Document:

ex_10-3.htm

PROMISSORY NOTE

 

	 $163,271.23	 Louisville, Kentucky 

 September 10, 2010

 

 

FOR VALUE RECEIVED, NTS/VIRGINIA DEVELOPMENT COMPANY, a Virginia corporation (the “Borrower”), with an address at 10172 Linn Station Road, Louisville, Kentucky 40223, promises to pay to the order of RESIDENTIAL MANAGEMENT COMPANY, a Kentucky corporation (the “Lender”), in lawful money of the United States of America in immediately available funds at its offices located at 10172 Linn Station Road, Louisville, Kentucky 40223, or at such other location as the Lender may designate from time to time, the principal sum of ONE HUNDRED SIXTY THREE THOUSAND TWO HUNDRED SEVENTY ONE DOLLARS AND TWENTY THREE CENTS ($163,271.23) (the “Loan”), together with interest accruing on the outstanding principal balance from the date hereof, as provided below:

1.           Interest Rate.  The principal balance of the Loan will bear interest at a fixed rate per annum (calculated on the basis of the actual number of days that principal is outstanding over a year of 360 days) equal to five and thirty-four one-hundredths percent (5.34%) per annum (the “Fixed Rate”).

In no event will the rate of interest hereunder exceed the maximum rate allowed by law.

2.           Payment Terms.  Interest shall be due and payable commencing on the first day of each month beginning October 1, 2010 until December 31, 2010 on which date all outstanding principal and accrued interest shall be due and payable in full (the “Maturity Date”).  Payments received will be applied to charges, fees and expenses (including attorneys’ fees), accrued interest and principal in any order the Lender may choose, in its sole discretion.

3.           Late Payments; Default Rate.  If a payment is more than 15 days late, the Borrower shall also pay to the Lender a late charge equal to 5% of the unpaid portion of the payment or $100, whichever is greater (the “Late Charge”).  Such 15 day period shall not be construed in any way to extend the due date of any such payment.  Upon maturity, whether by acceleration, demand or otherwise, and at the option of the Lender upon the occurrence of any Event of Default (as hereinafter defined) and during the continuance thereof, this Note shall bear interest at a rate per annum (calculated on the basis of the actual number of days that principal is outstanding over a year of 360 days) which shall be four percentage points (4%) in excess of the Fixed Rate in effect from time to time but not more than the maximum rate allowed by law (the “Default Rate”).  The Default Rate shall continue to apply whether or not judgment shall be entered on this Note.  Both the Late Charge and the Default Rate are imposed as liquidated damages for the purpose of defraying the Lender’s expenses incident to the handling of delinquent payments, but are in addition to, and not in lieu of, the Lender’s exercise of any rights and remedies hereunder, under the Loan Documents or under applicable law, and any fees and expenses of any agents or attorneys which the Lender may employ.  In addition, the Default Rate reflects the increased credit risk to the Lender of carrying a loan that is in default.  The Borrower

 

  

  

 

  

agrees that the Late Charge and Default Rate are reasonable forecasts of just compensation for anticipated and actual harm incurred by the Lender, and that the actual harm incurred by the Lender cannot be estimated with certainty and without difficulty.

4.           Prepayment.  The indebtedness evidenced by this Note may be prepaid in whole or in part at any time without penalty or premium.

5.           Events of Default.  The occurrence of any of the following events will be deemed to be an “Event of Default” under this Note:

(i)           Borrower fails to make any payment when due hereunder, or fails to otherwise comply with any term or provision of this Note, and such failure is not cured within any applicable cure period or fails to comply;

(ii)           The filing by or against Borrower of any proceeding in bankruptcy, receivership, insolvency, reorganization, liquidation, conservatorship or similar proceeding (and, in the case of any such proceeding instituted against any Obligor, such proceeding is not dismissed or stayed within 30 days of the commencement thereof);

(iii)           Any assignment by Borrower for the benefit of creditors, or any levy, garnishment, attachment or similar proceeding is instituted against any property of Borrower;

(iv)           A judgment or judgments are entered against Borrower, Borrower defaults in the payment of any other debts or there is a material adverse change in the financial condition of Borrower, or the Lender in good faith believes the prospects for repayment of this Note have been impaired; and

(v)           Any material statement made to the Lender about Borrower, or about Borrower’s financial condition, or about any collateral securing this Note is false or misleading.

Upon the occurrence of an Event of Default: (a) in an Event of Default specified in clauses (ii) or (iii) above shall occur, the outstanding principal balance and accrued interest hereunder together with any additional amounts payable hereunder shall be immediately due and payable without demand or notice of any kind; (b) if any other Event of Default shall occur, the outstanding principal balance and accrued interest hereunder together with any additional amounts payable hereunder, at the option of the Lender and without demand or notice of any kind may be accelerated and become immediately due and payable; (c) at the option of the Lender, this Note will bear interest at the Default Rate from the date of the occurrence of the Event of Default; and (d) the Lender may exercise from time to time any of the rights and remedies available to the Lender under applicable law.

