Limited Partnership Agreement - Chesapeake Louisiana LP
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
CHESAPEAKE LOUISIANA, L.P.,
AN OKLAHOMA LIMITED PARTNERSHIP
JUNE 30, 1997
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TABLE OF CONTENTS
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1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Formation . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3. Name; Place of Business . . . . . . . . . . . . . . . . . . . 2
4. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
5. Partnership Purpose . . . . . . . . . . . . . . . . . . . . . 2
6. Capital Contributions . . . . . . . . . . . . . . . . . . . . 2
6.1 Initial Contributions. . . . . . . . . . . . . . . . . . 2
6.2 Limited Liability. . . . . . . . . . . . . . . . . . . . 2
6.3 Optional Capital Contributions . . . . . . . . . . . . . 3
6.4 No Interest. . . . . . . . . . . . . . . . . . . . . . . 3
6.5 Nonpriority. . . . . . . . . . . . . . . . . . . . . . . 3
7. Capital Accounts and Allocations. . . . . . . . . . . . . . . 3
7.1 Allocations. . . . . . . . . . . . . . . . . . . . . . . 3
7.2 Contributed Property . . . . . . . . . . . . . . . . . . 4
7.3 Limitation on Allocations. . . . . . . . . . . . . . . . 4
7.4 Qualified Income Offset . . . . . . . . . . . . . . . . 4
8. Distributions . . . . . . . . . . . . . . . . . . . . . . . . 4
9. Fiscal Matters. . . . . . . . . . . . . . . . . . . . . . . . 5
10. Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . 5
10.1 Allocation on Transfer . . . . . . . . . . . . . . . . . 5
10.2 Tax Elections. . . . . . . . . . . . . . . . . . . . . . 5
10.3 Tax Returns. . . . . . . . . . . . . . . . . . . . . . . 5
10.4 Tax Matters Partner. . . . . . . . . . . . . . . . . . . 6
11. Management and Limitations. . . . . . . . . . . . . . . . . . 6
11.1 Role of General Partner. . . . . . . . . . . . . . . . . 6
11.2 General Limitations. . . . . . . . . . . . . . . . . . . 6
11.3 Funding. . . . . . . . . . . . . . . . . . . . . . . . . 7
11.4 Compensation . . . . . . . . . . . . . . . . . . . . . . 7
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12. Powers, Rights and Obligations of Limited Partner . . . . . . 7
12.1 Limitation of Liability . . . . . . . . . . . . . . . . 7
12.2 Participation in Management . . . . . . . . . . . . . . 7
13. Conveyances . . . . . . . . . . . . . . . . . . . . . . . . . 7
14. Restrictions on Transfer of Partnership Interest. . . . . . . 7
15. Incapacity of Partner . . . . . . . . . . . . . . . . . . . . 8
16. Default; Remedies . . . . . . . . . . . . . . . . . . . . . . 8
17. Liquidation Procedures. . . . . . . . . . . . . . . . . . . . 8
17.1 Creditors' Claims. . . . . . . . . . . . . . . . . . . . 9
17.2 Reserve. . . . . . . . . . . . . . . . . . . . . . . . . 9
17.3 Capital Account Balance . . . . . . . . . . . . . . . . 9
17.4 Distributions in Kind. . . . . . . . . . . . . . . . . . 9
17.5 Balancing of Accounts . . . . . . . . . . . . . . . . . 9
18. Indemnification . . . . . . . . . . . . . . . . . . . . . . . 9
19. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . 10
19.1 Governing Law. . . . . . . . . . . . . . . . . . . . . . 10
19.2 Right to Partition . . . . . . . . . . . . . . . . . . . 10
19.3 Approvals. . . . . . . . . . . . . . . . . . . . . . . . 10
19.4 Binding Effect . . . . . . . . . . . . . . . . . . . . . 10
19.5 Notices. . . . . . . . . . . . . . . . . . . . . . . . . 10
19.6 Construction . . . . . . . . . . . . . . . . . . . . . . 11
19.7 Execution. . . . . . . . . . . . . . . . . . . . . . . . 11
19.8 Time . . . . . . . . . . . . . . . . . . . . . . . . . . 11
19.9 Remedies . . . . . . . . . . . . . . . . . . . . . . . . 11
19.10 Supersession. . . . . . . . . . . . . . . . . . . . . . 11
20. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 11
20.1 Act . . . . . . . . . . . . . . . . . . . . . . . . . . 11
20.2 Affiliate . . . . . . . . . . . . . . . . . . . . . . . 11
20.3 Agreement . . . . . . . . . . . . . . . . . . . . . . . 12
20.4 Capital Contributions . . . . . . . . . . . . . . . . . 12
20.5 Code . . . . . . . . . . . . . . . . . . . . . . . . . . 12
20.6 Contracts of Indebtedness. . . . . . . . . . . . . . . . 12
