Exhibit 10.1

 

Execution Version

 

THIS RESTRUCTURING SUPPORT AGREEMENT IS NOT AN OFFER OR ACCEPTANCE WITH RESPECT
TO ANY SECURITIES OR A SOLICITATION OF ACCEPTANCES OF A CHAPTER 11 PLAN WITHIN
THE MEANING OF SECTION 1125 OF THE BANKRUPTCY CODE. ANY SUCH OFFER OR
SOLICITATION WILL COMPLY WITH ALL APPLICABLE SECURITIES LAWS AND/OR PROVISIONS
OF THE BANKRUPTCY CODE. Nothing contained in thIS RESTRUCTURING SUPPORT
AGREEMENT shall be an admission of fact or liability OR, UNTIL THE OCCURRENCE OF
THE AGREEMENT EFFECTIVE DATE ON THE TERMS DESCRIBED HEREIN, DEEMED BINDING ON
ANY OF THE PARTIES HERETO.

 

RESTRUCTURING SUPPORT AGREEMENT

 

This RESTRUCTURING SUPPORT AGREEMENT (including all exhibits, annexes, and
schedules hereto in accordance with Section 14.02, collectively,
this “Agreement”) is made and entered into as of June 28, 2020 (the “Execution
Date”), by and among the following parties (each of the following described in
sub-clauses (i) through (v) of this preamble, and any person or entity that
becomes a party hereto in accordance with the terms hereof, collectively,
the “Parties”):1

 

i.The undersigned parties that (a) have executed and delivered counterpart
signature pages to this Agreement, a joinder to this Agreement substantially in
the form attached hereto as Exhibit D (a “Joinder”), or a Transfer Agreement to
counsel to the Company Parties, counsel to the Consenting Revolving Credit
Facility Lenders, counsel to the Consenting FLLO Term Loan Facility Lenders, and
counsel to the Consenting Second Lien Noteholders and (b) have committed to
become, or have become, a DIP Lender in the Chapter 11 Cases (collectively,
the “Consenting DIP Lenders”).

 

ii.the undersigned holders of Revolving Credit Facility Claims that have
executed and delivered counterpart signature pages to this Agreement, a Joinder,
or a Transfer Agreement to counsel to the Company Parties, counsel to the
Consenting DIP Lenders, counsel to the Consenting FLLO Term Loan Facility
Lenders, and counsel to the Consenting Second Lien Noteholders (collectively,
the “Consenting Revolving Credit Facility Lenders”);

 

iii.the undersigned holders of FLLO Term Loan Facility Claims that have executed
and delivered counterpart signature pages to this Agreement, a Joinder or a
Transfer Agreement to counsel to the Company Parties, counsel to the Consenting
DIP Lenders, counsel to the Consenting Revolving Credit Facility Lenders, and
counsel to the Consenting Second Lien Noteholders (collectively, the “Consenting
FLLO Term Loan Facility Lenders”);

 

iv.the undersigned holders of, or investment advisors, sub-advisors, or managers
of discretionary accounts that hold, Second Lien Notes Claims that have executed
and delivered counterpart signature pages to this Agreement, a Joinder, or a
Transfer Agreement to counsel to the Company Parties, counsel to the Consenting
DIP Lenders, counsel to the Consenting Revolving Credit Facility Lenders, and
counsel to the Consenting FLLO Term Loan Facility Lenders (collectively,
the “Consenting Second Lien Noteholders” and, together with the Entities
referenced in clauses (i) - (iii), collectively, the “Consenting Stakeholders”);
and

 

 

1 Capitalized terms used but not defined in the preamble and recitals to this
Agreement have the meanings ascribed to them in Section 1.

 

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v.Chesapeake Energy Corporation, a corporation incorporated under the Laws of
Oklahoma, or any of its Affiliates listed on Exhibit A to this Agreement that
has executed and delivered counterpart signature pages to this Agreement to
counsel to the Consenting DIP Lenders, counsel to the Consenting Revolving
Credit Facility Lenders, counsel to the Consenting FLLO Term Loan Facility
Lenders, and counsel to the Consenting Second Lien Noteholders (each, a “Company
Party” and, collectively, the “Company Parties”).

 

RECITALS

 

WHEREAS, the Consenting Stakeholders have in good faith and at arms’ length
negotiated or been apprised of certain restructuring and recapitalization
transactions with respect to the Company Parties’ capital structure on the terms
set forth in this Agreement and as specified in the term sheet attached as
Exhibit B hereto (the “Restructuring Term Sheet” and, such transactions as
described in this Agreement and the Restructuring Term Sheet, collectively,
the “Restructuring Transactions”);

 

WHEREAS, the Company Parties intend to implement the Restructuring Transactions
through the commencement by the Debtors of voluntary cases under chapter 11 of
the Bankruptcy Code in the Bankruptcy Court (the cases commenced, the “Chapter
11 Cases”); and

 

WHEREAS, the Parties have agreed to take certain actions in support of the
Restructuring Transactions on the terms and conditions set forth in this
Agreement and the Restructuring Term Sheet;

 

NOW, THEREFORE, in consideration of the covenants and agreements contained
herein, and for other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, each Party, severally and not jointly, intending
to be legally bound hereby, agrees as follows:

 

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AGREEMENT

  

Section 1.             Definitions and Interpretation.

 

1.01.       Definitions. Capitalized terms used but not defined in this
Agreement have the meanings given to such terms in Exhibit 1 to Exhibit B
attached hereto.

 

1.02.       Interpretation. For purposes of this Agreement:

 

(a)          in the appropriate context, each term, whether stated in the
singular or the plural, shall include both the singular and the plural, and
pronouns stated in the masculine, feminine, or neuter gender shall include the
masculine, feminine, and neuter gender;

 

(b)          capitalized terms defined only in the plural or singular form shall
nonetheless have their defined meanings when used in the opposite form;

 

(c)          unless otherwise specified, any reference herein to a contract,
lease, instrument, release, indenture, or other agreement or document being in a
particular form or on particular terms and conditions means that such document
shall be substantially in such form or substantially on such terms and
conditions;

 

(d)          unless otherwise specified, any reference herein to an existing
document, schedule, or exhibit shall mean such document, schedule, or exhibit,
as it may have been or may be amended, restated, supplemented, or otherwise
modified from time to time; provided that any capitalized terms herein which are
defined with reference to another agreement, are defined with reference to such
other agreement as of the date of this Agreement, without giving effect to any
termination of such other agreement or amendments to such capitalized terms in
any such other agreement following the date hereof;

 

(e)          unless otherwise specified, all references herein to “Sections” are
references to Sections of this Agreement;

 

(f)           the words “herein,” “hereof,” and “hereto” refer to this Agreement
in its entirety rather than to any particular portion of this Agreement;

 

(g)          captions and headings to Sections are inserted for convenience of
reference only and are not intended to be a part of or to affect the
interpretation of this Agreement;

 

(h)          references to “shareholders”, “directors”, and/or “officers” shall
also include “members”, “partners”, and/or “managers”, as applicable, as such
terms are defined under the applicable limited liability company or partnership
Laws;

 

(i)           the use of “include” or “including” is without limitation, whether
stated or not;

 

(j)           the phrase “counsel to the Company Parties” refers to Kirkland &
Ellis LLP;

 

(k)          the phrase “counsel to the Consenting DIP Lenders” refers in this
Agreement to counsel specified in Section 14.10(b);

 

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(l)           the phrase “counsel to the Consenting Revolving Credit Facility
Lenders” refers in this Agreement to counsel specified in Section 14.10(c);

 

(m)         the phrase “counsel to the Consenting FLLO Term Loan Facility
Lenders” refers in this Agreement to counsel specified in Section 14.10(d);

 

(n)          the phrase “counsel to the Consenting Second Lien Noteholders”
refers in this Agreement to counsel specified in Section 14.10(e); and

 

(o)          the phrase “counsel to the Consenting Stakeholders” means counsel
to the Consenting DIP Lenders, counsel to the Consenting Revolving Credit
Facility Lenders, counsel to the Consenting FLLO Term Loan Facility Lenders, and
counsel to the Consenting Second Lien Noteholders.

 

Section 2.             Effectiveness of this Agreement. This Agreement shall
become effective and binding upon each of the Parties at 12:00 a.m., prevailing
Eastern Daylight Time, on the Agreement Effective Date, which is the date on
which all of the following conditions have been satisfied or waived in
accordance with this Agreement:

 

(a)          the holders of 100% of the aggregate Revolving DIP Loan Commitments
under the DIP Facility (inclusive of validly executed but unsettled trades)
shall have executed and delivered counterpart signature pages of this Agreement
to counsel to the Company Parties, counsel to the Consenting Revolving Credit
Facility Lenders, counsel to the Consenting FLLO Term Loan Facility Lenders, and
counsel to the Consenting Second Lien Noteholders;

 

(b)          the holders of at least 66.67% of the aggregate outstanding
principal amount under the Revolving Credit Facility (inclusive of validly
executed but unsettled trades) shall have executed and delivered counterpart
signature pages of this Agreement to counsel to the Company Parties, counsel to
the Consenting DIP Lenders, counsel to the Consenting FLLO Term Loan Facility
Lenders, and counsel to the Consenting Second Lien Noteholders;

 

(c)          the holders of at least 66.67% of the aggregate outstanding
principal amount under the FLLO Term Loan Facility (inclusive of validly
executed but unsettled trades) shall have executed and delivered counterpart
signature pages of this Agreement to counsel to the Company Parties, counsel to
the Consenting DIP Lenders, counsel to the Consenting Revolving Credit Facility
Lenders, and counsel to the Consenting Second Lien Noteholders;

 

(d)          the holders of at least 50% of the aggregate outstanding principal
amount of Second Lien Notes shall have executed and delivered counterpart
signature pages of this Agreement to counsel to the Company Parties, counsel to
the Consenting DIP Lenders, counsel to the Consenting Revolving Credit Facility
Lenders, and counsel to the Consenting FLLO Term Loan Facility Lenders;

 

(e)          the Company Parties shall have executed and delivered counterpart
signature pages of this Agreement to counsel to the Consenting DIP Lenders,
counsel to the Consenting Revolving Credit Facility Lenders, counsel to the
Consenting FLLO Term Loan Facility Lenders, and counsel to the Consenting Second
Lien Noteholders; and

 

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(f)           the Company Parties shall have paid in full all Restructuring
Expenses incurred and invoiced at least one (1) Business Day prior to the
Agreement Effective Date that were not previously paid by the Company Parties,
and shall pay all remaining outstanding Restructuring Expenses at least one
(1) day prior to Petition Date.

 

The Company Parties shall be provided signature pages of the Consenting
Stakeholders in unredacted form; provided, that the Company Parties and counsel
to the Company Parties shall not make any public disclosure of any kind that
would disclose either: (i) the holdings of any Consenting Stakeholders
(including the signature pages hereto, which shall not be publicly disclosed or
filed) or (ii) the identity of any Consenting Stakeholder, in each case without
the prior written consent of such Consenting Stakeholder or the order of a
Bankruptcy Court or other court with competent jurisdiction. For the avoidance
of doubt, if there is a subsequent Termination Date as to the Company Parties
pursuant to Section 12.02, Section 12.03, Section 12.04, Section 12.05,
Section 12.06, or Section 12.07, any and all provisions of the Agreement
referencing “counsel to the Company Parties,” a “Company Party,” or the “Company
Parties” are, and shall continue to be, in full force and effect with respect to
the Consenting Stakeholders as if such provisions were written without reference
to “counsel to the Company Parties,” a “Company Party,” or the “Company Parties”
and this Agreement, shall be in full force and effect with respect to each other
Party hereto until the occurrence of a Termination Date as to such Party.

 

Section 3.             Definitive Documents.

 

3.01.       The Definitive Documents governing the Restructuring Transactions
shall include, without limitation, the following: (A) the Plan and its exhibits,
ballots, and solicitation procedures; (B) the Confirmation Order; (C) the
Disclosure Statement; (D) the order of the Bankruptcy Court approving the
Disclosure Statement and the other Solicitation Materials; (E) the First Day
Pleadings and all orders sought pursuant thereto; (F) the Plan Supplement;
(G) the DIP Order, DIP Credit Agreement, and any and all other DIP Documents and
related documentation; (H) the Backstop Commitment Agreement, (I) Backstop
Commitment Agreement Approval Order, Rights Offering Procedures, Registration
Rights Agreement and any and all documentation required to implement, issue, and
distribute the New Common Stock; (J) the documents or agreements related to the
New Warrants; (K) the Exit Facilities Documents and related documentation;
(L) the Management Incentive Plan; (M) the New Organizational Documents and all
other documents or agreements for the governance of Reorganized Chesapeake,
including the list of directors of reorganized Chesapeake and any certificates
of incorporation and shareholders’ agreements or supplements as may be
reasonably necessary or advisable to implement the Restructuring; and (N) such
other agreements and documentation reasonably desired or necessary to consummate
and document the transactions contemplated by this Agreement, the Restructuring
Term Sheet, and the Plan.

 

3.02.       The Definitive Documents executed prior to the Execution Date or
contemporaneously herewith or in a form attached to this Agreement or the
Restructuring Term Sheet are acceptable to the Parties. The Definitive Documents
not executed or in a form attached to this Agreement or the Restructuring Term
Sheet as of the Execution Date remain subject to negotiation and completion.
Upon completion, the Definitive Documents and every other document, deed,
agreement, filing, notification, letter or instrument related to the
Restructuring Transactions shall contain terms, conditions, representations,
warranties, and covenants consistent with the terms of this Agreement, as they
may be modified, amended, or supplemented in accordance with Section 13.
Further,

 

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(a)          the Definitive Documents not executed or in a form attached to this
Agreement as of the Execution Date and any amendment to the Definitive Documents
shall at all times be in form and substance reasonably acceptable to the
Required Plan Sponsors2 and the Company Parties and, solely as affects their
rights or treatment in any material respect, the Required Consenting DIP
Lenders;

 

(b)          the Definitive Documents set forth in Section 3.01(A)-(E),
(F) (other than documents included in the Plan Supplement which are specifically
enumerated in Section 3.01), (G)-(H) and (K), and any modifications, amendments,
or supplements to the foregoing, shall at all times be in form and substance
reasonably acceptable to the Required Consenting DIP Lenders;

 

(c)          the New Warrants, the Rights Offering Procedures, the Registration
Rights Agreement and any and all documentation required to implement, issue, and
distribute the New Common Stock, and any modifications, amendments, or
supplements to the foregoing, shall at all times be in form and substance
reasonably acceptable to the Consenting Second Lien Noteholders holding at least
66.67% of the aggregate outstanding principal amount of the Second Lien Note
Claims that are held by Consenting Second Lien Noteholders;

 

(d)          the Backstop Commitment Agreement shall be in form and substance
acceptable to each Backstop Party;3 provided that if the Backstop Commitment
Agreement is not in form and substance acceptable to any particular Consenting
FLLO Term Loan Facility Lender, or Consenting Second Lien Noteholder, such
Consenting FLLO Term Loan Facility Lender, or Consenting Second Lien Noteholder
may refuse to be a Backstop Party but such event shall not give rise to any
termination of this Agreement so long as: (i) the Rights Offering is fully
backstopped by the Backstop Parties; and (ii) the terms of the Backstop
Commitment Agreement do not have a disproportionate and adverse effect on such
Consenting FLLO Term Loan Facility Lender, or Consenting Second Lien Noteholder
in any material respect as compared to all other Consenting FLLO Term Loan
Facility Lenders, or Consenting Second Lien Noteholders, respectively, proposed
to be Backstop Parties; and

 

(e)          the DIP Documents and Exit Facilities Documents shall be, and shall
be deemed to be, acceptable to the Consenting Stakeholders and Company Parties
to the extent they are consistent with the DIP Term Sheet and Exit Facilities
Term Sheet; provided that the Consenting Stakeholders and Company Parties
reserve all rights with respect to all terms (including any amendments thereto)
in the DIP Documents and Exit Facilities Documents that are not specified in the
DIP Term Sheet and Exit Facilities Term Sheet.

 

 

2“Required Plan Sponsors” means the Backstop Parties holding FLLO Term Loan
Facility Claims and commitments to Backstop the Rights Offering such that the
Required Plan Sponsors Percentage exceeds 66 2/3%. “Required Plan Sponsors
Percentage” means a fraction, expressed as a percentage, (a) the numerator of
which shall be the sum of (i) the aggregate outstanding principal amount of FLLO
Term Loan Facility Claims that are held by the relevant Backstop Parties and
(ii) the percentage of the Backstop ascribed to the relevant Backstop Parties
(as set forth in the Backstop Commitment Agreement) multiplied by the Rights
Offering Amount and (b) the denominator of which shall be the sum of (i) the
aggregate outstanding principal amount of FLLO Term Loan Facility Claims that
are held by all of the Backstop Parties and (ii) the Rights Offering Amount.

 

3“Backstop Party” means each of the members of the FLLO Ad Hoc Group and
Franklin that are signatories to the Backstop Commitment Agreement

 

 

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Section 4.             Commitments of the Consenting Stakeholders.

 

4.01.       General Commitments, Forbearances, and Waivers.

 

(a)          During the Agreement Effective Period, each Consenting Stakeholder,
severally and not jointly, agrees, in respect of all of its Company Claims, to:

 

(i)            support the Restructuring Transactions within the timeframes
outlined herein and in the Definitive Documents and vote and exercise any powers
or rights available to it (including in any creditors’ meeting or in any process
requiring voting or approval to which they are legally entitled to participate)
in each case in favor of any matter requiring approval to the extent necessary
to implement the Restructuring Transactions;

 

(ii)            use commercially reasonable efforts to cooperate with, and
subject to applicable Laws, assist the Company Parties in obtaining additional
support for the Restructuring Transactions from the Company Parties’ other
stakeholders;

 

(iii)           use commercially reasonable efforts to oppose, subject to
applicable Laws, any party or person from taking any actions contemplated in
Section 4.02(b);

 

(iv)           use any commercially reasonably efforts to give, subject to
applicable Laws, any notice, order, instruction, or direction to the applicable
Agents/Trustees necessary to give effect to the Restructuring Transactions; and

 

(v)            negotiate in good faith and use commercially reasonable efforts
to execute and implement the Definitive Documents that are consistent with this
Agreement.

 

(b)          During the Agreement Effective Period, subject to applicable Laws
and as otherwise set forth in this Agreement, each Consenting Stakeholder,
severally, and not jointly, agrees, in respect of all of its Company Claims,
that it shall not directly or indirectly:

 

(i)             object to, delay, impede, or take any other action to interfere
with acceptance, implementation, or consummation of the Restructuring
Transactions;

 

(ii)            either itself or through any representatives or agents, solicit,
initiate, negotiate, facilitate, propose, continue or respond to any Alternative
Restructuring Proposal from or with any Entity or propose, file, support,
consent to, seek formal or informal credit committee approval of, or vote for
any Alternative Restructuring Proposal (and shall immediately inform the other
Consenting Stakeholders and the Company Parties of any notification of any
Alternative Restructuring Proposal); provided, that notwithstanding the
foregoing, any Consenting Stakeholder or its representatives may respond to and
participate in discussions with any third party who has made, or intends to
make, any bona fide, unsolicited proposal to acquire any material assets of the
Company Parties or an Alternative Restructuring Proposal to the Company Parties
and take actions to facilitate or encourage the proposing Entity to submit such
material asset acquisition proposal or Alternative Restructuring Proposal to the
Company Parties;

 

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(iii)           file any motion, pleading, or other document with the Bankruptcy
Court or any other court (including any modifications or amendments thereof)
that, in whole or in part, is not materially consistent with this Agreement or
the Plan;

 

(iv)           initiate, or have initiated on its behalf, any litigation or
proceeding of any kind with respect this Agreement, or the other Restructuring
Transactions contemplated herein against the other Parties other than to enforce
this Agreement or any Definitive Document or as otherwise permitted under this
Agreement;

 

(v)           exercise, or direct any other person to exercise, any right or
remedy for the enforcement, collection, or recovery of any of Claims against or
Interests in the Company Parties; or

 

(vi)           object to, delay, impede, or take any other action to interfere
with the Company Parties’ ownership and possession of their assets, wherever
located, or interfere with the automatic stay arising under section 362 of the
Bankruptcy Code;

 

(vii)          object to or commence any legal proceeding challenging the
adequate protection granted or proposed to be granted to the holders of the
Revolving Credit Facility Claims, the FLLO Term Loan Facility Claims, or the
Second Lien Notes Claims under the DIP Order; or

 

(viii)         file or support, directly or indirectly, a motion, application,
adversary proceeding, or cause of action (a) challenging the validity,
enforceability, perfection or priority of, or seeking avoidance or subordination
of the DIP Claims, the Revolving Credit Facility Claims, the FLLO Term Loan
Facility Claims, the Second Lien Notes Claims, or the Liens securing such
Claims, or (b) otherwise seeking to impose liability upon or enjoin the DIP
Lenders, Revolving Credit Facility Lenders, FLLO Term Loan Facility Lenders, or
the Second Lien Noteholders.

 

4.02.       Commitments with Respect to Chapter 11 Cases.

 

(a)          During the Agreement Effective Period, each Consenting Stakeholder
that is entitled to vote to accept or reject the Plan pursuant to its terms,
severally, and not jointly, agrees that it shall, subject to receipt by such
Consenting Stakeholder, whether before or after the commencement of the Chapter
11 Cases, of the Solicitation Materials:

 

(i)             vote each of its Company Claims to accept the Plan by delivering
its duly executed and completed ballot accepting the Plan on a timely basis
following the commencement of the solicitation of the Plan and its actual
receipt of the Solicitation Materials and the ballot that meet the requirements
of Sections 1125 and 1126 of the Bankruptcy Code; provided, however, that the
consent or votes of the Consenting Stakeholders shall be immediately revoked and
deemed void ab initio upon the occurrence of the Termination Date (other than a
Termination Date caused solely by the Plan Effective Date);

 

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(ii)            to the extent it is permitted to elect whether to opt in or out
of the releases set forth in the Plan, elect to opt in to, or not to opt out of,
the releases set forth in the Plan by timely delivering its duly executed and
completed ballot(s) indicating such election; and

 

(iii)           except as expressly set forth in this Agreement, not change,
withdraw, amend, or revoke (or cause to be changed, withdrawn, amended, or
revoked) any vote or election referred to in clauses (i) and (ii) above.

 

(b)          During the Agreement Effective Period, each Consenting Stakeholder,
in respect of each of its Company Claims, severally and not jointly, will not
directly or indirectly object to, delay, impede, or take any other action to
interfere with any motion or other pleading or document filed by a Company Party
in the Bankruptcy Court that is consistent with this Agreement.

 

Section 5.             Additional Provisions Regarding the Consenting
Stakeholders’ Commitments. Notwithstanding anything contained in this Agreement,
nothing in this Agreement shall: (a) be construed to prohibit any Consenting
Stakeholder from appearing as a party in interest in any matter to be
adjudicated in the Chapter 11 Cases, so long as such appearance and the
positions advocated in connection therewith are not inconsistent with this
Agreement and are not for the purpose of delaying, interfering, impeding, or
taking any other action to delay, interfere or impede, directly or indirectly,
the Restructuring Transactions; (b) affect the ability of any Consenting
Stakeholder to consult with any other Consenting Stakeholder, the Company
Parties, or any other party in interest in the Chapter 11 Cases (including any
official committee and the United States Trustee); (c) impair or waive the
rights of any Consenting Stakeholder to assert or raise any objection permitted
under this Agreement in connection with the Restructuring Transactions;
(d) prevent any Consenting Stakeholder from enforcing this Agreement or
contesting whether any matter, fact, or thing is a breach of, or is inconsistent
with, this Agreement; (e) obligate a Consenting Stakeholder to deliver a vote to
support the Plan or prohibit a Consenting Stakeholder from withdrawing such
vote, in each case from and after the Termination Date as to a Consenting
Stakeholder (other than a Termination Date as a result of the occurrence of the
Plan Effective Date) and, for the avoidance of doubt, upon the Termination Date
(other than a Termination Date as a result of the occurrence of the Plan
Effective Date), such Consenting Stakeholder’s vote shall automatically be
deemed void ab initio and such Consenting Stakeholder shall have a reasonable
opportunity to cast a vote; (f) be construed to prohibit any Consenting
Stakeholder from either itself or through any representatives or agents,
soliciting, initiating, negotiating, facilitating, proposing, continuing, or
responding to any proposal to purchase or sell Company Claims, so long as such
Consenting Stakeholder complies with Section 8.01, or (g) prevent the DIP Agent
or DIP Lenders from exercising any of its or their rights and privileges under
the DIP Documents. Nothing in this Agreement shall impair or affect the rights
or obligations of any party under the DIP Documents or DIP Order.

 

Section 6.             Commitments of the Company Parties.

 

6.01.       Affirmative Commitments. Except as set forth in Section 7, during
the Agreement Effective Period, the Company Parties agree to:

 

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(a)          support and take all steps reasonably necessary and desirable to
consummate the Restructuring Transactions in accordance with this Agreement and
within the timeframes outlined herein;

 

(b)          support and take all steps necessary and desirable to facilitate
solicitation of the Plan in accordance with this Agreement and within the
timeframes outlined herein;

 

(c)          to the extent any legal or structural impediment arises that would
prevent, hinder, or delay the consummation of the Restructuring Transactions
contemplated herein, take all steps reasonably necessary and desirable to
address any such impediment;

 

(d)          use commercially reasonable efforts to obtain any and all required
regulatory and/or third-party approvals for the Restructuring Transactions;

 

(e)          negotiate in good faith and use commercially reasonable efforts
to execute and deliver the Definitive Documents and any other required
agreements to effectuate and consummate the Restructuring Transactions as
contemplated by this Agreement;

 

(f)           use commercially reasonable efforts to seek additional support for
the Restructuring Transactions from their other material stakeholders;

 

(g)          provide draft copies of all substantive motions, documents, and
other pleadings to be filed in the Chapter 11 Cases to counsel to the Consenting
DIP Lenders, counsel to the Consenting Revolving Credit Facility Lenders,
counsel to the Consenting FLLO Term Loan Facility Lenders, and counsel to the
Consenting Second Lien Noteholders as soon as reasonably practicable, but in no
event less than two (2) Business Days prior to the date when the Company Parties
intend to file such documents and, without limiting any approval rights set
forth in this Agreement, consult in good faith with counsel to the DIP Lenders,
counsel to the Consenting Revolving Credit Facility Lenders, counsel to the
Consenting FLLO Term Loan Facility Lenders, and counsel to the Consenting Second
Lien Noteholders regarding the form and substance of any such proposed filing.
Notwithstanding the foregoing, in the event that two (2) Business Days’ notice
is not reasonably practicable under the circumstances, the Company Parties shall
provide draft copies of any such motions, documents, or other pleadings to
counsel to the applicable Consenting Stakeholders as soon as otherwise
reasonably practicable before the date when the Company Parties intend to file
any such motion, documents, or other pleading;

 

(h)          provide, and direct their employees, officers, advisors, and other
representatives to provide, to each of the Consenting DIP Lenders, the
Consenting Revolving Credit Facility Lenders, the Consenting FLLO Term Loan
Facility Lenders, and the Consenting Second Lien Noteholders, and each of their
respective legal and financial advisors (i) reasonable access to the Company
Parties’ books and records during normal business hours on reasonable advance
notice to the Company Parties’ representatives and without disruption to the
operation of the Company Parties’ business, (ii) reasonable access to the
management and advisors of the Company Parties on reasonable advance notice to
such persons and without disruption to the operation of the Company Parties’
business, and (iii) such other information as reasonably requested by the
Consenting DIP Lenders, the Consenting Revolving Credit Facility Lenders, the
Consenting FLLO Term Loan Facility Lenders, the Consenting Second Lien
Noteholders or their respective legal and financial advisors; notwithstanding
the foregoing, the Company Parties shall not be required (x) to permit any
inspection, or to disclose any information, that in the reasonable judgment of
the Company Parties, would cause the Company Party to violate its respective
obligations with respect to confidentiality to a third party, (y) to disclose
any legally privileged information of the Company Party, or (z) to violate
applicable Law;

 

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(i)           actively oppose and object to the efforts of any person seeking to
object to, delay, impede, or take any other action to interfere with the
acceptance, implementation, or consummation of the Restructuring Transactions
(including, if applicable, the filing of timely filed objections or written
responses) to the extent such opposition or objection is reasonably necessary or
desirable to facilitate implementation of the Restructuring Transactions;

 

(j)           actively oppose and object to any motion, application, adversary
proceeding, or cause of action (a) challenging the validity, enforceability,
perfection or priority of, or seeking avoidance or subordination of the DIP
Claims; the Revolving Credit Facility Claims, the FLLO Term Loan Facility
Claims, or the Second Lien Notes Claims or the Liens securing such Claims,
(b) otherwise seeking to impose liability upon or enjoin the DIP Lenders, the
Revolving Credit Facility Lenders, the FLLO Term Loan Facility Lenders, or the
Second Lien Noteholders, (c) seeking the entry of an order directing the
appointment of a trustee or examiner (with expanded powers beyond those set
forth in sections 1106(a)(3) and (4) of the Bankruptcy Code), (d) seeking the
entry of an order converting the Chapter 11 Cases to cases under chapter 7 of
the Bankruptcy Code, (e) seeking the entry of an order dismissing the Chapter 11
Cases, or (f) seeking the entry of an order modifying or terminating the Company
Parties’ exclusive right to file and/or solicit acceptances of a plan of
reorganization, as applicable;

 

(k)          actively oppose or object to any effort by a third party seeking
standing to bring any motion, application, adversary proceeding, or cause of
action described in Section 6.01(j);

 

(l)           upon reasonable request of any of the Consenting Stakeholders,
inform counsel to the Consenting Stakeholders as to: (i) the material business
and financial (including liquidity) performance of the Company Parties; (ii) the
status and progress of the Restructuring Transactions, including progress in
relation to the negotiations of the Definitive Documents; and (iii) the status
of obtaining any necessary or desirable authorizations (including any consents)
from each Consenting Stakeholder, any competent judicial body, governmental
authority, banking, taxation, supervisory, or regulatory body or any stock
exchange;

 

(m)         inform counsel to the Consenting Stakeholders as soon as reasonably
practicable after becoming aware of: (i) any matter or circumstance which they
know, or believe is likely, to be a material impediment to the implementation or
consummation of the Restructuring Transactions; (ii) any notice of any
commencement of any material involuntary insolvency proceedings, legal suit for
payment of debt or securement of security from or by any person in respect of
any Company Party; (iii) a breach of this Agreement (including a breach by any
Company Party); and (iv) any representation or statement made or deemed to be
made by them under this Agreement which is or proves to have been incorrect or
misleading in any material respect when made or deemed to be made;

 

11

 

 

(n)          to the extent any legal or structural impediment arises under
Section 6.01(m) that would prevent, hinder or delay the consummation of the
Plan, use commercially reasonable efforts to negotiate with the Consenting DIP
Lenders, the Consenting Revolving Credit Facility Lenders, the Consenting FLLO
Term Loan Facility Lenders, and the Consenting Second Lien Noteholders in good
faith in an effort to agree to appropriate additional or alternative provisions
or alternative implementation mechanics to address any such impediment;
provided, that the economic outcome for the Consenting DIP Lenders, the
Consenting Revolving Credit Facility Lenders, the Consenting FLLO Term Loan
Facility Lenders, and the Consenting Second Lien Noteholders and other material
terms of this Agreement must be substantially preserved in such alternate
provisions or implementation mechanics;

 

(o)          to the extent the Company Parties decide to seek Bankruptcy Court
approval of (a) a key employee incentive plan for insider employees (the
“KEIP”), and/or (b) a key employee retention plan for key non-insider employees
(the “KERP”), such plans shall be in a form acceptable to the Consenting
Stakeholders with respect to the terms of such KEIP and/or KERP prior to filing
motion(s) seeking approval of the KEIP and/or KERP; provided, however, the KERP
effective as of May 1, 2020 shall be deemed acceptable to the Consenting
Stakeholders;

 

(p)          use commercially reasonable efforts to seek additional support for
the Restructuring from their other material stakeholders to the extent
reasonably prudent and, to the extent the Company Parties receive any Joinders
or Transfer Agreements, to notify the Consenting Stakeholders of such Joinders
and Transfer Agreements; and

 

(q)          promptly pay Restructuring Expenses.

 

6.02.       Negative Commitments. Except as set forth in Section 7, during the
Agreement Effective Period, each of the Company Parties shall not directly or
indirectly:

 

(a)          object to, delay, impede, or take any other action to interfere
with acceptance, implementation, or consummation of the Restructuring
Transactions;

 

(b)          take any action (i) that is inconsistent in any material respect
with the Restructuring Transactions described in this Agreement or the Plan,
(ii) is intended to frustrate or impede approval, implementation and
consummation of the Restructuring Transactions described in this Agreement or
the Plan, or (iii) would have the effect of frustrating or impeding approval,
implementation and consummation of the Restructuring Transactions described in
this Agreement or the Plan;

 

(c)          modify the Plan, in whole or in part, in a manner that is not
consistent with this Agreement in all material respects; or

 

(d)          file any motion, pleading, or Definitive Documents with the
Bankruptcy Court or any other court (including any modifications or amendments
thereof) that, in whole or in part, is not materially consistent with this
Agreement or the Plan.

 

12

 

 

Section 7.             Additional Provisions Regarding Company Parties’
Commitments.

 

7.01.       Notwithstanding anything to the contrary in this Agreement, nothing
in this Agreement shall require a Company Party or the board of directors, board
of managers, or similar governing body of a Company Party, after consulting with
counsel, to take any action or to refrain from taking any action with respect to
the Restructuring Transactions to the extent taking or failing to take such
action would be inconsistent with applicable Law or its fiduciary obligations
under applicable Law, and any such action or inaction pursuant to this
Section 7.01 shall not be deemed to constitute a breach of this Agreement. The
Company Parties shall give prompt written notice to the Consenting Stakeholders
of any determination in accordance with this Section 7.01 to take or refrain
from taking any action. This Section 7.01 shall not impede any Party’s right to
terminate this Agreement pursuant to Section 12.01(i).

 

7.02.       Notwithstanding anything to the contrary in this Agreement (but
subject to Section 7.01), each Company Party and its respective directors,
officers, employees, investment bankers, attorneys, accountants, consultants,
and other advisors or representatives shall have the right to consider, respond
to, and facilitate Alternative Restructuring Proposals, but may not solicit an
Alternative Restructuring Proposal, offer, indication of interest or inquiry for
one or more Alternative Restructuring Proposals, and in furtherance thereof,
may: (a) provide access to non-public information concerning any Company Party
to any Entity or enter into Confidentiality Agreements or nondisclosure
agreements with any Entity; (b) maintain or continue discussions or negotiations
with respect to Alternative Restructuring Proposals; (c) otherwise cooperate
with, assist, participate in, or facilitate any inquiries, proposals,
discussions, or negotiation of Alternative Restructuring Proposals; and
(d) enter into or continue discussions or negotiations with holders of Claims
against or Interests in a Company Party (including any Consenting Stakeholder),
any other party in interest in the Chapter 11 Cases (including any official
committee and the United States Trustee), or any other Entity regarding the
Restructuring Transactions or Alternative Restructuring Proposals. If any
Company Party receives an Alternative Restructuring Proposal, or any update to
an Alternative Restructuring Proposal from the counterparty thereto, then such
Company Party shall (A) within two (2) Business Days of receiving such proposal,
provide counsel to the Consenting Stakeholders with all documentation received
in connection with such Alternative Restructuring Proposal; (B) provide counsel
to the Consenting Stakeholders with regular updates as to the status and
progress of such Alternative Restructuring Proposal; and (C) respond promptly to
reasonable information requests and questions from counsel to the Consenting
Stakeholders relating to such Alternative Restructuring Proposal.

 

7.03.       Nothing in this Agreement shall: (a) impair or waive the rights of
such Company Party to assert or raise any objection permitted under this
Agreement in connection with the Restructuring Transactions; or (b) prevent such
Company Party from enforcing this Agreement or contesting whether any matter,
fact, or thing is a breach of, or is inconsistent with, this Agreement.

 

Section 8.             Transfer of Interests and Securities.

 

8.01.       During the Agreement Effective Period, no Consenting Stakeholder
shall Transfer any ownership (including any beneficial ownership as defined in
the Rule 13d-3 under the Securities Exchange Act of 1934, as amended) in any
Company Claims to any affiliated or unaffiliated party, including any party in
which it may hold a direct or indirect beneficial interest, unless:

 

13

 

 

(a)          the authorized transferee is either (1) a qualified institutional
buyer as defined in Rule 144A of the Securities Act, (2) a non-U.S. person in an
offshore transaction as defined under Regulation S under the Securities Act,
(3) an institutional accredited investor (as defined by Rule 501(a)(1), (2),
(3), and (7) of the Securities Act), or (4) a Consenting Stakeholder not in
breach of this Agreement;

 

(b)          either (i) the transferee executes and delivers to counsel to the
Consenting Stakeholders and counsel to the Company Parties, at or before the
time of the proposed Transfer, a Transfer Agreement or (ii) the transferee is a
Consenting Stakeholder or an affiliate thereof and the transferee provides
notice of such Transfer (including the amount and type of Company Claim/Interest
Transferred) to counsel to the Company Parties and counsel to the Consenting
Stakeholders by the close of business on the second Business Day following such
Transfer; and

 

(c)          such Transfer shall not violate the terms of any order entered by
the Bankruptcy Court with respect to preservation of net operating losses.

 

8.02.       Upon compliance with the requirements of Section 8.01, the
transferor shall be deemed to relinquish its rights (and be released from its
obligations) under this Agreement to the extent of the rights and obligations in
respect of such transferred Company Claims. With respect to Company Claims held
by the relevant transferee upon consummation of a Transfer, such transferee is
deemed to make all of the representations and warranties of a Consenting
Stakeholder and undertake all obligations relevant to such transferor
(including, for the avoidance of doubt, the commitments made in Section 4.02)
set forth in this Agreement. Any Transfer in violation of Section 8.01 shall be
void ab initio.

 

8.03.       This Agreement shall in no way be construed to preclude any
Consenting Stakeholders from acquiring additional Company Claims; provided,
however, that (a) such additional Company Claims shall automatically and
immediately upon acquisition by a Consenting Stakeholder be deemed subject to
the terms of this Agreement (regardless of when or whether notice of such
acquisition is given to counsel to the Company Parties or to counsel to the
Consenting DIP Lenders, counsel to the Consenting Revolving Credit Facility
Lenders, counsel to the Consenting FLLO Term Loan Facility Lenders, and counsel
to the Consenting Second Lien Noteholders) and (b) on the effective date of such
transfer, such Consenting Stakeholder must provide notice of such acquisition
(including the amount and type of Company Claim acquired) to counsel to the
Company Parties within five (5) Business Days of such acquisition.

 

8.04.       This Section 8 shall not impose any obligation on any Company Party
to issue any “cleansing letter” or otherwise publicly disclose information for
the purpose of enabling a Consenting Stakeholder to Transfer any of its Company
Claims. Notwithstanding anything to the contrary herein, to the extent a Company
Party and another Party have entered into a Confidentiality Agreement, the terms
of such Confidentiality Agreement shall continue to apply and remain in full
force and effect according to its terms, and this Agreement does not supersede
any rights or obligations otherwise arising under such Confidentiality
Agreements.

 

14

 

 

8.05.       Notwithstanding Section 8.01, (a) a Consenting Stakeholder may
Transfer any Company Claims to an Entity that is an Affiliate, affiliated fund,
or affiliated entity with a common investment advisor, which Entity shall
automatically be bound by this Agreement upon the Transfer of such Company
Claims and (b) a Qualified Marketmaker that acquires any Company Claims from
such Consenting Stakeholder with the purpose and intent of acting as a Qualified
Marketmaker for such Company Claims shall not be required to execute and deliver
a Transfer Agreement in respect of such Company Claims if such Qualified
Marketmaker subsequently Transfers such Company Claims (by purchase, sale
assignment, participation, or otherwise) to a transferee that is a Consenting
Stakeholder or a transferee who executes and delivers to counsel to the
Consenting Stakeholders and counsel to the Company Parties, at or before the
time of the proposed Transfer, a Transfer Agreement. Notwithstanding the
foregoing, to the extent any Consenting Stakeholder is acting in its capacity as
a Qualified Marketmaker, it may Transfer any Company Claims that it acquires
from a holder of such Company Claims that is not a Consenting Stakeholder
without the requirement that the transferee be or become a Consenting
Stakeholder or execute a Transfer Agreement.

 

8.06.       Notwithstanding anything to the contrary in this Section 8, the
restrictions on Transfer set forth in this Section 8 shall not apply to the
grant of any Liens or encumbrances on any claims and interests in favor of a
bank or broker-dealer holding custody of such claims and interests in the
ordinary course of business and which Lien or encumbrance is released upon the
Transfer of such claims and interests.

 

8.07.       Additional Consenting Stakeholders. Any holder of the DIP Claims,
the Revolving Credit Facility Claims, the FLLO Term Loan Facility Claims, or the
Second Lien Notes Claims that is not a party to this Agreement as of the
Agreement Effective Date may, at any time after the Agreement Effective Date,
become a Consenting Stakeholder by executing and delivering to counsel to the
Consenting DIP Lenders, counsel to the Consenting Revolving Credit Facility
Lenders, counsel to the Consenting FLLO Term Loan Facility Lenders, counsel to
the Consenting Second Lien Noteholders and counsel to the Company Parties a
Joinder, pursuant to which such Person shall be bound by the terms of this
Agreement.

 

Section 9.             Representations and Warranties of Consenting
Stakeholders. Each Consenting Stakeholder severally, and not jointly, represents
and warrants that, as of the date such Consenting Stakeholder executes and
delivers this Agreement and as of the Plan Effective Date:

 

(a)           it is the beneficial or record owner, or has validly executed
unsettled trades, of the face amount of the Company Claims or is the nominee,
investment manager, or advisor for beneficial holders of the Company Claims
reflected in, and, having made reasonable inquiry, is not the beneficial or
record owner of any Company Claims other than those reflected in, such
Consenting Stakeholder’s signature page to this Agreement or a Transfer
Agreement, as applicable (as may be updated pursuant to Section 8);

 

(b)          it has the full power and authority to act on behalf of, vote and
consent to matters concerning, such Company Claims;

 

(c)          such Company Claims are free and clear of any pledge, Lien,
security interest, charge, claim, equity, option, proxy, voting restriction,
right of first refusal, or other limitation on disposition, transfer, or
encumbrances of any kind, that would adversely affect in any way such Consenting
Stakeholder’s ability to perform any of its obligations under this Agreement at
the time such obligations are required to be performed;

 

15

 

 

(d)          it has the full power to vote, approve changes to, and Transfer all
of its Company Claims referable to it as contemplated by this Agreement subject
to applicable Law; and

 

(e)          solely with respect to holders of Company Claims, (i) it is either
(A) a qualified institutional buyer as defined in Rule 144A of the Securities
Act, (B) not a U.S. person (as defined in Regulation S of the Securities Act),
or (C) an institutional accredited investor (as defined by Rule 501(a)(1), (2),
(3), and (7) of the Securities Act), and (ii) any securities acquired by the
Consenting Stakeholder in connection with the Restructuring Transactions will
have been acquired for investment and not with a view to distribution or resale
in violation of the Securities Act.

 

Section 10.           Representations and Warranties of Company Parties. Each
Company Party severally, and not jointly, represents and warrants that:

 

(a)          as of the date such Company Party becomes a Party, each Company
Party believes that entry into this Agreement is consistent with the exercise of
such Company Party’s fiduciary duties; and

 

(b)          as of the Agreement Effective Date, the Company Parties and their
professionals are not entertaining, encouraging, soliciting, or discussing any
offers, indications of interest, or inquiries for an Alternative Restructuring
Proposal with any party and have not entertained, encouraged, solicited, or
discussed any such Alternative Restructuring Proposal with any party within one
week of the Agreement Effective Date, except as disclosed to the Consenting
Stakeholders.

 

Section 11.          Mutual Representations, Warranties, and Covenants

 

. Each of the Consenting Stakeholders and each Company Party, in each case
severally and not jointly, represents, warrants, and covenants to each other
Party, as of the date such Party executed and delivers this Agreement or
Joinder(s) and as of immediately prior to the Plan Effective Date:

 

(a)          it is validly existing and in good standing under the Laws of the
state of its organization, and this Agreement is a legal, valid, and binding
obligation of such Party, enforceable against it in accordance with its terms,
except as enforcement may be limited by applicable Laws relating to or limiting
creditors’ rights generally or by equitable principles relating to
enforceability;

 

(b)          except as expressly provided in this Agreement, the Plan, and the
Bankruptcy Code, no consent or approval is required by any other Entity in order
for it to effectuate the Restructuring Transactions contemplated by, and perform
its respective obligations under, this Agreement;

 

(c)          the entry into and performance by it of, and the transactions
contemplated by, this Agreement do not, and will not, conflict in any material
respect with any Law or regulation applicable to it or with any of its articles
of association, memorandum of association or other constitutional documents;

 

16

 

 

(d)          except as expressly provided in this Agreement, it has (or will
have, at the relevant time) all requisite corporate or other power and authority
to enter into, execute, and deliver this Agreement and to effectuate the
Restructuring Transactions contemplated by, and perform its respective
obligations under, this Agreement; and

 

(e)          except as expressly provided by this Agreement, it is not party to
any restructuring or similar agreements or arrangements with the other Parties
to this Agreement that have not been disclosed to all Parties to this Agreement.

 

Section 12.          Termination Events.

 

12.01.     Consenting Stakeholder Termination Events

 

. This Agreement may be terminated (a) with respect to the Consenting DIP
Lenders, by the Required Consenting DIP Lenders4 by the delivery to the
Consenting Revolving Credit Facility Lenders, the Consenting FLLO Term Loan
Facility Lenders, the Consenting Second Lien Noteholders, and the Company
Parties of a written notice in accordance with Section 14.10; (b) with respect
to the Consenting Revolving Credit Facility Lenders, by the Required Consenting
Revolving Credit Facility Lenders5 by the delivery to the Consenting DIP
Lenders, the Consenting FLLO Term Loan Facility Lenders, the Consenting Second
Lien Noteholders, and the Company Parties of a written notice in accordance with
Section 14.10; (c) with respect to the Consenting FLLO Term Loan Facility
Lenders, by the Required Consenting FLLO Term Loan Facility Lenders6 by the
delivery to the Consenting DIP Lenders, the Consenting Revolving Credit Facility
Lenders, the Consenting Second Lien Noteholders, and the Company Parties of a
written notice in accordance with Section 14.10; and (d) with respect to the
Consenting Second Lien Noteholders, by the Required Consenting Second Lien
Noteholders,7 by the delivery to the Consenting DIP Lenders, the Consenting
Revolving Credit Facility Lenders, Consenting FLLO Term Loan Facility Lenders,
and the Company Parties of a written notice in accordance with Section 14.10
hereof upon the occurrence of the following events:

 

(a)          the breach in any material respect by a Company Party of its
obligations under this Agreement, which breach is not cured within five
(5) Business Days after such Company Party has been given written notice of such
breach by another Party in accordance with Section 14.10 hereof, or if a Company
Party files, publicly announces, or informs the Consenting DIP Lenders, the
Consenting Revolving Credit Facility Lenders, the Consenting FLLO Term Loan
Facility Lenders, and the Consenting Second Lien Noteholders of its intention to
file a chapter 11 plan that contains terms and conditions that: (i) do not
provide the Consenting DIP Lenders, the Consenting Revolving Credit Facility
Lenders, the Consenting FLLO Term Loan Facility Lenders, or the Consenting
Second Lien Noteholders, as applicable, with the economic recovery set forth in
the Restructuring Term Sheet or (ii) are not otherwise consistent with this
Agreement and the Restructuring Term Sheet;

 

 

4 “Required Consenting DIP Lenders” means Consenting DIP Lenders holding at
least 51% of the aggregate Revolving DIP Loan Commitments under the DIP Facility
that are held by Consenting DIP Lenders.

 

5 “Required Consenting Revolving Credit Facility Lenders” means Consenting
Revolving Credit Facility Lenders holding at least 51% of the aggregate
outstanding principal amount of the Revolving Credit Facility Claims that are
held by Consenting Revolving Credit Facility Lenders.

 

6 “Required Consenting FLLO Term Loan Facility Lenders” means Consenting FLLO
Term Loan Facility Lenders holding at least 66.67% of the aggregate outstanding
principal amount of the FLLO Term Loan Facility Claims that are held by
Consenting FLLO Term Loan Facility Lenders.

 

7 “Required Consenting Second Lien Noteholders” means Consenting Second Lien
Noteholders holding at least 66.67% of the aggregate outstanding principal
amount of the Second Lien Note Claims that are held by Consenting Second Lien
Noteholders, but not less than two of the number of all Consenting Second Lien
Noteholders.

 

17

 

 

(b)          a material breach by any Company Party of any representation,
warranty, or covenant of such Company Party set forth in this Agreement that (to
the extent curable) remains uncured for a period of five (5) Business Days after
such Company Party has been given written notice of such breach by another Party
in accordance with Section 14.10 hereof;

 

(c)          the issuance by any governmental authority, including any
regulatory authority or court of competent jurisdiction, of any final,
non-appealable ruling or order that (i) enjoins the consummation of a material
portion of the Restructuring Transactions and (ii) remains in effect for ten
(10) Business Days; provided, that this termination right may not be exercised
by any Party that sought or requested such ruling or order in contravention of
any obligation set out in this Agreement;

 

(d)          the entry of an order by the Bankruptcy Court, or the filing of a
motion or application by any Company Party seeking an order (without the prior
written consent of the Required Consenting Stakeholders8), (i) converting one or
more of the Chapter 11 Cases of a Company Party to a case under chapter 7 of the
Bankruptcy Code, (ii) appointing an examiner with expanded powers beyond those
set forth in sections 1106(a)(3) and (4) of the Bankruptcy Code or a trustee in
one or more of the Chapter 11 Cases of a Company Party, (iii) dismissing the
Chapter 11 Cases, or (iv) rejecting this Agreement;

 

(e)          the Bankruptcy Court enters an order denying confirmation of the
Plan;

 

(f)           any Debtor files with the Bankruptcy Court any motion or
application seeking authority to sell any material assets (other than (i) any
sales contemplated in the Restructuring Term Sheet or disclosed in writing by
the Company Parties or their advisors and in reasonable detail to the Consenting
DIP Lenders, the Consenting Revolving Credit Facility Lenders, the Consenting
FLLO Term Loan Facility Lenders, and the Consenting Second Lien Noteholders or
their respective advisors prior to the execution of any definitive sale
agreement in respect of such sale or the filing of any motion or application by
the Company Parties seeking Bankruptcy Court approval of such sale and the
Required Consenting Stakeholders have consented in writing to such sale
(provided, that, if such sale would have a material, disproportionate and
adverse effect on any of the Company Claims held by the Consenting DIP Lenders,
the Consenting Revolving Credit Facility Lenders, the Consenting FLLO Term Loan
Facility Lenders, or the Consenting Second Lien Noteholders, a written consent
to such sale shall also have been provided by either or all of the Consenting
DIP Lenders, the Consenting Revolving Credit Facility Lenders, the Consenting
FLLO Term Loan Facility Lenders, or the Consenting Second Lien Noteholders,
respectively, upon which such material, disproportionate, and adverse effect
shall, or shall reasonably be expected to, result) and (ii) any sales pursuant
to any order establishing procedures for the sale of de minimis assets);

 

 

8 “Required Consenting Stakeholders” means the Required Consenting DIP Lenders,
the Required Consenting Revolving Credit Facility Lenders, and the Required Plan
Sponsors.

 

18

 

 

(g)          the occurrence of any one of the following events:

 

(i)            the Debtors or any Affiliate of the Debtors files a motion,
application, adversary proceeding, or cause of action (a) challenging the
validity, enforceability, perfection or priority of, or seeking avoidance,
subordination, or recharacterization of the DIP Claims, the Revolving Credit
Facility Claims, the FLLO Term Loan Facility Claims or the Second Lien Notes
Claims, as applicable, or the Liens securing any of such Claims, as applicable,
or (b) otherwise seeking to impose liability upon or enjoin the DIP Lenders, the
Revolving Credit Facility Lenders, the FLLO Term Loan Facility Lenders, or the
Second Lien Noteholders, as applicable;

 

(ii)            the Debtors or any Affiliate of the Debtors support any
application, adversary proceeding, or Cause of Action referred to in the
immediately preceding clause (i) filed by a third party, or consents to the
standing of any such third party to bring such application, adversary
proceeding, or Cause of Action;

 

(h)          the modification of the employment terms of any member of
Chesapeake’s senior management team without the consent of the Required
Consenting Stakeholders, including any further modification of the Chesapeake’s
compensation program as amended on May 5, 2020;

 

(i)           the failure to comply with or achieve any one of the milestones
set forth in the Restructuring Term Sheet, unless such milestone is extended
with the express prior written consent of the Required Consenting Stakeholders,
which consent may be provided via email from counsel to each of such Required
Consenting Stakeholders; provided that milestones (d) and (g) in the
Restructuring Term Sheet relating to the Exit Facilities may be extended with
the express prior written consent of the Required DIP Lenders and without the
consent of any other Consenting Stakeholders;

 

(j)           a Company Party or the board of directors, board of managers, or
such similar governing body of a Company Party takes or refrains from taking any
action in any respect on the basis of a determination made pursuant to
Section 7.01;

 

(k)          any Company Party (i) files, amends, or modifies, or files a
pleading seeking approval of, any Definitive Document or authority to amend or
modify any Definitive Document, in a manner that is inconsistent with the
consent rights set forth in Section 3.02 or constitutes a breach of this
Agreement, (ii) withdraws the Plan without the prior consent of the Required
Consenting Stakeholders, or (iii) publicly announces its intention to take any
such acts listed in the foregoing clause (i) or (ii), in the case of each of the
foregoing clauses (i) and (ii), which remains uncured (to the extent curable)
for five (5) Business Days after such terminating Consenting Stakeholders
transmit a written notice in accordance with Section 14.10 detailing any such
breach;

 

(l)           the occurrence and continuation of any event of default under the
DIP Credit Agreement that is not cured in accordance with the DIP Credit
Agreement;

 

19

 

 

(m)         the board of directors, board of managers, or such similar governing
body of any Company Party determines, after consulting with counsel, (i) that
proceeding with any of the Restructuring Transactions would be inconsistent with
the exercise of its fiduciary duties or applicable Law or (ii) in the exercise
of its fiduciary duties, to pursue an Alternative Restructuring Proposal and any
Company Party (a) makes a public announcement that it intends to accept an
Alternative Restructuring Proposal or (b) enters into a definitive agreement
with respect to an Alternative Restructuring Proposal;

 

(n)          the Debtors’ use of cash collateral, the DIP Facility, or the
Backstop Commitment Agreement has been terminated in accordance with each of
their respective terms;

 

(o)          if any of the Company Parties enters into an agreement with a
counterparty to a swap, collar, option or other hedging arrangement to terminate
such swap, collar, option, or other hedging arrangement without obtaining the
prior written consent of the Required Consenting Stakeholders;

 

(p)          the failure by the Debtors to make adequate protection payments to
the Consenting Revolving Credit Facility Lenders, the Consenting FLLO Term Loan
Facility Lenders, or Franklin, as applicable, in accordance with the DIP Order
following approval of such DIP Order by the Bankruptcy Court;

 

(q)          the entry of an order by the Bankruptcy Court or any other court of
competent jurisdiction, or the filing of a motion, application, or other
pleading by any Company Party seeking an order (without the prior written
consent of the Required Consenting Stakeholders), reversing or vacating the
Confirmation Order.

 

12.02.     Consenting DIP Lender Termination Rights. The Required Consenting DIP
Lenders may terminate this Agreement as to all Parties upon prior written notice
to all Parties in accordance with Section 14.10 hereof upon the occurrence of
any of the following events:

 

(a)           termination of this Agreement by either the Required Consenting
FLLO Term Loan Facility Lenders, the Required Consenting Second Lien
Noteholders, or the Company Parties;

 

(b)          any Debtor, any Consenting FLLO Term Loan Facility Lender, or any
Consenting Second Lien Noteholder files a motion, application, adversary
proceeding, or cause of action (A) challenging the validity, enforceability,
perfection or priority of, or seeking avoidance, subordination, or
recharacterization of the DIP Claims or the Liens securing such Claims or
(B) otherwise seeking to impose liability upon or enjoin the DIP Lenders or the
Revolving Credit Facility Lenders;

 

(c)          any Debtor, any Consenting FLLO Term Loan Facility Lender, or any
Consenting Second Lien Noteholder supports any application, adversary proceeding
or cause of action referred to in Section 12.04(b) filed by any third party, or
consents to the standing of such third party to bring such application,
adversary proceeding or cause of action; or

 

(d)          the breach in any material respect by one or more of the Consenting
FLLO Term Loan Facility Lenders or the Consenting Second Lien Noteholders of any
provision set forth in this Agreement that remains uncured for a period of five
(5) Business Days after the receipt by such Consenting FLLO Term Loan Facility
Lenders or Consenting Second Lien Noteholders of notice of such breach;
provided, however, that so long as non-breaching Consenting FLLO Term Loan
Facility Lenders party hereto continue to hold at least 66.67% of the
outstanding Revolving Credit Facility Claims or FLLO Term Loan Claims,
respectively, or non-breaching Consenting Second Lien Noteholders party hereto
continue to hold at least 50% of the outstanding Second Lien Notes Claims, such
termination shall be effective only with respect to such breaching Consenting
FLLO Term Loan Facility Lender(s) or Consenting Second Lien Noteholder(s),
respectively.

 

20

 

 

12.03.     Consenting Revolving Credit Facility Lender Termination Rights. The
Required Consenting Revolving Credit Facility Lenders may terminate this
Agreement as to all Parties upon prior written notice to all Parties in
accordance with Section 14.10 hereof upon the occurrence of any of the following
events:

 

(a)          termination of this Agreement by either the Required Consenting
FLLO Term Loan Facility Lenders, the Required Consenting Second Lien
Noteholders, or the Company Parties;

 

(b)          any Debtor, any Consenting FLLO Term Loan Facility Lender, or any
Consenting Second Lien Noteholder files a motion, application, adversary
proceeding, or cause of action (A) challenging the validity, enforceability,
perfection or priority of, or seeking avoidance, subordination, or
recharacterization of the Revolving Credit Facility Claims or the Liens securing
such Claims or (B) otherwise seeking to impose liability upon or enjoin the
Revolving Credit Facility Lenders;

 

(c)          any Debtor, any Consenting FLLO Term Loan Facility Lenders, or any
Consenting Second Lien Noteholder supports any application, adversary proceeding
or cause of action referred to in Section 12.04(b) filed by any third party, or
consents to the standing of such third party to bring such application,
adversary proceeding or cause of action; or

 

(d)          the breach in any material respect by one or more of the Consenting
FLLO Term Loan Facility Lenders or the Consenting Second Lien Noteholders of any
provision set forth in this Agreement that remains uncured for a period of five
(5) Business Days after the receipt by such Consenting DIP Lenders, Consenting
FLLO Term Loan Facility Lenders or Consenting Second Lien Noteholders of notice
of such breach; provided, however, that so long as non-breaching Consenting FLLO
Term Loan Facility Lenders continue to hold at least 66.67% of FLLO Term Loan
Claims, or non-breaching Consenting Second Lien Noteholders party hereto
continue to hold at least 50% of the outstanding Second Lien Notes Claims,
respectively, such termination shall be effective only with respect to such
breaching Consenting FLLO Term Loan Facility Lender(s) or Consenting Second Lien
Noteholder(s), respectively.

 

12.04.     Consenting FLLO Term Loan Facility Lender Termination Rights. The
Required Consenting FLLO Term Loan Facility Lenders may terminate this Agreement
as to all Parties upon prior written notice to all Parties in accordance with
Section 14.10 hereof upon the occurrence of any of the following events:

 

21

 

 

(a)           termination of this Agreement by any of the Required Consenting
DIP Lenders, the Required Consenting Revolving Credit Facility Lenders, the
Required Consenting Second Lien Noteholders, or the Company Parties;

 

(b)          any Debtor, any Consenting DIP Lender, any Consenting Revolving
Credit Facility Lender, or any Consenting Second Lien Noteholder files a motion,
application, adversary proceeding, or cause of action (A) challenging the
validity, enforceability, perfection or priority of, or seeking avoidance,
subordination or recharacterization of the FLLO Term Loan Facility Claims or the
Liens securing such Claims or (B) otherwise seeking to impose liability upon or
enjoin the FLLO Term Loan Facility Lenders;

 

(c)          any Debtor, any Consenting DIP Lender, any Consenting Revolving
Credit Facility Lenders, or any Consenting Second Lien Noteholder supports any
application, adversary proceeding or cause of action referred to in
Section 12.04(b) filed by any third party, or consents to the standing of such
third party to bring such application, adversary proceeding or cause of action;
or

 

(d)          the breach in any material respect by one or more of the Consenting
DIP Lenders, the Consenting Revolving Credit Facility Lenders or the Consenting
Second Lien Noteholders of any provision set forth in this Agreement that
remains uncured for a period of five (5) Business Days after the receipt by such
Consenting DIP Lender, Consenting Revolving Credit Facility Lenders or
Consenting Second Lien Noteholders of notice of such breach; provided, however,
that so long as non-breaching Consenting DIP Lenders continue to hold or control
at least 100% of the outstanding DIP Claims, non-breaching Consenting Revolving
Credit Facility Lenders party hereto continue to hold at least 66.67% of the
outstanding Revolving Credit Facility Claims, or non-breaching Consenting Second
Lien Noteholders party hereto continue to hold at least 50% of the Second Lien
Notes Claims, such termination shall be effective only with respect to such
breaching Consenting DIP Lender(s), Consenting Revolving Credit Facility
Lender(s) or Consenting Second Lien Noteholder(s), respectively; provided,
further, that in the event that one or more of the Consenting DIP Lenders
breaches this Agreement in any material respect such that the breach would
otherwise give rise to a termination right under this Section 12.04(d) if such
breach were to remain uncured for a five (5) Business Day period, each
Consenting FLLO Term Loan Facility Lender and each Consenting Second Lien
Noteholder shall have the right, but not the obligation, to purchase the DIP
Claims held by such breaching Consenting DIP Lender(s) during the five
(5) Business Day cure period, in which case the breach shall be deemed cured and
no termination right would arise under this Section 12.04(d).

 

12.05.     Consenting Second Lien Noteholder Termination Rights. The Required
Consenting Second Lien Noteholders may terminate this Agreement as to all
Parties upon prior written notice to all Parties in accordance with
Section 14.10 hereof upon the occurrence of any of the following events:

 

(a)           termination of this Agreement by either the Required Consenting
DIP Lenders, the Required Consenting Revolving Credit Facility Lenders, Required
Consenting FLLO Term Loan Facility Lenders, or the Company Parties;

 

(b)          any Debtor, any Consenting DIP Lenders, any Consenting Revolving
Credit Facility Lenders, or any Consenting FLLO Term Loan Facility Lender files
a motion, application, adversary proceeding, or cause of action (A) challenging
the validity, enforceability, perfection or priority of, or seeking avoidance,
subordination or recharacterization of the Second Lien Notes Claims or the Liens
securing such Claims or (B) otherwise seeking to impose liability upon or enjoin
the Second Lien Noteholders;

 

22

 

 

(c)          any Debtor, any Consenting DIP Lenders, any Consenting Revolving
Credit Facility Lenders, or any Consenting FLLO Term Loan Facility Lender
supports any application, adversary proceeding or cause of action referred to in
Section 12.05(b) filed by any third party, or consents to the standing of such
third party to bring such application, adversary proceeding or cause of action;
or

 

(d)          the breach in any material respect by one or more of the Consenting
DIP Lenders, the Consenting Revolving Credit Facility Lenders or the Consenting
FLLO Term Loan Facility Lenders of any provision set forth in this Agreement
that remains uncured for a period of five (5) Business Days after the receipt by
such Consenting DIP Lenders, Consenting Revolving Credit Facility Lenders or
Consenting FLLO Term Loan Facility Lenders of notice of such breach; provided,
however, that so long as non-breaching Consenting DIP Lenders continue to hold
or control at least 100% of the outstanding DIP Claims, or non-breaching
Consenting Revolving Credit Facility Lenders or Consenting FLLO Term Loan
Facility Lenders party hereto continue to hold at least 66.67% of the
outstanding Revolving Credit Facility Claims or FLLO Term Loan Facility Claims,
respectively, such termination shall be effective only with respect to such
breaching Consenting DIP Lender(s), Consenting Revolving Credit Facility
Lender(s) or Consenting FLLO Term Loan Facility Lender(s), respectively;
provided, further, that in the event that one or more of the Consenting DIP
Lenders breaches this Agreement in any material respect such that the breach
would otherwise give rise to a termination right under this Section 12.05(d) if
such breach were to remain uncured for a five (5) Business Day period, each
Consenting FLLO Term Loan Facility Lender and each Consenting Second Lien
Noteholder shall have the right, but not the obligation, to purchase the DIP
Claims held by such breaching Consenting DIP Lender(s) during the five
(5) Business Day cure period, in which case the breach shall be deemed cured and
no termination right would arise under this Section 12.05(d).

 

12.06.     Company Party Termination Events

 

.  Any Company Party may terminate this Agreement as to all Parties upon prior
written notice to all Parties in accordance with Section 14.10 hereof upon the
occurrence of any of the following events:

 

(a)          the breach in any material respect by one or more of the Consenting
DIP Lenders of any provision set forth in this Agreement that remains uncured
for a period of five (5) Business Days after the receipt by such Consenting DIP
Lenders of notice of such breach; provided, however, that so long as
non-breaching Consenting DIP Lenders party hereto continue to hold or control at
least 100% of the outstanding DIP Claims, such termination shall be effective
only with respect to such breaching Consenting DIP Lender(s); provided, further,
that in the event that one or more of the Consenting DIP Lenders breaches this
Agreement in any material respect such that the breach would otherwise give rise
to a termination right under this Section 12.06(a) if such breach were to remain
uncured for a five (5) Business Day period, each Consenting FLLO Term Loan
Facility Lender and each Consenting Second Lien Noteholder shall have the right,
but not the obligation, to purchase the DIP Claims held by such breaching
Consenting DIP Lender(s) during the five (5) Business Day cure period, in which
case the breach shall be deemed cured and no termination right would arise under
this Section 12.06(a);

 

23

 

 

(b)          the breach in any material respect by one or more of the Consenting
Revolving Credit Facility Lenders of any provision set forth in this Agreement
that remains uncured for a period of five (5) Business Days after the receipt by
such Consenting Revolving Credit Facility Lenders of notice of such breach;
provided, however, that so long as non-breaching Consenting Revolving Credit
Facility Lenders party hereto continue to hold at least 66.67% of the
outstanding Revolving Credit Facility Claims, such termination shall be
effective only with respect to such breaching Consenting Revolving Credit
Facility Lender(s);

 

(c)          the breach in any material respect by one or more of the Consenting
FLLO Term Loan Facility Lenders of any provision set forth in this Agreement
that remains uncured for a period of five (5) Business Days after the receipt by
such Consenting FLLO Term Loan Facility Lenders of notice of such breach;
provided, however, that so long as non-breaching Consenting FLLO Term Loan
Facility Lenders party hereto continue to hold at least 66.67% of the
outstanding FLLO Term Loan Facility Claims, such termination shall be effective
only with respect to such breaching Consenting FLLO Term Loan Facility
Lender(s);

 

(d)          the breach in any material respect by one or more of the Consenting
Second Lien Noteholders of any provision set forth in this Agreement that
remains uncured for a period of five (5) Business Days after the receipt by such
Consenting Second Lien Noteholders of notice of such breach; provided, however,
that so long as non-breaching Consenting Second Lien Noteholders party hereto
continue to hold at least 50% of the outstanding Second Lien Notes Claims, such
termination shall be effective only with respect to such breaching Consenting
Second Lien Noteholder(s);

 

(e)          the board of directors, board of managers, or such similar
governing body of any Company Party determines, after consulting with counsel,
(i) that proceeding with any of the Restructuring Transactions would be
inconsistent with the exercise of its fiduciary duties or applicable Law or
(ii) in the exercise of its fiduciary duties, to pursue an Alternative
Restructuring Proposal;

 

(f)           the issuance by any governmental authority, including any
regulatory authority or court of competent jurisdiction, of any final,
non-appealable ruling or order that (i) enjoins the consummation of a material
portion of the Restructuring Transactions and (ii) remains in effect for ten
(10) Business Days after such terminating Company Party transmits a written
notice in accordance with Section 14.10 hereof detailing any such issuance;
provided, that this termination right shall not apply to or be exercised by any
Company Party that sought or requested such ruling or order in contravention of
any obligation or restriction set out in this Agreement;

 

(g)          termination of this Agreement by either the Required Consenting DIP
Lenders, Required Consenting Revolving Credit Facility Lenders, the Required
Consenting FLLO Term Loan Facility Lenders, or the Required Consenting Second
Lien Noteholders; or

 

24

 

 

(h)          the Bankruptcy Court enters an order denying confirmation of the
Plan.

