EXHIBIT 10.28
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OPTION PURCHASE AGREEMENT
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THIS AGREEMENT is made this 28th day of February, 2000, between GOTHIC
ENERGY CORPORATION, an Oklahoma corporation ("GEC"), GOTHIC PRODUCTION COMPANY,
an Oklahoma corporation ("GPC" and, jointly and severally with GEC, the
"Buyer"), and CHESAPEAKE EXPLORATION LIMITED PARTNERSHIP, an Oklahoma limited
partnership, successor in interest by merger to Chesapeake Gothic Corp. (the
"Seller").
R E C I T A L S :
WHEREAS, the Seller owns (a) 61,007.474 shares of GEC's Senior Redeemable
Preferred Stock, Series B, $0.05 par value per share, (b) the right to receive
accrued and unpaid dividends on such Preferred Stock payable in kind, and (c)
2,394,125 shares of GEC's Common Stock, $0.01 par value per share (collectively,
the "GEC Securities");
WHEREAS, the Seller and one or more of the wholly owned subsidiaries of
Chesapeake Energy Corporation (collectively, the "CEC Parties"), and the Buyer
and the Buyer's affiliated entities (collectively, the "Gothic Parties") are
parties to that certain Sale and Participation Agreement dated as of March 31,
1998, as amended (the "Participation Agreement") pursuant to which: (a) the
Seller acquired an undivided fifty percent (50%) interest in certain oil, gas
and related assets from the Gothic Parties, (b) the CEC Parties and the Gothic
Parties provided for the maintenance, joint development and operation of the
Existing Acreage, the Related Interests and the Acquisition Acreage (as those
terms are defined in the Participation Agreement), and (c) an area of mutual
interest was created among the CEC Parties and the Gothic Parties covering lands
located in the States of Arkansas, Kansas, New Mexico (excluding the Pecos Slope
Acreage), Oklahoma and Texas;
WHEREAS, the Buyer desires to purchase an option to acquire all of the
Seller's GEC Securities (the "Option") pursuant to the Option Agreement in the
form at Schedule "A" attached as a part hereof (the "Option Agreement") which
the Seller is willing to sell to the Buyer in exchange for certain modifications
to the Participation Agreement and the performance of certain other agreements
and documents set forth herein, all subject to the terms and conditions set
forth in this Agreement;
WHEREAS, one or more of the Discount Noteholders (as hereinafter defined)
have made the execution and delivery of this Agreement and the Option a
condition precedent to the Discount Noteholders entering into agreements to
convert the debt held by such parties to equity of the Buyer.
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
1. Purchase and Sale. Subject to the terms and conditions set forth in this
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Agreement, the Seller hereby agrees to sell the Option and the Buyer hereby
agrees to purchase the Option and perform the Purchase Consideration.
2. Purchase Consideration. Upon satisfaction or waiver of the conditions
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precedent set forth in paragraph 3 hereof in accordance with the terms thereof,
and in consideration for the sale of the Option to the Buyer and as a condition
precedent to the effectiveness of such grant, the Buyer will cause the Gothic
Parties to take the following actions (the"Purchase Consideration") on the
Closing Date (as hereinafter defined):
2.1 Operations. The Gothic Parties will take all actions necessary to
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turn over to the CEC Parties operations on: (a) the ▇▇▇▇▇ identified
at Schedule "2.1" attached as a part hereof; and (b) all ▇▇▇▇▇ which
have been or are currently being developed under the Participation
Agreement and all other ▇▇▇▇▇ now or hereafter proposed which are
located in: (i) ▇▇▇▇▇ and ▇▇▇▇▇ Counties, Kansas, and (ii) Texas,
Beaver, Harper, Ellis, Woods, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, Major, ▇▇▇▇▇▇ (Township
19N only), Custer, Grady, Pittsburg, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ (except for
Sections 19-36 of Township 3N Range 20E) and LeFlore Counties,
Oklahoma, by permanently resigning as operator and waiving any rights
under the Participation Agreement to become operator of such ▇▇▇▇▇ in
the future. On
the Closing Date the Gothic Parties will execute and deliver
resignation of operator letters in form and substance satisfactory to
the Seller and will vote all of the Gothic Parties' interests in such
properties for the Chesapeake Parties as successor operator (the
"Operator Documents").
2.2 Extensions and Right of First Refusal. The Gothic Parties take all
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actions necessary to: (a) extend the term of the reassignment
obligation under paragraph 1.3 of the Participation Agreement until
April 30, 2006; (b) extend the Termination Date (as defined in
paragraph 14 of the Participation Agreement) until April 30, 2006, for
the portion of the Participation Area included in the States of
Arkansas, Kansas and Oklahoma and the portion of the State of Texas
located north of latitude 34 degrees N; (c) amend the default and
remedies provisions under paragraph 13 of the Participation Agreement;
and (d) grant the CEC Parties preferential purchase and related rights
with respect to sales of assets covered by the Participation
Agreement. In order to evidence such extension, the parties will
execute and deliver the Amendment Documents (as defined below)
simultaneously with the execution of this Agreement.
3. Conditions Precedent to Option Grant. Unless waived in writing by the
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Buyer and the Seller, the sale of the Option pursuant to this Agreement is
subject to the satisfaction of all of the following conditions precedent on or
before March 14, 2000 (the "Condition Satisfaction Period"), unless extended in
writing by the Seller:
3.1 Authorization. The terms of this Agreement and the Option will have
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been duly authorized by the respective Boards of Directors of the
Buyer and the Seller.
3.2 Consents. The Buyer and the Seller will have received required
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written consents to the terms and conditions of this Agreement from
the holders of the Buyer's 14 1/8% Senior Secured Discount Notes (the
"Discount Noteholders"), Bank One, Texas, N.A., and any other
necessary parties.
3.3 No Actions. No actions will have been taken or threatened to prevent
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any party from entering into of this Agreement, performing this
Agreement or seeking other relief as a result of this Agreement.
3.4 Discount Noteholders. The Discount Noteholders and the Gothic Parties
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will have executed and delivered the instruments necessary to evidence
the agreement of the Discount Noteholders to convert all of the notes
held by the Discount Noteholders into equity of the Buyer.
3.5 Additional Documents. The Gothic Parties and the CEC Parties will
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have each executed and delivered to the other parties such additional
documents and instruments as might be reasonably requested by the
Buyer or the Seller to consummate this Agreement.
3.6 JIB Payments. The Gothic Parties and the CEC Parties will have each
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paid current all joint interest ▇▇▇▇▇▇▇▇ owing to the parties as
required by the Joint Operating Agreements attached to the
Participation Agreement.
4. Closing. Unless extended in writing by the Seller, the transactions
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contemplated by this Agreement will be consummated on the date (the "Closing
Date") which is two (2) business days after the date all of the conditions under
paragraph 3 of this Agreement have been satisfied in full or waived in writing
by the Buyer and the Seller.