20.7 Defaulting Partner . . . . . . . . . . . . . . . . . . . 12
20.8 Departing Partner. . . . . . . . . . . . . . . . . . . . 12
20.9 General Partner. . . . . . . . . . . . . . . . . . . . . 12
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20.10 Incapacity. . . . . . . . . . . . . . . . . . . . . . . 12
20.11 Limited Partner . . . . . . . . . . . . . . . . . . . . 12
20.12 Net Cash Flow . . . . . . . . . . . . . . . . . . . . . 12
20.13 Operating Costs . . . . . . . . . . . . . . . . . . . . 12
20.14 Partner(s). . . . . . . . . . . . . . . . . . . . . . . 13
20.15 Partnership . . . . . . . . . . . . . . . . . . . . . . 13
20.16 Partnership Interest. . . . . . . . . . . . . . . . . . 13
20.17 Partnership Percentages . . . . . . . . . . . . . . . . 13
20.18 Person. . . . . . . . . . . . . . . . . . . . . . . . . 13
20.19 Proceeds. . . . . . . . . . . . . . . . . . . . . . . . 13
20.20 Properties. . . . . . . . . . . . . . . . . . . . . . . 13
20.21 Remaining Partner . . . . . . . . . . . . . . . . . . . 13
20.22 Representative. . . . . . . . . . . . . . . . . . . . . 14
20.23 Reserves. . . . . . . . . . . . . . . . . . . . . . . . 14
20.24 Revenues. . . . . . . . . . . . . . . . . . . . . . . . 14
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AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
(CHESAPEAKE LOUISIANA, L.P.)
THIS AGREEMENT is made effective the 30th day of June,
1997, between CHESAPEAKE OPERATING, INC., an Oklahoma corporation, and
CHESAPEAKE ENERGY LOUISIANA CORPORATION, an Oklahoma corporation.
W I T N E S S E T H :
WHEREAS, the Partnership was formed by the filing of a
Certificate of Limited Partnership (the "Certificate") with the Oklahoma
Secretary of State on May 20, 1997;
WHEREAS, the General Partner and Chesapeake Exploration
Limited Partnership, an Oklahoma limited partnership ("CELP"), as the sole
limited partner, executed and delivered that certain Limited Partnership
Agreement dated effective May 20, 1997 (the "Prior Agreement") as all of the
Partners of the Partnership;
WHEREAS, pursuant to that certain Assignment dated May
20, 1997, CELP assigned all of its Partnership Interest to Chesapeake Energy
Corporation, an Oklahoma corporation ("Chesapeake Energy"), and in connection
therewith the General Partner and Chesapeake Energy executed and delivered the
First Amendment to Limited Partnership Agreement (the "First Amendment") to
reflect the admission of Chesapeake Energy as the new sole limited partner of
the Partnership; and
WHEREAS, pursuant to that certain corporate Assignment
dated June 30, 1997, Chesapeake Energy assigned all of its Partnership Interest
to the Limited Partner and the parties desire to amend and restate the Prior
Agreement in order to reflect the admission of the Limited Partner to the
Partnership.
NOW THEREFORE, in consideration of the agreements herein
set forth, the Partners agree as follows:
1. Defined Terms. The capitalized terms used in this Agreement are defined at
paragraph 20 of this Agreement and are intended to have the meanings therein
indicated.
2. Formation. The Partners hereby form a limited partnership pursuant to the
Act and the terms of this Agreement. If any provision of this Agreement is
inconsistent with the Act, the terms of this Agreement will control to the
maximum extent permitted by the Act. The Partners agree to execute and deliver
such certificates as might be required from time to time in the conduct of the
Partnership's business.
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3. Name; Place of Business. The name of the Partnership is "Chesapeake
Louisiana, L.P.," and all business of the Partnership will be conducted under
that name. The principal place of business of the Partnership will be 6100
North Western, Oklahoma City, Oklahoma 73118. The Partnership may maintain
additional offices at other places designated by the General Partner.
4. Term. The Partnership will become effective as of the date of the filing
of the Certificate of Limited Partnership with the Oklahoma Secretary of State
and will continue until December 31, 2050, unless earlier terminated or further
extended in accordance with the terms of this Agreement or the Act.
