 34W 26 0.500000 0.400000 101.5
MLP SANTALA #3-26 217445 KANSAS GAS HASKELL KS 29S 34W 26 0.500000 0.400000 165.1
FIEDLER #1-36 217740 KANSAS GAS KEARNY KS 22S 37W 36 0.937500 0.684082 88.3
POWERS M.F.C. UNIT 217768 KANSAS GAS KEARNY KS 22S 37W 32 0.687500 0.598145 180.5
ROSE #1-34 217742 KANSAS GAS KEARNY KS 21S 37W 34 0.937500 0.688916 140.8
BREEDING #1-24 218221 KANSAS GAS MORTON KS 31S 41W 24 1.000000 0.783850 673.9
EMBERTON #1-8 218615 KANSAS GAS MORTON KS 31S 40W 8 1.000000 0.750000 140.9
HAYWARD G.L. "B" #1-35 218222 KANSAS GAS MORTON KS 31S 40W 35 1.000000 0.846350 1177.7
JOHNS #1-25 218226 KANSAS GAS MORTON KS 31S 41W 25 1.000000 0.846350 2065.3
LIPPOLT #1-28 218228 KANSAS GAS MORTON KS 31S 40W 28 1.000000 0.737075 598.5
MARQUARDT #1-28 217780 KANSAS GAS MORTON KS 32S 40W 28 1.000000 0.820000 569.7
MARQUARDT #2-28 217781 KANSAS GAS MORTON KS 32S 40W 28 0.000000 0.000000 0.0
MILBURN #1-16 218524 KANSAS GAS MORTON KS 31S 40W 16 0.000000 0.000000 0.0
MILBURN #1B-16 218527 KANSAS GAS MORTON KS 31S 40W 16 0.000000 0.000000 0.0
MILBURN #1C-16 218528 KANSAS GAS MORTON KS 31S 40W 16 1.000000 0.750000 140.0
MILBURN #2-16 218525 KANSAS GAS MORTON KS 31S 40W 16 0.750000 0.627857 104.1
OLGA SMITH #1-29 218517 KANSAS GAS MORTON KS 32S 42W 29 0.639844 0.521777 353.6
PERKINS #1-28 218227 KANSAS GAS MORTON KS 31S 40W 28 1.000000 0.737075 90.3
SLINKER #1-21 218232 KANSAS GAS MORTON KS 31S 40W 21 1.000000 0.846350 251.7
SLINKER #3-21 218234 KANSAS GAS MORTON KS 31S 40W 21 1.000000 0.846350 153.3
SWANSON #1-26 218235 KANSAS GAS MORTON KS 31S 40W 26 1.000000 0.646350 442.3
VYN #1-13 218217 KANSAS GAS MORTON KS 35S 43W 13 0.650000 0.506423 17.4
FAIR "A" #1-34 217748 KANSAS GAS SEWARD KS 31S 33W 34 0.250000 0.218750 331.1
GASKILL #3-5 218489 KANSAS GAS SEWARD KS 31S 33W 5 0.412500 0.348563 80.6
JARRETT TRUST #2-4 218504 KANSAS GAS SEWARD KS 32S 33W 4 0.950000 0.739968 1303.7
MLP YOUNG TRUST #1-5 218533 KANSAS GAS SEWARD KS 31S 34W 5 0.500000 0.400000 39.9
KIRBY #1-17 218211 KANSAS GAS STANTON KS 29S 39W 17 0.800000 0.660000 126.3
M R GAREY #1-17 218212 KANSAS GAS STANTON KS 29S 39W 17 0.800000 0.660000 83.4
ALDERMAN #2-11 217773 KANSAS GAS STEVENS KS 33S 35W 11 1.000000 0.875000 95.8
ALDERMAN #3-11 217774 KANSAS GAS STEVENS KS 33S 35W 11 1.000000 0.875000 383.6
BECKER W T #1-3 218646 KANSAS GAS STEVENS KS 33S 35W 3 1.000000 0.875000 707.4
BLACKMER ZELLA #1-7 218637 KANSAS GAS STEVENS KS 35S 36W 7 1.000000 0.875000 144.9
BOLES #1-26 218616 KANSAS GAS STEVENS KS 32S 35W 26 1.000000 0.875000 269.9
BROWNELL C #3-1 218639 KANSAS GAS STEVENS KS 32S 35W 1 0.875190 0.765791 208.8
</Table>
PAGE 13 OF 28
105
CHESAPEAKE ENERGY CORP
1ST QTR RESERVES W/BANK PRICING CASE
AS OF 4/1/2001
<Table>
<Caption>
DISC NET
PROP DATAROOM INCOME
LEASE NAME NUM AREA COUNTY ST TWN RANGE SEC WI NRI M$------
=========================================================================================================================
COBB #1-8 218668 KANSAS GAS STEVENS KS 33S 36W 8 1.000000 0.877812 214.4
CURTIS #2-24 218444 KANSAS GAS STEVENS KS 31S 39W 24 0.500000 0.437500 216.9
CURTIS A #1-24 218443 KANSAS GAS STEVENS KS 31S 39W 24 0.500000 0.437500 336.1
CURTIS C #1H-25 218445 KANSAS GAS STEVENS KS 31S 39W 24 0.500000 0.437500 156.1
DUNNE HOFFMAN K #1-16 218644 KANSAS GAS STEVENS KS 35S 38W 16 0.500000 0.437111 339.4
FLOWER #1-5 218666 KANSAS GAS STEVENS KS 33S 36W 5 1.000000 0.875000 317.7
FOSTER #2-18 218651 KANSAS GAS STEVENS KS 34S 36W 18 1.000000 0.875281 437.1
GRANT MORRELL #1-23 218641 KANSAS GAS STEVENS KS 32S 36W 23 1.000000 0.875000 397.2
GRAPE A #1-2 218656 KANSAS GAS STEVENS KS 34S 36W 2 0.500000 0.437500 294.4
GREGG #1-13 218660 KANSAS GAS STEVENS KS 34S 36W 13 1.000000 0.875000 224.1
GROTHE A #1-24 218650 KANSAS GAS STEVENS KS 33S 35W 24 1.000000 0.875000 407.6
GROTHE B #1-23 218649 KANSAS GAS STEVENS KS 33S 35W 23 0.500000 0.437500 89.5
HEGER B #2-26 UNIT 218654 KANSAS GAS STEVENS KS 33S 36W 26 1.000000 0.875000 301.1
HITCH LAND & CATTLE #1 218618 KANSAS GAS STEVENS KS 32S 35W 18 1.000000 0.875000 412.0
HOLT THOMAS T #1-10 218659 KANSAS GAS STEVENS KS 33S 36W 10 1.000000 0.875394 358.1
HUBER #1-5 UNIT 218635 KANSAS GAS STEVENS KS 35S 36W 5 1.000000 0.875000 282.3
HULPIEU #1-28 UNIT 218630 KANSAS GAS STEVENS KS 32S 37W 28 1.000000 0.875000 265.5
JONES #1-3 UNIT 218669 KANSAS GAS STEVENS KS 33S 36W 3 1.000000 0.875000 177.6
K BROWN #2-9 218667 KANSAS GAS STEVENS KS 33S 36W 9 1.000000 0.875000 117.3
L BIVENS #1-24 218662 KANSAS GAS STEVENS KS 34S 36W 24 1.000000 0.819712 164.9
LEMERT #2-4 218665 KANSAS GAS STEVENS KS 33S 36W 4 1.000000 0.860899 258.9
LILLY #1-19 217731 KANSAS GAS STEVENS KS 33S 37W 19 0.907738 0.767027 471.1
MARGARET JORDAN LEASE 217769 KANSAS GAS STEVENS KS 31S 35W 10 1.000000 0.875000 407.8
MAST WILLIAM B #1-24 218621 KANSAS GAS STEVENS KS 31S 36W 24 1.000000 0.875000 1702.8
MCCARTY #1-24 217732 KANSAS GAS STEVENS KS 33S 38W 24 0.907738 0.767027 575.1
MCGILL A #1-13 218643 KANSAS GAS STEVENS KS 32S 36W 13 1.000000 0.875000 126.4
MLP CAVNER D-1 210484 KANSAS GAS STEVENS KS 31S 38W 31 0.125000 0.100000 213.0
MLP CAVNER E-1 210797 KANSAS GAS STEVENS KS 31S 38W 31 0.125000 0.100000 771.9
MLP CORNELL UNIVERSITY A #1 211013 KANSAS GAS STEVENS KS 32S 39W 15 0.125000 0.100000 1200.6
MLP CORNELL UNIVERSITY B #1 212238 KANSAS GAS STEVENS KS 32S 39W 15 0.125000 0.100000 51.0
MLP ESCUE #1-34 218575 KANSAS GAS STEVENS KS 31S 39W 34 0.000000 0.000000 0.0
MLP SIMMONS A-1 210485 KANSAS GAS STEVENS KS 32S 39W 15 0.125000 0.100000 24.9
MUELLER #1-15 218658 KANSAS GAS STEVENS KS 33S 36W 15 1.000000 0.875000 593.8
MUELLER #2-15 217851 KANSAS GAS STEVENS KS 33S 36W 15 1.000000 0.875000 327.4
O G HINSHAW ESTATE #1-18 218619 KANSAS GAS STEVENS KS 31S 35W 18 1.000000 0.875000 184.2
PARKER ESTATE #2-32 218636 KANSAS GAS STEVENS KS 34S 36W 32 1.000000 0.875000 134.8
PARKER ESTATE #4-32 218634 KANSAS GAS STEVENS KS 34S 36W 32 1.000000 0.875000 872.7
PHILLIPS JUANITA F #1-17 218620 KANSAS GAS STEVENS KS 31S 35W 17 0.875000 0.765625 394.2
RATCLIFF #3-17 218671 KANSAS GAS STEVENS KS 33S 37W 17 1.000000 0.875000 130.4
SCHNEIDER #1-29 218652 KANSAS GAS STEVENS KS 34S 36W 29 1.000000 0.860201 222.6
WALKEMEYER #1-35 218655 KANSAS GAS STEVENS KS 33S 36W 35 0.500000 0.437500 308.5
WAYLAND #1-23 UNIT 218657 KANSAS GAS STEVENS KS 33S 36W 23 1.000000 0.875000 441.2
</Table>
Page 14 of 28
106
CHESAPEAKE ENERGY CORP
1ST QTR RESERVES W/BANK PRICING CASE
AS OF 4/1/2001
<Table>
<Caption>
DISC NET
PROP DATAROOM INCOME
LEASE NAME NUM AREA COUNTY ST TWN RANGE SEC WI NRI M$------
==================================================================================================================================
WING #1-33 UNIT 218645 KANSAS GAS STEVENS KS 32S 36W 33 1.000000 0.875000 413.8
WINTER #2-31 218632 KANSAS GAS STEVENS KS 34S 36W 31 1.000000 0.875000 375.7
KANSAS GAS 47034.8
ARNER #1-7 (T19) 111158 KNOX/GOLDEN TREND/BRADLEY GARVIN OK 3N 3W 7 0.050000 0.036250 1.4
BECK #1-23H 110783 KNOX/GOLDEN TREND/BRADLEY GARVIN OK 4N 4W 23 0.970000 0.729192 1031.0
BROWN #1-7 111122 KNOX/GOLDEN TREND/BRADLEY GARVIN OK 3N 3W 7 0.615000 0.451160 344.1
JOHN RAY #1-7 112362 KNOX/GOLDEN TREND/BRADLEY GARVIN OK 3N 3W 7 0.645000 0.473168 438.6
MARY SUE #1-7H 111377 KNOX/GOLDEN TREND/BRADLEY GARVIN OK 3N 3W 7 0.975000 0.765594 1288.3
MAYS #1-7 110992 KNOX/GOLDEN TREND/BRADLEY GARVIN OK 3N 3W 7 0.865400 0.643579 94.9
ALTA #1-33 112290 KNOX/GOLDEN TREND/BRADLEY GRADY OK 5N 6W 33 1.000000 0.859277 1679.1
AULD #1-34 151641 KNOX/GOLDEN TREND/BRADLEY GRADY OK 3N 5W 34 0.542210 0.434834 289.7
AULD #2-34 152228 KNOX/GOLDEN TREND/BRADLEY GRADY OK 3N 5W 34 0.542210 0.434834 377.9
BLOCH #1-34 112229 KNOX/GOLDEN TREND/BRADLEY GRADY OK 3N 5W 34 0.103528 0.088055 81.8
BLOCH #2-34 110372 KNOX/GOLDEN TREND/BRADLEY GRADY OK 3N 5W 34 0.053349 0.040356 14.3
BLOCH #3-34 110641 KNOX/GOLDEN TREND/BRADLEY GRADY OK 3N 5W 34 0.103528 0.088055 425.4
BLOCH #6-34 110736 KNOX/GOLDEN TREND/BRADLEY GRADY OK 3N 5W 34 0.053350 0.040356 2.3
BOATWRIGHT UNIT 3,6,7 111138 KNOX/GOLDEN TREND/BRADLEY GRADY OK 4N 6W 30 0.960000 0.819896 5159.6
BOB CRADDOCK #1-28 110933 KNOX/GOLDEN TREND/BRADLEY GRADY OK 5N 6W 28 0.631029 0.502195 2167.8
BOB ROY #1-8 119929 KNOX/GOLDEN TREND/BRADLEY GRADY OK 3N 5W 8 0.072063 0.056938 33.4
BRAD #1-35 111125 KNOX/GOLDEN TREND/BRADLEY GRADY OK 5N 6W 35 1.000000 0.839746 118.4
CAROLYN #1-34 113872 KNOX/GOLDEN TREND/BRADLEY GRADY OK 3N 5W 34 0.548767 0.438589 424.5
CHANDLER #1-34 151565 KNOX/GOLDEN TREND/BRADLEY GRADY OK 3N 5W 34 0.156117 0.136813 1364.1
CHANDLER #2-34 151956 KNOX/GOLDEN TREND/BRADLEY GRADY OK 3N 5W 34 0.171231 0.149255 270.2
CHARLIE #1-16 151522 KNOX/GOLDEN TREND/BRADLEY GRADY OK 3N 5W 16 0.773916 0.590713 760.1
CUNNINGHAM UNIT #7-33 111127 KNOX/GOLDEN TREND/BRADLEY GRADY OK 5N 6W 33 1.000000 0.866804 1893.8
DANIELLE #1-8 113867 KNOX/GOLDEN TREND/BRADLEY GRADY OK 3N 5W 8 0.072387 0.057196 244.3
DIAN #1-28 111602 KNOX/GOLDEN TREND/BRADLEY GRADY OK 5N 5W 28 0.522856 0.423247 1327.9
FELL #1-22 111365 KNOX/GOLDEN TREND/BRADLEY GRADY OK 5N 5W 22 0.666719 0.535263 322.4
GAGE ORDIVICIAN #1-27 111129 KNOX/GOLDEN TREND/BRADLEY GRADY OK 5N 6W 27 1.000000 0.845083 1792.5
GODWIN #1-22 151584 KNOX/GOLDEN TREND/BRADLEY GRADY OK 4N 6W 22 0.943411 0.722915 886.6
GOFF #1-16 152095 KNOX/GOLDEN TREND/BRADLEY GRADY OK 3N 5W 16 0.962096 0.736994 68.8
GUNGOLL #1-28 111178 KNOX/GOLDEN TREND/BRADLEY GRADY OK 5N 5W 28 0.478774 0.388049 253.3
HELEN #1-26 111404 KNOX/GOLDEN TREND/BRADLEY GRADY OK 5N 5W 26 0.445813 0.389922 1312.4
HOSLEY #1-32 151352 KNOX/GOLDEN TREND/BRADLEY GRADY OK 3N 5W 32 0.604945 0.493815 362.1
HOSLEY #2-32 151923 KNOX/GOLDEN TREND/BRADLEY GRADY OK 3N 5W 32 0.645847 0.533881 1303.4
IRA BOATWRIGHT #2-34 111131 KNOX/GOLDEN TREND/BRADLEY GRADY OK 5N 6W 34 1.000000 0.820637 1898.8
JANELL #1-21 151872 KNOX/GOLDEN TREND/BRADLEY GRADY OK 3N 5W 21 0.553093 0.414123 213.1
JD HOLBROOK #1-35 111128 KNOX/GOLDEN TREND/BRADLEY GRADY OK 5N 6W 35 1.000000 0.833242 5355.4
JOSEPHINE #1-25 111169 KNOX/GOLDEN TREND/BRADLEY GRADY OK 5N 5W 25 0.770000 0.558250 379.3
JOSEPHINE #2-25 110071 KNOX/GOLDEN TREND/BRADLEY GRADY OK 5N 5W 25 0.970000 0.703250 906.9
JULES #1-34 152305 KNOX/GOLDEN TREND/BRADLEY GRADY OK 3N 5W 34 0.171231 0.149255 123.3
KAREN #1-22H 151945 KNOX/GOLDEN TREND/BRADLEY GRADY OK 4N 6W 22 0.976744 0.748548 2060.4
</Table>
Page 15 of 28
107
CHESAPEAKE ENERGY CORP
1ST QTR RESERVES W/BANK PRICING CASE
AS OF 4/1/2001
<Table>
<Caption>
DISC NET
PROP DATAROOM INCOME
LEASE NAME NUM AREA COUNTY ST TWN RANGE SEC WI NRI M$------
====================================================================================================================================
LUE #1-8 110229 KNOX/GOLDEN TREND/BRADLEY GRADY OK 3N 5W 8 0.065958 0.054054 116.2
MACK #1-21 152225 KNOX/GOLDEN TREND/BRADLEY GRADY OK 3N 5W 21 0.943750 0.730739 552.4
MADISON #1-21L 151946 KNOX/GOLDEN TREND/BRADLEY GRADY OK 3N 5W 21 0.556971 0.453042 3187.9
MAURER #1-21 111600 KNOX/GOLDEN TREND/BRADLEY GRADY OK 5N 5W 21 0.980000 0.796399 895.2
MITCHELL #2-34 112365 KNOX/GOLDEN TREND/BRADLEY GRADY OK 3N 5W 34 0.171231 0.147481 1364.2
MITCHELL A #1-34 151317 KNOX/GOLDEN TREND/BRADLEY GRADY OK 3N 5W 34 0.156117 0.136313 253.2
MONARCH #1-22 151625 KNOX/GOLDEN TREND/BRADLEY GRADY OK 3N 5W 22 0.647247 0.512034 1330.9
NATIONS #1-34 110647 KNOX/GOLDEN TREND/BRADLEY GRADY OK 3N 5W 34 0.918010 0.730509 589.0
NICOLE #1-22 111209 KNOX/GOLDEN TREND/BRADLEY GRADY OK 5N 5W 22 0.870000 0.653055 984.3
NICOLE #2-22 113066 KNOX/GOLDEN TREND/BRADLEY GRADY OK 5N 5W 22 0.933832 0.666268 3607.0
OPAL #1-34 112088 KNOX/GOLDEN TREND/BRADLEY GRADY OK 3N 5W 34 0.669915 0.529863 504.3
PHILMORE #1-21 151702 KNOX/GOLDEN TREND/BRADLEY GRADY OK 3N 5W 21 0.552886 0.449693 1707.1
PITCHFORD #1-7 112214 KNOX/GOLDEN TREND/BRADLEY GRADY OK 4N 6W 7 0.389221 0.304237 1238.3
REEDER CRADDOCK #3T-33 111146 KNOX/GOLDEN TREND/BRADLEY GRADY OK 5N 6W 33 0.000000 0.000000 0.0
ROBINSON BROS #1-34 152360 KNOX/GOLDEN TREND/BRADLEY GRADY OK 3N 5W 34 0.542210 0.434834 495.0
ROBINSON FAMILY #1-34 152196 KNOX/GOLDEN TREND/BRADLEY GRADY OK 3N 5W 34 0.542210 0.434834 700.4
S.A. DRUMMOND #1 111120 KNOX/GOLDEN TREND/BRADLEY GRADY OK 5N 6W 34 1.000000 0.840448 123.3
SLUSHER #1-28 110392 KNOX/GOLDEN TREND/BRADLEY GRADY OK 3N 5W 28 0.069171 0.053250 148.0
SPARKS #1-26 111115 KNOX/GOLDEN TREND/BRADLEY GRADY OK 5N 5W 26 0.000000 0.000000 0.0
STEVE "A" #1-35 116685 KNOX/GOLDEN TREND/BRADLEY GRADY OK 5N 5W 8 0.980000 0.791981 299.1
TAFT #1-21 151457 KNOX/GOLDEN TREND/BRADLEY GRADY OK 3N 5W 21 0.165000 0.144375 577.7
WHITENER #1-30 (BROMIDE-CARBO 151996 KNOX/GOLDEN TREND/BRADLEY GRADY OK 5N 6W 30 0.967065 0.749899 160.9
WILBER #1-29 111861 KNOX/GOLDEN TREND/BRADLEY GRADY OK 5N 6W 29 0.803333 0.627619 1042.8
WILBER #2-29 CARBONATES 110314 KNOX/GOLDEN TREND/BRADLEY GRADY OK 5N 6W 29 0.873038 0.695337 702.8
WILBER CRADDOCK #1-33 111140 KNOX/GOLDEN TREND/BRADLEY GRADY OK 5N 6W 33 1.000000 0.863028 7.3
WILBER CRADDOCK #2-33 111143 KNOX/GOLDEN TREND/BRADLEY GRADY OK 5N 6W 33 1.000000 0.863027 121.4
WRIGHT #1-8 151464 KNOX/GOLDEN TREND/BRADLEY GRADY OK 3N 5W 8 0.709356 0.526292 976.3
HODGE #1-2ST 151515 KNOX/GOLDEN TREND/BRADLEY STEPHENS OK 2N 5W 2 0.948038 0.736397 721.5
LYDIA MAY #1-2 112046 KNOX/GOLDEN TREND/BRADLEY STEPHENS OK 2N 5W 2 0.087252 0.079150 249.7
SHARON JEAN #1-2 191540 KNOX/GOLDEN TREND/BRADLEY STEPHENS OK 2N 5W 2 0.087252 0.079150 887.1
SHARON JEAN #2-2 191623 KNOX/GOLDEN TREND/BRADLEY STEPHENS OK 2N 5W 2 0.087252 0.079150 701.7
SHARON JEAN #3-2 192202 KNOX/GOLDEN TREND/BRADLEY STEPHENS OK 2N 5W 2 0.087252 0.079150 129.2
SLEDGE A #1-23 151308 KNOX/GOLDEN TREND/BRADLEY STEPHENS OK 2N 5W 23 0.581208 0.471597 777.5
KNOX/GOLDEN TREND/BRADLEY 62203.3
SHELBY FEDERAL #3 819394 LOVINGTON EDDY NM 22S 24E 12 0.250000 0.187500 1473.5
ALSTON #1-8 812092 LOVINGTON LEA NM 16S 36E 8 0.872500 0.708906 788.8
BOYCE #1-15 810191 LOVINGTON LEA NM 16S 35E 15 0.986328 0.765758 1908.7
BOYCE #2-15 812304 LOVINGTON LEA NM 16S 35E 14 0.920000 0.690000 564.6
BUS BARN #1-4Y 811955 LOVINGTON LEA NM 16S 36E 4 0.640826 0.501789 203.2
CHAMBERS #1-7 811888 LOVINGTON LEA NM 16S 36E 7 0.651875 0.479128 1386.9
GANDY #19-1 811889 LOVINGTON LEA NM 16S 36E 19 0.379544 0.295858 1455.9
GILMORE #1-24 812364 LOVINGTON LEA NM 16S 36E 24 0.937500 0.703125 3438.3
</Table>
Page 16 of 28
108
CHESAPEAKE ENERGY CORP
1ST QTR RESERVES W/BANK PRICING CASE
AS OF 4/1/2001
<Table>
<Caption>
DISC NET
PROP DATAROOM INCOME
LEASE NAME NUM AREA COUNTY ST TWN RANGE SEC WI NRI M$------
===========================================================================================================================
KALA #1-12H 810703 LOVINGTON LEA NM 16S 35E 7 0.975000 0.812500 6900.3
KIM #1-1 812221 LOVINGTON LEA NM 16S 36E 1 0.606445 0.459908 2212.4
LOVINGTON #1-5 811953 LOVINGTON LEA NM 16S 36E 4 0.668500 0.528673 4234.5
MAYFLY #1-14 COM 810922 LOVINGTON LEA NM 16S 35E 14 0.175398 0.160645 438.8
MAYFLY #2-14 COM 810753 LOVINGTON LEA NM 16S 35E 14 0.175398 0.160645 762.3
MAYFLY #5-14 COM 812147 LOVINGTON LEA NM 16S 35E 14 0.250568 0.200454 162.0
PATTY #1-20 812093 LOVINGTON LEA NM 16S 36E 20 0.872500 0.727083 1911.6
LOVINGTON 27841.8
JENKINS L R UNIT 9-1A 116962 OTHER MID-CONTINENT ATOKA OK 1N 13E 9 0.801479 0.651934 1433.6
LAFEVERS 1-10 116963 OTHER MID-CONTINENT ATOKA OK 1N 13E 10 0.640710 0.509157 2251.5
MCENTIRE UNIT 3-1 116964 OTHER MID-CONTINENT ATOKA OK 1N 13E 3 1.000000 0.803983 738.6
BARETT #1-3H 182115 OTHER MID-CONTINENT CARTER OK 3S 1E 3 0.970000 0.786629 1807.0
EPLEY #1-9H 120997 OTHER MID-CONTINENT CARTER OK 1S 3W 9 0.385819 0.290132 1225.9
JOHNSTON #1-32 120810 OTHER MID-CONTINENT CARTER OK 1S 3W 32 0.091250 0.069863 8.0
GIVENS #2-34 114788 OTHER MID-CONTINENT MCCLAIN OK 8N 4W 34 0.000000 0.071135 5.2
GIVENS GAS UNIT 114786 OTHER MID-CONTINENT MCCLAIN OK 8N 4W 34 0.569082 0.497947 139.1
COWBOY LEASE 115425 OTHER MID-CONTINENT NOBLE OK 23N 2W 16 0.990000 0.594050 312.5
GERKEN #1-21 115343 OTHER MID-CONTINENT NOBLE OK 23N 2W 21 0.940625 0.764258 127.4
GERKEN #2-21 119917 OTHER MID-CONTINENT NOBLE OK 23N 2W 21 0.920625 0.748008 52.8
GERKEN #3-21 110708 OTHER MID-CONTINENT NOBLE OK 23N 2W 21 0.915625 0.765236 607.2
GERKEN #4-21 111962 OTHER MID-CONTINENT NOBLE OK 23N 2W 21 0.915625 0.765236 460.7
GERKEN #6-21 111960 OTHER MID-CONTINENT NOBLE OK 23N 2W 21 0.885625 0.740728 47.7
J. PAUL LEASE 115427 OTHER MID-CONTINENT NOBLE OK 23N 2W 16 0.990000 0.717800 2153.0
MCNEELY #1-21 115344 OTHER MID-CONTINENT NOBLE OK 23N 2W 21 0.996484 0.832398 242.4
MCNEELY #2-21 119919 OTHER MID-CONTINENT NOBLE OK 23N 2W 21 0.976484 0.816148 344.7
MCNEELY #3-21 110715 OTHER MID-CONTINENT NOBLE OK 23N 2W 21 0.996485 0.838642 560.4
MCNEELY #4-21 111959 OTHER MID-CONTINENT NOBLE OK 23N 2W 21 0.996485 0.838642 108.6
MIGHTY MOUSER LEASE 115428 OTHER MID-CONTINENT NOBLE OK 23N 2W 21 0.000000 0.000000 0.0
RUDMAN LEASE 115430 OTHER MID-CONTINENT NOBLE OK 23N 2W 21 0.990000 0.594050 506.6
T A #2 115285 OTHER MID-CONTINENT NOBLE OK 23N 2W 16 0.980625 0.787891 332.2
T A #3 115286 OTHER MID-CONTINENT NOBLE OK 23N 2W 16 0.000000 0.000000 0.0
BONNIE 12-1 113951 OTHER MID-CONTINENT STEPHENS OK 1N 6W 12 0.093143 0.073407 25.1
BRITTAIN #1-12 122189 OTHER MID-CONTINENT STEPHENS OK 1S 4W 12 0.589803 0.471957 2.0
CALMES 155126 OTHER MID-CONTINENT STEPHENS OK 1S 4W 2 0.685595 0.590747 170.0
DRAKE, J.B. #1-12 112581 OTHER MID-CONTINENT STEPHENS OK 1S 4W 12 0.000000 0.000000 0.0
EDWARDS #1-4 120777 OTHER MID-CONTINENT STEPHENS OK 1S 4W 4 0.278289 0.219848 154.6
EDWARDS #2-4 120794 OTHER MID-CONTINENT STEPHENS OK 1S 4W 4 0.398911 0.321140 282.5
EDWARDS #3-4 120933 OTHER MID-CONTINENT STEPHENS OK 1S 4W 4 0.492945 0.381782 278.1
GOODWIN #1 115123 OTHER MID-CONTINENT STEPHENS OK 1S 4W 2 0.387500 0.339063 247.2
GOODWIN A 115124 OTHER MID-CONTINENT STEPHENS OK 1S 4W 2 0.387500 0.339063 199.2
GOODWIN B 115125 OTHER MID-CONTINENT STEPHENS OK 1S 4W 2 0.391685 0.342495 182.5
GOODWIN, ARTHUR 115097 OTHER MID-CONTINENT STEPHENS OK 1S 4W 2 0.500000 0.437500 23.1
</Table>
Page 17 of 28
109
CHESAPEAKE ENERGY CORP
1ST QTR RESERVES W/BANK PRICING CASE
AS OF 4/1/2001
<Table>
<Caption>
DISC NET
PROP DATAROOM INCOME
LEASE NAME NUM AREA COUNTY ST TWN RANGE SEC WI NRI M$------
=============================================================================================================================
HANSON UNIT #1, #2 115121 OTHER MID-CONTINENT STEPHENS OK 1S 4W 12 0.775000 0.678125 565.1
HANSON-SHELL #3 115119 OTHER MID-CONTINENT STEPHENS OK 1S 4W 12 0.726563 0.635742 192.9
KEENER #1-4H 121213 OTHER MID-CONTINENT STEPHENS OK 1S 4W 4 0.263750 0.228902 438.3
LAYN, W.L. #2-1 121177 OTHER MID-CONTINENT STEPHENS OK 1S 4W 1 0.000000 0.000000 0.0
LAYN, W.L. UNIT 115120 OTHER MID-CONTINENT STEPHENS OK 1S 4W 1 0.484375 0.423828 300.0
LORRE #1-27H 132082 OTHER MID-CONTINENT STEPHENS OK 1N 4W 22 0.885000 0.690724 2951.0
PIERCE, WALTER #1 115122 OTHER MID-CONTINENT STEPHENS OK 1S 4W 2 0.387500 0.339063 254.1
PIERCE, WALTER #2 115513 OTHER MID-CONTINENT STEPHENS OK 1S 4W 2 0.387500 0.339063 159.4
QUINN, C. #10, #11, #12 191312 OTHER MID-CONTINENT STEPHENS OK 1S 5W 26 1.000000 0.875000 1573.2
QUINN, CLYDE #1, #5, #6 191306 OTHER MID-CONTINENT STEPHENS OK 1S 5W 26 1.000000 0.875000 447.5
QUINN, CLYDE #1A-26 191304 OTHER MID-CONTINENT STEPHENS OK 1S 5W 26 0.500000 0.437500 67.7
QUINN, TONY #26-2 191203 OTHER MID-CONTINENT STEPHENS OK 1S 5W 26 0.225000 0.196920 11.6
RINGER #1-32H 121553 OTHER MID-CONTINENT STEPHENS OK 1N 4W 32 0.451619 0.356436 1546.3
SIMMS ESTATE #3-2 122188 OTHER MID-CONTINENT STEPHENS OK 1S 4W 2 0.367296 0.306564 356.0
SUZANNE 1-12 116928 OTHER MID-CONTINENT STEPHENS OK 1N 6W 12 0.000000 0.006524 0.8
WILLIAMSON 1 2 3-12 116953 OTHER MID-CONTINENT STEPHENS OK 1N 6W 12 0.000000 0.006608 1.9
OTHER MID-CONTINENT 23895.2
ABERSOLD A-3 (1) 315602 PANHANDLE CARSON TX 3 181 0 1.000000 0.875000 61.1
BEDNORZ, JG T1 (4) 315817 PANHANDLE CARSON TX 4 2 0 1.000000 0.886719 129.3
BURNETT RANCH CENTRAL BATTERY 315899 PANHANDLE CARSON TX 0 1.000000 0.750000 0.5
BURNETT S B #G10-119 315916 PANHANDLE CARSON TX 119 1.000000 0.750000 1554.5
BURNETT S B #G2-102 315909 PANHANDLE CARSON TX 102 1.000000 0.750000 501.7
BURNETT S B #G3-81H 315910 PANHANDLE CARSON TX 81 1.000000 0.750000 1081.7
BURNETT S B #G4-103 315911 PANHANDLE CARSON TX 103 1.000000 0.750000 502.3
BURNETT S B #G5-79 315912 PANHANDLE CARSON TX 79 1.000000 0.750000 1026.7
BURNETT S B #G7-117 315913 PANHANDLE CARSON TX 117 1.000000 0.750000 399.0
BURNETT, MC 2R2 315785 PANHANDLE CARSON TX 0 1.000000 0.875000 585.6
BURNETT, MC G1B (15) 315784 PANHANDLE CARSON TX 5 21 0 1.000000 0.875000 638.9
BURNETT, MC G1C (16) 315788 PANHANDLE CARSON TX 4 35 0 1.000000 0.875000 959.2
BURNETT, MC G1D (17) 315786 PANHANDLE CARSON TX 5 34 0 1.000000 0.875000 829.0
BURNETT, MC H1 (28) 315789 PANHANDLE CARSON TX 5 104 0 1.000000 0.875000 52.3
BURNETT, MC P1 (29) 315577 PANHANDLE CARSON TX 4 54 0 1.000000 0.812500 267.5
BURNETT, MC P2 (30) 315578 PANHANDLE CARSON TX 5 48 0 1.000000 0.812500 1123.1
BURNETT, MC R1E (14) 315773 PANHANDLE CARSON TX 0 1.000000 0.875000 284.4
BURNETT, MC S1 (36) 315790 PANHANDLE CARSON TX 5 94 0 1.000000 0.875000 420.9
BURNETT, MC T1 (37) 315774 PANHANDLE CARSON TX 5 64 0 1.000000 0.875000 1705.5
BURNETT, MC T2 (10) 315780 PANHANDLE CARSON TX 5 70 0 1.000000 0.875000 773.7
BURNETT, MC T3 (38) 315775 PANHANDLE CARSON TX 5 86 0 1.000000 0.875000 172.5
BURNETT, MC T4 (39) 315776 PANHANDLE CARSON TX 5 84 0 1.000000 0.875000 514.5
BURNETT, MC T5 (11) 315781 PANHANDLE CARSON TX 5 89 0 1.000000 0.875000 705.0
BURNETT, MC T6 (12) 315782 PANHANDLE CARSON TX 5 61 0 1.000000 0.875000 2711.6
BURNETT, MC T7 (13) 315783 PANHANDLE CARSON TX 5 90 0 1.000000 0.875000 380.0
</Table>
Page 18 of 28
110
CHESAPEAKE ENERGY CORP
1ST QTR RESERVES W/BANK PRICING CASE
AS OF 4/1/2001
<Table>
<Caption>
DISC NET
PROP DATAROOM INCOME
LEASE NAME NUM AREA COUNTY ST TWN RANGE SEC WI NRI M$------
==========================================================================================================================
BURNETT, MC T7A (40) 315777 PANHANDLE CARSON TX 5 96 0 1.000000 0.875000 462.8
BURNETT, MC T8 (41) 315778 PANHANDLE CARSON TX 5 67 0 1.000000 0.875000 1292.1
BURNETT, MC T9R (35) 315779 PANHANDLE CARSON TX 5 108 0 1.000000 0.875000 182.7
CLARK #1-8 315923 PANHANDLE CARSON TX 8 1.000000 0.875000 500.0
EMPIRE GRANITE WASH LEASE 315971 PANHANDLE CARSON TX 13 0.000000 0.000000 0.0
GARNER, CR A2T (103) 315794 PANHANDLE CARSON TX 4 96 0 1.000000 0.875000 372.7
GORES S-1 (108) 315820 PANHANDLE CARSON TX 4 42 0 1.000000 0.415625 348.8
HAIDUK, H G-1 (111) 315591 PANHANDLE CARSON TX 4 21 0 1.000000 0.875000 281.1
HARRISON T-1 (114) 315799 PANHANDLE CARSON TX 4 40 0 1.000000 0.875000 41.1
HODGES #1-67 315924 PANHANDLE CARSON TX 67 1.000000 0.875000 392.3
JORDAN E-1 (121) 315795 PANHANDLE CARSON TX 4 94 0 1.000000 0.875000 542.6
JORDAN T-1 (122) 315796 PANHANDLE CARSON TX 4 83 0 1.000000 0.875000 483.3
JORDAN, WD T2 (123) 315797 PANHANDLE CARSON TX 4 95 0 1.000000 0.875000 247.0
JORDAN, WD T3 (124) 315798 PANHANDLE CARSON TX 4 84 0 1.000000 0.875000 310.6
KALKA, C. T1 (125) 315819 PANHANDLE CARSON TX 4 43 0 1.000000 0.875000 191.0
LEDRICK S-1 (133) 315675 PANHANDLE CARSON TX 239 0 1.000000 0.875000 214.1
MAULDIN E-1 (135) 315674 PANHANDLE CARSON TX 241 0 1.000000 0.875000 129.4
MCCONNELL, JC E1 (136) 315826 PANHANDLE CARSON TX 4 66 0 1.000000 0.875000 12.0
MCCONNELL, RS T1 (138) 315822 PANHANDLE CARSON TX 4 46 0 1.000000 0.875000 65.7
MCCOY T-1 (139) 315600 PANHANDLE CARSON TX 4 41 0 1.000000 0.875000 68.9
MCEWEN G-1 (140) 315583 PANHANDLE CARSON TX 3 204 0 1.000000 0.875000 379.4
MCLAUGHLIN, MJ M1 141 315800 PANHANDLE CARSON TX 4 61 0 1.000000 0.875000 152.9
MCLAUGHLIN, MJ M2 142 315801 PANHANDLE CARSON TX 4 72 0 1.000000 0.875000 580.7
MCLAUGHLIN, MJ M3 143 315802 PANHANDLE CARSON TX 4 39 0 1.000000 0.875000 499.8
MCLAUGHLIN, MJ M4 144 315803 PANHANDLE CARSON TX 4 62 0 1.000000 0.875000 247.0
MCLAUGHLIN, MJ M5 145 315804 PANHANDLE CARSON TX 4 40 0 1.000000 0.875000 21.1
MCLAUGHLIN, MJ M6 146 315805 PANHANDLE CARSON TX 4 49 0 1.000000 0.875000 68.4
MCLAUGHLIN, MJ M7 147 315806 PANHANDLE CARSON TX 4 50 0 1.000000 0.875000 128.4
MCLAUGHLIN, MJ M8 148 315807 PANHANDLE CARSON TX 4 71 0 1.000000 0.875000 205.6
MINERAL INV T1 149 315643 PANHANDLE CARSON TX 4 60 0 1.000000 0.875000 119.2
MOORE, EJ T1 (154) 315823 PANHANDLE CARSON TX 7 21 0 1.000000 0.875000 9.2
NOEL T-1 (155) 315691 PANHANDLE CARSON TX 4 26 0 1.000000 0.875000 143.0
POPE, DAVE E1 (156) 315828 PANHANDLE CARSON TX 7 23 0 1.000000 0.875000 89.4
POWERS #1-248 315931 PANHANDLE CARSON TX 248 1.000000 0.875000 258.8
RAMMING E-1 (160) 315679 PANHANDLE CARSON TX 4 18 0 1.000000 0.875000 420.3
SANFORD, JM P1 (161) 315825 PANHANDLE CARSON TX 3 13 0 1.000000 0.875000 54.6
SCHAFFER S-2 (162) 315663 PANHANDLE CARSON TX 4 64 0 1.000000 0.875000 94.3
SCHAFFER S-3 (163) 315664 PANHANDLE CARSON TX 4 63 0 1.000000 0.875000 1354.0
SCHAFFER S-4-R (164) 315665 PANHANDLE CARSON TX 4 48 0 1.000000 0.875000 42.5
SCHAFFER S-5 (165) 315666 PANHANDLE CARSON TX 4 69 0 1.000000 0.875000 456.0
SCHAFFER S-6 (166) 315667 PANHANDLE CARSON TX 4 70 0 1.000000 0.875000 311.0
SCHAFFER S-8 (168) 315669 PANHANDLE CARSON TX 4 85 0 1.000000 0.875000 310.7
</Table>
Page 19 of 28
111
CHESAPEAKE ENERGY CORP
1ST QTR RESERVES W/BANK PRICING CASE
AS OF 4/1/2001
<Table>
<Caption>
DISC NET
PROP DATAROOM INCOME
LEASE NAME NUM AREA COUNTY ST TWN RANGE SEC WI NRI M$------
==========================================================================================================================
SCHAFFER S-9 (169) 315670 PANHANDLE CARSON TX 4 86 0 1.000000 0.875000 678.4
SMITH E-1 (172) 315673 PANHANDLE CARSON TX 4 27 0 1.000000 0.875000 437.0
SMOOT #1-87 315932 PANHANDLE CARSON TX 87 1.000000 0.875000 407.0
TALLEY-BAIRD E1 207 315672 PANHANDLE CARSON TX 7 3 0 1.000000 0.875000 200.1
TEXAS CO FEE T5 214 315678 PANHANDLE CARSON TX 4 59 0 1.000000 0.875000 124.2
URBANCZYK, BEN G1 227 315589 PANHANDLE CARSON TX 4 19 0 1.000000 0.875000 83.7
URBANCZYK, BEN L2 228 315590 PANHANDLE CARSON TX 4 20 0 1.000000 0.875000 405.5
URBANCZYK, JH L2 230 315593 PANHANDLE CARSON TX 4 22 0 1.000000 0.838542 140.5
URBANCZYK, JH T1 229 315592 PANHANDLE CARSON TX 4 25 0 1.000000 0.838542 16.6
WITTER E-1 (234) 315579 PANHANDLE CARSON TX 7 22 0 1.000000 0.875000 159.3
ABERSOLD G-1 (2) 315601 PANHANDLE GRAY TX 3 180 0 1.000000 0.875000 17.0
BINKLEY, LE E1 (7) 315808 PANHANDLE GRAY TX 3 179 0 1.000000 0.875000 409.1
HEXTER E-3 (115) 315827 PANHANDLE GRAY TX 215 0 1.000000 0.750000 371.8
HUGGINS, DOROTHY #1-4 315922 PANHANDLE GRAY TX 4 1.000000 0.863047 551.1
MADDEN #1-112 315933 PANHANDLE GRAY TX 112 1.000000 0.875000 265.9
VANIMAN E-1 (231) 315580 PANHANDLE GRAY TX 3 157 0 1.000000 0.875000 333.2
CIRCLE DOT #1-84* 315831 PANHANDLE HEMPHILL TX 84 0 0.316216 0.225939 285.4
JOHNSON #202 315586 PANHANDLE HUTCHINSON TX 17 0 1.000000 0.875000 6.7
JOHNSON, CART P1 (117) 315588 PANHANDLE HUTCHINSON TX 1 0 1.000000 0.812500 414.7
JOHNSON, EB 201 315585 PANHANDLE HUTCHINSON TX 3 0 1.000000 0.875000 16.5
JOHNSON, EB 1B (118) 315584 PANHANDLE HUTCHINSON TX 2 0 1.000000 0.875000 252.5
JOHNSON, A.K. 315576 PANHANDLE HUTCHNSN TX 0 0.000000 0.000000 0.0
BEAUCHAMP P1R (3) 315824 PANHANDLE MOORE TX 44 111 0 1.000000 0.875000 369.3
BENNETT P-1 (5) 315661 PANHANDLE MOORE TX 2 0 1.000000 0.518745 90.8
BENNETT-SNEED P1 (6) 315793 PANHANDLE MOORE TX 1 24 0 1.000000 0.706247 1049.5
COON, RS 1051 315710 PANHANDLE MOORE TX 0 1.000000 0.875000 285.5
COON, RS 1052 315708 PANHANDLE MOORE TX 0 1.000000 0.875000 9.8
COON, RS M10R (52) 315734 PANHANDLE MOORE TX 44 192 0 1.000000 0.875000 748.6
COON, RS M11 (53) 315711 PANHANDLE MOORE TX 44 105 0 1.000000 0.875000 268.6
COON, RS M12R (54) 335695 PANHANDLE MOORE TX 44 187 0 1.000000 0.875000 436.0
COON, RS M13R (55) 315701 PANHANDLE MOORE TX 44 230 0 1.000000 0.875000 829.9
COON, RS M14 (56) 315702 PANHANDLE MOORE TX 44 229 0 1.000000 0.875000 451.2
COON, RS M15R (57) 315704 PANHANDLE MOORE TX 44 143 0 1.000000 0.875000 411.9
COON, RS M16 (58) 315726 PANHANDLE MOORE TX 44 101 0 1.000000 0.875000 340.9
COON, RS M17 (59) 315721 PANHANDLE MOORE TX 44 108 0 1.000000 0.875000 483.4
COON, RS M18R (60) 315718 PANHANDLE MOORE TX 44 148 0 1.000000 0.875000 481.9
COON, RS M1R (44) 315717 PANHANDLE MOORE TX 0 1.000000 0.875000 152.3
COON, RS M20 (61) 315693 PANHANDLE MOORE TX 44 152 0 1.000000 0.875000 330.4
COON, RS M21 (62) 315712 PANHANDLE MOORE TX 44 107 0 1.000000 0.875000 507.6
COON, RS M22R (63) 315735 PANHANDLE MOORE TX 44 187 0 1.000000 0.875000 404.9
COON, RS M23R (64) 315724 PANHANDLE MOORE TX 44 147 0 1.000000 0.875000 499.2
COON, RS M24R (65) 315696 PANHANDLE MOORE TX 44 193 0 1.000000 0.875000 352.0
</Table>
Page 20 of 28
112
CHESAPEAKE ENERGY CORP
1ST QTR RESERVES W/BANK PRICING CASE
AS OF 4/1/2001
<Table>
<Caption>
DISC NET
PROP DATAROOM INCOME
LEASE NAME NUM AREA COUNTY ST TWN RANGE SEC WI NRI M$------
===========================================================================================================================
COON, RS M25R (66) 315719 PANHANDLE MOORE TX 44 188 0 1.000000 0.875000 531.5
COON, RS M26 (67) 315722 PANHANDLE MOORE TX 44 145 0 1.000000 0.875000 390.9
COON, RS M27 (68) 315705 PANHANDLE MOORE TX 44 144 0 1.000000 0.875000 347.3
COON, RS M28 (69) 315694 PANHANDLE MOORE TX 44 185 0 1.000000 0.875000 305.8
COON, RS M29 (70) 315727 PANHANDLE MOORE TX 44 109 0 1.000000 0.875000 743.5
COON, RS M2R (45) 315692 PANHANDLE MOORE TX 0 1.000000 0.875000 205.1
COON, RS M30R (71) 315698 PANHANDLE MOORE TX 0 1.000000 0.875000 649.7
COON, RS M31R (72) 315736 PANHANDLE MOORE TX 44 150 0 1.000000 0.875000 262.8
COON, RS M32R (73) 315713 PANHANDLE MOORE TX 44 146 0 1.000000 0.875000 384.8
COON, RS M33 (74) 315699 PANHANDLE MOORE TX 44 189 0 1.000000 0.875000 440.7
COON, RS M3R (46) 315700 PANHANDLE MOORE TX 44 191 0 1.000000 0.875000 597.8
COON, RS M4 (47) 315720 PANHANDLE MOORE TX 44 103 0 1.000000 0.875000 282.6
COON, RS M5R (48) 315703 PANHANDLE MOORE TX 44 110 0 1.000000 0.875000 98.0
COON, RS M6R (49) 315723 PANHANDLE MOORE TX 44 106 0 1.000000 0.875000 431.6
COON, RS M7 (50) 315725 PANHANDLE MOORE TX 44 102 0 1.000000 0.875000 380.3
COON, RS M9 (51) 315697 PANHANDLE MOORE TX 44 231 0 1.000000 0.875000 649.8
COON-SNEED M10 (84) 315682 PANHANDLE MOORE TX 15 0 1.000000 0.850000 313.3
COON-SNEED M11 (85) 315730 PANHANDLE MOORE TX 12 0 1.000000 0.850000 706.0
COON-SNEED M12R (86) 315716 PANHANDLE MOORE TX 6 0 1.000000 0.850000 694.0
COON-SNEED M13 (87) 315683 PANHANDLE MOORE TX 13 0 1.000000 0.850000 353.9
COON-SNEED M1R (75) 315714 PANHANDLE MOORE TX 8 0 1.000000 0.850000 81.4
COON-SNEED M2 (76) 315680 PANHANDLE MOORE TX 16 0 1.000000 0.850000 137.6
COON-SNEED M3 (77) 315681 PANHANDLE MOORE TX 17 0 1.000000 0.850000 469.7
COON-SNEED M4 (78) 315731 PANHANDLE MOORE TX 3 0 1.000000 0.850000 317.7
COON-SNEED M5 (79) 315728 PANHANDLE MOORE TX 9 0 1.000000 0.850000 576.4
COON-SNEED M6R (80) 315733 PANHANDLE MOORE TX 5 0 1.000000 0.850000 517.7
COON-SNEED M7 (81) 315729 PANHANDLE MOORE TX 11 0 1.000000 0.850000 523.6
COON-SNEED M8R (82) 315732 PANHANDLE MOORE TX 1 0 1.000000 0.850000 578.8
COON-SNEED M9 (83) 315715 PANHANDLE MOORE TX 7 0 1.000000 0.850000 579.3
DONELSON, A.J. A #2 390003 PANHANDLE MOORE TX 176 1.000000 0.825781 1834.0
FOSTER F-2 (101) 315658 PANHANDLE MOORE TX 240 0 1.000000 0.875000 358.7
GOBER S-2 (105) 315598 PANHANDLE MOORE TX 15 0 1.000000 0.875000 508.4
GOBER S-3 (106) 315599 PANHANDLE MOORE TX 1 12 0 1.000000 0.875000 804.8
GOBER, OE S-1 (104) 315597 PANHANDLE MOORE TX 16 0 1.000000 0.875000 511.7
HAILE M-2 (113) 315685 PANHANDLE MOORE TX 1 2 0 1.000000 0.875000 498.6
HAILE, LJ M1 (112) 315684 PANHANDLE MOORE TX 1 1 0 1.000000 0.875000 292.9
HOHMANN, R.N. #2 312024 PANHANDLE MOORE TX 0 1.000000 0.875000 1551.1
JT SNEED 204 315635 PANHANDLE MOORE TX 0 1.000000 0.850000 14.1
JT SNEED 219 315636 PANHANDLE MOORE TX 0 1.000000 0.850000 19.5
JT SNEED 2361 315634 PANHANDLE MOORE TX 0 1.000000 0.850000 66.8
JT SNEED 2362 315628 PANHANDLE MOORE TX 0 1.000000 0.850000 215.1
JT SNEED 7201 315617 PANHANDLE MOORE TX 0 1.000000 0.850000 163.1
</Table>
Page 21 of 28
113
CHESAPEAKE ENERGY CORP
1ST QTR RESERVES W/BANK PRICING CASE
AS OF 4/1/2001
<Table>
<Caption>
DISC NET
PROP DATAROOM INCOME
LEASE NAME NUM AREA COUNTY ST TWN RANGE SEC WI NRI M$------
==========================================================================================================================
JT SNEED A 901 315688 PANHANDLE MOORE TX 0 1.000000 0.670000 23.2
JOHNSN-WALTRS #1-232 315677 PANHANDLE MOORE TX 29 0 1.000000 0.890754 353.2
JOHNSN-WALTRS P1 120 315676 PANHANDLE MOORE TX 28 0 1.000000 0.890754 1228.3
JONES B-1 (236) 315815 PANHANDLE MOORE TX 214 0 0.250000 0.218750 197.2
KILGORE G3 (127) 315770 PANHANDLE MOORE TX 19 0 1.000000 0.875000 384.0
KILGORE PAR-6 (130) 315771 PANHANDLE MOORE TX 5 0 1.000000 0.875000 199.0
KILGORE, C L G2 126 315769 PANHANDLE MOORE TX 29 0 1.000000 0.875000 19.3
KILGORE, C L P5 (129) 315791 PANHANDLE MOORE TX 9 0 1.000000 0.875000 170.6
LASAL NAT BK E1R 131 315792 PANHANDLE MOORE TX 0 1.000000 0.875000 849.6
LEA, H.I. 101 315763 PANHANDLE MOORE TX 47 47 0 1.000000 0.875000 23.4
LEA, H.I. 1R (132) 315764 PANHANDLE MOORE TX 47 47 0 1.000000 0.875000 412.4
LUCKY TIGER M1A 134 315766 PANHANDLE MOORE TX 1 5 0 1.000000 0.875000 319.2
MOORE M2R (151) 315642 PANHANDLE MOORE TX 44 0 1.000000 0.875000 114.1
MOORE P1R (152) 315641 PANHANDLE MOORE TX 44 14 0 1.000000 0.875000 82.0
MOORE P3R (153) 315640 PANHANDLE MOORE TX 44 0 1.000000 0.875000 414.1
MORTON, J.N. #2 312035 PANHANDLE MOORE TX 0 1.000000 0.875000 1190.2
POWELL, LB G1R (157) 315765 PANHANDLE MOORE TX 0 1.000000 0.703125 721.8
SCHLEE, JB 1 (171) 315743 PANHANDLE MOORE TX 44 271 0 1.000000 0.875000 1488.0
SNEED EST 1901 315811 PANHANDLE MOORE TX 0 1.000000 0.875000 153.4
SNEED EST 9401 315813 PANHANDLE MOORE TX 0 1.000000 0.875000 970.4
SNEED EST P2 (174) 315812 PANHANDLE MOORE TX 19 0 1.000000 0.850000 706.5
SNEED ESTATE #1903 312358 PANHANDLE MOORE TX 19 0.960000 0.840000 593.3
SNEED ESTATE R8SN 315657 PANHANDLE MOORE TX 0 1.000000 0.785000 418.3
SNEED R350 315814 PANHANDLE MOORE TX 0 1.000000 0.875000 710.8
SNEED, JT 101 315637 PANHANDLE MOORE TX 3 54 0 1.000000 0.850000 8.9
SNEED, JT 110 315639 PANHANDLE MOORE TX 0 1.000000 0.850000 73.7
SNEED, JT 113 315630 PANHANDLE MOORE TX 2 0 1.000000 0.850000 6.5
SNEED, JT 12 (187) 315737 PANHANDLE MOORE TX 1 13 0 1.000000 0.850000 388.5
SNEED, JT 124 315607 PANHANDLE MOORE TX 5 0 1.000000 0.850000 14.4
SNEED, JT 125 315631 PANHANDLE MOORE TX 3 71 0 1.000000 0.850000 155.5
SNEED, JT 127 315608 PANHANDLE MOORE TX 1 0 1.000000 0.850000 26.2
SNEED, JT 128 315632 PANHANDLE MOORE TX 0 1.000000 0.850000 305.5
SNEED, JT 130 315609 PANHANDLE MOORE TX 0 1.000000 0.850000 66.3
SNEED, JT 1-R (175) 315671 PANHANDLE MOORE TX 1 0 1.000000 0.670000 347.5
SNEED, JT 20 (194) 315739 PANHANDLE MOORE TX 0 1.000000 0.875000 773.0
SNEED, JT 201 315606 PANHANDLE MOORE TX 13 0 1.000000 0.875000 398.8
SNEED, JT 202 315610 PANHANDLE MOORE TX 0 1.000000 0.850000 2.6
SNEED, JT 203 315633 PANHANDLE MOORE TX 0 1.000000 0.850000 106.2
SNEED, JT P10 (185) 315616 PANHANDLE MOORE TX 0 1.000000 0.850000 900.3
SNEED, JT P13 (188) 315618 PANHANDLE MOORE TX 2 0 1.000000 0.850000 844.2
SNEED, JT P1R (176) 315611 PANHANDLE MOORE TX 15 0 1.000000 0.850000 359.2
SNEED, JT P2 (177) 315612 PANHANDLE MOORE TX 3 77 0 1.000000 0.850000 266.5
</Table>
Page 22 of 28
114
CHESAPEAKE ENERGY CORP
1ST QTR RESERVES W/BANK PRICING CASE
AS OF 4/1/2001
<Table>
<Caption>
DISC NET
PROP DATAROOM INCOME
LEASE NAME NUM AREA COUNTY ST TWN RANGE SEC WI NRI M$------
==========================================================================================================================
SNEED, JT P21 (195) 315619 PANHANDLE MOORE TX 3 72 0 1.000000 0.850000 301.7
SNEED, JT P22 (196) 315620 PANHANDLE MOORE TX 3 71 0 1.000000 0.850000 565.7
SNEED, JT P23 197 315656 PANHANDLE MOORE TX 30 0 1.000000 0.785000 447.3
SNEED, JT P24 (198) 315621 PANHANDLE MOORE TX 5 0 1.000000 0.850000 273.6
SNEED, JT P25 (199) 315622 PANHANDLE MOORE TX 2 0 1.000000 0.850000 590.8
SNEED, JT P26 (200) 315623 PANHANDLE MOORE TX 0 1.000000 0.850000 374.6
SNEED, JT P27 (201) 315624 PANHANDLE MOORE TX 1 0 1.000000 0.850000 508.9
SNEED, JT P28 (202) 315625 PANHANDLE MOORE TX 0 1.000000 0.850000 348.0
SNEED, JT P29 (203) 315626 PANHANDLE MOORE TX 0 1.000000 0.850000 689.3
SNEED, JT P3 (178) 315613 PANHANDLE MOORE TX 0 1.000000 0.850000 696.6
SNEED, JT P30R (204) 315627 PANHANDLE MOORE TX 1 0 1.000000 0.850000 361.4
SNEED, JT P31 (205) 315740 PANHANDLE MOORE TX 12 0 1.000000 0.850000 371.3
SNEED, JT P4 (179) 315614 PANHANDLE MOORE TX 3 54 0 1.000000 0.850000 262.5
SNEED, JT P5 (180) 315615 PANHANDLE MOORE TX 7 0 1.000000 0.850000 449.7
SNEED, JT P6 181 315653 PANHANDLE MOORE TX 38 0 1.000000 0.785000 540.1
SNEED, JT P7 (182) 315738 PANHANDLE MOORE TX 12 0 1.000000 0.850000 631.2
SNEED, JT S11 (186) 315689 PANHANDLE MOORE TX 8 0 1.000000 0.670000 391.9
SNEED, JT S14 189 315654 PANHANDLE MOORE TX 22 0 1.000000 0.785000 1060.2
SNEED, JT S15 (190) 315690 PANHANDLE MOORE TX 9 0 1.000000 0.670000 211.7
SNEED, JT S16 (191) 315687 PANHANDLE MOORE TX 1 28 0 1.000000 0.785000 300.2
SNEED, JT S17 192 315655 PANHANDLE MOORE TX 31 0 1.000000 0.785000 422.4
SNEED, JT S19 (193) 315629 PANHANDLE MOORE TX 6 0 1.000000 0.850000 490.7
SNEED, JT S2D (206) 315706 PANHANDLE MOORE TX 26 0 1.000000 0.670000 579.5
SNEED, JT S9 (184) 315686 PANHANDLE MOORE TX 1 27 0 1.000000 0.785000 795.1
TAYLOR, W H 2 (208) 315603 PANHANDLE MOORE TX 17 0 1.000000 0.875000 612.5
TAYLOR, W H G1 (209) 315604 PANHANDLE MOORE TX 21 0 1.000000 0.875000 331.6
TAYLOR, W H G3 (210) 315605 PANHANDLE MOORE TX 21 0 1.000000 0.875000 970.4
TAYLOR, W H H1R (211) 315767 PANHANDLE MOORE TX 0 1.000000 0.875000 608.3
TAYLOR, W H P1 212 315816 PANHANDLE MOORE TX 244 0 1.000000 0.875000 1061.3
TROUTMAN, GL S1R 226 315660 PANHANDLE MOORE TX 0 1.000000 0.875000 771.3
WILBAR #4 312039 PANHANDLE MOORE TX 0 1.000000 0.875000 1219.9
WILLIAMS, N B T1 233 315772 PANHANDLE MOORE TX 44 0 1.000000 0.875000 605.9
BUCKLES A #1-416 316014 PANHANDLE SHERMAN TX 416 1.000000 0.875000 2148.9
BUCKLES C #1-417 316034 PANHANDLE SHERMAN TX 417 1.000000 0.875000 298.4
CALVIRD A #1-382 316025 PANHANDLE SHERMAN TX 382 1.000000 0.875000 3292.6
HITZ "A" #1-451 316257 PANHANDLE SHERMAN TX 451 1.000000 0.875000 895.5
KEENAN A #2-336 312397 PANHANDLE SHERMAN TX 336 0.960000 0.840000 1141.4
PRONGER A #1-350 316013 PANHANDLE SHERMAN TX 350 1.000000 0.875000 1148.2
SEELEY A #1-415 316035 PANHANDLE SHERMAN TX 415 1.000000 0.875000 615.8
STEWART A #1-383 316016 PANHANDLE SHERMAN TX 383 1.000000 0.875000 523.1
TIDWELL A #2-403 316022 PANHANDLE SHERMAN TX 403 1.000000 0.875000 1305.8
WOHLFORD A #4-349 316024 PANHANDLE SHERMAN TX 349 1.000000 0.928600 3196.0
</Table>
Page 23 of 28
115
CHESAPEAKE ENERGY CORP
1ST QTR RESERVES W/BANK PRICING CASE
AS OF 4/1/2001
<Table>
<Caption>
DISC NET
PROP DATAROOM INCOME
LEASE NAME NUM AREA COUNTY ST TWN RANGE SEC WI NRI M$------
===========================================================================================================================
WOHLFORD B #1-368 316023 PANHANDLE SHERMAN TX 368 1.000000 0.928595 1688.8
WOHLFORD C #1-334 316030 PANHANDLE SHERMAN TX 334 1.000000 0.928595 2424.5
WOHLFORD D #2-315 316008 PANHANDLE SHERMAN TX 315 1.000000 0.888399 875.2
PANHANDLE 117121.2
BARBARA 4-16 116623 SAHARA BEAVER OK 6N 28ECM 16 0.980000 0.742656 44.7
BERNIE 4-14 116618 SAHARA BEAVER OK 6N 28ECM 14 0.980000 0.769453 176.8
HAROLD 1-16 119910 SAHARA BEAVER OK 6N 28ECM 16 0.980000 0.742650 276.9
HENNIGH 1-21 119909 SAHARA BEAVER OK 6N 28ECM 21 0.500000 0.437500 285.4
HENNIGH 2-21 110792 SAHARA BEAVER OK 6N 28ECM 21 0.500000 0.437500 1.4
HENNIGH 3-14 117449 SAHARA BEAVER OK 6N 28ECM 14 0.980000 0.769453 141.4
IDA 3-16 115550 SAHARA BEAVER OK 6N 28ECM 16 0.980000 0.742656 27.4