 

12.07.     Mutual Termination.  This Agreement, and the obligations of all
Parties hereunder, may be terminated by mutual written agreement among: (a) the
Required Consenting Stakeholders and (b) each Company Party.

 

12.08.     Automatic Termination.  This Agreement shall terminate automatically
without any further required action or notice immediately upon (a) the date that
is 10 days after any third party filing involuntary bankruptcy petitions in
respect of the Company Parties unless such petitions have been dismissed or
(b) the consummation of the Restructuring Transactions on the Plan Effective
Date.

 

12.09.     Effect of Termination.  Upon the occurrence of a Termination Date as
to a Party, this Agreement shall be of no further force and effect as to such
Party and each Party subject to such termination shall be released from its
commitments (including, without limitation, any commitment with respect to the
Exit Facilities and the Rights Offering), undertakings, and agreements under or
related to this Agreement and shall have the rights and remedies that it would
have had, had it not entered into this Agreement, and shall be entitled to take
all actions, whether with respect to the Restructuring Transactions or
otherwise, that it would have been entitled to take had it not entered into this
Agreement, including with respect to any and all Claims or Causes of Action. 
Upon the occurrence of a Termination Date prior to the Confirmation Order being
entered by a Bankruptcy Court, any and all consents or ballots tendered by the
Parties subject to such termination before a Termination Date shall be deemed,
for all purposes, to be null and void from the first instance and shall not be
considered or otherwise used in any manner by the Parties in connection with the
Restructuring Transactions and this Agreement or otherwise; provided, however,
any Consenting Stakeholder withdrawing or changing its vote pursuant to this
Section 12.09 shall promptly provide written notice of such withdrawal or change
to each other Party to this Agreement and, if such withdrawal or change occurs
on or after the Petition Date, file notice of such withdrawal or change with the
Bankruptcy Court. Nothing in this Agreement shall be construed as prohibiting a
Company Party or any of the Consenting Stakeholders from contesting whether any
such termination is in accordance with its terms or to seek enforcement of any
rights under this Agreement that arose or existed before a Termination Date.
Except as expressly provided in this Agreement, nothing herein is intended to,
or does, in any manner waive, limit, impair, or restrict (a) any right of any
Company Party who is a Party or the ability of any Company Party who is a Party
to protect and reserve its rights (including rights under this Agreement),
remedies, and interests, including its claims against any Consenting
Stakeholder, and (b) any right of any Consenting Stakeholder, or the ability of
any Consenting Stakeholder, to protect and preserve its rights (including rights
under this Agreement), remedies, and interests, including its claims against any
Company Party or Consenting Stakeholder. No purported termination of this
Agreement shall be effective under this Section 12.09 or otherwise if the Party
seeking to terminate this Agreement is in material breach of this Agreement,
except a termination pursuant to Section 12.06(d) or Section 12.06(g). Nothing
in this Section 12.09 shall restrict any Company Party’s right to terminate this
Agreement in accordance with Section 12.06(d).

 

25

 

 

Section 13.           Amendments and Waivers.

 

(a)          This Agreement may not be modified, amended, or supplemented, and
no condition or requirement of this Agreement may be waived, in any manner
except in accordance with this Section 13.

 

(a)          This Agreement may be modified, amended, or supplemented, or a
condition or requirement of this Agreement may be waived, in a writing signed
by: (a) each Company Party, (b) Consenting DIP Lenders holding 66.67% of the
aggregate outstanding principal amount of the DIP Claims that are held by
Consenting DIP Lenders, (c) solely with respect to any amendment to their
treatment or termination rights, Consenting Revolving Credit Facility Lenders
holding at least 66.67% of the aggregate outstanding principal amount of the
Revolving Credit Facility Claims that are held by Consenting Revolving Credit
Facility Lenders; provided, that any such amendment shall be on no less
favorable economic terms than currently provided for those creditors that elect
to receive Tranche B Exit Facility Loans unless otherwise consented to by the
Tranche B Lenders, and (d) the Required Plan Sponsors; provided, however, that
if the proposed modification, amendment, waiver, or supplement has a material,
disproportionate, and adverse effect on any of the Company Claims held by a
Consenting Stakeholder, then the consent of each such affected Consenting
Stakeholder shall also be required to effectuate such modification, amendment,
waiver or supplement; provided further that if the proposed modification,
supplement amendment, or waiver would modify the treatment of DIP Claims or have
a material, disproportionate, or adverse effect on the value of DIP Claims,
“66.67%” in clause (b) above shall be replaced with 100%.

 

(b)          Any proposed modification, amendment, waiver or supplement that
does not comply with this Section 13 shall be ineffective and void ab initio.

 

(c)          The waiver by any Party of a breach of any provision of this
Agreement shall not operate or be construed as a further or continuing waiver of
such breach or as a waiver of any other or subsequent breach. No failure on the
part of any Party to exercise, and no delay in exercising, any right, power or
remedy under this Agreement shall operate as a waiver of any such right, power
or remedy or any provision of this Agreement, nor shall any single or partial
exercise of such right, power or remedy by such Party preclude any other or
further exercise of such right, power or remedy or the exercise of any other
right, power or remedy. All remedies under this Agreement are cumulative and are
not exclusive of any other remedies provided by Law.

 

Section 14.           Miscellaneous.

 

14.01.     Acknowledgement. Notwithstanding any other provision herein, this
Agreement is not and shall not be deemed to be an offer with respect to any
securities or solicitation of votes for the acceptance of a plan of
reorganization for purposes of sections 1125 and 1126 of the Bankruptcy Code or
otherwise.  Any such offer or solicitation will be made only in compliance with
all applicable securities Laws, provisions of the Bankruptcy Code, and/or other
applicable Law.

 

14.02.     Exhibits Incorporated by Reference; Conflicts. Each of the exhibits,
annexes, signatures pages, and schedules attached hereto is expressly
incorporated herein and made a part of this Agreement, and all references to
this Agreement shall include such exhibits, annexes, and schedules. In the event
of any inconsistency between this Agreement (without reference to the exhibits,
annexes, and schedules hereto) and the exhibits, annexes, and schedules hereto,
this Agreement (without reference to the exhibits, annexes, and schedules
thereto) shall govern.

 

26

 

 

14.03.     Further Assurances.  Subject to the other terms of this Agreement,
the Parties agree to execute and deliver such other instruments and perform such
acts, in addition to the matters herein specified, as may be reasonably
appropriate or necessary, or as may be required by order of the Bankruptcy
Court, from time to time, to effectuate the Restructuring Transactions, as
applicable.

 

14.04.     Complete Agreement.  Except as otherwise explicitly provided herein,
this Agreement constitutes the entire agreement among the Parties with respect
to the subject matter hereof and supersedes all prior agreements, oral or
written, among the Parties with respect thereto (including, for the avoidance of
doubt, that certain Restructuring Support Agreement, dated as of June 19, 2020,
by and among the Consenting FLLO Term Loan Facility Lenders and the Consenting
Second Lien Noteholders party thereto), other than any Confidentiality
Agreement.

 

14.05.     GOVERNING LAW; SUBMISSION TO JURISDICTION; SELECTION OF FORUM.  THIS
AGREEMENT IS TO BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN SUCH
STATE, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF THAT
WOULD REQUIRE THE LAWS OF ANY OTHER JURISDICTION TO APPLY.  Each Party hereto
agrees that it shall bring any action or proceeding in respect of any claim
arising out of or related to this Agreement, to the extent possible, in the
Bankruptcy Court, and solely in connection with claims arising under this
Agreement: (a) irrevocably submits to the exclusive jurisdiction of the
Bankruptcy Court; (b) waives any objection to laying venue in any such action or
proceeding in the Bankruptcy Court; and (c) waives any objection that the
Bankruptcy Court is an inconvenient forum or does not have jurisdiction over any
Party hereto.

 

14.06.     Trial by Jury Waiver. EACH PARTY HERETO IRREVOCABLY WAIVES ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

14.07.     Execution of Agreement.  This Agreement may be executed and delivered
in any number of counterparts and by way of electronic signature and delivery,
each such counterpart, when executed and delivered, shall be deemed an original,
and all of which together shall constitute the same agreement.  Except as
expressly provided in this Agreement, each individual executing this Agreement
on behalf of a Party has been duly authorized and empowered to execute and
deliver this Agreement on behalf of said Party.

 

14.08.     Rules of Construction.  This Agreement is the product of negotiations
among the Consenting DIP Lenders, the Consenting Revolving Credit Facility
Lenders, the Consenting FLLO Term Loan Facility Lenders, the Consenting Second
Lien Noteholders, and the Company Parties, and in the enforcement or
interpretation hereof, is to be interpreted in a neutral manner, and any
presumption with regard to interpretation for or against any Party by reason of
that Party having drafted or caused to be drafted this Agreement, or any portion
hereof, shall not be effective in regard to the interpretation hereof. The
Parties were each represented by counsel during the negotiations and drafting of
this Agreement and continue to be represented by counsel and, therefore, waive
the application of any law, regulation, holding or rule of construction
(a) providing that ambiguities in an agreement or other document shall be
construed against the party drafting such agreement or document or (b) any Party
with a defense to the enforcement of the terms of this Agreement against such
Party based upon lack of legal counsel.

 

27

 

 

14.09.     Successors and Assigns; Third Parties.  This Agreement is intended to
bind and inure to the benefit of the Parties and their respective successors and
permitted assigns, as applicable. There are no third party beneficiaries under
this Agreement, and the rights or obligations of any Party under this Agreement
may not be assigned, delegated, or transferred to any other Entity.

 

14.10.     Notices.  All notices hereunder shall be deemed given if in writing
and delivered, by electronic mail, courier, or registered or certified mail
(return receipt requested), to the following addresses (or at such other
addresses as shall be specified by like notice):

 

(a)            if to a Company Party, to:

 

Chesapeake Energy Corporation

Attention: James R. Webb, Executive Vice President, General Counsel and
Corporate Secretary
E-mail address: jim.webb@chk.com

 

and

 

Kirkland & Ellis LLP
300 North LaSalle Street
Chicago, IL 60654
Attention: Patrick J. Nash, Jr., P.C., Marc Kieselstein, P.C., and Alexandra
Schwarzman
E-mail addresses: patrick.nash@kirkland.com; marc.kieselstein@kirkland.com; and
alexandra.schwarzman@kirkland.com

 

(b)if to a Consenting DIP Lender, to Sidley Austin LLP as counsel to the DIP
Agent:

 

Sidley Austin LLP

555 West Fifth Street

Los Angeles, CA 90013

Attention: Jennifer C. Hagle and Brian E. Minyard

Email address: jhagle@sidley.com; bminyard@sidley.com

 

28

 

 

(c)if to a Consenting Revolving Credit Facility Lender, to Sidley Austin LLP as
counsel to the Revolving Credit Facility Administrative Agent:

 

Sidley Austin LLP

555 West Fifth Street

Los Angeles, CA 90013

Attention: Jennifer C. Hagle and Brian E. Minyard

Email address: jhagle@sidley.com; bminyard@sidley.com

 

(d)if to a Consenting FLLO Term Loan Facility Lender represented by Davis Polk &
Wardwell LLP, to:

 

Davis Polk & Wardwell LLP

450 Lexington Avenue

New York, NY 10017

Attention: Damian S. Schaible, Darren S. Klein, and Aryeh Ethan Falk

Email addresses: damian.schaible@davispolk.com; darren.klein@davispolk.com; and
aryeh.falk@davispolk.com

 

(e)if to a Consenting Second Lien Noteholder represented by Akin Gump Strauss
Hauer & Feld LLP, to:

 

Akin Gump Strauss Hauer & Feld LLP

One Bryant Park

Bank of America Tower

New York, NY 10036-6745

Attention: Michael S. Stamer, Meredith A. Lahaie, and Stephen B. Kuhn

Email addresses: mstamer@akingump.com; mlahaie@akingump.com; and
skuhn@akingump.com

 

Any notice given by delivery, mail, or courier shall be effective when received.

 

14.11.     Independent Due Diligence and Decision Making. Each Consenting
Stakeholder hereby confirms that its decision to execute this Agreement has been
based upon its independent investigation of the operations, businesses,
financial and other conditions, and prospects of the Company Parties.

 

14.12.     Enforceability of Agreement. Each of the Parties to the extent
enforceable waives any right to assert that the exercise of termination rights
under this Agreement is subject to the automatic stay provisions of the
Bankruptcy Code, and expressly stipulates and consents hereunder to the
prospective modification of the automatic stay provisions of the Bankruptcy Code
for purposes of exercising termination rights under this Agreement, to the
extent the Bankruptcy Court determines that such relief is required.

 

14.13.     Settlement. If the Restructuring Transactions are not consummated, or
if this Agreement is terminated in accordance with its terms for any reason, the
Parties fully reserve any and all of their rights and nothing herein shall
constitute or be deemed to constitute such Party’s consent or approval of any
chapter 11 plan of reorganization for the Company Parties or any waiver of any
rights such Party may have under any subordination agreement. Pursuant to
Federal Rule of Evidence 408 and any other applicable rules of evidence, this
Agreement and all negotiations relating hereto shall not be admissible into
evidence in any proceeding other than a proceeding to enforce its terms or the
payment of damages to which a Party may be entitled under this Agreement.

 

29

 

 

14.14.     Specific Performance. It is understood and agreed by the Parties that
money damages would be an insufficient remedy for any breach of this Agreement
by any Party, and each non-breaching Party shall be entitled to specific
performance and injunctive or other equitable relief (without the posting of any
bond and without proof of actual damages) as a remedy of any such breach,
including an order of the Bankruptcy Court or other court of competent
jurisdiction requiring any Party to comply promptly with any of its obligations
hereunder.

 

14.15.     Several, Not Joint, Claims. Except where otherwise specified, the
agreements, representations, warranties, and obligations of the Parties under
this Agreement are, in all respects, several and not joint.

 

14.16.     Severability and Construction. If any provision of this Agreement
shall be held by a court of competent jurisdiction to be illegal, invalid, or
unenforceable, the remaining provisions shall remain in full force and effect if
essential terms and conditions of this Agreement for each Party remain valid,
binding, and enforceable.

 

14.17.     Remedies Cumulative. All rights, powers, and remedies provided under
this Agreement or otherwise available in respect hereof at Law or in equity
shall be cumulative and not alternative, and the exercise of any right, power,
or remedy thereof by any Party shall not preclude the simultaneous or later
exercise of any other such right, power, or remedy by such Party.

 

14.18.            Capacities of Consenting Stakeholders. Each Consenting
Stakeholder has entered into this agreement on account of all Company Claims
that it holds (directly or through discretionary accounts that it manages or
advises) and, except where otherwise specified in this Agreement, shall take or
refrain from taking all actions that it is obligated to take or refrain from
taking under this Agreement with respect to all such Company Claims.

 

14.19.            Relationship Among Consenting Stakeholders.

 

(a)            Notwithstanding anything to the contrary herein, the duties and
obligations of the Consenting Stakeholders under this Agreement shall be
several, not joint, with respect to each Consenting Stakeholder. None of the
Consenting Stakeholders shall have any fiduciary duty, any duty of trust or
confidence in any form, or other duties or responsibilities in any kind or form
to each other, any Consenting Stakeholder, any Company Party, or any of the
Company Party’s respective creditors or other stakeholders, and there are no
commitments among or between the Consenting Stakeholders as a result of this
Agreement or the transactions contemplated herein or in the Restructuring Term
Sheet, in each case except as expressly set forth in this Agreement. No Party
shall have any responsibility by virtue of this Agreement for any trading by any
other entity. It is understood and agreed that any Consenting Stakeholder may
trade in any debt or equity securities of any Company Parties without the
consent of the Company Parties or any Consenting Stakeholder, subject to
Section 8 of this Agreement and applicable securities laws. No prior history,
pattern or practice of sharing confidence among or between any of the Consenting
Stakeholders, and/or the Company Parties shall in any way affect or negate this
understanding and Agreement, and each Consenting Stakeholder shall be entitled
to independently protect and enforce its rights, including, without limitation,
the rights arising out of this Agreement, and it shall not be necessary for any
other Consenting Stakeholder to be joined as an additional party in any
proceeding for such purpose. Nothing contained in this Agreement, and no action
taken by any Consenting Stakeholder pursuant hereto is intended to constitute
the Consenting Stakeholders as a partnership, an association, a joint venture or
any other kind of entity, or create a presumption that any Consenting
Stakeholder is in any way acting in concert or as a member of a “group” with any
other Consenting Stakeholder or Consenting Stakeholders within the meaning of
Rule 13d-5 under the Securities Exchange Act of 1934, as amended. As of the date
hereof and for so long as this Agreement remains in effect, the Parties have no
agreement, arrangement or understanding with respect to acting together for the
purpose of acquiring, holding, voting or disposing of any securities of any of
the Company Parties and do not constitute a “group” within the meaning of
Section 13(d)(3) of the Exchange Act or Rule 13d-5 promulgated thereunder. For
the avoidance of doubt: (1) each Consenting Stakeholder is entering into this
Agreement directly with the Company Parties and not with any other Consenting
Stakeholder, (2) no other Consenting Stakeholder shall have any right to bring
any action against any other Consenting Stakeholder with respect to this
Agreement (or any breach thereof) and (3) no Consenting Stakeholder shall, nor
shall any action taken by a Consenting Stakeholder pursuant to this Agreement
cause such Consenting Stakeholder to, be obligated to vote its Interests in the
Company in any manner or otherwise be deemed to be acting in concert or as any
group with any other Consenting Stakeholder with respect to the obligations
under this Agreement nor shall this Agreement create a presumption that the
Consenting Stakeholders are in any way acting as a group. All rights under this
Agreement are separately granted to each Consenting Stakeholder by the Company
Parties and vice versa, and the use of a single document is for the convenience
of the Company Parties. The decision to commit to enter into the transactions
contemplated by this Agreement has been made independently. Nothing in this
Agreement shall require any Consenting Stakeholder to incur any expenses,
liabilities or other obligations, or agreement to any commitments, undertakings,
concessions, indemnities or other arrangements that could result in expenses or
other obligations to any Consenting Stakeholder; provided, that the preceding
sentence shall not serve to limit, alter or modify any Consenting Stakeholder’s
express obligations hereunder.

 

30

 

 

(b)            The Company Parties acknowledge that the Consenting Stakeholders
are engaged in a wide range of financial services and businesses, and, in
furtherance of the foregoing, the Consenting Stakeholders and Company Parties
acknowledge and agree that the obligations set forth in this Agreement shall
only apply to the trading desk(s) and/or business group(s) of the Consenting
Stakeholders that principally manage and/or supervise the Consenting
Stakeholder’s investment in the Company Parties, and shall not apply to any
other trading desk or business group of the Consenting Stakeholder so long as
they are not acting at the direction or for the benefit of such Consenting
Stakeholder.

 

14.20.            Email Consents. Where a written consent, acceptance, approval,
or waiver is required pursuant to or contemplated by this Agreement, pursuant to
Section 3.02, Section 13, or otherwise, including a written approval by the
Company Parties, the Required Consenting DIP Lenders, the Required Consenting
Revolving Credit Facility Lenders, the Required Consenting FLLO Term Loan
Facility Lenders, the Required Consenting Second Lien Noteholders, and/or the
Required Consenting Stakeholders, such written consent, acceptance, approval, or
waiver shall be deemed to have occurred if, by agreement between counsel to the
Parties submitting and receiving such consent, acceptance, approval, or waiver,
it is conveyed in writing (including electronic mail) between each such counsel
without representations or warranties of any kind on behalf of such counsel.

 

31

 

 

14.21.            Settlement Discussions. This Agreement is part of a proposed
settlement of matters that could otherwise be the subject of litigation among
the Parties, including any such matters arising under the Intercreditor
Agreement, any avoidance actions that could be brought against the DIP Lenders,
Revolving Credit Facility Lenders, FLLO Term Loan Facility Lenders, or Second
Lien Noteholders under section 547 of the Bankruptcy Code or any other provision
of the Bankruptcy Code, or other applicable law, and any matters related to the
enterprise value of the Company Parties. Subject to Section 14.13, each of the
Consenting FLLO Term Loan Facility Lenders and each of the Consenting Revolving
Credit Facility Lenders hereby agrees that it shall forbear from exercising any
rights it may have to seek turnover of any payments made to any other Consenting
Stakeholder arising under any provision of the Intercreditor Agreement,
including, but not limited to any turnover provisions in sections 3.05, 402.(l),
6.01 and 7.03 thereof, or the Collateral Trust Agreement, including section
5.05, 6.02(o), 8.01 and 9.03 thereto; provided, however, that any such
forbearance will expire on the Termination Date (other than a Termination Date
as a result of the occurrence of the Plan Effective Date) and, following such
Termination Date (other than a Termination Date as a result of the occurrence of
the Plan Effective Date), the Consenting FLLO Term Loan Facility Lenders or the
Consenting Revolving Credit Facility Lenders may freely exercise all rights and
remedies under the Intercreditor Agreement. For the avoidance of doubt, each of
the Consenting FLLO Term Loan Facility Lenders and each of the Consenting
Revolving Credit Facility Lenders hereby agrees that, if a Termination Date has
not occurred prior to the occurrence of the Plan Effective Date, then upon the
occurrence of the Plan Effective Date, such Consenting FLLO Term Loan Facility
Lender or Consenting Revolving Credit Facility Lenders shall conclusively,
absolutely, unconditionally, irrevocably and forever waive any rights it may
have to seek turnover of any payments to any other Consenting Stakeholder
arising under any provision of the Intercreditor Agreement, including, but not
limited to, any turnover provisions in sections 3.05, 4.02(l), 6.01 and 7.03
thereof. Each of the Consenting FLLO Term Loan Facility Lenders hereby agrees
that it shall not seek, and shall not direct or support the collateral agent
under the FLLO Term Loan Facility to seek, turnover of any payment of reasonable
and documented professional fees to any of the advisors to Franklin made
pursuant to this Agreement prior to the occurrence of the Termination Date
(other than a Termination Date as a result of the occurrence of the Plan
Effective Date) notwithstanding their rights under the Intercreditor Agreement
or termination of this Agreement; provided that this sentence shall not apply to
any success, completion, back-end, or similar fee of any banker or financial
advisor to Franklin. Each of the Consenting Revolving Credit Facility Lenders
hereby agrees that it shall not seek, and shall not direct or support the
collateral agent under the Revolving Credit Facility to seek, turnover of any
payment of reasonable and documented professional fees to any of the advisors to
Franklin or the FLLO Ad Hoc Group made pursuant to this Agreement prior to the
occurrence of the Termination Date (other than a Termination Date as a result of
the occurrence of the Plan Effective Date) notwithstanding their rights under
the Intercreditor Agreement or the Collateral Trust Agreement or termination of
this Agreement; provided that this sentence shall not apply to any success,
completion, back-end, or similar fee of any banker or financial advisor to
Franklin or the FLLO Ad Hoc Group. Nothing in this Agreement shall be deemed an
admission of any kind. Pursuant to Federal Rule of Evidence 408, any applicable
state rules of evidence and any other applicable law, foreign or domestic, this
Agreement, and all negotiations relating thereto shall not be admissible into
evidence in any proceeding other than to prove the existence of this Agreement
or in a proceeding to enforce the terms of this Agreement.

 

32

 

 

14.22.            Good Faith Cooperation; Further Assurances. The Parties shall
cooperate with each other in good faith and shall coordinate their activities
(to the extent reasonably practicable) in respect of all matters concerning the
implementation and consummation of the Restructuring. Further, each of the
Parties shall take such action (including executing and delivering any other
agreements and making and filing any required regulatory filings) as may be
reasonably necessary to carry out the purposes and intent of this Agreement.

 

14.23.            Public Disclosure. Under no circumstances may any Party make
any public disclosure of any kind that would disclose either: (i) the holdings
of any Consenting Stakeholders (including the signature pages hereto, which
shall not be publicly disclosed or filed) or (ii) the identity of any Consenting
Stakeholder, in each case without the prior written consent of such Consenting
Stakeholder or the order of a Bankruptcy Court or other court with competent
jurisdiction.

 

14.24.            Survival. Notwithstanding (a) any Transfer of any Company
Claims in accordance with this Agreement or (b) the termination of this
Agreement in accordance with its terms, the agreements and obligations of the
Parties in Section 12.09, Section 14, and the Confidentiality Agreements shall
survive such Transfer and/or termination and shall continue in full force and
effect for the benefit of the Parties in accordance with the terms hereof and
thereof.

 

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the day
and year first above written.

 

[All signature pages on file with the Debtors.]

 

33

 

 

 

EXHIBIT A

 

Company Parties

 

 

 

 

Brazos Valley Longhorn, L.L.C.

 

Brazos Valley Longhorn Finance Corp.

 

Burleson Sand LLC

 

Burleson Water Resources, LLC

 

Chesapeake AEZ Exploration, L.L.C.

 

Chesapeake Appalachia, L.L.C.

 

Chesapeake-Clements Acquisition, L.L.C.

 

Chesapeake E&P Holding, L.L.C.

 

Chesapeake energy corporation

 

Chesapeake Energy Louisiana, LLC

 

Chesapeake Energy Marketing, L.L.C.

 

Chesapeake Exploration, L.L.C.

 

Chesapeake Land Development Company, L.L.C.

 

Chesapeake Midstream Development, L.L.C.

 

 

 

 

Chesapeake NG Ventures Corporation

 

Chesapeake Operating, L.L.C., on behalf of itself and as the general partner of

 

Chesapeake Louisiana, L.P.

 

Chesapeake Plains, LLC

 

Chesapeake Royalty, L.L.C.

 

Chesapeake VRT, L.L.C.

 

CHK Energy Holdings, Inc.

 

CHK NGV Leasing Company, L.L.C.

 

CHK Utica, L.L.C.

 

Compass Manufacturing, L.L.C.

 

EMLP, L.L.C., on behalf of itself and as the general partner of

 

Empress Louisiana Properties, L.P.

 

Empress, L.L.C.

 

Esquisto Resources II, LLC

 

GSF, L.L.C.

 

MC Louisiana Minerals, L.L.C.

 

MC Mineral Company, L.L.C.

 

MidCon Compression, L.L.C.

 

Nomac Services, L.L.C.

 

Northern Michigan Exploration Company, L.L.C.

 

Petromax E&P Burleson, LLC

 

Sparks Drive SWD, Inc.

 

WHE AcqCo., LLC

 

WHR Eagle Ford LLC

 

WildHorse Resources II, LLC

 

WildHorse Resources Management Company, LLC

 

Winter Moon Energy Corporation

 

 

 

 

EXHIBIT B

 

Restructuring Term Sheet

 

 

 

 

Execution Version

 

THIS RESTRUCTURING TERM SHEET IS NOT AN OFFER WITH RESPECT TO ANY SECURITIES OR
A SOLICITATION OF ACCEPTANCES OF A CHAPTER 11 PLAN WITHIN THE MEANING OF
SECTION 1125 OF THE BANKRUPTCY CODE. ANY SUCH OFFER OR SOLICITATION WILL COMPLY
WITH ALL APPLICABLE SECURITIES LAWS AND/OR PROVISIONS OF THE BANKRUPTCY CODE.
NOTHING CONTAINED IN THIS RESTRUCTURING TERM SHEET SHALL BE AN ADMISSION OF FACT
OR LIABILITY OR, UNTIL THE OCCURRENCE OF THE PLAN EFFECTIVE DATE OF THE
RESTRUCTURING SUPPORT AGREEMENT ON THE TERMS DESCRIBED HEREIN AND IN THE
RESTRUCTURING SUPPORT AGREEMENT, DEEMED BINDING ON ANY OF THE PARTIES HERETO.

  

Restructuring Term Sheet

 

INTRODUCTION

 

This Restructuring Term Sheet1 describes the principal terms of the
Restructuring and the Restructuring Transactions of Chesapeake Energy
Corporation and its direct and indirect subsidiaries. The regulatory, corporate,
tax, accounting, and other legal and financial matters related to the
Restructuring have not been fully evaluated, and any such evaluation may affect
the terms and structure of any Restructuring. This Restructuring Term Sheet is
proffered in the nature of a settlement proposal in furtherance of settlement
discussions. Accordingly, this Restructuring Term Sheet and the information
contained herein are entitled to protection from any use or disclosure to any
party or person pursuant to Rule 408 of the Federal Rules of Evidence and any
other applicable rule, statute, or doctrine of similar import protecting the use
or disclosure of confidential settlement discussions.

 

This Restructuring Term Sheet does not include a description of all of the
terms, conditions, and other provisions that will be contained in the Definitive
Documents governing the Restructuring, which remain subject to negotiation and
completion in accordance with the Restructuring Support Agreement (“RSA”) and
applicable bankruptcy law. The Restructuring will not contain any material terms
or conditions that are inconsistent in any material respect with this
Restructuring Term Sheet or the RSA. This Restructuring Term Sheet incorporates
the rules of construction as set forth in section 102 of the Bankruptcy Code.

 

GENERAL PROVISIONS REGARDING THE RESTRUCTURING Restructuring Summary

The Restructuring will be consummated through the commencement of the Chapter 11
Cases in the Bankruptcy Court for the Southern District of Texas to implement
the Plan described herein on a pre-arranged basis.

 

The Debtors intend to enter into the Restructuring Transactions to restructure
the debt under the Revolving Credit Facility, FLLO Term Loan Facility, Second
Lien Notes, and Unsecured Notes and take advantage of certain features of
chapter 11.

 

 

1Capitalized terms used but not defined in this Restructuring Term Sheet have
the meanings given to such terms in Exhibit 1 to this Restructuring Term Sheet.

 

 

  

GENERAL PROVISIONS REGARDING THE RESTRUCTURING Chapter 11 Plan

On the Plan Effective Date, or as soon as is reasonably practicable thereafter,
each holder of an Allowed Claim or Interest, as applicable, shall receive under
the Plan the treatment described in this Restructuring Term Sheet in full and
final satisfaction, settlement, release, and discharge of and in exchange for
such holder’s Allowed Claim or Interest, except to the extent different
treatment is agreed to by the Reorganized Debtors with the consent of the
Required Consenting Stakeholders and the holder of such Allowed Claim or
Interest, as applicable.

 

The Plan will constitute a separate chapter 11 plan of reorganization for each
Debtor. For the avoidance of doubt, any action required to be taken by the
Debtors on the Plan Effective Date pursuant to this Restructuring Term Sheet may
be taken on the Plan Effective Date or as soon as is reasonably practicable
thereafter; provided that the foregoing shall not apply to the Conditions
Precedent to the Plan Effective Date; and provided further that all
distributions to Holders of DIP Claims and Claims in Class 3 must be made on the
Plan Effective Date.

Midstream Savings

The Debtors intend to achieve savings on certain midstream contracts through
rejection of such contracts and/or renegotiation of terms.

 

In the event that sufficient savings (as determined by the Required Plan
Sponsors) are not achieved, unless the Debtors and the Required Consenting
Stakeholders agree otherwise but subject to the reasonable written consent of
the DIP Agent and Required Consenting DIP Lenders, certain of the Debtors’
assets will be separated from the Debtors’ remaining assets to the extent not
inconsistent with 28 U.S.C. § 959(b).  The Restructuring will then be
consummated with respect to the remaining assets, and the separated assets will
be wound down in a manner agreed between the Debtors and the Required Consenting
Stakeholders.

DIP Facility The DIP Lenders will provide the DIP Facility.  The material terms
of the DIP Facility are set forth in the term sheet attached hereto as Exhibit 2
(the “DIP Term Sheet”). Exit Facilities On the Plan Effective Date, so long as
the Conditions Precedent to the Exit Facilities have been satisfied, the Exit
Facilities Lenders will provide the Exit Facilities pursuant to the Exit
Facilities Credit Agreements on the terms set forth in the term sheet attached
hereto as Exhibit 3 (the “Exit Facilities Term Sheet”).  The Exit Facilities
Lenders have each executed a commitment letter to the Exit Facilities which
incorporates the allocation of the Exit Facilities agreed by each lender prior
to and as a condition precedent to the execution of the Restructuring Support
Agreement. The Exit Facilities Documents shall be consistent with the Exit
Facilities Term Sheet. New Common Stock

On the Plan Effective Date, Reorganized Chesapeake shall issue a single class of
common equity interests (the “New Common Stock”). The New Common Stock will be
distributed in accordance with this Restructuring Term Sheet and on terms
acceptable to the Required Plan Sponsors.

 

As described herein, on the Plan Effective Date, pursuant to the Rights
Offering, Reorganized Chesapeake shall issue New Common Stock for an aggregate
purchase price of a minimum of $600 million.

 

2

 

 

GENERAL PROVISIONS REGARDING THE RESTRUCTURING New Warrants

On the Plan Effective Date, Reorganized Chesapeake shall issue to the holders of
Allowed Second Lien Notes Claims and Allowed Unsecured Notes Claims:

· Warrants to purchase 10% of the New Common Stock (after giving effect to the
Rights Offering, but subject to dilution by the Management Incentive Plan), with
a term of 5 years, at an initial exercise price per share struck at the equity
value, post new-money, implied by a total enterprise value of $4.0 billion (the
“New Class A Warrants”);

 

· Warrants to purchase 10% of the New Common Stock (after giving effect to the
Rights Offering, but subject to dilution by the Management Incentive Plan), with
a term of 5 years, at an initial exercise price per share struck at the equity
value, post new-money, implied by a total enterprise value of $4.5 billion (the
“New Class B Warrants”);

 

· Warrants to purchase 10% of the New Common Stock (after giving effect to the
Rights Offering, but subject to dilution by the Management Incentive Plan), with
a term of 5 years, at an initial exercise price per share struck at the equity
value, post new-money, implied by a total enterprise value of $5.0 billion (the
“New Class C Warrants” and, together with the New Class A Warrants and New
Class B Warrants, the “New Warrants”).

 

The New Warrants shall automatically terminate upon a deemed liquidation event
(e.g., a merger, consolidation, asset sale of all or substantially all of the
assets of Reorganized Chesapeake and its subsidiaries, taken as a whole, or
similar transactions); provided that a transaction in which the New Common Stock
of Reorganized Chesapeake continues to represent, or is exchanged for, at least
a majority of the outstanding common equity interests of the post-transaction
company shall not be a deemed liquidation event.

Cash on Hand Cash distributions, in accordance with this Restructuring Term
Sheet and the Plan, shall be made from cash on hand as of the Plan Effective
Date, including proceeds from the Rights Offering and the Exit Facilities.
Definitive Documents Any documents, including any Definitive Documents, that
remain the subject of negotiation as of the Agreement Effective Date shall be
subject to the rights and obligations set forth in Section 3 of the
RSA.  Failure to reference such rights and obligations as it relates to any
document referenced in this Restructuring Term Sheet shall not impair such
rights and obligations. Tax Matters The Parties will work together in good faith
and will use commercially reasonable efforts to structure and implement the
Restructuring in a tax efficient and cost-effective manner for the Debtors and
in a manner reasonably acceptable to the Required Consenting Stakeholders.

 

3

 

  

TREATMENT OF CLAIMS AND INTERESTS OF THE DEBTORS UNDER THE PLAN Class No. Type
of Claim Treatment Impairment / Voting Unclassified Non-Voting Claims N/A DIP
Claims Except to the extent the holder of an Allowed DIP Claim agrees to less
favorable treatment, on the Plan Effective Date, each holder of an Allowed DIP
Claim shall receive payment of its Allowed DIP Claims in full in cash from, at
the Debtors’ option, (i) the proceeds of the Exit Facilities available as of
Plan Effective Date and consistent with the Exit Facilities Term Sheet, (ii) the
proceeds of the Rights Offering, and (iii) cash on hand; provided that to the
extent that such DIP Lender is also an Exit Facility Lender, such DIP Lender’s
Allowed DIP Claims will first be reduced dollar-for-dollar and satisfied by the
amount of its Exit Facility Loans as of the Plan Effective Date. N/A N/A
Administrative Claims On the Plan Effective Date, each holder of an Allowed
Administrative Claim shall receive treatment in a manner consistent with section
1129(a)(2) of the Bankruptcy Code. N/A N/A Priority Tax Claims On the Plan
Effective Date, each holder of an Allowed Priority Tax Claim shall receive
treatment in a manner consistent with section 1129(a)(9)(C) of the
Bankruptcy Code. N/A Classified Claims and Interests of the Debtors Class 1
Other Secured Claims On the Plan Effective Date, each holder of an Allowed Other
Secured Claim shall receive, at the Debtors’ option and in consultation with the
Required Consenting Stakeholders:  (a) payment in full in cash; (b) the
collateral securing its Allowed Other Secured Claim; (c) Reinstatement of its
Allowed Other Secured Claim; or (d) such other treatment rendering its Allowed
Other Secured Claim Unimpaired in accordance with section 1124 of the Bankruptcy
Code. Unimpaired /
Deemed to
Accept Class 2 Other Priority Claims Each holder of an Allowed Other Priority
Claim shall receive treatment in a manner consistent with section 1129(a)(9) of
the Bankruptcy Code. Unimpaired /
Deemed to
Accept Class 3 Revolving Credit Facility Claims

On the Plan Effective Date, the Revolving Credit Facility Claims shall be
Allowed and deemed to be Allowed Claims in the full amount outstanding under the
Revolving Credit Facility, including all principal, any accrued and unpaid
interest at the contract rate, and all accrued and unpaid fees, expenses, and
non-contingent indemnity payable under the Revolving Credit Facility.

Except to the extent the holder of an Allowed Revolving Credit Facility Claim
agrees to less favorable treatment, on the Plan Effective Date, each holder of
an Allowed Revolving Credit Facility Claim shall receive, at such holder’s
option, either (i) Tranche A RBL Exit Facility Loans or (ii) Tranche B RBL Exit
Facility Loans, on a dollar for dollar basis; provided, that holders of
Revolving Credit Facility Claims sufficient to constitute class acceptance for
Class 3 pursuant to Section 1126(c) of the Bankruptcy Code may elect different
treatment for Class 3 Claims with the consent of the Debtors, the DIP Agent, and
the Required Consenting Stakeholders.

Impaired /
Entitled to
Vote Class 4 FLLO Term Loan Facility Claims On the Plan Effective Date, the FLLO
Term Loan Facility Claims shall be Allowed and deemed to be Allowed Claims in
the full amount outstanding under the FLLO Term Loan Facility, including all
principal, accrued and unpaid interest at the applicable default rate, and all
accrued and unpaid fees, expenses, and noncontingent indemnity payable under the
FLLO Term Loan Facility.  On the Plan Effective Date, each holder of an Allowed
FLLO Term Loan Facility Claim shall receive its pro rata share of (i) 76% of the
New Common Stock, subject to dilution on account of the Management Incentive
Plan, Rights Offering, Backstop Commitment Fee, and New Warrants, and (ii) the
right to participate in the Rights Offering on the terms set forth herein.
Impaired /
Entitled to
Vote Class 5 Second Lien Notes Claims On the Plan Effective Date, the Second
Lien Notes Claims shall be Allowed and deemed to be Allowed Claims in the full
amount outstanding under the Second Lien Notes Indenture, including the
aggregate outstanding principal amount of Second Lien Notes, any premium
(including the Make-Whole Premium (as defined in the Second Lien Notes
Indenture)), and accrued and unpaid interest, and each holder of an Allowed
Second Lien Notes Claim shall receive its pro rata share of (i) 12% of the New
Common Stock, subject to dilution on account of the Management Incentive Plan,
Rights Offering, Backstop Commitment Fee, and New Warrants, (ii) the right to
participate in the Rights Offering on the terms set forth herein, (iii) the New
Class A Warrants, (iv) the New Class B Warrants, and (v) 50% of the New Class C
Warrants. Impaired / Entitled to Vote

 

4

 

 

TREATMENT OF CLAIMS AND INTERESTS OF THE DEBTORS UNDER THE PLAN Class No. Type
of Claim Treatment Impairment / Voting Class 6 Unsecured Notes Claims

On the Plan Effective Date, the Unsecured Notes Claims shall be deemed Allowed
in full, and each holder of an Allowed Unsecured Notes Claim shall receive its
pro rata share of (i) the Unsecured Claims Recovery and (ii) 50% of the New
Class C Warrants.

 

“Unsecured Claims Recovery” means 12% of the New Common Stock, subject to
dilution on account of the Management Incentive Plan, Rights Offering, Backstop
Commitment Fee, and New Warrants.

Impaired /
Entitled to
Vote Class 7 General Unsecured Claims On the Plan Effective Date, each holder of
an Allowed General Unsecured Claim shall receive its pro rata share of the
Unsecured Claims Recovery. Impaired /
Entitled to
Vote Class 8 Intercompany Claims On the Plan Effective Date, each holder of an
Allowed Intercompany Claim shall have its Claim Reinstated or cancelled,
released, and extinguished and without any distribution at the Debtors’ election
with the consent of the Required Consenting Stakeholders.   Impaired /
Deemed to
Reject or
Unimpaired /
Deemed to
Accept Class 9 Existing Equity Interests Other Than in Chesapeake On the Plan
Effective Date, each holder of an Existing Equity Interest other than in
Chesapeake shall have such Interest Reinstated or cancelled, released, and
extinguished and without any distribution at the Debtors’ election with the
consent of the Required Consenting Stakeholders. Impaired /
Deemed to
Reject or
Unimpaired /
Deemed to
Accept Class 10 Existing Equity Interests in Chesapeake On the Plan Effective
Date, each holder of an Existing Equity Interest in Chesapeake shall have such
Interest cancelled, released, and extinguished without any distribution.
Impaired /
Deemed to
Reject

 

5

 

 

 

RIGHTS OFFERING AND BACKSTOP COMMITMENT Rights Offering and Backstop Commitment

On the Plan Effective Date, the Debtors will consummate a common equity rights
offering (the “Rights Offering”) for an aggregate subscription price of a
minimum of $600 million (the “Rights Offering Amount”) in accordance with the
Plan and the Backstop Commitment Agreement attached hereto as Exhibit 4 and the
Rights Offering Procedures. Subscription rights to participate in the Rights
Offering shall be distributed as follows:

 

(i)   25% of the New Common Stock to be issued pursuant to the Rights Offering
shall be reserved for the Backstop Parties;

 

(ii)  63.75% of the New Common Stock to be issued pursuant to the Rights
Offering shall be offered pro rata to the holders of Allowed FLLO Term Loan
Facility Claims; and

 

(iii) 11.25% of the New Common Stock to be issued pursuant to the Rights
Offering shall be offered pro rata to the holders of Allowed Second Lien Notes
Claims.

 

The issuance of such subscription rights will be exempt from SEC registration
under applicable law. The New Common Stock in the Rights Offering shall be
offered at the Rights Offering Value and shall dilute the New Common Stock
issued under the Plan on account of any prepetition claims (which New Common
Stock, for the avoidance of doubt, shall be subject to dilution for the
Management Incentive Plan and New Warrants).

 

The proceeds of the Rights Offering shall be used by the Debtors or Reorganized
Chesapeake, as applicable, to fund payments under the Plan and for general
corporate and strategic purposes as determined by management.

 

The Rights Offering shall be backstopped in full (the “Backstop”) by the
Backstop Parties in accordance with the terms and conditions set forth in the
Backstop Commitment Agreement. The Backstop Parties shall severally (but not
jointly) backstop the Rights Offering (with oversubscription rights with respect
to such amounts) on the terms set forth in the Backstop Commitment Agreement.
The members of the FLLO Ad Hoc Group shall backstop 77% of the Rights Offering
and Franklin shall backstop 23% of the Rights Offering (the “Backstop
Allocations”).

 

“Backstop Parties” means the members of the FLLO Ad Hoc Group and Franklin that
are signatories to the Backstop Commitment Agreement.

 

“Rights Offering Value” means a discount of 35% to the Plan Equity Value.

 

“Plan Equity Value” means the equity value, post new-money, as implied by a Plan
total enterprise value of $3.25 billion.

 

Backstop Commitment Fee The “Backstop Commitment Fee” means a nonrefundable
aggregate premium equal to 10% of the aggregate amount of the Rights Offering,
excluding any oversubscription amounts, payable in New Common Stock issued at
the Rights Offering Value.   Backstop Termination Fee / Put Option Premium If
the Backstop Parties are entitled to payment of the Put Option Premium  (as
defined in and on the terms and conditions set forth in the Backstop Commitment
Agreement) in cash, the Put Option Premium shall be a superpriority
administrative expense with priority over all other administrative claims except
it shall be unsecured and (i) be subordinated in priority to the administrative
claims provided on account of the DIP Claims and adequate protection on account
of the Revolving Credit Facility Claims (and any claims to which such DIP Claims
and adequate protection claims are subordinate) and (ii) payable only after all
such claims set forth in clause (i) have been paid in full in cash or provided
such other treatment as is agreed by (a) with respect to DIP Claims, 100% of New
Money DIP Lenders and (b) with respect to Revolving Credit Facility Claims,
holders of Revolving Credit Facility Claims sufficient to constitute class
acceptance pursuant to Section 1126(c) of the Bankruptcy Code.

 

6

 

 

MILESTONES

 

(a)   No later than June 30, 2020, the Company Parties and Backstop Parties
shall execute the Backstop Commitment Agreement and the Company Parties shall
commence the Chapter 11 Cases.

 

(b)   No later than 5 days after the Petition Date, the Bankruptcy Court shall
have entered the Interim DIP Order.

 

(c)   No later than 30 days after the Petition Date, the Company Parties shall
have Filed a motion seeking entry of the Backstop Commitment Agreement Approval
Order.

 

(d)   No later than 30 days after the Petition Date, the Company Parties shall
have Filed a motion which is acceptable to the DIP Agent, seeking (i) approval
of all fees to be paid with respect to the Exit Facilities and (ii) authority to
pay the upfront fees, arranger fees, and any other fees under the Exit
Facilities Term Sheet earned and payable prior to the effective date of a plan
of reorganization (the “Exit Facilities Motion”).

 

(e)   No later than 35 days after the Petition Date, the Bankruptcy Court shall
have entered the Final DIP Order.

 

(f)   No later than 60 days after the Petition Date, the Bankruptcy Court shall
have entered the Backstop Commitment Agreement Approval Order.

 

(g)   No later than 60 days after the Petition Date, the Debtors shall have
(i) obtained Bankruptcy Court approval of the relief requested in the Exit
Facilities Motion and (ii) paid the upfront fees, arranger fees, and all other
fees then earned and payable (as described in the Exit Facilities Term Sheet).

 

(h)  No later than 90 days after the Petition Date, the Company Parties shall
have Filed a Plan and Disclosure Statement that provides for treatment
acceptable to DIP Lenders (or such plan provides for the indefeasible repayment
of the DIP Obligations and obligations under the Revolving Credit Facility in
full in cash on the Effective Date and as a condition to the occurrence of the
Plan Effective Date); provided, that the treatment provided in this
Restructuring Term Sheet is acceptable to the DIP Lenders.

 

(i)   No later than 120 days after the Petition Date, the Company Parties shall
have Filed a motion seeking approval of the Disclosure Statement.

 

(j)   No later than 160 days after the Petition Date, the Bankruptcy Court shall
have entered an order approving the Disclosure Statement.

 

(k)  No later than 195 days after the Petition Date, the Bankruptcy Court shall
have entered the Confirmation Order.

 

(l)   No later than 220 days after the Petition Date, the Plan Effective Date
shall have occurred; provided that this milestone shall be automatically
extended to the extent necessary, but in no event longer than for fifteen (15)
consecutive business days to allow for the expiration of the marketing period
under the Exit Facilities Term Sheet.

 

The Milestones consisting of the entry of orders or judicial resolution by the
Bankruptcy Court shall be automatically extended (the “COVID-19 Extensions”) by
five (5) business days to the extent it is not reasonably feasible to hold and
conclude a hearing (if necessary) prior to the applicable Milestone as a result
of the closure of the Bankruptcy Court due to the events or circumstances
surrounding the virus known as COVID-19 (and the DIP Agent and the Required
Consenting Stakeholders shall be deemed to have automatically agreed to such
extension).

 

If (i) the Debtors fail to satisfy Milestones (e) or (f) set forth in the DIP
Term Sheet and (ii) a board observer is appointed at the election of the DIP
Agent (as contemplated by the terms of the DIP Term Sheet), then the Milestones
set forth in (i)-(l) above shall be automatically extended as follows: (a) the
Debtors shall file an Approved Plan and Disclosure Statement, and a motion to
approve such Approved Disclosure Statement, in each case, on or before a date
that is 135 days following the Petition Date; (b) such Approved Disclosure
Statement shall have been approved by Bankruptcy Court by the date that is no
later than 165 days after the Petition Date; (c) the Bankruptcy Court shall have
entered an order confirming such Approved Plan by the date that is no later than
200 days after the Petition Date; and (d) the effective date of such Approved
Plan shall have occurred by the date that is no later than 220 days after the
Petition Date; provided that this milestone (d) shall be automatically extended
to the extent necessary, but in no event longer than for fifteen (15)
consecutive business days to allow for the expiration of the marketing period
under the Exit Facilities Term Sheet.

 

If (i) the Debtors fail to satisfy Milestone (e) set forth in the DIP term sheet
on the date that is 135 days following the Petition Date and, (ii) the Debtors
take all actions necessary to implement a Chief Restructuring Officer pursuant
to an election exercised by the DIP Agent pursuant to the terms set forth in the
DIP Term Sheet, then, upon bankruptcy court approval and appointment of the CRO,
the Milestones set forth in (i)-(l) above shall be extended as follows:  (a) an
Approved Disclosure Statement, and the motion to approve such Approved
Disclosure Statement, shall be filed with an Approved Plan approved by the CRO
on or before the date that is 180 days following the Petition Date; (b) such
Approved Disclosure Statement shall have been approved by Bankruptcy Court by
the date that is no later than 210 days after the Petition Date; (c) the
Bankruptcy Court shall have entered an order confirming such Approved Plan by
the date that is no later than 245 days after the Petition Date; and (d) the
Effective Date of such Approved Plan shall have occurred by the date that is no
later than 260 days after the Petition Date; provided that this milestone
(d) shall be automatically extended to the extent necessary, but in no event
longer than for fifteen (15) consecutive business days to allow for the
expiration of the marketing period under the Exit Facilities Term Sheet (as
defined in the Restructuring Support Agreement); provided, further, that in no
event shall the Plan Effective Date extend beyond the Scheduled Maturity Date.

 

7

 

 

 

GENERAL PROVISIONS REGARDING THE PLAN Subordination Except as otherwise set
forth in this Restructuring Term Sheet and the RSA, the classification and
treatment of Claims under the Plan shall conform to the respective contractual,
legal, and equitable subordination rights of such Claims, and any such rights
shall be settled, compromised, and released pursuant to the Plan. Restructuring
Transactions The Confirmation Order shall be deemed to authorize, among other
things, all actions as may be necessary or appropriate to effectuate any
transaction described in, approved by, contemplated by, or necessary to
consummate the Plan and the Restructuring Transactions therein.  On the Plan
Effective Date, the Debtors, as applicable, shall issue all securities, notes,
instruments, certificates, and other documents required to be issued pursuant to
the Restructuring. Cancellation of Notes, Instruments, Certificates, and Other
Documents On the Plan Effective Date, except to the extent otherwise provided in
this Restructuring Term Sheet or the Plan, all notes, instruments, certificates,
and other documents evidencing Claims or Interests, including credit agreements
and indentures, shall be canceled, and the Debtors’ obligations thereunder or in
any way related thereto shall be deemed satisfied in full and discharged.
Executory Contracts and Unexpired Leases

The Plan will provide that the executory contracts and unexpired leases that are
not rejected as of the Plan Effective Date (either pursuant to the Plan or a
separate motion) will be deemed assumed pursuant to section 365 of the
Bankruptcy Code.

 

The Parties will work together in good faith to determine which executory
contracts and unexpired leases shall be assumed, assumed and assigned, or
rejected in the Chapter 11 Cases.

 

The Company Parties shall host a weekly telephonic meeting with the DIP Agent,
the Revolving Credit Facility Administrative Agent, the FLLO Ad Hoc Group, and
Franklin to discuss whether to reject or assume any midstream contracts, and (if
applicable) the strategy to renegotiate any midstream contracts.

Retention of Jurisdiction The Plan will provide that the Bankruptcy Court shall
retain jurisdiction for usual and customary matters. Discharge of Claims and
Termination of Interests Pursuant to section 1141(d) of the Bankruptcy Code and
except as otherwise specifically provided in the Plan or in any contract,
instrument, or other agreement or document created pursuant to the Plan, the
distributions, rights, and treatment that are provided in the Plan shall be in
complete satisfaction, discharge, and release, effective as of the Plan
Effective Date, of Claims (including any Intercompany Claims that the Debtors
resolve or compromise after the Plan Effective Date), Interests, and Causes of
Action of any nature whatsoever, including any interest accrued on Claims or
Interests from and after the Petition Date, whether known or unknown, against,
liabilities of, Liens on, obligations of, rights against, and Interests in the
Debtors or any of their assets or properties, regardless of whether any property
shall have been distributed or retained pursuant to the Plan on account of such
Claims and Interests, including demands, liabilities, and Causes of Action that
arose before the Plan Effective Date, any liability (including withdrawal
liability) to the extent such Claims or Interests relate to services that
employees of the Debtors have performed prior to the Plan Effective Date and
that arise from a termination of employment, any contingent or non-contingent
liability on account of representations or warranties issued on or before the
Plan Effective Date, and all debts of the kind specified in sections 502(g),
502(h), or 502(i) of the Bankruptcy Code, in each case whether or not (a) a
Proof of Claim based upon such debt or right is Filed or deemed Filed pursuant
to section 501 of the Bankruptcy Code, (b) a Claim or Interest based upon such
debt, right, or Interest is Allowed pursuant to section 502 of the Bankruptcy
Code, or (c) the holder of such a Claim or Interest has accepted the Plan.  The
Confirmation Order shall be a judicial determination of the discharge of all
Claims and Interests subject to the occurrence of the Plan Effective Date.
Releases by the Debtors, Releases by Holders of Claims and Interests,
Exculpation, and Injunction

The Plan shall include the release, exculpation, and injunction provisions set
forth in Exhibit 5 attached hereto.

 

The Consenting Revolving Credit Facility Lenders, the Consenting FLLO Term Loan
Facility Lenders, and the Consenting Second Lien Noteholders will, pursuant to
the RSA, agree to “opt in” to or not to “opt out” of, as applicable, the
consensual “Third-Party” releases, including those granted to the Company
Parties’ current and former officers, directors, and employees.

 

8

 

 

OTHER MATERIAL PROVISIONS REGARDING THE RESTRUCTURING Management Incentive Plan
On the Plan Effective Date, the Reorganized Debtors will implement a management
incentive plan (the “Management Incentive Plan”).  All grants under the
Management Incentive Plan shall be determined at the sole discretion of the New
Board including, without limitation, with respect to the participants,
allocation, timing, and the form and structure of the options, warrants and/or
equity compensation to be provided thereunder and taking into account market
compensation levels and historical equity compensation structures. Governance

The new board of directors of Reorganized Chesapeake (the “New Board”) shall be
appointed in accordance with the terms of the Governance Term Sheet attached
hereto as Exhibit 6, and the identities of the New Board shall be set forth in
the Plan Supplement to the extent known at the time of Filing.

 

Corporate governance for Reorganized Chesapeake, including charters, bylaws,
operating agreements, or other organization documents, as applicable (the “New
Organizational Documents”), shall be consistent with this Restructuring Term
Sheet and section 1123(a)(6) of the Bankruptcy Code and shall be in form and
substance satisfactory to the Required Plan Sponsors.

Exemption from SEC Registration

The issuance of all securities under the Plan (other than securities issued
pursuant to the Backstop set forth in the Backstop Commitment Agreement) will be
exempt from SEC registration under section 1145 of the Bankruptcy Code to the
fullest extent permissible.

 

Each Backstop Party that receives securities under the Plan will be entitled to
registration rights and sale support rights with respect to all such securities
to be documented in a registration rights agreement in form and substance
satisfactory to the Required Plan Sponsors.

Employment Obligations Pursuant to the RSA and this Restructuring Term Sheet,
the Parties consent to the continuation of the Debtors’ wages, compensation, and
benefits programs according to existing terms and practices, including executive
compensation programs and any motions in the Bankruptcy Court for approval
thereof.  On the Plan Effective Date, the Debtors shall (a) assume all
employment agreements, indemnification agreements, or other agreements entered
into with current and former employees or (b) enter into new agreements with
such employees on terms and conditions acceptable to the Debtor and such
employee.  Notwithstanding the foregoing, any employment agreements or other
employment-related agreements that provide for any acceleration or enhancement
of payments (including severance payments) , vesting, benefits or other rights,
in connection with a transaction that constitutes a change in control, change of
control or similar concept under such agreements, shall only be assumed if and
to the extent that the Debtors’ obtain waivers specifying that the consummation
of the Restructuring Transactions shall not trigger any such rights under
such agreements. Indemnification Obligations Consistent with applicable law, all
indemnification provisions in place as of the Plan Effective Date (whether in
the by-laws, certificates of incorporation or formation, limited liability
company agreements, other organizational documents, board resolutions,
indemnification agreements, employment contracts, or otherwise) for current and
former directors, officers, managers, employees, attorneys, accountants,
investment bankers, and other professionals of the Parties, as applicable, shall
be reinstated and remain intact, irrevocable, and shall survive the
effectiveness of the Restructuring on terms no less favorable to such current
and former directors, officers, managers, employees, attorneys, accountants,
investment bankers, and other professionals of the Parties than the
indemnification provisions in place prior to the Restructuring. Retained Causes
of Action The Reorganized Debtors, as applicable, shall retain all rights to
commence and pursue any Causes of Action, other than any Causes of Action that
the Debtors have released pursuant to the release and exculpation provisions
outlined in this Restructuring Term Sheet and implemented pursuant to the Plan.

 

9

 

 

 

Conditions Precedent to the Plan Effective Date

The following shall be conditions to the Plan Effective Date (the “Conditions
Precedent to the Plan Effective Date”):

 

(a)   the Bankruptcy Court shall have entered the Confirmation Order, which
shall:

 

(i)      authorize the Debtors to take all actions necessary to enter into,
implement, and consummate the contracts, instruments, releases, leases,
indentures, and other agreements or documents created in connection with the
Plan;

 

(ii)     decree that the provisions in the Confirmation Order and the Plan are
nonseverable and mutually dependent;

 

(iii)    authorize the Debtors, as applicable/necessary, to: (a) implement the
Restructuring Transactions, including the Rights Offering and Exit Facilities;
(b) distribute the New Common Stock pursuant to the exemption from registration
under the Securities Act provided by section 1145 of the Bankruptcy Code or
other exemption from such registration or pursuant to one or more registration
statements; (c) make all distributions and issuances as required under the Plan,
including cash and the New Common Stock; and (d) enter into any agreements,
transactions, and sales of property as set forth in the Plan Supplement,
including the Management Incentive Plan;

 

(iv)   authorize the implementation of the Plan in accordance with its terms;
and

 

(v)     provide that, pursuant to section 1146 of the Bankruptcy Code, the
assignment or surrender of any lease or sublease, and the delivery of any deed
or other instrument or transfer order, in furtherance of, or in connection with
the Plan, including any deeds, bills of sale, or assignments executed in
connection with any disposition or transfer of assets contemplated under the
Plan, shall not be subject to any stamp, real estate transfer, mortgage
recording, or other similar tax; and

 

(b)  the Debtors shall have obtained all authorizations, consents, regulatory
approvals, rulings, or documents that are necessary to implement and effectuate
the Plan;

 

(c)   the final version of each of the Plan, the Definitive Documents, and all
documents contained in any supplement to the Plan, including the Plan Supplement
and all of the schedules, documents, and exhibits contained therein shall have
been Filed in a manner consistent in all material respects with the RSA, this
Restructuring Term Sheet, and the Plan;

 

(d)   the RSA shall remain in full force and effect;

 

(e)   the Final Order approving the DIP Facility shall remain in full force and
effect and no event of default shall have occurred and be continuing thereunder;

 

 

10

 

 

OTHER MATERIAL PROVISIONS REGARDING THE RESTRUCTURING  

(f)   the Backstop Commitment Agreement Approval Order and Backstop Commitment
Agreement shall remain in full force and effect;

 

(g)   all professional fees and expenses of retained professionals that require
the Bankruptcy Court’s approval shall have been paid in full or amounts
sufficient to pay such fees and expenses after the Plan Effective Date shall
have been placed in a professional fee escrow account pending the Bankruptcy
Court’s approval of such fees and expenses;

 

(h)   to the extent invoiced, the payment in cash in full of all Restructuring
Expenses;

 

(i)    the Debtors shall have obtained exit financing in an amount and on terms
satisfactory to the Required Consenting Stakeholders (which shall not be
withheld in bad faith);

 

(j)    the Debtors shall have Minimum Liquidity2 of at least $500 million;

 

(k)   the Debtors shall have Total Leverage3 no greater than 2.25x;

 

(l)   the Debtors’ PDP PV10 test ratio shall be no less than 1.5x; and

 

(m) the Debtors shall have implemented the Restructuring Transactions and all
transactions contemplated in this Restructuring Term Sheet in a manner
consistent with the RSA, this Restructuring Term Sheet, and the Plan.

 

For the avoidance of doubt, if the Minimum Liquidity condition set forth in
subsection (j) above, the Total Leverage condition set forth in subsection
(k) above, and/or the PDP PV10 ratio set forth in subsection (l) above would not
otherwise be satisfied, the Required Plan Sponsors may agree, in their sole
discretion, to increase the Rights Offering amount above $600 million on the
same terms, including the Rights Offering Value and with an allocation
consistent with the Backstop Allocations, in order to enable such conditions to
be satisfied, provided that no Backstop Party’s Backstop Commitment may be
increased without its consent.

 

Waiver of Conditions Precedent to the Plan Effective Date The Debtors, with the
prior written consent of the Required Consenting Stakeholders (not to be
withheld unreasonably), may waive any one or more of the Conditions Precedent to
the Plan Effective Date.

 

 

2 “Minimum Liquidity” to be defined in a customary manner and to be net of
payables more than 90 days past due.

3 “Total Leverage” has the meaning ascribed to Total Leverage Ratio in the Exit
Facilities Term Sheet.

 

11

 

 

OTHER MATERIAL PROVISIONS REGARDING THE RESTRUCTURING Settlement

Pursuant to the RSA and this Restructuring Term Sheet, the Parties agree to
settle matters that could otherwise be the subject of litigation among the
Parties, including any such matters arising under the Intercreditor Agreement
and any matters related to the enterprise value of the Company Parties.

 

If a Termination Date has not occurred prior to the Plan Effective Date, then on
the Plan Effective Date, in conjunction with the issuance of new securities
under the Plan, the Backstop with respect to the Rights Offering, the DIP
Facility, the Exit Facilities and the various compromises of rights and claims
on which this Term Sheet and the Restructuring Transactions are predicated,
among other things, the FLLO Term Loan Facility Lenders shall conclusively,
absolutely, unconditionally, irrevocably and forever waive any rights they may
have to seek turnover of any payments arising under any provision of the
Intercreditor Agreement, including, but not limited to, any turnover provisions
in sections 3.05, 4.02(l), 6.01 and 7.03 thereof.

DIP Order/Cash Collateral Order

The Parties hereto agree and consent that the DIP Order and any cash collateral
order approved in the Chapter 11 Cases shall provide that the Debtors will pay
the fees and expenses of professionals of (i) the collateral trustee under the
Collateral Trust Agreement (including Paul Hastings LLP), (ii) the FLLO Term
Loan Facility Administrative Agent (including Arnold & Porter Kaye Scholer LLP
and one local counsel in the relevant jurisdiction), (iii) the FLLO Ad Hoc Group
(including Davis Polk & Wardwell LLP, Vinson & Elkins LLP, one local counsel in
each other relevant local jurisdiction, and Perella Weinberg Partners LP)
((ii)-(iii), collectively the “FLLO Professionals”), (iv) the Second Lien
Collateral Trustee (including Morgan, Lewis & Bockius LLP and one local counsel
in the relevant jurisdiction) and (v) Franklin (including Akin Gump Strauss
Hauer & Feld LLP, Moelis & Company LLC, one local counsel in each other relevant
local jurisdiction, and FTI Consulting, Inc.) ((iv)-(v), collectively, the
“Second Lien Professionals”); provided that:

 

(I)           (a) the payment of the fees and expenses of the FLLO Professionals
shall only be payable as a form of adequate protection for so long as (1) the
Restructuring Support Agreement has not been terminated as to the DIP Lenders,
Required Consenting Revolving Credit Facility Lenders, or FLLO Ad Hoc Group, or
(2) an alternative restructuring support agreement or similar agreement with
respect to the restructuring of the Debtors’ debt and businesses remains in
effect between the DIP Agent, the DIP Lenders, 66.67% of the Revolving Credit
Facility Lenders, and the FLLO Ad Hoc Group, in each case, at which time such
adequate protection shall terminate, provided that in the event such adequate
protection payments terminate pursuant to the foregoing, (a) all parties shall
retain all rights pursuant to the Collateral Trust Agreement, which rights are
fully reserved, including, without limitation, the rights, if any, of the
Existing FLLO Agent or Existing FLLO Lenders to seek different or additional
adequate protection in accordance with section 6.02(f) of the Collateral Trust
Agreement and (b) the Company Parties shall pay all fees and expenses of the
FLLO Professionals incurred prior to termination of adequate protection as
described herein; and

 

(II)          the payment of the fees and expenses of the Second Lien
Professionals shall only be payable as a form of adequate protection for so long
as the Restructuring Support Agreement has not been terminated as to the Company
Parties, DIP Lenders, Required Consenting Revolving Credit Facility Lenders, or
Franklin (at which time such adequate protection shall terminate), provided that
in the event such adequate protection payments terminate pursuant to the
foregoing, (a) all parties shall retain all rights pursuant to the Intercreditor
Agreement, including, without limitation, the rights, if any, of such parties to
seek different or additional adequate protection in accordance with section
4.02(f) of the Intercreditor Agreement and (b) the Company Parties shall pay all
fees and expenses of the Second Lien Professionals incurred prior to termination
of adequate protection as described herein.

