in the united states bankruptcy court for the … · 2020. 8. 6. · section 1125 of the bankruptcy...

Solicitation Version

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE

------------------------------------------------------------ x

In re : Chapter 11

:

CHISHOLM OIL AND GAS OPERATING, : Case No. 20–11593 (BLS)

LLC, et al., :

Debtors.1 : (Jointly Administered)

------------------------------------------------------------ x

DISCLOSURE STATEMENT FOR

AMENDED JOINT CHAPTER 11 PLAN OF REORGANIZATION OF

CHISHOLM OIL AND GAS OPERATING, LLC AND ITS AFFILIATED DEBTORS

WEIL, GOTSHAL & MANGES LLP

Matthew S. Barr

Kelly DiBlasi

Lauren Tauro

767 Fifth Avenue

New York, New York 10153

Telephone: (212) 310-8000

Facsimile: (212) 310-8007

YOUNG CONAWAY STARGATT &

TAYLOR, LLP

M. Blake Cleary (No. 3614)

Jaime Luton Chapman (No. 4936)

S. Alexander Faris (No. 6278)

Rodney Square

1000 North King Street

Wilmington, Delaware 19801

Telephone: (302) 571-6600

Facsimile: (302) 571-1253

Attorneys for the Debtors

and Debtors in Possession

Dated: August 3, 2020

Wilmington, Delaware

1 The Debtors in the chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number,

as applicable, are Chisholm Oil and Gas Operating II, LLC (8730); Chisholm Oil and Gas Operating, LLC (5382);

Cottonmouth SWD, LLC (9849); Chisholm Oil and Gas Nominee, Inc. (1558); and Chisholm Oil and Gas

Management II, LLC (8174). The Debtors’ mailing address is 1 West Third Street, Suite 1700, Tulsa, OK 74103.

Case 20-11593-BLS Doc 233 Filed 08/06/20 of 257

DISCLOSURE STATEMENT, DATED AUGUST 3, 2020

CHISHOLM OIL AND GAS OPERATING, LLC, ET AL.

THE SOLICITATION OF VOTES (THE “SOLICITATION”) WILL BE CONDUCTED

TO OBTAIN SUFFICIENT VOTES TO ACCEPT THE AMENDED JOINT CHAPTER

11 PLAN OF REORGANIZATION OF CHISHOLM OIL AND GAS OPERATING,

LLC AND ITS AFFILIATED DEBTORS, DATED AUGUST 3, 2020 (AS MAY BE

FURTHER AMENDED, MODIFIED, OR SUPPLEMENTED FROM TIME TO TIME,

THE “PLAN”). A COPY OF THE PLAN IS ATTACHED HERETO AS EXHIBIT A.

NO SOLICITATION OF VOTES TO ACCEPT OR REJECT THE PLAN MAY BE

MADE EXCEPT PURSUANT TO SECTION 1125 OF THE BANKRUPTCY CODE.

THE VOTING DEADLINE TO ACCEPT OR REJECT THE PLAN IS 4:00 P.M.

(PREVAILING EASTERN TIME) ON SEPTEMBER 11, 2020, UNLESS EXTENDED

BY THE DEBTORS (AS DEFINED BELOW) IN WRITING.

THE RECORD DATE FOR DETERMINING WHICH HOLDERS OF CLAIMS AND

INTERESTS MAY VOTE ON THE PLAN IS AUGUST 4, 2020 (THE “VOTING

RECORD DATE”).

RECOMMENDATION BY THE DEBTORS

The member of Chisholm Oil and Gas Operating, LLC and the board of directors or members,

as applicable, of each of its affiliated debtors have unanimously approved the transactions

contemplated by the Solicitation and the Plan and recommend that all creditors and interest

holders whose votes are being solicited submit ballots to accept the Plan.

Subject to the terms and conditions of the Restructuring Support Agreement (as defined

below), holders of approximately 99.6% of the RBL Claims (as defined below) and the

Consenting Sponsors (as defined below) have agreed to vote in favor of, or otherwise support,

the Plan. Additionally, the Term Loan Lenders (as defined below) and the Creditors’

Committee (as defined below) support confirmation of the Plan. The Creditors’ Committee

recommends that all holders of General Unsecured Claims (as defined below) vote to accept

the Plan.

HOLDERS OF CLAIMS OR INTERESTS SHOULD NOT CONSTRUE THE CONTENTS

OF THIS DISCLOSURE STATEMENT (THE “DISCLOSURE STATEMENT”) AS

PROVIDING ANY LEGAL, BUSINESS, FINANCIAL, OR TAX ADVICE AND SHOULD

CONSULT WITH THEIR OWN ADVISORS BEFORE CASTING A VOTE WITH

RESPECT TO THE PLAN.

THE INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT IS

INCLUDED FOR THE PURPOSE OF SOLICITING ACCEPTANCES OF THE PLAN


AND MAY NOT BE RELIED UPON FOR ANY PURPOSE OTHER THAN TO

DETERMINE HOW TO VOTE ON THE PLAN.

ALL HOLDERS OF CLAIMS AND INTERESTS ARE ADVISED AND ENCOURAGED

TO READ THIS DISCLOSURE STATEMENT AND THE PLAN IN THEIR ENTIRETY

BEFORE VOTING TO ACCEPT OR REJECT THE PLAN. IN PARTICULAR, ALL

HOLDERS OF CLAIMS AND INTERESTS SHOULD CAREFULLY READ AND

CONSIDER THE RISK FACTORS SET FORTH IN SECTION IX OF THIS

DISCLOSURE STATEMENT – “CERTAIN RISK FACTORS TO BE CONSIDERED” –

BEFORE VOTING TO ACCEPT OR REJECT THE PLAN. THE PLAN SUMMARY AND

STATEMENTS MADE IN THIS DISCLOSURE STATEMENT ARE QUALIFIED IN

THEIR ENTIRETY BY REFERENCE TO THE PLAN ITSELF AND ANY EXHIBITS

ATTACHED TO THE PLAN AND THIS DISCLOSURE STATEMENT. IN THE EVENT

OF ANY CONFLICT BETWEEN ANY DESCRIPTION SET FORTH IN THIS

DISCLOSURE STATEMENT AND THE TERMS OF THE PLAN, THE TERMS OF THE

PLAN SHALL GOVERN.

THE ISSUANCE AND DISTRIBUTION OF THE NEW EQUITY INTERESTS AND THE

WARRANTS (AND THE WARRANT EQUITY ISSUABLE UPON EXERCISE

THEREOF), AS APPLICABLE, UNDER ARTICLE IV OF THE PLAN SHALL BE

EXEMPT, PURSUANT TO SECTION 1145 OF THE BANKRUPTCY CODE, WITHOUT

FURTHER ACT OR ACTIONS BY ANY ENTITY, FROM REGISTRATION UNDER

THE SECURITIES ACT OF 1933 (AS AMENDED, THE “SECURITIES ACT”), AND ANY

OTHER APPLICABLE SECURITIES LAWS TO THE FULLEST EXTENT PERMITTED

BY SECTION 1145 OF THE BANKRUPTCY CODE. SUCH SECURITIES ISSUED

PURSUANT TO SECTION 1145 OF THE BANKRUPTCY CODE MAY BE RESOLD

WITHOUT REGISTRATION UNDER THE SECURITIES ACT OR OTHER FEDERAL

SECURITIES LAWS PURSUANT TO THE EXEMPTION PROVIDED BY SECTION

4(A)(1) OF THE SECURITIES ACT, SUBJECT TO: (I) THE HOLDER NOT BEING AN

“UNDERWRITER” WITH RESPECT TO SUCH SECURITIES, AS THAT TERM IS

DEFINED IN SUBSECTION (B) OF SECTION 1145 OF THE BANKRUPTCY CODE;

(II) THE HOLDER (A) NOT BEING AN “AFFILIATE” OF REORGANIZED

CHISHOLM PARENT AS DEFINED IN RULE 144(a)(1) UNDER THE SECURITIES

ACT, (B) NOT HAVING BEEN SUCH AN “AFFILIATE” WITHIN 90 DAYS OF SUCH

TRANSFER AND/OR (C) NOT HAVING ACQUIRED SUCH SECURITIES FROM AN

“AFFILIATE” WITHIN ONE YEAR OF SUCH TRANSFER (OTHER THAN, WITH

RESPECT TO CLAUSE (II), SUCH RESALES AS MAY BE PERMITTED BY AND

SUBJECT TO THE CONDITIONS OF RULE 144 OF THE SECURITIES ACT);

(III) COMPLIANCE WITH ANY RULES AND REGULATIONS OF THE SECURITIES

AND EXCHANGE COMMISSION APPLICABLE AT THE TIME OF ANY FUTURE

TRANSFER OF SUCH SECURITIES OR INSTRUMENTS; (IV) ANY RESTRICTIONS

ON THE TRANSFERABILITY OF THE NEW EQUITY INTERESTS CONTAINED IN

THE SHAREHOLDERS’ AGREEMENT; AND (V) ANY APPLICABLE REGULATORY

APPROVAL. IN ADDITION, SUCH SECTION 1145 EXEMPT SECURITIES

GENERALLY MAY BE RESOLD WITHOUT REGISTRATION UNDER STATE

SECURITIES LAWS PURSUANT TO VARIOUS EXEMPTIONS PROVIDED BY THE

RESPECTIVE LAWS OF THE SEVERAL STATES.


THIS DISCLOSURE STATEMENT HAS BEEN PREPARED IN ACCORDANCE WITH

SECTION 1125 OF THE BANKRUPTCY CODE AND BANKRUPTCY RULE 3016(b)

AND NOT NECESSARILY IN ACCORDANCE WITH NON-BANKRUPTCY LAW. THIS

DISCLOSURE STATEMENT HAS NOT BEEN APPROVED OR DISAPPROVED BY

THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE “SEC”)

OR ANY STATE SECURITIES COMMISSION OR ANY SECURITIES EXCHANGE OR

ASSOCIATION. NOR HAS THE SEC, ANY STATE SECURITIES COMMISSION, OR

ANY SECURITIES EXCHANGE OR ASSOCIATION PASSED UPON THE ACCURACY

OR ADEQUACY OF THE STATEMENTS CONTAINED IN THIS DISCLOSURE

STATEMENT.

CERTAIN STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT,

INCLUDING WITH RESPECT TO PROJECTED CREDITOR RECOVERIES AND

OTHER FORWARD-LOOKING STATEMENTS, ARE BASED ON ESTIMATES AND

ASSUMPTIONS. THERE CAN BE NO ASSURANCE THAT SUCH STATEMENTS

WILL BE REFLECTIVE OF ACTUAL OUTCOMES. FORWARD-LOOKING

STATEMENTS ARE PROVIDED IN THIS DISCLOSURE STATEMENT PURSUANT TO

THE SAFE HARBOR ESTABLISHED UNDER THE PRIVATE SECURITIES

LITIGATION REFORM ACT OF 1995 AND SHOULD BE EVALUATED IN THE

CONTEXT OF THE ESTIMATES, ASSUMPTIONS, UNCERTAINTIES, AND RISKS

DESCRIBED HEREIN.

THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT ARE MADE

AS OF THE DATE HEREOF UNLESS ANOTHER TIME IS SPECIFIED HEREIN, AND

THE DELIVERY OF THIS DISCLOSURE STATEMENT WILL NOT CREATE AN

IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION

STATED SINCE THE DATE HEREOF.

THE INFORMATION IN THIS DISCLOSURE STATEMENT IS BEING PROVIDED

SOLELY FOR PURPOSES OF VOTING TO ACCEPT OR REJECT THE PLAN OR

OBJECTING TO CONFIRMATION. NOTHING IN THIS DISCLOSURE STATEMENT

MAY BE USED BY ANY PARTY FOR ANY OTHER PURPOSE.

THE PLAN PROVIDES THAT THE FOLLOWING PARTIES ARE DEEMED TO

GRANT THE RELEASES PROVIDED FOR THEREIN: (I) THE HOLDERS OF ALL

CLAIMS OR INTERESTS WHO VOTE TO ACCEPT THE PLAN, (II) THE HOLDERS

OF ALL CLAIMS OR INTERESTS WHOSE VOTE TO ACCEPT OR REJECT THE

PLAN IS SOLICITED BUT WHO DO NOT VOTE EITHER TO ACCEPT OR TO

REJECT THE PLAN, (III) THE HOLDERS OF ALL CLAIMS OR INTERESTS WHO

VOTE, OR ARE DEEMED, TO REJECT THE PLAN BUT DO NOT OPT OUT OF

GRANTING THE RELEASES SET FORTH THEREIN, (IV) THE HOLDERS OF ALL

CLAIMS OR INTERESTS WHO WERE GIVEN NOTICE OF THE OPPORTUNITY TO

OPT OUT OF GRANTING THE RELEASES SET FORTH THEREIN BUT DID NOT OPT

OUT OF GRANTING THE RELEASES SET FORTH IN SECTION 10.7 OF THE PLAN,

(V) ALL OTHER HOLDERS OF CLAIMS OR INTERESTS TO THE MAXIMUM

EXTENT PERMITTED BY LAW, AND (VI) THE RELEASED PARTIES (AS DEFINED

IN THE PLAN).


ALL EXHIBITS TO THE DISCLOSURE STATEMENT ARE INCORPORATED INTO

AND ARE A PART OF THE DISCLOSURE STATEMENT AS IF SET FORTH IN FULL

HEREIN.


i

TABLE OF CONTENTS

I. INTRODUCTION ........................................................................................................................1

A. Overview of Restructuring Transaction ...................................................................1

B. Summary of Plan Classification and Treatment of Claims ......................................3

C. Inquiries ...................................................................................................................8

D. Confirmation ............................................................................................................8

II. DEBTORS’ BUSINESS .............................................................................................................9

A. Debtors’ Operations .................................................................................................9

B. Regulation of Debtors’ Business ...........................................................................10

III. CORPORATE AND CAPITAL STRUCTURE ......................................................................10

A. Organizational Structure ........................................................................................10

B. Debtors’ Capital Structure .....................................................................................11

C. Governance ............................................................................................................13

IV. KEY EVENTS LEADING TO COMMENCEMENT OF CHAPTER 11 CASES ................13

V. OVERVIEW OF CHAPTER 11 CASES..................................................................................15

A. First Day Pleadings ................................................................................................15

B. Other Motions ........................................................................................................17

C. Appointment of Creditors’ Committee ..................................................................19

D. Schedules and Statements ......................................................................................20

E. Plan Settlement ......................................................................................................20

VI. SUMMARY OF PLAN ...........................................................................................................21

A. General ...................................................................................................................21

B. Administrative Expense Claims, Adequate Protection Claims, Fee Claims,

and Priority Tax Claims .........................................................................................22

C. Classification and Claims and Interests .................................................................24

D. Treatment of Claims and Interests .........................................................................26

E. Means for Implementation .....................................................................................30

F. Distributions ...........................................................................................................36

G. Procedures for Disputed Claims ............................................................................41

H. Executory Contracts and Unexpired Leases ..........................................................44

I. Conditions Precedent to Confirmation of Plan and Occurrence of Effective

Date ........................................................................................................................47

J. Effect of Confirmation ...........................................................................................50


ii

K. Retention of Jurisdiction ........................................................................................55

L. Miscellaneous Provisions.......................................................................................57

VII. TRANSFER RESTRICTIONS AND CONSEQUENCES UNDER FEDERAL

SECURITIES LAWS .............................................................................................................62

A. Section 1145 of the Bankruptcy Code Exemption and Subsequent

Transfers ................................................................................................................62

VIII. CERTAIN U.S. FEDERAL TAX CONSEQUENCES OF PLAN .......................................64

A. Introduction ............................................................................................................64

B. Certain U.S. Federal Income Tax Consequences to the Debtors ...........................66

C. Certain U.S. Federal Income Tax Consequences to U.S. Holders of

Allowed Claims Entitled to Vote and Certain Interests .........................................69

D. Information Reporting and Backup Withholding ..................................................79

IX. CERTAIN RISK FACTORS TO BE CONSIDERED ............................................................80

A. Certain Bankruptcy Law Considerations ...............................................................80

B. Additional Factors Affecting the Value of Reorganized Debtors ..........................82

C. Factors Relating to Securities to Be Issued Under Plan ........................................85

D. Additional Factors ..................................................................................................87

X. VOTING PROCEDURES AND REQUIREMENTS ...............................................................87

A. Voting Deadline .....................................................................................................88

B. Voting Procedures ..................................................................................................88

C. Parties Entitled to Vote ..........................................................................................88

D. Waivers of Defects, Irregularities, etc. ..................................................................90

XI. CONFIRMATION OF PLAN .................................................................................................90

A. Confirmation Hearing ............................................................................................90

B. Objections to Confirmation....................................................................................90

C. Requirements for Confirmation of Plan .................................................................92

XII. VALUATION ANALYSIS ....................................................................................................96

A. Net-Asset Value .....................................................................................................97

B. Comparable Company Analysis ............................................................................98

C. Precedent Transactions Analysis ...........................................................................98

D. Total Enterprise Value and Implied Equity Value .................................................98

XIII. ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF PLAN ..........100

A. Alternative Plan of Reorganization ......................................................................100


iii

B. Sale Under Section 363 of the Bankruptcy Code ................................................100

C. Liquidation under Chapter 7 of Bankruptcy Code ...............................................100

XIV. CONCLUSION AND RECOMMENDATION..................................................................101

EXHIBITS

EXHIBIT A Plan

EXHIBIT B Restructuring Support Agreement

EXHIBIT C Organizational Structure

EXHIBIT D Liquidation Analysis

EXHIBIT E Financial Projections


I.

INTRODUCTION

A. Overview of Restructuring Transaction

Chisholm Oil and Gas Operating II, LLC (“Chisholm Parent”) and its debtor affiliates

(collectively, the “Debtors” or “Chisholm”) submit this Disclosure Statement in connection with

the Solicitation of votes on the Plan.1 The Debtors filed voluntary petitions for relief under

chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States

Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) on June 17, 2020

(the “Petition Date”). On July 1, 2020, the Office of the United States Trustee for Region 3

(the “U.S. Trustee”) appointed the Official Committee of Unsecured Creditors (the “Creditors’

Committee”).

The chapter 11 cases of the Debtors are being jointly administered (the “Chapter 11 Cases”)

pursuant to Rule 1015(b) of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”)

and Rule 1015-1 of the Local Rules of Bankruptcy Practice and Procedure of the United States

Bankruptcy Court for the District of Delaware (the “Local Rules”).

The Debtors are commencing the Solicitation to implement a comprehensive financial

restructuring to deleverage the Debtors’ balance sheet to ensure the Debtors’ long-term viability.

As a result of extensive negotiations, on June 15, 2020, the Debtors executed a restructuring

support agreement (the “Restructuring Support Agreement”), attached hereto as Exhibit B, with

(i) lenders that hold approximately 99.6% of the claims under the RBL Credit Agreement (as

defined below) (the “Consenting Creditors”) and (ii) prepetition equity holders (the “Consenting

Sponsors”), which own, directly or indirectly, 100% of the outstanding equity interests in the

Debtors.

The Debtors filed their initial chapter 11 plan on June 30, 2020 [Docket No. 85] (the “Initial

Plan”). Under the terms of the Restructuring Support Agreement, the Consenting Creditors and

Consenting Sponsors agreed, subject to the terms and conditions of the Restructuring Support

Agreement, to vote in favor of and support confirmation of the Initial Plan, which embodies the

restructuring transactions described in the restructuring term sheet attached to the Restructuring

Support Agreement as Exhibit A (the “Initial Restructuring Transaction”). The Consenting

Creditors and Consenting Sponsors played a critically important role in formulating the Initial

Restructuring Transaction and actively participated in the development and negotiation of the

Initial Plan.

Subsequent to the filing of the Initial Plan, the Creditors’ Committee and Term Loan Lenders

raised certain concerns and potential objections with respect to its terms. Since the filing of the

Initial Plan, the Debtors, the Consenting Creditors, and the Consenting Sponsors engaged in

discussions with the Creditors’ Committee and Term Loan Lenders regarding Plan related issues

to try to resolve their concerns and gain additional support for the Initial Plan. On July 31, 2020,

the Debtors, the Consenting Creditors, and the Consenting Sponsors reached an agreement with

the Creditors’ Committee and the Term Loan Lenders with respect to certain amendments to the

1 Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Plan.


2

Initial Restructuring Transaction embodied in the Initial Plan. The terms of the settlement

(the “Restructuring Transaction”) are reflected in the amended Plan filed on August 3, 2020

[Docket No. 216] and are discussed in more detail below. Pursuant to such agreement, the

Creditors’ Committee and the Term Loan Lenders have agreed to support and not object to the

Plan (including, among other things, the releases contained therein). In addition, the Term Loan

Lenders agreed to vote to accept the Plan and the Creditors’ Committee and its professionals

agreed to cease and not commence any efforts to (i) investigate and/or contest the RBL Claims

and related liens and (ii) seek, pursue, or seek standing to pursue avoidance actions or other claims

or causes of action against insiders of the Debtors (including the Consenting Sponsors).

The Restructuring Transaction will allow the Debtors to emerge from the Chapter 11 Cases

substantially de-levered and funded with additional capital to ensure the reorganized Debtors have

sufficient go-forward liquidity. As described more fully herein, the Debtors’ balance sheet

liabilities will be reduced from approximately $517 million in funded debt to approximately

$34.77 million in funded debt, which represents an approximate 93% reduction of debt on the

Effective Date relative to the Petition Date. The following table illustrates the difference in the

Debtors’ capital structure as of the Petition Date compared to the capital structure contemplated

by the Restructuring Transaction upon emergence from chapter 11.

Pre-Restructuring Post-Restructuring

RBL Claims

Term Loan Claims

$263 million

$254 million

FLFO RBL Facility

FLSO Term Loan Facility

$0

$34.77 million2

Total Funded Debt $517 million $34.77 million

The Restructuring Transaction offers the Debtors the opportunity to take advantage of an efficient

chapter 11 process to implement a balance sheet restructuring that addresses the Debtors’ near-

term liquidity and strengthens the Debtors through a significant de-leveraging with the support of

the Debtors’ largest constituents, while allowing business operations to continue without

interruption. This will enable the Debtors to maximize the value of their assets for all stakeholders

and emerge from the Chapter 11 Cases positioned for growth and success.

The Restructuring Transaction will restructure Chisholm’s balance sheet by (i) refinancing a

portion of the claims under the RBL Credit Agreement (as defined below) (the “RBL Claims”)

with new debt in the form of a first-lien second-out exit facility, (ii) equitizing the remaining RBL

Claims, (iii) either equitizing or cancelling the claims under the Term Loan Agreement (as defined

below) (the “Term Loan Claims”), and (iv) cancelling existing equity interests. Notwithstanding

the fact that substantially all of the Debtors’ assets are encumbered by liens to secure the RBL

Claims and Term Loan Claims and the value of the Debtors’ assets do not exceed the amount of

the RBL Claims, in an effort to streamline these cases and achieve a consensual confirmation

process, the Restructuring Transaction offers distributions to the holders of Allowed Term Loan

Claims, holders of Allowed General Unsecured Claims, and the Consenting Sponsors in the form

of cash, equity, warrants, and releases, as applicable, if these parties vote in favor of the Plan. The

Restructuring Transaction will also provide Chisholm with a not less than $15 million injection of

2 Total of FLSO Term Loan Facility not to exceed $40 million.


3

new capital upon emergence pursuant to a first-lien first-out reserve-based lending facility to fund

general working capital and for other general corporate purposes.

This Disclosure Statement provides holders of Claims and Interests entitled to vote to accept or

reject the Plan with adequate information about (i) the Debtors’ business and certain historical

events, (ii) the Debtors’ Chapter 11 Cases, (iii) the Plan, (iv) the rights of holders of Claims and

Interests under the Plan, and (v) other information necessary to enable each holder of a Claim and

Interest entitled to vote on the Plan to make an informed judgment as to whether to vote to accept

or reject the Plan. This Disclosure Statement also assists the Bankruptcy Court in determining

whether the Plan complies with the provisions of the Bankruptcy Code and should be confirmed.

B. Summary of Plan Classification and Treatment of Claims

Under the Bankruptcy Code, only holders of claims or interests in “impaired” Classes are entitled

to vote on the Plan. Under section 1124 of the Bankruptcy Code, a class of claims or interests is

“impaired” unless (i) the Plan leaves unaltered the legal, equitable, and contractual rights to which

such claim or interest entitles the holder thereof or (ii) notwithstanding any legal right to an

accelerated payment of such claim or interest, the Plan cures all existing defaults (other than

defaults resulting from the occurrence of events of bankruptcy) and reinstates the maturity of such

claim or interest as it existed before the default.

Holders of Claims and Interests in the following Classes are being solicited under, and are entitled

to vote on, the Plan:

Class 3 – RBL Claims;

Class 4 – Term Loan Claims;

Class 5 – General Unsecured Claims; and

Class 7 – Chisholm Parent Equity Interests.

The following table summarizes: (1) the treatment of Claims and Interests under the Plan;

(2) which Classes are impaired by the Plan; (3) which Classes are entitled to vote on the Plan; and

(4) the estimated recoveries for holders of Claims and Interests. The table is qualified in its entirety

by reference to the full text of the Plan. For a more detailed summary of the terms and provisions

of the Plan, see Section VI – Summary of Plan below. A detailed discussion of the analysis

underlying the estimated recoveries, including the assumptions underlying such analysis, is set

forth in the valuation analysis in Section XII – Valuation Analysis below.


4

Class and

Designation Treatment under the Plan

Impairment

and

Entitlement to

Vote

Approx.

Percentage

Recovery3

Class 1: Other

Priority Claims

The legal, equitable, and contractual rights of the

holders of Allowed Other Priority Claims are

unaltered by the Plan. Except to the extent that a

holder of an Allowed Other Priority Claim agrees to

different treatment, in full and final satisfaction of

such Allowed Other Priority Claim, each holder of an

Allowed Other Priority Claim shall receive, at the

option of the Debtors or the Reorganized Debtors (as

applicable), (i) on or as soon as reasonably practicable

after the later of the Effective Date and the date that is

ten (10) Business Days after the date such Other

Priority Claim becomes an Allowed Claim, payment

in full in Cash or (ii) other treatment consistent with

the provisions of section 1129 of the Bankruptcy

Code.

Unimpaired

(Not entitled to

vote –presumed

to accept)

100%

Class 2: Other

Secured Claims

The legal, equitable, and contractual rights of the

holders of Allowed Other Secured Claims are

unaltered by the Plan. Except to the extent that a

holder of an Allowed Other Secured Claim agrees to

different treatment, on or as soon as reasonably

practicable after the later of the Effective Date and the

date that is ten (10) Business Days after the date such

Other Secured Claim becomes an Allowed Claim, in

full and final satisfaction of such Allowed Other

Secured Claim, each holder of an Allowed Other

Secured Claim shall receive, at the option of the

Debtors or Reorganized Debtors (as applicable), with

the consent of the RBL Agent (which consent shall not

be unreasonably withheld), (i) payment in full in

Cash, (ii) reinstatement of such Allowed Other

Secured Claim, or (iii) such other treatment necessary

to render such Allowed Other Secured Claim

Unimpaired.

Unimpaired

(Not entitled to

vote – presumed

to accept)

100%

3 The estimated percentage recoveries set out in this table assume an implied equity value of $43 million. The

estimated percentage recoveries take into account dilution from any New Equity Interests issued pursuant to the

Management Incentive Plan, which reserves up to 5% of the New Equity Interests for participants under the

Management Incentive Plan to be adopted on the Effective Date or Warrant Equity which reserves up to 11% of the

New Equity Interests for redemption of the Warrants.


5

Class 3: RBL

Claims

On the Effective Date, each holder of an Allowed

RBL Claim shall receive, in full and final satisfaction

of such Allowed RBL Claim, such holder’s Pro Rata

share of:

i. 95% of the New Equity Interests, subject to

dilution by (y) the MIP Equity and (z) if

(A) Class 4, Class 5, and Class 7 vote to

accept the Plan and (B) as of the Confirmation

Date, the Consenting Sponsors have not

terminated their obligations under the

Restructuring Support Agreement pursuant to

Section 6(d)(xii) thereof, the Warrant Equity;

ii. if Class 4 does not vote to accept the Plan,

additional 5% of the New Equity Interests,

subject to dilution by the MIP Equity;

iii. if (A) Class 4 votes to accept the Plan but (B)

(x) either Class 5 or Class 7 does not vote to

accept the Plan or (y) prior to the

Confirmation Date, the Consenting Sponsors

terminate their obligations under the


Section 6(d)(xii) thereof, an additional 1% of

the New Equity Interests, subject to dilution

by the MIP Equity; and

iv. the FLSO Term Loan.

Impaired

(Entitled to

vote)

25.0% or

26.6%

Class 4: Term

Loan Claims

If Class 4 votes to accept the Plan, then on the

Effective Date (x) the Term Loan Claims shall be

deemed Allowed in the aggregate principal amount of

not less than $253,827,034.71 (which includes

payment in kind interest that has been added to the

principal), plus all outstanding interest, fees,

expenses, and other obligations due under the Term

Loan Documents as of the Petition Date, and shall not

be subject to any avoidance, reductions, setoff, offset,

recoupment, recharacterization, subordination

(whether equitable, contractual or otherwise),

counterclaims, cross-claims, defenses, disallowance,

impairment, objection, or any other challenge under

any applicable law or regulation by any Person, and

(y) each holder of an Allowed Term Loan Claim shall

receive, in full and final satisfaction of such Allowed

Term Loan Claim, such holder’s Pro Rata share of 4%

of the New Equity Interests, subject to dilution by the

Warrant Equity and the MIP Equity.

Impaired

(Entitled to

vote)

0.0% or

0.7%


6

If Class 4 does not vote to accept the Plan, then no

holder of a Term Loan Claim shall receive any

distribution on account of such Term Loan Claim.

Class 5:

General

Unsecured

Claims

If Class 5 votes to accept the Plan, then on or as soon

as reasonably practicable after the later of the

Effective Date and the date on which a General

Unsecured Claim becomes an Allowed General

Unsecured Claim, each holder of an Allowed General

Unsecured Claim shall receive, in full and final

satisfaction of such Allowed General Unsecured

Claim, such holder’s Pro Rata share of the GUC Cash

Pool, which GUC Cash Pool shall be in the total

amount of $3 million, subject to the GUC Cash Pool

Reduction.

If Class 5 does not vote to accept the Plan, then on or

as soon as reasonably practicable after the later of the

Effective Date and the date on which a General

Unsecured Claim becomes an Allowed General

Unsecured Claim, each holder of an Allowed General

Unsecured Claim shall receive, in full and final

satisfaction of such Allowed General Unsecured

Claim, such holder’s Pro Rata share of the GUC Cash

Pool, which GUC Cash Pool shall be in the total

amount of $1.5 million, subject to the GUC Cash Pool

Reduction.

Impaired

(Entitled to

vote)

5.4% (if

Class 5

does not

vote to

accept the

Plan) or

10.7% (if

Class 5

votes to

accept the

Plan)

Class 6:

Intercompany

Claims

On or after the Effective Date, all Intercompany

Claims shall be paid, adjusted, continued, settled,

reinstated, discharged, or eliminated, in each case to

the extent determined to be appropriate by the Debtors

or Reorganized Debtors, as applicable, with the

consent of the RBL Agent.

Unimpaired

(Not entitled to

vote – presumed

to accept)

100%

Class 7:

Chisholm

Parent Equity

Interests

On the Effective Date, Chisholm Parent Equity

Interests shall be cancelled and extinguished and will

be of no further force and effect.

i. If (A) Class 4, Class 5, and Class 7 vote to

accept the Plan and (B) as of the Confirmation

Date, the Consenting Sponsors have not

terminated their obligations under the


Section 6(d)(xii) thereof, then on the

Effective Date, each holder of Chisholm

Parent Equity Interests shall receive, in full

and final satisfaction of such Chisholm Parent

Equity Interests, such holder’s Pro Rata share

of:

Impaired

(Entitled to

vote)

N/A


7

a. 1% of the New Equity Interests,

subject to dilution by the Warrant

Equity and the MIP Equity; and

b. Warrants for up to 11% of the New

Equity Interests, subject to dilution

by the MIP Equity.

ii. If (A) Class 4, Class 5, or Class 7 does not

vote to accept the Plan or (B) prior to the

Confirmation Date, the Consenting Sponsors

terminate their obligations under the


Section 6(d)(xii) thereof, then no holder of

Chisholm Parent Equity Interests shall

receive any distribution on account of such

Chisholm Parent Equity Interests.

Class 8:

Chisholm

Management

Equity Interests

On the Effective Date, Chisholm Management Equity

Interests shall be cancelled, released, and

extinguished, and holders of Chisholm Management

Equity Interests shall not receive or retain any

property under the Plan on account of such Chisholm

Management Equity Interests.

Impaired

(Not entitled to

vote – presumed

to accept)

N/A

Class 9:

Intercompany

Interests

On the Effective Date, all Intercompany Interests shall

be adjusted, continued, settled, reinstated, discharged,

or eliminated as determined by the Debtors or the

Reorganized Debtors (as applicable) with the consent

of the RBL Agent.

Unimpaired

(Not entitled to

vote – presumed

to accept)

N/A

The table below sets forth the percentage ownership figures of New Equity Interests upon

occurrence of different events on and after the Effective Date:

Pre-

Warrants

Exercise and

Pre-

Management

Incentive

Plan – Classes

4 and 7 Reject

Pre-Warrants

Exercise and

Pre-

Management

Incentive Plan –

Class 4 Accepts

and either Class

5 or Class 7

Rejects

Pre-

Warrants

Exercise and

Pre-

Management

Incentive

Plan – Classes

4, 5, and 7

Accept

Post-Warrants

Exercise and

Pre-

Management

Incentive Plan –

Classes 4, 5, and

7 Accept

Post-

Management

Incentive

Plan and

Warrants

Exercise –

Classes 4, 5,

and 7 Accept

Holders of

RBL Claims 100.00% 96.00% 95.00% 84.55% 80.32%

Holders of

Term Loan

Claims

0.00% 4.00% 4.00% 3.56% 3.38%

Holders of

Chisholm 0.00% 0.00% 1.00% 0.89% 0.85%


8

Pre-

Warrants

Exercise and

Pre-

Management

Incentive

Plan – Classes

4 and 7 Reject

Pre-Warrants

Exercise and

Pre-

Management

Incentive Plan –

Class 4 Accepts

and either Class

5 or Class 7

Rejects

Pre-

Warrants

Exercise and

Pre-

Management

Incentive

Plan – Classes

4, 5, and 7

Accept

Post-Warrants

Exercise and

Pre-

Management

Incentive Plan –

Classes 4, 5, and

7 Accept

Post-

Management

Incentive

Plan and

Warrants

Exercise –

Classes 4, 5,

and 7 Accept

Parent Equity

Interests

Warrant

Equity 0.00% 0.00% 0.00% 11.00% 10.45%

Management

Incentive Plan4 0.00% 0.00% 0.00% 0.00% 5.00%

Total 100.00% 100.00% 100.00% 100.00% 100.00%

C. Inquiries

If you have any questions regarding the packet of materials you have received, please reach out to

Omni Agent Solutions, Inc., the Debtors’ voting agent (the “Voting Agent”) at (866) 989-6146

(U.S. & Canada toll-free) or (818) 646-2298 (international) or by sending an electronic mail

message to:

[email protected]

Copies of this Disclosure Statement, which includes the Plan and the Plan Supplement (when filed)

are also available on the Voting Agent’s website, cases.omniagentsolutions.com/chisholm.

PLEASE DO NOT DIRECT INQUIRIES TO THE BANKRUPTCY COURT.

D. Confirmation

Pursuant to section 1128 of the Bankruptcy Code, the hearing to consider confirmation of the Plan

will be held on September 23, 2020 at 10 a.m. (Prevailing Eastern Time) before the Honorable

Brendan Linehan Shannon, United States Bankruptcy Judge, for the United States Bankruptcy

Court for the District of Delaware (the “Confirmation Hearing”).

Objections and responses to confirmation of the Plan, if any, must be served and filed so as to be

received on or before the confirmation objection deadline, September 8, 2020 at 4:00 p.m.

(Prevailing Eastern Time). The Confirmation Hearing may be adjourned from time to time by the

Bankruptcy Court or the Debtors without further notice, except for adjournments announced in

open court or as indicated in any notice of agenda of matters scheduled for hearing filed with the

Bankruptcy Court.

4 Assumes the full Management Incentive Plan of 5% of New Equity Interests is granted by the New Board.


9

II.