6.           Indemnity.  The Borrower agrees to indemnify each of the Lender, each legal entity, if any, who controls, is controlled by or is under common control with the Lender, and each of their respective directors, officers and employees (the “Indemnified Parties”), and to hold each Indemnified Party harmless from and against any and all claims, damages, losses, liabilities and expenses (including all fees and charges of internal or external counsel with whom any

 

  

2

  

Indemnified Party may consult and all expenses of litigation and preparation therefor) which any Indemnified Party may incur or which may be asserted against any Indemnified Party by any person, entity or governmental authority (including any person or entity claiming derivatively on behalf of the Borrower), in connection with or arising out of or relating to the matters referred to in this Note whether (a) arising from or incurred in connection with any breach of a representation, warranty or covenant by the Borrower, or (b) arising out of or resulting from any suit, action, claim, proceeding or governmental investigation, pending or threatened, whether based on statute, regulation or order, or tort, or contract or otherwise, before any court or governmental authority; provided, however, that the foregoing indemnity agreement shall not apply to any claims, damages, losses, liabilities and expenses solely attributable to an Indemnified Party’s gross negligence or willful misconduct. The indemnity agreement contained in this Section shall survive the termination of this Note, payment of any amounts hereunder and the assignment of any rights hereunder.  The Borrower may participate at its expense in the defense of any such auction or claim.

7.           Miscellaneous. All notices, demands, requests, consents, approvals and other communications required or permitted hereunder (“Notices”) must be in writing (except as may be agreed otherwise above with respect to borrowing requests) and will be effective upon receipt. Notices may be given in any manner to which the parties may separately agree, including electronic mail.  Without limiting the foregoing, first-class mail, facsimile transmission and commercial courier service are hereby agreed to as acceptable methods for giving Notices.  Regardless of the manner in which provided, Notices may be sent to a party’s address as set forth above or to such other address as any party may give to the other for such purpose in accordance with this section.  No delay or omission on the Lender’s part to exercise any right or power arising hereunder will impair any such right or power.  The Lender’s rights and remedies hereunder are cumulative and not exclusive of any other rights or remedies which the Lender may have under other agreements, at law or in equity.  No modification, amendment or waiver of, or consent to any departure by the Borrower from, any provision of this Note will be effective unless made in a writing signed by the Lender, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.  The Borrower agrees to pay on demand, to the extent permitted by law, all costs and expenses incurred by the Lender in the enforcement of its rights in this Note and in any security therefor, including without limitation reasonable fees and expenses of the Lender’s counsel.  If any provision of this Note is found to be invalid, illegal or unenforceable in any respect by a court, all the other provisions of this Note will remain in full force and effect.  The Borrower and all other makers and indorsers of this Note hereby forever waive presentment, protest, notice of dishonor and notice of non-payment.  The Borrower also waives all defenses based on suretyship or impairment of collateral.  If this Notice is executed by more than one Borrower, the obligations of such persons or entities hereunder will be joint and several.  This Note shall bind the Borrower and its heirs, executors, administrators, successors and assigns, and the benefits hereof shall inure to the benefit of the Lender and its successors and assigns; provided, however, that the Borrower may not assign this Note in whole or in part without the Lender’s written consent and the Lender at any time may assign this Note in whole or in part.

This Note has been delivered to and accepted by the Lender and will be deemed to be made in the State where the Lender’s office indicated above is located.  This Note will be

 

  

3

 

  

interpreted and the rights and liabilities of the Lender and the Borrower determined in accordance with the laws of the State where the Lender’s office indicated above is located, excluding its conflict of laws rules. The Borrower hereby irrevocably consents to the exclusive jurisdiction of any state or federal court in the county or judicial district where the Lender’s office indicated above is located; provided that nothing contained in this Note will prevent the Lender from bringing any action, enforcing any award or judgment or exercising any rights against the Borrower individually, against any security or against any property of the Borrower within any other county, state or other foreign or domestic jurisdiction.  The Borrower acknowledges and agrees that the venue provided above is the most convenient forum for both the Lender and the Borrower. The Borrower waives any objection to venue and any objection based on a more convenient forum in any action instituted under this Note.

8.           Waiver of Jury Trial.  The Borrower irrevocably waives any and all right it may have to a trial by jury in any action, proceeding or claim of any nature relating to this Note, any documents executed in connection with this Notice or any transaction contemplated in any of such documents.  The Borrower acknowledges that the foregoing waiver is knowing and voluntary.

The Borrower acknowledges that it has read and understands all of the provisions of this Note, including the waiver of jury trial, and has been advised by counsel as necessary or appropriate.

WITNESS the due execution hereof by an authorized officer of Borrower, with the intent to be legally bound hereby.