4.1 Seller's Deliveries. Subject to the terms and conditions of this
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Agreement and the performance of the Buyer's obligations under
paragraph 4.2 of this Agreement, on the Closing Date the Seller will
deliver or cause to be delivered to the Buyer the following items (all
documents will be duly executed and acknowledged where required):
4.1.1 Option. The Option and the Amendment Documents (as hereinafter
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defined);
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4.1.2 Evidence of Authority. Such resolutions, certificates of good
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standing, incumbency certificates and other evidence of
authority with respect to the Seller as might be reasonably
requested by the Buyer;
4.1.3 Additional Documents. Such additional documents as might be
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reasonably requested by Gothic to consummate this Agreement.
4.2 Buyer's Deliveries. On the Closing Date, the Buyer will deliver or
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cause to be delivered to the Seller the following items (all documents
will be duly executed and acknowledged where required):
4.2.1 Purchase Consideration. The Gothic Parties will have each
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executed and delivered to the Seller the Second Amendment to
Participation Agreement in the form of Schedule "4.2.1"
attached hereto as a part hereof and the other documents
contemplated thereby (the "Amendment Documents"), the Operator
Documents and any other documents required to evidence the
Purchase Consideration;
4.2.2 Evidence of Authority. Such corporate resolutions,
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certificates of good standing, incumbency certificates and
other evidence of authority with respect to each of the Gothic
Parties as might be reasonably requested by the Seller;
4.2.3 Additional Documents. Such additional documents as might be
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reasonably requested by the Seller to consummate this
Agreement.
5. Seller Representations and Warranties. The Seller hereby represents and
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warrants to the Buyer that:
5.1 Title. The Seller has good and valid title to the GEC Securities,
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free and clear of all liens, claims and encumbrances.
5.2 Authority and Reliance. The Seller has taken all necessary action to
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authorize the execution, delivery and performance of this Agreement,
the Amendment Documents, the Operator Documents and the Option
Agreement and has adequate power, authority and legal right to enter
into, execute, deliver and perform this Agreement and to issue the
Option as contemplated hereby.
5.3 Consents. No consent, approval, license, qualification or formal
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exemption from, nor any filing, declaration or registration with, any
court, governmental agency or regulatory authority or any securities
exchange is required in connection with the execution, delivery or
performance by the Seller of this Agreement.
5.4 Litigation. There is no action, suit, investigation or proceeding,
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governmental or otherwise, pending or, to the best knowledge of the
Seller, threatened to which any of the CEC Parties is or would be a
party which seeks to restrain, enjoin, prevent the consummation of or
otherwise challenge this Agreement or the Seller's granting of the
Option or questions the legality or validity of any such transactions
or seeks to recover damages or obtain other relief in connection with
any such transactions.
6. Buyer Representations and Warranties. The Buyer hereby represents and
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warrants to the Seller that:
6.1 Authority and Reliance. The Buyer has taken all necessary action to
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authorize the execution, delivery and performance of this Agreement,
the Amendment Documents, the Operator Documents and the Option
Agreement and has all requisite corporate power, authority and legal
right to enter into, execute, deliver and perform this Agreement, the
Amendment Documents, the Operator Documents and the Option Agreement.
The Buyer further represents and warrants that,
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in purchasing the Option, the Buyer has relied upon independent
investigations made by the Buyer or the Buyer's representatives, that
the Buyer has had sufficient opportunities to make inquiries of the
Seller and that the Buyer and such representatives have been given the
opportunity to examine all documents concerning the terms and
conditions of the Option. The Buyer represents and warrants that the
Buyer is experienced in the oil and gas business, has knowledge and
experience in business and financial matters and is competent to
evaluate the value of the Option and the benefits and risks relating
to the purchase of the Option and the Buyer has determined that the
consideration being given by the Buyer is the fair value equivalent of
the consideration being received by the Buyer for the granting of the
Option.
6.2 Consents. The Buyer has obtained and provided to the Seller all
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consents, approvals or waivers necessary or appropriate for the Buyer
to enter into this Agreement and to consummate the transactions
contemplated hereby. No other authorization, consent, approval,
license, qualification or formal exemption from, nor any filing,
declaration or registration with, any court, governmental agency or
regulatory authority or any securities exchange is required in
connection with the execution, delivery or performance by the Gothic
Parties of this Agreement.
6.3 Litigation. There is no action, suit, investigation or proceeding,
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governmental or otherwise, pending or, to the best knowledge of the
Buyer, threatened to which any of the Gothic Parties is or would be a
party which seeks to restrain, enjoin, prevent the consummation of or
otherwise challenge this Agreement or the Buyer's purchase of the
Option or questions the legality or validity of any such transactions
or seeks to recover damages or obtain other relief in connection with
any such transactions.
7. Default; Failure of Conditions. In the event either party fails to perform
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such party's obligations hereunder (except as excused by another party's
default) (the "Defaulting Party") such failure will constitute an event of
default under this Agreement and the other party (the "Other Party") will have
the right to exercise any and all remedies available at law or in equity unless
such default is waived by the Other Party or cured by the Defaulting Party
within five (5) business days after receipt of notice of such default. The
remedies provided by this Agreement are cumulative and will not exclude any
other remedy to which the Other Party might be entitled under this Agreement or
applicable law. In the event the Other Party elects to selectively and
successfully enforce the Other Party's rights under this Agreement, such action
will not be deemed a waiver or discharge of any other remedy. During the
pendency of any default or disputes, this Agreement will be deemed to be in full
force. Notwithstanding anything herein to the contrary, on the occurrence of a
default or other breach of this Agreement by the Buyer, the Seller may terminate
the Option and the Option Agreement in the sole and absolute discretion of the
Seller.
8. Standstill. Each of the parties irrevocably agree that the negotiation,
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preparation, execution and delivery of this Agreement and any preliminary
discussions with any person regarding this Agreement, the Option or any similar
transaction will not and did not violate any standstill, nonsolicitation or
similar agreement including, without implied limitation, paragraph 5.4 of the
Securities Purchase Agreement among the Buyer, Chesapeake Acquisition
Corporation and Chesapeake Gothic Corp. dated March 31, 1998 (the "Securities
Purchase Agreement"), and relating to the purchase of the GEC Securities by
affiliates of the Seller. The Buyer hereby releases, acquits and forever
discharges the CEC Parties and the CEC Parties' directors, officers,
shareholders, partners, members, employees, agents, attorneys, parent
corporations, subsidiary corporations, affiliates and such parties' respective
successors and assigns from any and all claims, whether asserted or assertable,
known or unknown, and all actions, debts, suits, causes of action, both at law
and in equity, demands, defenses, offsets, liabilities, losses, obligations or
damages directly or indirectly related to any violation or alleged violation of
the Securities Purchase Agreement arising out of any action, inaction, contact,
discussions or matter prior to the date of this Agreement including, without
implied limitation, any violation or alleged violation of any standstill or
confidentiality agreement set forth in the Securities Purchase Agreement or
otherwise.
9. Deferral of Operations Turnovers. Notwithstanding anything to the
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contrary in this Agreement or in the Participation Agreement, during the
Condition Satisfaction Period, the Seller will not be required to turnover
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operations on any ▇▇▇▇▇ located in the areas described in paragraph 2.1 of this
Agreement including, without limitation, the Della 1-9 well.