DEBTORS’ BUSINESS

A. Debtors’ Operations

Chisholm is an exploration and production company focused on acquiring, developing, and

producing oil and natural gas in the Anadarko Basin in Oklahoma in an area commonly referred

to as the Sooner Trend Anadarko Basin Canadian and Kingfisher County (“STACK”). Prior to

Chisholm’s formation, Robert Zinke—a successful oil and gas prospector with 43 years E&P

experience—worked with Apollo Global Management LLC (“Apollo”), by and through certain of

its affiliates, to identify oil and gas investment opportunities. Ultimately, Apollo and Mr. Zinke

identified approximately 53,000 acres located in the STACK play near Kingfisher County,

Oklahoma owned by Staghorn Petroleum, LLC (“Staghorn”). On March 22, 2017, Apollo and

Mr. Zinke formed Chisholm Oil and Gas, LLC (one of the Consenting Sponsors) and purchased

the Staghorn assets. Thereafter, Chisholm continually expanded its acreage through incremental

bolt-on and strategic acquisitions.

One such acquisition was Chisholm’s merger with Gastar Exploration LLC (“Gastar”), an

exploration and production company that held STACK assets and was owned by Ares

Management, LLC (“Ares”), by and through certain of its affiliates. In 2018, Gastar commenced

voluntary cases under chapter 11 of the Bankruptcy Code. Chisholm had been interested in

Gastar’s assets prior to its restructuring. After Gastar’s emergence from chapter 11, Chisholm and

Gastar engaged in discussions regarding a potential acquisition.

Beginning in March 2019 and continuing into summer 2019, Gastar and Chisholm negotiated a

transaction by which Gastar would contribute its assets to Chisholm and, in return, Ares would

receive a roughly 42% stake in the equity and 50% stake of control rights of a new post-transaction

Chisholm entity. On June 9, 2019, Gastar and Chisholm entered into the Contribution Agreement,

pursuant to which Chisholm and Gastar contributed substantially all of their equity interests in

their respective subsidiaries to the newly-formed entity, Chisholm Oil and Gas Holdings, LLC

(“Holdings”). On August 9, 2019, the parties entered into the Merger Agreement, which

transferred substantially all of Gastar’s assets to Chisholm Oil and Gas Operating, LLC

(“Operating”), which owns substantially all of the Debtors’ assets. In connection with the

aforementioned transaction, the Consenting Sponsors became the direct owners of Holdings.

The Debtors’ business activities are primarily focused on horizontal development of oil and gas

properties in the STACK. The Debtors’ revenue is generated principally by the production and

sale of oil, gas, and natural gas liquids from such properties. As of the Petition Date, Chisholm

holds approximately 152,000 of highly contiguous net acres5 of oil and gas interests concentrated

in Kingfisher County and employs 32 employees and, at any given time, between 10 and 25

independent contractors. Chisholm maintains operational control over approximately 90% of its

reserves and contracts with various third parties for extractions at the remaining 10% of its sites.

5 A “net acre” is a measure of an exploration and production company’s interests calculated by multiplying the total

acreage held by the company by the percentage interest the company holds in oil, gas, or other minerals on such

acreage.


10

As of the Petition Date, 80% of Chisholm’s horizontal wells are operating and 20% are still capped

as a result of the economic and liquidity conditions discussed below. During the pendency of these

Chapter 11 Cases, the Debtors anticipate they will continue to open wells until approximately 83%

of Chisholm’s horizontal wells are operational. Additionally, as of the Petition Date, Chisholm is

not engaged in any drilling activities and does not anticipate engaging in any drilling activities

during the pendency of these Chapter 11 Cases.

In addition to its oil and gas operations, Chisholm has salt-water disposal capabilities developed

through its wholly owned subsidiary Cottonmouth SWD, LLC (“Cottonmouth”). Salt water is a

common byproduct of oil and gas extraction that must be disposed of carefully in order to avoid

environmental contaminations. Absent salt-water disposal capabilities, oil and gas developers

must contract with third parties for such services. Cottonmouth’s salt-water disposal capabilities

are currently non-operational; however, Cottonmouth’s services are highly synergistic with

Chisholm’s extraction operations. In-house salt-water disposal reduces Chisholm’s overall costs

and reliance on third party infrastructure while potentially providing an additional income stream

resulting from services rendered to third parties.

Chisholm’s non-debtor affiliate, Chisholm Midstream, LLC, also holds a 35% equity stake in a

midstream oil and gas gathering and transportation business, Great Salt Plains Midstream

Holdings, LLC (“GSPM”). GSPM provides the Debtors with essential services to gather,

transport, and process the Debtors’ produced oil and gas to bring it to market for sale to the ultimate

purchaser. Additionally, Operating holds certain profit interests, but not capital interests, in

GSPM. GSPM is not a debtor in these Chapter 11 Cases.

B. Regulation of Debtors’ Business

The Debtors’ operations are subject to various local, state, and federal laws and regulations

including those relating to the operation of drilling units, environmental protection, and health and

safety, and restrictions on oil and natural gas exploration and development.

III.

CORPORATE AND CAPITAL STRUCTURE

A. Organizational Structure

Chisholm consists of entities organized in Delaware. An illustration of Chisholm’s organizational

structure, as of the Petition Date, is attached hereto as Exhibit C. Holdings, a non-Debtor in these

Chapter 11 Cases, is the parent company that indirectly owns each Debtor. Operating, which is

the primary operating entity, is owned by Chisholm Oil and Gas Operating, II and owns 100% of

the equity interests in Cottonmouth and Chisholm Oil and Gas Nominee, Inc. (“Nominee”).

Chisholm Oil and Gas Management II, LLC (“Management”) is the direct employer of all of the

Debtors’ employees and is wholly directly and indirectly owned by Chisholm Oil and Gas

Management, LLC.


11

B. Debtors’ Capital Structure

i. Equity Ownership

The Debtors are privately held companies. The Consenting Sponsors, which are affiliates of

Apollo and Ares, indirectly hold 100% of the Debtors’ equity through the Consenting Sponsors’

direct ownership of Holdings.

ii. Prepetition Indebtedness

As of the Petition Date, the Debtors have outstanding funded debt obligations in the aggregate

amount of approximately $517 million, which consists of (i) approximately $263 million in

secured borrowings under the Debtors’ RBL Credit Agreement (as defined below) and

(ii) approximately $254 million in secured borrowings under the Debtors’ Term Loan Agreement

(as defined below).

(a) RBL Credit Agreement

Operating, as borrower, and Operating II are parties to that certain Credit Agreement, dated as of

March 21, 2017, with the lenders (the “RBL Lenders”) party thereto from time to time, Citibank,

N.A., as administrative agent (the “RBL Agent”), swingline lender and issuing bank and

Wilmington Trust, National Association, as collateral agent (the “RBL Collateral Agent”) (as

amended, restated, amended and restated, supplemented, or otherwise modified from time to time,

the “RBL Credit Agreement”). Prior to the Petition Date, the RBL Credit Agreement provided

for an up to $263 million revolving credit facility. The RBL Credit Agreement has an original

maturity date of March 21, 2022 and the obligations under the RBL Credit Agreement bear interest

at specified margins over the base rate of 1.50% to 2.50% for ABR-based loans or at specified

margins over LIBOR of 2.50% to 3.50% for LIBOR-based loans, in each case, based on utilization

of the borrowing base of the RBL Credit Agreement. Operating II, Cottonmouth, and Nominee

(collectively, the “Guarantors”) guaranteed the obligations of Operating under the RBL Credit

Agreement by entering into that certain Guarantee Agreement, dated as of March 21, 2017, by and

among Operating, the Guarantors, and the RBL Collateral Agent.

The borrowing base under the RBL Credit Agreement is redetermined semi-annually, with the

applicable RBL Lenders and Operating II each having the right to, in each case no more than two

times in any fiscal year, request an unscheduled redetermination between any two consecutive

semi-annual redeterminations. The borrowing base takes into account the estimated value of the

Debtors’ oil and natural gas reserves, total indebtedness, and other relevant factors consistent with

customary oil and natural gas lending criteria. In April 2020, the borrowing base was redetermined

and was set at $120 million. Advances under the RBL Credit Agreement are secured by liens on

substantially all of the Debtors’ material properties and assets, including the Debtors’ oil and gas

properties. Specifically, obligations under the RBL Credit Agreement are secured pursuant to that

certain Collateral Agreement (First Lien), dated as of March 21, 2017 (as amended, restated,

amended and restated, supplemented, or otherwise modified from time to time, the “RBL

Collateral Agreement”) and certain mortgages and deeds of trust executed prior to the date hereof

(in each case, as amended, restated, amended and restated, supplemented, or otherwise modified

from time to time, collectively, the “First Lien RBL Mortgages”). Pursuant to the RBL Collateral


12

Agreement, each of Operating and the Guarantors granted a first-priority lien on substantially all

of their property, including all accounts, cash, chattel paper, commercial tort claims, deposit

accounts (other than payroll, withholding tax and other fiduciary deposit accounts), documents,

general intangibles (including, without limitation, rights in and under any swap agreements), goods

(including all inventory and equipment), pledged securities, and proceeds of any collateral, and

pursuant to the First Lien RBL Mortgages, Operating and the Guarantors granted a first-priority

lien on oil and gas properties constituting at least 99% of the value of the oil and gas properties

evaluated in the recently delivered reserve report dated as of December 31, 2019, in each case, in

favor of the RBL Collateral Agent, for the benefit of the RBL Lenders and certain other secured

parties.

As of the Petition Date, the aggregate principal amount outstanding under the RBL Credit

Agreement is approximately $263 million, including undrawn letters of credit, plus any applicable

interest, fees, and other amounts.

(b) Term Loan Agreement

Operating, as borrower, and Operating II are parties to that certain Term Loan Agreement, dated

as of March 21, 2017, with the lenders party thereto from time to time and Wilmington Trust,

National Association, as administrative agent and collateral agent (the “Term Loan Agent”) (as

amended, restated, amended and restated, supplemented, or otherwise modified from time to time,

the “Term Loan Agreement”). Pursuant to the Term Loan Agreement, the Term Loan Lenders

provided Operating term loans in an aggregate principal amount of $250 million. The Term Loan

Agreement matures on March 21, 2024 and the obligations under the Term Loan Agreement bear

interest at (i) in the case of loans under the Term Loan Agreement where interest is payable in

cash, 8.00% over LIBOR and (ii) in the case of loans under the Term Loan Agreement where up

to 3.0% of interest is payable in kind, 8.50% over LIBOR. The Term Loan principal has increased

from $250 million to approximately $254 million, which includes payment in kind interest that

has been added to the principal as a result of the Debtors’ exercise of a payable in kind election

under the Term Loan Agreement.

The Guarantors guaranteed the obligations of Operating under the Term Loan Agreement by

entering into that certain Guarantee Agreement (Second Lien), dated as of March 21, 2017, by and

among Operating, the Guarantors, and the Term Loan Agent. The Borrower’s and Guarantors’

obligations under the Term Loan Agreement are secured pursuant to that certain Collateral

Agreement (Second Lien), dated as of March 21, 2017 (as amended, restated, amended and

restated, supplemented, or otherwise modified from time to time, the “Term Loan Collateral

Agreement”) and certain mortgages and deeds of trust executed prior to the date hereof (in each

case, as amended, restated, amended and restated, supplemented, or otherwise modified from time

to time, collectively, the “Term Loan Mortgages”). Pursuant to the Term Loan Collateral

Agreement, each of Operating and the Guarantors granted a second-priority lien on substantially

all of their property, including all accounts, cash, chattel paper, commercial tort claims, deposit

accounts (other than payroll, withholding tax and other fiduciary deposit accounts), documents,

general intangibles (including, without limitation, rights in and under any swap agreements), goods

(including all inventory and equipment), pledged securities, and proceeds of any collateral, and

pursuant to the Term Loan Mortgages, Operating and the Guarantors granted a second-priority lien

on oil and gas properties constituting at least 99% of the value of the oil and gas properties


13

evaluated in the most recently delivered reserve report, in each case, in favor of the Term Loan

Agent and, for the benefit of the Term Loan Lenders and certain other secured parties.

As of the Petition Date, the aggregate principal amount outstanding under the Term Loan

Agreement is approximately $254 million, plus any applicable interest, fees, and other amounts.

Pursuant to the terms of that certain Intercreditor Agreement, dated as of March 21, 2017, between

the RBL Agent, the RBL Collateral Agent, and the Term Loan Agent, the security interests in, and

liens upon, the Prepetition Collateral that secure the Term Loan Agreement and the related

guarantees are contractually subordinated to security interests in, and liens upon, the Prepetition

Collateral that secure the RBL Credit Agreement and certain other permitted indebtedness.

C. Governance

Each Debtor, with the exception of Nominee, is a member managed limited liability company.

The Debtors are ultimately controlled by the board of managers of Holdings. Additionally, the

Debtors’ senior management team is comprised of the following individuals:

Name Position

Michael Rigg ........................... Co-President and Chief Financial Officer

Andrew Chodur ....................... Co-President and Chief Operating Officer

Darrell Fuller ........................... Vice President of Corporate Administration

IV.

KEY EVENTS LEADING TO

COMMENCEMENT OF CHAPTER 11 CASES

The events leading to the Debtors’ Chapter 11 Cases started with certain issues related to the nature

of the Debtors’ assets in the STACK play. Prior to the Debtors’ acquisition of oil and gas assets

in this area, the initial wells drilled in such region were highly productive, which caused a number

of E&P companies (including eventually Chisholm) to begin developing in the region and drilling

their own wells. The region was viewed as an extremely attractive shale play comparable to the

Permian Basin in Western Texas and Southeastern New Mexico. The financial models, asset

valuations, extraction projections, and, ultimately, capital structures of E&P companies in the

region, including Chisholm, were developed based on these initially productive wells and

correspondingly inflated expectations.

These projections, however, ultimately proved to be wrong. Subsequent operations across the

STACK revealed several factors that were unaccounted for in initial assessments of the region.

Accordingly, most, if not all, oil and gas producers in the STACK play did not live up to

projections and many experienced some level of financial distress or underperformance, as

evidenced by recent chapter 11 filings of these operators, including Gastar, White Star Petroleum,

LLC, Alta Mesa Resources, Inc., and Chaparral Energy, Inc.

After repeatedly missing engineers’ projections, Chisholm undertook a careful examination of its

operational model and leadership team to determine if it was strategically positioned to optimize

its STACK assets. As a result, Chisholm brought in a new engineering team and engaged in a


14

bottoms-up re-write of the Debtors’ financial projections and drilling plan. The wells drilled under

the oversight of the new engineering team were developed at lower cost and provided greater and

more efficient oil yields than the Debtors’ prior wells. Chisholm expects to see continued

improvements as it continues to refine its geological modeling and targeting capabilities.

Due to the Debtors’ liquidity issues, however, they have not yet been able to implement their new

drilling plan and for the past several months have focused their efforts on developing a strategy to

improve liquidity and restructure certain burdensome obligations. In late 2019, the Debtors sought

to increase the debt capacity under the RBL Credit Agreement from $250 million to $300 million,

but the Debtors’ efforts were largely unsuccessful with the Debtors receiving an increase in

capacity of approximately $13 million. As a result, the Debtors had insufficient capital to continue

developing assets and were forced to cease drilling new wells, relying instead on existing wells for

revenue.

In early 2020, Chisholm retained Weil, Gotshal & Manges LLP, Evercore Group L.L.C., Alvarez

& Marsal North America, LLC, and Young Conaway Stargatt & Taylor, LLP (collectively, the

“Advisors”) to help analyze the best way to recapitalize, and started discussions with major

stakeholders. Shortly thereafter, the industry experienced a sharp reduction of demand for oil and

a corresponding reduction in commodity prices. Then, with the onset and spread of the COVID-

19 pandemic, oil and commodity prices continued to drop. In early March 2020, a disagreement

between Russia and Saudi Arabia led to a price war further reducing oil prices. Bilateral talks

between Russia and Saudi Arabia eventually led to an agreement between the countries and

reduction in production in an effort to stabilize oil prices. However, decreased demand and lack

of storage facilities led to a further reduction in price and negative oil prices for the first time in

history on April 20, 2020.

The unprecedented reduction in oil prices further disrupted Chisholm’s recapitalization efforts.

Chisholm was forced to suspend its extraction operations and conduct multiple reductions-in-force

to preserve liquidity. Discussions among Chisholm and the Advisors quickly pivoted towards

more significant restructuring strategies and discussions with the relevant stakeholders ensued.

Shortly thereafter, Chisholm determined it did not have sufficient liquidity to make its next interest

payment due under the Term Loan Agreement and therefore, on or about March 27, 2020,

Chisholm decided not to make such interest payment and elected to go into the five-day grace

period under the Term Loan Agreement. This subsequently gave rise to events of default under

both the Term Loan Agreement and RBL Credit Agreement. To prevent the exercise of remedies

against Chisholm and its assets as a result of the default and to provide the parties with sufficient

runway to negotiate and document the Restructuring Transaction, with the assistance of the

Advisors, Chisholm entered into that certain Forbearance Agreement, dated April 7, 2020 (as

subsequently amended or otherwise modified from time to time, the “Forbearance Agreement”)

with the RBL Agent, RBL Lenders, and the Hedge Banks party thereto.

Pursuant to the Forbearance Agreement, the RBL Lenders and the Hedge Banks agreed to forbear

from the exercise of any rights and remedies available to them against the Debtors with respect to

certain events of default specified in the Forbearance Agreement, including with respect to the

missed interest payment under the Term Loan Agreement, failure to deliver a compliant audit with

respect to the fiscal year ended December 31, 2019, and failure to deliver a budget as required by

the RBL Credit Agreement. As discussions progressed, the Forbearance Agreement was


15

periodically amended to, among other things, provide (i) additional time for the parties to reach an

agreement with respect to the Restructuring Transaction and (ii) for the repayment of the

borrowing base deficiency in six equal monthly installments pursuant to the terms of the RBL

Credit Agreement. The Forbearance Agreement expired on June 14, 2020 and was replaced by a

forbearance under the terms of the Restructuring Support Agreement. The Forbearance Agreement

and, subsequently, the Restructuring Support Agreement, also permitted the Debtors to

consensually monetize their oil hedging contracts and use such proceeds to fund ongoing operating

expenses and these Chapter 11 Cases, rather than pay down RBL Claims.

V.

OVERVIEW OF CHAPTER 11 CASES

On the Petition Date, the Debtors filed various “first-day” motions (collectively, the “First Day

Pleadings”) seeking certain immediate relief from the Bankruptcy Court authorizing the Debtors

to continue to operate in chapter 11 and avoid irreparable harm due to the commencement of the

Chapter 11 Cases. A brief description of the First Day Pleadings is set forth below. The

Bankruptcy Court granted substantially all of the relief requested in the First Day Pleadings on

both an interim and a final basis and entered various orders authorizing the Debtors to continue

operations in the ordinary course of business. In addition to the First Day Pleadings, the Debtors

have also filed other motions in these Chapter 11 Cases, which are described in more detail below.

A. First Day Pleadings

i. Joint Administration

On the Petition Date, the Debtors filed a motion requesting joint administration of their Chapter

11 Cases for procedural purposes only pursuant to Bankruptcy Rule 1015(b) of the Federal Rules

of Bankruptcy Procedure, and requesting that the Bankruptcy Court maintain one file and one

docket for all of the Chapter 11 Cases under the lead case. The Bankruptcy Court granted this

relief.

ii. Cash Management System

The Debtors maintain a centralized cash management system designed to receive, monitor,

aggregate, and distribute cash among the various Debtors. Following the Petition Date, the

Debtors obtained interim and final authority from the Bankruptcy Court to continue using their

existing cash management system, bank accounts, and check stock in the ordinary course of

business to avoid disruption in the Debtors’ operations and facilitate the efficient administration

of the Chapter 11 Cases. Additionally, the Debtors received authority to engage in ordinary course

business transactions related to certain gathering, transportation, and other midstream service

obligations incurred by the Debtors in an amount not to exceed $750,000 per month, absent further

relief from the Bankruptcy Court.

iii. Cash Collateral

On the Petition Date, the Debtors filed a motion to use cash collateral during these Chapter 11

Cases (the “Cash Collateral”) and provide adequate protection to the RBL Lenders, and solely to

the extent of their interest in the Prepetition Collateral (as defined in the Cash Collateral Order), if


16

any, to the Term Loan Lenders in connection therewith, on consensual terms agreed to with the

RBL Lenders and the Term Loan Lenders. Following the Petition Date, the Bankruptcy Court

entered orders on an interim and a final basis authorizing the Debtors to continue using Cash

Collateral.

iv. Taxes

Pursuant to the Plan, the Debtors intend to pay certain taxes and fees in full. To minimize any

disruption to the Debtors’ operations and ensure the efficient administration of the Chapter 11

Cases, following the Petition Date, the Debtors obtained interim and final authority from the

Bankruptcy Court to pay certain taxes, fees, and similar charges and assessments, whether arising

pre- or postpetition, to the appropriate taxing, regulatory, or other governmental authority in the

ordinary course of the Debtors’ businesses.

v. Insurance

In connection with the operation of the Debtors’ business, the Debtors maintain various insurance

policies designed to protect their property, assets, key personnel, and business operations. The

types of insurance policies maintained by the Debtors include a workers’ compensation program

and other liability and property insurance programs.

The maintenance of certain insurance coverage is essential to the Debtors’ operations and is

required by laws, various regulations, and contracts. The Debtors believe that the satisfaction of

their insurance obligations, whether arising pre- or postpetition, is necessary to maintain the

uninterrupted operation of the Debtors’ business. Accordingly, following the Petition Date, the

Debtors obtained interim and final authority from the Bankruptcy Court to continue to honor their

insurance obligations in the ordinary course.

vi. Employee Wages and Benefits

The Debtors’ business relies upon various employees and independent contractors. Generally,

members of the Debtors’ workforce rely upon their compensation to meet their daily living

expenses. To minimize the uncertainty and potential distractions associated with the Chapter 11

Cases and the potential disruption of the Debtors’ operations resulting therefrom, the Debtors

obtained interim and final authority from the Bankruptcy Court to continue to honor their

obligations to their workforce in the ordinary course of business, including (i) the payment and

maintenance of various employee compensation obligations, such as wages, taxes, certain

withholdings, and other programs, (ii) the payment and maintenance of employee benefit

programs, such as employee leave, healthcare, and life insurance, and (iii) the payment of pre-

and postpetition contractor obligations to independent contractors.

vii. Joint Interest Billings and Interest Owners

The Debtors are parties to numerous joint operating agreements and other contracts governing

operations on their oil and gas leases. In addition, the Debtors are obligated, pursuant to their oil

and gas leases, to remit revenue to the lessors who own the mineral rights leased by the Debtors,

which is attributable to their share of production from the producing wells located on their

respective leases, free of expenses of production. Further, certain assignments of the oil and gas


17

leases created an interest in a share of the production from the producing wells located on the

respective leases, free of expenses of production, that burden the Debtors’ working interest in the

leases. In order to preserve the status quo, avoid the potential incurrence of unnecessary statutory

liens, and to eliminate the risk of pervasive litigation over the existence of statutory liens, lien

priorities, and the amounts of claims of the various interest owners, the Debtors received interim

and final authority to pay or honor (i) certain amounts owed to holders of royalty, working and

other interests as required by the Debtors’ various leases and related agreements, (ii) amounts

owed to operators for unpaid joint interest billings, and (iii) other obligations incurred in

connection with the Debtors’ ongoing business operations and the operation of their oil and gas

properties in the ordinary course of business.

viii. Utilities

In the ordinary course of business, the Debtors incur certain expenses related to the essential utility

services such as water, gas, electric, and other utility services. The Debtors obtained interim and

final approval of procedures to provide such utility providers with adequate assurance that the

Debtors will continue to honor their obligations in the ordinary course.

B. Other Motions

i. Lease Rejection Motion

On June 18, 2020, the Debtors filed a motion (the “Lease Rejection Motion”) to reject an

unexpired lease of nonresidential real property that the Debtors no longer use due to changes in

operational needs and to abandon any property remaining upon the premises that the Debtors

determine is too difficult to remove or expensive to store relative to such property’s economic

benefit to the Debtors. On July 8, 2020, the Bankruptcy Court entered an order approving the

Lease Rejection Motion and authorizing the Debtors to (i) reject the lease as of June 18, 2020 and

(ii) abandon any property remaining upon the leased premises.

ii. Bar Date Motion

On June 26, 2020, the Debtors filed a motion to establish bar dates for holders of Claims to file

such Claims against the Debtors and to establish the M&M Claims Resolution Protocol [Docket

No. 79] (the “Bar Date Motion”).

On July 14, 2020, the Bankruptcy Court entered an order approving the Bar Date Motion (the “Bar

Date Order”) establishing the following Bar Dates: (i) August 25, 2020 at 5:00 p.m. (Prevailing

Eastern Time) as the deadline for each person (as defined in section 101(41) of the Bankruptcy

Code) and entity (as defined in section 101(15) of the Bankruptcy Code, other than a governmental

unit) to file a proof of claim in the Chapter 11 Cases (the “General Bar Date”); (ii) December 14,

2020 at 5:00 p.m. (Prevailing Eastern Time) as the deadline for all governmental units (as defined

in section 101(27) of the Bankruptcy Code) to file a proof of claim in the chapter 11 cases

(the “Governmental Bar Date”); (iii) the later of (a) the General Bar Date or the Governmental

Bar Date, as applicable, or (b) 5:00 p.m. (Prevailing Eastern Time) on the date that is 30 days from

the date on which the Debtors provide notice of a previously unscheduled Claim, an amendment

to the Debtors’ Schedules (as defined in the Bar Date Motion), or a supplement to the Schedules;

and (iv) the later of (a) the General Bar Date or the Governmental Bar Date, as applicable, or


18

(b) 5:00 p.m. (Prevailing Eastern Time) on the date that is 30 days following service of an order

approving rejection of any executory contract or unexpired lease of the Debtors as the deadline by

which claimants asserting claims resulting from the Debtors’ rejection of an executory contract or

unexpired lease must file proofs of claim for damages arising from such rejection.

The Bar Date Order also established the following M&M Claims Resolution Protocol:

(a) The M&M Claims Resolution Protocol shall apply to all (i) Prepetition

M&M Liens filed against the Debtors under applicable non-bankruptcy law and (ii) proofs of claim

filed against the Debtors on account of any Prepetition M&M Liens in accordance with the Bar

Date Order (collectively, the “M&M Lien Claims”). Each holder of an M&M Lien Claim is

referred to as an “M&M Lien Claimant”;

(b) The Debtors, the RBL Agent, and the Creditors’ Committee may dispute

the amount, priority, and/or validity of any M&M Lien Claim subject to the M&M Claims

Resolution Protocol;

(c) The Debtors will work expeditiously to resolve the M&M Lien Claims and

will endeavor to do so in the order in which M&M Lien Claims have been asserted or filed, while

also taking into account the amount of such asserted or filed claims and prioritizing accordingly;

(d) Following entry of the Bar Date Order, the Debtors shall serve each M&M

Lien Claimant with a copy of the Order approving the M&M Claims Resolution Protocol and the

Bar Date Notice, which describes the M&M Claims Resolution Protocol;

(e) Following entry of the Bar Date Order, the Debtors shall begin the process

of implementing the M&M Claims Resolution Protocol by serving each M&M Lien Claimant that

has filed an M&M Lien Claim with a notice (the “Dispute Notice”) containing a proposed allowed

amount and priority of such M&M Lien Claim (the “Proposed Resolution”). The Debtors shall

serve each Dispute Notice as soon as reasonably practicable after each M&M Lien Claim is filed

and after the Debtors have had a reasonable opportunity to review such claim and develop a

Proposed Resolution. The Proposed Resolutions shall be determined in consultation with the RBL

Agent. In addition, any Proposed Resolution that proposes granting an M&M Lien Claimant an

Allowed M&M Lien Claim (i) in the amount of $100,000 or more, and (ii) with priority over the

liens granted pursuant to the RBL Credit Agreement and all documents entered into in connection

therewith, shall require (y) the prior consent of the RBL Agent, which consent shall not be

unreasonably withheld and (z) prior notice to the Creditors’ Committee, which will have 3 business

days following receipt of such notice to object or seek relief from the Bankruptcy Court with

respect to the Proposed Resolution;

(f) Within seven days after service of the Dispute Notice, the M&M Lien

Claimant shall serve the Debtors and the RBL Agent with a response that either (i) accepts the

Proposed Resolution or (ii) rejects the Proposed Resolution and proposes a counteroffer (the

“Response”). The Response shall be served on: (i) the Debtors, c/o Chisholm Oil and Gas

Operating, LLC, 1 West Third Street, Suite 1700, Tulsa, OK 74103 and (ii) via email to counsel

to the Debtors, (A) Weil, Gotshal & Manges LLP, Attn: Matthew Barr, Esq.

([email protected]), Kelly DiBlasi, Esq. ([email protected]), and Lauren Tauro,


19

Esq. ([email protected]) and (B) Young Conaway Stargatt & Taylor, LLP, Attn: M. Blake

Cleary, Esq. ([email protected]) and Jaime L. Chapman, Esq. ([email protected]); and (iii)

via email to counsel to the RBL Agent, (A) Linklaters LLP, Attn: Margot B. Schonholtz, Esq.

([email protected]) and Penelope J. Jensen, Esq.

([email protected]) and (B) Morris, Nichols, Arsht & Tunnell LLP, Attn: Derek C.

Abbott, Esq. ([email protected]); and (iv) via email to counsel to the Creditors’ Committee (A)

Paul Hastings LLP, Attn: James T. Grogan ([email protected]) and Irena Goldstein

([email protected]) and (B) Blank Rome LLP, Attn: Regina S. Kelbon

([email protected]) and Stanley B. Tarr ([email protected]).

(g) If an M&M Lien Claimant accepts the Proposed Resolution or the Debtors,

after consultation with the RBL Agent, accept the counterproposal contained in the Response, the

parties shall work in good faith to memorialize and file a stipulation with the Bankruptcy Court

under certification of counsel. To the extent a Response proposes granting an M&M Lien Claimant

an Allowed M&M Lien Claim (i) in the amount of $100,000 or more, and (ii) with priority over

the liens granted pursuant to the RBL Credit Agreement and all documents entered into in

connection therewith, the Debtors shall not accept such counterproposal unless the RBL Agent

consents, which consent shall not be unreasonably withheld, and the Debtors have provided notice

to the Creditors’ Committee, which will have 3 business days following receipt of such notice to

object or seek relief from the Bankruptcy Court with respect to such counterproposal;

(h) If an M&M Lien Claimant does not respond to a Dispute Notice or the

Debtors reject the counterproposal contained in the Response, the Debtors and the RBL Agent may

file (i) an objection seeking to reduce, reclassify, and/or expunge the applicable M&M Lien Claim

or (ii) a motion on shortened notice seeking authority to estimate the M&M Lien Claim, and all

applicable Bankruptcy Rules and Local Rules shall apply, including Bankruptcy Rules 3007 and

9019.

(i) For the avoidance of doubt and notwithstanding anything in the Bar Date

Order to the contrary, the M&M Claims Resolution Protocol does not apply to any payment to be

made, or that has been made, by the Debtors pursuant the interim order [Docket No. 61] and any

final order entered by the Bankruptcy Court authorizing the Debtors to pay or honor amounts owed

to interest owners and for joint interest billings and other operating expenses, which are subject to

the Lien Cap.

C. Appointment of Creditors’ Committee

On July 1, 2020 the U.S. Trustee appointed the Creditors’ Committee pursuant to section 1102 of

the Bankruptcy Code to represent the interests of unsecured creditors in these Chapter 11 Cases.

The members of the Creditors’ Committee are (i) Alta Mesa Services, LP and (ii) Reliance Oilfield

Services, LLC. The Creditors’ Committee retained Paul Hastings LLP and Blank Rome LLP as

counsel and Conway Mackenzie as financial advisor.


20

D. Schedules and Statements

The Debtors field their schedules of assets and liabilities and statements of financial affairs on July

13, 2020. The Debtors’ meeting of creditors pursuant to section 341(a) of the Bankruptcy Code

was held on July 17, 2020 at 2:00 p.m. (Prevailing Eastern Time).

E. Plan Settlement

The Debtors filed the Initial Plan on June 30, 2020 with the support of the Consenting Creditors

and Consenting Sponsors. The Creditors’ Committee and the Term Loan Lenders raised a number

of concerns and potential objections with respect to the Initial Plan. Thereafter, the Debtors, the

Consenting Creditors, and the Consenting Sponsors engaged with the Creditors’ Committee and

the Term Loan Lenders to discuss these and other issues to work toward reaching an agreement on

a consensual chapter 11 plan supported by such parties. Pursuant to these discussions, the Debtors,

the Consenting Creditors, the Consenting Sponsors, the Creditors’ Committee, and the Term Loan

Lenders reached a settlement with respect to the Restructuring Transaction, the terms of which are

incorporated in the Plan filed contemporaneously herewith. Pursuant to the settlement, parties

have agreed to the following, among other things:

i. the holders of Allowed RBL Claims will receive their Pro Rata share of

95% of the New Equity Interests issued pursuant to the Plan, and either (a) an additional

1% of New Equity Interests if Class 4 (Term Loan Claims) votes to accept the Plan but

either Class 5 (General Unsecured Claims) or Class 7 (Chisholm Parent Equity Interests)

does not vote to accept the Plan or (b) an additional 5% of New Equity Interests if Class 4

(Term Loan Claims) does not vote to accept the Plan;

ii. if Class 4 (Term Loan Claims) votes to accept the Plan, holders of Allowed

Term Loan Claims will receive their Pro Rata share of 4% of the New Equity Interests

issued pursuant to the Plan;

iii. holders of Allowed General Unsecured Claims will receive their Pro Rata

share of $1.5 million in Cash (the “GUC Cash Pool”), subject to reduction dollar-for-

dollar by the amount of any Allowed Fee Claims of Professional Persons retained by the

Creditors’ Committee from and after July 27, 2020 greater than $150,000 in the aggregate

(the “GUC Cash Pool Reduction”); provided, however, that if Class 5 (General Unsecured

Claims) votes to accept the Plan, then the GUC Cash Pool shall be $3 million in Cash,

subject to the GUC Cash Pool Reduction);

iv. if (i) Class 4 (Term Loan Claims), Class 5 (General Unsecured Claims), and

Class 7 (Chisholm Parent Equity Interests) each vote to accept the Plan and (ii) as of the

Confirmation Date, the Consenting Sponsors have not terminated their obligations under

the Restructuring Support Agreement pursuant to Section 6(d)(xii) thereof, then holders of

Allowed Chisholm Parent Equity Interests will receive their pro rata share of (a) 1% of the

total New Equity Interests issued pursuant to the Plan and (b) Warrants for up to 11% of

the total New Equity Interests to be issued pursuant to the Plan;

v. prior to the Effective Date, a claims administrator reasonable acceptable to

the Debtors and the Creditors’ Committee shall be appointed to handle the General


21

Unsecured Claims resolution process (the “GUC Claims Administrator”). Such

appointment shall not become effective until the date that is 30 days following the Effective

Date if the amount of filed or scheduled (other than as contingent, unliquidated or disputed)

General Unsecured Claims exceeds $30 million in the aggregate;

vi. the Reorganized Debtors will reimburse the GUC Claims Administrator up

to $75,000 for its reasonable fees and out-of-pocket expenses incurred in connection with

the claims resolution;

vii. the Creditors’ Committee and each of its members in their capacity as such

will be Released Parties and Exculpated Fiduciaries under the Plan.

The Debtors, the Consenting Creditors, the Consenting Sponsors, the Creditors’ Committee, and

the Term Loan Lenders believe the settlement is fair and reasonable. The terms of the settlement

were negotiated by sophisticated parties and their advisors at arm’s-length, and the agreement

allows the Debtors to achieve their goal of completing an efficient restructuring process with the

Debtors emerging from chapter 11 with a de-levered balance sheet, enhanced liquidity, and the

support necessary to operate a successful business.

VI.

SUMMARY OF PLAN

A. General

This section of this Disclosure Statement summarizes the Plan, a copy of which is attached hereto

as Exhibit A. This summary is qualified in its entirety by reference to the Plan. YOU SHOULD

READ THE PLAN IN ITS ENTIRETY BEFORE VOTING TO ACCEPT OR REJECT

THE PLAN.