 

This provision shall survive the termination of the RSA.

 

12

 

 

Exhibit 1

 

Execution Version

Definitions

 

Term Definition Additional Consenting Stakeholder Any holder of Claims that is
not a party to the RSA as of the Agreement Effective Date who, at any time after
the Agreement Effective Date, becomes a party to the RSA as an applicable
Consenting Stakeholder. Administrative Claim A Claim for costs and expenses of
administration of the Chapter 11 Cases pursuant to sections 503(b), 507(a)(2),
507(b), or 1114(e)(2) of the Bankruptcy Code, including:  (a) the actual and
necessary costs and expenses incurred on or after the Petition Date until and
including the Plan Effective Date of preserving the Estates and operating the
Debtors’ businesses; (b) Allowed Professional Claims; and (c) all fees and
charges assessed against the Estates pursuant to section 1930 of chapter 123 of
title 28 of the United States Code.   Affiliate As defined in section 101(2) of
the Bankruptcy Code. Agent Any administrative agent, collateral agent, or
similar Entity under the Exit Facilities, the DIP Facility, the Revolving Credit
Facility, and/or the FLLO Term Loan Facility. Agents/Trustees Collectively, each
of the Agents and Trustees. Agreement Effective Date The date on which the
conditions set forth in Section 2 of the RSA have been satisfied or waived by
the appropriate Party or Parties in accordance with the RSA. Agreement Effective
Period With respect to a Party, the period from the Agreement Effective Date to
the Termination Date applicable to that Party. Allowed With respect to any Claim
or Interest, except as otherwise provided herein:  (a) a Claim or Interest in a
liquidated amount as to which no objection has been Filed prior to the
applicable claims objection deadline and that is evidenced by a Proof of Claim
or Interest, as applicable, timely Filed by the applicable Bar Date or that is
not required to be evidenced by a Filed Proof of Claim or Interest, as
applicable, under the Plan, the Bankruptcy Code, or a Final Order; (b) a Claim
or Interest that is scheduled by the Debtors as neither disputed, contingent,
nor unliquidated, and for which no Proof of Claim or Interest, as applicable,
has been timely Filed in an unliquidated or a different amount;  (c) a Claim or
Interest that is upheld or otherwise Allowed (i) pursuant to the Plan; (ii) in
any stipulation that is approved by the Bankruptcy Court; (iii) pursuant to any
contract, instrument, indenture, or other agreement entered into or assumed in
connection herewith; or (iv) by Final Order (including any such Claim to which
the Debtors had objected or which the Bankruptcy Court had disallowed prior to
such Final Order); provided that with respect to a Claim or Interest described
in clauses (a) through (c) above, such Claim or Interest shall be considered
Allowed only if and to the extent that with respect to such Claim or Interest no
objection to the allowance thereof has been or, in the Debtors’ or Reorganized
Debtors’ reasonable good faith judgment, may be interposed within the applicable
period of time fixed by the Plan, the Bankruptcy Code, the Bankruptcy Rules, or
the Bankruptcy Court, or such an objection is so interposed and the Claim or
Interest, as applicable, shall have been Allowed by a Final Order; provided,
further, that no Claim of any Entity subject to section 502(d) of the Bankruptcy
Code shall be deemed Allowed unless and until such Entity pays in full the
amount that it owes such Debtor or Reorganized Debtor, as applicable.  Any Claim
that has been or is hereafter listed in the Schedules as contingent,
unliquidated, or disputed, and for which no Proof of Claim or Interest is or has
been timely Filed, is not considered Allowed and shall be deemed expunged
without further action by the Debtors and without further notice to any party or
action, approval, or order of the Bankruptcy Court.  For the avoidance of doubt,
a Proof of Claim or Interest Filed after the Bar Date shall not be Allowed for
any purposes whatsoever absent entry of a Final Order allowing such late-Filed
Claim.  “Allow,” “Allowing,” and “Allowance” shall have correlative meanings.

 

 

 

 

Term Definition

Alternative Restructuring Proposal Any inquiry, proposal, offer, bid, term
sheet, discussion, or agreement with respect to a sale, disposition, new-money
investment, restructuring, reorganization, merger, amalgamation, acquisition,
consolidation, dissolution, debt investment, equity investment, liquidation,
tender offer, recapitalization, plan of reorganization, share exchange, business
combination, or similar transaction involving any one or more Company Parties or
the debt, equity, or other interests in any one or more Company Parties that is
an alternative to one or more of the Restructuring Transactions. Backstop As
defined in this Restructuring Term Sheet. Backstop Commitment Agreement That
certain Backstop Commitment Agreement to be negotiated between the Company
Parties and the Backstop Parties, which shall be executed prior to the Petition
Date. Backstop Commitment Agreement Approval Order An order of the Bankruptcy
Court that that is not stayed under Bankruptcy Rule 6004(h) or otherwise that
(a) authorizes the Company Parties to execute and deliver the Backstop
Commitment Agreement, pursuant to section 365 of the Bankruptcy Code and
(b) provides that the Backstop Commitment Fee shall constitute allowed
administrative expenses of the Debtors’ estates under sections 503(b) and 507 of
the Bankruptcy Code and shall be payable by the Debtors as provided in the
Backstop Commitment Agreement without further order of the Bankruptcy Court.
Backstop Commitment Fee As defined in this Restructuring Term Sheet. Backstop
Parties As defined in this Restructuring Term Sheet. Bankruptcy Code Title 11 of
the United States Code, 11 U.S.C. §§ 101–1532, as amended. Bankruptcy Court The
United States Bankruptcy Court for the Southern District of Texas. Bankruptcy
Rules The Federal Rules of Bankruptcy Procedure. Bar Date The date established
by the Bankruptcy Court by which Proof of Claims or Proof of Interests must be
Filed with respect to such Claims or Interests, other than Administrative
Claims, Claims held by Governmental Units, or other Claims or Interests for
which the Bankruptcy Court entered an order excluding the holders of such Claims
or Interests from the requirement of Filing Proof of Claims or Proof of
Interests.

 

2

 

 

Term Definition

Business Day Any day other than a Saturday, Sunday, or other day on which
commercial banks are authorized to close under the Laws of, or are in fact
closed in, the state of New York. Cause of Action Any claims, interests,
damages, remedies, causes of action, demands, rights, actions, suits,
obligations, liabilities, accounts, defenses, offsets, powers, privileges,
licenses, Liens, indemnities, guaranties, and franchises of any kind or
character whatsoever, whether known or unknown, foreseen or unforeseen, existing
or hereinafter arising, contingent or non-contingent, liquidated or
unliquidated, secured or unsecured, assertable, directly or derivatively,
matured or unmatured, suspected or unsuspected, in contract, tort, law, equity,
or otherwise.  Causes of Action also include: (a) all rights of setoff,
counterclaim, or recoupment and claims under contracts or for breaches of duties
imposed by law; (b) the right to object to or otherwise contest Claims or
Interests; (c) claims pursuant to sections 362, 510, 542, 543, 544 through 550,
or 553 of the Bankruptcy Code; and (d) such claims and defenses as fraud,
mistake, duress, and usury, and any other defenses set forth in section 558 of
the Bankruptcy Code. Chapter 11 Cases As defined in the RSA. Chesapeake
Chesapeake Energy Corporation or any successor or assign, by merger,
consolidation, or otherwise, prior to the Plan Effective Date. Claim Any claim,
as defined in section 101(5) of the Bankruptcy Code, against any of the Debtors.
Class A category of holders of Claims or Interests pursuant to
section 1122(a) of the Bankruptcy Code. Collateral Trust Agreement That certain
Collateral Trust Agreement dated December 19, 2019 by and between MUFG Union
Bank, N.A., as Collateral Trustee and Revolver Agent, and GLAS USA LLC, as
Original Term Loan Agent, and as acknowledged and agreed by certain of the
Debtors (as from time to time amended and restated) Company Parties As defined
in the RSA. Company Claims Claims against any Company Party. Conditions
Precedent to the Plan Effective Date As defined in this Restructuring Term
Sheet. Conditions Precedent to the Exit Facilities The conditions precedent to
the closing of the Exit Facilities identified on Exhibit D to the Exit
Facilities Term Sheet Confidentiality Agreement An executed confidentiality
agreement, including with respect to the issuance of a “cleansing letter” or
other public disclosure of material non-public information agreement, in
connection with any proposed Restructuring Transactions.

 

3

 

 

 

Term Definition Confirmation Entry of the Confirmation Order on the docket of
the Chapter 11 Cases. Confirmation Date The date on which the Bankruptcy Court
enters the Confirmation Order on the docket of the Chapter 11 Cases within the
meaning of Bankruptcy Rules 5003 and 9021. Confirmation Hearing The
hearing(s) before the Bankruptcy Court under section 1128 of the Bankruptcy Code
at which the Debtors seek entry of the Confirmation Order. Confirmation Order
The order of the Bankruptcy Court confirming the Plan under section 1129 of the
Bankruptcy Code. Consenting FLLO Term Loan Facility Lenders As defined in the
RSA. Consenting Revolving Credit Facility Lenders As defined in the RSA.
Consenting Second Lien Noteholders As defined in the RSA. Consenting
Stakeholders As defined in the RSA. Consenting Unsecured Noteholders Unsecured
Noteholders that are Party to the RSA. Consummation The occurrence of the Plan
Effective Date. COVID-19 Extensions As defined in this Restructuring Term Sheet.
CRO As defined in this Restructuring Term Sheet. Debtor Each Company Party that
has commenced Chapter 11 Cases. Definitive Documents The documents listed in
Section 3 of the RSA. DIP Agent MUFG Union Bank, N.A., in its capacity as
administrative agent and collateral agent under the DIP Credit Agreement. DIP
Claims All Claims derived from, based upon, or secured pursuant to the DIP
Credit Agreement or DIP Order, including Claims for all principal amounts
outstanding, interest, fees, expenses, costs, professional fee reimbursements,
transaction fees, Superpriority Hedge Claims, and other charges arising
thereunder or related thereto, in each case, with respect to the DIP Facility.
DIP Credit Agreement That certain superpriority secured debtor-in-possession
credit agreement that governs the DIP Facility (as may be amended, supplemented,
or otherwise modified from time to time) which shall be consistent with the DIP
Term Sheet and shall be executed by Chesapeake Energy Corporation, as borrower,
the Debtor guarantors that are party thereto, the DIP Lenders, and the DIP Agent
following entry of the Interim DIP Order.

 

4

 

 

Term Definition DIP Documents Collectively, the DIP Credit Agreement and any and
all other agreements, documents, and instruments delivered or to be entered into
in connection therewith, including any guarantee agreements, pledge and
collateral agreements, intercreditor agreements, and other security documents,
in each case consistent with the DIP Term Sheet and subject to the consent
rights described in the definition of DIP Facility below. DIP Facility That
certain debtor-in-possession financing facility in accordance with the terms and
conditions set forth in the DIP Credit Agreement, provided that the terms set
forth in the DIP Term Sheet shall be deemed acceptable to the FLLO Ad Hoc Group
and Franklin; and provided further that the terms of the DIP Facility that are
not set forth in the DIP Term Sheet shall otherwise be acceptable to the
Required Consenting Parties (which approval shall not be withheld in bad faith).
DIP Lenders The lenders party to the DIP Credit Agreement with respect to the
DIP Facility. DIP Obligations As defined in the DIP Order. DIP Order
Collectively, the Interim DIP Order and Final DIP Order. DIP Term Sheet As
defined in this Restructuring Term Sheet. Disclosure Statement The related
disclosure statement with respect to the Plan. Entity As defined in section
101(15) of the Bankruptcy Code. Estate The estate of any Debtor created under
sections 301 and 541 of the Bankruptcy Code upon the commencement of the
applicable Debtor’s Chapter 11 Case. Exculpated Parties Collectively, and in
each case in its capacity as such: (a) the Debtors; (b) any official committees
appointed in the Chapter 11 Cases and each of their respective members; (c) the
Consenting FLLO Term Loan Facility Lenders, (d) the Consenting Second Lien
Noteholders, (e) the Consenting Unsecured Noteholders, (f) the Backstop Parties,
(g) the Consenting Revolving Credit Facility Lenders, (h) the DIP Lenders,
(i) the Exit Facilities Lenders, (j) the Agents, and (k) with respect to each of
the foregoing, such Entity and its current and former Affiliates, and such
Entity’s and its current and former Affiliates’ current and former equity
holders, subsidiaries, officers, directors, managers, principals, members,
employees, agents, advisory board members, financial advisors, partners,
attorneys, accountants, investment bankers, consultants, representatives, and
other professionals, each in their capacity as such. Execution Date As defined
in the RSA. Existing Equity Interest An Interest in a Company Party existing as
of the Agreement Effective Date.  Notwithstanding the foregoing, Existing Equity
Interests do not include Intercompany Interests.

 

5

 

 

Term Definition Exit Facilities Collectively, the Exit RBL Facility and Exit
FLLO Term Loan Facility, provided that the terms set forth in the Exit
Facilities Term Sheet shall be deemed acceptable to the Company Parties, the
FLLO Ad Hoc Group, and Franklin; provided, further that the terms of the Exit
Facilities that are not set forth in the Exit Facilities Term Sheet shall
otherwise be acceptable to the Required Consenting Stakeholders (which approval
shall not be withheld in bad faith). Exit Facilities Agent MUFG Union Bank,
N.A., in its capacity as administrative agent for the Exit Facilities. Exit
Facilities Credit Agreements Those certain credit agreements that will govern
the Exit Facilities (as each may be amended, supplemented, or otherwise modified
from time to time), in each case which shall be consistent with the Exit
Facilities Term Sheet. Exit Facilities Documents Collectively, the Exit
Facilities Credit Agreements and any and all other agreements, documents, and
instruments delivered or to be entered into in connection therewith, including
any guarantee agreements, pledge and collateral agreements, intercreditor
agreements, and other security documents, in each case if any, the form and
substance of which shall be consistent with the Exit Facilities Term Sheet and
subject to the consent rights set forth in the definition of Exit Facilities
above. Exit Facilities Lenders The lenders party to the credit agreements
documenting the Exit RBL Facility and Exit FLLO Term Loan. Exit Facilities
Motion As defined in this Restructuring Term Sheet. Exit Facilities Term Sheet
As defined in this Restructuring Term Sheet. Exit FLLO Term Loan Facility As
defined in the Exit Facilities Term Sheet. Exit FLLO Term Loan “FLLO Term Loans”
as defined in the Exit Facilities Term Sheet. Exit Facility Loans Collectively,
the Tranche A RBL Exit Facility Loans, Tranche B RBL Exit Facility Loans, and
Exit FLLO Term Loans. Exit RBL Facility As defined in the Exit Facilities Term
Sheet. File, Filed, or Filing File, filed, or filing with the Bankruptcy Court
or its authorized designee in the Chapter 11 Cases. Final DIP Order Any order
regarding postpetition debtor in possession secured financing approved by the
Bankruptcy Court in these Chapter 11 Cases (including with respect to any
budgets governing or relating to such use) on a final basis, the form and
substance of which shall be consistent with the DIP Term Sheet. Final Order An
order or judgment of the Bankruptcy Court, or court of competent jurisdiction
with respect to the subject matter that has not been reversed, stayed, modified,
or amended, as entered on the docket in any Chapter 11 Case or the docket of any
court of competent jurisdiction, and as to which the time to appeal, or seek
certiorari or move for a new trial, reargument, or rehearing has expired and no
appeal or petition for certiorari or other proceedings for a new trial,
reargument, or rehearing has been timely taken, or as to which any appeal that
has been taken or any petition for certiorari that has been or may be timely
Filed has been withdrawn or resolved by the highest court to which the order or
judgment was appealed or from which certiorari was sought or the new trial,
reargument, or rehearing will have been denied, resulted in no stay pending
appeal of such order, or has otherwise been dismissed with prejudice; provided
that the possibility that a motion under Rule 60 of the Federal Rules of Civil
Procedure, or any analogous rule under the Bankruptcy Rules, may be Filed with
respect to such order will not preclude such order from being a Final Order.

 

6

 

 

Term Definition First Day Pleadings The pleadings and related documentation
requesting certain emergency relief, or supporting the request for such relief,
to be Filed on or around the Petition Date and to be heard at the “first day”
hearing. FLLO Ad Hoc Group The ad hoc group of FLLO Term Loan Facility Lenders
represented by Davis Polk & Wardwell LLP. FLLO Term Loan Facility The facility
outstanding under the FLLO Term Loan Facility Credit Agreement. FLLO Term Loan
Facility Administrative Agent GLAS USA LLC, in its capacity as administrative
agent for the FLLO Term Loan Facility. FLLO Term Loan Facility Claim Any Claim
on account of the FLLO Term Loan Facility. FLLO Term Loan Facility Credit
Agreement That certain term loan agreement, dated as of December 19, 2019
((i) as supplemented by that certain Class A Term Loan Supplement, dated as of
December 19, 2019 (as amended, restated or otherwise modified from time to
time), by and among Chesapeake, as borrower, the Debtor guarantors party
thereto, the FLLO Term Loan Facility Administrative Agent, and the lender
parties thereto, and (ii) as further amended, restated, or otherwise modified
from time to time), by and among Chesapeake, as borrower, the Debtor guarantors
party thereto, the FLLO Term Loan Facility Administrative Agent, and the lender
parties thereto. FLLO Term Loan Facility Lenders Holders of Allowed FLLO Term
Loan Facility Claims. FLLO Term Loan Facility Loans The term loans issued under
and on the terms set forth under the FLLO Term Loan Facility. Franklin Franklin
Advisers, Inc., as investment manager on behalf of certain funds and accounts.
General Unsecured Claims Any Unsecured Claim against a Debtor. Governmental Unit
As defined in section 101(27) of the Bankruptcy Code. Impaired With respect to
any Class of Claims or Interests, a Class of Claims or Interests that is
impaired within the meaning of section 1124 of the Bankruptcy Code. Incremental
Roll-Up Loans As defined in the DIP Term Sheet. Intercompany Claim A Claim held
by a Debtor against a Debtor. Intercompany Interest An Interest in a Debtor held
by a Debtor. Intercreditor Agreement That certain Intercreditor Agreement dated
as of December 19, 2019 between MUFG Union Bank, N.A. as Priority Lien Agent,
and Deutsche Bank Trust Company Americas, as Second Lien Collateral Trustee and
Acknowledged and Agreed by Chesapeake Energy Corporation and certain of its
subsidiaries. Interest Any equity security (as defined in section 101(16) of the
Bankruptcy Code) in any Debtor and any other rights, options, warrants, stock
appreciation rights, phantom stock rights, restricted stock units, redemption
rights, repurchase rights, convertible, exercisable or exchangeable securities
or other agreements, arrangements or commitments of any character relating to,
or whose value is related to, any such interest or other ownership interest in
any Debtor. Interim DIP Order Any order regarding postpetition debtor in
possession secured financing approved by the Bankruptcy Court in these Chapter
11 Cases (including with respect to any budgets governing or relating to such
use) on an interim basis, the form and substance of which shall be consistent
with the DIP Term Sheet. Joinder A joinder agreement whereby a holder of Claims
that is not a Party to the RSA as of the Agreement Effective Date may become a
Consenting Stakeholder by executing such joinder agreement. KEIP As defined in
the RSA. KERP As defined in the RSA. Law Any federal, state, local, or foreign
law (including common law), statute, code, ordinance, rule, regulation, order,
ruling, or judgment, in each case, that is validly adopted, promulgated, issued,
or entered by a governmental authority of competent jurisdiction (including the
Bankruptcy Court). Lien As defined in section 101(37) of the Bankruptcy Code.
Management Incentive Plan As defined in this Restructuring Term Sheet. Majority
DIP Lenders As defined in the DIP Order. New Board As defined in this
Restructuring Term Sheet. New Class A Warrants As defined in this Restructuring
Term Sheet.

 

7

 

 

Term Definition New Class B Warrants As defined in this Restructuring Term
Sheet. New Class C Warrants As defined in this Restructuring Term Sheet. New
Common Stock As defined in this Restructuring Term Sheet. New Money Roll-Up
Loans As defined in the DIP Term Sheet. New Organizational Documents As defined
in this Restructuring Term Sheet. New Warrants As defined in this Restructuring
Term Sheet. Other Priority Claim Any Claim other than an Administrative Claim or
a Priority Tax Claim entitled to priority in right of payment under
section 507(a) of the Bankruptcy Code. Other Secured Claim Any Secured Claim
other than a Revolving Credit Facility Claim, a FLLO Term Loan Facility Claim, a
Second Lien Notes Claim, or a DIP Claim.   Parties As defined in the RSA.
Permitted Transferee Each transferee of any Company Claims who meets the
requirements of Section 8 of the RSA. Petition Date The date on which the
Chapter 11 Cases are commenced. Plan The joint plan of reorganization Filed by
the Debtors under chapter 11 of the Bankruptcy Code that embodies the
Restructuring Transactions. Plan Effective Date The date that is the first
Business Day after the Confirmation Date on which all Conditions Precedent to
the Plan Effective Date have been satisfied or waived in accordance with the
Plan. Plan Equity Value As defined in this Restructuring Term Sheet. Plan
Supplement Any compilation of documents and forms of documents, agreements,
schedules, and exhibits to the Plan, which shall be Filed by the Debtors prior
to the Confirmation Hearing, and additional documents Filed with the Bankruptcy
Court prior to the Plan Effective Date as amendments to the Plan Supplement,
each of which shall be consistent in all respects with, and shall otherwise
contain, the terms and conditions and be subject to the consent rights set forth
in the RSA and this Restructuring Term Sheet, where applicable. Priority Tax
Claims Any Claim of a Governmental Unit of the kind specified in
section 507(a)(8) of the Bankruptcy Code. Professional Claim A Claim by a
professional seeking an award by the Bankruptcy Court of compensation for
services rendered or reimbursement of expenses incurred through and including
the Confirmation Date under sections 330, 331, 503(b)(2), 503(b)(3), 503(b)(4),
or 503(b)(5) of the Bankruptcy Code. Proof of Claim A proof of claim Filed
against any of the Debtors in the Chapter 11 Cases by the applicable bar date as
established by the Court. Proof of Interest A proof of Interest Filed against
any of the Debtors in the Chapter 11 Cases.

 

8

 

 

Term Definition Put Option Premium As defined in the Backstop Commitment
Agreement. Qualified Marketmaker An Entity that (a) holds itself out to the
public or the applicable private markets as standing ready in the ordinary
course of business to purchase from customers and sell to customers Company
Claims (or enter with customers into long and short positions in Company
Claims), in its capacity as a dealer or market maker in Company Claims and
(b) is, in fact, regularly in the business of making a market in claims against
issuers or borrowers (including debt securities or other debt). Registration
Rights Agreement The registration rights agreement pursuant to which each
Backstop Party shall be entitled to registration rights, to be entered into as
of the Plan Effective Date. Reinstatement or Reinstated With respect to Claims
and Interests, that the Claim or Interest shall be rendered unimpaired in
accordance with section 1124 of the Bankruptcy Code. Released Parties
Collectively, and in each case in its capacity as such:  (a) each Debtor;
(b) each Reorganized Debtor; (c) each Company Party; (d) each of the Debtors’
current and former directors and officers; (e) each DIP Lender; (f) each Exit
Facilities Lender; (g) each Agent; (h) each Trustee; (i) the Consenting
Revolving Credit Facility Lenders; (j) the Consenting FLLO Term Loan Facility
Lenders, (k) the Consenting Second Lien Noteholders, (l) the Consenting
Unsecured Noteholders, (m) the Backstop Parties; (n) all holders of Interests;
(o) with respect to each of the foregoing (a) through (o), each of such Entity
and its current and former Affiliates, and such Entities’ and their current and
former Affiliates’ current and former members, directors, managers, officers,
equity holders (regardless of whether such interests are held directly or
indirectly), predecessors, successors, and assigns, subsidiaries, and each of
their respective current and former members, equity holders, officers,
directors, managers, principals, members, employees, agents, advisory board
members, financial advisors, partners, attorneys, accountants, investment
bankers, consultants, representatives, and other professionals, each in their
capacity as such; provided that in each case, an Entity shall not be a Released
Party if it: (x) elects to opt out of the releases contained in the Plan; or
(y) timely Files with the Bankruptcy Court on the docket of the Chapter 11 Cases
an objection to the releases contained in the Plan that is not resolved
before Confirmation. Releasing Parties Collectively, and in each case in its
capacity as such:  (a) each Debtor; (b) each Reorganized Debtor; (c) each
Company Party; (d) each DIP Lender; (e) each Exit Facilities Lender; (f) each
Agent; (g) each Trustee; (h) the Consenting FLLO Term Loan Facility Lenders,
(i) the Consenting Revolving Credit Facility Lenders; (j) the Consenting Second
Lien Noteholders, (k) the Consenting Unsecured Noteholders, (l) the Backstop
Parties; (m) all holders of Claims; (n) all holders of Interests; (o) with
respect to each of the foregoing (a) through (o), such Entity and its current
and former Affiliates, and such Entities’ and their current and former
Affiliates’ current and former members, directors, managers, officers, equity
holders (regardless of whether such interests are held directly or indirectly),
predecessors, successors, and assigns, subsidiaries, and each of their
respective current and former members, equity holders, officers, directors,
managers, principals, members, employees, agents, advisory board members,
financial advisors, partners, attorneys, accountants, investment bankers,
consultants, representatives, and other professionals, in each case, solely in
their respective capacities as such with respect to such Entity and solely to
the extent such Entity has the authority to bind such Affiliate in such
capacity; provided that in each case, an Entity shall not be a Releasing Party
if it:  (x) elects to opt out of the releases contained in the Plan; or
(y) timely Files with the Bankruptcy Court on the docket of the Chapter 11 Cases
an objection to the releases contained in the Plan that is not resolved before
Confirmation. Reorganized Chesapeake Reorganized Chesapeake, or any successor or
assign, by merger, consolidation, or otherwise, on or after the Plan Effective
Date. Reorganized Debtors A Debtor, or any successor or assign thereto, by
merger, consolidation, or otherwise, on and after the Plan Effective Date.

 

9

 

 

Term Definition Required Consenting FLLO Term Loan Facility Lenders As defined
in the RSA. Required Consenting Revolving Credit Facility Lenders As defined in
the RSA. Required Consenting DIP Lenders As defined in the RSA. Required
Consenting Second Lien Noteholders As defined in the RSA. Required Consenting
Stakeholders As defined in the RSA. Required Consenting Stakeholders Percentage
As defined in the RSA. Required Plan Sponsors As defined in the RSA.
Restructuring The restructuring of Chesapeake and its direct and indirect
subsidiaries, as described in the RSA and this Restructuring Term Sheet.
Restructuring Expenses

The prepetition and postpetition reasonable and documented fees and expenses of
the FLLO Professionals and the Second Lien Professionals; provided that:

(a)       the fees and expenses of the FLLO Professionals shall only be
Restructuring Expenses for so long as (1) the Restructuring Support Agreement
has not been terminated as to the DIP Lenders, Required Consenting Revolving
Credit Facility Lenders, or FLLO Ad Hoc Group or (2) an alternative
restructuring support agreement or similar agreement with respect to the
restructuring of the Debtors’ debt and businesses remains in effect between the
DIP Agent, the DIP Lenders, 66.67% of the Revolving Credit Facility Lenders, and
the FLLO Ad Hoc Group, in each case, at which time such fees and expenses shall
cease to be Restructuring Expenses (a “FLLO Restructuring Expenses Termination
Event”), provided, that in the event a FLLO Restructuring Expenses Termination
Event occurs, (a) all parties shall retain all rights pursuant to the Collateral
Trust Agreement, which rights are fully reserved, including, without limitation,
the rights, if any, of the Existing FLLO Agent or Existing FLLO Lenders to seek
different or additional adequate protection in accordance with section
6.02(f) of the Collateral Trust Agreement and (b) the fees and expenses of the
FLLO Professionals incurred prior to such FLLO Restructuring Expenses
Termination Event shall be Restructuring Expenses; and

(b)       the fees and expenses of the Second Lien Professionals shall only be
Restructuring Expenses for so long as the Restructuring Support Agreement has
not been terminated as to the Company Parties, DIP Lenders, Required Consenting
Revolving Credit Facility Lenders, or Franklin (a “Second Lien Restructuring
Expenses Termination Event”); provided, that in the event a Second Lien
Restructuring Expenses Termination Event occurs, (a) all parties shall retain
all rights pursuant to the Intercreditor Agreement, including, without
limitation, the rights, if any, of such parties to seek different or additional
adequate protection in accordance with section 4.02(f) of the Intercreditor
Agreement and (b) the fees and expenses of the Second Lien Professionals
incurred prior to such Second Lien Restructuring Expenses Termination Event
shall be Restructuring Expenses.

Restructuring Term Sheet As defined in the RSA. Restructuring Transactions As
defined in the RSA. Revolving Credit Facility The facility outstanding under the
Revolving Credit Facility Credit Agreement. Revolving Credit Facility
Administrative Agent MUFG Union Bank, N.A., in its capacity as administrative
agent for the Revolving Credit Facility. Revolving Credit Facility Claim Any
Claim on account of the Revolving Credit Facility. Revolving Credit Facility
Credit Agreement That certain amended and restated credit agreement, dated as of
September 12, 2018 (as amended, restated, or otherwise modified from time to
time), by and among Chesapeake, as borrower, the Debtor guarantors party
thereto, the Revolving Credit Facility Administrative Agent, and the other
lender, issuer, and agent parties thereto.

 

10

 

 

Term Definition Revolving Credit Facility Lenders Holders of Allowed Revolving
Credit Facility Claims. Revolving Credit Facility Loans The loans issued under
and on the terms set forth under the Revolving Credit Facility. Revolving DIP
Loan Commitments As defined in the DIP Term Sheet. Revolving DIP Loans As
defined in the DIP Order. Rights Offering As defined in this Restructuring Term
Sheet. Rights Offering Amount As defined in this Restructuring Term Sheet.
Rights Offering Procedures The procedures governing the Rights Offering attached
as an exhibit to the Backstop Commitment Agreement. Rights Offering Value As
defined in this Restructuring Term Sheet. Roll-Up Loans As defined in the DIP
Order. RSA As defined in the introduction to this Restructuring Term Sheet. SEC
The Securities and Exchange Commission. Second Lien Noteholders Holders of
Allowed Second Lien Notes Claims. Second Lien Notes The 11.500% senior notes due
2025 issued by Chesapeake pursuant to the Second Lien Notes Indenture.   Second
Lien Notes Claim Any Claim on account of the Second Lien Notes. Second Lien
Notes Indenture That certain indenture dated as of December 19, 2019, by and
among Chesapeake, as issuer, certain Debtors guarantors party thereto, and the
Second Lien Notes Trustee, as may be amended, supplemented, or otherwise
modified from time to time. Second Lien Notes Trustee Deutsche Bank Trust
Company Americas, in its capacity as trustee and collateral trustee for the
Second Lien Notes Indenture. Secured When referring to a Claim: (a) secured by a
Lien on collateral to the extent of the value of such collateral, as determined
in accordance with section 506(a) of the Bankruptcy Code or (b) subject to a
valid right of setoff pursuant to section 553 of the Bankruptcy Code. Secured
Tax Claim Any Secured Claim that, absent its Secured status, would be entitled
to priority in right of payment under section 507(a)(8) of the Bankruptcy Code
(determined irrespective of time limitations), including any related Secured
Claim for penalties. Securities Act The Securities Act of 1933, as amended, 15
U.S.C. §§ 77a–77aa, or any similar federal, state, or local law. Solicitation
Materials The court-approved Plan and Disclosure Statement and related
documentation to be distributed to holders of Claims entitled to vote on the
Plan. Superpriority Hedge Claims As defined in the DIP Order Termination Date
The date on which termination of the RSA as to a Party is effective in
accordance with Section 12 of the RSA. Total Leverage As defined in this
Restructuring Term Sheet. Tranche A RBL Exit Facility Loans As defined in the
Exit Facilities Term Sheet. Tranche B RBL Exit Facility Loans As defined in the
Exit Facilities Term Sheet. Transfer To sell, resell, reallocate, use, pledge,
assign, transfer, hypothecate, participate, donate or otherwise encumber or
dispose of, directly or indirectly (including through derivatives, options,
swaps, pledges, forward sales or other transactions). Transfer Agreement An
executed form of the transfer agreement providing, among other things, that a
transferee is bound by the terms of the RSA and substantially in the form
attached to the RSA as Exhibit C. Trustee Any indenture trustee, collateral
trustee, or other trustee or similar entity under the Second Lien Notes or the
Unsecured Notes. Unimpaired With respect to a Class of Claims or Interests, a
Class of Claims or Interests that is not Impaired. United States Trustee The
United States Trustee for the jurisdiction in which the Chapter 11 Cases are
commenced. Unsecured Claim Any Claim that is not a Secured Claim. Unsecured
Claims Recovery As defined in this Restructuring Term Sheet. Unsecured
Noteholders Holders of Allowed Unsecured Notes Claims. Unsecured Notes The
6.625% senior notes due 2020, the 6.125% senior notes due 2021, the 5.375%
senior notes due 2021, the 4.875% senior notes due 2022, the 5.750% senior notes
due 2023, the 7.000% senior notes due 2024, the 8.000% senior notes due 2025,
the 8.000% senior notes due 2026, the 7.500% senior notes due 2026, the 8.000%
senior notes due 2027, the 5.500% convertible senior notes due 2026, and the
6.875% senior notes due 2025, all issued by certain Company Parties pursuant to
the Unsecured Notes Indentures. Unsecured Notes Claim Any Claim on account of
the Unsecured Notes.

 

11

 

 

 

Term Definition Unsecured Notes Indentures

Those certain indentures dated as of the following dates:

 

·     August 2, 2010 (6.625% senior notes due 2020);

·     February 11, 2011 (6.125% senior notes due 2021);

·     April 1, 2013 (5.375% senior notes due 2021);

·     April 24, 2014 (4.875% senior notes due 2022);

·     April 1, 2013 (5.750% senior notes due 2023);

·     September 27, 2018 (7.000% senior notes due 2024);

·     December 20, 2016 (8.000% senior notes due 2025);

·     April 3, 2019 (8.000% senior notes due 2026);

·     September 27, 2018 (7.500% senior notes due 2026);

·     June 6, 2017 (8.000% senior notes due 2027);

·     October 5, 2016 (5.500% convertible senior notes due 2026); and

·     February 1, 2017 (6.875% senior notes due 2025),

 

each by and among certain of the Company Parties and the Unsecured Notes
Trustees, as may be amended, supplemented, or otherwise modified from time to
time.

Unsecured Notes Trustees

The following entities:

 

·     The Bank of New York Trust Company, N.A. (6.625% senior notes due 2020);

·     The Bank of New York Trust Company, N.A. (6.125% senior notes due 2021);

·     The Bank of New York Trust Company, N.A. (5.375% senior notes due 2021);

·     Deutsche Bank Trust Company Americas (4.875% senior notes due 2022);

·     The Bank of New York Trust Company, N.A. (5.750% senior notes due 2023);

·     Deutsche Bank Trust Company Americas (7.000% senior notes due 2024);

·     Deutsche Bank Trust Company Americas (8.000% senior notes due 2025);

·     Deutsche Bank Trust Company Americas (8.000% senior notes due 2026);

·     Deutsche Bank Trust Company Americas (7.500% senior notes due 2026);

·     Deutsche Bank Trust Company Americas (8.000% senior notes due 2027);

·     Deutsche Bank Trust Company Americas (5.500% convertible senior notes due
2026); and

·     U.S. Bank National Association (6.875% senior notes due 2025),

 

each in its capacity as trustee for the Unsecured Notes Indentures.

 

12

 

 

Exhibit 2

 

DIP Facility Term Sheet

 

 CHK DIP Credit Facility Term Sheet 1 

 

 

Execution Version

 

SUMMARY OF PROPOSED TERMS AND CONDITIONS
FOR DIP FINANCING AND USE OF CASH COLLATERAL

 

Chesapeake Energy Corporation et al.,
as Debtors and Debtors-in-Possession
June 28, 2020

 

Capitalized terms used in this term sheet and not otherwise defined shall have
the meaning given to such terms in the Amended and Restated Credit Agreement,
dated as of September 12, 2018 (as amended, supplemented, and otherwise modified
from time to time, the “Prepetition Credit Agreement”), among the Borrower (as
defined below), the Prepetition Lenders (as defined below) and the Prepetition
Agent (as defined below) or the Restructuring Support Agreement (as defined
below).

 

Borrower: Chesapeake Energy Corporation, as debtor and debtor in possession (the
“Borrower”) under Chapter 11 of the United States Bankruptcy Code (the
“Bankruptcy Code”) in the jointly administered cases of Borrower and certain of
its affiliates (collectively, the “Cases”) in the United States Bankruptcy Court
for the Southern District of Texas (the “Bankruptcy Court”).     Guarantors: All
obligations under the DIP Facility (as defined below) and the other DIP Loan
Documents (as defined below) and any DIP Hedges (as defined below) will be
unconditionally guaranteed (the “Guarantee”) by each subsidiary of the Borrower
that is a debtor-in-possession under the Bankruptcy Code, including each
subsidiary of the Borrower which is a Guarantor as such term is defined in the
Prepetition Credit Agreement as of the Petition Date (as defined below) (such
parties, the “Guarantors”; and, together with the Borrower, the “Debtors”, which
have been identified on Schedule 1 hereto).     Prepetition Agent: MUFG Union
Bank, N.A., in its capacity as Administrative Agent under the Prepetition Credit
Agreement (the “Prepetition Agent”) and related prepetition loan documents
(collectively, the “Prepetition Loan Documents” and the loan facility evidenced
thereby, the “Prepetition RBL Facility”).     Prepetition Lenders: Those lenders
who are parties to the Prepetition Credit Agreement as of the Petition Date (the
“Prepetition Lenders”).    

DIP Agent:

 

MUFG Union Bank, N.A., in its capacity as Administrative Agent under the DIP
Credit Agreement (the “DIP Agent”).

 

 

 

 

DIP Lenders: The Prepetition Lenders providing Revolving DIP Loan Commitments
and/or receiving Roll-Up Claims (each as defined below) under the DIP Facility
(the “DIP Lenders”). The DIP Lenders who elect to participate in the DIP
Facility pursuant to the respective Revolving DIP Loan Commitments set forth on
Schedule 2 hereto are referred to herein as the “New Money DIP Lenders.”
Participation in the Revolving DIP Loan Commitments will be open to all
Prepetition Lenders on a pro rata basis.     Majority DIP Lenders: New Money DIP
Lenders (as defined below) holding more than 50% of the Revolving DIP Loan
Commitments under the DIP Facility shall constitute the “Majority DIP Lenders”.
    Petition Date: The date the Debtors file their Chapter 11 petitions (the
“Petition Date”).     DIP Facility and Roll-Up:

The DIP Lenders will provide to the Debtors a priming, senior secured,
super-priority debtor-in-possession credit facility (the “DIP Facility”)
comprising: (i) a revolving loan facility made available to the Borrower (the
“Revolving DIP Loans”) in the aggregate maximum principal amount of up to $925
million (including a sub-facility of up to $200 million for the issuance of
letters of credit, which shall (a) permit the issuance of letters of credit on
the Closing Date (as defined below) for general corporate purposes, including to
replace, backstop or provide credit support for any letters of credit issued
pursuant to the Prepetition RBL Facility (including by “grandfathering” such
letters of credit into the Revolving DIP Loan facility) and (b) reduce
availability under the DIP Facility on a dollar-for-dollar basis) (the
“Revolving DIP Loan Commitment”), and (ii) a conversion of all of the Loans
outstanding under the Prepetition Credit Agreement on the date the DIP Facility
becomes effective (the “Closing Date”) in excess of $750 million to loans under
the DIP Facility (the “Roll-Up Loans” and, together with the Revolving DIP
Loans, the “DIP Facility Loans”); provided, however that the amount of the
Roll-Up Loans shall not be less than $925 million.1 Upon the conversion of the
Roll-Up Loans in connection therewith, the Roll-Up Loans shall cease to be
indebtedness under the Prepetition Credit Agreement and shall be deemed DIP
Obligations (as defined below) in all respects, including for purposes of having
the benefit of Section 364(e) of the Bankruptcy Code. The Revolving DIP Loans
(and, for the avoidance of doubt, the DIP Hedges (as defined below)) shall be
given payment priority over the Roll-Up Loans, including in the event of a sale
or other disposition of the DIP Collateral (defined below), a prepayment of the
DIP Facility Loans, or the exercise of remedies by the DIP Lenders.

 

The Roll-Up Loans shall be calculated and structured as follows: (i) Roll-Up
Loans consisting of $925 million of Loans outstanding under the Prepetition
Credit Agreement held by the DIP Lenders providing the Revolving DIP Loan
Commitments (the “New Money DIP Lenders”) converted to loans under the DIP
Facility (the “New Money Roll-Up Loans”) and (ii) Roll-Up Loans consisting of
the amount of all Loans outstanding under the Prepetition Credit Agreement on
the Closing Date in excess of $750 million, less $925 million (the “Incremental
Roll-Up Loans”). The Incremental Roll-Up Loans shall be allocated to New Money
DIP Lenders and Prepetition Lenders that are not providing Revolving DIP Loan
Commitments (the “Non-Participating Lenders”), based on (i) with respect to the
Non-Participating Lenders, their respective prepetition pro rata Prepetition RBL
Facility commitment percentages and (ii) with respect to the New Money DIP
Lenders, their respective pro rata share of the Revolving DIP Loan Commitments.

 

Revolving DIP Loan Commitments in an amount of up to $[325 million] (the
“Interim Commitment”) of the Revolving DIP Loans approved by the Bankruptcy
Court pursuant to the Interim Order shall be made available to the Debtors
during the period from the date of entry of the Interim Order by the Bankruptcy
Court through the date of entry of the Final Order (as defined below) by the
Bankruptcy Court, and the balance of the Revolving DIP Loan Commitment shall be
available only upon and after entry of the Final Order. Upon the entry of the
Interim Order, the conversion of New Money Roll-Up Loans shall be in an amount
equal to the Interim Commitment approved by the Bankruptcy Court, with the
balance of the New Money Roll-Up Loans and the Incremental Roll-Up Loans
converting upon entry of the Final Order. Pending the entry of the Final Order,
the DIP Agent and the New Money DIP Lenders shall be afforded all of the
protections contained in the Interim Order.

 

The Revolving DIP Loans, subject to the foregoing and other applicable
conditions and consistent with past ordinary course processing procedures, will
be funded on (i) in the event of LIBOR Revolving DIP Loans (to be defined in the
DIP Credit Agreement), the third business day following the submission of a
proper notice of borrowing if requested by 1:00 p.m. New York time, or (ii) in
the event of ABR Revolving DIP Loans (to be defined in the DIP Credit
Agreement), the next business day following the submission of a proper notice of
borrowing if such request is made by 1:00 p.m. New York time. If such notice of
borrowing is submitted after 1:00 p.m. New York Time, such notice of borrowing
shall be deemed to have been delivered on the business day following the date
specified in the foregoing sentence.

 

 

 

1 Based on current assumptions regarding outstanding Loans under the Prepetition
Credit Agreement, the implied ratio of the Roll-Up Loans is approximately $1.27
of Loans under the Prepetition Credit Agreement to $1.00 of Revolving DIP Loan
Commitments.

 

 CHK DIP Credit Facility Term Sheet 2 

 

 

Exit Facilities: Pursuant to a Restructuring Support Agreement, dated June 28,
2020, by and among the Debtors, the DIP Lenders, certain holders of FLLO Term
Loans and certain holders of Second Lien Notes (as amended, restated,
supplemented or otherwise modified from time to time, the “Restructuring Support
Agreement”), the DIP Facility and remaining obligations under the Prepetition
RBL Facility shall be converted into Exit Facilities consisting of a $1.75
billion Exit RBL Facility and up to a $750 million Exit FLLO Term Loan Facility,
which Exit Facilities shall be provided by the DIP Lenders on terms and
conditions to be set forth in an Exit Facility Term Sheet and subject to the
requirements of the Restructuring Support Agreement.     Use of Proceeds: The
DIP Facility may be used only for (i) post-petition working capital purposes of
the Debtors, current interest and fees under the DIP Facility; (ii) the payment
of adequate protection payments to the Prepetition Agent and the Prepetition
Lenders, including fees payable under the Prepetition Credit Agreement;
(iii) expenses and professional fees for (a) the collateral trustee under the
Collateral Trust Agreement, (b) the FLLO Agent, (c) the FLLO Ad Hoc Group (as
defined in the Restructuring Support Agreement), (d) Deutsche Bank Trust Company
Americas, as the Second Lien Collateral Trustee (defined below) and (e) Franklin
Advisers Inc. (“Franklin”) solely to the extent and as set forth below; and
(iv) the allowed administrative costs and expenses of the Cases, in each case,
solely in accordance with the Approved Budget (subject to the Variance Limit)
and the Financing Orders (each as defined below) incorporating the terms hereof.
    DIP Facility Interest Rate and Fees:

See Schedule 3 hereto with respect to rates and fees.

 

The DIP Loan Documents will contain provisions to be mutually agreed with
respect to a replacement of the London interbank offered rate.

    Priority and Security: Subject to the Carve-Out, all obligations of the
Debtors under the DIP Facility (the “DIP Obligations”) and any DIP Hedges shall
be:       (i) entitled to super-priority claim status under Section 364(c)(1) of
the Bankruptcy Code with priority over all administrative expense claims and
unsecured claims now existing or hereafter arising under the Bankruptcy Code
(other than as provided in respect of DIP Hedges as described below), including,
without limitation, the prepetition claims and adequate protection claims of the
Prepetition Agent on behalf of the Prepetition Lenders and the prepetition
claims of the FLLO Agent on behalf of the FLLO Lenders (each as defined below),
subject only to the Carve-Out.  The super-priority claims of the DIP Lenders may
be repaid from any cash of the Debtors, including without limitation, Cash
Collateral and, subject to entry of the Final Order, any Avoidance Action
Proceeds (as defined below); provided that the super-priority claims granted to
the DIP Lenders on account of the Roll-Up Loans shall be immediately junior in
payment priority and subject to the super-priority claims granted to the New
Money DIP Lenders on account of the Revolving DIP Loans and DIP Hedges;

 

 CHK DIP Credit Facility Term Sheet 3 

 

 

  (ii)  secured, pursuant to Section 364(c)(2) of the Bankruptcy Code, by a
first priority, perfected lien on all of the Debtors’ rights in property of the
Debtors’ estates as of the Petition Date that, as of the Petition Date, were
unencumbered (and do not become perfected subsequent to the Petition Date as
permitted by Section 546(b) of the Bankruptcy Code) (but including, subject to
entry of the Final Order, the proceeds of Avoidance Actions (as defined below)
and property received or recovered thereby (the “Avoidance Action Proceeds”));  
     (iii)  secured, pursuant to Section 364(c)(3) of the Bankruptcy Code, by a
junior priority, perfected lien on all of the Debtors’ rights in property of the
Debtors’ estates as of the Petition Date that, as of the Petition Date, were
subject to a lien permitted under the terms of the Prepetition Credit Agreement
that was perfected prior to the Petition Date or is perfected subsequent to the
Petition Date as permitted by Section 546(b) of the Bankruptcy Code (other than
the Liens securing the obligations under the Prepetition Credit Agreement, the
FLLO Term Loan (as defined below) and the 11.5% Senior Secured Second Lien Notes
due 2025 issued by the Debtors pursuant to that certain Indenture dated as of
December 19, 2019 (the “Second Lien Indenture” and the notes issued thereunder,
the “Second Lien Notes”), which liens are addressed in (iv) below); and      
(iv) secured, pursuant to Section 364(d)(1) of the Bankruptcy Code, by valid,
enforceable, priming first priority, fully perfected security interests in and
liens upon all of the Debtors’ rights in property of the Debtors’ estates as of
the Petition Date and all of the Debtors’ rights in property acquired
post-petition (and proceeds thereof), whether now existing or hereafter acquired
or arising that secure the obligations under the Prepetition Credit Agreement,
the FLLO Term Loan and the Second Lien Notes (but subject to clause (iii) above)
(such lien, together with the liens described in clauses (ii) and (iii) above,
the “DIP Liens” and the collateral described in clauses (ii)–(iv) above,
collectively, the “DIP Collateral”);      

DIP Collateral shall also include any and all rents, issues, products,
offspring, proceeds and profits generated by any item of DIP Collateral, without
the necessity of any further action of any kind or nature by the DIP Agent or
the DIP Lenders in order to claim or perfect such rents, issues, products,
offspring, proceeds and/or profits.

 

Notwithstanding anything to the contrary contained herein, in no event shall any
estate causes of action under Chapter 5 of the Bankruptcy Code (the “Avoidance
Actions”) constitute DIP Collateral or be subject to a DIP Lien; provided,
however, DIP Collateral shall include, and the DIP Liens shall attach to,
Avoidance Action Proceeds subject to entry of the Final Order as set forth in
(ii) above.

 

The DIP Liens shall not be subject or subordinate to (i) subject to entry of the
Final Order only, any lien or security interest that is avoided and preserved
for the benefit of the Debtors and their estates under section 551 of the
Bankruptcy Code, (ii) any liens arising after the Petition Date including,
without limitation, any liens or security interests granted in favor of any
federal, state, municipal or other governmental unit, commission, board or court
for any liability of the Debtors, or (iii) any intercompany or affiliate liens
of the Debtors.

 

The DIP Liens will automatically attach to the DIP Collateral and become valid
and perfected immediately upon entry of the Interim Order without the
requirement of any further action by the DIP Agent or the DIP Lenders. The DIP
Liens granted to the DIP Lenders with respect to the Roll-Up Loans will be pari
passu (on a pro rata basis) to the DIP Liens granted to the New Money DIP
Lenders with respect to the Revolving DIP Loans and to the DIP Liens securing
DIP Hedges; provided, however, that (i) the Revolving DIP Loans and DIP Hedges
shall have payment priority over the Roll-Up Loans pursuant to the DIP Credit
Agreement and the Financing Orders, and (ii) the New Money Roll-Up Loans shall
have payment priority over the Incremental Roll-Up Loans pursuant to the DIP
Credit Agreement and the Financing Orders.

 

 CHK DIP Credit Facility Term Sheet 4 

 

 

Use of Cash Collateral:2 All cash and cash equivalents of the Debtors, whenever
or wherever acquired, and the proceeds of all collateral pledged to the DIP
Agent constitute cash collateral, as contemplated by Section 363 of the
Bankruptcy Code (“Cash Collateral”).  Cash Collateral may be used only for
(i) working capital purposes of the Debtors, (ii) interest and fees under the
DIP Facility, (iii) payment of adequate protection payments to the Prepetition
Agent and Prepetition Lenders, (iv) payment of expenses and professional fees
for (a) the collateral trustee under the Collateral Trust Agreement, (b) the
FLLO Agent, (c) the FLLO Ad Hoc Group, (d) Deutsche Bank Trust Company Americas,
as the Second Lien Collateral Trustee (the “Second Lien Collateral Trustee”) and
(e) Franklin solely to the extent and as set forth below, and (iv) the allowed
costs and expenses of the Cases, in each case, solely in accordance with the
Approved Budget and the Financing Orders incorporating the terms hereof (subject
to the Variance Limit).     Hedging:

The Debtors shall negotiate in good faith with each Prepetition Lender (or
affiliate of a Prepetition Lender) which is the counterparty (collectively, the
“Hedge Counterparties”) under one or more existing commodity price hedging
agreements (each, an “ISDA Transaction”) with one or more of the Debtors to
mutually terminate and close out all of the outstanding ISDA Transactions
between the Debtors and such Hedge Counterparty on one or more day(s) to be
agreed which, in any event, will be no fewer than 3 days prior to the Petition
Date; provided that if the Debtors and any Hedge Counterparty are unable to
reach agreement on a mutual termination of such ISDA Transactions, such Hedge
Counterparty shall retain its rights, powers, and remedies under the terms of
the applicable ISDA Master Agreement that governs such ISDA Transactions. To the
extent that the parties mutually agree upon the termination and close out of
outstanding ISDA Transactions prior to the Petition Date, the Debtors shall
irrevocably instruct each Hedge Counterparty to pay any termination amounts owed
to the Debtors directly to the Prepetition Agent to be applied to repay any
outstanding obligations under the Prepetition Credit Facility (and the
Commitments thereunder will be automatically reduced on a dollar-for-dollar
basis by the amount repaid). After the Petition Date, to the extent any Hedge
Counterparty (i) terminates and closes out any outstanding ISDA Transactions
existing as of the Petition Date or (ii) makes any settlement payments in
respect of such ISDA Transactions existing as of the Petition Date, all such
termination or settlement amounts owed to the Debtors, as applicable, shall be
immediately applied to repay outstanding obligations under the Prepetition
Credit Facility. It is understood that this provision is not intended as, and
does not constitute, an agreement with respect to, or a modification or waiver
of any of Hedge Counterparty’s rights, powers and remedies (including netting
rights) under the applicable ISDA Master Agreement that governs the applicable
ISDA Transactions, all of which are reserved, and that any such agreement,
modification or waiver will be evidenced by a separate instrument among the
Borrower, the Prepetition Agent, certain Prepetition Lenders and the relevant
Hedge Counterparties.

 

The Debtors may enter into commodity hedge transactions with New Money DIP
Lenders or their affiliates subject to minimum requirements and maximum
limitations set forth below pursuant to Master ISDAs and Schedules on terms to
be agreed between the parties thereto, which Master ISDAs and Schedules shall be
entered into following entry of the Hedging Order (as defined below) (the “DIP
Hedges”). Subject to the Carve-Out, and solely upon entry of the Hedging Order,
the DIP Hedges shall be allowed superpriority claims, pursuant to section
364(c)(1), with pari passu priority to the Revolving DIP Loans (but, for the
avoidance of doubt with priority over the Roll-Up Loans) and with priority over
all other claims (including claims otherwise having priority under section 507
of the Bankruptcy Code or otherwise) (the “Hedge Administrative Claim”).

 

“Hedging Order” means interim or final (as applicable) order granting a motion
authorizing the Debtors to continue prepetition hedging arrangements and enter
into postpetition hedging arrangements, among other relief, which such order
shall be in form and substance reasonably satisfactory to the DIP Agent and
Majority DIP Lenders. The Debtors may file a “first day” motion seeking entry of
the Hedging Order, which such motion shall be in form and substance reasonably
satisfactory to the DIP Agent, and seek a hearing on such motion at the “second
day” hearing in the Cases.

 

Beginning on the date that is thirty (30) days after the Petition Date, which
may be extended in the DIP Agent’s sole discretion (with respect to the July 1,
2020 Reserve Report (as defined below) on July 1, 2020, and tested with the
delivery of each subsequent Reserve Report, the Debtors shall enter into and
maintain DIP Hedges consisting of commodity hedging agreements that hedge a
minimum of 50% of the reasonably anticipated projected monthly production from
proved developed producing oil and gas reserves (in each case, calculated
separately for (i) crude oil and (ii) natural gas and natural gas liquids, taken
together, and in the case of clauses (i) and (ii), based on the most recently
delivered Reserve Report) for a rolling twenty-four (24) month period.

 

The Debtors shall be permitted to enter into DIP Hedges so long as, at the time
such DIP Hedge is entered into, the term of which does not exceed 60 months and
the notional volumes of which do not exceed (a) for the 24 month period from the
date such commodity hedge transaction is executed, 90% of the reasonably
anticipated projected monthly production from proved developed producing oil and
gas reserves and (b) for the 24-month period thereafter, 80% of the reasonably
anticipated projected monthly protection from proved developed producing oil and
gas reserves (in each case, calculated separately for (i) crude oil and
(ii) natural gas and natural gas liquids, taken together, and in the case of
clauses (i) and (ii), based on the most recently delivered Reserve Report).

 

 

 

2 Financing Order to include certain provisions, protections, and reservations
of rights for the Prepetition Agent and the Prepetition Lenders and other
prepetition secured parties with respect to consent to use cash collateral. Any
omissions of such provisions, protections, and reservations in this DIP Facility
Term Sheet are not a waiver or concession of such provision, protection, or
reservation.

 

 CHK DIP Credit Facility Term Sheet 5 

 

 

 

Conditions Precedent: The closing of the DIP Facility and the Debtors’ right to
use Cash Collateral pursuant to the terms hereof will be subject to the
satisfaction of all conditions precedent to be set forth in the DIP Credit
Agreement (as defined below) deemed necessary or appropriate by the DIP Agent
and the Prepetition Agent, as applicable, including but not limited to:      

(i) [satisfactory completion of legal and collateral due diligence and
transaction structuring, including due diligence concerning the Cases and the
receipt of all required court approvals of the DIP Facility and any other
motions of the Debtors of concern to the DIP Lenders;

 

(ii) the DIP Agent shall have received executed counterparts to the DIP Facility
from each DIP Lender;]3

     

(iii) no later than 2 days prior to the Petition Date, the DIP Agent and the
Prepetition Agent shall have received a cash forecast for the period from the
Petition Date through the Scheduled Maturity Date (as defined below) setting
forth projected cash flows and disbursements, to be in form, scope and substance
acceptable to the DIP Agent, the New Money DIP Lenders, and the Prepetition
Agent and Majority Lenders (the “Initial Approved Budget”);

 

(iv) the Debtors shall have provided the DIP Agent and the DIP Lenders with a
copy of the cash management motion and proposed order to be filed with the
Bankruptcy Court in connection with the commencement of the Cases. The cash
management order filed by the Debtors and entered by the Bankruptcy Court shall
be in form and substance reasonably satisfactory to the DIP Agent;

 

(v) the Debtors shall not have executed, entered into or otherwise committed to
any plan or restructuring support agreement or any other agreement or
understanding concerning the terms of a chapter 11 plan or other exit strategy
without the consent of the DIP Agent;

 

(vi) an interim debtor-in-possession financing order, substantially on the terms
contemplated in this DIP Term Sheet (and otherwise acceptable to the DIP Agent)
(the “Interim Order”), shall have been entered by the Bankruptcy Court within
five (5) days following the Petition Date and shall not have been vacated,
reversed or stayed, appealed, or modified or amended without the prior written
consent of the DIP Agent and, if such modification or amendment is materially
adverse to the DIP Lenders, the Majority DIP Lenders. Notwithstanding anything
to the contrary contained herein, funding of any Interim Commitment shall be
subject to entry of the Interim Order and funding of the balance of the
commitments under the DIP Facility and continued authority to use Cash
Collateral shall be subject to entry, within 35 days following the Petition
Date, of a final debtor-in-possession financing/use of cash collateral order,
substantially on the terms contemplated by this DIP Term Sheet and in form and
substance acceptable to the DIP Agent (the “Final Order” and, together with the
Interim Order, collectively, the “Financing Orders”), which shall not have been
vacated, reversed or stayed, appealed (and for which the appeal period has
expired or has been waived), or modified or amended without the prior written
consent of the DIP Agent and, if such modification or amendment is materially
adverse to the DIP Lenders, the Majority DIP Lenders;

 

 

 

3             To be omitted from definitive credit agreement.

 

 CHK DIP Credit Facility Term Sheet 6 

 

 

  (vii) orders approving all “first day” motions shall have been entered, and,
in the case of any “first day” motions and orders that affect the rights or
duties of the DIP Agent or DIP Lenders, in form and substance reasonably
acceptable to the DIP Agent;      

(viii) the execution and delivery, in form and substance acceptable to the DIP
Agent and the New Money DIP Lenders in their sole discretion, of a definitive
credit agreement (the “DIP Credit Agreement”) and related security
agreement(s) and guarantees, security documents, and other agreements, customary
opinions, instruments and documents required by the DIP Agent and the New Money
DIP Lenders (collectively, and together with the DIP Credit Agreement, the “DIP
Loan Documents”);

 

(ix) the representations and warranties of the Debtors contained in the DIP Loan
Documents shall be true and correct in all material respects (or, in the case of
any representation and warranty that is qualified as to “Material Adverse
Effect” or otherwise as to “materiality”, in all respects) as of the Closing
Date (or as of such earlier date if the representation or warranty specifically
relates to an earlier date);

 

(x) except as disclosed to the DIP Agent and the DIP Lenders in writing, since
the date of execution of the Commitment Letter, there shall have been no
Material Adverse Effect (as defined in the DIP Loan Documents);

 

(xi) payment in full in cash of the Upfront DIP Fee and DIP Backstop Fee as set
forth in Schedule 3 hereto;

 

(xii) reimbursement in full in cash of the reasonable and documented
out-of-pocket professional fees, costs and expenses of the DIP Agent;

 

(xiii) the DIP Agent shall have received (for distribution to the DIP Lenders),
by at least three (3) business days prior to the Closing Date “know your
customer” and anti-money laundering rules and regulations, including the Patriot
Act, beneficial ownership and other similar information that may be required by
any New Money DIP Lender;

 

(xiv) upon the entry of the Interim Order, the DIP Agent shall, for the benefit
of the DIP Agent and the DIP Lenders, have valid, perfected and enforceable
first priority or superpriority priming, as applicable, liens on the DIP
Collateral to the extent set forth in the Interim Order, subject only to the
Carve-Out and the liens permitted by the DIP Loan Documents;

 

(xv) there shall not exist any action, suit, investigation, litigation or
proceeding pending or threatened (other than the Cases) in any court or before
any governmental authority that, in the reasonable opinion of the DIP Agent,
materially and adversely affects any of the transactions contemplated hereby, or
that has or could be reasonably likely to result in a Material Adverse Effect;

 

(xvi) any proceeds of the termination, offset, modification or other unwind or
monetization of prepetition hedge agreements received by the Borrower,
Guarantors, or their subsidiaries prior to the effectiveness of the DIP Facility
shall have been applied to the obligations under the Prepetition Credit
Agreement on a pro rata basis and after giving effect to such application and
other ordinary course payments of the Prepetition Loans prior to the Petition
Date, there shall not be more than $2.005 billion of aggregate exposure
(including Loans and participations in Letters of Credit under the Prepetition
RBL Facility as of the Petition Date (and, for the avoidance of doubt, there
shall be no exposure in respect of Swingline Loans));

 

(xvii) on or prior to the Petition Date, the Borrower shall have executed the
Commitment Letter dated as of June 28, 2020 by and among the Borrower and each
Commitment Party (as defined therein) (the “Commitment Letter”);

 

(xviii) the Debtors shall have obtained documentation evidencing a $600 million
equity commitment and/or a committed backstopped equity rights offering
reasonably acceptable to the DIP Agent and the Majority DIP Lenders, subject
only to Bankruptcy Court approval, it being understood that the draft of the
Backstop Commitment Agreement provided to, and accepted by, the DIP Agent prior
to the Petition Date is satisfactory to the DIP Agent and the Majority DIP
Lenders; and

 

 CHK DIP Credit Facility Term Sheet 7 

 

 

 

[(xix) such other deliverables as the DIP Agent and the Prepetition Agent may
require.]4

 

Modifications of the Financing Orders shall require approval of the DIP Agent
and the Prepetition Agent in their sole discretion; provided that modifications
of the Financing Orders that are materially adverse to the DIP Lenders shall
also require approval of the Majority DIP Lenders.

    Representations and Warranties:

Each of the Debtors under the DIP Loan Documents will make the representations
and warranties set forth in Article VIII of the Prepetition Credit Agreement and
the other Prepetition Loan Documents (other than any representation of warranty
in respect of solvency), modified as necessary to reflect the filing of the
Cases and the Debtors’ financial condition, other representations and warranties
customarily found in loan documents for similar debtor-in-possession financings,
and with such other modifications and such other representations and warranties
as the DIP Agent may require, including, but not limited to:

 

(a) orders of the Bankruptcy Court related to the financing contemplated by the
DIP Facility remain in effect;

 

(b) there are no defaults under material agreements arising after the Petition
Date, (i) that would, either individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect or (ii) for which exercise of
remedies would not be stayed by section 362 of the Bankruptcy Code; and

 

(c) the Debtors have not failed to disclose any material assumptions with
respect to the Initial Approved Budget and, as of the Closing Date, affirm the
reasonableness of the assumptions in the Initial Approved Budget in all material
respects, subject to customary qualifiers.

    Milestones:

Each of the Debtors will agree to comply with the following deadlines (each of
which may be extended as set forth further below or with the prior written
consent of the DIP Agent and Majority DIP Lenders without further order of the
Bankruptcy Court) (collectively, the “Milestones”):

 

(a)           The Bankruptcy Court shall have entered the Interim Order no later
than 5 days after the Petition Date;

 

(b)           No later than the date that is 30 days after the Petition Date,
the Debtors shall have filed a motion, in form and substance acceptable to the
DIP Agent, seeking (i) approval of all fees to be paid with respect to the Exit
Facilities and (ii) authority to pay the upfront fees, arranger fees, and any
other fees under the Exit Facilities Term Sheet earned and payable prior to the
effective date of a plan of reorganization (the “Exit Facilities Motion”).

 

(c)           The Bankruptcy Court shall have entered the Final Order no later
than 35 days after the Petition Date;

 

(d)           No later than the date that is 60 days after the Petition Date,
the Debtors shall have (i) obtained Bankruptcy Court approval of the relief
requested in the Exit Facilities Motion and (ii) paid the upfront fees, arranger
fees, and all other fees then earned and payable (as described in the Exit
Facilities Term Sheet);

 

(e)           The Debtors shall file a chapter 11 plan (a “Plan”) and a
disclosure statement for the Plan (a “Disclosure Statement”) that provides for
treatment acceptable to the DIP Lenders (or such Plan provides for the
indefeasible repayment of the DIP Obligations and obligations under the
Prepetition RBL Facility in full in cash on the Effective Date and as a
condition to emergence) (such Plan, an “Approved Plan”, such Disclosure
Statement, an “Approved Disclosure Statement”, and together with an Approved
Plan, collectively an “Approved Plan and Disclosure Statement”), in each case,
no later than 90 days after the Petition Date; provided, that for so long as the
Restructuring Support Agreement is in effect the treatment provided in the
Restructuring Support Agreement is acceptable to the DIP Lenders;

 

(f)            No later than the date that is 90 days after the Petition Date,
the Court shall have entered the Backstop Commitment Agreement Approval Order
(as defined in the Restructuring Term Sheet) and the Backstop Commitment
Agreement shall remain effective and binding on the parties thereto;

 

(g)           the Debtors shall have filed a motion for approval of the Approved
Disclosure Statement no later than 120 days after the Petition Date;

 

(h)           the Approved Disclosure Statement shall be approved by the
Bankruptcy Court by the date that is no later than 160 days after the Petition
Date;

 

(i)            the Bankruptcy Court shall have entered an order confirming the
Approved Plan by the date that is no later than 195 days after the Petition
Date; and

 

(j)            the effective date of the Approved Plan (the “Effective Date”)
shall have occurred by the date that is no later than 220 days after the
Petition Date; provided that this milestone shall be automatically extended to
the extent necessary, but in no event longer than for fifteen (15) consecutive
business days to allow for the expiration of the marketing period under the Exit
Facilities Term Sheet (as defined in the Restructuring Support Agreement.

 

 

 

4             To be omitted from definitive credit agreement.

 

 CHK DIP Credit Facility Term Sheet 8 

 

 

 

The Milestones consisting of the entry of orders or judicial resolution by the
Bankruptcy Court shall be automatically extended (the “COVID-19 Extensions”) by
five (5) business days to the extent it is not reasonably feasible to hold and
conclude a hearing (if necessary) prior to the applicable Milestone as a result
of the closure of the Bankruptcy Court due to the events or circumstances
surrounding the virus known as COVID-19 (and the DIP Agent shall be deemed to
have automatically agreed to such extension).