10. Miscellaneous. It is further agreed as follows:
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10.1 Time. Time is of the essence of this Agreement.
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10.2 Notices. Any notice, demand or communication required or permitted
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to be given by any provision of this Agreement will be in writing and
will be deemed to have been given and received when delivered
personally or by telefacsimile to the party designated to receive
such notice, or on the date following the day sent by overnight
courier, or on the third (3rd) business day after the same is sent by
certified mail, postage and charges prepaid, directed to the
following addresses or to such other or additional addresses as any
party might designate by written notice to the other parties:
To the Buyer: Gothic Energy Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone (▇▇▇) ▇▇▇-▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Pray, Walker, Jackman, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Telephone (▇▇▇) ▇▇▇-▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
To the Seller: Chesapeake Energy Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telephone (▇▇▇) ▇▇▇-▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Self, ▇▇▇▇▇▇▇ & Lees, Inc.
2725 Oklahoma Tower
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇
Telephone (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
10.3 Press Release. Except to the extent required by applicable
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disclosure requirements, all press releases relating to this
Agreement and the transactions contemplated by this Agreement will be
approved by the Buyer and the Seller prior to dissemination.
10.4 Choice of Law. This Agreement will be interpreted, construed and
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enforced in accordance with the laws of the State of Oklahoma and
will be deemed for such purposes to have been made, executed and
performed in Oklahoma County, Oklahoma. All claims, disputes and
other matters
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in question arising out of or relating to this Agreement will be
decided by proceedings instituted and litigated in the District Court
of Oklahoma County, Oklahoma, or the United States District Court for
the Western District of Oklahoma.
10.5 Headings. The paragraph headings contained in this Agreement are for
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reference purposes only and are not intended to affect in any way the
meaning or interpretation of this Agreement.
10.6 No Oral Agreements. There are no unwritten oral agreements,
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understandings, warranties or representations with respect to the
subject matter of this Agreement.
10.7 Assignment. It is agreed that neither party may assign such party's
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rights nor delegate such party's duties under this Agreement without
the express written consent of the other party to this Agreement.
10.8 Amendment. Neither this Agreement, nor any of the provisions hereof
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can be changed, waived, discharged or terminated, except by an
instrument in writing signed by the party against whom enforcement of
the change, waiver, discharge or termination is sought.
10.9 Severability. If any clause or provision of this Agreement is
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illegal, invalid or unenforceable under any present or future law,
the remainder of this Agreement will not be affected thereby. It is
the intention of the parties that if any such provision is held to be
illegal, invalid or unenforceable, there will be added in lieu
thereof a provision as similar in terms to such provisions as is
possible to cause such provision to be legal, valid and enforceable.
10.10 Attorney Fees. If any party institutes an action or proceeding
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against any other party relating to the provisions of this Agreement,
the party to such action or proceeding which does not prevail will
reimburse the prevailing party therein for the reasonable expenses of
attorneys' fees and disbursements incurred by the prevailing party.
10.11 Waiver. Waiver of performance of any obligation or term contained
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in this Agreement by any party, or waiver by one party of the other's
default hereunder must be in writing and will not operate as a waiver
of performance of any other obligation or term of this Agreement or
constitute a future waiver of the same obligation or a waiver of any
future default.
IN WITNESS WHEREOF, the Seller and the Buyer have executed this
Agreement as of the date first above written.
GOTHIC ENERGY CORPORATION, an Oklahoma corporation
By
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
GOTHIC PRODUCTION COMPANY, an Oklahoma corporation
By
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
(jointly and severally referred to herein as the
"Buyer")
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CHESAPEAKE EXPLORATION LIMITED PARTNERSHIP, an
Oklahoma limited partnership
By: Chesapeake Operating, Inc., General
Partner
By
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
Chief Executive Officer
(the "Seller")
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OPTION AGREEMENT
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THIS AGREEMENT is made this ____ day of __________, 2000, between GOTHIC
ENERGY CORPORATION, an Oklahoma corporation ("GEC"), GOTHIC PRODUCTION COMPANY,
an Oklahoma corporation ("GPC"and, jointly and severally with GEC, "Gothic"),
and CHESAPEAKE EXPLORATION LIMITED PARTNERSHIP, an Oklahoma limited partnership,
successor in interest by merger to Chesapeake Gothic Corp. ("Chesapeake").
R E C I T A L S :
WHEREAS, Chesapeake owns (a) __________________ shares of GEC's Senior
Redeemable Preferred Stock, Series B, $0.05 par value per share, (b) the right
to receive accrued and unpaid dividends on such Preferred Stock payable in kind,
and (c) 2,394,125 shares of GEC's Common Stock, $0.01 par value per share
(collectively, the "GEC Securities");
WHEREAS, Chesapeake or one or more of the wholly owned subsidiaries of
Chesapeake Energy Corporation (collectively, the "CEC Parties"), and Gothic and
its affiliated entities (collectively, the "Gothic Parties") are parties to that
certain Sale and Participation Agreement dated as of March 31, 1998, as amended
(the "Participation Agreement") pursuant to which: (a) Chesapeake acquired an
undivided fifty percent (50%) interest in certain oil, gas and related assets
from the Gothic Parties, (b) the CEC Parties and the Gothic Parties provided for
the maintenance, joint development and operation of the Existing Acreage, the
Related Interests and the Acquisition Acreage (as those terms are defined in the
Participation Agreement), and (c) an area of mutual interest was created among
the CEC Parties and the Gothic Parties covering lands located in whole or in
part in the States of Arkansas, Kansas, New Mexico (excluding the Pecos Slope
Acreage), Oklahoma and Texas; and
WHEREAS, Gothic has purchased an option to acquire all of Chesapeake's GEC
Securities which Chesapeake has granted, such option to be evidenced by and
subject to the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of receipt of the consideration set forth
in that certain Option Purchase Agreement of even date herewith, the mutual
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Option Agreement. Chesapeake hereby grants to Gothic the right and option
to purchase all of the GEC Securities owned by Chesapeake (the "Option") in
strict accordance with the terms and conditions of this Agreement.
2. Term. Unless Fully Exercised in strict accordance with all of the terms and
conditions set forth in this Agreement, unless extended in writing by
Chesapeake, the Option will expire on the
Final Schedule Schedule "A"
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Page 1 of 17 Pages
earlier of: (i) __________, 2000, at 5:00 p.m. Oklahoma City, Oklahoma time; or
(ii) thirty (30) days after the confirmation order of the plan of bankruptcy for
Gothic (the "Option Period"), and all rights and obligations of Chesapeake and
the Gothic Parties under this Agreement will expire and terminate without any
further notice or action. The Option will be deemed "Fully Exercised" if, and
only if, each of the following actions is completed before the expiration of the
Option Period: (a) receipt by Chesapeake of the exercise notice under paragraph
of this Agreement; (b) satisfaction in full by the Gothic Parties of all
conditions precedent set forth in this Agreement; and (c) full and complete
performance by the Gothic Parties of the Exercise Consideration (as defined
below) including, without implied limitation, the execution, delivery and
recordation (where appropriate) of the Conveyance Documents and the Restated
Participation Agreement (as those terms are defined below).