LETA #3-17 116621 SAHARA BEAVER OK 6N 28ECM 17 0.980000 0.742656 94.3
LETA #4-17 110199 SAHARA BEAVER OK 6N 28ECM 17 0.980000 0.742734 77.4
LETA #5-17 110732 SAHARA BEAVER OK 6N 28ECM 17 0.980000 0.742734 66.7
LETA #6-17 110733 SAHARA BEAVER OK 6N 28ECM 17 0.980000 0.742734 33.4
LIND 1-16 119911 SAHARA BEAVER OK 6N 28ECM 16 0.980000 0.742656 326.9
NELSON 1-17 110369 SAHARA BEAVER OK 6N 28ECM 17 0.980000 0.742656 250.2
ROBERTS #1 (MORROW) 119539 SAHARA BEAVER OK 2N 28ECM 11 0.225196 0.175433 81.4
ROBERTS #2-11 119540 SAHARA BEAVER OK 2N 28ECM 11 0.225196 0.175433 31.1
SMITH 2-23 116620 SAHARA BEAVER OK 6N 28ECM 23 0.980000 0.792199 5.0
LOCKE 1-7 111048 SAHARA CLARK KS 35S 25W 7 0.750000 0.561914 597.4
THEIS 2-16 112059 SAHARA CLARK KS 35S 25W 16 1.000000 0.761914 80.4
THEIS 4-17 110383 SAHARA CLARK KS 35S 25W 17 0.750000 0.561914 152.1
THEIS 4-18 110939 SAHARA CLARK KS 35S 25W 18 1.000000 0.761914 684.9
EPP 114865 SAHARA HARPER OK 27N 23W 32 0.375000 0.328125 276.5
JAQUITH 1-7 110512 SAHARA MAJOR OK 23N 15W 7 0.958346 0.811743 399.9
REAMES #2-32 110323 SAHARA MAJOR OK 20N 11W 32 1.000000 0.849702 238.5
REAMES UNIT ""C"" 1-32 110348 SAHARA MAJOR OK 20N 11W 32 0.875000 0.765625 43.4
ROHLA #2-7 110338 SAHARA MAJOR OK 20N 15W 7 0.500156 0.400125 25.9
SKUNK CREEK 1-4 113122 SAHARA MAJOR OK 20N 13W 4 0.750000 0.554610 412.5
SKUNK CREEK 2-4 113123 SAHARA MAJOR OK 20N 13W 4 0.770000 0.668571 108.3
SKUNK CREEK 3-4 113124 SAHARA MAJOR OK 20N 13W 4 0.900000 0.764703 850.0
SKUNK CREEK 4-4 115557 SAHARA MAJOR OK 20N 13W 4 0.900000 0.764703 857.2
STELLA 7-10 114063 SAHARA MAJOR OK 23N 15W 7 0.937520 0.793520 308.4
BLAKE NO 77 #2-34 115417 SAHARA TEXAS OK 6N 15ECM 34 1.000000 0.875000 732.4
FERRIS #2-33 115415 SAHARA TEXAS OK 6N 15ECM 33 1.000000 0.875000 353.8
OKLAHOMA C #1-11 115240 SAHARA TEXAS OK 1N 11E 11 1.000000 0.875000 264.7
BARNES #1-8 115348 SAHARA WOODS OK 23N 15W 8 0.794031 0.586871 42.4
BARNES #1-9 115350 SAHARA WOODS OK 23N 15W 9 0.422035 0.323154 41.9
BARNES #2-9 115351 SAHARA WOODS OK 23N 15W 9 0.000000 0.000000 0.0
BETTY JOE 21-11 114106 SAHARA WOODS OK 24N 13W 21 0.950000 0.840336 23.5
BILL #1-5 117145 SAHARA WOODS OK 23N 15W 5 0.861438 0.638452 203.5
</Table>
Page 24 of 28
116
CHESAPEAKE ENERGY CORP
1ST QTR RESERVES W/BANK PRICING CASE
AS OF 4/1/2001
<Table>
<Caption>
DISC NET
PROP DATAROOM INCOME
LEASE NAME NUM AREA COUNTY ST TWN RANGE SEC WI NRI M$------
=============================================================================================================================
BOUZIDEN 27-6 114150 SAHARA WOODS OK 24N 16W 27 0.993212 0.825021 1011.7
BOWERS #1-5 115353 SAHARA WOODS OK 23N 15W 5 0.825408 0.603256 120.3
BREIDENSTEIN 1-17 114917 SAHARA WOODS OK 24N 13W 17 0.250000 0.218750 145.3
CASEY #1-34 119606 SAHARA WOODS OK 26N 17W 34 0.125000 0.113281 113.9
COPENHAVER 21-10 114062 SAHARA WOODS OK 24N 13W 21 0.950000 0.833274 43.1
FARRIS 21-3 114081 SAHARA WOODS OK 24N 13W 21 0.962500 0.840336 777.8
GAIL 1-4 115464 SAHARA WOODS OK 23N 15W 4 0.861302 0.627752 137.4
GAIL 25-1 113956 SAHARA WOODS OK 24N 13W 25 0.491471 0.403160 2.3
HANSEN J 114905 SAHARA WOODS OK 24N 13W 21 0.000000 0.000000 0.0
HAZEL #1-5 110378 SAHARA WOODS OK 23N 15W 5 0.856936 0.635483 344.8
HULL #1-3 115357 SAHARA WOODS OK 23N 15W 3 0.830817 0.611270 50.7
HULL #1-9 113469 SAHARA WOODS OK 23N 15W 9 0.856567 0.726306 77.4
HULL #2-3 115358 SAHARA WOODS OK 23N 15W 3 0.718747 0.513189 140.0
JAMES A 1-34 110059 SAHARA WOODS OK 26N 17W 34 0.606277 0.458884 393.8
JEFFERIES D 1-25 113788 SAHARA WOODS OK 24N 13W 25 0.496605 0.407371 22.2
JEFFREY #1-9 110495 SAHARA WOODS OK 23N 15W 9 0.848181 0.718850 113.6
JIM #1-4 110280 SAHARA WOODS OK 23N 15W 4 0.863832 0.629559 119.0
KAMA #1-5 110379 SAHARA WOODS OK 23N 15W 5 0.850346 0.630007 88.6
KELLN #1-29 115359 SAHARA WOODS OK 24N 15W 29 0.000000 0.000000 0.0
KELLN 28-07 114139 SAHARA WOODS OK 24N 16W 28 0.974990 0.842618 1061.2
KERR #1-4 115361 SAHARA WOODS OK 23N 15W 4 0.500447 0.373606 2.9
KYLIE MARIE #3-3 115267 SAHARA WOODS OK 23N 15W 3 0.903278 0.697494 385.5
LEON 26-7 113992 SAHARA WOODS OK 24N 13W 26 0.607017 0.515355 313.9
LOEVA 114197 SAHARA WOODS OK 24N 15W 23 0.993188 0.806966 560.4
LOEVA #2-23 110469 SAHARA WOODS OK 24N 15W 23 0.996866 0.809954 369.7
LONDON #1-18 192436 SAHARA WOODS OK 26N 17W 18 0.269656 0.235293 96.2
LONDON #1-19 115368 SAHARA WOODS OK 26N 17W 19 0.247035 0.200147 83.8
LONDON #2-18 192439 SAHARA WOODS OK 26N 17W 18 0.490663 0.427958 4.8
LONDON #3-18 192441 SAHARA WOODS OK 26N 17W 18 0.272796 0.238516 64.7
LONDON #4-18 195457 SAHARA WOODS OK 26N 17W 18 0.584389 0.509361 423.1
LONDON #4-19 113918 SAHARA WOODS OK 26N 17W 19 0.497128 0.421553 194.0
LONDON #5-19 110458 SAHARA WOODS OK 26N 17W 19 0.289367 0.242408 212.5
LOTT 1-13 116801 SAHARA WOODS OK 24N 13W 13 0.302619 0.248242 12.2
LOTT 2-13 116802 SAHARA WOODS OK 24N 13W 13 0.302619 0.248242 1.8
LOTT 3-13 116803 SAHARA WOODS OK 24N 13W 13 0.282619 0.231836 59.6
MARIE 21-4 114119 SAHARA WOODS OK 24N 13W 21 0.000000 0.000000 0.0
MARK 26-8 113955 SAHARA WOODS OK 24N 13W 26 0.674635 0.531627 11.8
MAX 25-14 113963 SAHARA WOODS OK 24N 13W 25 0.996679 0.817519 202.8
MCGILL 1-15 TBG 110499 SAHARA WOODS OK 26N 17W 15 0.715187 0.626105 1021.2
MCGILL 2-15 110508 SAHARA WOODS OK 26N 17W 15 0.865000 0.757285 109.3
MERLE 1-4 110281 SAHARA WOODS OK 23N 15W 4 0.761504 0.557208 38.5
MORSE I J 1-25 114784 SAHARA WOODS OK 25N 13W 25 1.000000 0.875000 394.4
</Table>
Page 25 of 28
117
CHESAPEAKE ENERGY CORP
1ST QTR RESERVES W/BANK PRICING CASE
AS OF 4/1/2001
<Table>
<Caption>
DISC NET
PROP DATAROOM INCOME
LEASE NAME NUM AREA COUNTY ST TWN RANGE SEC WI NRI M$------
=============================================================================================================================
NATHANIEL 1-3 115462 SAHARA WOODS OK 23N 15W 3 0.863787 0.666117 162.2
O WALKER #1-26 113840 SAHARA WOODS OK 26N 16W 26 0.662414 0.491567 30.2
ORVILLE WALKER #2-26 115259 SAHARA WOODS OK 26N 16W 26 0.829022 0.641079 75.6
RACHEL 21-10 114095 SAHARA WOODS OK 24N 13W 21 0.950000 0.828000 7.3
READ #1-19 115373 SAHARA WOODS OK 26N 16W 19 0.845451 0.730871 2.0
READ #2-19 115258 SAHARA WOODS OK 26N 16W 19 0.896002 0.787093 301.7
READ #3-19 113915 SAHARA WOODS OK 26N 16W 19 0.916335 0.798351 241.3
REUTLINGER #1-29 115375 SAHARA WOODS OK 28N 19W 29 0.000000 0.000000 0.0
REUTLINGER #2-29 115257 SAHARA WOODS OK 28N 19W 29 0.877178 0.729212 150.2
RONALD B 17-16 114338 SAHARA WOODS OK 24N 16W 17 0.930340 0.808321 127.8
ROY 21-15 114140 SAHARA WOODS OK 24N 13W 21 0.950000 0.833274 36.0
SENIOR 16-12 114163 SAHARA WOODS OK 24N 16W 16 0.894793 0.754769 156.6
SHELITE 1-8 119879 SAHARA WOODS OK 23N 15W 8 0.912960 0.691967 360.9
STERBA 2-12 116916 SAHARA WOODS OK 23N 13W 12 0.434529 0.356450 49.2
STERBA 3-12 116917 SAHARA WOODS OK 23N 13W 12 0.434529 0.356450 168.7
STERBA 4-12 116918 SAHARA WOODS OK 23N 13W 12 0.434529 0.356450 1.3
STERBA 13-12 114202 SAHARA WOODS OK 23N 13W 12 0.496594 0.402998 52.4
STEVENS A 1-26 116920 SAHARA WOODS OK 24N 13W 26 0.000000 0.000000 0.0
STEVENS A 2-26 116921 SAHARA WOODS OK 24N 13W 26 0.496605 0.407053 3.9
STEVENS B 1-22 114910 SAHARA WOODS OK 24N 13W 22 0.000000 0.010254 0.7
STEVENS B 2-22 116923 SAHARA WOODS OK 24N 13W 22 0.000000 0.000000 0.0
STEWERT 2-25 116925 SAHARA WOODS OK 24N 13W 25 0.496605 0.407371 1.6
VIRGIL 1-13 113968 SAHARA WOODS OK 23N 14W 13 0.000000 0.000000 0.0
VIRGIL 13-11 113945 SAHARA WOODS OK 23N 14W 13 0.843760 0.632820 27.1
WAYNOKA 27-1 113127 SAHARA WOODS OK 25N 15W 27 0.828734 0.644343 173.8
WHIPPLE #1-36 115382 SAHARA WOODS OK 26N 16W 36 0.566890 0.471146 101.6
WHIPPLE #2-36 115268 SAHARA WOODS OK 26N 16W 36 0.838749 0.730232 293.7
WILFORD 22-5 113939 SAHARA WOODS OK 24N 13W 22 0.744494 0.558370 52.1
BINGHAM 1-1 114353 SAHARA WOODWARD OK 24N 18W 12 0.049375 0.037792 0.2
BINGHAM 12-7 114176 SAHARA WOODWARD OK 24N 18W 12 0.915625 0.715497 20.6
BOOTH HEMENWAY #1-25 115405 SAHARA WOODWARD OK 26N 18W 25 0.879167 0.609629 147.3
BOOTH HEMENWAY #2-25 115406 SAHARA WOODWARD OK 26N 18W 25 0.945299 0.723745 75.1
BOOTH HEMENWAY #3-25 115261 SAHARA WOODWARD OK 26N 18W 25 0.908333 0.695443 174.6
BOOTH HEMENWAY #4-25 115272 SAHARA WOODWARD OK 26N 18W 25 0.970000 0.795703 1.9
BOOTH HEMENWAY #5-25 116703 SAHARA WOODWARD OK 26N 18W 25 0.950000 0.779297 28.0
BOYD 1-8 192434 SAHARA WOODWARD OK 25N 18W 8 0.980000 0.807734 188.5
DALLETT #1-15 110207 SAHARA WOODWARD OK 24N 18W 15 0.845710 0.658945 885.3
DIXIE 1-36 114199 SAHARA WOODWARD OK 26N 19W 36 1.000000 0.875000 344.6
DIXIE 2-36 113346 SAHARA WOODWARD OK 26N 19W 36 0.980000 0.857500 385.7
LAURA 7-11 114153 SAHARA WOODWARD OK 24N 17W 7 0.986971 0.811703 457.7
LONDON #2-19 115367 SAHARA WOODWARD OK 26N 17W 19 0.265672 0.213502 33.7
LONDON #3-19 115250 SAHARA WOODWARD OK 26N 17W 19 0.569661 0.460674 106.0
</Table>
Page 26 of 28
118
CHESAPEAKE ENERGY CORP
1ST QTR RESERVES W/BANK PRICING CASE
AS OF 4/1/2001
<Table>
<Caption>
DISC NET
PROP DATAROOM INCOME
LEASE NAME NUM AREA COUNTY ST TWN RANGE SEC WI NRI M$------
==========================================================================================================================
MADDUX 1-24 115445 SAHARA WOODWARD OK 26N 19W 24 0.980000 0.835488 324.8
MADDUX 2-24 119931 SAHARA WOODWARD OK 26N 19W 24 0.980000 0.835488 198.7
MADDUX 3-24 110456 SAHARA WOODWARD OK 26N 19W 24 0.980000 0.835488 116.3
MAY #2-7 110743 SAHARA WOODWARD OK 24N 18W 7 0.973456 0.759046 289.1
MILLER #1-27 114374 SAHARA WOODWARD OK 25N 18W 27 0.187500 0.164063 170.5
MILLER #2-27 113350 SAHARA WOODWARD OK 25N 18W 27 0.167500 0.146563 43.5
MILLER CATTLE 1-1 113894 SAHARA WOODWARD OK 25N 19W 1 0.948750 0.798659 542.8
MILLER CATTLE 2-1 110696 SAHARA WOODWARD OK 25N 19W 1 0.980000 0.826003 120.7
NIXON 1-35 113365 SAHARA WOODWARD OK 26N 19W 35 0.980000 0.798715 229.4
P&G 1-26 116681 SAHARA WOODWARD OK 26N 19W 26 0.980000 0.826270 75.0
PEACH #1-7 119914 SAHARA WOODWARD OK 24N 18W 7 0.724872 0.561957 387.7
RITA JO 1-30 116615 SAHARA WOODWARD OK 26N 18W 30 0.980000 0.819348 73.4
ROCK 1-16 114198 SAHARA WOODWARD OK 25N 17W 16 0.980000 0.816667 175.2
ROSALIE 25-05 (CHESTER) B114174 SAHARA WOODWARD OK 24N 17W 25 0.748930 0.610622 407.4
ROSALIE 25-05 (TONKAWA) A114174 SAHARA WOODWARD OK 24N 17W 25 0.748930 0.610622 196.5
SANDRA 1-36 115469 SAHARA WOODWARD OK 25N 18W 36 0.960000 0.779501 215.0
SIMPSON WALKER #1-23 115389 SAHARA WOODWARD OK 26N 18W 23 0.556337 0.465573 4.7
SIMPSON WALKER #1-26 115390 SAHARA WOODWARD OK 26N 18W 26 0.492303 0.404009 83.4
SIMPSON WALKER #1-36 115395 SAHARA WOODWARD OK 26N 18W 36 0.741084 0.618571 156.5
SIMPSON WALKER #1-6 115397 SAHARA WOODWARD OK 25N 17W 6 0.494601 0.350647 176.0
SIMPSON WALKER #2-23 115419 SAHARA WOODWARD OK 26N 18W 23 0.681151 0.584301 208.5
SIMPSON WALKER #2-26 115262 SAHARA WOODWARD OK 26N 18W 26 0.620758 0.532415 27.4
SIMPSON WALKER #2-36 115396 SAHARA WOODWARD OK 26N 18W 36 0.518459 0.447343 158.9
SIMPSON WALKER #2-6 115398 SAHARA WOODWARD OK 25N 17W 6 0.497064 0.391330 82.4
SIMPSON WALKER #3-23 117146 SAHARA WOODWARD OK 26N 18W 23 0.814223 0.692487 51.0
SIMPSON WALKER #3-26 115420 SAHARA WOODWARD OK 26N 18W 26 0.414581 0.354419 136.3
SIMPSON WALKER #3-36 115270 SAHARA WOODWARD OK 26N 18W 36 0.521127 0.450538 116.3
SIMPSON WALKER #3-6 113917 SAHARA WOODWARD OK 25N 17W 6 0.913973 0.733672 87.6
SIMPSON WALKER #4-26 110222 SAHARA WOODWARD OK 26N 18W 26 0.450248 0.384530 178.3
SIMPSON WALKER #4-36 116742 SAHARA WOODWARD OK 26N 18W 36 0.724005 0.624362 137.1
SIMPSON WALKER #5-23 110234 SAHARA WOODWARD OK 26N 18W 23 0.885026 0.751307 210.5
STOUT A 1-1 119999 SAHARA WOODWARD OK 25N 19W 1 0.980000 0.826002 556.8
THUNDERBIRD 1-21 115467 SAHARA WOODWARD OK 25N 17W 21 0.917500 0.750566 294.6
TRAVIS HEPNER 1-18 119894 SAHARA WOODWARD OK 26N 18W 18 0.960000 0.802383 63.2
WALKER #1-14 115402 SAHARA WOODWARD OK 26N 18W 14 0.561367 0.466862 24.8
WALKER #1-15 115384 SAHARA WOODWARD OK 26N 18W 15 0.619458 0.454075 3.5
WALKER #1-16 115403 SAHARA WOODWARD OK 26N 18W 16 0.598313 0.512586 61.7
WALKER #2-14 115254 SAHARA WOODWARD OK 26N 18W 14 0.538913 0.457025 324.3
WALKER #2-15 115285 SAHARA WOODWARD OK 26N 18W 15 0.631647 0.485038 0.7
WALKER #2-16 115552 SAHARA WOODWARD OK 26N 18W 16 0.817611 0.715410 161.2
WALKER #3-14 113908 SAHARA WOODWARD OK 26N 18W 14 0.808899 0.688888 22.1
WALKER #3-15 115255 SAHARA WOODWARD OK 26N 18W 15 0.747843 0.573969 219.9
</Table>
Page 27 of 28
119
CHESAPEAKE ENERGY CORP
1ST QTR RESERVES W/BANK PRICING CASE
AS OF 4/1/2001
<Table>
<Caption>
DISC NET
PROP DATAROOM INCOME
LEASE NAME NUM AREA COUNTY ST TWN RANGE SEC WI NRI M$------
=============================================================================================================================
WALKER #3-16 110183 SAHARA WOODWARD OK 26N 18W 16 0.592262 0.518229 22.3
WALKER #4-14 110231 SAHARA WOODWARD OK 26N 18W 14 0.000000 0.000000 0.0
WALKER #4-15 113916 SAHARA WOODWARD OK 26N 18W 15 0.587582 0.451107 48.6
WOODWARD TRUST #2-5 115263 SAHARA WOODWARD OK 25N 17W 5 0.962744 0.799346 40.5
SAHARA 30596.5
MOORE #1-H 321318 TEXAS AUSTIN CHALK BRAZOS TX 0 0.770158 0.577618 1734.7
TEXAS AUSTIN CHALK 1734.7
DAVIS GAS UNIT #1 322005 WHARTON COUNTY WHARTON TX 0 0.960000 0.749803 1026.1
NILSON #1 310857 WHARTON COUNTY WHARTON TX 0 1.000000 0.768596 3858.6
WHARTON COUNTY 4884.7
PAASCH #11-26 458814 WILLISTON BILLINGS ND 138N 102W 26 0.495000 0.420750 32.1
SOUTH FRYBURG TYLER UNIT (ORR 459027 WILLISTON BILLINGS ND 139N 101W 0 0.000000 0.012176 350.5
TRACY MOUNTAIN UNIT 458816 WILLISTON BILLINGS ND 138N 101W 9 0.928835 0.774034 6689.3
BAKKEN #1 458779 WILLISTON DIVIDE ND 161N 095W 32 0.800000 0.648289 52.1
DOLPHIN UNIT 458780 WILLISTON DIVIDE ND 161N 95W 32 0.628940 0.590396 2420.6
STONEVIEW-STONEWALL UNIT 458808 WILLISTON DIVIDE ND 60N 95W 0 0.067416 0.055351 962.6
DOLEZAL #1-18 458785 WILLISTON DUNN ND 145N 97W 18 0.790206 0.628626 734.3
FOX #1 458771 WILLISTON MCKENZIE ND 152N 94W 34 0.800000 0.642667 565.2
DUGOUT FEDERAL #1-15 455458 WILLISTON RICHLAND MT 26N 55E 15 0.933917 0.752411 3661.3
NOTEBOOM #1-34 412045 WILLISTON RICHLAND MT 26N 59E 34 0.975000 0.748313 1355.8
VITT #1-5 411860 WILLISTON RICHLAND MT 25N 57E 5 0.904688 0.791262 804.7
ZOANNI #1-5 411871 WILLISTON RICHLAND MT 25N 57E 5 0.964549 0.785857 747.7
ENGELKE #1-8 418743 WILLISTON SHERIDAN MT 31N 56E 8 1.000000 0.833333 900.7
WILLISTON 19276.9
GRAND TOTAL 507724.7
Third Supplemental Mortgage Properties
Weiss #1 WASHINGTON TX 0.454905 0.374092
Wade Unit #1-32 CADDO OK 0.857422 0.692990
Wade Unit #2-32 CADDO OK 0.857422 0.692990
BL Pierce Unit #1-33 CADDO OK 1.000000 0.800357
Berry #2-23 GRADY OK 0.847772 0.686336
</Table>
Page 28 of 28
120
SCHEDULE 4.1(b)
CHESAPEAKE ENERGY CORPORATION
Hedging Summary
NYMEX as of close: June 1, 2001
<Table>
<Caption>
GAS SUMMARY
W/A W/A
Production Fixed Reference/ Total
Month NYMEX Volume Price Floating (Exposure) (Expense)/
(MMBtu) (MS/Koch) Price(CEC) Benefit Benefit
- --------------------- ------------ ------------ --------------- --------------- ------------ ------------
SUMMARY OF OPEN SWAPS
JULY 2001 3.930 10,230,000 4.931 4.067 8,835,310
AUGUST 2001 4.009 10,230,000 4.951 4.135 8,342,100
SEPTEMBER 2001 4.046 9,900,000 4.940 4.159 7,737,600
OCTOBER 2001 4.079 7,750,000 5.238 4.253 7,635,610
NOVEMBER 2001 4.244 7,500,000 5.483 4.446 7,776,600
DECEMBER 2001 4.409 5,270,000 5.678 4.677 5,277,750
------------ ------------ --------------- --------------- ------------ ------------
TOTAL 2001 4.087 50,880,000 5.142 4.246 45,604,970 45,604,970
------------ ------------ --------------- --------------- ------------ ------------
JANUARY 2002 4.477 5,580,000 5.689 4.710 5,460,960
FEBRUARY 2002 4.360 5,040,000 5.505 4.545 4,837,280
MARCH 2002 4.190 5,580,000 5.185 4.285 5,025,100
APRIL 2002 3.840 7,500,000 4.593 3.888 5,286,000
MAY 2002 3.765 7,750,000 4.555 3.809 5,783,050
JUNE 2002 3.810 7,500,000 4.550 3.833 5,379,000
JULY 2002 3.850 7,750,000 4.568 3.870 5,409,500
AUGUST 2002 3.870 7,750,000 4.582 3.888 5,378,500
SEPTEMBER 2002 3.887 7,500,000 4.572 3.902 5,025,600
OCTOBER 2002 3.905 7,750,000 4.572 3.920 5,056,100
NOVEMBER 2002 4.015 3,900,000 4.505 4.035 1,836,000
DECEMBER 2002 4.145 4,030,000 4.611 4.155 1,838,920
------------ ------------ --------------- --------------- ------------ ------------
TOTAL 2002 3.974 77,630,000 4.754 4.029 56,316,010 56,316,010
------------ ------------ --------------- --------------- ------------ ------------
JANUARY 2003 4.205 1,860,000 4.150 4.205 (102,300)
FEBRUARY 2003 4.085 1,680,000 4.030 4.085 (92,400)
MARCH 2003 3.938 1,860,000 3.870 3.938 (126,480)
APRIL 2003 3.675 1,800,000 3.610 3.675 (117,000)
MAY 2003 3.660 1,860,000 3.600 3.660 (111,600)
JUNE 2003 3.700 1,800,000 3.630 3.700 (126,000)
JULY 2003 3.755 1,860,000 3.690 3.755 (120,900)
AUGUST 2003 3.785 1,860,000 3.720 3.785 (120,900)
SEPTEMBER 2003 3.797 1,800,000 3.730 3.797 (120,600)
OCTOBER 2003 3.820 1,860,000 3.750 3.820 (130,200)
NOVEMBER 2003 3.955 1,800,000 3.860 3.955 (171,000)
DECEMBER 2003 4.095 1,860,000 4.000 4.095 (176,700)
------------ ------------ --------------- --------------- ------------ ------------
TOTAL 2003 3.872 21,900,000 3.803 3.872 (1,516,080) (1,516,080)
------------ ------------ --------------- --------------- ------------ ------------
TOTAL 3.997 150,410,000 4.747 4.080 100,404,900 100,404,900
SUMMARY OF OPEN COLLARS
JULY 2001 3.930 2,480,000 4.250 6.263 793,600
AUGUST 2001 4.009 2,480,000 4.250 6.263 597,680
SEPTEMBER 2001 4.046 2,400,000 4.250 6.263 489,600
OCTOBER 2001 4.079 1,860,000 4.000 6.083 0
NOVEMBER 2001 4.244 1,800,000 4.000 6.083 0
DECEMBER 2001 4.409 1,860,000 4.000 6.083 0
------------ ------------ --------------- --------------- ------------ ------------
TOTAL 2001 4.101 12,880,000 4.143 6.186 1,880,880
------------ ------------ --------------- --------------- ------------ ------------
JANUARY 2002 4.477 620,000 4.000 5.750 0
FEBRUARY 2002 4.360 560,000 4.000 5.750 0
MARCH 2002 4.190 620,000 4.000 5.750 0
APRIL 2002 3.840 1,200,000 4.000 5.375 192,000
MAY 2002 3.765 1,240,000 4.000 5.375 291,400
JUNE 2002 3.810 1,200,000 4.000 5.375 228,000
JULY 2002 3.850 1,240,000 4.000 5.375 186,000
AUGUST 2002 3.870 1,240,000 4.000 5.375 161,200
SEPTEMBER 2002 3.887 1,200,000 4.000 5.375 135,600
OCTOBER 2002 3.905 1,240,000 4.000 5.375 117,800
NOVEMBER 2002 4.015 600,000 4.000 5.750 0
DECEMBER 2002 4.145 620,000 4.000 5.750 0
------------ ------------ --------------- --------------- ------------ ------------
TOTAL 2002 3.709 11,580,000 4.000 5.473 1,312,000
------------ ------------ --------------- --------------- ------------ ------------
TOTAL 4.029 24,460,000 4.075 5.848 3,192,880 0
</Table>
<Table>
<Caption>
OIL SUMMARY
Summary of Open Positions
W/A W/A
Production Fixed Reference/ Total
Month NYMEX Volume Price Floating (Exposure) (Expense)/
(BBL) (MS/Koch) Price (CEC) Benefit Benefit
- --------------------- ------------ ------------ --------------- --------------- ------------ ------------
MAY 2001 28.709 165,000 29.754 28.709 172,415
JUNE 2001 27.930 160,000 29.712 27.930 285,100
JULY 2001 28.170 165,000 29.679 28.170 249,050
AUGUST 2001 28.170 165,000 29.647 28.170 243,750
SEPTEMBER 2001 28.030 160,000 29.615 28.030 253,600
OCTOBER 2001 27.820 165,000 29.592 27.820 292,400
NOVEMBER 2001 27.590 160,000 29.558 27.590 314,900
DECEMBER 2001 27.330 165,000 29.543 27.330 365,150
------------ ------------ --------------- --------------- ------------ ------------
TOTAL 2001 27.970 1,305,000 29.638 27.970 2,176,365 2,176,365
------------ ------------ --------------- --------------- ------------ ------------
JANUARY 2002 27.070 62,000 25.150 27.070 (119,040)
FEBRUARY 2002 26.820 56,000 25.150 26.820 (93,520)
MARCH 2002 26.570 62,000 25.150 26.570 (88,040)
APRIL 2002 26.330 60,000 25.150 26.330 (70,800)
MAY 2002 26.090 62,000 25.150 26.090 (58,280)
JUNE 2002 25.850 60,000 25.150 25.850 (42,000)
JULY 2002 25.620 62,000 25.150 25.620 (29,140)
AUGUST 2002 25.400 62,000 25.150 25.400 (15,500)
SEPTEMBER 2002 25.180 60,000 25.150 25.180 (1,800)
OCTOBER 2002 24.980 62,000 25.150 24.980 10,540
NOVEMBER 2002 24.790 60,000 25.150 24.790 21,600
DECEMBER 2002 24.610 62,000 25.150 24.610 33,480
------------ ------------ --------------- --------------- ------------ ------------
TOTAL 2002 25.770 730,000 25.150 25.770 (452,500) (452,500)
------------ ------------ --------------- --------------- ------------ ------------
TOTAL 27.181 2,035,000 28.028 27.181 1,723,865 1,723,865
</Table>
121
SCHEDULE 4.4
CHESAPEAKE ENERGY CORPORATION
CONSENTS, AUTHORIZATIONS, FILINGS & NOTICES
None
122
SCHEDULE 4.6
CHESAPEAKE ENERGY CORPORATION
(AND AFFILIATES)
PENDING LITIGATION MATTERS
MATERIAL LITIGATION (>$1,000,000 POTENTIAL LIABILITY)
A. SECURITIES LITIGATION
1. TOM YUAN v. BAYARD DRILLING TECHNOLOGIES, INC.,
CHESAPEAKE ENERGY CORPORATION, ET AL., CASE NO
CIV-98-171-L, USDC WD OK
Date of filing: February 3, 1998
B. WEST PANHANDLE FIELD CASES (AGGREGATE POTENTIAL LIABILITY
>$1,000,000)
1. CRAIG FULLER, ET AL. v. NGPC, MIDCON GAS SERVICES,
CPLP, COI, MEYER OIL COMPANY, OXY USA, INC. AND
OCCIDENTAL PETROLEUM CORPORATION, CASE NO. 8456,
100TH DISTRICT COURT OF CARSON CO., TX [CG #16]
Date of filing: June 23, 1997; third amended petition
filed April 20, 2000.
2. A. C. SMITH, ET AL. v. NGPL, MIDCON GAS SERVICES;
CPLP AND COI, NO. 98-47, 69TH DISTRICT COURT OF MOORE
CO., TX, FORMERLY NO. CA-2-98-CV-032, USDC ND TX
[PYTHIAN LEASE WELL/UNIT]
Date of filing: First filing: January 26, 1998;
refiling: May 29, 1998; fifth amended petition filed
April 14, 2000
3. MICHAEL C. PACE, ET AL. v. NGPL, MIDCON AND MC
PANHANDLE, INC. (NOW KNOWN AS CHESAPEAKE PANHANDLE,
INC.), CASE NO. 2:99-CV-0327-J, USDC ND TX [CG #58]
Date of filing: January 21, 1999 (Midcon and NGPL
served September 20 and 21, 1999, respectively)
4. LOIS LAW, ET AL. v. MC PANHANDLE, INC., ET AL., CASE
NO. 97-70, 69TH DISTRICT COURT OF MOORE CO., TX
[HAAS-8070-OG]
Date of filing: December 22, 1997
5. MARGARET DAUER, ET AL. v. NGPL, MIDCON AND PANTERA
ENERGY COMPANY, NO. 8261, 69TH DISTRICT COURT OF
CARSON CO., TX, FORMERLY 2-95-CV-271, USDC ND TX
[DAUER E1 AND PANTERA'S DAUER B1]
Date of filing: First Filing: October 30, 1995;
Refiling: February 21, 1996
6. JOSEPH H. POOL, ET AL. v. MC PANHANDLE, INC., ET AL.,
NO. 98-30, 69TH DISTRICT COURT OF MOORE CO., TX,
FORMERLY NO. CA-2-97-CV-468, USDC ND TX [CG #22]
123
Date of filing: First filing: 1997; Refiling: May 11,
1998
7. JOSEPH H. POOL, ET AL. v. MC PANHANDLE, INC., ET AL.,
NO. 98-36, 69TH DISTRICT COURT OF MOORE CO., TX,
FORMERLY NO. CA-2-97-CV-036, USDC ND TX [CG #39]
Date of filing: First filing: February 2, 1998;
Refiling: May 20, 1998
8. JOSEPH H. POOL, ET AL. v. NGPL, MIDCON GAS SERVICES
AND CELP, NO. 98-35, 69TH DISTRICT COURT OF MOORE
CO., TX, FORMERLY NO. CA-2-97-CV-035, USDC ND TX [CG
#46]
Date of filing: First Filing: February 2, 1998;
Refiling: May 20, 1998; Second Amended Petition filed
August 13, 1999
9. JOSEPH H. POOL, ET AL. v. NGPL, MIDCON GAS SERVICES,
CPLP, COI, OCCIDENTAL PETROLEUM CORPORATION AND
MIDCON GAS PRODUCTS CORP., NO. 98-49, 69TH DISTRICT
COURT OF MOORE CO., TX, FORMERLY NO. CA-2-98-CV-082,
USDC ND TX [CG #38]
Date of filing: First filing: March 10, 1998;
Refiling: May 29, 1998; First Amended Petition filed
June 13, 2000.
10. JOSEPH H. POOL, ET AL. v. NGPL, MIDCON GAS SERVICES,
CPLP, COI, OCCIDENTAL, MIDCON GAS PRODUCTS, ET AL.,
NO. 98-50, 69TH DISTRICT COURT OF MOORE CO., TX,
FORMERLY NO. CA-2-98-CV-105, USDC ND TX [CG #17]
Date of filing: First Filing: March 18, 1998;
Refiling: May 29, 1998; First Amended Petition filed
July 31, 2000
11. JOSEPH H. POOL, ET AL. v. NGPL, MIDCON GAS SERVICES;
CPLP, COI, OCCIDENTAL, MIDCON GAS PRODUCTS., NO.
98-48, 69TH DISTRICT COURT OF MOORE CO., TX, FORMERLY
NO. CA-2-98-037, USDC ND TX [CG #53]
Date of filing: First filing: February 2, 1998;
Refiling: May 29, 1998; Second Amended Petition filed
June 9, 2000
12. JOSEPH H. POOL v. MC PANHANDLE, INC., ET AL., NO.
98-70, 69TH DISTRICT COURT OF MOORE CO., TX, FORMERLY
NO. 2-98-CV-112, USDC ND TX [CG #54]
Date of filing: First filing: March 23, 1998;
Refiling: October 22, 1998
13. JOSEPH H. POOL, ET AL. v. MC PANHANDLE, INC., ET AL.,
NO. 98-33, 69TH DISTRICT COURT OF MOORE CO., TX [CG
#13]
Date of filing: May 14, 1998
14. PHILLIP THOMPSON, ET AL. v. MC PANHANDLE, INC., ET
AL., CA NO. 2:98-CV-012-J, USDC ND TX, AMARILLO
DIVISION (CONSOLIDATED WITH CASE NO. CA NO.
2:98-CV-106) [CG #60 & 70]
Date of filing: January 8, 1998 (CV-012)
March 18, 1998 (CV-106)
2
124
15. BRENDA MORRISON v. CPLP, COI, CEC CEMI, NGPL, MIDCON
GAS SERVICES, MIDCON GAS PRODUCTS, KINDER MORGAN,
INC., ONEOK TEXAS GAS MARKETING, L.P., AMERICAN
PIPELINE COMPANY AND OCCIDENTAL PETROLEUM
CORPORATION, CASE NO. 8864, 100RD DISTRICT COURT,
CARSON COUNTY, TX
Date of filing: May 1, 2000
16. JAMES D. MASSAY, ET AL. v. HUGOTON ENERGY
CORPORATION, CHESAPEAKE OPERATING, INC. AND
CHESAPEAKE ENERGY CORPORATION, CASE NO. 30986, 223RD
DISTRICT COURT, GRAY COUNTY, TX
Date of filing: May 21, 1998
3
125
SCHEDULE 4.15(a)
SUBSIDIARIES OF CHESAPEAKE ENERGY CORPORATION
(an Oklahoma Corporation)
<Table>
<Caption>
DIRECT OR
CORPORATIONS STATE OF ORGANIZATION INDIRECT OWNERSHIP
- ------------ --------------------- ------------------
The Ames Company, Inc. Oklahoma 100%
Arkoma Pittsburg Holding Corporation Oklahoma 100%
Carmen Acquisition Corp. Oklahoma 100%
Chesapeake Acquisition Corporation Oklahoma 100%
Chesapeake Canada Corporation Alberta, Canada 100%
Chesapeake Energy Louisiana Corporation Oklahoma 100%
Chesapeake Energy Marketing, Inc. Oklahoma 100%
Chesapeake Operating, Inc. Oklahoma 100%
Chesapeake Royalty Company Oklahoma 100%
Gothic Energy Corporation Oklahoma 100%
Gothic Production Corporation Oklahoma 100%
Nomac Drilling Corporation Oklahoma 100%
PARTNERSHIPS
Chesapeake Exploration Limited Partnership Oklahoma 100%
Chesapeake Louisiana, L.P. Oklahoma 100%
Chesapeake Panhandle Limited Partnership Oklahoma 100%
Chesapeake-Staghorn Acquisition L.P. Oklahoma 100%
</Table>
JOINT VENTURES IN WHICH CHESAPEAKE ENERGY CORPORATION OR ITS SUBSIDIARIES HAVE
AN INTEREST:
JN Exploration (Irene field)
Louisiana Chalk Marketing Services
Mitchell Louisiana Gas Services, Inc.
Ranger Oil Company
126
SCHEDULE 4.15(b)
CHESAPEAKE ENERGY CORPORATION
OUTSTANDING WARRANTS
<Table>
<Caption>
CHK
ISSUE EXPIRATION ---------------------------
DESCRIPTION CUSIP DATE DATE SHARES EX PRICE
----------- ------------ ------------ ------------ ------------ ------------
Gaines Berland Warrants 165167123 8/19/96 8/19/01 38,160 $ 11.79
Amoco Warrants 1/23/98 11/24/02 450,000 10.00
PIK Warrants 383482213 1/23/98 1/23/03 194,838 14.41 *
PIK Warrants ($.01 exercise price) 383482163 1/23/98 1/23/03 11,039 0.0524
12 1/4% Senior Notes 165167131 9/9/97 9/1/04 267,120 15.72
14 1/8% Discount Notes 165167149 4/21/98 5/1/05 157,410 12.58
------------
1,118,567 $ 12.46
</Table>
* Exercise price is the lower of this price or the average closing price
for the five business days prior to exercise.
127
SCHEDULE 4.17(d)
CHESAPEAKE ENERGY CORPORATION
ENVIRONMENTAL PROCEEDINGS/ACTIONS
None
128
SCHEDULE 4.19
1. Third Supplement and Amendment to Deed of Trust, Mortgage, Line of Credit
Mortgage, Assignment, Security Agreement, Fixture Filing and Financing Statement
from Chesapeake Exploration Limited Partnership to Carl Stutzman, Trustee and
Union Bank of California, N.A., Agent ("Third Supplement").
RECORDING JURISDICTIONS
Sebastian County, AR Grady County, OK
Clark County, KS Harper County, OK
Ellis County, KS Kingfisher County, OK
Finney County, KS Latimer County, OK
Grant County, KS LeFlore County, OK
Hamilton County, KS Major County, OK
Haskell County, KS McClain County, OK
Kearny County, KS McIntosh County, OK
Kingman County, KS Noble County, OK
Morton County, KS Pittsburg County, OK
Ness County, KS Pontotoc County, OK
Seward County, KS Pottawatomie County, OK
Sheridan County, KS Roger Mills County, OK
Stanton County, KS Stephens County, OK
Stevens County, KS Texas County, OK
Richland County, MT Washita County, OK
Sheridan County, MT Woods County, OK
Eddy County, NM Woodward County, OK
Lea County, NM Brazos County, TX
San Juan County, NM Carson County, TX
Billings County, ND Foard County, TX
Divide County, ND Glasscock County, TX
Dunn County, ND Gray County, TX
McKenzie County, ND Hardeman County, TX
Alfalfa County, OK Hemphill County, TX
Atoka County, OK Hutchinson County, TX
Beaver County, OK Irion County, TX
Beckham County, OK Moore County, TX
Blaine County, OK Reagan County, TX
Caddo County, OK Sherman County, TX
Canadian County, OK Washington County, TX
Carter County, OK Wharton County, TX
Custer County, OK
Dewey County, OK
Ellis County, OK
Garfield County, OK
Garvin County, OK
129
2. Financing Statement naming Chespeake Exploration Limited Partnership as
Debtor covering collateral described in the Third Supplement.
RECORDING JURISDICTIONS
Secretary of State of Texas
Oklahoma County, Oklahoma
130
SCHEDULE 5.1(j)
EXISTING MORTGAGES
131
SCHEDULE A
1. Deed of Trust, Mortgage, Line of Credit Mortgage, Assignment, Security
Agreement, Fixture Filing and Financing Statement from Chesapeake
Exploration Limited Partnership to Carl Stutzman, Trustee and Union
Bank of California, N.A., Agent dated August 18, 2000.
<Table>
<Caption>
RECORDING JURISDICTION RECORDING DATA
---------------------- --------------
Sebastian County, AR Document #7024842
Book 0023, Page 0031
Recorded 8/23/00
Clark County, KS Book 90, Page 313
Recorded 8/28/00
Ellis County, KS Book 491, Page 955
Recorded 8/28/00
Finney County, KS Document #5129
Book 234, Page 291
Recorded 8/28/00
Grant County, KS Book 204, Page 558
Recorded 9/8/00
Hamilton County, KS Book 105, Page 86
Recorded 8/31/00
Haskell County, KS Volume 152, Page 721
Recorded 8/28/00
Kearny County, KS Book 172, Page 381
Recorded 8/28/00
Kingman County, KS Book 217, Page 203
Recorded 8/30/00
Morton County, KS Book 111, Page 304
Recorded 8/31/00
Ness County, KS Book 267, Page 584
Recorded 8/29/00
Seward County, KS Volume 519, Page 195
Recorded 8/28/00
Sheridan County, KS Volume 243, Page 503
Recorded 8/28/00
Stanton County, KS Book 62, Page 119
Recorded 8/29/00
Stevens County, KS Document #9548
Book 144, Page 50
Recorded 9/1/00
Richard County, MT Document #502808
Book B165, Page 168
Recorded 8/24/00
Sheridan County, MT Document #454373
Film 596, EXP 1756
Recorded 8/24/00
</Table>
-1-
132
<Table>
<Caption>
RECORDING JURISDICTION RECORDING DATA
---------------------- --------------
Eddy County, NM Reception # 0008330
Book 391, Page 361
Recorded 8/23/00
Len County, NM Document #62905
Book 1034, Page 325
Recorded 8/23/00
San Juan County, NM Document #200012230
Book 1307, Page 429
Recorded 8/23/00
Billings County, ND Document #115814
Book 89, Page 353
Recorded 8/29/00
Divide County, ND Document #221006
Book 237, Page 619
Recorded 8/25/00
Dunn County, ND Document #3004027
Recorded 8/25/00
McKenzie County, ND Document #337599
Recorded 8/24/00
Alfalfa County, OK Document #20886
Book 550, Page 264
Recorded 8/28/00
Atoka County, OK Document #2200
Book 604, Page 587
Recorded 8/31/00
Beaver County, OK Document #2000-2404
Book 1047, Page 0387
Recorded 8/28/00
Beckham, OK Document #07526
Book 1659, Page 540
Recorded 8/28/00
Blaine County, OK Document #003020
Book 811, Page 73
Recorded 8/30/00
Caddo County, OK Document 006421
Book 2303, Page 146
Recorded 8/30/00
Canadian County, OK Document #2000017989
Book 2368, Page 751
Recorded 8/30/00
Carter County, OK Document # 008605
Book 3562, Page 52
Recorded 8/28/00
Custer County, OK Document #5142
Book 1110, Page 541
Recorded 8/28/00
Dewey County, OK Document #002593
Book 1136, Page 601
Recorded 8/29/00
</Table>
-2-
133
<Table>
<Caption>
RECORDING JURISDICTION RECORDING DATA
---------------------- --------------
Ellis County, OK Document #2492
Book 644, Page 821
Recorded 8/31/00
Garfield County, OK Document #009913
Book 1503, Page 92
Recorded 8/29/00
Garvin County, OK Document #05462
Book 1575, Page 727
Recorded 8/28/00
Grady County, OK Document #11302
Book 3220, Page 184
Recorded 8/28/00
Harper County, OK Book 0558, Page 247
Recorded 9/1/00
Kingfisher County, OK Document #3524
Book 1717, Page 85
Recorded 8/28/00
Latimer County, OK Document #002935
Book 561, Page 559
Recorded 9/6/00
LeFlore County, OK Document #8835
Book 1331, Page 121
Recorded 8/31/00
Major County, OK Document #61132
Book, 1515, Page 123
Recorded 8/30/00
McClain County, OK Document #6009
Book 1554, Page 444
Recorded 8/28/00
Noble County, OK Document #2000-60330
Book 545, Page 1-70
Recorded 9/8/00
Pittsburg County, OK Document #053513
Book, 001070, Page 001
Recorded 8/30/00
Pontotoc County, OK Document #005085
Book 1574, Page 135
Recorded 8/29/00
Pottawatomie County, OK Reception #2000-11938
Book _____, Page 1-54
Recorded 8/30/00
Roger Mills County, OK Document #2000-9481
Volume 1622, Page 64
Recorded 8/28/00
Stephens County, OK Document #66-1034
Book 2430, Page 69
Recorded 8/29/00
</Table>
-3-
134
<Table>
<Caption>
RECORDING JURISDICTION RECORDING DATA
---------------------- --------------
Texas County, OK Reception #2000 653075
Book 1017, Page 445
Recorded 8/28/00
Washita County, OK Document #4270
Book 910, Page 733
Recorded 8/30/00
Woods County, OK Document #2273-3
Book 899, Page 31
Recorded 8/30/00
Woodward County, OK Document #1123
Book 1731, Page 112
Recorded 9/1/00
Brazos County, TX Document #0724248
Volume 3910, Page 79
Recorded 8/23/00
Carson County, TX Document #0001760
Volume 307, Page 479
Recorded 8/23/00
Foard County, TX Instrument #61958
Volume 215, Page 932
Recorded 8/23/00
Glasscock County, TX Instrument #2874
Volume 48, Page 588
Recorded 8/23/00
Gray County, TX Document #148909
Volume 763, Page 1
Recorded 8/25/00
Hardeman County, TX Document #000529
Volume 384, Page 529
Recorded 8/30/00
Hemphill County, TX Document #031447
Volume 530, Page 000472
Recorded 8/23/00
Hutchinson County, TX Document #0298447
Volume 1013, Page 19
Recorded 8/23/00
Irion County, TX Document #019521
Volume 137, Page 660
Recorded 8/24/00
Moore County, TX Document #138034
Volume 527, Page 111
Recorded 8/23/00
Reagan County, TX Document #91640
Volume 15, Page 43
Recorded 8/23/00
Sherman County TX Document #010378
Volume 234, Page 814
Recorded 8/23/00
</Table>
-4-
135
2. First Amendment to Deed of Trust, Mortgage, Line of Credit Mortgage
Assignment, Security Agreement, Fixture Filing and Financing Statement executed
effective December 20, 2000, amending the original mortgage dated August 18,
2000.
<Table>
<Caption>
RECORDING JURISDICTION RECORDING DATA
- ---------------------- --------------
Sebastian County, AR Document number 7033089
Book 0029, Page 0125
Recorded 12/29/00
Clark County, KS Book 91, Page 81
Recorded 1/9/01
Ellis County, KS Book 497, Page 724
Recorded 12/28/00
Finney County, KS Document 7639
Book 236, Page 219
Recorded 12/28/00
Grant County, KS Document M-00344, mortgage fees
Book 206, Page 234
Recorded 12/29/00
Hamilton County, KS Document number 1165
Book 106, Page 47
Recorded 12/29/00
Haskell County, KS Vol. 153, Page 778
Recorded 1/2/01
Kearny County, KS Book 174, Page 439
Recorded 12/28/00
Kingman County, KS Book 219, Page 51
Recorded 12/28/00
Morton County, KS Book 112, Page 512,
Recorded 12/28/00
Ness County, KS Book 269, Page 7
Recorded 12/28/00
Seward County, KS Volume 522, Page 490
Recorded December 28, 2000
Sheridan County, KS Vol. 244, Page 270,
Recorded 12/28/00
Stanton County, KS Book 63, Page 23
Recorded 1/10/00
Stevens County, KS Book 195, Page 431
Recorded 12/26/00
Richland County, MT Document number 504220
Book 166, Page 364
Recorded 12/28/00
Sheridan County, MT Document number 454991,
Film 597, Exp. 1619
Recorded 12/26/00
</Table>
-5-
136
<Table>
<Caption>
RECORDING JURISDICTION RECORDING DATA
- ---------------------- --------------
Eddy County, NM Reception number 0012668
Book 401, Page 0617
Recorded 12/27/00
Lea County, NM Document 68122
Book 1054, Page 398
Recorded 12/29/00
San Juan County, NM Document number 200018815
Book 1314, Page 320
Recorded 12/27/00
Billings County, ND Book 29, Page 603
Recorded 12/29/00
Divide County, ND Document number 221366
Book 213M, Page 288
Recorded 1/9/01
Dunn County, ND Document # 3004610
Recorded 12/26/00
McKenzie County, ND Document number 338282
Recorded 12/26/00
Alfalfa County, OK Document 21629
Book 552, Page 354
Recorded 12/28/00
Atoka County, OK Book 608, Page 0288
Recorded 1/2/01
Beaver County, OK Document 2000-3700
Book 1053, Page 0393
Recorded 12/28/00
Beckham, OK Document number 11034
Book 1676, Page 130
Recorded 12/29/00
Blaine County, OK Document number 004501
Book 817, Page 663
Recorded 12/28/00
Caddo County, OK Document number 2000 9436
Book 2322, Page 97
Recorded 12/29/00
Canadian County, OK Document # 2000026267
Book 2396, Page 24
Recorded 12/29/00
Carter County, OK Document number 012789
Book 3601, Page 250
Recorded 12/26/00
Custer County, OK Document 7575
Book 1120, Page 537
Recorded 12/28/00
Dewey County, OK Document number 003866
Book 1143, Page 126
Recorded 12/29/00
</Table>
-6-
137
<Table>
<Caption>
RECORDING JURISDICTION RECORDING DATA
- ---------------------- --------------
Ellis County, OK File Number 3464
Book 648, Page 643
Recorded 12/28/00
Garfield County, OK Document 014315
Book 1516, Page 117
Recorded 12/28/00
Garvin County, OK Document 00138
Book 1586, Page 471
Recorded 1/9/01
Grady County, OK Document number 16553
Book 3249, Page 1
Recorded 12/27/00
Harper County, OK Book 0560, Page 706
Recorded 12/28/00
Kingfisher County, OK Document number 5183
Book 1733, Page 263
Recorded 12/26/00
Latimer County, OK Document number 004438
Book 0567, Page 0009
Recorded 12/28/00
LeFlore County, OK Document Number 99
Book 1345, Page 419
Recorded 1/3/01
Major County, OK Document number 62354
Book 1524, Page 232
Recorded 12/28/00
McClain County, OK Document number 9069
Book 1564, Page 445
Recorded 12/27/00
Noble County, OK Document 2000-61448
Book 0548, Page 516
Recorded 12/28/00
Pittsburg County, OK Document number 058498
Book 001089, Page 034
Recorded 1/4/00
Pontotoc County, OK Book 1582, Page 528
Recorded 1/5/01
Pottawatomie County, OK Reception Number 2000-17532
Recorded 12/28/00
Roger Mills County, OK Document number # 2000-11139
Volume 1631, Page 71
Recorded 12/28/00
Stephens County, OK Document number 66-5976
Book 2475, Page 1
Recorded 12/28/00
Texas County, OK Reception Number 2000 654679
Book 1023, Page 184
Recorded 12/28/00
</Table>
-7-
138
<Table>
<Caption>
RECORDING JURISDICTION RECORDING DATA
- ---------------------- --------------
Washita County, OK Document number 6108
Book 915, Page 875
Recorded 12/29/00
Woods County, OK Document number 3423-3
Book 905, Page 474
Recorded 12/27/00
Woodward County, OK Document number 3147
Book 1747, Page 138
Recorded 12/27/00
Brazos County, TX Document number 0733064
Vol. 04014, Page 00025
Recorded 12/27/00
Carson County, TX Document # 0002351
Volume 310, Page 219
Recorded 12/28/00
Foard County, TX Instrument # 62206
Volume 217, Page 249
Recorded 12/28/00
Glasscock County, TX Instrument number 3373
Recorded 12/27/00
Gray County, TX Document 150022
Volume 766, Page 788
Recorded 12/28/00
Hardeman County, TX Document number 37905
Vol. 386, Page 849
Recorded 12/28/00
Hemphill County, TX Document number 032085
Volume 533, Page 000625
Recorded 12/28/00
Hutchinson County, TX Document number 0299924
Volume 1029, Page 322
Recorded 12/29/00
Irion County, TX Document number 019778
Volume 139, Page 164
Recorded 12/29/00
Moore County, TX Document number 139079
Vol. 531, Page 263
Recorded 1/3/01
Reagan County, TX Instrument number 92129
Volume 20, Page 72
Recorded 12/27/00
Sherman County, TX Document 010899
Volume 236, Page 904
Recorded 12/29/00
</Table>
-8-
139
3. Second Supplement and Amendment to Deed of Trust, Mortgage, Line of Credit
Mortgage, Assignment, Security Agreement. Fixture Filing and Financing
Statement from Chesapeake Exploration Limited Partnership to Carl Srutzman,
Trustee and Union Bank of California, N.A., Agent dated May 3, 2001,
amending the First Amendment executed effective December 20, 2000, and
amending the original mortgage dated August 18, 2000.