 

If the Debtors fail to satisfy clause (e) or (f) above, then the Required Plan
Sponsors, for the benefit of all Consenting FLLO Term Loan Facility Lenders and
Consenting Second Lien Noteholders (each as defined in the Restructuring Support
Agreement) and the DIP Agent shall each have the right to appoint a board
observer, effective immediately, who shall attend any board of directors
meetings and management meetings concerning the restructuring (it being
understood that nothing herein prohibits or otherwise limits the board of
directors from meeting in executive session; provided that if any officer
attends such executive session concerning the restructuring the board observer
shall also attend). In consideration for the immediate and effective appointment
of the DIP Agent’s board observer, the Milestones shall be extended as follows:
(a) the Debtors shall file an Approved Plan and Disclosure Statement, and a
motion to approve such Approved Disclosure Statement, in each case, on or before
a date that is 135 days following the Petition Date; (b) such Approved
Disclosure Statement shall have been approved by Bankruptcy Court by the date
that is no later than 165 days after the Petition Date; (c) the Bankruptcy Court
shall have entered an order confirming such Approved Plan by the date that is no
later than 200 days after the Petition Date; and (d) the Effective Date of such
Approved Plan shall have occurred by the date that is no later than 220 days
after the Petition Date, provided that this milestone (d) shall be automatically
extended to the extent necessary, but in no event longer than for fifteen (15)
consecutive business days to allow for the expiration of the marketing period
under the Exit Facilities Term Sheet (as defined in the Restructuring Support
Agreement).

 

If the Milestone set forth in clause (e) above is not satisfied on or before the
date that is 135 days following the Petition Date, then (x) at the request of
the DIP Agent, the Debtors shall immediately take all actions necessary on an
expedited basis to implement the appointment of a Chief Restructuring Officer
(“CRO”) acceptable to the DIP Agent in its sole discretion who shall (i) be
vested with the executive authority to oversee the Debtors’ restructuring,
subject to oversight by the board of directors in accordance with applicable
law, (ii) attend any board of directors meetings and management meetings
concerning the restructuring (it being understood that nothing herein prohibits
or otherwise limits the board of directors from meeting in executive session;
provided that if any officer attends such executive session concerning the
restructuring the CRO shall also attend), (iii) report directly to the board of
directors, (iv) provide updates to the Bankruptcy Court; and (v) otherwise
satisfy the requirements of 11 U.S.C. §327; and (y) the Debtors’ shall file an
Approved Plan on or before the date that is 180 days after the Petition Date
that has been approved by the CRO.

 

Upon Bankruptcy Court approval and appointment of the CRO, the Milestones shall
be extended as follows: (a) an Approved Disclosure Statement, and the motion to
approve such Approved Disclosure Statement, shall be filed with an Approved Plan
approved by the CRO on or before the date that is 180 days following the
Petition Date; (b) such Approved Disclosure Statement shall have been approved
by Bankruptcy Court by the date that is no later than 210 days after the
Petition Date; (c) the Bankruptcy Court shall have entered an order confirming
such Approved Plan by the date that is no later than 245 days after the Petition
Date; and (d) the Effective Date of such Approved Plan shall have occurred by
the date that is no later than 260 days after the Petition Date, provided that
this milestone (d) shall be automatically extended to the extent necessary, but
in no event longer than for fifteen (15) consecutive business days to allow for
the expiration of the marketing period under the Exit Facilities Term Sheet (as
defined in the Restructuring Support Agreement); provided, further, that in no
event shall the Plan Effective Date extend beyond the Scheduled Maturity Date.

   

 

 CHK DIP Credit Facility Term Sheet 9 

 

 

Mandatory Prepayments: The Borrower shall prepay the Revolving DIP Loans,
without premium or penalty, at any time that the outstanding principal amount of
Revolving DIP Loans (and any exposure in respect of letters of credit issued
pursuant to the letter of credit sub-facility) exceeds the Revolving DIP Loan
Commitments.     Reporting and Information:

The DIP Loan Documents will contain the reporting and information covenants made
by the Debtors under the Prepetition Credit Agreement (including those set forth
in Sections 9.1 and 9.2 thereof) and the other Prepetition Loan Documents,
modified in a customary manner to reflect the nature and tenor of the DIP
Facility. Without limiting the foregoing, such reporting and information
covenants shall include provision to the DIP Agent (for circulation to the DIP
Lenders) of:

 

(a) all reports (including engineering and reserve reports) currently provided
by the Debtors to the Prepetition Agent under the Prepetition Loan Documents
(collectively, a “Reserve Report”); provided, however, that Reserve Reports
shall be provided quarterly beginning July 1, 2020 on terms substantially
similar to those contained in the Prepetition Credit Agreement with respect to
“Internal Reserve Reports”; provided further that the Reserve Report to be
provided on April 1, 2021 shall be prepared by an approved third party engineer
on terms substantially similar to those contained in the Prepetition Credit
Agreement for such reports. All Reserve Reports will be prepared using 4-year
NYMEX strip pricing adjusted for applicable differentials and DIP Hedges and
held flat after such 4-year period at the average of the 37th month through the
48th month’s price (“Strip Pricing”);

 

(b) within 20 days of month end, monthly production reports and lease operating
statements for the previous month and monthly hedge schedule;

 

(c) within 30 days of month end, unaudited monthly balance sheet and income
statement together with a compliance certificate; and

 

(d) any other business or financial information which may be reasonably
requested by the DIP Agent;

 

Without limiting the generality of the foregoing, the Debtors shall deliver to
the DIP Agent (i) Variance Reports (as defined below); (ii) copies of any
motions to be filed by or on behalf of any Debtor in the Cases at least two
(2) business days prior to such filing (or, if not practicable, as soon as
reasonably practicable), (iii) all notices required to be given to all parties
specified in any Financing Order; and (iv) such other information (including
access to the Debtors’ books, records, personnel and advisors) as the DIP Agent
may reasonably request.

 

No later than the date that is the 15th business day after the end of each
month, the Debtors shall deliver to the DIP Agent and DIP Lenders in a form
reasonably acceptable to the DIP Agent: a detailed forward-looking rolling
three-month forecast of capital expenditures by basin and category (the “Capital
Expenditure Report”) including, as applicable, a report from a financial officer
comparing the capital expenditures on an accrual basis for the current month to
the same period in the prior month’s Capital Expenditure Report and addressing
any variance of actual performance to the Capital Expenditure Report for the
prior month.

    Budget; Variance Covenant; Other Financial Covenants:

On July 30, 2020 (the “Initial Reporting Date”), the Debtors shall prepare for
the DIP Agent’s and DIP Lenders’ review and the DIP Agent’s and Majority DIP
Lenders’ consent an updated thirteen-week (13-week) detailed cash projection,
which shall be thereafter updated, as necessary, but shall not be updated less
than once every four weeks (each, a “Proposed Budget”). Upon the Debtors’
receipt of the DIP Agent’s and Majority DIP Lenders’ consent to a Proposed
Budget, (such consent not to be unreasonably conditioned, delayed, or withheld;
provided that the DIP Agent and DIP Lenders shall have no less than five
(5) business days to review and respond to the Proposed Budget) which approval
shall be in the DIP Agent’s and Majority DIP Lenders’ reasonable discretion,
such budget shall become an “Approved Budget” and shall replace the
then-operative Approved Budget for all purposes. The Initial Approved Budget
shall be the Approved Budget until such time as a new Proposed Budget is
approved, following which such Proposed Budget shall constitute the Approved
Budget until a subsequent Proposed Budget is approved. The Debtors shall operate
in accordance with the Approved Budget and all disbursements shall be consistent
with the provisions of the Approved Budget (subject to the Variance Limit). The
Debtors may submit additional Proposed Budgets to the DIP Agent and DIP Lenders,
but until the DIP Agent and Majority DIP Lenders consent to such Proposed
Budget, it shall not become an Approved Budget and the Debtors shall continue to
comply with the then-operative Approved Budget.

 

Beginning on July 9, 2020, and on the Thursday of each calendar week thereafter,
the Debtors shall deliver to the DIP Agent, in a form consistent with the form
of the Approved Budget, a variance report comparing the Debtors’ actual receipts
and disbursements by line item for the prior calendar week and the prior four
calendar weeks (on a cumulative basis) with the projected receipts and
disbursements for such week and the prior four calendar weeks (on a cumulative
basis) as reflected in the applicable Approved Budget for such weeks, which
variance report shall include a report from a financial officer of the Debtors
(the “Weekly Variance Report”).

 

No later than 4:00 p.m. Central Time on the Initial Reporting Date and on each
Thursday thereafter that is the four (4)-week anniversary of the Initial
Reporting Date (each such date, a “Monthly Variance Testing Date” and each such
four-week period, the “Monthly Testing Period”), the Debtors shall provide to
the DIP Agent (for circulation to the DIP Lenders) and the Prepetition Agent a
report detailing (i) the aggregate disbursements of the Debtors and aggregate
receipts during the applicable Monthly Testing Period for (a) LOE and capital
expenditures on a combined basis, (b) all other operating disbursements
(excluding LOE and capital expenditures), and (c) Debtors’ professionals’ fees;
and (ii) any variance (whether positive or negative, expressed as a percentage)
between the aggregate disbursements made during such Monthly Testing Period by
the Debtors against the aggregate disbursements for the Monthly Testing Period,
as set forth in the applicable Approved Budget (a “Monthly Variance Report,”
together with the Weekly Variance Report, the “Variance Reports”).

 

The Debtors shall comply with the following (collectively, the “Variance
Covenant”):

 

 CHK DIP Credit Facility Term Sheet 10 

 

 

 

As of any Monthly Variance Testing Date, for the Monthly Testing Period ending
on the Sunday preceding such Monthly Variance Testing Date, the Debtors shall
not allow: (i) LOE and capital expenditures on a combined basis to be greater
than 110% of the estimated disbursement for such items in the Approved Budget;
(ii) all other operating disbursements (excluding LOE and capital expenditures)
to be greater than 115% of the estimated disbursement for such items in the
Approved Budget, and (iii) Debtors’ professionals’ fees to be greater than 110%
of the estimated disbursement for such items in the Approved Budget, each for
such Monthly Testing Period (collectively, the “Variance Limit”). Additional
variances, if any, from the Approved Budget, and any proposed changes to the
Approved Budget, shall be subject to the DIP Agent’s reasonable approval. For
the avoidance of doubt, any reference to “written consent” hereunder shall
include consent granted by email.

 

Asset Coverage Ratio. The Debtors will not permit, as of the date of delivery of
each Reserve Report, the ratio of (a) PDP PV10 (as determined in such Reserve
Report and including, for the avoidance of doubt, the present value of DIP
Hedges) to (b) the sum of (i) the aggregate amount of all Revolving DIP Loans
(and any exposure in respect of letters of credit issued pursuant to the letter
of credit sub-facility) plus (ii) the aggregate principal amount of all Roll-Up
Loans plus (iii) the aggregate principal amount of all Prepetition Loans, in
each case outstanding as of such date, to be less than 1.25 to 1.0.

 

Key Employee Plans. No Debtor shall (a) enter into any key employee retention
plan and incentive plan, other than such plans in effect as of the Petition Date
or (b) amend or modify any existing key employee retention plan and incentive
plan, unless such plan, amendment or modification, as applicable, is
satisfactory to the DIP Agent and Majority DIP Lenders (it being agreed and
understood that the KERP of the Borrower effective as of May 1, 2020 for which
the Borrower will seek Bankruptcy Court approval shall be permitted).

    Affirmative and Negative Covenants:

The DIP Loan Documents will contain the affirmative and negative covenants made
by the Debtors under the Prepetition Credit Agreement and the other Prepetition
Loan Documents, with such modifications thereto and such other affirmative and
negative covenants as the DIP Agent and the New Money DIP Lenders shall require;
provided that the negative covenants made by the Debtors under the Prepetition
Credit Agreement and the other Prepetition Loan Documents will be modified to
eliminate the baskets and carve-outs set forth therein (other than baskets and
carve-outs to be agreed in the DIP Loan Documents limited to those necessary for
the Debtors to run their business in the ordinary course of business) and
additional restrictions on the following:

 

(a) disposing of assets outside of the ordinary course of business (including,
without limitation, any sale and leaseback transaction and any disposition under
Bankruptcy Code section 363) in respect of transactions for total net cash
proceeds of more than $5 million in the aggregate for each fiscal year (other
than as contemplated by the procedures for de minimis asset transactions
authorized and approved by the Bankruptcy Court);

 

(b) paying prepetition indebtedness, except as expressly provided for herein or
pursuant to orders entered upon pleadings in form and substance reasonably
satisfactory to the DIP Agent; and

 

(c) asserting any right of subrogation or contribution against any other Debtors
until all borrowings under the DIP Facility are paid in full and the Revolving
DIP Loan Commitments are terminated.

 

The DIP Loan Documents will contain an affirmative covenant that the Debtors
will provide written notice to the DIP Agent and the Prepetition Agent if any of
the Debtors intend to provide information with respect to the Prepetition Loan
Documents to a party in interest or is compelled to provide such information by
order of the Bankruptcy Court.

 

 CHK DIP Credit Facility Term Sheet 11 

 

 

Events of Default: “Events of Default” shall include events of default
customarily found in loan documents for similar debtor-in-possession financings,
with such modifications as the DIP Agent may require, including the occurrence
of any of the following:       (i) the Interim Order at any time ceases to be in
full force and effect, or shall be vacated, reversed or stayed, or modified or
amended without the prior written consent of the DIP Agent and, if such
modification or amendment is materially adverse to the DIP Lenders, the Majority
DIP Lenders;      

(ii) the Final Order at any time ceases to be in full force and effect, or shall
be vacated, reversed or stayed, modified or amended without the prior written
consent of the DIP Agent and, if such modification or amendment is materially
adverse to the DIP Lenders, the Majority DIP Lenders, or shall not have been
entered within 35 days after the entry of the Interim Order (subject to any
COVID-19 Extensions); provided such time may be extended by agreement among the
Borrower and DIP Agent;

 

(iii) the inaccuracy in any material respect of any representation of any Debtor
when made or deemed made;

      (iv) failure of any Debtor (a) to comply with the Variance Covenant,
(b) to satisfy any Milestone, (c) to have an Approved Budget; (d) to comply with
any negative covenant or certain other customary affirmative covenants in the
DIP Loan Documents or with any other covenant or agreement contained in the
Financing Orders in any respect or (e) to comply with any other covenant or
agreement contained in the DIP Loan Documents, subject, in the case of the
foregoing clause (e), to a grace period of 30 days;       (v) (a) any of the
Cases shall be dismissed or converted to a case under Chapter 7 of the
Bankruptcy Code; a Chapter 11 Trustee or an examiner (other than a fee examiner)
with enlarged powers relating to the operation of the business of any Debtor
(powers beyond those expressly set forth in Section 1106(a)(3) and (4) of the
Bankruptcy Code) shall be appointed, (b) any other super-priority claim (other
than the Carve-Out (as defined below) and in respect of the DIP Hedges) or grant
of any other lien (including any adequate protection lien) which is pari passu
with or senior to the claims and liens of the DIP Agent or the Prepetition Agent
shall be granted in any of the Cases, or (c) the filing of any pleading by any
Debtor seeking or otherwise consenting to or supporting any of the matters set
forth in clause (a) or clause (b) of this subsection (v);       (vi)  other than
payments authorized by the Bankruptcy Court and which are set forth in the
Approved Budget (A) in respect of accrued payroll and related expenses as of the
commencement of the Cases, (B) in respect of adequate protection payments set
forth herein and consented to by the DIP Agent or otherwise permitted under the
terms of the Collateral Trust Agreement (as defined below) or the Intercreditor
Agreement (as defined below), as applicable, or (C) in respect of certain
critical vendors and other creditors, in each case to the extent authorized by
one or more “first day” or other orders satisfactory to the DIP Agent, any
Debtor shall make any payment (whether by way of adequate protection or
otherwise) of principal or interest or otherwise on account of any prepetition
indebtedness or payables (including without limitation, reclamation claims);    
  (vii) the Bankruptcy Court shall enter one or more orders during the pendency
of the Cases granting relief from the automatic stay to the holder or holders of
any lien to permit foreclosure (or the granting of a deed in lieu of foreclosure
or the like) on assets of any Debtor or the Debtors that have an aggregate value
in excess of $7.5 million without the prior written consent of the DIP Agent;  
    (viii) the Termination Date (as defined below) shall have occurred;

 

 CHK DIP Credit Facility Term Sheet 12 

 

 

 

(ix) the Debtors’ “exclusive period” under Section 1121 of the Bankruptcy Code
for the filing of a plan of reorganization terminates for any reason;

 

(x) any Debtor petitions the Bankruptcy court to obtain additional financing
pari passu or senior to the DIP Facility without the consent of the DIP Agent
(other than the Carve-Out or as contemplated under the Hedging Order);

 

(xi) failure of any Debtor to comply with the terms of the applicable Financing
Order;

 

(xii) the consensual use of prepetition Cash Collateral is terminated;

 

(xiii) (A) the Debtors engage in or support any challenge to the validity,
perfection, priority, extent or enforceability of the DIP Facility or the
Prepetition Loan Documents or the liens on or security interest in the assets of
the Debtors securing the DIP Obligations or the Prepetition Obligations,
including without limitation seeking to equitably subordinate or avoid the liens
securing the such indebtedness or (B) the Debtors engage in or support any
investigation or assert any claims or causes of action (or directly or
indirectly support assertion of the same) against the DIP Agent, any DIP Lender,
the Prepetition Agent or any Prepetition Lender; provided, however, that it
shall not constitute an Event of Default if any of the Debtors provides
information with respect to the Prepetition Loan Documents to a party in
interest or is compelled to provide information by an order of the Bankruptcy
Court;

 

(xiv) any person shall obtain a Section 506(a) judgment or similar determination
with respect to the Prepetition Obligations;

 

(xv) the allowance of any claim or claims under Section 506(c) of the Bankruptcy
Code against any of the DIP Collateral;

 

(xvi) the consummation of a sale of any material portion of the DIP Collateral
(other than a sale in the ordinary course of business that is contemplated by
the Approved Budget) without the advance written consent of the DIP Agent and
Majority DIP Lenders if such sale or other transaction does not satisfy the DIP
Obligations in full in Cash;

     

(xvii) the confirmation of a plan of reorganization or liquidation that does not
provide for treatment acceptable to the DIP Lenders, or any Debtor proposes or
supports, or fails to contest in good faith, the entry of such a plan of
reorganization or liquidation, unless such plan contemplates indefeasibly paying
the DIP Obligations and obligations under the Prepetition RBL Facility in full,
in cash on the effective date of such plan;

 

(xviii)  entry of an order by the Bankruptcy Court in favor of the statutory
committee of unsecured creditors (the “Creditors’ Committee”), if any, appointed
in the Cases, any ad hoc committee, or any other party in interest,
(i) sustaining an objection to claims of the DIP Agent or any of the DIP
Lenders, (ii) avoiding any liens held by the DIP Agent or any of the DIP
Lenders, (iii) sustaining an objection to claims of the Prepetition Agent or any
of the Prepetition Lenders, or (iv) avoiding any liens held by the Prepetition
Agent or any of the Prepetition Lenders except as otherwise agreed by the
Prepetition Agent in writing; or

 

(xix) if (i) that certain Collateral Trust Agreement dated December 19, 2019 by
and between MUFG Union Bank, N.A., as Collateral Trustee and Revolver Agent, and
GLAS USA LLC, as Original Term Loan Agent, and as acknowledged and agreed by
certain of the Debtors (as from time to time amended and restated) (the
“Collateral Trust Agreement”), or that certain Intercreditor Agreement dated as
of December 19, 2019 by and between MUFG Union Bank, N.A., as Priority Lien
Agent, and Deutsche Bank Trust Company Americas, as Second Lien Collateral
Trustee, and as acknowledged and agreed by certain of the Debtors (as from time
to time amended and restated) (the “Second Lien Intercreditor Agreement”, and
together with the Collateral Trust Agreement, collectively, the “Intercreditor
Agreements”) shall for any reason, except to the extent permitted by the terms
thereof, cease to be in full force and effect and valid, binding and enforceable
in accordance with its terms against the Borrower or any party thereto or any
holder of the liens subordinated thereby, or be amended, modified or
supplemented to cause the liens securing the obligations of the FLLO Agent or
Second Lien Collateral Trustee to be senior or pari passu in priority to the
liens securing the obligations under the Prepetition Loan Documents without the
consent of the Prepetition Agent, (ii) the Borrower takes any action
inconsistent with the terms of any Intercreditor Agreement (other than in
connection with an Approved Plan), (iii) any person bound by any Intercreditor
Agreement takes any action inconsistent with the terms thereof and the Borrower
shall fail to promptly take commercially reasonable actions necessary to oppose
such action or (iv) any order of any court of competent jurisdiction is granted
which is materially inconsistent with the terms of any Intercreditor Agreement
and is adverse to the interests of the Prepetition Agent or Prepetition Lenders.

      Upon the occurrence and during the continuance of any Event of Default,
upon the direction of the Majority DIP Lenders, the DIP Agent shall accelerate
the DIP Obligations and, thereafter, may take all or any of the following
actions without further order of or application to the Bankruptcy Court,5
provided that in the case of the enforcement of liens or other remedies with
respect to DIP Collateral pursuant to clause (2) below, the DIP Agent shall
provide the Debtors (with a copy to any counsel for the Creditors’ Committee
appointed in the Cases and to the United States Trustee) with five (5) business
days’ prior written notice (the “Enforcement Notice Period”) and file such
notice on the docket in the Cases, during which Enforcement Notice Period any
such party must file a pleading in opposition to the DIP Agent’s exercise of its
rights and remedies and seek an emergency hearing prior to the conclusion of the
Enforcement Notice Period  and provided further, that in any hearing following
such notice, the only issue that may be raised by any party in opposition to the
actions proposed or available to be taken by the DIP Agent shall be whether, in
fact, an Event of Default has occurred and is continuing:

 

 

 

5 The Financing Orders will include similar language modifying automatic stay to
permit Prepetition Agent to terminate right to use Cash Collateral in the event
of a default.

 

 CHK DIP Credit Facility Term Sheet 13 

 

 

  (1) declare the principal of and accrued interest on the outstanding
borrowings to be immediately due and payable and terminate, as applicable, any
further commitments under the DIP Facility and/or terminate, as applicable, the
right of the Debtors to use Cash Collateral; and      

(2)  charge the default rate of interest under the DIP Facility and take any
other action or exercise any other right or remedy (including without
limitation, with respect to the liens in favor of the DIP Agent on behalf of the
DIP Lenders) permitted under the DIP Loan Documents or applicable law.

 

Unless during the Enforcement Notice Period the Bankruptcy Court determines that
an Event of Default has not occurred (or that no Event of Default that has
occurred is continuing), the DIP Agent shall have relief from the automatic stay
without further notice or order and may foreclose on all or any portion of the
DIP Collateral or otherwise exercise remedies against the DIP Collateral.

 

Without limiting the foregoing, but subject to the Enforcement Notice Period,
upon the occurrence and during the continuation of an Event of Default, each DIP
Lender (and its respective affiliates, including its various branches and
offices) shall have the authority, subject to obtaining the prior written
consent of the DIP Agent and to the fullest extent permitted by applicable law,
to set off and apply any and all deposits (of whatever type and in whatever
currency) at any time held and other obligations (in whatever currency) at any
time owing by such DIP Lender (or its affiliate) to or for the credit or account
of any Borrower against any and all of the DIP Obligations of such Borrower to
such Lender; provided that the DIP Credit Agreement shall contain provisions
with respect to setoff (and sharing of proceeds of setoff) substantially similar
to the Prepetition Credit Agreement and except that the application of any
proceeds from any such set off right shall be subject to the payment priority
with respect to the Revolving DIP Loans described above. The foregoing right of
setoff shall apply irrespective of whether such DIP Lender has made any demand
under the DIP Loan Documents and even if the DIP Obligations of the Borrower are
contingent or unmatured.

    Maturity/Termination Date:

The DIP Facility and the Debtors’ right to use Cash Collateral (as applicable)
shall automatically terminate without further notice or court proceedings on the
earliest to occur of (i) nine (9) months after the Petition Date (the “Scheduled
Maturity Date”); (ii) the date of termination of the Revolving DIP Loan
Commitment and/or acceleration of any outstanding borrowings under the DIP
Facility pursuant to an Event of Default; (iii) subject to the COVID-19
Extension, the first business day on which the Interim Order expires by its
terms or is terminated, unless the Final Order has been entered and become
effective prior thereto; (iv) conversion of any of the Cases to a case under
chapter 7 of the Bankruptcy Code unless otherwise consented to in writing by the
DIP Agent and Majority DIP Lenders; (v) dismissal of any of the Cases, unless
otherwise consented to in writing by the DIP Agent and the Majority DIP Lenders;
(vi) the closing of a sale of substantially all of the equity or assets of the
Debtors (unless done pursuant to a confirmed chapter 11 plan); (vii) the date of
repayment in cash in full by the Debtors of all DIP Obligations and termination
of the Revolving DIP Loan Commitment in accordance with the terms of the DIP
Facility; and (viii) the effective date of any Debtor’s plan of reorganization
confirmed in the Cases (the “Termination Date”), unless extended, as to the DIP
Facility, with the prior written consent of the DIP Agent and, in the case of
clause (i), the New Money DIP Lenders and, in the case of clauses (ii) – (viii),
the Majority DIP Lenders, and as to the use of Cash Collateral, with the prior
written consent of the Prepetition Agent and Majority Lenders.

    Assignments and Participations:

The DIP Lenders will be permitted to assign DIP Facility Loans and Revolving DIP
Loan Commitments under the DIP Facility with the prior written consent of the
Borrower (such consent not to be unreasonably withheld, conditioned or delayed)
unless an Event of Default has occurred and is continuing or unless such
assignments are to other DIP Lenders or affiliates or approved funds thereof.
All assignments will require the consent of the DIP Agent, not to be
unreasonably withheld or delayed. Each assignment will be in an amount not less
than $5 million(or a lesser amount if the assigning DIP Lender’s aggregate
Revolving DIP Loans, Roll-Up Loans, or Revolving DIP Loan Commitments, as
applicable, amount to less than $5 million), except in the case of an assignment
to a DIP Lender or an Affiliate of a DIP Lender or an assignment of the entire
remaining amount of the assigning DIP Lender’s Revolving DIP Loans, Roll-Up
Loans, or Revolving DIP Loan Commitments, as applicable. Subject to the
limitations above, New Money DIP Lenders will be permitted to assign their
respective Revolving DIP Loans and Revolving DIP Loan Commitments independently
from such DIP Lender’s Roll-Up Loans, and vice versa.

 

The New Money DIP Lenders will be permitted to sell participations in DIP
Facility Loans and Revolving DIP Loan Commitments without restriction. Voting
rights of participants shall be limited to matters consistent with the
Prepetition Credit Agreement.

 

 CHK DIP Credit Facility Term Sheet 14 

 

 

Adequate Protection for Prepetition Agent, Prepetition Lenders, FLLO Agent, FLLO
Lenders, Second Lien Collateral Trustee and Holders of Second Lien Notes :

The Prepetition Agent shall receive the following as adequate protection for the
benefit of the Prepetition Lenders:

 

(i)  a super-priority claim under Section 507(b) of the Bankruptcy Code, with
priority over all administrative expense claims and unsecured claims now
existing or after arising, provided, however, that such super-priority claim
shall be junior and subject to the Carve-Out, the super-priority claim of the
DIP Agent for the benefit of the DIP Lenders in respect of the DIP Facility and
the super-priority claim in respect of the DIP Hedges;

 

(ii)  a second priority, valid, enforceable, fully perfected security interest
in and replacement lien on the DIP Collateral, subordinate only to (a) the liens
of the DIP Agent for the benefit of the DIP Lenders in respect of the DIP
Facility and the liens securing the DIP Hedges, (b) Permitted Liens, and (c) the
Carve-Out;

 

(iii)  the reasonable, documented out-of-pocket fees, costs and expenses
incurred or accrued by the Prepetition Agent (the foregoing to include all
unpaid prepetition fees, costs and expenses) in connection with any and all
aspects of the Debtors’ Cases, and including the reasonable and documented
out-of-pocket fees and expenses of the legal and financial advisors and
investment bankers to the Prepetition Agent and other professionals, hired by or
on behalf of the Prepetition Agent;

 

(iv) upon closing of the DIP Facility, payment of all accrued and unpaid
interest at the non-default rate of L + 3.5% (with a LIBOR floor of 0.00%) and
fees then owing under the Prepetition Credit Agreement; and

 

(v) so long as the loans under the Prepetition Credit Facility (the “Prepetition
Loans”) shall not have become Roll-Up Loans, the Prepetition Lenders shall be
entitled to cash payment of all interest accruing post-petition under the
Prepetition Loan Documents at the non-default rate of L + 3.5% (with a LIBOR
floor of 0.00%) and fees as and when due pursuant to the Prepetition Loan
Documents;

 

provided, however, that (x) the adequate protection claims and liens described
in the preceding clauses (i) and (ii) shall be granted only to the extent of any
diminution in the value of any Cash Collateral or other collateral arising as a
result of (A) the use, sale, or lease of Cash Collateral or other collateral,
(B) the granting of priming liens to secure the DIP Facility or (C) the
imposition of the automatic stay, and (y) the adequate protection claim
described in the preceding clause (i) and the adequate protection liens
described in the preceding clause (ii) shall not attach to any Avoidance Actions
but shall attach to any Avoidance Action Proceeds, subject to entry of the Final
Order.

 

The Financing Orders shall provide for adequate protection in the form of
replacement liens and superpriority claims, financial reporting and rights of
access and information, payment of fees and expenses of professionals (as
described below) for the benefit of (i) GLAS USA, LLC (“FLLO Agent”), as
administrative agent under that certain Term Loan Agreement, dated as of
December 19, 2019 (the “FLLO Term Loan”) or the lenders thereunder (the “FLLO
Lenders”) or (ii) Second Lien Collateral Trustee or holders of Second Lien Notes
to the extent permitted by the Intercreditor Agreements.

 

The foregoing adequate protection liens shall be deemed automatically perfected
as of the Petition Date without further action, although if the DIP Agent, the
Prepetition Agent, the FLLO Agent, or the Second Lien Collateral Trustee
determine to file any financing statements, notice of liens or similar
instruments, the Debtors will cooperate and assist in any such filings and the
automatic stay shall be lifted to allow such filings.

 

The Debtors will pay the fees and expenses of professionals of (i) the
collateral trustee under the Collateral Trust Agreement (including Paul Hastings
LLP), (ii) the FLLO Term Loan Facility Administrative Agent (including Arnold &
Porter Kaye Scholer LLP and one local counsel in the relevant jurisdiction),
(iii) the FLLO Ad Hoc Group (including Davis Polk & Wardwell LLP, Vinson &
Elkins LLP, one local counsel in each other relevant local jurisdiction, and
Perella Weinberg Partners LP) ((ii)-(iii), collectively the “FLLO
Professionals”), (iv) the Second Lien Collateral Trustee (including Morgan,
Lewis & Bockius LLP and one local counsel in the relevant jurisdiction) and
(v) Franklin (including Akin Gump Strauss Hauer & Feld LLP, one local counsel in
each other relevant local jurisdiction, Moelis & Company LLC and FTI
Consulting, Inc.) ((iv)-(v), collectively, the “Second Lien Professionals”);
provided that (x) the payment of the fees and expenses of the FLLO Professionals
shall only be payable as a form of adequate protection for so long as (1) the
Restructuring Support Agreement has not been terminated as to the DIP Lenders,
Required Consenting Revolving Credit Facility Lenders, or FLLO Ad Hoc Group, or
(2) an alternative restructuring support agreement or similar agreement with
respect to the restructuring of the Debtors’ debt and businesses remains in
effect between the DIP Agent, the DIP Lenders, 66.67% of the  Revolving Credit
Facility Lenders, and the FLLO Ad Hoc Group, in each case, at which time such
adequate protection shall terminate, provided further that in the event such
adequate protection payments terminate pursuant to the foregoing, (a) all
parties shall retain all rights pursuant to the Collateral Trust Agreement,
which rights are fully reserved, including, without limitation, the rights, if
any, of the Existing FLLO Agent or Existing FLLO Lenders to seek different or
additional adequate protection in accordance with section 6.02(f) of the
Collateral Trust Agreement and (b) the Debtors shall pay all fees and expenses
of the FLLO Professionals incurred prior to termination of the payment of the
fees and expenses of the FLLO Professionals as a form of adequate protection as
described herein; and (y) the payment of the fees and expenses of the Second
Lien Professionals shall only be payable as a form of adequate protection for so
long as the Restructuring Support Agreement has not been terminated as to the
Debtors, DIP Lenders, Required Consenting Revolving Credit Facility Lenders, or
Franklin (at which time such adequate protection shall terminate),
provided further that in the event such adequate protection payments terminate
pursuant to the foregoing, (a) all parties shall retain all rights pursuant to
the Intercreditor Agreement, including, without limitation, the rights, if any,
of such parties to seek different or additional adequate protection in
accordance with section 4.02(f) of the Intercreditor Agreement and (b) the
Debtors shall pay all fees and expenses of the Second Lien Professionals
incurred prior to termination of the payment of the fees and expenses of the
Second Lien Professionals as a form of adequate protection as described herein.
This provision shall survive termination of the Restructuring Support Agreement.

 

 CHK DIP Credit Facility Term Sheet 15 

 

 

Carve-Out: [See Exhibit A hereto.]     Estate Professional Fees: Financing
Orders to include language confirming that nothing in such orders or otherwise
shall be construed as consent to the allowance of any fees, expenses,
reimbursement or compensation sought by any professional retained by the Debtors
or the Creditors’ Committee, or shall affect the right of any party in interest,
including any DIP Secured Party or any Prepetition Secured Party, to object to
the allowance and payment of any such fees, expenses, reimbursement or
compensation.     Section 506(c) Waiver: Except to the extent of the Carve-Out,
no expenses of administration of the Cases or any future proceeding that may
result therefrom, including liquidation in bankruptcy or other proceedings under
the Bankruptcy Code, shall be charged against or recovered from any collateral
pursuant to Section 506(c) of the Bankruptcy Code or any similar principle of
law, without the prior written consent of the DIP Agent, the Prepetition Agent,
the FLLO Agent, and the Existing Second Lien Notes Trustee (as defined in the
Financing Orders) and no such consent shall be implied from any other action,
inaction, or acquiescence by the DIP Secured Parties, the Existing RBL Secured
Parties, the Existing FLLO Secured Parties or the Existing Second Lien Secured
Parties (each as defined in the Financing Orders); provided that the Debtors
shall irrevocably waive and shall be prohibited from asserting any claim
described in this paragraph, under section 506(c) of the Bankruptcy Code or
otherwise, for any costs and expenses incurred in connection with the
preservation, protection or enhancement of, or realization by the DIP Secured
Parties, the Existing RBL Secured Parties, the Existing FLLO Secured Parties, or
the Existing Second Lien Secured Parties upon the DIP Collateral, the Existing
RBL Collateral, the Existing FLLO Collateral, or the Existing Second Lien
Collateral, as applicable (each as defined in the Financing Orders);
provided further that the foregoing waivers shall be without prejudice to any
provisions of the Final Order with respect to costs or expenses incurred
following entry of such Final Order.     Waiver of Marshaling: Except to the
extent of the Carve Out, (i) in connection with any disposition of or exercise
of rights and remedies with respect to the DIP Collateral, the DIP Agent may use
commercially reasonable efforts to first apply proceeds of the DIP Collateral
that is not Existing Collateral to satisfy the DIP Obligations before applying
proceeds of DIP Collateral that is Existing Collateral to satisfy the DIP
Obligations and (ii) in no event shall any of the DIP Secured Parties, any of
the Existing RBL Secured Parties, the Existing FLLO Secured Parties, or the
Existing Second Lien Secured Parties (each as defined in the Financing Orders)
be subject to the equitable doctrine of “marshaling” or any other similar
doctrine with respect to the collateral securing the DIP Obligations, the RBL
Adequate Protection Obligations, the Existing RBL Obligations, the FLLO Adequate
Protection Obligations, the Existing FLLO Obligations, the Second Lien Adequate
Protection Obligations, or the Existing Second Lien Obligations (each as defined
in the Financing Orders).     Section 552(b):

The DIP Secured Parties and the Existing Secured Parties (each as defined in the
Financing Orders) shall be entitled to all of the rights and benefits of
Section 552(b) of the Bankruptcy Code, the “equities of the case” exception
under sections 552(b)(i) and (ii) of the Bankruptcy Code shall not apply to such
parties with respect to the proceeds, products, rents, issues or profits of any
of their collateral, and no expenses of administration of the Cases or any
future proceeding that may result therefrom, including liquidation in bankruptcy
or other proceedings under the Bankruptcy Code, may be charged against proceeds,
product, offspring or profits from any of the collateral under Section 552(b) of
the Bankruptcy Code (subject to any provisions of the Final Order with respect
to costs or expenses incurred following the entry of such Final Order).

 

Furthermore, the Debtors and their estates shall be deemed to have irrevocably
waived and have agreed not to assert any claim or right under sections 552 or
726 of the Bankruptcy Code to avoid the imposition of DIP Liens, Existing Liens
or the Adequate Protection Liens (each as defined in the Financing Orders) on
any property acquired by any of the Debtors or any of their estates or to seek
to surcharge any costs or expenses incurred in connection with the preservation,
protection or enhancement of, or realization by, DIP Secured Parties and the
Existing Secured Parties (each as defined in the Financing Orders) upon the DIP
Collateral or the Existing Collateral (as defined in the Financing Orders), as
applicable (subject to any provisions of the Final Order with respect to costs
or expenses incurred following the entry of such Final Order).

    No Priming or Pari Passu Liens: No order shall be entered authorizing or
approving any liens or encumbrances on the DIP Collateral or the Prepetition
Collateral, as applicable, senior to or pari passu with the liens of the
Prepetition Agent for the benefit of the Prepetition Lenders, or the DIP Agent
for the benefit of the DIP Lenders other than as otherwise contemplated herein.

 

 CHK DIP Credit Facility Term Sheet 16 

 

 

Acknowledgement/Stipulations: The Debtors shall stipulate and acknowledge (i) to
the amount, validity, priority and enforceability of the Obligations (as defined
in the Prepetition Credit Agreement) under the Prepetition Loan Documents,
(ii) that the Prepetition Agent for the benefit of the Prepetition Lenders has a
valid, enforceable and fully perfected first priority lien in all of the
collateral under the Prepetition Loan Documents (the “Prepetition Collateral”),
including Cash Collateral, and all proceeds thereof, subject only to the DIP
Liens, the Permitted Liens, and the Carve-Out, and (iii) that the Prepetition
Collateral is declining in value on a daily basis as the result of the Debtors’
business operations, including current levels of resource extraction, capital
expenditure, and cash flow.  The Debtors shall provide a full release to DIP
Secured Parties and the Existing Secured Parties (each as defined in the
Financing Orders), which would not bind the Creditors’ Committee or other party
in interest until the expiration of the period described in the paragraph below
titled “Challenge Period”.     Challenge Period:

The Financing Orders shall establish a deadline that (i) in the case of a
Creditors’ Committee, is no earlier than thirty (30) days after the appointment
of such committee, but in any event is within sixty (60) days of the Petition
Date, or (ii) in the case of any other party in interest, is within forty (40)
days of the Petition Date, by which the Creditors’ Committee, or any creditor or
other party-in-interest (in any case, which has obtained the requisite standing)
must commence an adversary proceeding, if at all, against the Prepetition Agent
or the Prepetition Lenders for the purpose of challenging the validity, extent,
priority, perfection and enforceability of the prepetition secured debt under
the Prepetition Credit Agreement or the other Prepetition Loan Documents, or the
liens, claims and security interests in the Prepetition Collateral in favor of
the Prepetition Agent or the Prepetition Lenders or otherwise asserting any
claims or causes of action against the Prepetition Agent or such Prepetition
Lenders on behalf of the Debtors’ estates; provided, however, that nothing
contained in this term sheet, the DIP Loan Documents or the Financing Orders
shall be deemed to confer standing on the Creditors’ Committee or any other
party in interest to commence such an adversary proceeding. If such an adversary
proceeding is not commenced within such period, then the DIP Secured Parties and
the Existing Secured Parties (each as defined in the Financing Orders) shall
automatically receive full waivers and releases provided in the Financing Orders
and the liens of the Prepetition Agent on behalf of the Prepetition Lenders
shall be valid, perfected, enforceable and unavoidable without any further
action by the Prepetition Agent or Prepetition Lenders under the terms of the
Financing Orders.

 

None of the Carve-Out, any Cash Collateral, the DIP Facility Loans, the DIP
Collateral or the Prepetition Collateral, may be used to challenge the amount,
validity, perfection, priority or enforceability of, or assert any defense,
counterclaim or offset to, the DIP Loan Documents or the Prepetition Loan
Documents, or the security interests and liens securing any of the DIP
Obligations or Prepetition Obligations, or to fund prosecution or assertion of
any claims, or to otherwise litigate against the DIP Agent, any DIP Lender, the
Prepetition Agent or any Prepetition Lender; provided that up to $50,000 shall
be made available to the Creditors’ Committee for investigation costs in respect
of the stipulations set forth in the Financing Orders, [which amount may be
included in the Carve-Out].6

    Expenses: The reasonable, documented out-of-pocket fees, costs and expenses
incurred by the DIP Agent (the foregoing to include all unpaid prepetition fees,
costs and expenses incurred by the DIP Agent in connection with the DIP
Facility) in connection with any and all aspects of the Debtors’ Cases,
including, without limitation, the reasonable and documented out-of-pocket fees
and expenses of the DIP Agent’s legal counsel (Sidley Austin LLP), banker
(Houlihan Lokey), and financial advisor (RPA Advisors) and other professionals,
hired by or on behalf of the DIP Agent with the Debtors’ reasonable consent,
shall be payable by the Debtors under the DIP Facility on a monthly basis,
promptly upon submission by such professional of a summary invoice setting forth
such fees, costs and expenses.     Indemnification: The Debtors shall agree to
indemnify and hold harmless the DIP Agent and the DIP Lenders and each of their
respective affiliates and each of their respective officers, directors,
employees, agents, advisors, attorneys and representatives (each, an
“Indemnified Party”) from and against any and all claims, damages, losses,
liabilities and expenses (including, without limitation, reasonable and
documented out-of-pocket fees and disbursements of counsel), that may be
incurred by or asserted or awarded against any Indemnified Party (including,
without limitation, in connection with any investigation, litigation or
proceeding or the preparation of a defense in connection therewith), arising out
of or in connection with or by reason of the transactions contemplated hereby,
provided that no Indemnified Party will be indemnified for exclusions of the
type excluded from “Indemnified Liabilities” (as such term is defined in the
Prepetition Credit Facility).  In the case of an investigation, litigation or
other proceeding to which the indemnity in this paragraph applies, such
indemnity shall be effective whether or not such investigation, litigation or
proceeding is brought by any of the Debtors, any of their respective directors,
security holders or creditors, an Indemnified Party or any other person or an
Indemnified Party is otherwise a party thereto and whether or not the
transactions contemplated hereby are consummated.     Confidentiality: Except as
required by law or in connection with the implementation of this Term Sheet, the
terms hereof will be kept strictly confidential by each of the Debtors and may
only be disclosed to such Debtor’s affiliates, legal counsel, financial advisors
and consultants who have been informed of, and agree to abide by, the
confidentiality of this Term Sheet.  To the extent that any disclosure becomes
legally required, the DIP Agent shall be notified promptly and before the
required disclosure is made.    

Governing Law:

The laws of the State of New York (excluding the laws applicable to conflicts or
choice of law), except as governed by the Bankruptcy Code.

 

 

 

6 DIP Agent shall have authority to negotiate Investigation Budget with the
Creditors’ Committee.

 

 CHK DIP Credit Facility Term Sheet 17 

 

 

 

 

Schedule 1

 

Guarantors

 

1.Chesapeake AEZ Exploration, L.L.C.

 

2.Chesapeake Appalachia, L.L.C.

 

3.Chesapeake E&P Holding, L.L.C.

 

4.Chesapeake Energy Louisiana, LLC

 

5.Chesapeake Energy Marketing, L.L.C.

 

6.Chesapeake Exploration, L.L.C.

 

7.Chesapeake Land Development Company, L.L.C.

 

8.Chesapeake Louisiana, L.P.

 

9.Chesapeake Midstream Development, L.L.C.

 

10.Chesapeake NG Ventures Corporation

 

11.Chesapeake Operating, L.L.C.

 

12.Chesapeake Plains, LLC

 

13.Chesapeake Royalty, L.L.C.

 

14.Chesapeake VRT, L.L.C.

 

15.Chesapeake-Clements Acquisition, L.L.C.

 

16.CHK Energy Holdings, Inc.

 

17.CHK NGV Leasing Company, L.L.C.

 

18.CHK Utica, L.L.C.

 

19.Compass Manufacturing, L.L.C.

 

20.EMLP, L.L.C.

 

21.Empress Louisiana Properties, L.P.

 

22.Empress, L.L.C.

 

23.GSF, L.L.C.

 

24.MC Louisiana Minerals, L.L.C.

 

25.MC Mineral Company, L.L.C.

 

26.MidCon Compression, L.L.C.

 

27.Nomac Services, L.L.C.

 

28.Northern Michigan Exploration Company, L.L.C.

 

29.Sparks Drive SWD, Inc.

 

30.Winter Moon Energy Corporation

 

31.Brazos Valley Longhorn Finance Corp.

 

32.Brazos Valley Longhorn, L.L.C.

 

33.Burleson Sand LLC

 

34.Burleson Water Resources, LLC

 

35.Esquisto Resources II, LLC

 

36.Petromax E&P Burleson, LLC

 

37.WHE AcqCo., LLC

 

38.WHR Eagle Ford LLC

 

39.Wildhorse Resources II, LLC

 

40.Wildhorse Resources Management Company, LLC

 

 

 

 

Schedule 2

 

DIP Lender Commitments

 

[DIP Lender Commitments on file with the Debtors.]

 

 

 

 

Exhibit A

 

Carve-Out

 

1.              Carve Out.

 

(a)            Carve Out.  As used in this [Final/Interim] Order, the “Carve
Out” means the sum of (i) all fees required to be paid to the Clerk of the Court
and to the Office of the United States Trustee under section 1930(a) of title 28
of the United States Code plus interest at the statutory rate (without regard to
the notice set forth in (iii) below); (ii) all reasonable fees and expenses up
to $100,000 incurred by a trustee under section 726(b) of the Bankruptcy Code
(without regard to the notice set forth in (iii) below); (iii) to the extent
allowed at any time, whether by interim order, procedural order, or otherwise,
all unpaid fees and expenses (the “Allowed Professional Fees”) incurred by
persons or firms retained by the Debtors pursuant to section 327, 328, or 363 of
the Bankruptcy Code (the “Debtor Professionals”) and the Creditors’ Committee 
pursuant to section 328 or 1103 of the Bankruptcy Code (the “Committee
Professionals” and, together with the Debtor Professionals, the “Professional
Persons”) at any time before or on the first business day following delivery by
the [DIP Agent] of a Carve Out Trigger Notice (as defined below), whether
allowed by the Court prior to or after delivery of a Carve Out Trigger Notice;
and (iv) Allowed Professional Fees of Professional Persons in an aggregate
amount not to exceed $7.5 million incurred after the first business day
following delivery by the [DIP Agent] of the Carve Out Trigger Notice, to the
extent allowed at any time, whether by interim order, procedural order, or
otherwise (the amounts set forth in this clause (iv) being the “Post-Carve Out
Trigger Notice Cap”).  For purposes of the foregoing, “Carve Out Trigger Notice”
shall mean a written notice delivered by email (or other electronic means) by
the [DIP Agent] to the Debtors, their lead restructuring counsel, the U.S.
Trustee, and counsel to the Creditors’ Committee, which notice may be delivered
following the occurrence and during the continuation of an Event of Default and
acceleration of the DIP Obligations under the DIP Facility, stating that the
Post-Carve Out Trigger Notice Cap has been invoked.

 

 

 

 

(b)            Carve Out Reserves.  On the day on which a Carve Out Trigger
Notice is given by the DIP Agent to the Debtors with a copy to counsel to the
Creditors’ Committee (the “Termination Declaration Date”), the Carve Out Trigger
Notice shall (i) be deemed a draw request and notice of borrowing by the Debtors
for Revolving DIP Loans under the Revolving DIP Loan Commitment (on a pro rata
basis based on the then outstanding Revolving DIP Loan Commitments), in an
amount equal to the then unpaid amounts of the Allowed Professional Fees (any
such amounts actually advanced shall constitute Revolving DIP Loans) and
(ii) also constitute a demand to the Debtors to utilize all cash on hand as of
such date and any available cash thereafter held by any Debtor to fund a reserve
in an amount equal to the then unpaid amounts of the Allowed Professional Fees. 
The Debtors shall deposit and hold such amounts in a segregated account at the
DIP Agent in trust to pay such then unpaid Allowed Professional Fees (the
“Pre-Carve Out Trigger Notice Reserve”) prior to any and all other claims.  On
the Termination Declaration Date, the Carve Out Trigger Notice shall also (i) be
deemed a request by the Debtors for Revolving DIP Loans under the Revolving DIP
Loan Commitment (on a pro rata basis based on the then outstanding Revolving DIP
Loan Commitments), in an amount equal to the Post-Carve Out Trigger Notice Cap
(any such amounts actually advanced shall constitute Revolving DIP Loans) and
(ii) constitute a demand to the Debtors to utilize all cash on hand as of such
date and any available cash thereafter held by any Debtor, after funding the
Pre-Carve Out Trigger Notice Reserve, to fund a reserve in an amount equal to
the Post-Carve Out Trigger Notice Cap.  The Debtors shall deposit and hold such
amounts in a segregated account at the DIP Agent in trust to pay such Allowed
Professional Fees benefiting from the Post-Carve Out Trigger Notice Cap (the
“Post-Carve Out Trigger Notice Reserve” and, together with the Pre-Carve Out
Trigger Notice Reserve, the “Carve Out Reserves”) prior to any and all other
claims.  On the first business day after the DIP Agent gives such notice to such
DIP Lenders, notwithstanding anything in the DIP Credit Agreement to the
contrary, including with respect to the existence of a Default (as defined in
the DIP Credit Agreement) or Event of Default, the failure of the Debtors to
satisfy any or all of the conditions precedent for Revolving DIP Loans under the
Revolving DIP Facility, any termination of the Revolving DIP Loan Commitments
following an Event of Default, or the occurrence of the Maturity Date, each New
Money DIP Lender with an outstanding Revolving DIP Loan Commitment (on a pro
rata basis based on the then outstanding Revolving DIP Loan Commitments) shall
make available to the DIP Agent such New Money DIP Lender’s pro rata share with
respect to such borrowing in accordance with the Revolving DIP Facility;
provided that the New Money DIP Lenders shall have no requirement to fund the
Carve-Out Reserves in excess of any remaining borrowing availability under the
DIP Loan Documents.  All funds in the Pre-Carve Out Trigger Notice Reserve shall
be used first to pay the obligations set forth in clauses (i) through (iii) of
the definition of Carve Out set forth above (the “Pre-Carve Out Amounts”), but
not, for the avoidance of doubt, the Post-Carve Out Trigger Notice Cap, until
paid in full, and then, to the extent the Pre-Carve Out Trigger Notice Reserve
has not been reduced to zero, to pay the DIP Agent for the benefit of the DIP
Lenders, unless the DIP Obligations have been indefeasibly paid in full, in
cash, and all Revolving DIP Loan Commitments have been terminated, in which case
any such excess shall be paid to the [Prepetition Secured Creditors] in
accordance with their rights and priorities as of the Petition Date.  All funds
in the Post-Carve Out Trigger Notice Reserve shall be used first to pay the
obligations set forth in clause (iv) of the definition of Carve Out set forth
above (the “Post-Carve Out Amounts”), and then, to the extent the Post-Carve Out
Trigger Notice Reserve has not been reduced to zero, to pay the DIP Agent for
the benefit of the DIP Lenders, unless the DIP Obligations have been
indefeasibly paid in full, in cash, and all Revolving DIP Loan Commitments have
been terminated, in which case any such excess shall be paid to the [Prepetition
Secured Creditors] in accordance with their rights and priorities as of the
Petition Date.  Notwithstanding anything to the contrary in the DIP Loan
Documents, or this [Final/Interim] Order, if either of the Carve Out Reserves is
not funded in full in the amounts set forth in this paragraph [●], then, any
excess funds in one of the Carve Out Reserves following the payment of the
Pre-Carve Out Amounts and Post-Carve Out Amounts, respectively, shall be used to
fund the other Carve Out Reserve, up to the applicable amount set forth in this
paragraph [●], prior to making any payments to the DIP Agent or the [Prepetition
Secured Creditors], as applicable.  Notwithstanding anything to the contrary in
the DIP Loan Documents or this [Final/Interim] Order, following delivery of a
Carve Out Trigger Notice, the DIP Agent and the Prepetition Agent shall not
sweep or foreclose on cash (including cash received as a result of the sale or
other disposition of any assets) of the Debtors until the Carve Out Reserves
have been fully funded, but shall have a security interest in any residual
interest in the Carve Out Reserves, with any excess paid to the DIP Agent for
application in accordance with the DIP Loan Documents.  Further, notwithstanding
anything to the contrary in this [Final/Interim] Order, (i) disbursements by the
Debtors from the Carve Out Reserves shall not constitute Revolving DIP Loans or
increase or reduce the DIP Obligations, (ii) the failure of the Carve Out
Reserves to satisfy in full the Allowed Professional Fees shall not affect the
priority of the Carve Out, and (iii) in no way shall the Initial Budget, Budget,
Carve Out, Post-Carve Out Trigger Notice Cap, Carve Out Reserves, or any of the
foregoing be construed as a cap or limitation on the amount of the Allowed
Professional Fees due and payable by the Debtors.  For the avoidance of doubt
and notwithstanding anything to the contrary in this [Final/Interim] Order, the
DIP Facility, or in any [Prepetition Secured Facilities], the Carve Out shall be
senior to all liens and claims securing the DIP Obligations, the DIP Hedges, the
Adequate Protection Obligations, and any and all other forms of adequate
protection, liens, or claims securing the DIP Facility, or the [Prepetition
Secured Obligations].

 

 

 

 

(c)            Payment of Allowed Professional Fees Prior to the Termination
Declaration Date.  Any payment or reimbursement made prior to the occurrence of
the Termination Declaration Date in respect of any Allowed Professional Fees
shall not reduce the Carve Out.

 

(d)            No Direct Obligation To Pay Allowed Professional Fees.  None of
the DIP Agent, DIP Lenders, or the [Prepetition Secured Creditors] shall be
responsible for the payment or reimbursement of any fees or disbursements of any
Professional Person incurred in connection with the Chapter 11 Cases or any
successor cases under any chapter of the Bankruptcy Code.  Nothing in this
[Interim/Final] Order or otherwise shall be construed to obligate the DIP Agent,
the DIP Lenders, or the [Prepetition Secured Creditors], in any way, to pay
compensation to, or to reimburse expenses of, any Professional Person or to
guarantee that the Debtors have sufficient funds to pay such compensation or
reimbursement.

 

 

 

 

(e)            Payment of Carve Out On or After the Termination Declaration
Date.  Any payment or reimbursement made on or after the occurrence of the
Termination Declaration Date in respect of any Allowed Professional Fees shall
permanently reduce the Carve Out on a dollar-for-dollar basis.  Any funding of
the Carve Out shall be added to, and made a part of, the DIP Obligations secured
by the DIP Collateral and shall be otherwise entitled to the protections granted
under this [Final/Interim] Order, the DIP Loan Documents, the Bankruptcy Code,
and applicable law.

 

 

 

 

Exhibit 3

 

Exit Facilities Term Sheet

 

 

 

  

Execution Version

 

EXHIBIT B

 

RBL Facility

Summary of Terms and Conditions

 

Set forth below is a summary of the principal terms and conditions for the RBL
Facility. Capitalized terms used but not otherwise defined herein shall have the
meanings assigned to such terms in the Commitment Letter to which this Exhibit B
is attached or on Exhibits C or D (including the Annexes hereto and thereto)
attached thereto; provided, that in the event any such capitalized term is
subject to multiple and differing definitions, the appropriate meaning shall be
determined by reference to the context in which it is used.

 

PARTIES           Borrower: Chesapeake Energy Corporation (the “Borrower”).    
    Guarantors: All obligations of the Borrower under the RBL Facility (as
defined below) and, at the Borrower’s option, under any treasury management
agreement (a “Secured Treasury Management Agreement”) or any currency, interest
rate protection or other hedging agreement (a “Secured Hedging Agreement”, which
Secured Treasury Management Agreements and Secured Hedging Agreements shall have
the same payment priority as the Tranche A RBL Loans described below), in each
case entered into by the Borrower with the Administrative Agent, an RBL Lender
(as defined below) or any person that is an affiliate of the Administrative
Agent or an RBL Lender at the time the relevant transaction is entered into
(collectively, the “Borrower Obligations”) will be unconditionally guaranteed on
a senior basis (the “Guaranty”) by each of the Borrower’s wholly-owned
Restricted Subsidiaries other than:           (a) immaterial subsidiaries
subject to thresholds to be agreed (“Immaterial Subsidiaries”),           (b)
any subsidiary that is prohibited by law, regulation or contractual obligation
from providing such Guaranty or that would require a governmental (including
regulatory) consent, approval, license or authorization in order to provide such
Guaranty, and             (c) solely in the case of any obligation under any
Secured Hedging Agreement that constitutes a “swap” within the meaning of
section 1(a)(47) of the Commodity Exchange Act, any subsidiary that is not an
“Eligible Contract Participant” as defined under the Commodity Exchange Act    
        (the “Guarantors”; the Borrower and the Guarantors, collectively, the
“Loan Parties”).  

 

Term Sheet - RBL Facility

Exhibit B - Page 1

 

 

        For purposes of the RBL Credit Documentation (as defined below),
“Restricted Subsidiary” means any existing or future direct or indirect
subsidiary of the Borrower other than any Unrestricted Subsidiary (as defined
below).         Lead Arranger and Bookrunner: MUFG Union Bank, N.A. will act as
lead arranger and bookrunner for the RBL Facility (in such capacity, the “RBL
Lead Arranger”).         Joint Lead Arrangers and Joint Bookrunners Bank of
America, N.A., BMO Capital Markets Corp., Wells Fargo Securities, LLC, Citibank,
N.A., JPMorgan Chase Bank, N.A., and Royal Bank of Canada will act as joint lead
arrangers and joint bookrunners for the RBL Facility.         Administrative
Agent and Collateral Agent: MUFG Union Bank, N.A. will act as the sole and
exclusive administrative agent and collateral agent for the RBL Lenders referred
to below (in such capacities, the “RBL Agent”).         RBL Lenders: Holders of
Revolving Credit Facility Claims and DIP Claims (as defined in the Restructuring
Support Agreement) or one or more of their designated affiliates (collectively,
and together with any person that becomes a lender by assignment as set forth
under the heading “Assignments and Participations” below, the “RBL Lenders”).  
Prepetition Credit Facility           Borrower: Chesapeake Energy Corporation.  
      Prepetition Credit Agreement Amended and Restated Credit Agreement, dated
as of September 12, 2018 (as amended, supplemented, and otherwise modified from
time to time), among the Borrower, the lenders party thereto and MUFG Union
Bank, N.A., as the administrative agent thereunder (the “Prepetition Credit
Agreement” and the credit facility provided thereunder, the “Prepetition Credit
Facility”).         RBL Facility       Type and Amount:

A revolving reserve-based loan facility (the “RBL Facility”) in an initial
aggregate principal amount of $1.75 billion (the loans thereunder, irrespective
of tranche (as described below), the “RBL Loans”). The RBL Facility shall
consist of two tranches of RBL Loans:

 

Tranche A RBL Exit Facility Loans (the “Tranche A RBL Loans”, and the
commitments under the RBL Facility to make such Tranche A RBL Loans, the “RBL
Tranche A Commitments”), in an amount equal to $[●], which Tranche A RBL Loans
(i) will be partially funded on the Closing Date, (ii) will have a scheduled
maturity of 3 years from the Closing Date, (iii) shall at all times be repaid
prior to the repayment of any Tranche B RBL Loans and (iv) shall be fully
revolving.

 

Tranche B RBL Exit Facility Loans (the “Tranche B RBL Loans”) in an amount equal
to $[●], which Tranche B RBL Loans (i) will be fully funded on the Closing Date,
(ii) will have a maturity of 4 years from the Closing Date, (iii) will be
prepaid or repaid only after no Tranche A RBL Loans remain outstanding, and (iv)
once so prepaid or repaid, may not be reborrowed.

 

Amounts funded (or Letters of Credit issued) under the RBL Facility will be
available in U.S. dollars.

 

       

Term Sheet - RBL Facility

Exhibit B - Page 2

 

 

 

Availability:

The Tranche A RBL Loans shall be available on a revolving basis during the
period commencing on the Closing Date and ending on the Revolving Maturity Date
(as defined below); provided that no more than $1.25 billion will be funded
under the RBL Facility on the Closing Date to fund a portion of the
Restructuring Transactions. The full amount of the RBL Facility shall be
available for same-day ABR borrowings to the extent borrowing requests are
received by 11am Eastern time.

 

At all times, availability under the RBL Facility shall be equal to the lesser
of the aggregate RBL Tranche A Commitments and the amount by which the then
effective Borrowing Base exceeds the Credit Facilities Total Outstandings.

 

The “RBL Total Outstandings” means, at any time, the aggregate principal amount
of RBL Loans (whether Tranche A RBL Loans or Tranche B RBL Loans) then
outstanding plus the aggregate stated amount of all issued Letters of Credit
and, without duplication, all unreimbursed disbursements on any Letter of Credit
as of such date (unless cash collateralized or backstopped pursuant to
arrangements reasonably acceptable to the relevant Issuing Lender).

 

The “Credit Facilities Total Outstandings” mean the RBL Total Outstandings plus
the outstanding FLLO Term Loans.

 

        Maturity:

The RBL Tranche A Commitments shall terminate and all Tranche A RBL Loans will
mature on the date that is three (3) years after the Closing Date (the “RBL
Tranche A Termination Date”).

 

The Tranche B RBL Loans will mature on the date that is four (4) years after the
Closing Date (the “RBL Tranche B Termination Date”).

 

        Borrowing Base: The RBL Facility shall be subject to the borrowing base
described below (it being understood that the Borrowing Base under the RBL
Facility is intended to encompass both the RBL Facility and the FLLO Term Loans
and that, at any time that the FLLO Term Loans cease to be secured debt, the
Borrowing Base will be automatically reduced to the amount of the RBL Facility
portion of the Borrowing Base at such time).  The borrowing base for the RBL
Facility (the “Borrowing Base”), at any time, shall be based on the aggregate
present  value, discounted at 10% per annum, of (i) the proved oil and gas
reserves of the Loan Parties located within the geographic boundaries of the
United States included in the most recent Reserve Report (as defined below)
delivered to the RBL Agent (such properties, the “Borrowing Base Properties”)
and (ii) any hedge positions existing at the time of such redetermination, in
each case utilizing the RBL Agent’s then current internal bank price deck and
approved by the RBL Lenders as provided below.           The initial borrowing
base for the RBL Facility will be $2.5 billion from the date of the initial
borrowing under the RBL Facility (the “Closing Date”) until, subject to the
rights of optional redetermination and the other adjustments provided for
herein, the next redetermination date (provided, that the Required RBL Lenders
will confirm the amount of this initial Borrowing Base (or provide a new initial
Borrowing Base amount) prior to the Closing Date based on the Initial Reserve
Report in a manner substantially similar to the redetermination process
described below).          

The Borrowing Base shall be re-determined semi-annually on or about (i) the date
that is six months from the Closing Date (the “First Scheduled
Redetermination”)and (ii) thereafter, each May 1 and October 1 to occur after
the Closing Date, beginning on the first such date to occur after the
redetermination described in clause (i), based upon (i) a reserve report
prepared as of the immediately preceding January 1 and July 1, respectively, and
other related information, and delivered on or before April 1 and September 1,
respectively and/or (ii) other engineering data reasonably acceptable to the RBL
Agent (each such report or other engineering data, a “Reserve Report”) and other
related information. Each April 1 Reserve Report shall be prepared by an
Approved Petroleum Engineer (as defined below) as to 80% by volumes of the
Borrowing Base Properties covered thereby, with the balance prepared by or under
the supervision of the Borrower’s chief engineer. Each August 1 Reserve Report
(and any Reserve Report delivered in connection with any unscheduled
redetermination) may be prepared internally by petroleum engineers who are
employees of the Borrower or its affiliates. The Borrowing Base shall be
calculated and proposed by the RBL Agent on behalf of the Required RBL Lenders
in good faith in accordance with its usual and customary oil and gas lending
criteria as it exists at the particular time and as specified in the RBL Credit
Documentation (as defined below) and approved by the Required RBL Lenders or all
of the RBL Lenders, as the case may be. The RBL Agent shall notify the Lenders
of the RBL Agent’s proposed amount of the redetermined Borrowing Base after the
RBL Agent has received complete engineering reports from the Borrower and has
had a reasonable opportunity to determine the proposed Borrowing Base.

 

“Approved Petroleum Engineer” means any of (a) Schlumberger N.V., (b)
Netherland, Sewell & Associates, Inc., (c) Cawley, Gillespie & Associates, Inc.,
(d) Ryder Scott Company, L.P., (e) LaRoche Petroleum Consultants, Ltd. and (f)
any other independent engineer chosen by the Borrower and reasonably acceptable
to the RBL Agent.

 

 

 

Term Sheet - RBL Facility

Exhibit B - Page 3

 

 

  Unscheduled redeterminations of the Borrowing Base may be made (a) following
the First Scheduled Redetermination date at the request of the Required RBL
Lenders not more than once between any two scheduled redeterminations and (b) at
any time (including prior to the First Scheduled Redetermination date as
described above) by the Borrower.             In addition to the foregoing,
after the Closing Date, the Borrowing Base shall be subject to automatic
reductions between redeterminations in connection with:           (i)   sales or
other dispositions (including in connection with the designation of unrestricted
subsidiaries and investments) of Borrowing Base Properties and early
monetization or early termination of any hedge positions existing at the time of
the last redetermination date and relied on by the RBL Lenders in determining
the Borrowing Base since the later of (A) the last redetermination date and
(B) the last adjustment made pursuant to this clause (i), with an aggregate
Borrowing Base value and Hedge PV (as defined below) with respect to all such
Borrowing Base Properties sold or otherwise disposed of and hedge positions
monetized or terminated early exceeding 5.0% of the Borrowing Base then in
effect (after giving effect to any hedge agreements entered into
(1) contemporaneously with such early monetization or termination or
(2) subsequent to the last redetermination of the Borrowing Base), in an amount
equal to the Hedge PV with respect to such hedge positions monetized or
terminated or the Borrowing Base value as determined by the RBL Agent with
respect to such Borrowing Base Properties disposed, and taking into account
concurrent acquisitions or other investments for which Reserve Reports have been
delivered to the RBL Agent and which have been given value by the RBL Agent and
the other RBL Lenders; and           (ii)    only with respect to amounts in
excess of the Permitted Debt Prepayment (as defined below), the issuance of any
junior lien, unsecured senior or senior subordinated indebtedness after the
Closing Date (including any additional “first lien last out” indebtedness) (such
additional indebtedness “Specified Additional Debt”) under the basket permitting
Specified Additional Debt and any permitted refinancing indebtedness in respect
thereof; and in the case of this clause (ii), the Borrowing Base shall be
immediately reduced by $0.50 for every $1.00 of Specified Additional Debt that
remains outstanding, other than any such indebtedness constituting a permitted
refinancing of Specified Additional Debt (only to the extent that the aggregate
principal amount of such refinancing indebtedness does not result in an increase
in the principal amount thereof plus amounts to fund any original issue discount
or upfront fees relating thereto plus amounts to fund accrued interest, fees,
expenses, premiums, etc. thereon).  