In general, a chapter 11 plan (i) divides claims and equity interests into separate classes,

(ii) specifies the consideration that each class is to receive under the plan, and (iii) contains other

provisions necessary to implement the plan. Under the Bankruptcy Code, “claims” and “equity

interests,” rather than “creditors” and “shareholders,” are classified because creditors and

shareholders may hold claims and equity interests in more than one class. Under section 1124 of

the Bankruptcy Code, a class of claims is “impaired” under a plan unless the plan (i) leaves

unaltered the legal, equitable, and contractual rights of each holder of a claim in such class or

(ii) provides, among other things, for the cure of certain existing defaults and reinstatement of the

maturity of claims in such class. Classes 3, 4, 5, 7 and 8 are impaired under the Plan. Ballots are

being furnished herewith to all holders of Claims and Interests in Classes 3, 4, 5, and 7 that are

entitled to vote to accept or reject the Plan (the “Eligible Holders”). Class 8 is presumed to accept

the Plan as a proponent of the Plan and, therefore, Interests in such Class will not vote on the Plan.


22

B. Administrative Expense Claims, Adequate Protection Claims, Fee Claims, and

Priority Tax Claims

i. Treatment of Adequate Protection Claims

(a) In lieu of the Cash payment to which the RBL Lenders otherwise would be

entitled to receive, the RBL Agent, as the holder of an Allowed Adequate Protection Claim on

behalf of the RBL Lenders, has agreed that the New Equity Interests and the FLSO Term Loan

received by the RBL Lenders on account of their Allowed RBL Claims, as set forth in Section 4.3

of the Plan, shall also be in full and final satisfaction of such Allowed Adequate Protection Claim.

(b) In lieu of the Cash payment, if any, to which the Term Loan Lenders

otherwise would be entitled to receive for any Allowed Adequate Protection Claim, the Term Loan

Agent, on behalf of the Term Loan Lenders, has agreed that the distribution to be received by the

Term Loan Lenders as set forth in Section 4.4 of the Plan, shall also be in full and final satisfaction

of such Allowed Adequate Protection Claim, if any.

ii. Treatment of Administrative Expense Claims

(a) Except to the extent that a holder of an Allowed Administrative Expense

Claim agrees to a different treatment, each holder of an Allowed Administrative Expense Claim

(other than Restructuring Expenses or Fee Claims) shall receive, in full and final satisfaction of

such Claim, on or as soon as reasonably practicable after the later of (i) the Effective Date and

(ii) the first Business Day that is thirty (30) calendar days after the date such Administrative

Expense Claim becomes an Allowed Administrative Expense Claim, Cash in an amount equal to

such Allowed Administrative Expense Claim; provided, however, that Allowed Administrative

Expense Claims representing liabilities incurred in the ordinary course of business by the Debtors

shall be paid by the Debtors or the Reorganized Debtors, as applicable, in the ordinary course of

business, consistent with past practice and in accordance with the terms and subject to the

conditions of any orders or agreements governing, instruments evidencing, or other documents

establishing, such liabilities.

(b) Except as otherwise provided in Section 2.2 of the Plan, and except with

respect to Fee Claims and Administrative Expense Claims that arose in the ordinary course of

business during the Chapter 11 Cases, requests for payment of Allowed Administrative Expense

Claims must be filed pursuant to the procedures specified in the Confirmation Order and any notice

related thereto no later than the Administrative Expense Claims Bar Date.

iii. Treatment of Fee Claims

(a) All Professional Persons seeking awards by the Bankruptcy Court of

compensation for services rendered or reimbursement of expenses incurred through and including

the Confirmation Date under sections 327, 328, 330, 331, 503(b)(2), 503(b)(3), 503(b)(4),

503(b)(5), or 1103 of the Bankruptcy Code shall (i) file, on or before the date that is forty-five (45)

days after the Confirmation Date, their respective applications for final allowances of

compensation for services rendered and reimbursement of expenses incurred and (ii) be paid in

full, in Cash, in such amounts as are Allowed by the Bankruptcy Court or authorized to be paid in

accordance with the order(s) relating to or allowing any such Fee Claim. The Debtors are


23

authorized to pay compensation for professional services rendered and reimbursement of expenses

incurred after the Confirmation Date in the ordinary course and without the need for Bankruptcy

Court approval.

(b) Any Allowed Fee Claims of Professional Persons retained by the Creditors’

Committee incurred on or after July 27, 2020 through the Effective Date that exceeds $150,000 in

the aggregate shall be paid from the GUC Cash Pool.

(c) On the Effective Date, the Debtors shall establish and fund the Fee Escrow

Account. The Debtors, after consultation with the RBL Agent and the Creditors’ Committee, shall

fund the Fee Escrow Account with Cash equal to the Professional Persons’ good faith estimates of

the Fee Claims. Funds held in the Fee Escrow Account shall not be considered property of the

Debtors’ Estates or property of the Reorganized Debtors, but shall revert to the Reorganized

Debtors only after all Allowed Fee Claims have been irrevocably paid in full. The Fee Escrow

Account shall be held in trust for Professional Persons and for no other parties until all Allowed

Fee Claims have been paid in full. Fee Claims shall be paid in full, in Cash, in such amounts as

are Allowed by the Bankruptcy Court (i) on or as soon as reasonably practicable after the date

upon which a Final Order relating to any such Allowed Fee Claim is entered, (ii) on such other

terms as may be mutually agreed upon between the holder of such an Allowed Fee Claim and the

Debtors or the Reorganized Debtors, as applicable, or (iii) in accordance with the Interim

Compensation Procedures Order. The Reorganized Debtors’ obligations with respect to Fee

Claims shall not be limited by nor deemed limited to the balance of funds held in the Fee Escrow

Account. To the extent that funds held in the Fee Escrow Account are insufficient to satisfy the

amount of Allowed Fee Claims owing to the Professional Persons, such Professional Persons shall

have an Allowed Administrative Expense Claim for any such deficiency, which shall be satisfied

in accordance with Section 2.2 of the Plan. When such Allowed Fee Claims have been paid in

full, any remaining amount in the Fee Escrow Account should be promptly returned to the

Reorganized Debtors without any further action or order of the Bankruptcy Court. No Liens,

claims, or interests shall encumber the Professional Fee Escrow in any way, other than customary

liens in favor of the depository bank at which the Fee Escrow Account is maintained.

(d) Any objections to Fee Claims shall be served and filed (i) no later than

twenty-one (21) days after the filing of the final applications for compensation or reimbursement

or (ii) such later date ordered by the Bankruptcy Court.

iv. Treatment of Priority Tax Claims

Except to the extent that a holder of an Allowed Priority Tax Claim agrees to a different treatment,

each holder of an Allowed Priority Tax Claim shall receive, in full and final satisfaction of such

Allowed Priority Tax Claim, at the sole option of the Debtors or the Reorganized Debtors, as

applicable (i) Cash in an amount equal to such Allowed Priority Tax Claim on or as soon as

reasonably practicable after the later of (a) the Effective Date, (b) the first Business Day that is

thirty (30) calendar days after the date such Priority Tax Claim becomes an Allowed Priority Tax

Claim, and (c) the date such Allowed Priority Tax Claim is due and payable in the ordinary course,

or (ii) such other treatment consistent with the provisions of section 1129(a)(9) of the Bankruptcy

Code.


24

v. Restructuring Expenses

The Restructuring Expenses incurred, or estimated to be incurred, up to and including the Effective

Date, shall be paid in full in Cash on the Effective Date or as soon as reasonably practicable

thereafter (to the extent not previously paid during the course of the Chapter 11 Cases) in

accordance with, and subject to, the terms of the Restructuring Support Agreement, without any

requirement to file a fee application with the Bankruptcy Court and without any requirement for

Bankruptcy Court review or approval. All Restructuring Expenses to be paid on the Effective Date

shall be estimated prior to and as of the Effective Date and such estimates shall be delivered to the

Debtors at least two (2) Business Days before the anticipated Effective Date. Notwithstanding the

foregoing, such estimates shall not be considered an admission or limitation with respect to such

Restructuring Expenses. On the Effective Date or as soon as practicable thereafter, final invoices

for all Restructuring Expenses incurred prior to and as of the Effective Date shall be submitted to

the Reorganized Debtors. In addition, the Debtors and the Reorganized Debtors (as applicable)

shall continue to pay when due pre- and post-Effective Date Restructuring Expenses of the RBL

Agent and the RBL Collateral Agent related to implementation, consummation, and defense of the

Plan, including in connection with the claims allowance process, whether incurred before, on or

after the Effective Date, consistent with the terms and conditions of the Restructuring Support

Agreement and the Cash Collateral Order. With respect to Restructuring Expenses arising prior

to the Effective Date, such amounts shall be paid consistent with the terms and conditions of the

Restructuring Support Agreement and the Cash Collateral Order.

C. Classification and Claims and Interests

i. Classification in General

A Claim or Interest is placed in a particular Class for all purposes, including voting, confirmation,

and distribution under the Plan and under sections 1122 and 1123(a)(1) of the Bankruptcy Code.

A Claim or Interest is placed in a particular Class for the purpose of receiving distributions

pursuant to the Plan only to the extent that such Claim or Interest is an Allowed Claim or Allowed

Interest in that Class and such Claim or Interest has not been satisfied, released, or otherwise settled

prior to the Effective Date.

ii. Formation of Debtor Groups for Convenience Only

Solely with respect to Class 5, and solely for purposes of (i) describing treatment under the Plan,

(ii) tabulating votes for such Class and confirmation of the Plan, and (iii) making Plan Distributions

in respect of such Class, the Plan groups the Debtors together. Such groupings shall not affect any

Debtor’s status as a separate legal entity, change the organizational structure of the Debtors’

business enterprise, constitute a change of control of any Debtor for any purpose, cause a merger

or consolidation of any legal entities, or cause the transfer of any assets. Except as otherwise

provided by or permitted under the Plan, all Debtors shall continue to exist as separate legal

entities.

iii. Summary of Classification of Claims and Interests

The following table designates the Classes of Claims against and Interests in the Debtors and

specifies which Classes are (i) Impaired and Unimpaired under the Plan, (ii) entitled to vote to


25

accept or reject the Plan in accordance with section 1126 of the Bankruptcy Code, and

(iii) presumed to accept or deemed to reject the Plan. In accordance with section 1123(a)(1) of the

Bankruptcy Code, Administrative Expense Claims and Priority Tax Claims have not been

classified. The classification of Claims and Interests set forth herein shall apply separately to each

Debtor.

Class Type of Claim or Interest Impairment Entitled to Vote

Class 1 Other Priority Claims Unimpaired No (Presumed to accept)

Class 2 Other Secured Claims Unimpaired No (Presumed to accept)

Class 3 RBL Claims Impaired Yes

Class 4 Term Loan Claims Impaired Yes

Class 5 General Unsecured Claims Impaired Yes

Class 6 Intercompany Claims Unimpaired No (Presumed to accept)

Class 7 Chisholm Parent Equity Interests Impaired Yes

Class 8 Chisholm Management Equity Interests Impaired No (Presumed to accept

as Plan proponent)

Class 9 Intercompany Interests Unimpaired No (Presumed to accept)

iv. Special Provision Governing Unimpaired Claims

Except as otherwise provided in the Plan, nothing under the Plan shall affect the rights of the

Debtors or the Reorganized Debtors, as applicable, in respect of any Unimpaired Claims, including

all rights in respect of legal and equitable defenses to, or setoffs or recoupments against, any such

Unimpaired Claims.

v. Elimination of Vacant Classes

Any Class that, as of the commencement of the Confirmation Hearing, does not have at least one

Claim or Interest that is Allowed in an amount greater than zero for voting purposes shall be

considered vacant, deemed eliminated from the Plan for purposes of acceptance or rejection of the

Plan, and disregarded for purposes of determining whether the Plan satisfies section 1129(a)(8) of

the Bankruptcy Code with respect to such Class.

vi. Voting Classes; Presumed acceptance by Non-Voting Classes

With respect to each Debtor, if a Class contained Claims or Interests eligible to vote and no holder

of such Claims or Interests, as applicable, votes to accept or reject the Plan, the Plan shall be

presumed accepted by the holders of such Claims or Interests, as applicable, in such Class.

vii. Voting; Presumptions; Solicitation

(a) Acceptance by Certain Impaired Classes. Only holders of Claims in

Class 3, Class 4, and Class 5, and Interests in Class 7 are entitled to vote to accept or reject the

Plan. An Impaired Class of Claims shall have accepted the Plan if (i) the holders of at least


26

two-thirds (2/3) in amount of the Allowed Claims actually voting in such Class have voted to

accept the Plan and (ii) the holders of more than one-half (1/2) in number of the Allowed Claims

actually voting in such Class have voted to accept the Plan. An Impaired Class of Interests shall

have accepted the Plan if the holders of at least two-thirds (2/3) in amount of the Allowed Interests

actually voting in Class 7 have voted to accept the Plan.

(b) Presumed Acceptance by Unimpaired Classes. Holders of Claims and

Interests in Classes 1, 2, 6, 8, and 9 are conclusively presumed to have accepted the Plan pursuant

to section 1126(f) of the Bankruptcy Code. Accordingly, such holders are not entitled to vote to

accept or reject the Plan.

viii. Cramdown

If any Class is deemed to reject the Plan or is entitled to vote on the Plan and does not vote to

accept the Plan, the Debtors may (i) seek confirmation of the Plan under section 1129(b) of the

Bankruptcy Code or (ii) amend or modify the Plan in accordance with its terms and the Bankruptcy

Code. If a controversy arises as to whether any Claim or Interest, or any Class of Claims or

Interests, is Impaired, the Bankruptcy Court shall, after notice and a hearing, determine such

controversy on or before the Confirmation Date.

ix. No Waiver

Nothing contained in the Plan shall be construed to waive a Debtor’s or other Person’s right to

object on any basis to any Claim.

D. Treatment of Claims and Interests

i. Class 1: Other Priority Claims

(a) Treatment: The legal, equitable, and contractual rights of the holders of

Allowed Other Priority Claims are unaltered by the Plan. Except to the extent that a holder of an

Allowed Other Priority Claim agrees to different treatment, in full and final satisfaction of such

Allowed Other Priority Claim, each holder of an Allowed Other Priority Claim shall receive, at

the option of the Debtors or the Reorganized Debtors (as applicable), (i) on or as soon as

reasonably practicable after the later of the Effective Date and the date that is ten (10) Business

Days after the date such Other Priority Claim becomes an Allowed Claim, payment in full in Cash

or (ii) other treatment consistent with the provisions of section 1129 of the Bankruptcy Code.

(b) Impairment and Voting: Allowed Other Priority Claims are Unimpaired.

In accordance with section 1126(f) of the Bankruptcy Code, the holders of Allowed Other Priority

Claims are conclusively presumed to accept the Plan and are not entitled to vote to accept or reject

the Plan, and the votes of such holders shall not be solicited with respect to such Allowed Other

Priority Claims.

ii. Class 2: Other Secured Claims

(a) Treatment: The legal, equitable, and contractual rights of the holders of

Allowed Other Secured Claims are unaltered by the Plan. Except to the extent that a holder of an


27

Allowed Other Secured Claim agrees to different treatment, on or as soon as reasonably practicable

after the later of the Effective Date and the date that is ten (10) Business Days after the date such

Other Secured Claim becomes an Allowed Claim, in full and final satisfaction of such Allowed

Other Secured Claim, each holder of an Allowed Other Secured Claim shall receive, at the option

of the Debtors or Reorganized Debtors (as applicable), with the consent of the RBL Agent (which

consent shall not be unreasonably withheld), (i) payment in full in Cash, (ii) reinstatement of such

Allowed Other Secured Claim, or (iii) such other treatment necessary to render such Allowed

Other Secured Claim Unimpaired.

(b) Impairment and Voting: Allowed Other Secured Claims are Unimpaired.

In accordance with section 1126(f) of the Bankruptcy Code, the holders of Allowed Other Secured

Claims are conclusively presumed to accept the Plan and are not entitled to vote to accept or reject

the Plan, and the votes of such holders shall not be solicited with respect to such Allowed Other

Secured Claims.

iii. Class 3: RBL Claims

(a) Allowance: The RBL Claims shall be deemed Allowed on the Effective

Date in the aggregate principal amount of not less than $263,000,000, plus all outstanding interest,

fees, expenses and other obligations due under the RBL Credit Agreement, the Secured Hedge

Agreements, the Secured Cash Management Agreements and the other RBL Credit Documents as

of the Petition Date, and shall not be subject to any avoidance, reductions, setoff, offset,

recoupment, recharacterization, subordination (whether equitable, contractual or otherwise),

counterclaims, cross-claims, defenses, disallowance, impairment, objection or any other challenge

under any applicable law or regulation by any Person.

(b) Treatment: On the Effective Date, each holder of an Allowed RBL Claim

shall receive, in full and final satisfaction of such Allowed RBL Claim, such holder’s Pro Rata

share of:

(i) 95% of the New Equity Interests, subject to dilution by (y) the MIP

Equity and (z) if (A) Class 4, Class 5, and Class 7 vote to accept the

Plan and (B) as of the Confirmation Date, the Consenting Sponsors

have not terminated their obligations under the Restructuring

Support Agreement pursuant to Section 6(d)(xii) thereof, the

Warrant Equity;

(ii) if Class 4 does not vote to accept the Plan, an additional 5% of the

New Equity Interests, subject to dilution by the MIP Equity;

(iii) if (A) Class 4 votes to accept the Plan but (B) (x) either Class 5 or

Class 7 does not vote to accept the Plan or (y) prior to the

Confirmation Date, the Consenting Sponsors terminate their

obligations under the Restructuring Support Agreement pursuant to

Section 6(d)(xii) thereof, an additional 1% of the New Equity

Interests, subject to dilution by the MIP Equity; and

(iv) the FLSO Term Loan.


28

(c) Impairment and Voting: RBL Claims are Impaired. Holders of Allowed

RBL Claims are entitled to vote on the Plan.

iv. Class 4: Term Loan Claims

(a) Treatment:

(i) If Class 4 votes to accept the Plan, then on the Effective Date (x) the

Term Loan Claims shall be deemed Allowed in the aggregate

principal amount of not less than $253,827,034.71 (which includes

payment in kind interest that has been added to the principal), plus

all outstanding interest, fees, expenses, and other obligations due

under the Term Loan Documents as of the Petition Date, and shall

not be subject to any avoidance, reductions, setoff, offset,

recoupment, recharacterization, subordination (whether equitable,

contractual or otherwise), counterclaims, cross-claims, defenses,

disallowance, impairment, objection, or any other challenge under

any applicable law or regulation by any Person, and (y) each holder

of an Allowed Term Loan Claim shall receive, in full and final

satisfaction of such Allowed Term Loan Claim, such holder’s Pro

Rata share of 4% of the New Equity Interests, subject to dilution by

the Warrant Equity and the MIP Equity.

(ii) If Class 4 does not vote to accept the Plan, then no holder of a Term

Loan Claim shall receive any distribution on account of such Term

Loan Claim.

(b) Impairment and Voting: Term Loan Claims are Impaired. Holders of

Term Loan Claims are entitled to vote on the Plan.

v. Class 5: General Unsecured Claims

(a) Treatment:

(i) If Class 5 votes to accept the Plan, then on or as soon as reasonably

practicable after the later of the Effective Date and the date on which

a General Unsecured Claim becomes an Allowed General

Unsecured Claim, each holder of an Allowed General Unsecured

Claim shall receive, in full and final satisfaction of such Allowed

General Unsecured Claim, such holder’s Pro Rata share of the GUC

Cash Pool, which GUC Cash Pool shall be in the total amount of $3

million, subject to the GUC Cash Pool Reduction.

(ii) If Class 5 does not vote to accept the Plan, then on or as soon as

reasonably practicable after the later of the Effective Date and the

date on which a General Unsecured Claim becomes an Allowed

General Unsecured Claim, each holder of an Allowed General

Unsecured Claim shall receive, in full and final satisfaction of such


29

Allowed General Unsecured Claim, such holder’s Pro Rata share of

the GUC Cash Pool, which GUC Cash Pool shall be in the total

amount of $1.5 million, subject to the GUC Cash Pool Reduction.

(b) Impairment and Voting: General Unsecured Claims are Impaired.

Holders of General Unsecured Claims are entitled to vote on the Plan.

vi. Class 6: Intercompany Claims

(a) Treatment: On or after the Effective Date, all Intercompany Claims shall

be paid, adjusted, continued, settled, reinstated, discharged, or eliminated, in each case to the extent

determined to be appropriate by the Debtors or Reorganized Debtors, as applicable, with the


(b) Impairment and Voting: All Allowed Intercompany Claims are deemed

Unimpaired. In accordance with section 1126(f) of the Bankruptcy Code, the holders of Allowed

Intercompany Claims are conclusively presumed to accept the Plan and are not entitled to vote to

accept or reject the Plan, and the votes of such holders shall not be solicited with respect to such

Allowed Intercompany Claims.

vii. Class 7: Chisholm Parent Equity Interests

(a) Treatment: On the Effective Date, Chisholm Parent Equity Interests shall

be cancelled and extinguished and will be of no further force and effect.

(i) If (A) Class 4, Class 5, and Class 7 vote to accept the Plan and (B) as

of the Confirmation Date, the Consenting Sponsors have not

terminated their obligations under the Restructuring Support

Agreement pursuant to Section 6(d)(xii) thereof, then on the

Effective Date, each holder of Chisholm Parent Equity Interests

shall receive, in full and final satisfaction of such Chisholm Parent

Equity Interests, such holder’s Pro Rata share of:

1. 1% of the New Equity Interests, subject to dilution by the

Warrant Equity and the MIP Equity; and

2. Warrants for up to 11% of the New Equity Interests, subject

to dilution by the MIP Equity.

(ii) If (A) Class 4, Class 5, or Class 7 does not vote to accept the Plan

or (B) prior to the Confirmation Date, the Consenting Sponsors

terminate their obligations under the Restructuring Support

Agreement pursuant to Section 6(d)(xii) thereof, then no holder of

Chisholm Parent Equity Interests shall receive any distribution on

account of such Chisholm Parent Equity Interests.

(b) Impairment and Voting: Chisholm Parent Equity Interests are Impaired.

Holders of Chisholm Parent Equity Interests are entitled to vote on the Plan.


30

viii. Class 8: Chisholm Management Equity Interests

(a) Treatment: On the Effective Date, the Chisholm Management Equity

Interests shall be cancelled and extinguished, and holders of Chisholm Management Equity

Interests shall not receive or retain any property under the Plan on account of such Chisholm

Management Equity Interests.

(b) Impairment and Voting: Chisholm Management Equity Interests are

Impaired. As proponents of the Plan, the holders of Chisholm Management Equity Interests are

conclusively presumed to accept the Plan, and the votes of such holders shall not be solicited with

respect to such Chisholm Management Equity Interests.

ix. Class 9: Intercompany Interests

(a) Treatment: On the Effective Date, all Intercompany Interests shall be

adjusted, continued, settled, reinstated, discharged, or eliminated as determined by the Debtors or

the Reorganized Debtors (as applicable) with the consent of the RBL Agent.

(b) Impairment and Voting: Allowed Intercompany Interests are

Unimpaired. In accordance with section 1126(f) of the Bankruptcy Code, the holders of Allowed

Intercompany Interests are conclusively presumed to accept the Plan and are not entitled to vote

to accept or reject the Plan, and the votes of such holders shall not be solicited with respect to such

Allowed Intercompany Interests.

E. Means for Implementation

i. Sources of Consideration for Plan Distribution

The Reorganized Debtors shall fund Cash Plan Distributions with (i) Cash available on or after the

Effective Date and (ii) Cash proceeds from the FLFO RBL Facility, to the extent applicable.

ii. Compromise and Settlement of Claims, Interests, and Controversies

Subject to approval by the Bankruptcy Court in connection with confirmation of the Plan, the

provisions of the Plan and other documents entered into in connection with the Plan constitute a

good faith compromise and settlement among the Debtors, the Consenting Creditors, the

Consenting Sponsors, the Creditors’ Committee, and the Term Loan Lenders of claims, Causes of

Action, and controversies among such parties. The Plan shall be deemed a motion to approve the

compromises and settlements contained in the Plan and the good faith compromise and settlement

of all of the claims, Causes of Action and controversies described in the foregoing sentence

pursuant to sections 363 and 1123(b)(3) of the Bankruptcy Code and Bankruptcy Rule 9019. Entry

of the Confirmation Order shall constitute the Bankruptcy Court’s approval of such compromises

and settlements, as well as a finding by the Bankruptcy Court that the compromises and settlements

are fair, equitable, reasonable, and in the best interests of the Debtors and their Estates.


31

iii. Continued Corporate Existence; Effectuating Documents; Further Transactions

(a) Except as otherwise provided in the Plan, the Debtors shall continue to exist

after the Effective Date as Reorganized Debtors in accordance with the applicable laws of the

respective jurisdictions in which they are incorporated or organized and pursuant to the Amended

Organizational Documents or other applicable corporate documents.

(b) On or after the Effective Date, without prejudice to the rights of any party

to a contract or other agreement with any Reorganized Debtor, each Reorganized Debtor may, in

its sole discretion, take such action as permitted by applicable law and the Amended

Organizational Documents, as such Reorganized Debtor may determine is reasonable and

appropriate, including causing (i) a Reorganized Debtor to be merged into another Reorganized

Debtor or an affiliate of a Reorganized Debtor, (ii) a Reorganized Debtor to be dissolved, (iii) the

legal name of a Reorganized Debtor to be changed, or (iv) the closure of a Reorganized Debtor’s

Chapter 11 Case on the Effective Date or any time thereafter, and such action and documents are

deemed to require no further action or approval (other than any requisite filings required under

applicable state, federal, or foreign law).

(c) On the Effective Date or as soon as reasonably practicable thereafter, the

Reorganized Debtors may take all actions as may be necessary or appropriate to effect any

transaction described in, approved by, or necessary or appropriate to effectuate the Plan, including

(i) the execution and delivery of appropriate agreements or other documents of merger,

consolidation, restructuring, conversion, disposition, transfer, dissolution, or liquidation

containing terms that are consistent with the terms of the Plan and the Definitive Documents and

that satisfy the requirements of applicable law and any other terms to which the applicable entities

may agree, (ii) the execution and delivery of appropriate instruments of transfer, assignment,

assumption, or delegation of any asset, property, right, liability, debt, or obligation on terms

consistent with the terms of the Plan and having other terms to which the applicable parties agree,

(iii) the filing of appropriate certificates or articles of incorporation or formation and amendments

thereto, reincorporation, merger, consolidation, conversion, or dissolution pursuant to applicable

law, (iv) the Restructuring Transactions, and (v) all other actions that the applicable entities

determine to be necessary or appropriate, including, without limitation, making filings or

recordings that may be required by applicable law.

iv. Corporate and Limited Liability Company Action

Upon the Effective Date, all actions contemplated by the Plan shall be deemed authorized and

approved in all respects, including (i) those set forth in Sections 5.3 and 5.13 of the Plan and (ii) all

other actions contemplated by the Plan (whether to occur before, on, or after the Effective Date),

in each case, in accordance with and subject to the terms hereof. All matters provided for in the

Plan involving the corporate or limited liability company structure of the Debtors or the

Reorganized Debtors shall be deemed to have occurred and shall be in effect, without any

requirement of further action by the Security holders, directors, managers, or officers of the

Debtors or the Reorganized Debtors. On or (as applicable) before the Effective Date, the

appropriate managers, directors, and officers of the Debtors shall be authorized and directed to

issue, execute, and deliver the agreements, documents, Securities, and instruments contemplated


32

by the Plan (or necessary or desirable to effect the transactions contemplated by the Plan) in the

name of and on behalf of the Reorganized Debtors, including (i) the Amended Organizational

Documents, (ii) the Exit Credit Facilities Documents, (iii) the New Equity Interests, (iv) Warrants,

and (v) any and all other agreements, documents, Securities, and instruments relating to the

foregoing. The authorizations and approvals contemplated by Section 5.4 of the Plan shall be

effective notwithstanding any requirements under nonbankruptcy law.

v. Cancellation of Existing Securities and Agreements

Except for the purpose of evidencing a right to a distribution under the Plan and except as otherwise

set forth in the Plan, or in any Plan Document, on the Effective Date, all agreements, instruments,

notes, certificates, indentures, mortgages, Securities and other documents evidencing any Claim

or Interest (other than Intercompany Claims and Intercompany Interests, to the extent they are not

modified by the Plan) and any rights of any holder in respect thereof shall be deemed cancelled

and of no force or effect and the obligations of the Debtors thereunder shall be deemed fully

satisfied, released, and discharged and, as applicable, shall be deemed to have been surrendered to

the Disbursing Agent. The holders of or parties to such cancelled instruments, Securities, and

other documentation shall have no rights arising from or related to such instruments, Securities, or

other documentation or the cancellation thereof, except the rights provided for pursuant to the Plan.

Notwithstanding the foregoing, any provision in any agreement, instrument, note, certificate,

indenture, mortgage, Security or other document that causes or effectuates, or purports to cause or

effectuate, a default, termination, waiver, or other forfeiture of, or by, the Debtors of their interests

as a result of the cancellations, terminations, satisfaction, releases, or discharges provided for in

Section 5.5 of the Plan shall be deemed null and void and shall be of no force and effect.

vi. Cancellation of Certain Existing Security Interests

Upon the full payment or other satisfaction of an Allowed Other Secured Claim, or promptly

thereafter, the holder of such Allowed Other Secured Claim shall deliver to the Debtors or

Reorganized Debtors, as applicable, any collateral or other property of a Debtor held by such

holder, together with any termination statements, instruments of satisfaction, or releases of all

security interests with respect to its Allowed Other Secured Claim that may be reasonably required

to terminate any related financing statements, mortgages, mechanics’ or other statutory Liens, or

lis pendens, or similar interests or documents.

vii. Officers and Boards of Directors

(a) On the Effective Date, the New Board shall consist of five (5) directors

selected by the Requisite Creditors. The identity and affiliations of any Person proposed to serve

on the New Board shall be disclosed in accordance with section 1129(a)(5) of the Bankruptcy

Code.

(b) Except as otherwise provided in the Plan Supplement, the officers of the

respective Reorganized Debtors immediately before the Effective Date, as applicable, shall serve

as the initial officers of each of the respective Reorganized Debtors on and after the Effective Date.

After the Effective Date, the selection of officers of the Reorganized Debtors shall be as provided

by their respective Amended Organizational Documents.


33

(c) Except to the extent that a member of the board of directors or a manager,

as applicable, of a Debtor continues to serve as a director or manager of such Debtor on and after

the Effective Date, the members of the board of directors or managers, as applicable, of each

Debtor prior to the Effective Date, in their capacities as such, shall have no continuing obligations

or duties to the Reorganized Debtors on or after the Effective Date and each such director or

manager shall be deemed to have resigned or shall otherwise cease to be a director or manager of

the applicable Debtor on the Effective Date. Commencing on the Effective Date, each of the

directors and managers, as applicable, of each of the Reorganized Debtors shall be deemed elected

and serve pursuant to the terms of the applicable Amended Organizational Documents of such

Reorganized Debtor and may be replaced or removed in accordance with such organizational

documents.

viii. Management Incentive Plan

As soon as practicable after the Effective Date, the New Board shall adopt the Management

Incentive Plan. The MIP Equity shall be reserved for grants made from time to time to directors,

officers, or other management and employees of the Reorganized Debtors. The New Board shall

determine the form, allocation, amounts, and timing of such grants.

ix. Authorization and Issuance of New Equity Interests and Warrants

(a) On the Effective Date, Reorganized Chisholm Parent is authorized to issue

or cause to be issued and shall issue (i) the New Equity Interests and (ii) the Warrants (if Class 4

and Class 7 are entitled to receive a distribution in accordance with Article IV of the Plan) for

distribution in accordance with the terms of the Plan without the need for any further corporate or

shareholder action. All of the New Equity Interests and the Warrants issuable under the Plan,

when so issued, shall be duly authorized, validly issued, and, in the case of the New Equity

Interests, fully paid, and non-assessable. The Warrant Equity (upon payment of the exercise price

in accordance with the terms of such Warrants) issued pursuant to the Plan shall be duly authorized,

validly issued, fully paid, and non-assessable.

(b) The Warrants (if Class 4 and Class 7 are entitled to receive a distribution in

accordance with Article IV of the Plan) shall be issuable pursuant to the terms of the Warrant

Agreement. Each Warrant shall, subject to the terms of the Warrant Agreement, be exercisable

for one (1) New Equity Interest.

x. Securities Exemptions

The offer, issuance, and distribution of the New Equity Interests, and the Warrants (and the

Warrant Equity issuable upon exercise thereof) under Article IV of the Plan shall be exempt,

pursuant to section 1145 of the Bankruptcy Code, without further act or actions by any Person,

from registration under the Securities Act, and all rules and regulations promulgated thereunder,

and any other applicable securities laws, to the fullest extent permitted by section 1145 of the

Bankruptcy Code. The New Equity Interests and the Warrants (and the Warrant Equity issuable

upon exercise thereof) issued pursuant to section 1145(a) of the Bankruptcy Code may be resold

without registration under the Securities Act or other federal securities laws pursuant to the

exemption provided by section 4(a)(1) of the Securities Act, subject to: (i) the holder not being an


34

“underwriter” with respect to such securities, as that term is defined in subsection (b) of section

1145 the Bankruptcy Code; (ii) the holder (a) not being an “affiliate” of Reorganized Chisholm

Parent as defined in Rule 144(a)(1) under the Securities Act, (b) not having been such an “affiliate”

within ninety (90) days of such transfer and/or (c) not having acquired such securities from an

“affiliate” within one year of such transfer (other than, with respect to clause (ii), such resales as

may be permitted by and subject to the conditions of Rule 144 of the Securities Act);

(iii) compliance with any rules and regulations of the Securities and Exchange Commission

applicable at the time of any future transfer of such securities or instruments; (iv) any restrictions

on the transferability of the New Equity Interests contained in the Shareholders’ Agreement; and

(v) any applicable regulatory approval. In addition, such section 1145 exempt Securities generally

may be resold without registration under state securities laws pursuant to various exemptions

provided by the respective laws of the several states.

xi. Exit Credit Facilities

(a) The Reorganized Debtors shall enter into the Exit Credit Facilities

Documents, and the Exit Credit Facilities will be made available to the Reorganized Debtors,

pursuant to and subject to the terms and conditions set forth in the Exit Credit Facilities

Documents.

(b) Confirmation shall be deemed approval of the entry into and incurrence of

the Exit Credit Facilities (including the transactions contemplated thereby, and all actions to be

taken, undertakings to be made, and obligations and guarantees to be incurred and fees paid in

connection therewith), and to the extent not approved by the Bankruptcy Court previously, the

Reorganized Debtors shall be authorized to execute and deliver any Exit Credit Facilities

Documents and any liens and security interests in favor of the Exit Secured Parties under the Exit

Credit Facilities securing such obligations, and perform their obligations thereunder, including the

payment of any fees, expenses, losses, damages, or indemnities, without further notice to or order

of the Bankruptcy Court, act or action under applicable law, regulation, order or rule or vote,

consent, authorization, or approval of any Person, subject to such modifications as the Debtors

(with the prior written consent of the RBL Agent) or Reorganized Debtors may deem necessary to

consummate the Exit Credit Facilities. The Exit Credit Facilities Documents, including any and

all such documents that serve to evidence and secure the Reorganized Debtors’ respective

obligations under the Exit Credit Facilities and any liens and security interests in favor of the Exit

Secured Parties under the Exit Credit Facilities securing such obligations, shall constitute legal,

valid, and binding obligations of the Reorganized Debtors and be enforceable in accordance with

their respective terms.

xii. General Unsecured Claims Recoveries

(a) On or prior to the Effective Date, the Debtors shall establish and fund the

GUC Cash Pool, which shall be held in trust for distributions on account of Allowed General

Unsecured Claims, subject to the GUC Cash Pool Reduction.

(b) The GUC Cash Pool (i) shall not be deemed property of the Debtors or

Reorganized Debtors, (ii) shall be held in trust to fund distributions, subject to the GUC Cash Pool


35

Reduction, on account of Allowed General Unsecured Claims as provided herein, and (iii) shall

not be encumbered by any Liens, Claims, or Interests.