 

 

	 	
NTS/VIRGINIA DEVELOPMENT COMPANY,

a Virginia corporation

 

By:           /s/ Gregory A. Wells      

Name:      Gregory A. Wells

Title:        Executive Vice President

 

 

4chk09242010_42.htm

Exhibit 4.2

 

CHESAPEAKE ENERGY CORPORATION

 

as Issuer,

 

THE SUBSIDIARY GUARANTORS PARTY HERETO

 

as Subsidiary Guarantors,

 

and

 

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.

 

As Trustee

 

 

 

FIRST SUPPLEMENTAL INDENTURE

 

 

Dated August 17, 2010

 

To

 

Indenture dated as of August 2, 2010

 

 

$600,000,000

 

 

6.875% Senior Notes due 2018

 

 

 

  

  

  

TABLE OF CONTENTS

Page

 

	
ARTICLE 1

	
THE SECURITIES 

	
1   

 

	
  

	
Section 1.1

	
The Securities 

	
1   

 

	
  

	
Section 1.2

	
Authentication 

	
2   

 

	
  

	
Section 1.3

	
Registrar and Paying Agent 

	
2   

 

	
  

	
Section 1.4

	
Transfer and Exchange 

	
2   

 

	
  

	
Section 1.5

	
Guarantee of the Notes 

	
2   

 

	
  

	
Section 1.6

	
Defeasance and Discharge 

	
2   

 

	
  

	
Section 1.7

	
Redemption 

	
3   

 

	
ARTICLE 2

	
MISCELLANEOUS PROVISIONS 

	
4   

 

	
  

	
Section 2.1

	
Counterpart Originals 

	
4   

 

	
  

	
Section 2.2

	
Governing Law 

	
4   

 

	  	
 

	  

  

  

 

  

THIS FIRST SUPPLEMENTAL INDENTURE dated as of August 17, 2010 (this "Supplemental Indenture"), is among Chesapeake Energy Corporation, an Oklahoma corporation (the "Company"), the Subsidiary Guarantors party hereto and The Bank of New York Mellon Trust Company, N.A., a national banking association, as trustee (the "Trustee").  Each capitalized term used but not defined herein shall have the meaning assigned to such term in the Base Indenture (as defined below).

 

RECITALS:

 

WHEREAS, the Company, the Subsidiary Guarantors and the Trustee are parties to an Indenture, dated as of August 2, 2010 (the "Base Indenture" and as supplemented by this Supplemental Indenture, the "Indenture"), providing for the issuance by the Company from time to time of its debentures, notes, bonds and other evidences of indebtedness, issued and to be issued in one or more series unlimited as to principal amount (the "Securities"), and the guarantee by each Subsidiary Guarantor of the Securities (the "Guarantee");

 

WHEREAS, the Company has duly authorized and desires to cause to be issued pursuant to the Indenture a new series of Securities designated the 6.875% Senior Notes due 2018 (the "Notes"), all of such Notes to be guaranteed by the Subsidiary Guarantors as provided in Article Ten of the Base Indenture;

 

WHEREAS, the Company desires to cause the issuance of the Notes pursuant to Sections 2.01 and 2.03 of the Base Indenture, which sections permit the execution of indentures supplemental thereto to establish the form and terms of Securities of any series;

 

WHEREAS, pursuant to Section 9.01 of the Base Indenture, the Company and the Subsidiary Guarantors have requested that the Trustee join in the execution of this Supplemental Indenture to establish the form and terms of the Notes;

 

WHEREAS, all things necessary have been done to make the Notes, when executed by the Company and authenticated and delivered hereunder and under the Base Indenture and duly issued by the Company, and the Guarantee of the Subsidiary Guarantors, when the Notes are duly issued by the Company, the legal, valid and binding obligations of the Company and the Subsidiary Guarantors, respectively, and to make this Supplemental Indenture a legal, valid and binding agreement of the Company and the Subsidiary Guarantors enforceable in accordance with its terms.

 

NOW THEREFORE, the Company, the Subsidiary Guarantors and the Trustee hereby agree that the following provisions shall supplement the Base Indenture:

 

ARTICLE 1

THE NOTES

 

Section 1.1 Form.  The Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A to this Supplemental Indenture (the "Form of Note").  The terms and provisions contained in the Form of Note shall constitute, and are hereby expressly made, a part of this Supplemental Indenture and to the extent applicable, the Company, the Subsidiary Guarantors and the Trustee, by their execution and delivery of this Supplemental Indenture, expressly agree to such terms and provisions and to be bound thereby.

 

Section 1.2 Title, Issuance.  The Notes shall be entitled the "6.875% Senior Notes due 2018".  The Notes shall be issued initially in the form of one or more Global Securities in definitive, fully registered form and shall be deposited on behalf of the purchasers of the Notes with the Trustee, at its principal corporate trust office, as custodian for The Depository Trust Company, which is hereby appointed Depositary for the Global Securities (the "Depositary").  The Notes shall be registered in the name of the Depositary or a nominee of the Depositary, duly executed by the Company and authenticated by the Trustee as hereinafter provided.  The aggregate principal amount of the Global Securities may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee as hereinafter provided.