5. Partnership Purpose. The purpose of the Partnership is to engage in the
acquisition, ownership, development and operation of oil and gas properties as
the General Partner may select and to engage in any and all general business
activities related thereto or in any way incidental thereto, including, without
limitation, owning interests in corporations, partnerships, joint ventures or
other entities and entering into oil and gas leases, contracts or other
agreements with others to acquire, own, develop and operate such properties,
and to do all things necessary or desirable for the promotion, conduct and
operation of the business of the Partnership.
6. Capital Contributions. The Partners will make the following Capital
Contributions to the Partnership:
6.1 Initial Contributions. On execution of this Agreement, each
Partner will make the Capital Contribution set forth below and
the capital account of each Partner will be credited with such
amounts:
Partner Amount
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General Partner $ 100.00
Limited Partner $9,900.00
Although the General Partner will be liable for the obligations
of the Partnership to the same extent that the Partnership is
liable for such obligations, the General Partner will have no
obligation to lend money to the Partnership or to make any
additional Capital Contribution.
6.2 Limited Liability. The Limited Partner will not be bound by or
personally liable for: (a) the expenses, liabilities or
obligations of the Partnership; or (b) any advances or
additional Capital Contributions. Without limitation on the
generality of the foregoing: (i) the Limited Partner will have
no obligation or liability to make any Capital Contributions to
the Partnership, lend any funds to the Partnership or assume
any liability on behalf of the Partnership with
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respect to any financing of the Partnership or with respect to
any matter or thing; and (ii) the Limited Partner will have no
obligation or liability on account of any negative balance in
the Limited Partner's capital account.
6.3 Optional Capital Contributions. If the General Partner
determines that additional Capital Contributions are necessary,
the General Partner may elect to make or not make all or part of
the additional Capital Contributions. If the General Partner
elects not to make all or part of the additional Capital
Contributions, the General Partner will provide notice of such
election to the Limited Partner setting forth the amount of the
recommended Capital Contribution, the proposed use of the
Capital Contribution and the amount of the additional Capital
Contribution not made by the General Partner. The Limited
Partner is permitted, but not required, to make an additional
Capital Contribution in the amount set forth in such notice.
Each Capital Contribution made hereunder will be credited to the
appropriate capital account of the contributing Partner as
determined in the reasonable discretion of the General Partner.
6.4 No Interest. Capital Contributions will not bear interest.
6.5 Nonpriority. Except as otherwise expressly provided in this
Agreement, no Partner will have the right to withdraw or reduce
a Partner's Capital Contribution prior to the dissolution of the
Partnership. No Partner will have the right to demand or receive
property other than cash in return for such Partner's Capital
Contribution or with respect to any distribution of the
Partnership.
7. Capital Accounts and Allocations. With respect to each Partner, the
Partnership will establish and maintain a separate capital account for the
Partnership. Each Partner's capital account will be the amount of all Capital
Contributions made by the Partner increased by the following amounts: (a) the
amount of the Partner's distributive share of income or gain allocated to the
Partner; and (b) the amount of any Partnership liabilities that are assumed by
such Partner or that are secured by any Partnership property distributed to
such Partner and decreased by (x) the amount of the Partner's distributive
share of loss allocated to the Partner, (y) the amount of cash distributed and
the net fair market value of all property distributed by the Partnership to the
Partner, and (z) the amount of any liabilities of such Partner that are assumed
by the Partnership or that are secured by property contributed by such Partner
to the Partnership. The allocation of income, expenses, gain, profit and loss
will be as follows:
7.1 Allocations. Except as otherwise provided in this paragraph 7,
the profits, losses, income, gain and expenses of the
Partnership will be allocated to the Partners in accordance with
the Partnership Percentages. Any allocation to a Partner of a
portion of the net profits or net losses of the Partnership will
be deemed to be an allocation to that Partner of the same
proportional part of each
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item of income, gain, loss, deduction or credit that is earned,
realized or available for or to the Partnership for federal
income tax purposes.
7.2 Contributed Property. Notwithstanding paragraph 7.1 of this
Agreement, any income, gain, loss or deduction with respect to
property contributed by a Partner to the Partnership which has a
fair market value different from its adjusted basis for federal
income tax purposes will be allocated among the Partners in
accordance with Section 704(c) of the Code.
7.3 Limitation on Allocations. Notwithstanding anything to the
contrary contained herein, no allocation of net loss will be
made to the Limited Partner to the extent that such allocation
would create or increase a negative balance in Limited Partner's
capital account. To the extent that an allocation of net loss to
the Limited Partner is prohibited under this paragraph 7.3, the
net loss will be allocated one hundred percent (100%) to the
General Partner until such time as the allocation of the net
loss will not create or increase a negative balance in the
Limited Partner's capital account. Any special allocations of
net loss pursuant to this paragraph 7.3 will be taken into
account in computing subsequent allocations of net losses so
that the net losses allocated to each Partner pursuant to this
paragraph 7.3 will, to the extent possible, be equal to the net
amount that would have been allocated to each such Partner if
such allocations had not occurred.