(c) Any funds remaining in the GUC Cash Pool after all Allowed General

Unsecured Claims have been paid pursuant to the terms of this Plan shall revert to the Reorganized

Debtors.

xiii. Restructuring Transactions

On the Effective Date or as soon as reasonably practicable thereafter, the Debtors or Reorganized

Debtors, as applicable, may take all actions consistent with the Plan as may be necessary or

appropriate to effect any transaction described in, approved by, contemplated by, or necessary to

effectuate the Restructuring Transactions under and in connection with the Plan.

xiv. Separate Plans

Notwithstanding the combination of separate plans of reorganization for the Debtors set forth in

the Plan for purposes of economy and efficiency, the Plan constitutes a separate chapter 11 plan

for each Debtor. Accordingly, if the Bankruptcy Court does not confirm the Plan with respect to

one or more Debtors, it may still confirm the Plan with respect to any other Debtor that satisfies

the confirmation requirements of section 1129 of the Bankruptcy Code.

xv. Tax Structure

To the extent practicable, the Restructuring will be structured so as to obtain the most beneficial

structure for the Company, its equity holders post-transaction and the Consenting Sponsors, given

the totality of the circumstances, as determined by the Debtors in its business judgment and

reasonably acceptable to the RBL Agent and the Requisite Creditors.

xvi. Closing of Chapter 11 Cases

The Reorganized Debtors shall, promptly after the full administration of the Chapter 11 Cases, file

with the Bankruptcy Court all documents required by Bankruptcy Rule 3022 and any applicable

order of the Bankruptcy Court to close the Chapter 11 Cases. As of the Effective Date, the

Reorganized Debtors may submit separate orders to the Bankruptcy Court under certification of

counsel closing certain individual Chapter 11 Cases and changing the caption of the Chapter 11

Cases accordingly. Matters concerning Claims may be heard and adjudicated a Debtor’s Chapter

11 Case that remains open regardless of whether the applicable Claim is against a Debtor in a

chapter 11 case that is closed. Nothing in the Plan shall authorize the closing of any case nunc pro

tunc to a date that precedes the date any such order is entered. Any request for nunc pro tunc relief

shall be made on motion served on the United States Trustee, and the Bankruptcy Court shall rule

on such request after notice and a hearing. Upon the filing of a motion to close the last Chapter

11 Case remaining open, the Reorganized Debtors shall file a final report with respect to all of the

Chapter 11 Cases pursuant to Local Rule 3022-1(c).


36

F. Distributions

i. Distributions Generally

The Disbursing Agent shall make all Plan Distributions to the appropriate holders of Allowed

Claims and Allowed Interests in accordance with the terms of the Plan.

ii. No Postpetition Interest on Claims

Unless otherwise provided in the Plan, the Plan Documents, the Confirmation Order, or other order

of the Bankruptcy Court, or required by applicable bankruptcy law, postpetition interest shall not

accrue or be paid on any Claim and no holder of a Claim shall be entitled to interest accruing on

or after the Petition Date on any such Claim.

iii. Date of Distributions

Unless otherwise provided in the Plan, any distributions and deliveries to be made under the Plan

shall be made on the Effective Date or as soon as reasonably practicable thereafter, and any

subsequent distributions will be made at least as frequently as each subsequent Quarterly

Distribution Date. In the event that any payment or act under the Plan is required to be made or

performed on a date that is not a Business Day, then the making of such payment or the

performance of such act may be completed on the next succeeding Business Day, but shall be

deemed to have been completed as of the required date. If and to the extent that there are Disputed

Claims, distributions on account of any such Disputed Claims shall be made pursuant to the

provisions set forth in Article VII of the Plan.

iv. Distribution Record Date

As of the close of business on the Distribution Record Date, the various lists of holders of Claims

in each Class, as maintained by the Debtors or their agents, shall be deemed closed, and there shall

be no further changes in the record holders of any Claims after the Distribution Record Date.

Neither the Debtors nor the Disbursing Agent shall have any obligation to recognize any transfer

of a Claim occurring after the close of business on the Distribution Record Date. In addition, with

respect to payment of any Cure Amounts or disputes over any Cure Amounts, neither the Debtors

nor the Disbursing Agent shall have any obligation to recognize or deal with any party other than

the non-Debtor party to the applicable executory contract or unexpired lease, even if such non-

Debtor party has sold, assigned, or otherwise transferred its Claim for a Cure Amount.

v. Distributions after Effective Date

Distributions made after the Effective Date to holders of Disputed Claims that are not Allowed

Claims as of the Effective Date but which later become Allowed Claims shall be deemed to have

been made on the Effective Date.

vi. Disbursing Agent

All Plan Distributions shall be made by the Disbursing Agent on and after the Effective Date as

provided herein. The Disbursing Agent shall not be required to give any bond or surety or other


37

security for the performance of its duties. The Reorganized Debtors shall use commercially

reasonable efforts to provide the Disbursing Agent (if other than the Reorganized Debtors) with

the amounts of Claims and the identities and addresses of holders of Claims, in each case, as set

forth in the Debtors’ or Reorganized Debtors’ books and records. The Reorganized Debtors shall

cooperate in good faith with the applicable Disbursing Agent (if other than the Reorganized

Debtors) to comply with the reporting and withholding requirements outlined in Section 6.18 of

the Plan.

vii. Delivery of Distributions

(a) Subject to Bankruptcy Rule 9010, the Disbursing Agent shall make all

distributions to any holder of an Allowed Claim as and when required by the Plan at (i) the address

of such holder on the books and records of the Debtors or their agents or (ii) at the address in any

written notice of address change delivered to the Debtors or the Disbursing Agent, including any

addresses included on any transfers of Claim filed pursuant to Bankruptcy Rule 3001. Subject to

Section 6.8 of the Plan, in the event that any distribution to any holder is returned as undeliverable,

no distribution or payment to such holder shall be made unless and until the Disbursing Agent has

been notified of the then-current address of such holder, at which time or as soon thereafter as

reasonably practicable, such distribution shall be made to such holder without interest.

(b) Provided the Warrants are DTC-eligible and the Debtors, in their sole

discretion, elect to deliver such Warrants through the facilities of DTC, the Warrants shall be

distributed in accordance with the customary practices of DTC for a mandatory distribution, as

and to the extent practicable. To the extent the Warrants are not delivered through the facilities of

DTC, the Debtors shall facilitate registration of the Warrants into the names of the relevant

beneficial owners as soon as practicable following the Effective Date.

(c) In connection with any Plan Distribution to be effected through the facilities

of DTC (whether by means of book entry exchange, free delivery, or otherwise), the Debtors and

the Reorganized Debtors, as applicable, shall be entitled to recognize and deal for all purposes

under the Plan with holders of New Equity Interests and Warrants to the extent consistent with the

customary practices of DTC used in connection with such distributions. All New Equity Interests

and Warrants to be distributed under the Plan shall be issued in the names of such Holders or their

nominees in accordance with DTC’s book entry exchange procedures to the extent that the Holders

of New Equity Interests and Warrants held any Claims and/or Interests through the facilities of

DTC; provided, however, that to the extent the New Equity Interests and/or Warrants are not

eligible for distribution in accordance with DTC’s customary practices, Reorganized Chisholm

Parent shall take all such reasonable actions as may be required to cause the distributions of the

New Equity Interests and Warrants under the Plan. Notwithstanding anything in the Plan to the

contrary, no Person (including, for the avoidance of doubt, DTC) may require a legal opinion

regarding the validity of any transaction contemplated by the Plan, including whether the New

Equity Interests and Warrants are exempt from registration and/or eligible for DTC book-entry

delivery, settlement, and depository services.


38

viii. Unclaimed Property

(a) One year from the later of: (i) the Effective Date and (ii) the date that is ten

(10) Business Days after the date a Claim or Interest is first Allowed, all distributions payable on

account of such Claim or Interest that are not claimed or accepted by such date shall be deemed

unclaimed property under section 347(b) of the Bankruptcy Code and shall revert to the

Reorganized Debtors or their successors or assigns, and all claims of any other Person (including

the holder of a Claim in the same Class) to such distribution shall be discharged and forever barred.

The Reorganized Debtors and the Disbursing Agent shall have no obligation to attempt to locate

any holder of an Allowed Claim other than by reviewing the Debtors’ books and records and the

Bankruptcy Court’s filings.

(b) A distribution shall be deemed unclaimed if a holder has not (i) accepted a

particular distribution or, in the case of distribution made by check by ninety (90) days after

issuance, negotiated such check, (ii) given notice to the Reorganized Debtors of an intent to accept

a particular distribution, (iii) responded to the Debtors’ or Reorganized Debtors’, as applicable,

request for information necessary to facilitate a particular distribution, or (iv) taken any other

action necessary to facilitate such distribution.

ix. Satisfaction of Claims

Unless otherwise provided in the Plan, any distributions and deliveries to be made on account of

Allowed Claims under the Plan shall be in complete and final satisfaction, settlement, and

discharge of and exchange for such Allowed Claims.

x. Manner of Payment under Plan

Except as specifically provided herein, at the option of the Debtors or the Reorganized Debtors, as

applicable, any Cash payment to be made under the Plan may be made by a check or wire transfer

or as otherwise required or provided in applicable agreements or customary practices of the

Debtors or Reorganized Debtors, as applicable.

xi. Fractional Shares

No fractional shares of New Equity Interests shall be distributed. When any distribution would

otherwise result in the issuance of a number of shares of New Equity Interests that is not a whole

number, the New Equity Interests subject to such distribution shall be rounded to the next higher

or lower whole number as follows: (i) fractions equal to or greater than 1/2 shall be rounded to the

next higher whole number, and (ii) fractions less than 1/2 shall be rounded to the next lower whole

number. The total number of New Equity Interests to be distributed on account of Allowed Claims

or Interests shall be adjusted as necessary to account for the rounding provided for herein. No

consideration shall be provided in lieu of fractional shares that are rounded down. Fractional

amounts of New Equity Interests that are not distributed in accordance with Section 6.11 of the

Plan shall be returned to, and ownership thereof shall vest in, Reorganized Chisholm Parent.


39

xii. Minimum Distribution

Neither the Reorganized Debtors nor the Disbursing Agent, as applicable, shall have an obligation

to make a distribution pursuant to the Plan that is less than one (1) share of New Equity Interests

or $100.00 in Cash.

xiii. No Distribution in Excess of Amount of Allowed Claim

Notwithstanding anything to the contrary in the Plan, no holder of an Allowed Claim shall receive,

on account of such Allowed Claim, Plan Distributions in excess of the Allowed amount of such

Claim (plus any postpetition interest on such Claim solely to the extent permitted by Section 6.2

of the Plan).

xiv. Allocation of Distributions Between Principal and Interest

Except as otherwise required by law (as determined by the Debtors or Reorganized Debtors),

distributions with respect to an Allowed Claim shall be allocated first to the principal portion of

such Allowed Claim (as determined for United States federal income tax purposes) and, thereafter,

to the remaining portion of such Allowed Claim, if any.

xv. Setoffs and Recoupments

Each Debtor or Reorganized Debtor, or such entity’s designee as instructed by such Debtor or

Reorganized Debtor, may, pursuant to section 553 of the Bankruptcy Code or applicable

nonbankruptcy law, set off or recoup against any Allowed Claim and the distributions to be made

pursuant to the Plan on account of such Allowed Claim, any and all claims, rights, and Causes of

Action of any nature whatsoever that a Debtor or Reorganized Debtor or its successors may hold

against the holder of such Allowed Claim after the Effective Date. Notwithstanding the foregoing,

neither the failure to effect a setoff or recoupment nor the allowance of any Claim hereunder shall

constitute a waiver or release by a Debtor or Reorganized Debtor or its successor of any claims,

rights, or Causes of Action that a Debtor or Reorganized Debtor or its successor or assign may

possess against the holder of such Claim.

xvi. Rights and Powers of Disbursing Agent

The Disbursing Agent shall be empowered to (i) effect all actions and execute all agreements,

instruments, and other documents necessary to perform its duties hereunder, (ii) make all

applicable distributions or payments provided for under the Plan, (iii) employ professionals to

represent it with respect to its responsibilities, and (iv) exercise such other powers as may be vested

in the Disbursing Agent by order of the Bankruptcy Court (including any Final Order issued after

the Effective Date) or pursuant to the Plan, or as deemed by the Disbursing Agent to be necessary

and proper to implement the provisions hereof.

xvii. Expenses of Disbursing Agent

To the extent the Disbursing Agent is a Person other than a Debtor or Reorganized Debtor or as

otherwise ordered by the Bankruptcy Court, subject to the written agreement of the Reorganized

Debtors, the amount of any reasonable fees and out-of-pocket expenses incurred by the Disbursing


40

Agent on or after the Effective Date (including taxes) and any reasonable compensation and out-

of-pocket expense reimbursement Claims (including for reasonable attorneys’ fees and other

professional fees and expenses) made by the Disbursing Agent shall be paid in Cash by the

Reorganized Debtors in the ordinary course of business.

xviii. Withholding and Reporting Requirements

(a) Withholding Rights. In connection with the Plan, any Person issuing any

instrument or making any distribution or payment in connection therewith, shall comply with all

applicable withholding and reporting requirements imposed by any federal, state, or local taxing

authority. In the case of a non-Cash distribution that is subject to withholding, the distributing

party may require the intended recipient of such distribution to provide the withholding agent with

an amount of Cash sufficient to satisfy such withholding tax as a condition to receiving such

distribution or withhold an appropriate portion of such distributed property and either (i) sell such

withheld property to generate Cash necessary to pay over the withholding tax (or reimburse the

distributing party for any advance payment of the withholding tax) or (ii) pay the withholding tax

using its own funds and retain such withheld property. The distributing party shall have the right

not to make a distribution under the Plan until its withholding or reporting obligation is satisfied

pursuant to the preceding sentences. Any amounts withheld pursuant to the Plan shall be deemed

to have been distributed to and received by the applicable recipient for all purposes of the Plan.

(b) Forms. Any party entitled to receive any property as an issuance or

distribution under the Plan shall, upon request, deliver to the withholding agent or such other

Person designated by the Reorganized Debtors a Form W-8, Form W-9 and/or any other forms or

documents, as applicable, requested by any Reorganized Debtor to reduce or eliminate any

required federal, state, or local withholding. If the party entitled to receive such property as an

issuance or distribution fails to comply with any such request for a one hundred eighty (180) day

period beginning on the date after the date such request is made, the amount of such issuance or

distribution shall irrevocably revert to the applicable Reorganized Debtor and any Claim in respect

of such distribution under the Plan shall be discharged and forever barred from assertion against

such Reorganized Debtor or its respective property.

(c) Notwithstanding the above, each holder of an Allowed Claim or Interest

that is to receive a distribution under the Plan shall have the sole and exclusive responsibility for

the satisfaction and payment of any tax obligations imposed on such holder by any Governmental

Unit, including income, withholding, and other tax obligations, on account of such Plan

Distribution.

xix. Indefeasible Distribution

Any and all distributions made under the Plan shall be indefeasible and not subject to clawback or

turnover.


41

G. Procedures for Disputed Claims

i. Objections to Claims

Except as provided in Section 7.3 of the Plan, the Debtors or Reorganized Debtors, as applicable,

shall be entitled to object to Claims. After the Effective Date, the Debtors or the Reorganized

Debtors, as applicable, shall have and retain any and all rights and defenses that the Debtors had

with respect to any Claim immediately before the Effective Date. Except as expressly provided in

the Plan or in any order entered in the Chapter 11 Cases before the Effective Date (including the

Confirmation Order), no Claim shall become an Allowed Claim unless and until such Claim is

deemed Allowed pursuant to the Plan or a Final Order, including the Confirmation Order,

Allowing such Claim. Any objection to Claims shall be served and filed on or before the Claims

Objection Deadline, as such deadline may be extended from time to time.

ii. Resolution of Disputed Claims

(a) Except as provided in Section 7.3 of the Plan, or as otherwise provided in

an order of the Bankruptcy Court and notwithstanding any requirements that may be imposed

pursuant to Bankruptcy Rule 9019, on and after the Effective Date, the Reorganized Debtors shall

have the authority to (i) file, withdraw, or litigate to judgment objections to Claims (ii) settle or

compromise any Disputed Claims, without further notice to or action, order, or approval by the

Bankruptcy Court, and (iii) administer and adjust the Claims Register to reflect any such

settlements or compromises without any further notice to or action, order, or approval by the

Bankruptcy Court.

(b) Prior to the Effective Date, the Creditors’ Committee shall have

consultation rights with respect to any proposed resolution of Disputed General Unsecured Claims.

(c) The M&M Claims Resolution Protocol shall remain in effect and binding

on the Reorganized Debtors and all holders of Prepetition M&M Liens Claims on and after the

Effective Date.

(d) Notwithstanding any other provisions hereof, if any portion of a Claim filed,

scheduled, or otherwise asserted on account of the Prepetition M&M Liens or otherwise asserting

Other Secured Claims is a Disputed Claim, no payment or distribution provided hereunder shall

be made on account of such Claim unless and until such Disputed Claim becomes an Allowed

Claim.

iii. Resolution of Disputed General Unsecured Claims

(a) Following thirty (30) days after the Effective Date, if the amount of filed or

scheduled (other than as contingent, unliquidated, or disputed) General Unsecured Claims exceeds

$30 million in the aggregate, then the Reorganized Debtors shall appoint the GUC Claims

Administrator. Notwithstanding any requirements that may be imposed pursuant to Bankruptcy

Rule 9019 and except with respect to General Unsecured Claims that are Allowed prior to the

Effective Date, on and after the Effective Date the GUC Claims Administrator shall have the

authority, in consultation with the Reorganized Debtors, to (i) file, withdraw, or litigate to

judgment objections to General Unsecured Claims, (ii) settle or compromise any Disputed


42

General Unsecured Claims, without further notice to or action, order, or approval by the

Bankruptcy Court, and (iii) direct the Claims and Noticing Agent to administer and adjust the

Claims Register to reflect any such settlements or compromises without any further notice to or

action, order, or approval by the Bankruptcy Court.

(b) The Reorganized Debtors shall reimburse the GUC Claims Administrator

up to $75,000 for its reasonable fees and out-of-pocket expenses incurred in connection with the

resolution of General Unsecured Claims pursuant to its authority set forth in Section 7.3(a) of the

Plan.

iv. Estimation of Claims

The Debtors, the Reorganized Debtors, or the GUC Claims Administrator (only with respect to

General Unsecured Claims), as applicable, may at any time request that the Bankruptcy Court

estimate any contingent, unliquidated, or Disputed Claim pursuant to section 502(c) of the

Bankruptcy Code, regardless of whether the Debtors had previously objected to or otherwise

disputed such Claim or whether the Bankruptcy Court has ruled on any such objection. The

Bankruptcy Court shall retain jurisdiction to estimate any Claim at any time during litigation

concerning any objection to any Claim, including during the pendency of any appeal relating to

any such objection. In the event that the Bankruptcy Court estimates any contingent, unliquidated,

or Disputed Claim, the amount so estimated shall constitute either the Allowed amount of such

Claim or a maximum limitation on such Claim, as determined by the Bankruptcy Court. If the

estimated amount constitutes a maximum limitation on the amount of such Claim, the Debtors, the

Reorganized Debtors, or the GUC Claims Administrator (only with respect to General Unsecured

Claims), as applicable, may pursue supplementary proceedings to object to the allowance of such

Claim.

v. Adjustment to Claims Register Without Objection

Any duplicate Claim or Interest or any Claim or Interest that has been paid or satisfied, or any

Claim that has been amended or superseded, may be adjusted or expunged on the Claims Register

by the Debtors, Reorganized Debtors, or the GUC Claims Administrator (only with respect to

General Unsecured Claims), as applicable, upon stipulation between the parties in interest without

a Claims objection having to be filed and without any further notice or action, order, or approval

of the Bankruptcy Court.

vi. Claim Resolution Procedures Cumulative

All of the objection, estimation, and resolution procedures in the Plan are intended to be cumulative

and not exclusive of one another. Claims may be estimated and subsequently settled,

compromised, withdrawn, or resolved in accordance with the Plan without further notice or

Bankruptcy Court approval.

vii. No Distributions Pending Allowance

Except with respect to Fee Claims, which are governed by the Interim Compensation Procedures

Order, if an objection, motion to estimate, or other challenge to a Claim is filed, no payment or


43

distribution provided under this Plan shall be made on account of such Claim unless and until (and

only to the extent that) such Claim becomes an Allowed Claim.

viii. Distributions after Allowance

To the extent that a Disputed Claim ultimately becomes an Allowed Claim, distributions (if any)

shall be made to the holder of such Allowed Claim in accordance with the provisions of the Plan.

As soon as practicable after the date on which the order or judgment of the Bankruptcy Court

allowing any Disputed Claim becomes a Final Order (but in no event later than the first Quarterly

Distribution Date after such date), the Disbursing Agent shall provide to the holder of such Claim

the distribution (if any) to which such holder is entitled under the Plan as of the Effective Date,

without any interest to be paid on account of such Claim unless required by the Bankruptcy Code.

ix. Disputed Claims Reserve

(a) Cash in the amount that would be distributable from the GUC Cash Pool to

any Disputed General Unsecured Claim had such Disputed General Unsecured Claim been

Allowed on the Effective Date, together with all earnings thereon (net of any taxes imposed thereon

or otherwise payable by the Disputed Claims Reserve), shall be deposited in the Disputed Claims

Reserve (which may be held in the same segregated account as the GUC Cash Pool). The amount

of the Disputed Claims Reserve shall be determined prior to the Confirmation Hearing, based on

the Debtors’ good faith estimates (in consultation with the Creditors’ Committee) or an order of

the Bankruptcy Court estimating such Disputed Claims, and shall be established on or about the

Effective Date.

(b) Subject to definitive guidance from the IRS or a court of competent

jurisdiction to the contrary, or the receipt of a determination by the IRS, the Disbursing Agent shall

treat the Disputed Claims Reserve as a “disputed ownership fund” governed by Treasury

Regulation section 1.468B-9 and to the extent permitted by applicable law, report consistently with

the foregoing for state and local income tax purposes. All parties (including the Debtors, the

Reorganized Debtors, the Disbursing Agent, and the holders of Disputed General Unsecured

Claims) shall be required to report for tax purposes consistently with the foregoing.

(c) The Disbursing Agent shall hold in the Disputed Claims Reserve all

payments to be made on account of Disputed General Unsecured Claims for the benefit of holders

of Disputed General Unsecured Claims whose Claims are subsequently Allowed. All taxes

imposed on assets or income of the Disputed Claims Reserve shall be payable by the Disbursing

Agent from the assets of the Disputed Claims Reserve, and all taxes imposed on assets or income

of the GUC Cash Pool will be payable by the Disbursing Agent from the assets of the GUC Cash

Pool.

(d) To the extent that a Disputed Claim becomes an Allowed Claim after the

Effective Date, the Disbursing Agent shall distribute to the holder thereof the distribution, if any,

of Cash out of the Disputed Claims Reserve to which such holder is entitled hereunder. No interest

shall be paid with respect to any Disputed Claim that becomes an Allowed Claim after the Effective

Date.


44

(e) In the event the remaining reserved Cash in the Disputed Claims Reserve is

insufficient to satisfy all the Disputed General Unsecured Claims that have become Allowed, such

Allowed General Unsecured Claims shall be satisfied Pro Rata from such remaining Cash. After

all Cash has been distributed from the Disputed Claims Reserve, no further distributions shall be

made in respect of Disputed General Unsecured Claims. At such time as all Disputed General

Unsecured Claims have been resolved, any remaining Cash in the Disputed Claims Reserve shall

be distributed Pro Rata to all holders of Allowed General Unsecured Claims.

H. Executory Contracts and Unexpired Leases

i. General Treatment

(a) As of and subject to the occurrence of the Effective Date and the payment

of any applicable Cure Amount, all executory contracts and unexpired leases to which any of the

Debtors are parties shall be deemed assumed, unless such contract or lease (i) was previously

assumed or rejected by the Debtors, pursuant to a Final Order of the Bankruptcy Court,

(ii) previously expired or terminated pursuant to its own terms or by agreement of the parties

thereto, (iii) is the subject of a motion to reject filed by the Debtors on or before the Confirmation

Date, (iv) is specifically designated, with the consent of the RBL Agent, as a contract or lease to

be rejected on the Schedule of Rejected Contracts, or (v) is specifically designated as a contract or

lease to be rejected as reasonably requested by the RBL Agent by the deadline to file the Plan

Supplement.

(b) Subject to (i) satisfaction of the conditions set forth in Section 8.1(a) of the

Plan, (ii) resolution of any disputes in accordance with Section 8.2 of the Plan with respect to the

contracts or leases subject to such dispute, and (iii) the occurrence of the Effective Date, entry of

the Confirmation Order by the Bankruptcy Court shall constitute approval of the assumptions or

rejections provided for in the Plan pursuant to sections 365(a) and 1123 of the Bankruptcy Code.

Each executory contract and unexpired lease assumed pursuant to the Plan shall vest in and be

fully enforceable by the applicable Reorganized Debtor in accordance with its terms, except as

modified by the provisions of the Plan, any Final Order of the Bankruptcy Court authorizing and

providing for its assumption, or applicable law.

(c) The Debtors shall file, as part of the Plan Supplement, the Schedule of

Rejected Contracts.

ii. Determination of Cure Disputes and Deemed Consent

(a) Any Cure Amount shall be satisfied, pursuant to section 365(b)(1) of the

Bankruptcy Code, by payment of the Cure Amount, as reflected on the applicable Cure Notice, in

Cash on the Effective Date, subject to the limitations described below, or on such other terms as

the counterparties to such executory contracts or unexpired leases and the Debtors may otherwise

agree.

(b) The Debtors shall serve a Cure Notice on counterparties to executory

contracts and unexpired leases no later than twenty-one (21) days before the commencement of

the Confirmation Hearing in accordance with the order approving the Disclosure Statement and

Solicitation procedures. If a counterparty to any executory contract or unexpired lease is not listed


45

on the applicable Cure Notice, the proposed Cure Amount for such executory contract or unexpired

lease shall be deemed to be zero dollars ($0).

(c) Any counterparty to an executory contract or unexpired lease shall have the

time prescribed by the order approving the Disclosure Statement and Solicitation procedures to

object to the proposed assumption or related Cure Amount listed on the Cure Notice.

(d) Any counterparty to an executory contract or unexpired lease that fails to

object timely to the proposed assumption or Cure Amount (i) shall be deemed to have assented to

such assumption or Cure Amount, notwithstanding any provision thereof that purports to

(1) prohibit, restrict, or condition the transfer or assignment of such contract or lease or

(2) terminate or permit the termination of a contract or lease as a result of any direct or indirect

transfer or assignment of the rights of the Debtors under such contract or lease or a change, if any,

in the ownership or control to the extent contemplated by the Plan, and shall forever be barred and

enjoined from asserting such objection against the Debtors or terminating or modifying such

contract or lease on account of transactions contemplated by the Plan, and (ii) shall be forever

barred, estopped, and enjoined from challenging the validity of such assumption thereafter.

(e) If there is a dispute regarding (i) any Cure Amount, (ii) the ability of the

Debtors to provide adequate assurance of future performance (within the meaning of section 365

of the Bankruptcy Code) under such contract or least to be assumed, or (iii) any other matter

pertaining to assumption, such dispute shall be heard by the Bankruptcy Court prior to such

assumption being effective. Notwithstanding the foregoing, to the extent the dispute relates solely

to any Cure Amounts, the applicable Debtor may assume the executory contract or unexpired lease

prior to the resolution of any such dispute, as long as that the Debtor reserves Cash in an amount

sufficient to pay the full amount reasonably asserted as the required Cure Amount by the contract

counterparty. Following entry of a Final Order resolving any such dispute, the Debtors shall have

right to reject any executory contract or unexpired lease within thirty (30) days of such resolution.

(f) Subject to resolution of any dispute regarding any Cure Amount (in

consultation with the RBL Agent), all Cure Amounts shall be satisfied by the Debtors or

Reorganized Debtors, as the case may be, upon assumption of the underlying contracts and

unexpired leases. Assumption of any executory contract or unexpired lease pursuant to the Plan,

or otherwise, shall result in the full release and satisfaction of any Claims or defaults, subject to

satisfaction of the Cure Amount, whether monetary or nonmonetary, including defaults of

provisions restricting the change in control or ownership interest composition or other bankruptcy-

related defaults, arising under any assumed executory contract or unexpired lease at any time

before the effective date of the assumption. Any Proofs of Claim filed with respect to an executory

contract or unexpired lease that has been assumed shall be deemed disallowed and expunged,

without further notice to or action, order or approval of the Bankruptcy Court or any other Person,

upon the deemed assumption of such contract or unexpired lease.

iii. Rejection Damages Claims

Any counterparty to an executory contract or unexpired lease that is identified on the Schedule of

Rejected Contracts or is otherwise rejected by the Debtors must file and serve a Proof of Claim on

the applicable Debtor that is party to the contract or lease to be rejected no later than thirty (30)


46

days after the later of (i) the Confirmation Date or (ii) the effective date of rejection of such

executory contract or unexpired lease.

iv. Survival of the Debtors’ Indemnification Obligations

Any obligations of the Debtors pursuant to their corporate charters, bylaws, limited liability

company agreements, or other organizational documents to indemnify current and former officers,

directors, members, managers, agents, or employees with respect to all present and future actions,

suits, and proceedings against the Debtors or such officers, directors, members, managers, agents,

or employees based upon any act or omission for or on behalf of the Debtors shall not be

discharged, impaired, or otherwise affected by the Plan. All such obligations shall be deemed and

treated as executory contracts to be assumed by the Debtors under the Plan and shall continue as

obligations of the Reorganized Debtors. Any claim based on the Debtors’ obligations under the

Plan shall not be a Disputed Claim or subject to any objection in either case by reason of section

502(e)(1)(B) of the Bankruptcy Code.

v. Compensation and Benefit Plans

Unless otherwise modified prior to the Effective Date, all employment policies, and all

compensation and benefits plans, policies, and programs of the Debtors applicable to their

respective employees, retirees, and nonemployee directors, including all savings plans, retirement

plans, healthcare plans, disability plans, severance benefit plans, incentive plans, and life and

accidental death and dismemberment insurance plans, are deemed to be, and shall be treated as,

executory contracts under the Plan and, on the Effective Date, shall be assumed pursuant to

sections 365 and 1123 of the Bankruptcy Code.

vi. Insurance Policies

(a) All insurance policies to which any Debtor is a party as of the Effective

Date, including any directors’ and officers’ insurance policies, shall be deemed to be and treated

as executory contracts and shall be assumed by the applicable Debtor or Reorganized Debtor and

shall continue in full force and effect thereafter in accordance with their respective terms. All

other insurance policies shall vest in the Reorganized Debtors.

(b) In addition, after the Effective Date, the Reorganized Debtors shall not

terminate or otherwise reduce the coverage under any directors’ and officers’ insurance policies

(including any “tail policy”) in effect or purchased as of the Petition Date. Any individual covered

by such insurance policies, including all current or former members, managers, directors, and

officers of the Debtors who served in such capacity at any time prior to the Effective Date shall be

entitled to the full benefits of any such policy for the full term of the policy regardless of whether

such members, managers, directors, officers, or other individuals remain in such positions after the

Effective Date.

vii. Reservation of Rights

(a) Neither the exclusion nor the inclusion by the Debtors of any contract or

lease on any exhibit, schedule, or other annex to the Plan or in the Plan Supplement, nor anything

contained in the Plan, shall constitute an admission by the Debtors that any such contract or lease


47

is or is not an executory contract or unexpired lease or that the Debtors or the Reorganized Debtors

or their respective affiliates has any liability thereunder.

(b) Except as explicitly provided in the Plan, nothing in the Plan shall waive,

excuse, limit, diminish, or otherwise alter any of the defenses, claims, Causes of Action, or other

rights of the Debtors or the Reorganized Debtors under any executory or non-executory contract

or unexpired or expired lease.

(c) Nothing in the Plan shall increase, augment, or add to any of the duties,

obligations, responsibilities, or liabilities of the Debtors or the Reorganized Debtors, as applicable,

under any executory or non-executory contract or unexpired or expired lease.

(d) If there is a dispute regarding whether a contract or lease is or was executory

or unexpired at the time of its assumption under the Plan, the Debtors or Reorganized Debtors, as

applicable, shall have thirty (30) days following entry of a Final Order resolving such dispute to

alter their treatment of such contract or lease.

I. Conditions Precedent to Confirmation of Plan and Occurrence of Effective Date

i. Conditions Precedent to Confirmation

The Confirmation Date shall not occur unless the following conditions precedent have been

satisfied:

(a) as of the Confirmation Hearing, (i) the amount of the Prepetition M&M

Liens, plus, without duplication, (ii) the amount of any Allowed Other Secured Claims on account

of such Prepetition M&M Liens, shall not exceed the Lien Cap. For the avoidance of doubt, the

Lien Cap shall include all Prepetition M&M Liens paid during the Chapter 11 Cases pursuant to

the interim and final orders granting the Motion of the Debtors Pursuant to 11 U.S.C. §§ 105(a)

and 363(b) and Fed. R. Bankr. P. 6003 and 6004 for Entry of Interim and Final Orders (I)

Authorizing Debtors to Pay or Honor (A) Amounts Owed to Interests Owners, (B) Joint Interest

Billings, and (C) Other Operating Expenses and (II) Granting Related Relief [Docket No. 9] or

other order of the Bankruptcy Court;

(b) the M&M Claims Resolution Protocol shall remain in effect;

(c) the Cash Collateral Order is in full force and effect; and

(d) the Plan Supplement has been filed.

ii. Conditions Precedent to Effective Date

The Effective Date shall not occur unless all of the following conditions precedent have been

satisfied:

(a) the Definitive Documents contain terms and conditions consistent in all

material respects with the Restructuring Support Agreement;


48

(b) the Bankruptcy Court shall have entered the Confirmation Order, and such

Confirmation Order shall not have been stayed or materially modified and shall:

(i) authorize the Debtors to take all actions necessary to enter

into, implement, and consummate the contracts, instruments,

releases, leases, and other agreements or documents created

in connection with the Plan in a manner consistent in all

respect with the Restructuring Support Agreement and

subject to the consent rights set forth therein;

(ii) decree that the provisions in the Confirmation Order and the

Plan are non-severable and mutually dependent;

(iii) authorize the Debtors to (1) implement the Restructuring, (2)

make all distributions and issuances as required under the

Plan, including Cash, New Equity Interests, and Warrants,

(3) enter into the Exit Credit Facilities, and (4) enter into any

agreements and transactions, including the Management

Incentive Plan, in each case, in a manner consistent with the

terms of the Restructuring Support Agreement and subject

to the consent rights set forth therein; and

(iv) authorize the implementation of the Plan in accordance with

its terms;

(c) the documents related to the Exit Credit Facilities shall have been duly

executed and delivered by all of the relevant parties thereto and the closing of each Exit Credit

Facility shall have occurred;

(d) all conditions precedent to the effectiveness of the Exit Credit Facilities

shall have been satisfied or waived in writing in accordance with the terms of each of the Exit

Credit Facilities;

(e) the final version of the Plan, the Definitive Documents, and all documents

contained in any supplement to the Plan, including any exhibits, schedules, amendments,

modifications, or supplements thereto or other documents contained therein, shall have been

executed or filed, as applicable, in form and substance consistent in all material respects with the

Restructuring Support Agreement and the Plan;

(f) the Debtors shall have implemented the Restructuring and all transactions

contemplated in the Restructuring Support Agreement in a manner consistent with the

Restructuring Support Agreement (and subject to, and in accordance with, the consent rights set

forth therein) and the Plan;

(g) all governmental approvals, including Bankruptcy Court approval,

necessary to effectuate the Restructuring shall have been obtained and all applicable waiting

periods have expired;


49

(h) to the extent invoiced in accordance with the terms of the Plan, the

Restructuring Support Agreement, and the Cash Collateral Order, all Restructuring Expenses shall

have been paid in full in Cash;

(i) the Restructuring Support Agreement shall be in full force and effect and

binding on the Debtors and the Consenting Creditors;

(j) each of the Definitive Documents shall (i) have been executed and

delivered, and any condition precedent contained to effectiveness therein have been satisfied or

waived in accordance therewith, and (ii) be in full force and effect and binding upon the relevant

parties; and

(k) all actions, documents and agreements necessary to implement and

consummate the Plan, including entry into the Definitive Documents and the Amended

Organizational Documents, and the transactions and other matters contemplated thereby, shall

have been effected and executed.

iii. Waiver of Conditions Precedent

(a) Each of the conditions precedent to the occurrence of the Effective Date

may be waived in writing by the Debtors and the RBL Agent without leave of or order of the

Bankruptcy Court. Any such waiver that would, directly or indirectly, abrogate the consent rights

of the Consenting Sponsors set forth in Section 2(b) of the Restructuring Support Agreement shall

also require consent of the Consenting Sponsors. If any such condition precedent is waived

pursuant to Section 9.3 and the Effective Date occurs, each party agreeing to waive such condition

precedent shall be estopped from withdrawing such waiver after the Effective Date or otherwise

challenging the occurrence of the Effective Date on the basis that such condition was not satisfied,

the waiver of such condition precedent shall benefit from the “equitable mootness” doctrine, and

the occurrence of the Effective Date shall foreclose any ability to challenge the Plan in any court.

If the Plan is confirmed for fewer than all of the Debtors, only the conditions applicable to the

Debtor or Debtors for which the Plan is confirmed must be satisfied or waived for the Effective

Date to occur.