 

Except as provided in Section 2.13 of the Indenture, owners of beneficial interests in Global Securities shall not be entitled to receive physical delivery of certificated Notes.  The Notes shall be issued in denominations of $1,000 and integral multiples of $1,000 in excess thereof.

 

The transfer and exchange of Global Securities or beneficial interests therein shall be effected through the Depositary, in accordance with Section 2.13 of the Base Indenture and the rules and procedures of the Depositary therefor.

 

Section 1.3 Amount, Authentication.

 

The Trustee shall authenticate and deliver (i) on the Issue Date, $600,000,000 in aggregate principal amount of the Notes and (ii) from time to time after the Issue Date, additional Notes ("Additional Notes") in such principal amounts as may be specified in a Company Order described in this Section 1.3, in each case upon a Company Order for the authentication and delivery thereof and satisfaction of the other provisions of Section 2.05 of the Base Indenture.  Such order shall specify the amount of the Notes to be authenticated, the date on which the Notes are to be authenticated, and the name or names of the initial Holder or Holders.  The aggregate principal amount of Notes that may be outstanding at any time may not exceed $600,000,000 plus such additional principal amounts as may be issued and authenticated pursuant to clause (ii) of this paragraph (except as provided in Section 2.10 of the Base Indenture).

 

Section 1.4 Registrar and Paying Agent.  The Company confirms the appointment of the Trustee as Registrar and Paying Agent with respect to the Notes pursuant to Section 2.06 of the Base Indenture.

 

Section 1.5 Guarantee of the Notes.

 

In accordance with Article Ten of the Base Indenture, the Notes will be fully, unconditionally and absolutely guaranteed on a senior basis, jointly and severally, by the Subsidiary Guarantors.

 

Section 1.6 Defeasance and Discharge.

 

The Notes shall be subject to satisfaction and discharge and to both legal defeasance and covenant defeasance as contemplated by Articles Eight and Twelve of the Base Indenture.

 

Section 1.7 Redemption.

 

(a)  The Company shall have no obligation to redeem, purchase or repay the Notes pursuant to any mandatory redemption, sinking fund or analogous provisions or at the option of a Holder thereof.

 

(b)  At any time prior to August 15, 2013, the Company, at its option, may redeem the Notes in whole or from time to time in part for an amount equal to the Make-Whole Price plus accrued and unpaid interest to the date of redemption in accordance with the Form of Note.  At any time on or after August 15, 2013, the Company, at its option, may redeem the Notes in whole or from time to time in part at the redemption prices set forth in the Form of Note plus accrued and unpaid interest to the date of redemption in accordance with the Form of Note.

 

ARTICLE 2

MISCELLANEOUS PROVISIONS

 

Section 2.1 Counterpart Originals.

 

The parties may sign any number of copies of this Supplemental Indenture.  Each signed copy shall be an original, but all of them together represent the same instrument.

 

Section 2.2 Governing Law.

 

THIS SUPPLEMENTAL INDENTURE AND THE NOTES AND THE GUARANTEES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS TO THE EXTENT THAT THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY, EXCEPT TO THE EXTENT THAT THE LAWS OF THE STATE OF NEW YORK WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION REGARDING THE VALIDITY OF THE NOTES AND THE GUARANTEES.

 

 

  

  

 

  

 

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the day and year first above written.

 

	 	

COMPANY:

 

CHESAPEAKE ENERGY CORPORATION

	 
	 	 	 	 
	
 

	
By: 

	/s/ JENNIFER M. GRIGSBY	 
	 	 	

Name:   Jennifer M. Grigsby

	 
	 	 	

Title:     Senior Vice President, Treasurer

              and Corporate Secretary

	 
	 	 	 	 

 

  

  

 

  

	
SUBSIDIARY GUARANTORS:

 

	
CARMEN ACQUISITION, L.L.C.

CHESAPEAKE AEZ EXPLORATION, L.L.C.

CHESAPEAKE APPALACHIA, L.L.C.

CHESAPEAKE-CLEMENTS ACQUISITION, L.L.C.

CHESAPEAKE ENERGY LOUISIANA CORPORATION

CHESAPEAKE ENERGY MARKETING, INC.

CHESAPEAKE EXPLORATION, L.L.C.

CHESAPEAKE LAND DEVELOPMENT COMPANY, L.L.C.

CHESAPEAKE OPERATING, INC.

CHESAPEAKE PLAZA, L.L.C.

CHESAPEAKE ROYALTY, L.L.C.

CHK HOLDINGS, L.L.C.

COMPASS MANUFACTURING, L.L.C.

DIAMOND Y ENTERPRISE, INCORPORATED

GENE D. YOST & SON, INC.

GOTHIC PRODUCTION, L.L.C.