7.4 Qualified Income Offset. Any Partner who unexpectedly receives an
adjustment, allocation or distribution which creates or
increases a deficit balance in that Partner's capital account
will be allocated items of income and gain (in that order)
attributable to the appropriate portion of the Properties in an
amount and manner sufficient to eliminate or reduce the deficit
balance in that Partner's capital account as quickly as
possible. Any special allocations of items of income or gain
pursuant to this paragraph 7.4 will be taken into account in
computing subsequent allocations of net profits so that the net
amount of any items so allocated and the net profits, net losses
and all other items allocated to each Partner pursuant to this
paragraph 7.4 will, to the extent possible, be equal to the net
amount that would have been allocated to each such Partner if
such unexpected adjustments, allocations or distributions had
not occurred.
8. Distributions. Proceeds and Net Cash Flow will be distributed to the
Partners at least annually. Within forty-five (45) days after the close of each
fiscal year, the General Partner will determine, in the General Partner's sole
discretion, whether there is Net Cash Flow or Proceeds available for
distribution. In computing Proceeds and Net Cash Flow, the General Partner may
establish a Reserve for anticipated capital costs, a reasonable working capital
Reserve and any other Reserves deemed necessary by the General Partner. The
Proceeds and Net Cash Flow (if any) will be distributed to the Partners in
accordance with each Partner's Partnership Percentage.
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9. Fiscal Matters. With respect to the financial affairs of the Partnership,
it is agreed that: (a) the fiscal year will be the period commencing on each
July 1 and ending on each subsequent June 30; (b) the books of the Partnership
will be maintained at the principal office of the General Partner in Oklahoma
City, Oklahoma in accordance with generally accepted accounting principles
consistently applied as determined by the General Partner; (c) annual balance
sheets and statements of income and expenses will be rendered to each Partner
within ninety (90) days after the close of each fiscal year reflecting the
performance of the Partnership as a whole; (d) the funds of the Partnership
will be maintained in a bank account or accounts on deposit with a bank or
banks designated by the General Partner; (e) each Partner will have the right
to examine and copy the books and records of the Partnership at all reasonable
times; and (f) all tax returns and books of account of the Partnership will be
prepared and maintained by the General Partner.
10. Tax Matters. The Partners acknowledge that the Partnership is subject to
the partnership provisions of the Code and agree to file all necessary
documents to be taxed as a partnership and agree not to elect pursuant to
Section 761(a) of the Code to be excluded from the application of the
provisions of Subchapter K of Chapter 1 of Subtitle A of the Code. The Partners
further agree as follows:
10.1 Allocation on Transfer. If a Partnership Interest is
transferred, the profit and loss for the fiscal year in which
the transfer occurs which is attributable to the Partnership
Interest transferred will be allocated between the transferor
and the transferee of such Partnership Interest as such parties
might agree, provided written notice of such allocation is given
to the General Partner by the transferee prior to the January 15
following the date of such transfer and such allocation is
consistent with Section 706 of the Code. In the event the
transferee fails to specify a method of allocation on or before
July 15 of the year following the year in which the transfer
occurs, the General Partner is authorized to allocate the net
profit and loss in accordance with the Code.
10.2 Tax Elections. If there is a distribution of property of the
Partnership as described in Section 734 of the Code, or if there
is a transfer of a Partnership Interest as described in Section
743 of the Code, the Partnership may, but is not required to,
file an election under Section 754 of the Code to provide for an
optional adjustment to the basis of the Partnership property. In
addition to the foregoing election, the General Partner, after
consultation with the Limited Partner, will make such other
elections on behalf of the Partnership as the General Partner
determines to be in the best interest of the Partnership.
10.3 Tax Returns. The General Partner will cause to be prepared and
filed all tax returns on behalf of the Partnership required by
each jurisdiction in which the Partnership operates. Each
Partner agrees to furnish to the General Partner such
information as might be reasonably required for the proper
preparation of such tax returns.