(b) Except as otherwise provided under the Plan, all actions required to be taken

on the Effective Date shall take place and shall be deemed to have occurred simultaneously and

no such action shall be deemed to have occurred prior to the taking of any other such action.

(c) The stay of the Confirmation Order pursuant to Bankruptcy Rule 3020(e)

shall be deemed waived by and upon the entry of the Confirmation Order, and the Confirmation

Order shall take effect immediately upon its entry.

iv. Effect of Failure of a Condition

If the conditions listed in Section 9.2 of the Plan are not satisfied or waived in accordance with

Section 9.3 of the Plan on or before the first Business Day that is more than ten (10) days after the

date on which the Confirmation Order is entered or by such later date set forth by the Debtors in a

notice filed with the Bankruptcy Court prior to the expiration of such period, the Plan shall be null

and void in all respects and nothing contained in the Plan or the Disclosure Statement shall


50

(i) constitute a waiver or release of any Claims by or against or any Interests in the Debtors,

(ii) prejudice in any manner the rights of any Person, or (iii) constitute an admission,

acknowledgement, offer, or undertaking by the Debtors, any of the Consenting Creditors, or any

other Person.

J. Effect of Confirmation

i. Binding Effect

Except as otherwise provided in section 1141(d)(3) of the Bankruptcy Code, and subject to the

occurrence of the Effective Date, on and after the entry of the Confirmation Order, the provisions

of the Plan and the Plan Documents shall bind the Debtors, the Estates, the Reorganized Debtors,

and every holder of a Claim against or Interest in any Debtor, and inure to the benefit of and be

binding on such holder’s respective successors and assigns, regardless of whether the Claim or

Interest of such holder is Impaired under the Plan and whether such holder has accepted the Plan.

Except as expressly provided in the Plan, all agreements, instruments and other documents filed

in connection with the Plan shall be given full force and effect, and shall bind all parties referred

to therein as of the Effective Date, whether or not such agreements are actually issued, delivered,

or recorded on the Effective Date or thereafter and whether or not a party has actually executed

such agreement.

ii. Vesting Assets

Except as otherwise provided in the Plan, or any Plan Document, on and after the Effective Date,

pursuant to sections 1141(b) and (c) of the Bankruptcy Code, all assets of the Estates, including

all claims, rights, and Causes of Action and any property acquired by the Debtors under or in

connection with the Plan or the Plan Supplement, shall vest in each respective Reorganized Debtor

free and clear of all Claims, Liens, encumbrances, charges, and other interests. Subject to the

terms of the Plan, on and after the Effective Date, the Reorganized Debtors may operate their

businesses and may use, acquire, and dispose of property and prosecute, compromise, or settle any

Claims (including any Administrative Expense Claims) and Causes of Action without supervision

of or approval by the Bankruptcy Court and free and clear of any restrictions of the Bankruptcy

Code or the Bankruptcy Rules other than restrictions expressly imposed by the Plan or the

Confirmation Order. Without limiting the foregoing, the Reorganized Debtors may pay the

charges that they incur on or after the Confirmation Date for Professional Persons’ fees,

disbursements, expenses, or related support services without application to the Bankruptcy Court.

iii. Discharge of Claims against Interests in Debtors

Upon the Effective Date and in consideration of the distributions to be made under the Plan, except

as otherwise expressly provided in the Plan or in the Confirmation Order, each holder (as well as

any trustee or agents on behalf of each holder) of a Claim or Interest and any affiliate of such

holder shall be deemed to have forever waived, released, and discharged the Debtors, to the fullest

extent permitted by section 1141 of the Bankruptcy Code, of and from any and all Claims, Interest,

rights, and liabilities that arose prior to the Effective Date. Except as otherwise provided in the

Plan, upon the Effective Date, all such holders of Claims and Interests and their affiliates shall be

forever precluded and enjoined, pursuant to sections 105, 524, and 1141 of the Bankruptcy Code,


51

from prosecuting or asserting any such discharged Claim against or terminated Interest in any

Debtor or Reorganized Debtor.

iv. Pre-Confirmation Injunctions and Stays

Unless otherwise provided in the Plan or a Final Order of the Bankruptcy Court, all injunctions

and stays arising under or entered during the Chapter 11 Cases, whether under sections 105 or 362

of the Bankruptcy Code or otherwise, and in existence on the date of entry of the Confirmation

Order, shall remain in full force and effect until the later of the Effective Date and the date indicated

in the order providing for such injunction or stay.

v. Injunction against Interference with Plan

Upon the entry of the Confirmation Order, all holders of Claims and Interests and all other parties

in interest, along with their respective present and former affiliates, employees, agents, officers,

directors, and principals, shall be enjoined from taking any action to interfere with the

implementation or the occurrence of the Effective Date.

vi. Plan Injunction

(a) Except as otherwise provided in the Plan, in the Plan Documents, or in the

Confirmation Order, as of the entry of the Confirmation Order but subject to the occurrence of the

Effective Date, all Persons who have held, hold, or may hold Claims against or Interests in any or

all of the Debtors and their respective Related Persons, are permanently enjoined after the entry of

the Confirmation Order from (i) commencing, conducting, or continuing in any manner, directly

or indirectly, any suit, action, or other proceeding of any kind (including any proceeding in a

judicial, arbitral, administrative, or other forum) against or affecting, directly or indirectly, a

Debtor, a Reorganized Debtor, or an Estate or the property of any of the foregoing, or any direct

or indirect transferee of any property of, or direct or indirect successor in interest to, any of the

foregoing Persons mentioned in this subsection (i) or any property of any such transferee or

successor, (ii) enforcing, levying, attaching (including any prejudgment attachment), collecting,

or otherwise recovering in any manner or by any means, whether directly or indirectly, any

judgment, award, decree, or order against a Debtor, a Reorganized Debtor, or an Estate or its

property, or any direct or indirect transferee of any property of, or direct or indirect successor in

interest to, any of the foregoing Persons mentioned in this subsection (ii) or any property of any

such transferee or successor, (iii) creating, perfecting, or otherwise enforcing in any manner,

directly or indirectly, any encumbrance of any kind against a Debtor, a Reorganized Debtor, or an

Estate or any of its property, or any direct or indirect transferee of any property of, or successor in

interest to, any of the foregoing Persons mentioned in this subsection (iii) or any property of any

such transferee or successor, (iv) acting or proceeding in any manner, in any place whatsoever,

that does not conform to or comply with the provisions of the Plan, and the Plan Documents, to

the full extent permitted by applicable law, and (v) commencing or continuing, in any manner or

in any place, any action that does not comply with or is inconsistent with the provisions of the Plan

and the Plan Documents.


52

(b) By accepting distributions pursuant to the Plan, each holder of an Allowed

Claim or Interest shall be deemed to have affirmatively and specifically consented to be bound by

the Plan, including the injunctions set forth in Section 10.7(a) of the Plan.

vii. Releases

(a) Releases by Debtors. As of the Effective Date, except for the rights and

remedies that remain in effect from and after the Effective Date to enforce the Plan, the

Definitive Documents, and the obligations contemplated by the Restructuring, on and after

the Effective Date, the Released Parties will be conclusively, absolutely, unconditionally,

irrevocably, and forever released and discharged, to the maximum extent permitted by law,

by the Debtors, the Reorganized Debtors, and the Estates, in each case on behalf of

themselves and their respective successors, assigns, and Representatives and any and all

other Persons that may purport to assert any Cause of Action derivatively, by or through the

foregoing Persons, from any and all Causes of Action (including any derivative claims,

asserted or assertable on behalf of the Debtors, the Reorganized Debtors, or the Estates) that

the Debtors, the Reorganized Debtors, the Estates, or their affiliates would have been legally

entitled to assert in their own right (whether individually or collectively) or on behalf of the

holder of any Claim or Interest or other Person, based on, relating to, or in any manner

arising from, in whole or in part: the Debtors (including the management, direct or indirect

ownership, or operation thereof) or their Estates; the Reorganized Debtors; the Chapter 11

Cases; the Plan; the Restructuring; the RBL Facility; any debt or security of the Debtors

and the ownership thereof; the purchase, sale, or rescission of the purchase or sale of any

debt or 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 or other interactions between any Debtor and any

Released Party; the restructuring of any Claim or Interest before or during the Chapter 11

Cases; any other in-or-out-of-court restructuring efforts of the Debtors; any intercompany

transaction; the negotiation, formulation, preparation, dissemination, or consummation of

the Exit Credit Facilities, the Plan, any of the other Definitive Documents (including the

Restructuring Support Agreement), or any other contract, instrument, release, or document

created or entered into in connection with the Plan or any of the other Definitive Documents;

the Solicitation; or any other act or omission, transaction, agreement, event, or other

occurrence related to any of the forgoing and taking place on or before the Effective Date.

Notwithstanding anything in the Plan to the contrary, the releases contained in Section

10.7(a) of the Plan shall not release any Person from Causes of Action based on willful

misconduct, gross negligence or intentional fraud as determined by a Final Order.

(b) Releases by Holders of Claims or Interests. As of the Effective Date,

except for the rights and remedies that remain in effect from and after the Effective Date to

enforce the Plan, the Definitive Documents, and the obligations contemplated by the

Restructuring, on and after the Effective Date, the Released Parties will be conclusively,

absolutely, unconditionally, irrevocably, and forever released and discharged, to the

maximum extent permitted by law, by the Releasing Parties, in each case from any and all

Causes of Action (including any derivative claims, asserted or assertable on behalf of the

Debtors, the Reorganized Debtors, or their Estates) that such Releasing Parties or their

estates, affiliates, heirs, executors, administrators, successors, assigns, managers,


53

accountants, attorneys, representatives, consultants, agents, and any other Persons claiming

under or through them would have been legally entitled to assert in their own right (whether

individually or collectively) or on behalf of the holder of any Claim or Interest or other

Person, based on, relating to, or in any manner arising from, in whole or in part: the Debtors

(including the management, direct or indirect ownership, or operation thereof) or their

Estates; the Reorganized Debtors; the Chapter 11 Cases; the Plan; the Restructuring; the

RBL Facility; any debt or security of the Debtors and the ownership thereof; the purchase,

sale, or rescission of the purchase or sale of any debt or 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 or

other interactions between any Debtor and any Released Party; the restructuring of any

Claim or Interest before or during the Chapter 11 Cases; any other in-or-out-of-court

restructuring efforts of the Debtors; any intercompany transaction; the negotiation,

formulation, preparation, dissemination, or consummation of the Exit Credit Facilities, the

Plan, any of the other Definitive Documents (including the Restructuring Support

Agreement), or any other contract, instrument, release, or document created or entered into

in connection with the Plan or any of the other Definitive Documents; the Solicitation; or any

other act or omission, transaction, agreement, event, or other occurrence related to any of

the forgoing and taking place on or before the Effective Date. Notwithstanding anything in

the Plan to the contrary, the releases contained in Section 10.7(b) of the Plan shall not release

any Person from Causes of Action based on willful misconduct, gross negligence or

intentional fraud as determined by a Final Order.

viii. Exculpation

To the fullest extent permitted by applicable law, from and after the Effective Date, no

Exculpated Fiduciary and, solely to the extent provided by section 1125(e) of the Bankruptcy

Code, no Section 1125(e) Party, will have or incur, and each such Person will be released and

exculpated from, any Cause of Action based on, relating to, or in any manner arising from,

in whole or in part: the administration or filing of the Chapter 11 Cases; the negotiation,

formulation, preparation, dissemination, or consummation of the Restructuring, the Exit

Credit Facilities, the issuances of New Equity Interests and Warrants (and the Warrant

Equity issued upon exercise thereof), the Amended Organizational Documents, the

Management Incentive Plan, the Disclosure Statement, the Restructuring Support

Agreement, the Restructuring, the Plan, or any of the other Definitive Documents; the

Solicitation; the funding of the Plan; the occurrence of the Effective Date; the administration

of the Plan or the property to be distributed under the Plan; the issuance of securities under

or in connection with the Plan; the purchase, sale, or rescission of the purchase or sale of any

security of the Debtors or the Reorganized Debtors; or any other act or omission,

transaction, agreement, event, or other occurrence related to any of the forgoing and taking

place on or after the Petition Date through the Effective Date. Notwithstanding anything in

the Plan to the contrary, the exculpation provided in Section 10.8 of the Plan shall not release

any Person from Causes of Action based on willful misconduct, gross negligence or

intentional fraud as determined by a Final Order, but in all respects such Persons will be

entitled to reasonably rely upon the advice of counsel with respect to their duties and

responsibilities pursuant to the Plan. The exculpation provided in Section 10.8 of the Plan


54

shall be in addition to, and not in limitation of, all other releases, indemnities, exculpations,

and any other applicable law or rules protecting the Exculpated Parties from liability.

ix. Injunction Related to Releases and Exculpation

The Confirmation Order shall permanently enjoin the commencement or prosecution by any

Person, whether directly, derivatively, or otherwise, of any Claims, obligations, suits, judgments,

damages, demands, debts, rights, Causes of Action, losses, or liabilities released pursuant to the

Plan, including, without limitation, the claims, obligations, suits, judgments, damages, demands,

debts, rights, Causes of Action, and liabilities released or exculpated in the Plan or the

Confirmation Order.

x. Subordinated Claims

The allowance, classification, and treatment of all Allowed Claims and Interests and the respective

distributions and treatments thereof under the Plan take into account and conform to the relative

priority and rights of the Claims and Interests in each Class in connection with any contractual,

legal, and equitable subordination rights relating thereto, whether arising under general principles

of equitable subordination, sections 510(a), 510(b), or 510(c) of the Bankruptcy Code, or

otherwise. Pursuant to section 510 of the Bankruptcy Code, the Debtors reserve the right to

reclassify any Allowed Claim or Interest in accordance with any contractual, legal, or equitable

subordination relating thereto.

xi. Retention of Causes of Action and Reservation of Rights

Except as otherwise provided in the Plan, including Sections 10.6, 10.7, 10.8 and 10.9, nothing

contained in the Plan or the Confirmation Order shall be deemed to be a waiver or relinquishment

of any rights, claims, Causes of Action, rights of setoff or recoupment, or other legal or equitable

defenses that the Debtors had immediately prior to the Effective Date on behalf of the Estates or

of themselves in accordance with any provision of the Bankruptcy Code or any applicable

nonbankruptcy law. The Reorganized Debtors shall have, retain, reserve, and be entitled to assert

all such claims, Causes of Action, rights of setoff or recoupment, and other legal or equitable

defenses as fully as if the Chapter 11 Cases had not been commenced, and all of the Debtors’ legal

and equitable rights in respect of any Unimpaired Claim may be asserted after the Confirmation

Date and Effective Date to the same extent as if the Chapter 11 Cases had not been commenced.

xii. Ipso Facto and Similar Provisions Ineffective

Any term of any prepetition policy, prepetition contract, or other prepetition obligation applicable

to a Debtor shall be void and of no further force or effect with respect to any Debtor to the extent

that such policy, contract, or other obligation is conditioned on, creates an obligation of the Debtor

as a result of, or gives rise to a right of any Entity based on (i) the insolvency or financial condition

of a Debtor, (ii) the commencement of the Chapter 11 Cases, (iii) the confirmation or

consummation of the Plan, including any change of control that shall occur as a result of such

consummation, or (iv) the Restructuring Transactions.


55

K. Retention of Jurisdiction

i. Retention of Jurisdiction

On and after the Effective Date, the Bankruptcy Court shall retain exclusive jurisdiction, pursuant

to 28 U.S.C. §§ 1334 and 157, over all matters arising in or related to the Chapter 11 Cases for,

among other things, the following purposes:

(a) to hear and determine motions and/or applications for the assumption or

rejection of executory contracts or unexpired leases and any disputes over Cure Amounts resulting

therefrom;

(b) to determine any motion, adversary proceeding, application, contested

matter, and other litigated matter pending on or commenced after the entry of the Confirmation

Order;

(c) to hear and resolve any disputes arising from or related to (i) any orders of

the Bankruptcy Court granting relief under Bankruptcy Code 2004 or (ii) any protective orders

entered by the Bankruptcy Court in connection with the foregoing;

(d) to ensure that distributions to holders of Allowed Claims and Interests are

accomplished as provided in the Plan and the Confirmation Order and to adjudicate any and all

disputes arising from or relating to distributions under the Plan;

(e) to consider Claims or the allowance, classification, priority, compromise,

estimation, or payment of any Claim;

(f) to enter, implement, or enforce such orders as may be appropriate in the

event that the Confirmation Order is for any reason stayed, reversed, revoked, modified, or

vacated;

(g) to issue and enforce injunctions, enter and implement other orders, and take

such other actions as may be necessary or appropriate to restrain interference by any Person with

the consummation, implementation, or enforcement of the Plan, the Confirmation Order, or any

other order of the Bankruptcy Court;

(h) to hear and determine any application to modify the Plan in accordance with

section 1127 of the Bankruptcy Code or approve any modification of the Confirmation Order or

any contract, instrument, release, or other agreements or document created in connection with the

Plan, the Disclosure Statement, or the Confirmation Order (in each case, to the extent Bankruptcy

Court approval is necessary), or to remedy any defect or omission or reconcile any inconsistency

in the Plan, the Disclosure Statement, the Confirmation Order, or any order of the Bankruptcy

Court, in such a manner as may be necessary to carry out the purposes and effects thereof;

(i) to hear and determine all Fee Claims;

(j) to resolve disputes concerning any reserves with respect to Disputed Claims

or the administration thereof;


56

(k) to hear and determine disputes arising in connection with the interpretation,

implementation, or enforcement of the Plan, the Confirmation Order, any transactions or payments

in furtherance of either, or any agreement, instrument, or other document governing or related to

any of the foregoing;

(l) to take any action and issue such orders, including any such action or orders

as may be necessary after entry of the Confirmation Order or the occurrence of the Effective Date,

as may be necessary to construe, enforce, implement, execute, and consummate the Plan and the

Plan Documents;

(m) to determine such other matters and for such other purposes as may be

provided in the Confirmation Order;

(n) to hear and determine matters concerning state, local, and federal taxes in

accordance with sections 346, 505, and 1146 of the Bankruptcy Code (including any requests for

expedited determinations under section 505(b) of the Bankruptcy Code);

(o) to hear and determine any other matters related to the Chapter 11 Cases and

not inconsistent with the Bankruptcy Code or title 28 of the United States Code;

(p) to resolve any disputes concerning whether a Person had sufficient notice

of the Chapter 11 Cases, the Disclosure Statement, any solicitation conducted in connection with

the Chapter 11 Cases, any bar date established in the Chapter 11 Cases, or any deadline for

responding or objecting to a Cure Amount, in each case, for the purpose for determining whether

a Claim or Interest is discharged hereunder or for any other purposes;

(q) to hear, adjudicate, decide, or resolve any and all matters related to Article

X of the Plan, including, without limitation, the releases, discharge, exculpations, and injunctions

issued thereunder;

(r) to hear and determine any rights, Claims, or Causes of Action held by or

accruing to the Debtors pursuant to the Bankruptcy Code or pursuant to any federal statute or legal

theory;

(s) to recover all assets of the Debtors and property of the Estates, wherever

located; and

(t) to enter a final decree closing each of the Chapter 11 Cases.

ii. Courts of Competent Jurisdiction

If the Bankruptcy Court abstains from exercising, or declines to exercise, jurisdiction or is

otherwise without jurisdiction over any matter arising out of the Plan, such abstention, refusal, or

failure of jurisdiction shall have no effect upon and shall not control, prohibit, or limit the exercise

of jurisdiction by any other court having competent jurisdiction with respect to such matter.


57

L. Miscellaneous Provisions

i. Statutory Fees

All Statutory Fees due and payable prior to the Effective Date shall be paid by the Debtors or the

Reorganized Debtors. On and after the Effective Date, the Reorganized Debtors shall pay any and

all Statutory Fees when due and payable, and shall file with the Bankruptcy Court quarterly reports

in a form reasonably acceptable to the U.S. Trustee. Each Debtor or Reorganized Debtor, as

applicable, shall remain obligated to pay quarterly fees to the U.S. Trustee until the earliest of that

particular Debtor’s, or Reorganized Debtor’s, as applicable, case being closed, dismissed, or

converted to a case under Chapter 7 of the Bankruptcy Code.

ii. Exemption from Certain Transfer Taxes

Pursuant to section 1146 of the Bankruptcy Code, (i) the issuance, transfer or exchange of any

Securities, instruments or documents, (ii) the creation of any Lien, mortgage, deed of trust or other

security interest, (iii) all sale transactions consummated by the Debtors and approved by the

Bankruptcy Court on and after the Confirmation Date through and including the Effective Date,

including any transfers effectuated under the Plan, (iv) any assumption, assignment, or sale by the

Debtors of their interests in unexpired leases of nonresidential real property or executory contracts

pursuant to section 365(a) of the Bankruptcy Code, (v) the grant of collateral under the Exit Credit

Facilities, and (vi) the issuance, renewal, modification, or securing of indebtedness by such means,

and the making, delivery or recording of any deed or other instrument of transfer under, in

furtherance of, or in connection with, the Plan, including the Confirmation Order, shall not be

subject to any document recording tax, stamp tax, conveyance fee or other similar tax, mortgage

tax, real estate transfer tax, mortgage recording tax, Uniform Commercial Code filing or recording

fee, regulatory filing or recording fee, sales tax, use tax or other similar tax or governmental

assessment. Consistent with the foregoing, each recorder of deeds or similar official for any

county, city or Governmental Unit in which any instrument under the Plan is to be recorded shall,

pursuant to the Confirmation Order, be ordered and directed to accept such instrument without

requiring the payment of any filing fees, documentary stamp tax, deed stamps, stamp tax, transfer

tax, intangible tax or similar tax.

iii. Request for Expedited Determination of Taxes

The Debtors shall have the right to request an expedited determination under section 505(b) of the

Bankruptcy Code with respect to tax returns filed, or to be filed, for any and all taxable periods

ending after the Petition Date through the Effective Date.

iv. Dates of Actions to Implement Plan

In the event that any payment or act under the Plan is required to be made or performed on a date

that is not a Business Day, then the making of such payment or the performance of such act may

be completed on or as soon as reasonably practicable after the next succeeding Business Day but

shall be deemed to have been completed as of the required date.


58

v. Amendments

(a) Plan Modifications. Subject to the prior written consent of (i) the RBL

Agent, (ii) the Term Loan Lenders, solely with respect to the treatment of Class 4 Claims, and

(iii) the Creditors’ Committee, solely with respect to the treatment of Class 5 Claims and Section

7.3 of the Plan, the Plan may be amended, modified, or supplemented by the Debtors in the manner

provided for by section 1127 of the Bankruptcy Code or as otherwise permitted by law, without

additional disclosure pursuant to section 1125 of the Bankruptcy Code, except as otherwise

ordered by the Bankruptcy Court and in accordance with the Restructuring Support Agreement.

In addition, after the Confirmation Date, so long as such action does not materially and adversely

affect the treatment of holders of Allowed Claims pursuant to the Plan, the Debtors, with the prior

consent of the RBL Agent (which consent shall not be unreasonably withheld), may remedy any

defect or omission or reconcile any inconsistencies in the Plan or the Confirmation Order with

respect to such matters as may be necessary to carry out the purposes of effects of the Plan, and

any holder of a Claim or Interest that has accepted the Plan shall be deemed to have accepted the

Plan as amended, modified, or supplemented.

(b) Certain Technical Amendments. Subject to the Restructuring Support

Agreement, prior to the Effective Date, the Debtors, with the prior consent of the RBL Agent

(which consent shall not be unreasonably withheld) may make appropriate technical adjustments

and modifications to the Plan without further order or approval of the Bankruptcy Court, as long

as such technical adjustments and modifications do not adversely affect in a material way the

treatment of holders of Claims or Interests under the Plan and are consistent with the terms of the

Restructuring Support Agreement.

vi. Revocation or Withdrawal of Plan

To the extent permitted under the Restructuring Support Agreement and any consent rights

thereunder, the Debtors reserve the right to revoke or withdraw the Plan prior to the Effective Date

as to any or all of the Debtors. If, with respect to a Debtor, the Plan has been revoked or withdrawn

prior to the Effective Date, or if confirmation or the occurrence of the Effective Date as to such

Debtor does not occur on the Effective Date, then, with respect to such Debtor (i) the Plan shall be

null and void in all respects, (ii) any settlement or compromise embodied in the Plan (including

the fixing or limiting to an amount any Claim or Interest or Class of Claims or Interests),

assumption or rejection of executory contracts or unexpired leases affected by the Plan, and any

document or agreement executed pursuant to the Plan shall be deemed null and void, and

(iii) nothing contained in the Plan shall (a) constitute a waiver or release of any Claim by or

against, or any Interest in, such Debtor or any other Person, (b) prejudice in any manner the rights

of such Debtor or any other Person, or (c) constitute an admission of any sort by any Debtor or

any other Person.

vii. Severability

If, prior to the entry of the Confirmation Order, any term or provision of the Plan is held by the

Bankruptcy Court to be invalid, void, or unenforceable, the Bankruptcy Court, at the request of

the Debtors, shall have the power to alter and interpret such term or provision to make it valid or

enforceable to the maximum extent practicable, consistent with the original purpose of the term or


59

provision held to be invalid, void, or unenforceable, and such term or provision shall then be

applicable as altered or interpreted. Notwithstanding any such holding, alteration, or interpretation

by the Bankruptcy Court, the remainder of the terms and provisions of the Plan shall remain in full

force and effect and shall in no way be affected, impaired, or invalidated by such holding,

alteration, or interpretation. The Confirmation Order shall constitute a judicial determination and

shall provide that each term and provision of the Plan, as it may have been altered or interpreted

in accordance with Section 12.7 of the Plan, is (i) valid and enforceable pursuant to its terms,

(ii) integral to the Plan and may not be deleted or modified without the consent of the Debtors or

the Reorganized Debtors (as the case may be), and (iii) nonseverable and mutually dependent.

viii. Governing Law

Except to the extent that the Bankruptcy Code or other federal law is applicable or to the extent

that a Plan Document provides otherwise, the rights, duties, and obligations arising under the Plan

and the Plan Documents shall be governed by, and construed and enforced in accordance with, the

internal laws of the State of New York, without giving effect to the principles of conflicts of laws

thereof (other than section 5-1401 and section 5-1402 of the New York General Obligations Law).

ix. Immediate Binding Effect

Notwithstanding Bankruptcy Rules 3020(e), 6004(h), 7062, or otherwise, upon the occurrence of

the Effective Date, the terms of the Plan and the Plan Documents shall be immediately effective

and enforceable and deemed binding upon and inure to the benefit of the Debtors, the Reorganized

Debtors, the holders of Claims and Interests, the Released Parties, and each of their respective

successors and assigns.

x. Successors and Assigns

The rights, benefits, and obligations of any Person named or referred to in the Plan shall be binding

on and shall inure to the benefit of any heir, executor, administrator, successor, or permitted assign,

if any, of each such Person.

xi. Entire Agreement

On the Effective Date, the Plan, the Plan Supplement, and the Confirmation Order shall supersede

all previous and contemporaneous negotiations, promises, covenants, agreements, understandings,

and representations on such subjects, all of which have become merged and integrated into the

Plan.

xii. Computing Time

In computing any period of time prescribed or allowed by the Plan, unless otherwise set forth in

the Plan or determined by the Bankruptcy Court, the provisions of Bankruptcy Rule 9006 shall

apply.


60

xiii. Exhibits to Plan

All exhibits, schedules, supplements, and appendices to the Plan (including the Plan Supplement)

are incorporated into and are a part of the Plan as if set forth in full in the Plan.

xiv. Notices

All notices, requests, and demands under the Plan shall be in writing (including by email

transmission) and, unless otherwise provided in the Plan, shall be deemed to have been duly given

or made only when actually delivered or, in the case of notice by email transmission, when received

and confirmed by email, addressed as follows:

(a) if to the Debtors or Reorganized Debtors:

Chisholm Oil and Gas Operating, LLC

1 West Third Street, Suite 1700

Tulsa, Oklahoma 74103

Attn: Michael Rigg ([email protected])

– and –

WEIL, GOTSHAL & MANGES LLP

767 Fifth Avenue


Telephone: (212) 310-8000

Facsimile: (212) 310-8007

Attn:

Matt Barr, Esq. ([email protected])

Kelly DiBlasi, Esq. ([email protected])

Lauren Tauro, Esq. ([email protected])

– and –

YOUNG CONAWAY STARGATT & TAYLOR, LLP

1000 North King Street


Telephone: (302) 571-6600

Facsimile: (302) 571-1253

Attn:

M. Blake Cleary, Esq. ([email protected])

J. Luton Chapman, Esq. ([email protected])

S. Alexander Faris, Esq. ([email protected])

Attorneys for Debtors


61

(b) if to the RBL Agent:

LINKLATERS LLP

1345 Avenue of the Americas


Telephone: (212) 903-9000

Facsimile: (212) 903-9100

Attn:

Margot Schonholtz, Esq. ([email protected])

Penelope Jensen, Esq. ([email protected])

– and –

Morris, Nichols, Arsht & Tunnell LLP

1201 North Market Street, 16th Floor, P.O. Box 1347

Wilmington, DE 19899-1347

Telephone: (302) 351-9357

Facsimile: (302) 425-4664

Attn: Derek C. Abbott, Esq. ([email protected])

Attorneys for RBL Agent

(c) if to Consenting Sponsors:

PAUL, WEISS, RIFKIND, WHARTON & GARRISON, LLP



Telephone: (212) 373-3000

Facsimile: (212) 757-3990

Attn:

Jeffrey D. Saferstein, Esq. ([email protected])

Elizabeth McColm, Esq. ([email protected])

Attorneys for Consenting Sponsors

(d) if to the Creditors’ Committee:

PAUL HASTINGS LLP

600 Travis Street, Fifty-Eight Floor

Houston, Texas 77002

Telephone: (713) 860-7300

Facsimile: (713) 353-3100

Attn:

James T. Grogan, Esq. ([email protected])

Kevin P. Broughel, Esq. ([email protected])

– and –


62

BLANK ROME LLP

1201 Market Street, Suite 800


Telephone: (302) 425-6423

Facsimile: (302) 252-0921

Attn:

Regina Stango Kelbon, Esq. ([email protected])

Stanley B. Tarr, Esq. ([email protected])

Attorneys for Creditors’ Committee

After the occurrence of the Effective Date, the Reorganized Debtors have authority to send a notice

to Entities that, to continue to receive documents pursuant to Bankruptcy Rule 2002, such entities

must file a renewed request to receive documents pursuant to Bankruptcy Rule 2002.

Notwithstanding the foregoing, the U.S. Trustee need not file such a renewed request and shall

continue to receive documents without any further action being necessary. After the occurrence

of the Effective Date, the Reorganized Debtors are authorized to limit the list of entities receiving

documents pursuant to Bankruptcy Rule 2002 to those Entities that have filed such renewed

requests.

xv. Reservation of Rights

Except as otherwise provided in the Plan, the Plan shall be of no force or effect unless the

Bankruptcy Court enters the Confirmation Order. None of the filing of the Plan, any statement or

provision of the Plan, or the taking of any action by the Debtors with respect to the Plan shall be

or shall be deemed to be an admission or waiver of any rights of the Debtors with respect to any

Claims or Interests prior to the Effective Date.

VII.

TRANSFER RESTRICTIONS AND

CONSEQUENCES UNDER FEDERAL SECURITIES LAWS

The New Equity Interests and the Warrants issued under the Plan (and the Warrant Equity issuable

upon exercise thereof) will be issued without registration under the Securities Act or any similar

federal, state, or local law. The issuance and distribution of the New Equity Interests and the

Warrants (and the Warrant Equity issuable upon exercise thereof) to holders of Allowed RBL

Claims, and, if they vote in favor of the Plan, Allowed Term Loan Claims and Allowed Chisholm

Parent Equity Interests, as applicable, in accordance with Article IV of the Plan will be exempt,

pursuant to section 1145 of the Bankruptcy Code, without further act or actions by any Person,

from registration under the Securities Act and any other applicable state or local securities laws to

the fullest extent permitted by section 1145 of the Bankruptcy Code.

A. Section 1145 of the Bankruptcy Code Exemption and Subsequent Transfers

Section 1145 of the Bankruptcy Code generally exempts from registration under the Securities Act

the offer or sale pursuant to a chapter 11 plan of a security of the debtor, of an affiliate participating

in a joint plan with the debtor, or of a successor to the debtor under a plan, if such securities are


63

offered or sold in exchange for a claim against, or interest in, the debtor or such affiliate, or

principally in such exchange and partly for cash. Section 1145 of the Bankruptcy Code also

exempts from registration the offer of a security through any right to subscribe sold in the manner

provided in the prior sentence, and the sale of a security upon the exercise of such right. The

issuance and distribution of the New Equity Interests and the Warrants (and the Warrant Equity

issuable upon exercise thereof) to holders of Allowed RBL Claims and, if they vote in favor of the

Plan, Allowed Term Loan Claims and Allowed Chisholm Parent Equity Interests, as applicable,

under Article IV of the Plan shall be exempt, pursuant to section 1145 of the Bankruptcy Code,

without further act or action by any Person, from registration under (i) the Securities Act and

(ii) any applicable federal, state, or local law requiring registration for the issuance or distribution

of securities. Such securities issued pursuant to section 1145(a) of the Bankruptcy Code may be

resold without registration under the Securities Act or other federal securities laws pursuant to the

exemption provided by section 4(a)(1) of the Securities Act, subject to: (i) the holder not being an

“underwriter” with respect to such securities, as that term is defined in subsection (b) of section

1145 of the Bankruptcy Code; (ii) the holder (a) not being an “affiliate” of Reorganized Chisholm

Parent as defined in Rule 144(a)(1) under the Securities Act, (b) not having been such an “affiliate”

within ninety (90) days of such transfer and/or (c) not having acquired such securities from an

“affiliate” within one year of such transfer(other than, with respect to clause (ii), such resales as

may be permitted by and subject to the conditions of Rule 144 of the Securities Act); (iii)

compliance with any rules and regulations of the Securities and Exchange Commission applicable

at the time of any future transfer of such securities or instruments; (iv) any restrictions on the

transferability of the New Equity Interests contained in the Shareholders’ Agreement; (v) any

applicable regulatory approval; and (vi) any restrictions necessary for the Debtors to preserve their

ability to utilize certain tax attributes that exist as of the Effective Date. In addition, such section

1145 exempt securities generally may be resold without registration under state securities laws

pursuant to various exemptions provided by the respective laws of the several states.

Section 1145(b) of the Bankruptcy Code defines “underwriter” as one who, except with respect to

ordinary trading transactions, (i) purchases a claim with a view to distribution of any security to

be received in exchange for the claim, (ii) offers to sell securities issued under a plan for the holders

of such securities, (iii) offers to buy securities issued under a plan from persons receiving such

securities, if the offer to buy is made with a view to distribution, or (iv) is an issuer, as used in

Section 2(a)(11) of the Securities Act, with respect to such securities, which includes control

persons of the issuer.

“Control,” as defined in Rule 405 of the Securities Act, means the possession, directly or

indirectly, of the power to direct or cause the direction of the management and policies of a person,

whether through the ownership of voting securities, by contract, or otherwise. The legislative

history of Section 1145 of the Bankruptcy Code suggests that a creditor who owns 10% or more

of a class of voting securities of a reorganized debtor may be presumed to be a “controlling

person” and, therefore, an underwriter.

Notwithstanding the foregoing, control person underwriters may be able to sell securities without

registration pursuant to the resale limitations of Rule 144 under the Securities Act, which permits

the resale of securities received by such underwriters pursuant to a chapter 11 plan, subject to

applicable volume limitations, notice and manner of sale requirements, and certain other

conditions. Parties who believe they may be statutory underwriters as defined in section 1145 of


64

the Bankruptcy Code are advised to consult with their own legal advisors as to the availability of

the exemption provided by Rule 144.

In any case, recipients of securities issued under the Plan are advised to consult with their own

legal advisors as to the availability of any such exemption from registration requirements under

state law in any given instance and as to any applicable requirements or conditions to such

availability.

VIII.

CERTAIN U.S. FEDERAL TAX CONSEQUENCES OF PLAN

A. Introduction

The following discussion summarizes certain United States (“U.S.”) federal income tax

consequences of the implementation of the Plan to the Debtors, the Reorganized Debtors, and U.S.

Holders (as defined below) of Claims entitled to vote on the Plan (i.e., U.S. Holders of RBL

Claims, Term Loan Claims, and General Unsecured Claims) and the Chisholm Parent Equity

Interests. It does not address the U.S. federal income tax consequences to U.S. Holders of

unimpaired Claims or who are deemed to accept the Plan.