GREAT PLAINS OILFIELD RENTAL, L.L.C.

HAWG HAULING & DISPOSAL, LLC

HODGES TRUCKING COMPANY, L.L.C.

MC LOUISIANA MINERALS, L.L.C.

MC MINERAL COMPANY, L.L.C.

MIDCON COMPRESSION, L.L.C.

NOMAC DRILLING, L.L.C.

VENTURA REFINING AND TRANSMISSION, LLC

 

	 	 	 
	 	 	 	 
	
 

	
By: 

	/s/ JENNIFER M. GRIGSBY	 
	 	 	

Name:   Jennifer M. Grigsby

	 
	 	 	

Title:     Senior Vice President, Treasurer

              and Corporate Secretary

	 
	 	 	 	 

 

  

  

 

  

 

	 	

CHESAPEAKE LOUISIANA, L.P.

	 
	 	 	 	 
	 	 	 	 
	 	By:	

Chesapeake Operating, Inc., as general partner

	 
	 	 	 	 
	
 

	
By: 

	/s/ JENNIFER M. GRIGSBY	 
	 	 	Name:   Jennifer M. Grigsby	 
	 	 	

Title:     Senior Vice President, Treasurer

              and Corporate Secretary

	 
	 	 	 	 

	 	

EMPRESS LOUISIANA PROPERTIES, L.P.

	 
	 	 	 	 
	 	 	 	 
	 	By:	

EMLP, L.L.C., as general partner

	 
	 	 	 	 
	
 

	
By: 

	/s/ JENNIFER M. GRIGSBY	 
	 	 	Name:   Jennifer M. Grigsby	 
	 	 	

Title:     Senior Vice President, Treasurer

              and Corporate Secretary

	 
	 	 	 	 

  

  

 

  

	 	
TRUSTEE:

 

	 
	 	
THE BANK OF NEW YORK MELLON TRUST     

COMPANY, N.A., AS TRUSTEE

	 
	 	 	 	 
	
 

	
By: 

	/s/ D.G. DONOVAN	 
	 	 	Name: D. G. Donovan	 
	 	 	Title:    Authorized Signatory	 
	 	 	 	 

 

  

  

 

  

Exhibit A

FORM OF NOTE

 

[FACE OF NOTE]

 

 

[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

 

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.]1

 

  

1 To be included in a Global Security

A-1

  

  

  

 

 

	Certificate No. 	 CUSIP NO. 165167 CE5
	$    	 ISIN NO. US165167CE51

 

                                                                       

                                                                      

 

6.875% Senior Notes due 2018

 

Chesapeake Energy Corporation, an Oklahoma corporation, promises to pay to ________________, or registered assigns, the principal sum of  _____________________________________ Dollars on August 15, 2018.

 

Interest Payment Dates: February 15 and August 15 (commencing February 15, 20112)

 

Record Dates:  February 1 and August 1

 

Additional provisions of this Note are set forth on the other side of this Note.

 

Dated: ________________

 

	 	

CHESAPEAKE ENERGY CORPORATION

	 
	 	 	 	 
	
 

	
By: 

	/s/ 	 
	 	 	Name: 	 
	 	 	Title: 	 
	 	 	 	 

 

 

	
 

	
By: 

	/s/ 	 
	 	 	Name: 	 
	 	 	Title: 	 
	 	 	 	 

 

TRUSTEE’S CERTIFICATE OF

AUTHENTICATION

 

	
This is one of the Securities of the Series designated therein referred to in the within-mentioned Indenture.

 

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.

As Trustee

	  
	
Date:

	  	
By:

	  
	  	
Authorized Signatory

  

2 Or such later date as is appropriate in the case of Additional Notes.

A-2

  

  

 

  

[REVERSE SIDE OF NOTE]

 

6.875% Senior Note due 2018

 

1. Interest

 

Chesapeake Energy Corporation, an Oklahoma corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the “Company”), promises to pay interest on the principal amount of this Note at the rate per annum shown above.  The Company will pay interest semiannually on February 15 and August 15 of each year, commencing February 15, 20113.  Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from August 17, 20104.  Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months.

 

2. Method of Payment

 

The Company will pay interest on the Notes (except defaulted interest) to the Persons who are registered holders of Notes at the close of business on the February 1 or August 1 next preceding the interest payment date even if Notes are canceled after the record date and on or before the interest payment date.  Holders must surrender Notes to a Paying Agent to collect principal payments.  The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts.  Payments in respect of the Notes represented by a Global Security (including principal, premium and interest) will be made by wire transfer of immediately available funds to the accounts specified by The Depository Trust Company.  The Company will make all payments in respect of a certificated Note (including principal, premium and interest) by mailing a check to the registered address of each Holder thereof; provided, however, that payments on a certificated Note will be made by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).