3. Exercise. Gothic may exercise the Option at any time prior to the
expiration of the Option Period by delivery to Chesapeake of a written notice
advising Chesapeake of Gothic's intent to exercise the Option. On receipt of
such notice of intent to exercise: (a) this Agreement will be deemed a legally
binding agreement by Gothic to purchase the GEC Securities from Chesapeake prior
to the expiration of the Option Period on the terms and conditions stated in
this Agreement; and (b) this Agreement will be deemed to be a legally binding
agreement by Chesapeake to sell the GEC Securities to Gothic prior to the
expiration of the Option Period under the terms and conditions stated in this
Agreement. Notwithstanding the foregoing, Chesapeake will have no obligation to
assign or deliver any interest in the GEC Securities to Gothic until the Option
is Fully Exercised.
4. Exercise Consideration. The payment of the "Exercise Consideration" means
the performance by Gothic of all of the following agreements in accordance
herewith:
4.1 Sale and Conveyance. As a portion of the Exercise Consideration the
Gothic Parties will convey and assign to the CEC Parties all of the
Gothic Parties' right, title and interest in and to the Properties (as
defined below) free and clear of any and all liens, claims and
encumbrances. The Properties assigned to the CEC Parties will be
assigned pursuant to the form of assignment at Schedule "(a)" attached
as a part hereof with appropriate schedules attached to describe the
Properties as set forth in Schedule "4.1(b)" attached hereto as a part
hereof (the "Property Schedules") and the Properties located within
the CHK Area (as hereinafter defined) will be released from the terms
of the Participation Agreement in all respects.
4.2 Participation Agreement. The Gothic Parties and the CEC Parties will
enter into the Amended and Restated Participation Agreement in the
form of Schedule "" attached as a part hereof (the "Restated
Participation Agreement") which will amend and replace the
Participation Agreement to the extent set forth in the Restated
Participation Agreement.
4.3 Definitions. For purposes of this Agreement the term "Properties"
means the following: (a) any right to any reconveyance in favor of the
Gothic Parties under
Final Schedule Schedule "A"
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Page 2 of 17 Pages
paragraph 1.3 of the Participation Agreement, any reversion or any
other interest owned by the Gothic Parties under the Participation
Agreement in the fifty percent (50%) interest in the Existing Acreage,
the Related Interests and the Acquisition Acreage (as those terms are
defined in the Participation Agreement) previously conveyed to the CEC
Parties together with any related interests or property rights
acquired by the CEC Parties so that the CEC Parties own such interest
in any and all acreage, interests and property rights acquired in
connection with the Participation Agreement free and clear of all re-
assignment obligations, reversionary interests or any other terms or
obligations under the Participation Agreement; (b) except for the
Gothic Wellbore Interests (as defined below) but specifically
including any other ▇▇▇▇▇ participated in by the Gothic Parties
pursuant to paragraph 5.8 of this Agreement, all of the Gothic
Parties' right, title and interest in all oil, gas and mineral
interests of every kind and character within the CHK Area (as defined
below) together with any related interests and property rights
including, without limitation, any interest in farmout agreements,
contribution agreements, exploration agreements, access agreements,
the Existing Acreage, the Related Interests, the Acquisition Acreage
and other agreements to acquire such interests which are owned by the
Gothic Parties in the CHK Area; and (c) the right to operations of all
▇▇▇▇▇ in the CHK Area including, without limitation, any well
containing the Gothic Wellbore Interests. For purposes of this
Agreement: (y) the term "CHK Area" means: (i) ▇▇▇▇▇ and ▇▇▇▇▇
Counties, Kansas, and (ii) Texas, Beaver, Harper, Ellis, Woods,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇, Major, ▇▇▇▇▇▇ (Townships in 19N only), ▇▇▇▇▇▇, ▇▇▇▇▇
(Townships in 7N, 8N and 9N only), Pittsburg, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
(excluding Sections 25, 34, 35 and 36 in Township 3 North, Range 19
East, Sections19, 22, 23, 24, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35
and 36 in Township 3 North, Range 20 East and Sections 19, 20, 27, 28,
31, 32, 33, and 34 in Township 3 North, Range 21 East) and LeFlore
Counties, Oklahoma; and (z) the term "Gothic Wellbore Interests" means
the Gothic Parties' interests in the following wellbores (but
excluding any interest in any acreage within the applicable
governmental production unit): (i) any wellbores in the CHK Area which
were producing in paying quantities as of February 1, 2000, and (ii)
the next wellbores to be drilled in the designated quarter section of
the governmental spacing units as described in Schedule "4.3" attached
hereto as a part hereof which includes four (4) locations in ▇▇▇▇▇▇
County, Oklahoma, six (6) locations in Pittsburg County, Oklahoma,
four (4) locations in ▇▇▇▇▇▇▇ County, Oklahoma and one (1) location in
Major County, Oklahoma.
5. Conditions Precedent to Exercise. Unless waived in writing by Chesapeake
in Chesapeake's sole discretion, the right of Gothic to exercise the Option is
subject to the satisfaction of all of the following conditions precedent:
5.1 Plan of Reorganization. A plan of reorganization for Gothic will have
been confirmed under the United States Bankruptcy Code, as amended, on
terms and conditions which approve, without modification, this
Agreement, the Restated Participation Agreement and all of the other
instruments, agreements,
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conveyances, certificates, memoranda and other documents to be entered into upon
the exercise of the Option and the consummation of the provisions of this
Agreement (the "Conveyance Documents").
5.2 Approvals. Chesapeake and Gothic will have received written consents
and approvals to the terms and conditions of this Agreement and the
Conveyance Documents in form and substance satisfactory to Chesapeake
from the holders of the Gothic's 14 1/8% Senior Secured Discount
Notes, the holders of the Gothic's Senior Notes, Bank One, Texas,
N.A., and any other necessary parties deemed necessary or prudent by
Chesapeake.
5.3 Lien Releases. Chesapeake will have received lien releases and other
documents required to assure Chesapeake that the Properties and the
other interests to be acquired by the CEC Parties under the Conveyance
Documents will be free and clear of all liens, claims and
encumbrances.
5.4 Conveyance Documents. The Conveyance Documents will have been duly
executed, acknowledged (where appropriate) and delivered by the Gothic
Parties and the CEC Parties, the Conveyance Documents will include a
certificate making and reaffirming each of the representations,
warranties, covenants and agreements set forth in this Agreement, and
the covenants and conditions precedent set forth therein will have
been satisfied.
5.5 Litigation. No actions, suits or litigation will have been threatened
or filed seeking to prevent the consummation of the transactions
contemplated by the Conveyance Documents or seeking damages or other
relief as a result of the Conveyance Documents or the consummation of
the transactions contemplated thereby and: (a) no preliminary or
permanent injunction or other order will have been issued by any court
of competent jurisdiction or any regulatory body preventing
consummation of the transactions contemplated by this Agreement or the
Conveyance Documents; (b) no action will have been commenced or
threatened against Chesapeake, Gothic or any of their respective
affiliates, associates, officers or directors seeking damages arising
from, to prevent or challenge the transactions contemplated by this
Agreement and the Conveyance Documents; (c) all representations and
warranties of Gothic contained herein will be true and correct in all
material respects on and as of the date of the exercise of the Option;
and (d) the Gothic Parties will have performed or satisfied on and as
of the date of the exercise of the Option, all obligations, covenants,
agreements and conditions contained in this Agreement and the
Conveyance Documents to be performed or complied with by the Gothic
Parties.