This discussion of U.S. federal income tax consequences below is based on the Internal Revenue

Code of 1986, as amended (the “Tax Code”), the U.S. Treasury Regulations promulgated

thereunder (the “Treasury Regulations”), judicial authorities, and published administrative rules,

pronouncements and positions of the Internal Revenue Service (the “IRS”), and other applicable

authorities, all as in effect on the date hereof. The U.S. federal income tax consequences of the

contemplated transactions are complex and subject to significant uncertainties. Changes in the

rules or new interpretations of the rules may apply retroactively and could significantly affect the

U.S. federal income tax consequences described below. The Debtors have not requested an

opinion of counsel or a ruling from the IRS with respect to any of the tax aspects of the

contemplated transactions, and the discussion below is not binding upon the IRS or any court. No

assurance can be given that the IRS would not assert, or that a court would not sustain, a different

position than any position discussed herein.

This summary does not address non-U.S., state, local, or non-income tax consequences of the Plan,

nor does it purport to address all aspects of U.S. federal income taxation that may be relevant to a

holder in light of its individual circumstances or to special classes of taxpayers, such as non-U.S.

holders, Persons who are related to the Debtors within the meaning of the Tax Code, small business

investment companies, regulated investment companies, real estate investment trusts, banks and

certain other financial institutions, insurance companies, tax-exempt organizations, mutual funds,

retirement plans, individual retirement and other tax-deferred accounts, U.S. expatriates, holders

that are, or hold their Claims, directly or indirectly, through S corporations, partnerships, or other

pass-through entities for U.S. federal income tax purposes, Persons whose functional currency is

not the U.S. dollar, dealers in securities or foreign currency, traders that mark-to-market their

securities, Persons subject to special tax accounting rules as a result of any item of gross income

with respect to the Claims being taken into account in an applicable financial statement (as defined

in section 451 of the Tax Code), and Persons who hold RBL Claims, Term Loan Claims, General

Unsecured Claims, and Chisholm Parent Equity Interests or who will hold the New Equity


65

Interests, the Warrants, or the FLSO Term Loan as part of a straddle, hedge, conversion

transaction, or other integrated investment, and Persons who are themselves in bankruptcy. In

addition, this discussion does not address the Foreign Account Tax Compliance Act, the alternative

minimum tax, the base erosion and anti-abuse tax, the “Medicare” tax on net investment income,

or U.S. federal taxes other than income taxes, nor does it apply, except as otherwise indicated

below, to any Person that acquires New Equity Interests, the Warrants, or the FLSO Term in the

secondary market.

This discussion assumes that a U.S. Holder of a Claim holds only Claims in a single Class, has

held the RBL Claims, Term Loan Claims, or General Unsecured Claims only as “capital assets”

(within the meaning of section 1221 of the Tax Code) and will hold the New Equity Interests,

FLSO Term Loan, and the Warrants as capital assets. The following summary assumes that

Classes 4, 5, and 7 vote to accept the Plan. The U.S. federal income tax consequences of the

implementation of the Plan to the Debtors, the Reorganized Debtors, and U.S. Holders of Claims

described below also may vary depending on the nature of any restructuring transactions that the

Debtors and/or Reorganized Debtors engage in. Unless otherwise indicated below, this discussion

assumes that the various debt and other arrangements (including transactions contemplated under

the Plan) to which the Debtors are parties will be respected for U.S. federal income tax purposes

in accordance with their form.

For purposes of this discussion, a “U.S. Holder” is a holder of a Claim that is: (1) an individual

citizen or resident of the United States for U.S. federal income tax purposes; (2) a corporation (or

other entity treated as a corporation for U.S. federal income tax purposes) created or organized

under the laws of the United States, any state thereof or the District of Columbia; (3) an estate the

income of which is subject to U.S. federal income taxation regardless of the source of such income;

or (4) a trust (A) if a court within the United States is able to exercise primary jurisdiction over the

trust’s administration and one or more United States persons (within the meaning of section

7701(a)(30) of the Tax Code) have authority to control all substantial decisions of the trust or

(B) that has a valid election in effect under applicable Treasury Regulations to be treated as a

United States person.

If a partnership (or other entity treated as a partnership or other pass-through entity for U.S. federal

income tax purposes) is a U.S. Holder of a Claim, the tax treatment of the partner (or other

beneficial owner) generally will depend upon the status of the partner (or other beneficial owner)

and the activities of the partnership and the partner. Partnerships and partners (or other beneficial

owners) of such partnerships (or other entities treated as partnerships or other pass-through

entities) that are U.S. Holders of Claims should consult their tax advisors regarding the U.S. federal

income tax consequences of the Plan.

THE FOLLOWING SUMMARY OF CERTAIN U.S. FEDERAL INCOME TAX

CONSEQUENCES IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT A

SUBSTITUTE FOR CAREFUL TAX PLANNING AND ADVICE BASED UPON THE

INDIVIDUAL CIRCUMSTANCES PERTAINING TO A HOLDER OF A CLAIM. ALL

HOLDERS OF CLAIMS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS

TO THE FEDERAL, STATE, LOCAL, NON-U.S., NON-INCOME, AND OTHER TAX

CONSEQUENCES OF THE PLAN.


66

B. Certain U.S. Federal Income Tax Consequences to the Debtors

The Debtors are disregarded entities of Holdings, a partnership for U.S federal income tax

purposes (other than Chisholm Oil and Gas Management II, LLC (which is a partnership for U.S.

federal income tax purposes) and Chisholm Oil and Gas Nominee, Inc. (which is a corporation for

U.S. federal income tax purposes)). Because the Debtors are disregarded entities of Holdings

(other than Chisholm Oil and Gas Management II, LLC or Chisholm Oil and Gas Nominee, Inc.)

and Holdings is a partnership for U.S. federal income tax purposes, the Debtors and Holdings are

not generally themselves subject to U.S. federal income tax. Instead, each holder of equity interests

in Holdings is generally required to report on its U.S. federal income tax return, and pay tax in

respect of, its distributive share of each item of income, gain, loss, deduction and credit of the

Debtors (other than Chisholm Oil and Gas Nominee, Inc.). Accordingly, the U.S. federal income

tax consequences of the restructuring transactions under the Plan are generally not borne by the

Debtors, but instead borne by the holders of equity interests in Holdings. Unless otherwise

indicated below, the following discussion below does not address Chisholm Oil and Gas

Management II, LLC or Chisholm Oil and Gas Nominee, Inc.

The tax consequences of the implementation of the Plan to the Debtors, Reorganized Debtors, U.S.

Holders of RBL Claims, U.S. Holders of Allowed Term Loan Claims, and holders of Chisholm

Parent Equity Interests differ depending on whether the Debtors pursue a reorganization

transaction structured for U.S. federal income tax purposes as an exchange of the RBL Claims and

Allowed Term Loan Claims for the New Equity Interests and the FLSO Term Loan and Warrants,

as applicable (the “Equitization Restructuring”) or a reorganization transaction treated for U.S.

federal income tax purposes as a taxable disposition of the assets of the Debtors (and in the case

of Chisholm Oil and Gas Nominee, Inc., its stock) (the “Asset Sale Restructuring”). The Debtors

have not yet determined whether to pursue the Equitization Restructuring or the Asset Sale

Restructuring.

The restructuring transactions are subject to potential change by the Debtors (in accordance with

the Plan and Restructuring Support Agreement) to ensure a more beneficial structure for holders

of Claims and the Debtors given the totality of the circumstances. The remainder of the discussion

assumes the implementation of the Equitization Restructuring or the Asset Sale Restructuring as

described.

i. Equitization Restructuring

If the Debtors pursue the Equitization Restructuring, the Debtors expect to take the position that,

for U.S. federal income tax purposes, the following steps shall be deemed to occur and take place

in the following order:

(i) Holdings is treated as issuing the FLSO Term Loan;

(ii) Holdings is treated as transferring a portion of the Debtors’ assets (subject to the

FLSO Term Loan) in a taxable exchange for the remaining RBL Claims and for the

Allowed Term Loan Claims; and

(iii) holders of RBL Claims contribute such assets, and holders of Allowed Term Loan

Claims contribute such assets, and Holdings is treated as contributing any non-


67

transferred assets, in each case, subject to the FLSO Term Loan, to Reorganized

Chisholm Parent in exchange for the New Equity Interests and Warrants, as

applicable, distributed under the Plan. Reorganized Chisholm Parent assumes the

FLSO Term Loan from Holdings.

Holdings is expected to recognize gain or loss with respect to the portion of the Debtors’ assets

transferred in exchange for RBL Claims and Allowed Term Loan Claims in an amount equal to

the difference between the value of the consideration Holdings would receive (which generally is

equal to the fair market value of the assets transferred, and in this case, would be equal to at least

the amount of liabilities treated as discharged for U.S. federal income tax purposes) and the

aggregate adjusted tax basis in such assets. Any such gain or loss would be allocated to the holders

of equity interest in Holdings. Reorganized Chisholm Parent would generally have an initial tax

basis in the portion of the assets treated as acquired from the holders of the RBL Claims and

Allowed Term Loan Claims equal to their respective fair market values at the time of the transfer

and in the portion of the assets treated as acquired from Holdings equal to Holdings’ adjusted tax

basis in such assets at the time of transfer. The following discussion assumes that Holdings would

continue to be treated for U.S. federal income tax purposes as holding the New Equity Interests

and Warrants for periods after the Effective Date. The Debtors are exploring a potential alternative

structure whereby Holdings may be treated as transferring the Debtors’ assets in a non-taxable

exchange, but the Debtors have not yet determined whether such treatment is feasible.

There is no assurance that the IRS would not take a position contrary to those described above.

Accordingly, holders of equity interests in Holdings and holders of Claims and are urged to consult

their tax advisors regarding the gain and loss and the deductibility of any losses recognized as a

result of the transfer of assets (including any other limitations that may be imposed by the tax law

based on a holder’s individual circumstances).

ii. Asset Sale Restructuring

If the Debtors pursue the Asset Sale Restructuring, the Debtors would transfer all or substantially

all of their assets in a taxable transaction, and Reorganized Chisholm Parent would be expected to

be treated as a corporation for U.S. federal income tax purposes. The Debtors may also explore a

potential alternative of this structure whereby Reorganized Chisholm Parent would be treated as a

partnership for U.S. federal income tax purposes. The following summary assumes that

Reorganized Chisholm Parent will be treated as a corporation for U.S. federal income tax purposes.

Such transfer is generally treated as a taxable sale or exchange of the assets of the Debtors (and in

the case of Chisholm Oil and Gas Nominee, Inc., its stock) for U.S. federal income tax purposes.

Holdings would recognize gain or loss upon the transfer of its assets in an amount equal to the

difference between the value of the consideration the Debtors receive (which generally is equal to

the fair market value of the assets treated as transferred by Holdings) and the aggregate adjusted

tax basis in such assets. It is possible that the fair market value of the assets could be treated as

less than the amount of liabilities treated as discharged for U.S. federal income tax purposes. As

described above, because Holdings is a partnership for U.S. federal income tax purposes, such gain

or loss would be allocated to the holders of equity interests in Holdings. Although several

provisions of the Tax Code can defer or disallow a loss recognized as a result of a transfer of assets

under certain circumstances (such as, potentially, a transfer of assets to a corporation for stock in


68

connection with the initial capitalization of the corporation or a transaction between related

parties), the Debtors believe that it is unlikely that such provisions apply.

In general, Reorganized Chisholm Parent would generally have an initial tax basis in the acquired

assets equal to their respective fair market values at the time of the transfer.

There is no assurance that the IRS would not take a position contrary to those described above.

Accordingly, holders of equity interests in Holdings and holders of Claims and are urged to consult

their tax advisors regarding the gain and loss and the deductibility of any losses recognized as a

result of the transfer of assets (including any other limitations that may be imposed by the tax law

based on a holder’s individual circumstances).

iii. COD Income

In general, absent an exception, a taxpayer realizes and recognizes cancellation of indebtedness

income (“COD Income”) upon satisfaction of its outstanding indebtedness for total consideration

less than the amount of such indebtedness. The amount of COD Income, in general, is the excess

of (i) the adjusted issue price of the indebtedness satisfied, over (ii) the sum of (a) the amount of

any cash and (b) the fair market value (or adjusted issue price, in the case of debt instruments) of

any consideration, in each case, given in satisfaction of such indebtedness at the time of the

exchange.

As described above, because the Debtors are disregarded entities for U.S. federal income tax

purposes, such COD Income, if any, and any other income recognized by the Debtors upon

implementation of the Plan are expected to be allocated to holders of equity interests in Holdings.

Certain statutory or judicial exceptions potentially can apply to limit the amount of COD Income

required to be included in income by the holders of equity interests in Holdings, depending on

their circumstances. In particular, exceptions are available that would allow COD Income to be

excluded from gross income if the COD Income is taken into account by a taxpayer that is insolvent

(but only to the extent of insolvency) or in bankruptcy. These exceptions apply at the “partner”

level and thus depend on whether the partner, i.e., the holder of equity interests in Holdings to

whom the COD Income is allocated, is itself insolvent or in bankruptcy. Whether the Debtors are

insolvent or in bankruptcy is not relevant for this purpose. For purposes of determining insolvency

of a holder of equity interests in Holdings (measured immediately prior to the Effective Date), the

holder of equity interests in Holdings would be treated as if it were individually liable for an

amount of partnership debt equal to the allocated amount of the COD Income. To the extent any

amount of COD Income is excludable by a holder of equity interests in Holdings by reason of the

insolvency or bankruptcy exception, the holder of equity interests in Holdings generally would be

required to reduce certain tax attributes (such as net operating losses, tax credits, possibly adjusted

tax basis in assets and passive losses) after the determination of its tax liability for the taxable year

(including, as described above, the amount of gain or loss recognized by the Holdings and allocated

to the holders of equity interests in Holdings with respect to a transaction treated as sale of assets).

Alternatively, a holder of equity interests in Holdings could elect first to reduce the adjusted tax

basis of its depreciable assets pursuant to section 108(b)(5) of the Tax Code. However, a partner

in a partnership may only make this election with respect to the portion of its outside basis

attributable to depreciable assets if the partnership so consents. Any COD Income over the amount


69

of available tax attributes would generally not give rise to U.S. federal income tax and generally

would not be expected to have any other U.S. federal income tax impact.

The adjusted tax basis of a holder’s equity interests in Holdings would be increased to the extent

of any income or gain allocated to such partner and decreased (but not below zero) to the extent of

any loss or deduction allocated to such partner, whether or not such loss is disallowed and thus not

deductible.

For U.S. federal income tax purposes, the discharge of a partnership’s indebtedness pursuant to

the Plan can result in a deemed cash distribution to its partners based on the amount of the

indebtedness allocable to such partner. To the extent that any such deemed cash distribution

exceeds the partner’s adjusted tax basis in its partnership interests (after adjustment for net gain or

loss allocable to the partner), such partner is expected to recognize capital gain. Any such capital

gain is generally treated as long-term if the partner’s holding period in its partnership interests is

more than one year and otherwise expected to be treated as short-term. A partner’s adjusted tax

basis in its partnership interests would be decreased (but not below zero) to the extent of any such

deemed cash distribution.

iv. Potential Application of AHYDO Provisions

The FLSO Term Loan may be subject to the provisions of the Tax Code dealing with applicable

high yield discount obligations (“AHYDOs”). These provisions can result in the deferral, and

even disallowance, of an issuer’s deduction of interest with respect to original issue discount

(“OID”). The FLSO Term Loan may be issued with OID. A debt obligation is generally treated

as an AHYDO if it is issued with substantial OID (meaning that there is accrued OID as of the

close of the first accrual period ending after the fifth anniversary of issuance in excess of one year’s

interest, both actual and imputed), has a yield to maturity of at least five percentage points over

the applicable federal rate in effect for the calendar month in which such notes are issued, and has

a maturity of over five years.

In the event that a debt instrument constitutes an AHYDO, a corporate issuer’s interest deduction

is deferred until such interest is paid in cash. Moreover, to the extent the yield to maturity on the

debt instrument is at least six percentage points over the applicable federal rate, a portion of a

corporate issuer’s interest deduction is disallowed. Accordingly, it is possible that the deductibility

of interest relating to the FLSO Term Loan may, in part, be deferred or disallowed to the extent

the FLSO Term Loan constitutes an AHYDO and the issuer of the FLSO Term Loan is either

(i) treated as a corporation for U.S. federal income tax purposes or (ii) is a disregarded entity or a

partnership for U.S. federal income tax purposes with a corporate owner or owners.

C. Certain U.S. Federal Income Tax Consequences to U.S. Holders of Allowed

Claims Entitled to Vote and Certain Interests

The following discussion assumes that the Debtors will pursue either an Equitization Restructuring

or the Asset Sale Restructuring. U.S. Holders of Claims are urged to consult their tax advisors

regarding the tax consequences of either of the transactions.


70

i. Consequences to U.S. Holders of Allowed RBL Claims

Pursuant to the Plan, in exchange for the full and final satisfaction, compromise, settlement, release

and discharge of Allowed RBL Claims, each holder thereof will receive its Pro Rata share of 95%

of the New Equity Interests and the FLSO Term Loan.

(a) Equitization Restructuring

As discussed above, the Debtors expect to take the position that, for U.S. federal income tax

purposes, the RBL Claims are exchanged for the FLSO Term Loan and a portion of the Debtors’

assets, subject to the FLSO Term Loan (the “RBL Exchange”), and holders of the RBL Claims

contribute such assets (subject to the FLSO Term Loan) to Reorganized Chisholm Parent in

exchange for the New Equity Interests (the “RBL Contribution”).

A U.S. Holder of RBL Claims is generally expected to recognize gain or loss in the RBL Exchange

equal to the difference between (i) the “issue price” of the FLSO Term Loan and the fair market

value of the assets, which in the aggregate would be equivalent to the fair market value of the New

Equity Interests, and (ii) such U.S. Holder’s adjusted tax basis in its RBL Claims treated as

exchanged pursuant to the RBL Exchange (other than any adjusted tax basis attributable to accrued

but unpaid interest). See Section C.v – “Character of Gain or Loss,” below. A U.S. Holder of RBL

Claims is expected to recognize interest income to the extent of any consideration allocable to

accrued but unpaid interest not previously included in income. See Section C.vi – “Accrued

Interest,” below. A U.S. Holder of RBL Claims is not expected to recognize gain or loss in the

RBL Contribution. The U.S. Holder’s initial tax basis in the New Equity Interests is expected to

be equal to the fair market value of the assets contributed, adjusted for the liabilities encumbering

such assets and in the FLSO Term Loan equal to the issue price. The U.S. Holder’s holding period

in the New Equity Interests and FLSO Term Loan generally begins on the day after the Effective

Date.

The “issue price” of the FLSO Term Loan depends on whether, at any time during the 31-day

period ending 15 days after the Effective Date, such FLSO Term Loan or the RBL Claims are

considered traded on an “established market.” Pursuant to applicable U.S. Treasury regulations,

an “established market” need not be a formal market. It is sufficient if there is a readily available

sales price for an executed purchase or sale of the FLSO Term Loan or RBL Claims, or if there is

one or more “firm quotes” or “indicative quotes” for the FLSO Term Loan or RBL Claims, in each

case as such terms are defined in applicable U.S. Treasury regulations. If the FLSO Term Loan is

considered traded on an established market, its issue price for U.S. federal income tax purposes is

expected to equal its fair market value as of the Effective Date. If the FLSO Term Loan is not

considered traded on an established market but the RBL Claims are so treated, the issue price of

the FLSO Term Loan for U.S. federal income tax purposes is expected to be based on the fair

market value of the RBL Claims (with appropriate adjustments, such as for the amount of cash

received, if any). If neither the FLSO Term Loan nor the RBL Claims are treated as traded on an

established market, the issue price of the FLSO Term Loan for U.S. federal income tax purposes

is generally its stated principal amount. If the Debtors determine that the FLSO Term Loan or

RBL Claims are traded on an established market, such determination and the determination of

issue price would be binding on a U.S. Holder unless such U.S. Holder discloses, on a timely-filed

U.S. federal income tax return for the taxable year that includes the Effective Date that such U.S.


71

Holder’s determination is different from the Debtors’ determination, the reasons for such U.S.

Holder’s different determination and, if applicable, how such U.S. Holder determined the fair

market value.

The Debtors do not believe that the RBL Claims currently would be, or the FLSO Term Loan will

be, considered traded on an established market, however the relevant determination date for such

purpose is the Effective Date and there can be no assurances that a trading market will not arise in

respect of the RBL Claims or the FLSO Term Loan between now and 15 days after the Effective

Date. Accordingly, each holder of RBL Claims is urged to consult its tax advisor regarding such

determination and the gain or loss that such holder may recognize as a result of the Loan Exchange.

(b) Asset Sale Restructuring

The exchange of RBL Claims for the New Equity Interests and the FLSO Term Loan by a U.S.

Holder is expected to be treated as a taxable exchange of the RBL Claims. Such a U.S. Holder is

expected to recognize gain or loss equal to the difference between (i) the sum of the (a) fair market

value of the New Equity Interests and (b) issue price of the FLSO Term Loan and (ii) such U.S.

Holder’s adjusted tax basis in its RBL Claims (other than any adjusted tax basis attributable to

accrued but unpaid interest). See Section C.v – “Character of Gain or Loss,” below. A U.S. holder

of RBL Claims is expected to recognize interest income to the extent of any consideration allocable

to accrued but unpaid interest not previously included in income. See Section C.vi – “Accrued

Interest,” below. A U.S. Holder’s initial tax basis in the New Equity Interests is expected to be

equal to its fair market value and in the FLSO Term Loan equal to the issue price. A U.S. Holder’s

holding period for the New Equity Interests and FLSO Term Loan generally begins on the day

following the Effective Date. With respect to the issue price of the FLSO Term Loan, see Section

C.i(a) – “Equitization Restructuring” discussion above.

ii. Consequences to U.S. Holders of Allowed Term Loan Claims

Pursuant to the Plan, in exchange for the full and final satisfaction, compromise, settlement, release

and discharge of Allowed Term Loan Claims, each holder thereof will receive its Pro Rata share

of 4% of the New Equity Interests, if the Class of Term Loan Claims votes to accept the Plan.


As discussed above, the Debtors expect to take the position that, for U.S. federal income tax

purposes, the Allowed Term Loan Claims are exchanged for a portion of the Debtors’ assets

subject to the FLSO Term Loan (the “Term Lender Exchange”) and holders of the Allowed Term

Loan Claims contribute such assets, subject to the FLSO Term Loan, to Reorganized Chisholm

Parent in exchange for the New Equity Interests (the “Term Lender Contribution”).

A U.S. Holder of Allowed Term Loan Claims is generally expected to recognize gain or loss in

Term Lender Exchange. See Section C.v – “Character of Gain or Loss,” below. Such a U.S. Holder

would recognize gain or loss equal to the difference between (i) the fair market value of the assets,

which would be equivalent to the fair market value of the New Equity Interests, and (ii) such U.S.

Holder’s adjusted tax basis in its Allowed Term Loan Claims (other than any adjusted tax basis

attributable to accrued but unpaid interest). See Section C.v – “Character of Gain or Loss,” below.

A U.S. Holder of Allowed Term Loan Claims is expected to recognize interest income to the extent


72

of any consideration allocable to accrued but unpaid interest not previously included in income.

See Section C.vi – “Accrued Interest,” below. A U.S. Holder of Allowed Term Loan Claims is

not expected to recognize gain or loss in the Term Lender Contribution. The U.S. Holder’s

aggregate initial tax basis in the New Equity Interests is expected to be equal to the fair market

value of the assets contributed, adjusted for the liabilities encumbering such assets. The U.S.

Holder’s holding period in the New Equity Interests generally begins on the day after the Effective

Date.


The exchange of Allowed Term Loan Claims for New Equity Interests by a U.S. Holder is expected

to be treated as a taxable exchange of the Allowed Term Loan Claims. Such a U.S. Holder would

be expected to recognize gain or loss equal to the difference between (i) the fair market value of

the New Equity Interests and (ii) such U.S. Holder’s adjusted tax basis in its Allowed Term Loan

Claims (other than any adjusted tax basis attributable to accrued but unpaid interest). See Section

C.v – “Character of Gain or Loss,” below. A U.S. holder of Allowed Term Loan Claims is expected

to recognize interest income to the extent of any consideration allocable to accrued but unpaid

interest not previously included in income. See Section C.vi – “Accrued Interest,” below. A U.S.

Holder’s aggregate initial tax basis in the New Equity Interests is expected to be equal to fair

market value, with such aggregate initial basis allocable to the New Equity Interests based on their

relative fair market values. A U.S. Holder’s holding period for the New Equity Interests generally

begins on the day following the Effective Date.

iii. Consequences to U.S. Holders of General Unsecured Claims

Pursuant to the Plan, in exchange for full and final satisfaction, compromise, settlement, release,

and discharge of Allowed General Unsecured Claims, each holder thereof will receive its Pro Rata

share of the GUC Cash Pool, subject to the GUC Cash Pool Reduction.

The receipt of cash by a U.S. Holder of an Allowed General Unsecured Claim is expected to be

treated as a taxable exchange. Such a U.S. Holder would be expected to recognize gain or loss

equal to the difference between (i) the Cash to be received by such U.S. Holder from the GUC

Cash Pool and (ii) such U.S. Holder’s adjusted tax basis in its Claim. See Section C.v – “Character

of Gain or Loss,” below. To the extent that any consideration is allocable to accrued but unpaid

interest not previously included in income, the U.S. Holder is expected to recognize ordinary

interest income. See Section C.vi – “Accrued Interest,” below.

iv. Consequences to U.S. Holders of Chisholm Parent Equity Interests

Pursuant to the Plan, each holder of Chisholm Parent Equity Interests will receive its Pro Rata

share of 1% of the New Equity Interests and Warrants for up to 11% of the New Equity Interests,

if (A) the Classes of Term Loan Claims, General Unsecured Claims, and Chisholm Parent Equity

Interests vote to accept the Plan and (B) as of the Confirmation Date, the Consenting Sponsors

have not terminated their obligations under the Restructuring Support Agreement pursuant to

Section 6(d)(xii) thereof. The Chisholm Parent Equity Interests will be cancelled, released, and

extinguished and of no further force and effect.


73


As discussed above, Chisholm Parent is a disregarded entity of Holdings for U.S. federal income

tax purposes. See Section B.i – “Equitization Restructuring” for a discussion of the Equitization

Restructuring with respect to Holdings generally.

The Debtors intend to treat the cancellation of the Chisholm Parent Equity Interests and

distribution of New Equity Interests and Warrants to Holdings under the Plan as a contribution by

Holdings of any non-transferred assets of the Debtors (subject to the FLSO Term Loan) to

Reorganized Chisholm Parent in exchange for the New Equity Interests and Warrants for U.S.

federal income tax purposes (the “Holdings Contribution”). Assuming that the FLSO Term Loan

would be treated as a “qualified liability” within the meaning of applicable Treasury Regulations

under section 707 of the Tax Code, Holdings is not expected to recognize gain or loss in the

Holdings Contribution. Holdings’ aggregate initial tax basis in the New Equity Interests and

Warrants received in exchange for the contributed assets is expected to be equal to its adjusted tax

basis in the portion of the Debtors’ assets it is deemed to contribute (and in the case of Chisholm

Oil and Gas Nominee, Inc., the stock considered contributed), with such aggregate initial basis

allocable to the New Equity Interests and Warrants based on their relative fair market values.

Holdings’ holding period in the New Equity Interests and Warrants generally includes its holding

period in the assets it is deemed to contribute.

The contribution of property to a partnership by a partner is generally treated as a “disguised sale”

of a portion of such property for U.S. federal income tax purposes if a liability encumbers the

property or the partnership assumes a liability of such partner and such liability is not a “qualified

liability”. To the extent a property contribution is treated as a disguised sale, the transaction

between a contributing partner (such as Holdings) and the partnership is treated as a sale for all

purposes of the Code. Whether or not the contribution of assets contemplated by the Equitization

Restructuring qualifies as a disguised sale is unclear. Holders of equity interests in Holdings are

urged to consult their tax advisor regarding the potential treatment of the Holdings Contribution

as a disguised sale.


The acquisition of the New Equity Interests and Warrants by Holdings is expected to be treated as

a taxable exchange. See Section B.i – “Asset Sale Restructuring” for a discussion of the Asset

Sale Restructuring with respect to Holdings generally. Holdings’ initial tax basis in the New

Equity Interests and Warrants with respect to such interests is expected to be equal to fair market

value. Holdings’ holding period for the New Equity Interests and Warrants received on the

Effective Date generally begins on the day following the Effective Date.

v. Character of Gain or Loss

Generally, the gain or loss recognized by a U.S. Holder with respect to a Claim or Interest is a

capital gain or loss unless, with respect to a Claim, such Claim was acquired at a market discount,

and depending on whether and the extent to which the U.S. Holder previously claimed a bad debt

deduction with respect to such Claim. Any such capital gain or loss is generally long-term if the


74

U.S. Holder’s holding period in the Claim or Interest is more than one year and otherwise expected

to be short-term. The deductibility of capital losses is subject to certain limitations.

A holder that purchased its Claims from a prior holder at a “market discount” (relative to the

principal amount of the Claims at the time of acquisition) may be subject to the market discount

rules of the Tax Code. A holder that purchased its Claim from a prior holder would be considered

to have purchased such Claim with “market discount” if the holder’s adjusted tax basis in its Claim

is less than the stated redemption price of such Claim at maturity by at least a de minimis amount.

Under these rules, any gain recognized on the exchange of Claims (other than in respect of a Claim

for accrued but unpaid interest) is generally treated as ordinary income to the extent of the market

discount accrued (on a straight line basis or, at the election of the holder, on a constant yield basis)

during the holder’s period of ownership, unless the holder elected to include the market discount

in income as it accrued. If a holder of Claims did not elect to include market discount in income

as it accrued and, thus, under the market discount rules, was required to defer all or a portion of

any deductions for interest on debt incurred or maintained to purchase or carry its Claims, such

deferred amounts would become deductible at the time of the exchange. U.S. Holders should

consult their own tax advisors concerning the application of the market discount rules to their

Claims.

vi. Accrued Interest

Although no assurance can be given that the IRS will accept, or that a court will uphold the

position, to the extent that any RBL Claim, Term Loan Claim, or General Unsecured Claim has

any accrued but unpaid interest thereon, the Plan specifies that any distribution received by the

holder of such Claim will be allocated first to the principal amount of the Claim (as determined

for U.S. federal income tax purposes) and then, to the extent the consideration exceeds the principal

amount of the Claim, to accrued but unpaid interest. See Section 6.14 of the Plan. Any amount

allocated to accrued but unpaid interest is taxable to a U.S. Holder as ordinary interest income if

such amount has not been previously included in the U.S. Holder’s gross income for U.S. federal

income tax purposes, regardless of whether such U.S. Holder realizes an overall gain or loss as a

result of surrendering its Claim. Conversely, a U.S. Holder may be able to recognize a deductible

loss to the extent that any accrued interest was previously included in the U.S. Holder’s gross

income but was not paid in full by the Debtors.

Holders of Claims are urged to consult their tax advisors regarding the allocation of consideration

received under the Plan, as well as the deductibility of accrued but unpaid interest and the character

of any loss claimed with respect to accrued but unpaid interest previously included in gross income

for U.S. federal income tax purposes.

vii. New Equity Interests


This discussion assumes that the Reorganized Debtors would be treated as partnerships or

disregarded entities (other than Chisholm Oil and Gas Nominee, Inc.) for U.S. federal income tax

purposes. The following discussion assumes that no election will be made for Reorganized

Chisholm Parent to be treated as a corporation for U.S. federal income tax purposes and


75

Reorganized Chisholm Parent is not treated as a publicly traded partnership under section 7704 of

the Tax Code. Reorganized Chisholm Parent and its subsidiaries that are treated as disregarded

entities (the “Reorganized Pass-through Debtors”) are generally not themselves subject to U.S.

federal income tax. Instead, Reorganized Chisholm Parent will file an annual partnership

information return with the IRS, which form will report the results of the operations of the

Reorganized Pass-through Debtors. Each recipient of New Equity Interests is generally required

to report on its U.S. federal income tax return, and pay tax in respect of, its distributive share of

each item of the Reorganized Pass-through Debtors’ income, gain, loss, deduction, and credit for

each taxable year of the Reorganized Pass-through Debtors ending with or within such partner’s

taxable year. Each item generally has the same character as if the partner of Reorganized Chisholm

Parent had realized the item directly. Partners are required to report these items regardless of the

extent to which, or whether, they receive cash distributions from Reorganized Chisholm Parent for

such taxable year, and thus may incur income tax liabilities in excess of any distributions from

Reorganized Chisholm Parent. Reorganized Chisholm Parent would provide each partner with

information to report its allocable share of the Reorganized Pass-through Debtors’ tax items for

U.S. federal income tax purposes. No assurance can be given, however, that Reorganized

Chisholm Parent will be able to provide such information prior to the initial due date of the

partners’ U.S. federal income tax returns and the partners may therefore be required to apply to

the IRS for an extension of time to file their tax returns.

The board of directors of Reorganized Chisholm Parent will have the right to decide how items

are reported on Reorganized Chisholm Parent’s U.S. federal income tax returns, and all partners

are required under the Tax Code to treat the items consistently on their own returns, unless they

file a statement with the IRS disclosing the inconsistency. In the event that an income tax return

of Reorganized Chisholm Parent is audited by the IRS, the tax treatment of Reorganized Chisholm

Parent’s income and deductions are generally determined at the Reorganized Chisholm Parent

level in a single proceeding, rather than in individual audits of the partners. The partnership

representative has considerable authority under the Tax Code and the limited liability company

agreement for Reorganized Chisholm Parent to make decisions affecting the tax treatment and

procedural rights of all partners.

A partner generally does not recognize gain or loss on the receipt of a distribution of cash or

property from Reorganized Chisholm Parent (provided that the partner is not treated as exchanging

such partner’s share of Reorganized Chisholm Parent’s “unrealized receivables” and/or certain

“inventory items” (as those terms are defined in the Tax Code, and together “Ordinary Income

Items”) for other partnership property). A partner, however, recognizes gain on the receipt of a

distribution of money and, in some cases, “marketable securities,” from Reorganized Chisholm

Parent (including any constructive distribution of money resulting from a reduction of the partner’s

share of the indebtedness of Reorganized Chisholm Parent) to the extent such cash distribution or

the fair market value of such marketable securities distributed exceeds such partner’s adjusted tax

basis in its partnership interest. Such distribution would be treated as gain from the sale or

exchange of a partnership interest, which is described below.

A partner generally recognizes gain on the complete liquidation of its partnership interest only to

the extent the amount of money received exceeds its adjusted tax basis in its interest. Distributions

of certain marketable securities are treated as distributions of money for purposes of determining

gain. Any gain recognized by a partner on the receipt of a distribution from Reorganized Chisholm


76

Parent is generally capital gain, but may be taxable as ordinary income under certain other

circumstances. No loss can be recognized on a distribution in liquidation of a partnership interest,

unless the partner receives no property other than money and Ordinary Income Items.

A partner’s adjusted tax basis in its interest in Reorganized Chisholm Parent is generally equal to

such partner’s initial tax basis (discussed above), increased by the sum of (a) any additional capital

contribution such partner makes to Reorganized Chisholm Parent, (b) the partner’s allocable share

of the income of Reorganized Chisholm Parent, and (c) increases in the partner’s allocable share

of the indebtedness of Reorganized Chisholm Parent, and reduced, but not below zero, by the sum

of (d) the partner’s allocable share of the losses of Reorganized Chisholm Parent, and (e) the

amount of money or the adjusted tax basis of property distributed to such partner, including

constructive distributions of money resulting from reductions in such partner’s allocable share of

the indebtedness of Reorganized Chisholm Parent.

A sale of all or part of a partner’s New Equity Interests generally results in the recognition of gain

or loss in an amount equal to the difference between the amount of the sales proceeds or

distribution (including any constructive distribution) and such partner’s adjusted tax basis for the

portion of the interest disposed of. Any gain or loss recognized with respect to such a sale is

generally treated as capital gain or loss, and long-term capital gain or loss if the interest has been

held for more than one year, except to the extent (i) that the proceeds of the sale are attributable to

a partner’s allocable share of certain Ordinary Income Items of Reorganized Chisholm Parent and

such proceeds exceed the partner’s adjusted tax basis attributable to such Ordinary Income Items

and (ii) of previously allowed bad debt or ordinary loss deductions. A partner’s ability to deduct

any loss recognized on the sale of its partnership interest depends on the partner’s own

circumstances and may be restricted under the Tax Code.