<Table>
<Caption>
RECORDING JURISDICTION RECORDING DATA
- ---------------------- --------------
Sebastian County, AR Document #7042868
Book 014, Page 037
Recorded 5-14-01
Clark County, KS Book 91, Page 221
Recorded 5-17-01
Ellis County, KS Book 505, Page 880
Recorded 5-14-01
Finney County, KS Document #3470
Vol. 238, Page 927
Recorded 5-01
Grant County, KS Book 208, Page 163
Recorded 5-21-01
Hamilton County, KS Document, #655
Book 107, Page 27
Recorded 5-17-01
Haskell County, KS Vol. 155, Page 551
Recorded 5-17-01
Affidavit - Vol. 155, Page 577
Recorded 5-17-01
Kearny County, KS Book 177, Page 169
Recorded 5-29-01
Kingman County, KS Book 221, Page 24
Recorded 5-30-01
Morton County, KS Book 115, Page 031
Recorded 5-17-01
Ness County, KS Book 270, Page 651
Recorded 5-17-01
Seward County, KS Document #1417
Book 526, Page 856
Recorded 5-17-01
Sheridan County, KS Vol. 245, Page 241
Recorded 5-25-01
Stanton County, KS Book 63, Page 59
Recorded 5-17-01
Stevens County, KS Book 197, Page 449
Recorded 5-15-01
</Table>
-9-
140
<Table>
<Caption>
RECORDING JURISDICTION RECORDING DATA
- ---------------------- --------------
Richland County, MT Document #506042
Book 167, Page 842
Recorded 5-14-01
Sheridan County, MT Document #455944
Book 599, Page 225
Recorded 5-14-01
Eddy County, NM Document #0105014
Book 415, Page 0226
Recorded 5-14-01
Lea County, NM Document #05947
Book 1078, Page 00468
Recorded 5-14-01
San Juan County, NM Document #200107686
Book 1321, Page 1209
Recorded 5-14-01
Billings County, ND Document #116765
Book 90, Page 245
Recorded 5-14-01
Divide County, ND Document #221817
Book 214M, Page 164
Recorded 5-17-01
Dunn County, ND Document #3005524
Book 131, Page 158
Recorded 5-18-01
McKenzie County, ND Document #339522
Recorded 5-14-01
Alfalfa County, OK Document #22368
Book 554, Page 468
Recorded 5-14-01
Atoka County, OK Document #1509
Book 613, Page 116
Recorded 5-15-01
Beaver County, OK Document #2001-1741
Book 1061, Page 363
Recorded 5-14-01
Beckham County, OK Document #03568
Book 1693, Page 052
Recorded 5-14-01
Blaine County, OK Document #1710
Book 824, Page 705
Recorded 5-14-01
Caddo County, OK Document #004047
Book 2344, Page 383
Recorded 5-17-01
Canadian County, OK Document #2001009935
</Table>
-10-
141
<Table>
<Caption>
RECORDING JURISDICTION RECORDING DATA
- ---------------------- --------------
Book 2435, Page 469
Recorded 5-14-01
Carter County, OK Document #004636
Book 3648, Page 17
Recorded 5-14-01
Custer County, OK Document #2748
Book 1132, Page 185
Recorded 5-14-01
Dewey County, OK Document #001346
Book 1151, Page 22
Recorded 5-15-01
Ellis County, OK Document #4842
Book 653, Page 620
Recorded 5-14-01
Garfield County, OK Document #005059
Book 1533, Page 32l
Recorded 5-15-01
Garvin County, OK Document #03088
Book 1596, Page 665
Recorded 5-14-01
Grady County, OK Document #6220
Book 3282, Page 7
Recorded 5-14-01
Harper County, OK Document #IW-1910
Book 564, Page 573
Recorded 5-14-01
Kingfisher County, OK Document #1931
Book 1753, Page 201
Recorded 5-14-01
Latimer County, OK Document #002049
Book 0575, Page 0481
Recorded 5-14-0l
LeFlore County, OK Document #5238
Book 1361, Page 1
Recorded 5-14-01
Major County, OK Document #63761
Book 1533, Page 161
Recorded 5-14-01
McC1ain County, OK Document #3738
Book 1577, Page 527
Recorded 5-14-01
</Table>
-11-
142
<Table>
<Caption>
RECORDING JURISDICTION RECORDING DATA
- ---------------------- --------------
McIntosh County, OK Document #116777
Book 582, Page 168
Recorded 5-17-01
Noble County, OK Document #2001-1384
Book 553, Page 428
Recorded 5-14-01
Pittsburg County, OK Document #063790
Book 001107, Page 498
Recorded 5-15-01
Pontotoc County, OK Document #2957
Book 1593, Page 183
Recorded 5-17-01
Pottawatomie County, OK Document #2001 6458
Page 1
Recorded 5-14-01
Roger Mills County, OK Document #2001-2433
Book 1644, Page 194
Recorded 5-29-01
Stephens County, OK
Texas County, OK Document #2001 656558
Book 1029, Page 709
Recorded 5-14-01
Washita County, OK Document #2358
Book 922, Page 549
Recorded 5-14-01
Woods County, OK Document #1550
Book 914, Page 189
Recorded 5-15-01
Woodward County, OK Document #5912
Book 1771, Page 82
Recorded 5-14-01
Brazos County, TX Document 744146
Volume 4161, Page 40
Recorded 5-24-01
Carson County, TX Document #0000593
Vol. 313, Page 265
Recorded 5-14-01
Foard County, TX Document #62422
Volume 218, Page 241
Recorded 5-14-01
Glasscock County, TX Document #3893
Volume 54, Page 730
Recorded 5-15-01
</Table>
-12-
143
<Table>
<Caption>
RECORDING JURISDICTION RECORDING DATA
- ---------------------- --------------
Gray County, TX Document #151295
Vol. 771, Page 376
Recorded 5-14-01
Hardeman County, TX Vol. 389, Page 807
Recorded 5-30-01
Hemphill County, TX Document #032701
Vol. 536, Page 271
Recorded 5-14-01
Hutchinson County, TX Document #0301484
Book 1049, Page 287
Recorded 5-14-01
Irion County, TX Document #020102
Vol. 140, Page 736
Recorded 5-16-01
Moore County, TX Vol. 537, Page 001
Recorded 5-25-01
Reagan County, TX Document #92634
Volume 24, Page 434
Recorded 5-14-01
Sherman County, TX Document #011411
Vol. 238, Page 768
Recorded 5-17-01
Wharton County, TX Document #214309
Vol. 411, Page 618
Recorded 5-14-01
</Table>
-13-
144
SCHEDULE 7.2(d)
CHESAPEAKE ENERGY CORPORATION
EXISTING INDEBTEDNESS
1. Chelsea Ventures, LTD
$1,087,800.00 note payable as of June, 8, 2001 (payable in monthly
installments of $77,700 through August 1, 2002)
2. K. Stewart Petroleum Corporation.
$22,375,000.00 acquisition of 100% of outstanding capital stock.
A production payment of $0.125 per mcf of Chesapeake's net volumes
produced from the Cat Creek 1-19 (or other wells in the designated
Noncompete Area in West Beckham County, Oklahoma) for a term of ten
years.
3. Ram Energy, Inc.
Potential cash make-whole payment to Ram selling shareholders based on
number of CHK shares sold from 5/30/01 to 8/27/01, but only if average
sales price for all shares sold in the period defined is less than
$8.854. Pursuant to the Stock Purchase Agreement dated January 31, 2001
between Carmen Acquisition Corp. and William Stuart Price and the Stock
Purchase Agreement dated February 23, 2001 between Carmen Acquisition
Corp. and M. Helen Bennett, formerly Fisher, as Trustee of the M. Helen
Fisher 1992 Trust under Trust Agreement dated July 24, 1992.
145
SCHEDULE 7.3(f)
CHESAPEAKE ENERGY CORPORATION
EXISTING LIENS
None
146
SCHEDULE 7.7(m)
CHESAPEAKE ENERGY CORPORATION
INVESTMENTS
1. Investment in Network Oil.com pursuant to the October 29, 1999 Vanguard
Offering (<1%)
2. Investment in Petroleum Place, Inc. (preferred stock)
3. Investment in Advanced Drilling Technologies (50% ownership of
privately held drilling company)
4. Investment in Seven Seas Petroleum, Inc. (a Cayman Islands Corporation)
$22,500,000 for a note receivable and warrants representing 20% of the
common stock of Seven Seas
5. Ram Energy, Inc. (1,349,500 shares of common stock)
Purchase by Carmen Acquisition Corp. of 111/2% Senior Notes of RAM
Energy Corporation due 2008 for estimated aggregate purchase price
of $12,000,000.
Exercise of option to purchase 27,500 shares of Ram common stock
after 2/1/02 but before 2/15/03 at an exercise price of $7.33 per
share ($201,575 total price), pursuant to the Stock Purchase
Agreement dated January 31, 2001 between Carmen Acquisition Corp.
and William Stuart Price
6. Canaan Energy Corporation (approx. $14MM cash acquisition of common
stock)
147
EXHIBIT A
================================================================================
GUARANTEE AGREEMENT
made by
CHESAPEAKE ENERGY CORPORATION
and certain of its Subsidiaries
in favor of
UNION BANK OF CALIFORNIA, N.A.,
as Administrative Agent
Dated as of June ___, 2001
================================================================================
148
TABLE OF CONTENTS
<Table>
<Caption>
Page
----
SECTION 1. DEFINED TERMS...................................................................................2
1.1 Definitions.....................................................................................2
1.2 Other Definitional Provisions...................................................................3
SECTION 2. GUARANTEE.......................................................................................3
2.1 Guarantee.......................................................................................3
2.2 Right of Contribution...........................................................................4
2.3 No Subrogation..................................................................................4
2.4 Amendments, etc. with respect to the Borrower Obligations.......................................4
2.5 Guarantee Absolute and Unconditional............................................................5
2.6 Reinstatement...................................................................................5
2.7 Payments........................................................................................6
2.8 Representations and Warranties..................................................................6
2.9 Subordination...................................................................................7
SECTION 3. MISCELLANEOUS...................................................................................7
3.1 Amendments in Writing...........................................................................7
3.2 Notices.........................................................................................7
3.3 No Waiver by Course of Conduct; Cumulative Remedies.............................................7
3.4 Enforcement Expenses; Indemnification...........................................................7
3.5 Successors and Assigns..........................................................................8
3.6 Set-Off.........................................................................................8
3.7 Counterparts....................................................................................8
3.8 Severability....................................................................................8
3.9 Section Headings................................................................................9
3.10 Integration.....................................................................................9
3.11 GOVERNING LAW...................................................................................9
3.12 Submission To Jurisdiction; Waivers.............................................................9
3.13 Acknowledgements................................................................................9
3.14 Additional Guarantors..........................................................................10
3.15 Releases.......................................................................................10
3.16 Authority of the Administrative Agent..........................................................10
3.17 WAIVER OF JURY TRIAL...........................................................................10
</Table>
SCHEDULES
Schedule 1 Notice Addresses
ANNEX
Annex 1 Assumption Agreement
i
149
AMENDED, RESTATED AND CONSOLIDATED
GUARANTEE AGREEMENT
AMENDED, RESTATED AND CONSOLIDATED GUARANTEE AGREEMENT, dated
as of June __, 2001, made by each of the signatories hereto (together with any
other entity that may become a party hereto as provided herein, the
"Guarantors"), in favor of UNION BANK OF CALIFORNIA, N.A., as Administrative
Agent (in such capacity, the "Administrative Agent") for the banks and other
financial institutions or entities (the "Lenders") from time to time parties to
the Second Amended and Restated Credit Agreement, dated as of June __, 2001 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement", unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the Credit
Agreement), among Chesapeake Energy Corporation (the "Parent"), Chesapeake
Exploration Limited Partnership (the "Borrower"), Bear Stearns Corporate Lending
Inc., as Syndication Agent, the Administrative Agent and the lenders from time
to time party thereto.
WITNESSETH:
WHEREAS, the Parent, the Borrower, the Syndication Agent, the
Administrative Agent and certain financial institutions as lenders are party to
the Existing Credit Agreement;
WHEREAS, in connection with the Existing Credit Agreement and
in accordance therewith, (i) the Parent executed that certain Guaranty (the
"Existing Parent Guaranty") dated as of May 30, 2000 in favor of the
Administrative Agent for the benefit of the lenders under the Existing Credit
Agreement and (ii) the Guarantors (other than the Parent) executed that certain
Guaranty (the "Existing Subsidiary Guaranty") dated as of May 30, 2000 in favor
of the Administrative Agent for the benefit of the lenders under the Existing
Credit Agreement;
WHEREAS, the Borrower has requested that the Existing Credit
Agreement be amended and restated on the terms and conditions as set forth in
the Credit Agreement;
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to make extensions of credit to the Borrower upon the terms and
subject to the conditions set forth therein;
WHEREAS, the Borrower is a member of an affiliated group of
companies that includes each other Guarantor;
WHEREAS, the proceeds of the extensions of credit under the
Credit Agreement will be used in part to enable the Borrower to make valuable
transfers to one or more of the Guarantors in connection with the operation of
their respective businesses;
WHEREAS, the Borrower and the Guarantors are engaged in
related businesses, and each Guarantor will derive substantial direct and
indirect benefit from the making of the extensions of credit under the Credit
Agreement; and
150
2
WHEREAS, it is a condition precedent to the obligation of the
Lenders to amend and restate the Existing Credit Agreement and to make their
respective extensions of credit to the Borrower under the Credit Agreement that
the Existing Parent Guaranty and the Existing Subsidiary Guaranty be amended,
restated and consolidated on the terms and conditions set forth herein and that
the Guarantors shall have executed and delivered this Agreement to the
Administrative Agent for the ratable benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce
the Administrative Agent and the Lenders to enter into the Credit Agreement and
to induce the Lenders to make their respective extensions of credit to the
Borrower thereunder, each Guarantor hereby agrees with the Administrative Agent,
for the ratable benefit of the Lenders, that each of the Existing Parent
Guaranty and the Existing Subsidiary Guaranty shall be amended, restated and
consolidated as follows:
SECTION 1. DEFINED TERMS
1.1 Definitions. (a) Unless otherwise defined herein, terms defined in
the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement.
(b) The following terms shall have the following meanings:
"Agreement": this Amended, Restated and Consolidated Guarantee
Agreement, as the same may be amended, supplemented or otherwise modified from
time to time.
"Borrower Obligations": the unpaid principal of and interest
on (including interest accruing after the maturity of the Revolving Loans and
Reimbursement Obligations and interest accruing after the filing of any petition
in bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to the Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) the Revolving Loans and
all other obligations and liabilities of the Borrower and the other Loan Parties
to any Agent or to any Lender, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with, this Agreement, the Credit
Agreement, any other Loan Document, the Letters of Credit or any other document
made, delivered or given in connection herewith or therewith, whether on account
of principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses (including all fees, charges and disbursements of counsel to any Agent
or to any Lender that are required to be paid by the Borrower and the other Loan
Parties pursuant hereto) or otherwise.
"Guarantor Obligations": with respect to any Guarantor, all
obligations and liabilities of such Guarantor which may arise under or in
connection with this Agreement (including, without limitation, Section 2) or any
other Loan Document to which such Guarantor is a party, in each case whether on
account of guarantee obligations, reimbursement obligations, fees, indemnities,
costs, expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the Administrative Agent or to the Lenders that are
required to be paid by such Guarantor pursuant to the terms of this Agreement or
any other Loan Document).
151
3
"Obligations": (i) in the case of the Borrower, the Borrower
Obligations, and (ii) in the case of each Guarantor, its Guarantor Obligations.
1.2 Other Definitional Provisions. (a) The words "hereof," "herein,"
"hereto" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section and Schedule references are to this Agreement unless
otherwise specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. GUARANTEE
2.1 Guarantee. (a) Each of the Guarantors hereby, jointly and
severally, unconditionally and irrevocably, guarantees to the Administrative
Agent, for the ratable benefit of the Lenders and their respective successors,
indorsees, transferees and assigns, the prompt and complete payment and
performance by the Borrower when due (whether at the stated maturity, by
acceleration or otherwise) of the Borrower Obligations.
(b) Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder and under the
other Loan Documents shall in no event exceed the amount which can be guaranteed
by such Guarantor under applicable federal and state laws relating to the
insolvency of debtors (after giving effect to the right of contribution
established in Section 2.2).
(c) Each Guarantor agrees that the Borrower Obligations may at any time
and from time to time exceed the amount of the liability of such Guarantor
hereunder without impairing the guarantee contained in this Section 2 or
affecting the rights and remedies of the Administrative Agent or any Lender
hereunder.
(d) The guarantee contained in this Section 2 shall remain in full
force and effect until all the Borrower Obligations and the obligations of each
Guarantor under the guarantee contained in this Section 2 shall have been
satisfied by payment in full, no Letter of Credit shall be outstanding and the
Revolving Commitments shall be terminated, notwithstanding that from time to
time during the term of the Credit Agreement the Borrower may be free from any
Borrower Obligations.
(e) No payment made by the Borrower, any of the Guarantors, any other
guarantor or any other Person or received or collected by the Administrative
Agent or any Lender from the Borrower, any of the Guarantors, any other
guarantor or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application at any time or from time to time in
reduction of or in payment of the Borrower Obligations shall be deemed to
modify, reduce, release or otherwise affect the liability of any Guarantor
hereunder which shall, notwithstanding any such payment (other than any payment
made by such Guarantor in respect of the Borrower Obligations or any payment
received or collected from such Guarantor in respect of the Borrower
Obligations), remain liable for the Borrower Obligations up to the maximum
liability
152
4
of such Guarantor hereunder until the Borrower Obligations are paid in full, no
Letter of Credit shall be outstanding and the Revolving Commitments are
terminated
2.2 Right of Contribution. Each Subsidiary Guarantor hereby agrees that
to the extent that a Subsidiary Guarantor shall have paid more than its
proportionate share of any payment made hereunder, such Subsidiary Guarantor
shall be entitled to seek and receive contribution from and against any other
Subsidiary Guarantor hereunder which has not paid its proportionate share of
such payment. Each Subsidiary Guarantor's right of contribution shall be subject
to the terms and conditions of Section 2.3. The provisions of this Section 2.2
shall in no respect limit the obligations and liabilities of any Subsidiary
Guarantor to the Administrative Agent and the Lenders, and each Subsidiary
Guarantor shall remain liable to the Administrative Agent and the Lenders for
the full amount guaranteed by such Subsidiary Guarantor hereunder.
2.3 No Subrogation. Notwithstanding any payment made by any Guarantor
hereunder or any set-off or application of funds of any Guarantor by the
Administrative Agent or any Lender, no Guarantor shall be entitled to be
subrogated to any of the rights of the Administrative Agent or any Lender
against the Borrower or any other Guarantor or any collateral security or
guarantee or right of offset held by the Administrative Agent or any Lender for
the payment of the Borrower Obligations, nor shall any Guarantor seek or be
entitled to seek any contribution or reimbursement from the Borrower or any
other Guarantor in respect of payments made by such Guarantor hereunder, until
all amounts owing to the Administrative Agent and the Lenders by the Borrower on
account of the Borrower Obligations are paid in full, no Letter of Credit shall
be outstanding and the Revolving Commitments are terminated. If any amount shall
be paid to any Guarantor on account of such subrogation rights at any time when
all of the Borrower Obligations shall not have been paid in full, such amount
shall be held by such Guarantor in trust for the Administrative Agent and the
Lenders, segregated from other funds of such Guarantor, and shall, forthwith
upon receipt by such Guarantor, be turned over to the Administrative Agent in
the exact form received by such Guarantor (duly indorsed by such Guarantor to
the Administrative Agent, if required), to be applied against the Borrower
Obligations, whether matured or unmatured, in such order as the Administrative
Agent may determine.
2.4 Amendments, etc. with respect to the Borrower Obligations. Each
Guarantor shall remain obligated hereunder notwithstanding that, without any
reservation of rights against any Guarantor and without notice to or further
assent by any Guarantor, any demand for payment of any of the Borrower
Obligations made by the Administrative Agent or any Lender may be rescinded by
the Administrative Agent or such Lender and any of the Borrower Obligations
continued, and the Borrower Obligations, or the liability of any other Person
upon or for any part thereof, or any collateral security or guarantee therefor
or right of offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Administrative Agent or any Lender, and the
Credit Agreement and the other Loan Documents and any other documents executed
and delivered in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Administrative Agent (or the Majority
Lenders, the Required Lenders or all the Lenders, as the case may be) may deem
advisable from time to time, and any collateral security, guarantee or right of
offset at any time held by the Administrative Agent or any Lender for the
payment of the Borrower Obligations may be sold, exchanged,
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waived, surrendered or released. Neither the Administrative Agent nor any Lender
shall have any obligation to protect, secure, perfect or insure any Lien at any
time held by it as security for the Borrower Obligations or for the guarantee
contained in this Section 2 or any property subject thereto.
2.5 Guarantee Absolute and Unconditional. Each Guarantor waives any and
all notice of the creation, renewal, extension or accrual of any of the Borrower
Obligations and notice of or proof of reliance by the Administrative Agent or
any Lender upon the guarantee contained in this Section 2 or acceptance of the
guarantee contained in this Section 2; the Borrower Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or incurred,
or renewed, extended, amended or waived, in reliance upon the guarantee
contained in this Section 2; and all dealings between the Borrower and any of
the Guarantors, on the one hand, and the Administrative Agent and the Lenders,
on the other hand, likewise shall be conclusively presumed to have been had or
consummated in reliance upon the guarantee contained in this Section 2. Each
Guarantor waives diligence, presentment, protest, demand for payment and notice
of default or nonpayment to or upon the Borrower or any of the Guarantors with
respect to the Borrower Obligations. Each Guarantor understands and agrees that
the guarantee contained in this Section 2 shall be construed as a continuing,
absolute and unconditional guarantee of payment without regard to (a) the
validity or enforceability of the Credit Agreement or any other Loan Document,
any of the Borrower Obligations or any other collateral security therefor or
guarantee or right of offset with respect thereto at any time or from time to
time held by the Administrative Agent or any Lender, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) which may at any
time be available to or be asserted by the Borrower or any other Person against
the Administrative Agent or any Lender, or (c) any other circumstance whatsoever
(with or without notice to or knowledge of the Borrower or such Guarantor) which
constitutes, or might be construed to constitute, an equitable or legal
discharge of the Borrower for the Borrower Obligations, or of such Guarantor
under the guarantee contained in this Section 2, in bankruptcy or in any other
instance. When making any demand hereunder or otherwise pursuing its rights and
remedies hereunder against any Guarantor, the Administrative Agent or any Lender
may, but shall be under no obligation to, make a similar demand on or otherwise
pursue such rights and remedies as it may have against the Borrower, any other
Guarantor or any other Person or against any collateral security or guarantee
for the Borrower Obligations or any right of offset with respect thereto, and
any failure by the Administrative Agent or any Lender to make any such demand,
to pursue such other rights or remedies or to collect any payments from the
Borrower, any other Guarantor or any other Person or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or any
release of the Borrower, any other Guarantor or any other Person or any such
collateral security, guarantee or right of offset, shall not relieve any
Guarantor of any obligation or liability hereunder, and shall not impair or
affect the rights and remedies, whether express, implied or available as a
matter of law, of the Administrative Agent or any Lender against any Guarantor.
For the purposes hereof "demand" shall include the commencement and continuance
of any legal proceedings.
2.6 Reinstatement. The guarantee contained in this Section 2 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Borrower Obligations is rescinded or
must otherwise be restored or returned by the Administrative Agent or any Lender
upon the insolvency, bankruptcy, dissolution, liquidation or
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reorganization of the Borrower or any Guarantor, or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, the Borrower or any Guarantor or any substantial part of its
property, or otherwise, all as though such payments had not been made.
2.7 Payments. Each Guarantor hereby guarantees that payments hereunder
will be paid to the Administrative Agent without set-off or counterclaim in
Dollars at the Funding Office.
2.8 Representations and Warranties. Each Subsidiary Guarantor hereby
represents and warrants that:
(a) It is (i) duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, (ii) has the power and
authority, and the legal right, to own and operate its property, to lease the
property it operates as lessee and to conduct the business in which it is
currently engaged, (iii) is duly qualified as a foreign corporation and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such qualification
and (iv) is in compliance with all Requirements of Law except to the extent that
the failure to comply therewith could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect;
(b) It has the power and authority, and the legal right, to make,
deliver and perform this Agreement. It has taken all necessary organizational
action to authorize the execution, delivery and performance of this Agreement.
No consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required in
connection with the transactions contemplated hereby or with the execution,
delivery, performance, validity or enforceability of this Agreement. This
Agreement and each other Loan Document it is a party to constitutes a legal,
valid and binding obligation of such Guarantor, enforceable against it in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).
(c) Its execution, delivery and performance of this Agreement and the
other Loan Documents to which it is a party to will not violate any Requirement
of Law or any Contractual Obligation of it and will not result in, or require,
the creation or imposition of any Lien on any of its properties or revenues
pursuant to any Requirement of Law or any such Contractual Obligation (other
than the Liens created by the Security Documents).
(d) It is, and after giving effect to the incurrence of all
Indebtedness and obligations being incurred in connection with the Loan
Documents will be and will continue to be, Solvent.
(e) The representations and warranties set forth in Section 4 of the
Credit Agreement, to the extent applicable to such Guarantor, are true and
correct.
Each Guarantor agrees that the foregoing representations and warranties shall be
deemed to have been made by such Guarantor on the date of each borrowing under
the Credit Agreement by the
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Borrower on and as of the date of such borrowing as though made hereunder on and
as of the date of such borrowing.
2.9 Subordination. Each Guarantor hereby subordinated and makes
inferior to the Borrower Obligations any and all indebtedness now or at any time
hereafter owed by the Borrower to any Guarantor. Each Guarantor agrees that
after the occurrence of any Default or Event of Default it will neither permit
the Borrower to repay such indebtedness or any part thereof nor accept payment
from the Borrower of such indebtedness or any part thereof without the prior
written consent of the Administrative Agent and the Lenders, the amount so paid
shall be held in trust for the benefit of the Lenders, shall be segregated from
the other funds of such Guarantor, and shall forthwith be paid over to the
Administrative Agent to be held by the Administrative Agent as collateral for,
or then or at any time thereafter applied in whole or in part by the
Administrative Agent against, all or any portions of the Borrower Obligations,
whether matured or unmatured, in such order as the Administrative Agent shall
elect.
SECTION 3. MISCELLANEOUS
3.1 Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with Section 10.1 of the Credit Agreement.
3.2 Notices. All notices, requests and demands to or upon the
Administrative Agent or any Guarantor hereunder shall be effected in the manner
provided for in Section 10.2 of the Credit Agreement; provided that any such
notice, request or demand to or upon any Guarantor shall be addressed to such
Guarantor at its notice address set forth on Schedule 1.
3.3 No Waiver by Course of Conduct; Cumulative Remedies. Neither the
Administrative Agent nor any Lender shall by any act (except by a written
instrument pursuant to Section 3.1), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default. No failure to exercise, nor any delay in
exercising, on the part of the Administrative Agent or any Lender, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Administrative Agent or any Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Administrative Agent or such Lender would otherwise
have on any future occasion. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.
3.4 Enforcement Expenses; Indemnification. (a) Each Guarantor agrees to
pay or reimburse each Lender and the Administrative Agent for all its costs and
expenses incurred in collecting against such Guarantor under the guarantee
contained in Section 2 or otherwise enforcing or preserving any rights under
this Agreement and the other Loan Documents to which such Guarantor is a party,
including, without limitation, the fees and disbursements of counsel
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8
(including the allocated fees and expenses of in-house counsel) to each Lender
and of counsel to the Administrative Agent.
(b) Each Guarantor agrees to pay, and to save the Administrative Agent
and the Lenders harmless from, any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Agreement to the extent the
Borrower would be required to do so pursuant to Section 10.5 of the Credit
Agreement.
(c) The agreements in this Section 3.4 shall survive repayment of the
Obligations and all other amounts payable under the Credit Agreement and the
other Loan Documents.
3.5 Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of each Guarantor and shall inure to the benefit of the
Administrative Agent and the Lenders and their successors and assigns; provided
that no Guarantor may assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written consent of the
Administrative Agent.
3.6 Set-Off. Each Guarantor hereby irrevocably authorizes the
Administrative Agent and each Lender at any time and from time to time, without
notice to such Guarantor or any other Guarantor, any such notice being expressly
waived by each Guarantor, to set-off and appropriate and apply any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by the Administrative Agent or such Lender
to or for the credit or the account of such Guarantor, or any part thereof in
such amounts as the Administrative Agent or such Lender may elect, against and
on account of the obligations and liabilities of such Guarantor to the
Administrative Agent or such Lender hereunder and claims of every nature and
description of the Administrative Agent or such Lender against such Guarantor,
in any currency, whether arising hereunder, under the Credit Agreement, any
other Loan Document or otherwise, as the Administrative Agent or such Lender may
elect, whether or not the Administrative Agent or any Lender has made any demand
for payment and although such obligations, liabilities and claims may be
contingent or unmatured. The Administrative Agent and each Lender shall notify
such Guarantor promptly of any such set-off and the application made by the
Administrative Agent or such Lender of the proceeds thereof, provided that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of the Administrative Agent and each Lender under this
Section 3.6 are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which the Administrative Agent or such
Lender may have.
3.7 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
3.8 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any
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such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
3.9 Section Headings. The Section headings used in this Agreement are
for convenience of reference only and are not to affect the construction hereof
or be taken into consideration in the interpretation hereof.
3.10 Integration. This Agreement and the other Loan Documents represent
the agreement of the Guarantors, the Administrative Agent and the Lenders with
respect to the subject matter hereof and thereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agent or any
Lender relative to subject matter hereof and thereof not expressly set forth or
referred to herein or in the other Loan Documents.
3.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
3.12 Submission To Jurisdiction; Waivers. Each Guarantor hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the State of
New York, the courts of the United States of America for the Southern District
of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or proceeding may
be effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such Guarantor at its
address referred to in Section 3.2 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect service
of process in any other manner permitted by law or shall limit the right to sue
in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to in
this Section any special, exemplary, punitive or consequential damages.
3.13 Acknowledgements. Each Guarantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents to which it is a party;
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(b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to any Guarantor arising out of or in connection with
this Agreement or any of the other Loan Documents, and the relationship between
the Guarantors, on the one hand, and the Administrative Agent and Lenders, on
the other hand, in connection herewith or therewith is solely that of debtor and
creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among the
Lenders or among the Guarantors and the Lenders.
3.14 Additional Guarantors. Each Subsidiary of the Borrower that is
required to become a party to this Agreement pursuant to Section 6.9 of the
Credit Agreement shall become a Guarantor for all purposes of this Agreement
upon execution and delivery by such Subsidiary of an Assumption Agreement in the
form of Annex 1 hereto.
3.15 Releases. (a) At such time as the Revolving Loans, the
Reimbursement Obligations and the other Obligations shall have been paid in
full, the Revolving Commitments have been terminated and no Letters of Credit
shall be outstanding, this Agreement and all obligations (other than those
expressly stated to survive such termination) of the Administrative Agent and
each Guarantor hereunder shall terminate, all without delivery of any instrument
or performance of any act by any party.
(b) At the request and sole expense of the Borrower, a Subsidiary
Guarantor shall be released from its obligations hereunder in the event that all
the Capital Stock of such Subsidiary Guarantor shall be sold, transferred or
otherwise disposed of in a transaction permitted by the Credit Agreement;
provided that the Borrower shall have delivered to the Administrative Agent, at
least ten Business Days prior to the date of the proposed release, a written
request for release identifying the relevant Subsidiary Guarantor and the terms
of the sale or other disposition in reasonable detail, including the price
thereof and any expenses in connection therewith, together with a certification
by the Borrower stating that such transaction is in compliance with the Credit
Agreement and the other Loan Documents.
3.16 Authority of the Administrative Agent. Each Guarantor acknowledges
that the rights and responsibilities of the Administrative Agent under this
Agreement with respect to any action taken by the Administrative Agent or the
exercise or non-exercise by the Administrative Agent of any option, voting
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the Administrative
Agent and the Lenders, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Administrative Agent and the Guarantors, the Administrative Agent
shall be conclusively presumed to be acting as agent for the Lenders with full
and valid authority so to act or refrain from acting, and no Guarantor shall be
under any obligation, or entitlement, to make any inquiry respecting such
authority.
3.17 WAIVER OF JURY TRIAL. EACH GUARANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY
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LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
AND FOR ANY COUNTERCLAIM THEREIN.
160
IN WITNESS WHEREOF, each of the undersigned has caused this
Guarantee Agreement to be duly executed and delivered as of the date first above
written.
[NAME OF GUARANTOR]
By:
------------------------------------------
Title:
161
Schedule 1 to
Guarantee Agreement
NOTICE ADDRESSES OF GUARANTORS
162
Annex 1 to
Guarantee Agreement
ASSUMPTION AGREEMENT, dated as of ________________, 200_, made
by ______________________________ (the "Additional Guarantor"), in favor of
___________________________, as administrative agent (in such capacity, the
"Administrative Agent") for the banks and other financial institutions or
entities (the "Lenders") parties to the Credit Agreement referred to below. All
capitalized terms not defined herein shall have the meaning ascribed to them in
such Credit Agreement.
WITNESSETH:
WHEREAS, Chesapeake Exploration Limited Partnership, an
Oklahoma limited partnership (the "Borrower"), Chesapeake Energy Corporation, an
Oklahoma corporation (the "Company"), Bear Stearns Corporate Lending Inc., as
syndication agent (in such capacity, the "Syndication Agent"), Union Bank of
California, N.A., as administrative agent and collateral agent (in such
capacity, the "Administrative Agent"), the several banks and other financial
institutions or entities from time to time parties to this Agreement (the
"Lenders") and Bear, Stearns & Co. Inc., as sole lead arranger and sole
bookrunner (in such capacity, the "Lead Arranger") have entered into that
certain Second Amended and Restated Credit Agreement, dated as of June ___, 2001
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement");
WHEREAS, in connection with the Credit Agreement, the Borrower
and certain of its Affiliates (other than the Additional Guarantor) agreed to
amend, restate and consolidate the Existing Parent Guaranty and the Existing
Subsidiary Guaranty (as such terms are defined in the Guarantee Agreement (as
hereinafter defined)) on the terms and conditions as set forth in the Amended,
Restated and Consolidated Guarantee Agreement, dated as of June __, 2001 (as
amended, supplemented or otherwise modified from time to time, the "Guarantee
Agreement") and enter into such Guarantee Agreement in favor of the
Administrative Agent for the benefit of the Lenders;
WHEREAS, the Credit Agreement requires the Additional
Guarantor to become a party to the Guarantee Agreement; and
WHEREAS, the Additional Guarantor has agreed to execute and
deliver this Assumption Agreement in order to become a party to the Guarantee
Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Guarantee Agreement. By executing and delivering this
Assumption Agreement, the Additional Guarantor, as provided in Section 3.14 of
the Guarantee Agreement, hereby becomes a party to the Guarantee Agreement as a
Guarantor thereunder with the same force and effect as if originally named
therein as a Guarantor and, without limiting the generality of the foregoing,
hereby expressly assumes all obligations and liabilities of a Guarantor
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thereunder. The information set forth in Annex 1-A hereto is hereby added to the
information set forth in the Schedules to the Guarantee Agreement.
2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK.
164
IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above written.
[ADDITIONAL GUARANTOR]
By:
------------------------------------------
Name:
Title:
165
Annex 1-A to
Assumption Agreement
Supplement to Schedule 1
166
EXHIBIT B
FORM OF
COMPLIANCE CERTIFICATE
This Compliance Certificate is delivered pursuant to Section
6.2(b), of the Second Amended and Restated Credit Agreement, dated as of June
___, 2001 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among Chesapeake Exploration Limited Partnership, an
Oklahoma limited partnership (the "Borrower"), Chesapeake Energy Corporation, an
Oklahoma corporation (the "Company"), Bear Stearns Corporate Lending Inc., as
syndication agent (in such capacity, the "Syndication Agent"), Union Bank of
California, N.A., as administrative agent and collateral agent (in such
capacity, the "Administrative Agent"), the several banks and other financial
institutions or entities from time to time parties to this Agreement (the
"Lenders") and Bear, Stearns & Co. Inc., as sole lead arranger and sole
bookrunner (in such capacity, the "Lead Arranger"). Unless otherwise defined
herein, terms defined in the Credit Agreement and used herein shall have the
meanings given to them in the Credit Agreement.
1. I am the duly elected, qualified and acting Chief Financial
Officer of the Company.
2. I have reviewed and am familiar with the contents of this
Certificate.
3. I have reviewed the terms of the Credit Agreement and the
Loan Documents and have made or caused to be made under my supervision, a review
in reasonable detail of the transactions and condition of the Borrower during
the accounting period covered by the financial statements attached hereto as
Attachment 1 (the "Financial Statements"). Such review did not disclose the
existence during or at the end of the accounting period covered by the Financial
Statements, and I have no knowledge of the existence, as of the date of this
Certificate, of any condition or event which constitutes a Default or Event of
Default[, except as set forth below].
4. Attached hereto as Attachment 2, which I have reviewed and
hereby certify as to accuracy and completeness, are the computations (a) showing
compliance with the covenants set forth in Sections 7.1, 7.2(e), 7.2(k), 7.3(k),
7.3(l), 7.5(e), 7.6(b), 7.6(c), 7.7(g), 7.7(h), 7.7(i), 7.7(j), 7.7(l) and 7.16
of the Credit Agreement, (b) necessary to determine the value of the oil and gas
properties of the Company and its Subsidiaries over which a Lien has been
created pursuant to Section 7.3(k) of the Credit Agreement based on the
applicable Engineering Reports delivered pursuant to Section 6.2(e) and the
applicable price assumptions provided to the Company by the Administrative Agent
in accordance with Section 6.2(b) of the Credit Agreement and (c) necessary to
determine the Applicable Margins and the Commitment Fee Rate.
5. Attached hereto as Attachment 3 are copies of the reports
and appraisals prepared by independent petroleum engineers and appraisers and
any other relevant documentation in connection with the determination of the
Adjusted Consolidated Net Tangible Assets pursuant to the Indentures in
connection with the calculation of the Senior Debt Limit with respect to the
covenant set forth in Section 7.16 of the Credit Agreement.
6. A Senior Debt Limit Reporting Event has [not] occurred and
is [not] continuing.
167
IN WITNESS WHEREOF, I have executed this Certificate this
_____ day of ____, 200__.
---------------------------
Name:
Title:
168
Attachment 1
to Compliance Certificate
[Attach Financial Statements]
169
Attachment 2
to Compliance Certificate
The information described herein is as of ______, ____, and pertains to
the period from _________, ____ to ________________ __, ____.
[Set forth Covenant Calculations,
Calculations of the Applicable Margins and
the Commitment Fee Rate]
170
Attachment 3
to Compliance Certificate
[Reports and Appraisals in connection
with determination of Senior Debt Limit]
171
EXHIBIT C
FORM OF
CLOSING CERTIFICATE
Pursuant to Section 5.1(h) of the Second Amended and Restated
Credit Agreement, dated as of June ___, 2001 (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement", terms defined in
the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement), among Chesapeake Exploration Limited Partnership, an
Oklahoma limited partnership (the "Borrower"), Chesapeake Energy Corporation, an
Oklahoma corporation (the "Company"), Bear Stearns Corporate Lending Inc., as
syndication agent (in such capacity, the "Syndication Agent"), Union Bank of
California, N.A., as administrative agent and collateral agent (in such
capacity, the "Administrative Agent"), the several banks and other financial
institutions or entities from time to time parties to this Agreement (the
"Lenders") and Bear, Stearns & Co. Inc., as sole lead arranger and sole
bookrunner (in such capacity, the "Lead Arranger"), the undersigned [INSERT
TITLE OF OFFICER] of [INSERT NAME OF LOAN PARTY] (the "Certifying Loan Party")
hereby certifies as follows:
1. The representations and warranties of the Certifying Loan
Party set forth in each of the Loan Documents to which it is a party or which
are contained in any certificate furnished by or on behalf of the Certifying
Loan Party pursuant to any of the Loan Documents to which it is a party are true
and correct on and as of the date hereof with the same effect as if made on the
date hereof, except for representations and warranties expressly stated to
relate to a specific earlier date, in which case such representations and
warranties were true and correct as of such earlier date.
2. ___________________ is the duly elected and qualified
Corporate Secretary of the Certifying Loan Party and the signature set forth for
such officer below is such officer's true and genuine signature.
3. No Default or Event of Default has occurred and is
continuing as of the date hereof or after giving effect to the Loans to be made
on the date hereof and the use of proceeds thereof. [Company and Borrower only]
4. None of the Loan Parties nor Chesapeake Canada Corporation
has incurred any Indebtedness (other than under the Credit Agreement) which is
secured by a Lien permitted under Section 4.9(i) and Section 4.10(a) of each of
the 8-1/2% Note Indenture and the 7-7/8% Note Indenture.
5. The conditions precedent set forth in Section [5.1] of the
Credit Agreement were satisfied as of the Closing Date. [Company and Borrower
only]
172
2
The undersigned Corporate Secretary of the Certifying Loan
Party certifies as follows:
6. There are no liquidation or dissolution proceedings pending
or to my knowledge threatened against the Certifying Loan Party, nor has any
other event occurred adversely affecting or threatening the continued corporate
existence of the Certifying Loan Party.
7. The Certifying Loan Party is a corporation duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its organization.
8. Attached hereto as Annex 1 is a true and complete copy of
resolutions duly adopted by the Board of Directors of the Certifying Loan Party
on _________________; such resolutions have not in any way been amended,
modified, revoked or rescinded, have been in full force and effect since their
adoption to and including the date hereof and are now in full force and effect
and are the only corporate proceedings of the Certifying Loan Party now in force
relating to or affecting the matters referred to therein.
9. Attached hereto as Annex 2 is a true and complete copy of
the By-Laws of the Certifying Loan Party as in effect on the date hereof.
10. Attached hereto as Annex 3 is a true and complete copy of
the Certificate of Incorporation of the Certifying Loan Party as in effect on
the date hereof.
11. The following persons are now duly elected and qualified
officers of the Certifying Loan Party holding the offices indicated next to
their respective names below, and the signatures appearing opposite their
respective names below are the true and genuine signatures of such officers, and
each of such officers is duly authorized to execute and deliver on behalf of the
Certifying Loan Party each of the Loan Documents to which it is a party and any
certificate or other document to be delivered by the Certifying Loan Party
pursuant to the Loan Documents to which it is a party:
<Table>
<Caption>
Name Office Signature
---- ------ ---------
------------------------
------------------------
------------------------
</Table>
173
IN WITNESS WHEREOF, the undersigned have hereunto set our
names as of the date set forth below.
- ------------------------------- ---------------------------
Name: Name:
Title: Title: Corporate Secretary
Date: , 200
---------------- --
174
ANNEX 1
[Board Resolutions]
175
ANNEX 2
[Bylaws]
176
ANNEX 3
[Certificate of Incorporation]
177
EXHIBIT D
Form of Mortgage
178
Form of Mortgage Originally Filed
179
(AR, KS, MT, NM, ND, OK, TX)
DEED OF TRUST, MORTGAGE, LINE OF CREDIT MORTGAGE
ASSIGNMENT, SECURITY AGREEMENT, FIXTURE FILING
AND FINANCING STATEMENT
FROM
and
CHESAPEAKE EXPLORATION LIMITED PARTNERSHIP
(Taxpayer I.D. No. 73-1384282)
TO
CARL STUTZMAN, TRUSTEE
AND
UNION BANK OF CALIFORNIA, N.A., AGENT
(Taxpayer I.D. No. 94-0304228)
Dated August __, 2000
A CARBON, PHOTOGRAPHIC, FACSIMILE, OR OTHER REPRODUCTION OF THIS INSTRUMENT IS
SUFFICIENT AS A FINANCING STATEMENT.
THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS, SECURES PAYMENT OF
FUTURE ADVANCES, AND COVERS PROCEEDS OF COLLATERAL.
THIS INSTRUMENT COVERS MINERALS AND OTHER SUBSTANCES OF VALUE WHICH MAY BE
EXTRACTED FROM THE EARTH (INCLUDING WITHOUT LIMITATION OIL AND GAS), AND THE
ACCOUNTS RELATED THERETO, WHICH WILL BE FINANCED AT THE WELLHEADS OR MINEHEADS
OF THE WELLS OR MINES LOCATED ON THE PROPERTIES DESCRIBED IN SECTION 1.1 OF THIS
INSTRUMENT. THIS INSTRUMENT COVERS GOODS WHICH ARE OR ARE TO BECOME FIXTURES ON
THE REAL PROPERTY DESCRIBED HEREIN. THIS INSTRUMENT IS TO BE FILED FOR RECORD,
AMONG OTHER PLACES, IN THE REAL ESTATE OR COMPARABLE RECORDS OF THE COUNTIES
REFERENCED IN EXHIBIT A HERETO AND/OR ANNEX I HERETO AND SUCH FILING SHALL
SERVE, AMONG OTHER PURPOSES, AS A FIXTURE FILING. THE MORTGAGOR HAS AN INTEREST
OF RECORD IN THE REAL ESTATE CONCERNED, WHICH INTEREST IS DESCRIBED IN SECTION
1.1 OF THIS INSTRUMENT.
A POWER OF SALE HAS BEEN GRANTED IN THIS MORTGAGE. A POWER OF SALE MAY ALLOW
AGENT (AS HEREINAFTER DEFINED) OR THE TRUSTEE (AS HEREINAFTER DEFINED) TO TAKE
THE MORTGAGED PROPERTIES AND SELL THEM WITHOUT GOING TO COURT IN A FORECLOSURE
ACTION UPON DEFAULT BY THE MORTGAGOR (AS HEREINAFTER DEFINED) UNDER THIS
MORTGAGE.
WHEN RECORDED OR FILED RETURN TO: THIS DOCUMENT PREPARED BY:
Thompson & Knight L.L.P. Timothy W. Dowdy
1700 Pacific Avenue Thompson & Knight L.L.P.
Suite 3300 1700 Pacific Avenue
Dallas, Texas 75201 Suite 3300
Attention: Brenda Sheetz Dallas, Texas 75201
180
DEED OF TRUST, MORTGAGE, LINE OF CREDIT MORTGAGE
ASSIGNMENT, SECURITY AGREEMENT, FIXTURE FILING
AND FINANCING STATEMENT
(this "Mortgage")
ARTICLE I.
Granting Clauses; Secured Indebtedness
Section 1.1. Grant and Mortgage. CHESAPEAKE EXPLORATION LIMITED
PARTNERSHIP (herein called "Mortgagor"), for and in consideration of the sum of
Ten Dollars ($10.00) to Mortgagor in hand paid, and in order to secure the
payment of the secured indebtedness hereinafter referred to and the performance
of the obligations, covenants, agreements, warranties and undertakings of
Mortgagor hereinafter described, does hereby (a) GRANT, BARGAIN, SELL, CONVEY,
TRANSFER, ASSIGN AND SET OVER to Carl Stutzman, Trustee (the "Trustee"), and
grant to Trustee a POWER OF SALE (pursuant to this Mortgage and applicable law)
with respect to, those of the following described properties, rights and
interests which are located in (or cover properties located in) the state of
Texas or which are located within (or cover properties located within) the
offshore area over which the United States of America asserts jurisdiction and
to which the laws of Texas are applicable with respect to this Mortgage and/or
the liens or security interests created hereby (the "Deed of Trust Mortgaged
Properties"), and (b) MORTGAGE, ASSIGN, WARRANT, PLEDGE AND HYPOTHECATE to Agent
(as hereinafter defined in Section 1.3(a)), and grant to Agent a POWER OF SALE
(pursuant to this Mortgage and applicable law) with respect to, all of the
following described rights, interests and properties (including, without
limitation, those located in (or cover properties located in) the states of
Arkansas, Kansas, Montana, New Mexico, North Dakota and Oklahoma) which were not
granted to Trustee in clause (a) above (the "Other Mortgaged Properties"):
A. The oil, gas and/or other mineral properties, and/or
mineral rights described in Exhibit A attached hereto and made a part
hereof, and the oil, gas and/or mineral properties, and/or mineral
rights described in Annex I (or described or referenced in the
instruments described in Annex I (except those certain properties,
rights and interests which were subject to the Prior Mortgages (as such
term is defined in Section 5.28 below) and which have been expressly
released in writing by Agent prior to the date hereof, if any);
B. Without limitation of the foregoing, (1) all other right,
title and interest of Mortgagor of whatever kind or character (whether
now owned or hereafter acquired by operation of law or otherwise) in
and to (i) the oil, gas and/or mineral leases or other agreements
described in Exhibit A hereto, (ii) the lands described or referred to
in Exhibit A (or described in any of the instruments described or
referred to in Exhibit A), without regard to any limitations as to
specific lands or depths that may be set forth in Exhibit A hereto or
in any of the leases or other agreements described in Exhibit A hereto,
and (2) all other right, title and interest of Mortgagor of whatever
kind or character (whether now owned or hereafter acquired by operation
of law or otherwise) in and to (i) the oil, gas and/or mineral leases
or other agreements described in Annex I hereto (or described in any of
the instruments described or referred to in Annex I), (ii) the lands
described or referred to in Annex I (or described in any of the
instruments described or referred to in Annex I), without regard to any
limitations as to specific lands or depths that may be set forth in
Annex I hereto or in any of the leases or other agreements described in
Annex I hereto, except with respect to those certain properties, rights
and interests described in B.(2)(i) and B.(2)(ii) above which were
subject to the Prior Mortgages (as such term is defined in Section 5.28
below) and which have been expressly released in writing by Agent prior
to the date of this Mortgage, if any;
C. All of Mortgagor's interest (whether now owned or hereafter
acquired by operation of law or otherwise) in and to all presently
existing and hereafter created oil, gas and/or mineral unitization,
pooling and/or communitization agreements, declarations and/or orders,
and in and to the properties, rights and interests covered and the
units created thereby (including, without limitation, units formed
under orders, rules, regulations or other official acts of any federal,
state or other authority having jurisdiction), which cover, affect or
otherwise relate to the properties, rights and interests described in
clause A or B above;
D. All of Mortgagor's interest in and rights under (whether
now owned or hereafter acquired by operation of law or otherwise) all
presently existing and hereafter created operating agreements,
equipment leases, production sales contracts, processing agreements,
transportation agreements, gas balancing agreements, farmout and/or
farm-in agreements, salt water disposal
181
agreements, area of mutual interest agreements, and other contracts
and/or agreements which cover, affect, or otherwise relate to the
properties, rights and interests described in clause A, B or C above or
to the operation of such properties, rights and interests or to the
treating, handling, storing, processing, transporting or marketing of
oil, gas, other hydrcarbons, or other minerals produced from (or
allocated to) such properties, rights and interests (including, but not
limited to, those contracts listed in Exhibit A hereto and/or Annex I
hereto), as same may be amended or supplemented from time to time, and
E. All of Mortgagor's interest (whether now owned or hereafter
acquired by operation of law or otherwise) in and to all improvements,
fixtures, movable or immovable property and other real and/or personal
property (including, without limitation, all wells, pumping units,
wellhead equipment, tanks, pipelines, flow lines, gathering lines,
compressors, dehydration units, separators, meters, buildings,
injection facilities, salt water disposal facilities, and power,
telephone and telegraph lines), and all easements, servitudes,
rights-of-way, surface leases, licenses, permits and other surface
rights, which are now or hereafter used, or held for use, in connection
with the properties, rights and interests described in clause A, B or C
above, or in connection with the operation of such properties, rights
and interests, or in connection with the treating, handling, storing,
processing, transporting or marketing of oil, gas, other hydrocarbons,
or other minerals produced from (or allocated to) such properties,
rights and interests; and
F. All rights, estates, powers and privileges appurtenant to
the foregoing rights, interests and properties.
TO HAVE AND TO HOLD (a) the Deed of Trust Mortgaged Properties unto the
Trustee, and its successors or substitutes in this trust, and to its or their
successors and assigns, in trust, however, upon the terms, provisions and
conditions herein set forth, and (b) the Other Mortgaged Properties unto Agent,
and Agent's successors and assigns, upon the terms, provisions and conditions
herein set forth (the Deed of Trust Mortgaged Properties and the Other Mortgaged
Properties are herein sometimes collectively called the "Mortgaged Properties").
Section 1.2. Grant of Security Interest. In order to further secure the
payment of the secured indebtedness hereinafter referred to and the performance
of the obligations, covenants, agreements, warranties, and undertakings of
Mortgagor hereinafter described, Mortgagor does hereby grant to Agent (as
hereinafter defined in Section 1.3(a)) a security interest in the entire
interest of Mortgagor (whether now owned or hereafter acquired by operation of
law or otherwise) in and to the Mortgaged Properties and in and to:
(a) all oil, gas, other hydrocarbons, and other minerals
produced from or allocated to the Mortgaged Properties, and any
products processed or obtained therefrom (herein collectively called
the "Production"), together with all proceeds of Production (regardless
of whether Production to which such proceeds relate occurred on or
before or after the date hereof), and together with all liens and
security interests securing payment of the proceeds of the Production,
including, but not limited to, those liens and security interests
provided for under (i) statutes enacted in the jurisdictions in which
the Mortgaged Properties are located, or (ii) statutes made applicable
to the Mortgaged Properties under federal law (or some combination of
federal and state law);
(b) without limitation of any other provisions of this Section
1.2, all payments received in lieu of production from the Mortgaged
Properties (regardless of whether such payments accrued, and/or the
events which gave rise to such payments occurred, on or before or after
the date hereof), including, without limitation, "take or pay" payments
and similar payments, payments received in settlement of or pursuant to
a judgment rendered with respect to take or pay or similar obligations
or other obligations under a production sales contract, and payments
received in buyout or buydown or other settlement of a production sales
contract, and payments received under a gas balancing or similar
agreement as a result of (or received otherwise in settlement of or
pursuant to judgment rendered with respect to) rights held by Mortgagor
as a result of Mortgagor (and/or its predecessors in title) taking or
having taken less gas from lands covered by a Mortgaged Property (or
lands pooled or unitized therewith) than their ownership of such
Mortgaged Property would entitle them to receive (the payments
described in this subsection (b) being herein called "Payments in Lieu
of Production");
(c) all equipment, inventory, improvements, fixtures,
accessions, goods and other personal property or movable property of
whatever nature now or hereafter located on or used or held for use in
connection with the Mortgaged Properties (or in connection with the
operation thereof or the treating, handling, storing, processing,
transporting, or marketing of Production), and all licenses and permits
of whatever nature now or hereafter used or held for use in connection
with the Mortgaged Properties (or in connection with the operation
thereof or the
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182
treating. handling, storing, processing, transporting, or marketing of
Production), and all renewals or replacements of the foregoing or
substitutions for the foregoing;
(d) all contract rights, choses in action (i.e.. rights to
enforce contracts or to bring claims thereunder) and other general
intangibles (regardless of whether the same arose, and or the events
which gave rise to the same occurred, on or before or after the date
hereof) related to the Mortgaged Properties, the operation thereof
(whether Mortgagor is operator or non-operator), or the treating,
handling, storing, processing, transporting, or marketing of Production
(including, without limitation, any of the same relating to payment of
proceeds of Production or to payment of amounts which could constitute
Payments in Lieu of Production);
(e) Without limitation of the generality of the foregoing, any
rights and interests of Mortgagor under any present or future hedge or
swap agreements, cap, floor, collar, exchange, forward or other hedge
or protection agreements or transactions relating to crude oil, natural
gas or other hydrocarbons, or any option with respect to any such
agreement or transaction now existing or hereafter entered into by or
on behalf of Mortgagor;
(f) all geological, geophysical, engineering, accounting,
title, legal, and other technical or business data concerning the
Mortgaged Properties, the Production or any other item of Property (as
hereinafter defined) which are now or hereafter in the possession of
Mortgagor or in which Mortgagor can otherwise grant a security
interest, and all books, files, records, magnetic media, and other
forms of recording or obtaining access to such data;
(g) all money, documents, instruments, chattel paper,
securities, accounts or general intangibles arising from or by virtue
of any transaction (regardless of whether such transaction occurred on
or before or after the date hereof) related to the Mortgaged
Properties, the Production or any other item of Property (all of the
properties, rights and interests described in subsections (a), (b),
(c), (d), (e) and (f) above and this subsection (g) being herein
sometimes collectively called the "Collateral"); and
(h) all proceeds of the Collateral, whether such proceeds or
payments are goods, money, documents, instruments, chattel paper,
securities, accounts, general intangibles, fixtures, real/immovable
property, personal/ movable property or other assets (the Mortgaged
Properties, the Collateral and the proceeds of the Collateral being
herein sometimes collectively called the "Property").
Section 1.3. Notes, Loan Documents, Other Obligations. This Mortgage is
made to secure and enforce the payment and performance of the following
promissory notes, obligations, indebtedness and liabilities:
(a) All indebtedness and other obligations now or hereafter
incurred or arising pursuant to the provisions of that certain Amended
and Restated Credit Agreement dated as of May 30, 2000 between
Chesapeake Exploration Limited Partnership, as Borrower, Chesapeake
Energy Corporation and certain of its subsidiaries, as Guarantors, and
Union Bank of California N.A., individually and in its capacity as
Agent for the benefit of the lenders (herein collectively called
"Lenders") under the Amended and Restated Credit Agreement (such
lenders currently are Union Bank of California, N.A., Bear Sterns
Corporate Lending Inc, National Bank of Canada, and Bank of Oklahoma,
N.A.), as amended by that certain First Amendment to Amended and
Restated Credit Agreement dated as of August 1, 2000 (which Amended and
Restated Credit Agreement, as heretofore amended, amends and restates
that certain Credit Agreement dated as of August 27, 1998 between
Chesapeake Mid-Continent Corp. (predecessor by merger with Chesapeake
Exploration Limited Partnership; Chesapeake Exploration Limited
Partnership being the surviving entity), as Borrower, and Union Bank of
California, N.A., individually and in its capacity as Agent, and all
amendments to such Credit Agreement), and all supplements thereto and
amendments or modifications thereof, and all agreements given in
substitution therefor or in restatement, renewal or extension thereof,
in whole or in part (such Amended and Restated Credit Agreement, as
amended by the First Amendment to Amended and Restated Credit
Agreement, and as the same may from time to time be supplemented,
amended or modified, and all other agreements given in substitution
therefor or in restatement, renewal or extension thereof, in whole or
in part, being herein called the "Credit Agreement") (Union Bank of
California, N.A. in such capacity as Agent under the Credit Agreement
is herein called "Agent", and in its individual capacity is herein
called "Union Bank");
(b) The following promissory notes (such notes, as from time
to time supplemented, amended or modified, and all other notes given in
substitution therefor, or in modification, renewal or extension
thereof, in whole or in part, are herein collectively called the
"Notes"):
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183
(i) One certain promissory note dated as of August 1,
2000, in the principal amount of Thirty Seven Million Five
Hundred Thousand Dollars ($37,500,000) made by Mortgagor and
payable to the order of Union Bank, on or before July 15, 2002
(given in whole or in part in renewal and replacement (but not
in extinguishment or novation) of that certain promissory note
dated as of May 30, 2000 in the principal amount of One
Hundred Million Dollars ($100,000,000) made by Mortgagor and
payable to the order of Union Bank, which May 30, 2000 note in
turn was given in whole or in part in renewal, replacement,
increase and extension of various prior notes), bearing
interest as therein provided, and containing a provision for
the payment of a reasonable additional amount as attorneys'
fees, as the same may from time to time be supplemented,
amended or modified, and all other notes given in substitution
therefor or in modification, renewal or extension thereof, in
whole or in part;
(ii) One certain promissory note dated as of August
1, 2000, in the principal amount of Thirty Seven Million Five
Hundred Thousand Dollars ($37,500,000) made by Mortgagor and
payable to the order of Bear Sterns Corporate Lending Inc., on
or before July 15, 2002 (given in whole or in part in renewal
and replacement (but not in extinguishment or novation) of
that certain promissory note dated as of May 30, 2000 in the
principal amount of One Hundred Million Dollars ($100,000,000)
made by Mortgagor and payable to the order of Union Bank,
which May 30, 2000 note in turn was given in whole or in part
in renewal, replacement, increase and extension of various
prior notes), bearing interest as therein provided, and
containing a provision for the payment of a reasonable
additional amount as attorneys' fees, as the same may from
time to time be supplemented, amended or modified, and all
other notes given in substitution therefor or in modification,
renewal or extension thereof, in whole or in part;
(iii) One certain promissory note dated as of August
1, 2000, in the principal amount of Fifteen Million Dollars
($15,000,000) made by Mortgagor and payable to the order of
the National Bank of Canada, on or before July 15, 2002 (given
in whole or in part in renewal and replacement (but not in
extinguishment or novation) of that certain promissory note
dated as of May 30, 2000 in the principal amount of One
Hundred Million Dollars ($100,000,000) made by Mortgagor and
payable to the order of Union Bank, which May 30, 2000 note in
turn was given in whole or in part in renewal, replacement,
increase and extension of various prior notes), bearing
interest as therein provided, and containing a provision for
the payment of a reasonable additional amount as attorneys'
fees, as the same may from time to time be supplemented,
amended or modified, and all other notes given in substitution
therefor or in modification, renewal or extension thereof, in
whole or in part;
(iv) One certain promissory note dated as of August
1, 2000, in the principal amount of Ten Million Dollars
($10,000,000) made by Mortgagor and payable to the order of
Bank of Oklahoma, N.A., on or before July 15, 2002 (given in
whole or in part in renewal and replacement (but not in
extinguishment or novation) of that certain promissory note
dated as of May 30, 2000 in the principal amount of One
Hundred Million Dollars ($100,000,000) made by Mortgagor and
payable to the order of Union Bank, which May 30, 2000 note in
turn was given in whole or in part in renewal, replacement,
increase and extension of various prior notes), bearing
interest as therein provided, and containing a provision for
the payment of a reasonable additional amount as attorneys'
fees, as the same may from time to time be supplemented,
amended or modified, and all other notes given in substitution
therefor or in modification, renewal or extension thereof, in
whole or in part.