 

Term Sheet - RBL Facility

Exhibit B - Page 4

 

 

 

“Hedge PV” means, with respect to any commodity hedge contract, the present
value, discounted at 10% per annum, of the future receipts expected to be paid
to the Borrower or its restricted subsidiaries under such hedge contract netted
against the RBL Agent’s then current internal bank price deck; provided, that
the “Hedge PV” shall never be less than $0.00.

 

“PV-10” means the present value of the Loan Parties’ oil and gas properties
(calculated before federal and state income taxes (but not other taxes
customarily included in such calculation, including sales, ad valorem and
severance taxes), discounted at 10% per annum, of the future net revenues
expected to accrue to the Loan Parties’ collective interests in such reserves
during the remaining expected economic lives of such reserves, calculated in a
manner consistent with past practice and other than in respect of calculating
the Total PDP PV-10 (which shall be calculated using the Ten Year Strip Price),
shall be calculated using the RBL Agent’s then current internal bank price deck.

 

“Total PDP PV-10” means, as of any date of determination, the PV-10 of the Loan
Parties’ oil and gas properties characterized as Proved Developed Producing
reserves and any hedge positions existing on such date. Each calculation of such
Total PDP PV-10 shall be made (a) using the Ten-Year Strip Price adjusted in a
manner reasonably acceptable to the RBL Agent for any basis differential,
quality and gravity, (b) using costs as of the date of estimation without future
escalation, and without giving effect to non-property related expenses such as
general and administrative expenses, debt service, future income tax expense and
depreciation, depletion and amortization, and (c) to the extent not otherwise
specified in the preceding clauses of this sentence, using reasonable economic
assumptions consistent with such clauses. Total PDP PV-10 shall be calculated on
a pro forma basis, giving effect to (i) acquisitions and dispositions of oil and
gas properties consummated by the Borrower and the other Loan Parties since the
date of the Reserve Report most recently delivered to the RBL Agent (provided
that, in the case of any acquisition of oil and gas properties, the RBL Agent
shall have received a Reserve Report, in form and substance reasonably
satisfactory to it, evaluating the proved developed producing reserves
attributable thereto) and (ii) the unwind, monetization or termination of, or
the entry into, any hedge agreement to which a Loan Party is a party, in each
case occurring since the date of the Reserve Report most recently delivered to
the RBL Agent.

 

“Ten-Year Strip Price” means, as of any date, (a) for the 120-month period
commencing with the month in which such date occurs, as quoted on the New York
Mercantile Exchange (the “NYMEX”) adjusted for applicable differentials (based
on average of last twelve (12) months actuals) and hedge agreements and
published in a nationally recognized publication for such pricing reasonably
acceptable to the RBL Agent (as such prices may be corrected or revised from
time to time by the NYMEX in accordance with its rules and regulations), the
corresponding monthly quoted futures contract price for such months 0–120 and
(b) for periods after such 120 month period, the average corresponding monthly
quoted futures contract price for months 108-120.

 

 

 

Term Sheet - RBL Facility

Exhibit B - Page 5

 

 

Letters of Credit: $200 million of the RBL Tranche A Commitments shall be
available for the issuance of letters of credit, including documentary letters
of credit in U.S. dollars (the “Letters of Credit”), by the RBL Agent and one or
more RBL Lenders reasonably acceptable to the Borrower (in such capacity, each,
an “Issuing Lender”).  No Letter of Credit shall have an expiration date after
the earlier of (a) 1 year after the date of issuance or such longer period of
time as may be agreed to by the applicable Issuing Lender and (b) 3 business
days prior to the RBL Tranche A Termination Date; provided that any Letter of
Credit with a 1-year tenor may provide for automatic or “evergreen” renewal
thereof for additional 1-year periods (which shall in no event extend beyond the
date referred to in clause (b) above unless cash collateralized or backstopped
pursuant to arrangements reasonably satisfactory to the Issuing Lender
thereof).  So long as the Borrower is the primary obligor and a signatory to a
request for the issuance of a Letter of Credit, Letters of Credit may be issued
for the account of the Borrower or any of the Restricted Subsidiaries.          
Any drawing under any Letter of Credit shall be reimbursed by the Borrower
(whether with its own funds or with the proceeds of RBL Loans) within 3 business
days after notice thereof is received by the Borrower from the relevant Issuing
Lender.  To the extent that the Borrower does not so reimburse the Issuing
Lender within such time period, the RBL Lenders shall be irrevocably and
unconditionally obligated to fund participations in the reimbursement
obligations on a pro rata basis based on their respective RBL Tranche A
Commitments.           Letters of Credit may be issued on the Closing Date in
the ordinary course of business and to replace or provide credit support for any
existing letters of credit (including by “grandfathering” such existing letters
of credit into the RBL Facility).         Use of Proceeds: The proceeds of the
RBL Loans may be used (a) on the Closing Date, (i)  to finance a portion of the
Restructuring Transactions, including the refinancing of the DIP Facility and
the Prepetition Credit Facility and the payment of related fees and expenses,
(ii) to finance working capital and the payment of transaction costs and
(iii) to finance working capital needs and other general corporate purposes and
(b) after the Closing Date, to finance the working capital needs and other
general corporate purposes of the Borrower and its subsidiaries (including for
capital expenditures, acquisitions, working capital and/or purchase price
adjustments, the payment of transaction fees and expenses, other investments,
restricted payments and any other purpose not prohibited by the RBL Credit
Documentation).  

 

Term Sheet - RBL Facility

Exhibit B - Page 6

 

 

CERTAIN PAYMENT PROVISIONS   Interest Rates and Fees: As set forth on Annex I
hereto.         Optional Prepayments and Commitment Reductions:

RBL Loans may be prepaid and the RBL Tranche A Commitments may be reduced, in
whole or in part, without premium or penalty, in minimum amounts to be agreed,
at the option of the Borrower at any time upon 1 business day’s (or, in the case
of a prepayment of RBL Eurodollar Loans (as defined on Annex I hereto), 3
business days’) prior notice, subject to reimbursement of the RBL Lenders’
redeployment costs in the case of a prepayment of RBL Eurodollar Loans prior to
the last day of the relevant interest period. Optional prepayments of the RBL
Loans shall, subject to the paragraph below, be applied to the installments of
the RBL Loans as directed by the Borrower (or in the absence of direction from
the Borrower, in the direct order of maturity).

 

All prepayments or repayments of RBL Loans, whether optional or mandatory, shall
first be applied to Tranche A RBL Loans until no Tranche A RBL Loans remain
outstanding.

 

        Mandatory Prepayments: At any time when Credit Facilities Total
Outstandings exceeds the Borrowing Base then in effect (such difference being a
“Borrowing Base Deficiency”), the Borrower shall, within ten (10) business days
after written notice from the RBL Agent to the Borrower of such Borrowing Base
Deficiency, notify the RBL Agent that it intends to take one or any combination
of the following actions:           (A)   within thirty (30) days after such
notice from the RBL Agent, execute and deliver mortgages reasonably acceptable
to the RBL Agent encumbering additional Borrowing Base Properties (accompanied
by acceptable engineering reports with respect to such properties) to the extent
necessary to eliminate such Borrowing Base Deficiency  (with acceptable title
information with respect to 85% of the PV-10 value of such Borrowing Base
Properties to follow within sixty (60) days of the delivery of such mortgages);
          (B)   within thirty (30) days after such notice from the RBL Agent,
prepay the RBL Loans in an amount sufficient to eliminate such Borrowing Base
Deficiency; or          

(C)    prepay the RBL Loans in an amount sufficient to eliminate such Borrowing
Base Deficiency in three equal monthly installments, with interest, beginning on
the 30th day after the Borrower’s receipt of notice of such Borrowing Base
Deficiency from the RBL Agent (as such Borrowing Base Deficiency may be
increased or reduced during such three-month period as a result of a Borrowing
Base redetermination or other adjustment of the Borrowing Base);

 

provided, that if the Borrowing Base is reduced as the result of (i) an asset
sale or disposition of Borrowing Base Properties or the monetization or early
termination of any hedge position in excess of 5% of the value of the Borrowing
Base or (ii) the issuance of Specified Additional Debt (as described in the
section captioned “Borrowing Base”) and a Borrowing Base Deficiency results from
such reduction, then the Borrower shall immediately (and in any event within one
(1) business day after the receipt of net cash proceeds therefrom) eliminate
such Borrowing Base Deficiency with the proceeds of such asset sale, disposition
or monetization or early termination of any hedge position or the issuance of
Specified Additional Debt, as applicable. Additionally, any Borrowing Base
Deficiency resulting from a voluntary termination or reduction of Commitments
shall be required to be eliminated on the date of such termination.

 

Notwithstanding the foregoing, any net proceeds from the incurrence of junior
debt otherwise permitted under the RBL Credit Documentation shall be used to
repay the FLLO Term Loans at par (the “Permitted Debt Prepayment”).

 

In addition, the RBL Credit Documentation will contain a customary anti-cash
hoarding prepayment provision that is consistent with the Prepetition Credit
Facility, except that the five (5) business day cure period shall be replaced
with three (3) business days and the limits on cash on hand shall be reduced
from $100 million to $75 million.

 

 

 

Term Sheet - RBL Facility

Exhibit B - Page 7

 

 

 

The RBL Loans shall be prepaid and the Letters of Credit shall be cash
collateralized or otherwise “backstopped” or replaced to the extent all such
extensions of credit under the RBL Facility exceed the RBL Tranche A
Commitments.

 

        COLLATERAL Subject to the provisions of the immediately following
paragraphs, the Borrower Obligations and the obligations of each other Loan
Party under its Guaranty shall be secured by a perfected first-priority security
interest (subject to permitted liens and other exceptions to be set forth in the
RBL Credit Documentation) in substantially all of the Loan Parties’ tangible and
intangible assets (including, without limitation, (i) a pledge of the capital
stock of each Loan Party’s direct subsidiaries (other than Unrestricted
Subsidiaries and otherwise subject to customary exceptions), (ii) all
as-extracted collateral arising from the Borrowing Base Properties, accounts
receivable with respect to sales of hydrocarbons from the Borrowing Base
Properties, inventory and equipment related to the Borrowing Base Properties,
cash and cash equivalents, general intangibles, investment property, all deposit
and securities accounts and (iii) all of the Borrowing Base Properties (it being
understood that the Loan Parties shall only be required at any time to maintain
mortgages on at least 90% of the PV-10 value of the Borrowing Base Properties to
which proved reserves are attributed) and the proceeds of the foregoing) (the
“Collateral”).           Notwithstanding the foregoing, there shall be customary
exclusions, consistent with the Prepetition Credit Agreement, from the
Collateral, including, but not limited to (a) any property or asset the grant or
perfection of a security interest in which would result in adverse tax
consequences as reasonably determined by the Borrower and the RBL Agent, (b) any
property or asset the grant or perfection of a security interest in which would
require governmental consent, approval, license or authorization and (c) any
building or manufactured (mobile home) (as defined in applicable flood insurance
regulations).           The priority of security interests and relative rights
of the lenders under the RBL Facility and the lenders under the FLLO Term Loan
Facility shall be subject to collateral agency arrangements set forth in a
collateral agency agreement (the “Collateral Agency Agreement”) substantially
similar to the collateral agency agreement executed in connection with the
Prepetition Credit Facility and which shall provide, among other provisions,
that the obligations under the FLLO Term Loan Facility shall be junior in right
of repayment to the RBL Facility at all times.           The RBL Credit
Documentation will authorize the RBL Agent or other collateral trustee, as
applicable, to enter into customary intercreditor arrangements in respect
additional debt that is permitted to be incurred and secured under the RBL
Credit Documentation on a pari passu or junior basis with the RBL Facility.  The
material terms of such collateral agency arrangements shall be reasonably
acceptable to the RBL Agent and the Borrower.         TITLE In connection with
each scheduled redetermination of the Borrowing Base, the Borrower shall deliver
such information (in form and substance reasonably satisfactory to the RBL
Agent) on Borrowing Base Properties as is required to demonstrate satisfactory
title on 85% of the PV-10 value of the Borrowing Base Properties included in the
most recent Reserve Report.         CERTAIN CONDITIONS           Closing
Conditions: As set forth on Exhibit D.         Post-Closing Conditions:

The making of each RBL Loan and the issuance, amendment, modification, renewal
or extension of a Letter of Credit (other than any amendment, modification,
renewal or extension of a Letter of Credit which does not increase the face
amount of such Letter of Credit) after the Closing Date, in each case, shall be
conditioned upon (a) the accuracy in all material respects of all
representations and warranties in the RBL Credit Documentation (except in the
case of any such representation which expressly relates to a given date or
period, such representation and warranty shall be true and correct in all
material respects as of the respective date or for the respective period, as the
case may be), (b) the Borrower holding no more than $75 million of cash on hand
after giving effect to such extension of credit (and the use of proceeds
therefrom within 3 business days), (c) there being no default or event of
default in existence at the time of, or after giving effect to the making of,
such extension of credit, and (d) delivery of a customary borrowing notice or
request for issuance of a Letter of Credit, as applicable.

 

 

 

Term Sheet - RBL Facility

Exhibit B - Page 8

 

 

DOCUMENTATION       RBL Credit Documentation: The definitive financing
documentation for the RBL Facility (the “RBL Credit Documentation”), which will
be drafted by the counsel to the RBL Agent, shall, except as otherwise set forth
herein, have substantially the same terms, representations and warranties,
covenants and events of default as set forth in the Prepetition Credit
Agreement; provided that all such terms, representations and warranties,
covenants and events of default shall be modified to (a) except to the extent
set forth herein, reflect terms and conditions (including carve-outs and
baskets) that are customary as of the Closing Date for similarly-sized reserve
based revolving credit facilities and (b) reflect such other terms as the
Borrower and the RBL Lead Arranger shall agree (the “Documentation Principles”).
    Representations and Warranties:

Subject to the Documentation Principles, to be substantially the same as the
Prepetition Credit Agreement and to be limited to the following:

 

·      organizational existence and corporate status;

 

·      organizational power and authority;

 

·      due authorization, execution and delivery of the RBL Credit
Documentation;

 

·      enforceability of the RBL Credit Documentation;

 

·      no conflicts of the RBL Credit Documentation with applicable law,
organizational documents or contractual obligations;

 

·      financial statements for periods ended after the Closing Date;

 

·      no material adverse effect;

 

·      capitalization of subsidiaries;

 

·      compliance with laws;

 

·      use of proceeds not in violation of FCPA, OFAC and the PATRIOT Act;
Beneficial Ownership Certification

 

·      governmental and third party approvals and consents;

 

·      ERISA and labor matters; environmental matters;

 

·      litigation;

 

·      ownership of property;

 

·      taxes;

 

·      Federal Reserve margin regulations; Investment Company Act;

 

·      hedge agreements;

 

·      pari passu or priority status;

 

·      true and complete disclosure; and

 

·      solvency (to be defined in a manner consistent with Annex I to Exhibit D)
of the Borrower and its Restricted Subsidiaries, taken as a whole, on the
Closing Date; and the creation, validity and perfection of security interests.

 

  The foregoing representations and warranties shall apply to the Borrower and
its Restricted Subsidiaries (with certain exceptions to cover all subsidiaries
to be agreed).

 

Term Sheet - RBL Facility

Exhibit B - Page 9

 

 

Affirmative Covenants:

Subject to the Documentation Principles, to be substantially the same as the
Prepetition Credit Agreement and to be limited to the following:

 

·      delivery of (i) annual audited financial statements within five business
days after the date on which such financial statements are required to be filed
with the SEC (after giving effect to any permitted extensions) (or, if such
financial statements are not required to be filed with the SEC, on or before the
date that is 90 days after the end of each such fiscal year) (accompanied by an
opinion of an independent accounting firm that is not subject to (or does not
contain) a “going concern” qualification or explanatory paragraph or
qualification as to the scope of the relevant audit (other than with respect to,
or resulting from, (i) the occurrence of the maturity date of the RBL Facility
within one year from the date such opinion is delivered or (ii) any potential
inability to satisfy the Financial Covenants (as provided below) on a future
date or in a future period)), (ii) quarterly unaudited financial statements (for
each of the first 3 fiscal quarters of each fiscal year) within five Business
Days after the date on which such financial statements are required to be filed
with the SEC (after giving effect to any permitted extensions) (or, if such
financial statements are not required to be filed with the SEC, on or before the
date that is 60 days after the end of each such quarterly accounting period),
(iii) officers’ certificates and (iv) other information reasonably requested by
the RBL Agent;

 

·      beneficial ownership certification (only upon knowledge of changes
thereto);

 

·      notices of default, litigation, environmental matters and certain other
events;

 

·      maintenance of books and records; maintenance of existence; maintenance
of insurance; maintenance of properties

 

·      payment of taxes;

 

 

Term Sheet - RBL Facility

Exhibit B - Page 10

 

 

   

·      control agreements;

 

·      compliance with laws (including ERISA and environmental laws);

 

·      maintenance of property and insurance; payment of taxes; right of the RBL
Agent to inspect property and books and records (subject to frequency and cost
reimbursement limitations) (no more than once per year, unless an Event of
Default is ongoing);

 

·      use of proceeds;

 

·      reserve reports, lease operating statements, and hedge schedules; title
information (as described above); supplemental mortgages (if necessary, with
each scheduled redetermination);

 

·      designation of Unrestricted Subsidiaries;

 

·      further assurances on guaranty and Collateral matters (including, without
limitation, with respect to additional guarantors, guarantees and security
interests in after-acquired property), subject to the parameters set forth under
“Collateral” above; and

 

·      minimum required hedging of the Borrower and its Restricted Subsidiaries
attributable to PDP reserves for each of (i) crude oil and (ii) natural gas
liquids and natural gas (taken together), with each of (i) and (ii) calculated
separately as follows: (A) 80% from the Closing Date to the 24th month after the
Closing Date; (B) 65% for the 25th month after the Closing Date to the 36th
month after the Closing Date and (C) 50% for the 37th to the 48th month after
the Closing Date; provided, that, if the Borrower reasonably determines that,
after working in good faith with the applicable counterparties, the RBL Lenders
(and their affiliates) have insufficient aggregate capacity or are unwilling or
otherwise fail or refuse to enter into hedge agreements with one or more Loan
Parties on commercially reasonable terms consistent with terms available to
other similarly situated borrowers, then the minimum hedging requirements shall
be reduced solely to the extent necessary to reflect the maximum volumes for
which the RBL Lenders (and their respective affiliates) have insufficient
aggregate capacity, willingness or otherwise fail or refuse to enter into such
hedge agreements.

    The foregoing affirmative covenants shall apply to the Borrower and its
Restricted Subsidiaries.

 

Term Sheet - RBL Facility

Exhibit B - Page 11

 

 

Financial Covenants:

Limited to (i) First Lien Leverage Ratio, (ii) Total Leverage Ratio,
(iii) Current Ratio and (iv) Secured Debt Coverage Ratio, measured for the
Borrower and the Loan Parties.

 

 

The “First Lien Leverage Ratio” shall be no more than 2.75 to 1.00 and will be
defined as the ratio of (a) consolidated debt that is secured on a
first-priority basis by all or any portion of the Collateral (including the
Credit Facilities Total Outstandings), net of unrestricted cash and cash
equivalents held in a pledged account in an amount not to exceed $100 million
(the “Unrestricted Cash Amount”) to (b) Consolidated EBITDAX (subject to the
last paragraph of this Section).

 

The “Total Leverage Ratio” shall be no more than 3.50 to 1.00 and will be
defined as the ratio of (a) Consolidated Indebtedness (defined in a manner
consistent with the Documentation Principles) net of the Unrestricted Cash
Amount to (b) Consolidated EBITDAX (subject to the last paragraph of this
Section).

 

The “Current Ratio” shall be no less than 1.00 to 1.00 and will be defined as
the ratio of consolidated current assets of the Borrower and its Restricted
Subsidiaries (including the unused amount of the RBL Tranche A Commitments as of
such date, but excluding non-cash assets under FAS 133 or ASC 815) to
(b) consolidated current liabilities of the Borrower and its Restricted
Subsidiaries as of such date (excluding (i) non-cash obligations under FAS 133
(or ASC 815), (ii) current maturities under the Credit Facilities and other
current maturities of long-term indebtedness and (iii) such other exclusions as
shall be reasonably agreed to in the RBL Credit Documentation).

 

The “Secured Debt Coverage Ratio” shall be no less than 1.50 to 1.00 and will be
defined as the ratio of Total PDP PV-10 to total consolidated debt that is
secured (including the Credit Facilities Total Outstandings and any other
secured debt).

 

 

The Financial Covenants shall be tested as of the last day of each fiscal
quarter of the Borrower (beginning with the first full fiscal quarter to occur
after the Closing Date); provided, that the Secured Debt Coverage Ratio shall be
measured semi-annually contemporaneously with the delivery of the Reserve Report
(beginning with the first Reserve Report delivered after the Closing Date).

 

For purposes of the RBL Credit Documentation, “Consolidated EBITDAX” (and
component definitions, including, without limitation, Consolidated Net Income)
will be defined subject to the Documentation Principles, and will include
certain addbacks, including, without limitation, addbacks for costs and expenses
related to the implementation of fresh start accounting and costs and expenses
incurred in connection with restructuring activities (including the
Restructuring Transactions).

 

Term Sheet - RBL Facility

Exhibit B - Page 12

 

 

 

“Specified Quarter” shall mean the fourth fiscal quarter of 2020 based on actual
numbers to the extent the testing date is in 2021 and, to the extent the testing
date is in 2020 based on actual numbers for such portion of the fiscal quarter
prior to the Closing Date, and based on reasonable pro forma projections for
such portion of the fiscal quarter after the Closing Date.

 

“Consolidated EBITDAX” shall be calculated on a building annualized basis so
that (i) for a testing date in 2020 or a testing date in the first fiscal
quarter of 2021 (up to but not including the last day of the first fiscal
quarter of 2021), Consolidated EBITDAX for such quarter shall be calculated by
multiplying Consolidated EBITDAX for the Specified Quarter by four, (ii) for a
testing date on the last day of the first fiscal quarter of 2021 or the second
fiscal quarter of 2021 (up to but not including the last of the second fiscal
quarter of 2021), Consolidated EBITDAX for such quarter shall be calculated by
multiplying Consolidated EBITDAX for the first fiscal quarter of 2021 by four,
(iii) for a testing date on the last day of the second fiscal quarter or in the
third fiscal quarter of 2021 (up to but not including the last day of the third
fiscal quarter), Consolidated EBITDAX for the such quarter shall be calculated
by multiplying Consolidated EBITDAX for the first two fiscal quarters in 2021 by
two and (iv) for a testing date on the last day of the third fiscal quarter of
2021 or the fourth fiscal quarter of 2021 (up to but not including the last day
of the fourth fiscal quarter), the first three fiscal quarters of 2021
multiplied by four divided by three or (b) for a testing date on any date
thereafter, Consolidated EBITDAX for the immediately preceding four fiscal
quarter period.

 

Negative Covenants:

Subject to the Documentation Principles, to be substantially the same as the
Prepetition Credit Agreement to be limited to:

 

 

(a)    indebtedness (including guarantee obligations in respect of
indebtedness), with exceptions for, among other things,

 

 

(i)            purchase money indebtedness and capital leases;  

 

 

(ii)           a general incurrence-based debt basket for Specified Additional
Debt subject to (a) pro forma compliance with the Financial Covenants, (b) no
Default or Event of Default and (c) a Total Leverage Ratio no greater than 3.00
to 1.00;

 

(iii)          the Exit FLLO Term Loan Facility or any permitted refinancing or
permitted replacements thereof; and

 

(iii)          a general debt basket in an amount to be agreed;

 

Term Sheet - RBL Facility

Exhibit B - Page 13

 

 

  (b)   liens, including a general lien basket in an amount to be agreed, liens
attaching to Specified Additional Debt (as provided above) and liens securing
the Exit FLLO Term Loan Facility or any last out or junior liens securing any
permitted refinancing or permitted replacements thereof;   (c)   mergers,
consolidations, liquidations and dissolutions;   (d)   sales, dispositions or
transfers of assets;   (e)   dividends or distributions on, return of capital,
payment or delivery of property or cash to equity holders, or redemptions,
retirement or repurchases of, or other restricted payments in respect of, the
equity interests of the Borrower or the other Loan Parties;  
(f)    acquisitions, investments, loans and advances and other investments;  
(g)   limitations on junior debt payments and amendments;   (h)   burdensome
agreements in respect of negative pledge clauses with respect to the Collateral;
  (i)    transactions with affiliates;   (j)    limitation on subsidiary
distributions;   (k)   changes in fiscal year;   (l)    amendments of
organizational documents of the Loan Parties and material contracts of the Loan
Parties, in each case, that are materially adverse to the RBL Lenders;  
(m)   use of proceeds;   (n)   sanctions; anti-corruption use of proceeds; and  
(o)   maximum permitted hedging of the Borrower and its Restricted Subsidiaries
attributable to PDP reserves for each of (i) crude oil and (ii) natural gas
liquids and natural gas (taken together), with each of (i) and (ii) calculated
separately as follows:  (A) 90% for each of the first two years; and (B) 80% for
the third year and thereafter.   The RBL Credit Documentation will contain
provisions pursuant to which, subject to customary limitations on investments in
Unrestricted Subsidiaries, the Borrower will be permitted to designate (or
re-designate) any existing or subsequently acquired or organized Restricted
Subsidiary as an “unrestricted subsidiary” (each, an “Unrestricted Subsidiary”)
and designate (or re-designate) any such Unrestricted Subsidiary as a Restricted
Subsidiary; provided, that after giving effect to any such designation or
re-designation, no default or Event of Default shall exist.  

 

Term Sheet - RBL Facility

Exhibit B - Page 14

 

 

Events of Default: Subject to the Documentation Principles, to be substantially
the same as the Prepetition Credit Agreement (including materiality thresholds,
exceptions and grace periods) and to be limited to: nonpayment of principal when
due; nonpayment of interest or regularly scheduled fees; nonpayment of other
amounts after five days; material inaccuracy of a representation or warranty
when made; violation of a covenant (with certain covenants subject to a 30 day
grace period); cross-default to material indebtedness in excess of an amount to
be reasonably agreed; bankruptcy events with respect to the Borrower or a
material Restricted Subsidiary; certain ERISA events; unpaid, final judgments
involving a liability in excess of an amount to be reasonably agreed that have
not been vacated, discharged, stayed or bonded pending appeal within 60 days
from the entry thereof; actual (or assertion by a Loan Party in writing) of the
invalidity of any guarantee or any material security document; and a change of
control (consistent with the Prepetition Credit Agreement but giving effect to
certain “permitted holder” modifications).   Voting: Amendments and waivers of
the RBL Credit Documentation will require the approval of RBL Lenders that are
non-defaulting RBL Lenders holding more than 50% of the aggregate amount of the
RBL Loans and the RBL Tranche A Commitments (the “Majority RBL Lenders”), except
that:   (a)   the consent of each RBL Lender directly and adversely affected
thereby (but not the Majority RBL Lenders) shall be required with respect to:  
(i)     reductions in the principal amount of any RBL Loan owed to such RBL
Lender or any scheduled amortization payment thereon,   (ii)   extensions of the
final maturity of any RBL Loan owed to such RBL Lender or any scheduled
amortization payment thereon or the due date of any interest or fee payment owed
to such RBL Lender (in each case other than any extension for administrative
convenience),   (iii)  reductions in the rate of interest (other than a waiver
of default interest) or the amount of any fees owed to such RBL Lender (it being
understood that any change in the definitions of any ratio used in the
calculation of such rate of interest or fees (or the component definitions)
shall not constitute a reduction in any rate of interest or fees),

 

Term Sheet - RBL Facility

Exhibit B - Page 15

 

 

  (iv)  increases in the amount of such RBL Lender’s RBL Loans or RBL Tranche A
Commitment (it being understood that a waiver of any condition precedent or the
waiver of any default, event of default or mandatory prepayment shall not
constitute an increase of any RBL Loan or RBL Tranche A Commitment of any RBL
Lender), and   (v)   extensions of the expiry date of such RBL Lender’s RBL
Tranche A Commitment (it being understood that a waiver of any condition
precedent or the waiver of any default, event of default or mandatory prepayment
shall not constitute an extension of any commitment of any RBL Lender, which
shall only require a Majority RBL Lender vote).   (b)   the consent of 66.67%
(calculated as provided above) of the Tranche A RBL Lenders (other than
Non-Participating Lenders (as such term is defined in the DIP Credit Agreement)
and any affiliates thereof (the “Non-Participating Lenders”)) (the “Required RBL
Lenders”) shall be required in the case of decreases in, or reaffirmations of,
the Borrowing Base (other than as set forth in the section titled “Borrowing
Base”);   (c)    the consent of 100% of the RBL Lenders shall be required with
respect to:   (i)    reductions of any of the voting percentages set forth in
the definition of “Majority RBL Lenders” or “Required RBL Lenders”,  
(ii)    releases of all or substantially all of the Collateral, and  

(iii)   releases of all or substantially all of the value of the Guaranty,(other
than, in the case of clauses (ii) and (iii) above, to the extent otherwise in
accordance with the RBL Credit Documentation).

 

(d)   the consent of 100% of the Tranche A RBL Lenders (excluding any
Non-Participating Lender) shall be required with respect to any increase in the
Borrowing Base (it being understood that any redetermination of the Borrower
Base may be extended or postponed with the consent of Majority Lenders).

 

Notwithstanding the foregoing, amendments and waivers of the Financial Covenants
(or any of financial definitions included in (and for purposes of) the Financial
Covenants) will require only the consent of the Majority RBL Lenders and no
other consents or approvals shall be required.

 

Term Sheet - RBL Facility

Exhibit B - Page 16

 

 

 

The RBL Credit Documentation shall contain provisions allowing the Borrower to
replace a RBL Lender in connection with amendments and waivers requiring the
consent of the Required RBL Lenders, all RBL Lenders or of all RBL Lenders
directly affected thereby (so long as the Majority RBL Lenders or a majority of
the relevant affected RBL Lenders, as the case may be, consent thereto),
increased costs, taxes, etc. and “defaulting” or insolvent RBL Lenders.

 

Any provision of the RBL Credit Documentation may be amended by an agreement in
writing signed by the RBL Agent and the Borrower to cure any immaterial
ambiguity, omission, defect or inconsistency.

 

Defaulting Lenders:

The RBL Credit Documentation shall contain customary limitations on and
protections with respect to “defaulting” RBL Lenders (including provisions
relating to cash collateral requirements for such RBL Lender; reallocation of
participations in, or the Borrower providing cash collateral to support Letters
of Credit; suspension of voting rights and rights to receive certain fee and
other payments; termination or assignment of the commitments or RBL Loans of
such defaulting RBL Lender and any RBL Lender subject to customary “EU Bail-In”
provisions). Defaulting RBL Lenders will not be entitled to receive commitment
or Letter of Credit fees.

 

Assignments and Participations: The RBL Lenders shall be permitted to assign all
or a portion of their RBL Loans and RBL Tranche A Commitments with the consent
of (a) the Borrower (such consent not to be unreasonably withheld), unless an
event of default has occurred and is continuing or such assignment is to a RBL
Lender, an affiliate of a RBL Lender or an Approved Fund (as defined below) (but
if in respect of the RBL Facility, only to another RBL Lender under the RBL
Facility); provided that the Borrower shall be deemed to have consented to any
assignment unless it shall have objected thereto by written notice to the RBL
Agent within 10 business days after having received written notice thereof,
(b) the RBL Agent (not to be unreasonably withheld), and (c) each Issuing Lender
(not to be unreasonably withheld).  In the case of partial assignments (other
than to another RBL Lender, an affiliate of a RBL Lender or an Approved Fund),
the minimum assignment amount shall be $15 million (and $1 million increments
above such amount) unless otherwise agreed by the Borrower and the RBL Agent
(or, in each case, if less, all of the relevant RBL Lender’s remaining loans and
commitments of the applicable class).  The RBL Agent shall receive a processing
and recordation fee of $3,500 (which fee may be waived or reduced in the sole
discretion of the RBL Agent) in connection with all assignments.  

 

Term Sheet - RBL Facility

Exhibit B - Page 17

 

 

 

“Approved Fund” means, with respect to any RBL Lender, any person (other than a
natural person) that is engaged in making, purchasing, holding or otherwise
investing in commercial loans and similar extensions of credit in the ordinary
course of its activities and is administered, advised or managed by (i) such RBL
Lender, (ii) an affiliate of such RBL Lender or (iii) an entity or an affiliate
of an entity that administers, advises or manages such RBL Lender.

 

 

Pledges of RBL Loans in accordance with applicable law shall be permitted
without restriction.

 

Yield Protection and Taxes:

The RBL Credit Documentation shall contain customary provisions (a) protecting
the RBL Lenders against increased costs or loss of yield resulting from changes
in reserve, capital adequacy and other requirements of law and (b) indemnifying
the RBL Lenders for “breakage costs” incurred in connection with, among other
things, any prepayment of a RBL Eurodollar Loan on a day other than the last day
of an interest period with respect thereto.  The RBL Credit Documentation shall
contain a customary tax gross up.  

 

Expenses and Indemnification: The Borrower shall pay (a) all reasonable and
documented out-of-pocket expenses (and with respect to legal expenses, limited
to reasonable fees, disbursements and other charges of one primary outside
counsel, and if necessary, of a single firm of local outside counsel in each
material jurisdiction for all persons, taken as  whole (unless there is an
actual or perceived conflict of interest in which case all such similarly
situated persons, taken as a whole, may retain an outside counsel upon written
notice to the Borrower and RBL Agent), in each case, to the RBL Agent) of the
RBL Agent and the RBL Lead Arranger incurred on or after the Closing Date within
ten (10) days after written demand thereof associated with the syndication of
the RBL Facility and the preparation, execution, delivery and administration of
the RBL Credit Documentation and any amendment or waiver with respect thereto
and (b) all reasonable out-of-pocket expenses of the RBL Agent and the RBL
Lenders within ten (10) days after written demand thereof in connection with the
enforcement of the RBL Credit Documentation.

 

Term Sheet - RBL Facility

Exhibit B - Page 18

 

 

 

The RBL Agent, the RBL Lead Arranger and the RBL Lenders (and their affiliates
and their respective officers, directors, employees, agents, advisors and other
representatives) (each, an “indemnified person”) will be indemnified for and
held harmless against, any losses, claims, damages and liabilities (it being
understood that any such losses, claims, damages or liabilities that consist of
legal fees and/or expenses shall be limited to the actual reasonable and
documented out-of-pocket fees, disbursements and other charges of one counsel to
all indemnified persons taken as a whole and, solely in the case of a conflict
of interest, one additional counsel to all affected indemnified persons taken as
a whole, and, if reasonably necessary, one local counsel in any relevant
material jurisdiction to all indemnified persons, taken as a whole and, solely
in the case of an actual or reasonably perceived conflict of interest, one
additional local counsel to all affected indemnified persons, taken as a whole,
in each case incurred in connection with investigating or defending any claim,
litigation or proceeding relating to the RBL Facility or the use or the proposed
use thereof) incurred in respect of the RBL Facility or the use or the proposed
use of proceeds thereof, except to the extent they arise from the gross
negligence or willful misconduct of the RBL Credit Documentation by, such
indemnified person, in each case as determined by a final, non-appealable
judgment of a court of competent jurisdiction or any dispute solely among the
indemnified persons (other than any claims against an indemnified person in its
capacity as the RBL Agent or RBL Lead Arranger) and not arising out of any act
or omission of the Borrower, or any of its subsidiaries.  None of the
indemnified persons, the Borrower, any subsidiary of the Borrower or any
affiliates or directors, officers, employees, agents, advisors or other
representatives of any of the foregoing shall be liable for any special,
indirect, consequential or punitive damages in connection with the RBL Facility
(including the use or intended use of the proceeds of the RBL Facility);
provided that the foregoing shall not limit the indemnification obligations in
the immediately preceding sentence to the extent including in any third party
claim in connection with which such indemnified person is entitled to
indemnification hereunder.  Notwithstanding the foregoing, each indemnified
person shall be obligated to refund and return any and all amounts paid by the
Borrower to such indemnified person for fees, expenses or damages to the extent
such indemnified person is not entitled to payment of such amounts in accordance
with the terms hereof.

 

   Governing Law and Forum:

New York.

 

Counsel to the RBL Agent and

the RBL Lead Arranger:

 

 

Sidley Austin LLP.

 

 

Term Sheet - RBL Facility

Exhibit B - Page 19

 

 

EXHIBIT C

 

First Lien Last Out Term Loan Facility

Summary of Terms and Conditions

 

Set forth below is a summary of the principal terms and conditions for the FLLO
Term Loan Facility. Capitalized terms used but not otherwise defined herein
shall have the meanings assigned to such terms in the Commitment Letter to which
this Exhibit C is attached or on Exhibits B or D (including the Annexes hereto
and thereto) attached thereto; provided, that in the event any such capitalized
term is subject to multiple and differing definitions, the appropriate meaning
shall be determined by reference to the context in which it is used.

 

PARTIES   Borrower: Chesapeake Energy Corporation. Guarantors: All obligations
of the Borrower under the FLLO Term Loan Facility will be unconditionally
guaranteed on a senior basis by the same Guarantors that guarantee the RBL
Facility. Lead Arranger and Bookrunner: MUFG Union Bank, N.A. will act as lead
arranger and bookrunner for the FLLO Term Loan Facility (in such capacity, the
“FLLO Lead Arranger”). Joint Lead Arrangers and Joint Bookrunners Bank of
America, N.A., BMO Capital Markets Corp., Wells Fargo Securities, LLC, Citibank,
N.A., JPMorgan Chase Bank, N.A., and Royal Bank of Canada will act as joint lead
arrangers and joint bookrunners for the FLLO Term Loan Facility. FLLO Term Loan
Administrative Agent and Collateral Agent:   MUFG Union Bank, N.A. or an
affiliate thereof will act as the sole and exclusive administrative agent and
collateral agent for the FLLO Term Lenders referred to below (in such
capacities, the “FLLO Term Loan Agent” and, together with the RBL Agent, the
“Agents”). FLLO Term Lenders: Holders of DIP Claims (as defined in the
Restructuring Support Agreement) (collectively, and together with any person
that becomes a lender by assignment as set forth under the heading “Assignments
and Participations” below, the “FLLO Term Lenders”).

 

Term Sheet – FLLO Term Loan Facility
Exhibit C – Page 1

 

 

TYPE AND AMOUNT OF FLLO TERM LOAN FACILITY Type and Amount: A 5-year first lien
last out term loan facility (the “FLLO Term Loan Facility”) in an aggregate
principal amount of $750 million (the loans thereunder, the “FLLO Term Loans”
and, together with the RBL Loans, the “Loans”). Amortization: Commencing the
first full quarter following the Closing Date, quarterly amortization of
principal in equal installments of 0.25% of the funded FLLO Term Loan amounts.
Maturity: The FLLO Term Loans will mature on the date which is 5 years following
the Closing Date (the “FLLO Term Loan Maturity Date”). Availability: The FLLO
Term Loans shall be made in a single drawing on the Closing Date.  Repayments
and prepayments of the FLLO Term Loans may not be reborrowed. Use of Proceeds:
Same as the RBL Facility. CERTAIN PAYMENT PROVISIONS Interest Rates and Fees: As
set forth on Annex I hereto. Optional Prepayments:

The FLLO Term Loans will be non-callable until the second anniversary of the
Closing Date (provided that the FLLO Term Loans may be repaid without premium or
penalty within 90 days of the Closing Date to the extent that, at the time of
such repayment, at least 50.1% of the FLLO Term Loans are held by the initial
holders thereof). Thereafter, and to the extent permitted by the RBL Credit
Documentation, FLLO Term Loans may be prepaid, in whole or in part, without
premium or penalty (except as set forth under the heading “FLLO Term Loan
Prepayment Fee” below), in minimum amounts to be agreed, at the option of the
Borrower at any time upon 1 business days (or, in the case of a prepayment of
Eurodollar Loans, 3 business days’) prior notice, subject to reimbursement of
the FLLO Term Lenders’ redeployment costs in the case of a prepayment of
Eurodollar Loans prior to the last day of the relevant interest period.

 

FLLO Term Loan Prepayment Fee:

Any (a)  optional prepayment of the FLLO Term Loans and (b) mandatory prepayment
of the FLLO Term Loans with the proceeds of indebtedness that is not permitted
by the Credit Documentation (any transaction described in clauses (a) through
(b) above, a “Subject Prepayment Transaction”) will be subject to a customary
make-whole (discounted at the applicable adjusted treasury rate plus 50 basis
points) if made prior to the second anniversary of the Closing Date and
thereafter subject to the following prepayment premiums (expressed as a
percentage of the outstanding principal amount of the FLLO Term Loans prepaid)
as set forth opposite the relevant period from the Closing Date as indicated
below:

 

Year

 

Year 3:

 

Year 4:

 

Thereafter:

Call Premium

 

6.00%

 

3.00%

 

0.00%

 

Term Sheet – FLLO Term Loan Facility
Exhibit C – Page 2

 

 

Mandatory Prepayments:

Prior to the repayment in full and termination of the RBL Facility (and any
permitted refinancing thereof), the Borrower shall prepay the FLLO Term Loans
with 100% of the net proceeds from the incurrence of junior debt permitted under
the Credit Documentation.

 

Following the repayment in full and termination of the RBL Facility, the
Borrower shall make the following mandatory prepayments:

 

(a)    100% of net proceeds of certain non-ordinary course sales or other
dispositions of Collateral (including as a result of casualty or condemnation)
by the Loan Parties subject to a 365 day reinvestment right period (which may be
extended by an additional 180 days as long as a binding commitment for such
reinvestment has been entered into within such 365 day-period); and

 

(b)    On a quarterly basis, any excess cash flow (to be defined in a manner to
be agreed), such that (and only to the extent) after giving pro forma effect to
the prepayment of the loans in such amount, (x) the Total PDP PV-10 to (y) the
Consolidated Indebtedness net of the Unrestricted Cash Amount would be equal to
2.00 to 1.00.

 

For the avoidance of doubt, all such mandatory prepayments shall be made at par.

 

COLLATERAL The Borrower obligations under the FLLO Term Loan Facility and each
other Loan Party’s obligations under the Guaranty shall be secured on a
first-lien basis (but with a right to repayment that is junior to the rights of
the RBL Facility at all times) by the same Collateral securing the RBL Facility
subject to the provisions of the Collateral Trust Agreement.  

 

Term Sheet – FLLO Term Loan Facility
Exhibit C – Page 3

 

 

 

The first lien pledges, security interest and mortgages on the Collateral shall
be created and perfected on terms, and pursuant to the same collateral
documentation that will be the Credit Documentation, in each case, subject to
the Collateral Trust Agreement.

 

The Collateral Trust Agreement shall provide for the automatic release of any
Guaranty or Collateral under the FLLO Term Loan Facility to the extent the
corresponding guarantor and collateral is released under the RBL Credit
Facility.

 

DOCUMENTATION   FLLO Term Loan Credit Documentation: The definitive financing
documentation for the FLLO Term Loan Facility will be the “FLLO Term Loan Credit
Documentation” (together with the RBL Credit Documentation, the “Credit
Documentation”), which will be drafted by the counsel to the FLLO Term Loan
Agent, shall, contain the terms and conditions set forth in the Commitment
Letter and such other terms as the Borrower and the FLLO Lead Arrangers shall
agreement; it being understood and agreed that the FLLO Term Loan Credit
Documentation shall be based on and consistent with the RBL Credit
Documentation; provided, that, any extensions of time periods for the delivery
of collateral, guarantees or reserve or title reporting provided by the RBL
Agent or RBL Lenders shall automatically apply to the corresponding requirement
under the FLLO Term Loan Credit Documentation. The principles described under
this section entitled “FLLO Term Loan Credit Documentation” shall be referred to
as the “FLLO Documentation Principles”. Closing Conditions: As set forth on
Exhibit D. Representations and Warranties: Subject to the FLLO Documentation
Principles, the representations and warranties shall be substantially similar to
(and limited to) those representations and warranties contained in the RBL
Credit Documentation. Affirmative Covenants: Subject to the FLLO Documentation
Principles, the affirmative covenants shall be substantially similar to (and
limited to) those affirmative covenants contained in the RBL Credit
Documentation. Financial Covenants: Same (and limited to) financial covenants as
those financial covenants contained in the RBL Credit Documentation.

 

Term Sheet – FLLO Term Loan Facility
Exhibit C – Page 4

 

 

Negative Covenants: Subject to the FLLO Documentation Principles, the negative
covenants shall be substantially similar to (and limited to) those negative
covenants contained in the RBL Credit Documentation. Events of Default: Subject
to the FLLO Documentation Principles, the events of default shall be
substantially similar to (and limited to) the events of default contained in the
RBL Credit Documentation, provided, however, that the FLLO Term Loan Credit
Documentation shall contain notice provisions, thresholds, and grace and cure
periods consistent with customary high yield bond indentures. Voting: The FLLO
Term Loan Credit Documentation will contain provisions for amendments, waivers
and other modifications substantially similar to such provisions contained in
the RBL Credit Documentation and to include customary affiliate voting
provisions. Defaulting Lenders: The FLLO Term Loan Credit Documentation shall
contain customary limitations on and protections with respect to “defaulting”
FLLO Term Lenders. Assignments and Participations: The FLLO Term Loan Credit
Documentation will contain provisions for assignments of and participations in
the FLLO Term Loans substantially similar to the provisions for assignments of
and participations in the loans contained in the RBL Credit Documentation
modified to reflect the term loan nature of the FLLO Term Loans. Yield
Protection and Taxes: The FLLO Term Loan Credit Documentation will contain yield
protection and tax provisions substantially similar to those contained in the
RBL Credit Documentation. Expenses and Indemnification: The FLLO Term Loan
Credit Documentation will contain provisions for expense reimbursement and
indemnification substantially similar to those provisions for expense
reimbursement and indemnification contained in the RBL Credit Documentation,
provided that expense reimbursement and indemnitees shall only be available
under the FLLO Term Loan Credit Documentation for the Agents and Arrangers (and
their respective affiliates). Governing Law and Forum: New York. Counsel to the
FLLO Term Loan Agent: Sidley Austin LLP.

 

Term Sheet – FLLO Term Loan Facility
Exhibit C – Page 5

 

 

EXHIBIT D

 

Conditions Precedent

 

The availability and initial funding of the Exit RBL Facility and the Exit FLLO
Term Loan Facility (collectively, the “Credit Facilities” and each a “Credit
Facility”) shall be subject to the satisfaction (or waiver) of solely the
following conditions. Capitalized terms used but not otherwise defined herein
have the meanings assigned to such terms in the Commitment Letter to which this
Exhibit D is attached (including by reference to the Restructuring Support
Agreement) or on Exhibits B or C (including the Annexes thereto) attached
thereto; provided, that in the event any such capitalized term is subject to
multiple and differing definitions, the appropriate meaning shall be determined
by reference to the context in which it is used.

 

1.Each of the Loan Parties shall have executed and delivered the relevant Credit
Documentation to which it is a party, which shall, in each case, be
substantially consistent with the terms of the term sheets set forth Exhibits B
and C to the satisfaction of the Commitment Parties and the Borrower, including
all documents and instruments required to create and perfect the security
interests in the Collateral, and the Lead Arranger and the Agents shall have
received: customary closing and secretary’s certificates, borrowing notices and
legal opinions (including legal opinions of local counsel in each material
relevant jurisdiction), corporate documents (including organizational documents
and certificates of authorization and/or good standing in each jurisdiction
where material Borrowing Base Properties) are located and resolutions; a
certificate of the chief financial officer (or other officer with reasonably
equivalent responsibilities) of the Borrower in the form attached as Annex I
hereto, certifying that the Borrower and its subsidiaries, on a consolidated
basis, after giving effect to the Restructuring Transactions, are solvent; and
such other documents and instruments as are customary for transactions of this
type (including evidence of insurance and customary lien and judgment searches
reflecting the absence of liens and security interests other than those being
released on or prior to the Closing Date, or which are otherwise permitted under
the Credit Documentation).

 

2.The representations in the Credit Documentation shall be true and correct in
all material respects (except in the case of any such representation which
expressly relates to a given date or period, such representation and warranty
shall be true and correct in all material respects as of the respective date or
for the respective period, as the case may be).

 

3.The Restructuring shall be consummated substantially concurrently with the
initial funding of the Credit Facilities on Closing Date.

 

4.The Agents shall have received a certificate of a responsible officer of the
Borrower certifying (a) that the Borrower and its restricted subsidiaries have
received all material third-party and governmental consents and approvals
required by the terms of the Credit Documentation, (b) as to other customary
matters in connection with the Closing Date, and (c) since the Petition Date,
there has not been any material adverse change in, or material adverse effect on
the business, operations, property, liabilities (actual or contingent) or
condition (financial or otherwise) of the Loan Parties, taken as a whole, other
than any change, event or occurrence, arising individually or in the aggregate,
from events that could reasonably be expected to result from the filing or
commencement of the Chapter 11 Cases (as defined in the Restructuring Support
Agreement) or the announcement of the filing or commencement of the Chapter 11
Cases.

 

Conditions Precedent
Exhibit D – Page 1

 

 

5.The Agents shall have received (a) audited consolidated financial statements
of the Borrower for the fiscal year ended December 31, 2019 and unaudited
consolidated financial statements of the Borrower for each fiscal quarter
thereafter ending at least 60 days prior to the Closing Date, (it being agreed
and understood that the financial statements described in this clause (a) have
been received by the Agents and the condition described in this clause (a) has
been satisfied with respect to the fiscal year of the Borrower ended December
31, 2019, and fiscal quarter ended March 31, 2020), (b) a pro forma unaudited
consolidated balance sheet of the Borrower as of the Closing Date (based on the
unaudited consolidated balance sheet of the Borrower as of the most recently
ended calendar month ended at least 30 calendar days before the Closing Date),
after giving effect to the making of the initial extensions of credit under the
Credit Facilities, the application of the proceeds thereof and to the other
transactions contemplated to occur on the Closing Date, certified by the
Borrower’s chief financial officer, which shall reflect no indebtedness other
than the Loans made by the Lenders under each of the Credit Facilities, as
applicable, on the Closing Date and other indebtedness permitted by the Credit
Documentation (excluding any Specified Additional Debt), (c) at least 30 days
prior to the Closing Date (or such later date as the RBL Agent may agree in its
sole discretion), a reserve report, with an as of date within 150 days of the
contemplated Plan Effective Date, prepared by an Approved Petroleum Engineer (as
defined in the RBL Facility Term Sheet) covering the Borrowing Base Properties
(the “Initial Reserve Report”) as to at least 80% by volumes of the Borrowing
Base Properties covered thereby, with the balance prepared by or under the
supervision of the Borrower’s chief engineer, (d) lease operating statements and
production reports with respect to the oil and gas properties evaluated in the
Initial Reserve Report for each fiscal quarter ended since the Petition Date and
ending at least 60 days prior to the Closing Date and, to the extent that the
Closing Date occurs on or after the day that is 60 days after the fiscal year
ended December 31, 2020, for the fiscal year ended December 31, 2020 and (e)
such other customary financial Projections in respect of the Borrower and its
subsidiaries as the Lead Arranger may reasonably request in connection with the
arrangement and syndication of the Exit FLLO Term Loan Facility to the extent so
requested no later than 30 days prior to the Marketing Period Commencement Date
(determined prior to giving effect to this clause (e)). The information required
to be delivered pursuant to this paragraph 5 is referred to herein as the
“Required Bank Information”.

 

6.All actions necessary to establish that each Agent will have a perfected first
priority security interest in the Collateral as required by the Credit
Documentation shall have been taken, including delivery of an appropriate number
of counterparts for filing in all relevant jurisdictions of all documents and
instruments necessary to grant the Collateral Agent a perfected security
interest (subject to liens permitted under the relevant Credit Documentation) in
the Collateral under the Credit Facilities shall have been delivered; provided,
however, to the extent the Borrower and Guarantors are unable to (i) execute and
deliver control agreements in connection with deposit accounts, commodities
accounts or securities accounts or (ii) deliver insurance endorsements after the
use of commercially reasonable efforts, the Borrower and the Guarantors shall
have a 10 business day post-closing period (or such longer period as the RBL
Agent may reasonably agree) to deliver such items in clause (i) and (ii).

 

7.The Borrower shall have delivered satisfactory title information with respect
to 85% of the PV-10 value of the Borrowing Base Properties evaluated in the
Initial Reserve Report; provided, however, to the extent the Borrower is unable
to deliver such title after the use of commercially reasonable efforts, the
Borrower shall have a 30 day post-closing period (or such longer period as the
RBL Agent may reasonably agree) to deliver such title. .

 

Conditions Precedent
Exhibit D – Page 2

 

 

8.All (a) fees required to be paid on the Closing Date pursuant to the Fee
Letters and (b) expenses required to be paid on the Closing Date pursuant to the
Commitment Letter to the extent invoiced at least 3 business days prior to the
Closing Date (the “Invoice Date”), shall, in each case, substantially
concurrently with the initial borrowings have been paid (which amounts may be
offset against the proceeds of the Credit Facilities).

 

9.The Agent and Commitment Parties shall have received, at least five (5)
business days prior to the Closing Date, all documentation and other information
required by regulatory authorities with respect to the Loan Parties under
applicable “know your customer” and anti-money laundering rules and regulations,
including, without limitation, the PATRIOT Act, that has been reasonably
requested by the Commitment Parties at least 10 business days in advance of the
Closing Date.

 

10.To the extent the Exit FLLO Term Loan Facility is to be funded on the Closing
Date, the Lead Arranger shall have been afforded a period (the “Marketing
Period”) of at least 15 consecutive business days (ending no later than the
business day immediately prior to the Closing Date) upon receipt of the Required
Bank Information (such date, the “Marketing Period Commencement Date”) (provided
that the provision of any information as required under paragraph 5 above shall
not “restart” the Marketing Period once the Marketing Period has otherwise
begun) to syndicate the Exit FLLO Term Loan Facility.

 

11.The Plan (as defined in the Restructuring Support Agreement), the order
entered by the Bankruptcy Court confirming the Plan (the “Confirmation Order”),
and any related order of the Bankruptcy Court (and any amendments or
modifications to any of the foregoing) shall be consistent with the
Restructuring Support Agreement (other than any changes to the terms described
therein that would not reasonably be expected to adversely affect the interests
of the Agents, the RBL Lenders or the FLLO Term Lenders in any material respect)
and be in substance reasonably satisfactory to the Agents and shall provide for
approval of the Credit Facilities and contain customary releases and
exculpations, in each case that are reasonably acceptable to the Agents.

 

12.The Confirmation Order shall be in full force and effect and shall not have
been reversed, stayed, modified or amended, and shall not be subject to any
pending appeals other than appeals the result of which would not have a
materially adverse effect on the rights and interests of the Agents, the RBL
Lenders or the FLLO Term Lenders.

 

13.The Plan Effective Date (as defined in the Restructuring Support Agreement)
shall have occurred, all conditions precedent to the confirmation and
effectiveness of the Plan, as set forth in the Plan (other than the
effectiveness of the Credit Facilities, which shall occur contemporaneously with
the Plan Effective Date), shall have been fulfilled or waived as permitted
therein, including, without limitation, all transactions contemplated in the
Plan or in the Confirmation Order to occur on the Plan Effective Date shall have
been substantially consummated in accordance with the terms thereof and in
compliance with applicable law, Bankruptcy Court and regulatory approvals.

 

14.The Agents shall have received satisfactory evidence as to the payment in
full on the Plan Effective Date of all material administrative expense claims,
priority claims and other claims (including professional and transaction fees)
required to be paid upon the Plan Effective Date.

 

15.The lenders under the Prepetition Credit Facility shall receive the treatment
outlined in the Exit RBL Facility Term Sheet, the Exit FLLO Term Loan Facility
Term Sheet, the DIP Credit Agreement, the Restructuring Support Agreement, the
Restructuring Term Sheet, and the Plan, and the DIP Lenders shall receive the
treatment under the Restructuring Support Agreement, the Restructuring Term
Sheet, and the Plan and the commitments thereunder shall have been terminated,
and all security interests related thereto shall have either (a) been terminated
or (b) been amended and restated to secure the Borrower’s obligations under the
Credit Facilities, in either case concurrently with the Closing Date.

 

Conditions Precedent
Exhibit D – Page 3

 

 

16.Each of the Debtors shall have paid to the DIP Lenders holding DIP Loans all
other payments as provided for in any final orders entered in connection with
the DIP Credit Agreement and/or use of cash collateral, and the Plan, which
amounts shall be applied to the repayment of the DIP Obligations in accordance
with the Plan. The DIP Credit Agreement and the Restructuring Support Agreement
shall be in full force and effect and no default or event of default shall have
occurred and be continuing pursuant to the terms thereof.

 

17.After giving effect to the Restructuring Transactions, the pro forma Total
Leverage Ratio (calculated in accordance with the “Financial Covenants”
paragraph of the Exit RBL Facility Term Sheet, including the last paragraph
thereof) is no greater than 2.25 to 1.00, and the RBL Agent shall have received
a certificate from a financial officer of the Borrower stating the same.

 

18.After giving effect to the Restructuring Transactions, the ratio of (x)
Credit Facilities Total Outstandings and any other secured debt of the Borrower
as of the Closing Date to (y) Total PDP PV-10 measured on a pro forma basis, is
no less than 1.50 to 1.00, and the RBL Agent shall have received a certificate
from a financial officer of the Borrower stating the same.

 

19.The RBL Agent shall have received a certificate from a financial officer of
the Borrower, dated as of the Closing Date, certifying that (i) the Borrower has
received cash equity contributions in an aggregate amount no less than $600
million pursuant to the Backstop Commitment Agreement (as defined in the
Restructuring Support Agreement), (ii) after giving effect to the Restructuring
Transactions, the RBL Total Outstandings shall be no greater than $1,250 million
and (iii) after giving effect to the Restructuring Transactions, minimum
liquidity (to include unrestricted cash on hand and availability under the Exit
RBL Facility) of the Borrower and the Restricted Subsidiaries shall be no less
than $500 million.

 

Conditions Precedent
Exhibit D – Page 4

 

 

 

Annex I to Exhibit D

 

Form of Solvency Certificate

[•][•], 20[•]

 

This Solvency Certificate is being executed and delivered pursuant to
Section [•] of that certain [•] (the “Credit Agreement”; the terms defined
therein being used herein as therein defined).

 

I, [•], the [Chief Financial Officer/equivalent officer] of the Borrower, in
such capacity and not in an individual capacity, hereby certify as follows:

 

1.I am generally familiar with the businesses and assets of the Borrower and its
Restricted Subsidiaries, taken as a whole, and am duly authorized to execute
this Solvency Certificate on behalf of the Borrower pursuant to the Credit
Agreement; and

 

2.As of the date hereof and after giving effect to the Transactions and the
incurrence of the indebtedness and obligations being incurred in connection with
the Credit Agreement and the Transactions, that, (i) the sum of the debt
(including contingent liabilities) of the Borrower and its subsidiaries, taken
as a whole, does not exceed the fair value of the assets of the Borrower and its
subsidiaries, taken as a whole; (ii) the capital of the Borrower and its
subsidiaries, taken as a whole, is not unreasonably small in relation to the
business of the Borrower or its subsidiaries, taken as a whole, contemplated as
of the date hereof; and (iii) the Borrower and its subsidiaries, taken as a
whole, do not intend to incur, or believe that they will incur, debts (including
current obligations and contingent liabilities) beyond their ability to pay such
debts as they mature in the ordinary course of business. For the purposes
hereof, the amount of any contingent liability at any time shall be computed as
the amount that, in light of all of the facts and circumstances existing at such
time, represents the amount that can reasonably be expected to become an actual
or matured liability.

 

[Remainder of page intentionally left blank]

 

Conditions Precedent

Annex I to Exhibit D – Page 1

 

 

IN WITNESS WHEREOF, I have executed this Solvency Certificate on the date first
written above.

 

  By:     Name: [•]   Title: [Chief Financial Officer/equivalent officer]      
 

 

Conditions Precedent

Annex I to Exhibit D – Page 2

 

 

 

Exhibit 4

 

Backstop Commitment Agreement

 

 

 

 

Execution Version

 

 

 

BACKSTOP COMMITMENT AGREEMENT

 

AMONG

 

Chesapeake Energy Corporation

 

AND

 

THE BACKSTOP PARTIES PARTY HERETO

 

Dated as of June 28, 2020

 

 

 

 

 

 

TABLE OF CONTENTS

 

  Page     Article I DEFINITIONS 2 Section 1.1 Definitions 2 Section 1.2
Construction 14       Article II BACKSTOP COMMITMENT 15 Section 2.1 The Rights
Offering; Subscription Rights 15 Section 2.2 The Backstop Commitment 16
Section 2.3 Backstop Party Default 16 Section 2.4 Escrow Account Funding 18
Section 2.5 Closing 19 Section 2.6 Designation and Assignment Rights 19      
Article III PUT OPTION PREMIUM 22 Section 3.1 Put Option Premium Payable by the
Company 22 Section 3.2 Payment of Put Option Premium. 23       Article IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY 23 Section 4.1 Organization and
Qualification 23 Section 4.2 Corporate Power and Authority 25 Section 4.3
Execution and Delivery; Enforceability 25 Section 4.4 Authorized and Issued
Equity Interests 26 Section 4.5 No Conflicts. 26 Section 4.6 Consents and
Approvals 26 Section 4.7 Absence of Certain Changes 27 Section 4.8 No Violation;
Compliance with Laws 27 Section 4.9 Arm’s Length 27 Section 4.10 Financial
Statements 27 Section 4.11 SEC Documents 27 Section 4.12 No Undisclosed Material
Liabilities 27 Section 4.13 Legal Proceedings 28 Section 4.14 Labor Relations.
28 Section 4.15 Intellectual Property 29 Section 4.16 Title to Real and Personal
Property 29 Section 4.17 Licenses and Permits 30 Section 4.18 Environmental 30
Section 4.19 Tax Matters 31 Section 4.20 Company Plans 33 Section 4.21 Internal
Control Over Financial Reporting 34 Section 4.22 Disclosure Controls and
Procedures 34 Section 4.23 Material Contracts 34 Section 4.24 No Unlawful
Payments 35 Section 4.25 Compliance with Money Laundering Laws 35 Section 4.26
Compliance with Sanctions Laws 35 Section 4.27 No Broker’s Fees 36 Section 4.28
No Registration Rights 36

 

i

 

 

TABLE OF CONTENTS (cont’d)

 

    Page       Section 4.29 Takeover Statutes 36 Section 4.30 Insurance 36
Section 4.31 No Undisclosed Relationships 36 Section 4.32 Investment Company Act
36 Section 4.33 Disclosure Schedule, and Company SEC Document References 37    
  Article V REPRESENTATIONS AND WARRANTIES OF THE BACKSTOP PARTIES 37
Section 5.1 Organization 37 Section 5.2 Organizational Power and Authority 38
Section 5.3 Execution and Delivery 38 Section 5.4 No Conflict 38 Section 5.5
Consents and Approvals 38 Section 5.6 No Registration 38 Section 5.7 Purchasing
Intent 39 Section 5.8 Sophistication; Investigation 39 Section 5.9 No Broker’s
Fees 39 Section 5.10 Sufficient Funds 39       Article VI ADDITIONAL COVENANTS
39 Section 6.1 Conduct of Business 39 Section 6.2 Access to Information;
Confidentiality 41 Section 6.3 Financial Information. 42 Section 6.4
Commercially Reasonable Efforts 43 Section 6.5 Registration Rights Agreement;
Reorganized Chesapeake Organizational Documents. 43 Section 6.6 Blue Sky 44
Section 6.7 DTC Eligibility 44 Section 6.8 Use of Proceeds 45 Section 6.9 Share
Legend 45 Section 6.10 Antitrust Approvals 45 Section 6.11 Alternative
Restructuring Proposals 46 Section 6.12 Tax Treatment 47 Section 6.13 Expense
Reimbursement 47       Article VII CONDITIONS TO THE OBLIGATIONS OF THE PARTIES
48 Section 7.1 Conditions to the Obligations of the Backstop Parties 48
Section 7.2 Waiver of Conditions to Obligations of Backstop Parties 50
Section 7.3 Conditions to the Obligations of the Debtors 50       Article VIII
TERMINATION 51 Section 8.1 Consensual Termination 51 Section 8.2 Termination by
the Required Backstop Parties 51 Section 8.3 Termination by the Company 53
Section 8.4 Individual Backstop Party Termination 54 Section 8.5 Effect of
Termination 55

 

ii

 

 

TABLE OF CONTENTS (cont’d)

 

  Page     Article IX INDEMNIFICATION AND CONTRIBUTION 55 Section 9.1
Indemnification Obligations 55 Section 9.2 Indemnification Procedure 56
Section 9.3 Settlement of Indemnified Claims 57 Section 9.4 Contribution 57
Section 9.5 Treatment of Indemnification Payments 58       Article X GENERAL
PROVISIONS 58 Section 10.1 Notices 58 Section 10.2 Assignment; Third Party
Beneficiaries 59 Section 10.3 Prior Negotiations; Entire Agreement 59
Section 10.4 Governing Law; Venue 60 Section 10.5 Waiver of Jury Trial 60
Section 10.6 Counterparts 60 Section 10.7 Waivers and Amendments; Rights
Cumulative; Consent 61 Section 10.8 Headings 61 Section 10.9 No Survival 61
Section 10.10 Specific Performance 61 Section 10.11 Damages 62 Section 10.12 No
Reliance 62 Section 10.13 Publicity 62 Section 10.14 Settlement Discussions 62
Section 10.15 No Recourse 63 Section 10.16 Independence of Backstop Parties’
Obligations and Rights 63

 

SCHEDULES     Schedule 1 Backstop Commitment Schedule     EXHIBITS     Exhibit A
Form of Joinder Agreement

 

iii

 

 

BACKSTOP COMMITMENT AGREEMENT

 

THIS BACKSTOP COMMITMENT AGREEMENT (this “Agreement”), dated as of June 28,
2020, is made by and among Chesapeake Energy Corporation, a corporation
incorporated under the Laws of Oklahoma (the “Company”), on behalf of itself and
each of the other Debtors, on the one hand, and each Backstop Party, on the
other hand. The Company and each Backstop Party are referred to herein,
individually, as a “Party” and collectively, as the “Parties”. Capitalized terms
that are used but not otherwise defined in this Agreement shall have the
meanings given to them in Section 1.1 hereof or, if not defined therein, shall
have the meanings given to them in the Restructuring Support Agreement or
Restructuring Term Sheet, as applicable.