5.6 Lease Maintenance. The Gothic Parties will have maintained in full
force and effect all of the oil, gas and mineral leases, farmout
agreements, joint development agreements, joint operating agreements
and other oil and gas related
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interests covered by the Participation Agreement in full force and
effect and will not have rejected or terminated any of such interests
or breached any of the terms or conditions applicable thereto.
5.7 No Default. The Gothic Parties will have not defaulted under this
Agreement, the Participation Agreement or the Option Purchase
Agreement, each of the Gothic Parties' representations and warranties
will be true and correct in all material respects and there will not
have occurred any event that would constitute an event of default with
the passage of time.
5.8 Participation. The Gothic Parties will not have proposed any ▇▇▇▇▇ to
be drilled in or on any governmental production unit (as defined in
the Participation Agreement) containing any of the Properties in the
CHK Area as to which drilling operations had not commenced prior to
February 1, 2000 and, with respect to any ▇▇▇▇▇ (other than the Gothic
Wellbore Interests) proposed by the Chesapeake Parties or third
parties spudded after February 1, 2000 ("Interim ▇▇▇▇▇"), in the event
the Gothic Parties elect to participate therein, all of the interests
of the Gothic Parties in such Interim ▇▇▇▇▇ and the governmental
spacing units with respect thereto will, at Chesapeake's election, be
included in the Properties to be conveyed to Chesapeake pursuant to
paragraph 10.2.1 of this Agreement. In the event the Gothic Parties
elect not to participate in any such Interim ▇▇▇▇▇, the Gothic Parties
will have farmed out, assigned or otherwise conveyed to the Chesapeake
Parties, the Gothic Parties' interests in any such Interim ▇▇▇▇▇ and
the governmental spacing units pursuant to the Participation
Agreement.
5.9 JIB Payments. The Gothic Parties will have paid current all joint
interest ▇▇▇▇▇▇▇▇ owing to the CEC Parties as required by the Joint
Operating Agreements attached to the Participation Agreement.
5.10 Motion to Affirm. Within forty-five (45) days after the filing of the
petition in bankruptcy for one or more of the Gothic Parties, the
Gothic Parties will have filed a motion and will thereafter diligently
pursue entry of an order in such bankruptcy proceeding to irrevocably
affirm this Agreement, the Option, the Conveyance Documents, the
Participation Agreement and the Restated Participation Agreement in
all respects.
6. Chesapeake Representations and Warranties. Chesapeake hereby represents
and warrants to Gothic that as of the date of this Agreement and until the
Option is exercised in accordance with the terms and conditions of this
Agreement or the Option Period has expired without the Option being exercised:
6.1 Ownership. Chesapeake has and will have good and valid title to the
GEC Securities, free and clear of all liens, claims and encumbrances.
No person or entity other than the CEC Parties has or will have any
interest in the GEC
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Securities either of record or beneficially.
6.2 Authority. Chesapeake has taken all necessary action to authorize the
execution, delivery and performance of this Agreement and has adequate
corporate power, authority and legal right to enter into, execute,
deliver and perform this Agreement and to consummate the transactions
contemplated hereby.
6.3 Absence of Liabilities. Except as approved by Gothic in writing prior
to the Closing Date: (a) Chesapeake has no debt, liability, obligation
or commitment, absolute or contingent, known or unknown, relating to
or connected with the GEC Securities; (b) the GEC Securities will not
be subject to or liable for any claim, debt, liability, lien,
encumbrance, obligation, guaranty or commitment of Chesapeake on the
Closing Date; and (c) any such claims, debts, liabilities, obligations
or commitments will be the sole responsibility of Chesapeake and
Chesapeake hereby agrees to indemnify and hold harmless Gothic from
all such matters.
6.4 Consents and Approvals. No notice to, filing with, or authorization,
consent or approval of any governmental entity, person or other entity
is necessary for the consummation of the transactions contemplated by
this Agreement. The execution, delivery, performance and consummation
of this Agreement does not and will not: (a) violate, conflict with or
constitute a default or an event that, with notice or lapse of time or
both, would be a default, breach or violation under any term or
provision of any instrument, agreement, contract, commitment, license,
promissory note, conditional sales contract, indenture, mortgage, deed
of trust, lease or other agreement, instrument or arrangement to which
Chesapeake is a party or by which Chesapeake or, to the best of
Chesapeake's knowledge, the GEC Securities are bound; (b) violate,
conflict or constitute a breach of any statute, regulation or judicial
or administrative order, award, judgment or decree to which Chesapeake
is a party or to which Chesapeake or, to the best of Chesapeake's
knowledge the GEC Securities are bound; or (c) result in the creation
or imposition of any adverse claim or interest, lien, encumbrance,
charge, equity or restriction of any nature whatever, upon or
affecting Chesapeake, or to the best of Chesapeake's knowledge, the
GEC Securities or Gothic.
7 Gothic Representations and Warranties. Gothic hereby represents and
warrants to Chesapeake that as of the date of this Agreement and as of the
Closing Date:
7.1 Authority and Reliance. Gothic has taken all necessary action to
authorize the execution, delivery and performance of this Agreement
and has all requisite corporate power, authority and legal right to
enter into, execute, deliver and perform this Agreement and to
consummate the transactions contemplated hereby and to own, lease, and
operate its properties and to conduct its business as now being
conducted. Gothic represents and warrants that Gothic is experienced
in the
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oil and gas business and has knowledge and experience in business and
financial matters and, with respect to investments generally and, in
particular, investments generally comparable to the Option and the GEC
Securities, Gothic is competent to evaluate the value of each of the
GEC Securities and the Exercise Price and the benefits and risks
relating to this Agreement and Gothic has determined that the
consideration being given by Gothic is the fair value equivalent of
the consideration being received by Gothic for the purchase and
exercise of the Option. If Gothic exercises the Option, Gothic's
representations and warranties hereunder will extend fully to the
exercise of the Option as if made on the date the Option is exercised.
7.2 Consents. Gothic has obtained and provided to Chesapeake all consents,
approvals or waivers necessary or appropriate for Gothic to enter into
this Agreement and to consummate the transactions contemplated hereby.
No other authorization, consent, approval, license, qualification or
formal exemption from, nor any filing, declaration or registration
with, any court, governmental agency or regulatory authority or any
securities exchange is required in connection with the execution,
delivery or performance by the Gothic Parties of this Agreement.
7.3 Litigation. There is no action, suit, investigation or proceeding,
governmental or otherwise, pending or, to the best of Gothic's
knowledge, threatened to which any of the Gothic Parties is or would
be a party or of which the Properties, the Properties or other assets
of the Gothic Parties is or would be subject.