NOTE TO NORTH DAKOTA RECORDING OFFICER: Attached hereto (as Annex II)
only to counterparts hereof to be filed in the State of North Dakota is
an adequate statement of the interest.
(c) All indebtedness and other obligations now or hereafter
incurred or arising pursuant to or permitted by the provisions of the
Notes, the Credit Agreement, this Mortgage or any other instrument now
or hereafter evidencing, governing, guaranteeing or securing the
"secured indebtedness" (as hereinafter defined) or any part thereof or
otherwise executed in connection with any advance or loan evidenced or
governed by any one or more of the Notes or the Credit Agreement (the
Notes, the Credit Agreement, this Mortgage and such other instruments
being herein sometimes collectively called the "Loan Documents"); and
(d) All other loans and future advances made by one or more
Lenders to Mortgagor and all other debts, obligations and liabilities
of Mortgagor of every kind and character now or hereafter existing in
favor of one or more Lenders, whether direct or indirect, primary or
secondary, joint or several, fixed or contingent, and whether
originally payable to one or more
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184
Lenders or to a third party and subsequently acquired by one or more
Lenders, it being contemplated that Mortgagor may hereafter become
indebted to one or more Lenders for such further debts, obligations and
liabilities; and
(e) Without limiting the generality of the foregoing, all
post-petition interest, expenses, and other duties and liabilities with
respect to indebtedness or other obligations described above in this
Section 1.3, which would be owed but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization, or similar proceeding.
(f) Payment of and performance of any and all present or
future obligations of Mortgagor according to the terms of any present
or future interest or currency rate swap, rate cap, rate floor, rate
collar, exchange transaction, forward rate agreement, or other exchange
or rate protection agreements or any option with respect to any such
transaction now existing or hereafter entered into between Mortgagor
and one or more Lenders (or any one or more affiliates of any Lender);
(g) Payment of and performance of any and all present or
future obligations of Mortgagor according to the terms of any present
or future swap agreements, cap, floor, collar, exchange transaction,
forward agreement or other exchange or protection agreements relating
to crude oil, natural gas or other hydrocarbons, or any option with
respect to any such transaction now existing or hereafter entered into
between Mortgagor and one or more Lenders (or any one or more
affiliates of any Lender);
Section 1.4. Secured Indebtedness. The indebtedness referred to in
Section 1.3, and all renewals, extensions and modifications thereof, and all
substitutions therefor, in whole or in part, are herein sometimes referred to as
the "secured indebtedness" or the "indebtedness secured hereby". It is
contemplated and acknowledged that the secured indebtedness may include
revolving credit loans and advances from time to time, and that this Mortgage
shall have effect, as of the date hereof, to secure all secured indebtedness,
regardless of whether any amounts are advanced on the date hereof or on a later
date or, whether having been advanced, are later repaid in part or in whole and
further advances made at a later date.
Section 1.5. NEW MEXICO AGGREGATE UNPAID PRINCIPAL AMOUNT. AS TO ONLY
THE MORTGAGED PROPERTIES SITUATED IN THE STATE OF NEW MEXICO, THE AGGREGATE
UNPAID PRINCIPAL AMOUNT OF THE SECURED INDEBTEDNESS OUTSTANDING AT ANY
PARTICULAR TIME (AFTER HAVING GIVEN EFFECT TO ALL ADVANCES AND ALL REPAYMENTS
MADE PRIOR TO SUCH TIME) WHICH IS SECURED BY PROPERTY LOCATED IN NEW MEXICO
SHALL NOT AGGREGATE AN UNPAID PRINCIPAL AMOUNT IN EXCESS OF TWO HUNDRED MILLION
DOLLARS ($200,000,000.00).
Section 1.6. Line of Credit Mortgage. This Mortgage is a line of credit
mortgage pursuant to Section 48-7-4.B NMSA 1978 Comp.
Section 1.7. INDEBTEDNESS SECURED BY ARKANSAS PROPERTIES. WITH RESPECT
TO PROPERTY LOCATED IN THE STATE OF ARKANSAS, IT IS AGREED THAT THIS MORTGAGE
SHALL STAND AS SECURITY FOR THE PAYMENT OF ALL FUTURE AND ADDITIONAL
INDEBTEDNESS, DIRECT OR INDIRECT, CREATED AFTER THE DATE OF THIS MORTGAGE, WHICH
MAY BE OWING BY MORTGAGOR TO ONE OR MORE LENDERS AT ANY TIME PRIOR TO THE
PAYMENT IN FULL OF ALL OBLIGATIONS, INCLUDING FUTURE ADVANCES SECURED BY THIS
MORTGAGE; SUCH FUTURE AND ADDITIONAL INDEBTEDNESS TO BE SECURED HEREBY
REGARDLESS OF WHETHER IT SHALL BE PREDICATED UPON FUTURE LOANS OR ADVANCES
HEREAFTER MADE BY ONE OR MORE OF THE LENDERS, OR OBLIGATIONS HEREAFTER ACQUIRED
BY ONE OR MORE OF SUCH LENDERS THROUGH ASSIGNMENT OR SUBROGATION OR OTHERWISE,
OR SHALL REPRESENT INDIRECT OBLIGATIONS (CREATED AFTER THE DATE OF THIS
MORTGAGE) BASED UPON ANY ENDORSEMENTS, GUARANTIES OR SURETYSHIP; AND IT IS
AGREED THAT THIS MORTGAGE SHALL STAND AS SECURITY FOR ALL SUCH FUTURE AND
ADDITIONAL INDEBTEDNESS WHETHER IT BE INCURRED FOR ANY BUSINESS PURPOSE THAT WAS
RELATED OR WHOLLY UNRELATED TO THE PURPOSE OF THE ORIGINAL NOTE, OR WHETHER IT
WAS INCURRED FOR SOME PERSONAL OR NONBUSINESS PURPOSE, OR FOR ANY OTHER PURPOSE
RELATED OR UNRELATED, OR SIMILAR OR DISSIMILAR, TO THE PURPOSE OF THE ORIGINAL
NOTE AND LOAN, UPON REQUEST OF MORTGAGOR, PRIOR TO THE DISCHARGE OF THIS
MORTGAGE, LENDER, AT ITS OPTION, MAY MAKE FUTURE ADVANCES TO MORTGAGOR. SUCH
FUTURE ADVANCES, WITH INTEREST THEREON, SHALL BE SECURED BY THIS
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185
MORTGAGE AND WHEN EVIDENCED BY PROMISSORY NOTES, THE SAID NOTES ARE SECURED
HEREBY. NOTHING HEREIN CONTAINED SHALL IMPLY ANY OBLIGATION ON THE PART OF ANY
LENDER TO MAKE ANY SUCH ADDITIONAL LOAN OR ADVANCES.
SECTION 1.8. MAXIMUM SECURED AMOUNT. NOTWITHSTANDING ANY PROVISION
HEREOF TO THE CONTRARY, THE OUTSTANDING INDEBTEDNESS SECURED BY PROPERTY LOCATED
IN EACH OF THE STATES OF KANSAS AND MONTANA SHALL NOT, AT ANY TIME OR FROM TIME
TO TIME, EXCEED AN AGGREGATE MAXIMUM AMOUNT OF $200,000,000.
ARTICLE II.
Representations. Warranties and Covenants
Section 2.1. Mortgagor represents, warrants, and covenants as follows:
(a) Title and Permitted Encumbrances. Mortgagor has, and
Mortgagor covenants to maintain, good and defensible title to the
Property, free and clear of all liens, security interests, and
encumbrances except for (i) the contracts, agreements, burdens,
encumbrances and other matters set forth in the descriptions of certain
of the Mortgaged Properties on Exhibit A hereto, (ii) the liens and
security interests evidenced by this Mortgage, (iii) statutory liens
for taxes which are not yet delinquent, (iv) liens under operating
agreements, pooling orders and unitization agreements, and mechanics'
and materialmen's liens, with respect to obligations which are not yet
due, and (v) other liens and security interests (if any) in favor of
Agent (the matters described in the foregoing clauses (i), (ii), (iii),
(iv), and (v) being herein called the "Permitted Encumbrances"):
Mortgagor will warrant and defend title to the Property, subject as
aforesaid, against the claims and demands of all persons claiming or to
claim the same or any part thereof. With respect to each Mortgaged
Property, the ownership of Mortgagor in such Mortgaged Property does
and will, (i) with respect to each tract of land described in Exhibit A
hereto, (whether described directly in such Exhibit A or described by
reference to another instrument) in connection with such Mortgaged
Property, (A) entitle Mortgagor to receive (subject to the terms and
provisions of this Mortgage) a decimal or percentage share of the oil,
gas and other hydrocarbons produced from, or allocated to, such tract
equal to not less than the decimal or percentage share set forth in
Exhibit A in connection with such tract opposite the words "Net Revenue
Interest" (or words of similar import), (B) cause Mortgagor to be
obligated to bear a decimal or percentage share of the cost of
exploration, development and operation of such tract of land not
greater than the decimal or percentage share set forth in Exhibit A in
connection with such tract opposite the words "Working Interest" (or
words of similar import) and (ii) if such Mortgaged Property is shown
on Exhibit A to be subject to a unit or units, with respect to each
such unit, (A) entitle Mortgagor to receive (subject to the terms and
provisions of this Mortgage) a decimal or percentage share of all
substances covered by such unit which are produced from, or allocated
to, such unit equal to not less than the decimal or percentage share
set forth in Exhibit A in connection with such Mortgaged Property
opposite the words "Unit Net Revenue Interest" or words of similar
import (and if such Mortgaged Property is subject to more than one
unit, words identifying such interest with such unit), and (B) obligate
Mortgagor to bear a decimal or percentage share of the cost of
exploration, development and operation of such unit not greater than
the decimal or percentage share set forth in Exhibit A in connection
with such Mortgaged Property opposite the words "Unit Working Interest"
or words of similar import (and if such Mortgaged Property is subject
to more than one unit, words identifying such interest with such unit).
With respect to each Property described in Exhibit A hereto which is
subject to a voluntary or involuntary pooling, unitization or
communitization agreement and/or order, the term "tract of land" as
used in this Section 2.1(a) shall mean the pooled, unitized or
communitized area as an entirety and shall not be deemed to refer to
any individual tract committed to said pooled, unitized or communitized
area. Without limitation of the foregoing, the ownership by Mortgagor
of the Mortgaged Properties does and will, with respect to each well or
unit identified on Schedule I attached hereto and made a part hereof,
entitle Mortgagor to receive (subject to the terms and provisions of
this Mortgage) a decimal or percentage share of the oil, gas and other
hydrocarbons produced from, or allocated to, such well or unit equal to
not less than the decimal or percentage share set forth, for such well
or unit, in the column headed "Net Revenue Interest" on Schedule I, and
cause Mortgagor to be obligated to bear a decimal or percentage share
of the cost of operation of such well or unit equal to not more than
the decimal or percentage share set forth, for such well or unit, in
the column headed "Working Interest" on Schedule I. The above-described
shares of production which Mortgagor is entitled to receive and shares
of expenses which Mortgagor is obligated to bear are not and will not
be subject to change
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(other than changes which arise pursuant to non-consent provisions of
operating agreements described in Exhibit A in connection with
operations hereafter proposed), except, and only to the extent that,
such changes are reflected in Exhibit A and/or Schedule I, as the case
may be. There is not and will not be any unexpired financing statement
covering any part of the Property on file in any public office naming
any party other than Agent as secured party. Upon request by Agent,
Mortgagor will deliver to Agent schedules of all internal and third
party information identifying the Mortgaged Properties (such as, for
example, lease names and numbers assigned by Mortgagor or the operator
of any Mortgaged Property, well and/or unit and/or property names and
numbers assigned by purchasers of Production, and internal
identification names and numbers used by Mortgagor in accounting for
revenues, costs, and joint interest transactions attributable to the
Mortgaged Properties).
(b) Leases and Contracts: Performance of Obligations. The oil,
gas and/or mineral leases, contracts. servitudes and other agreements
forming a part of the Property, to the extent the same cover or
otherwise relate to the Property, are in full force and effect, and
Mortgagor agrees to so maintain them in full force and effect. All
rents, royalties and other payments due and payable under such leases,
contracts, servitudes and other agreements, or under the Permitted
Encumbrances, or otherwise attendant to the ownership or operation of
the Property, have been, and will continue to be, properly and timely
paid. Mortgagor is not in default with respect to Mortgagor's
obligations (and Mortgagor is not aware of any default by any third
party with respect to such third party's obligations) under such
leases, contracts, servitudes and other agreements, or under the
Permitted Encumbrances, or otherwise attendant to the ownership or
operation of any part of the Property, where such default could
adversely affect the ownership or operation of the Property; Mortgagor
will fulfill all such obligations coming due in the future, Mortgagor
is not currently accounting (and will not hereafter agree to account)
for any royalties, or overriding royalties or other payments out of
production, on a basis (other than delivery in kind) less favorable to
Mortgagor than proceeds received by Mortgagor (calculated at the well)
from sale of production, and there are no situations where Mortgagor is
aware that a contingent liability may exist to account on a basis other
than on the basis of proceeds received by Mortgagor (calculated at the
well).
(c) Sale of Production. No Mortgaged Property is or will
become subject to any contractual or other arrangement (i) whereby
payment for production is or can be deferred for a substantial period
after the month in which such production is delivered (i.e., in the
case of oil, not in excess of 60 days, and in the case of gas, not in
excess of 90 days) or (ii) whereby payments are made to Mortgagor other
than by checks, drafts, wire transfer advises or other similar
writings, instruments or communications for the immediate payment of
money. Except for production sales contracts, processing agreements or
transportation agreements (or other agreements relating to the
marketing of Production) listed on Exhibit A (in connection with the
Mortgaged Properties to where they relate), (i) no Mortgaged Property
is or will become subject to any contractual or other arrangement for
the sale, processing or transportation of Production (or otherwise
related to the marketing of Production) which cannot be cancelled on
120 days' (or less) notice and (ii) all contractual or other
arrangements for the sale, processing or transportation of Production
(or otherwise related to the marketing of Production) shall be bona
fide arm's length transactions with third parties not affiliated with
Mortgagor and shall be at the best price (and on the best terms)
available (such price shall, in the case of Production sales which are
subject to price controls, be determined giving consideration to such
fact). Mortgagor is presently receiving a price for all production from
(or attributable to) each Mortgaged Property covered by a production
sales contract listed on Exhibit A as computed in accordance with the
terms of such contract, and is not having deliveries of production from
such Mortgaged Property curtailed substantially below such property's
delivery capacity. Neither Mortgagor, nor any of its predecessors in
title, has received prepayments (including, but not limited to,
payments for gas not taken pursuant to "take or pay" or other similar
arrangements) for any oil, gas or other hydrocarbons produced or to be
produced from the Mortgaged Properties after the date hereof, and
Mortgagor hereby covenants not to enter into any such advance or
prepayment arrangements whereby it accepts consideration for oil, gas
or other hydrocarbons not yet produced. No Mortgaged Property is or
will become subject to any "take or pay" or other similar arrangement
(i) which can be satisfied in whole or in part by the production or
transportation of gas from other properties or (ii) as a result of
which production from the Mortgaged Properties may be required to be
delivered to one or more third parties without payment (or without full
payment) therefor as a result of payments made, or other actions taken,
with respect to other properties. There is no Mortgaged Property with
respect to which Mortgagor, or its predecessors in title, has, prior to
the date hereof, taken more ("overproduced"), or less
("underproduced"), gas from the lands covered thereby (or pooled or
unitized therewith) than its ownership interest in such Mortgaged
Property would entitle it to take. Mortgagor will not after the date
hereof become "overproduced" (as above defined) with respect to any
well on the Mortgaged Properties (or on any unit in which the Mortgaged
Properties participate), in an amount in excess of Mortgagor's
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share of gas produced from such well during the preceding four calendar
months. No Mortgaged Property is or will become subject to a gas
balancing arrangement under which one or more third parties may take a
portion of the production attributable to such Mortgaged Property
without payment (or without full payment) therefor as a result of
production having been taken from, or as a result of other actions or
inactions with respect to, other properties. No Mortgaged Property is
subject at the present time to any regulatory refund obligation and, to
the best of Mortgagor's knowledge, no facts exist which might cause the
same to be imposed.
(d) Condition of Personal or Movable Property. The equipment,
inventory, improvements, fixtures, goods and other tangible
personal/movable property forming a part of the Property are and will
remain in good repair and condition and are and will be adequate for
the normal operation of the Property in accordance with prudent
industry standards; all of such Property is, and will remain, located
on the Mortgaged Properties, except for that portion thereof which is
or shall be located elsewhere (including that usually located on the
Mortgaged Properties but temporarily located elsewhere) in the course
of the normal operation of the Property.
(e) Operation of Mortgaged Properties. The Mortgaged
Properties (and properties unitized therewith) are being (and, to the
extent the same could adversely affect the ownership or operation of
the Mortgaged Properties after the date hereof, have in the past been),
and hereafter will be, maintained, operated and developed in a good and
workmanlike manner, in accordance with prudent industry standards and
in conformity with all applicable laws and all rules, regulations and
orders of all duly constituted authorities having jurisdiction and in
conformity with all oil, gas and/or other mineral leases and other
contracts and agreements forming a part of the Property and in
conformity with the Permitted Encumbrances; specifically in this
connection, (i) no Mortgaged Property is subject to having allowable
production after the date hereof reduced below the full and regular
allowable (including the maximum permissible tolerance) because of any
overproduction (whether or not the same was permissible at the time)
prior to the date hereof and (ii) none of the wells located on the
Mortgaged Properties (or properties unitized therewith) are or will be
deviated from the vertical more than the maximum permitted by
applicable laws, regulations, rules and orders, and such wells are, and
will remain, bottomed under and producing from, with the well bores
wholly within, the Mortgaged Properties (or, in the case of wells
located on properties unitized therewith, such unitized properties).
There are no wells being drilled, deepened, plugged back or reworked,
and no other operations are being conducted for which consent is
required under the applicable operating agreement (or which are other
than normal operation of existing wells on the Mortgaged Properties);
there are no proposals currently outstanding (whether made by Mortgagor
or by any other party) to drill, deepen, plug back, or rework wells, or
to conduct any such other operations, or to abandon any wells on the
Mortgaged Properties (nor are there any such proposals which have been
approved either by Mortgagor or any other party, with respect to which
the operations covered thereby have not been commenced). There are no
dry holes, or otherwise inactive wells, located on the Mortgaged
Properties or on lands pooled or unitized therewith (including, without
limitation, any wells which would, if located in Texas, require
compliance with Railroad Commission Rule 14(b)(2)), except for wells
that have been properly plugged and abandoned. Mortgagor has, and will
have in the future, all governmental licenses and permits necessary or
appropriate to own and operate the Property; Mortgagor has not received
notice of any violations in respect of any such licenses or permits.
(f) Sale or Disposal. Mortgagor will not, without the prior
written consent of Agent, sell, exchange, lease, transfer, or otherwise
dispose of any part of, or interest in, the Property other than (i)
sales, transfers and other dispositions of machinery, equipment and
other personal/movable property and fixtures made in connection with a
release, surrender or abandonment (to which Agent has given its prior
written consent) of a lease, (ii) sales, transfers and other
dispositions of machinery, equipment and other personal/movable
property and fixtures in connection with the abandonment (to which
Agent has given its prior written consent) of a well, (iii) sales,
transfers and other dispositions of machinery, equipment and other
personal/movable property and fixtures which are (A) obsolete for their
intended purpose and disposed of in the ordinary course of business or
(B) replaced by articles of at least equal suitability and value owned
by Mortgagor free and clear of all liens except this Mortgage and the
Permitted Encumbrances, and (iv) sales of Production which are made in
the ordinary course of business and in compliance with Section 2.1(c)
hereof, provided that nothing in clause (iv) shall be construed as
limiting Agent's rights under Article III of this Mortgage. Mortgagor
shall account fully and faithfully for and, if Agent so elects, shall
promptly pay or turn over to Agent the proceeds in whatever form
received from disposition in any manner of any of the Property.
Mortgagor shall at all times keep the Property and its proceeds
separate and distinct from other property of Mortgagor and shall keep
accurate and complete records of the Property and its proceeds.
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(g) Ad Valorem and Severance Taxes. Mortgagor has paid and
discharged, and will continue to pay and discharge, all ad valorem
taxes assessed against the Property or any part thereof and all
production, severance and other taxes assessed against, or measured by,
the Production or the value, or proceeds, of the Production.
(h) Suits and Claims. There are no suits, actions, claims,
investigations, inquiries, proceedings or demands pending (or. to
Mortgagor's knowledge, threatened) which affect the Property
(including, without limitation, any which challenge or otherwise
pertain to Mortgagor's title to the Property) and no judicial or
administrative actions, suits or proceedings pending (or, to
Mortgagor's knowledge, threatened) against Mortgagor.
(i) Environmental.
(A) Current Status. The Property and Mortgagor are
not in violation of Applicable Environmental Laws (below
defined), or subject to any existing, pending or, to the best
knowledge of Mortgagor, threatened investigation or inquiry by
any governmental authority or any other person under or with
respect to Applicable Environmental Laws, or subject to any
remedial obligations under Applicable Environmental Laws, and
are in compliance with all permits and licenses required under
Applicable Environmental Laws, and this representation will
continue to be true and correct following disclosure to the
applicable governmental authorities of all relevant facts,
conditions and circumstances, if any, pertaining to the
Property and Mortgagor. "Applicable Environmental Laws" shall
mean any applicable laws, orders, rules, or regulations
pertaining to safety, health or the environment, as such laws,
orders, rules or regulations now exist or are hereafter
enacted and/or amended (including without limitation the
Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986 (as amended, hereinafter
called "CERCLA"), the Resource Conservation and Recovery Act
of 1976, as amended by the Used Oil Recycling Act of 1980, the
Solid Waste Disposal Act Amendments of 1980, and the Hazardous
and Solid Waste Amendments of 1984 (as amended, hereinafter
called "RCRA") and applicable state and local law). Mortgagor
undertook, at the time of acquisition of the Property, all
appropriate inquiry into the previous ownership and uses of
the Property consistent with good commercial or customary
practice. Mortgagor has taken all steps necessary to determine
and has determined that no hazardous substances or solid
wastes have been disposed of or otherwise released at, into,
upon or under the Property. The use which Mortgagor makes and
intends to make of the Property will not result in the use,
treatment, storage or disposal or other release of any
hazardous substance or solid waste at, into, upon or under the
Property, except such usage, and temporary storage in
anticipation of usage. as is in the ordinary course of
business and in compliance with Applicable Environmental Laws.
The terms "hazardous substance" and "release" as used in this
Mortgage shall have the meanings specified in CERCLA, and the
terms "solid waste" and "disposal" (or "disposed") shall have
the meanings specified in RCRA; provided, in the event either
CERCLA or RCRA is amended so as to broaden the meaning of any
term defined thereby, such broader meaning shall apply
subsequent to the effective date of such amendment and
provided further, to the extent that the laws of the states in
which the Mortgaged Properties are located establish a meaning
for "hazardous substance," "release," "solid waste," or
"disposal" which is broader than that specified in either
CERCLA or RCRA, such broader meaning shall apply. The
"Associated Property" (as such term is hereinafter defined) is
not in violation of any Applicable Environmental Laws for
which Mortgagor or its predecessors in the Property would be
responsible. The term "Associated Property" as used in this
Mortgage shall mean any and all interests in and to (and or
carved out of) the lands which are described or referred to in
Exhibit A hereto, or which are otherwise described in any of
the oil, gas and/or mineral leases or other instruments
described in or referred to in such Exhibit A, whether or not
such property interests are owned by Mortgagor.
(B) Future Performance. Mortgagor will not cause or
permit the Property or the Associated Property or Mortgagor to
be in violation of, or do anything or permit anything to be
done which will subject the Property or the Associated
Property to any remedial obligations under, or result in
noncompliance with applicable permits and licenses under, any
Applicable Environmental Laws, assuming disclosure to the
applicable governmental authorities of all relevant facts,
conditions and circumstances, if any, pertaining to the
Property or the Associated Property and Mortgagor will
promptly notify Agent in writing of any existing, pending or,
to the best knowledge of Mortgagor, threatened investigation,
claim, suit or inquiry by any governmental authority or any
person in connection with any Applicable Environmental Laws.
Mortgagor will take all
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steps necessary to determine that no hazardous substances or
solid wastes have been disposed of or otherwise released on or
to the Property or the Associated Property. Mortgagor will not
cause or permit the disposal or other release of any hazardous
substance or solid waste at. into, upon or under the Property
or the Associated Property and covenants and agrees to keep or
cause the Property and/or the Associated Property to be kept
free of any hazardous substance or solid waste (except such
use, and temporary storage in anticipation of use, as is
required in the ordinary course of business, all while in
compliance with Applicable Environmental Laws), and to remove
the same (or if removal is prohibited bylaw, to take whatever
action is required by law) promptly upon discovery at its sole
expense. Upon Agent's reasonable request, at any time and from
time to time during the existence of this Mortgage, Mortgagor
will provide at Mortgagor's sole expense an inspection or
audit of the Property and the Associated Property from an
engineering or consulting form approved by Agent. indicating
the presence or absence of hazardous substances and solid
waste on the Property and/or the Associated Property and
compliance with Applicable Environmental Laws.
(j) Not Abandon Wells: Participate in Operations. Mortgagor
will not, without prior written consent of Agent, abandon, or consent
to the abandonment of, any well producing from the Mortgaged Properties
(or properties unitized therewith) so long as such well is capable (or
is subject to being made capable through drilling, reworking or other
operations which it would be commercially feasible to conduct) of
producing oil, gas, or other hydrocarbons or other minerals in
commercial quantities (as determined without considering the effect of
this Mortgage). Mortgagor will not, without prior written consent of
Agent, elect not to participate in a proposed operation on the
Mortgaged Properties where the effect of such election would be the
forfeiture either temporarily (i.e. until a certain sum of money is
received out of the forfeited interest) or permanently of any interest
in the Mortgaged Properties.
(k) Defense of Mortgage. If the validity or priority of this
Mortgage or of any rights, titles, liens or security interests created
or evidenced hereby with respect to the Property or any part thereof or
the title of Mortgagor to the Property shall be endangered or
questioned or shall be attacked directly or indirectly or if any legal
proceedings are instituted against Mortgagor with respect thereto,
Mortgagor will give prompt written notice thereof to Agent and at
Mortgagor's own cost and expense will diligently endeavor to cure any
defect that may be developed or claimed, and will take all necessary
and proper steps for the defense of such legal proceedings, including,
but not limited to, the employment of counsel, the prosecution or
defense of litigation and the release or discharge of all adverse
claims, and Trustee and Agent, or either of them (whether or not named
as parties to legal proceedings with respect thereto), are hereby
authorized and empowered to take such additional steps as in their
judgment and discretion may be necessary or proper for the defense of
any such legal proceedings or the protection of the validity or
priority of this Mortgage and the rights, titles, liens and security
interests created or evidenced hereby, including but not limited to the
employment of independent counsel, the prosecution or defense of
litigation, the compromise or discharge of any adverse claims made with
respect to the Property, the purchase of any tax title and the removal
of prior liens or security interests, and all expenditures so made of
every kind and character shall he a demand obligation (which obligation
Mortgagor hereby expressly promises to pay) owing by Mortgagor to Agent
or Trustee (as the case may be) and shall bear interest from the date
expended until paid at the rate described in Section 2.3 hereof, and
the party incurring such expenses shall be subrogated to all rights of
the person receiving such payment.
(I) Fees and Expenses: Indemnity. Mortgagor will reimburse
Trustee, Agent and each Lender (for purposes of this paragraph, the
terms "Trustee", Agent and "Lender" shall include the directors,
officers, partners, employees and agents of Trustee, Agent or any
Lender, respectively, and any persons or entities owned or controlled
by or affiliated with Trustee, Agent or any Lender, respectively) for
all expenditures, including reasonable attorneys' fees and expenses,
incurred or expended in connection with (i) the breach by Mortgagor of
any covenant, agreement or condition contained herein or in any other
Loan Document, (ii) the exercise of any rights and remedies hereunder
or under any other Loan Document, and (iii) the protection of the
Property and/or liens and security interests therein. Mortgagor will
indemnify and hold harmless Trustee, Agent and each Lender from and
against (and will reimburse such indemnified parties for) all claims,
demands, liabilities, losses, damages (including without limitation
consequential damages), causes of action, judgments, penalties, costs
and expenses (including without limitation reasonable attorneys' fees
and expenses) which may be imposed upon, asserted against or incurred
or paid by the Trustee, the Agent or any Lender on account of, in
connection with, or arising out of (A) any bodily injury or death or
natural resource, human health or property damage occurring in, at,
into, under or upon or in the vicinity of the Property through any
cause whatsoever, (B) any act performed or omitted to be performed
hereunder or the breach of any representation or warranty herein, (C)
the exercise of any rights and remedies hereunder or under
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any other Loan Document, (D) any transaction, act, omission, event or
circumstance arising out of or in any way connected with the Property
or with this Mortgage or any other Loan Document, (E) any violation on
or prior to the Release Date (as hereinafter defined) of any Applicable
Environmental Law, (F) any act, omission, event or circumstance
existing or occurring on or prior to the Release Date (including
without limitation the presence on or under the Property or the
Associated Property or release at, into, upon, under or from the
Property or the Associated Property of hazardous substances or solid
wastes disposed of or otherwise released) resulting from or in
connection with the ownership, construction, occupancy, operation, use
and/or maintenance of the Property or the Associated Property,
regardless of whether the act, omission, event or circumstance
constituted a violation of any Applicable Environmental Law at the time
of its existence or occurrence, and (G) any and all claims or
proceedings (whether brought by private party or governmental agencies)
for human health, bodily injury, property damage, abatement or
remediation, environmental damage, cleanup, mitigation, removal,
natural resource damage or impairment or any other injury or damage
resulting from or relating to any hazardous or toxic substance, solid
waste or contaminated material located upon or migrating into, from or
through the Property or the Associated Property (whether or not the
release of such materials was caused by Mortgagor, a tenant or
subtenant or a prior owner or tenant or subtenant on the Property or
the Associated Property and whether or not the alleged liability is
attributable to the use, treatment, handling, storage, generation,
transportation, removal or disposal of such substance, waste or
material or the mere presence of such substance, waste or material on
or under the Property or the Associated Property), which the Trustee
any/or the Agent and/or any Lender may have liability with respect to
due to the making of the loan or loans evidenced by any of the Notes,
the granting of this Mortgage, the exercise of any rights under the
Loan Documents, or otherwise. Agent shall have the right to compromise
and adjust any such claims, actions and judgments, and in addition to
the rights to be indemnified as herein provided, all amounts paid in
compromise, satisfaction or discharge of any such claim, action or
judgment, and all court costs, attorneys' fees and other expenses of
every character expended by Agent, Trustee or any Lender pursuant to
the provisions of this section shall be a demand obligation (which
obligation Mortgagor hereby expressly promises to pay) owing by
Mortgagor to the applicable party or parties. The "Release Date" as
used herein shall mean the earlier of the following two dates: (i) the
date on which the indebtedness and obligations secured hereby have been
paid and performed in full and this Mortgage has been released of
record, or (ii) the date on which the lien of this Mortgage is
foreclosed or a deed in lieu of such foreclosure is fully effective and
recorded. WITHOUT LIMITATION, IT IS THE INTENTION OF MORTGAGOR AND
MORTGAGOR AGREES THAT THE FOREGOING INDEMNITIES SHALL APPLY TO EACH
INDEMNIFIED PARTY WITH RESPECT TO CLAIMS, DEMANDS, LIABILITIES, LOSSES,
DAMAGES, CAUSES OF ACTION, JUDGMENTS, PENALTIES, COSTS AND EXPENSES
(INCLUDING WITHOUT LIMITATION REASONABLE ATTORNEYS' FEES) WHICH IN
WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OF SUCH
(AND/OR ANY OTHER) INDEMNIFIED PARTY. However, such indemnities shall
not apply to any particular indemnified party (but shall apply to the
other indemnified parties) to the extent the subject of the
indemnification is caused by or arises out of the gross negligence or
willful misconduct of such particular indemnified party. The foregoing
indemnities shall not terminate upon the Release Date or upon the
release, foreclosure or other termination of this Mortgage but will
survive the Release Date, foreclosure of this Mortgage or conveyance in
lieu of foreclosure, and the repayment of the secured indebtedness and
the discharge and release of this Mortgage and the other documents
evidencing and/or securing the secured indebtedness. Any amount to be
paid hereunder by Mortgagor to Agent, Trustee and/or any Lender shall
be a demand obligation owing by Mortgagor to the applicable party or
parties and shall be subject to and covered by the provisions of
Section 2.3 hereof
(m) Insurance. Mortgagor will carry insurance as provided in
the Credit Agreement. In the event of any loss under any insurance
policies so carried by Mortgagor, Agent shall have the right (but not
the obligation) to make proof of loss and collect the same, and all
amounts so received shall be applied toward costs, charges and expenses
(including reasonable attorneys' fees), if any, incurred in the
collection thereof, then to the payment, in the order determined by
Agent in its own discretion, of the secured indebtedness, and any
balance remaining shall be subject to the order of Mortgagor. Agent is
hereby authorized but not obligated to enforce in its name or in the
name of Mortgagor payment of any or all of said policies or settle or
compromise any claim in respect thereof, and to collect and make
receipts for the proceeds thereof and Agent is hereby appointed
Mortgagor's agent and attorney-in-fact to endorse any check or draft
payable to Mortgagor in order to collect the proceeds of insurance. In
the event of foreclosure of this Mortgage, or other transfer of title
to the Property in extinguishment in whole or in part of the secured
indebtedness, all right, title and interest of Mortgagor in and to such
policies then in force concerning the Property and all proceeds payable
thereunder shall thereupon vest in the purchaser at such foreclosure or
other transferee in the event of such other transfer of title.
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(n) Further Assurances. Mortgagor will, on request of Agent,
(i) promptly correct any defect, error or omission which may be
discovered in the contents of this Mortgage, or in any other Loan
Document, or in the execution or acknowledgment of this Mortgage or any
other Loan Document; (ii) execute, acknowledge, deliver and record
and/or file such further instruments (including, without limitation,
further deeds of trust, mortgages, security agreements, financing
statements, continuation statements, and assignments of production,
accounts, funds, contract rights, general intangibles, and proceeds)
and do such further acts as may be necessary, desirable or proper to
carry out more effectively the purposes of this Mortgage and the other
Loan Documents and to more fully identify and subject to the liens and
security interests hereof any property intended to be covered hereby,
including specifically, but without limitation, any renewals,
additions, substitutions, replacements, or appurtenances to the
Property; and (iii) execute, acknowledge, deliver, and file and/or
record any document or instrument (including specifically any financing
statement) desired by Agent to protect the lien or the security
interest hereunder against the rights or interests of third persons.
Mortgagor shall pay all costs connected with any of the foregoing.
(o) Name and Place of Business. Mortgagor has not during the
preceding five years, been known by or used any other corporate or
partnership, trade or fictitious name. Mortgagor will not cause or
permit any change to be made in its name, identity, or corporate or
partnership structure, or its federal employer identification number
unless Mortgagor shall have notified Agent of such change at least
thirty (30) days prior to the effective date of such change, and shall
have first taken all action required by Agent for the purpose of
further perfecting or protecting the liens and security interests in
the Property created hereby. Mortgagor's principal place of business
and chief executive office, and the place where Mortgagor keeps its
books and records concerning the Property (including, particularly,
the records with respect to "Production Proceeds", as defined in
Section 3.1 hereof, from the Mortgaged Properties) has for the
preceding four months, been, and will continue to be (unless Mortgagor
notifies Agent of any change in writing at least thirty (30) days prior
to the date of such change), the address set forth at the end of this
Mortgage.
(p) Not a Foreign Person. Mortgagor is not a "foreign person"
within the meaning of the Internal Revenue Code of 1986, as amended,
(hereinafter called the "Code"), Sections 1445 and 7701 (i.e. Mortgagor
is not a non-resident alien, foreign corporation, foreign partnership,
foreign trust or foreign estate as those terms are defined in the Code
and any regulations promulgated thereunder).
Section 2.2. Compliance by Operator. As to any part of the Mortgaged
Properties which is not a working interest, Mortgagor agrees to take all such
action and to exercise all rights and remedies as are available to Mortgagor to
cause the owner or owners of the working interest in such properties to comply
with the covenants and agreements contained herein; and as to any part of the
Mortgaged Properties which is a working interest but which is operated by a
party other than Mortgagor, Mortgagor agrees to take all such action and to
exercise all rights and remedies as are available to Mortgagor (including, but
not limited to, all rights under any operating agreement) to cause the party who
is the operator of such property to comply with the covenants and agreements
contained herein.
Section 2.3. Performance on Mortgagor's Behalf. Mortgagor agrees that,
if Mortgagor fails to perform any act or to take any action which hereunder
Mortgagor is required to perform or take, or to pay any money which hereunder
Mortgagor is required to pay, Agent, in Mortgagor's name or its own name, may,
but shall not be obligated to, perform or cause to be performed such act or take
such action or pay such money, and any expenses so incurred by Agent and any
money so paid by Agent shall be a demand obligation owing by Mortgagor to Agent
(which obligation Mortgagor hereby expressly promises to pay) and Agent, upon
making such payment, shall be subrogated to all of the rights of the person,
corporation or body politic receiving such payment. Each amount due and owing by
Mortgagor to Trustee and/or Agent and/or any Lender pursuant to this Mortgage
shall bear interest each day, from the date of such expenditure or payment until
paid, at a rate equal to the rate as provided for past due principal under the
Notes (provided that, should applicable law provide for a maximum permissible
rate of interest on such amounts, such rate shall not be greater than such
maximum permissible rate); all such amounts, together with such interest
thereon, shall be a part of the secured indebtedness and shall be secured by
this Mortgage.
ARTICLE III.
Assignment of Production, Accounts, and Proceeds
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Section 3.1 Assignment of Production. Mortgagor does hereby absolutely
and unconditionally assign, transfer and set over to Agent all Production which
accrues to Mortgagor's interest in the Mortgaged Properties, all proceeds of
such Production and all Payments in Lieu of Production (herein collectively
referred to as the "Production Proceeds"), together with the immediate and
continuing right to collect and receive such Production Proceeds. Mortgagor
directs and instructs any and all purchasers of any Production to pay to Agent
all of the Production Proceeds accruing to Mortgagor's interest until such time
as such purchasers have been furnished with evidence that all secured
indebtedness has been paid and that this Mortgage has been released. Mortgagor
agrees that no purchasers of the Production shall have any responsibility for
the application of any funds paid to Agent.
Section 3.2. Effectuating Payment of Production Proceeds to Agent.
Independent of the foregoing provisions and authorities herein granted,
Mortgagor agrees to execute and deliver any and all transfer orders, division
orders and other instruments that may be requested by Agent or that may be
required by any purchaser of any Production for the purpose of effectuating
payment of the Production Proceeds to Agent. If under any existing sales
agreements, other than division orders or transfer orders, any Production
Proceeds are required to be paid by the purchaser to Mortgagor so that under
such existing agreements payment cannot be made of such Production Proceeds to
Agent, Mortgagor's interest in all Production Proceeds under such sales
agreements and in all other Production Proceeds which for any reason may be paid
to Mortgagor shall, when received by Mortgagor, constitute trust funds in
Mortgagor's hands and shall be immediately paid over to Agent. Without
limitation upon any of the foregoing, Mortgagor hereby constitutes and appoints
Agent as Mortgagor's special attorney-in-fact (with full power of substitution,
either generally or for such periods or purposes as Agent may from time to time
prescribe) in the name, place and stead of Mortgagor to do any and every act and
exercise any and every power that Mortgagor might or could do or exercise
personally with respect to all Production and Production Proceeds (the same
having been assigned by Mortgagor to Agent pursuant to Section 3.1 hereof),
expressly inclusive, but not limited to, the right, power and authority to:
(a) Execute and deliver in the name of Mortgagor any and all
transfer orders, division orders, letters in lieu of transfer orders,
indemnifications, certificates and other instruments of every nature
that may be requested or required by any purchaser of Production from
any of the Mortgaged Properties for the purposes of effectuating
payment of the Production Proceeds to Agent or which Agent may
otherwise deem necessary or appropriate to effect the intent and
purposes of the assignment contained in Section 3.1; and
(b) If under any product sales agreements other than division
orders or transfer orders, any Production Proceeds are required to be
paid by the purchaser to Mortgagor so that under such existing
agreements payment cannot be made of such Production Proceeds to Agent,
to make, execute and enter into such sales agreements or other
agreements as are necessary to direct Production Proceeds to be payable
to Agent;
giving and granting unto said attorney-in-fact full power and authority to do
and perform any and every act and thing whatsoever necessary and requisite to be
done as fully and to all intents and purposes, as Mortgagor might or could do if
personally present; and Mortgagor shall be bound thereby as fully and
effectively as if Mortgagor had personally executed, acknowledged and delivered
any of the foregoing certificates or documents. The powers and authorities
herein conferred upon Agent may be exercised by Agent through any person who, at
the time of the execution of the particular instrument, is an officer of Agent.
The power of attorney herein conferred is granted for valuable consideration and
hence is coupled with an interest and is irrevocable so long as the secured
indebtedness, or any part thereof, shall remain unpaid. All persons dealing with
Agent or any substitute shall be fully protected in treating the powers and
authorities conferred by this paragraph as continuing in full force and effect
until advised by Agent that all the secured indebtedness is fully and finally
paid. Agent may, but shall not he obligated to, take such action as it deems
appropriate in an effort to collect the Production Proceeds and any reasonable
expenses (including reasonable attorney's fees) so incurred by Agent shall be a
demand obligation of Mortgagor and shall be part of the secured indebtedness,
and shall bear interest each day, from the date of such expenditure or payment
until paid, at the rate described in Section 2.3 hereof.
Section 3.3. Change of Purchaser. To the extent a default has occurred
hereunder and is continuing, should any person now or hereafter purchasing or
taking Production fail to make payment promptly to Agent of the Production
Proceeds, Agent shall, subject to then existing contractual prohibitions, have
the right to make, or to require Mortgagor to make, a change of purchaser, and
the right to designate or approve the new purchaser, and Agent shall have no
liability or responsibility in connection therewith so long as ordinary care is
used in making such designation.
Section 3.4. Application of Production Proceeds. So long as no default
has occurred hereunder, the Production Proceeds received by Agent during each
calendar month shall on the first business day of the next succeeding calendar
month (or, at the option of Agent, on any earlier date) be applied by Agent as
follows:
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FIRST, to the payment of all secured indebtedness then due and
payable, in such manner and order as Agent deems advisable;
SECOND, to the prepayment of the remainder of the secured
indebtedness in such manner and order and to such extent as Agent deems
advisable; and
THIRD, the remainder, if any, of the Production Proceeds shall
be paid over to Mortgagor or to Mortgagor's order or to such other
parties as may be entitled thereto by law.
After a default hereunder has occurred, all Production Proceeds from time to
time in the hands of Agent shall be applied by it toward the payment of all
secured indebtedness (principal, interest, attorney's fees and other fees and
expenses) at such times and in such manner and order and to such extent as Agent
deems advisable.
Section 3.5. Release From Liability; Indemnification. Agent and its
successors and assigns are hereby released and absolved from all liability for
failure to enforce collection of the Production Proceeds and from all other
responsibility in connection therewith, except the responsibility of each to
account to Mortgagor for funds actually received by each. Mortgagor agrees to
indemnify and hold harmless Agent (for purposes of this paragraph, the term
"Agent" shall include the directors, officers, partners, employees and agents of
Agent and any persons or entities owned or controlled by or affiliated with
Agent) from and against all claims, demands, liabilities, losses, damages
(including without limitation consequential damages), causes of action,
judgments, penalties, costs and expenses (including without limitation
reasonable attorneys' fees and expenses) imposed upon, asserted against or
incurred or paid by Agent by reason of the assertion that Agent received, either
before or after payment in full of the secured indebtedness, funds from the
production of oil, gas, other hydrocarbons or other minerals claimed by third
persons (and/or funds attributable to sales of production which (i) were made at
prices in excess of the maximum price permitted by applicable law or (ii) were
otherwise made in violation of laws, rules, regulations and/or orders governing
such sales), and Agent shall have the right to defend against any such claims or
actions, employing attorneys of its own selection, and if not furnished with
indemnity satisfactory to it, Agent shall have the right to compromise and
adjust any such claims, actions and judgments, and in addition to the rights to
be indemnified as herein provided, all amounts paid by Agent in compromise,
satisfaction or discharge of any such claim, action or judgment, and all court
costs, attorneys' fees and other expenses of every character expended by Agent
pursuant to the provisions of this section shall be a demand obligation (which
obligation Mortgagor hereby expressly promises to pay) owing by Mortgagor to
Agent and shall bear interest, from the date expended until paid, at the rate
described in Section 2.3 hereof. The foregoing indemnities shall not terminate
upon the Release Date or upon the release, foreclosure or other termination of
this Mortgage but will survive the Release Date, foreclosure of this Mortgage or
conveyance in lieu of foreclosure, and the repayment of the secured indebtedness
and the discharge and release of this Mortgage and the other documents
evidencing and/or securing the secured indebtedness. WITHOUT LIMITATION, IT IS
THE INTENTION OF MORTGAGOR AND MORTGAGOR AGREES THAT THE FOREGOING RELEASES AND
INDEMNITIES SHALL APPLY TO EACH INDEMNIFIED PARTY WITH RESPECT TO ALL CLAIMS,
DEMANDS, LIABILITIES, LOSSES, DAMAGES (INCLUDING WITHOUT LIMITATION
CONSEQUENTIAL DAMAGES), CAUSES OF ACTION, JUDGMENTS, PENALTIES, COSTS AND
EXPENSES (INCLUDING WITHOUT LIMITATION REASONABLE ATTORNEYS' FEES AND EXPENSES)
WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OF SUCH
(AND/OR ANY OTHER) INDEMNIFIED PARTY. However, such indemnities shall not apply
to any particular indemnified PARTY (But shall apply to the other indemnified
parties) to the extent the subject of the indemnification is caused by or arises
out of the gross negligence or willful misconduct of such particular indemnified
party.
Section 3.6. Mortgagor's Absolute Obligation to Pay Notes. Nothing
herein contained shall detract from or limit the obligations of Mortgagor to
make prompt payment of the Notes, and any and all other secured indebtedness, at
the time and in the manner provided herein and in the Loan Documents, regardless
of whether the Production and Production Proceeds herein assigned are sufficient
to pay same, and the rights under this Article III shall be cumulative of all
other rights under the Loan Documents.
Section 3.7. Rights under Oklahoma Oil and Gas Owners' Lien Act.
Mortgagor hereby grants, sells, assigns and sets over unto Agent during the term
hereof, all of Mortgagor's rights and interests pursuant to the provisions of
the Oil and Gas Owners' Lien Act (OKLA. STAT. tit. 52, Sections 548.1-548.6 (the
"Oklahoma Act"), hereby vesting in Agent all of Mortgagor's rights as an
interest owner to the continuing security interest in and lien upon the oil or
gas severed or the proceeds of sale. Agent may, at its option, file the verified
notice of lien in order to perfect such lien, but shall not be obligated to make
such filing and shall not be held liable to Mortgagor for any act or omission
pursuant to the Oklahoma Act.
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Section 3.8. Rights Under New Mexico Act. Mortgagor hereby grants,
sells, assigns and sets over unto Agent, during the term hereof, all of
Mortgagor's rights and interests pursuant to the provisions of Sections 48-9-1,
et seq. N.M.S.A. 1978 Comp. (the "New Mexico Act"), hereby vesting in Agent all
of Mortgagor's nights as an interest owner to the continuing security interest
in and lien upon the oil or gas severed or the proceeds of sale. Agent may, at
its option, file the verified notice of lien in order to perfect such lien, but
shall not be obligated to make such filing and shall not be held liable to
Mortgagor for any act or omission pursuant to the New Mexico Act.
ARTICLE IV.
Remedies Upon Default
Section 4.1. Default. The term "default" as used in this Mortgage shall
mean the occurrence of any of the following events:
(a) the occurrence of an "Event of Default" as defined in the
Credit Agreement;
(b) the failure of Mortgagor to pay over to Agent any
Production Proceeds which are receivable by Agent under this Mortgage
but which are paid to Mortgagor rather than Agent (either as provided
for in Section 3.2 hereof or otherwise), except Production Proceeds
paid over to Mortgagor by Agent under clause THIRD of Section 3.4; or
(c) the failure of Mortgagor timely and properly to observe,
keep or perform any covenant, agreement, warranty or condition herein
required to be observed, kept or performed, if such failure is not
remedied within 30 days after written notice and demand by Agent for
the performance of such covenant, agreement, warranty or condition; or
(d) any representation contained herein shall prove to have
been false or misleading in any material respect on the date made (or
on the date as of which made) and such representation is not made true
and correct (as of the time such corrective action is taken) within 30
days after written notice and demand by Agent to Mortgagor objecting to
such representation not being true and correct; or
(e) Mortgagor suffers the entry against it of a judgment,
decree or order for relief by a court of competent jurisdiction in an
involuntary proceeding commenced under any applicable bankruptcy,
insolvency or other similar law of any jurisdiction now or hereafter in
effect, including the United States Bankruptcy Code, as from time to
time amended, or has such a proceeding commenced against it which
remains undismissed for a period of 30 days; or
(f) Mortgagor commences a voluntary case under any applicable
bankruptcy, insolvency or similar law now or hereafter in effect,
including the United States Bankruptcy Code, as from time to time
amended, or applies for or consents to the entry of an order for relief
in an involuntary case under any such law; or Mortgagor makes a general
assignment for the benefit of creditors or fails to pay (or admits in
writing its inability to pay) its debts as such debts become due; or
Mortgagor takes corporate or other action in furtherance of any of the
foregoing; or
(g) Mortgagor suffers the appointment of or taking of
possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official for a substantial part of its assets
or for any part of the Property in a proceeding brought against or
initiated by it and (1) such appointment or taking is neither made
ineffective nor discharged within 30 days after the making of such
appointment or within 30 days after such taking, or (2) such
appointment or taking is consented to, requested by, or acquiesced to
by Mortgagor; or
(h) Mortgagor suffers a writ or warrant of attachment or any
similar process to be issued by any court against all or any
substantial part of its assets or any part of the Property, and such
writ or warrant of attachment or any similar process is not stayed or
released within 30 days after the entry or levy thereof or after any
stay is vacated or set aside: or
Section 4.2. Acceleration of Secured Indebtedness. Upon the occurrence
of a default, Agent at any time and from time to time may without notice to
Mortgagor or any other person declare any or all of the secured indebtedness
immediately due and payable and all such secured indebtedness shall thereupon be
immediately due and payable, without presentment, demand, protest, notice of
protest, declaration or notice of acceleration or intention to accelerate,
putting the Mortgagor in default, dishonor, notice of
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dishonor or any other notice or declaration of any kind, all of which are hereby
expressly waived by Mortgagor, and the liens evidenced hereby shall be subject
to foreclosure in any manner provided for herein or provided for by law as Agent
may elect.
Section 4.3. Pre-Foreclosure Remedies. Upon the occurrence of a
default, or any event or circumstance which, with the lapse of time or the
giving of notice, or both, would constitute a default hereunder, Agent is
authorized, prior or subsequent to the institution of any foreclosure
proceedings, to enter upon the Property, or any part thereof, and to take
possession of the Property and all books and records relating thereto, and to
exercise without interference from Mortgagor any and all rights which Mortgagor
has with respect to the management, possession, operation, protection or
preservation of the Property. If necessary to obtain the possession provided for
above, Agent may invoke any and all remedies to dispossess Mortgagor. All costs,
expenses and liabilities of every character incurred by Agent in managing,
operating, maintaining, protecting or preserving the Property shall constitute a
demand obligation (which obligation Mortgagor hereby expressly promises to pay)
owing by Mortgagor to Agent and shall bear interest from date of expenditure
until paid at the rate described in Section 2.3 hereof, all of which shall
constitute a portion of the secured indebtedness and shall be secured by this
Mortgage and by any other instrument securing the secured indebtedness. In
connection with any action taken by Agent pursuant to this Section 4.3, AGENT
SHALL NOT BE LIABLE FOR ANY LOSS SUSTAINED BY MORTGAGOR RESULTING FROM ANY ACT
OR OMISSION OF AGENT (INCLUDING AGENT'S OWN NEGLIGENCE) IN MANAGING THE PROPERTY
UNLESS SUCH LOSS IS CAUSED BY THE WILLFUL MISCONDUCT AND BAD FAITH OF AGENT, nor
shall Agent be obligated to perform or discharge any obligation, duty or
liability of Mortgagor arising under any agreement forming a part of the
Property or arising under any Permitted Encumbrance or otherwise arising.
Mortgagor hereby assents to, ratifies and confirms any and all actions of Agent
with respect to the Property taken under this Section 4.3.
Section 4.4. Foreclosure.
(a) Upon the occurrence of a default, Trustee is authorized and
empowered and it shall be Trustee's special duty at the request of Agent to sell
the Deed of Trust Mortgaged Properties, or any part thereof, as an entirety or
in parcels as Agent may elect, at such place or places and otherwise in the
manner and upon such notice as may be required by law or, in the absence of any
such requirement, as Trustee may deem appropriate. If Trustee shall have given
notice of sale hereunder, any successor or substitute Trustee thereafter
appointed may complete the sale and the conveyance of the property pursuant
thereto as if such notice had been given by the successor or substitute Trustee
conducting the sale. Cumulative of the foregoing and the other provisions of
this Section 4.4 as to any portion of the Deed of Trust Mortgaged Properties
located in the State of Texas (or within the offshore area over which the United
States of America asserts jurisdiction and to which the laws of such state are
applicable with respect to this Mortgage and/or the liens or security interests
created hereby), such sales of all or any part of such Deed of Trust Mortgaged
Properties shall be conducted at the courthouse of any county (whether or not
the counties in which such Deed of Trust Mortgaged Properties are located are
contiguous) in the State of Texas in which any part of such Deed of Trust
Mortgaged Properties is situated or which lies shoreward of any Deed of Trust
Mortgaged Property (i.e., to the extent a particular Deed of Trust Mortgaged
Property lies offshore within the reasonable projected seaward extension of the
relevant county boundary), at public vendue to the highest bidder for cash
between the hours of ten o'clock a.m. and four o'clock p.m. on the first Tuesday
in any month or at such other place, time and date as provided by the statutes
of the State of Texas then in force governing sales of real estate under powers
conferred by deed of trust, after having given notice of such sale in accordance
with such statutes.
A POWER OF SALE HAS BEEN GRANTED IN THIS MORTGAGE. A POWER OF SALE MAY
ALLOW TRUSTEE TO TAKE THE MORTGAGED PROPERTIES AND SELL THEM WITHOUT GOING TO
COURT IN A FORECLOSURE ACTION UPON DEFAULT BY MORTGAGOR UNDER THIS MORTGAGE.
(b) Upon the occurrence of a default, this Mortgage may be foreclosed
as to the Other Mortgaged Properties, or any part thereof, in any manner
permitted by applicable law. Cumulative of the foregoing and the other
provisions of this Section 4.4:
(i) As to Other Mortgaged Properties located in the State of
Oklahoma, Mortgagor hereby confers on Agent the power to sell the
Mortgaged Properties in accordance with the Oklahoma Power of Sale
Mortgage Foreclosure Act (OKLA. STAT. tit. 46, Sections 41-49), as the
same may be amended from time to time. Mortgagor hereby represents and
warrants that this Mortgage transaction does not involve a consumer
loan as said term is defined in Section 3-104 of Title 14A of the
Oklahoma Statutes, that this Mortgage does not secure an extension of
credit made primarily for agricultural purposes as defined in paragraph
4 of Section 1-301 of Title 14A of the Oklahoma Statutes, and that this
Mortgage is not a mortgage on the Mortgagor's homestead; and
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(ii) As to Other Mortgaged Properties located in the State of
Arkansas, Agent shall have the power to sell such Other Mortgaged
Properties for cash at public sale to the highest bidder 60 days
following the recording in the Arkansas counties reflected in Exhibit A
hereto of a notice of default and intention to sell and publication of
notice in a newspaper in general circulation in said counties for 30
days, once a week for four consecutive weeks prior to the date of sale,
with the final publication no more than 7 days prior to the sale.
A POWER OF SALE HAS BEEN GRANTED IN THIS MORTGAGE. A POWER OF SALE MAY ALLOW
AGENT TO TAKE THE MORTGAGED PROPERTIES AND SELL THEM WITHOUT GOING TO COURT IN A
FORECLOSURE ACTION UPON DEFAULT BY MORTGAGOR UNDER THIS MORTGAGE.
(c) Upon the occurrence of a default, Agent may Exercise its rights of
enforcement with respect to the Collateral under the Texas Business and Commerce
Code, as amended, under the Uniform Commercial Code of Kansas, New Mexico, North
Dakota, or Oklahoma or under any other statute in force in any state to the
extent the same is applicable law. Cumulative of the foregoing and the other
provisions of this Section 4.4.
(i) Agent may enter upon the Mortgaged Properties or otherwise
upon Mortgagor's premises to take possession of, assemble and collect
the Collateral or to render it unusable; and
(ii) Agent may require Mortgagor to assemble the Collateral
and make it available at a place Agent designates which is mutually
convenient to allow Agent to take possession or dispose of the
Collateral; and
(iii) written notice mailed to Mortgagor as provided herein at
least five (5) days prior to the date of public sale of the Collateral
or prior to the date after which private sale of the Collateral will be
made shall constitute reasonable notice; and
(iv) in the event of a foreclosure of the liens and/or
security interests evidenced hereby, the Collateral, or any part
thereof, and the Mortgaged Properties, or any part thereof, may, at the
option of Agent, be sold, as a whole or in parts, together or
separately (including, without limitation, where a portion of the
Mortgaged Properties is sold, the Collateral related thereto may be
sold in connection therewith); and
(v) the expenses of sale provided for in clause FIRST of
Section 4.7 shall include the reasonable expenses of retaking the
Collateral, or any part thereof, holding the same and preparing the
same for sale or other disposition; and
(vi) should, under this subsection, the Collateral be disposed
of other than by sale, any proceeds of such disposition shall be
treated under Section 4.7 as if the same were sales proceeds.
(d) To the extent permitted by applicable law, the sale hereunder of
less than the whole of the Property shall not exhaust the powers of sale herein
granted or the right to judicial foreclosure, and successive sale or sales may
be made until the whole of the Property shall be sold, and, if the proceeds of
such sale of less than the whole of the Property shall be less than the
aggregate of the indebtedness secured hereby and the expense of conducting such
sale, this Mortgage and the liens and security interests hereof shall remain in
full force and effect as to the unsold portion of the Property just as though no
sale had been made; provided, however, that Mortgagor shall never have any right
to require the sale of less than the whole of the Property. In the event any
sale hereunder is not completed or is defective in the opinion of Agent, such
sale shall not exhaust the powers of sale hereunder or the right to judicial
foreclosure, and Agent shall have the right to cause a subsequent sale or sales
to be made. Any sale may be adjourned by announcement at the time and place
appointed for such sale without further notice except as may be required by law.
The Trustee or his successor or substitute, and the Agent acting under power of
sale, may appoint or delegate any one or more persons as agent to perform any
act or acts necessary or incident to any sale held by it (including, without
limitation, the posting of notices and the conduct of sale), and such
appointment need not be in writing or recorded. Any and all statements of fact
or other recitals made in any deed or deeds, or other instruments of transfer,
given in connection with a sale as to nonpayment of the secured indebtedness or
as to the occurrence of any default, or as to all of the secured indebtedness
having been declared to be due and payable, or as to the request to sell, or as
to notice of time, place and terms of sale and the properties to be sold having
been duly given, or, with respect to any sale by the Trustee, or any successor
or substitute trustee, as to the refusal, failure or inability to act of Trustee
or any substitute or successor trustee or the appointment of any substitute or
successor trustee, or as to any other act or thing having been duly done, shall
be taken as prima facie evidence of the truth of the facts so stated and
recited. Notwithstanding any reference herein to the Notes or the Credit
Agreement or any other Loan Document, all persons dealing with the Mortgaged
Properties
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shall be entitled to rely on any document, or certificate, of the Agent as to
the occurrence of an event, such as an Event of Default, and shall not be
charged with or forced to review any provision of any other document to
determine the accuracy thereof. With respect to any sale held in foreclosure of
the liens and/or security interests covered hereby, it shall not be necessary
for the Trustee, Agent, any public officer acting under execution or order of
the court or any other party to have physically present or constructively in
his/her or its possession, either at the time of or prior to such sale, the
Property or any part thereof.