 

RECITALS

 

WHEREAS, the Company (as defined in the Restructuring Support Agreement), the
Backstop Parties and the Consenting Stakeholders (as defined in the
Restructuring Support Agreement) have entered into a Restructuring Support
Agreement, dated as of June 28, 2020 (including the terms and conditions set
forth in the Restructuring Term Sheet attached as Exhibit B to the Restructuring
Support Agreement (the “Restructuring Term Sheet” and collectively, including
all the exhibits thereto, as may be amended, supplemented or otherwise modified
from time to time, the “Restructuring Support Agreement”)), which (a) provides
for the restructuring of the Debtors’ capital structure and financial
obligations pursuant to a plan of reorganization to be filed in the Debtors’
jointly administered cases (the “Chapter 11 Cases”) under Title 11 of the United
States Code, 11 U.S.C. §§ 101-1532 (as it may be amended from time to time,
the “Bankruptcy Code”), currently pending, or to be commenced, in the United
States Bankruptcy Court for Southern District of Texas (the “Bankruptcy Court”),
implementing the terms and conditions of the Restructuring Transactions and
(b) requires that the Plan be consistent with the Restructuring Support
Agreement;

 

WHEREAS, the Debtors plan to file with the Bankruptcy Court, in accordance with
the terms of the Restructuring Support Agreement, motions seeking entry of,
among others, the Backstop Commitment Agreement Approval Order, the Disclosure
Statement Order, the Confirmation Order and the DIP Order; and

 

WHEREAS, pursuant to the Plan, the Restructuring Support Agreement and this
Agreement, and in accordance with the Rights Offering Procedures, the Company,
on behalf of Reorganized Chesapeake, will conduct a rights offering (the “Rights
Offering”) for the Rights Offering Shares for an aggregate subscription price of
$600 million (the “Rights Offering Amount”) and a per-share purchase price equal
to the Per Share Purchase Price, and on the Plan Effective Date, Reorganized
Chesapeake shall assume and perform any remaining obligations with respect to
the Rights Offering and issue the Rights Offering Shares.

 

NOW, THEREFORE, in consideration of the mutual promises, agreements,
representations, warranties and covenants contained herein, the Company (on
behalf of itself and each other Debtor) and each of the Backstop Parties hereby
agrees, severally and not jointly, as follows:

 

1

 

 

Article I
DEFINITIONS

 

Section 1.1      Definitions. Except as otherwise expressly provided in this
Agreement, whenever used in this Agreement (including any Exhibits and Schedules
hereto), the following terms shall have the respective meanings specified
therefor below or in the Restructuring Support Agreement or Restructuring Term
Sheet, as applicable:

 

“66 2/3 Consenting Second Lien Noteholders” means Consenting Second Lien
Noteholders holding at least 66 2/3% of the aggregate outstanding principal
amount of the Second Lien Note Claims that are held by Consenting Second Lien
Noteholders.

 

“Affiliate” means, with respect to any Person, any other Person that, directly
or indirectly, Controls or is Controlled by or is under common Control with such
Person, and shall include the meaning of “affiliate” set forth in section
101(2) of the Bankruptcy Code; provided, however, that for purposes of this
Agreement, no Backstop Party shall be deemed an Affiliate of any Debtor.
“Affiliated” has a correlative meaning.

 

“Affiliated Fund” means, with respect to a Backstop Party, any Affiliates
(including at the institutional level) of such Backstop Party or any special
purpose investment vehicles, investment accounts or funds managed, advised or
sub-advised by such Backstop Party, an Affiliate of such Backstop Party or by
the same investment manager, advisor or sub-advisor as such Backstop Party or an
Affiliate of such Backstop Party.

 

“Agreement” has the meaning set forth in the Preamble.

 

“Alternative Restructuring Proposal” has the meaning set forth in the
Restructuring Term Sheet.

 

“Antitrust Authorities” means the United States Federal Trade Commission, the
Antitrust Division of the United States Department of Justice, the attorneys
general of the several states of the United States and any other Governmental
Unit, whether domestic or foreign, having jurisdiction pursuant to the Antitrust
Laws, and “Antitrust Authority” means any of them.

 

“Antitrust Laws” means the Sherman Act, the Clayton Act, the HSR Act, the
Federal Trade Commission Act, and any other Law, whether domestic or foreign,
governing agreements in restraint of trade, monopolization, pre-merger
notification, the lessening of competition through merger or acquisition or
anti-competitive conduct, and any foreign investment Laws.

 

“Applicable Consent” has the meaning set forth in Section 4.6.

 

“Available Shares” means, collectively, all of the Unsubscribed Shares and
Direct Investment Shares that any Backstop Party fails to purchase as a result
of a Backstop Party Default by such Backstop Party.

 

“Backstop Commitment” has the meaning set forth in Section 2.2.

 

2

 

 

“Backstop Commitment Agreement Approval Order” has the meaning set forth in the
Restructuring Term Sheet.

 

“Backstop Commitment Percentage” means with respect to any Backstop Party, such
Backstop Party’s percentage of the Backstop Commitments as set forth opposite
such Backstop Party’s name under the column titled “Backstop Commitment
Percentage” on the Backstop Commitment Schedule. Any reference to “Backstop
Commitment Percentage” in this Agreement means the Backstop Commitment
Percentage in effect at the time of the relevant determination.

 

“Backstop Commitment Schedule” means, Schedule 1 to this Agreement, as it may be
amended, supplemented or otherwise modified from time to time in accordance with
this Agreement.

 

“Backstop Party” means the Parties set forth on the Backstop Commitment
Schedule, as it may be amended from time to time in accordance with this
Agreement.

 

“Backstop Party Default” means the failure by any Backstop Party to (a) deliver
and pay the aggregate Per Share Purchase Price for such Backstop Party’s
Backstop Commitment Percentage of any Unsubscribed Shares by the Escrow Account
Funding Date in accordance with Section 2.4(b) or (b) fully exercise all
Subscription Rights that are issued to it pursuant to the Rights Offering and
duly purchase all Rights Offering Shares (including the Direct Investment
Shares) issuable to it pursuant to such exercise, in accordance with this
Agreement and the Plan.

 

“Backstop Party Replacement” has the meaning set forth in Section 2.3(b).

 

“Backstop Party Replacement Period” has the meaning set forth in Section 2.3(b).

 

“Bankruptcy Code” has the meaning set forth in the Recitals.

 

“Bankruptcy Court” has the meaning set forth in the Recitals.

 

“BCA Approval Obligations” means the obligations of the Company and the other
Debtors under this Agreement and the Backstop Commitment Agreement Approval
Order.

 

“Business Day” has the meaning set forth in the Restructuring Term Sheet.

 

“Bylaws” means the bylaws of Reorganized Chesapeake, which shall become
effective as of Plan Effective Date, and which shall be consistent with the
terms set forth in the Restructuring Support Agreement and the Plan, and
otherwise be in form and substance reasonably acceptable to the Required Plan
Sponsors and the Company.

 

“Certificate of Incorporation” means the certificate of incorporation of
Reorganized Chesapeake as in effect on the Plan Effective Date, which shall be
consistent with the terms set forth in the Restructuring Support Agreement and
the Plan, and otherwise be in form and substance reasonably acceptable to the
Required Plan Sponsors and the Company.

 

“Chapter 11 Cases” has the meaning set forth in the Recitals.

 

3

 

 

“Closing” has the meaning set forth in Section 2.5(a).

 

“Closing Date” has the meaning set forth in Section 2.5(a).

 

“Code” means the Internal Revenue Code of 1986.

 

“Collective Bargaining Agreements” means any and all written or oral agreements,
memoranda of understanding, contracts, letters, side letters and contractual
obligations of any kind, nature and description, that have been entered into
between the Company or any of its Subsidiaries and any Employee Representative
or that the Company or any of its Subsidiaries are bound by.

 

“Common Shares” means the shares of common stock that constitute equity
interests in Reorganized Chesapeake.

 

“Company” has the meaning set forth in the Preamble.

 

“Company Balance Sheet” means the consolidated balance sheet of the Company and
its Subsidiaries as of December 31, 2019.

 

“Company Claims” has the meaning set forth in the Restructuring Term Sheet.

 

“Company Disclosure Schedules” means the disclosure schedules delivered by the
Company to the Backstop Parties on the date of this Agreement.

 

“Company Plans” means each “employee benefit plan” within the meaning of
Section 3(3) of ERISA (other than a Multiemployer Plan) and each other profit
sharing, stock purchase, stock option, restricted stock, other equity or
equity-based compensation, severance, retention, employment, consulting,
change-of-control, bonus, incentive, deferred compensation, employee loan,
retirement, fringe benefit and other benefit plan, agreement, program, policy,
commitment or other arrangement, whether or not subject to ERISA, whether formal
or informal, in each case, that is sponsored, maintained, contributed or
required to be contributed to by the Company or any of its Subsidiaries for the
current or future benefit of any current or former director, officer, employee
or individual independent contractor of the Company or any of its Subsidiaries,
or under which the Company or any of its Subsidiaries has any current or
contingent liability.

 

“Company SEC Documents” means all of the reports, schedules, forms, statements
and other documents (including exhibits and other information incorporated
therein) filed with the SEC by the Company.

 

“Conditions Precedent to the Plan Effective Date” has the meaning set forth in
the Restructuring Term Sheet.

 

“Confirmation Date” has the meaning set forth in the Restructuring Term Sheet.

 

“Confirmation Hearing” has the meaning set forth in the Restructuring Term
Sheet.

 

“Confirmation Order” has the meaning set forth in the Restructuring Term Sheet.

 

4

 

 

“Consenting Second Lien Noteholders” has the meaning set forth in the
Restructuring Support Agreement.

 

“Consenting Stakeholders” has the meaning set forth in the Restructuring Support
Agreement.

 

“Contract” means any agreement, contract or instrument, including any loan,
note, bond, mortgage, indenture, guarantee, deed of trust, license, franchise,
commitment, lease, franchise agreement, letter of intent, memorandum of
understanding or other enforceable arrangement or obligation, and any amendments
thereto, whether written or oral, but excluding the Plan.

 

“Control” means, with respect to any Person, the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities or
by Contract or agency or otherwise. The terms “controlling”, “controlled by” or
“under common control with” each have the correlative meaning.

 

“COVID-19” means SARS-CoV-2 or COVID-19, and any evolutions thereof or related
or associated epidemics, pandemic or disease outbreaks.

 

“COVID-19 Measures” means any quarantine, “shelter in place,” “stay at home,”
workforce reduction, social distancing, shut down, closure, sequester or any
other Law, Order, directive, guidelines or recommendations by any Governmental
Unit in connection with or in response to COVID-19, including, but not limited
to, the Coronavirus Aid, Relief, and Economic Security Act (CARES).

 

“Debtor” has the meaning set forth in the Restructuring Term Sheet.

 

“Defaulting Backstop Party” means in respect of a Backstop Party Default that is
continuing, the applicable defaulting Backstop Party.

 

“Definitive Documents” has the meaning set forth in the Restructuring Support
Agreement.

 

“DIP Agents” has the meaning set forth in the Restructuring Term Sheet.

 

“DIP Claims” has the meaning set forth in the Restructuring Term Sheet.

 

“DIP Credit Agreements” has the meaning set forth in the Restructuring Term
Sheet.

 

“DIP Facilities” has the meaning set forth in the Restructuring Term Sheet.

 

“DIP Order” has the meaning set forth in the Restructuring Term Sheet.

 

“Direct Investment Right” has the meaning set forth in Section 2.1.

 

“Direct Investment Shares” means the Common Shares issued in accordance with the
Direct Investment Right.

 

“Disclosure Statement” has the meaning set forth in the Restructuring Term
Sheet.

 

5

 

 

“Disclosure Statement Order” means an Order, in form and substance reasonably
acceptable to the Required Plan Sponsors and the Company, approving the
Disclosure Statement with respect to the Plan and approving the Rights Offering
Procedures and the solicitation with respect to the Plan which are in form and
substance reasonably acceptable to the Required Plan Sponsors and the Company.

 

“DTC” means The Depository Trust Company.

 

“Employee Representative” has the meaning set forth in Section 4.14(a).

 

“Enforceability Exceptions” has the meaning set forth in Section 4.3.

 

“Environmental Laws” has the meaning set forth in Section 4.18(a).

 

“Environmental Permits” has the meaning set forth in Section 4.18(a).

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“ERISA Affiliate” with respect to an entity means any other entity that,
together with such first entity, would be treated as a single employer under
Section 414 of the Code.

 

“Escrow Account” has the meaning set forth in Section 2.4(a).

 

“Escrow Account Funding Date” has the meaning set forth in Section 2.4(b).

 

“Event” means any event, development, occurrence, circumstance, effect,
condition, result, state of facts or change.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Executive Officer” means, with respect to a Person, such Person’s principal
executive officer, president, principal financial officer, principal accounting
officer (or, if there is no such accounting officer, the controller), any vice
president of such Person in charge of a principal business unit, division or
function (such as sales, administration or finance), any other officer who
performs a policy-making function, or any other Person who performs similar
policy-making functions for such Person. Officers of such Person’s parent(s) or
subsidiaries shall be deemed Executive Officers of such Person if they perform
such policy-making functions for such Person.

 

“Exit Facility” has the meaning set forth in the Restructuring Term Sheet.

 

“Exit Facility Documents” has the meaning set forth in the Restructuring Term
Sheet.

 

“Exit Facility Term Sheet” has the meaning set forth in the Restructuring Term
Sheet.

 

“Expense Reimbursement” has the meaning set forth in Section 6.13.

 

“FCPA” has the meaning set forth in Section 4.24.

 

“Filing Party” has the meaning set forth in Section 6.10(b).

 

6

 

 

“Final Order” has the meaning set forth in the Restructuring Term Sheet.

 

“Financial Reports” has the meaning set forth in Section 6.3.

 

“FLLO Term Loan Facility” has the meaning set forth in the Restructuring Term
Sheet.

 

“FLLO Term Loan Facility Administrative Agent” has the meaning set forth in the
Restructuring Term Sheet.

 

“FLLO Term Loan Facility Credit Agreement” has the meaning set forth in the
Restructuring Term Sheet.

 

“FLLO Term Loan Facility Lenders” has the meaning set forth in the Restructuring
Term Sheet.

 

“Funding Amount” has the meaning set forth in Section 2.4(b).

 

“Funding Notice” has the meaning set forth in Section 2.4(a).

 

“Funding Notice Date” has the meaning set forth in Section 2.4(a).

 

“GAAP” means United States generally accepted accounting principles.

 

“Governmental Unit” means any U.S. or non-U.S. federal, state, municipal, local,
judicial, administrative, legislative or regulatory agency, department,
commission, court, or tribunal of competent jurisdiction (including any branch,
department or official thereof).

 

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended from time to time.

 

“Indemnified Claim” has the meaning set forth in Section 9.2.

 

“Indemnified Person” has the meaning set forth in Section 9.1.

 

“Indemnifying Parties” has the meaning set forth in Section 9.1.

 

“Infringe” has the meaning set forth in Section 4.15.

 

“Intellectual Property” means all U.S. or foreign intellectual or industrial
property or proprietary rights, including any: (i) trademarks, service marks,
trade dress, domain names, social media identifiers, corporate and trade names,
logos and all other indicia of source or origin, together with all associated
goodwill, (ii) patents, inventions, invention disclosures, technology, know-how,
processes and methods, (iii) copyrights and copyrighted works, (including
software, applications, source and object code, databases and compilations,
online, advertising and promotional materials, mobile and social media content
and documentation), (iv) trade secrets and confidential or proprietary
information or content, and (v) all registrations, applications, renewals,
re-issues, continuations, continuations-in-part, divisions, extensions,
re-examinations and foreign counterparts of any of the foregoing.

 

7

 

 

“Investment Companies” has the meaning set forth in Section 2.4(b).

 

“Joinder Agreement” has the meaning set forth in Section 2.6(c).

 

“Joint Filing Party” has the meaning set forth in Section 6.10(c).

 

“knowledge” of the Company means the actual knowledge, after a reasonable
inquiry of their direct reports, of Robert D. Lawler, Domenic J. Dell’Osso, Jr.,
Frank J. Patterson, James R. Webb, William M. Buergler or the chief
restructuring officer of the Company, if any.

 

“Law” has the meaning set forth in the Restructuring Term Sheet.

 

“Legal Proceedings” has the meaning set forth in Section 4.13.

 

“Legend” has the meaning set forth in Section 6.9.

 

“Lien” means any lien, adverse claim, charge, option, right of first refusal,
servitude, security interest, mortgage, pledge, deed of trust, easement,
encumbrance, restriction on transfer, conditional sale or other title retention
agreement, defect in title, lien or judicial lien as defined in sections 101(36)
and (37) of the Bankruptcy Code or other restrictions of a similar kind.

 

“Losses” has the meaning set forth in Section 9.1.

 

“Management Incentive Plan” has the meaning set forth in the Restructuring Term
Sheet.

 

“Material Adverse Effect” means any Event, which individually, or together with
all other Events, has had or would reasonably be expected to have a material and
adverse effect on (a) the business, assets, liabilities, finances, properties,
results of operations or condition (financial or otherwise) of the Debtors and
their Subsidiaries, taken as a whole, or (b) the ability of the Debtors, taken
as a whole, to perform their obligations under, or to consummate the
transactions contemplated by, the Transaction Agreements, including the Rights
Offering, provided in the case of clause (a) only, except to the extent such
Event results from, arises out of, or is attributable to, the following (either
alone or in combination): (i) any Event after the date hereof in global,
national or regional political conditions (including hostilities, acts of war,
sabotage, terrorism or military actions, or any escalation or material worsening
of any such hostilities, acts of war, sabotage, terrorism or military actions
existing or underway) or in the general business, market, financial or economic
conditions affecting the industries, regions and markets in which the Debtors
operate, including any change in the United States or applicable foreign
economies or securities, commodities or financial markets, or force majeure
events or “acts of God”; (ii) any changes after the date hereof in applicable
Law or GAAP, or in the interpretation or enforcement thereof; (iii) the
execution, announcement, disclosure or performance of this Agreement or the
other Transaction Agreements or the transactions contemplated hereby or thereby
or any related transactions (including any act or omission of the Debtors
expressly required or prohibited, as applicable, by this Agreement or consented
to or required by the Required Backstop Parties in writing) (it being understood
and agreed that this clause (iii) shall not apply with respect to any
representation or warranty that is intended to address the consequences of the
execution and delivery of this Agreement or the public announcement or the
pendency of this Agreement); (iv) changes in the market price or trading volume
of the Company Claims or equity or debt securities of the Debtors (but not the
underlying facts giving rise to such changes unless such facts are otherwise
excluded pursuant to other clauses contained in this definition); (v) the filing
or pendency of the Chapter 11 Cases or any reasonably anticipated effects
thereof; (vi) declarations of national emergencies or natural disasters;
(vii) any epidemic, pandemic or disease outbreak (including the COVID-19
pandemic), or any Law, regulation, statute, directive, pronouncement or
guideline issued by a Governmental Unit, the Centers for Disease Control and
Prevention, the World Health Organization or industry group providing for
business closures, “sheltering-in-place” or other restrictions that relate to,
or arise out of, an epidemic, pandemic or disease outbreak (including the
COVID-19 pandemic) or any change in such Law, regulation, statute, directive,
pronouncement or guideline or interpretation thereof following the date of this
Agreement; (viii) the effect of any action taken by the Backstop Parties or
their Affiliates with respect to the DIP Facility; (ix) any failure, in and of
itself, of the Debtors to meet, with respect to any period or periods, any
internal or industry analyst projections, forecasts, estimates of earnings or
revenues or business plans (but not the underlying facts giving rise to such
failure unless such facts are otherwise excluded pursuant to other clauses
contained in this definition); (x) the occurrence of a Backstop Party Default or
(xi) any matters expressly disclosed in the Company Disclosure Schedules as
delivered on the date hereof; provided, that the exceptions set forth in clauses
(i), (ii), (vi) and (vii) shall not apply to the extent that such Event is
disproportionately adverse to the Debtors and their Subsidiaries, taken as a
whole, as compared to other companies in the industries in which the Debtors
operate.

 

8

 

 

“Material Contract” has the meaning set forth in Section 4.23(a).

 

“Materials of Environmental Concern” means any gasoline or petroleum (including
crude oil or any fraction thereof) or petroleum products, polychlorinated
biphenyls, per- and polyfluoroalkyl substances, urea-formaldehyde insulation,
asbestos, pollutants, contaminants, radioactive substances, and any other
substances of any kind, that are regulated pursuant to or give rise to liability
under any applicable Law pertaining to pollution or protection of the
environment.

 

“Money Laundering Laws” has the meaning set forth in Section 4.25.

 

“Multiemployer Plan” means a “multiemployer plan” as defined in Section 3(37) of
ERISA.

 

“New Backstop Party” has the meaning set forth in Section 2.6(d).

 

“New Money DIP Lenders” has the meaning set forth in Section 3.2(a).

 

“New Organizational Documents” has the meaning set forth in the Restructuring
Term Sheet.

 

“New Warrants” has the meaning set forth in the Restructuring Term Sheet.

 

“Non-Competition Agreement” has the meaning set forth in Section 4.23(b).

 

“Non-Transferring Backstop Parties” has the meaning set forth in Section 2.6(d).

 

“Offer Acceptance Notice” has the meaning set forth in Section 2.6(d).

 

9

 

 

“Offered Backstop Commitment” has the meaning set forth in Section 2.6(d).

 

“Order” means any judgment, order, award, injunction, writ, permit, license or
decree of any Governmental Unit or arbitrator of applicable jurisdiction.

 

“Outside Date” has the meaning set forth in Section 8.2(a).

 

“Owned Real Property” means all Real Property owned, in whole or in part by the
Company and its Subsidiaries, together with the Company’s and its Subsidiaries
interest in all buildings, fixtures and improvements now or subsequently located
thereon, and all appurtenances thereto.

 

“Party” has the meaning set forth in the Preamble.

 

“Per Share Purchase Price” means a purchase price per Common Share reflecting a
discount of thirty-five percent (35%) to the Plan Equity Value, calculated
consistently with the Restructuring Support Agreement.

 

“Permitted Liens” means (a) Liens for Taxes (i) that are not yet delinquent,
(ii) that are being contested in good faith by appropriate proceedings and for
which adequate reserves have been made with respect thereto or (iii) the
nonpayment of which is permitted or required by the Bankruptcy Code;
(b) landlord’s, operator’s, vendors’, carriers’, warehousemen’s, mechanics’,
materialmen’s, repairmen’s and other similar Liens for rent, labor, materials or
supplies or other like Liens arising by operation of law in the ordinary course
of business or incident to the exploration, development, operation and
maintenance of oil and gas properties provided with respect to any Real Property
or personal property incurred in the ordinary course of business consistent with
past practice and as otherwise not prohibited under this Agreement and that do
not materially detract from the value of, or materially impair the use of, any
of the Real Property or personal property of any of the Debtors, or, if for
amounts that do materially detract from the value of, or materially impair the
use of, any of the Real Property or personal property of any of the Debtors, if
such Lien is being contested in good faith by appropriate proceedings and for
which adequate reserves have been made with respect thereto; (c) zoning,
building codes and other land use Laws regulating the use or occupancy of any
Real Property or the activities conducted thereon that are imposed by any
Governmental Unit having jurisdiction over such Real Property; provided, that no
such zoning, building codes and other land use Laws prohibit the use or
occupancy of such Real Property; (d) easements, covenants, conditions, minor
encroachments, restrictions on transfer and other similar matters affecting
title to any Real Property (including any title retention agreement) and other
title defects and encumbrances that do not or would not materially impair the
ownership, use or occupancy of such Real Property or the operation of the
Debtors’ business; (e) Liens granted under any Contracts (including joint
operating agreements, oil and gas leases, farmout agreements, joint development
agreements, transportation agreements, marketing agreements, seismic licenses
and other similar operational oil and gas agreements), in each case, to the
extent the same are ordinary and customary in the oil and gas business and do
not or would not materially impair the ownership, use or occupancy of any Real
Property or the operation of the Debtors’ business and which are for claims not
more than sixty (60) days delinquent or, if such claim does materially impair
such ownership, use, occupancy or operation and are for obligations that are
more than sixty (60) days delinquent, are being contested in good faith by
appropriate proceedings and for which adequate reserves have been made with
respect thereto; (f) from and after the occurrence of the Plan Effective Date,
Liens granted in connection with the Exit Facility, and Liens that are
explicitly permitted under the Exit Facility; (g) mortgages on a lessor’s
interest in a lease or sublease; provided that no foreclosure proceedings have
been duly filed (unless, in such case, such mortgage has been subordinated to
the applicable lease); (h) Liens that, pursuant to the Plan and the Confirmation
Order, will be discharged and released on the Plan Effective Date; (i) matters
that would be reflected on a survey of any Real Property that do not or would
not materially impair the ownership, use or occupancy of such Real Property or
the operation of the Debtors’ business; and (j) Liens granted under the DIP
Credit Agreements and the DIP Order, and Liens that are explicitly permitted
under the DIP Credit Agreements and the schedules thereto as of the date hereof.

 

10

 

 

“Person” means an individual, firm, corporation (including any non-profit
corporation), partnership, limited liability company, joint venture,
association, trust, Governmental Unit or other entity or organization.

 

“Plan” has the meaning set forth in the Restructuring Term Sheet.

 

“Plan Effective Date” has the meaning set forth in the Restructuring Term Sheet.

 

“Plan Equity Value” means the equity value, post new-money, as implied by a Plan
total enterprise value of $3.25 billion.

 

“Plan Supplement” means any compilation of documents and forms of documents,
agreements, schedules, and exhibits to the Plan, which shall be filed by the
Debtors prior to the Confirmation Hearing, and additional documents filed with
the Bankruptcy Court prior to the Plan Effective Date as amendments to the Plan
Supplement, each of which shall be consistent in all respects with, and shall
otherwise contain, the terms and conditions and be subject to the consent rights
set forth in the Restructuring Support Agreement and the Restructuring Term
Sheet, where applicable.

 

“Post-Effective Date Business” means the businesses, assets and properties of
Reorganized Chesapeake and its Subsidiaries, taken as a whole, as of the Plan
Effective Date after giving effect to the transactions contemplated by the Plan.

 

“Pre-Closing Period” means the period from the date of this Agreement to the
earlier of the Closing Date and the date on which this Agreement is terminated
in accordance with its terms.

 

“Pre-Closing Tax Period” means all taxable periods ending on or before the
Closing Date and the portion through the end of the Closing Date of any Straddle
Period (each such taxable period, a “Pre-Closing Tax Period”).

 

“Purchasing Backstop Party” has the meaning set forth in Section 2.6(d).

 

“Purchase Price” means an amount equal to the product of the Unsubscribed Shares
to be purchased by a Backstop Party and the Per Share Purchase Price.

 

“Put Option Premium” has the meaning set forth in Section 3.1.

 

11

 

 

“Put Option Premium Shares” has the meaning set forth in Section 3.2(b).

 

“Real Property” means, collectively, all right, title and interest (including
any leasehold estate) in and to any and all parcels of or interests in real
property owned in fee or leased by any of the Debtors, together with, in each
case, all easements, hereditaments and appurtenances relating thereto, all
improvements and appurtenant fixtures incidental to the ownership or lease
thereof.

 

“Real Property Leases” means those leases, subleases, licenses, concessions and
other agreements, as amended, modified or restated, pursuant to which the
Company or one of its Subsidiaries holds a leasehold or subleasehold estate in,
or is granted the right to use or occupy, any land, buildings, structures,
improvements, fixtures or other interest in Real Property used in the Company’s
or its Subsidiaries’ business.

 

“Registrable Shares” has the meaning set forth in Section 6.5(a).

 

“Registration Rights Agreement” has the meaning set forth in the Restructuring
Term Sheet.

 

“Related Party” means, with respect to any Person, (a) any former, current or
future director, officer, agent, Affiliate, employee, general or limited
partner, member, manager or stockholder of such Person and (b) any former,
current or future director, officer, agent, Affiliate, employee, general or
limited partner, member, manager or stockholder of any of the foregoing.

 

“Related Purchaser” has the meaning set forth in Section 2.6(a).

 

“Remaining Available Shares” has the meaning set forth in Section 2.3(b).

 

“Reorganized Chesapeake” has the meaning set forth in the Restructuring Term
Sheet.

 

“Reorganized Debtors” has the meaning set forth in the Restructuring Term Sheet.

 

“Replacing Backstop Parties” has the meaning set forth in Section 2.3(b).

 

“Representatives” means, with respect to any Person, such Person’s directors,
officers, members, partners, managers, employees, agents, investment bankers,
financial advisors, attorneys, accountants, advisors and other representatives.

 

“Required Backstop Parties” means the Backstop Parties holding at least 66 2/3%
of the aggregate Backstop Commitments held by non-Defaulting Backstop Parties as
of the date on which the consent or approval of the Required Backstop Parties is
solicited.

 

“Required Plan Sponsors” has the meaning set forth in the Restructuring Support
Agreement.

 

“Restructuring” has the meaning set forth in the Restructuring Term Sheet.

 

“Restructuring Support Agreement” has the meaning set forth in the Recitals.

 

“Restructuring Term Sheet” has the meaning set forth in the Recitals.

 

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“Restructuring Transactions” has the meaning set forth in the Restructuring
Support Agreement.

 

“Revolving Credit Facility” has the meaning set forth in the Restructuring Term
Sheet.

 

“Revolving Credit Facility Claims” has the meaning set forth in the
Restructuring Term Sheet.

 

“Rights Offering” has the meaning set forth in the Recitals.

 

“Rights Offering Amount” has the meaning set forth in the Recitals.

 

“Rights Offering Expiration Time” means the time and the date on which the
rights offering subscription forms must be duly delivered to the Rights Offering
Subscription Agent in accordance with the Rights Offering Procedures, together
with the applicable aggregate Per Share Purchase Price, if applicable.

 

“Rights Offering Participants” means the Persons issued Subscription Rights in
the Rights Offering in accordance with the Rights Offering Procedures and the
Plan.

 

“Rights Offering Procedures” means the procedures governing the Rights Offering.

 

“Rights Offering Shares” means the Common Shares issued in accordance with the
Rights Offering (including the Direct Investment Shares) and subject to the
Rights Offering Procedures and the Restructuring Support Agreement.

 

“Rights Offering Subscription Agent” means Epiq Corporate Restructuring, LLC or
another subscription agent appointed by the Company and reasonably acceptable to
the Required Backstop Parties.

 

“ROFO Notice Period” has the meaning set forth in Section 2.6(d).

 

“Sanctions” has the meaning set forth in Section 4.26.

 

“SEC” means the U.S. Securities and Exchange Commission.

 

“Second Lien Notes Claims” has the meaning set forth in the Restructuring Term
Sheet.

 

“Securities Act” means the Securities Act of 1933, as amended, 15 U.S.C.
§§ 77a–77aa, or any similar federal, state, or local Law.

 

“Straddle Period” means any taxable period that includes (but does not end on)
the Closing Date.

 

“Subscription Rights” means the subscription rights issued in the Rights
Offering to the Rights Offering Participants in accordance with the Rights
Offering Procedures and the Plan (including the Direct Investment Right).

 

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“Subsidiary” means, with respect to any Person, any corporation, partnership,
joint venture or other legal entity as to which such Person (either alone or
through or together with any other subsidiary), (a) owns, directly or
indirectly, more than fifty percent (50%) of the stock or other equity
interests, (b) has the power to elect a majority of the board of directors or
similar governing body, or (c) has the power to direct the business and
policies.

 

“Takeover Statute” means any restrictions contained in any “fair price,”
“moratorium,” “control share acquisition,” “business combination” or other
similar anti-takeover statute or regulation.

 

“Taxes” means all taxes, assessments, duties, levies or other mandatory
governmental charges paid to a Governmental Unit in the nature of a tax,
including all federal, state, local, foreign and other income, franchise,
profits, gross receipts, capital gains, capital stock, transfer, property,
sales, use, value-added, occupation, excise, severance, windfall profits, stamp,
payroll, social security, withholding and other taxes, assessments, duties, or
levies (whether payable directly or by withholding and whether or not requiring
the filing of a return), all estimated taxes, deficiency assessments, additions
to tax, penalties and interest thereon and shall include any liability for such
amounts as a result of being a member of a combined, consolidated, unitary or
affiliated group.

 

“Transaction Agreements” has the meaning set forth in Section 4.2(a).

 

“Transfer” means to sell, transfer, assign, pledge, hypothecate, participate,
donate or otherwise encumber or dispose of, directly or indirectly (including
through derivatives, options, swaps, pledges, forward sales or other
transactions in which any Person receives the right to own or acquire any
current or future interest in a Subscription Right, a Rights Offering Share or
Common Share). “Transfer” used as a noun has a correlative meaning.

 

“Transferring Backstop Party” has the meaning set forth in Section 2.6(d).

 

“Unlegended Shares” has the meaning set forth in Section 6.7.

 

“Unsubscribed Shares” means all of the Rights Offering Shares that have not been
duly purchased by the Rights Offering Participants in accordance with the Rights
Offering Procedures and the Plan, excluding the Direct Investment Shares.

 

“willful or intentional breach” has the meaning set forth in Section 9.4.

 

Section 1.2      Construction. In this Agreement, unless the context otherwise
requires:

 

(a)            references to Articles, Sections, Exhibits and Schedules are
references to the articles and sections or subsections of, and the exhibits and
schedules attached to, this Agreement;

 

(b)            descriptive headings of the Articles and Sections of this
Agreement are inserted for convenience only, do not constitute a part of this
Agreement and shall not affect in any way the meaning or interpretation of this
Agreement;

 

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(c)            references in this Agreement to “writing” or comparable
expressions include a reference to a written document transmitted by means of
electronic mail in portable document format (pdf), facsimile transmission or
comparable means of communication;

 

(d)            words expressed in the singular number shall include the plural
and vice versa; words expressed in the masculine shall include the feminine and
neuter gender and vice versa;

 

(e)            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, including all Exhibits and Schedules attached to this Agreement, and
not to any provision of this Agreement;

 

(f)            the term “this Agreement” shall be construed as a reference to
this Agreement as the same may have been, or may from time to time be, amended,
modified, varied, novated or supplemented;

 

(g)          “include”, “includes” and “including” are deemed to be followed by
“without limitation” whether or not they are in fact followed by such words;

 

(h)          references to “day” or “days” are to calendar days;

 

(i)           references to “the date hereof” means the date of this Agreement;

 

(j)          unless otherwise specified, references to a statute means such
statute as amended from time to time and includes any successor legislation
thereto and any rules or regulations promulgated thereunder in effect from time
to time; and

 

(k)        references to “dollars” or “$” refer to currency of the United States
of America, unless otherwise expressly provided.

 

Article II
BACKSTOP COMMITMENT

 

Section 2.1      The Rights Offering; Subscription Rights. On and subject to the
terms and conditions hereof, including entry of the Backstop Commitment
Agreement Approval Order, the Company, on behalf of Reorganized Chesapeake,
shall conduct the Rights Offering pursuant to and in accordance with the Plan,
the Rights Offering Procedures and the Disclosure Statement Order. The Rights
Offering will be conducted in reliance upon the exemption from registration
under the Securities Act provided in Section 1145 of the Bankruptcy Code, and
all Rights Offering Shares (other than the Unsubscribed Shares purchased by the
Backstop Parties pursuant to this Agreement) will be issued in reliance upon
such exemption, and the Plan and the Disclosure Statement shall each include a
statement to such effect. The offer and sale of the Unsubscribed Shares
purchased by the Backstop Parties pursuant to this Agreement will be made in
reliance on the exemption from registration provided by Section 4(a)(2) of the
Securities Act or another available exemption from registration under the
Securities Act, and the Plan and the Disclosure Statement shall each include a
statement to such effect. Twenty-five percent (25%) of the Common Shares to be
issued pursuant to the Rights Offering shall be reserved for the Backstop
Parties pro rata based on the Backstop Parties’ Backstop Commitment Percentages
(the “Direct Investment Right”).

 

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Section 2.2            The Backstop Commitment. On and subject to the terms and
conditions hereof, including entry of the Backstop Commitment Agreement Approval
Order, each Backstop Party agrees, severally and not jointly, to fully exercise
all Subscription Rights that are issued to it pursuant to the Rights Offering
and the Plan, and duly and timely purchase all Rights Offering Shares issuable
to it pursuant to such exercise, in accordance with the Rights Offering
Procedures and the Plan; provided that any Defaulting Backstop Party shall be
liable to each non-Defaulting Backstop Party, the Company and Reorganized
Chesapeake as a result of a Backstop Party Default by such Defaulting Backstop
Party hereunder. In connection with the Rights Offering, and on and subject to
the terms and conditions hereof, including entry of the Confirmation Order, each
Backstop Party agrees, severally and not jointly (in accordance with its
Backstop Commitment Percentage), to purchase, and Reorganized Chesapeake shall
sell to such Backstop Party (or Related Purchaser), on the Closing Date for the
applicable aggregate Per Share Purchase Price, (a) the number of Unsubscribed
Shares equal to (i) such Backstop Party’s Backstop Commitment Percentage,
multiplied by (ii) the aggregate number of Unsubscribed Shares and (b) the
number of Direct Investment Shares equal to (i) such Backstop Party’s Backstop
Commitment Percentage, multiplied by (ii) the aggregate number of Direct
Investment Shares (such obligations, the “Backstop Commitment”), in each case
rounded among the Backstop Parties solely to avoid fractional shares as the
Required Backstop Parties may determine in their sole discretion (provided that
in no event shall such rounding reduce the aggregate commitment of the Backstop
Parties). Notwithstanding anything to the contrary, the Backstop Parties shall
not be required to exercise their Subscription Rights or their Direct Investment
Rights until the date that the Company and the Backstop Parties reasonably agree
is approximately three (3) Business Days prior to the Plan Effective Date.

 

Section 2.3            Backstop Party Default.

 

(a)          Upon the occurrence of a Backstop Party Default, the Backstop
Parties and their respective Related Purchasers (other than any Defaulting
Backstop Party) shall have the right, but not the obligation, within five
(5) Business Days after receipt of written notice from the Company to all
Backstop Parties (other than any Defaulting Backstop Party) of such Backstop
Party Default, which notice shall be given promptly following the occurrence of
such Backstop Party Default and to all Backstop Parties (other than any
Defaulting Backstop Party) concurrently (such period, the “Backstop Party
Replacement Period”), to make arrangements for one or more of the Backstop
Parties and their respective Related Purchasers (other than any Defaulting
Backstop Party) to purchase all or any portion of the Available Shares at the
Per Share Purchase Price (any such purchase, a “Backstop Party Replacement”) on
the terms and subject to the conditions set forth in this Agreement and in such
amounts as may be agreed upon by all of the Backstop Parties electing to
purchase all or any portion of the Available Shares, or, if no such agreement is
reached, based upon the relative applicable Backstop Commitment Percentages of
any such Backstop Parties and their respective Related Purchasers (other than
any Defaulting Backstop Party) (such Backstop Parties, the “Replacing Backstop
Parties”).

 

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(b)          In the event the Backstop Parties and their respective Related
Purchasers do not elect to purchase all of the Available Shares pursuant to
Section 2.3(a) (any such unpurchased Available Shares, the “Remaining Available
Shares”), the Company shall give prompt written notice thereof to each of the
Backstop Parties (other than any Defaulting Backstop Party), and each Backstop
Party and their respective Related Purchasers (other than any Defaulting
Backstop Party) shall have the right, but not the obligation, within five
(5) Business Days after receipt of such notice to make arrangements for one or
more of the Backstop Parties (other than any Defaulting Backstop Party) to
purchase all or any portion of the Remaining Available Shares at the Per Share
Purchase Price on the terms and subject to the conditions set forth in this
Agreement and in such amounts as may be agreed upon by all of the Backstop
Parties electing to purchase all or any portion of such Remaining Available
Shares, or, if no such agreement is reached, based upon the relative applicable
Backstop Commitment Percentages of any such Backstop Parties and their
respective Related Purchasers (other than any Defaulting Backstop Party). For
the avoidance of doubt, nothing in this Section 2.3(b) shall relieve any
Backstop Party of its obligation to fulfill its Backstop Commitment.

 

(c)          In the event that any Remaining Available Shares are available for
purchase pursuant to Section 2.3(b) and the Backstop Parties and their
respective Related Purchasers (other than any Defaulting Backstop Party) do not
elect to purchase all such Available Shares pursuant to the provisions thereof,
the Company may, in its sole discretion, elect to utilize the Cover Transaction
Period to consummate a Cover Transaction.  As used herein, “Cover Transaction”
means a circumstance in which the Company, in its sole discretion, arranges for
the sale of all or any portion of the Available Shares to any other Person, on
terms and conditions substantially similar to the Backstop Commitment and the
other terms and conditions applicable to the Backstop Parties in their
obligation to purchase the Available Shares pursuant to this Agreement, during
the Cover Transaction Period, and “Cover Transaction Period” means the ten
(10) Business Day period following expiration of the five (5) Business Day
period specified in Section 2.3(b). For the avoidance of doubt, the Company’s
election to pursue a Cover Transaction, whether or not consummated, shall not
relieve any Backstop Party of its obligations pursuant to this Article II or
otherwise to fulfill its Backstop Commitment.

 

(d)          Any Available Shares purchased by a Replacing Backstop Party (and
any commitment and applicable aggregate Per Share Purchase Price associated
therewith) shall be included, among other things, in the determination of the
Backstop Commitment Percentage of such Replacing Backstop Party for all purposes
hereunder, including for purposes of the definition of “Required Backstop
Parties.” If a Backstop Party Default occurs, the Outside Date shall be delayed
only to the extent necessary to allow for (i) the Backstop Party Replacement to
be completed within the Backstop Party Replacement Period and/or (ii), if
applicable, the Cover Transaction to be completed within the Cover Transaction
Period.

 

(e)          If a Backstop Party is a Defaulting Backstop Party, it shall not be
entitled to any of the Put Option Premium hereunder.

 

(f)           For the avoidance of doubt, notwithstanding anything to the
contrary set forth in Section 8.4 but subject to Section 10.11, no provision of
this Agreement shall relieve any Defaulting Backstop Party from liability
hereunder, or limit the availability of the remedies set forth in Section 10.10,
in connection with any such Defaulting Backstop Party’s Backstop Party Default.

 

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Section 2.4            Escrow Account Funding.

 

(a)          Funding Notice. No later than the third (3rd) Business Day
following the Rights Offering Expiration Time, the Rights Offering Subscription
Agent shall, on behalf of the Company, deliver to each Backstop Party a written
notice (the “Funding Notice,” and the date of such delivery, the “Funding Notice
Date”) setting forth (i) the aggregate number of Rights Offering Shares elected
to be purchased by the Rights Offering Participants, and the aggregate Per Share
Purchase Price therefor in each case; (ii) the aggregate number of Unsubscribed
Shares, if any, and the aggregate Per Share Purchase Price therefor in each
case; (iii) the aggregate number of Unsubscribed Shares (based upon such
Backstop Party’s Backstop Commitment Percentage) to be issued and sold by
Reorganized Chesapeake to such Backstop Party and the aggregate Per Share
Purchase Price therefor; (iv) the aggregate number of Direct Investment Shares
(based upon such Backstop Party’s Backstop Commitment Percentage) to be issued
and sold by Reorganized Chesapeake to such Backstop Party and the aggregate Per
Share Purchase Price therefor; (v) if applicable, the number of Rights Offering
Shares such Backstop Party is subscribed for in the Rights Offering and for
which such Backstop Party had not yet paid to the Rights Offering Subscription
Agent, the Per Share Purchase Price therefor and the aggregate amount to be paid
for the Rights Offering Shares; and (vi) the escrow account designated in escrow
agreements reasonably acceptable to the Required Backstop Parties and the
Company or the segregated account described under Section 2.4(b) to which such
Backstop Party shall deliver and pay the aggregate Per Share Purchase Price for
such Backstop Party’s Backstop Commitment Percentage of the Unsubscribed Shares,
and, if applicable, the aggregate Per Share Purchase Price for the Rights
Offering Shares such Backstop Party has subscribed for in the Rights Offering
(the “Escrow Account”). The Company shall promptly direct the Rights Offering
Subscription Agent to provide any written backup, information and documentation
relating to the information contained in the applicable Funding Notice as any
Backstop Party may reasonably request.

 

(b)          Escrow Account Funding. On the date agreed with the Required
Backstop Parties pursuant to escrow agreements reasonably acceptable to the
Required Backstop Parties and the Company (the “Escrow Account Funding Date”),
each Backstop Party (other than those that are registered investment companies
(“Investment Companies”) under the Investment Company Act of 1940, as amended
(the “Investment Company Act”)) shall deliver and pay an amount equal to the sum
of (i) the aggregate Per Share Purchase Price for such Backstop Party’s Backstop
Commitment Percentage of the Unsubscribed Shares, plus (ii) the aggregate Per
Share Purchase Price for the Common Shares issuable pursuant to such Backstop
Party’s exercise of all the Subscription Rights issued to it in the Rights
Offering, plus (iii) the aggregate Per Share Purchase Price for the Direct
Investment Shares (the “Funding Amount”), each by wire transfer of immediately
available funds in U.S. dollars into the Escrow Account in satisfaction of such
Backstop Party’s Backstop Commitment and its obligation to fully exercise its
Subscription Rights; provided, that in no event shall the Escrow Account Funding
Date be less than five (5) Business Days after the Funding Notice Date or more
than two (2) Business Days prior to the Plan Effective Date. On the Plan
Effective Date, each Backstop Party that is an Investment Company shall deliver
and pay its respective Funding Amount by wire transfer of immediately available
funds in U.S. dollars to a segregated bank account of the Company or the Rights
Offering Subscription Agent designated in the Funding Notice, or make other
arrangements that are reasonably acceptable to the applicable Investment Company
and the Company, in satisfaction of such Backstop Party’s Backstop Commitment
and its obligations to fully exercise its Subscription Rights. For the avoidance
of doubt, any Backstop Party that fails to fulfill its obligation to fully
deliver and pay the aggregate Per Share Purchase Price for such Backstop Party’s
Backstop Commitment Percentage of any Unsubscribed Shares or fully exercise such
Backstop Party’s Subscription Rights (including the Direct Investment Rights)
and duly purchase all of the Common Shares issuable to it pursuant to such
exercise on (i) if an Investment Company, on the Closing Date, or
(ii) otherwise, on the Escrow Account Funding Date, as applicable, shall be
deemed a Defaulting Backstop Party. If the Closing does not occur, all amounts
deposited by the Backstop Parties in the Escrow Account or segregated account,
as applicable, shall be returned to the Backstop Parties as promptly as
reasonably practicable.

 

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Section 2.5          Closing.

 

(a)          Subject to Article VII, unless otherwise mutually agreed in writing
between the Company and the Required Backstop Parties, the closing of the
Backstop Commitments (the “Closing”) shall take place at the offices of
Kirkland & Ellis LLP, 609 Main Street, Houston, Texas 77002 at 10:00 a.m.,
Houston, Texas time, on the date on which all of the conditions set forth in
Article VII shall have been satisfied or waived in accordance with this
Agreement (other than conditions that by their terms are to be satisfied at the
Closing, but subject to the satisfaction or waiver of such conditions). The date
on which the Closing actually occurs shall be referred to herein as the “Closing
Date”. The Closing Date shall be concurrent with the Plan Effective Date.

 

(b)          At the Closing, the funds held in the Escrow Account (and any
amounts paid to a Rights Offering Subscription Agent bank account pursuant to
the last sentence of Section 2.4(b)) shall, as applicable, be released and
utilized in accordance with the Plan.

 

(c)          At the Closing, issuance of the Rights Offering Shares purchased by
each Backstop Party under the Rights Offering (including the Direct Investment
Shares) or the Unsubscribed Shares pursuant to the Backstop Commitment
(including any Available Shares that such Backstop Party has agreed to purchase
in addition to its Backstop Commitment as a Replacing Backstop Party) will be
made by Reorganized Chesapeake to each Backstop Party (or to its designee in
accordance with Section 2.6(a)) in accordance with Section 6.7 against payment
of the aggregate Per Share Purchase Price for such Common Shares purchased by
such Backstop Party, in satisfaction of such Backstop Party’s Backstop
Commitment. Notwithstanding anything to the contrary in this Agreement, all
Common Shares (including the Rights Offering Shares, Direct Investment Shares,
Unsubscribed Shares and Put Option Premium Shares) will be delivered with all
issue, stamp, transfer, sales and use, or similar transfer Taxes or duties that
are due and payable (if any) in connection with such delivery duly paid by the
Company on behalf of Reorganized Chesapeake.

 

Section 2.6          Designation and Assignment Rights.

 

(a)          No Backstop Party shall be entitled to Transfer all or any portion
of its Backstop Commitment except as expressly provided in this Section 2.6.
After the Closing Date, nothing in this Agreement shall limit or restrict in any
way the ability of any Backstop Party (or any permitted transferee thereof) to
Transfer any of the Common Shares or any interest therein; provided, that any
such Transfer shall be made pursuant to an effective registration statement
under the Securities Act or an exemption from the registration requirements
thereunder and pursuant to applicable securities Laws. Notwithstanding anything
in this Agreement to the contrary, this Agreement does not limit or restrict the
Transfer of any Company Claims with respect to the Debtors and nothing in this
Agreement shall restrict the ability of a Backstop Party to Transfer any Company
Claims (including the associated Subscription Rights) in compliance with
Section 8 of the Restructuring Support Agreement, and any such Transfer shall
not impair or otherwise affect the rights and obligations of such Backstop Party
under this Agreement or, for the avoidance of doubt, result in any change to
such Backstop Party’s Backstop Commitment Percentage.

 

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(b)          Each Backstop Party shall have the right to designate by written
notice to the Company no later than two (2) Business Days prior to the Closing
Date that some or all of the Unsubscribed Shares, Direct Investment Shares and
Put Option Premium Shares that it is obligated or has the right to receive
hereunder (including any Available Shares that such Backstop Party has agreed to
purchase in addition to its Backstop Commitment as a Replacing Backstop Party)
be issued in the name of, and delivered to, one or more of its Affiliates or
Affiliated Funds (each, a “Related Purchaser”) upon receipt by the Company of
payment therefor in accordance with the terms hereof, which notice of
designation shall (i) be addressed to the Company and signed by such Backstop
Party and each such Related Purchaser, (ii) specify the number of Unsubscribed
Shares, Direct Investment Shares and Put Option Premium Shares to be delivered
to or issued in the name of such Related Purchaser and (iii) contain a
confirmation by each such Related Purchaser of the accuracy of the
representations and warranties set forth in Section 5.4 through Section 5.9, as
if such Related Purchaser was a Backstop Party; provided, that no such
designation pursuant to this Section 2.6(b) shall relieve such Backstop Party
from its obligations under this Agreement.

 

(c)          Each Backstop Party shall have the right to Transfer all or any
portion of its Backstop Commitment to (i) an Affiliated Fund of the transferring
Backstop Party or (ii) another Backstop Party or an Affiliated Fund thereof
without the prior written consent of the Company or any other Backstop Party
provided, that as a precondition to any such Transfer (i) such transferee, if
not already a Backstop Party, shall agree to be fully bound by, and subject to,
this Agreement as a Backstop Party hereto and shall execute and deliver a
joinder agreement in substantially the form attached as Exhibit A hereto or
otherwise in form and substance reasonably acceptable to the Company (a “Joinder
Agreement”) and (ii) such transferee, if not already a party to the
Restructuring Support Agreement, shall execute a joinder to the Restructuring
Support Agreement. The parties agreeing to such Transfer shall provide prompt
written notice thereof to the Company and the other Backstop Parties. Any such
Transfer shall relieve the transferring Backstop Party from all of its rights
and obligations under this Agreement with respect to such transferred Backstop
Commitment if (i) to the extent such transferred Backstop Commitment is to an
existing Backstop Party, after giving effect to such Transfer, the aggregate
Backstop Commitments of the transferee Backstop Party and all of its Affiliated
Funds, taken as a whole, does not exceed 125% of such aggregate Backstop
Commitments in effect as of the date of this Agreement; (ii) the transferring
Backstop Party (A) has provided an adequate equity support letter or a
guarantee, in an amount sufficient to satisfy the transferred Backstop
Commitment, in form and substance reasonably acceptable to the Company or
(B) remains fully obligated to fund such Backstop Commitment; or (iii) the
Company provides prior written consent of such Transfer, not to be unreasonably
withheld, conditioned or delayed.

 

20

 

 

(d)

 

(i)           Subject to Section 2.6(d)(ii), if a Backstop Party desires to
Transfer (a “Transferring Backstop Party”) all or any portion of its Backstop
Commitment to a Person other than a Backstop Party as of such date (a “New
Backstop Party”), such Transferring Backstop Party shall first provide written
notice (an “Offering Notice”) to the other Backstop Parties party to this
Agreement as of such date (the “Non-Transferring Backstop Parties”) and the
Company of such Transfer, which Offering Notice shall state the amount of the
Backstop Commitment proposed to be Transferred by the Transferring Backstop
Party (the “Offered Backstop Commitment”), the consideration offered by the New
Backstop Party and the other material terms and conditions of the Transfer,
including a description of any non-cash consideration in sufficient detail to
permit the valuation thereof. The Offering Notice shall constitute the
Transferring Backstop Party’s offer to Transfer the Offered Backstop Commitment
to the Non-Transferring Backstop Parties, which offer shall be irrevocable for
ten (10) Business Days (the “ROFO Notice Period”). Upon receipt of the Offering
Notice, each Non-Transferring Backstop Party may elect during the ROFO Notice
Period, in its sole discretion, to assume, in whole or in part, the Offered
Backstop Commitment on the same terms and for the same consideration as set
forth in the Offering Notice by delivering a written notice (an “Offer
Acceptance Notice”) to the Transferring Backstop Party, the other
Non-Transferring Backstop Parties and the Company stating that it offers to
purchase such portion of the Offered Backstop Commitment on the terms specified
in the Offering Notice. Any Offer Acceptance Notice shall be binding upon
delivery and irrevocable by the applicable Non-Transferring Backstop Party. If
more than one Non-Transferring Backstop Party (each, a “Purchasing Backstop
Party”) timely delivers an Offer Acceptance Notice and the aggregate amount of
Backstop Commitments to be purchased pursuant to such Offer Acceptance Notices
is greater than the amount of the Offered Backstop Commitment, each Purchasing
Backstop Party shall be allocated a portion of the Offered Backstop Commitment
based upon its applicable Backstop Commitment Percentage as of the date of the
Offering Notice as compared to the Backstop Commitment Percentages of all of the
Purchasing Backstop Parties, unless otherwise agreed to by the Non-Transferring
Backstop Parties. To the extent any portion of the Offered Backstop Commitment
is not assumed by the Non-Transferring Backstop Parties, the Transferring
Backstop Party shall have a thirty (30) calendar day period in which to agree a
Transfer of such portion to a New Backstop Party on substantially the same (or
more favorable as to the Transferring Backstop Party) terms and conditions as
were set forth in the Offering Notice. If the Transferring Backstop Party does
not agree such a Transfer in accordance with the foregoing time limitations,
then the right of the Transferring Backstop Party to agree such Transfer
pursuant to this Section 2.6(d) shall terminate and the Transferring Backstop
Party shall again comply with the procedures set forth in this
Section 2.6(d) with respect to any proposed Transfer of its Backstop Commitments
to a new Backstop Party.

 

(ii)          Notwithstanding anything to the contrary set forth in
Section 2.6(d)(i), a Transferring Backstop Party may Transfer, in one or more
Transfers, to a New Backstop Party up to an aggregate of ten percent (10%) of
the Backstop Commitments of such Transferring Backstop Party and all of its
Affiliated Funds, taken as a whole, in effect as of the date hereof, without
providing an Offering Notice or otherwise complying with the procedures in
Section 2.6(d)(i).

 

(iii)         If a New Backstop Party assumes any Backstop Commitments in
compliance with this Section 2.6(d), such Transfer shall relieve the
Transferring Backstop Party from all of its rights and obligations under this
Agreement with respect to such transferred Backstop Commitment if (A) to the
extent such transferred Backstop Commitment is to a Non-Transferring Backstop
Party, on the same conditions as set forth in Section 2.6(c), (B) the
transferring Backstop Party (1) has provided an adequate equity support letter
or a guarantee, in an amount sufficient to satisfy the transferred Backstop
Commitment, in form and substance reasonably acceptable to the Company or
(2) remains fully obligated to fund such Backstop Commitment; or (C) the Company
provides prior written consent of such Transfer, not to be unreasonably
withheld, conditioned or delayed. As preconditions to any Transfer of a Backstop
Commitment to a New Backstop Party pursuant to this Section 2.6(d): (I) such New
Backstop Party shall agree to be fully bound by, and subject to, this Agreement
as a Backstop Party hereto and shall execute and deliver a Joinder Agreement and
(II) such New Backstop Party shall execute a joinder to the Restructuring
Support Agreement.

 

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(e)          Notwithstanding the foregoing, each Backstop Party may elect to
Transfer all or any portion of its Backstop Commitment to a New Backstop Party
without following the procedures in Section 2.6(d) and without the prior consent
of the Company or any other Backstop Party if such transferring Backstop Party
elects to remain fully obligated to fund its Backstop Commitment in the event
such New Backstop Party defaults in the funding. As preconditions to any such
Transfer: (i) such New Backstop Party shall agree to be fully bound by, and
subject to, this Agreement as a Backstop Party hereto and shall execute and
deliver a Joinder Agreement and (ii) such New Backstop Party shall execute a
joinder to the Restructuring Support Agreement. Such Joinder Agreement shall
indicate that the Transferring Backstop Party remains fully obligated to fund
the Transferred Backstop Commitment in the event that the New Backstop Party
defaults under any of its obligations hereunder. The parties agreeing to such
Transfer shall provide prompt written notice thereof to the Company and the
other Backstop Parties. Upon receipt of such written notice, the Company shall
revise the Backstop Commitment Schedule to reflect such Transfer and also
indicate that the Transferring Backstop Party remains obligated in the event the
New Backstop Party defaults in its obligations hereunder. For all other purposes
hereunder, the New Backstop Party shall have the rights and obligations
associated with the transferred Backstop Commitment, including with respect to
the Put Option Premium and the determination of the Required Backstop Parties.

 

(f)           Upon the consummation of any Transfers of Backstop Commitments in
accordance with Section 2.6(c), Section 2.6(d) or Section 2.6(e), the Company
shall revise the Backstop Commitment Schedule to reflect such Transfer.
Notwithstanding anything to the contrary contained in this Section 2.6, any
Transfer of a Backstop Commitment under Section 2.6(c), Section 2.6(d) or
Section 2.6(e) must include the associated Direct Investment Rights, which may
not be transferred, in whole or in part, separate from the Backstop Commitment.

 

Article III
PUT OPTION PREMIUM

 

Section 3.1            Put Option Premium Payable by the Company. Subject to
Section 3.2, in consideration for the Backstop Commitment and the other
agreements of the Backstop Parties in this Agreement, the Debtors shall pay or
cause to be paid a nonrefundable aggregate fee equal to $60 million, which
represents ten percent (10%) of the Rights Offering Amount, based on their
respective Backstop Commitment Percentages at the time such payment is made (the
“Put Option Premium”) (including any Replacing Backstop Party but excluding any
Defaulting Backstop Party). If the Backstop Parties are entitled to payment of
the Put Option Premium in cash, the Put Option Premium shall be a superpriority
administrative expense with priority over all other administrative claims except
it shall be unsecured and (i) be subordinated in priority to the administrative
claims provided on account of the DIP Claims and adequate protection on account
of the Revolving Credit Facility Claims (and any claims to which such DIP Claims
and adequate protection claims are subordinate) and (ii) payable only after all
such claims set forth in clause (i) have been paid in full in cash or provided
such other treatment as is agreed by (a) with respect to DIP Claims, 100% of New
Money DIP Lenders and (b) with respect to Revolving Credit Facility Claims,
holders of Revolving Credit Facility Claims sufficient to constitute class
acceptance pursuant to Section 1126(c) of the Bankruptcy Code.

 

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Section 3.2            Payment of Put Option Premium.

 

(a)          The Put Option Premium shall be fully earned, nonrefundable and
non-avoidable and accrued by the Company as of the date hereof. The Put Option
Premium shall be paid by the Company and Reorganized Chesapeake by, as
applicable: (i) the issuance of a number of Common Shares equal to the Put
Option Premium divided by the Per Share Purchase Price (the “Put Option Premium
Shares”) (in each case rounded among the Backstop Parties solely to avoid
fractional shares as the Required Backstop Parties may determine in their sole
discretion) at the Closing pursuant to Section 2.5 or (ii) if this Agreement is
earlier terminated pursuant to Article VIII (other than any termination of this
Agreement with respect to one or more Backstop Parties pursuant to
Section 8.3(b) or Section 8.4) payment in cash by wire transfer of immediately
available funds in U.S. dollars to the accounts specified by each Backstop Party
to the Company in writing as contemplated by Section 8.5(b). The aggregate Put
Option Premium payable to a Backstop Party shall be reduced ratably upon a
Backstop Party Default based on the Backstop Commitment Percentage of the
Defaulting Backstop Party; provided, that if a Backstop Party Replacement
sufficient to cure all or a portion of the Backstop Party Default occurs, the
Put Option Premium shall only be ratably reduced to the extent of the uncured
Backstop Party Default, and such amount that would have otherwise been reduced
shall be paid to the Replacing Backstop Parties, as applicable.

 

(b)          The Put Option Premium shall be paid by the Debtors, free and clear
of any withholding or deduction for any applicable Taxes (except for any Taxes
arising as a result of a Backstop Party’s failure to provide an IRS Form W-9 or
appropriate IRS Form W-8, as applicable), on the Plan Effective Date, within the
time specified therein. For the avoidance of doubt, the Put Option Premium will
be payable as provided herein, irrespective of the amount of Unsubscribed Shares
(if any) actually purchased.

 

Article IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

Except (i) as set forth in the corresponding section of the Company Disclosure
Schedules or (ii) as disclosed in the Company SEC Documents filed with the SEC
on or after December 31, 2019 and publicly available on the SEC’s Electronic
Data-Gathering, Analysis and Retrieval system prior to the date hereof
(excluding any disclosures contained in the “Forward-Looking Statements” or
“Risk Factors” sections thereof), the Company, on behalf of itself and each of
the other Debtors hereby represents and warrants to the Backstop Parties (unless
otherwise set forth herein, as of the date of this Agreement and as of the
Closing Date) as set forth below.

 

Section 4.1           Organization and Qualification. Each of the Debtors (a) is
a duly organized and validly existing corporation, limited liability company or
partnership, as the case may be, and, if applicable, in good standing (or the
equivalent thereof) under the Laws of the jurisdiction of its incorporation or
organization (except where the failure to be in good standing, or the
equivalent, would not reasonably be excepted to have, individually or in the
aggregate, a Material Adverse Effect), (b) has the corporate or other applicable
power and authority to own its property and assets and to transact the business
in which it is currently engaged and presently proposes to engage and (c) except
where the failure to have such authority or qualification would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect, is duly qualified and is authorized to do business and is in good
standing in each jurisdiction where the conduct of its business as currently
conducted requires such qualifications.

 

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Section 4.2           Corporate Power and Authority.

 

(a)          The Company has the requisite corporate power and authority
(i) (A) subject to entry of the Backstop Commitment Agreement Approval Order and
the Confirmation Order and the terms thereof, to enter into, execute and deliver
this Agreement and to perform the BCA Approval Obligations and (B) subject to
entry of the Backstop Commitment Agreement Approval Order and the Confirmation
Order and the terms thereof, to perform each of its other obligations hereunder
and (ii) subject to entry of the Backstop Commitment Agreement Approval Order,
the Disclosure Statement Order, the Confirmation Order and the DIP Order and the
terms thereof, to consummate the transactions contemplated herein and by the
Restructuring Support Agreement, to enter into, execute and deliver all
agreements to which it will be a party as contemplated by this Agreement and the
Restructuring Support Agreement (this Agreement, the Plan, the Disclosure
Statement, the Restructuring Support Agreement, the DIP Credit Agreements, the
Exit Facility, the Registration Rights Agreement and such other agreements and
any Plan supplements or documents referred to herein or therein or hereunder or
thereunder, collectively, the “Transaction Agreements”) and to perform its
obligations under each of the Transaction Agreements (other than this
Agreement). Subject to the receipt of the foregoing Orders, as applicable, the
execution and delivery of this Agreement and each of the other Transaction
Agreements and the consummation of the transactions contemplated hereby and
thereby have been or will be duly authorized by all requisite corporate action
on behalf of the Company.

 

(b)          Subject to entry of the Backstop Commitment Agreement Approval
Order, the Disclosure Statement Order, the Confirmation Order and the DIP Order
and the terms thereof, each of the other Debtors has the requisite power and
authority (corporate or otherwise) to enter into, execute and deliver each
Transaction Agreement to which such other Debtor is a party and to perform its
obligations thereunder. Subject to entry of the Backstop Commitment Agreement
Approval Order, the Disclosure Statement Order, the Confirmation Order and the
DIP Order and the terms thereof, the execution and delivery of this Agreement
and each of the other Transaction Agreements and the consummation of the
transactions contemplated hereby and thereby have been or will be duly
authorized by all requisite action (corporate or otherwise) on behalf of each
other Debtor party thereto.

 

(c)          Notwithstanding the foregoing, the Company makes no express or
implied representations or warranties, on behalf of itself or the other Debtors,
with respect to actions (including in the foregoing) to be undertaken by
Reorganized Chesapeake, which actions shall be governed by the Plan and the
Restructuring Support Agreement.

 

24

 

 

Section 4.3            Execution and Delivery; Enforceability. Subject to entry
of the Backstop Commitment Agreement Approval Order and the terms thereof, this
Agreement will have been, and subject to the entry of the Backstop Commitment
Agreement Approval Order, the Disclosure Statement Order, the Confirmation
Order, the DIP Order and the terms thereof, each other Transaction Agreement
will be, duly executed and delivered by the Company and each of the other
Debtors party thereto, as applicable. Upon entry of the Backstop Commitment
Agreement Approval Order and assuming due and valid execution and delivery
hereof by the Backstop Parties, the BCA Approval Obligations will constitute the
valid and legally binding obligations of the Company and, to the extent
applicable, the other Debtors, enforceable against the Company and, to the
extent applicable, the other Debtors in accordance with their respective terms,
subject to bankruptcy, insolvency, reorganization, moratorium and other similar
Laws now or hereafter in effect relating to creditor’s rights generally and
subject to general principles of equity (collectively, the “Enforceability
Exceptions”). Upon entry of the Backstop Commitment Agreement Approval Order and
assuming due and valid execution and delivery of this Agreement and the other
Transaction Agreements by the Backstop Parties and, to the extent applicable,
any other parties hereof and thereof, each of the obligations of the Company
and, to the extent applicable, the other Debtors hereunder and thereunder will
constitute the valid and legally binding obligations of the Company and, to the
extent applicable, the other Debtors, enforceable against the Company and, to
the extent applicable, the other Debtors, in accordance with their respective
terms, subject to the Enforceability Exceptions.

 

Section 4.4            Authorized and Issued Equity Interests.