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10.4 Tax Matters Partner. The General Partner is hereby designated
the tax matters partner and will in good faith represent the
Partnership in all administrative and judicial proceedings
involving federal income tax matters. As the tax matters
partner, the powers of the General Partner will include, but not
be limited to, the power to: (a) appoint an attorney-in-fact to
represent the Partnership in such proceedings; (b) engage in any
activities enumerated in the Code; and (c) employ attorneys,
accountants, consultants, appraisers and such other Persons as
deemed appropriate. The General Partner will provide all present
and former Partners affected by an Internal Revenue Service
proceeding with such notice of the proceeding as is required by
the Code. While acting as the tax matters partner, neither the
General Partner nor the General Partner's agents will be liable
to the Partners for any actions taken by or on behalf of the
General Partner, including the execution of a settlement
agreement with the Internal Revenue Service, so long as the
General Partner acts in good faith in representing the interest
of the Partnership and the Partners. The General Partner is
entitled to reimbursement for all reasonable expenses relating
to the representation of the Partnership as the tax matters
partner, which may include, but are not limited to, expenses of
Persons employed by the General Partner in connection with an
examination, audit, administrative or judicial proceeding
relating to federal income tax matters.
11. Management and Limitations. Subject only to the limitations hereafter set
forth, the management of the Partnership and its business will rest exclusively
with the General Partner, who will have all the rights and powers which may be
possessed by a general partner pursuant to the Act and such further rights and
powers as are otherwise conferred by law or are necessary, advisable or
convenient in connection with the management of the business of the
Partnership.
11.1 Role of General Partner. The General Partner will manage and
control the Partnership, the Properties and the Partnership's
business and affairs and will use reasonable efforts to carry
out the business of the Partnership as set forth in this
Agreement. The General Partner will devote the General Partner's
efforts to the business of the Partnership to the extent the
General Partner, in the General Partner's reasonable discretion,
determines is necessary for the efficient administration
thereof. The General Partner will be responsible for the
acquisition and maintenance of the proper qualification of the
Partnership in each jurisdiction and will provide evidence of
such qualification to any Partner on request.
11.2 General Limitations. Without first obtaining the written consent
of the Limited Partner, the General Partner will not have
authority to: (a) do any act in contravention of this Agreement;
(b) possess Partnership property for other than Partnership
purposes; (c) assign Partnership property in trust for the
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benefit of creditors; (d) do any act which would make it
impossible to carry on the ordinary business of the Partnership;
or (e) amend this Agreement.
11.3 Funding. The General Partner is specifically authorized to take
all Partnership actions reasonable or necessary to obtain
funding for the operation of the Partnership's business, all
pursuant to terms satisfactory to the General Partner in the
General Partner's sole discretion. Such actions include, without
implied limitation, the obtaining of credit secured by a lien on
the Properties.
11.4 Compensation. Except as expressly provided herein, no Partner
will receive any compensation, salary or fee from the
Partnership as a Partner.
12. Powers, Rights and Obligations of Limited Partner. The Limited Partner
will have the following rights, powers and obligations:
12.1 Limitation of Liability. The liability of the Limited Partner
will be limited to the Limited Partner's Capital Contributions
whether or not previously contributed, plus the Limited
Partner's share of the net profits of the Partnership which are
undistributed. In addition, if the Limited Partner has received
the return in whole or in part of the Limited Partner's Capital
Contributions, the Limited Partner nevertheless remains liable
to the Partnership for any sum, not in excess of the amount of
such Capital Contributions so returned plus interest, necessary
to discharge the Partnership's liabilities to all creditors who
extended credit or whose claims arose before such amount was
returned. All of the Partnership's assets will be subject to the
Partnership's debts and liabilities.
12.2 Participation in Management. The Limited Partner will not take
part in, or interfere in any manner with, the management,
control, conduct or operation of the Partnership, or have any
right, power or authority to act for or bind the Partnership.
The Limited Partner will not have the right to bring an action
for partition against the Partnership.
13. Conveyances. The assets of the Partnership will be held in the name of the
Partnership. Subject only to the limitations set forth in paragraph 11 of this
Agreement, any deed, bill of sale, mortgage, lease, registration, contract of
sale or other instrument purporting to convey or encumber the interest of the
Partnership covering all or any portion of the Properties or any other asset of
the Partnership will be sufficient if signed on behalf of the Partnership by
the General Partner or by a representative designated by a certificate of
authority executed by the General Partner. The Partnership may sell, transfer,
convey or otherwise dispose of any of the Properties at any time to any Person,
including, without limitation, any Affiliate.
14. Restrictions on Transfer of Partnership Interest. No Partner may transfer
(a transfer includes, but is not limited to, any sale, transfer, assignment,
pledge, creation of a security
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interest in or other disposition) or in any way alienate all or any part of a
Partnership Interest without the prior written consent of the other Partner,
which consent may be arbitrarily withheld.