 

3. Indenture

 

The Company issued the Notes under an Indenture dated as of August 2, 2010 among the Company, the Subsidiary Guarantors and the Trustee, as supplemented by that First Supplemental Indenture dated as of August 17, 2010 among the Company, the Subsidiary Guarantors and the Trustee (as so supplemented, the “Indenture”).  The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as in effect on the date of the Indenture (the “Act”).  Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture.  The Notes are subject to all such terms, and Holders are referred to the Indenture and the Act for a statement of those terms.

 

  

    3 Or such other date as is appropriate in the case of Additional Notes.

  

    4 Or such later date as is appropriate in the case of Additional Notes.

 

A-3

  

  

 

  

The Company shall be entitled to issue Additional Notes pursuant to Section 2.03 of the Indenture.  The Notes issued on the Issue Date and any Additional Notes will be treated as a single series for all purposes under the Indenture.

 

4. Make-Whole Price Redemption

 

At any time prior to August 15, 2013, the Company, at its option, may redeem the Notes, in whole or from time to time in part, for an amount equal to the Make-Whole Price plus accrued and unpaid interest on the Notes so redeemed to the date of redemption.  Any redemption pursuant to this paragraph 4 shall be made, to the extent applicable, pursuant to the provisions of Sections 3.02 through 3.07 of the Indenture.

 

"Make-Whole Price" means the sum of the outstanding principal amount of the Notes to be redeemed plus the Make-Whole Amount of such Notes.

 

"Make-Whole Amount" with respect to a Note means an amount equal to the excess, if any, of (i) the present value of the remaining principal, premium, if any, and interest payments due on such Note (excluding any portion of such payments of interest accrued as of the redemption date) as if such Note were redeemed on the Maturity Date, computed using a discount rate equal to the Treasury Rate plus 50 basis points, over (ii) the outstanding principal amount of such Note.

 

"Treasury Rate" means the yield to maturity (calculated on a semi-annual bond equivalent basis) at the time of the computation of United States Treasury securities with a constant maturity (as compiled by and published in the most recent Federal Reserve Statistical Release H.15 (519), which has become publicly available at least two Business Days prior to the date of the redemption notice or, if such Statistical Release is no longer published, any publicly available source of similar market data) most nearly equal to the then remaining maturity of the Notes assuming redemption of the Notes on the Maturity Date; provided, however, that if the Make-Whole Average Life of such Note is not equal to the constant maturity of the United States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the Make-Whole Average Life of such Notes is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used.

 

"Make-Whole Average Life" means the number of years (calculated to the nearest one-twelfth) between the date of redemption and the Maturity Date.

 

4A.           Optional Redemption

 

At any time on or after August 15, 2013, the Company, at its option, may redeem the Notes, in whole or from time to time in part, at the redemption prices set forth below (expressed as a percentage of the principal amount of the Notes to be redeemed), plus accrued and unpaid interest on the Notes so redeemed to the date of redemption, if redeemed during the 12-month period commencing on August 15 of the years indicated below:

 

A-4

  

  

 

  

 

	
Year

	
Redemption 

price

	
2013                                                                                         

	
105.156%

	
2014                                                                                         

	
103.438%

	
2015                                                                                         

	
101.719%

	
2016 and thereafter                                                                                         

	
100.000%

Any redemption pursuant to this paragraph 4A shall be made, to the extent applicable, pursuant to the provisions of Sections 3.02 through 3.07 of the Indenture.

 

5. Notice of Redemption

 

Notice of redemption will be mailed to the Holder’s registered address at least 30 days but not more than 60 days before the redemption date to each Holder of Notes to be redeemed. If less than all Notes are to be redeemed, the Trustee shall select pro rata, by lot or, if the Notes are listed on any securities exchange, by any other method that complies with the requirements of such exchange, the Notes to be redeemed in multiples of $1,000; provided, however, that no Notes with a principal amount of $1,000 or less will be redeemed in part.  Notes in denominations larger than $1,000 may be redeemed in part.  On and after the redemption date, interest ceases to accrue on Notes or portions of them called for redemption (unless the Company shall default in the payment of the redemption price or accrued interest).

 

6. Net Proceeds Offer

 

In the event of certain Sale/Leaseback Transactions, the Company may be required to make a Net Proceeds Offer to purchase all or any portion of each Holder’s Notes, at 100% of the principal amount thereof, plus accrued and unpaid interest to the Net Proceeds Payment Date.

 

7. Restrictive Covenants

 

The Indenture imposes certain limitations on, among other things, the ability of the Company to merge or consolidate with any other Person or sell and lease back certain of its properties or assets and the ability of the Company or the Subsidiaries to incur encumbrances securing funded debt against certain property, all subject to certain limitations described in the Indenture.

 

8. Ranking and Guarantees

 

The Notes are general senior unsecured obligations of the Company.  The Company’s obligation to pay principal, premium, if any, and interest with respect to the Notes is unconditionally guaranteed on a senior basis, jointly and severally, by the Subsidiary Guarantors pursuant to Article Ten of the Indenture.  Certain limitations to the obligations of the Subsidiary Guarantors are set forth in further detail in the Indenture.