 

(a)          On the Closing Date, Reorganized Chesapeake will have sufficient
authorized but unissued Common Shares to meet its obligations to deliver the
Rights Offering Shares, Unsubscribed Shares, Put Option Premium Shares, any
Common Shares to be issued upon the valid exercise of the New Warrants (“Warrant
Shares”) and any other Common Shares to be issued pursuant to the Plan, the
Restructuring Support Agreement and this Agreement. The Common Shares and New
Warrants to be issued pursuant to the Plan and the Restructuring Support
Agreement and this Agreement, including the Rights Offering Shares, Unsubscribed
Shares and Put Option Premium Shares, the Warrant Shares and any other Common
Shares to be issued pursuant to the Plan, the Restructuring Support Agreement
and this Agreement, will, when issued and delivered by Reorganized Chesapeake,
be duly and validly authorized, issued and delivered and shall be fully paid and
non-assessable, and free and clear of all Taxes, Liens (other than transfer
restrictions imposed hereunder, in connection with the Restructuring
Transactions or by applicable Law), preemptive rights, subscription and similar
rights, other than any rights set forth in the New Organizational Documents and
the Registration Rights Agreement. Reorganized Chesapeake shall at all times
reserve and keep available a number of its authorized but unissued Common Shares
sufficient to permit the exercise in full of all outstanding New Warrants. The
Warrant Shares will, when issued and delivered by Reorganized Chesapeake, be
duly and validly authorized, issued and delivered and shall be fully paid and
non-assessable, and free and clear of all Taxes, Liens (other than transfer
restrictions imposed hereunder or by applicable Law), preemptive rights,
subscription and similar rights, other than any rights set forth in the New
Organizational Documents and the Registration Rights Agreement.

 

(b)          Except as set forth in this Agreement or as contemplated by the
Plan, the Restructuring Support Agreement, the New Warrants or Management
Incentive Plan, as of the Closing Date, none of the Debtors will be party to or
otherwise bound by or subject to any outstanding option, warrant, call, right,
security, commitment, Contract, arrangement or undertaking (including any
preemptive right) that (i) obligates any of the Debtors to issue, deliver, sell
or transfer, or repurchase, redeem or otherwise acquire, or cause to be issued,
delivered, sold or transferred, or repurchased, redeemed or otherwise acquired,
any units or shares of capital stock of, or other equity or voting interests in,
any of the Debtors or any security convertible or exercisable for or
exchangeable into any units or shares of capital stock of, or other equity or
voting interests in, any of the Debtors, (ii) obligates any of the Debtors to
issue, grant, extend or enter into any such option, warrant, call, right,
security, commitment, Contract, arrangement or undertaking, (iii) restricts the
Transfer of any units or shares of capital stock of, or other equity interests
in, any of the Debtors or (iv) relates to the voting of any units or other
equity interests in any of the Debtors.

 

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Section 4.5            No Conflicts. Assuming the consents described in
Section 4.6 and Section 7.1(j) are obtained, the execution and delivery by the
Company and, if applicable, any other Debtor, of this Agreement, the Plan and
the other Transaction Agreements, the compliance by the Company and, if
applicable, any other Debtor, with the provisions hereof and thereof and the
consummation of the transactions contemplated herein and therein will not
(a) conflict with, or result in a breach, modification or violation of, any of
the terms or provisions of, or constitute a default under (with or without
notice or lapse of time, or both), or result, except to the extent specified in
the Plan, in the acceleration of, or the creation of any Lien under, or cause
any payment or consent to be required under any Contract to which any Debtor
will be bound as of the Closing Date after giving effect to the Plan or to which
any of the property or assets of any Debtor will be subject as of the Closing
Date after giving effect to the Plan, (b) result in any violation of the
provisions of any of the Debtors’ organizational documents or the New
Organizational Documents (other than, for the avoidance of doubt, a breach or
default that would be triggered as a result of the Chapter 11 Cases or the
Company’s or any Debtor’s undertaking to implement the Restructuring
Transactions through the Chapter 11 Cases), or (c) result in any violation of
any Law or Order applicable to any Debtor or any of their properties, except in
each of the cases described in clause (a) or (c) for any conflict, breach,
modification, violation, default, acceleration or Lien which would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.

 

Section 4.6            Consents and Approvals. No consent, approval,
authorization, Order, registration or qualification of or with any Governmental
Unit having jurisdiction over any of the Debtors or any of their properties
(each, an “Applicable Consent”) is required for the execution and delivery by
the Company and, to the extent relevant, the other Debtors, of this Agreement,
the Plan and the other Transaction Agreements, the compliance by the Company
and, to the extent relevant, the other Debtors, with the provisions hereof and
thereof and the consummation of the transactions contemplated herein and
therein, except for (a) the entry of the Backstop Commitment Agreement Approval
Order authorizing the Company to assume this Agreement and perform the BCA
Approval Obligations, (b) entry of the Disclosure Statement Order, (c) entry by
the Bankruptcy Court, or any other court of competent jurisdiction, of Orders as
may be necessary in the Chapter 11 Cases from time-to-time; (d) the entry of the
Confirmation Order, (e) filings, notifications, authorizations, approvals,
consents, clearances or termination or expiration of all applicable waiting
periods under any Antitrust Laws in connection with the transactions
contemplated by this Agreement, (f) such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities or
“Blue Sky” Laws in connection with the transactions contemplated by this
Agreement and the Rights Offering, (g) any notifications, filings, consents,
waivers and approvals listed on Section 7.1(j) of the Company Disclosure
Schedules and (h) any other Applicable Consents that, if not made or obtained,
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.

 

26

 

 

Section 4.7            Absence of Certain Changes. Since December 31, 2019 to
the date of this Agreement, no Event has occurred or exists that constitutes,
individually or in the aggregate, a Material Adverse Effect.

 

Section 4.8            No Violation; Compliance with Laws. (a) The Company is
not in violation of its certificate of formation or bylaws in any material
respect, and (b) no other Debtor is in violation of its respective charter or
bylaws, certificate of formation or limited liability company operating
agreement or similar organizational document in any material respect. None of
the Debtors is or has been at any time since January 1, 2018 in violation of any
Law or Order, except for any such violations that have not had and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.

 

Section 4.9            Arm’s Length. The Company and each Debtor acknowledges
and agrees that (a) each of the Backstop Parties is acting solely in the
capacity of an arm’s length contractual counterparty to the Company with respect
to the transactions contemplated hereby and not as a financial advisor or a
fiduciary to, or an agent of, the Company or any of its Subsidiaries and (b) no
Backstop Party is advising the Company or any of its Subsidiaries as to any
legal, tax, investment, accounting or regulatory matters in any jurisdiction.

 

Section 4.10          Financial Statements. The consolidated financial
statements of the Company included or incorporated by reference in Forms 10-Q
and 10-K filed by the Company with the SEC since December 31, 2019, comply or
when submitted or filed will comply, as the case may be, in all material
respects with the applicable requirements of the Securities Act and the Exchange
Act and present fairly or when submitted and filed will present fairly in all
material respects the financial position, results of operations and cash flows
of the Company and its consolidated subsidiaries, taken as a whole, as of the
dates indicated and for the periods specified therein. Such financial statements
have been prepared in conformity with GAAP applied on a consistent basis
throughout the periods and at the dates covered thereby (except as disclosed
therein). Neither the Company nor any of its Subsidiaries is a party to, or has
any commitment to become a party to, any “off balance sheet arrangements” (as
defined in Item 303(a) of Regulation S-K promulgated by the SEC), where the
purpose or intended effect of such arrangement is to avoid disclosure of any
material transaction involving, or material liabilities of, the Company or any
of its Subsidiary in the Company SEC Documents.

 

Section 4.11          SEC Documents. Since December 31, 2019, the Company has
filed all reports, schedules, forms, statements and other documents (including
exhibits and other information incorporated therein) required to be filed with
the SEC. No Company SEC Document that has been filed prior to the date this
representation has been made, after giving effect to any amendments or
supplements thereto and to any subsequently filed Company SEC Documents, in each
case filed prior to the date this representation is made, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.

 

Section 4.12          No Undisclosed Material Liabilities. Except as has not had
and would not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect, there are no liabilities or obligations of the
Company or any of its Subsidiaries of any kind whatsoever, whether accrued,
contingent, absolute, determined or determinable, and there is no existing
condition, situation or set of circumstances that would reasonably be expected
to result in such a liability or obligation other than: (i) liabilities or
obligations disclosed and provided for in the Company Balance Sheet or in the
notes thereto; and (ii) liabilities or obligations incurred in the ordinary
course of business since December 31, 2019 or disclosed in the Company SEC
Documents.

 

27

 

 

Section 4.13          Legal Proceedings. Other than the Chapter 11 Cases and any
adversary proceedings or contested motions commenced in connection therewith,
there are no notices, claims, complaints, requests for information or legal,
governmental, administrative, judicial or regulatory investigations, audits,
actions, suits, arbitrations or proceedings (collectively, “Legal Proceedings”)
pending or, to the Company’s knowledge, threatened to which the Company or any
of its Subsidiaries is a party or to which any property of the Company or any of
its Subsidiaries is the subject that would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.

 

Section 4.14          Labor Relations.

 

(a)          Other than the Chapter 11 Cases and any adversary proceedings or
contested motions commenced in connection therewith, there is no labor or
employment-related Legal Proceeding pending or, to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries, by or on behalf of
any of their respective employees or such employees’ labor organization, works
council, workers’ committee, union representatives or any other type of
employees’ representatives appointed for collective bargaining purposes
(collectively “Employee Representatives”), or by any Governmental Unit, that has
had or would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.

 

(b)          Neither the Company nor any of its Subsidiaries is or in the past
two (2) years has been a party to or subject to, or is currently negotiating in
connection with entering into, any Collective Bargaining Agreement, and there
has not been any union organizing efforts, petitions or other unionization
activity seeking recognition of a collective bargaining unit relating to the
Company or any of its Subsidiaries in the past two (2) years. There is no
strike, slowdown, concerted work stoppage, picketing, lockout, material labor
dispute or, to the knowledge of the Company, threat thereof, by or with respect
to any employees of the Company or any of its Subsidiaries, and, to the
knowledge of the Company, there has not been any such action within the past two
(2) years. Except as has not had and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, neither the Company
nor any of its Subsidiaries is subject to any obligation (whether pursuant to
Law or Contract) to notify, inform and/or consult with, or obtain consent from,
any Employee Representative regarding the transactions contemplated by this
Agreement prior to entering into this Agreement.

 

(c)          The Company and each of its Subsidiaries are, and within the past
two (2) years have been, in compliance with all applicable Laws relating to
labor and employment, including those relating to payment of their obligations
to all employees of the Company and any of its Subsidiaries in respect of all
wages, salaries, fees, commissions, bonuses, overtime pay, holiday pay, sick pay
and all other compensation, remuneration and emoluments due and payable to such
employees under Law, and those relating to labor management relations, hours,
employee classification, discrimination, sexual harassment, civil rights,
affirmative action, work authorization, immigration, safety and health,
information privacy and security and workers compensation, except in each case
to the extent that any noncompliance does not constitute or would not reasonably
be expected to constitute, individually or in the aggregate, a Material Adverse
Effect and, for the avoidance of doubt, except for any payments that are not
permitted by the Bankruptcy Court or the Bankruptcy Code.

 

28

 

 

(d)          The Company and each of its Subsidiaries are, and within the past
two (2) years have been, in compliance with the Worker Adjustment and Retraining
Notification Act and any comparable Law and have no liabilities or other
obligations thereunder, except to the extent that any noncompliance does not
constitute or would not reasonably be expected to constitute, individually or in
the aggregate, a Material Adverse Effect.

 

Section 4.15          Intellectual Property. Except as has not had and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect: (i) the Company and its Subsidiaries exclusively own, free and
clear of all Liens except for Permitted Liens, all of their (x) patents and
registered Intellectual Property (and all applications therefor) and
(y) proprietary unregistered Intellectual Property, and all of the items in
clause (x) are subsisting, and, to the knowledge of the Company, valid and
enforceable; (ii) no Intellectual Property owned by the Company or its
Subsidiaries, to the knowledge of the Company, has been infringed,
misappropriated or violated (“Infringe”) by any other Person since January 1,
2017; (iii) the conduct of the businesses of the Company and its Subsidiaries as
presently conducted does not Infringe any Intellectual Property of any other
Person and no Person has alleged same in writing, except for allegations that
have since been resolved or in connection with the Chapter 11 Cases and any
adversary proceedings or contested motions commenced in connection therewith;
and (iv) the Company and its Subsidiaries take commercially reasonable actions
to maintain and protect (a) the confidentiality of their trade secrets and
confidential information and (b) the integrity, security and continuous
operation of their material software, systems, websites and networks (and all
data therein), and, in the one year prior to the date of this Agreement (or
earlier, if any of same have not since been resolved in all material respects),
there have been no outages, interruptions, or breaches of same.

 

Section 4.16          Title to Real and Personal Property. Except as has not had
and would not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect:

 

(a)          Real Property. The Company or one of its Subsidiaries, as the case
may be, has good and valid title in fee simple to each Owned Real Property, free
and clear of all Liens, except for Permitted Liens.

 

(b)          Leased Real Property. All Real Property Leases necessary for the
operation of the Post-Effective Date Business are valid, binding and enforceable
by and against the Company or its relevant Subsidiaries, and, to the knowledge
of the Company no written notice to terminate, in whole or part, any of such
leases has been delivered to the Company or any of its Subsidiaries (nor, to the
knowledge of the Company, has there been any indication that any such notice of
termination will be served). Other than as a result of the filing of the Chapter
11 Cases, neither the Company nor any of its Subsidiaries nor, to the knowledge
of the Company, any other party to any material Real Property Lease necessary
for the operation of the Post-Effective Date Business is in default or breach
under the terms thereof except for such instances of default or breach that do
not have and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.

 

29

 

 

(c)          Personal Property. The Company or its Subsidiaries has good title
or, in the case of leased assets, a valid leasehold interest, free and clear of
all Liens, to all of its tangible personal property and leased assets, except
for Permitted Liens.

 

Section 4.17          Licenses and Permits. The Company and its Subsidiaries
possess all licenses, certificates, permits and other authorizations issued by,
and have made all declarations and filings with, the appropriate Governmental
Units that are necessary for the ownership or lease of their respective
properties and the conduct of the Post-Effective Date Business, in each case,
except as would not have and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. Except as would not
have and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, neither the Company nor any of its
Subsidiaries (i) has received notice of any revocation or modification of any
such license, certificate, permit or authorization or (ii) has any reason to
believe that any such license, certificate, permit or authorization will not be
renewed in the ordinary course.

 

Section 4.18          Environmental. The Company and its Subsidiaries are, and
have been for the past two (2) years, in compliance with all applicable Laws
relating to the protection of the environment, natural resources (including
wetlands, wildlife, aquatic and terrestrial species and vegetation) or of human
health and safety (with respect to exposure to Materials of Environmental
Concern), or to the management, use, transportation, treatment, storage,
disposal or arrangement for disposal of Materials of Environmental Concern
(collectively, “Environmental Laws”), except for such noncompliance that would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.

 

(b)          The Company and its Subsidiaries (i) have received, possess and are
in compliance with all permits, licenses, exemptions and other approvals
required of them under applicable Environmental Laws to conduct their respective
businesses as currently conducted (“Environmental Permits”), (ii) are not
subject to any written or other formal action to revoke, terminate, cancel or
limit any such Environmental Permits, and (iii) have paid all fees, assessments
or expenses due under any such Environmental Permits, except in each case as
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.

 

(c)          Except with respect to matters that have been fully and finally
settled or resolved, (i) there are no Legal Proceedings under any Environmental
Laws pending or, to the knowledge of the Company, threatened against the Company
or any of its Subsidiaries, and (ii) the Company and its Subsidiaries have not
received written notice of any actual or potential liability of the Company for
the investigation, remediation or monitoring of any Materials of Environmental
Concern at any location, or for any violation of Environmental Laws or
Environmental Permits, where such Legal Proceedings or liability would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.

 

(d)          Within the past two (2) years (or earlier, to the extent the
Company or any of its Subsidiaries is subject to ongoing obligations), none of
the Company or any of its Subsidiaries has entered into any consent decree,
settlement or other agreement with any Governmental Unit, and none of the
Company or its Subsidiaries is subject to any Order, in either case relating to
any Environmental Laws, Environmental Permits or to Materials of Environmental
Concern, except for such consent decrees, settlements, agreements or Orders that
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.

 

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(e)          There has been no release, disposal or arrangement for disposal of
any Materials of Environmental Concern by or on behalf of the Company or its
Subsidiaries, or release at or from any real property currently or, to the
knowledge of the Company, formerly owned, leased or operated by the Company or
its Subsidiaries, in each case that would reasonably be expected to (i) give
rise to any Legal Proceeding, or to any liability, under any Environmental Law,
or (ii) prevent the Company or any of its Subsidiaries from complying with
applicable Environmental Laws or Environmental Permits, except for such Legal
Proceedings, liability or burden or non-compliance that would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.

 

(f)          Neither the Company nor any of its Subsidiaries has assumed or
accepted by Contract any liabilities of any other Person under Environmental
Laws or concerning any Materials of Environmental Concern, where such assumption
or acceptance of responsibility would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.

 

(g)          There has been no third-party environmental investigation, study,
audit, review or assessment conducted on behalf of the Company within the last
two (2) years in relation to the current business of the Company or any of its
Subsidiaries or any real property or facility now or previously owned, leased or
operated by the Company or any of its Subsidiaries describing any facts or
circumstances which would reasonably be expected to give rise to any Legal
Proceeding, or to any liability, under any Environmental Law or Environmental
Permit, which Legal Proceeding or liability would reasonably be expected to have
a Material Adverse Effect, the non-privileged written part of which has not been
delivered or made available to the Backstop Parties.

 

(h)          Notwithstanding the generality of any other representations and
warranties in this Agreement, the representations and warranties in this
Section 4.18 constitute the sole and exclusive representations and warranties in
this Agreement with respect to any environmental, health or safety matters,
including any arising under or relating to Environmental Laws, Environmental
Permits or Materials of Environmental Concern.

 

Section 4.19          Tax Matters. Except in each case as to matters that would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect,

 

(a)          the Company and each of its Subsidiaries have timely filed or
caused to be timely filed (taking into account any applicable extension of time
within which to file) with the appropriate taxing authorities all tax returns,
statements, forms and reports (including declarations, disclosures, schedules,
estimates and information statements) for Taxes (“Tax Returns”) that are
required to be filed by the Company and its Subsidiaries. The Tax Returns
accurately reflect all liability for Taxes of the Company and its Subsidiaries
for the periods covered thereby;

 

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(b)          the Company and each of its Subsidiaries has paid or caused to be
paid all Taxes imposed on it or its assets, business or properties which Taxes
are due and payable and, to the extent not yet due and payable, has made
adequate provision for the payment of such Taxes in accordance with GAAP or will
make adequate provision therefor when required under GAAP on the financial
statements of the Company included in the Company SEC Documents (except
(i) Taxes or assessments that are being contested in good faith by appropriate
proceedings and for which the Company or its Subsidiaries (as the case may be)
have set aside on their books adequate reserves in accordance with GAAP or
(ii) Taxes the non-payment thereof is permitted or required by the Bankruptcy
Code);

 

(c)          as of the date hereof, with respect to the Company and its
Subsidiaries, other than in connection with (A) the Chapter 11 Cases, or
(B) Taxes being contested in good faith by appropriate proceedings for which
adequate provisions have been made (to the extent required in accordance with
GAAP), (I) there is no outstanding audit, assessment or written claim concerning
any Tax liability of the Company and its Subsidiaries, (II) neither the Company
nor its Subsidiaries have received any written notices from any taxing authority
relating to any outstanding tax issue that could materially affect the Company
and its Subsidiaries; and (III) there are no Liens with respect to Taxes upon
any of the assets or properties of the Company and its Subsidiaries, other than
Permitted Liens;

 

(d)          all Taxes that the Company and its Subsidiaries were required by
Law to withhold or collect in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third party
have been duly withheld or collected, and have been timely paid to the proper
authorities to the extent due and payable;

 

(e)          none of the Company or any of its Subsidiaries has been either a
“distributing corporation” or a “controlled corporation” in a distribution
occurring during the last two (2) years prior to the date hereof which was
treated by the parties thereto as a distribution to which Section 355 of the
Code is applicable;

 

(f)           within the last three (3) years prior to the date hereof, none of
the Company and any of its Subsidiaries has been included in any “consolidated,”
“unitary” or “combined” Tax Return provided for under any Law with respect to
Taxes for any taxable period for which the statute of limitations has not
expired (other than a group of which the Company and/or its current or past
Subsidiaries are or were the only members);

 

(g)          there are no tax sharing, indemnification or similar agreements in
effect between the Company or any of its Subsidiaries or any predecessor or
Affiliate thereof and any other party (including any predecessors or Affiliates
thereof) under which the Company or any of its Subsidiaries is a party to or
otherwise bound by; and

 

(h)          none of the Company and any of its Subsidiaries has received a
written claim which remains outstanding to pay any liability for Taxes of any
Person (other than the Company or its Subsidiaries) arising from the application
of U.S. Treasury Regulation Section 1.1502-6 or any analogous provision of
state, local or foreign law, by contract or as a transferee or successor.

 

(i)           Sections 4.14(c), 4.19, 4.20(a), 4.20(c) and 4.20(e) (in each
case, to the extent related to Tax matters) shall constitute the sole and
exclusive representations and warranties with respect to Tax matters. No
representation or warranty is provided with respect to any Tax position taken
for any Tax period following the consummation of the Plan or with respect to the
availability of any Tax attribute in such period. For the avoidance of doubt,
the foregoing sentence is not intended to address any Pre-Closing Tax Period.

 

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Section 4.20          Company Plans

 

(a)          Except as would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect: (i) each Company Plan is in
compliance with ERISA, the Code, other applicable Laws and its governing
documents; (ii) each Company Plan that is intended to be a qualified plan under
Section 401(a) of the Code has received a favorable determination or opinion
letter from the IRS, and, to the knowledge of the Company, nothing has occurred
that is reasonably likely to result in the loss of the qualification of such
Company Plan under Section 401(a) of the Code or the imposition of any
liability, penalty or tax under ERISA or the Code; (iii) all contributions
required to have been made under the terms of any Company Plan have been timely
made; and (iv) no claim, action, litigation, audit, examination, investigation
or administrative proceeding has been made, commenced or, to the knowledge of
the Company, threatened in writing with respect to any Company Plan (other than
(A) routine claims for benefits payable in the ordinary course, (B) otherwise in
relation to the Chapter 11 Cases or (C) any that, individually, would not
reasonably be expected to result in a liability of the Company or any of its
Subsidiaries in excess of $50,000).

 

(b)          Except as would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect, neither the Company nor any of its
Subsidiaries sponsors, maintains, administers or contributes to (or has any
obligation to contribute to) or has or is reasonably expected to have any direct
or indirect liability (including on account of a predecessor entity or an ERISA
Affiliate) with respect to, any plan subject to Title IV of ERISA, including any
Multiemployer Plan.

 

(c)          Except as would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect, neither the Company nor any of its
Subsidiaries has any current or projected liability for, and no Company Plan
provides for post-employment or retiree health, life insurance or other welfare
benefits, except for benefits required by Section 4980B of the Code or similar
Law.

 

(d)          Neither the execution of this Agreement, the Plan or the other
Transaction Agreements, nor the consummation of the transactions contemplated
hereby or thereby will (A) entitle any director, employee or individual
independent contractor of the Company or any of its Subsidiaries to severance
pay or any increase in severance pay upon any termination of service after the
date hereof or (B) accelerate the time of payment or vesting or result in any
payment or funding (through a grantor trust or otherwise) of compensation or
benefits under, increase the amount payable or result in any other material
obligation pursuant to, any of the Company Plans.

 

(e)          The execution, delivery of and performance by the Company and its
Subsidiaries of its obligations under this Agreement will not (either alone or
upon the occurrence of any additional or subsequent events) result in “excess
parachute payments” within the meaning of Section 280G(b)(1) of the Code or any
payments under any other applicable Laws that would be treated in such similar
nature to such section of the Code, with respect to any Company Plan that would
be in effect immediately after the Closing.

 

(f)           Except as would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect, no Company Plan is maintained
outside the jurisdiction of the United States and covers any employee residing
or working outside the United States.

 

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Section 4.21          Internal Control Over Financial Reporting. The Company has
established and maintains a system of internal control over financial reporting
(as defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act)
that complies in all material respects with the requirements of the Exchange Act
and has been designed to provide reasonable assurances regarding the reliability
of financial reporting and the preparation of financial statements for external
purposes in accordance with GAAP. To its knowledge, the Company does not have
any material weaknesses in its internal control over financial reporting as of
the date hereof.

 

Section 4.22          Disclosure Controls and Procedures. The Company
(i) maintains disclosure controls and procedures (within the meaning of
Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) designed to
ensure that information required to be disclosed by the Company in the reports
that it files and submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the SEC’s rules and
forms, including that information required to be disclosed by the Company in the
reports that it files and submits under the Exchange Act is accumulated and
communicated to management of the Company as appropriate to allow timely
decisions regarding required disclosure, and (ii) to the knowledge of the
Company has disclosed, based upon the most recent evaluation of the Company’s
internal control over financial reporting, to its auditors and the audit
committee of the Company’s board of directors (A) all significant deficiencies
and material weaknesses in the design or operation of the Company’s internal
control over financial reporting which are reasonably likely to adversely affect
its ability to record, process, summarize and report financial data and (B) any
fraud that involves management or other employees who have a significant role in
the Company’s internal control over financial reporting. Neither the Company nor
any of its Subsidiaries has made any prohibited loans to any executive officer
of the Company (as defined in Rule 3b-7 under the Exchange Act) or director of
the Company. There are no outstanding loans or other extensions of credit made
by the Company or any of its Subsidiaries to any executive officer of the
Company (as defined in Rule 3b-7 under the Exchange Act) or director of the
Company.

 

Section 4.23          Material Contracts.

 

(a)          Other than as a result of a rejection motion filed by any of the
Debtors in the Chapter 11 Cases, all Material Contracts are valid, binding and
enforceable by and against the Company or its relevant Subsidiary, except where
the failure to be valid, binding or enforceable would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect, and, to
the knowledge of the Company, no written notice to terminate, in whole or part,
any Material Contract has been delivered to the Company or any of its
Subsidiaries except where such termination would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect. Other than as
a result of the filing of the Chapter 11 Cases, neither the Company nor any of
its Subsidiaries nor, to the knowledge of the Company, any other party to any
Material Contract, is in default or material breach under the terms thereof
except, in each case, for such instances of default or material breach that
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect. For purposes of this Agreement, “Material Contract”
means any Contract necessary for the operation of the Post-Effective Date
Business that is a “material contract” (as such term is defined in Item
601(b)(10) of Regulation S-K or required to be disclosed on a Current Report on
Form 8-K).

 

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(b)          Except as has not, had and would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect, as of the
date hereof, neither the Company nor any of its Subsidiaries is party to any
contract, agreement, arrangement or understanding containing any provision or
covenant limiting in any material respect the ability of the Company or any of
its Subsidiaries (or, after the Plan Effective Date) to (i) sell any products or
services of or to any other Person or in any geographic region or (ii) engage in
any line of business (or, after the Plan Effective Date, Reorganized Chesapeake
or its Subsidiaries) (each, a “Non-Competition Agreement”).

 

Section 4.24          No Unlawful Payments. Since January 1, 2015, neither the
Company nor any of its Subsidiaries nor, to the knowledge of the Company, any of
their respective directors, officers or employees, agents or other Persons
acting on behalf of the Company or any of its Subsidiaries, has in any material
respect: (a) used any funds of the Company or any of its Subsidiaries for any
unlawful contribution, gift, entertainment or other unlawful expense, in each
case relating to political activity; (b) made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; (c) violated or is in violation of any provision of U.S.
Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations
thereunder (“FCPA”); or (d) made any bribe, rebate, payoff, influence payment,
kickback or other similar unlawful payment. No material Legal Proceeding by or
before any Governmental Unit or any arbitrator involving any of the Debtors,
their respective Subsidiaries with respect to the FCPA or similar applicable
anti-corruption laws is pending or, to the knowledge of the Company, threatened.
The Debtors and their respective Subsidiaries have implemented and maintain in
effect policies and procedures designed to ensure compliance by the Debtors and
their respective Subsidiaries and their respective directors, officers,
employees and agents with the FCPA and any other applicable anti-corruption
Laws.

 

Section 4.25          Compliance with Money Laundering Laws. The operations of
the Company and its Subsidiaries are and since January 1, 2015 have been at all
times conducted in compliance in all material respects with applicable financial
recordkeeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the money laundering statutes of
all jurisdictions, the rules and regulations thereunder and any related or
similar Laws (collectively, the “Money Laundering Laws”) and no material action,
suit or proceeding by or before any Governmental Unit or any arbitrator
involving the Company or any of its Subsidiaries with respect to Money
Laundering Laws is pending or, to the knowledge of the Company, threatened. The
Debtors and their respective Subsidiaries have implemented and maintain in
effect policies and procedures designed to ensure compliance by the Debtors and
their respective Subsidiaries and their respective directors, officers,
employees and agents with the Money Laundering Laws.

 

Section 4.26          Compliance with Sanctions Laws. Neither the Company nor
any of its Subsidiaries nor, to the knowledge of the Company, any of their
respective directors, officers or employees, nor any agent or other Person
acting on behalf of the Company or any of its Subsidiaries, is currently subject
to any U.S. sanctions administered by the Office of Foreign Assets Control of
the U.S. Treasury Department (“Sanctions”). The Company will not directly or
indirectly use the proceeds of the Rights Offering or the sale of the
Unsubscribed Shares, or lend, contribute or otherwise make available such
proceeds to any Subsidiary, joint venture partner or other Person, for the
purpose of financing the activities of any Person that, to the knowledge of the
Company, is currently subject to any U.S. sanctions administered by the Office
of Foreign Assets Control of the U.S. Treasury Department. The Debtors and their
respective Subsidiaries have implemented and maintain in effect policies and
procedures designed to ensure compliance by the Debtors and their respective
Subsidiaries and their respective directors, officers, employees and agents with
the Sanctions.

 

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Section 4.27         No Broker’s Fees. Neither the Company nor any of its
Subsidiaries is a party to any Contract with any Person (other than this
Agreement) that would give rise to a valid claim against the Backstop Parties
for a brokerage commission, finder’s fee or like payment in connection with the
Rights Offering or the sale of the Unsubscribed Shares.

 

Section 4.28         No Registration Rights. Except as provided for pursuant to
the Registration Rights Agreement, no Person has the right to require the
Company or any of its Subsidiaries to register any securities for sale under the
Securities Act.

 

Section 4.29         Takeover Statutes. No Takeover Statute is applicable to
this Agreement, the Backstop Commitment and the other transactions contemplated
by this Agreement.

 

Section 4.30         Insurance. Except as would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect: (i) all
premiums due and payable in respect of insurance policies maintained by the
Company and its Subsidiaries have been paid, (ii) the insurance maintained by or
on behalf of the Company and its Subsidiaries is adequate and (iii) as of the
date hereof, to the knowledge of the Company, neither the Company nor any of its
Subsidiaries has received notice from any insurer or agent of such insurer with
respect to any insurance policies of the Company and its Subsidiaries of
cancellation or termination of such policies, other than such notices which are
received in the ordinary course of business or for policies that have expired on
their terms.

 

Section 4.31         No Undisclosed Relationships. There are no Contracts or
other direct or indirect relationships existing as of the date hereof between or
among any of the Debtors or their Subsidiaries, on the one hand, and any
director, officer or greater than five percent (5%) stockholder of any of the
Debtors, or Affiliate thereof, on the other hand that is required by the
Exchange Act to be described in the Company’s filings with the SEC and that is
not so described. A correct and complete copy of any Contract existing as of the
date hereof between or among any of the Debtors or their Subsidiaries, on the
one hand, and any director, officer or greater than five percent (5%)
stockholder of any of the Debtors or their Subsidiaries, or Affiliate thereof,
on the other hand, that is required by the Exchange Act to be described in the
Company’s filings with the SEC is filed as an exhibit to, or incorporated by
reference as indicated in, the Annual Report on Form 10-K for the fiscal year
ended December 31, 2019 or such subsequently filed Quarterly Report on Form 10-Q
or Current Report on Form 8-K.

 

Section 4.32         Investment Company Act. None of the Debtors or any of their
respective Subsidiaries is, or immediately after giving effect to the
consummation of the Restructuring will be, an “investment company” as defined
in, or subject to regulation under, the Investment Company Act, and this
conclusion is based on one or more bases or exclusions other than Sections
3(c)(1) and 3(c)(7) of the Investment Company Act, including that none of the
Debtors or their Subsidiaries comes within the basic definition of ‘investment
company’ under section 3(a)(1) of the Investment Company Act.

 

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Section 4.33         Disclosure Schedule, and Company SEC Document References.

 

(a)            The parties hereto agree that any reference in a particular
Section of the Company Disclosure Schedules shall be deemed disclosed in each
other section of the Company Disclosure Schedules to which such fact or item may
apply so long as (a) such other section is referenced by applicable
cross-reference or (b) it is reasonably apparent that such disclosure is
applicable to such other section. The headings contained in the Company
Disclosure Schedules are for convenience of reference only and shall not be
deemed to modify or influence the interpretation of the information contained in
the Company Disclosure Schedules or this Agreement. The Company Disclosure
Schedules are not intended to constitute, and shall not be construed as, an
admission or indication that any such fact or item is required to be disclosed.
Any fact or item disclosed in the Company Disclosure Schedules shall not by
reason only of such inclusion be deemed to be material, to establish any
standard of materiality or to define further the meaning of such terms for
purposes of this Agreement and matters reflected in the Company Disclosure
Schedules are not necessarily limited to matters required by this Agreement to
be reflected herein and may be included solely for information purposes. No
disclosure in the Company Disclosure Schedules relating to any possible breach
or violation of any Contract, Law or order shall be construed as an admission or
indication that any such breach or violation exists or has actually occurred.
The information contained in the Company Disclosure Schedules are confidential
information subject to Section 6.2, and no third party may rely on any
information disclosed or set forth therein.

 

(b)            The parties hereto agree that any information contained in any
part of any Company SEC Document shall only be deemed to be an exception to (or
a disclosure for purposes of) the Company’s representations and warranties if
the relevance of that information as an exception to (or a disclosure for
purposes of) such representations and warranties would be reasonably apparent to
a person who has read that information concurrently with such representations
and warranties, without any independent knowledge on the part of the reader
regarding the matters so disclosed; provided that in no event shall any
information contained in any part of any Company SEC Document entitled “Risk
Factors” or any part entitled “Forward-Looking Statements” be deemed to be an
exception to (or a disclosure for purposes of) any representations and
warranties of the Company contained in this Agreement.

 

Article V
REPRESENTATIONS AND WARRANTIES OF THE BACKSTOP PARTIES

 

Each Backstop Party, severally and not jointly, represents and warrants as to
itself only (unless otherwise set forth herein, as of the date of this Agreement
and as of the Closing Date) as set forth below.

 

Section 5.1         Organization. Such Backstop Party is a legal entity duly
organized, validly existing and, if applicable, in good standing (or the
equivalent thereof) under the Laws of its jurisdiction of incorporation or
organization.

 

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Section 5.2         Organizational Power and Authority. Such Backstop Party has
the requisite power and authority (corporate or otherwise) to enter into,
execute and deliver this Agreement and to perform its obligations hereunder and
thereunder and has taken all necessary action (corporate or otherwise) required
for the due authorization, execution, delivery and performance by it of this
Agreement.

 

Section 5.3         Execution and Delivery. This Agreement (a) has been, or
prior to its execution and delivery will be, duly and validly executed and
delivered by such Backstop Party and (b) upon entry of the Backstop Commitment
Agreement Approval Order and assuming due and valid execution and delivery
hereof and thereof by the Company and the other Debtors (as applicable), will
constitute valid and legally binding obligations of such Backstop Party,
enforceable against such Backstop Party in accordance with their respective
terms subject to the Enforceability Exceptions.

 

Section 5.4         No Conflict. Assuming that the consents referred to in
Section 5.5 are obtained, the execution and delivery by such Backstop Party of
this Agreement, the compliance by such Backstop Party with all of the provisions
hereof and thereof and the consummation of the transactions contemplated herein
and therein (a) will not conflict with, or result in breach, modification,
termination or violation of, any of the terms or provisions of, or constitute a
default under (with or without notice or lapse of time or both), or result in
the acceleration of, or the creation of any Lien under, any Contract to which
such Backstop Party is party or is bound or to which any of the property or
assets or such Backstop Party are subject, (b) will not result in any violation
of the provisions of the certificate of incorporation or bylaws (or comparable
constituent documents) of such Backstop Party and (c) will not result in any
material violation of any Law or Order applicable to such Backstop Party or any
of its properties, except in each of the cases described in clauses (a) or (c),
for any conflict, breach, modification, termination, violation, default,
acceleration or Lien which would not reasonably be expected, individually or in
the aggregate, to prohibit or materially and adversely impact such Backstop
Party’s performance of its obligations under this Agreement.

 

Section 5.5         Consents and Approvals. No consent, approval, authorization,
Order, registration or qualification of or with any Governmental Unit having
jurisdiction over such Backstop Party or any of its properties is required for
the execution and delivery by such Backstop Party of this Agreement, the
compliance by such Backstop Party with the provisions hereof and the
consummation of the transactions (including the purchase by such Backstop Party
of its Backstop Commitment Percentage of the Unsubscribed Shares and its portion
of the Rights Offering Shares) contemplated herein and therein, except (a) any
consent, approval, authorization, Order, registration or qualification which, if
not made or obtained, would not reasonably be expected, individually or in the
aggregate, to prohibit or materially and adversely impact such Backstop Party’s
performance of its obligations under this Agreement and (b) filings,
notifications, authorizations, approvals, consents, clearances or termination or
expiration of all applicable waiting periods under any Antitrust Laws in
connection with the transactions contemplated by this Agreement.

 

Section 5.6         No Registration. Such Backstop Party understands that
(a) the Unsubscribed Shares, Put Option Premium Shares and Rights Offering
Shares have not been registered under the Securities Act by reason of a specific
exemption from the registration provisions of the Securities Act, the
availability of which depends on, among other things, the bona fide nature of
the investment intent and the accuracy of such Backstop Party’s representations
as expressed herein or otherwise made pursuant hereto, and (b) the foregoing
shares cannot be sold unless subsequently registered under the Securities Act or
an exemption from registration is available.

 

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Section 5.7         Purchasing Intent. Such Backstop Party is acquiring the
Unsubscribed Shares, Put Option Premium Shares and Rights Offering Shares for
its own account or accounts or funds over which it holds voting discretion, not
otherwise as a nominee or agent, and not otherwise with the view to, or for
resale in connection with, any distribution thereof not in compliance with
applicable securities Laws, and such Backstop Party has no present intention of
selling, granting any other participation in, or otherwise distributing the
same, except in compliance with applicable securities Laws.

 

Section 5.8         Sophistication; Investigation. Such Backstop Party has such
knowledge and experience in financial and business matters such that it is
capable of evaluating the merits and risks of its investment in the Unsubscribed
Shares, Put Option Premium Shares and Rights Offering Shares. Such Backstop
Party is an “accredited investor” within the meaning of Rule 501(a) of the
Securities Act or a “qualified institutional buyer” within the meaning of
Rule 144A of the Securities Act. Such Backstop Party understands and is able to
bear any economic risks associated with such investment (including the necessity
of holding such shares for an indefinite period of time). Except for the
representations and warranties expressly set forth in this Agreement or any
other Transaction Agreement, such Backstop Party has independently evaluated the
merits and risks of its decision to enter into this Agreement and disclaims
reliance on any representations or warranties, either express or implied, by or
on behalf of any of the Debtors.

 

Section 5.9         No Broker’s Fees. Such Backstop Party is not a party to any
Contract with any Person (other than the Transaction Agreements) that would give
rise to a valid claim against any of the Debtors for a brokerage commission,
finder’s fee or like payment in connection with the Rights Offering or the sale
of the Unsubscribed Shares, Put Option Premium Shares or Rights Offering Shares.

 

Section 5.10         Sufficient Funds. Such Backstop Party will have immediately
available funds to make and complete the payment of the aggregate purchase price
for the exercise of all of its Subscription Rights that are issued to it
pursuant to the Rights Offering and fund such Backstop Party’s Backstop
Commitment.

 

Article VI
ADDITIONAL COVENANTS

 

Section 6.1         Conduct of Business.

 

(a)            Except as explicitly set forth in this Agreement or otherwise
contemplated by the Restructuring Support Agreement, Disclosure Statement and
Plan, with the prior written consent of the Required Backstop Parties or in
connection with, in the Company’s reasonable discretion, any reasonable COVID-19
Measures, during the period from the date of this Agreement to the earlier of
the Closing Date and the date on which this Agreement is terminated in
accordance with its terms, the Company shall, and shall cause each of its
Subsidiaries to carry on its business in the ordinary course and use
commercially reasonable efforts to:

 

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(i)            preserve intact its present business and its Post-Effective Date
Business;

 

(ii)            maintain in effect all of its foreign, federal, state and local
licenses, permits, consents, franchises, approvals and authorizations (except
where the failure to do so would not individually, or in the aggregate, have a
Material Adverse Effect);

 

(iii)            keep available the services of its officers and key employees;
and

 

(iv)            preserve its relationships with material customers, suppliers,
licensors, licensees, distributors and others having business dealings with the
Company or its Subsidiaries in connection with the Post-Effective Date Business.

 

(b)            Without limiting the generality of the foregoing, except as
explicitly set forth in this Agreement or otherwise contemplated by the
Restructuring Support Agreement, Disclosure Statement and Plan, the Company
shall not, and shall not permit any of its Subsidiaries to, take any of the
following actions without the prior written consent of the Required Backstop
Parties:

 

(i)            amend the Company’s certificate of incorporation, Bylaws or other
similar organizational documents (whether by merger, consolidation or otherwise)
other than in connection with the New Organizational Documents;

 

(ii)            incur any capital expenditures or any obligations or liabilities
in respect thereof, other than (A) in the ordinary course of business or
(B) that is not material to the Post-Effective Date Business

 

(iii)            acquire (by merger, consolidation, acquisition of stock or
assets or otherwise), directly or indirectly, any assets, securities,
properties, interests or businesses, other than (A) in the ordinary course of
business, or (B) acquisitions (by merger, consolidation, acquisition of stock or
assets or otherwise) that do not exceed $5,000,000 individually or $25,000,000
in the aggregate;

 

(iv)            enter into, amend or modify in any material respect or terminate
any Material Contract or otherwise waive, release or assign any material rights,
claims or benefits of the Company or any of its Subsidiaries under any Material
Contract;

 

(v)            enter into any contract, agreement, arrangement or understanding
that is a material Non-Competition Agreement;

 

(vi)            sell, lease or otherwise transfer, or create or incur any Lien
on, any of the Company’s or its Subsidiaries’ assets, securities, properties,
interests or businesses, other than (A) in the ordinary course of business, or
(B) sales of assets, securities, properties, interests or businesses with a sale
price (including any related assumed indebtedness) that do not exceed $5,000,000
individually or $25,000,000 in the aggregate;

 

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(vii)            other than in connection with actions permitted by
Section 6.1(b)(ii), make any loans, advances or capital contributions to, or
investments in, any other Person, other than (A) in the ordinary course of
business, or (B) loans, advances or capital contributions that do not exceed
$5,000,000 individually or $25,000,000 in the aggregate;

 

(viii)            (A) unless required by a Company Plan in effect on the date
hereof, with respect to any current or former directors or Executive Officers of
the Company: (1) grant or increase any retention, severance or termination pay
(or amend any existing retention, severance pay or termination arrangement);
(2) enter into any employment, consulting, bonus, change in control, deferred
compensation or other similar agreement (or amend any such existing agreement);
(3) increase benefits provided or payable under any existing severance or
termination pay policies; or (4) increase compensation, bonus or other benefits;
(B) grant any equity or equity-based awards to, or discretionarily accelerated
the vesting or payment of any such awards; or (C) establish, adopt, enter into
or materially amend any material Company Plan or any Collective Bargaining
Agreement other than as required by the relevant Company Plan in effect on the
date hereof or as required by applicable Law;

 

(ix)            (A) terminate the service of any Executive Officer of the
Company or (B) hire, appoint, elect or promote any Person to be an Executive
Officer of the Company;

 

(x)            settle, or offer or propose to settle, (A) any material
litigation, investigation, arbitration, proceeding or other claim involving or
against the Company or any of its Subsidiaries, (B) any stockholder litigation
or dispute against the Company or any of its officers or directors or (C) any
litigation, arbitration, proceeding or dispute that relates to the transactions
contemplated hereby; or

 

(xi)            agree, resolve or commit to do any of the foregoing.

 

Section 6.2         Access to Information; Confidentiality.

 

(a)            Subject to applicable Law, COVID-19 Measures and Section 6.2(b),
upon reasonable notice during the Pre-Closing Period, the Debtors shall afford
the Backstop Parties and their Representatives upon request reasonable access,
during normal business hours and without unreasonable disruption or interference
with the Debtors’ business or operations, to the Debtors’ employees, properties,
books, Contracts and records and, during the Pre-Closing Period, the Debtors
shall furnish promptly to such parties all reasonable information concerning the
Debtors’ business, properties and personnel as may reasonably be requested by
any such party, provided that the foregoing shall not require the Company (i) to
permit any inspection, or to disclose any information, that in the reasonable
judgment of the Company, would cause any of the Debtors to violate any of their
respective obligations with respect to confidentiality to a third party if the
Company shall have used its commercially reasonable efforts to obtain, but
failed to obtain, the consent of such third party to such inspection or
disclosure, (ii) to disclose any legally privileged information of any of the
Debtors, (iii) to violate any applicable Laws or Orders, or (iv) to permit any
sampling, testing, analysis or investigation of environmental media at or
related to the Debtors’ properties. All requests for information and access made
in accordance with this Section 6.2 shall be directed to an executive officer of
the Company or such Person as may be designated by the Company’s executive
officers.

 

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(b)            From and after the date hereof until the date that is one
(1) year after the expiration of the Pre-Closing Period, each Backstop Party
shall, and shall cause its Representatives to, (i) keep confidential and not
provide or disclose to any Person any documents or information received or
otherwise obtained by such Backstop Party or its Representatives pursuant to
this Section 6.2 or Section 6.3 (except that provision or disclosure may be made
to any Affiliate or Representative of such Backstop Party who needs to know such
information for purposes of this Agreement or the other Transaction Agreements
and who agrees to observe the terms of this Section 6.2(b) (and such Backstop
Party will remain liable for any breach of such terms by any such Affiliate or
Representative)), and (ii) not use such documents or information for any purpose
other than in connection with this Agreement or the other Transaction Agreements
or the transactions contemplated hereby or thereby. Notwithstanding the
foregoing, the immediately preceding sentence shall not apply in respect of
documents or information that (A) is now or subsequently becomes generally
available to the public through no violation of this Section 6.2(b), (B) becomes
available to a Backstop Party or its Representatives on a non-confidential basis
from a source other than any of the Debtors or any of their respective
Representatives, (C) becomes available to a Backstop Party or its
Representatives through document production or discovery in connection with the
Chapter 11 Cases or other judicial or administrative process, but subject to any
confidentiality restrictions imposed by the Chapter 11 Cases or other such
process, (D) as or is independently developed by you or any of your
Representatives without reference to such document or information or (E) such
Backstop Party or any Representative thereof is requested or required to
disclose pursuant to judicial or administrative process or pursuant to
applicable Law or applicable securities exchange rules and regulations or the
rules and regulations of any administrative or self-regulatory organization,
including by oral questions, interrogatories, requests for information or
documents, subpoenas, civil investigative demand or similar process; provided,
that, such Backstop Party or such Representative shall provide the Company with
prompt written notice thereof (except that no such notice shall be required to
be given in the case of routine examinations by any regulator that are not
specifically directed at the transactions contemplated by this Agreement or the
information or documents provided pursuant to Section 6.2(a) or Section 6.3) and
cooperate with the Company to obtain a protective Order or similar remedy to
cause such information or documents not to be disclosed, including interposing
all available objections thereto, at the Company’s sole cost and expense;
provided, further, that, in the event that such protective Order or other
similar remedy is not obtained, the disclosing party shall furnish only that
portion of such information or documents that is legally required to be
disclosed and shall exercise its commercially reasonable efforts (at the
Company’s sole cost and expense) to obtain assurance that confidential treatment
will be accorded such disclosed information or documents. The provisions of this
Section 6.2(b) shall not apply to any Backstop Party that, as of the date
hereof, is party to a confidentiality or non-disclosure agreement with the
Debtors, for so long as such agreement remains in full force and effect
(including any amendments thereto).

 

Section 6.3         Financial Information.

 

(a)            At all times prior to the Closing Date or termination of this
Agreement, the Company shall deliver to each Backstop Party that so requests
(and to such Persons’ financial advisors and counsel), subject to
‎Section 6.2(b), financial reports, cash flow forecasts, variance reports, and
accompanying certifications, as well as all statements and reports the Company
is required to deliver to FLLO Term Loan Facility Administrative Agent pursuant
to Section 8.1 of the FLLO Term Loan Facility Credit Agreement (the “Financial
Reports”). To the extent the information contains material, non-public
information, such information may at the election of the Backstop Party be
provided to the Backstop Party’s financial advisors and counsel.

 

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Section 6.4         Commercially Reasonable Efforts

 

(a)            Without in any way limiting any other respective obligation of
the Company or any Backstop Party in this Agreement, each Party shall use (and
the Company shall cause the other Debtors to use) commercially reasonable
efforts to take or cause to be taken all actions, and do or cause to be done all
things, reasonably necessary, proper or advisable in order to consummate and
make effective the transactions contemplated by this Agreement and the Plan,
including using commercially reasonable efforts in:

 

(i)            timely preparing and filing all documentation reasonably
necessary to effect all necessary notices, reports and other filings of such
Person and to obtain as promptly as practicable all consents, registrations,
approvals, permits and authorizations necessary or advisable to be obtained from
any third party or Governmental Unit;

 

(ii)            defending any Legal Proceedings in any way challenging (A) this
Agreement, the Plan, the Registration Rights Agreement or any other Transaction
Agreement, (B) the Backstop Commitment Agreement Approval Order, the Disclosure
Statement Order, the Confirmation Order or the DIP Order or (C) the consummation
of the transactions contemplated hereby and thereby, including seeking to have
any stay or temporary restraining Order entered by any Governmental Unit vacated
or reversed; and

 

(iii)            working together in good faith to finalize Reorganized
Chesapeake Organizational Documents, Transaction Agreements, the Registration
Rights Agreement and all other documents relating thereto for timely inclusion
in the Plan and filing with the Bankruptcy Court.

 

(b)            Subject to Laws or applicable rules relating to the exchange of
information, and in accordance with the Restructuring Support Agreement, the
Backstop Parties and the Company shall have the right to review in advance, and
to the extent practicable each will consult with the other on all of the
information relating to Backstop Parties or the Company, as the case may be, and
any of their respective Subsidiaries, that appears in any filing made with, or
written materials submitted to, any Governmental Unit in connection with the
transactions contemplated by this Agreement or the Plan; provided, however, that
the Backstop Parties are not required to provide for review in advance
declarations or other evidence submitted in connection with any filing with the
Bankruptcy Court. In exercising the foregoing rights, the Parties shall act as
reasonably and as promptly as practicable.

 

Section 6.5         Registration Rights Agreement; Reorganized Chesapeake
Organizational Documents.

 

(a)            Reorganized Chesapeake will enter into the Registration Rights
Agreement, which agreement shall be in form and substance consistent with the
Restructuring Term Sheet and otherwise reasonably acceptable to the Required
Plan Sponsors and the 66 2/3 Consenting Second Lien Noteholders (the
“Registration Rights Agreement”), in respect of the Common Shares, New Warrants
and Warrant Shares that the Backstop Parties (and their respective Related
Purchasers) may acquire in accordance with the Plan and this Agreement
(collectively, the “Registrable Shares”). The Registration Rights Agreement
shall, among other things, (i) provide for Reorganized Chesapeake to use
commercially reasonable efforts to file or confidentially submit a shelf
registration statement (whether on Form S-3 or on Form S-1) with the SEC
covering the resale of Registrable Shares as soon following the Plan Effective
Date as is permissible under the applicable rules and regulations of the SEC
(and in no event later than 30 days following the Plan Effective Date or, if
“fresh start” accounting is required, no later than 90 days following the Plan
Effective Date), and provide for the requirements to use commercially reasonable
efforts to cause such shelf registration statement to become effective on the
earliest date reasonably practicable thereafter, (ii) provide that Reorganized
Chesapeake’s obligation to maintain an effective shelf registration statement
under the Registration Rights Agreement will terminate no earlier than the time
that Registrable Shares issued to the Backstop Parties and their respective
Related Purchasers may be sold by such Persons in a single transaction without
limitation under Rule 144 of the Securities Act and (iii) treat each Backstop
Party and Related Purchasers no less favorably than other Backstop Parties and
the Related Purchasers with respect to its Registrable Shares.

 

43

 

 

(b)            The Plan will provide that on the Plan Effective Date, New
Organizational Documents will be duly authorized, approved, adopted and in full
force and effect. Forms of New Organizational Documents shall be filed with the
Bankruptcy Court as part of the Plan Supplement or an amendment thereto.

 

Section 6.6         Blue Sky. The Company shall, on or before the Closing Date,
take such action as the Company shall reasonably determine is necessary in order
to obtain an exemption for, or to qualify the offer and sale of the Unsubscribed
Shares, Put Option Premium Shares, Rights Offering Shares and Warrant Shares to
the Backstop Parties and Related Purchasers pursuant to this Agreement under
applicable securities and “Blue Sky” Laws of the states of the United States (or
to obtain an exemption from such qualification) and any applicable foreign
jurisdictions, and shall provide evidence of any such action so taken to the
Backstop Parties on or prior to the Closing Date. Reorganized Chesapeake shall
timely make all filings and reports relating to the offer and sale of the
Unsubscribed Shares, Put Option Premium Shares, Rights Offering Shares and
Warrant Shares issued hereunder required under applicable securities and “Blue
Sky” Laws of the states of the United States following the Closing Date. The
Company or Reorganized Chesapeake, as applicable, shall pay all fees and
expenses in connection with satisfying its obligations under this Section 6.6.
Notwithstanding the foregoing, the Company and Reorganized Chesapeake shall not
be required to qualify as a foreign corporation or to file a general consent to
service in any jurisdiction where it is not now so qualified or required to file
such consent.

 

Section 6.7         DTC Eligibility. Reorganized Chesapeake shall use
commercially reasonable efforts to promptly make, when applicable from time to
time before, at and after the Closing, all Unlegended Shares eligible for
deposit with DTC, unless a Backstop Party or Related Purchasers requests
delivery of a physical stock certificate in lieu thereof. “Unlegended Shares”
means any Common Shares acquired by the Backstop Parties and their respective
Affiliates (including any Related Purchaser in respect thereof) pursuant to this
Agreement and the Plan, including all shares issued to the Backstop Parties and
their respective Affiliates in connection with the Rights Offering, that do not
require, or are no longer subject to, the Legend. Common Shares subject to the
Legend to be delivered pursuant to this Agreement shall, if feasible, be
eligible with DTC under a restricted CUSIP or, if not feasible, issued pursuant
to Reorganized Chesapeake’s book entry procedures and delivery to such Backstop
Party and its Related Purchasers of an account statement reflecting the book
entry of such Unsubscribed Shares (including, for the avoidance of doubt, the
Available Shares) shall be deemed delivery of such Unsubscribed Shares for
purposes of this Agreement, unless a Backstop Party requests delivery of a
physical stock certificate. If a Backstop Party or Related Purchaser requests
delivery of one or more physical stock certificates, Reorganized Chesapeake
shall use commercially reasonable efforts to deliver such stock certificates in
accordance with the instructions of such Backstop Party or Related Purchaser.

 

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Section 6.8         Use of Proceeds. The Company or Reorganized Chesapeake, as
applicable, will apply the proceeds from the Rights Offering for the purposes
identified in the Disclosure Statement and the Plan and for general corporate
and strategic purposes as determined by management and the board of directors of
Reorganized Chesapeake.

 

Section 6.9         Share Legend. Each certificate evidencing Unsubscribed
Shares, Put Option Premium Shares and Rights Offering Shares issued hereunder,
and each certificate issued in exchange for or upon the Transfer of any such
shares, shall be stamped or otherwise imprinted with a legend (the “Legend”) in
substantially the following form:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON DATE
OF ISSUANCE, HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED (THE “ACT”), OR ANY OTHER APPLICABLE STATE SECURITIES LAWS,
AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR AN AVAILABLE EXEMPTION FROM REGISTRATION THEREUNDER.”

 

In the event that any such shares are uncertificated, such shares shall be
subject to a restrictive notation substantially similar to the Legend in the
stock ledger or other appropriate records maintained by Reorganized Chesapeake
or its agent, or DTC, and the term “Legend” shall include such restrictive
notation. Reorganized Chesapeake shall remove the Legend (or restrictive
notation, as applicable) set forth above from the certificates evidencing any
such shares (or the share register or other appropriate Reorganized Chesapeake
records, in the case of uncertified shares), upon request, at any time after the
restrictions described in such Legend cease to be applicable, including, as
applicable, when such shares may be sold under Rule 144 of the Securities Act.
Reorganized Chesapeake may reasonably request such certificates or other
evidence that such restrictions no longer apply as a condition to removing the
Legend and will obtain any necessary legal opinions at the Company’s or
Reorganized Chesapeake’s cost and expense.

 

Section 6.10         Antitrust Approvals.

 

(a)            Each Party agrees to use commercially reasonable efforts to take,
or cause to be taken, all actions and to do, or cause to be done, all things
necessary to consummate and make effective the transactions contemplated by this
Agreement, the Plan and the other Transaction Agreements, including (i) if
applicable, filing, or causing to be filed, the Notification and Report
Form pursuant to the HSR Act with respect to the transactions contemplated by
this Agreement with the Antitrust Division of the United States Department of
Justice and the United States Federal Trade Commission and any filings (or, if
required by any Antitrust Authority, any drafts thereof) under any other
Antitrust Laws that are necessary to consummate and make effective the
transactions contemplated by this Agreement as soon as reasonably practicable
(and with respect to any filings required pursuant to the HSR Act, no later than
fifteen (15) Business Days following the later of (x) the date hereof or (y) a
date reasonably determined by the Required Backstop Parties (not to be later
than twenty-five (25) Business Days following the date hereof)) and
(ii) promptly furnishing any documents or information reasonably requested by
any Antitrust Authority. The Company agrees to pay all filing fees of a
Governmental Unit incurred by any Party in connection with the filings and other
actions contemplated by this Section 6.10(a).

 

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(b)            The Company and each Backstop Party subject to an obligation
pursuant to the Antitrust Laws to notify any transaction contemplated by this
Agreement, the Plan or the other Transaction Agreements that has notified the
Company in writing of such obligation (each such Backstop Party, a “Filing
Party”) agree to reasonably cooperate with each other as to the appropriate time
of filing such notification and its content. The Company and each Filing Party
shall, to the extent permitted by applicable Law: (i) promptly notify each other
of, and if in writing, furnish each other with copies of (or, in the case of
material oral communications, advise each other orally of) any material
communications from or with an Antitrust Authority; (ii) not participate in any
meeting with an Antitrust Authority unless it consults with each other Filing
Party and the Company, as applicable, in advance and, to the extent permitted by
the Antitrust Authority and applicable Law, give each other Filing Party and the
Company, as applicable, a reasonable opportunity to attend and participate
thereat; (iii) furnish each other Filing Party and the Company, as applicable,
with copies of all material correspondence and communications between such
Filing Party or the Company and the Antitrust Authority; (iv) furnish each other
Filing Party with such necessary information and reasonable assistance as may be
reasonably necessary in connection with the preparation of necessary filings or
submission of information to the Antitrust Authority; and (v) not withdraw its
filing, if any, under the HSR Act without the prior written consent of the
Required Backstop Parties and the Company.

 

(c)            Should a Filing Party be subject to an obligation under the
Antitrust Laws to jointly notify with one or more other Filing Parties (each, a
“Joint Filing Party”) any transaction contemplated by this Agreement, the Plan
or the other Transaction Agreements, such Joint Filing Party shall promptly
notify each other Joint Filing Party of, and if in writing, furnish each other
Joint Filing Party with copies of (or, in the case of material oral
communications, advise each other Joint Filing Party orally of) any
communications from or with an Antitrust Authority.

 

(d)            The Company and each Filing Party shall use their commercially
reasonable efforts to obtain all authorizations, approvals, consents, or
clearances under any applicable Antitrust Laws or to cause the termination or
expiration of all applicable waiting periods under any Antitrust Laws in
connection with the transactions contemplated by this Agreement at the earliest
possible date after the date of filing. The communications contemplated by this
Section 6.10 may be made by the Company or a Filing Party on an outside
counsel-only basis or subject to other agreed upon confidentiality safeguards in
the event that they contain commercially sensitive information of the Company or
a Filing Party. The obligations in this Section 6.10 shall not apply to filings,
correspondence, communications or meetings with Antitrust Authorities unrelated
to the transactions contemplated by this Agreement, the Plan or the other
Transaction Agreements.

 

Section 6.11         Alternative Restructuring Proposals. Subject to the
Restructuring Support Agreement, the Company and the other Debtors shall not
seek, solicit, or support any Alternative Restructuring Proposal, and shall not
cause or allow any of their agents or representatives to solicit any agreements
relating to an Alternative Restructuring Proposal; provided, however, that
nothing in this Section 6.11 shall limit (i) subject to obtaining all applicable
consents and approvals required under the Restructuring Support Agreement, the
Parties’ ability to engage in marketing efforts, discussions, and/or
negotiations with any party regarding refinancing of the Exit Facility to be
consummated following the Plan Effective Date, or (ii) require the Debtors or
any of their respective directors, officers, members or managers, as applicable
(each in such Person’s capacity as a director, officer, member or manager), to
take any action, or refrain from taking any action, to the extent that taking
such action or refraining from taking such action would be inconsistent with, or
cause such party to breach such party’s fiduciary obligations under applicable
Law, or shall limit any Debtor from considering any Alternative Restructuring
Proposal brought to them consistent with their fiduciary duties.

 

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Section 6.12         Tax Treatment. The Company and each of the Backstop Parties
hereby agree to treat the rights and obligations arising under this Agreement,
including the Backstop Commitment and the Put Option Premium, for U.S. federal
and applicable state and local income tax purposes, as an option to sell
property issued by each Backstop Party to the Company in consideration for the
Put Option Premium. Each party shall file all Tax Returns consistent with, and
take no position inconsistent with, such treatment (whether in audits or
otherwise) unless required to do so pursuant to a “determination” within the
meaning of Section 1313(a) of the Code.

 

Section 6.13         Expense Reimbursement. Whether or not the transactions
contemplated hereunder are consummated, the Debtors or Reorganized Chesapeake,
as applicable, agree to pay all reasonably incurred and documented out-of-pocket
fees and expenses of the Backstop Parties executing this Agreement as of the
date hereof (the “Initial Backstop Parties”), including the reasonably incurred
and documented out-of-pocket fees and expenses of the attorneys, accountants,
other professionals, advisors, and consultants to the Initial Backstop Parties,
including the fees and expenses of Perella Weinberg Partners LP, Moelis &
Company LLC, FTI Consulting, Inc., Davis Polk & Wardwell LLP, Akin Gump Strauss
Hauer & Feld LLP and any local counsels engaged by the Initial Backstop Parties,
whether incurred in connection with the Chapter 11 Cases or the preparation
therefor, including the transactions contemplated by this Agreement and the
Restructuring Support Agreement and (such payment obligations, the “Expense
Reimbursement”). The Expense Reimbursement shall, pursuant to the Backstop
Commitment Agreement Approval Order, constitute allowed administrative expenses
against each of the Debtors’ estates under sections 503(b) and 507 of the
Bankruptcy Code. The Debtors shall pay any invoices for the Expense
Reimbursement within five (5) Business Days of receipt thereof. The Expense
Reimbursement accrued through the date on which the Backstop Commitment
Agreement Approval Order is entered shall be paid in accordance with the
Backstop Commitment Agreement Approval Order upon its entry by the Bankruptcy
Court and as promptly as reasonably practicable after the date of the entry of
the Backstop Commitment Agreement Approval Order. The Expense Reimbursement
shall thereafter be payable on a monthly basis by the Debtors in accordance with
the Backstop Commitment Agreement Approval Order. The Initial Backstop Parties
shall reasonably promptly provide summary copies of all invoices (which shall
not be required to contain time entries and which may be redacted or modified to
the extent necessary to delete any information subject to the attorney-client
privilege, any information constituting attorney work product, or any other
confidential information, and the provision of their invoices shall not
constitute any waiver of the attorney client privilege or of any benefits of the
attorney work product doctrine) to the Debtors and to the United States Trustee.
Unless otherwise ordered by the Bankruptcy Court, no recipient of any payment
hereunder shall be required to file with respect thereto any interim or final
fee application with the Bankruptcy Court. Notwithstanding anything contained in
this Section 6.13 to the contrary, the Debtors or Reorganized Chesapeake, as
applicable, shall not accrue additional Expense Reimbursement obligations from
and after the Closing or termination of this Agreement pursuant to Article VIII,
and the obligation to pay such Expense Reimbursements shall survive the Closing
or such termination until paid.

 

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Article VII
CONDITIONS TO THE OBLIGATIONS OF THE PARTIES

 

Section 7.1         Conditions to the Obligations of the Backstop Parties. The
obligations of each Backstop Party to consummate the transactions contemplated
hereby shall be subject to (unless waived in accordance with Section 7.2) the
satisfaction of the following conditions prior to or at the Closing:

 

(a)            Backstop Commitment Agreement Approval Order. The Bankruptcy
Court shall have entered the Backstop Commitment Agreement Approval Order in
form and substance reasonably acceptable to the Required Plan Sponsors, and such
Order shall be a Final Order.

 

(b)            Disclosure Statement Order. The Bankruptcy Court shall have
entered the Disclosure Statement Order in form and substance reasonably
acceptable to the Required Plan Sponsors, and such Order shall be a Final Order.

 

(c)            Confirmation Order. The Bankruptcy Court shall have entered the
Confirmation Order in form and substance reasonably acceptable to the Required
Plan Sponsors, and such Order shall be a Final Order.

 

(d)            Plan. The Company and all of the other Debtors shall have
substantially complied with the terms of the Plan (as amended or supplemented
from time to time) that are to be performed by the Company, Reorganized
Chesapeake and the other Debtors on or prior to the Plan Effective Date and the
conditions to the occurrence of the Plan Effective Date (other than any
conditions relating to occurrence of the Closing) set forth in the Plan shall
have been satisfied or waived in accordance with the terms of the Plan.

 

(e)            Rights Offering. The Rights Offering shall have been conducted in
accordance with the Plan, the Disclosure Statement Order and this Agreement.

 

(f)            Plan Effective Date. The Plan Effective Date shall have occurred,
or shall be deemed to have occurred concurrently with the Closing, as
applicable, in accordance with the terms and conditions in the Plan and in the
Confirmation Order;

 

(g)            Registration Rights Agreement; Reorganized Chesapeake
Organizational Documents.

 

(i)            The Registration Rights Agreement shall have been executed and
delivered by Reorganized Chesapeake, shall otherwise have become effective with
respect to the Backstop Parties and the other parties thereto, and shall be in
full force and effect.

 

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(ii)            The New Organizational Documents shall have been duly approved
and adopted and shall be in full force and effect.

 

(h)            Governmental Approvals. All waiting periods applicable under
Antitrust Laws in connection with the transactions contemplated by this
Agreement shall have terminated or expired and all authorizations, approvals,
consents or clearances under the Antitrust Laws shall have been obtained or
deemed obtained.

 

(i)            No Legal Impediment to Issuance. No Law or Order shall have
become effective or been enacted, adopted or issued by any Governmental Unit
that prohibits the implementation of the Plan or the transactions contemplated
by this Agreement.