In general, any cash distributions with respect to the New Equity Interests are expected to be

treated as taxable dividends to the extent paid out of Reorganized Chisholm Parent’s current or

accumulated earnings and profits and includible by the holder as ordinary income when received.

“Qualified dividend income” received by a non-corporate U.S. Holder is subject to preferential tax

rates. Subject to applicable limitations, distributions treated as dividends paid to U.S. Holders that

are corporations generally will be eligible for the dividends-received deduction. However, the

dividends-received deduction is only available if certain holding period requirements are satisfied.

The length of time that a shareholder has held its stock is reduced for any period during which the

equityholder’s risk of loss with respect to the equity interests is diminished by reason of the

existence of certain options, contracts to sell, short sales, or similar transactions. In addition, to

the extent that a corporation incurs indebtedness that is directly attributable to an investment in the

equity interests on which the distribution treated as a dividend is paid, all or a portion of the

dividends received deduction may be disallowed.

To the extent the amount of any distribution exceeds available earnings and profits with respect to

such distribution, the excess is applied against and reduce the holder’s adjusted tax basis (on a

dollar-for-dollar basis) in respect of the New Equity Interests as to which the distribution was

made, but not below zero. Any remaining excess is expected to be treated as gain from the sale or

exchange of New Equity Interests.


77

Unless a nonrecognition provision applies, holders generally recognize capital gain or loss upon

the sale or exchange of New Equity Interests in an amount equal to the difference between (i) the

holder’s adjusted tax basis in its New Equity Interests held and (ii) the sum of the cash and the fair

market value of any property received from such disposition. Any such gain or loss generally

would generally be treated as long-term if the holder’s holding period for its New Equity Interests

held is more than one year at that time and otherwise short-term. A reduced tax rate on long-term

capital gain may apply to non-corporate holders. The deductibility of capital losses is subject to

significant limitations.

viii. FLSO Term Loan

(a) Payments of Stated Interest on the FLSO Term Loan Obligations

Payments of stated interest on the FLSO Term Loan are expected to be taxable to a U.S. Holder

as ordinary interest income at the time such payments are accrued or are received (in accordance

with the holder’s regular method of tax accounting).

(b) Accrual of Original Issue Discount on the FLSO Term Loan

Obligations

The FLSO Term Loan may be treated as issued with OID. A debt instrument generally has OID

if its “stated redemption price at maturity” exceeds its “issue price” (as described in Section

C.i(a) – “Equitization Restructuring” above) by more than a de minimis amount. The FLSO Term

Loan’s “stated redemption price at maturity” for this purpose would include all principal and

interest payable over the term of the FLSO Term Loan, other than “qualified stated interest,” i.e.,

stated interest that is unconditionally payable at least annually at a constant rate in cash or property

(other than debt of the issuer). All stated interest payable on the FLSO Term Loan is expected to

be treated as qualified stated interest for this purpose.

If the FLSO Term Loan is issued with OID, a U.S. Holder of the FLSO Term Loan is generally

required to include OID in gross income as it accrues over the term of the loan in accordance with

a constant yield-to-maturity method, regardless of whether the U.S. Holder is a cash or accrual

method taxpayer and whether and when the U.S. Holder receives cash payments of interest on the

obligation. Accordingly, a U.S. Holder could be treated as receiving interest income in advance

of a corresponding receipt of cash. Any OID that a U.S. Holder includes in income is expected to

increase the holder’s adjusted tax basis in the FLSO Term Loan. A U.S. Holder is generally not

required to include separately in income cash payments (other than in respect of qualified stated

interest) received on the FLSO Term Loan; instead, such payments reduce the U.S. Holder’s

adjusted tax basis in the FLSO Term Loan by the amount of the payment).

The amount of OID includible in income for a taxable year by a U.S. Holder generally equals the

sum of the daily portions of OID that accrue on the FLSO Term Loan for each day during the

taxable year on which such U.S. Holder holds the FLSO Term Loan, whether reporting on the cash

or accrual basis of accounting for U.S. federal income tax purposes. The daily portion is

determined by allocating to each day of an accrual period (generally, the period between interest

payments or compounding dates) a pro rata portion of the OID allocable to such accrual period.

The amount of OID expected to accrue during an accrual period is the product of the “adjusted


78

issue price” of the FLSO Term Loan at the beginning of the accrual period multiplied by the yield

to maturity of the FLSO Term Loan less the amount of any qualified stated interest allocable to

such accrual period. The “adjusted issue price” of a FLSO Term Loan at the beginning of an

accrual period equals its issue price, increased by the aggregate amount of OID that has accrued

on the FLSO Term Loan in all prior accrual periods, and decreased by any payments made during

all prior accrual periods on the FLSO Term Loan other than qualified stated interest.

The rules regarding the determination of issue price and OID are complex, and the OID rules

described above may not apply in all cases. See Section A.iv – “Potential Application of AHYDO

Provisions” above. Accordingly, each holder of RBL Claims is urged to consult its tax advisor

regarding the possible application of the OID rules to the FLSO Term Loan.

ix. Warrants


In the event of an Equitization Restructuring, the Debtors currently expect the Warrants to be

treated as “noncompensatory options” pursuant to Treasury Regulation Sections 1.704-1, 1.721-2

and 1.761-3. To the extent treated as noncompensatory options, ownership of Warrants alone

generally would not be expected to cause a U.S. Holder of the Warrants to be treated as a partner

in Reorganized Chisholm Parent, as the Warrants would not be treated as conveying any interest

in the capital or profits of Reorganized Chisholm Parent unless or until the point at which a Warrant

is exercised and New Equity Interests are issued therewith. However, there can be no assurance

that the IRS would not express a contrary view, including, that the terms of the Warrants could

cause the Warrants to be treated as additional New Equity Interests prior to their exercise.

An exercising U.S. Holder of a Warrant treated as a noncompensatory option is generally treated

as having contributed, in exchange for New Equity Interests, an amount of money equal to the

amount paid to exercise such Warrant and receive the New Equity Interests. A U.S. Holder of

Warrants generally would not recognize any gain or loss upon the exercise of such Warrants treated

as noncompensatory options. Reorganized Chisholm Parent may address the potential for a

discrepancy among the capital accounts of New Equity Interests issued upon exercise of Warrants

and other New Equity Interests by making interim adjustments to capital accounts if certain events

occur while the Warrants are outstanding and at the time of exercise.

As a result of exercise of the Warrants, the liabilities of the Reorganized Pass-through Debtors

allocable to the holders of the New Equity Interests at that time could be shifted to the U.S. Holders

of New Equity Interests issued upon the exercise of the Warrants. In such case, the U.S. Holders

of the New Equity Interests prior to the exercise of the Warrants would be deemed to have received

a cash distribution equal to the amount of the reduction in liabilities of the Reorganized Pass-

through Debtors allocated to such holders. Distributions to U.S. Holders of the New Equity

Interests, including deemed distributions described in the preceding sentence, are generally not

taxable for U.S. federal income tax purposes, except to the extent the amount of any such cash

distribution exceeds such holder’s adjusted tax basis in its New Equity Interests immediately

before the distribution. Cash distributions that are in excess of adjusted tax basis in the New Equity

Interests are generally considered to be gain from the sale or exchange of New Equity Interests.

Thus, if a debt shift in connection with an exercise of a Warrant results in a deemed cash


79

distribution that exceeds the adjusted tax basis a U.S. Holder has in its New Equity Interests, such

holder would recognize gain in an amount equal to such excess.

A U.S. Holder is expected to recognize gain or loss for U.S. federal income tax purposes upon the

sale, exchange or other taxable disposition of a Warrant in an amount equal to the difference, if

any, between the amount realized and such U.S. Holder’s adjusted tax basis in the Warrant being

sold. The amount realized upon a sale of the Warrants is generally measured by the sum of all

consideration received. Any gain or loss from the disposition of such Warrants is expected to be

capital gain or loss. Upon the lapse of a Warrant, it is anticipated that the Warrant holder would

recognize a capital loss equal to the portion of the adjusted tax basis (if any) of the Warrant.


In the event of an Asset Sale Restructuring, a U.S. Holder of Warrants generally would not

recognize any gain or loss upon the exercise of such Warrants. A U.S. Holder’s initial tax basis in

the New Equity Interests received upon exercise of a Warrant should be equal to the sum of (i) the

amount paid upon exercise of the Warrant and (ii) the U.S. Holder’s adjusted tax basis in the

Warrant. A holder’s holding period in the New Equity Interests received upon exercise of a

Warrant generally should commence the day following the exercise of the right. See Section

C.ix(a) – “Equitization Transaction” for a discussion of the sale, exchange, or other taxable

disposition of a Warrant generally.

D. Information Reporting and Backup Withholding

Payments of interest (including accruals of OID) or dividends and any other reportable payments,

possibly including amounts received pursuant to the Plan and payments of proceeds from the sale,

retirement or other disposition of the exchange consideration, may be subject to “backup

withholding” (currently at a rate of 24%) if a recipient of those payments fails to furnish to the

payor certain identifying information and, in some cases, a certification that the recipient is not

subject to backup withholding. Backup withholding is not an additional tax. Any amounts

deducted and withheld generally would be treated as a credit against that recipient’s U.S. federal

income tax, provided that appropriate proof is timely provided under rules established by the IRS.

Furthermore, certain penalties may be imposed by the IRS on a recipient of payments who is

required to supply information but who does not do so in the proper manner. Backup withholding

generally would not be expected to apply with respect to payments made to certain exempt

recipients, such as corporations and financial institutions. Information may also be required to be

provided to the IRS concerning payments, unless an exemption applies. Holders of Claims are

urged to consult their tax advisors regarding their qualification for exemption from backup

withholding and information reporting and the procedures for obtaining such an exemption.

U.S. Treasury regulations generally require disclosure by a taxpayer on its U.S. federal income tax

return of certain types of transactions in which the taxpayer participated, including, among other

types of transactions, certain transactions that result in the taxpayer’s claiming a loss in excess of

certain thresholds. Holders of Claims are urged to consult their tax advisor regarding these U.S.

Treasury regulations and whether the contemplated transactions under the Plan would be subject

to these U.S. Treasury regulations and require disclosure on their tax returns.


80

The foregoing summary has been provided for informational purposes only. The restructuring

transactions are subject to potential change by the Debtors (in accordance with the Plan and

Restructuring Support Agreement) to ensure a more beneficial structure for holders of Claims

and the Debtors given the totality of the circumstances. Holders of Claims and holders of

Chisholm Parent Equity Interests are urged to consult its tax advisor concerning the U.S.

federal, state, local, and other tax consequences applicable under the Plan.

IX.

CERTAIN RISK FACTORS TO BE CONSIDERED

Before voting to accept or reject the Plan, holders of Claims and Interests should read and carefully

consider the risk factors set forth below, in addition to the information set forth in this Disclosure

Statement together with any attachments, exhibits, or documents incorporated by reference hereto.

The factors below should not be regarded as the only risks associated with the Plan or its

implementation.

A. Certain Bankruptcy Law Considerations

i. General

Although the Debtors believe that the Chapter 11 Cases will not be materially disruptive to their

business, the Debtors cannot be certain that this will be the case, including if the Effective Date is

prolonged. Although the Plan is designed to minimize the length of the Chapter 11 Cases, it is

impossible to predict with certainty the amount of time that one or more of the Debtors may spend

in bankruptcy or to assure parties in interest that the Plan will be confirmed. It is possible that

bankruptcy proceedings could adversely affect the Debtors’ relationships with their key customers,

vendors, and employees. The cases will also involve additional expense and may divert some of

the attention of the Debtors’ management away from business operations.

ii. Risk of Non-Confirmation of the Plan

Although the Debtors believe that the Plan will satisfy all requirements necessary for confirmation

by the Bankruptcy Court, there can be no assurance that the Bankruptcy Court will reach the same

conclusion or that modifications to the Plan will not be required for confirmation or that such

modifications would not necessitate re-solicitation of votes. Moreover, the Debtors can make no

assurances that they will receive the requisite votes for acceptance to confirm the Plan or satisfy

all of the conditions for confirmation required under the Plan. Even if all voting classes vote in

favor of the Plan or the requirements for “cramdown” are met with respect to any Class that

rejected the Plan, the Bankruptcy Court could decline to confirm the Plan if it finds that any of the

statutory requirements for confirmation are not met. If the Plan is not confirmed, it is unclear what

distributions holders of Claims or Interests ultimately would receive with respect to their Claims

or Interests in a subsequent plan of reorganization or otherwise. Non-confirmation of the Plan

could result in protracted Chapter 11 Cases, which could significantly and detrimentally impact

the Debtors’ relationships with vendors, suppliers, employees, and major customers. In such

circumstances, the Debtors may no longer have consent to use Cash Collateral, and even if they

do there likely would be a significant strain on liquidity and the Debtors may be forced to seek


81

postpetition financing. There is no guarantee that such funding would be available or on what

terms.

iii. Non-Consensual Confirmation

If any impaired class of claims or equity interests does not accept or is deemed not to accept a plan

of reorganization, a bankruptcy court may nevertheless confirm such plan at the proponent’s

request if at least one impaired class has voted to accept the plan (with such acceptance being

determined without including the vote of any “insider” in such class), and as to each impaired class

that has not accepted the plan, the Bankruptcy Court determines that the plan “does not

discriminate unfairly” and is “fair and equitable” with respect to the dissenting impaired classes.

If any Class votes to reject the plan, then these requirements must be satisfied with respect to such

rejecting Classes. The Debtors believe that the Plan satisfies these requirements.

iv. Risk of Non-Occurrence of the Effective Date

Although the Debtors believe that the Effective Date will occur soon after the Confirmation Date,

there can be no assurance as to the timing of the Effective Date. If the conditions precedent to the

Effective Date set forth in the Plan have not occurred or have not been waived as set forth in Article

IX of the Plan, then the Confirmation Order may be vacated, in which event no distributions would

be made under the Plan, the Debtors and all holders of Claims or Interests would be restored to the

status quo as of the day immediately preceding the Confirmation Date, and the Debtors’

obligations with respect to Claims and Interests would remain unchanged. Nonoccurrence of the

Effective Date could result in substantial changes to the Plan and protracted Chapter 11 Cases,

which could significantly and detrimentally impact the Debtors’ relationships with vendors,

suppliers, employees, and major customers. In such circumstances, the Debtors may no longer

have consent to use Cash Collateral, and even if they do there likely would be a significant strain

on liquidity and the Debtors may be forced to seek postpetition financing. There is no guarantee

that such funding would be available or on what terms.

v. Risk of Termination of the Restructuring Support Agreement

The Restructuring Support Agreement contains certain provisions that give the Debtors, the

Requisite Creditors (as defined in the Restructuring Support Agreement), and the Consenting

Sponsors the ability to terminate the Restructuring Support Agreement if various conditions are

satisfied. Termination of the Restructuring Support Agreement could result in substantial changes

to the Plan and protracted Chapter 11 Cases, which could significantly and detrimentally impact

the Debtors’ relationships with vendors, suppliers, employees, and major customers. In such

circumstances, the Debtors may no longer have consent to use Cash Collateral, and even if they

do there likely would be a significant strain on liquidity and the Debtors may be forced to seek

postpetition financing. There is no guarantee that such funding would be available or on what

terms.

vi. Conversion into Chapter 7 Cases

If no plan of reorganization can be confirmed, or if the Bankruptcy Court otherwise finds that it

would be in the best interest of holders of Claims and Interests, the Chapter 11 Cases may be

converted to cases under chapter 7 of the Bankruptcy Code, pursuant to which a trustee would be


82

appointed or elected to liquidate the Debtors’ assets for distribution in accordance with the

priorities established by the Bankruptcy Code. Please refer to Section XIII.C. hereof, as well as

the Liquidation Analysis attached hereto as Exhibit D, for a discussion of the effects that a chapter

7 liquidation would have on the recoveries of holders of Claims and Interests.

vii. Risks Related to Possible Objections to the Plan

There is a risk that certain parties could oppose and object to either the entirety of the Plan or

specific provisions of the Plan. Although the Debtors believe that the Plan complies with all

relevant Bankruptcy Code provisions, there can be no guarantee that a party in interest will not file

an objection to the Plan or that the Bankruptcy Court will not sustain such an objection.

viii. Releases, Injunctions, and Exculpations Provisions May Not Be Approved

Article X of the Plan provides for certain releases, injunctions, and exculpations for Claims and

Causes of Action that may otherwise be asserted against the Debtors, the Reorganized Debtors,

the Exculpated Parties, or the Released Parties, as applicable. The releases, injunctions, and

exculpations provided in the Plan are subject to objection by parties in interest and may not be

approved. If the releases and exculpations are not approved, certain parties may not be considered

Releasing Parties, Released Parties, or Exculpated Parties, and certain Released Parties or

Exculpated Parties may withdraw their support for the Plan.

B. Additional Factors Affecting the Value of Reorganized Debtors

i. Claims Could Be More than Projected

There can be no assurance that the estimated Allowed amount of Claims in Class 5 (General

Unsecured Claims) will not be significantly more than projected, which in turn, could cause the

value of distributions to be reduced substantially. Inevitably, some assumptions will not

materialize, and unanticipated events and circumstances may affect the ultimate results. Therefore,

the actual amount of Allowed Claims in Class 5 may vary materially from the Debtors’ projections

and feasibility analysis.

ii. Projections and Other Forward-Looking Statements Are Not Assured, and Actual Results May Vary

Certain of the information contained herein is, by nature, forward-looking, and contains estimates

and assumptions, which might ultimately prove to be incorrect, and projections, which may be

materially different from actual future experiences. Many of the assumptions underlying the

projections are subject to significant uncertainties that are beyond the control of the Debtors or

Reorganized Debtors, including the timing, confirmation, and consummation of the Plan, the

Debtors’ customer relationships, inflation, and other unanticipated market and economic

conditions. There are uncertainties associated with any projections and estimates, and they should

not be considered assurances or guarantees of the amount of funds that will be available under the

Plan. Some assumptions may not materialize and unanticipated events and circumstances may

affect the actual results. Projections are inherently subject to substantial and numerous

uncertainties and to a wide variety of significant business, economic, and competitive risks, and


83

the assumptions underlying the projections may be inaccurate in material respects, which may

impact the value of the New Equity Interests. In addition, unanticipated events and circumstances

occurring after the approval of this Disclosure Statement by the Bankruptcy Court, including any

natural disasters, terrorist attacks, or health epidemics may affect the actual financial results

achieved. Such results may vary significantly from the forecasts and such variations may be

material.

iii. Risks Associated with Debtors’ Business and Industry and Financial Conditions

(a) Risks Associated with Debtors’ Business and Industry

The risks associated with the Debtors’ business and industry include, among other things, volatility

in commodity prices for oil, natural gas, and natural gas liquids (“NGLS”). The prices for oil,

natural gas, and NGLs are volatile due to a variety of factors that include the following:

worldwide and regional economic conditions that impact domestic and foreign supply

and demand for oil and natural gas;

social unrest and political instability, particularly in major oil and natural gas producing

regions outside the United States, such as the Middle East, and armed conflict or

terrorist attacks, whether or not in oil or natural gas producing regions;

the level and growth of consumer product demand;

labor unrest in oil and natural gas producing regions;

weather conditions, including hurricane and other natural occurrences that affect the

supply and/or demand of oil and natural gas;

the price and availability of alternative fuels and renewable energy sources;

the impact of the U.S. dollar exchange rates on commodity prices;

the price of foreign imports;

technological advances affecting energy consumption; and

worldwide economic conditions.

In addition, global or national health concerns can negatively impact the economy and, therefore

demand and pricing for oil and natural gas products. In March 2020, the World Health

Organization declared a global pandemic with respect to COVID-19. This outbreak has led to a

decline in factory output and transportation demand, causing oil and gas prices to suffer.

Moreover, the breakdown in dialogue between OPEC and Russia over proposed oil production

cuts in the midst of the COVID-19 pandemic caused oil and gas prices to fall to their lowest levels

in nearly twenty years. There can be no assurance that OPEC members and other oil exporting

nations will agree to future production cuts or other actions to support and stabilize oil prices nor


84

can there be any assurance that they will not further reduce oil prices or increase production.

Uncertainty regarding future actions that the OPEC members may take or other oil exporting

countries could lead to increased volatility in the price of oil, which could cause us to incur future

impairment charges that adversely affect our business, financial condition and results of

operations. Further, it is impossible to tell how long, the extent or to what degree the COVID-19

pandemic will affect macroeconomic conditions and commodity prices.

Other risks associated with the Debtors business and industry include (i) the Debtors’ ability to

successfully develop the Debtors’ undeveloped acreage; (ii) the cost and availability of goods and

services, such as drilling rigs; (iii) access to and availability of water and other treatment materials

to carry out fracture stimulations in the Debtors’ resource play; (iv) access to adequate gathering

systems, processing and treating facilities, and transportation take-away capacity to move the

Debtors’ production to marketing outlets to sell the Debtors’ production at market prices;

(v) drilling and operating risks; and (vi) exploration and development risks.

(b) Risks Associated with Post-Emergence Indebtedness

On the Effective Date, on a consolidated basis, it is expected that the Reorganized Debtors will

have total secured indebtedness of approximately $34.77 million. If the Reorganized Debtors

subsequently fully draw on the FLFO RBL Facility, the total secured funded indebtedness

outstanding could increase to up to approximately $49.77 million. The Reorganized Debtors may

not be able to generate sufficient revenue to satisfy their obligations under such indebtedness,

increasing the risk that they may default on such debt obligations.

The Reorganized Debtors’ earnings and cash flow may vary significantly from year to year.

Additionally, the Reorganized Debtors’ future cash flow may be insufficient to meet their debt

obligations and commitments. Any insufficiency could negatively impact the Reorganized

Debtors’ business. A range of economic, competitive, business, and industry factors will affect

the Reorganized Debtors’ future financial performance and, as a result, their ability to generate

cash flow from operations and to pay their debt. Many of these factors are beyond the Reorganized

Debtors’ control.

If the Reorganized Debtors do not generate enough cash flow from operations to satisfy their debt

obligations, they may have to undertake alternative financing plans, such as:

Refinancing or restructuring debt;

Selling assets;

Reducing or delaying capital investments; or

Seeking to raise additional capital.

It cannot be assured, however, that undertaking alternative financing plans, if necessary, would

allow the Reorganized Debtors to meet their debt obligations. An inability to generate sufficient

cash flow to satisfy their debt obligations or to obtain alternative financing could materially and

adversely affect the Reorganized Debtors’ ability to make payments on the Exit Credit Facilities

and their business, financial condition, results of operations, and prospects.


85

(c) Defects in Collateral Securing the Exit Facilities

The indebtedness under the Exit Facilities will be secured, subject to certain exceptions and

permitted liens, on a first-priority basis by security interests in substantially all assets of the

Reorganized Debtors (henceforth, the “Collateral”). The Collateral securing the Exit Facilities

may be subject to exceptions, defects, encumbrances, liens, and other imperfections. Accordingly,

it cannot be assured that the remaining proceeds from a sale of the Collateral would be sufficient

to repay holders of the debt under the Exit Facilities. The fair market value of the Collateral is

subject to fluctuations based on factors that include, among others, the ability to sell Collateral in

an orderly manner, general economic conditions, the availability of buyers, the Reorganized

Debtors’ ability to implement their business strategy, and similar factors. By its nature, portions

of the Collateral may be illiquid and may have no readily ascertainable market value. In the event

of a subsequent foreclosure, liquidation, bankruptcy, or similar proceeding, it cannot be assured

that the proceeds from any sale or liquidation of the Collateral will be sufficient to pay the

Reorganized Debtors’ obligations under the Exit Credit Facilities, in full or at all. There can also

be no assurance that the Collateral will be saleable, and, even if saleable, the timing of its

liquidation would be uncertain. Accordingly, there may not be sufficient value to pay all or any

of the amounts due on the Exit Credit Facilities.

C. Factors Relating to Securities to Be Issued Under Plan

i. Market for Securities

There is currently no market for the New Equity Interests or the Warrants, and the Reorganized

Debtors are under no obligation to list any securities on any national securities exchange.

Therefore, there can be no assurance that any of the foregoing securities will be tradable or liquid

at any time after the Effective Date. If a trading market does not develop or is not maintained,

holders of the foregoing securities may experience difficulty reselling such securities or be unable

to sell them at all. Even if such a market were to exist, such securities could trade at prices higher

or lower than the estimated value set forth in this Disclosure Statement depending upon many

factors including prevailing interests rates, markets for similar securities, industry conditions, and

the performance of, and investor expectations for, the Reorganized Debtors. Accordingly, holders

of these securities may bear certain risk associated with holding securities for an indefinite period

of time.

ii. Potential Dilution

The ownership percentage represented by the New Equity Interests distributed on the Effective

Date under the Plan will be subject to dilution from the New Equity Interests issued pursuant to

the Management Incentive Plan and issuable upon exercise of the Warrants and any other shares

that may be issued post-emergence. In the future, similar to all companies, additional equity

financings or other share issuances by any of the Reorganized Debtors could adversely affect the

value of the New Equity Interests issuable upon such conversion. The amount and dilutive effect

of any of the foregoing could be material.


86

iii. Significant Holders

The holders of RBL Claims are expected to acquire a significant ownership interest in the New

Equity Interests pursuant to the Plan. These holders may, among other things, exercise a

controlling influence over the Reorganized Debtors and have the power to elect directors and

approve significant transactions.

iv. Equity Interests Subordinated to Reorganized Debtors’ Indebtedness

In any subsequent liquidation, dissolution, or winding up of the Reorganized Debtors, the New

Equity Interests and the Warrants (and the Warrant Equity issued upon exercise thereof) would

rank below all debt claims against the Reorganized Debtors. As a result, holders of the New Equity

Interests will not be entitled to receive any payment or other distribution of assets upon the

liquidation, dissolution, or winding up of the Reorganized Debtors until after all the Reorganized

Debtors’ obligations to their debt holders have been satisfied.

v. Implied Valuation of New Equity Interests Not Intended to Represent Trading Value of New Equity Interests

The valuation of the Reorganized Debtors is not intended to represent the trading value of New

Equity Interests or the Warrants (and the Warrant Equity issued upon exercise thereof) in public

or private markets and is subject to additional uncertainties and contingencies, all of which are

difficult to predict. Actual market prices of such securities at issuance will depend upon, among

other things: (i) prevailing interest rates; (ii) conditions in the financial markets; (iii) the anticipated

initial securities of creditors receiving New Equity Interests or the Warrants (and the Warrant

Equity issued upon exercise thereof) under the Plan, some of which may prefer to liquidate their

investment rather than hold it on a long-term basis; and (iv) other factors that generally influence

the prices of securities. The actual market prices of the New Equity Interests or the Warrants (and

the Warrant Equity issued upon exercise thereof) are likely to be volatile. Many factors, including

factors unrelated to the Reorganized Debtors’ actual operating performance and other factors not

possible to predict, could cause the market prices of the New Equity Interests or the Warrants (and

the Warrant Equity issued upon exercise thereof) to rise and fall. Accordingly, the implied value,

stated herein and in the Plan, of the securities to be issued does not necessarily reflect, and should

not be construed as reflecting, values that will be attained for the New Equity Interests in the public

or private markets.

vi. No Dividends

Reorganized Chisholm Parent might not pay any dividends on the New Equity Interests and may

instead retain any future cash flows for debt reduction and to support its operations. As a result,

the success of an investment in the New Equity Interests may depend entirely upon any future

appreciation in the value of the New Equity Interests. There is no guarantee that the New Equity

Interests will appreciate in value or even maintain their initial value.


87

D. Additional Factors

i. Debtors Could Withdraw Plan

Subject to the terms of, and without prejudice to, the rights of any party to the Restructuring

Support Agreement, including consent rights contained therein, the Plan may be revoked or

withdrawn prior to the Confirmation Date by the Debtors.

ii. Debtors Have No Duty to Update

The statements contained in this Disclosure Statement are made by the Debtors as of the date

hereof, unless otherwise specified herein, and the delivery of this Disclosure Statement after that

date does not imply that there has been no change in the information set forth herein since that

date. The Debtors have no duty to update this Disclosure Statement unless otherwise ordered to

do so by the Bankruptcy Court.

iii. No Representations Outside this Disclosure Statement Are Authorized

No representations concerning or related to the Debtors, the Chapter 11 Cases, or the Plan are

authorized by the Bankruptcy Court or the Bankruptcy Code, other than as set forth in this

Disclosure Statement. Any representations or inducements made to secure your vote for

acceptance or rejection of the Plan that are other than those contained in, or included with, this

Disclosure Statement should not be relied upon in making the decision to vote to accept or reject

the Plan.

iv. No Legal or Tax Advice Is Provided by this Disclosure Statement

The contents of this Disclosure Statement should not be construed as legal, business, or tax advice.

Each holder of a Claim or Interest should consult their own legal counsel and accountant as to

legal, tax, and other matters concerning their Claim or Interest. This Disclosure Statement is not

legal advice to you. This Disclosure Statement may not be relied upon for any purpose other than

to determine how to vote on the Plan or object to confirmation of the Plan.

v. No Admission Made

Nothing contained herein or in the Plan will constitute an admission of, or will be deemed evidence

of, the tax or other legal effects of the Plan on the Debtors or holders of Claims or Interests.

X.

VOTING PROCEDURES AND REQUIREMENTS

Before voting to accept or reject the Plan, each Eligible Holder should carefully review the Plan

attached hereto as Exhibit A. All descriptions of the Plan set forth in this Disclosure Statement

are subject to the terms and conditions of the Plan.


88

A. Voting Deadline

All Eligible Holders have been sent a Ballot together with this Disclosure Statement. Such Eligible

Holders should read the Ballot carefully and follow the instructions contained therein. Please use

only the Ballot that accompanies this Disclosure Statement to cast your vote.

The Debtors have engaged Omni Agent Solutions, Inc. as their Voting Agent to assist in the

transmission of voting materials and in the tabulation of votes with respect to the Plan.

IN ORDER FOR YOUR VOTE TO BE COUNTED TOWARDS CONFIRMATION OF

THE PLAN, THIS BALLOT MUST BE COMPLETED, EXECUTED, AND RETURNED

SO THAT IT IS ACTUALLY RECEIVED BY THE VOTING AGENT ON OR BEFORE

4:00 P.M. (PREVAILING EASTERN TIME) ON SEPTEMBER 11, 2020 (THE “VOTING

DEADLINE”), UNLESS EXTENDED BY THE DEBTORS.

IF YOU (I) HAVE ANY QUESTIONS REGARDING THE BALLOT, (II) DID NOT RECEIVE

A COPY OF THE PLAN, OR (III) NEED ADDITIONAL COPIES OF THE BALLOT OR

OTHER ENCLOSED MATERIALS, PLEASE REACH OUT TO THE VOTING AGENT AT 1-

866-989-6146 (US & CANADA TOLL-FREE) OR 1-818-646-2298 (INTERNATIONAL) OR

BY SENDING AN ELECTRONIC MAIL MESSAGE TO:

[email protected]

B. Voting Procedures

Eligible Holders in each Class should provide all of the information requested by the Ballot, and

should complete and return all Ballots received in the enclosed, self-addressed, postage-paid

envelope provided with each such Ballot to the Voting Agent, or via the customized online

balloting portal on the Debtors’ case website maintained by the Voting Agent.

HOLDERS ARE STRONGLY ENCOURAGED TO SUBMIT THEIR BALLOTS VIA THE

E-BALLOT PLATFORM.

C. Parties Entitled to Vote

Under the Bankruptcy Code, only holders of claims or interests in “impaired” classes are entitled

to vote on a plan. Under section 1124 of the Bankruptcy Code, a class of claims or interests is

deemed to be “impaired” under a plan unless (i) the plan leaves unaltered the legal, equitable, and

contractual rights to which such claim or interest entitles the holder thereof or (ii) notwithstanding

any legal right to an accelerated payment of such claim or interest, the plan cures all existing

defaults (other than defaults resulting from the occurrence of events of bankruptcy) and reinstates

the maturity of such claim or interest as it existed before the default.

If, however, the holder of an impaired claim or interest will not receive or retain any distribution

under the plan on account of such claim or interest, the Bankruptcy Code deems such holder to

have rejected the plan, and, accordingly, holders of such claims and interests do not actually vote

on the plan. If a claim or interest is not impaired by the plan, the Bankruptcy Code deems the


89

holder of such claim or interest to have accepted the plan and, accordingly, holders of such claims

and interests are not entitled to vote on the plan.

A vote may be disregarded if the Bankruptcy Court determines, pursuant to section 1126(e) of the

Bankruptcy Code, that it was not solicited or procured in good faith or in accordance with the

provisions of the Bankruptcy Code.

The Bankruptcy Code defines “acceptance” of a plan by a class of (1) claims as acceptance by

creditors in that class that hold at least two-thirds (2/3) in dollar amount and more than one-half

(1/2) in number of the claims that cast ballots for acceptance or rejection of the plan and

(2) interests as acceptance by interest holders in that class that hold at least two-thirds (2/3) in

amount of the interests that cast ballots for acceptance or rejection of the plan.

The Claims and Interests in the following Classes are Impaired under the Plan and entitled to vote

to accept or reject the Plan:

Class 3 – RBL Claims

Class 4 –Term Loan Claims

Class 5 – General Unsecured Claims

Class 7 –Chisholm Parent Equity Interests

An Eligible Holder should vote on the Plan by completing a Ballot in accordance with the

instructions therein and as set forth above.

All Ballots must be signed by the Eligible Holder (or its authorized representative) by the Voting

Deadline. Unless otherwise ordered by the Bankruptcy Court, Ballots that are signed, dated, and

timely received, but on which a vote to accept or reject the Plan has not been indicated, will not be

counted. The Debtors, in their sole discretion, may request that the Voting Agent attempt to

contact such voters to cure any such defects in the Ballots. Any Ballot marked to both accept and

reject the Plan will not be counted. If you return more than one Ballot voting different claims, the

Ballots are not voted in the same manner, and if you do not correct this before the Voting Deadline,

those Ballots will not be counted. An otherwise properly executed Ballot that attempts to partially

accept and partially reject the Plan will likewise not be counted.

Under the Bankruptcy Code, for purposes of determining whether the requisite votes for

acceptance have been received, only Eligible Holders who actually vote will be counted. The

failure of a holder to deliver a duly executed Ballot to the Voting Agent will be deemed to

constitute an abstention by such holder with respect to voting on the Plan and such abstentions will

not be counted as votes for or against the Plan.

Except as provided below, unless the Ballot is timely submitted to the Voting Agent before the

Voting Deadline together with any other documents required by such Ballot, the Debtors may, in

their sole discretion, reject such Ballot as invalid, and therefore decline to utilize it in connection

with seeking confirmation of the Plan.


90

D. Waivers of Defects, Irregularities, etc.

Unless otherwise directed by the Bankruptcy Court, all questions as to the validity, form, eligibility

(including time of receipt), acceptance, and revocation or withdrawals of Ballots will be

determined by the Voting Agent or the Debtors, as applicable, in their sole discretion, which

determination will be final and binding. The Debtors reserve the right to reject any and all Ballots

submitted by any of their respective creditors not in proper form, the acceptance of which would,

in the opinion of the Debtors or their counsel, as applicable, be unlawful. The Debtors further

reserve their respective rights to waive any defects or irregularities or conditions of delivery as to

any particular Ballot. The interpretation (including the Ballot and the respective instructions

thereto) by the applicable Debtor, unless otherwise directed by the Bankruptcy Court, will be final

and binding on all parties. Unless waived, any defects or irregularities in connection with

deliveries of Ballots must be cured within such time as the Debtors (or the Bankruptcy Court)

determines. Neither the Debtors nor any other person will be under any duty to provide notification

of defects or irregularities with respect to deliveries of Ballots nor will any of them incur any

liabilities for failure to provide such notification. Unless otherwise directed by the Bankruptcy

Court, delivery of such Ballots will not be deemed to have been made until such irregularities have

been cured or waived. Ballots previously furnished (and as to which any irregularities have not

theretofore been cured or waived) will be invalidated.

XI.

CONFIRMATION OF PLAN

A. Confirmation Hearing

Section 1128(a) of the Bankruptcy Code requires the Bankruptcy Court to hold a confirmation

hearing upon appropriate notice to all required parties. The Confirmation Hearing has been

scheduled for September 23, 2020 at 10 a.m. (Prevailing Eastern Time). Notice of the

Confirmation Hearing will be provided to all known creditors and equity holders or their

representatives. The Confirmation Hearing may be adjourned from time to time by the Bankruptcy

Court without further notice except for the announcement of the continuation date made at the

Confirmation Hearing, at any subsequent continued Confirmation Hearing, or pursuant to a notice

filed on the docket for the Chapter 11 Cases.