Section 4.5. Effective as Mortgage. As to the Deed of Trust Mortgaged
Properties, this instrument shall be effective as a mortgage as well as a deed
of trust and upon the occurrence of a default may be foreclosed as to the Deed
of Trust Mortgaged Properties, or any portion thereof, in any manner permitted
by applicable law, and any foreclosure suit may be brought by Trustee or by
Agent. To the extent, if any, required to cause this instrument to be so
effective as a mortgage as well as a deed of trust, Mortgagor hereby mortgages
the Deed of Trust Mortgaged Properties to Agent. In the event a foreclosure
hereunder as to the Deed of Trust Mortgaged Properties, or any part thereof,
shall be commenced by Trustee, or his substitute or successor, Agent may at any
time before the sale of such properties direct Trustee to abandon the sale, and
may then institute suit for the foreclosure of this Mortgage as to such
properties. It is agreed that if Agent should institute a suit for the
foreclosure of this Mortgage, Agent may at any time before the entry of a final
judgment in said suit dismiss the same, and require Trustee, its substitute or
successor, to sell the Deed of Trust Mortgaged Properties, or any part thereof,
in accordance with the provisions of this Mortgage.
Section 4.6. Receiver. In addition to all other remedies herein
provided for, Mortgagor agrees that, upon the occurrence of a default or any
event or circumstance which, with the lapse of time or the giving of notice, or
both, would constitute a default hereunder, Agent shall as a matter of right be
entitled to the appointment of a receiver or receivers for all or any part of
the Property, whether such receivership be incident to a proposed sale (or
sales) of such property or otherwise, and without regard to the value of the
Property or the solvency of any person or persons liable for the payment of the
indebtedness secured hereby, and Mortgagor does hereby consent to the
appointment of such receiver or receivers, waives any and all defenses to such
appointment, and agrees not to oppose any application therefor by Agent, and
agrees that such appointment shall in no manner impair, prejudice or otherwise
affect the rights of Agent under Article III hereof. Mortgagor expressly waives
notice of a hearing for appointment of a receiver and the necessity for bond or
an accounting by the receiver. Nothing herein is to be construed to deprive
Agent or any Lender of any other right, remedy or privilege it may now or
hereafter have under the law to have a receiver appointed. Any money advanced by
Agent in connection with any such receivership shall be a demand obligation
(which obligation Mortgagor hereby expressly promises to pay) owing by Mortgagor
to Agent and shall bear interest, from the date of making such advancement by
Agent until paid, at the rate described in Section 2.3 hereof.
Section 4.7. Proceeds of Foreclosure. The proceeds of any sale held in
foreclosure of the liens and/or security interests evidenced hereby shall be
applied:
FIRST, to the payment of all necessary costs and expenses
incident to such foreclosure sale, including but not limited to all
court costs and charges of every character in the event foreclosed by
suit and including but not limited to a reasonable fee to the Trustee
if such sale was made by the Trustee acting under the provisions of
Section 4.4(a);
SECOND, to the payment of the secured indebtedness (including
specifically without limitation the principal, interest and attorneys'
fees due and unpaid on the Notes and the amounts due and unpaid and
owed under this Mortgage) in such manner and order as Agent may elect;
and
THIRD, the remainder, if any there shall be. shall be paid to
Mortgagor, or to Mortgagor's heirs, devisees, representatives,
successors or assigns, or such other persons as may be entitled thereto
by law.
Section 4.8. Lender as Purchaser. Any party constituting Lender shall
have the right to become the purchaser at any sale held in foreclosure of the
liens and/or security interests evidenced hereby, and any party constituting
Lender which is purchasing at any such sale shall have the right to credit upon
the amount of the bid made therefor, to the extent necessary to satisfy such
bid, the secured indebtedness owing to such party, or if such party holds less
than all of such indebtedness, the pro rata part thereof owing to such party,
accounting to all other parties constituting Lender who are not joining in such
bid in cash for the portion of such bid or bids apportionable to such
non-bidding parties.
Section 4.9. Foreclosure as to Matured Debt. Upon the occurrence of a
default, Agent shall have the right to proceed with foreclosure of the liens
and/or security interests evidenced hereby without declaring the entire secured
indebtedness due, and in such event, any such foreclosure sale may be made
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subject to the unmatured part of the secured indebtedness and shall not in any
manner affect the unmatured part of the secured indebtedness, but as to such
unmatured part, this Mortgage shall remain in full force and effect just as
though no sale had been made. The proceeds of such sale shall be applied as
provided in Section 4.7 except that the amount paid under clause SECOND thereof
shall be only the matured portion of the secured indebtedness and any proceeds
of such sale in excess of those provided for in clauses FIRST and SECOND
(modified as provided above) shall be applied as provided in Section 3.4 hereof.
Several sales may be made hereunder without exhausting the right of sale for any
unmatured part of the secured indebtedness.
Section 4.10. Remedies Cumulative. All remedies herein provided for are
cumulative of each other and of all other remedies existing at law or in equity
and are cumulative of any and all other remedies provided for in any other Loan
Document, and, in addition to the remedies herein provided, there shall continue
to be available all such other remedies as may now or hereafter exist at law or
in equity for the collection of the secured indebtedness and the enforcement of
the covenants herein and the foreclosure of the liens and/or security interests
evidenced hereby, and the resort to any remedy provided for hereunder or under
any such other Loan Document or provided for by law shall not prevent the
concurrent or subsequent employment of any other appropriate remedy or remedies.
Section 4.11. Discretion as to Security. Agent may resort to any
security given by this Mortgage or to any other security now existing or
hereafter given to secure the payment of the secured indebtedness, in whole or
in part, and in such portions and in such order as may seem best to Agent in its
sole and uncontrolled discretion, and any such action shall not in any way be
considered as a waiver of any of the rights, benefits, liens or security
interests evidenced by this Mortgage.
Section 4.12. Mortgagor's Waiver of Certain Rights. To the full extent
Mortgagor may do so, Mortgagor agrees that Mortgagor will not at any time insist
upon, plead, claim or take the benefit or advantage of any law now or hereafter
in force providing for any appraisement, valuation, stay, extension or
redemption, and Mortgagor, for Mortgagor, Mortgagor's heirs, devisees,
representatives, successors and assigns, and for any and all persons ever
claiming any interest in the Property, to the extent permitted by applicable
law, hereby waives and releases all rights of appraisement, valuation, stay of
execution, redemption, notice of intention to mature or declare due the whole of
the secured indebtedness, notice of election to mature or declare due the whole
of the secured indebtedness and all rights to a marshaling of assets of
Mortgagor, including the Property, or to a sale in inverse order of alienation
in the event of foreclosure of the liens and/or security interests hereby
created. Mortgagor shall not have or assert any right under any statute or rule
of law pertaining to the marshaling of assets, sale in inverse order of
alienation, the exemption of homestead, the administration of estates of
decedents, or other matters whatever to defeat, reduce or affect the right under
the terms of this Mortgage to a sale of the Property for the collection of the
secured indebtedness without any prior or different resort for collection, or
the right under the terms of this Mortgage to the payment of the secured
indebtedness out of the proceeds of sale of the Property in preference to every
other claimant whatever. If any law referred to in this section and now in
force, of which Mortgagor or Mortgagor's heirs, devisees, representatives,
successors or assigns or any other persons claiming any interest in the
Mortgaged Properties or the Collateral might take advantage despite this
section, shall hereafter be repealed or cease to be in force, such law shall not
thereafter be deemed to preclude the application of this section.
Section 4.13. Mortgagor as Tenant Post-Foreclosure. In the event there
is a foreclosure sale hereunder and at the time of such sale Mortgagor or
Mortgagor's heirs, devisees, representatives, successors or assigns or any other
persons claiming any interest in the Property by, through or under Mortgagor are
occupying or using the Property, or any part thereof, each and all shall
immediately become the tenant of the purchaser at such sale, which tenancy shall
be a tenancy from day to day, terminable at the will of either landlord or
tenant, at a reasonable rental per day based upon the value of the property
occupied, such rental to be due daily to the purchaser. To the extent permitted
by applicable law, the purchaser at such sale shall, notwithstanding any
language herein apparently to the contrary, have the sole option to demand
immediate possession following the sale or to permit the occupants to remain as
tenants at will. In the event the tenant fails to surrender possession of said
property upon demand, the purchaser shall be entitled to institute and maintain
a summary action for possession of the property (such as an action for forcible
entry and detainer) in any court having jurisdiction.
Section 4.14. Waiver of Oklahoma Appraisement. As to the Property
situated in or otherwise subject to the laws of the State of Oklahoma,
appraisement of the Property is hereby waived (or not) at the option of Agent,
such option to be exercised at the time judgment is rendered in any foreclosure
hereof or at any time prior thereto.
Section 4.15. Limitation on New Mexico Redemption Period. Pursuant to
Section 39-5-19 of New Mexico Statutes, 1978 Annotated, the redemption period
after foreclosure sale for any Property situated in or otherwise subject to the
laws of the State of New Mexico shall be limited to one (1) month.
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Section 4.16 Waiver of Arkansas Right of Redemption. In addition to and
without limitation to the foregoing in any manner, Mortgagor hereby releases
unto Agent all right of redemption under the laws of the State of Arkansas,
including without limitation all rights under Ark. Code Ann. Section 18-49-106,
as amended.
ARTICLE V.
Miscellaneous
Section 5.1. Scope of Mortgage. This Mortgage is a deed of trust and
mortgage of both real/immovable and personal/movable property, a security
agreement, a financing statement and an assignment, and also covers proceeds and
fixtures.
Section 5.2. Effective as a Financing Statement. This Mortgage covers
goods which are or are to become fixtures on the real property described herein,
and this Mortgage shall be effective as a financing statement filed as a fixture
filing with respect to all fixtures included within the Property. The Mortgagor
has an interest of record in the real estate concerned. This Mortgage shall also
be effective as a financing statement, filed as a fixture filing, covering
minerals and other substances of value which may be extracted from the earth
(including without limitation oil and gas), and accounts related thereto, which
will be financed at the wellhead or minehead of the wells or mines located on
the Mortgaged Properties. This Mortgage is to be filed for record in the
real/immovable property records of each county where any part of the Mortgaged
Properties is situated or which lies shoreward of any Mortgaged Property (i.e.,
to the extent a Mortgaged Property lies offshore within the projected seaward
extension of the relevant county boundaries), and may also be filed in the
offices of the Bureau of Land Management or the Minerals Management Service or
any relevant state agency (or any successor agencies). This Mortgage shall also
be effective as a financing statement covering any other Property and may be
filed in any other appropriate filing or recording office. The mailing address
of Mortgagor is the address of Mortgagor set forth at the end of this Mortgage
and the address of Agent from which information concerning the security
interests hereunder may be obtained is the address of Agent set forth at the end
of this Mortgage.
Section 5.3. Reproduction of Mortgage as Financing Statement. A carbon,
photographic, facsimile or other reproduction of this Mortgage or of any
financing statement relating to this Mortgage shall be sufficient as a financing
statement for any of the purposes referred to in Section 5.2.
Section 5.4. Notice to Account Debtors. In addition to, but without
limitation of, the rights granted in Article III hereof, Agent may, at any time
after a default has occurred that is continuing, notify the account debtors or
obligors of any accounts, chattel paper, negotiable instruments or other
evidences of indebtedness included in the Collateral to pay Agent directly.
Section 5.5. Waivers. Agent may at any time and from time to time in
writing waive compliance by Mortgagor with any covenant herein made by Mortgagor
to the extent and in the manner specified in such writing, or consent to
Mortgagor's doing any act which hereunder Mortgagor is prohibited from doing, or
to Mortgagor's failing to do any act which hereunder Mortgagor is required to
do, to the extent and in the manner specified in such writing, or release any
part of the Property or any interest therein or any Production Proceeds from the
lien and security interest of this Mortgage, without the joinder of Trustee. Any
party liable, either directly or indirectly, for the secured indebtedness or for
any covenant herein or in any other Loan Document may be released from all or
any part of such obligations without impairing or releasing the liability of any
other party. No such act shall in any way impair any rights or powers hereunder
except to the extent specifically agreed to in such writing.
Section 5.6. No Impairment of Security. The lien, security interest and
other security rights hereunder shall not be impaired by any indulgence,
moratorium or release which may be granted including, but not limited to, any
renewal, extension or modification which may be granted with respect to any
secured indebtedness, or any surrender, compromise, release, renewal, extension,
exchange or substitution which may be granted in respect of the Property
(including without limitation Production Proceeds), or any part thereof or any
interest therein, or any release or indulgence granted to any endorser,
guarantor or surety of any secured indebtedness.
Section 5.7. Acts Not Constituting Waiver. Any default may be waived
without waiving any other prior or subsequent default. Any default may be
remedied without waiving the default remedied. Neither failure to exercise, nor
delay in exercising, any right, power or remedy upon any default shall be
construed as a waiver of such default or as a waiver of the right to exercise
any such right, power or
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remedy at a later date. No single or partial exercise of any right, power or
remedy hereunder shall exhaust the same or shall preclude any other or further
exercise thereof, and every such right, power or remedy hereunder may be
exercised at any tune and from time to time. No modification or waiver of any
provision hereof nor consent to any departure by Mortgagor therefrom shall in
any event be effective unless the same shall be in writing and signed by Agent
and then such waiver or consent shall be effective only in the specific
instances, for the purpose for which given and to the extent therein specified.
No notice to nor demand on Mortgagor in any case shall of itself entitle
Mortgagor to any other or further notice or demand in similar or other
circumstances. Acceptance of any payment in an amount less than the amount then
due on any secured indebtedness shall be deemed an acceptance on account only
and shall not in any way excuse the existence of a default hereunder.
Section 5.8. Mortgagor's Successors. In the event the ownership of the
Property or any part thereof becomes vested in a person other than Mortgagor,
then, without notice to Mortgagor, such successor or successors in interest may
be dealt with, with reference to this Mortgage and to the indebtedness secured
hereby, in the same manner as with Mortgagor, without in any way vitiating or
discharging Mortgagor's liability hereunder or for the payment of the
indebtedness or performance of the obligations secured hereby. No transfer of
the Property, no forbearance, and no extension of the time for the payment of
the indebtedness secured hereby, shall operate to release, discharge, modify,
change or affect, in whole or in part, the liability of Mortgagor hereunder or
for the payment of the indebtedness or performance of the obligations secured
hereby, or the liability of any other person hereunder or for the payment of the
indebtedness secured hereby.
Section 5.9. Place of Payment. All secured indebtedness which may be
owing hereunder at any time by Mortgagor shall be payable at the place
designated in the Credit Agreement (or if no such designation is made, at the
address of Agent indicated at the end of this Mortgage), or at such other place
as Agent may designate in writing.
Section 5.10. Subrogation to Existing Liens. To the extent that
proceeds of the Notes are used to pay indebtedness secured by any outstanding
lien, security interest, charge or prior encumbrance against the Property, such
proceeds have been advanced at Mortgagor's request, and the party or parties
advancing the same shall be subrogated to any and all rights, security interests
and liens owned by any owner or holder of such outstanding liens, security
interests, charges or encumbrances, irrespective of whether said liens, security
interests, charges or encumbrances are released, and it is expressly understood
that, in consideration of the payment of such indebtedness, Mortgagor hereby
waives and releases all demands and causes of action for offsets and payments
to, upon and in connection with the said indebtedness.
Section 5.11. Application of Payments to Certain Indebtedness. If any
part of the secured indebtedness cannot be lawfully secured by this Mortgage or
if any part of the Property cannot be lawfully subject to the lien and security
interest hereof to the full extent of such indebtedness, then all payments made
shall be applied on said indebtedness first in discharge of that portion thereof
which is not secured by this Mortgage.
Section 5.12. Compliance With Usury Laws. It is the intent of
Mortgagor, Lender and all other parties to the Loan Documents to contract in
strict compliance with applicable usury law from time to time in effect. In
furtherance thereof, it is stipulated and agreed that none of the terms and
provisions contained herein shall ever be construed to create a contract to pay,
for the use, forbearance or detention of money, interest in excess of the
maximum amount of interest permitted to be charged by applicable law from time
to time in effect.
Section 5.13. Substitute Trustee. The Trustee may resign by an
instrument in writing addressed to Agent, or Trustee may be removed at any time
with or without cause by an instrument in writing executed by Agent. In case of
the death, resignation, removal, or disqualification of Trustee, or if for any
reason Agent shall deem it desirable to appoint a substitute or successor
trustee to act instead of the herein named trustee or any substitute or
successor trustee, then Agent shall have the right and is hereby authorized and
empowered to appoint a successor trustee, or a substitute trustee, without other
formality than appointment and designation in writing executed by Agent and the
authority hereby conferred shall extend to the appointment of other successor
and substitute trustees successively until the indebtedness secured hereby has
been paid in full, or until the Property is sold hereunder. In the event the
secured indebtedness is owned by more than one person or entity, the holder or
holders of not less than a majority in the amount of such indebtedness shall
have the right and authority to make the appointment of a successor or
substitute trustee as provided for in the preceding sentence or to remove
Trustee as provided in the first sentence of this section. Such appointment and
designation by Agent, shall be full evidence of the right and authority to make
the same and of all facts therein recited. If Agent is a corporation or
association and such appointment is executed in its behalf by an officer of such
corporation or association, such appointment shall be conclusively presumed to
be executed with authority and shall be valid and sufficient without proof of
any action by the board of directors or any superior officer of the
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corporation or association. Agent may act through an agent or attorney-in-fact
in substituting trustees. Upon the making of any such appointment and
designation, all of the estate and title of Trustee in the Deed of Trust
Mortgaged Properties shall vest in the named successor or substitute Trustee and
such successor or substitute shall thereupon succeed to, and shall hold,
possess and execute, all the rights, powers, privileges, immunities and duties
herein conferred upon Trustee; but nevertheless, upon the written request of
Agent or of the successor or substitute Trustee, the Trustee ceasing to act
shall execute and deliver an instrument transferring to such successor or
substitute Trustee all of the estate and title in the Deed of Trust Mortgaged
Properties of the Trustee so ceasing to act, together with all the rights,
powers, privileges, Immunities and duties herein conferred upon the Trustee, and
shall duly assign, transfer and deliver any of the properties and moneys held by
said Trustee hereunder to said successor or substitute Trustee. All references
herein to Trustee shall be deemed to refer to Trustee (including any successor
or substitute appointed and designated as herein provided) from time to time
acting hereunder.
Section 5.14. No Liability for Trustee. THE TRUSTEE SHALL NOT BE LIABLE
FOR ANY ERROR OF JUDGMENT OR ACT DONE BY TRUSTEE IN GOOD FAITH, OR BE OTHERWISE
RESPONSIBLE OR ACCOUNTABLE UNDER ANY CIRCUMSTANCES WHATSOEVER (INCLUDING,
WITHOUT LIMITATION, THE TRUSTEE'S NEGLIGENCE), EXCEPT FOR TRUSTEE'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT. The Trustee shall have the right to rely on
any instrument, document or signature authorizing or supporting any action taken
or proposed to be taken by the Trustee hereunder, believed by the Trustee in
good faith to be genuine. All moneys received by Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated in any manner from any other moneys
(except to the extent required by law), and Trustee shall be under no liability
for interest on any moneys received by him hereunder. Mortgagor hereby ratifies
and confirms any and all acts which the herein named Trustee or its successor or
successors, substitute or substitutes, shall do lawfully by virtue hereof.
Mortgagor will reimburse Trustee for, and indemnify and save Trustee harmless
against, any and all liability and expenses (including attorneys fees) which may
be incurred by Trustee in the performance of his duties. The foregoing
indemnities shall not terminate upon the Release Date or upon the release,
foreclosure or other termination of this Mortgage but will survive the Release
Date, foreclosure of this Mortgage or conveyance in lieu of foreclosure, and the
repayment of the secured indebtedness and the discharge and release of this
Mortgage and the other documents evidencing and/or securing the secured
indebtedness. Any amount to be paid hereunder by Mortgagor to Trustee shall be a
demand obligation owing by Mortgagor to Trustee and shall be subject to and
covered by the provisions of Section 2.3 hereof.
Section 5.15. Release of Mortgagee. If all of the secured indebtedness
be paid as the same becomes due and payable, all other requirements of the
Credit Agreement are satisfied and all of the covenants, warranties,
undertakings and agreements made in this Mortgage are kept and performed, and if
neither the Mortgagor nor any Lender is bound to the other or required to refund
such payment to the payor thereof to any third person to permit any obligation
or secured indebtedness to be incurred then or thereafter, then, upon sixty (60)
days prior written notice (or such lesser number of days as may be mandated by
applicable law), the Mortgagor may request that this Mortgage be terminated.
Upon such termination the Mortgagor may further request that a written act of
release of this Mortgage be provided (except this Mortgage shall be reinstated
to the extent expressly provided herein, and will continue with respect to
indemnification and other rights which are to continue following the release
hereof). Agent agrees to deliver such an act of release (subject to the
foregoing limitation), all at the cost and expense of the Mortgagor, within
sixty (60) days (or such lesser number of days as may be mandated by applicable
law) of receiving such request unless Agent in good faith, has cause to believe
that Mortgagor is not entitled to a termination of this Mortgage.
Notwithstanding the foregoing, it is understood and agreed that certain
indemnifications, and other rights, which are provided herein to continue
following the release hereof, shall continue in effect notwithstanding such
release of such payment or payments; and provided that if any payment to Lender
or Agent, is held to constitute a preference or a voidable transfer under
applicable state or federal laws or if for any other reason Lender, or Agent is
required to refund such payment to the payor thereof or to pay the amount
thereof to any third party, this Mortgage shall be reinstated to the extent of
such payment or payments.
Section 5.16. Notice. All notices, requests, consents, demands and
other communications required or permitted hereunder or under any other Loan
Document shall be in writing and, unless otherwise specifically provided in such
other Loan Document, shall be deemed sufficiently given or furnished if
delivered by personal delivery, by telecopy, by delivery service with proof of
delivery, or by registered or certified United States mail, postage prepaid, at
the addresses specified at the end of this Mortgage (unless changed by similar
notice in writing given by the particular party whose address is to be changed).
Any such notice or communication shall be deemed to have been given (a) in the
case of personal delivery or delivery service, as of the date of first attempted
delivery at the address and in the manner provided herein, (b) in the case of
telecopy, upon receipt, and (c) in the case of registered or certified United
States mail, three days after deposit in the mail. Notwithstanding the
foregoing, or anything else in the Loan Documents which may appear to the
contrary, any notice given in connection
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with a foreclosure of the liens and/or security interests created hereunder, or
otherwise in connection with the exercise by Agent, any Lender or Trustee of
their respective rights hereunder or under any other Loan Document, which is
given in a manner permitted by applicable law shall constitute proper notice:
without limitation of the foregoing, notice given in a form required or
permitted by statute shall (as to the portion of the Property to which such
statute is applicable) constitute proper notice.
Section 5.17. Invalidity of Certain Provisions. A determination that
any provision of this Mortgage is unenforceable or invalid shall not affect the
enforceability or validity of any other provision and the determination that the
application of any provision of this Mortgage to any person or circumstance is
illegal or unenforceable shall not affect the enforceability or validity of such
provision as it may apply to other persons or circumstances.
Section 5.18. Gender; Titles. Within this Mortgage, words of any gender
shall be held and construed to include any other gender, and words in the
singular number shall be held and construed to include the plural, unless the
context otherwise requires. Titles appearing at the beginning of any
subdivisions hereof are for convenience only, do not constitute any part of such
subdivisions, and shall be disregarded in construing the language contained in
such subdivisions.
Section 5.19. Recording. Mortgagor will cause this Mortgage and all
amendments and supplements thereto and substitutions therefor and all financing
statements and continuation statements relating thereto to be recorded, filed,
re-recorded and refiled in such manner and in such places as Trustee or Agent
shall reasonably request and will pay all such recording, filing, re-recording
and refiling taxes, fees and other charges.
Section 5.20. Reporting Compliance. Mortgagor agrees to comply with any
and all reporting requirements applicable to the transaction evidenced by the
Notes and secured by this Mortgage which are set forth in any law, statute,
ordinance, rule, regulation, order or determination of any governmental
authority, and further agrees upon request of Agent to furnish Agent with
evidence of such compliance.
Section 5.21. Certain Consents. Except where otherwise expressly
provided herein, in any instance hereunder where the approval, consent or the
exercise of judgment of Agent or any Lender is required, the granting or denial
of such approval or consent and the exercise of such judgment shall be within
the sole discretion of such party, and such party shall not, for any reason or
to any extent, be required to grant such approval or consent or exercise such
judgment in any particular manner, regardless of the reasonableness of either
the request or the judgment of such party.
Section 5.22. Certain Obligations of Mortgagor. Without limiting
Mortgagor's obligations hereunder, Mortgagor's liability hereunder shall extend
to and include all post petition interest, expenses, and other duties and
liabilities with respect to Mortgagor's obligations hereunder which would be
owed but for the fact that the same may be unenforceable due to the existence of
a bankruptcy, reorganization or similar proceeding.
Section 5.23. Authority of Agent. The persons constituting Lender may,
by agreement among them, provide for and regulate the exercise of rights and
remedies hereunder, but, unless and until modified to the contrary in writing
signed by all such persons and recorded in the same counties as this Mortgage is
recorded, (i) all persons other than Mortgagor and its affiliates shall be
entitled to rely on the releases, waivers, consents, approvals, notifications
and other acts (including, without limitation, or trustees, hereunder and the
bidding in of all or any part of the secured indebtedness held by any one or
more Lenders, whether the same be conducted under the provisions hereof or
otherwise) of Agent, without inquiry into any such agreements or the existence
of required consent or approval of any persons constituting Lender and without
the joinder of any party other than Agent in such releases, waivers, consents,
approvals, notifications or other acts and (ii) all notices, requests, consents,
demands and other communications required or permitted to be given hereunder may
be given to Agent.
Section 5.24. Counterparts. This Mortgage may be executed in several
counterparts, all of which are identical, except that, to facilitate
recordation, certain counterparts hereof may include only that portion of
Exhibit A, Schedule I and/or Annex I which contains descriptions of the
properties located in (or otherwise subject to the recording or filing
requirements and/or protections of the recording or filing acts or regulations
of) the recording jurisdiction in which the particular counterpart is to be
recorded, and other portions of Exhibit A, Schedule I and Annex I shall be
included in such counterparts by reference only. Those counterparts of this
Mortgage which are to be filed or recorded in states other than the State of
North Dakota may not have an Annex II attached thereto. All of the counterparts
hereof together shall constitute one and the same instrument. A counterpart of
the Mortgage with a complete Exhibit A, Schedule I and Annex I shall be recorded
in Stevens County, Kansas.
Section 5.25. Successors and Assigns. The terms, provisions, covenants,
representations, indemnifications and conditions hereof shall be binding upon
Mortgagor, and the successors and assigns
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of Mortgagor, and shall inure to the benefit of Agent, Trustee and each person
constituting Lender and their respective successors and assigns, and shall
constitute covenants running with the Mortgaged Properties. Should the agency
under which Agent serves be terminated, or otherwise cease to exist. Lenders
(including the respective successors and assigns of each person constituting
Lender named herein) shall be deemed to be the successors to Agent. All
references in this Mortgage to Mortgagor, Agent, Trustee or Lenders shall be
deemed to include all such successors and assigns.
Section 5.26. FINAL AGREEMENT OF THE PARTIES. THE WRITTEN LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR. CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
Section 5.27. CHOICE OF LAW. WITHOUT REGARD TO PRINCIPLES OF CONFLICTS
OF LAW, THIS MORTGAGE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS MADE AND TO
BE PERFORMED ENTIRELY WITHIN SUCH STATE AND THE LAWS OF THE UNITED STATES OF
AMERICA, EXCEPT THAT TO THE EXTENT THAT THE LAW OF A STATE IN WHICH A PORTION OF
THE PROPERTY IS LOCATED (OR WHICH IS OTHERWISE APPLICABLE TO A PORTION OF THE
PROPERTY) NECESSARILY OR, IN THE SOLE DISCRETION OF LENDER, APPROPRIATELY
GOVERNS WITH RESPECT TO PROCEDURAL AND SUBSTANTIVE MATTERS RELATING TO THE
CREATION, PERFECTION AND ENFORCEMENT OF THE LIENS, SECURITY INTERESTS AND OTHER
RIGHTS AND REMEDIES OF THE TRUSTEE OR THE LENDER GRANTED HEREIN, THE LAW OF SUCH
STATE SHALL APPLY AS TO THAT PORTION OF THE PROPERTY LOCATED IN (OR WHICH IS
OTHERWISE SUBJECT TO THE LAWS OF) SUCH STATE.
Section 5.28. Restatement of Prior Mortgages. The Notes described in
Section 12(b) are given in part in renewal and extension of indebtedness
outstanding under the promissory notes described in and secured by the
instruments set forth in Annex I attached hereto and made a part hereof (as
amended or supplemented to the date hereof, the "Prior Mortgages"). It is the
desire and intention of the parties hereto to renew and extend all liens,
rights, powers, privileges, superior titles, estates and security interests
existing by virtue of the Prior Mortgages and in connection therewith, it is
understood and agreed that this Mortgage restates and amends each of the Prior
Mortgages in its entirety. This Mortgage renews and extends all liens, rights,
powers, privileges, superior titles, estates and security interests existing by
virtue of each of the Prior Mortgages, but the terms, provisions and conditions
of such liens, powers, privileges, superior titles, estates and security
interests shall hereafter be governed in all respects by this Mortgage and any
amendments or supplements thereto. Notwithstanding the fact that the properties,
rights and interests described in and subject to the Prior Mortgages (except
those which have been previously released in writing by the Agent) are also
subject to the liens, rights, powers, privileges, titles, estates and security
interests existing by virtue of this Mortgage, this Mortgage does not, and shall
not be construed to, release, discharge, extinguish or diminish, in any way, the
liens, rights, powers, privileges, superior titles, estates and security
interests existing by virtue of each of the Prior Mortgages, or the priority
thereof.
IN WITNESS WHEREOF, this instrument is executed by Mortgagor this day
of August, 2000.
CHESAPEAKE EXPLORATION LIMITED PARTNERSHIP
By: Chesapeake Operating, Inc., its general partner
By:
------------------------------------------------
Martha A. Burger
Treasurer
The address of Mortgagor is: This instrument prepared by:
6104 N. Western Timothy W. Dowdy
Oklahoma City, Oklahoma 73118 Thompson & Knight L.L.P.
1700 Pacific Avenue
The common address of Trustee and Agent is: Suite 3300
Dallas, Texas 75201
500 N. Akard, Suite 4200
Dallas, Texas 75201
-24-
204
MORTGAGOR ACKNOWLEDGEMENT
STATE OF_______ )
)
COUNTY OF______ )
BE IT REMEMBERED THAT I, the undersigned authority, a notary public
duly qualified, commissioned, sworn and acting in and for the county and state
aforesaid, and being authorized in such county and state to take
acknowledgments, hereby certify that, on this ___ day of August, 2000 there
personally appeared before me and known to me (or satisfactorily proven) to be
the person described in the foregoing instrument: Martha A. Burger as Treasurer
of Chesapeake Operating, Inc., an Oklahoma corporation in its capacity as
general partner on behalf of Chesapeake Exploration Limited Partnership, an
Oklahoma limited partnership, known to me to be such person, such partnership
being a party to the foregoing instrument.
KANSAS, The foregoing instrument was acknowledged before me on this
MONTANA, NEW day, by Martha A. Burger as Treasurer of Chesapeake Operating,
MEXICO, NORTH Inc., an Oklahoma corporation in its capacity as general
DAKOTA, partner of Chesapeake Exploration Limited Partnership, an
OKLAHOMA Oklahoma limited partnership, on behalf of said corporation in
TEXAS its capacity as general partner on behalf of said limited
partnership.
ARKANSAS On this date before me, the undersigned officer, personally
appeared Martha A. Burger, known to me (or satisfactorily
proven) to be the person described in the foregoing
instrument, and acknowledged herself to be the Treasurer of
Chesapeake Operating, Inc., an Oklahoma corporation, in its
capacity as general partner of Chesapeake Exploration Limited
Partnership, an Oklahoma limited partnership, and that she as
such Treasurer, being authorized so to do, executed the
foregoing instrument for the purposes therein contained, by
signing the name of the corporation by herself as Treasurer,
in its capacity as general partner of Chesapeake Exploration
Limited Partnership, on behalf of Chesapeake Exploration
Limited Partnership.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in
the City of ______ County, __________, on the day and year first above written.
-------------------------------------
NOTARY PUBLIC, State of
-------------
-------------------------------------
(printed name)
My commission expires:
- --------------------------------
[SEAL]
-25-
205
EXHIBIT A
Descriptions of Leases
*[TO BE SUPPLIED BY MORTGAGOR]
*[KS, OK AND ND - TRACT INDEX STATES]
NOTE: WE WILL FILE A MASTER WITH ALL EXHIBITS, SCHEDULES AND ANNEXES IN
STEVENS COUNTY, KS
-1-
206
Schedule I
[List of Wells with NRI and WI]
-2-
207
Annex I
Description of the 3 prior Mortgages and their supplements and amendments and
along with the recording schedules thereto (should be able to just copy the
recording schedules for each of the above referenced instruments into this
document), and ALSO ATTACHED AS A PART OF ANNEX I, the Exhibit A's to the prior
mortgages and all supplements and amendments thereto (but only with respect to
the tract index states - KS, ND and OK).
-3-
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Annex II
To be attached to counterparts to be filed in the State of North Dakota only.
Attach true and accurate, but unexecuted copies of the notes described in
Section 1.3(b) along with the definition section out of the Credit Agreement.
-4-
209
Form of First Amendment to Mortgage
210
FIRST AMENDMENT TO DEED OF TRUST,
MORTGAGE, LINE OF CREDIT MORTGAGE, ASSIGNMENT,
SECURITY AGREEMENT, FIXTURE FILING AND
FINANCING STATEMENT
RECITALS:
A. Reference is made to that certain Deed of Trust, Mortgage, Line of
Credit Mortgage, Assignment, Security Agreement, Fixture Filing and FINANCING
STATEMENT (the "August 18, 2000 Mortgage") dated August 18, 2000 from Chesapeake
Exploration Limited Partnership (herein and in the Original Mortgage called the
"Mortgagor") to Carl Stutzman, Trustee and Union Bank of California, N. A.,
Agent (herein and in the Original Mortgage called "Agent"), recorded as shown on
Schedule A hereto (the August 18, 2000 Mortgage amends and restates certain
prior mortgages described therein; the August 18, 2000 Mortgage and the prior
mortgages amended and restated thereby are herein collectively called the
"Original Mortgage").
B. Certain amendments to the Credit Agreement (referred to in Section
1(a) below) have been executed, and Mortgagor has executed and delivered certain
new promissory notes which are more particularly described in Sections 1.3(b)(v)
and 1 .3(b)(vi) below.
C. Mortgagor and Agent desire to execute this instrument (herein called
this "First Mortgage Amendment"; the Original Mortgage as supplemented and
amended by this First Mortgage Amendment is herein sometimes called the
"Mortgage") in order to reflect of record such amendments to the Credit
Agreement and such new notes, and in order to further secure payment of the
secured indebtedness (as defined in the Mortgage).
SUPPLEMENT AND AMENDMENT:
NOW, THEREFORE, to secure payment of the secured indebtedness, and the
performance of the obligations, covenants, agreements, warranties and
undertakings contained herein or in the Original Mortgage, and in consideration
of the sum of Ten Dollars ($10.00) and other good and valuable consideration in
hand paid to Mortgagor, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto have agreed and do hereby agree as follows:
1. Amendments.
A. Sections 1.3(a) and 1.3(b) of the Original Mortgage are
deleted in their entirety and replaced with the following:
"(a) All indebtedness and other obligations now or
hereafter incurred or arising pursuant to the provisions of
that certain Amended and Restated Credit Agreement dated as of
May 30, 2000 between Chesapeake Exploration Limited
Partnership, as Borrower, Chesapeake Energy Corporation and
certain of its subsidiaries, as Guarantors, and Union Bank of
California, N.A., individually and in its capacity as Agent
for the benefit of the lenders (herein collectively called
"Lenders") under the Amended and Restated Credit Agreement
(such lenders currently are Union Bank of California, N.A.,
Bear Steams Corporate Lending, National Bank of Canada, and
Bank of Oklahoma, N.A.), as amended by that certain First
Amendment to Amended and Restated Credit Agreement dated as of
August 1, 2000, as amended by that certain Second Amendment to
Amended and Restated Credit Agreement dated as of October 16,
2000, and as amended by that certain Third Amendment to
Amended and Restated Credit Agreement dated as of December 15,
2000 (which Amended and Restated Credit Agreement, as
heretofore amended, amends and restates that certain Credit
Agreement dated as of August 27, 1998 between Chesapeake
Mid-Continent Corp. (predecessor by merger with Chesapeake
Exploration Limited Partnership; Chesapeake Exploration
Limited Partnership being the surviving entity), as Borrower,
and Union Bank of California,
1
211
N.A., individually and in its capacity as Agent, and all
amendments to such Credit Agreement), and all other
supplements thereto and amendments or modifications thereof,
and all agreements given in substitution therefor or in
restatement, renewal or extension thereof, in whole or in part
(such Amended and Restated Credit Agreement, as amended by the
First Amendment to Amended and Restated Credit Agreement, the
Second Amendment to Amended and Restated Credit Agreement, and
the Third Amendment to Amended and Restated Credit Agreement,
and as the same may from time to time be supplemented, amended
or modified, and all other agreements given in substitution
therefor or in restatement, renewal or extension thereof, in
whole or in part, being herein called the "Credit Agreement")
(Union Bank of California, N.A. in such capacities as
administrative agent and documentation agent under the Credit
Agreement is herein called "Agent", and in its individual
capacity is herein called "Union Bank");
(b) The following promissory notes (such notes, as from time
to time supplemented, amended or modified, and all other notes given in
substitution therefor, or in modification, renewal or extension
thereof, in whole or in part, are herein collectively called the
"Notes"):
(i) One certain promissory note dated as of August 1,
2000, in the principal amount of Thirty Seven Million Five
Hundred Thousand Dollars ($37,500,000) made by Mortgagor and
payable to the order of Union Bank, on or before July 15, 2002
(given in whole or in part in renewal and replacement (but not
in extinguishment or novation) of that certain promissory note
dated as of May 30, 2000 in the principal amount of One
Hundred Million Dollars ($100,000,000) made by Mortgagor and
payable to the order of Union Bank, which May 30, 2000 note in
turn was given in whole or in part in renewal, replacement,
increase and extension of various prior notes), bearing
interest as therein provided, and containing a provision for
the payment of a reasonable additional amount as attorneys'
fees, as the same may from time to time be supplemented,
amended or modified, and all other notes given in substitution
therefor or in modification, renewal or extension thereof, in
whole or in part;
(ii) One certain promissory note dated as of August
1, 2000, in the principal amount of Thirty Seven Million Five
Hundred Thousand Dollars ($37,500,000) made by Mortgagor and
payable to the order of Bear Stearns Corporate Lending Inc.,
on or before July 15, 2002 (given in whole or in part in
renewal and replacement (but not in extinguishment or
novation) of that certain promissory note dated as of May 30,
2000 in the principal amount of One Hundred Million Dollars
($100,000,000) made by Mortgagor and payable to the order of
Union Bank, which May 30, 2000 note in turn was given in whole
or in part in renewal, replacement, increase and extension of
various prior notes), bearing interest as therein provided,
and containing a provision for the payment of a reasonable
additional amount as attorneys' fees, as the same may from
time to time be supplemented, amended or modified, and all
other notes given in substitution therefor or in modification,
renewal or extension thereof, in whole or in part;
(iii) One certain promissory note dated as of August
1, 2000, in the principal amount of Fifteen Million Dollars
($15,000,000) made by Mortgagor and payable to the order of
the National Bank of Canada, on or before July 15, 2002 (given
in whole or in part in renewal and replacement (but not in
extinguishment or novation) of that certain promissory note
dated as of May 30, 2000 in the principal amount of One
Hundred Million Dollars ($100,000,000) made by Mortgagor and
payable to the order of Union Bank, which May 30, 2000 note in
turn was given in whole or in part in renewal, replacement,
increase and extension of various prior notes), bearing
interest as therein provided, and containing a provision for
the payment of a reasonable additional amount as attorneys'
fees, as the same may from time to time be supplemented,
amended or modified, and all other notes given in substitution
therefor or in modification, renewal or extension thereof, in
whole or in part;
-2-
212
(iv) One certain promissory note dated as of August
1, 2000, in the principal amount of Ten Million Dollars
($10,000,000) made by Mortgagor and payable to the order of
Bank of Oklahoma, N.A., on or before July 15, 2002 (given in
whole or in part in renewal and replacement (but not in
extinguishment or novation) of that certain promissory note
dated as of May 30, 2000 in the principal amount of One
Hundred Million Dollars ($100,000,000) made by Mortgagor and
payable to the order of Union Bank, which May 30, 2000 note in
turn was given in whole or in part in renewal, replacement,
increase and extension of various prior notes), bearing
interest as therein provided, and containing a provision for
the payment of a reasonable additional amount as attorneys'
fees, as the same may from time to time be supplemented,
amended or modified, and all other notes given in substitution
therefor or in modification, renewal or extension thereof, in
whole or in part.
(v) One certain promissory note dated as of December
15, 2000, in the principal amount of Fifteen Million Dollars
($15,000,000) made by Mortgagor and payable to the order of
Union Bank, on or before February 15, 2001, bearing interest
as therein provided, and containing a provision for the
payment of a reasonable additional amount as attorneys' fees,
as the same may from time to time be supplemented, amended or
modified, and all other notes given in substitution therefor
or in modification, renewal or extension thereof, in whole or
in part;
(vi) One certain promissory note dated as of December
15, 2000, in the principal amount of Fifteen Million Dollars
($15,000,000) made by Mortgagor and payable to the order of
Bear Steams Corporate Lending Inc., on or before February 15,
2001, bearing interest as therein provided, and containing a
provision for the payment of a reasonable additional amount as
attorneys' fees, as the same may from time to time be
supplemented, amended or modified, and all other notes given
in substitution therefor or in modification, renewal or
extension thereof, in whole or in part;
NOTE TO NORTH DAKOTA RECORDING OFFICER: THE promissory notes described
in subsections 1.3(b)(i) through 1.3(b)(iv) above were described in the Original
Mortgage and an adequate statement of the interest with respect to these
existing notes is contained in such Original Mortgage (Annex II to the Original
Mortgage is incorporated herein by reference). However, with respect to the new
promissory notes described in subsections 1.3(b)(v) and l.3(b)(vi), an adequate
statement of the interest for these new notes is attached hereto (as Annex II),
but only to counterparts hereof to be filed in the State of North Dakota.
B. KANSAS MAXIMUM SECURED AMOUNT. NOTWITHSTANDING ANY PROVISION HEREOF
TO THE CONTRARY, THE OUTSTANDING INDEBTEDNESS SECURED BY PROPERTY LOCATED IN THE
STATE OF KANSAS SHALL NOT, AT ANY TIME OR FROM TIME TO TIME, EXCEED AN AGGREGATE
MAXIMUM AMOUNT OF $130,009,000.
2. Effect of Amendment. Except as expressly amended hereby, the
Original Mortgage shall remain in full force and effect. Nothing in this First
Mortgage Amendment releases any right, claim, lien, security interests or
entitlement of Agent created by or contained in the Original Mortgage or
releases Mortgagor from any covenant, warranty or obligation created by or
contained in the Original Mortgage. To the fullest extent permitted by
applicable law, this First Mortgage Amendment is intended by the parties to
have, and shall have, the same dignity and priority as the Original Mortgage as
originally recorded.
3. Counterparts. This instrument may be executed in several
counterparts, all of which are identical, except that, to facilitate
recordation, certain counterparts hereof may include (as Attachment 1) portions
of Exhibit A to the Original Mortgage which contain descriptions of properties
located in (or otherwise subject to the requirements and/or protections of the
recording or filing acts or regulations of) the recording jurisdiction in which
the particular counterpart is to be recorded. All of such counterparts together
shall constitute one and the same instrument.
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213
4. Ratification Reconfirmation. The Mortgage is hereby ratified,
adopted, confirmed, and renewed. All representations, warranties and covenants
of Mortgagor in the Original Mortgage are hereby repeated, remade and
incorporated herein by this reference for the benefit of Agent on and as of the
date hereof, except to the extent changed by the transactions contemplated by
this First Mortgage Amendment.
5. Successors and Assigns. The terms, provisions, covenants and
conditions hereof shall be binding upon Mortgagor, and the successors and
assigns of Mortgagor, and shall inure to the benefit of Agent and its successors
and assigns. All references in this instrument to Mortgagor or Agent shall be
deemed to include all such successors and assigns.
6. Miscellaneous. This First Mortgage Amendment shall be considered a
"Loan Document", as such term is defined in the Mortgage.
Executed by the parties hereto on the dates of their respective
acknowledgments.
MORTGAGOR:
Chesapeake Exploration Limited Partnership
By: Chesapeake Operating, Inc., its general
partner
By:
---------------------------------------
Martha A. Burger
Treasurer
-4-
214
AGENT:
Union Bank of California, N.A., individually
and as Agent
By:
----------------------------------------
Name:
----------------------------------
Title:
----------------------------------
By:
----------------------------------------
Name:
----------------------------------
Title:
----------------------------------
The address of Mortgagor is: This instrument prepared by:
6104 N. Western Timothy W. Dowdy
Oklahoma City, Oklahoma 73118 Thompson & Knight L.L.P.
1700 Pacific Avenue
The common address of Trustee and Agent is: Suite 3300
Dallas, Texas 75201
500 N. Akard, Suite 4200
Dallas, Texas 75201
-5-
215
MORTGAGOR ACKNOWLEDGMENT
STATE OF OKLAHOMA )
)
COUNTY OF OKLAHOMA )
BE IT REMEMBERED THAT I, the undersigned authority, a notary public
duly qualified, commissioned, sworn and acting in and for the county and state
aforesaid, and being authorized in such county and state to take
acknowledgments, hereby certify that, on this ___ day of December, 2000 there
personally appeared before me and known to me (or satisfactorily proven) to be
the person described in the foregoing instrument: Martha A. Burger as Treasurer
of Chesapeake Operating, Inc., an Oklahoma corporation in its capacity as
general partner on behalf of Chesapeake Exploration Limited Partnership, an
Oklahoma limited partnership, known to me to be such person, such partnership
being a party to the foregoing instrument.
KANSAS, The foregoing instrument was acknowledged before me on
MONTANA, NEW this day, by Martha A. Burger as Treasurer of
MEXICO, NORTH Chesapeake Operating, Inc., an Oklahoma corporation in
DAKOTA, its capacity as general partner of Chesapeake
OKLAHOMA and Exploration Limited Partnership, an Oklahoma limited
TEXAS partnership, on behalf of said corporation in its
capacity as general partner on behalf of said limited
partnership.
ARKANSAS On this date before me, the undersigned officer,
personally appeared Martha A. Burger, known to me (or
satisfactorily proven) to be the person described in
the foregoing instrument, and acknowledged herself to
be the Treasurer of Chesapeake Operating, Inc., an
Oklahoma corporation, in its capacity as general
partner of Chesapeake Exploration Limited Partnership,
an Oklahoma limited partnership, and that she as such
Treasurer, being authorized so to do, executed the
foregoing instrument for the purposes therein
contained, by signing the name of the corporation by
herself as Treasurer, in its capacity as general
partner of Chesapeake Exploration Limited Partnership,
on behalf of Chesapeake Exploration Limited
Partnership.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the
City of Oklahoma City, Oklahoma County, Oklahoma, on the day and year first
above written.
-----------------------------------
NOTARY PUBLIC, State of Oklahoma
-----------------------------------
(printed name)
My commission expires:
- ---------------------
[SEAL]
-6-
216
AGENT ACKNOWLEDGEMENT
STATE OF TEXAS )
)
COUNTY OF DALLAS )
BE IT REMEMBERED THAT I, the undersigned authority, a notary public
duly qualified, commissioned, sworn and acting in and for the county and state
aforesaid, and being authorized in such county and state to take
acknowledgments, hereby certify that, on this ____ day of December, 2000 there
personally appeared before me and known to me (or satisfactorily proven) to be
the person described in the foregoing instrument: ______________and
_______________ as ____________________ and respectively, of Union Bank of
California. N.A, a national banking association, known to me to be such person,
such national banking association being a party to the foregoing instrument.
KANSAS, The foregoing instrument was acknowledged before me on
MONTANA, NEW this day, by ___________and_____________, as
MEXICO, NORTH _____________________ and ______________,
DAKOTA, ____________________ respectively, of Union Bank of
OKLAHOMA and association. California, N.A., a national banking
TEXAS association, on behalf of said national banking
ARKANSAS On this date before me, the undersigned officer,
personally appeared ____________________ and
_________________ known to me (or satisfactorily
proven) to be the persons described IN the foregoing
instrument, and acknowledged themselves to be the
________________ and respectively, of Union Bank of
California, N.A., A national banking association, and
that they as such officers, being authorized so to do,
executed the foregoing instrument for the purposes
therein contained, by signing the name of the national
banking association by themselves as the aforementioned
officers of such national banking association.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the
City of Dallas, Dallas County, Texas, on the day and year first above written.
-----------------------------------
NOTARY PUBLIC, State of Oklahoma
-----------------------------------
(printed name)
My commission expires:
- ---------------------
[SEAL]
-7-
217
Schedule A
1. Deed of Trust, Mortgage, Line of Credit Mortgage, Assignment, Security
Agreement, Fixture Filing and Financing Statement from Chesapeake
Exploration Limited Partnership to Carl Stutzman, Trustee and Union
Bank of California, N.A., Agent dated August 18, 2000.
<Table>
<Caption>
RECORDING JURISDICTION RECORDING DATA
---------------------- --------------
Sebastian County, AR Document #7024842
Book 0023, Page 0031
Recorded 8/23/00
Clark County, KS Book 90, Page 313
Recorded 8/28/00
Ellis County, KS Book 491, Page 955
Recorded 8/28/00
Finney County, KS Document #5129
Book 234, Page 291
Recorded 8/28/00
Grant County, KS Book 204, Page 558
Recorded 9/8/00
Hamilton County, KS Book 105, Page 86
Recorded 8/31/00
Haskell County, KS Volume 152, Page 721
Recorded 8/28/00
Kearny County, KS Book 172, Page 381
Recorded 8/28/00
Kingman County, KS Book 217, Page 203
Recorded 8/30/00
Morton County, KS Book 111, Page 304
Recorded 8/31/00
Ness County, KS Book 267, Page 584
Recorded 8/29/00
Seward County, KS Volume 519, Page 195
Recorded 8/28/00
Sheridan County, KS Volume 243, Page 503
Recorded 8/28/00
Stanton County, KS Book 62, Page 119
Recorded 8/29/00
Stevens County, KS Document #9548
Book 144, Page 50
Recorded 9/1/00
Richland County, MT Document #502808
Book B165, Page 168
Recorded 8/24/00
Sheridan County, MT Document #454373
Film 596, EXP 1756
Recorded 8/24/00
</Table>
-1-
218
<Table>
<Caption>
RECORDING JURISDICTION RECORDING DATA
---------------------- --------------
Eddy County, NM Reception #0008330
Book 391, Page 361
Recorded 8/23/00
Lea County, NM Document #62905
Book 1034, Page 325
Recorded 8/23/00
San Juan County, NM Document #200012230
Book 1307, Page 429
Recorded 8/23/00
Billings County, ND Document #115814
Book 89, Page 353
Recorded 8/29/00
Divide County, ND Document #221006
Book 237, Page 619
Recorded 8/25/00
Dunn County, ND Document #3004027
Recorded 8/25/00
McKenzie County, ND Document #337599
Recorded 8/24/00
Alfalfa County, OK Document #20886
Book 550, Page 264
Recorded 8/28/00
Atoka County, OK Document #2200
Book 604, Page 587
Recorded 8/31/00
Beaver County, OK Document #2000-2404
Book 1047, Page 0387
Recorded 8/28/00
Beckham, OK Document #07526
Book 1659, Page 540
Recorded 8/28/00
Blame County, OK Document #003020
Book 811, Page 73
Recorded 8/30/00
Caddo County, OK Document 006421
Book 2303, Page 146
Recorded 8/30/00
Canadian County, OK Document #2000017989
Book 2368, Page 751
Recorded 8/30/00
Carter County, OK Document #008605
Book 3562, Page 52
Recorded 8/28/00
Custer County, OK Document #5142
Book 1110, Page 541
Recorded 8/28/00
Dewey County, OK Document #002593
Book 1136, Page 601
Recorded 8/29/00
</Table>
-2-
219
<Table>
<Caption>
RECORDING JURISDICTION RECORDING DATA
---------------------- --------------
Ellis County, OK Document #2492
Book 644, Page 821
Recorded 8/31/00
Garfield County, OK Document #009913
Book 1503, Page 92
Recorded 8/29/00
Garvin County, OK Document #05462
Book 1575, Page 727
Recorded 8/28/00
Grady County, OK Document #11302
Book 3220, Page 184
Recorded 8/28/00
Harper County, OK Book 0558, Page 247
Recorded 9/1/00
Kingfisher County, OK Document #3524
Book 1717, Page 85
Recorded 8/28/00
Latimer County, OK Document #002935
Book 561, Page 559
Recorded 9/6/00
LeFlore County, OK Document #8835
Book 1331, Page 121
Recorded 8/31/00
Major County, OK Document #61132
Book, 1515, Page 123
Recorded 8/30/00
McClain County, OK Document #6009
Book 1554, Page 444
Recorded 8/28/00
Noble County, OK Document #2000-60330
Book 545, Page 1-70
Recorded 9/8/00
Pittsburg County, OK Document #053513
Book, 001070, Page 001
Recorded 8/30/00
Pontotoc County, OK Document #005085
Book 1574, Page 135
Recorded 8/29/00
Pottawatomie County, OK Reception #2000-11938
Book____, Page 1-54
Recorded 8/30/00
Roger Mills County, OK Document #2000-9481
Volume 1622, Page 64
Recorded 8/28/00
Stephens County, OK Document #66-1034
Book 2430, Page 69
Recorded 8/29/00
</Table>
-3-
220
<Table>
<Caption>
RECORDING JURISDICTION RECORDING DATA
- ---------------------- --------------
Texas County, OK Reception #2000 653075
Book 1017, Page 445
Recorded 8/28/00
Washita County, OK Document #4270
Book 910, Page 733
Recorded 8/30/00
Woods County, OK Document #2273-3
Book 899, Page 31
Recorded 8/30/00
Woodward County, OK Document #1123
Book 1731, Page 112
Recorded 9/1/00
Brazos County, TX Document #0724248
Volume 3910, Page 79
Recorded 8/23/00
Carson County, TX Document #0001760
Volume 307, Page 479
Recorded 8/23/00
Foard County, TX Instrument #61958
Volume 215, Page 932
Recorded 8/23/00
Glasscock County, TX Instrument #2874
Volume 48, Page 588
Recorded 8/23/00
Gray County, TX Document #148909
Volume 763, Page 1
Recorded 8/25/00
Hardeman County, TX Document #000529
Volume 384, Page 529
Recorded 8/30/00
Hemphill County, TX Document #031447
Volume 530, Page 000472
Recorded 8/23/00
Hutchinson County, TX Document #0298447
Volume 1013,Page 19
Recorded 8/23/00
Irion County, TX Document #019521
Volume 137, Page 660
Recorded 8/24/00
Moore County, TX Document #138034
Volume 527, Page 111
Recorded 8/23/00
Reagan County, TX Document #91640
Volume 15, Page 43
Recorded 8/23/00
Sherman County, TX Document #010378
Volume 234, Page 814
Recorded 8/23/00
</Table>
-4-
221
ANNEX II
FOR NORTH DAKOTA PURPOSES: This note, supplemented by the attached definitions,
contains a statement of the interest pursuant to the notes set forth in Sections
1.3(b)(v) and 1.3(b)(vi) of the Mortgage:
PROMISSORY NOTE
$________________ December 15, 2000
FOR VALUE RECEIVED, the undersigned, Chesapeake Exploration Limited
Partnership, an Oklahoma limited partnership (herein called "Borrower"), hereby
promises to pay to the order of ________________________________ (herein called
"Lender"), the principal sum of ________________ Dollars ($______), or, if less,
the aggregate unpaid principal amount of the Supplemental Loan made under this
Note by Lender to Borrower pursuant to the terms of the Credit Agreement (as
hereinafter defined), together with interest on the unpaid principal balance
thereof as hereinafter set forth, both principal and interest payable as herein
provided in lawful money of the United States of America at the offices of the
Agent, 445 South Figueroa Street, Los Angeles, California 90071, or at such
other place, as from time to time may be designated by the Agent.
This Note (a) is issued and delivered under that certain Amended and
Restated Credit Agreement dated May 30, 2000, among Chesapeake Energy
Corporation, Borrower, certain Guarantors and Union Bank of California, N.A., as
Agent, and the lenders (the "Credit Agreement"), and is an Supplemental Note as
defined therein, (b) is subject to the terms and provisions of the Credit
Agreement, which contains provisions for payments and prepayments hereunder and
acceleration of the maturity hereof upon the happening of certain stated events,
and (c) is secured by and entitled to the benefits of certain Security Documents
(as identified and defined in the Credit Agreement). Payments on this Note shall
be made and applied as provided herein and in the Credit Agreement. Reference is
hereby made to the Credit Agreement for a description of certain rights,
limitations of rights, obligations and duties of the parties hereto and for the
meanings assigned to terms used and not defined herein and to the Security
Documents for a description of the nature and extent of the security thereby
provided and the rights of the parties thereto.
For the purposes of this Note, the following terms have the meanings
assigned to them below:
"Base Rate Payment Date" means (i) the last day of each March, June,
September and December, beginning December 31, 2000, and (ii) any day on
which past due interest or principal is owed hereunder and is unpaid. If
the terms hereof or of the Credit Agreement provide that payments of
interest or principal hereon shall be deferred from one Base Rate Payment
Date to another day, such other day shall also be a Base Rate Payment
Date.
"Eurodollar Rate Payment Date" means, with respect to any
Eurodollar Loan: (i) the day on which the related Interest Period ends
and, if such Interest Period is three months or longer, the three-month
anniversary of the first day of such Interest Period, and (ii) any day on
which past due interest or past due principal is owed hereunder with
respect to such Eurodollar Loan and is unpaid. If the terms hereof or of
the Credit Agreement provide that payments of interest or principal with
respect to such Eurodollar Loan shall be deferred from one Eurodollar Rate
Payment Date to another day, such other day shall also be a Eurodollar
Rate Payment Date.
The principal amount of this Note, together with all interest accrued
hereon, shall be due and payable in full on the Supplemental Maturity Date.
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Unless the Default Rate shall be applicable, Base Rate Loans from time to
time outstanding shall bear interest on each day outstanding at the Base Rate in
effect on such day. On each Base Rate Payment Date Borrower shall pay to the
holder hereof all unpaid interest which has accrued on each Base Rate Loan to
but not including such Base Rate Payment Date. Unless the Default Rate shall be
applicable, each Eurodollar Loan shall bear interest on each day during the
related Interest Period at the related Eurodollar Rate in effect on such day. On
each Eurodollar Rate Payment Date relating to such Eurodollar Loan, Borrower
shall pay to the holder hereof all unpaid interest which has accrued on such
Eurodollar Loan to but not including such Eurodollar Rate Payment Date. After
the occurrence and during the continuance of an Event of Default and a notice to
Borrower by Agent that the Default Rate shall apply, all Supplemental Loans
shall bear interest on each day outstanding at the Default Rate in effect on
such day, and such interest shall be due and payable daily as it accrues.
Notwithstanding the foregoing provisions of this paragraph: (a) this Note shall
never bear interest in excess of the Highest Lawful Rate, and (b) if at any time
the rate at which interest is payable on this Note is limited by the Highest
Lawful Rate (by the foregoing clause (a) or by reference to the Highest Lawful
Rate in the definitions of Base Rate, Eurodollar Rate and Default Rate), this
Note shall bear interest at the Highest Lawful Rate and shall continue to bear
interest at the Highest Lawful Rate until such time as the total amount of
interest accrued hereon equals (but does not exceed) the total amount of
interest which would have accrued hereon had there been no Highest Lawful Rate
applicable hereto.