15. Incapacity of Partner. On the Incapacity of a Partner, the Remaining
Partner will have the option to: (a) continue the Partnership by accepting the
Representative of the Departing Partner as a Partner; (b) purchase the
Partnership Interest from the Departing Partner at a price acceptable to the
Representative of the Departing Partner and the Remaining Partner; or (c)
dissolve the Partnership in accordance with paragraph 17 of this Agreement.
Written notice of the exercise of one of the foregoing options will be given by
the Remaining Partner to the Representative of the Departing Partner within
sixty (60) days after the appointment of such Representative. Each Partner
hereby instructs his Representative to cooperate with the Remaining Partner
and, on the exercise of any of the foregoing options, to consummate the
transactions with regard to the Partnership Interest of the Departing Partner
as provided in this paragraph 15.
16. Default; Remedies. The failure by a Partner to perform any obligation
incumbent on such Partner under this Agreement within thirty (30) days after
written demand for such performance by the Remaining Partner will constitute a
default in the performance of this Agreement by such Partner. On the occurrence
of a default, the Remaining Partner will have the option to dissolve the
Partnership and wind up the Partnership's affairs in accordance with paragraph
17 of this Agreement. The Defaulting Partner will execute or cause to be
executed all documents necessary to effect dissolution and winding up and will
have only the right to receive, on a final winding up of the affairs of the
Partnership, the distributive share to which the Defaulting Partner would have
been entitled on a winding up had such default not occurred, less: (a) all
damages, including, without limitation, reasonable attorneys' fees, resulting
from the default; and (b) all of the costs, expenses and losses incurred which
directly result from the winding up of the Partnership.
17. Liquidation Procedures. The Partnership will be dissolved on the
occurrence of any of the following: (a) the consent of all of the Partners; (b)
the written election of the General Partner and the giving of written notice of
such election to the Limited Partner; (c) a valid election for dissolution
under paragraph 15 of this Agreement; (d) a valid election for dissolution
under paragraph 16 of this Agreement; or (e) the sale of all of the assets of
the Partnership. On dissolution of the Partnership, the General Partner will
promptly wind up and terminate the business and affairs of the Partnership. The
Partners agree to execute or cause to be executed all documents required in
connection with the dissolution, termination and winding up of the Partnership.
A reasonable period of time will be allowed for the orderly termination of the
Partnership business, discharge of the Partnership's liabilities and
distribution or liquidation of the remaining assets so as to enable the
Partnership to minimize the losses from the liquidation process. A full
accounting of the assets and liabilities of the Partnership will be prepared
and furnished to each Partner within thirty (30) days after completion. The
Partnership property and assets and/or the Proceeds from the liquidation
thereof will be paid, applied and/or distributed in the following order of
priority:
17.1 Creditors' Claims. To the payment of the debts and liabilities
of the Partnership and the expenses of liquidation including,
but not limited to, any loans or
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advancements made by any Partner to the Partnership and any
management fees to the General Partner, the General Partner's
Affiliates, or any other Person managing the Partnership
business.
17.2 Reserve. To the creation of any Reserves which the General
Partner deems reasonably necessary for any liabilities of the
Partnership or of the Partners arising out of the Partnership.
Such Reserves will be paid over by the General Partner to a
Person satisfactory to the General Partner to be held in escrow
for such period as the General Partner deems advisable and for
distribution at the expiration of such term in the manner
hereinafter provided.
17.3 Capital Account Balance. To the Partners in accordance with the
Partnership Percentages, adjusted to the date of distribution.
For the purpose of the application of paragraph of this
Agreement and determining the Partnership Percentages on
liquidation, all unrealized gains, losses and accrued income and
deductions will be treated as realized and recognized
immediately before the date of distribution.
17.4 Distributions in Kind. Any non-cash assets to be distributed in
kind will first be valued at their fair market value to
determine the gain or loss that would have resulted if such
assets were sold for such value. Such gain or loss will then be
allocated pursuant to paragraph of this Agreement, and the
Partnership Percentages will be adjusted to reflect such gain or
loss. The amount distributed and charged to the capital account
of each Partner receiving an interest in such distributed assets
will be the fair market value of such interest.
17.5 Balancing of Accounts. The General Partner will not be required
to make Capital Contributions or advance funds to the
Partnership or the Limited Partner as a result of the inability
of the Partnership to make the payments described in the
foregoing paragraphs. The sole obligation of the General Partner
with respect to such payments will be to apply Partnership funds
to the extent the same are available in the order and manner
provided in such paragraphs.
18. Indemnification. The Partnership will indemnify and hold each Partner
harmless from all liability, loss and expense, including reasonable attorneys'
fees and litigation expenses, which any Partner might incur by reason of any
action which is not in violation of this Agreement and is performed by such
Partner in good faith in furtherance of the Partnership's business interests,
including, without limitation, the execution of Contracts of Indebtedness.