 

(j)            Consents. All governmental and third party notifications,
filings, consents, waivers and approvals required for the consummation of the
transactions set forth on Section 7.1(j) of the Company Disclosure Schedules
have been made or received.

 

(k)            Representations and Warranties.

 

(i)            The representations and warranties of the Debtors contained in
Section 4.7 and Section 4.29 shall be true and correct in all respects on and as
of the Closing Date with the same effect as if made on and as of the Closing
Date (except for such representations and warranties made as of a specified
date, which shall be true and correct only as of the specified date).

 

(ii)            The representations and warranties of the Debtors contained in
Sections 4.2, 4.3 and 4.4 shall be true and correct in all material respects on
and as of the Closing Date after giving effect to the Plan with the same effect
as if made on and as of the Closing Date after giving effect to the Plan (except
for such representations and warranties made as of a specified date, which shall
be true and correct in all material respects only as of the specified date).

 

(iii)            The representations and warranties of the Debtors contained in
this Agreement other than those referred to in clauses (i) and (ii) above shall
be true and correct (disregarding all materiality or Material Adverse Effect
qualifiers) on and as of the Closing Date after giving effect to the Plan with
the same effect as if made on and as of the Closing Date after giving effect to
the Plan (except for such representations and warranties made as of a specified
date, which shall be true and correct only as of the specified date), except
where the failure to be so true and correct does not constitute, individually or
in the aggregate, a Material Adverse Effect.

 

(l)            Exit Facility. The Exit Facility, in form and substance
reasonably acceptable to the Required Plan Sponsors, shall have become
effective.

 

(m)            Covenants. The Company shall have performed and complied, in all
material respects, with all its covenants and agreements contained in this
Agreement that contemplate, by their terms, performance or compliance prior to
the Closing Date.

 

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(n)            Material Adverse Effect. Since the date of this Agreement, there
shall not have occurred, and there shall not exist, any Event that constitutes,
individually or in the aggregate, a Material Adverse Effect.

 

(o)            Officer’s Certificate. Each Backstop Party shall have received on
and as of the Closing Date a certificate of the chief executive officer or chief
financial officer of the Company confirming that the conditions set forth in
Section 7.1(k), (l) and (n) and (p) have been satisfied.

 

(p)            Restructuring Support Agreement Conditions Precedent. All
Conditions Precedent to the Plan Effective Date (as such term is defined in the
Restructuring Term Sheet) shall have been satisfied or waived in accordance with
the Restructuring Support Agreement.

 

(q)            Funding Notice. Each Backstop Party shall have received the
Funding Notice.

 

Section 7.2         Waiver of Conditions to Obligations of Backstop Parties.
Subject to Section 10.7, all or any of the conditions set forth in Section 7.1
may only be waived in whole or in part with respect to all Backstop Parties by a
written instrument executed by the Required Backstop Parties in their sole
discretion and if so waived, all Backstop Parties shall be bound by such waiver.

 

Section 7.3         Conditions to the Obligations of the Debtors. The
obligations of the Debtors to consummate the transactions contemplated hereby
with the Backstop Parties is subject to (unless waived by the Company) the
satisfaction of each of the following conditions:

 

(a)            Backstop Commitment Agreement Approval Order. The Bankruptcy
Court shall have entered the Backstop Commitment Agreement Approval Order and
such Order shall be a Final Order.

 

(b)            Disclosure Statement Order. The Bankruptcy Court shall have
entered the Disclosure Statement Order, and such Order shall be a Final Order.

 

(c)            Confirmation Order. The Bankruptcy Court shall have entered the
Confirmation Order, and such Order shall be a Final Order.

 

(d)            DIP Order. The Bankruptcy Court shall have entered the DIP Order,
and such Order shall be a Final Order.

 

(e)            Plan Effective Date. The Plan Effective Date shall have occurred,
or shall be deemed to have occurred concurrently with the Closing, as
applicable, in accordance with the terms and conditions in the Plan and in the
Confirmation Order.

 

(f)            Governmental Approvals. All waiting periods applicable under
Antitrust Laws in connection with the transactions contemplated by this
Agreement shall have terminated or expired and all authorizations, approvals,
consents or clearances shall have been obtained or deemed obtained.

 

(g)            No Legal Impediment to Issuance. No Law or Order shall have
become effective or been enacted, adopted or issued by any Governmental Unit
that prohibits the implementation of the Plan or the transactions contemplated
by this Agreement.

 

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(h)            Representations and Warranties.

 

(i)            The representations and warranties of the Backstop Parties
contained in this Agreement that are qualified by “materiality” or “material
adverse effect” or words or similar import shall be true and correct in all
respects on and as of the Closing Date with the same effect as if made on and as
of the Closing Date (except for such representations and warranties made as of a
specified date, which shall be true and correct in all respects only as of the
specified date).

 

(ii)            The representations and warranties of the Backstop Parties
contained in this Agreement that are not qualified by “materiality” or “material
adverse effect” or words or similar import shall be true and correct in all
material respects on and as of the Closing Date with the same effect as if made
on and as of the Closing Date (except for such representations and warranties
made as of a specified date, which shall be true and correct in all material
respects only as of the specified date).

 

(i)            Covenants. The Backstop Parties shall have performed and
complied, in all material respects, with all of their covenants and agreements
contained in this Agreement and in any other document delivered pursuant to this
Agreement.

 

Article VIII
TERMINATION

 

Section 8.1         Consensual Termination. This Agreement may be terminated and
the transactions contemplated hereby may be abandoned at any time prior to the
Closing Date by mutual written consent of the Company and the Required Backstop
Parties.

 

Section 8.2         Termination by the Required Backstop Parties.
Notwithstanding anything to the contrary in this Agreement, unless and until
there is an unstayed Order of the Bankruptcy Court providing that the giving of
notice under and/or termination of this Agreement in accordance with its terms
is not prohibited by the automatic stay imposed by section 362 of the Bankruptcy
Code, and except as otherwise provided in this Section 8.2, at which point this
Agreement may be terminated by the Required Backstop Parties (or in the case of
Section 8.2(a), each Backstop Party can terminate, but only with respect to
itself, after the Outside Date (unless the Outside Date is extended by the
Required Backstop Parties, then only after such extended Outside Date)) upon
written notice to the Company upon the occurrence of any of the following
Events, this Agreement shall terminate automatically without any further action
or notice by any Party at 5:00 p.m., Houston, Texas time on the fifth Business
Day following the occurrence of any of the following Events; provided that the
Required Backstop Parties may waive such termination or extend any applicable
dates in accordance with Section 10.7 (or in the case of Section 8.2(a), each
Backstop Party can terminate, but only with respect to itself, after the Outside
Date (unless the Outside Date is extended by the Required Backstop Parties, then
only after such extended Outside Date)):

 

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(a)            the Closing Date has not occurred by 11:59 p.m., Eastern Time on
December 28, 2020 (as may be extended pursuant to Section 2.3(d) or the
following proviso, the “Outside Date”), unless prior thereto the Plan Effective
Date occurs and the Rights Offering has been consummated; provided, that the
Outside Date may be waived or extended one or more times with the prior written
consent of the Required Backstop Parties except that, notwithstanding anything
to the contrary in this Agreement, the Outside Date may not be extended later
than 11:59 p.m., Eastern Time on March 28, 2021; provided further,
notwithstanding anything to the contrary herein, each Backstop Party may
terminate this Agreement by written notice to the Company, or automatic
termination of this Agreement pursuant to the immediately preceding paragraph
may only be waived in writing by each Backstop Party, in each case solely with
respect to itself, if the Closing Date has not occurred by (i) if the Outside
Date has not been extended by the Required Backstop Parties pursuant to this
Section 8.2(a), the Outside Date, or (ii) otherwise, such extended Outside Date;
provided further, a Backstop Party that terminates this Agreement pursuant to
this Section 8.2(a), shall have no further obligations with respect to its
Backstop Commitment, no entitlement to any Direct Investment Rights, no
entitlement to any Expense Reimbursement for periods after the effectiveness of
such termination (but, for the avoidance of doubt, the Company shall remain
obligated to pay any Expense Reimbursement for such terminating Backstop Party
accrued before the effectiveness of such termination unless such Backstop Party
was previously or substantially simultaneously terminated in accordance with
Section 8.3(b)), and shall be entitled to payment of the Put Option Premium in
cash pursuant to Section 8.5(b) unless such Backstop Party was previously or
substantially simultaneously terminated in accordance with Section 8.3(b).

 

(b)            the obligations of the Consenting Stakeholders or the FLLO Term
Loan Facility Lenders under the Restructuring Support Agreement are terminated
in accordance with the terms of the Restructuring Support Agreement;

 

(c)            (i) the Company or the other Debtors shall have materially
breached any representation, warranty, covenant or other agreement made by the
Company or the other Debtors in this Agreement or any such representation or
warranty shall have become materially inaccurate after the date of this
Agreement and such breach or inaccuracy would, individually or in the aggregate,
cause a condition set forth in Section 7.1(k), Section 7.1(l), Section 7.1(n) or
Section 7.1(p) not to be satisfied, (ii) the Required Backstop Parties shall
have delivered written notice of such breach or inaccuracy to the Company,
(iii) such breach or inaccuracy is not cured by the Company or the other Debtors
by the tenth (10th) Business Day after receipt of such notice, and (iv) as a
result of such failure to cure, any condition set forth in Section 7.1(k),
Section 7.1(l), Section 7.1(n) or Section 7.1(p) is not capable of being
satisfied; provided, that, this Agreement shall not terminate automatically (and
the Required Backstop Parties may not terminate this Agreement, as applicable)
pursuant to this Section 8.2(c) if the Required Backstop Parties are then in
willful or intentional breach of this Agreement if they are then in breach of
any representation, warranty, covenant or other agreement hereunder that would
result in the failure of any condition set forth in Section 7.3;

 

(d)            any Law or final and non-appealable Order shall have been
enacted, adopted or issued by any Governmental Unit that prohibits the
implementation of the Plan or any Rights Offering or the transactions
contemplated by this Agreement, the other Transaction Agreements or the
Registration Rights Agreement; provided that the Debtors shall have ten
(10) Business Days following the issuance of any such Law or Order to obtain
relief or propose an alternative that would allow consummation of such
transactions in a manner that does not prevent or diminish compliance with the
terms of the Transaction Agreements;

 

(e)            (i) the Debtors have materially breached their obligations under
Section 6.11; (ii) the Bankruptcy Court approves or authorizes an Alternative
Restructuring Proposal; or (iii) any of the Debtors enters into any Contract
providing for the consummation of any Alternative Restructuring Proposal;

 

52

 

 

(f)            the Company or any other Debtor (i) materially and adversely (to
the Backstop Parties, in their capacities as such) amends or modifies, or files
a pleading seeking authority to amend or modify, the Definitive Documents in
violation of the requirements of the Restructuring Support Agreement or
(ii) publicly announces its intention to take any such action listed in
sub-clauses (i) of this subsection; or

 

(g)            the Backstop Commitment Agreement Approval Order, Disclosure
Statement Order, Confirmation Order or any other Order approving the Exit
Facility, this Agreement, the Rights Offering Procedures, the Plan or the
Disclosure Statement is terminated, reversed, stayed, dismissed, vacated, or
reconsidered, or any such Order is modified or amended after entry without the
prior written consent of the Required Plan Sponsors (and such action has not
been reversed or vacated within thirty (30) calendar days after its issuance) in
a manner that prevents or prohibits the consummation of the Restructuring
Transactions contemplated in this Agreement or any of the Definitive Documents
in a way that cannot be remedied by the Debtors subject to the reasonable
satisfaction of the Required Backstop Parties.

 

Section 8.3         Termination by the Company. This Agreement may be terminated
by the Company upon written notice to each Backstop Party upon the occurrence of
any of the following Events, subject to the rights of the Company to fully and
conditionally waive, in writing, on a prospective or retroactive basis the
occurrence of such Event:

 

(a)            any Law or final and non-appealable Order shall have been
enacted, adopted or issued by any Governmental Unit that prohibits the
implementation of the Plan or any Rights Offering or the transactions
contemplated by this Agreement or the other Transaction Agreements;

 

(b)            subject to the right of the Backstop Parties to arrange a
Backstop Party Replacement in accordance with Section 2.3 or Section 2.6 (which
will be deemed to cure any breach by the replaced Backstop Party pursuant to
this Section 8.3(b)) (i) any Backstop Party shall have materially breached any
representation, warranty, covenant or other agreement made by such Backstop
Party in this Agreement or any such representation or warranty shall have become
materially inaccurate after the date of this Agreement and such breach or
inaccuracy would, individually or in the aggregate, cause a condition set forth
in Section 7.3(i) not to be satisfied, (ii) the Company shall have delivered
written notice of such material breach or material inaccuracy to such Backstop
Party, (iii) such material breach or material inaccuracy is not cured by such
Backstop Party by the tenth (10th) Business Day after receipt of such notice,
and (iv) as a result of such failure to cure, any condition set forth in
Section 7.3(i) is not capable of being satisfied, then the Company may terminate
this Agreement solely with respect to such breaching Backstop Party and shall
offer to the other non-breaching Backstop Parties the right but not the
obligation to assume such terminated Backstop Party’s Backstop Commitment in
such amounts as may be agreed upon by all of the Backstop Parties electing to
assume all or any portion of the Backstop Commitment, or, if no such agreement
is reached, based upon the relative applicable Backstop Commitment Percentages
of any such Backstop Parties; provided, that the Company shall not have the
right to terminate this Agreement pursuant to this Section 8.3(b) if it is then
in willful or intentional breach of this Agreement; provided, further, that this
Agreement shall continue in full force and effect with respect to the
non-breaching Backstop Parties;

 

53

 

 

(c)            the Backstop Commitment Agreement Approval Order, Disclosure
Statement Order, Confirmation Order or any other Order approving the Exit
Facility, this Agreement, the Rights Offering Procedures, the Plan or the
Disclosure Statement is terminated, reversed, stayed, dismissed, vacated, or
reconsidered, or any such Order is modified or amended after entry without the
prior acquiescence or written consent (not to be unreasonably withheld,
conditioned or delayed) of the Company (and such action has not been reversed or
vacated within thirty (30) calendar days after its issuance) in a manner that
prevents or prohibits the consummation of the Restructuring Transactions
contemplated in this Agreement or any of the Definitive Documents in a way that
cannot be remedied by the Backstop Parties subject to the reasonable
satisfaction of the Debtors.

 

(d)            solely if the Bankruptcy Court has entered the Backstop
Commitment Agreement Approval Order but has not yet entered the Confirmation
Order, the board of directors of the Company determines that continued
performance under this Agreement (including taking any action or refraining from
taking any action and including, without limitation, the Plan or solicitation of
the Plan) would be inconsistent with the board of directors’ fiduciary
obligations under applicable Law (as reasonably determined by the board of
directors in good faith after consultation with outside legal counsel and based
on the advice of such counsel), and the board of directors shall give prompt
written notice to the Backstop Parties of any determination in accordance with
this Section 8.3(d);

 

(e)            the Restructuring Support Agreement is terminated as to the
Company in accordance with its terms; or

 

(f)            the Closing Date has not occurred by the Outside Date (as the
same may be extended pursuant to Section 8.2(a) or Section 2.3(d)), unless prior
thereto the Plan Effective Date occurs and the Rights Offering has been
consummated; provided, that the Company shall not have the right to terminate
this Agreement pursuant to this Section 8.3(f) if it is then in willful or
intentional breach of this Agreement.

 

Section 8.4         Individual Backstop Party Termination. Any Backstop Party
may terminate its status as a party to this Agreement, including all of its
Backstop Commitments, as to itself only, upon the filing of any Definitive
Document that contains terms that are not consistent with the terms of the
Restructuring Support Agreement (as in effect as of the date hereof without
giving effect to any amendment or modification thereof) and where such
differences, taken as a whole, have a material and adverse impact on such
Backstop Party, by delivery of a written notice to all Parties in accordance
with Section 10.1 hereof within three (3) Business Days of such filing. Such
terminating Backstop Party shall not be entitled to any of the Put Option
Premium, Direct Investment Rights or Expense Reimbursement for periods following
its termination hereunder (but, for the avoidance of doubt, the Company shall
remain obligated to pay any Expense Reimbursement for such terminating Backstop
Party accrued before the effectiveness of such termination). Following
effectiveness of such termination, the other Backstop Parties may arrange for a
Backstop Party Replacement pursuant to Section 2.3.

 

54

 

 

Section 8.5         Effect of Termination.

 

(a)            Upon termination of this Agreement pursuant to this Article VIII,
this Agreement shall forthwith become void and there shall be no further
obligations or liabilities on the part of the Parties; provided, that (i) the
provisions set forth in Article III, Section 6.13, this Section 8.5, Article IX
and Article X (including, for the avoidance of doubt, the obligation of the
Debtors or the Company, as applicable, to pay the Put Option Premium pursuant to
Section 8.5(b) and the Expense Reimbursement pursuant to Section 6.13 (unless
such Backstop Party was previously or substantially simultaneously terminated in
accordance with Section 8.3(b))) shall survive the termination of this Agreement
in accordance with their terms and subject to any Order of the Bankruptcy Court
and (ii) subject to Section 10.11, nothing in this Section 8.5 shall relieve any
Party from liability for gross negligence or any willful or intentional breach
of this Agreement. For purposes of this Agreement, “willful or intentional
breach” means a breach of this Agreement that is a consequence of an act
undertaken by the breaching Party with the knowledge that the taking of such act
would, or would reasonably be expected to, cause a breach of this Agreement.

 

(b)            Upon termination of this Agreement pursuant to this Article VIII
(other than any termination of this Agreement with respect to one or more
Backstop Parties pursuant to Section 8.3(b) or Section 8.4), the Company or the
Debtors, as applicable, shall pay cash in the amount of the Put Option Premium
to the Backstop Parties (excluding any terminated Backstop Parties under
Section 8.3(b), any Backstop Parties who have terminated under Section 8.4 and
any Defaulting Backstop Parties) or their designees based upon their respective
Backstop Commitment Percentages, by wire transfer of immediately available funds
to such accounts as each Backstop Party may designate, within two (2) Business
Days of such termination. For the avoidance of doubt, if this Agreement is
terminated pursuant to Section 8.2(a) with respect to one or more Backstop
Parties, such Backstop Parties (unless previously or substantially
simultaneously terminated under Section 8.3(b)) shall be entitled to their
ratable portion of the Put Option Premium in cash by wire transfer of
immediately available funds to such accounts as such Backstop Party may
designate, within two (2) Business Days of such termination.

 

Article IX
INDEMNIFICATION AND CONTRIBUTION

 

Section 9.1         Indemnification Obligations. Following the entry of the
Backstop Commitment Agreement Approval Order, the Company, the other Debtors and
the Reorganized Debtors (the “Indemnifying Parties” and each an “Indemnifying
Party”) shall, jointly and severally, indemnify and hold harmless each Backstop
Party, its Affiliates, shareholders, members, partners and other equity holders,
general partners, managers and its and their respective Representatives, agents
and controlling persons (each, an “Indemnified Person”) from and against any and
all losses, claims, damages, liabilities and costs and expenses (other than
Taxes of the Backstop Parties, except to the extent provided for in
Section 2.5(c), Section 3.2 and 4.4(a)) (collectively, “Losses”) that any such
Indemnified Person may incur or to which any such Indemnified Person may become
subject arising out of or in connection with this Agreement, the Restructuring
Support Agreement, the Chapter 11 Cases or any other similar claims and related
litigation, the Plan and the transactions contemplated hereby and thereby,
including the Backstop Commitments, the Rights Offering, the payment of the Put
Option Premium or the use of the proceeds of the Rights Offering, or any claim,
challenge, litigation, investigation or proceeding relating to any of the
foregoing, regardless of whether any Indemnified Person is a party thereto,
whether or not such proceedings are brought by the Company, the other Debtors,
the Reorganized Debtors, their respective equity holders, Affiliates, creditors
or any other Person, and reimburse each Indemnified Person upon demand for
reasonable and documented (subject to redaction to preserve attorney client and
work product privileges) legal or other third-party expenses incurred in
connection with investigating, preparing to defend or defending, or providing
evidence in or preparing to serve or serving as a witness with respect to, any
lawsuit, investigation, claim or other proceeding relating to any of the
foregoing (including in connection with the enforcement of the indemnification
obligations set forth herein), irrespective of whether or not the transactions
contemplated by this Agreement or the Plan are consummated or whether or not
this Agreement is terminated; provided that the foregoing indemnity will not, as
to any Indemnified Person, apply to Losses (a) as to a Defaulting Backstop Party
and its Related Parties, caused by a Backstop Party Default by such Backstop
Party, or (b) to the extent they are found by a final, non-appealable judgment
of a court of competent jurisdiction to arise from the bad faith, willful
misconduct or gross negligence of such Indemnified Person. The Indemnified
Persons are express third party beneficiaries of this Article IX.

 

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Section 9.2         Indemnification Procedure. Promptly after receipt by an
Indemnified Person of notice of the commencement of any claim, challenge,
litigation, investigation or proceeding (an “Indemnified Claim”), such
Indemnified Person will, if a claim is to be made hereunder against the
Indemnifying Party in respect thereof, notify the Indemnifying Party in writing
of the commencement thereof; provided that (a) the omission to so notify the
Indemnifying Party will not relieve the Indemnifying Party from any liability
that it may have hereunder except to the extent it has been materially
prejudiced by such failure and (b) the omission to so notify the Indemnifying
Party will not relieve the Indemnifying Party from any liability that it may
have to such Indemnified Person otherwise than on account of this Article IX. In
case any such Indemnified Claims are brought against any Indemnified Person and
it notifies the Indemnifying Party of the commencement thereof, the Indemnifying
Party will be entitled to participate therein, and, to the extent that it may
elect by written notice delivered to such Indemnified Person, to assume the
defense thereof or participation therein, with counsel reasonably acceptable to
such Indemnified Person; provided that if the parties (including any impleaded
parties) to any such Indemnified Claims include both such Indemnified Person and
the Indemnifying Party and based on advice of such Indemnified Person’s counsel
there are legal defenses available to such Indemnified Person that are different
from or additional to those available to the Indemnifying Party, such
Indemnified Person shall have the right to select separate counsel to assert
such legal defenses and to otherwise participate in the defense of such
Indemnified Claims. Upon receipt of notice from the Indemnifying Party to such
Indemnified Person of its election to so assume the defense of such Indemnified
Claims with counsel reasonably acceptable to the Indemnified Person, the
Indemnifying Party shall not be liable to such Indemnified Person for expenses
incurred by such Indemnified Person in connection with the defense thereof
(other than reasonable costs of investigation) unless (i) such Indemnified
Person shall have employed separate counsel (in addition to any local counsel)
in connection with the assertion of legal defenses in accordance with the
proviso to the immediately preceding sentence (it being understood, however,
that the Indemnifying Party shall not be liable for the expenses of more than
one separate counsel representing the Indemnified Persons who are parties to
such Indemnified Claims (in addition to one local counsel in each jurisdiction
in which local counsel is required)), (ii) the Indemnifying Party shall not have
employed counsel reasonably acceptable to such Indemnified Person to represent
such Indemnified Person within a reasonable time after notice of commencement of
the Indemnified Claims, (iii) after the Indemnifying Party assumes the defense
of the Indemnified Claims and determines in good faith that the Indemnifying
Party shall have failed or is failing to defend such claim, and is provided
written notice of such failure by the Indemnified Person and such failure is not
reasonably cured within ten (10) Business Days of receipt of such notice, or
(iv) the Indemnifying Party shall have authorized in writing the employment of
counsel for such Indemnified Person.

 

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Nothing in this Section 9.2 shall limit the ability that the Debtors and the
Reorganized Debtors otherwise have (i) to have sole control over any Tax
controversy or Tax audit of the Debtors or the Reorganized Debtors or (ii) to
settle any liability for Taxes of the Debtors or the Reorganized Debtors. The
Debtors or Reorganized Debtors, as applicable, shall give prompt notice to all
relevant Backstop Parties of any material changes or events in connection with a
Tax controversy or audit.

 

Section 9.3         Settlement of Indemnified Claims. The Indemnifying Party
shall not be liable for any settlement of any Indemnified Claims effected
without its written consent (which consent shall not be unreasonably withheld).
If any settlement of any Indemnified Claims is consummated with the written
consent of the Indemnifying Party or if there is a final judgment for the
plaintiff in any such Indemnified Claims, the Indemnifying Party agrees to
indemnify and hold harmless each Indemnified Person from and against any and all
Losses by reason of such settlement or judgment to the extent such Losses are
otherwise subject to indemnification by the Indemnifying Party hereunder in
accordance with, and subject to the limitations of, the provisions of this
Article IX. The Indemnifying Party shall not, without the prior written consent
of an Indemnified Person (which consent shall be granted or withheld in the
Indemnified Person’s sole discretion), effect any settlement of any pending or
threatened Indemnified Claims in respect of which indemnity or contribution has
been sought hereunder by such Indemnified Person unless (a) such settlement
includes an unconditional release of such Indemnified Person in form and
substance reasonably acceptable to such Indemnified Person from all liability on
the claims that are the subject matter of such Indemnified Claims and (b) such
settlement does not include any statement as to or any admission of fault,
culpability or a failure to act by or on behalf of any Indemnified Person.

 

Section 9.4         Contribution. If for any reason the foregoing
indemnification is unavailable to any Indemnified Person or insufficient to hold
it harmless from Losses that are subject to indemnification pursuant to
Section 9.1, then the Indemnifying Party shall contribute to the amount paid or
payable by such Indemnified Person as a result of such Loss in such proportion
as is appropriate to reflect not only the relative benefits received by the
Indemnifying Party, on the one hand, and such Indemnified Person, on the other
hand, but also the relative fault of the Indemnifying Party, on the one hand,
and such Indemnified Person, on the other hand, as well as any relevant
equitable considerations. It is hereby agreed that the relative benefits to the
Indemnifying Party, on the one hand, and all Indemnified Persons, on the other
hand, shall be deemed to be in the same proportion as (a) the total value
received or proposed to be received by the Company (or Reorganized Chesapeake,
as applicable) pursuant to the issuance and sale of the Unsubscribed Shares and
the Rights Offering Shares in the Rights Offering contemplated by this Agreement
and the Plan bears to (b) the Put Option Premium paid or proposed to be paid to
the Backstop Parties. The Indemnifying Parties also agree that no Indemnified
Person shall have any liability based on their comparative or contributory
negligence or otherwise to the Indemnifying Parties, any Person asserting claims
on behalf of or in right of any of the Indemnifying Parties, or any other Person
in connection with an Indemnified Claim.

 

57

 

 

Section 9.5         Treatment of Indemnification Payments. All amounts paid by
the Indemnifying Party to an Indemnified Person under this Article IX shall, to
the extent permitted by applicable Law, be treated as adjustments to the
Purchase Price for all Tax purposes. The provisions of this Article IX are an
integral part of the transactions contemplated by this Agreement and without
these provisions the Backstop Parties would not have entered into this
Agreement, and the obligations of the Debtors under this Article IX shall
constitute allowed administrative expenses of the Debtors’ estate under Sections
503(b) and 507 of the Bankruptcy Code and are payable without further Order of
the Bankruptcy Court, and the Debtors (and the Reorganized Debtors) may comply
with the requirements of this Article IX without further Order of the Bankruptcy
Court.

 

Article X
GENERAL PROVISIONS

 

Section 10.1         Notices. All notices and other communications in connection
with this Agreement shall be in writing and shall be deemed given if delivered
personally, sent via electronic mail, mailed by registered or certified mail
(return receipt requested) or delivered by an express courier (with
confirmation) to the Parties at the following addresses (or at such other
address for a Party as may be specified by like notice):

 

(a)            If to the Company or any of the other Debtors:

 

Chesapeake Energy Corporation
6100 North Western Avenue
Oklahoma City, Oklahoma 73118 

Tel:   (405) 848-8000 Attn:  James R. Webb, Executive Vice President, General
Counsel and Corporate Secretary Email:  jim.webb@chk.com

 

with copies (which shall not constitute notice) to:

 

Kirkland & Ellis LLP
300 North LaSalle Street
Chicago, Illinois 60654,

Tel:  (312) 862-2000 Fax:  (312) 862-2200 Attn:  Patrick J. Nash, Jr., P.C.   
Marc Kieselstein, P.C.    Alexandra Schwarzman Email:  
patrick.nash@kirkland.com    marc.kieselstein@kirkland.com   
alexandra.schwarzman@kirkland.com

 

58

 

 

(b)            If to the FLLO Backstop Parties, to:

 

Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, NY 10017

Tel:  +1 212 450 4000 Fax:  +1 212 701 5800 Attn:  Damian S. Schaible    Darren
S. Klein    Aryeh Ethan Falk    Stephen Salmon    Bryan M. Quinn Email: 
damian.schaible@davispolk.com;    darren.klein@davispolk.com   
aryeh.falk@davispolk.com    stephen.salmon@davispolk.com   
bryan.quinn@davispolk.com

 

(c)            If to the Franklin Backstop Parties, to:

 

Akin Gump Strauss Hauer & Feld LLP
One Bryant Park 

Bank of America Tower 

New York, NY 10036-6745 

Tel:  +1 713 220 5800 Attn:  Michael S. Stamer     Meredith A. Lahaie    
Stephen B. Kuhn  Email:  mstamer@akingump.com;     mlahaie@akingump.com    
skuhn@akingump.com

 

Section 10.2         Assignment; Third Party Beneficiaries. Neither this
Agreement nor any of the rights, interests or obligations under this Agreement
shall be assigned by any Party (whether by operation of Law or otherwise)
without the prior written consent of the Company and the Required Backstop
Parties, other than an assignment by a Backstop Party expressly permitted by
Section 2.3 or 2.6 and any purported assignment in violation of this
Section 10.2 shall be void ab initio. Except as provided under Article IX with
respect to the Indemnified Persons, this Agreement (including the documents and
instruments referred to in this Agreement) is not intended to and does not
confer upon any Person any rights or remedies under this Agreement other than
the Parties.

 

Section 10.3         Prior Negotiations; Entire Agreement.

 

(a)            This Agreement (including the agreements attached as Exhibits to
and the documents and instruments referred to in this Agreement) and the
Restructuring Support Agreement (including the Restructuring Term Sheet)
constitute the entire agreement of the Parties and supersede all prior
agreements, arrangements or understandings, whether written or oral, among the
Parties with respect to the subject matter of this Agreement, except that the
Parties hereto acknowledge that any confidentiality agreements heretofore
executed among the Parties and the Restructuring Support Agreement (including
the Restructuring Term Sheet) will each continue in full force and effect;
provided, that in the event of any conflict between this Agreement and the
Restructuring Support Agreement (including the Restructuring Term Sheet), the
Restructuring Support Agreement (including the Restructuring Term Sheet) shall
prevail. All exhibits, schedules and annexes hereto or referred to herein are
hereby incorporated in and made a part of this Agreement as if set forth in full
herein.

 

59

 

 

(b)            Notwithstanding anything to the contrary in the Plan (including
any amendments, supplements or modifications thereto) or the Confirmation Order
(and any amendments, supplements or modifications thereto) or an affirmative
vote to accept the Plan submitted by any Backstop Party, nothing contained in
the Plan (including any amendments, supplements or modifications thereto) or
Confirmation Order (including any amendments, supplements or modifications
thereto) shall alter, amend or modify the rights of the Backstop Parties under
this Agreement unless such alteration, amendment or modification has been made
in accordance with Section 10.7.

 

Section 10.4         Governing Law; Venue. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York, without
regard to such state’s choice of law provisions which would require the
application of the law of any other jurisdiction. By its execution and delivery
of this Agreement, each Party irrevocably and unconditionally agrees for itself
that any legal action, suit, or proceeding against it with respect to any matter
arising under or arising out of or in connection with this Agreement or for
recognition or enforcement of any judgment rendered in any such action, suit, or
proceeding, may be brought in the BANKRUPTCY COURT, and by executing and
delivering this Agreement, each of the Parties irrevocably accepts and submits
itself to the exclusive jurisdiction of such court, generally and
unconditionally, with respect to any such action, suit or proceeding. THE
PARTIES HEREBY AGREE THAT MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH
ANY SUCH ACTION OR PROCEEDING TO AN ADDRESS PROVIDED IN WRITING BY THE RECIPIENT
OF SUCH MAILING, OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW, SHALL BE
VALID AND SUFFICIENT SERVICE THEREOF AND HEREBY WAIVE ANY OBJECTIONS TO SERVICE
ACCOMPLISHED IN THE MANNER HEREIN PROVIDED.

 

Section 10.5         Waiver of Jury Trial. EACH PARTY HEREBY WAIVES ALL RIGHTS
TO TRIAL BY JURY IN ANY JURISDICTION IN ANY ACTION, SUIT OR PROCEEDING BROUGHT
TO RESOLVE ANY DISPUTE AMONG THE PARTIES UNDER THIS AGREEMENT, WHETHER IN
CONTRACT, TORT OR OTHERWISE.

 

Section 10.6         Counterparts. This Agreement may be executed through the
use of electronic signature and in any number of counterparts, all of which will
be considered an original and one and the same agreement and will become
effective when counterparts have been signed (electronically or otherwise) by
each of the Parties and delivered to each other Party (including via facsimile
or other electronic transmission), it being understood that each Party need not
sign the same counterpart. The Company shall be provided signature pages of the
Backstop Parties in unredacted form; provided, that the Company, the Debtors and
counsel to the Company and the Debtors shall not make any public disclosure of
any kind that would disclose either: (i) the holdings or Backstop Commitments of
any Backstop Parties (including the signature pages hereto, which shall not be
publicly disclosed or filed), (ii) the identity of any Backstop Parties and
(iii) the Backstop Commitment Schedule, in each case without the prior written
consent of such Backstop Party or the order of a Bankruptcy Court or other court
with competent jurisdiction.

 

60

 

 

Section 10.7         Waivers and Amendments; Rights Cumulative; Consent. This
Agreement may be amended, restated, modified or changed only by a written
instrument signed by the Company and the Required Backstop Parties; provided,
that any Backstop Party’s (other than a Defaulting Backstop Party) prior written
consent shall be required for any amendment that would, directly or indirectly:
(i) modify such Backstop Party’s Backstop Commitment Percentage, including with
respect to the Direct Investment Shares, (ii) increase the Per Share Purchase
Price, (iii) decrease the Put Option Premium or adversely modify the method of
payment thereof, (iv) extend the Outside Date other than as permitted by
Section 8.2(a), (v) change any provision of this Section 10.7 or the definition
of “Required Backstop Parties” or (vi) have a materially adverse and
disproportionate effect on such Backstop Party. Notwithstanding the foregoing,
the Backstop Commitment Schedule shall be revised as necessary without requiring
a written instrument signed by the Company and the Required Backstop Parties to
reflect changes in the composition of the Backstop Parties and Backstop
Commitment Percentages as a result of Transfers permitted in accordance with the
terms and conditions of this Agreement and no such revisions shall give rise to
any termination right or allow the Backstop Parties to fail to close the
transactions contemplated by this Agreement. The terms and conditions of this
Agreement (other than the conditions set forth in Sections 7.1 and 7.3, the
waiver of which shall be governed by Article VII) may be waived (A) by the
Debtors only by a written instrument executed by the Company and (B) by the
Required Backstop Parties only by a written instrument executed by the Required
Backstop Parties. No delay on the part of any Party in exercising any right,
power or privilege pursuant to this Agreement will operate as a waiver thereof,
nor will any waiver on the part of any Party of any right, power or privilege
pursuant to this Agreement, nor will any single or partial exercise of any
right, power or privilege pursuant to this Agreement, preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
pursuant to this Agreement. Except as otherwise provided in this Agreement, the
rights and remedies provided pursuant to this Agreement are cumulative and are
not exclusive of any rights or remedies which any Party otherwise may have at
law or in equity.

 

Section 10.8         Headings. The headings in this Agreement are for reference
purposes only and will not in any way affect the meaning or interpretation of
this Agreement.

 

Section 10.9         No Survival. All representations, warranties, covenants and
agreements made in this Agreement shall not survive the Closing Date except for
covenants and agreements that by their terms are to be satisfied after the
Closing Date, which covenants and agreements shall survive until satisfied in
accordance with their terms. Notwithstanding the foregoing, this Article X, the
indemnification and other obligations of the Company pursuant to Article IX and
the obligations set forth in Article III, Section 6.13 and Section 8.5 shall
survive the Closing Date or the termination of this Agreement until the latest
date permitted by applicable Law and, if applicable, be assumed by Reorganized
Chesapeake and its Subsidiaries.

 

Section 10.10         Specific Performance. The Parties agree that irreparable
damage would occur if any provision of this Agreement were not performed in
accordance with the terms hereof and that the Parties shall be entitled to an
injunction or injunctions without the necessity of posting a bond to prevent
breaches of this Agreement or to enforce specifically the performance of the
terms and provisions hereof, in addition to any other remedy to which they are
entitled at law or in equity. Unless otherwise expressly stated in this
Agreement, no right or remedy described or provided in this Agreement is
intended to be exclusive or to preclude a Party from pursuing other rights and
remedies to the extent available under this Agreement, at law or in equity.

 

61

 

 

Section 10.11         Damages. Notwithstanding anything to the contrary in this
Agreement, none of the Parties will be liable for, and none of the Parties shall
claim or seek to recover, any punitive, special, indirect or consequential
damages or damages for lost profits.

 

Section 10.12         No Reliance. No Backstop Party or any of its Related
Parties shall have any duties or obligations to the other Backstop Parties in
respect of this Agreement, the Plan or the transactions contemplated hereby or
thereby, except those expressly set forth herein. Without limiting the
generality of the foregoing, (a) no Backstop Party or any of its Related Parties
shall be subject to any fiduciary or other implied duties to the other Backstop
Parties, (b) no Backstop Party or any of its Related Parties shall have any duty
to take any discretionary action or exercise any discretionary powers on behalf
of any other Backstop Party, (c) no Backstop Party or any of its Related Parties
shall have any duty to the other Backstop Parties to obtain, through the
exercise of diligence or otherwise, to investigate, confirm, or disclose to the
other Backstop Parties any information relating to any Debtor that may have been
communicated to or obtained by such Backstop Party or any of its Affiliates in
any capacity, (d) no Backstop Party may rely, and each Backstop Party confirms
that it has not relied, on any due diligence investigation that any other
Backstop Party or any Person acting on behalf of such other Backstop Party may
have conducted with respect to the Company or any of its Affiliates or any of
their respective securities, and (e) each Backstop Party acknowledges that no
other Backstop Party is acting as a placement agent, initial purchaser,
underwriter, broker or finder with respect to its Unsubscribed Shares or
Backstop Commitment Percentage of its Backstop Commitment.

 

Section 10.13         Publicity. Other than as may be required by applicable Law
or the rules and regulations of any securities exchange, at all times prior to
the Closing Date or the earlier termination of this Agreement in accordance with
its terms, the Company and the Backstop Parties shall consult with each other
prior to issuing any press releases (and provide each other a reasonable
opportunity to review and comment upon such release) or otherwise making public
announcements with respect to the transactions contemplated by this Agreement,
it being understood that nothing in this Section 10.13 shall prohibit any Party
from filing any motions or other pleadings or documents with the Bankruptcy
Court in connection with the Chapter 11 Cases or making any other filings or
public announcements as may be required by applicable Law. For the avoidance of
doubt, each Party shall have the right, without any obligation to the other
Parties, to decline to comment to the press with respect to this Agreement.

 

Section 10.14         Settlement Discussions. This Agreement and the
transactions contemplated herein are part of a proposed settlement of a dispute
between the Parties. Nothing herein shall be deemed an admission of any kind.
Pursuant to Section 408 of the U.S. Federal Rules of Evidence and any applicable
state rules of evidence, this Agreement and all negotiations relating thereto
shall not be admissible into evidence in any Legal Proceeding, except to the
extent filed with, or disclosed to, the Bankruptcy Court in connection with the
Chapter 11 Cases (other than a Legal Proceeding to approve or enforce the terms
of this Agreement).

 

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Section 10.15         No Recourse. Notwithstanding anything that may be
expressed or implied in this Agreement, and notwithstanding the fact that
certain of the Parties may be partnerships or limited liability companies, each
Party covenants, agrees and acknowledges that no recourse under this Agreement
or any documents or instruments delivered in connection with this Agreement
shall be had against any Party’s Affiliates, or any of such Party’s Affiliates’
or respective Related Parties in each case other than the Parties to this
Agreement and each of their respective successors (which with respect to the
Debtors includes the Reorganized Debtors) and permitted assignees under this
Agreement, whether by the enforcement of any assessment or by any legal or
equitable proceeding, or by virtue of any applicable Law, it being expressly
agreed and acknowledged that no personal liability whatsoever shall attach to,
be imposed on or otherwise be incurred by any of the Related Parties, as such,
for any obligation or liability of any Party under this Agreement or any
documents or instruments delivered in connection herewith for any claim based
on, in respect of or by reason of such obligations or liabilities or their
creation; provided, however, nothing in this Section 10.15 shall relieve or
otherwise limit the liability of any Party hereto or any of their respective
successors or permitted assigns for any breach or violation of its obligations
under this Agreement or such other documents or instruments.  For the avoidance
of doubt, none of the Parties will have any recourse, be entitled to commence
any proceeding or make any claim under this Agreement or in connection with the
transactions contemplated hereby except against any of the Parties or their
respective successors and permitted assigns, as applicable.

 

Section 10.16         Independence of Backstop Parties’ Obligations and Rights.
The obligations of each Backstop Party under this Agreement and the transactions
contemplated herein and therein are several and not joint with the obligations
of any other Backstop Party, and no Backstop Party shall be responsible in any
way for the performance of the obligations of any other Backstop Party under
this Agreement or the transactions contemplated herein. Nothing contained herein
or in any other agreement referred to in this Agreement, and no action taken by
any Backstop Party pursuant hereto shall be deemed to constitute the Backstop
Parties as, and the Debtors acknowledges that the Backstop Parties do not so
constitute, a partnership, an association, a joint venture or any other kind of
entity, or create a presumption that the Backstop Parties are in any way acting
in concert or as a group, including, without limitation, with respect to any
agreement, arrangement, or understanding with respect to acting together for the
purpose of acquiring, holding, voting, or disposing of any equity securities of
the Debtors or with respect to acting as a “group” within the meaning of
Rule 13d-5 under the Exchange Act, and the Debtors will not assert any such
claim with respect to such obligations or the transactions contemplated by this
Agreement and the Debtors acknowledge that the Backstop Parties are not acting
in concert or as a group with respect to such obligations or the transactions
contemplated by this Agreement. The Debtors acknowledge and each Backstop Party
confirms that it has independently participated in the negotiation of the
transactions contemplated herein with the advice of its own counsel and
advisors. Each Backstop Party shall be entitled to independently protect and
enforce its rights, including, without limitation, the rights arising out of
this Agreement and it shall not be necessary for any other Backstop Party to be
joined as an additional party in any proceeding for such purpose. The use of a
single agreement to effectuate the transactions contemplated herein was solely
in the control of the Debtors, not the action or decision of any Backstop Party,
and was done solely for the convenience of the Debtors and not because it was
required or requested to do so by any Backstop Party. It is expressly understood
and agreed that each provision contained in this Agreement is between the
Backstop Parties and the Debtors, solely, and not between the Debtors and the
Backstop Parties collectively and not between and among the Backstop Parties.

 

63

 

 

[All signature pages on file with the Debtors.]

 

 

 

 

Schedule 1

 

Backstop Commitment Schedule

 

 

 

 

[Backstop Commitment Schedule on file with the Debtors.]

 

 

 

 

Exhibit A

 

Form of Joinder Agreement

 

JOINDER AGREEMENT

 

This joinder agreement (the “Joinder Agreement”) to Backstop Commitment
Agreement dated [●], 2020 (as amended, supplemented or otherwise modified from
time to time, the “BCA”), between the Debtors (as defined in the BCA) and the
Backstop Parties (as defined in the BCA) is executed and delivered by
________________________________ (the “Joining Party”) as of ______________,
2020 (the “Joinder Date”). Each capitalized term used herein but not otherwise
defined shall have the meaning set forth in the BCA.

 

Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the
terms of the BCA, a copy of which is attached to this Joinder Agreement as Annex
I (as the same has been or may be hereafter amended, restated or otherwise
modified from time to time in accordance with the provisions hereof). The
Joining Party shall hereafter be deemed to be an “Backstop Party” for all
purposes under the BCA. If the Joining Party is not a party to the Restructuring
Support Agreement, the Joining Party shall prior to, or simultaneously with, its
execution of this Joinder Agreement, also execute a joinder to the Restructuring
Support Agreement.

 

Representations and Warranties. The Joining Party hereby severally and not
jointly makes the representations and warranties of the Backstop Parties set
forth in Article V of the BCA to the Debtors as of the date of this Joinder
Agreement.

 

Governing Law. This Joinder Agreement shall be governed by and construed in
accordance with the Laws of the State of New York without application of any
choice of law provisions that would require the application of the Laws of
another jurisdiction.

 

[Signature pages follow.]

 

 

 

 

IN WITNESS WHEREOF, the Joining Party has caused this Joinder Agreement to be
executed as of the Joinder Date.

 

  JOINING PARTY       [BACKSTOP PARTY], by and on behalf of certain of its and
its affiliates’ managed funds and/or accounts           By:       Name:    
Title:

 

AGREED AND ACCEPTED AS OF THE
JOINDER DATE:       CHESAPEAKE ENERGY CORPORATION, as Debtor           By:
                                Name:     Title:  

 

 

 

 

Exhibit 5

 

Release, Exculpation, and Injunction Provisions

 

Release, Exculpation, and Injunction Provisions Releases by the Debtors

Notwithstanding anything contained in the Plan to the contrary, pursuant to
section 1123(b) of the Bankruptcy Code, in exchange for good and valuable
consideration, the adequacy of which is hereby confirmed, on and after the Plan
Effective Date, each Released Party is deemed to be, hereby conclusively,
absolutely, unconditionally, irrevocably, and forever released and discharged by
the Debtors, the Reorganized Debtors, and their Estates, in each case on behalf
of themselves and their respective successors, assigns, and representatives, and
any and all other Entities who may purport to assert any Cause of Action,
directly or derivatively, by, through, for, or because of the foregoing
Entities, from any and all Claims and Causes of Action, including any derivative
claims, asserted on behalf of the Debtors, whether known or unknown, foreseen or
unforeseen, matured or unmatured, existing or hereafter arising, in law, equity,
contract, tort or otherwise, that the Debtors, the Reorganized Debtors, or their
Estates would have been legally entitled to assert in their own right (whether
individually or collectively) or on behalf of the holder of any Claim against,
or Interest in, a Debtor or other Entity, or that any holder of any Claim
against, or Interest in, a Debtor or other Entity could have asserted on behalf
of the Debtors, based on or relating to, or in any manner arising from, in whole
or in part, the Debtors (including the capital structure, management, ownership,
or operation thereof), any security of the Debtors or the Reorganized Debtors,
the subject matter of, or the transactions or events giving rise to, any Claim
or Interest that is treated in the Plan, the business or contractual
arrangements between any Debtor and any Released Party, the Revolving Credit
Facility, the FLLO Term Loan Facility, the Second Lien Notes, the assertion or
enforcement of rights and remedies against the Debtors, the Debtors’ in- or
out-of-court restructuring efforts, any avoidance actions, intercompany
transactions between or among a Company Party and another Company Party, the
Chapter 11 Cases, the formulation, preparation, dissemination, negotiation, or
Filing of the RSA, the Disclosure Statement, the Backstop Commitment Agreement,
the DIP Facility, the Exit Facilities, the Plan (including, for the avoidance of
doubt, the Plan Supplement), or any Restructuring Transaction, contract,
instrument, release, or other agreement or document (including any legal opinion
requested by any Entity regarding any transaction, contract, instrument,
document or other agreement contemplated by the Plan or the reliance by any
Released Party on the Plan or the Confirmation Order in lieu of such legal
opinion) created or entered into in connection with the RSA, the Disclosure
Statement, the Backstop Commitment Agreement, the DIP Facility, the Plan, the
Plan Supplement, or the Exit Facilities, before or during the Chapter 11 Cases,
the Filing of the Chapter 11 Cases, the pursuit of Confirmation, the pursuit of
Consummation, the administration and implementation of the Plan, including the
issuance or distribution of securities pursuant to the Plan, or the distribution
of property under the Plan or any other related agreement, or upon any other act
or omission, transaction, agreement, event, or other occurrence related or
relating to any of the foregoing taking place on or before the Plan Effective
Date, other than claims or liabilities arising out of or relating to any act or
omission of a Released Party that constitutes actual fraud, willful misconduct,
or gross negligence, each solely to the extent as determined by a Final Order of
a court of competent jurisdiction. Notwithstanding anything to the contrary in
the foregoing, the releases set forth above do not release any post Plan
Effective Date obligations of any party or Entity under the Plan, the
Confirmation Order, any Restructuring Transaction, or any document, instrument,
or agreement (including those set forth in the Plan Supplement) executed to
implement the Plan, including the Exit Facilities Documents, or any Claim or
obligation arising under the Plan.

Entry of the Confirmation Order shall constitute the Bankruptcy Court’s
approval, pursuant to Bankruptcy Rule 9019, of the debtors’ release, which
includes by reference each of the related provisions and definitions contained
in the Plan, and further, shall constitute the Bankruptcy Court’s finding that
the debtors’ release is: (a) in exchange for the good and valuable consideration
provided by the Released Parties, including, without limitation, the Released
Parties’ contributions to facilitating the Restructuring and implementing the
Plan; (b) a good faith settlement and compromise of the Claims released by the
debtors’ release; (c) in the best interests of the Debtors and all holders of
Claims and Interests; (d) fair, equitable, and reasonable; (e) given and made
after due notice and opportunity for hearing; and (f) a bar to any of the
Debtors, the Reorganized Debtors, or the Debtors’ Estates asserting any Claim or
Cause of Action released pursuant to the debtors’ release.

 

 

 

 

Releases by Holders of Claims and Interests

Except as otherwise expressly set forth in this Plan or the Confirmation Order,
on and after the Plan Effective Date, in exchange for good and valuable
consideration, the adequacy of which is hereby confirmed, each Released Party
is, and is deemed to be, hereby conclusively, absolutely, unconditionally,
irrevocably and forever, released and discharged by each Releasing Party from
any and all Causes of Action, whether known or unknown, foreseen or unforeseen,
matured or unmatured, existing or hereafter arising, in law, equity, contract,
tort, or otherwise, including any derivative claims asserted on behalf of the
Debtors, that such Entity would have been legally entitled to assert (whether
individually or collectively), based on or relating to, or in any manner arising
from, in whole or in part, the Debtors (including the capital structure,
management, ownership, or operation thereof), any security of the Debtors or the
Reorganized Debtors, the subject matter of, or the transactions or events giving
rise to, any Claim or Interest that is treated in the Plan, the business or
contractual arrangements between any Debtor and any Released Party, the
Revolving Credit Facility, the FLLO Term Loan Facility, the Second Lien Notes,
the assertion or enforcement of rights and remedies against the Debtors, the
Debtors’ in- or out-of-court restructuring efforts, any avoidance actions,
intercompany transactions between or among a Company Party and another Company
Party, the Chapter 11 Cases, the formulation, preparation, dissemination,
negotiation, or Filing of the RSA, the Disclosure Statement, the DIP Facility,
the Exit Facilities, the Plan (including, for the avoidance of doubt, the Plan
Supplement), or any Restructuring Transaction, contract, instrument, release, or
other agreement or document (including any legal opinion requested by any Entity
regarding any transaction, contract, instrument, document or other agreement
contemplated by the Plan or the reliance by any Released Party on the Plan or
the Confirmation Order in lieu of such legal opinion) created or entered into in
connection with the RSA, the Disclosure Statement, the DIP Facility, the Plan,
the Plan Supplement, before or during the Chapter 11 Cases, the Filing of the
Chapter 11 Cases, the pursuit of Confirmation, the pursuit of Consummation, the
administration and implementation of the Plan, including the issuance or
distribution of securities pursuant to the Plan, or the distribution of property
under the Plan or any other related agreement, or upon any other act or
omission, transaction, agreement, event, or other occurrence related or relating
to any of the foregoing taking place on or before the Plan Effective Date, other
than claims or liabilities arising out of or relating to any act or omission of
a Released Party that constitutes actual fraud, willful misconduct, or gross
negligence, each solely to the extent as determined by a Final Order of a court
of competent jurisdiction. Notwithstanding anything to the contrary in the
foregoing, the releases set forth above do not release (i) any party of any
obligations related to customary banking products, banking services or other
financial accommodations (except as may be expressly amended or modified by the
Plan and the Exit Facilities Credit Agreements, or any other financing document
under and as defined therein) or (ii) any post-Plan Effective Date obligations
of any party or Entity under the Plan, the Confirmation Order, any Restructuring
Transaction, or any document, instrument, or agreement (including those set
forth in the Plan Supplement) executed to implement the Plan, including the Exit
Facilities documents, or any Claim or obligation arising under the Plan.

Entry of the Confirmation Order shall constitute the Bankruptcy Court’s
approval, pursuant to Bankruptcy Rule 9019, of the third-party releases, which
includes by reference each of the related provisions and definitions contained
herein, and, further, shall constitute the Bankruptcy Court’s finding that the
third-party releases are: (a) consensual; (b) essential to the confirmation of
the Plan; (c) given in exchange for the good and valuable consideration provided
by the Released Parties; (d) a good faith settlement and compromise of the
Claims released by the third-party releases; (e) in the best interests of the
Debtors and their Estates; (f) fair, equitable, and reasonable; (g) given and
made after due notice and opportunity for hearing; and (h) a bar to any of the
Releasing Parties asserting any claim or Cause of Action released pursuant to
the third-party releases.

 

2

 

 

Exculpation

Except as otherwise specifically provided in the Plan or the Confirmation Order,
no Exculpated Party shall have or incur liability for, and each Exculpated Party
is hereby released and exculpated from, any Cause of Action for any claim
related to any act or omission in connection with, relating to, or arising out
of, the Chapter 11 Cases, the formulation, preparation, dissemination,
negotiation, Filing, or termination of the RSA and related prepetition
transactions, the Disclosure Statement, the Plan, the Plan Supplement, or any
Restructuring Transaction, contract, instrument, release or other agreement or
document (including any legal opinion requested by any Entity regarding any
transaction, contract, instrument, document or other agreement contemplated by
the Plan or the reliance by any Released Party on the Plan or the Confirmation
Order in lieu of such legal opinion) created or entered into before or during
the Chapter 11 Cases, any preference, fraudulent transfer, or other avoidance
claim arising pursuant to chapter 5 of the Bankruptcy Code or other applicable
law, the Filing of the Chapter 11 Cases, the pursuit of Confirmation, the
pursuit of Consummation, the administration and implementation of the Plan,
including the issuance or distribution of securities pursuant to the Plan, or
the distribution of property under the Plan or any other related agreement, or
upon any other related act or omission, transaction, agreement, event, or other
occurrence taking place on or before the Plan Effective Date, except for claims
related to any act or omission that is determined in a Final Order by a court of
competent jurisdiction to have constituted actual fraud, willful misconduct, or
gross negligence, but in all respects such Entities shall be entitled to
reasonably rely upon the advice of counsel with respect to their duties and
responsibilities pursuant to the Plan.

The Exculpated Parties and other parties set forth above have, and upon
confirmation of the Plan shall be deemed to have, participated in good faith and
in compliance with the applicable laws with regard to the solicitation of votes
and distribution of consideration pursuant to the Plan and, therefore, are not,
and on account of such distributions shall not be, liable at any time for the
violation of any applicable law, rule, or regulation governing the solicitation
of acceptances or rejections of the Plan or such distributions made pursuant to
the Plan.

Injunction

Except as otherwise expressly provided in the Plan or the Confirmation Order or
for obligations issued or required to be paid pursuant to the Plan or the
Confirmation Order, all Entities who have held, hold, or may hold Claims or
Interests that have been released, discharged, or are subject to exculpation are
permanently enjoined, from and after the Plan Effective Date, from taking any of
the following actions against, as applicable, the Debtors, the Reorganized
Debtors, the Exculpated Parties, or the Released Parties: (1) commencing or
continuing in any manner any action or other proceeding of any kind on account
of or in connection with or with respect to any such Claims or Interests;
(2) enforcing, attaching, collecting, or recovering by any manner or means any
judgment, award, decree, or order against such Entities on account of or in
connection with or with respect to any such Claims or Interests; (3) creating,
perfecting, or enforcing any encumbrance of any kind against such Entities or
the property or the Estates of such Entities on account of or in connection with
or with respect to any such Claims or Interests; (4) asserting any right of
setoff, subrogation, or recoupment of any kind against any obligation due from
such Entities or against the property of such Entities on account of or in
connection with or with respect to any such Claims or Interests unless such
holder has Filed a motion requesting the right to perform such setoff on or
before the Plan Effective Date, and notwithstanding an indication of a Claim or
Interest or otherwise that such holder asserts, has, or intends to preserve any
right of setoff pursuant to applicable law or otherwise; and (5) commencing or
continuing in any manner any action or other proceeding of any kind on account
of or in connection with or with respect to any such Claims or Interests
released or settled pursuant to the Plan.

Upon entry of the Confirmation Order, all holders of Claims and Interests and
their respective current and former employees, agents, officers, directors,
principals, and direct and indirect affiliates shall be enjoined from taking any
actions to interfere with the implementation or Consummation of the Plan. Except
as otherwise set forth in the Confirmation Order, each holder of an Allowed
Claim or Allowed Interest, as applicable, by accepting, or being eligible to
accept, distributions under or Reinstatement of such Claim or Interest, as
applicable, pursuant to the Plan, shall be deemed to have consented to the
injunction provisions set forth in this Restructuring Term Sheet and the Plan.

 

3

 

 

Exhibit 6

 

Governance Term Sheet 

 

 

 

CONFIDENTIAL MATERIALS
SUBJECT TO FRE 408 FOR SETTLEMENT PURPOSES

CHESAPEAKE ENERGY CORPORATION

GOVERNANCE TERM SHEET

 

This term sheet (this “Term Sheet”) describes certain corporate governance
provisions to be in effect after the Restructuring of Chesapeake Energy
Corporation and the other Debtors. Capitalized terms used in this Term Sheet but
not defined herein shall have the meanings set forth in the RSA and the
Restructuring Term Sheet, as applicable, of which this Term Sheet forms a part.

 

Reorganized Company Reorganized Chesapeake (the “Company”) will be a Delaware
corporation. Capital Stock One class of voting common stock (the “New Common
Stock”) and authorized but unissued “blank check” preferred stock, having such
designations, preferences, limitations and relative rights, including
preferences over the New Common Stock with respect to dividends and
distributions, as the New Board may determine. Board of Directors

The New Board to consist of seven (7) directors composed of: (i) the chief
executive officer of the Company; (ii) one director selected by BlackRock
Financial Management, Inc. (on behalf of funds and accounts under management);
(iii) one director selected by Fidelity Management and Research (or a subsidiary
or affiliate thereof); (iv) one director selected by PGIM, Inc. (on behalf of
funds and accounts under management); (v) one director selected by Franklin
Advisers, Inc. (or a subsidiary or affiliate thereof); and (vi) two directors
selected by the Consenting FLLO Term Loan Facility Lenders (excluding those set
forth in clauses (ii) through (v)) holding a majority in principal amount of the
FLLO Term Loan Facility held by such lenders.

The Consenting FLLO Term Loan Facility Lenders and Franklin will consult with
one another regarding the process of selecting the New Board. At least four
(4) of the members of the New Board shall meet the independence requirements of
The New York Stock Exchange.

After the Plan Emergence Date, the members of the New Board will be elected by
the holders of the New Common Stock annually.

Stockholder Approvals

In addition to any approvals required under applicable law and regulation,
without the approval of the holders of a majority of the outstanding New Common
Stock, the Company shall not authorize, adopt or amend any equity incentive plan
other than the Management Incentive Plan or authorize any increase in the amount
of shares or equity awards under the Management Incentive Plan or any other
equity incentive plan or equity compensation plan.

In addition, until such time as the New Common Stock is listed on a National
Securities Exchange (as defined below), without the approval of the holders of a
majority of outstanding New Common Stock, the Company shall not:

(i)       issue shares of New Common Stock in excess of 5% of the fully-diluted
number of shares of New Common Stock outstanding and authorized for issuance
under the Plan on the Plan Effective Date (including all shares contemplated
under the claims recovery, the New Warrants, the Rights Offering, the Backstop
Commitment Agreement and the Management Incentive Plan) or authorize or issue
any shares of preferred stock; provided that this limitation shall not apply in
connection with the adoption of a bona fide stockholder rights plan by the
Company’s board of directors;

(ii)       enter into any sales, transfers or licenses of any Company
subsidiary, division, operation, business, line of business, assets or property,
in each case, held by the Company or any of its subsidiaries with any person
other than the Company or one or more of its wholly-owned subsidiaries involving
consideration in excess of $50,000,000 per transaction or series of related
transactions; or

(iii)       make any acquisition, by merger, consolidation or stock or asset
purchase or investment with respect to any business, assets, property or any
corporation or other entity, involving consideration in excess of $50,000,000
per transaction or series of related transactions.

“National Securities Exchange” means The New York Stock Exchange, The Nasdaq
Global Select Market or The Nasdaq Global Market.

 

1

 

 

Transfer Restrictions

The New Common Stock will be transferrable without Company consent, subject to
compliance with applicable securities laws.

If requested by the Required Consenting Stakeholders before the Plan Effective
Date, the New Organizational Documents will include transfer restrictions
designed to limit an ownership change for purposes of Section 382 of the U.S.
Internal Revenue Code or otherwise the Company may implement a stockholder
rights plan designed for such purpose, in each case effective upon the Plan
Effective Date.

Registration Rights Each Backstop Party to have customary registration rights
for the New Common Stock, the New Warrants and the New Common Stock underlying
the New Warrants to be provided for in a registration rights agreement (the
“RRA”). Listing

Prior to the Plan Effective Date, the Required Consenting Stakeholders shall
determine whether the Company shall use commercially reasonable efforts to
(i) cause the New Common Stock to be listed on a National Securities Exchange on
the Plan Effective Date or to (ii) cause the New Common Stock to be listed on an
Alternative Securities Exchange on the Plan Effective Date, to engage a market
maker for the New Common Stock and to take other reasonable steps to establish
that the New Common Stock is regularly traded on an established securities
market for purposes of Section 897 under the U.S. Internal Revenue Code of 1986
and Treasury regulations promulgated and proposed to be promulgated thereunder
(together, the “FIRPTA Rules”).

The RRA will provide that, after the Plan Effective Date, if the New Common
Stock is not then listed on a National Securities Exchange, the holders of a
majority of the number of shares of New Common Stock outstanding on the Plan
Effective Date can require the Company to use commercially reasonable efforts to
cause the New Common Stock to be listed on a National Securities Exchange as
promptly as reasonably practicable.

The RRA will also provide that, after the Plan Effective Date, if the New Common
Stock is not then listed on a National Securities Exchange, the holders of a
majority of the number of shares of New Common Stock outstanding on the Plan
Effective Date can require the Company to use commercially reasonable efforts to
cause the New Common Stock to be listed on an Alternative Securities Exchange as
promptly as reasonably practicable, to engage a market maker for the New Common
Stock and to take other reasonable steps to establish that the New Common Stock
is regularly traded on an established securities market for purposes of the
FIRPTA Rules.

“Alternative Securities Exchange” means, excluding any National Securities
Exchange, any other securities exchange or over-the-counter quotation system,
including, without limitation, the NYSE MKT, the Nasdaq Capital Market, any
quotation or other listing service provided by the OTC Markets Group or the
Financial Industry Regulatory Authority, Inc., any “pink sheet” or other
alternative listing service or any successor or substantially equivalent service
to any of the foregoing.

 

2

 

 

SEC Filings The RRA will provide that at any time the Company is not required to
file public reports with the SEC, the Company shall continue to file such public
reports on EDGAR as a voluntary filer, unless approved by the holders of a
majority of the outstanding New Common Stock. DTC The New Common Stock is to be
DTC-eligible, other than any shares of New Common Stock required to bear a
“restricted” legend under applicable securities laws (which shall be in DTC
under a restricted CUSIP if feasible, otherwise in book entry form). The Company
shall use commercially reasonable efforts to remove any such restricted legends
when permitted under applicable securities laws, including obtaining any
necessary legal opinions. The Company shall provide certificated shares upon
reasonable request. Other Terms Consistent with Section 3.02 of the RSA, all
other corporate governance terms, the New Organizational Documents and the RRA
shall be in form and substance reasonably satisfactory to the Required
Consenting Stakeholders. The New Organizational Documents shall also provide for
the indemnification and exculpation of directors, officers and appropriate
persons to the fullest extent permitted by applicable law.

 

3

 

 

EXHIBIT C

 

Provision for Transfer Agreement

 

The undersigned (“Transferee”) hereby acknowledges that it has read and
understands the Restructuring Support Agreement, dated as of __________ (the
“Agreement”),1 by and among the Consenting Stakeholders and the other Parties
thereto, including the transferor to the Transferee of any Company Claims (each
such transferor, a “Transferor”), and agrees to be bound by the terms and
conditions thereof to the extent the Transferor was thereby bound, and shall be
deemed a “Consenting Stakeholder” and a [“Consenting DIP Lender”] [“Consenting
Revolving Credit Facility Lender”] [“Consenting FLLO Term Loan Facility Lender”]
[“Consenting Second Lien Noteholder”] under the terms of the Agreement.

 

The Transferee specifically agrees to be bound by the terms and conditions of
the Agreement and makes all representations and warranties contained therein as
of the date of the Transfer including the agreement to be bound by the vote of
the Transferor if such vote was cast before the effectiveness of the Transfer
discussed herein.

 

Date Executed:

 

______________________________________ 

Name: 

Title: 

Address: 

E-mail address(es):

 

Aggregate Amounts Beneficially Owned or Managed on Account of: DIP Facility
(total commitments)   Revolving Credit Facility   FLLO Term Loan Facility  
Second Lien Notes   Unsecured Noteholders  

 

 

1       Capitalized terms used but not otherwise defined herein shall having the
meaning ascribed to such terms in the Agreement.

 

 

 

 

EXHIBIT D

 

Form of Consenting Stakeholder Joinder

 

The undersigned (“Joinder Party”) hereby acknowledges that it has read and
understands the Restructuring Support Agreement, dated as of __________ (the
“Agreement”),2 by and among the Consenting Stakeholders and the other Parties
thereto, and agrees to be bound by the terms and conditions thereof to the
extent the other Parties are thereby bound, and shall be deemed a “Consenting
Stakeholder” and a [“Consenting DIP Lender”] [“Consenting Revolving Credit
Facility Lender”] [“Consenting FLLO Term Loan Facility Lender”] [“Consenting
Second Lien Noteholder”] under the terms of the Agreement.

 

The Joinder Party specifically agrees to be bound by the terms and conditions of
the Agreement and makes all representations and warranties contained therein as
of the date of this joinder and any further date specified in the Agreement.

 

Date Executed:

 

______________________________________ 

Name: 

Title: 

Address: 

E-mail address(es):

 

Aggregate Amounts Beneficially Owned or Managed on Account of: DIP Facility
(total commitments)   Revolving Credit Facility   FLLO Term Loan Facility  
Second Lien Notes   Unsecured Noteholders  

 

 

2       Capitalized terms used but not otherwise defined herein shall having the
meaning ascribed to such terms in the Agreement.