Notwithstanding the foregoing paragraph and all other provisions of this
Note, in no event shall the interest payable hereon, whether before or after
maturity, exceed the maximum amount of interest which, under applicable law, may
be charged on this Note, and this Note is expressly made subject to the
provisions of the Credit Agreement which more fully set out the limitations on
how interest accrues hereon. In the event applicable law provides for a ceiling
under Section 303 of the Texas Finance Code, that ceiling shall be the weekly
ceiling and shall be used in this Note for calculating the Highest Lawful Rate
and for all other purposes. The term "applicable law" as used in this Note shall
mean the laws of the State of Texas or the laws of the United States, whichever
laws allow the greater interest, as such laws now exist or may be changed or
amended or come into effect in the future.
If this Note is placed in the hands of an attorney for collection after
default, or if all or any part of the indebtedness represented hereby is proved,
established or collected in any court or in any bankruptcy, receivership, debtor
relief, probate or other court proceedings, Borrower and all endorsers, sureties
and guarantors of this Note jointly and severally agree to pay reasonable
attorneys' fees and collection costs to the holder hereof in addition to the
principal and interest payable hereunder.
Borrower and all endorsers, sureties and guarantors of this Note hereby
severally waive demand, presentment, notice of demand and of dishonor and
nonpayment of this Note, protest, notice of protest, notice of intention to
accelerate the maturity of this Note, declaration or notice of acceleration of
the maturity of this Note, diligence in collecting, the bringing of any suit
against any party and any notice of or defense on account of any extensions,
renewals, partial payments or changes in any manner of or in this Note or in any
of its terms, provisions and covenants, or any releases or substitutions of any
security, or any delay, indulgence or other act of any trustee or any holder
hereof, whether before or after maturity.
THIS NOTE AND THE RIGHTS AND DUTIES OF THE PARTIES HERETO SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW), EXCEPT TO THE EXTENT THE SAME ARE GOVERNED BY APPLICABLE
FEDERAL LAW.
CHESAPEAKE EXPLORATION
LIMITED PARTNERSHIP
By: Chesapeake Operating, Inc.,
its general partner
By:
--------------------------------------
Martha A. Burger
Treasurer
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Definitions
"Affiliate" means, as to any Person, each other Person that directly or
indirectly (through one or more intermediaries or otherwise) controls, is
controlled by, or is under common control with, such Person. A Person shall be
deemed to be "controlled by" any other Person if such other Person possesses,
directly or indirectly, power
(a) to vote 20% or more of the securities (on a fully diluted basis)
having ordinary voting power for the election of directors or managing
general partners; or
(b) to direct or cause the direction of the management and policies
of such Person whether by contract or otherwise.
"Agent" means Union Bank of California, N.A., as Agent hereunder, and its
successors in such capacity; provided, however, that until such time as a Lender
other than Union Bank of California, N.A. becomes a party hereto, "Agent" shall
mean Union Bank of California, N.A., individually.
"Agreement" means this Amended and Restated Credit Agreement.
"Applicable Lending Office" means, with respect to each Lender, such
Lender's Domestic Lending Office in the case of Base Rate Loans and such
Lender's Eurodollar Lending Office in the case of Eurodollar Loans.
"Applicable Utilization Level" means on any date the level set forth below
that corresponds to the percentage, at the close of business on such day,
equivalent to the (i) Facility Usage divided by (ii) the Borrowing Base (the
"Utilization Percent"):
<Table>
<Caption>
Applicable Utilization Level Utilization Percent
---------------------------- -----------------------------
Level I less than 20%
Level II equal to or greater than
20% but less than 40%
Level III equal to or greater than
40% but less than 60%
Level IV equal to or greater than 60%
</Table>
"Bank Parties" means Agent, LC Issuer, and all Lenders.
"Base Rate" means the Base Rate Margin plus the higher of (a) Agent's
Reference Rate and (b) the Federal Funds Rate plus one-half percent (0.5%) per
annum. As used in this paragraph, Agent's "Reference Rate" means that variable
rate of interest per annum established by Agent from time to time as its
"reference rate" (which rate of interest may not be the lowest rate charged on
similar loans). Each change in the Base Rate shall become effective without
prior notice to Borrower automatically as of the opening of business on the date
of such change in the Base Rate. The Base Rate shall in no event, however,
exceed the Highest Lawful Rate.
"Base Rate Loan" means a Loan which bears interest at the Base Rate.
"Base Rate Margin" means, on any date, with respect to each Base Rate
portion of a Loan, the number of basis points per annum set forth below based on
the Applicable Utilization Level on such date:
<Table>
<Caption>
Applicable Utilization Level Base Rate Margin
---------------------------- ----------------
Level I 50
Level II 75
Level III 100
Level IV 125
</Table>
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Changes in the applicable Base Rate Margin will occur automatically without
prior notice as changes in the Applicable Utilization Level occur. Agent will
give notice promptly to Borrower and the Lenders of changes in the Base Rate
Margin.
"Borrower" means Chesapeake Exploration Limited Partnership, an Oklahoma
limited partnership.
"Borrowing" means a borrowing of new Loans of a single Type pursuant to
Section 2.2 or a Continuation or Conversion of existing Loans into a single Type
(and, in the case of Eurodollar Loans, with the same Interest Period) pursuant
to Section 2.3.
"Borrowing Base" means, at the particular time in question, either the
amount provided for in Section 2.8 or the amount determined by Agent and
Required Lenders in accordance with the provisions of Section 2.9, as reduced by
Borrower pursuant to Section 2.10 or as reduced pursuant to Section 7.5;
provided, however, that in no event shall the Borrowing Base ever exceed the
Maximum Loan Amount.
"Borrowing Base Deficiency" has the meaning given it in Section 2.7(b).
"Borrowing Notice" means a written or telephonic request, or a written
confirmation, made by Borrower which meets the requirements of Section 2.2.
"Business Day" means a day, other than a Saturday or Sunday, on which
commercial banks are open for business with the public in Los Angeles,
California. Any Business Day in any way relating to Eurodollar Loans (such as
the day on which an Interest Period begins or ends) must also be a day on which,
in the judgment of Agent, significant transactions in dollars are carried out in
the interbank eurocurrency market.
"Cash Equivalents" means investments in:
(a) marketable obligations, maturing within 12 months after acquisition
thereof, issued or unconditionally guaranteed by the United States of America or
an instrumentality or agency thereof and entitled to the full faith and credit
of the United States of America.
(b) demand deposits, and time deposits (including certificates of deposit)
maturing within 12 months from the date of deposit thereof, with any office of
any Lender or with a domestic office of any national or state bank or trust
company which is organized under the Laws of the United States of America or any
state therein, which has capital, surplus and undivided profits of at least
$500,000,000, and whose certificates of deposit have at least the third highest
credit rating given by either Rating Agency.
(c) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clause (a) above entered into
with any commercial bank meeting the specifications of clause (b) above
(d) open market commercial paper, maturing within 270 days after
acquisition thereof, which has the highest or second highest credit rating given
by either Rating Agency.
(e) money market or other mutual funds substantially all of whose assets
comprise securities of the types described in clauses (a) through (d) above.
"Change of Control" means the occurrence of any of the following events:
(i) any Person other than Parent or one of its wholly-owned Subsidiaries shall
acquire or hold any legal or beneficial ownership of Borrower or any Guarantor,
(ii) any Person or two or more Persons acting as a group shall acquire
beneficial ownership (within the meaning of Rule 13d-3 of the SEC under the
Securities Act of 1934, as amended, and including holding proxies to vote for
the
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election of directors other than proxies held by Parent's management or their
designees to be voted in favor of Persons nominated by Parent's Board of
Directors) of 35% or more of the outstanding voting securities of Parent,
measured by voting power (including both common stock and any preferred stock or
other equity securities entitling the holders thereof to vote with the holders
of common stock in elections for directors of Parent), (iii) one-third or more
of the directors of Parent shall consist of Persons not nominated by Parent's
Board of Directors (not including as Board nominees any directors which the
Board is obligated to nominate pursuant to shareholders agreements, voting trust
arrangements or similar arrangements) or (iv) neither Aubrey K. McClendon nor
Tom Ward shall be executive officers and directors of Parent.
"Chesapeake Canada" means Chesapeake Canada Corporation, an Alberta
corporation.
"Chesapeake Marketing" means Chesapeake Marketing, Inc., an Oklahoma
corporation.
"Collateral" means all property of any kind which is subject to a Lien in
favor of Lenders (or in favor of Agent for the benefit of Lenders) or which,
under the terms of any Security Document, is purported to be subject to such a
Lien.
"Commitment Period" means the period from and including the date hereof
until and including the Maturity Date (or, if earlier, the day on which the
commitments of the Lenders are terminated pursuant to Section 8.1, or the day
the Notes first become due and payable in full).
"Consolidated" refers to the consolidation of any Person, in accordance
with GAAP, with its properly consolidated subsidiaries. References herein to a
Person's Consolidated financial statements, financial position, financial
condition, liabilities, etc. refer to the consolidated financial statements,
financial position, financial condition, liabilities, etc. of such Person and
its properly consolidated subsidiaries.
"Consolidated EBITDA" means, with respect to any period, the sum of (a)
the Consolidated Net Income of Parent and its Subsidiaries during such period,
plus (b) Consolidated interest expense which was deducted in determining such
Consolidated Net Income, plus (c) all income taxes which were deducted in
determining such Consolidated Net Income, plus (d) all depreciation,
amortization (including amortization of good will and debt issue costs) and
other non-cash charges (including any provision for the reduction in the
carrying value of assets recorded in accordance with GAAP) which were deducted
in determining such Consolidated Net Income, minus (e) all non-cash items of
income which were included in determining such Consolidated Net Income. Revenues
and expenses derived from Hedging Contracts related to interest rates or
dividend rates will be treated as adjustments to interest expense for purposes
of this definition.
"Consolidated Fixed Charges" means, with respect to any period, the sum
(without duplication) of the following (in each case, eliminating all offsetting
debits and credits between Parent and its Subsidiaries and all other items
required to be eliminated in the course of the preparation of Consolidated
financial statements of Parent and its Subsidiaries in accordance with GAAP):
(a) all Consolidated Interest Expense during such period, plus (b) all
scheduled, required and actual payments or prepayments of principal on
Indebtedness (other than revolving credit Indebtedness) of Parent and its
Subsidiaries during such period, plus (c) all dividends (other than dividend
payable in common stock) declared by Parent and attributable to such period. For
purposes of this Agreement a dividend is "attributed" to the Fiscal Quarter
immediately preceding the Fiscal Quarter in which such dividend is actually
declared by Parent.
"Consolidated Interest Expense" means, with respect to any period, the sum
(without duplication) of the following (in each case, eliminating all offsetting
debits and credits between Parent and its Subsidiaries and all other items
required to be eliminated in the course of the preparation of Consolidated
financial statements of Parent and its Subsidiaries in accordance with GAAP):
(a) all interest, commitment fees and loan fees in respect of Indebtedness of
Parent or any of its Subsidiaries (including imputed interest on Capital Lease
Obligations) deducted in determining Consolidated Net Income for such period,
together with all interest capitalized or deferred during such period and not
deducted in determining Consolidated Net Income for such period, plus (b) all
fees, expenses and charges in respect of letters of credit issued for the
account of Parent or any of its Subsidiaries deducted in determining
Consolidated Net Income for such period, together with all such fees, expenses
and charges in respect of letters of credit capitalized
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or deferred during such period and not deducted in determining Consolidated Net
Income for such period. Revenues and expenses derived from Hedging Contracts
related to interest rates or dividend rates will be treated as adjustments to
interest expense for purposes of this definition.
"Consolidated Net Income" means, with respect to any period, Parent's and
its Subsidiaries' gross revenues for such period, including any cash dividends
or distributions actually received from any other Person during such period,
minus Parent's and its Subsidiaries' expenses and other proper charges against
income (including but not limited to income taxes), determined on a Consolidated
basis after eliminating earnings or losses attributable to outstanding minority
interests and excluding the net earnings of any Person other than a Subsidiary
in which Parent or any of its Subsidiaries has an ownership interest.
"Continuation/Conversion Notice" means a written or telephonic request, or
a written confirmation, made by Borrower which meets the requirements of Section
2.3.
"Continue", "Continuation", and "Continued" shall refer to the
continuation pursuant to Section 2.3 hereof of a Eurodollar Loan as a Eurodollar
Loan from one Interest Period to the next Interest Period.
"Convert", "Conversion", and "Converted" shall refer to a conversion
pursuant to Section 2.3 or Article III of one Type of Loan into another Type of
Loan.
"Default" means any Event of Default and any default, event or condition
which would, with the giving of any requisite notices and the passage of any
requisite periods of time, constitute an Event of Default.
"Default Rate" means, at the time in question, three percent (3.0%) per
annum plus the Base Rate then in effect; provided that, with respect to any
Eurodollar Loan with an Interest Period extending beyond the date such
Eurodollar Loan becomes due and payable, "Default Rate" shall mean three percent
(3.0%) per annum plus the related Eurodollar Rate. The Default Rate shall never
exceed the Highest Lawful Rate.
"Deficiency Notice" has the meaning given it in Section 2.7.
"Determination Date" has the meaning given it in Section 2.9.
"Disclosure Report" means either a notice given by Borrower or Parent
under Section 6.4 or a certificate given by Borrower's or Parent's chief
financial officer under Section 6.2(b).
"Disclosure Schedule" means Schedule 1 hereto.
"Distribution" means (a) any dividend or other distribution made by a
Restricted Person on or in respect of any stock, partnership interest, or other
equity interest in such Restricted Person (including any option or warrant to
buy such an equity interest), or (b) any payment made by a Restricted Person to
purchase, redeem, acquire or retire any stock, partnership interest, or other
equity interest in such Restricted Person (including any such option or
warrant).
"Domestic Lending Office" means, with respect to any Lender, the office of
such Lender specified as its "Domestic Lending Office" below its name on the
Lender Schedule attached hereto, or such other office as such Lender may from
time to time specify to Borrower and Agent; and, with respect to Agent, the
office, branch, or agency through which it administers this Agreement.
"Eligible Transferee" means a Person which either (a) is a Lender or
Lender Affiliate or (b) is consented to as an Eligible Transferee by Agent and,
so long as no Event of Default is continuing, by Borrower, which consents in
each case will not be unreasonably withheld (provided that no Person organized
outside the United States may be an Eligible Transferee if Borrower would be
required to pay withholding taxes on interest or principal owed to such Person).
"Engineering Report" means the Initial Engineering Report and each
engineering report delivered pursuant to Section 6.2.
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"Environmental Laws" means any and all Laws relating to the environment or
to emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes
into the environment including ambient air, surface water, ground water, or
land, or otherwise relating to the manufacture, processing, distribution use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations promulgated
with respect thereto.
"ERISA Affiliate" means Restricted Persons and all members of a controlled
group of corporations and all trades or businesses (whether or not incorporated)
under common control that, together with Restricted Persons, are treated as a
single employer under Section 414 of the Internal Revenue Code of 1986, as
amended.
"ERISA Plan" means any employee pension benefit plan subject to Title IV
of ERISA maintained by any ERISA Affiliate with respect to which any Restricted
Person has a fixed or contingent liability.
"Eurodollar Lending Office" means, with respect to any Lender, the office
of such Lender specified as its "Eurodollar Lending Office" below its name on
the Lender Schedule attached hereto (or, if no such office is specified, its
Domestic Lending Office), or such other office of such Lender as such Lender may
from time to time specify to Borrower and Agent.
"Eurodollar Loan" means a Loan which is properly designated as a
Eurodollar Loan pursuant to Section 2.2 or 2.3.
"Eurodollar Margin" means, on any date, with respect to each Eurodollar
Loan, the number of basis points per annum set forth below based on the
Applicable Utilization Level on such date:
<Table>
<Caption>
Applicable Utilization Level Eurodollar Margin
---------------------------- -----------------
Level I 200
Level II 225
Level III 250
Level IV 275
</Table>
Changes in the applicable Eurodollar Margin will occur automatically without
prior notice as changes in the Applicable Utilization Level occur. Agent will
give notice promptly to Borrower and the Lenders of changes in the Eurodollar
Margin.
"Eurodollar Rate" means, with respect to each particular Eurodollar Loan
and the associated LIBOR Rate and Reserve Percentage, the rate per annum
calculated by Agent (rounded upwards, if necessary, to the next higher 0.01%)
determined on a daily basis pursuant to the following formula:
Eurodollar Rate=
LIBOR Rate + Eurodollar Margin
---------------------------
100.0% - Reserve Percentage
The Eurodollar Rate for any Eurodollar Loan shall change whenever the Eurodollar
Margin or the Reserve Percentage changes. No Eurodollar Rate shall ever exceed
the Highest Lawful Rate.
"Evaluation Date" means each of the following:
(a) January 1 and July 1 of each year, beginning July 1, 2000;
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(b) Each other date which either Borrower or Required Lenders, at their
respective options, specifies as a date as of which the Borrowing Base is to be
redetermined, provided that each such date must be the first or last date of a
current calendar month and that Borrower shall not be entitled to request any
such redetermination more than once during any six (6) month period beginning
with any January 1 or July 1.
"Event of Default" has the meaning given it in Section 8.1.
"Facility Usage" means, at the time in question, the aggregate amount of
outstanding Loans and existing LC Obligations at such time.
"Federal Funds Rate" shall mean, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100th of one percent) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (i) if the day for which such rate is to
be determined is not a Business Day, the Federal Funds Rate for such day shall
be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (ii) if such rate is not so
published for any day, the Federal Funds Rate for such day shall be the average
rate quoted to Agent on such day on such transactions as determined by Agent.
"Fiscal Quarter" means the fiscal quarter of Parent.
"Fiscal Year" means the fiscal year of Parent.
"GAAP" means those generally accepted accounting principles and practices
which are recognized as such by the Financial Accounting Standards Board (or any
generally recognized successor) and which, in the case of Parent and its
Consolidated Subsidiaries, are applied for all periods after the date hereof in
a manner consistent with the manner in which such principles and practices were
applied to the audited Initial Financial Statements. If any change in any
accounting principle or practice is required by the Financial Accounting
Standards Board (or any such successor) in order for such principle or practice
to continue as a generally accepted accounting principle or practice, all
reports and financial statements required hereunder with respect to Parent or
with respect to Parent and its Consolidated Subsidiaries may be prepared in
accordance with such change, but all calculations and determinations to be made
hereunder may be made in accordance with such change only after notice of such
change is given to each Lender and Majority Lenders agree to such change insofar
as it affects the accounting of Parent or of Parent and its Consolidated
Subsidiaries.
"Guarantor" means any Person who has guaranteed some or all of the
Obligations pursuant to a guaranty listed on the Security Schedule or any other
Person who has guaranteed some or all of the Obligations and who has been
accepted by Agent as a Guarantor or any Subsidiary of Borrower which now or
hereafter executes and delivers a guaranty to Agent pursuant to Section 6.17.
"Hazardous Materials" means any substances regulated under any
Environmental Law, whether as pollutants, contaminants, or chemicals, or as
industrial, toxic or hazardous substances or wastes, or otherwise.
"Hedging Contract" means (a) any agreement providing for options, swaps,
floors, caps, collars, forward sales or forward purchases involving interest
rates, commodities or commodity prices, equities, currencies, bonds, or indexes
based on any of the foregoing, (b) any option, futures or forward contract
traded on an exchange, and (c) any other derivative agreement or other similar
agreement or arrangement.
"Highest Lawful Rate" means, with respect to each Lender, the maximum
nonusurious rate of interest that such Lender is permitted under applicable Law
to contract for, take, charge, or receive with respect to its Loan. All
determinations herein of the Highest Lawful Rate, or of any interest rate
determined by reference to the Highest Lawful Rate, shall be made separately for
each Lender as appropriate to assure that the Loan Documents are not construed
to obligate any
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Person to pay interest to any Lender at a rate in excess of the Highest Lawful
Rate applicable to such Lender.
"Indebtedness" of any Person means Liabilities (without duplication) in
any of the following categories:
A. Liabilities for borrowed money,
B. Liabilities constituting an obligation to pay the deferred purchase
price of property or services,
C. Liabilities evidenced by a bond, debenture, note or similar instrument,
D. Liabilities which would under GAAP be shown on such Person's balance
sheet as a liability, and are payable more than one year from the date of
creation thereof (other than reserves for taxes and reserves for contingent
obligations),
E. Liabilities arising under Hedging Contracts,
F. Liabilities constituting principal under leases capitalized in
accordance with GAAP or arising under operating leases,
G. Liabilities arising under conditional sales or other title retention
agreements,
H. Liabilities owing under direct or indirect guaranties of Liabilities of
any other Person or constituting obligations to purchase or acquire or to
otherwise protect or insure a creditor against loss in respect of Liabilities of
any other Person (such as obligations under working capital maintenance
agreements, agreements to keep-well, or agreements to purchase Liabilities,
assets, goods, securities or services), but excluding endorsements in the
ordinary course of business of negotiable instruments in the course of
collection,
I. Liabilities (for example, repurchase agreements, mandatorily redeemable
preferred stock and sale/leaseback agreements) consisting of an obligation to
purchase or redeem securities or other property, if such Liabilities arises out
of or in connection with the sale of or issuance of the same or similar
securities or property,
J. Liabilities with respect to letters of credit or applications or
reimbursement agreements therefor,
K. Liabilities with respect to payments received in consideration of oil,
gas, or other minerals yet to be acquired or produced at the time of payment
(including obligations under "take-or-pay" contracts to deliver gas in return
for payments already received and the undischarged balance of any production
payment created by such Person or for the creation of which such Person directly
or indirectly received payment),
L. Liabilities with respect to other obligations to deliver goods or
services in consideration of advance payments therefor, or
(m) Liabilities in respect of banker's acceptances or similar instruments
issued or accepted by banks;
provided, however, that the "Indebtedness" of any Person shall not include
Liabilities that were incurred by such Person on ordinary trade terms to
vendors, suppliers, or other Persons providing goods and services for use by
such Person in the ordinary course of its business, unless and until such
Liabilities are outstanding more than 120 days past the original invoice or
billing date therefor (but excluding such Liabilities so outstanding which are
contested in good faith by appropriate proceedings and for which adequate
reserves are maintained on the books of such Person in accordance with GAAP).
"Indentures" means (i) that certain Indenture dated April 1, 1996 among
Parent, as Issuer, the Subsidiary Guarantors, as Guarantors, and United States
Trust Company of New York, as
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Trustee, providing for $120,000,000 in principal amount of 9.125% Senior Notes
due 2006, as supplemented prior to the date hereof (the "96 Indenture"), (ii)
that certain Indenture dated March 15, 1997 among Parent, as Issuer, the
Subsidiary Guarantors, as Guarantors, and United States Trust Company of New
York. as Trustee, providing for $150,000,000 in principal amount of 7.875%
Senior Notes due 2004, as supplemented prior to the date hereof, and that
certain Indenture dated March 15, 1997 among Parent, as Issuer, the Subsidiary
Guarantors, as Guarantors, and United States Trust Company of New York, as
Trustee, providing for $150,000,000 in principal amount of 8.5% Senior Notes due
2012, as supplemented prior to the date hereof (the "97 Indenture"), and (iii)
that certain Indenture dated April 1, 1998 among Parent, as Issuer, the
Subsidiary Guarantors, as Guarantors, and United States Trust Company of New
York, as Trustee, providing for $500,000,000 in principal amount of 9 5/8%
Senior Notes due 2005 (the "98 Indenture").
"Initial Engineering Report" means the following engineering reports
concerning oil and gas properties of Restricted Persons:
(i) Report dated January 1, 2000 prepared by Williamson Petroleum
Consultants, Inc.;
(ii) Report dated January 1, 2000 prepared by Ryder Scott Company; and
(iii) Report dated January 1, 2000 prepared by Parent's employee
engineers.
"Initial Financial Statements" means (i) the audited annual Consolidated
financial statements of Parent dated as of December 31, 1999, and (ii) the
unaudited quarterly Consolidated financial statements of Parent dated as of
March 31, 2000.
"Insurance Schedule" means Schedule 3 attached hereto.
"Interest Period" means, with respect to each particular Eurodollar Loan
in a Borrowing, a period of 1, 2, 3 or 6 months, as specified in the Borrowing
Notice or Continuation/Conversion Notice applicable thereto, beginning on and
including the date specified in such Borrowing Notice or Continuation/Conversion
Notice (which must be a Business Day), and ending on but not including the same
day of the month as the day on which it began (e.g., a period beginning on the
third day of one month shall end on but not include the third day of another
month), provided that each Interest Period which would otherwise end on a day
which is not a Business Day shall end on the next succeeding Business Day
(unless such next succeeding Business Day is the first Business Day of a
calendar month, in which case such Interest Period shall end on the immediately
preceding Business Day). No Interest Period may be elected which would extend
past the date on which the associated Note is due and payable in full.
"Investment" means any investment, in cash or by delivery of property
made, directly or indirectly in any Person, whether by acquisition of shares of
capital stock, indebtedness or other obligations or securities or by loan,
advance, capital contribution or otherwise.
"Law" means any statute, law, regulation, ordinance, rule, treaty,
judgment, order, decree, permit, concession, franchise, license, agreement or
other governmental restriction of the United States or any state or political
subdivision thereof or of any foreign country or any department, province or
other political subdivision thereof.
"LC Application" means any application for a Letter of Credit hereafter
made by Borrower to LC Issuer.
"LC Collateral" has the meaning given to such term in Section 2.16(a).
"LC Issuer" means Union Bank of California, N.A. in its capacity as the
issuer of Letters of Credit hereunder, and its successors in such capacity.
Agent may, with the consent of Borrower and the Lender in question, appoint any
Lender hereunder as the LC Issuer in place of or in addition to Union Bank of
California, N.A.
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"LC Obligations" means, at the time in question, the sum of all Matured LC
Obligations plus the maximum amounts which LC Issuer might then or thereafter be
called upon to advance under all Letters of Credit then outstanding.
"Lenders" means each signatory hereto (other than Borrower and Restricted
Persons that are party hereto), including Union Bank of California, N.A. in its
capacity as a Lender hereunder rather than as Agent or LC Issuer, and the
successors of each such party as holder of a Note.
"Lender Affiliate" means, with respect to a Lender, any Person that
directly or indirectly (through one or more intermediaries or otherwise)
controls, is controlled by or is under the common control with such Lender;
control meaning the power to vote more than 50% of the securities having
ordinary voting power for election of directors.
"Lending Office" means, with respect to any Lender, such Lender's Domestic
Lending Office or Eurodollar Lending Office, as applicable; with respect to LC
Issuer, the office, branch, or agency through which it issues Letters of Credit;
and, with respect to Agent, the office, branch, or agency through which it
administers this Agreement.
"Letter of Credit" means any letter of credit issued by LC Issuer
hereunder at the application of Borrower.
"Letter of Credit Fee Rate" means, on any date the number of basis points
per annum set forth below based on the Applicable Utilization Level on such
date:
<Table>
<Caption>
Applicable Utilization Level Letter of Credit Fee Rate
---------------------------- -------------------------
Level I 200
Level II 225
Level III 250
Level IV 275
</Table>
Changes in the applicable Letter of Credit Fee Rate will occur automatically
without prior notice as changes in the Applicable Utilization Level occur. Agent
will give notice promptly to Borrower and the Lenders of changes in the Letter
of Credit Fee Rate.
"Liabilities" means, as to any Person, all indebtedness, liabilities and
obligations of such Person, whether matured or unmatured, liquidated or
unliquidated, primary or secondary, direct or indirect, absolute, fixed or
contingent.
"LIBOR Rate" means, with respect to each particular Eurodollar Loan and
the related Interest Period, the rate of interest per annum determined by Agent
in accordance with its customary general practices to be representative of the
rates at which deposits of dollars are offered to Agent at approximately 9:00
a.m. New York, New York time two Business Days prior to the first day of such
Interest Period (by prime banks in the interbank eurocurrency market which have
been selected by Agent in accordance with its customary general practices) for
delivery on the first day of such Interest Period in an amount equal or
comparable to the amount of the applicable Eurodollar Loan and for a period of
time equal or comparable to the length of such Interest Period. The LIBOR Rate
determined by Agent with respect to a particular Eurodollar Loan shall be fixed
at such rate for the duration of the associated Interest Period. If Agent is
unable so to determine the LIBOR Rate for any Eurodollar Loan, Borrower shall be
deemed not to have elected such Eurodollar Loan.
"Lien" means, with respect to any property or assets, any right or
interest therein of a creditor to secure Liabilities owed to it or any other
arrangement with such creditor which provides for the payment of such
Liabilities out of such property or assets or which allows such creditor to have
such Liabilities satisfied out of such property or assets prior to the general
creditors of any owner thereof, including any lien, mortgage, security interest,
pledge, deposit,
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production payment, rights of a vendor under any title retention or conditional
sale agreement or lease substantially equivalent thereto, tax lien, mechanic's
or materialman's lien, or any other charge or encumbrance for security purposes,
whether arising by Law or agreement or otherwise, but excluding any right of
offset which arises without agreement in the ordinary course of business. "Lien"
also means any filed financing statement, any registration of a pledge (such as
with an issuer of uncertificated securities), or any other arrangement or action
which would serve to perfect a Lien described in the preceding sentence,
regardless of whether such financing statement is filed, such registration is
made, or such arrangement or action is undertaken before or after such Lien
exists.
"Loan" has the meaning given to such term in Section 2.1.
"Loan Documents" means this Agreement, the Notes, the Security
Documents, the Letters of Credit, the LC Applications, and all other agreements,
certificates, documents, instruments and writings at any time delivered in
connection herewith or therewith (exclusive of term sheets, commitment letters,
correspondence and similar documents used in the negotiation hereof, except to
the extent the same contain information about Borrower or its Affiliates,
properties, business or prospects).
"Majority Lenders" means Agent and Lenders whose aggregate Percentage
Shares equal or exceed sixty-six and two-thirds percent (66 2/3%).
"Material Adverse Change" means a material and adverse change, from the
state of affairs presented in the Initial Financial Statements or as represented
or warranted in any Loan Document, to (a) Restricted Persons' Consolidated
financial condition, (b) the operations or properties of Restricted Persons,
considered as a whole, (c) Borrower's or any other Restricted Persons' ability
to timely pay the Obligations, or (d) the enforceability of the material terms
of any Loan Documents.
"Matured LC Obligations" means all amounts paid by LC Issuer on drafts
or demands for payment drawn or made under or purported to be under any Letter
of Credit and all other amounts due and owing to LC Issuer under any LC
Application for any Letter of Credit, to the extent the same have not been
repaid to LC Issuer (with the proceeds of Loans or otherwise).
"Maturity Date" means July 15, 2002.
"Maximum Drawing Amount" means at the time in question the sum of the
maximum amounts which LC Issuer might then or thereafter be called upon to
advance under all Letters of Credit then outstanding.
"Maximum Loan Amount" means the amount of $75,000,000.
"Moody" means Moody's Investors Service, Inc. and any successor thereto
that is a nationally-recognized rating agency.
"Mortgaged Properties" means all properties subject to the Security
Documents.
"Note" has the meaning given it in Section 2.1.
"Obligations" means all Liabilities from time to time owing by any
Restricted Person to any Bank Party under or pursuant to any of the Loan
Documents, including all LC Obligations. "Obligation" means any part of the
Obligations.
"Parent" means Chesapeake Energy Corporation, an Oklahoma corporation.
"Percentage Share" means, with respect to any Lender (a) when used in
Sections 2.1 or 2.5, in any Borrowing Notice or when no Loans are outstanding
hereunder, the percentage set forth opposite such Lender's name on Lender
Schedule attached hereto, and (b) when used otherwise, the percentage obtained
by dividing (i) the sum of the unpaid principal balance of such Lender's Loans
at the time in question plus the Matured LC Obligations which such Lender has
funded pursuant to Section 2.13(c) plus the portion of the Maximum Drawing
Amount which such Lender might be obligated to fund under Section 2.13(c), by
(ii) the sum of the aggregate unpaid
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principal balance of all Loans at such time plus the aggregate amount of LC
Obligations outstanding at such time.
"Permitted Investments" means:
(i) Cash Equivalents,
(ii) Investments by any Restricted Person in any of its Subsidiaries
(other than Chesapeake Canada) provided that such Subsidiary is a Guarantor,
(iii) additional capital contributions to or other investments in
Chesapeake Canada not in excess of the aggregate amount of $60,000,000 after
August 27, 1998,
(iv) the entry into operating agreements, joint ventures, processing
agreements, farm-out agreements, development agreements, area of mutual interest
agreements, contracts for the sale, transportation or exchange of oil and
natural gas, unitization agreements, pooling arrangements, joint bidding
agreements, service contracts, partnership agreements (whether general or
limited) or other similar customary agreements, transactions, properties,
interests or arrangements, and investments and expenditures in connection
therewith or pursuant thereto, in each case made or entered into in the ordinary
course of the oil and gas business,
(v) Investments consisting of loans or credit extensions permitted
under Section 7.8, and
(vi) Investments existing on the date hereof listed on Schedule 4
hereto.
"Permitted Lien" has the meaning given to such term in Section 7.2.
"Person" means an individual, corporation, partnership, limited
liability company, association, joint stock company, trust or trustee thereof,
estate or executor thereof, unincorporated organization or joint venture,
Tribunal, or any other legally recognizable entity.
"Rating Agency" means either S&P or Moody's or their respective
successors.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect.
"Required Lenders" means Agent and Lenders whose aggregate Percentage
Shares equal or exceed seventy-five percent (75%).
"Reserve Percentage" means, on any day with respect to each particular
Eurodollar Loan, the maximum reserve requirement, as determined by Agent
(including without limitation any basic, supplemental, marginal, emergency or
similar reserves), expressed as a percentage and rounded to the next higher
0.01%, which would then apply under Regulation D with respect to "Eurocurrency
liabilities", as such term is defined in Regulation D, of $1,000,000 or more. If
such reserve requirement shall change after the date hereof, the Reserve
Percentage shall be automatically increased or decreased, as the case may be,
from time to time as of the effective time of each such change in such reserve
requirement.
"Restricted Person" means Parent, Borrower, and each Subsidiary of
Parent, (whether or not such Subsidiary is a Guarantor).
"S&P" means Standard & Poor's Ratings Group and any successor thereto
that is a nationally-recognized rating agency.
"SEC" means the Securities and Exchange Commission.
"Security Documents" means the instruments listed in the Security
Schedule and all other security agreements, deeds of trust, mortgages, chattel
mortgages, pledges, guaranties, financing statements, continuation statements,
extension agreements and other agreements or instruments now, heretofore, or
hereafter delivered by any Restricted Person to Agent in connection with this
Agreement or any transaction contemplated hereby to secure or guarantee the
payment of any
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part of the Obligations or the performance of any Restricted Person's other
duties and obligations under the Loan Documents.
"Security Schedule" means Schedule 2 hereto.
"Senior Debt Limit" means on any day (a) the maximum amount of
Indebtedness that Parent and its Subsidiaries may incur and secure pursuant to
the terms of each of the following: (I) clause (i) of the definition of
"Permitted Indebtedness" and clause (ii) of the definition of "Permitted Liens"
under the '96 Indenture, (II) clause (i) of Section 4.8 of the '97 Indentures
and (III) clause (i) of the definition of "Permitted Indebtedness" and clause
(ii) of the definition of "Permitted Liens" under the '98 Indenture minus (b)
the amount of Indebtedness (other than Indebtedness under the Borrowing Base)
that Parent or any of its Subsidiaries have incurred and/or secured by Liens on
such day that counts against the restrictions on the maximum amount of
Indebtedness referred to in clause (a).
"Subsidiary" means, with respect to any Person, any corporation,
association, partnership, joint venture, or other business or corporate entity,
enterprise or organization which is directly or indirectly (through one or more
intermediaries) controlled by or owned fifty percent or more by such Person.
"Termination Event" means (a) the occurrence with respect to any ERISA
Plan of (i) a reportable event described in Sections 4043(b)(5) or (6) of ERISA
or (ii) any other reportable event described in Section 4043(b) of ERISA other
than a reportable event not subject to the provision for 30-day notice to the
Pension Benefit Guaranty Corporation pursuant to a waiver by such corporation
under Section 4043(a) of ERISA, or (b) the withdrawal of any ERISA Affiliate
from an ERISA Plan during a plan year in which it was a "substantial employer"
as defined in Section 4001 (a)(2) of ERISA, or (c) the filing of a notice of
intent to terminate any ERISA Plan or the treatment of any ERISA Plan amendment
as a termination under Section 4041 of ERISA, or (d) the institution of
proceedings to terminate any ERISA Plan by the Pension Benefit Guaranty
Corporation under Section 4042 of ERISA, or (e) any other event or condition
which might constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any ERISA Plan.
"Tribunal" means any government, any arbitration panel, any court or
any governmental department, commission, board, bureau, agency or
instrumentality of the United States of America or any state, province,
commonwealth, nation, territory, possession, county, parish, town, township,
village or municipality, whether now or hereafter constituted or existing.
"Type" means, with respect to any Loans, the characterization of such
Loans as either Base Rate Loans or Eurodollar Loans.
Additional Definitions from Third Amendment to Amended and Restated Credit
Agreement
(a) The definitions of "Lean" and "Maximum Loan Amount" are
hereby amended in their entirety to read as follows:
"'Loan' means the Loans as defined in Section 2.1 and the
Supplemental Loans, collectively."
"'Maximum Loan Amount' means the amount of $100,000,000 plus,
during the Supplemental Credit Period, the Supplemental Maximum
Amount."
"'Note' means the Notes as defined in Section 2.1 and the
Supplemental Notes, collectively."
(b) The following definitions are hereby added to Section 1.1
of the Original Agreement in appropriate alphabetical order to read as
follows:
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"'Supplemental Lenders' means Union Bank of California, N.A.
and Bear Stearns Corporate Lending, Inc., and the successors of each
such Person as holder of a Note."
"'Supplemental Lenders' Percentage Share' means 50% with
respect to Union Bank of California, N.A. and 50% with respect to Bear
Sterns Corporate Lending, Inc., and the successors of each such Person
as holder of a Supplemental Note."
"'Supplemental Loan' has the meaning given to such term in
Section 2.1(a).
"'Supplemental Loan Commitment Period' means the period from
December _, 2000 to but not including the Supplemental Maturity Period.
"'Supplemental Maturity Date' means January 30, 2001."
"'Supplemental Maximum Amount' means the amount of
$20,000,000."
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Form of Second Supplement and Amendment to Mortgage
237
SECOND SUPPLEMENT AND AMENDMENT TO DEED OF TRUST,
MORTGAGE, LINE OF CREDIT MORTGAGE, ASSIGNMENT,
SECURITY AGREEMENT, FIXTURE FILING AND
FINANCING STATEMENT
RECITALS:
A. Reference is made to that certain Deed of Trust, Mortgage, Line of
Credit Mortgage, Assignment, Security Agreement, Fixture Filing and Financing
Statement (the "August 18, 2000 Mortgage") dated August 18, 2000 from Chesapeake
Exploration Limited Partnership (herein and in the Original Mortgage called the
"Mortgagor") to Carl Stutzman, Trustee and Union Bank of California, N. A.,
Agent (herein and in the Original Mortgage called "Agent"), recorded as shown on
Schedule A hereto (the August 18, 2000 Mortgage amends and restates certain
prior mortgages described therein; the August 18, 2000 Mortgage and the prior
mortgages amended and restated thereby are herein collectively called the
"Original Mortgage"), as amended by that certain First Amendment to Deed of
Trust, Mortgage, Line of Credit Mortgage, Assignment, Security Agreement,
Fixture Filing and Financing Statement (the "First Mortgage Amendment") dated
December 20, 2000, recorded as shown on Schedule A hereto (the Original
Mortgage, as amended by the First Mortgage Amendment, is herein called the
"Existing Mortgage").
B. Certain amendments to the Credit Agreement (referred to in Section
1(a) below) have been executed, and Mortgagor has executed and delivered certain
new promissory notes which are more particularly described in Sections 1.3(b)
below.
C. Pursuant to the terms of the Credit Agreement, the parties desire to
subject additional properties to the liens and security interests of the
Existing Mortgage.
D. Mortgagor and Agent desire to execute this instrument (herein called
this "Second Mortgage Amendment"; the Existing Mortgage as supplemented and
amended by this Second Mortgage Amendment is herein sometimes called the
"Mortgage") in order to reflect of record such amendments to the Credit
Agreement and such new notes, in order to subject additional properties to the
liens and security interests of the Mortgage, and in order to further secure
payment of the secured indebtedness (as defined in the Mortgage).
SUPPLEMENT AND AMENDMENT:
NOW, THEREFORE, to secure payment of the secured indebtedness, and the
performance of the obligations, covenants, agreements, warranties and
undertakings contained herein or in the Original Mortgage, and in consideration
of the sum of Ten Dollars ($10.00) and other good and valuable consideration in
hand paid to Mortgagor, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto have agreed and do hereby agree as follows:
1. Amendments.
A. Sections 1.3(a) and 1.3(b) of the Original Mortgage are deleted in
their entirety and replaced with the following:
"(a) All indebtedness and other obligations now or hereafter
incurred or arising pursuant to the provisions of that certain Amended
and Restated Credit Agreement dated as of May 30, 2000 between
Chesapeake Exploration Limited Partnership, as Borrower, Chesapeake
Energy Corporation and certain of its subsidiaries, as Guarantors,
and Union Bank of California, N.A., individually and in its capacity as
Agent for the benefit of the lenders (herein collectively called
"Lenders") under the Amended and Restated Credit Agreement (such
lenders currently are Union Bank of California, N.A., Bear Steams
Corporate Lending Inc, National Bank of Canada, and Bank of Oklahoma,
N.A.), as amended by that certain First Amendment to Amended and
Restated Credit Agreement dated as of August 1,
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2000, as amended by that certain Second Amendment to Amended and
Restated Credit Agreement dated as of October 16, 2000, as amended by
that certain Third Amendment to Amended and Restated Credit Agreement
dated as of December 15. 2000, as amended by that certain Fourth
Amendment to Amended and Restated Credit Agreement dated as of March
30, 2001, and as amended by that certain Fifth Amendment to Amended and
Restated Credit Agreement dated as of May 1, 2001 (which Amended and
Restated Credit Agreement, as heretofore amended, amends and restates
that certain Credit Agreement dated as of August 27, 1998 between
Chesapeake Mid-Continent Corp. (predecessor by merger with Chesapeake
Exploration Limited Partnership; Chesapeake Exploration Limited
Partnership being the surviving entity), as Borrower, and Union Bank of
California, N.A., individually and in its capacity as Agent, and all
amendments to such Credit Agreement), and all other supplements thereto
and amendments or modifications thereof, and all agreements given in
substitution therefor or in restatement, renewal or extension thereof,
in whole or in part (such Amended and Restated Credit Agreement, as
amended by the First Amendment to Amended and Restated Credit
Agreement, the Second Amendment to Amended and Restated Credit
Agreement, the Third Amendment to Amended and Restated Credit
Agreement, the Fourth Amendment to Amended and Restated Credit
Agreement, and the Fifth Amendment to Amended and Restated Credit
Agreement, and as the same may from time to time be supplemented,
amended or modified, and all other agreements given in substitution
therefor or in restatement, renewal or extension thereof, in whole or
in part, being herein called the "Credit Agreement") (Union Bank of
California, N.A. in such capacities as administrative agent and
documentation agent under the Credit Agreement is herein called
"Agent", and in its individual capacity is herein called "Union Bank");
(b) The following promissory notes (such notes, as from time to time
supplemented, amended or modified, and all other notes given in substitution
therefor, or in modification, renewal or extension thereof, in whole or in part,
are herein collectively called the "Notes"):
(i) One certain promissory note dated as of August 1, 2000, in
the principal amount of Thirty Seven Million Five Hundred Thousand
Dollars ($37,500,000) made by Mortgagor and payable to the order of
Union Bank, on or before July 15, 2002 (given in whole or in part in
renewal and replacement (but not in extinguishment or novation) of that
certain promissory note dated as of May 30, 2000 in the principal
amount of One Hundred Million Dollars ($100,000,000) made by Mortgagor
and payable to the order of Union Bank, which May 30, 2000 note in turn
was given in whole or in part in renewal, replacement, increase and
extension of various prior notes), bearing interest as therein
provided, and containing a provision for the payment of a reasonable
additional amount as attorneys' fees, as the same may from time to time
be supplemented, amended or modified, and all other notes given in
substitution therefor or in modification, renewal or extension thereof,
in whole or in part;
(ii) One certain promissory note dated as of August 1, 2000,
in the principal amount of Thirty Seven Million Five Hundred Thousand
Dollars ($37,500,000) made by Mortgagor and payable to the order of
Bear Stearns Corporate Lending Inc., on or before July 15, 2002 (given
in whole or in part in renewal and replacement (but not in
extinguishment or novation) of that certain promissory note dated as of
May 30, 2000 in the principal amount of One Hundred Million Dollars
($100,000,000) made by Mortgagor and payable to the order of Union
Bank, which May 30, 2000 note in turn was given in whole or in part in
renewal, replacement, increase and extension of various prior notes),
bearing interest as therein provided, and containing a provision for
the payment of a reasonable additional amount as attorneys' fees, as
the same may from time to time be supplemented, amended or modified,
and all other notes given in substitution therefor or in modification,
renewal or extension thereof, in whole or in part;
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(iii) One certain promissory note dated as of August 1, 2000,
in the principal amount of Fifteen Million Dollars ($15,000,000) made
by Mortgagor and payable to the order of the National Bank of Canada,
on or before July 15, 2002 (given in whole or in part in renewal and
replacement (but not in extinguishment or novation) of that certain
promissory note dated as of May 30, 2000 in the principal amount of One
Hundred Million Dollars ($100,000,000) made by Mortgagor and payable to
the order of Union Bank, which May 30, 2000 note in turn was given in
whole or in part in renewal, replacement, increase and extension of
various prior notes), bearing interest as therein provided, and
containing a provision for the payment of a reasonable additional
amount as attorneys' fees, as the same may from time to time be
supplemented, amended or modified, and all other notes given in
substitution therefor or in modification, renewal or extension thereof,
in whole or in part;
(iv) One certain promissory note dated as of August 1, 2000,
in the principal amount of Ten Million Dollars ($10,000,000) made by
Mortgagor and payable to the order of Bank of Oklahoma, N.A., on or
before July 15, 2002 (given in whole or in part in renewal and
replacement (but not in extinguishment or novation) of that certain
promissory note dated as of May 30, 2000 in the principal amount of One
Hundred Million Dollars ($100,000,000) made by Mortgagor and payable to
the order of Union Bank, which May 30, 2000 note in turn was given in
whole or in part in renewal, replacement, increase and extension of
various prior notes), bearing interest as therein provided, and
containing a provision for the payment of a reasonable additional
amount as attorneys' fees, as the same may from time to time be
supplemented, amended or modified, and all other notes given in
substitution therefor or in modification, renewal or extension thereof,
in whole or in part.
(v) One certain promissory note dated as of May 1, 2001, in
the principal amount of Twenty-five Million Dollars ($25,000,000) made
by Mortgagor and payable to the order of Union Bank, on or before June
30, 2001, bearing interest as therein provided, and containing a
provision for the payment of a reasonable additional amount as
attorneys' fees, as the same may from time to time be supplemented,
amended or modified, and all other notes given in substitution therefor
or in modification, renewal or extension thereof, in whole or in part;
(vi) One certain promissory note dated as of May 1, 2001, in
the principal amount of Twenty-five Million Dollars ($25,000,000) made
by Mortgagor and payable to the order of Bear Stearns Corporate Lending
Inc., on or before June 30, 2001, bearing interest as therein provided,
and containing a provision for the payment of a reasonable additional
amount as attorneys' fees, as the same may from time to time be
supplemented, amended or modified, and all other notes given in
substitution therefor or in modification, renewal or extension thereof,
in whole or in part;
NOTE TO NORTH DAKOTA RECORDING OFFICER: The promissory notes described
in subsections 1.3(b)(i) through 1.3(b)(iv) above were described in the Original
Mortgage and an adequate statement of the interest with respect to these
existing notes is contained in such Original Mortgage (Annex II to the Original
Mortgage is incorporated herein by reference). However, with respect to the new
promissory notes described in subsections 1.3(b)(v) and 1.3(b)(vi), an adequate
statement of the interest for these new notes is attached hereto (as Annex II),
but only to counterparts hereof to be filed in the State of North Dakota.
2. Grant and Mortgage. Mortgagor (upon and subject to all the terms,
covenants, provisions, conditions and authorization set forth in the Original
Mortgage, as amended hereby) does hereby (a) GRANT, BARGAIN, SELL, CONVEY,
TRANSFER, ASSIGN AND SET OVER to Carl Stutzman, Trustee (the "Trustee"), and
grant to Trustee a POWER OF SALE (pursuant to the Mortgage and applicable law)
with respect to, those of the following described properties, rights and
interests which are located in (or cover properties located in) the state of
Texas (the "Additional Deed of Trust Mortgaged Properties"), and (b) MORTGAGE,
ASSIGN, WARRANT, PLEDGE and HYPOTHECATE to Agent, and grant to Agent a POWER OF
SALE (pursuant to the Mortgage and applicable law) with respect to, all of the
following described
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rights, interests and properties which were not granted to Trustee in clause (a)
above (the "Additional Other Mortgaged Properties")
A. The oil, gas and/or other mineral properties which are
described in Exhibit A attached hereto and made a part hereof;
B. Without limitation of the foregoing, all other right, title
and interest of Mortgagor of whatever kind or character (whether now
owned or hereafter acquired by operation of law or otherwise) in and to
(i) the oil, gas and/or mineral leases or other agreements described in
Exhibit A hereto, and/or (ii) the lands described or referred to in
Exhibit A (or described in any of the instruments described or referred
to in Exhibit A), without regard to any limitations as to specific
lands or depths that may be set forth in Exhibit A hereto or in any of
the leases or other agreements described in Exhibit A hereto;
C. All of Mortgagor's interest (whether now owned or hereafter
acquired by operation of law or otherwise) in and to all presently
existing and hereafter created oil, gas and/or mineral unitization,
pooling and/or communitization agreements, declarations and/or orders,
and in and to the properties, rights and interests covered and the
units created thereby (including, without limitation, units formed
under orders, rules, regulations or other official acts of any federal,
state or other authority having jurisdiction), which cover, affect or
otherwise relate to the properties, rights and interests described in
clause A or B above;
D. All of Mortgagor's interest in and rights under (whether
now owned or hereafter acquired by operation of law or otherwise) all
presently existing and hereafter created operating agreements,
equipment leases, production sales contracts, processing agreements,
transportation agreements, gas balancing agreements, farmout and/or
farm-in agreements, salt water disposal agreements, area of mutual
interest agreements, and other contracts and/or agreements which cover,
affect, or otherwise relate to the properties, rights and interests
described in clause A, B or C above or to the operation of such
properties, rights and interests or to the treating, handling, storing,
processing, transporting or marketing of oil, gas, other hydrocarbons,
or other minerals produced from (or allocated to) such properties,
rights and interests (including, but not limited to, those contracts
listed in Exhibit A hereto), as same may be amended or supplemented
from time to time; and
E. All of Mortgagor's interest (whether now owned or hereafter
acquired by operation of law or otherwise) in and to all improvements,
fixtures, movable or immovable property and other real and/or personal
property (including, without limitation, all wells, pumping units,
wellhead equipment, tanks, pipelines, flow lines, gathering lines,
compressors, dehydration units, separators, meters, buildings,
injection facilities, salt water disposal facilities, and power,
telephone and telegraph lines), and all easements, servitudes,
rights-of-way, surface leases, licenses, permits and other surface
rights, which are now or hereafter used, or held for use, in connection
with the properties, rights and interests described in clause A, B or C
above, or in connection with the operation of such properties, rights
and interests, or in connection with the treating, handling, storing,
processing, transporting or marketing of oil, gas, other hydrocarbons,
or other minerals produced from (or allocated to) such properties,
rights and interests; and
F. All rights, estates, powers and privileges appurtenant to
the foregoing rights, interests and properties.
TO HAVE AND TO HOLD (a) the Additional Deed of Trust Mortgaged
Properties unto the Trustee, and its successors or substitutes in this trust,
and to its or their successors and assigns, in trust, however, upon the terms,
provisions and conditions herein set forth, and (b) the Additional Other
Mortgaged Properties unto Agent, and Agent's heirs, devisees, representatives,
successors and assigns, upon the terms, provisions and conditions herein set
forth (the Additional Deed of Trust Mortgaged Properties and the Additional
Other Mortgaged Properties are herein sometimes collectively called the
"Additional Mortgaged Properties").
-4-
241
3. Mortgagor hereby grants to Agent a security interest in the entire
interest of Mortgagor (whether now owned or hereafter acquired by operation of
law or otherwise) in and to:
(a) all oil, gas, other hydrocarbons and other minerals
produced from or allocated to the Additional Mortgaged Properties, and
any products processed or obtained therefrom (herein collectively
called the "Additional Production"), together with all proceeds of
Additional Production (regardless of whether Additional Production to
which such proceeds relate occurred on or before or after the date
hereof), and together with all liens and security interests securing
payment of the proceeds of the Additional Production, including, but
not limited to, those liens and security interests provided for under
(i) statutes enacted in the jurisdictions in which the Additional
Mortgaged Properties are located, or (ii) statutes made applicable to
the Additional Mortgaged Properties under federal law (or some
combination of federal and state law);
(b) without limitation of any other provisions of this Section
3, all payments received in lieu of production from the Additional
Mortgaged Properties (regardless of whether such payments accrued,
and/or the events which gave rise to such payments occurred, on or
before or after the date hereof), including, without limitation, "take
or pay" payments and similar payments, payments received in settlement
of or pursuant to a judgment rendered with respect to take or pay or
similar obligations or other obligations under a production sales
contract, payments received in buyout or buydown or other settlement of
a production sales contract, and payments received under a gas
balancing or similar agreement as a result of (or received otherwise in
settlement of or pursuant to judgment rendered with respect to) rights
held by Mortgagor as a result of Mortgagor (and/or its predecessors in
title) taking or having taken less gas from lands covered by an
Additional Mortgaged Property (or lands pooled or unitized therewith)
than their ownership of such an Additional Mortgaged Property would
entitle them to receive (the payments described in this subsection (b)
being herein called "Additional Payments in Lieu of Production");
(c) all equipment, inventory, improvements, fixtures,
accessions, goods and other personal property or movable property of
whatever nature now or hereafter located on or used or held for use in
connection with the Additional Mortgaged Properties (or in connection
with the operation thereof or the treating, handling, storing,
processing, transporting, or marketing of Additional Production), and
all licenses and permits of whatever nature now or hereafter used or
held for use in connection with the Additional Mortgaged Properties (or
in connection with the operation thereof or the treating, handling,
storing, processing, transporting, or marketing of Additional
Production), and all renewals or replacements of the foregoing or
substitutions for the foregoing;
(d) all contract rights, choses in action (i.e., rights to
enforce contracts or to bring claims thereunder) and other general
intangibles (regardless of whether the same arose, and/or the events
which gave rise to the same occurred, on or before or after the date
hereof) related to the Additional Mortgaged Properties, the operation
thereof (whether Mortgagor is operator or non-operator), or the
treating, handling, storing, processing, transporting, or marketing of
Additional Production (including, without limitation, any of the same
relating to payment of proceeds of Additional Production or to payment
of amounts which could constitute Additional Payments in Lieu of
Production);
(e) without limitation of the generality of the foregoing, any
rights and interests of Mortgagor under any present or future hedge or
swap agreements, cap, floor, collar, exchange, forward or other hedge
or protection agreements or transactions relating to crude oil, natural
gas or other hydrocarbons, or any option with respect to any such
agreement or transaction now existing or hereafter entered into by or
on behalf of Mortgagor;
(f) all geological, geophysical, engineering, accounting,
title, legal, and other technical or business data concerning the
Additional Mortgaged Properties, the Additional Production or any other
item of Additional Property (as hereinafter defined) which are now or
hereafter in the possession of Mortgagor or in which Mortgagor can
otherwise grant a security interest, and all books, files, records,
magnetic media, and other forms of recording or obtaining access to
such data;
-5-
242
(g) all money, documents, instruments, chattel paper,
securities, accounts or general intangibles arising from or by virtue
of any transaction (regardless of whether such transaction occurred on
or before or after the date hereof) related to the Additional Mortgaged
Properties, the Additional Production or any other item of Additional
Property (all of the properties, rights and interests described in
subsections (a), (b), (c), (d), (e) and (f) above and this subsection
(g) being herein sometimes collectively called the "Additional
Collateral"); and
(h) all proceeds of the Additional Collateral, whether such
proceeds or payments are goods, money, documents, instruments, chattel
paper, securities, accounts, general intangibles, fixtures,
real/immovable property, personal/movable property or other assets (the
Additional Mortgaged Properties, the Additional Collateral and the
proceeds of the Additional Collateral being herein sometimes
collectively called the "Additional Property").
4. Assignment of Production. Mortgagor does hereby absolutely and
unconditionally assign, transfer and set over to Agent all Additional Production
which accrues to Mortgagor's interest in the Additional Mortgaged Properties,
all proceeds of such Additional Production and all Additional Payments in Lieu
of Production (herein collectively referred to as the "Additional Production
Proceeds"), together with the immediate and continuing right to collect and
receive such Additional Production Proceeds. Mortgagor directs and instructs any
and all purchasers of any Additional Production to pay to Agent all of the
Additional Production Proceeds accruing to Mortgagor's interest until such time
as such purchasers have been furnished with evidence that all secured
indebtedness has been paid and that the Mortgage has been released. Mortgagor
agrees that no purchasers of the Additional Production shall have any
responsibility for the application of any funds paid to Agent.
5. Supplement to Mortgage Exhibits. Exhibit A to the Existing Mortgage
is hereby supplemented and amended by adding thereto Exhibit A to this Second
Mortgage Amendment. All references in the Mortgage to "Exhibit A" (including,
without limitation, references to Exhibit A used in the definition of the term
"Mortgaged Properties" set forth in the Existing Mortgage) shall refer
collectively to Exhibit A to the Existing Mortgage and to Exhibit A to this
Second Mortgage Amendment. Schedule I to the Existing Mortgage is hereby
supplemented and amended by adding thereto Schedule I to this Second Mortgage
Amendment. All references in the Mortgage to "Schedule I" shall refer
collectively to Schedule I to the Existing Mortgage and to Schedule I to this
Second Mortgage Amendment. Any representations or warranties of Mortgagor made
in the Existing Mortgage with respect to the Mortgaged Properties shall also
apply to the Additional Mortgaged Properties.
6. Definitions. Henceforth, all references to the "Mortgaged
Properties" contained in. the Mortgage shall include not only those properties
which were included in such definition prior to the execution of this Second
Mortgage Amendment but also the Additional Mortgaged Properties, and,
henceforth, all references to the "Deed of Trust Mortgaged Properties" contained
in the Mortgage shall include not only those properties which were included in
such definition prior to the execution of this Second Mortgage Amendment but
also the Additional Deed of Trust Mortgaged Properties, and, henceforth, all
references to the "Other Mortgaged Properties" contained in the Mortgage shall
include not only those properties which were included in such definition prior
to the execution of this Second Mortgage Amendment but also the Additional Other
Mortgaged Properties. Henceforth, all references to the "Collateral," "the
proceeds of the Collateral", the "Production", "Payments in Lieu of Production",
and "Production Proceeds" contained in the Mortgage, shall include not only
those properties, rights, interests, collateral and proceeds which were included
within the scope of such terms prior to the execution of this Second Mortgage
Amendment but also the Additional Collateral, the proceeds of the Additional
Collateral, the Additional Production, the Additional Payments in Lieu of
Production and the Additional Production Proceeds. Henceforth all references to
the "Property" contained in the Mortgage, shall include not only those
properties, rights, interests, collateral and proceeds which were included in
such definition prior to the execution of this Second Mortgage Amendment but
also the Additional Property.