19. Miscellaneous. It is further agreed that:
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19.1 Governing Law. This Agreement has been executed, delivered and
is intended to be performed in Oklahoma City, Oklahoma, and the
substantive laws of the State of Oklahoma will govern the
validity, construction and enforcement of this Agreement.
19.2 Right to Partition. The Partners agree that during the term of
the Partnership and during the period of its dissolution, no
Partner will have any right to ask for partition of the assets
now owned or hereafter acquired by the Partnership or to
maintain any action for partition with respect to any property
of the Partnership.
19.3 Approvals. When approval by any Partner is required hereunder,
such approval will not be unreasonably withheld except as
specifically permitted under this Agreement. Unless provision is
made for a specific period of time, the period of time in which
the right of approval will be exercised will be thirty (30)
days. If the Partner whose approval is required neither approves
nor disapproves a proposed action within the applicable period,
the Partner will be deemed to have given approval. If a Partner
disapproves any action proposed by any other Partner hereunder,
such disapproval will not be effective unless the reasons for
such disapproval are stated in writing and provided to the
Partner proposing the action.
19.4 Binding Effect. This instrument constitutes the entire agreement
between the Partners relating to the subject matter hereof and
may not be changed, modified, amended or supplemented except in
writing, signed by all of the Partners. This Agreement will be
binding on each of the Partners and their respective successors
and permitted assigns. If any part of this Agreement is held to
be unenforceable, the balance will nevertheless be carried into
effect. All Persons to whom any Partnership Interest might be
transferred in accordance with this Agreement will, by accepting
such transfer, be bound by this Agreement to the same extent as
if such Person had been an original party hereto.
19.5 Notices. Any notice, payment, demand or communication required
or permitted to be given by any provision of this Agreement will
be deemed to have been given when delivered personally to the
Partner or when actually received if sent by registered or
certified mail, postage and charges prepaid, to the parties at
the following addresses:
General Partner: Chesapeake Operating, Inc.
6100 North Western
Oklahoma City, Oklahoma 73118
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Limited Partner: Chesapeake Energy Louisiana Corporation
6100 North Western
Oklahoma City, Oklahoma 73118
19.6 Construction. This Agreement is made in accordance with the Act
and is to be construed, enforced and governed in accordance
therewith. Except for the terms defined in paragraph 20 of this
Agreement, the descriptive headings contained herein are for
convenience only and are not intended to define the subject
matter of the provisions of this Agreement.
19.7 Execution. This Agreement may be executed in multiple
counterparts with the same effect as if all Partners had signed
the same document. All counterparts will be construed together
and will constitute one instrument. This Agreement will not be
binding or constitute evidence of an agreement until all of the
Partners have executed and delivered a counterpart of this
Agreement.
19.8 Time. Time is of the essence of this Agreement.
19.9 Remedies. The Partners intend that their respective obligations
under this Agreement will be enforceable by specific
performance, provided that any Defaulting Partner may also be
liable in damages where permitted by law or this Agreement. All
remedies of the Partnership or any Partner provided by this
Agreement are cumulative and will not exclude any other remedy
to which any Partner might be lawfully entitled. Failure by the
Partnership or any Partner to insist on strict performance of
the obligations created by this Agreement will not be a waiver
of any right to demand strict compliance with this Agreement at
any later time.
19.10 Supersession. This Agreement is the final, complete and
exclusive expression of the agreement between the Partners with
respect to the Partnership and supersedes and replaces in all
respects the Prior Agreement. On execution of this Agreement by
the Partners, the relationship between the Partners will be
governed by the terms of this Agreement and not by the Prior
Agreement.
20. Definitions. The following words are intended to have the following
meanings when used in this Agreement:
20.1 Act. The Oklahoma Revised Uniform Limited Partnership Act, as
the same is hereafter amended from time to time.
20.2 Affiliate. Any Person which, directly or indirectly: (a) is
controlled by a Partner; (b) controls a Partner; or (c) is under
common control with a Partner. For the purpose of this paragraph
20.2, "control" means the direct or indirect
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power to determine or cause to be determined the management
policies of such entity, whether through ownership, by contract
or otherwise.
20.3 Agreement. This Amended and Restated Limited Partnership
Agreement and all amendments and modifications hereto.
20.4 Capital Contributions. A contribution by a Partner to the
Partnership of cash or property.
20.5 Code. The Internal Revenue Code of 1986, as amended from time to
time, and all regulations issued pursuant thereto.