 

9. Denominations; Transfer; Exchange

 

The Notes are in registered form without coupons in denominations of $1,000 principal amount and whole multiples of $1,000.  A Holder may transfer or exchange Notes in accordance with the Indenture.  The Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture.  The Registrar need not register the transfer of or exchange of any Notes selected for redemption (except, in the case of a Note to be redeemed in part, the portion of the Note not to be redeemed) or any Notes for a period of 15 Business Days before the mailing of a notice of an offer to repurchase or redeem Notes or 15 Business Days before an interest payment date.

 

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10. Persons Deemed Owners

 

The registered Holder of this Note may be treated as the owner of it for all purposes.

 

11. Unclaimed Money

 

If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its request unless an abandoned property law designates another Person.  After any such payment, Holders entitled to the money must look only to the Company and not to the Trustee for payment.

 

12. Discharge and Defeasance

 

Subject to certain conditions, the Company at any time shall be entitled to terminate some or all of its obligations under the Notes and the Indenture if the Company deposits with the Trustee money or U.S. Government Securities for the payment of principal and interest on the Notes to redemption or maturity, as the case may be.

 

13. Amendment, Supplement, Waiver

 

Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the consent of the Holders of at least a majority of the outstanding principal amount of the Notes, and any past default or noncompliance with any provision may be waived with the consent of the Holders of a majority in principal amount of the Notes.  Without the consent of any Holder, the Company may amend or supplement the Indenture or the Notes to, among other things, cure any ambiguity, defect or inconsistency or to make any change that does not adversely affect the rights of any Holder in any material respect.

 

14. Successor Obligor

 

When a successor obligor assumes all the obligations of its predecessor under the Notes and the Indenture, the predecessor obligor will be released from those obligations.

 

15. Defaults and Remedies

 

An Event of Default generally is: default by the Company or any Subsidiary Guarantor for 30 days in payment of interest on the Notes; default by the Company or any Subsidiary Guarantor in payment of principal of, or premium, if any, on the Notes; default by the Company or any Subsidiary Guarantor in the deposit of any optional redemption or repurchase payment when due and payable; defaults resulting in acceleration prior to maturity of certain other Indebtedness or resulting from payment defaults under certain other Indebtedness; failure by the Company or any Subsidiary Guarantor for 60 days after notice to comply with any of its other agreements in the Indenture; a failure of any Guarantee of a Subsidiary Guarantor to be in full force and effect or denial by any Subsidiary Guarantor of its obligations with respect thereto; and certain events of bankruptcy or insolvency.  Subject to certain limitations in the Indenture, if an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately, except that in the case of an Event of Default arising from certain events of bankruptcy, insolvency or reorganization, all outstanding Notes shall become due and payable immediately without further action or notice.  Holders may not enforce the Indenture or the Notes except as provided in the Indenture.  The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Notes.  Subject to certain limitations, Holders of a majority in principal amount of the Notes may direct the Trustee in its exercise of any trust or power.  The Company must furnish an annual compliance certificate to the Trustee.

 

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16. Trustee Dealings with Company and Subsidiary Guarantors

 

The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Company, the Subsidiary Guarantors or their respective Subsidiaries or Affiliates with the same rights it would have if it were not Trustee.

 

17. No Recourse Against Others

 

A director, officer, employee or stockholder, as such, of the Company, any Subsidiary Guarantor or the Trustee shall not have any liability for any obligations of the Company, any Subsidiary Guarantor or the Trustee under the Notes or the Indenture or for any claim based on, in respect of or by reason of, such obligations or their creation.  Each Holder by accepting a Note waives and releases all such liability.  The waiver and release are part of the consideration for the issue of the Note.

 

18. Authentication

 

This Note shall not be valid until the Trustee or an authenticating agent signs the certificate of authentication on the other side of this Note.

 

19. Abbreviations

 

Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with right of survivorship and not as tenants in common), CUST (=Custodian), and U/G/M/A (=Uniform Gifts to Minors Act).

 

20. CUSIP Numbers

 

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company will cause CUSIP numbers to be printed on the Notes as a convenience to Holders of the Notes.  No representation is made as to the accuracy of such numbers as printed on the Notes and reliance may be placed only on the other identification numbers printed hereon.

 

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21. Governing Law

 

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY, EXCEPT TO THE EXTENT THAT THE LAWS OF THE STATE OF NEW YORK WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION REGARDING THE VALIDITY OF THE NOTES.

 

 

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The Company will furnish to any Holder upon written request and without charge to the Holder a copy of the Indenture.  Requests may be made to:

 

Chesapeake Energy Corporation

6100 North Western Avenue

Oklahoma City, OK 73118

 

Attention:  Assistant Treasurer

 

 

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NOTATION OF GUARANTEE

 

The Subsidiary Guarantors (which term includes any successor Persons under the Indenture), have fully, unconditionally and absolutely guaranteed on a senior basis, jointly and severally, to the extent set forth in the Indenture and subject to the provisions in the Indenture, the due and punctual payment of the principal of, and premium, if any, and interest on the Notes and all other amounts due and payable under the Indenture and the Notes by the Company.