7. Effect of Amendment. Except as expressly amended hereby, the
Existing Mortgage shall remain in full force and effect. Nothing in this Second
Mortgage Amendment releases any
-6-
243
right, claim, lien, security interests or entitlement of Agent created by or
contained in the Existing Mortgage or releases Mortgagor from any covenant,
warranty or obligation created by or contained in the Existing Mortgage. To the
fullest extent permitted by applicable law, this Second Mortgage Amendment is
intended by the parties to have, and shall have, the same dignity and priority
as the Existing Mortgage as originally recorded.
8. Scope of Amendment. This Second Mortgage Amendment represents a
supplemental deed of trust and mortgage of both real and personal property, a
supplemental security agreement, a supplemental assignment, and a supplemental
financing statement, and also covers proceeds and fixtures.
9. Effective as Financing Statement. This Second Mortgage Amendment
shall be effective as a financing statement filed as a fixture filing with
respect to all fixtures included within the Additional Property. This Second
Mortgage Amendment shall also be effective as a financing statement covering
minerals and other substances of value which may be extracted from the earth
(including without limitation oil and gas), and accounts related thereto, which
will be financed at the wellhead or minehead of the wells or mines located on
the Additional Mortgaged Properties. This Second Mortgage Amendment is to be
filed for record in the real estate records of each county where any part of the
Additional Mortgaged Properties is situated, and may also be filed in the
offices of the Bureau of Land Management or the Minerals Management Service or
state agency (or any successor agencies). This Second Mortgage Amendment shall
also be effective as a financing statement covering any other Additional
Property and may be filed in any other appropriate filing or recording office.
The mailing address of Mortgagor is the address of Mortgagor set forth at the
end of this Second Mortgage Amendment and the address of Agent from which
information concerning the security interests hereunder may be obtained is the
address of Agent set forth at the end of this Second Mortgage Amendment. A
carbon, photographic, facsimile or other reproduction of this instrument or of
any financing statement relating to this instrument shall be sufficient as a
financing statement for any of the purposes referred to above.
10. Counterparts. This instrument may be executed in several
counterparts, all of which are identical, except that, to facilitate
recordation, (i) certain counterparts hereof may include only that portion of
Exhibit A hereto that contains descriptions of properties located in (or
otherwise subject to the requirements and/or protections of the recording or
filing acts or regulations of) the recording jurisdiction in which a particular
counterpart is to be recorded, and other portions of Exhibit A hereto shall be
included in such counterparts by reference only, and (ii) certain counterparts
hereof may include (as Attachment 1) portions of Exhibit A to the Original
Mortgage which contain descriptions of properties located in (or otherwise
subject to the requirements and/or protections of the recording or filing acts
or regulations of) the recording jurisdiction in which the particular
counterpart is to be recorded. All of such counterparts together shall
constitute one and the same instrument. Complete copies of this instrument,
containing the entire Exhibit A, have been retained by Mortgagor and Agent.
11. Ratification, Reconfirmation. The Mortgage is hereby ratified,
adopted, confirmed, and renewed. All representations, warranties and covenants
of Mortgagor in the Original Mortgage are hereby repeated, remade and
incorporated herein by this reference for the benefit of Agent on and as of the
date hereof, except to the extent changed by the transactions contemplated by
this Second Mortgage Amendment.
12. Successors and Assigns. The terms, provisions, covenants and
conditions hereof shall be binding upon Mortgagor, and the successors and
assigns of Mortgagor, and shall inure to the benefit of Agent and its successors
and assigns. All references in this instrument to Mortgagor or Agent shall be
deemed to include all such successors and assigns.
13. Miscellaneous. This Second Mortgage Amendment shall be considered a
"Loan Document", as such term is defined in the Mortgage.
Executed by the parties hereto on the dates of their respective
acknowledgments.
-7-
244
MORTGAGOR:
Chesapeake Exploration Limited Partnership
By: Chesapeake Operating, Inc., its general
partner
By:
------------------------------------------
Martha A. Burger
Treasurer
AGENT:
Union Bank of California, N.A., individually
and as Agent
By:
------------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
By:
------------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
The address of Mortgagor is: This instrument prepared by:
6104 N. Western Timothy W. Dowdy
Oklahoma City, Oklahoma 73118 Thompson & Knight L.L.P.
1700 Pacific Avenue
The common address of Trustee and Agent is: Suite 3300
Dallas, Texas 75201
500 N. Akard, Suite 4200
Dallas, Texas 75201
-8-
245
MORTGAGOR ACKNOWLEDGMENT
STATE OF OKLAHOMA )
)
COUNTY OF OKLAHOMA )
BE IT REMEMBERED THAT I, the undersigned authority, a notary public
duly qualified, commissioned, sworn and acting in and for the county and state
aforesaid, and being authorized in such county and state to take
acknowledgments, hereby certify that, on this ___ day of May, 2001 there
personally appeared before me and known to me (or satisfactorily proven) to be
the person described in the foregoing instrument: Martha A. Burger as Treasurer
of Chesapeake Operating, Inc., an Oklahoma corporation in its capacity as
general partner on behalf of Chesapeake Exploration Limited Partnership, an
Oklahoma limited partnership, known to me to be such person, such partnership
being a party to the foregoing instrument.
KANSAS, The foregoing instrument was acknowledged before me on this
MONTANA, NEW day, by Martha A. Burger as Treasurer of Chesapeake Operating,
MEXICO, NORTH Inc., an Oklahoma corporation in its capacity as general
DAKOTA, partner of Chesapeake Exploration Limited Partnership, an
OKLAHOMA and Oklahoma limited partnership, on behalf of said corporation in
TEXAS its capacity as general partner on behalf of said limited
partnership.
ARKANSAS On this date before me, the undersigned officer, personally
appeared Martha A. Burger, known to me (or satisfactorily
proven) to be the person described in the foregoing
instrument, and acknowledged herself to be the Treasurer of
Chesapeake Operating, Inc., an Oklahoma corporation, in its
capacity as general partner of Chesapeake Exploration Limited
Partnership, an Oklahoma limited partnership, and that she as
such Treasurer, being authorized so to do, executed the
foregoing instrument for the purposes therein contained, by
signing the name of the corporation by herself as Treasurer,
in its capacity as general partner of Chesapeake Exploration
Limited Partnership, on behalf of Chesapeake Exploration
Limited Partnership.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in
the City of Oklahoma City, Oklahoma County, Oklahoma, on the day and year first
above written.
----------------------------------------------
NOTARY PUBLIC, State of Oklahoma
----------------------------------------------
(printed name)
My commission expires:
- ----------------------
[SEAL]
-9-
246
AGENT ACKNOWLEDGEMENT
STATE OF TEXAS )
)
COUNTY OF DALLAS )
BE IT REMEMBERED THAT I, the undersigned authority, a notary public
duly qualified, commissioned, sworn and acting in and for the county and state
aforesaid, and being authorized in such county and state to take
acknowledgments, hereby certify that, on this ___ day of May, 2001 there
personally appeared before me and known to me (or satisfactorily proven) to be
the person described in the foregoing instrument: _________________ and
______________, as ____________________ and __________________, respectively, of
Union Bank of California, N.A., a national banking association, known to me to
be such person, such national banking association being a party to the foregoing
instrument.
KANSAS, The foregoing instrument was acknowledged before me on this
MONTANA, NEW day, by ________________ and ________________, as
MEXICO, NORTH ________________ and ____________________, respectively, of
DAKOTA, Union Bank of California, N.A., a national banking
OKLAHOMA and association, on behalf of said national banking association.
TEXAS
ARKANSAS On this date before me, the undersigned officer, personally
appeared _____________________ and __________________, known
to me (or satisfactorily proven) to be the persons described
in the foregoing instrument, and acknowledged themselves to be
the _________________ and _______________, respectively, of
Union Bank of California, N.A., a national banking
association, and that they as such officers, being authorized
so to do, executed the foregoing instrument for the purposes
therein contained, by signing the name of the national banking
association by themselves as the aforementioned officers of
such national banking association.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in
the City of Dallas, Dallas County, Texas, on the day and year first above
written.
--------------------------------------------
NOTARY PUBLIC, State of Texas
-10-
247
--------------------------------------------
(printed name)
My commission expIres:
- ----------------------
[SEAL]
-11-
248
Schedule A
1. Deed of Trust, Mortgage, Line of Credit Mortgage, Assignment, Security
Agreement, Fixture Filing and Financing Statement from Chesapeake
Exploration Limited Partnership to Carl Stutzman, Trustee and Union Bank
of California, N. A. , Agent dated August 18, 2000.
<Table>
<Caption>
RECORDING JURISDICTION RECORDING DATA
- ---------------------- --------------
Sebastian County, AR Document #7024842
Book 0023, Page 0031
Recorded 8/23/00
Clark County, KS Book 90, Page 313
Recorded 8/28/00
Ellis County, KS Book 491, Page 955
Recorded 8/28/00
Finney County, KS Document #5129
Book 234, Page 291
Recorded 8/28/00
Grant County, KS Book 204, Page 558
Recorded 9/8/00
Hamilton County, KS Book 105, Page 86
Recorded 8/31/00
Haskell County, KS Volume 152, Page 721
Recorded 8/28/00
Kearny County, KS Book 172, Page 381
Recorded 8/28/00
Kingman County, KS Book 217, Page 203
Recorded 8/30/00
Morton County, KS Book 111, Page 304
Recorded 8/31/00
Ness County, KS Book 267, Page 584
Recorded 8/29/00
Seward County, KS Volume 519, Page 195
Recorded 8/28/00
Sheridan County, KS Volume 243, Page 503
Recorded 8/28/00
Stanton County, KS Book 62, Page 119
Recorded 8/29/00
Stevens County, KS Document #9548
Book 144, Page 50
Recorded 9/1/00
Richland County, MT Document #502808
Book B165, Page 168
Recorded 8/24/00
Sheridan County, MT Document #454373
Film 596, EXP 1756
Recorded 8/24/00
</Table>
-1-
249
<Table>
<Caption>
RECORDING JURISDICTION RECORDING DATA
- ---------------------- --------------
Eddy County, NM Reception #0008330
Book 391, Page 361
Recorded 8/23/00
Lea County, NM Document #62905
Book 1034, Page 325
Recorded 8/23/00
San Juan County, NM Document #200012230
Book 1307, Page 429
Recorded 8/23/00
Billings County, ND Document #115814
Book 89, Page 353
Recorded 8/29/00
Divide County, ND Document #221006
Book 237, Page 619
Recorded 8/25/00
Dunn County, ND Document #3004027
Recorded 8/25/00
McKenzie County, ND Document #337599
Recorded 8/24/00
Alfalfa County, OK Document #20886
Book 550, Page 264
Recorded 8/28/00
Atoka County, OK Document #2200
Book 604, Page 587
Recorded 8/31/00
Beaver County, OK Document #2000-2404
Book 1047, Page 0387
Recorded 8/28/00
Beckham, OK Document #07526
Book 1659, Page 540
Recorded 8/28/00
Blaine County, OK Document #003020
Book 811, Page 73
Recorded 8/30/00
Caddo County, OK Document 006421
Book 2303, Page 146
Recorded 8/30/00
Canadian County, OK Document #2000017989
Book 2368, Page 751
Recorded 8/30/00
Carter County, OK Document #008605
Book 3562, Page 52
Recorded 8/28/00
Custer County, OK Document #5142
Book 1110, Page 54l
Recorded 8/28/00
Dewey County, OK Document #002593
Book 1136, Page 60l
Recorded 8/29/00
</Table>
-2-
250
<Table>
<Caption>
RECORDING JURISDICTION RECORDING DATA
- ---------------------- --------------
Ellis County, OK Document #2492
Book 644, Page 821
Recorded 8/31/00
Garfield County, OK Document #009913
Book 1503, Page 92
Recorded 8/29/00
Garvin County, OK Document #05462
Book 1575, Page 727
Recorded 8/28/00
Grady County, OK Document #11302
Book 3220, Page 184
Recorded 8/28/00
Harper County, OK Book 0558, Page 247
Recorded 9/1/00
Kingfisher County, OK Document #3524
Book 1717, Page 85
Recorded 8/28/00
Latimer County, OK Document #002935
Book 561, Page 559
Recorded 9/6/00
LeFlore County, OK Document #8835
Book 1331, Page 121
Recorded 8/31/00
Major County, OK Document #61132
Book, 1515, Page 123
Recorded 8/30/00
McClain County, OK Document #6009
Book 1554, Page 444
Recorded 8/28/00
Noble County, OK Document #2000-60330
Book 545, Page 1-70
Recorded 9/8/00
Pittsburg County, OK Document #053513
Book , 001070, Page 001
Recorded 8/30/00
Pontotoc County, OK Document #005085
Book 1574, Page 135
Recorded 8/29/00
Pottawatomie County, OK Reception #2000-11938
Book ___, Page 1-54
Recorded 8/30/00
Roger Mills County, OK Document #2000-9481
Volume 1622, Page 64
Recorded 8/28/00
Stephens County, OK Document #66-1034
Book 2430, Page 69
Recorded 8/29/00
</Table>
-3-
251
<Table>
<Caption>
RECORDING JURISDICTION RECORDING DATA
- ---------------------- --------------
Texas County, OK Reception #2000 653075
Book 1017, Page 445
Recorded 8/28/00
Washita County, OK Document #4270
Book 910, Page 733
Recorded 8/30/00
Woods County, OK Document #2273-3
Book 899, Page 31
Recorded 8/30/00
Woodward County, OK Document #1123
Book 1731, Page 112
Recorded 9/1/00
Brazos County, TX Document #0724248
Volume 3910, Page 79
Recorded 8/23/00
Carson County, TX Document #0001760
Volume 307, Page 479
Recorded 8/23/00
Foard County, TX Instrument #61958
Volume 215, Page 932
Recorded 8/23/00
Glasscock County, TX Instrument #2874
Volume 48, Page 588
Recorded 8/23/00
Gray County, TX Document #148909
Volume 763, Page 1
Recorded 8/25/00
Hardeman County, TX Document #000529
Volume 384, Page 529
Recorded 8/30/00
Hemphill County, TX Document #031447
Volume 530, Page 000472
Recorded 8/23/00
Hutchinson County, TX Document #0298447
Volume 1013, Page 19
Recorded 8/23/00
Irion County, TX Document #019521
Volume 137, Page 660
Recorded 8/24/00
Moore County, TX Document #138034
Volume 527, Page 111
Recorded 8/23/00
Reagan County, TX Document #91640
Volume 15, Page 43
Recorded 8/23/00
Sherman County, TX Document #010378
Volume 234, Page 814
Recorded 8/23/00
</Table>
-4-
252
2. First Amendment to Deed of Trust, Mortgage, Line of Credit Mortgage,
Assignment, Security Agreement, Fixture Filing and Financing Statement executed
effective December 20, 2000, amending the original mortgage dated August 18,
2000.
<Table>
<Caption>
RECORDING JURISDICTION RECORDING DATA
- ---------------------- --------------
Sebastian County, AR Document number 7033089
Book 0029, Page 0125
Recorded 12/29/00
Clark County, KS Book 91, Page 81
Recorded 1/9/01
Ellis County, KS Book 497, Page 724
Recorded 12/28/00
Finney County, KS Document 7639
Book 236, Page 219
Recorded 12/28/00
Grant County, KS Document M-00344, mortgage fees
Book 206, Page 234
Recorded 12/29/00
Hamilton County, KS Document number 1165
Book 106, Page 47
Recorded 12/29/00
Haskell County, KS Vol. 153, Page 778
Recorded 1/2/01
Kearny County, KS Book 174, Page 439
Recorded 12/28/00
Kingman County, KS Book 219, Page 51
Recorded 12/28/00
Morton County, KS Book 112, Page 512,
Recorded 12/28/00
Ness County, KS Book 269, Page 7
Recorded 12/28/00
Seward County, KS Volume 522, Page 490
Recorded December 28, 2000
Sheridan County, KS Vol. 244, Page 270,
Recorded 12/28/00
Stanton County, KS Book 63, Page 23
Recorded 1/10/00
Stevens County, KS Book 195, Page 431
Recorded 12/26/00
Richland County, MT Document number 504220
Book 166, Page 364
Recorded 12/28/00
Sheridan County, MT Document number 454991,
Film 597, Exp. 1619
Recorded 12/26/00
</Table>
-5-
253
<Table>
<Caption>
RECORDING JURISDICTION RECORDING DATA
---------------------- --------------
Eddy County, NM Reception number 0012668
Book 401, Page 0617
Recorded 12/27/00
Lea County, NM Document 68122
Book 1054, Page 398
Recorded 12/29/00
San Juan County, NM Document number 200018815
Book 1314, Page 320
Recorded 12/27/00
Billings County, ND Book 89, Page 603
Recorded 12/29/00
Divide County, ND Document number 221366
Book 213M, Page 288
Recorded 1/9/01
Dunn County, ND Document #3004610
Recorded 12/26/00
McKenzie County, ND Document number 338282
Recorded 12/26/00
Alfalfa County, OK Document 21629
Book 552, Page 354
Recorded 12/28/00
Atoka County, OK Book 608, Page 0288
Recorded 1/2/01
Beaver County, OK Document 2000-3700
Book 1053, Page 0393
Recorded 12/28/00
Beckham, OK Document number 11034,
Book 1676, Page 130
Recorded 12/29/00
Blaine County, OK Document number 004501
Book 817, Page 663
Recorded 12/28/00
Caddo County, OK Document number 2000 9436
Book 2322, Page 97
Recorded 12/29/00
Canadian County, OK Document # 2000026267
Book 2396, Page 24
Recorded 12/29/00
Carter County, OK Document number 012789
Book 3601, Page 250
Recorded 12/26/00
Custer County, OK Document 7575
Book 1120, Page 537
Recorded 12/28/00
Dewey County, OK Document number 003866
Book 1143, Page 126
Recorded 12/29/00
</Table>
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<Table>
<Caption>
RECORDING JURISDICTION RECORDING DATA
---------------------- --------------
Ellis County, OK File Number 3464
Book 648, Page 643
Recorded 12/28/00
Garfield County, OK Document 014315
Book 1516, Page 117
Recorded 12/28/00
Garvin County, OK Document 00138
Book 1586, Page 471
Recorded 1/9/01
Grady County, OK Document number 16553
Book 3249, Page 1
Recorded 12/27/00
Harper County, OK Book 0560, Page 706
Recorded 12/28/00
Kingfisher County, OK Document number 5183
Book 1733, Page 263
Recorded 12/26/00
Latimer County, OK Document number 004438
Book 0567, Page 0009
Recorded 12/28/00
LeFlore County, OK Document number 99
Book 1345, Page 419
Recorded 1/3/01
Major County, OK Document number 62354
Book 1524, Page 232
Recorded 12/28/00
McClain County, OK Document number 9069
Book 1564, Page 445
Recorded 12/27/00
Noble County, OK Document 2000-61448
Book 0548, Page 516
Recorded 12/28/00
Pittsburg County, OK Document number 058498
Book 001089, Page 034
Recorded 1/4/00
Pontotoc County, OK Book 1582, Page 528
Recorded 1/5/01
Pottawatomie County, OK Reception number 2000-17532
Recorded 12/28/00
Roger Mills County, OK Document #2000-11139
Volume 1631, Page 71
Recorded 12/28/00
Stephens County, OK Document number 66-5976
Book 2475, Page 1
Recorded 12/28/00
Texas County, OK Reception number 2000 654679
Book 1023, Page 184
Recorded 12/28/00
</Table>
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255
<Table>
<Caption>
RECORDING JURISDICTION RECORDING DATA
---------------------- --------------
Washita County, OK Document number 6108
Book 915, Page 875
Recorded 12/29/00
Woods County, OK Document number 3423-3
Book 905, Page 474,
Recorded 12/27/00
Woodward County, OK Document number 3147
Book 1747, Page 138
Recorded 12/27/00
Brazos County, TX Document number 0733064
Vol. 04014, Page 00025
Recorded 12/27/00
Carson County, TX Document # 0002351
Volume 310, Page 219
Recorded 12/28/00
Foard County, TX Instrument # 62206
Volume 217, Page 249
Recorded 12/28/00
Glasscock County, TX Instrument number 3373
Recorded 12/27/00
Gray County, TX Document 150022
Volume 766, Page 788
Recorded 12/28/00
Hardeman County, TX Document number 37905
Vol. 386, Page 849
Recorded 12/28/00
Hemphill County, TX Document number 032085
Volume 533, Page 000625
Recorded 12/28/00
Hutchinson County, TX Document number 0299924
Volume 1029, Page 322
Recorded 12/29/00
Irion County, TX Document number 019778
Volume 139, Page 164
Recorded 12/29/00
Moore County, TX Document number 139079
Vol. 531, Page 263
Recorded 1/3/01
Reagan County, TX Instrument number 92129
Volume 20, Page 72
Recorded 12/27/00
Sherman County, TX Document 010899
Volume 236, Page 904
Recorded 12/29/00
</Table>
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256
Exhibits
Exhibit A - the new properties
Schedule I - NRI/WI for wells
Attachment I - Exhibit A's for old mortgage for tract index states
(original restated mortgage 8/18/2000, first amendment 12/20/2000)
ANNEX II
FOR NORTH DAKOTA PURPOSES: This note, supplemented by the attached definitions,
contains a statement of the interest pursuant to the notes set forth in Sections
l.3(b)(_) and l.3(b)(_) of the Mortgage:
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257
Form of Third Supplement and Amendment to Mortgage
258
THIRD SUPPLEMENT AND AMENDMENT TO DEED OF TRUST,
MORTGAGE, LINE OF CREDIT MORTGAGE, ASSIGNMENT,
SECURITY AGREEMENT, FIXTURE FILING AND
FINANCING STATEMENT
RECITALS:
A. Reference is made to that certain Deed of Trust, Mortgage, Line of
Credit Mortgage, Assignment, Security Agreement, Fixture Filing and Financing
Statement (the "August 18, 2000 Mortgage") dated August 18, 2000 from Chesapeake
Exploration Limited Partnership, as Mortgagor, to Carl Stutzman, Trustee and
Union Bank of California, N. A., Agent (herein and in the Original Mortgage
called "Agent"), recorded as shown on Schedule A hereto (the August 18, 2000
Mortgage amends and restates certain prior mortgages described therein; the
August 18, 2000 Mortgage and the prior mortgages amended and restated thereby
are herein collectively called the "Original Mortgage"), as amended by that
certain First Amendment to Deed of Trust, Mortgage, Line of Credit Mortgage,
Assignment, Security Agreement, Fixture Filing and Financing Statement (the
"First Mortgage Amendment") dated December 20, 2000, recorded as shown on
Schedule A hereto, and as amended by that certain Second Supplement and
Amendment to Deed of Trust, Mortgage, Line of Credit Mortgage, Assignment,
Security Agreement, Fixture Filing and Financing Statement (the "Second Mortgage
Amendment") dated May 3, 2001, recorded as shown on Schedule A hereto (the
Original Mortgage, as amended by the First Mortgage Amendment and by the Second
Mortgage Amendment, is herein called the "Existing Mortgage").
B. That certain Second Amended and Restated Credit Agreement (referred to
in Section 1(a) below) has been executed, and Mortgagor has obtained pursuant
thereto a $225,000,000 senior secured revolving credit facility.
C. Pursuant to the terms of the Credit Agreement, the parties desire (i)
to subject additional properties (more particularly described in Part One of
Exhibit A attached hereto and made a part hereof) of Chesapeake Exploration
Limited Partnership to the liens and security interests of the Existing
Mortgage, and (ii) to subject certain properties (more particularly described in
Part Two of Exhibit A attached hereto and made a part hereof) of Gothic
Production Corporation, an Oklahoma corporation, whose tax identification number
is 73-1539475, to the liens and security interests of the Existing Mortgage.
Chesapeake Exploration Limited Partnership and Gothic Production Corporation are
herein collectively called the "Mortgagor").
D. Mortgagor and Agent desire to execute this instrument (herein called
this "Third Mortgage Amendment"; the Existing Mortgage as supplemented and
amended by this Third Mortgage Amendment is herein sometimes called the
"Mortgage") in order to reflect of record such Second Amended and Restated
Credit Agreement, in order to subject additional properties to the liens and
security interests of the Mortgage, and in order to further secure payment of
the secured indebtedness (as defined in the Mortgage).
SUPPLEMENT AND AMENDMENT:
NOW, THEREFORE, to secure payment of the secured indebtedness, and the
performance of the obligations, covenants, agreements, warranties and
undertakings contained herein or in the Existing Mortgage, and in consideration
of the sum of Ten Dollars ($10.00) and other good and valuable consideration in
hand paid to Mortgagor, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto have agreed and do hereby agree as follows:
1. Amendments.
A. The term "Mortgagor" is hereby amended to mean collectively
Chesapeake Exploration Limited Partnership and Gothic Production Corporation.
Unless the context clearly indicates otherwise, as used in this Mortgage,
"Mortgagor" means both Chesapeake Exploration, Limited Partnership and Gothic
Production Corporation or any of them. The obligations of Mortgagor hereunder
shall be joint and several.
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259
B. Sections 1.3(a) and 1.3(b) of the Existing Mortgage are deleted
in their entirety and replaced with the following:
"(a) All indebtedness and other obligations (including, without
limitation, all Indebtedness and Obligations (as such terms are
defined in the Credit Agreement)) now or hereafter incurred or
arising pursuant to the provisions of that certain Second Amended
and Restated Credit Agreement, dated as of June 11, 2001, among
CHESAPEAKE EXPLORATION LIMITED PARTNERSHIP, an Oklahoma limited
partnership (the "Borrower"), CHESAPEAKE ENERGY CORPORATION, an
Oklahoma corporation, the several banks and other financial
institutions or entities from time to time parties to this Agreement
(the "Lenders"), BEAR, STEARNS & CO. INC., as sole lead arranger and
sole bookrunner (in such capacity, the "Lead Arranger"), BEAR
STEARNS CORPORATE LENDING INC., as syndication agent, (in such
capacity, the "Syndication Agent"), and UNION BANK OF CALIFORNIA,
NA., as administrative agent and collateral agent, and BNP Paribas
and Toronto Dominion (Texas), Inc., as co-documentation agents
(which amends and restates that certain Amended and Restated Credit
Agreement dated as of May 30, 2000 between Chesapeake Exploration
Limited Partnership, as Borrower, Chesapeake Energy Corporation and
certain of its subsidiaries, as Guarantors, and Union Bank of
California, N.A., individually and in its capacity as Agent for the
benefit of the lenders under the Amended and Restated Credit
Agreement, as such Amended and Restated Credit Agreement has been
heretofore amended), and all other supplements thereto and
amendments or modifications thereof, and all agreements given in
substitution therefor or in restatement, renewal or extension
thereof, in whole or in part (such Second Amended and Restated
Credit Agreement, as the same may from time to time be supplemented.
amended or modified, and all other agreements given in substitution
therefor or in restatement, renewal or extension thereof, in whole
or in part, being herein called the "Credit Agreement") (Union Bank
of California, N.A., in such capacities as administrative agent and
collateral agent under the Credit Agreement, is herein called
"Agent", and in its individual capacity is herein called "Union
Bank");
(b) Those certain Revolving Credit Notes that may be issued from
time to time pursuant to the Credit Agreement, made by Borrower and
payable to the order of the Lenders on or before September 30, 2003,
unless otherwise extended pursuant to the Credit Agreement (such notes, as
from time to time supplemented, amended or modified, and all other notes
given in substitution therefor, or in modification, renewal or extension
thereof, in whole or in part, are herein collectively called the
"Notes");"
NOTE TO NORTH DAKOTA RECORDING OFFICER: Attached as Annex II, but only to
counterparts hereof to be filed in the State of North Dakota, is an adequate
statement of the interest with respect to the revolving credit loans made
pursuant to the Credit Agreement.
C. Section 1.3(c) of the Existing Mortgage is deleted in its
entirety and replaced with the following:
"(c) All indebtedness and other obligations now or hereafter
incurred or arising pursuant to or permitted by the provisions of the
Notes, the Credit Agreement, the Guarantee (as hereinafter defined), this
Mortgage or any other instrument now or hereafter evidencing, governing,
guaranteeing or securing the "secured indebtedness" (as hereinafter
defined) or any part thereof or otherwise executed in connection with any
advance or loan evidenced or governed by any one or more of the Notes or
the Credit Agreement (the Notes, the Credit Agreement, the Guarantee, this
Mortgage and such other instruments being herein sometimes collectively
called the "Loan Documents");"
D. Sections 1.3(f) and 1.3(g) of the Existing Mortgage are deleted
in their entirety and Section 1.3 (f) shall be replaced with the following:
"(f) All indebtedness and other obligations now or hereafter
incurred or arising pursuant to the provisions of that certain
Guarantee Agreement made by Chesapeake Energy Corporation and
certain of its Subsidiaries in favor of Union
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260
Bank of California as Administrative Agent dated as of June 11,
2001, and all other supplements thereto and amendments or
modifications thereof, and all agreements given in substitution
therefor or in restatement, renewal or extension thereof, in whole
or in part (herein called the "Guarantee")."
E. Section 1.5 of the Existing Mortgage is deleted in its entirety
and shall be replaced with the following:
"Section 1.5. NEW MEXICO AGGREGATE UNPAID PRINCIPAL AMOUNT. AS TO ONLY THE
MORTGAGED PROPERTIES SITUATED IN THE STATE OF NEW MEXICO, THE AGGREGATE UNPAID
PRINCIPAL AMOUNT OF THE SECURED INDEBTEDNESS OUTSTANDING AT ANY PARTICULAR TIME
(AFTER HAVING GIVEN EFFECT TO ALL ADVANCES AND ALL REPAYMENTS MADE PRIOR TO SUCH
TIME) WHICH IS SECURED BY PROPERTY LOCATED IN NEW MEXICO SHALL NOT AGGREGATE AN
UNPAID PRINCIPAL AMOUNT IN EXCESS OF FOUR HUNDRED FIFTY MILLION DOLLARS
($450,000,000.00)."
F. Section 1.7 of the Existing Mortgage is deleted in its entirety
and shall be replaced with the following:
"Section 1.7. INDEBTEDNESS SECURED BY ARKANSAS PROPERTIES. WITH RESPECT TO
PROPERTY LOCATED IN THE STATE OF ARKANSAS, IT IS AGREED THAT THIS MORTGAGE SHALL
STAND AS SECURITY FOR THE PAYMENT OF ALL OBLIGATIONS (AS SUCH TERM IS DEFINED IN
THE CREDIT AGREEMENT), DIRECT OR INDIRECT, CREATED AFTER THE DATE OF THIS
MORTGAGE, WHICH MAY BE OWING BY MORTGAGOR TO ONE OR MORE LENDERS AT ANY TIME
PRIOR TO THE PAYMENT IN FULL OF ALL OBLIGATIONS, INCLUDING FUTURE ADVANCES
SECURED BY THIS MORTGAGE; SUCH OBLIGATIONS TO BE SECURED HEREBY REGARDLESS OF
WHETHER IT SHALL BE PREDICATED UPON FUTURE LOANS OR ADVANCES HEREAFTER MADE BY
ONE OR MORE OF THE LENDERS, OR OBLIGATIONS HEREAFTER ACQUIRED BY ONE OR MORE OF
SUCH LENDERS THROUGH ASSIGNMENT OR SUBROGATION OR OTHERWISE, OR SHALL REPRESENT
INDIRECT OBLIGATIONS (CREATED AFTER THE DATE OF THIS MORTGAGE) BASED UPON ANY
ENDORSEMENTS, GUARANTIES OR SURETYSHIP; AND IT IS AGREED THAT THIS MORTGAGE
SHALL STAND AS SECURITY FOR ALL SUCH OBLIGATIONS WHETHER IT BE INCURRED FOR
ANY BUSINESS PURPOSE THAT WAS RELATED OR WHOLLY UNRELATED TO THE PURPOSE OF THE
CREDIT AGREEMENT, OR WHETHER IT WAS INCURRED FOR SOME PERSONAL OR NONBUSINESS
PURPOSE, OR FOR ANY OTHER PURPOSE RELATED OR UNRELATED, OR SIMILAR OR
DISSIMILAR, TO THE PURPOSE OF THE CREDIT AGREEMENT AND LOAN, UPON REQUEST OF
BORROWER, PRIOR TO THE DISCHARGE OF THIS MORTGAGE, LENDER, AT ITS OPTION, MAY
MAKE FUTURE ADVANCES TO BORROWER SUCH FUTURE ADVANCES, WITH INTEREST THEREON,
SHALL BE SECURED BY THIS MORTGAGE AND WHEN EVIDENCED BY PROMISSORY NOTES, THE
SAID NOTES ARE SECURED HEREBY. NOTHING HEREIN CONTAINED SHALL IMPLY ANY
OBLIGATION ON THE PART OF ANY LENDER TO MAKE ANY SUCH ADDITIONAL LOAN OR
ADVANCES."
G. Section 1.8 of the Existing Mortgage is deleted in its entirety
and shall be replaced with the following:
"SECTION 1.8. MAXIMUM SECURED AMOUNT. NOTWITHSTANDING ANY PROVISION
HEREOF TO THE CONTRARY, THE OUTSTANDING INDEBTEDNESS SECURED BY PROPERTY LOCATED
IN THE STATE OF MONTANA SHALL NOT, AT ANY TIME OR FROM TIME TO TIME, EXCEED AN
AGGREGATE MAXIMUM AMOUNT OF $225,000,000."
H. Section 2.1(1) of the Existing Mortgage is deleted in its
entirety and shall be replaced with the following:
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261
"(I) Fees and Expenses: Indemnity. Mortgagor will reimburse
Trustee. Agent. Syndication Agent, Lead Arranger and each Lender
(for purposes of this paragraph, the terms "Trustee", "Agent",
"Syndication Agent", "Lead Arranger" and "Lender" shall include the
directors, officers, partners, employees and agents of Trustee.
Agent. Syndication Agent, Lead Arranger or any Lender, respectively,
and any persons or entities owned or controlled by or affiliated
with Trustee, Agent, Syndication Agent, Lead Arranger or any Lender,
respectively) for all expenditures, including reasonable attorneys'
fees and expenses, incurred or expended in connection with (i) the
breach by Mortgagor of any covenant, agreement or condition
contained herein or in any other Loan Document, (ii) the exercise of
any rights and remedies hereunder or under any other Loan Document,
and (iii) the protection of the Property and/or liens and security
interests therein. Mortgagor will indenmify and hold harmless
Trustee, Agent, Syndication Agent, Lead Arranger and each Lender
from and against (and will reimburse such indemnified parties for)
all claims, demands, liabilities, losses, damages (including without
limitation consequential damages). causes of action, judgments,
penalties, costs and expenses (including without limitation
reasonable attorneys' fees and expenses) which may be imposed upon,
asserted against or incurred or paid by the Trustee, the Agent, the
Syndication Agent, the Lead Arranger or any Lender on account of, in
connection with, or arising out of (A) any bodily injury or death or
natural resource, human health or property damage occurring in, at,
into, under or upon or in the vicinity of the Property through any
cause whatsoever, (B) any act performed or omitted to be performed
hereunder or the breach of any representation or warranty herein,
(C) the exercise of any rights and remedies hereunder or under any
other Loan Document, (D) any transaction, act, omission, event or
circumstance arising out of or in any way connected with the
Property or with this Mortgage or any other Loan Document. (E) any
violation on or prior to the Release Date (as hereinafter defined)
of any Applicable Environmental Law, (F) any act, omission, event or
circumstance existing or occurring on or prior to the Release Date
(including without limitation the presence on or under the Property
or the Associated Property or release at, into, upon. under or from
the Property or the Associated Property of hazardous substances or
solid wastes disposed of or otherwise released) resulting from or in
connection with the ownership, construction, occupancy, operation,
use and/or maintenance of the Property or the Associated Property,
regardless of whether the act, omission, event or circumstance
constituted a violation of any Applicable Environmental Law at the
time of its existence or occurrence, and (G) any and all claims or
proceedings (whether brought by private party or governmental
agencies) for human health, bodily injury, property damage,
abatement or remediation, environmental damage, cleanup, mitigation,
removal, natural resource damage or impairment or any other injury
or damage resulting from or relating to any hazardous or toxic
substance, solid waste or contaminated material located upon or
migrating into, from or through the Property or the Associated
Property (whether or not the release of such materials was caused by
Mortgagor, a tenant or subtenant or a prior owner or tenant or
subtenant on the Property or the Associated Property and whether or
not the alleged liability is attributable to the use, treatment,
handling, storage, generation, transportation, removal or disposal
of such substance, waste or material or the mere presence of such
substance, waste or material on or under the Property or the
Associated Property), which the Trustee, the Agent, the Syndication,
the Lead Arranger and/or any Lender may have liability with respect
to due to the making of the loan or loans under the Credit Agreement
or evidenced by any of the Notes, the granting of this Mortgage, the
exercise of any rights under the Loan Documents, or otherwise. Agent
shall have the right to compromise and adjust any such claims,
actions and judgments, and in addition to the rights to be
indemnified as herein provided, all amounts paid in compromise,
satisfaction or discharge of any such claim, action or judgment, and
all court costs, attorneys' fees and other expenses of every
character expended by Agent, Syndication Agent, Lead Arranger,
Trustee or any Lender pursuant to the provisions of this section
shall be a demand obligation (which obligation Mortgagor hereby
expressly promises to pay) owing by Mortgagor to the applicable
party or parties. The "Release Date" as used herein shall mean the
earlier of the following two dates: (i) the date on which the
indebtedness and obligations secured hereby have been paid and
performed in full and this Mortgage has been released of record, or
(ii) the date on which the lien of this Mortgage is foreclosed or a
deed in lieu of such foreclosure is fully effective and recorded.
WITHOUT LIMITATION, IT IS THE INTENTION OF MORTGAGOR AND MORTGAGOR
AGREES THAT THE FOREGOING INDEMNITIES SHALL APPLY TO EACH
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262
INDEMNIFIED PARTY WITH RESPECT TO CLAIMS, DEMANDS, LIABILITIES, LOSSES,
DAMAGES, CAUSES OF ACTION, JUDGMENTS, PENALTIES, COSTS AND EXPENSES
(INCLUDING WITHOUT LIMITATION REASONABLE ATTORNEYS FEES) WHICH IN WHOLE OR
iN PART ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OF SUCH (AND/OR ANY
OTHER) INDEMNIFIED PARTY. HOWEVER, such indemnities shall not apply to any
particular indemnified party (but shall apply to the other indemnified
parties) to the extent the subject of the indemnification is caused by or
arises out of the gross negligence or willful misconduct of such
particular indemnified party. The foregoing indemnities shall not
terminate upon the Release Date or upon the release, foreclosure or other
termination of this Mortgage but will survive the Release Date,
foreclosure of this Mortgage or conveyance in lieu of foreclosure, and the
repayment of the secured indebtedness and the discharge and release of
this Mortgage and the other documents evidencing and/or securing the
secured indebtedness. Any amount to be paid hereunder by Mortgagor to
Agent, Syndication Agent, Lead Arranger, Trustee and/or any Lender shall
be a demand obligation owing by Mortgagor to the applicable party or
parties and shall be subject to and covered by the provisions of Section
2.3 hereof."
I. Section 2.3 of the Existing Mortgage is deleted in its entirety
and shall be replaced with the following:
"Section 2.3. Performance on Mortagor's Behalf. Mortgagor agrees that, if
Mortgagor fails to perform any act or to take any action which hereunder
Mortgagor is required to perform or take, or to pay any money which hereunder
Mortgagor is required to pay, Agent, in Mortgagor's name or its own name, may,
but shall not be obligated to, perform or cause to be performed such act or take
such action or pay such money, and any expenses so incurred by Agent and any
money so paid by Agent shall be a demand obligation owing by Mortgagor to Agent
(which obligation Mortgagor hereby expressly promises to pay) and Agent, upon
making such payment, shall be subrogated to all of the rights of the person,
corporation or body politic receiving such payment. Each amount due and owing by
Mortgagor to Trustee, Agent, Syndication Agent, Lead Arranger and/or any Lender
pursuant to this Mortgage shall bear interest each day, from the date of such
expenditure or payment until paid, at a rate equal to the rate as provided for
past due principal under the Credit Agreement (provided that, should applicable
law provide for a maximum permissible rate of interest on such amounts, such
rate shall not be greater than such maximum permissible rate); all such amounts,
together with such interest thereon, shall be a part of the secured indebtedness
and shall be secured by this Mortgage."
J. Section 3.6 of the Existing Mortgage is deleted in its entirety
and shall be replaced with the following:
"Section 3.6 Mortgagor's Absolute Obligation to Pay Obligations under the
Credit Agreement. Nothing herein contained shall detract from or limit the
obligations of Mortgagor to make prompt payment of the Obligations under the
Credit Agreement, and any and all other secured indebtedness, at the time and in
the manner provided herein and in the Loan Documents, regardless of whether the
Production and Production Proceeds herein assigned are sufficient to pay same,
and the rights under this Article III shall be cumulative of all other rights
under the Loan Documents."
K. Section 4.7 of the Existing Mortgage is deleted in its entirety
and shall be replaced with the following:
"Section 4.7 Proceeds of Foreclosure. The proceeds of any sale held in
foreclosure of the liens and/or security interests evidenced hereby shall be
applied:
FIRST, to the payment of all necessary costs and expenses incident
to such foreclosure sale, including but not limited to all court costs and
charges of every character in the event foreclosed by suit and including
but not limited to a reasonable fee to the Trustee if such sale was made
by the Trustee acting under the provisions of Section 4.4(a);
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263
SECOND, to the payment of the secured indebtedness (including
specifically without limitation the principal, interest and attorneys'
fees due and unpaid on the Credit Agreement and the amounts due and unpaid
and owed under this Mortgage) in such mariner and order as Agent may
elect; and
THIRD, the remainder, if any there shall be, shall be paid to
Mortgagor, or to Mortgagor's heirs, devisees, representatives, successors
or assigns, or such other persons as may be entitled thereto by law."
L. Section 5.10 of the Existing Mortgage is deleted in its entirety
and shall be replaced with the following:
"Section 5.10. Subrogation to Existing Liens. To the extent that proceeds
of the Notes are used to pay indebtedness secured by any outstanding lien,
security interest, charge or prior encumbrance against the Property, such
proceeds have been advanced at Mortgagor's request, and the party or parties
advancing the same shall be subrogated to any and all rights, security interests
and liens owned by any owner or holder of such outstanding liens, security
interests, charges or encumbrances, irrespective of whether said liens, security
interests, charges or encumbrances are released, and it is expressly understood
that, in consideration of the payment of such indebtedness, Mortgagor hereby
waives and releases all demands and causes of action for offsets and payments
to, upon and in connection with the said indebtedness."
M. Section 5.15 of the Existing Mortgage is deleted in its entirety
and shall be replaced with the following:
"Section 5.15. Release of Mortgage. If all of the secured indebtedness be
paid as the same becomes due and payable, the Revolving Commitments under the
Credit Agreement shall have been terminated and the Revolving Loans thereunder
(with accrued interest thereon) and all other amounts owing thereunder and the
other Loan Documents (as defined in the Credit Agreement) (including all amounts
of L/C Obligations (as defined in the Credit Agreement), whether or not the
beneficiaries of the then outstanding Letters of Credit (as defined in the
Credit Agreement) shall have presented the documents required thereunder) shall
have been paid in full and all of the covenants, warranties, undertakings and
agreements made in this Mortgage are kept and performed, and if neither the
Borrower nor any Lender is bound to the other or required to refund such payment
to the payor thereof to any third person to permit any obligation or secured
indebtedness to be incurred then or thereafter, then, upon sixty (60) days prior
written notice (or such lesser number of days as may be mandated by applicable
law), the Borrower may request that this Mortgage be terminated. Upon such
termination the Borrower may further request that a written act of release of
this Mortgage be provided (except this Mortgage shall be reinstated to the
extent expressly provided herein, and will continue with respect to
indemnification and other rights which are to continue following the release
hereof). Agent agrees to deliver such an act of release (subject to the
foregoing limitation), all at the cost and expense of the Mortgagor, within
sixty (60) days (or such lesser number of days as may be mandated by applicable
law) of receiving such request unless Agent in good faith, has cause to believe
that Mortgagor is not entitled to a termination of this Mortgage.
Notwithstanding the foregoing, it is understood and agreed that certain
indemnifications, and other rights, which are provided herein to continue
following the release hereof, shall continue in effect notwithstanding such
release of such payment or payments; and provided that if any payment to Lender,
Agent, Syndication Agent or Lead Arranger, is held to constitute a preference or
a voidable transfer under applicable state or federal laws or if for any other
reason Lender, Agent, Syndication Agent or Lead Arranger is required to refund
such payment to the payor thereof or to pay the amount thereof to any third
party, this Mortgage shall be reinstated to the extent of such payment or
payments."
N. Section 5.20 of the Existing Mortgage is deleted in its entirety
and shall be replaced with the following:
"Section 5.20. Reporting Compliance. Mortgagor agrees to comply with any
and all reporting requirements applicable to the transaction evidenced by the
Credit Agreement and secured by this Mortgage which are set forth in any law,
statute, ordinance, rule, regulation, order or determination of any governmental
authority, and further agrees upon request of Agent to furnish Agent with
evidence of such compliance."
264
2. Grant and Mortgage. Mortgagor (upon and subject to all the terms,
covenants, provisions, conditions and authorization set forth in the Existing
Mortgage, as amended hereby) does hereby (a) GRANT, BARGAIN. SELL. CONVEY,
TRANSFER, ASSIGN AND SET OVER to Carl Stutzman, Trustee (the "Trustee"), and
grant to Trustee a POWER OF SALE (pursuant to the Mortgage and applicable law)
with respect to, those of the following described properties, rights and
interests which are located in (or cover properties located in) the state of
Texas (the "Additional Deed of Trust Mortgaged Properties"), and (b) MORTGAGE,
ASSIGN, WARRANT, PLEDGE and HYPOTHECATE to Agent, and grant to Agent a POWER OF
SALE (pursuant to the Mortgage and applicable law) with respect to, all of the
following described rights, interests and properties which were not granted to
Trustee in clause (a) above (the "Additional Other Mortgaged Properties"):
A. The oil, gas and/or other mineral properties which are
described in Exhibit A attached hereto and made a part hereof;
B. Without limitation of the foregoing, all other right, title
and interest of Mortgagor of whatever kind or character (whether now
owned or hereafter acquired by operation of law or otherwise) in and to
(i) the oil, gas and/or mineral leases or other agreements described in
Exhibit A hereto, and/or (ii) the lands described or referred to in
Exhibit A (or described in any of the instruments described or referred
to in Exhibit A), without regard to any limitations as to specific
lands or depths that may be set forth in Exhibit A hereto or in any of
the leases or other agreements described in Exhibit A hereto;
C. All of Mortgagor's interest (whether now owned or hereafter
acquired by operation of law or otherwise) in and to all presently
existing and hereafter created oil, gas and/or mineral unitization,
pooling and/or communitization agreements, declarations and/or orders,
and in and to the properties, rights and interests covered and the
units created thereby (including, without limitation, units formed
under orders, rules, regulations or other official acts of any federal,
state or other authority having jurisdiction), which cover, affect or
otherwise relate to the properties, rights and interests described in
clause A or B above;
D. All of Mortgagor's interest in and rights under (whether
now owned or hereafter acquired by operation of law or otherwise) all
presently existing and hereafter created operating agreements,
equipment leases, production sales contracts, processing agreements,
transportation agreements, gas balancing agreements, farmout and/or
farm-in agreements, salt water disposal agreements, area of mutual
interest agreements, and other contracts and/or agreements which cover,
affect, or otherwise relate to the properties, rights and interests
described in clause A, B or C above or to the operation of such
properties, rights and interests or to the treating, handling, storing,
processing, transporting or marketing of oil, gas, other hydrocarbons,
or other minerals produced from (or allocated to) such properties,
rights and interests (including, but not limited to, those contracts
listed in Exhibit A hereto), as same may be amended or supplemented
from time to time; and
E. All of Mortgagor's interest (whether now owned or hereafter
acquired by operation of law or otherwise) in and to all improvements,
fixtures, movable or immovable property and other real and/or personal
property (including, without limitation, all wells, pumping units,
wellhead equipment, tanks, pipelines, flow lines, gathering lines,
compressors, dehydration units, separators, meters, buildings,
injection facilities, salt water disposal facilities, and power,
telephone and telegraph lines), and all easements, servitudes,
rights-of-way, surface leases, licenses, permits and other surface
rights, which are now or hereafter used, or held for use, in connection
with the properties, rights and interests described in clause A, B or C
above, or in connection with the operation of such properties, rights
and interests, or in connection with the treating, handling, storing,
processing, transporting or marketing of oil, gas, other hydrocarbons,
or other minerals produced from (or allocated to) such properties,
rights and interests; and
-7-
265
F. All rights, estates, powers and privileges appurtenant to
the foregoing rights, interests and properties.
TO HAVE AND TO HOLD (a) the Additional Deed of Trust Mortgaged
Properties unto the Trustee, and its successors or substitutes in this trust,
and to its or their successors and assigns, in trust, however, upon the terms,
provisions and conditions herein set forth, and (b) the Additional Other
Mortgaged Properties unto Agent, and Agent's heirs, devisees, representatives,
successors and assigns, upon the terms, provisions and conditions herein set
forth (the Additional Deed of Trust Mortgaged Properties and the Additional
Other Mortgaged Properties are herein sometimes collectively called the
"Additional Mortgaged Properties").
3. Mortgagor hereby grants to Agent a security interest in the entire
interest of Mortgagor (whether now owned or hereafter acquired by operation of
law or otherwise) in and to:
(a) all oil, gas, other hydrocarbons, and other minerals
produced from or allocated to the Additional Mortgaged Properties, and
any products processed or obtained therefrom (herein collectively
called the "Additional Production"), together with all proceeds of
Additional Production (regardless of whether Additional Production to
which such proceeds relate occurred on or before or after the date
hereof), and together with all liens and security interests securing
payment of the proceeds of the Additional Production, including, but
not limited to, those liens and security interests provided for under
(i) statutes enacted in the jurisdictions in which the Additional
Mortgaged Properties are located, or (ii) statutes made applicable to
the Additional Mortgaged Properties under federal law (or some
combination of federal and state law);
(b) without limitation of any other provisions of this Section
3, all payments received in lieu of production from the Additional
Mortgaged Properties (regardless of whether such payments accrued,
and/or the events which gave rise to such payments occurred, on or
before or after the date hereof), including, without limitation, "take
or pay, payments and similar payments, payments received in settlement
of or pursuant to a judgment rendered with respect to take or pay or
similar obligations or other obligations under a production sales
contract, payments received in buyout or buydown or other settlement of
a production sales contract, and payments received under a gas
balancing or similar agreement as a result of (or received otherwise in
settlement of or pursuant to judgment rendered with respect to) rights
held by Mortgagor as a result of Mortgagor (and/or its predecessors in
title) taking or having taken less gas from lands covered by an
Additional Mortgaged Property (or lands pooled or unitized therewith)
than their ownership of such an Additional Mortgaged Property would
entitle them to receive (the payments described in this subsection (b)
being herein called "Additional Payments in Lieu of Production");
(c) all equipment, inventory, improvements, fixtures,
accessions, goods and other personal property or movable property of
whatever nature now or hereafter located on or used or held for use in
connection with the Additional Mortgaged Properties (or in connection
with the operation thereof or the treating, handling, storing,
processing, transporting, or marketing of Additional Production), and
all licenses and permits of whatever nature now or hereafter used or
held for use in connection with the Additional Mortgaged Properties (or
in connection with the operation thereof or the treating, handling,
storing, processing, transporting, or marketing of Additional
Production), and all renewals or replacements of the foregoing or
substitutions for the foregoing;
(d) all contract rights, choses in action (i.e., rights to
enforce contracts or to bring claims thereunder) and other general
intangibles (regardless of whether the same arose, and/or the events
which gave rise to the same occurred, on or before or after the date
hereof) related to the Additional Mortgaged Properties, the operation
thereof (whether Mortgagor is operator or non-operator), or the
treating, handling, storing, processing, transporting, or marketing of
Additional Production (including, without limitation, any of the same
relating to payment of proceeds of Additional Production or to payment
of amounts which could constitute Additional Payments in Lieu of
Production);
-8-
266
(e) without limitation of the generality of the foregoing, any
rights and interests of Mortgagor under any present or future hedge or
swap agreements, cap, floor, collar, exchange, forward or other hedge
or protection agreements or transactions relating to crude oil, natural
gas or other hydrocarbons, or any option with respect to any such
agreement or transaction now existing or hereafter entered into by or
on behalf of Mortgagor;
(f) all geological, geophysical, engineering, accounting,
title, legal, and other technical or business data concerning the
Additional Mortgaged Properties, the Additional Production or any other
item of Additional Property (as hereinafter defined) which are now or
hereafter in the possession of Mortgagor or in which Mortgagor can
otherwise grant a security interest, and all books, files, records,
magnetic media, and other forms of recording or obtaining access to
such data;
(g) all money, documents, instruments, chattel paper,
securities, accounts or general intangibles arising from or by virtue
of any transaction (regardless of whether such transaction occurred on
or before or after the date hereof) related to the Additional Mortgaged
Properties, the Additional Production or any other item of Additional
Property (all of the properties, rights and interests described in
subsections (a), (b), (c), (d), (e) and (f) above and this subsection
(g) being herein sometimes collectively called the "Additional
Collateral"); and
(h) all proceeds of the Additional Collateral, whether such
proceeds or payments are goods, money, documents, instruments, chattel
paper, securities, accounts, general intangibles, fixtures,
real/immovable property, personal/movable property or other assets
(the Additional Mortgaged Properties, the Additional Collateral and the
proceeds of the Additional Collateral being herein sometimes
collectively called the "Additional Property").
4. Assignment of Production. Mortgagor does hereby absolutely and
unconditionally assign, transfer and set over to Agent all Additional Production
which accrues to Mortgagor's interest in the Additional Mortgaged Properties,
all proceeds of such Additional Production and all Additional Payments in Lieu
of Production (herein collectively referred to as the "Additional Production
Proceeds"), together with the immediate and continuing right to collect and
receive such Additional Production Proceeds. Mortgagor directs and instructs any
and all purchasers of any Additional Production to pay to Agent all of the
Additional Production Proceeds accruing to Mortgagor's interest until such time
as such purchasers have been furnished with evidence that all secured
indebtedness has been paid and that the Mortgage has been released. Mortgagor
agrees that no purchasers of the Additional Production shall have any
responsibility for the application of any funds paid to Agent.
5. Supplement to Mortgage Exhibits. Exhibit A to the Existing Mortgage
is hereby supplemented and amended by adding thereto Exhibit A to this Third
Mortgage Amendment. All references in the Mortgage to "Exhibit A" (including,
without limitation, references to Exhibit A used in the definition of the term
"Mortgaged Properties" set forth in the Existing Mortgage) shall refer
collectively to Exhibit A to the Existing Mortgage and to Exhibit A to this
Third Mortgage Amendment. Schedule I to the Existing Mortgage is hereby
supplemented and amended by adding thereto Schedule I to this Third Mortgage
Amendment. All references in the Mortgage to "Schedule I" shall refer
collectively to Schedule I to the Existing Mortgage and to Schedule I to this
Third Mortgage Amendment. Any representations or warranties of Mortgagor made in
the Existing Mortgage with respect to the Mortgaged Properties shall also apply
to the Additional Mortgaged Properties.
6. Definitions. Henceforth, all references to the "Mortgaged
Properties" contained in the Mortgage shall include not only those properties
which were included in such definition prior to the execution of this Third
Mortgage Amendment but also the Additional Mortgaged Properties, and,
henceforth, all references to the "Deed of Trust Mortgaged Properties" contained
in the Mortgage shall include not only those properties which were included in
such definition prior to the execution of this Third Mortgage Amendment but also
the Additional Deed of Trust Mortgaged Properties, and, henceforth, all
references to the "Other Mortgaged Properties" contained in the Mortgage shall
include not only those properties which were included in such
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267
definition prior to the execution of this Third Mortgage Amendment but also the
Additional Other Mortgaged Properties. Henceforth, all references to the
"Collateral," "the proceeds of the Collateral", the "Production", "Payments in
Lieu of Production", and "Production Proceeds" contained in the Mortgage, shall
include not only those properties, rights, interests, collateral and proceeds
which were included within the scope of such terms prior to the execution of
this Third Mortgage Amendment but also the Additional Collateral, the proceeds
of the Additional Collateral, the Additional Production, the Additional Payments
in Lieu of Production and the Additional Production Proceeds. Henceforth all
references to the "Property" contained in the Mortgage, shall include not only
those properties, rights, interests, collateral and proceeds which were included
in such definition prior to the execution of this Third Mortgage Amendment but
also the Additional Property.
7. Effect of Amendment. Except as expressly amended hereby, the
Existing Mortgage shall remain in full force and effect. Nothing in this Third
Mortgage Amendment releases any right, claim, lien, security interests or
entitlement of Agent created by or contained in the Existing Mortgage or
releases Mortgagor from any covenant, warranty or obligation created by or
contained in the Existing Mortgage. To the fullest extent permitted by
applicable law, this Third Mortgage Amendment is intended by the parties to
have, and shall have, the same dignity and priority as the Existing Mortgage as
originally recorded.
8. Scope of Amendment. This Third Mortgage Amendment represents a
supplemental deed of trust and mortgage of both real and personal property, a
supplemental security agreement, a supplemental assignment, and a supplemental
financing statement, and also covers proceeds and fixtures.
9. Effective as Financing Statement. This Third Mortgage Amendment
shall be effective as a financing statement filed as a fixture filing with
respect to all fixtures included within the Additional Property. This Third
Mortgage Amendment shall also be effective as a financing statement covering
minerals and other substances of value which may be extracted from the earth
(including without limitation oil and gas), and accounts related thereto, which
will be financed at the wellhead or minehead of the wells or mines located on
the Additional Mortgaged Properties. This Third Mortgage Amendment is to be
filed for record in the real estate records of each county where any part of the
Additional Mortgaged Properties is situated, and may also be filed in the
offices of the Bureau of Land Management or the Minerals Management Service or
state agency (or any successor agencies). This Third Mortgage Amendment shall
also be effective as a financing statement covering any other Additional
Property and may be filed in any other appropriate filing or recording office.
The mailing address of Mortgagor is the address of Mortgagor set forth at the
end of this Third Mortgage Amendment and the address of Agent from which
information concerning the security interests hereunder may be obtained is the
address of Agent set forth at the end of this Third Mortgage Amendment. A
carbon, photographic, facsimile or other reproduction of this instrument or of
any financing statement relating to this instrument shall be sufficient as a
financing statement for any of the purposes referred to above.
10. Counterparts. This instrument may be executed in several
counterparts, all of which are identical, except that, to facilitate
recordation, (i) certain counterparts hereof may include only that portion of
Exhibit A hereto that contains descriptions of properties located in (or
otherwise subject to the requirements and/or protections of the recording or
filing acts or regulations of) the recording jurisdiction in which a particular
counterpart is to be recorded, and other portions of Exhibit A hereto shall be
included in such counterparts by reference only, and (ii) certain counterparts
hereof may include (as Attachment 1) portions of Exhibit A to the Existing
Mortgage which contain descriptions of properties located in (or otherwise
subject to the requirements and/or protections of the recording or filing acts
or regulations of) the recording jurisdiction in which the particular
counterpart is to be recorded. All of such counterparts together shall
constitute one and the same instrument. Complete copies of this instrument,
containing the entire Exhibit A, have been retained by Mortgagor and Agent.
11. Ratification. Reconfirmation. The Mortgage is hereby ratified,
adopted, confirmed, and renewed. All representations, warranties and covenants
of Mortgagor in the Existing Mortgage are hereby repeated, remade and
incorporated herein by this reference for the
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268
benefit of Agent on and as of the date hereof, except to the extent changed by
the transactions contemplated by this Third Mortgage Amendment.
12. Successors and Assigns. The terms, provisions, covenants and
conditions hereof shall be binding upon Mortgagor, and the successors and
assigns of Mortgagor, and shall inure to the benefit of Agent and its successors
and assigns. All references in this instrument to Mortgagor or Agent shall be
deemed to include all such successors and assigns.
13. Miscellaneous. This Third Mortgage Amendment shall be considered a
"Loan Document", as such term is defined in the Mortgage.
Executed by the parties hereto on the dates of their respective
acknowledgments.