20.6 Contracts of Indebtedness. All promissory notes, lease
agreements, purchase agreements, guarantees of payment or
performance, operating contracts, employment agreements,
undertakings and other assurances now or hereafter executed on
behalf of the Partnership by the General Partner in connection
with the business of the Partnership.
20.7 Defaulting Partner. A Partner who fails to perform an obligation
under this Agreement as provided in paragraph 16 of this
Agreement.
20.8 Departing Partner. Any Partner suffering from an Incapacity.
20.9 General Partner. Chesapeake Operating, Inc., an Oklahoma
corporation, and its successors and permitted assigns.
20.10 Incapacity. The occurrence of any of the following events:
(a) the filing by or against a Partner of any petition for
discharge, arrangement, plan or other relief under the
bankruptcy laws of the United States or any state; (b) the entry
by a court of competent jurisdiction of any final judgment or
decree subjecting the Partnership Interest of any Partner to a
lien, attachment or charging order or purporting to transfer all
or any part of a Partnership Interest to any Person not a
Partner; (c) the dissolution or other termination of the legal
existence of a Partner who is a corporation, partnership or
trust; or (d) the death or mental incompetence of a Partner who
is a natural Person.
20.11 Limited Partner. Chesapeake Energy Louisiana Corporation, an
Oklahoma corporation, and its successors and permitted assigns.
20.12 Net Cash Flow. In respect of any period, the amount, if any, by
which the Revenues for such period exceed the Operating Costs
for such period.
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20.13 Operating Costs. In respect of any period, all costs and
expenses actually paid by the Partnership which include, without
limitation: (a) the principal and interest on any Contracts of
Indebtedness paid by the Partnership during such period; (b) all
costs of acquiring, improving, developing, managing, leasing,
operating, maintaining, replacing and preserving the Properties,
including, without limitation all fees payable under any
management contracts and all capital expenditures relating to
the Properties; (c) any casualty losses to the extent not
reimbursed by insurance proceeds during such period; and (d)
deposits to Reserves during such period. Operating Costs does
not include depreciation and amortization.
20.14 Partner(s). The General Partner and/or the Limited Partner.
20.15 Partnership. The Oklahoma limited partnership created by this
Agreement and known as Chesapeake Louisiana, L.P.
20.16 Partnership Interest. In respect of any Partner, all of such
Partner's right, title and ownership interest in the
Partnership, including, without limitation, all profits,
surplus, distributions, return of capital, contract rights,
accounts receivable and general intangibles owing by the
Partnership to a Partner solely by reason of the status of the
Partner as a member of the Partnership.
20.17 Partnership Percentages. With respect to each Partner, the
following percentage:
General Partner 1%
Limited Partner 99%
20.18 Person. Any individual, entity, corporation, association, trust,
partnership, joint venture or any government or agency or
political subdivision thereof.
20.19 Proceeds. Properties sale proceeds, proceeds from loans to
refinance the Properties, condemnation proceeds and insurance
proceeds (excluding business interruption insurance proceeds)
excluding Capital Contributions.
20.20 Properties. All assets and other properties now owned or
hereafter acquired by the Partnership, including, without
limitation, all oil and gas properties or interests therein,
partnership and joint venture interests, stock, overriding
royalty interests, carried interests, backin interests,
production payments and other oil and gas and related interests.
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20.21 Remaining Partner. The Partner who is not: (a) the Defaulting
Partner in the case of paragraph 16 of this Agreement; or (b)
the Departing Partner in the case of paragraph 15 of this
Agreement.
20.22 Representative. The legal representative, trustee or successor
of a Departing Partner, as the case may be.
20.23 Reserves. Cash deposits established from time to time in the
discretion of the General Partner to provide sources for payment
of obligations incurred or to be incurred, whether direct or
contingent, by the Partnership or the General Partner in
connection with the business of the Partnership.
20.24 Revenues. In respect of any period, the cash balance held by the
Partnership at the beginning of the period (including Reserves)
plus the aggregate of any gross receipts (excluding Proceeds,
but including Capital Contributions) received by the Partnership
from all sources during such period.
IN WITNESS WHEREOF, the parties have executed this Limited
Partnership Agreement effective the date first above written.
CHESAPEAKE OPERATING, INC., an
Oklahoma corporation
By /s/ AUBREY K. MCCLENDON
---------------------------------------
Aubrey K. McClendon, President
(the "General Partner")
CHESAPEAKE ENERGY LOUISIANA CORPORATION, an
Oklahoma corporation
By /s/ AUBREY K. MCCLENDON
---------------------------------------
Aubrey K. McClendon, President
(the "Limited Partner")
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