 

The obligations of each Subsidiary Guarantor to the Holders of Notes and to the Trustee pursuant to its Guarantee and the Indenture are expressly set forth in Article Ten of the Base Indenture and reference is hereby made to the Indenture for the precise terms of the Guarantee.

 

	
SUBSIDIARY GUARANTORS:

 

	  
	
CHESAPEAKE LOUISIANA, L.P.

 

	  
	
By:

 

	
 Chesapeake Operating, Inc., as general partner

	  	  
	  	  
	
By:

	  
	  	
Name:   Jennifer M. Grigsby

Title:     Senior Vice President, Treasurer

              and Corporate Secretary

	  
	  
	
EMPRESS LOUISIANA PROPERTIES, L.P.

	  
	
By:

 

	
 EMLP, L.L.C., as general partner

	  	  
	  	  
	
By:

	  
	  	
Name:   Jennifer M. Grigsby

Title:     Senior Vice President, Treasurer

              and Corporate Secretary

 

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CARMEN ACQUISITION, L.L.C.

CHESAPEAKE AEZ EXPLORATION, L.L.C.

CHESAPEAKE APPALACHIA, L.L.C.

CHESAPEAKE-CLEMENTS ACQUISITION, L.L.C.

CHESAPEAKE ENERGY LOUISIANA CORPORATION

CHESAPEAKE ENERGY MARKETING, INC.

CHESAPEAKE EXPLORATION, L.L.C.

CHESAPEAKE LAND DEVELOPMENT COMPANY, L.L.C.

CHESAPEAKE OPERATING, INC.

CHESAPEAKE PLAZA, L.L.C.

CHESAPEAKE ROYALTY, L.L.C.

CHK HOLDINGS, L.L.C.

COMPASS MANUFACTURING, L.L.C.

DIAMOND Y ENTERPRISE, INCORPORATED

GENE D. YOST & SON, INC.

GOTHIC PRODUCTION, L.L.C.

GREAT PLAINS OILFIELD RENTAL, L.L.C.

HAWG HAULING & DISPOSAL, LLC

HODGES TRUSCING COMPANY, L.L.C.

MC LOUISIANA MINERALS, L.L.C.

MC MINERAL COMPANY, L.L.C.

MIDCON COMPRESSION, L.L.C.

NOMAC DRILLING, L.L.C.

VENTURA REFINING AND TRANSMISSION, LLC

	  
	
By:

 

	  
	  	
Name:   Jennifer M. Grigsby

	  	
Title:     Senior Vice President, Treasurer

              and Corporate Secretary

A-11

  

  

 

  

 

____________________________________________________________

 

ASSIGNMENT FORM

 

To assign this Note, fill in the form below:

 

I or we assign and transfer this Note to

 

(Print or type assignee’s name, address and zip code)

 

(Insert assignee’s social security or tax I.D. No.)

 

and irrevocably appoint                           agent to transfer this Note on the books of the Company.  The agent may substitute another to act for him.

 

 

	
Dated:

	  	
Your Signature:

	  

 

 

_______________________________________________________________________

Sign exactly as your name appears on the other side of this Note.

 

 

Signature Guarantee:

 

	
 

Signature must be guaranteed

 

	  

 

Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

 

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SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY

 

The following increases or decreases in this Global Security have been made:

 

	

Date of

Exchange

	 	

Amount of decrease in Principal  amount of 

this Global Security

	 	

Amount of increase in 

Principal amount of 

this Global Security

	 	

Principal amount of 

this Global Security 

following such 

decrease or increase

	 	

Signature of 

authorized officer of 

Trustee

	  	 	  	 	  	 	  	 	  
	  	 	  	 	  	 	  	 	  
	  	 	  	 	  	 	  	 	  
	  	 	  	 	  	 	  	 	  
	  	 	  	 	  	 	  	 	  
	  	 	  	 	  	 	  	 	  
	  	 	  	 	  	 	  	 	  
	  	 	  	 	  	 	  	 	  
	  	 	  	 	  	 	  	 	  
	  	 	  	 	  	 	  	 	  

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OPTION OF HOLDER TO ELECT PURCHASE

 

If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 of the Indenture, check the box:

 

 ̈

 

If you want to elect to have only part of this Note purchased by the Company pursuant to Section 4.10 of the Indenture, state the amount in principal amount:  $__________________________

 

	
Dated:

	  	 	
Your Signature:

	  
	  	  	 	  	
(Sign exactly as your name appears on the other side of this Note.)

 

	
Signature Guarantee:

 

	  
	
(Signature must be guaranteed)

	  

 

Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

 

A-14

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