MORTGAGOR:
Chesapeake Exploration Limited Partnership
By: Chesapeake Operating, Inc., its
general partner
By:
----------------------------------------
Martha A. Burger
Treasurer
Gothic Production Corporation
By:
----------------------------------------
Martha A. Burger
Treasurer
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269
AGENT:
Union Bank of California, N.A., individually
and as Agent
By:
-----------------------------------------
Carl Stutzman
Senior Vice President and Manager
By:
-----------------------------------------
Dustin Gaspari
Vice President
The common address of Mortgagor is: This instrument prepared by:
6104 N. Western Timothy W. Dowdy
Oklahoma City, Oklahoma 73118 Thompson & Knight L.L.P.
1700 Pacific Avenue
The common address of Trustee and Agent is: Suite 3300
Dallas, Texas 75201
500 N. Akard, Suite 4200
Dallas, Texas 75201
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MORTGAGOR ACKNOWLEDGMENT
STATE OF OKLAHOMA )
)
COUNTY OF OKLAHOMA )
BE IT REMEMBERED THAT I, the undersigned authority, a notary public
duly qualified, commissioned, sworn and acting in and for the county and state
aforesaid, and being authorized in such county and state to take
acknowledgments, hereby certify that, on this ____ day of June, 2001 there
personally appeared before me and known to me (or satisfactorily proven) to be
the person described in the foregoing instrument: Martha A. Burger as Treasurer
of Chesapeake Operating, Inc., an Oklahoma corporation in its capacity as
general partner on behalf of Chesapeake Exploration Limited Partnership, an
Oklahoma limited partnership, known to me to be such person, such partnership
being a party to the foregoing instrument.
KANSAS, The foregoing instrument was acknowledged before me on this
MONTANA, NEW day, by Martha A. Burger as Treasurer of Chesapeake Operating,
MEXICO, NORTH Inc., an Oklahoma corporation in its capacity as general
DAKOTA, partner of Chesapeake Exploration Limited Partnership, an
OKLAHOMA and Oklahoma limited partnership, on behalf of said corporation in
TEXAS its capacity as general partner on behalf of said limited
partnership.
ARKANSAS On this date before me, the undersigned officer, personally
appeared Martha A. Burger, known to me (or satisfactorily
proven) to be the person described in the foregoing
instrument, and acknowledged herself to be the Treasurer of
Chesapeake Operating, Inc., an Oklahoma corporation, in its
capacity as general partner of Chesapeake Exploration Limited
Partnership, an Oklahoma limited partnership, and that she as
such Treasurer, being authorized so to do, executed the
foregoing instrument for the purposes therein contained, by
signing the name of the corporation by herself as Treasurer,
in its capacity as general partner of Chesapeake Exploration
Limited Partnership, on behalf of Chesapeake Exploration
Limited Partnership.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in
the City of Oklahoma City, Oklahoma County, Oklahoma, on the day and year first
above written.
--------------------------------------------
NOTARY PUBLIC, State of Oklahoma
--------------------------------------------
(printed name)
My commission expires:
- ----------------------
[SEAL]
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271
STATE OF OKLAHOMA )
)
COUNTY OF OKLAHOMA )
BE IT REMEMBERED THAT I, the undersigned authority, a notary public
duly qualified, commissioned, sworn and acting in and for the county and state
aforesaid, and being authorized in such county and state to take
acknowledgments, hereby certify that, on this ___ day of June, 2001 there
personally appeared before me and known to me (or satisfactorily proven) to be
the person described in the foregoing instrument: Martha A. Burger as Treasurer
of Gothic Production Corporation, an Oklahoma corporation, known to me to be
such person, such corporation being a party to the foregoing instrument.
KANSAS, The foregoing instrument was acknowledged before me on this
MONTANA, NEW day, by Martha A. Burger as Treasurer of Gothic Production
MEXICO, NORTH Corporation, an Oklahoma corporation, on behalf of said
DAKOTA, corporation.
OKLAHOMA and
TEXAS
ARKANSAS On this date before me, the undersigned officer, personally
appeared Martha A. Burger, known to me (or satisfactorily
proven) to be the person described in the foregoing
instrument, and acknowledged herself to be the Treasurer of
Gothic Production Corporation, an Oklahoma corporation, and
that she as such Treasurer, being authorized so to do,
executed the foregoing instrument for the purposes therein
contained, by signing the name of the corporation by herself
as Treasurer, on behalf of Gothic Production Corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in
the City of Oklahoma City, Oklahoma County, Oklahoma, on the day and year first
above written.
---------------------------------------------------
NOTARY PUBLIC, State of Oklahoma
---------------------------------------------------
(printed name)
My commission expires:
- ----------------------
[SEAL]
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AGENT ACKNOWLEDGMENT
STATE OF TEXAS )
)
COUNTY OF DALLAS )
BE IT REMEMBERED THAT I, the undersigned authority, a notary public
duly qualified, commissioned, sworn and acting in and for the county and state
aforesaid, and being authorized in such county and state to take
acknowledgments, hereby certify that, on this 11th day of June, 2001 there
personally appeared before me and known to me (or satisfactorily proven) to be
the person described in the foregoing instrument: Carl Stutzman and Dustin
Gaspari, as Senior Vice President and Manager, and as Vice President,
respectively, of Union Bank of California, N.A., a national banking association,
known to me to be such person, such national banking association being a party
to the foregoing instrument.
KANSAS, The foregoing instrument was acknowledged before me on this
MONTANA, NEW day, by Carl Stutzman and Dustin Gaspari, as Senior Vice
MEXICO, NORTH President and Manager, and as Vice President, respectively, of
DAKOTA, Union Bank of California, N.A., a national banking
OKLAHOMA and association, on behalf of said national banking association.
TEXAS
ARKANSAS On this date before me, the undersigned officer, personally
appeared Carl Stutzman and Dustin Gaspari, known to me (or
satisfactorily proven) to be the persons described in the
foregoing instrument, and acknowledged themselves to be the
Senior Vice President and Manager, and the Vice President,
respectively, of Union Bank of California, N.A., a national
banking association, and that they as such officers, being
authorized so to do, executed the foregoing instrument for the
purposes therein contained, by signing the name of the
national banking association by themselves as the
aforementioned officers of such national banking association.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in
the City of Dallas, Dallas County, Texas, on the day and year first above
written.
---------------------------------------
NOTARY PUBLIC, State of Texas
---------------------------------------
(printed name)
My commission expires:
- ----------------------
[SEAL]
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273
Schedule A
1. Deed of Trust, Mortgage, Line of Credit Mortgage, Assignment, Security
Agreement, Fixture Filing and Financing Statement from Chesapeake
Exploration Limited Partnership to Carl Stutzman, Trustee and Union
Bank of California, N. A. , Agent dated August 18, 2000.
<Table>
<Caption>
RECORDING JURISDICTION RECORDING DATA
- ---------------------- --------------
Sebastian County, AR Document #7024842
Book 0023, Page 0031
Recorded 8/23/00
Clark County, KS Book 90, Page 313
Recorded 8/28/00
Ellis County, KS Book 491, Page 955
Recorded 8/28/00
Finney County, KS Document #5129
Book 234, Page 291
Recorded 8/28/00
Grant County, KS Book 204, Page 558
Recorded 9/8/00
Hamilton County, KS Book 105, Page 86
Recorded 8/31/00
Haskell County, KS Volume 152, Page 721
Recorded 8/28/00
Kearny County, KS Book 172, Page 381
Recorded 8/28/00
Kingman County, KS Book 217, Page 203
Recorded 8/30/00
Morton County, KS Book 111, Page 304
Recorded 8/31/00
Ness County, KS Book 267, Page 584
Recorded 8/29/00
Seward County, KS Volume 519, Page 195
Recorded 8/28/00
Sheridan County, KS Volume 243, Page 503
Recorded 8/28/00
Stanton County, KS Book 62, Page 119
Recorded 8/29/00
Stevens County, KS Document #9548
Book 144, Page 50
Recorded 9/1/00
Richland County, MT Document #502808
Book B165, Page 168
Recorded 8/24/00
Sheridan County, MT Document #454373
Film 596, EXP 1756
Recorded 8/24/00
</Table>
-1-
274
<Table>
<Caption>
RECORDING JURISDICTION RECORDING DATA
- ---------------------- --------------
Eddy County, NM Reception #0008330
Book 391, Page 361
Recorded 8/23/00
Lea County, NM Document #62905
Book 1034, Page 325
Recorded 8/23/00
San Juan County, NM Document #200012230
Book 1307, Page 429
Recorded 8/23/00
Billings County, ND Document #115814
Book 89, Page 353
Recorded 8/29/00
Divide County, ND Document #221006
Book 237, Page 619
Recorded 8/25/00
Dunn County, ND Document #3004027
Recorded 8/25/00
McKenzie County, ND Document #337599
Recorded 8/24/00
Alfalfa County, OK Document #20886
Book 550, Page 264
Recorded 8/28/00
Atoka County, OK Document #2200
Book 604, Page 587
Recorded 8/31/00
Beaver County, OK Document #2000-2404
Book 1047, Page 0387
Recorded 8/28/00
Beckham, OK Document #07526
Book 1659, Page 540
Recorded 8/28/00
Blaine County, OK Document #003020
Book 811, Page 73
Recorded 8/30/00
Caddo County, OK Document 006421
Book 2303, Page 146
Recorded 8/30/00
Canadian County, OK Document #2000017989
Book 2368, Page 751
Recorded 8/30/00
Carter County, OK Document #008605
Book 3562, Page 52
Recorded 8/28/00
Custer County, OK Document #5142
Book 1110, Page 541
Recorded 8/28/00
Dewey County, OK Document #002593
Book 1136, Page 601
Recorded 8/29/00
</Table>
-2-
275
<Table>
<Caption>
RECORDING JURISDICTION RECORDING DATA
- ---------------------- --------------
Ellis County, OK Document #2492
Book 644, Page 821
Recorded 8/31/00
Garfield County, OK Document #009913
Book 1503, Page 92
Recorded 8/29/00
Garvin County, OK Document #05462
Book 1575, Page 727
Recorded 8/28/00
Grady County, OK Document #11302
Book 3220, Page 184
Recorded 8/28/00
Harper County, OK Book 0558, Page 247
Recorded 9/1/00
Kingfisher County, OK Document #3524
Book 1717, Page 85
Recorded 8/28/00
Latimer County, OK Document #002935
Book 561, Page 559
Recorded 9/6/00
LeFlore County, OK Document #8835
Book 1331, Page 121
Recorded 8/31/00
Major County, OK Document #61132
Book, 1515, Page 123
Recorded 8/30/00
McClain County, OK Document #6009
Book 1554, Page 444
Recorded 8/28/00
Noble County, OK Document #2000-60330
Book 545, Page 1-70
Recorded 9/8/00
Pittsburg County, OK Document #0535 13
Book, 001070, Page 001
Recorded 8/30/00
Pontotoc County, OK Document #005085
Book 1574, Page 135
Recorded 8/29/00
Pottawatomie County, OK Reception #2000-11938
Book ____, Page 1-54
Recorded 8/30/00
Roger Mills County, OK Document #2000-9481
Volume 1622, Page 64
Recorded 8/28/00
Stephens County, OK Document #66-1034
Book 2430, Page 69
Recorded 8/29/00
</Table>
-3-
276
<Table>
<Caption>
RECORDING JURISDICTION RECORDING DATA
- ---------------------- --------------
Texas County, OK Reception #2000 653075
Book 1017, Page 445
Recorded 8/28/00
Washita County, OK Document #4270
Book 910, Page 733
Recorded 8/30/00
Woods County, OK Document #2273-3
Book 899, Page 31
Recorded 8/30/00
Woodward County, OK Document #1123
Book 1731, Page 112
Recorded 9/1/00
Brazos County, TX Document #0724248
Volume 3910, Page 79
Recorded 8/23/00
Carson County, TX Document #0001760
Volume 307, Page 479
Recorded 8/23/00
Foard County, TX Instrument #61958
Volume 215, Page 932
Recorded 8/23/00
Glasscock County, TX Instrument #2874
Volume 48, Page 588
Recorded 8/23/00
Gray County, TX Document #148909
Volume 763, Page 1
Recorded 8/25/00
Hardeman County, TX Document #000529
Volume 384, Page 529
Recorded 8/30/00
Hemphill County, TX Document #031447
Volume 530, Page 000472
Recorded 8/23/00
Hutchinson County, TX Document #0298447
Volume 1013, Page 19
Recorded 8/23/00
Irion County, TX Document #019521
Volume 137, Page 660
Recorded 8/24/00
Moore County, TX Document #138034
Volume 527, Page 111
Recorded 8/23/00
Reagan County, TX Document #91640
Volume 15, Page 43
Recorded 8/23/00
Sherman County, TX Document #010378
Volume 234, Page 814
Recorded 8/23/00
</Table>
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277
2. First Amendment to Deed of Trust, Mortgage, Line of Credit Mortgage,
Assignment, Security Agreement, Fixture Filing and Financing Statement executed
effective December 20, 2000, amending the original mortgage dated August 18,
2000.
<Table>
<Caption>
RECORDING JURISDICTION RECORDING DATA
- ---------------------- --------------
Sebastian County, AR Document number 7033089
Book 0029, Page 0125
Recorded 12/29/00
Clark County, KS Book 91, Page 81
Recorded 1/9/0 1
Ellis County, KS Book 497, Page 724
Recorded 12/28/00
Finney County, KS Document 7639
Book 236, Page 219
Recorded 12/28/00
Grant County, KS Document M-00344, mortgage fees
Book 206, Page 234
Recorded 12/29/00
Hamilton County, KS Document number 1165
Book 106, Page 47
Recorded 12/29/00
Haskell County, KS Vol. 153, Page 778
Recorded 1/2/01
Kearny County, KS Book 174, Page 439
Recorded 12/28/00
Kingman County, KS Book 219, Page 51
Recorded 12/28/00
Morton County, KS Book 112, Page 512,
Recorded 12/28/00
Ness County, KS Book 269, Page 7
Recorded 12/28/00
Seward County, KS Volume 522, Page 490
Recorded December 28, 2000
Sheridan County, KS Vol. 244, Page 270,
Recorded 12/28/00
Stanton County, KS Book 63, Page 23
Recorded 1/10/00
Stevens County, KS Book 195, Page 431
Recorded 12/26/00
Richland County, MT Document number 504220
Book 166, Page 364
Recorded 12/28/00
Sheridan County, MT Document number 454991,
Film 597, Exp. 1619
Recorded 12/26/00
</Table>
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<Table>
<Caption>
RECORDING JURISDICTION RECORDING DATA
- ---------------------- --------------
Eddy County, NM Reception number 0012668
Book 401, Page 0617
Recorded 12/27/00
Lea County, NM Document 68122
Book 1054, Page 398
Recorded 12/29/00
San Juan County, NM Document number 200018815
Book 1314, Page 320
Recorded 12/27/00
Billings County, ND Book 89, Page 603
Recorded 12/29/00
Divide County, ND Document number 221366
Book 213M, Page 288
Recorded 1/9/01
Dunn County, ND Document #3004610
Recorded 12/26/00
McKenzie County, ND Document number 338282
Recorded 12/26/00
Alfalfa County, OK Document 21629
Book 552, Page 354
Recorded 12/28/00
Atoka County, OK Book 608, Page 0288
Recorded 1/2/01
Beaver County, OK Document 2000-3700
Book 1053, Page 0393
Recorded 12/28/00
Beckham, OK Document number 11034,
Book 1676, Page 130
Recorded 12/29/00
Blaine County, OK Document number 004501
Book 817, Page 663
Recorded 12/28/00
Caddo County, OK Document number 2000 9436
Book 2322, Page 97
Recorded 12/29/00
Canadian County, OK Document #2000026267
Book 2396, Page 24
Recorded 12/29/00
Carter County, OK Document number 012789
Book 3601, Page 250
Recorded 12/26/00
Custer County, OK Document 7575
Book 1120, Page 537
Recorded 12/28/00
Dewey County, OK Document number 003866
Book 1143, Page 126
Recorded 12/29/00
</Table>
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<Table>
<Caption>
RECORDING JURISDICTION RECORDING DATA
- ---------------------- --------------
Ellis County, OK File Number 3464
Book 648, Page 643
Recorded 12/28/00
Garfield County, OK Document 014315
Book 1516, Page 117
Recorded 12/28/00
Garvin County, OK Document 00138
Book 1586, Page 471
Recorded 1/9/01
Grady County, OK Document number 16553
Book 3249, Page 1
Recorded 12/27/00
Harper County, OK Book 0560, Page 706
Recorded 12/28/00
Kingfisher County, OK Document number 5183
Book 1733, Page 263
Recorded 12/26/00
Latimer County, OK Document number 004438
Book 0567, Page 0009
Recorded 12/28/00
LeFlore County, OK Document number 99
Book 1345, Page 419
Recorded 1/3/01
Major County. OK Document number 62354
Book 1524, Page 232
Recorded 12/28/00
McClain County, OK Document number 9069
Book 1564, Page 445
Recorded 12/27/00
Noble County, OK Document 2000-6 1448
Book 0548, Page 516
Recorded 12/28/00
Pittsburg County, OK Document number 058498
Book 001089, Page 034
Recorded 1/4/00
Pontotoc County, OK Book 1582, Page 528
Recorded 1/5/0 1
Pottawatomie County, OK Reception number 2000-17532
Recorded 12/28/00
Roger Mills County, OK Document #2000-11139
Volume 1631, Page 71
Recorded 12/28/00
Stephens County, OK Document number 66-5976
Book 2475, Page 1
Recorded 12/28/00
Texas County, OK Reception number 2000 654679
Book 1023, Page 184
Recorded 12/28/00
</Table>
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<Table>
<Caption>
RECORDING JURISDICTION RECORDING DATA
- ---------------------- --------------
Washita County, OK Document number 6108
Book 915, Page 875
Recorded 12/29/00
Woods County, OK Document number 3423-3
Book 905, Page 474,
Recorded 12/27/00
Woodward County, OK Document number 3147
Book 1747, Page 138
Recorded 12/27/00
Brazos County, TX Document number 0733064
Vol. 04014, Page 00025
Recorded 12/27/00
Carson County, TX Document #0002351
Volume 310, Page 219
Recorded 12/28/00
Foard County, TX Instrument #62206
Volume 217, Page 249
Recorded 12/28/00
Glasscock County, TX Instrument number 3373
Recorded 12/27/00
Gray County, TX Document 150022
Volume 766, Page 788
Recorded 12/28/00
Hardeman County, TX Document number 37905
Vol. 386, Page 849
Recorded 12/28/00
Hemphill County, TX Document number 032085
Volume 533, Page 000625
Recorded 12/28/00
Hutchinson County, TX Document number 0299924
Volume 1029, Page 322
Recorded 12/29/00
Irion County, TX Document number 019778
Volume 139, Page 164
Recorded 12/29/00
Moore County, TX Document number 139079
Vol. 531,Page 263
Recorded 1/3/01
Reagan County, TX Instrument number 92129
Volume 20, Page 72
Recorded 12/27/00
Sherman County, TX Document 010899
Volume 236, Page 904
Recorded 12/29/00
</Table>
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3. Second Supplement and Amendment to Deed of Trust, Mortgage, Line of
Credit Mortgage, Assignment Security Agreement, Fixture Filing and
Financing Statement from Chesapeake Exploration Limited Partnership to
Carl Stutzman, Trustee and Union Bank of California, N.A., Agent
dated May 3, 2001, amending the First Amendment executed effective
December 20, 2000, and amending the original mortgage dated August 18,
2000.
<Table>
<Caption>
RECORDING JURISDICTION RECORDING DATA
- ---------------------- --------------
Sebastian County, AR Document # 7042868
Book 014, Page 037
Recorded 5-14-01
Clark County, KS Book 91, Page 221
Recorded 5-17-01
Ellis County, KS Book 505, Page 880
Recorded 5-14-01
Finney County, KS Document #3470
Vol. 238, Page 927
Recorded 5-01
Grant County, KS Book 208, Page 163
Recorded 5-21-01
Hamilton County, KS Document # 655
Book 107, Page 27
Recorded 5-17-01
Haskell County, KS Vol. 155, Page 551
Recorded 5-17-01
Affidavit - Vol. 155, Page 577
Recorded 5-17-01
Kearny County, KS Book 177, Page 169
Recorded 5-29-01
Kingman County, KS Book 221, Page 84
Recorded 5-30-01
Morton County, KS Book 115, Page 031
Recorded 5-17-01
Ness County, KS Book 270, Page 651
Recorded 5-17-01
Seward County, KS Document # 1417
Book 526, Page 856
Recorded 5-17-01
Sheridan County, KS Vol. 245, Page 241
Recorded 5-25-01
Stanton County, KS Book 63, Page 59
Recorded 5-17-01
Stevens County. KS Book 197, Page 449
Recorded 5-15-01
</Table>
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<Table>
Richland County, MT Document # 506042
Book 167, Page 842
Recorded 5-14-01
Sheridan County, MT Document # 455944
Book 599, Page 225
Recorded 5-14-01
Eddy County, NM Document #0105014
Book 415, Page 0226
Recorded 5-14-01
Lea County, NM Document # 05947
Book 1078, Page 00468
Recorded 5-14-01
San Juan County, NM Document # 200107686
Book 1321, Page 1209
Recorded 5-14-01
Billings County, ND Document # 116765
Book 90, Page 245
Recorded 5-14-01
Divide County, ND Document # 221817
Book 214M, Page 164
Recorded 5-17-01
Dunn County, ND Document # 3005524
Book 131, Page 158
Recorded 5-18-01
McKenzie County, ND Document # 339522
Recorded 5-14-01
Alfalfa County, OK Document # 22368
Book 554, Page 468
Recorded 5-14-01
Atoka County, OK Document # 1509
Book 613, Page 116
Recorded 5-15-01
Beaver County, OK Document # 2001-1741
Book 1061, Page 363
Recorded 5-14-01
Beckham County, OK Document # 03568
Book 1693, Page 052
Recorded 5-14-01
Blaine County, OK Document # 1710
Book 824, Page 705
Recorded 5-14-01
Caddo County, OK Document # 004047
Book 2344, Page 383
Recorded 5-17-01
</Table>
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<Table>
Canadian County, OK Document # 2001009935
Book 2435, Page 469
Recorded 5-14-01
Carter County, OK Document # 004636
Book 3648, Page 17
Recorded 5-14-01
Custer County, OK Document # 2748
Book 1132, Page 185
Recorded 5-14-01
Dewey County, OK Document #001346
Book 1151, Page 22
Recorded 5-15-01
Ellis County, OK Document # 4842
Book 653, Page 620
Recorded 5-14-01
Garfield County, OK Document # 005059
Book 1533, Page 321
Recorded 5-15-01
Garvin County, OK Document # 03088
Book 1596, Page 665
Recorded 5-14-01
Grady County, OK Document # 6220
Book 3282, Page 7
Recorded 5-14-01
Harper County, OK Document # LW-1910
Book 564, Page 573
Recorded 5-14-01
Kingfisher County, OK Document # 1931
Book 1753, Page 201
Recorded 5-14-01
Latimer County, OK Document # 002049
Book 0575, Page 0481
Recorded 5-14-01
LeFlore County, OK Document # 5238
Book 1361, Page 1
Recorded 5-14-01
Major County, OK Document # 63761
Book 1533, Page 161
Recorded 5-14-01
McClain County, OK Document # 3738
Book 1577, Page 527
Recorded 5-14-01
</Table>
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<Table>
McIntosh County, OK Document # 116777
Book 582, Page 168
Recorded 5-17-01
Noble County, OK Document # 2001-1384
Book 553, Page 428
Recorded 5-14-01
Pittsburg County, OK Document # 063790
Book 001107, Page 498
Recorded 5-15-01
Pontotoc County, OK Document # 2957
Book 1593, Page 183
Recorded 5-17-01
Pottawatomie County, OK Document # 2001 6458
Page 1
Recorded 5-14-01
Roger Mills County, OK Document # 2001 - 2433
Book 1644, Page 194
Recorded 5-29-01
Stephens County, OK
Texas County, OK Document # 2001 656558
Book 1029, Page 709
Recorded 5-14-01
Washita County, OK Document # 2358
Book 922, Page 549
Recorded 5-14-01
Woods County, OK Document # 1550
Book 914, Page 189
Recorded 5-15-01
Woodward County, OK Document # 5912
Book 1771, Page 82
Recorded 5-14-01
Brazos County, TX Document 744146
Volume 4161, Page 40
Recorded 5-24-01
Carson County, TX Document # 0000593
Vol. 313, Page 265
Recorded 5-14-01
Foard County, TX Document # 62422
Volume 218, Page 241
Recorded 5-14-01
Glasscock County, TX Document # 3893
Volume 54, Page 730
Recorded 5-15-01
</Table>
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<Table>
Gray County, TX Document # 151295
Vol. 771, Page 376
Recorded 5-14-01
Hardeman County, TX Vol. 389, Page 807
Recorded 5-30-01
Document # 032701
Hemphill County, TX Vol. 536, Page 271
Recorded 5-14-01
Document # 0301484
Hutchinson County, TX Book 1049, Page 287
Recorded 5-14-01
Document # 020102
Irion County, TX Vol. 140, Page 736
Recorded 5-16-01
Vol. 537, Page 001
Moore County, TX Recorded 5-25-01
Document # 92634
Volume 24, Page 434
Reagan County, TX Recorded 5-14-01
Document # 011411
Vol. 238, Page 768
Sherman County, TX Recorded 5-17-01
Document # 214309
Vol. 411, Page 618
Wharton County, TX Recorded 5-14-01
</Table>
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286
Exhibits
Exhibit A - the new properties
Schedule I - NRI-WI for wells
Attachment I - Exhibit A's for old mortgage for tract index states KS, OK, & ND
(original restated mortgage 8/18/2000, second supplement 5/3/2001)
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287
ANNEX II
FOR NORTH DAKOTA PURPOSES: The interest rate is to be determined in accordance
with the terms of the Credit Agreement. The statement of the interest below is
illustrative and for purposes of North Dakota law to permit the recording
hereof, and shall not be binding on the parties. The following contains a
statement of the interest with respect to the revolving credit loans made
pursuant to the Credit Agreement which is adequate for North Dakota recording
purposes:
1.1 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall
bear interest for each day during each Interest Period with respect thereto at a
rate per annum equal to the Eurodollar Rate determined for such day plus the
Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate per annum
equal to the Base Rate plus the Applicable Margin.
(c) (i) If all or a portion of the principal amount of any
Revolving Loan or Reimbursement Obligation shall not be paid when due (whether
at the stated maturity, by acceleration or otherwise), such overdue amount shall
bear interest at a rate per annum equal to (x) in the case of the Revolving
Loans, the rate that would otherwise be applicable thereto pursuant to the
foregoing provisions of this Section plus 2% or (y) in the case of Reimbursement
Obligations, the rate applicable to Base Rate Loans plus 2%, and (ii) if all or
a portion of any interest payable on any Revolving Loan or Reimbursement
Obligation or any commitment fee or other amount payable hereunder shall not be
paid when due (whether at the stated maturity, by acceleration or otherwise),
such overdue amount shall bear interest at a rate per annum equal to the rate
then applicable to Base Rate Loans plus 2%, in each case, with respect to
clauses (i) and (ii) above, from the date of such non-payment until such amount
is paid in full (as well after as before judgment).
(d) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (c) of this Section
shall be payable from time to time on demand.
1.2 Computation of Interest and Fees. (a) Interest and fees payable
pursuant hereto shall be calculated on the basis of a 360-day year for the
actual days elapsed, except that, with respect to Base Rate Loans the rate of
interest on which is calculated on the basis of the Reference Rate, the interest
thereon shall be calculated on the basis of a 365- (or 366-, as the case may be)
day year for the actual days elapsed. The Administrative Agent shall as soon as
practicable notify the Borrower and the Lenders of each determination of a
Eurodollar Rate. Any change in the interest rate on a Revolving Loan resulting
from a change in the Base Rate or the Eurocurrency Reserve Requirements shall
become effective as of the opening of business on the day on which such change
becomes effective. The Administrative Agent shall as soon as practicable notify
the Borrower and the Lenders of the effective date and the amount of each such
change in interest rate.
Definitions
"Applicable Margin": for each Type of Revolving Loan, the rate
per annum set forth under the relevant column heading below:
Base Rate Loans Eurodollar Loans
1.25% 2.25%
; provided, that, on and after the first adjustment date occurring after the
date which is six months after the Closing Date, the Applicable Margin with
respect to each Type of Revolving Loan will be determined pursuant to the
Pricing Grid.
"Base Rate": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greater of (a) the Reference
Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on
such day plus 0.50%. For purposes hereof: "Reference Rate" shall mean the rate
of interest per annum publicly announced from time to time by Union Bank of
California as its "reference rate" (the Reference Rate not being intended to be
the lowest rate of interest charged by Union Bank of California in connection
with extensions of credit to
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288
debtors). Any change in the Base Rate due to a change in the Reference Rate or
the Federal Funds Effective Rate shall be effective as of the opening of
business on the effective day of such change in the Reference Rate or the
Federal Funds Effective Rate, respectively.
"Base Rate Loans": Revolving Loans the rate of interest applicable to
which is based upon the Base Rate.
"Board": the Board of Governors of the Federal Reserve System of the
United States (or any successor).
"Borrowing Base": at any time, the amount of the "Borrowing Base" as
determined in accordance with Section 2.13 (which initially shall be
$225,000,000 except as redetermined and adjusted pursuant to the Credit
Agreement.
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City or Los Angeles, California are
authorized or required by law to close, provided, that with respect to notices
and determinations in connection with, and payments of principal and interest
on, Eurodollar Loans, such day is also a day for trading by and between banks in
Dollar deposits in the interbank eurodollar market.
"Closing Date": the date on which the conditions precedent set forth in
Section 5.1 of the Credit Agreement shall have been satisfied, which date is
June 8, 2001.
"Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal fraction) of reserve requirements in effect on such day
(including basic, supplemental, marginal and emergency reserves under any
regulations of the Board or other Governmental Authority having jurisdiction
with respect thereto) dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board) maintained by a member bank of the Federal Reserve
System.
"Eurodollar Base Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate per annum determined on the
basis of the rate for deposits in Dollars for a period equal to such Interest
Period commencing on the first day of such Interest Period appearing on Page
3750 of the Dow Jones Markets screen as of 9:00 A.M., London time, two Business
Days prior to the beginning of such Interest Period. In the event that such rate
does not appear on Page 3750 of the Dow Jones Markets screen (or otherwise on
such screen), the "Eurodollar Base Rate" shall be determined by reference to
such other comparable publicly available service for displaying eurodollar rates
as may be selected by the Administrative Agent or, in the absence of such
availability, by reference to the rate at which the Administrative Agent is
offered Dollar deposits at or about 9:00 A.M., New York City time, two Business
Days prior to the beginning of such Interest Period in the interbank eurodollar
market where its eurodollar and foreign currency and exchange operations are
then being conducted for delivery on the first day of such Interest Period for
the number of days comprised therein.
"Eurodollar Loans": Revolving Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest Period
pertaining to a Eurodollar Loan, a rate per annum determined by the
Administrative Agent for such day in accordance with the following formula
(rounded upward to the nearest 1/100th of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Federal Funds Effective Rate": for any day, the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for the day of such transactions received by the Administrative Agent
from three federal funds brokers of recognized standing selected by it.
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289
"Governmental Authority": any nation or government, any state or
other political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization (including the National Association of Insurance Commissioners).
"Interest Payment Date": (a) as to any Base Rate Loan, the last day of
each March, June, September and December to occur while such Base Rate Loan is
outstanding and the final maturity date of such Base Rate Loan, (b) as to any
Eurodollar Loan having an Interest Period of three months or less, the last day
of such Interest Period, (c) as to any Eurodollar Loan having an Interest Period
longer than three months, each day that is three months, or a whole multiple
thereof, after the first day of such Interest Period and the last day of such
Interest Period and (d) as to any Eurodollar Loan, the date of any repayment or
prepayment made in respect thereof.
"Interest Period": as to any Eurodollar Loan, (a) initially, the period
commencing on the borrowing or conversion date, as the case may be, with
respect to such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Borrower in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto; and (b) thereafter,
each period commencing on the last day of the next preceding Interest Period
applicable to such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Borrower by irrevocable notice to the
Administrative Agent no later than 8:00 A.M., Los Angeles, California time,
three Business Days prior to the last day of the then current Interest Period
with respect thereto; provided that, all of the foregoing provisions relating to
Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day that
is not a Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless the result of such extension would
be to carry such Interest Period into another calendar month in which
event such Interest Period shall end on the immediately preceding
Business Day;
(ii) the Borrower may not select an Interest Period that would
extend beyond the Revolving Termination Date;
(iii) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month; and
(iv) the Borrower shall select Interest Periods so as not to
require a payment or prepayment of any Eurodollar Loan during an
Interest Period for such Eurodollar Loan.
"Revolving Commitments": (a) Subject to the terms and conditions of the
Credit Agreement, each Lender shall make revolving credit loans ("Revolving
Loans") to the Borrower from time to time during the Revolving Commitment Period
in an aggregate principal amount at any one time outstanding which, subject to
various limitations, does not exceed such Lender's Revolving Commitment. The
amount of the Total Revolving Commitments as of the Closing Date is
$225,000,000;
"Revolving Termination Date": September 30, 2003, as extended pursuant
to Section 2.1 of the Credit Agreement.
"Revolving Commitment Period": the period from and including the
Closing Date to the Revolving Termination Date.
"Type": as to any Revolving Loan, its nature as a Base Rate Loan or a
Eurodollar Loan.
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290
EXHIBIT E
FORM OF
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Second Amended and Restated Credit
Agreement, dated as of June ___, 2001 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among Chesapeake
Exploration Limited Partnership, an Oklahoma limited partnership (the
"Borrower"), Chesapeake Energy Corporation, an Oklahoma corporation (the
"Company"), Bear Stearns Corporate Lending Inc., as syndication agent (in such
capacity, the "Syndication Agent"), Union Bank of California, N.A., as
administrative agent and collateral agent (in such capacity, the "Administrative
Agent"), the several banks and other financial institutions or entities from
time to time parties to this Agreement (the "Lenders") and Bear, Stearns & Co.
Inc., as sole lead arranger and sole bookrunner (in such capacity, the "Lead
Arranger"). Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the Credit
Agreement.
The Assignor identified on Schedule l hereto (the "Assignor")
and the Assignee identified on Schedule l hereto (the "Assignee") agree as
follows:
1. The Assignor hereby irrevocably sells and assigns to the
Assignee without recourse to the Assignor, and the Assignee hereby irrevocably
purchases and assumes from the Assignor without recourse to the Assignor, as of
the Effective Date (as defined below), the interest described in Schedule 1
hereto (the "Assigned Interest") in and to the Assignor's rights and obligations
under the Credit Agreement with respect to those credit facilities contained in
the Credit Agreement as are set forth on Schedule 1 hereto (individually, an
"Assigned Facility"; collectively, the "Assigned Facilities"), in a principal
amount for each Assigned Facility as set forth on Schedule 1 hereto.
2. The Assignor (a) makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or with
respect to the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Credit Agreement, any other Loan Document or any
other instrument or document furnished pursuant thereto, other than that the
Assignor has not created any adverse claim upon the interest being assigned by
it hereunder and that such interest is free and clear of any such adverse claim
and (b) makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Borrower, any of its Affiliates or any
other obligor or the performance or observance by the Borrower, any of its
Affiliates or any other obligor of any of their respective obligations under the
Credit Agreement or any other Loan Document or any other instrument or document
furnished pursuant hereto or thereto.
3. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (b) confirms that it
has received a copy of the Credit Agreement, together with copies of the
financial statements delivered pursuant to Sections 4.1 and 6.1 thereof and such
other documents and information as it has deemed appropriate to make
291
2
its own credit analysis and decision to enter into this Assignment and
Acceptance; (c) agrees that it will, independently and without reliance upon the
Assignor, the Agents or any Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Credit Agreement, the other
Loan Documents or any other instrument or document furnished pursuant hereto or
thereto; (d) appoints and authorizes the Agents to take such action as agent on
its behalf and to exercise such powers and discretion under the Credit
Agreement, the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto as are delegated to the Agents by the terms
thereof, together with such powers as are incidental thereto; and (e) agrees
that it will be bound by the provisions of the Credit Agreement and will perform
in accordance with its terms all the obligations which by the terms of the
Credit Agreement are required to be performed by it as a Lender including, if it
is organized under the laws of a jurisdiction outside the United States, its
obligation pursuant to Section 3.10(d) of the Credit Agreement.
4. The effective date of this Assignment and Acceptance shall
be the Effective Date of Assignment described in Schedule 1 hereto (the
"Effective Date"). Following the execution of this Assignment and Acceptance, it
will be delivered to the Administrative Agent for acceptance by it and recording
by the Administrative Agent pursuant to the Credit Agreement, effective as of
the Effective Date (which shall not, unless otherwise agreed to by the
Administrative Agent, be earlier than five Business Days after the date of such
acceptance and recording by the Administrative Agent).
5. Upon such acceptance and recording, from and after the
Effective Date, the Administrative Agent shall make all payments in respect of
the Assigned Interest (including payments of principal, interest, fees and other
amounts) to the Assignor for amounts which have accrued to the Effective Date
and to the Assignee for amounts which have accrued subsequent to the Effective
Date.
6. From and after the Effective Date, (a) the Assignee shall
be a party to the Credit Agreement and, to the extent provided in this
Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and under the other Loan Documents and shall be bound by the
provisions thereof and (b) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement.
7. This Assignment and Acceptance shall be governed by and
construed in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Acceptance to be executed as of the date first above written by
their respective duly authorized officers on Schedule 1 hereto.
292
Schedule 1
to Assignment and Acceptance with respect to
the Second Amended and Restated Credit Agreement,
dated as of June ___, 2001
Name of Assignor:
------------------------
Name of Assignee:
------------------------
Effective Date of Assignment:
------------------------
<Table>
<Caption>
Principal
Amount Assigned Revolving Percentage Assigned
--------------- -----------------------------
$ . %
--------- -------- ----------
</Table>
[Name of Assignee] [Name of Assignor]
By: By:
--------------------------- ---------------------------------
Title: Title:
Accepted for Recordation in the Register: Required Consents (if any):
UNION BANK OF CALIFORNIA, N.A., as CHESAPEAKE EXPLORATION LIMITED
Administrative Agent PARTNERSHIP
By: Chesapeake Operating, Inc., its
general partner
By: By:
--------------------------- ---------------------------------
Title: Title:
UNION BANK OF CALIFORNIA, N.A.,, as
Administrative Agent
By:
---------------------------------
Title:
293
EXHIBIT F
[COMMERCIAL LAW GROUP, P.C. LETTERHEAD]
June 11, 2001
Union Bank of California, N.A.
4200 Lincoln Plaza
500 North Akard
Dallas, Texas 75201
Bear Stearns Corporate Lending Inc.
245 Park Avenue
New York, New York 10167
Re: Chesapeake Exploration Limited Partnership;
$225,000,000 Senior Secured Revolving
Credit Facility: Our File No. 3518-2002
Gentlemen:
This opinion is being delivered to you pursuant to Section 5. 1(h)(i)
of the Second Amended and Restated Credit Agreement dated as of June ___, 2001
(the "Agreement"), among Chesapeake Exploration Limited Partnership (the
"Borrower"), Chesapeake Energy Corporation (the "Company"), Bear Stearns
Corporate Lending Inc., Union Bank of California, N.A., the several banks and
other financial institutions or entities from time to time parties to the
Agreement and Bear Steams & Co. Inc. Capitalized terms which are defined in the
Agreement and which are used but not defined herein will have the meanings given
them in the Agreement.
We have acted as special counsel for the Borrower, the Company,
Chesapeake Acquisition Corporation ("CAC"), Chesapeake Energy Louisiana
Corporation ("CELC"), Chesapeake Louisiana, L.P. ("CLLP"), Chesapeake Operating,
Inc. ("COI"), Chesapeake Panhandle Limited Partnership ("CPLP"), Chesapeake
Royalty Company ("CRC"), Chesapeake-Staghorn Acquisition L.P. ("CSALP"), Arkoma
Pittsburg Holding Corporation ("APHC"), Gothic Energy Corporation ("GEC"),
Gothic Production Corporation ("GPC"), Nomac Drilling Corporation ("NDC") and
The Ames Company, Inc. ("TACI") in connection with the transactions contemplated
by the Agreement. The entities identified in the preceding sentence are
hereinafter singly referred to as a "Group Member" and collectively referred to
as the "Group Members."
As such counsel we have assisted in the negotiation of the Agreement
and the other Loan Documents. We have examined executed counterparts (or, where
indicated, photostatic copies of executed counterparts) of the documents listed
in Schedule 1 attached hereto. The documents listed in Section I of Schedule 1
are hereinafter referred to as the "Principal Documents," the
294
Union Bank of California, N.A.
Bear Stearns Corporate Lending Inc.
June 11, 2001
Page 2
documents listed in Section II of Schedule 1 are hereinafter referred to as the
"Authority Documents" and the documents listed in Section III of Schedule 1 are
hereinafter referred to as the "Indentures." We have discussed the matters
addressed in this opinion with officers and representatives of the Group Members
to the extent we have deemed appropriate to enable us to render this opinion,
and we have received a certificate authorizing us to deliver this opinion which
is attached hereto as Exhibit A.
In preparing this opinion we have also examined original counterparts
or photostatic or certified copies of all other instruments, agreements,
certificates, records and other documents (whether of the Group Members, or
their officers, directors, shareholders and representatives, public officials or
other persons) which we have considered relevant to the opinions hereinafter
expressed. As to certain questions of fact material to such opinions we have,
where such facts were not otherwise verified or established, relied upon
certificates listed in Section II of Schedule 1 of officers of the Group
Members.
1. We have been informed of the facts surrounding the financing or have
assumed for purposes of this opinion, as follows:
1.1 Each Lender is duly formed and validly existing and is duly authorized
to enter into and perform the Principal Documents.
1.2 Except as otherwise expressly set forth in this opinion, there are no
requirements for consent, approval or authorization of the Principal
Documents required of any Lender by any party or by any governmental
authority and the Principal Documents have mutuality of binding effect
as between the Group Members and each Lender.
1.3 The genuineness of all signatures of parties other than the Group
Members to all documents or instruments, the authenticity of documents
or instruments submitted to us as originals, the conformity to the
original of all documents or instruments submitted to us as copies and
the authenticity of the originals of such copies.
2. Based solely upon our review of the foregoing items, upon the information
and assumptions set forth herein and such legal considerations as we deem
relevant, and subject to the qualifications and limitations hereinafter set
forth, we are of the opinion that:
2.1 The Company, CAC, CELC, COI, CRC, APHC, GEC, GPC, NDC and TACI are
each a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Oklahoma. The Borrower, CLLP,
CPLP and CSALP are each a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Oklahoma.
295
Union Bank of California, N.A.
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June 11, 2001
Page 3
2.2 Each of the Group Members has the power and authority to execute and
deliver each Principal Document to which it is a party, to perform its
obligations thereunder and to grant the security interests to be
granted by it pursuant to the Security Documents. Each Principal
Document has been duly authorized, executed and delivered by each of
the Group Members which is a party thereto. Each of the Group Members
is in good standing and duly authorized to do business in each state
where such qualifications is necessary.
2.3 Assuming that the transactions contemplated under the Principal
Documents bear a reasonable relation to the State of New York, the
parties agreement that New York law will govern the Principal
Documents is a valid and effective choice of law under Section 1-105
of Title 12A of the Oklahoma Statutes.
2.4 All of the outstanding shares of stock of CAC, CELC, COI, CRC and GEC,
respectively, are owned of record and beneficially by the Company. All
of the outstanding shares of stock of APHC are owned of record and
beneficially by the Borrower. All of the outstanding shares of stock
of NDC and TACI are owned of record and beneficially by COI. All of
the outstanding shares of stock of GPC are owned of record and
beneficially by GEC. COI is the sole general partner of the Borrower,
CLLP, CPLP and CSALP. All of the outstanding ownership interests of
the Borrower, CLLP, CPLP and CSALP are owned, directly or indirectly,
by the Company.
2.5 Subject to the filing requirements described in paragraph 2.6 hereof~
the Mortgages create, to secure the Obligations, a mortgage lien in
the Mortgaged Properties defined in the Agreement located in the State
of Oklahoma and a perfected security interest in the Collateral
defined in the Mortgages and proceeds of such Collateral with respect
to which a security interest can be created under the Uniform
Commercial Code of Oklahoma (the "Code") and perfected by the filing
of financing statements in the State of Oklahoma pursuant to the Code
(the "Oklahoma Financing Statements").
2.6 A fully executed counterpart of the Mortgages is required to be filed
and recorded in the appropriate real estate records of the offices of
the County Clerks of the Oklahoma counties in which properties
described in the Mortgages are located. Once the Mortgages are so
filed and recorded, no further or subsequent filing or refiling will
be necessary in the State of Oklahoma in order to continue the
existence or perfection of the lien and security interest referred to
in paragraph 2.5 hereof except that (a) in the event any indebtedness
secured by the Mortgages has not been paid before the expiration often
years from the date of the last maturing obligation secured by the
Mortgages, an extension agreement with respect to the Mortgages,
providing for the renewal or extension of such indebtedness, should be
entered into and filed and recorded in the same records of each office
in which
296
Union Bank of California, N.A.
Bear Stearns Corporate Lending Inc.
June 11, 2001
Page 4
the Mortgages have been filed prior to the expiration of such ten-year
period, (b) a continuation statement with respect to the Oklahoma
Financing Statements must be filed under the Code in the office where
such Oklahoma Financing Statements were filed within six months prior
to the expiration of five years from the date of such filing (or
otherwise within the time permitted by Section 9.403 of the Code), and
subsequent continuation statements must be filed within six months
prior to the end of each subsequent five-year period, and (c)
amendments or supplements to the Oklahoma Financing Statements or
additional financing statements may be required to be filed in the
event of a change in the name, identity or partnership structure of
the Borrower or in the event the Oklahoma Financing Statements
otherwise become inaccurate or incomplete.
2.7 The acceptance of the Mortgages by the Administrative Agent, its
possession and retention of its rights thereunder, and its
presentation of such instruments for filing and recording as described
in paragraph 2.6 hereof will not require the Administrative Agent to
pay or otherwise subject the Administrative Agent to any tax, fee or
other charge except the customary fee charged by each filing or
recording officer on a per-page or per-instrument basis. The
Administrative Agent is not required to qualify to do business in the
State of Oklahoma or to otherwise register or make any filing (other
than those described in paragraph 2.6 hereof) with any state or local
official in the State of Oklahoma as a result of its acceptance of
such instruments, its possession and retention of its rights
thereunder, or the filing or recording thereof.
2.8 The execution, delivery and performance by each of the Group Members
of the Principal Documents to which it is a party, the granting of the
security interests to be granted by it pursuant to the Security
Documents and the consummation of the transactions contemplated by and
incurrence of Indebtedness under the Principal Documents will not and
did not: (a) violate any provision of the articles of incorporation,
bylaws or limited partnership agreement of any of the Group Members;
or (b) breach or result in a default under or result in the maturing
of any indebtedness or result in the creation of any lien upon or
security interest in the Group Members' properties pursuant to the
Indentures or, to our knowledge, any indebtedness pursuant to any
mortgage, deed of trust, note or loan agreement, material license
agreement, or other material agreement or instrument known to us to
which any of the Group Members is a party or by which any of their
respective properties are bound; (c) require the Group Members to
execute and deliver a supplemental indenture pursuant to the terms of
any of the Indentures; or (d) result in a violation of any law, rule
or regulation or, to the best of our knowledge, any judgment, order,
decree, determination or award of any court or governmental authority
which is now in effect and applicable to any of the Group Members or
any of their respective properties. Without limiting the foregoing,
based upon (i) that certain Certificate of even date herewith executed
by the
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Bear Stearns Corporate Lending Inc.
June 11, 2001
Page 5
Treasurer of the Company attached hereto as Exhibit B and (ii) our
review of the Indentures, the Borrower may incur the maximum loan
amount available under the Agreement and such incurrence will not
violate the provisions of any of the Indentures.
2.9 Except for any which have been obtained or completed, to our
knowledge, no consent, approval, waiver, license, authorization or
action by or filing with any court or governmental authority, any
trustee under any of the Indentures, or any other third party is or
was required for the execution and delivery by any of the Group
Members of any of the Principal Documents to which it is a party or
the consummation of the transactions contemplated thereby or the
performance of the Group Members' respective obligations thereunder in
accordance with the terms of the Principal Documents.
2.10 To our knowledge there are no actions, suits, proceedings or
investigations before or by, pending or threatened in writing against,
or affecting any of the Group Members or the business, assets or
properties of any Group Member in, any court, governmental agency or
arbitrator: (a) seeking to affect the enforceability or performance by
any of the Group Members of any Principal Documents; or (b) which are
otherwise required to be disclosed under the Agreement, except for
those which have been disclosed.
2.11 None of the Group Members is an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended. None of the Group Members
is a public utility company within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
2.12 Assuming that each of the Principal Documents is a valid and binding
obligation of each of the Lenders enforceable in accordance with its
terms, each of the Principal Documents is a valid and binding
obligation of each of the Group Members which is a party thereto,
enforceable against each of the Group Members which is a party thereto
in accordance with its terms.
2.13 Assuming that the Borrower will comply with the provisions of the
Agreement relating to the use of proceeds, the execution and delivery
of the Agreement by the Borrower and the making of the Revolving Loans
thereunder will not violate Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System.
3. The foregoing opinions are subject to the following qualifications and
comments:
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Bear Stearns Corporate Lending Inc.
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Page 6
3.1 No opinion is expressed as to the enforceability of the Principal
Documents with respect to: (a) the availability of any equitable
remedy such as an injunction or specific performance, as the
availability of such remedy is in the discretion of the court; or (b)
whether a court would grant a particular remedy sought under a
Principal Document as opposed to another remedy sought under such
Principal Document at law or in equity, provided, however, except with
respect to state or federal bankruptcy laws, in our opinion, such
qualification will not materially interfere with the ultimate
realization of the benefits contemplated by the Principal Documents,
except for the economic consequence of any judicial, administrative or
procedural delay.
3.2 We express no opinion as to: (a) limitations imposed by the "due
process" clauses of the United States Constitution and/or the
Constitution of the State of Oklahoma; (b) enforceability of
provisions which purport to restrict access to legal or equitable
remedies or waive any rights to notices or which purport to establish
evidentiary standards; (c) enforceability of provisions relating to
subrogation rights or remedies, waivers or ratification of future
acts, powers of attorney, rights of third parties, indemnity,
severance, marshalling of assets, transferability of assets which by
their nature are not transferable, or sales in the inverse order of
alienation; or (d) limitations on enforceability imposed by (i) the
doctrine against clogging the equity of redemption, bankruptcy,
insolvency, moratorium, reorganization or similar laws of general
application affecting the enforcement of creditors' rights in general,
and (ii) general principles of equity. The enforceability of the
obligations under the Principal Documents may be further limited by
constitutional limitations, including those applicable to notice and
due process requirements and redemption rights of the United States
under the Federal Tax Lien Act of 1966, as amended. In addition, our
opinion as to enforceability is limited to the extent that
prohibitions on alienation, hypothecation or further encumbrances may
be determined by a court applying Oklahoma law to be an unreasonable
restraint on the incidents of ownership of the property.
3.3 Our opinion is limited to the application of the laws of the State of
Oklahoma and applicable federal law. In rendering the opinion
expressed in paragraph 2.12 hereof we have assumed that the laws of
the State of Oklahoma govern the validity, binding effect and
enforceability of the Principal Documents.
3.4 The qualification of any opinion or statement herein by the use of the
words "to our knowledge" or "known to us" means that during the course
of our representation as described in this opinion letter, no
information has come to the attention of the attorneys in this firm
involved in the transactions described which would give such attorneys
current actual knowledge of the existence of the facts so qualified.
Except as set forth herein, we have not undertaken any investigation
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Union Bank of California, N.A.
Bear Stearns Corporate Lending Inc.
June 11, 2001
Page 7
to determine the existence of such facts, and no inference as to our
knowledge thereof will be drawn from the fact of our representation of
any party or otherwise.
The opinions herein expressed are for the benefit of the Agents and
each of the Lenders party to the Agreement from time to time and may be relied
upon only by the Agents, the other Lenders, Simpson Thacher & Bartlett and
Thompson & Knight in connection with any opinion delivered to the Lenders. No
opinion is implied or may be inferred beyond the matters expressly stated
herein. This opinion is based upon the law in existence on the date of this
letter and we assume no responsibility or obligation to monitor any change in
any such law or to modify this opinion as a result thereof.
Very truly yours,
COMMERCIAL LAW GROUP, P.C.
CRL:hlo
cc: Mr. Marcus C. Rowland
Ms. Martha A. Burger
Ms. Jennifer M. Grigsby
300
EXHIBIT G
FORM OF EXEMPTION CERTIFICATE
Reference is made to the Second Amended and Restated Credit
Agreement, dated as of June ___, 2001 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among Chesapeake
Exploration Limited Partnership, an Oklahoma limited partnership (the
"Borrower"), Chesapeake Energy Corporation, an Oklahoma corporation (the
"Company"), Bear Stearns Corporate Lending Inc., as syndication agent (in such
capacity, the "Syndication Agent"), Union Bank of California, N.A., as
administrative agent and collateral agent (in such capacity, the "Administrative
Agent"), the several banks and other financial institutions or entities from
time to time parties to this Agreement (the "Lenders") and Bear, Stearns & Co.
Inc., as sole lead arranger and sole bookrunner (in such capacity, the "Lead
Arranger"). Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the Credit
Agreement. ________________________________________ (the "Non-U.S. Lender") is
providing this certificate pursuant to Section 3.10(d) of the Credit Agreement.
The Non-U.S. Lender hereby represents and warrants that:
1. The Non-U.S. Lender is the sole record and beneficial owner
of the Loans in respect of which it is providing this certificate.
2. The Non-U.S. Lender is not a "bank" for purposes of Section
881(c)(3)(A) of the Internal Revenue Code of 1986, as amended (the "Code"). In
this regard, the Non-U.S. Lender further represents and warrants that:
(a) the Non-U.S. Lender is not subject to regulatory or other
legal requirements as a bank in any jurisdiction; and
(b) the Non-U.S. Lender has not been treated as a bank for
purposes of any tax, securities law or other filing or submission made
to any Governmental Authority, any application made to a rating agency
or qualification for any exemption from tax, securities law or other
legal requirements.
3. The Non-U.S. Lender is not a 10-percent shareholder of the
Borrower within the meaning of Section 881(c)(3)(B) of the Code.
4. The Non-U.S. Lender is not a controlled foreign corporation
receiving interest from a related person within the meaning of Section
881(c)(3)(C) of the Code.
301
2
IN WITNESS WHEREOF, the undersigned has duly executed this
certificate on the __th day of ____________, 200_.
[NAME OF NON-U.S. LENDER]
By:
-----------------------------
Name:
Title:
302
EXHIBIT H
FORM OF
REVOLVING CREDIT NOTE
U.S.$_________ New York, New York
, 2001
FOR VALUE RECEIVED, the undersigned, CHESAPEAKE EXPLORATION
LIMITED PARTNERSHIP, an Oklahoma limited partnership (the "Borrower"), hereby
unconditionally promises to pay to the order of ________(the "Lender") at the
Funding Office specified in the Credit Agreement (as hereinafter defined), in
lawful money of the United States of America and in immediately available funds,
on the Revolving Termination Date (as defined in the Credit Agreement referred
to below) the principal amount of (a) ________U.S. DOLLARS (U.S.$_____), or, if
less, (b) the aggregate unpaid principal amount of all Revolving Loans of the
Lender to the Borrower outstanding under the Credit Agreement. The Borrower
further agrees to pay interest in like money at such office on the unpaid
principal amount hereof from time to time outstanding at the rates and on the
dates specified in Section 3.5 of such Credit Agreement.
The holder of this Note is authorized to record on the
schedules annexed hereto and made a part hereof or on a continuation thereof
which shall be attached hereto and made a part hereof the date, Type and amount
of each Revolving Loan of the Lender outstanding under the Credit Agreement and
the date and amount of each payment or prepayment of principal thereof, each
continuation thereof, each conversion of all or a portion thereof to another
Type and, in the case of Eurodollar Loans, the length of each Interest Period
and the applicable Eurodollar Rate with respect thereto. Each such recordation
shall constitute prima facie evidence of the accuracy of the information so
recorded, provided that the failure to make any such recordation or any error in
any such recordation shall not affect the obligations of the Borrower under the
Credit Agreement or this Note.
This Note (a) is one of the Notes referred to in the Second
Amended and Restated Credit Agreement, dated as of June ___, 2001 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
among Chesapeake Energy Corporation, Chesapeake Exploration Limited Partnership,
as Borrower, Bear Stearns Corporate Lending Inc., as Syndication Agent, Union
Bank of California, as Administrative Agent, the several lenders from time to
time parties thereto and Bear Stearns & Co. Inc., as Sole Lead Arranger and Sole
Bookrunner, (b) is subject to the provisions of the Credit Agreement and (c) is
subject to optional and mandatory prepayment in whole or in part as provided in
the Credit Agreement. This Note is guaranteed as provided in the Loan Documents.
Reference is hereby made to the Loan Documents for a description of the
properties and assets in which a security interest has been granted, the nature
and extent of the security and the guarantees, the terms and conditions upon
which the security interests and each guarantee were granted and the rights of
the holder of this Note in respect thereof.
303
Upon the occurrence of any one or more Events of Default
specified in the Credit Agreement, all amounts then remaining unpaid on this
Note shall become, or may be declared to be, immediately due and payable, all as
provided in the Credit Agreement.
All parties now and hereafter liable with respect to this
Note, whether maker, principal, surety, guarantor, endorser or otherwise, hereby
waive presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the Credit
Agreement.
304
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
CHESAPEAKE EXPLORATION
LIMITED PARTNERSHIP
By: Chesapeake Operating, Inc., its general
partner
-------------------------------------------
By:
Title:
305
Schedule A
to Revolving Credit Note
BASE RATE LOANS, CONVERSIONS AND REPAYMENTS OF BASE RATE LOANS
<Table>
<Caption>
Amount Amount of Base Rate Unpaid Principal
Amount of Converted to Amount of Principal of Loans Converted to Balance of Base Rate
Date Base Rate Loans Base Rate Loans Base Rate Loans Repaid Eurodollar Loans Loans Notation Made By
- ------- ---------------- --------------- ----------------------- ------------------- --------------------- ------------------
</Table>
306
Schedule B
to Revolving Credit Note
EURODOLLAR LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR LOANS
<Table>
<Caption>
Amount of Amount Interest Period and Amount of Principal Amount of Eurodollar Unpaid Principal
Eurodollar Converted to Eurodollar Rate with of Eurodollar Loans Loans Converted to Balance of Notation
Date Loans Eurodollar Loans Respect Thereto Repaid Base Rate Loans Eurodollar Loans Made By
- ------- ---------- ---------------- -------------------- ------------------- -------------------- ---------------- ---------
</Table>
307
EXHIBIT I
FORM OF
LENDER ADDENDUM
The undersigned Lender (i) consents to the amendment and
restatement of the Existing Credit Agreement pursuant to the Second Amended and
Restated Credit Agreement, dated as of June ___, 2001 (as amended, supplemented
or otherwise modified from time to time, the "Credit Agreement"), among
Chesapeake Exploration Limited Partnership, an Oklahoma limited partnership (the
"Borrower"), Chesapeake Energy Corporation, an Oklahoma corporation (the
"Company"), Bear Stearns Corporate Lending Inc., as syndication agent (in such
capacity, the "Syndication Agent"), Union Bank of California, N.A., as
administrative agent and collateral agent (in such capacity, the "Administrative
Agent"), the several banks and other financial institutions or entities from
time to time parties to this Agreement (the "Lenders") and Bear, Stearns & Co.
Inc., as sole lead arranger and sole bookrunner (in such capacity, the "Lead
Arranger") and agrees to all of the provisions thereof and (ii) becomes a party
thereto, as a Lender, with obligations applicable to such Lender thereunder,
including, without limitation, the obligation to make extensions of credit to
the Borrower in an aggregate principal amount not to exceed the amount of its
Revolving Commitment, as the case may be, as set forth opposite the undersigned
Lender's name in Schedule 1.1A to the Credit Agreement, as such amount may be
changed from time to time as provided in the Credit Agreement. Unless otherwise
defined herein, terms defined in the Credit Agreement and used herein shall have
the meanings given to them in the Credit Agreement.
-------------------------------
(Name of Lender)
By:
----------------------------
Name:
Title:
Dated as of June __, 2001 [Insert scheduled Closing Date]