7.4 Properties. All of the oil, gas and related interests of every kind
and character owned by the Gothic Parties or any of the Gothic
Parties' direct or indirect subsidiaries which are located in the CHK
Area are described in Schedule "7.4" attached as a part hereof.
8. Covenants. Unless waived in writing, the parties agree to the following
during the Option Period:
8.1 Conduct of Businesses. Prior to the exercise of the Option or
expiration of the Option Period, the Gothic Parties will operate in a
businesslike manner in accordance with prior practices and will
maintain and preserve all of the assets and businesses of the Gothic
Parties including the Properties.
8.2 Properties. The Gothic Parties have not and will not: (a) transfer,
sell, mortgage, pledge, encumber or dispose of any assets covered by
this Agreement or the Restated Participation Agreement, except for the
existing mortgages which have been subordinated to the interests of
Chesapeake pursuant to the Participation Agreement; or (b) except in
the ordinary course of business consistent with past business
practices, make or permit any amendment or termination of any material
contract, agreement or commitment affecting the assets covered by this
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Agreement or the Restated Participation Agreement.
8.3 Consents. The parties will use their best efforts to obtain, all
licenses, permits, consents, approvals, authorizations, qualifications
and orders of governmental authorities and parties to contracts with
the Gothic Parties as are necessary for the consummation of the
transactions contemplated by this Agreement or are reasonably
requested by Chesapeake.
8.4 Litigation. Promptly on learning thereof, each party to this Agreement
will notify the other party of any litigation, suit or administrative
proceeding that could reasonably be expected to have a material
adverse affect on the ability of the parties to consummate the
transactions contemplated by this Agreement or the Conveyance
Documents, or otherwise adversely affect any of the businesses,
affairs, assets, prospects, operations or conditions, financial or
otherwise, of the parties, whether or not the claim is considered to
be covered by insurance. Gothic and Chesapeake each agree to not to
agree to or join in the pursuit of any injunctive relief prohibiting
the transactions contemplated by this Agreement.
8.5 Plan of Reorganization. Gothic will not propose or consent to any plan
of reorganization which materially conflicts with any of the terms and
conditions of this Agreement, the Conveyance Documents or the Restated
Participation Agreement and will not dispute or seek to modify or
rescind this Agreement in any bankruptcy proceeding or other action
affecting Gothic. The Gothic Parties will simultaneously provide to
Chesapeake copies of all notices, filings and other documents relating
to the Gothic Parties bankruptcy, reorganization or any proposed plan
of reorganization including, without limitation, all communications
to, from or among any of the Gothic Parties, any formal or informal
committees of creditors or security holders or any creditors of the
Gothic Parties, whether before or after the filing of bankruptcy.
8.6 GEC Securities. Chesapeake will not transfer, sell, pledge, encumber
or dispose of any of the GEC Securities.
9. Representations and Warranties for the Properties. As an inducement to
Chesapeake to enter into this Agreement and accept the assignment of the
interests in the Properties, Gothic represents and warrants to Chesapeake that
as of the date of this Agreement and the Closing Date:
9.1 No Assumption of Obligations. Except as approved by Chesapeake in
writing prior to the Closing Date, the execution and consummation of
this Agreement will not obligate Chesapeake with respect to (or result
in the assumption by Chesapeake of) any obligation of Gothic arising
prior to the Closing Date under or with respect to, any liability,
agreement or commitment relating to the Properties including, without
implied limitation, to pay to or share with any third
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party any portion of the Hydrocarbons attributable to the Properties.
The term "Hydrocarbons" means and includes oil, gas, casinghead gas,
condensate, natural gas liquids and all components of the foregoing.
9.2 Absence of Liabilities. Except as approved by Chesapeake in writing
prior to the Closing Date: (a) Gothic has no debt, liability,
obligation or commitment, absolute or contingent, known or unknown,
relating to or connected with the Properties; (b) neither Chesapeake
nor the Properties will be subject to or liable for any claim, debt,
liability, lien, encumbrance, obligation, guaranty or commitment on
the Closing Date; and (c) any such claims, debts, liabilities,
obligations or commitments will be the sole responsibility of Gothic
and Gothic hereby agrees to indemnify and hold harmless Chesapeake
from all such matters. Gothic has complied and will continue to comply
with all applicable federal, state or local statutes, laws and
regulations.
9.3 Contracts. Gothic has delivered to Chesapeake true copies (or
descriptions, in the case of oral agreements) of all of the contracts
and agreements relating to the Properties including, without
limitation, all marketing and production sales contracts. Except as
approved by Chesapeake in writing prior to the Closing Date, no such
marketing or production sales contracts will in any way prevent or
hinder Chesapeake in taking in kind Chesapeake's share of production
from the Properties. There are no other material contracts,
commitments or agreements in effect related to the Properties that
have not been disclosed to Chesapeake in writing. To the best of
Gothic's knowledge: (a) such contracts and agreements are in full
force and effect; (b) no event of default or event which would become
an event of default with the giving of notice or passage of time has
occurred; and (c) no condition presently exists which would give any
party to any such contract the right to terminate such contract. There
are no other material contracts, commitments or agreements in effect
related to the Properties.
9.4 Consents and Approvals. No notice to, filing with, or authorization,
consent or approval of any governmental entity, person or other entity
is necessary for the consummation of the transactions contemplated by
this Agreement. The execution, delivery, performance and consummation
of this Agreement does not and will not: violate, conflict with or
constitute a default or an event that, with notice or lapse of time or
both, would be a default, breach or violation under any term or
provision of any instrument, agreement, contract, commitment, license,
promissory note, conditional sales contract, indenture, mortgage, deed
of trust, lease or other agreement, instrument or arrangement to which
Gothic is a party or by which Gothic or, to the best of Gothic's
knowledge, the Properties are bound; violate, conflict or constitute a
breach of any statute, regulation or judicial or administrative order,
award, judgment or decree to which Gothic is a party or to which
Gothic or, to the best of Gothic's knowledge the Properties are bound;
or result in the creation or imposition of any adverse claim or
interest, lien,
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encumbrance, charge, equity or restriction of any nature whatever,
upon or affecting Gothic, or to the best of Gothic's knowledge, the
Properties or Chesapeake.
9.5 Litigation. To the best of Gothic's knowledge there is: (a) no action,
suit or proceeding pending, threatened or contemplated against Gothic
or the Properties; and (b) no proceeding, investigation, charge, audit
or inquiry threatened or pending before or by any federal, state,
municipal or other governmental court, department, commission, board,
bureau, agency or instrumentality which might result in an adverse
effect on Gothic or the Properties. Gothic hereby agrees to indemnify
and hold harmless Chesapeake with respect to any and all litigation
and proceedings.
9.6 Title. Gothic owns, possesses and holds good and defensible title
beneficially and of record in and to the respective Properties free
and clear of all claims, liens, encumbrances, conditions,
restrictions, calls on production, obligations to pay to or share with
third parties any revenue or other matter adversely affecting the
value or ownership of the Properties. All of the oil, gas and related
interests of every kind and character owned by Gothic or any of
Gothic's affiliates which are located in the CHK Area are described in
the Conveyance Documents. Gothic is entitled to receive not less than
the "Net Revenue Interest" set forth in the Conveyance Documents of
all Hydrocarbons produced, saved and marketed from the Properties
without reduction, suspension or termination of such interest
throughout the duration of the productive life of such Properties and
is in no event obligated to bear any of the costs and expenses related
to the maintenance, development or operation (including, without
limitation, the costs and expenses of plugging and abandoning any
▇▇▇▇▇ and removal and salvage of any equipment and facilities) of the
Properties throughout the productive life of the Properties in excess
of the "Working Interest" set forth in Conveyance Documents. To the
best of Gothic's knowledge, there are no suspended revenues or any
basis to suspend revenues from the Properties. To the best of Gothic's
knowledge, there does not exist any lien, claim, encumbrance,
restriction or other matter which might cause Chesapeake to not
receive for its own account free and clear of all liens, claims and
encumbrances the percentage of the fair market value of all
Hydrocarbons produced, saved or used from each of the Properties after
the Closing Date equal to the Net Revenue Interest designated in the
Conveyance Documents.
9.7 Foreign Person. Gothic is not a "foreign person" as that term is
defined under the Internal Revenue Code of 1986.
9.8 Oil and Gas Leases in Good Standing. Except as approved by Chesapeake
in writing prior to the Closing Date, to the best of Gothic's
knowledge all oil and gas leases which are material singly or in the
aggregate are in full force and effect, and Gothic is not in default
thereunder.
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9.9 Taxes. All ad valorem, property, production, severance and similar
taxes and assessments based on or measured by the ownership of
property comprising the Properties or the production or removal of
hydrocarbons or the receipt of proceeds therefrom have been timely
paid when due and are not in arrears.
9.10 Contracts, Consents and Preferential Rights. Gothic has disclosed to
Chesapeake in writing after the date hereof by reference to this
paragraph: (a) all partnership, joint venture, farmin/farmout, dry
hole, bottom hole, acreage contribution, area of mutual interest,
purchase and/or acquisition agreements of which any terms remain
executory which materially affect the Properties; (b) all other
executory contracts to which Gothic is a party which materially
affect any item of the Properties; (c) all governmental or court
approvals and third party contractual consents required in order to
consummate the transactions contemplated by this Agreement; (d) all
agreements pursuant to which third parties have preferential rights
or similar rights to acquire any portion of the Properties upon the
sale contemplated by this Agreement; and (e) all other contracts and
agreements which are in any single case of material importance to the
Properties.
9.11 Tax Partnerships. None of the Properties is treated for income tax
purposes as being owned by a partnership.
9.12 Environmental Conditions. Gothic is not aware, and has not received
notice from any person, entity or governmental body, agency or
commission, of any release, disposal, event, condition, circumstance,
activity, practice or incident concerning any land, facility, asset
or property that: (a) interferes with or prevents compliance or
continued compliance by Gothic (or by Chesapeake after the Closing
Date) with any federal, state or local law, regulation, code or
ordinance or the terms of any license or permit issued pursuant
thereto; or (b) gives rise to or results in any common law or other
liability of Gothic to any person, entity or governmental body,
agency or commission for damage or injury to natural resources,
wildlife, human health or the environment which would have a material
adverse effect on Gothic in each case. Gothic is not aware of any
civil, criminal or administrative action, lawsuit, demand,
litigation, claim, hearing, notice of violation, investigation or
proceeding, pending or threatened, against Gothic or operator of any
of the lands, facilities, assets and properties owned or formerly
owned, operated, leased or used by Gothic as a result of the
violation or breach of any federal, state, or local law, regulation,
code or ordinance or any duty arising at common law to any person,
entity or governmental body, singly or in the aggregate, which if
determined adversely would have a material adverse effect on Gothic.
9.13 Plugging Status. To the best of Gothic's knowledge, all ▇▇▇▇▇ on the
Properties that have been permanently plugged and abandoned have been
so plugged and
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abandoned in accordance in all material respects with all applicable
requirements of each governmental authority having jurisdiction over
Gothic and the Properties.
9.14 Affiliate Transactions. There are no transactions affecting any of
the Properties between Gothic and any of Gothic's affiliates. As used
in this Agreement, "affiliate" means, with respect to any person or
entity, each other person or entity directly or indirectly
controlling controlled by or under common control with such person.
9.15 Full Disclosure. This Agreement, any schedule referenced in or
attached to this Agreement, any document furnished to Chesapeake
under this Agreement and any certification furnished to Chesapeake
under this Agreement does not contain any untrue statement of a
material fact and does not omit to state a material fact necessary to
make the statements made, in the circumstances under which they were
made, not misleading. All of the representations, warranties and
covenants in this Agreement: (a) are true and correct as of the date
made; (b) will be true and correct as of the Closing Date; and (c)
will survive and not be waived, discharged, released, modified,
terminated or affected by any due diligence by Chesapeake.
10. Closing. Unless the Option Period has expired or the closing is extended
in writing by Gothic and Chesapeake, the transactions contemplated by this
Agreement will be consummated on the date (the "Closing Date") which is five (5)
business days after the later of: (a) the notice of intent to exercise under
paragraph of this Agreement; or (b) the date all of the conditions under this
Agreement have been satisfied in full.
10.1 Chesapeake's Deliveries. Subject to the terms and conditions of this
Agreement, on the Closing Date Chesapeake will deliver or cause to be
delivered to Gothic the following items (all documents will be duly
executed and acknowledged where required):
10.1.1 GEC Securities. Conditioned on the Option being Fully
Exercised, the GEC Securities due under paragraph of this
Agreement together with stock powers with all signatures
guaranteed in the form attached hereto as Schedule "10.1.1";
10.1.2 Evidence of Authority. Such resolutions, certificates of
good standing, incumbency certificates and other evidence of
authority with respect to Chesapeake as might be reasonably
requested by Gothic;
10.1.3 JIB Payments. Current payment of all joint interest ▇▇▇▇▇▇▇▇
owing to the Gothic Parties as required by the Joint
Operating Agreements attached to the Participation
Agreement;
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10.1.4 Closing Memorandum. A memorandum setting forth the items
delivered and accounting for the payments made on the
Closing Date;
10.1.5 Additional Documents. Such additional documents as might be
reasonably requested by Gothic to consummate this Agreement;
and
10.1.6 Interim ▇▇▇▇▇. In the event Chesapeake elects to include the
Gothic Parties' interests in the Interim ▇▇▇▇▇ in the
Properties pursuant to paragraph 5.8 hereof, Chesapeake will
pay to the Gothic Parties an amount equal to the Gothic
Parties' unrecovered drilling costs for such Interim ▇▇▇▇▇.
10.2 Gothic's Deliveries. On the Closing Date, Gothic will deliver or
cause to be delivered to Chesapeake the following items (all
documents will be duly executed and acknowledged where required):
10.2.1 Assignments. The Conveyance Documents in substantially the
form and substance satisfactory to Chesapeake conveying to
Chesapeake all of Gothic Parties' right, title and interest
in and to the Properties including, without limitation, all
of the right, title and interest in and to the Interim ▇▇▇▇▇
in the event Chesapeake elects to include the Interim ▇▇▇▇▇
in the Properties pursuant to paragraph 5.8 hereof;
10.2.2 Releases. Releases and termination statements with respect
to any and all liens, claims, security interests and other
encumbrances covering any of the Properties including a
release of any reconveyance rights in favor of the Gothic
Parties under the Participation Agreement;
10.2.3 Evidence of Authority. Such corporate resolutions,
certificates of good standing, incumbency certificates and
other evidence of authority with respect to each of the
Gothic Parties as might be reasonably requested by
Chesapeake;
10.2.4 Closing Memorandum. A memorandum setting forth the items
delivered and accounting for the payments made on the
Closing Date;
10.2.5 Additional Documents. Such additional documents as might be
reasonably requested by Chesapeake to consummate this
Agreement.
10.3 Costs. Gothic will pay the following closing costs: (a) Gothic's
attorneys' fees, investment banker's fees and bank fees; (b) the cost
of recording all mortgage or other lien releases and the cost of
documentary stamps to be affixed to any deeds conveying title to the
Properties to Chesapeake; and (c) any other charge imposed by any
governmental authority for the transfer of any item comprising the
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Properties. Chesapeake will pay only Chesapeake's attorneys' fees and
the cost of recording the Conveyance Documents. Chesapeake and the
Gothic Parties each agree to use their respective best efforts to
take any and all reasonable action to minimize the recording costs
and other charges associated with the consummation of the
transactions contemplated by this Agreement.
10.4 Files and Data. As of the Closing Date and at all times thereafter
during the term of the Restated Participation Agreement, Gothic will
make available to Chesapeake for copying, at Chesapeake's expense,
all files, records, reports and other data relating to the
Properties.
11. Default. In the event either party fails to perform such party's
obligations hereunder (except as excused by another party's default) (the
"Defaulting Party") such failure will constitute an event of default under this
Agreement and the other party (the "Other Party") will have the right to
exercise any and all remedies available at law or in equity including, without
limitation, specific performance of this Agreement or any one or more of the
provisions herein contained, unless such default is waived by the Other Party or
cured by the Defaulting Party within five (5) business days after receipt of
notice of such default. The remedies provided by this Agreement are cumulative
and will not exclude any other remedy to which the Other Party might be entitled
under this Agreement or applicable law. In the event the Other Party elects to
selectively and successfully enforce the Other Party's rights under this
Agreement, such action will not be deemed a waiver or discharge of any other
remedy. During the pendency of any default or disputes, this Agreement will be
deemed to be in full force and effect. Notwithstanding anything herein to the
contrary, on the occurrence of a default or other breach of this Agreement by
Gothic, Chesapeake may terminate the Option in the sole and absolute discretion
of Chesapeake.
12. Miscellaneous. It is further agreed as follows:
12.1 Time. Time is of the essence of this Agreement.
12.2 Notices. Any notice, demand or communication required or permitted to
be given by any provision of this Agreement will be in writing and
will be deemed to have been given and received when delivered
personally or by telefacsimile to the party designated to receive
such notice, or on the date following the day sent by overnight
courier, or on the third (3rd) business day after the same is sent by
certified mail, postage and charges prepaid, directed to the
following addresses or to such other or additional addresses as any
party might designate by written notice to the other parties:
Final Schedule Schedule "A"
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To Gothic: Gothic Energy Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone (▇▇▇) ▇▇▇-▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Pray, Walker, Jackman, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Telephone (▇▇▇) ▇▇▇-▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
To Chesapeake: Chesapeake Energy Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telephone (▇▇▇) ▇▇▇-▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Self, ▇▇▇▇▇▇▇ & Lees, Inc.
2725 Oklahoma Tower
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇
Telephone (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
12.3 Cooperation. At all times during the Option Period the parties agree
to execute and deliver, or cause to be executed and delivered, such
documents and do, or cause to be done, such other acts and things as
might reasonably be requested by the other party to this Agreement to
assure that the benefits of this Agreement are realized by the
parties.
12.4 Press Release. Except to the extent required by applicable disclosure
requirements, all press releases relating to this Agreement and the
transactions contemplated by this Agreement and the Conveyance
Documents will be approved by Gothic and Chesapeake prior to
dissemination.
12.5 Choice of Law. This Agreement will be interpreted, construed and
enforced in accordance with the laws of the State of Oklahoma and
will be deemed for such
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Page 15 of 17 Pages
purposes to have been made, executed and performed in Oklahoma
County, Oklahoma. All claims, disputes and other matters in question
arising out of or relating to this Agreement will be decided by
proceedings instituted and litigated in the District Court of
Oklahoma County, Oklahoma or the United States District Court for
the Western District of Oklahoma.
12.6 Headings. The paragraph headings contained in this Agreement are for
reference purposes only and are not intended to affect in any way
the meaning or interpretation of this Agreement.
12.7 Entire Agreement. This Agreement and any document executed in
connection herewith on or after the date of this Agreement
constitute the entire agreement between the parties with respect to
the subject matter hereof and there are no agreements,
understandings, warranties or representations except as set forth
herein.
12.8 Assignment. It is agreed that the parties may not assign such
party's rights nor delegate such party's duties under this Agreement
without the express written consent of the other parties to this
Agreement.
12.9 Amendment. Neither this Agreement, nor any of the provisions hereof
can be changed, waived, discharged or terminated, except by an
instrument in writing signed by the party against whom enforcement
of the change, waiver, discharge or termination is sought.
12.10 Severability. If any clause or provision of this Agreement is
illegal, invalid or unenforceable under any present or future law,
the remainder of this Agreement will not be affected thereby. It is
the intention of the parties that if any such provision is held to
be illegal, invalid or unenforceable, there will be added in lieu
thereof a provision as similar in terms to such provisions as is
possible to cause such provision to be legal, valid and enforceable.
12.11 Attorney Fees. If any party institutes an action or proceeding
against any other party relating to the provisions of this
Agreement, the party to such action or proceeding which does not
prevail will reimburse the prevailing party therein for the
reasonable expenses of attorneys' fees and disbursements incurred by
the prevailing party.
12.12 Waiver. Waiver of performance of any obligation or term contained in
this Agreement by any party, or waiver by one party of the other's
default hereunder will not operate as a waiver of performance of any
other obligation or term of this Agreement or a future waiver of the
same obligation or a waiver of any future default.
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IN WITNESS WHEREOF, Chesapeake and Gothic have executed this Agreement
as of the date first above written.
GOTHIC ENERGY CORPORATION, an Oklahoma
corporation
By
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
GOTHIC PRODUCTION COMPANY,
an Oklahoma corporation
By
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
(jointly and severally referred to
herein as "Gothic")
CHESAPEAKE EXPLORATION LIMITED
PARTNERSHIP, an Oklahoma
limited partnership
By: Chesapeake Operating, Inc.,
General Partner
By
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
Chief Executive Officer
("Chesapeake")
Final Schedule Schedule "A"
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Page 17 of 17 Pages