B. Objections to Confirmation

Section 1128(b) of the Bankruptcy Code provides that any party in interest may object to the

confirmation of a plan. Any objection to confirmation of the Plan must be in writing, must conform

to the Bankruptcy Rules and the Local Rules, must set forth the name of the objector, the nature

and amount of the Claims held or asserted by the objector against the Debtors’ estates or properties,

and the basis for the objection and the specific grounds therefore, and must be filed with the

Bankruptcy Court and served upon the following parties by email, including such other parties as

the Bankruptcy Court may order.

(a) Debtors at


Attn: Michael Rigg ([email protected])


91

(b) Counsel to Debtors at

Young Conaway Stargatt & Taylor, LLP

Attn: M. Blake Cleary ([email protected])

Jaime Luton Chapman ([email protected])

S. Alexander Faris ([email protected])

-and-

Weil, Gotshal & Manges LLP

Attn: Matthew S. Barr ([email protected])

Kelly DiBlasi ([email protected])

Lauren Tauro ([email protected])

(c) Office of U.S. Trustee at

Office of the United States Trustee for the District of Delaware

Attn: Timothy Fox, Jr. ([email protected])

(d) Counsel to RBL Agent at

Linklaters LLP

Attn: Margot Schonholtz ([email protected])

Penelope Jensen ([email protected])

(e) Counsel to Consenting Sponsors at

Paul, Weiss, Rifkind, Wharton & Garrison, LLP

Attn: Jeffrey D. Saferstein ([email protected])

Elizabeth McColm ([email protected])

(f) Counsel to Creditors’ Committee

Paul Hastings LLP

Attn: James T. Grogan ([email protected])

Kevin P. Broughel ([email protected])

-and-

Blank Rome LLP

Attn: Regina Stango Kelbon ([email protected])

Stanley B. Tarr ([email protected])

IF AN OBJECTION TO CONFIRMATION IS NOT TIMELY SERVED AND FILED BY

SEPTEMBER 8, 2020 AT 4:00 P.M. (PREVAILING EASTERN TIME), IT MAY NOT BE

CONSIDERED BY THE BANKRUPTCY COURT.


92

C. Requirements for Confirmation of Plan

i. Requirements of Section 1129(a) of Bankruptcy Code

At the Confirmation Hearing, the Bankruptcy Court will determine whether the confirmation

requirements specified in section 1129(a) of the Bankruptcy Code have been satisfied, including

whether:

(i) the Plan complies with the applicable provisions of the Bankruptcy Code;

(ii) the Debtors have complied with the applicable provisions of the Bankruptcy Code;

(iii) the Plan has been proposed in good faith and not by any means forbidden by law;

(iv) any payment made or promised by the Debtors, for services or for costs and

expenses in or in connection with the Chapter 11 Cases, or in connection with the

Plan and incident to the Chapter 11 Cases, has been disclosed to the Bankruptcy

Court, and any such payment made before confirmation of the Plan is reasonable,

or if such payment is to be fixed after confirmation of the Plan, such payment is

subject to the approval of the Bankruptcy Court as reasonable;

(v) the Debtors have disclosed, to the extent known, the identity and affiliations of any

individual proposed to serve, after confirmation of the Plan, as a director or officer

of the Reorganized Debtors, an affiliate of the Debtors participating in the Plan with

the Debtors, or a successor to the Debtors under the Plan, and the appointment to,

or continuance in, such office of such individual is consistent with the interests

holders of Claims and Interests and with public policy, and the Debtors have

disclosed the identity of any insider who will be employed or retained by the

Reorganized Debtors, and the nature of any compensation for such insider;

(vi) with respect to each Class of Claims or Interests, each holder of an Impaired Claim

or Interest has either accepted the Plan or will receive or retain under the Plan, on

account of such holder’s Claim, property of a value, as of the Effective Date of the

Plan, that is not less than the amount such holder would receive or retain if the

Debtors were liquidated on the Effective Date of the Plan under chapter 7 of the

Bankruptcy Code;

(vii) except to the extent the Plan meets the requirements of section 1129(b) of the

Bankruptcy Code (as discussed further below), each Class of Claims or Interests

either accepted the Plan or is not impaired under the Plan;

(viii) except to the extent that the holder of a particular Claim has agreed to a different

treatment of such Claim, the Plan provides that Administrative Expense Claims,

Other Priority Claims, and Priority Tax Claims will be paid in full or receive such

other treatment consistent with the provisions of section 1129(a)(9) of the

Bankruptcy Code;


93

(ix) at least one Class of impaired Claims has accepted the Plan, determined without

including any acceptance of the Plan by any insider holding a Claim in such Class;

(x) confirmation of the Plan is not likely to be followed by the liquidation, or the need

for further financial reorganization, of the Debtors or any successor to the Debtors

under the Plan; and

(xi) all fees payable under section 1930 of title 28, as determined by the Bankruptcy

Court at the Confirmation Hearing, have been paid or the Plan provides for the

payment of all such fees on the Effective Date of the Plan.

As provided above, among the requirements for confirmation are that the Plan is (A) accepted by

all impaired Classes of Claims and Interests entitled to vote or, if rejected or deemed rejected by

an impaired Class, that the Plan “does not discriminate unfairly” and is “fair and equitable” as to

such Class; (B) in the “best interests” of the holders of Claims and Interests impaired under the

Plan; and (C) feasible.

ii. Acceptance of Plan

Under the Bankruptcy Code, a class accepts a chapter 11 plan if (i) holders of two-thirds (2/3) in

amount and (ii) with respect to holders of claims, more than a majority in number of the allowed

claims in such class (other than those designated under section 1126(e) of the Bankruptcy Code)

vote to accept the plan. Holders of claims or interests that fail to vote are not counted in

determining the thresholds for acceptance of the plan.

If any impaired Class of Claims or Interests does not accept the Plan, the Bankruptcy Court may

still confirm the Plan at the request of the Debtors if, as to each Impaired Class of Claims or

Interests that has not accepted the Plan (or is deemed to reject the Plan), the Plan “does not

discriminate unfairly” and is “fair and equitable” under the so-called “cramdown” provisions set

forth in section 1129(b) of the Bankruptcy Code. The “unfair discrimination” test applies to classes

of claims or interests that are of equal priority and are receiving different treatment under the plan.

A chapter 11 plan does not discriminate unfairly, within the meaning of the Bankruptcy Code, if

the legal rights of a dissenting class are treated in a manner consistent with the treatment of other

classes whose legal rights are substantially similar to those of the dissenting class and if no class

of claims or interests receives more than it legally is entitled to receive for its claims or interests.

The test does not require that the treatment be the same or equivalent, but that such treatment be

“fair.” The “fair and equitable” test applies to classes of different priority and status (e.g., secured

versus unsecured; claims versus interests) and includes the general requirement that no class of

claims receive more than 100% of the allowed amount of the claims in such class. As to a

dissenting class, if any, the test sets different standards that must be satisfied for the plan to be

confirmed, depending on the type of claims or interests in such class. The following sets forth the

“fair and equitable” test that must be satisfied as to each type of class for a plan to be confirmed if

such class rejects the plan:

Secured Creditors. Each holder of an impaired secured claim either

(a) retains its liens on the property, to the extent of the allowed amount of

its secured claim, and receives deferred cash payments having a value, as of


94

the effective date of the plan, of at least the allowed amount of such secured

claim, (b) has the right to credit bid the amount of its claim if its property is

sold and retains its lien on the proceeds of the sale, or (c) receives the

“indubitable equivalent” of its allowed secured claim.

Unsecured Creditors. Either (a) each holder of an impaired unsecured

claim receives or retains under the Plan, property of a value, as of the

effective date of the Plan, equal to the amount of its allowed claim or (b) the

holders of claims and interests that are junior to the claims of the dissenting

class will not receive any property under the plan.

Interests. Either (a) each equity interest holder will receive or retain under

the plan property of a value equal to the greater of (i) the fixed liquidation

preference or redemption price, if any, of such equity interest and (ii) the

value of the equity interest or (b) the holders of interests that are junior to

the interests of the dissenting class will not receive or retain any property

under the plan.

The Debtors believe the Plan satisfies the “fair and equitable” requirement with respect to any

rejecting Class.

IF ALL OTHER CONFIRMATION REQUIREMENTS ARE SATISFIED AT THE

CONFIRMATION HEARING, THE DEBTORS WILL ASK THE BANKRUPTCY

COURT TO RULE THAT THE PLAN MAY BE CONFIRMED ON THE GROUND THAT

THE SECTION 1129(b) REQUIREMENTS HAVE BEEN SATISFIED.

iii. Best Interests Test

As noted above, with respect to each impaired class of claims and equity interests, confirmation

of a plan requires that each such holder either: (a) accept the plan; or (b) receive or retain under

the plan property of a value, as of the effective date of the plan, that is not less than the value such

holder would receive or retain if the Debtors were liquidated under chapter 7 of the Bankruptcy

Code. This requirement is referred to as the “best interests test.”

This test requires a bankruptcy court to determine what the holders of allowed claims and allowed

equity interests in each impaired class would receive from a liquidation of the debtor’s assets and

properties in the context of a liquidation under chapter 7 of the Bankruptcy Code. To determine

if a plan is in the best interests of each impaired class, the value of the distributions from the

proceeds of the liquidation of the debtor’s assets and properties (after subtracting the amounts

attributable to the aforesaid claims) is then compared with the value offered to such classes of

claims and equity interests under the plan.

Under the Plan, all holders of Impaired Claims and Interests will receive property with a value not

less than the value such holder would receive in a liquidation under chapter 7 of the Bankruptcy

Code. This conclusion is based primarily on: (a) consideration of the effects that a chapter 7

liquidation would have on the ultimate proceeds available for distribution to holders of Impaired

Claims and Interests; and (b) the Liquidation Analysis attached hereto as Exhibit D.


95

Any liquidation analysis is speculative, as it is necessarily premised on assumptions and estimates

that are inherently subject to significant uncertainties and contingencies, many of which would be

beyond the control of the Debtors. The Liquidation Analysis provided in Exhibit D is solely for

the purpose of disclosing to holders of Claims and Interests the effects of a hypothetical chapter 7

liquidation of the Debtors, subject to the assumptions set forth therein. There can be no assurance

as to values that would actually be realized in a chapter 7 liquidation nor can there be any assurance

that a bankruptcy court will accept the Debtors’ conclusions or concur with such assumptions in

making its determinations under section 1129(a)(7) of the Bankruptcy Code.

iv. Feasibility

Section 1129(a)(11) of the Bankruptcy Code requires that a debtor demonstrate that confirmation

of a plan is not likely to be followed by liquidation or the need for further financial reorganization.

For purposes of determining whether the Plan meets this requirement, the Debtors have analyzed

their ability to meet their obligations under the Plan. As part of this analysis, the Debtors have

prepared the consolidated financial projections for the Reorganized Debtors (collectively with the

reserve information, development of schedules, and financial information, the “Financial

Projections”) for fiscal years 2020 through 2025. The Financial Projections, and the assumptions

on which they are based, are attached hereto as Exhibit E. Based upon such Financial Projections,

the Debtors conclude they will have sufficient resources to make all payments required pursuant

to the Plan and that confirmation of the Plan is not likely to be followed by liquidation or the need

for further reorganization. Moreover, Article IX hereof sets forth certain risk factors that could

impact the feasibility of the Plan.

The Debtors do not, as a matter of course, publish their business plans or strategies, projections or

anticipated financial position. Accordingly, the Debtors do not anticipate that they will, and

disclaim any obligation to, furnish updated business plans or Financial Projections to parties in

interest after the Confirmation Date or otherwise make such information public. In connection

with the planning and development of the Plan, the Financial Projections were prepared by the

Debtors, with the assistance of their professionals, to present the anticipated impact of the Plan.

The Financial Projections assume that the Plan will be implemented in accordance with its stated

terms. The Financial Projections are based on forecasts of key economic variables and may be

significantly impacted by, among other factors, oil and natural gas prices, expectations regarding

future commodity prices, the level of activity of oil and natural gas exploration, development, and

production domestically and internationally, demand for drilling services, competition and supply

of competing rigs, changes in the political environment of the countries in which the Debtors

operate, regulatory changes, and a variety of other factors.

Consequently, the estimates and assumptions underlying the Financial Projections are inherently

uncertain and are subject to material business, economic, and other uncertainties. Therefore, such

Financial Projections, estimates, and assumptions are not necessarily indicative of current values

or future performance, which may be significantly less or more favorable than set forth herein.

The Financial Projections should be read in conjunction with the assumptions, qualifications, and

explanations set forth in this Disclosure Statement, the Plan, and the Plan Supplement, in their

entirety, and the historical consolidated financial statements (including the notes and schedules

thereto).


96

XII.

VALUATION ANALYSIS

THE VALUATION INFORMATION CONTAINED IN THE FOLLOWING ANALYSIS IS

NOT A PREDICTION OR GUARANTEE OF THE ACTUAL MARKET VALUE THAT MAY

BE REALIZED THROUGH THE SALE OF ANY SECURITIES TO BE ISSUED PURSUANT

TO THE PLAN. THIS VALUATION IS PRESENTED SOLELY FOR THE PURPOSE OF

PROVIDING ADEQUATE INFORMATION AS REQUIRED BY SECTION 1125 OF THE

BANKRUPTCY CODE TO ENABLE THE HOLDERS OF CLAIMS OR INTERESTS

ENTITLED TO VOTE TO ACCEPT OR REJECT THE PLAN TO MAKE AN INFORMED

JUDGMENT ABOUT THE PLAN AND SHOULD NOT BE USED OR RELIED UPON FOR

ANY OTHER PURPOSE, INCLUDING THE PURCHASE OR SALE OF CLAIMS AGAINST

THE DEBTORS. IN ADDITION, THE VALUATION OF NEWLY-ISSUED SECURITIES IS

SUBJECT TO ADDITIONAL UNCERTAINTIES AND CONTINGENCIES, ALL OF WHICH

ARE DIFFICULT TO PREDICT. ACTUAL MARKET PRICES OF SUCH SECURITIES AT

ISSUANCE WILL DEPEND UPON, AMONG OTHER THINGS, PREVAILING INTEREST

RATES, CONDITIONS IN THE FINANCIAL MARKETS, THE ANTICIPATED INITIAL

SECURITIES HOLDINGS OF PREPETITION CREDITORS, SOME OF WHICH MAY

PREFER TO LIQUIDATE THEIR INVESTMENT RATHER THAN HOLD IT ON A LONG-

TERM BASIS, AND OTHER FACTORS WHICH GENERALLY INFLUENCE PRICES OF

SECURITIES.

THE ESTIMATES OF THE ENTERPRISE VALUE AND EQUITY VALUE DETERMINED

BY EVERCORE REPRESENT ESTIMATED ENTERPRISE VALUES AND DO NOT

REFLECT VALUES THAT COULD BE ATTAINABLE IN PUBLIC OR PRIVATE

MARKETS. THE IMPUTED ESTIMATE OF THE RANGE OF THE EQUITY VALUE OF

THE REORGANIZED DEBTORS ASCRIBED IN THE ANALYSIS DOES NOT PURPORT TO

BE AN ESTIMATE OF THE POST-REORGANIZATION MARKET TRADING VALUE. ANY

SUCH TRADING VALUE MAY BE MATERIALLY DIFFERENT FROM THE IMPUTED

ESTIMATE OF THE EQUITY VALUE RANGE FOR THE REORGANIZED DEBTORS

ASSOCIATED WITH EVERCORE’S VALUATION ANALYSIS.

Solely for purposes of the Plan and the Disclosure Statement, Evercore Group L.L.C.

(“Evercore”), as investment banker and financial advisor to the Debtors, has estimated the total

enterprise value (the “Total Enterprise Value”) and implied equity value (the “Equity Value”)

of the Reorganized Debtors on a going-concern basis and pro forma for the transactions

contemplated by the Plan.

In estimating the Debtors’ Total Enterprise Value, Evercore met with the Debtors’ senior

management team to discuss the Debtors’ assets, operations, and future prospects; reviewed the

Debtors’ historical financial information; reviewed certain of the Debtors’ internal financial and

operating data, including the Debtors’ reserve report; reviewed the Debtors’ Financial Projections

for the Reorganized Debtors provided in Exhibit E; reviewed publicly available third-party

information; and conducted such other studies, analyses, and inquiries we deemed appropriate.

The valuation analysis herein represents a valuation of the Reorganized Debtors as the continuing

operators of the business and assets of the Debtors, after giving effect to the Plan, based on the


97

application of standard valuation techniques. The estimated values set forth below: (i) do not

purport to constitute an appraisal of the assets of the Reorganized Debtors; (ii) do not constitute

an opinion on the terms and provisions or fairness from a financial point of view to any holder of

the consideration to be received by such holder under the Plan; (iii) do not constitute a

recommendation to any holder of Claims or Interests as to how such holder should vote or

otherwise act with respect to the Plan; and (iv) do not necessarily reflect the actual market value

that might be realized through a sale or liquidation of the Reorganized Debtors.

In preparing the estimates set forth below, Evercore has relied upon the accuracy, completeness,

and fairness of financial, reserve, and other information furnished by the Debtors. Evercore did

not attempt to independently audit or verify such information, nor did it perform an independent

appraisal of the assets or liabilities of the Reorganized Debtors.

The estimated values set forth herein assume that the Reorganized Debtors will achieve their

Projections in all material respects. Evercore has relied on the Debtors’ representation and

warranty that the Projections: (i) have been prepared in good faith; (ii) are based on fully disclosed

assumptions, which, in light of the circumstances under which they were made, are reasonable;

(iii) reflect the Debtors’ best currently available estimates; and (iv) reflect the good faith judgments

of the Debtors. Evercore does not offer an opinion as to the attainability of the Projections. As

disclosed in the Disclosure Statement, the future results of the Reorganized Debtors are dependent

upon various factors, many of which are beyond the control or knowledge of the Debtors and

Evercore and, consequently, are inherently difficult to project.

This analysis contemplates facts and conditions known and existing as of the date of the Disclosure

Statement. Events and conditions subsequent to this date, including updated projections, as well

as other factors, could have a substantial effect upon the Total Enterprise Value. Among other

things, failure to consummate the Plan in a timely manner may have a materially negative effect

on the Total Enterprise Value. For purposes of this valuation, Evercore has assumed that no

material changes that would affect value will occur between the date of the Disclosure Statement

and the assumed Effective Date.

Evercore did not consider any one analysis or factor to the exclusion of any other analyses or

factors. Accordingly, Evercore believes that its analysis and views must be considered as a whole

and that selecting portions of its analysis and factors could create a misleading or incomplete view

of the processes underlying the preparation of the valuation. Reliance on only one of these

methodologies used or portions of the analysis performed could create a misleading or incomplete

conclusion.

The following is a summary of analyses performed by Evercore to arrive at its recommended range

of estimated Total Enterprise Value for the Reorganized Debtors.

A. Net-Asset Value

The value of the Debtors’ oil and gas reserves was estimated using a net asset value (“NAV”)

approach. The Debtors’ reserves value calculates the estimated sum of net cash flows directly

attributable to the Debtors’ oil and gas properties. Future production volumes attributable to the

properties are estimated and multiplied by the projected realized price, which incorporates the


98

projected market price less an expected differential between the market price and the price at which

the Debtors can sell their production. Projected severance taxes, ad valorem taxes, lease operating

expenses, gathering, processing, transportation and marketing expenses, and capital expenditures

are then subtracted from revenue to calculate net cash flows. Evercore then discounted the

resulting net cash flows using selected risked discount rates at an industry standard range for

economically producing properties. These values were then adjusted for other non-reserve assets

and liabilities, including general and administrative expenses and marketing deficiencies of the

Debtors not reflected in the underlying reserve-based cash flows to determine the net asset value

of the Debtors.

B. Comparable Company Analysis

The comparable company analysis estimates the value of a company based on a relative

comparison with publicly traded companies with similar operating and financial characteristics.

Under this methodology, the enterprise value for each selected public company is determined by

examining the trading prices for the equity securities of such company in the public markets and

adding either the aggregate amount or market value of outstanding net debt for such company.

Such enterprise values are commonly expressed as multiples of various measures of financial and

operating statistics, such as earnings before interest, taxes, depreciation, depletion, amortization

and exploration expenses (“EBITDAX”), proved reserves and production. The Total Enterprise

Value is then calculated by applying these multiples to the Reorganized Debtors’ actual and

projected financial and operational metrics. The selection of public comparable companies for

this purpose was based upon the geographic location, scale, percentage of developed and

undeveloped reserves, quantum of reserves relative to production and percentage of reserves

represented by oil and natural gas liquids relative to natural gas, as well as other characteristics

that were deemed relevant.

C. Precedent Transactions Analysis

Precedent transactions analysis estimates the value of a company by examining public and private

transactions on both a corporate and asset-level basis. Under this methodology, transaction values

are commonly expressed as multiples of various measures of financial and operating statistics,

such as EBITDAX, proved reserves, and production. The selection of asset-level transactions for

this purpose was based upon the commodity weighting, reserve life, asset type, commodity price

environment, development level, relative size, geographic location, and other characteristics that

were deemed relevant. The selection of corporate transactions for this purpose was based upon

the asset type, relative size and other characteristics that were deemed relevant. For precedent

corporate transactions, due to the significant variation in commodity prices for the precedent

transactions, proved reserve and production multiples were not utilized in this analysis. The Total

Enterprise Value in this case is calculated by applying multiples of EBITDAX to the Reorganized

Debtors’ actual and projected financial results.

D. Total Enterprise Value and Implied Equity Value

The assumed range of the reorganization value, as of an assumed Effective Date of September 30,

2020, reflects work performed by Evercore on the basis of information with respect to the business

and assets of the Debtors available to Evercore as of the date of the Disclosure Statement. It should


99

be understood that, although subsequent developments may affect Evercore’s conclusions,

Evercore does not have any obligation to update, revise, or reaffirm its estimate.

As a result of the analysis described herein, Evercore estimated the Total Enterprise Value of the

Reorganized Debtors to be approximately $55 million to $85 million, with a midpoint of $70

million as of the assumed Effective Date of September 30, 2020. Based on the assumed pro forma

net debt of $27 million6 as of the Effective Date, the Equity Value is approximately $28 million to

$58 million, with a midpoint of $43 million. This estimate is based in part on information provided

by the Debtors, solely for purposes of the Plan, and Evercore assumes that no material changes

would affect value as stipulated in the Plan between the date of the Disclosure Statement and the

Effective Date.

The estimate of Total Enterprise Value set forth herein is not necessarily indicative of actual

outcomes, which may be significantly more or less favorable than those set forth herein depending

on the results of the Debtors’ operations or changes in the financial markets. Additionally, these

estimates of value represent hypothetical enterprise and equity values of the Reorganized Debtors

as the continuing operator of the Debtors’ business and assets, and do not purport to reflect or

constitute appraisals, liquidation values, or estimates of the actual market value that may be

realized through the sale of any securities to be issued pursuant to the Plan, which may be

significantly different than the amounts set forth herein. Such estimates were developed solely for

purposes of analysis of implied relative recoveries to holders of Allowed Claims and Interests

under the Plan. The value of an operating business such as the Debtors’ business is subject to

uncertainties and contingencies that are difficult to predict and will fluctuate with changes in

factors affecting the financial condition and prospects of such business.

Evercore’s estimated valuation range of the Reorganized Debtors does not constitute a

recommendation to any holder of Claims or Interests as to how such holder should vote or

otherwise act with respect to the Plan. The estimated value of the Reorganized Debtors set forth

herein does not constitute an opinion as to the fairness from a financial point of view to any holder

of the consideration to be received by such holder under the Plan or of the terms and provisions of

the Plan. Accordingly, because valuation estimates are inherently subject to uncertainties none of

the Debtors, Evercore, or any other person assumes responsibility for their accuracy or any

differences between the estimated valuation ranges herein and any actual outcome.

Evercore is acting as investment banker and financial advisor to the Debtors and will not be

responsible for, and will not provide, any tax, accounting, actuarial, legal, or other specialist

advice.

6 Projected gross debt of $35 million less $8 million of estimated Cash as of the Effective Date after accounting for a

GUC Cash Pool in the amount of $3 million. For the avoidance of doubt, this assumption does not modify the terms

of the Plan, which provide that the $3 million GUC Cash Pool is subject to (i) Class 5 voting to accept the Plan and

(ii) reduction for the GUC Cash Pool Reduction.


100

XIII.

ALTERNATIVES TO CONFIRMATION

AND CONSUMMATION OF PLAN

The Debtors have evaluated several alternatives to the Plan. After studying these alternatives, the

Debtors have concluded that the Plan is the best alternative and will maximize recoveries to parties

in interest, assuming confirmation and consummation of the Plan. If the Plan is not confirmed and

consummated, the alternatives to the Plan are (i) the preparation and presentation of an alternative

reorganization, (ii) a sale of some or all of the Debtors’ assets pursuant to section 363 of the

Bankruptcy Code, or (iii) a liquidation under chapter 7 of the Bankruptcy Code.

A. Alternative Plan of Reorganization

If the Plan is not confirmed, the Debtors (or if the Debtors’ exclusive period in which to file a plan

of reorganization has expired, any other party in interest) could attempt to formulate a different

plan. Such a plan might involve either (i) a reorganization and continuation of the Debtors’

business or (ii) an orderly liquidation of their assets. The Debtors, however, believe that the Plan,

as described herein, enables their stakeholders to realize the most value under the circumstances.

B. Sale Under Section 363 of the Bankruptcy Code

If the Plan is not confirmed, the Debtors could seek from the Bankruptcy Court, after notice and

hearing, authorization to sell their assets under section 363 of the Bankruptcy Code. Holders of

Allowed Claims in Class 2 and Class 3 would be entitled to credit bid on any property to which

their security interest is attached to the extent of the value of such security interest, and to offset

their Claims against the purchase price of the property. In addition, the security interests in the

Debtors’ assets held by holders of Claims in Classes 2 and 3 would attach to the proceeds of any

sale of the Debtors’ assets to the extent of their secured interests therein. Upon analysis and

consideration of this alternative, the Debtors do not believe a sale of their assets under section 363

of the Bankruptcy Code would yield a higher recovery for the holders of Claims and Interests

under the Plan.

C. Liquidation under Chapter 7 of Bankruptcy Code

If no plan can be confirmed, the Chapter 11 Cases may be converted to cases under chapter 7 of

the Bankruptcy Code in which a trustee would be elected or appointed to liquidate the assets of

the Debtors for distribution to their creditors in accordance with the priorities established by the

Bankruptcy Code. The effect that a chapter 7 liquidation would have on the recovery of holders

of Allowed Claims and Interests is set forth in the Liquidation Analysis attached hereto as

Exhibit D.

The Debtors believe that liquidation under chapter 7 would result in smaller distributions to

creditors than those provided for in the Plan because of, among other things, the delay resulting

from the conversion of the Chapter 11 Cases, the additional administrative expenses associated

with the appointment of a trustee and the trustee’s retention of professionals who would be required

to become familiar with the many legal and factual issues in the Chapter 11 Cases, and the loss in

value attributable to an expeditious liquidation of the Debtors’ assets as required by chapter 7.


[Signature Page for Disclosure Statement for Amended Joint Chapter 11 Plan of Reorganization of Chisholm Oil

and Gas Operating, LLC and Its Affiliated Debtors]

XIV.

CONCLUSION AND RECOMMENDATION

The Debtors believe the Plan is in the best interests of all stakeholders and urge the holders of

Claims in Classes 3, 4, 5, and 7 to vote in favor thereof.


Respectfully submitted,

Chisholm Oil and Gas Operating, LLC, and its

undersigned affiliates

By: /s/ Michael Rigg

Name:

Title:

Michael Rigg

Chief Financial Officer

on behalf of

Chisholm Oil and Gas Operating II, LLC

Cottonmouth SWD, LLC

Chisholm Oil and Gas Nominee, Inc.

Chisholm Oil and Gas Management II,

LLC


Exhibit A

Plan


Solicitation Version

IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

------------------------------------------------------------ x In re : Chapter 11 : CHISHOLM OIL AND GAS OPERATING, : Case No. 20–11593 (BLS) LLC, et al., :

Debtors.1 : (Jointly Administered) ------------------------------------------------------------ x

AMENDED JOINT CHAPTER 11 PLAN OF REORGANIZATION OF CHISHOLM OIL AND GAS OPERATING, LLC AND ITS AFFILIATED DEBTORS

WEIL, GOTSHAL & MANGES LLP Matthew S. Barr Kelly DiBlasi Lauren Tauro 767 Fifth Avenue New York, New York 10153 Telephone: (212) 310-8000 Facsimile: (212) 310-8007

YOUNG CONAWAY STARGATT & TAYLOR, LLP M. Blake Cleary (No. 3614) Jaime Luton Chapman (No. 4936) S. Alexander Faris (No. 6278) Rodney Square 1000 North King Street Wilmington, Delaware 19801 Telephone: (302) 571-6600 Facsimile: (302) 571-1253

Attorneys for the Debtors and Debtors in Possession


Wilmington, Delaware

1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, as applicable, are Chisholm Oil and Gas Operating II, LLC (8730); Chisholm Oil and Gas Operating, LLC (5382); Cottonmouth SWD, LLC (9849); Chisholm Oil and Gas Nominee, Inc. (1558); and Chisholm Oil and Gas Management II, LLC (8174). The Debtors’ mailing address is 1 West Third Street, Suite 1700, Tulsa, OK 74103.


i

Table of Contents

ARTICLE I. DEFINITIONS AND INTERPRETATION. ..................................................1 1.1 Definitions................................................................................................................1 1.2 Interpretation; Application of Definitions; Rules of Construction ........................14 1.3 Reference to Monetary Figures ..............................................................................14 1.4 Consent Rights .......................................................................................................14 1.5 Controlling Document ...........................................................................................15

ARTICLE II. ADMINISTRATIVE EXPENSE CLAIMS, ADEQUATE PROTECTION CLAIMS, FEE CLAIMS, AND PRIORITY TAX CLAIMS. ..........................................................................................................15

2.1 Treatment of Adequate Protection Claims .............................................................15 2.2 Treatment of Administrative Expense Claims .......................................................15 2.3 Treatment of Fee Claims ........................................................................................16 2.4 Treatment of Priority Tax Claims ..........................................................................17 2.5 Restructuring Expenses ..........................................................................................17

ARTICLE III. CLASSIFICATION OF CLAIMS AND INTERESTS. ...............................17 3.1 Classification in General ........................................................................................17 3.2 Formation of Debtor Groups for Convenience Only .............................................18 3.3 Summary of Classification of Claims and Interests ...............................................18 3.4 Special Provision Governing Unimpaired Claims .................................................18 3.5 Elimination of Vacant Classes ...............................................................................19 3.6 Voting Classes; Presumed Acceptance by Non-Voting Classes............................19 3.7 Voting; Presumptions; Solicitation ........................................................................19 3.8 Cramdown ..............................................................................................................19 3.9 No Waiver ..............................................................................................................19

ARTICLE IV. TREATMENT OF CLAIMS AND INTERESTS. .......................................20 4.1 Class 1: Other Priority Claims ..............................................................................20 4.2 Class 2: Other Secured Claims .............................................................................20 4.3 Class 3: RBL Claims .............................................................................................20 4.4 Class 4: Term Loan Claims...................................................................................21 4.5 Class 5: General Unsecured Claims ......................................................................22 4.6 Class 6: Intercompany Claims ..............................................................................22 4.7 Class 7: Chisholm Parent Equity Interests ............................................................23


ii

4.8 Class 8: Chisholm Management Equity Interests .................................................23 4.9 Class 9: Intercompany Interests ............................................................................23

ARTICLE V. MEANS FOR IMPLEMENTATION. ...........................................................24 5.1 Sources of Consideration for Plan Distribution .....................................................24 5.2 Compromise and Settlement of Claims, Interests, and Controversies ...................24 5.3 Continued Corporate Existence; Effectuating Documents; Further

Transactions ...........................................................................................................24 5.4 Corporate and Limited Liability Company Action ................................................25 5.5 Cancellation of Existing Securities and Agreements .............................................25 5.6 Cancellation of Certain Existing Security Interests ...............................................26 5.7 Officers and Boards of Directors ...........................................................................26 5.8 Management Incentive Plan ...................................................................................26 5.9 Authorization and Issuance of New Equity Interests and Warrants ......................27 5.10 Securities Exemptions ............................................................................................27 5.11 Exit Credit Facilities ..............................................................................................27 5.12 General Unsecured Claims Recoveries ..................................................................28 5.13 Restructuring Transactions ....................................................................................28 5.14 Separate Plans ........................................................................................................28 5.15 Tax Structure ..........................................................................................................29 5.16 Closing of Chapter 11 Cases ..................................................................................29

ARTICLE VI. DISTRIBUTIONS. ..........................................................................................29 6.1 Distributions Generally ..........................................................................................29 6.2 No Postpetition Interest on Claims ........................................................................29 6.3 Date of Distributions ..............................................................................................29 6.4 Distribution Record Date .......................................................................................30 6.5 Distributions after Effective Date ..........................................................................30 6.6 Disbursing Agent ...................................................................................................30 6.7 Delivery of Distributions .......................................................................................30 6.8 Unclaimed Property ...............................................................................................31 6.9 Satisfaction of Claims ............................................................................................31 6.10 Manner of Payment under Plan..............................................................................32 6.11 Fractional Shares ....................................................................................................32 6.12 Minimum Distribution ...........................................................................................32


iii

6.13 No Distribution in Excess of Amount of Allowed Claim ......................................32 6.14 Allocation of Distributions Between Principal and Interest ..................................32 6.15 Setoffs and Recoupments .......................................................................................32 6.16 Rights and Powers of Disbursing Agent ................................................................33 6.17 Expenses of Disbursing Agent ...............................................................................33 6.18 Withholding and Reporting Requirements ............................................................33 6.19 Indefeasible Distribution ........................................................................................34

ARTICLE VII. PROCEDURES FOR DISPUTED CLAIMS. ..............................................34 7.1 Objections to Claims ..............................................................................................34 7.2 Resolution of Disputed Claims ..............................................................................34 7.3 Resolution of Disputed General Unsecured Claims ..............................................35 7.4 Estimation of Claims..............................................................................................35 7.5 Adjustment to Claims Register Without Objection ...............................................35 7.6 Claim Resolution Procedures Cumulative .............................................................36 7.7 No Distributions Pending Allowance ....................................................................36 7.8 Distributions after Allowance ................................................................................36 7.9 Disputed Claims Reserve .......................................................................................36

ARTICLE VIII. EXECUTORY CONTRACTS AND UNEXPIRED LEASES. ...................37 8.1 General Treatment .................................................................................................37 8.2 Determination of Cure Disputes and Deemed Consent .........................................38 8.3 Rejection Damages Claims ....................................................................................39 8.4 Survival of the Debtors’ Indemnification Obligations ...........................................39 8.5 Compensation and Benefit Plans ...........................................................................39 8.6 Insurance Policies ..................................................................................................39 8.7 Reservation of Rights .............................................................................................40

ARTICLE IX. CONDITIONS PRECEDENT TO CONFIRMATION OF PLAN AND OCCURRENCE OF EFFECTIVE DATE. .........................................40

9.1 Conditions Precedent to Confirmation...................................................................40 9.2 Conditions Precedent to Effective Date .................................................................41 9.3 Waiver of Conditions Precedent ............................................................................42 9.4 Effect of Failure of a Condition .............................................................................43

ARTICLE X. EFFECT OF CONFIRMATION. ..................................................................43 10.1 Binding Effect ........................................................................................................43


iv

10.2 Vesting of Assets ...................................................................................................43 10.3 Discharge of Claims against and Interests in Debtors ...........................................44 10.4 Pre-Confirmation Injunctions and Stays ................................................................44 10.5 Injunction against Interference with Plan ..............................................................44 10.6 Plan Injunction .......................................................................................................44 10.7 Releases..................................................................................................................45 10.8 Exculpation ............................................................................................................46 10.9 Injunction Related to Releases and Exculpation ....................................................47 10.10 Subordinated Claims ..............................................................................................47 10.11 Retention of Causes of Action and Reservation of Rights ....................................47 10.12 Ipso Facto and Similar Provisions Ineffective .......................................................48

ARTICLE XI. RETENTION OF JURISDICTION. .............................................................48 11.1 Retention of Jurisdiction ........................................................................................48 11.2 Courts of Competent Jurisdiction ..........................................................................50

ARTICLE XII. MISCELLANEOUS PROVISIONS. .............................................................50 12.1 Statutory Fees.........................................................................................................50 12.2 Exemption from Certain Transfer Taxes ...............................................................50 12.3 Request for Expedited Determination of Taxes .....................................................51 12.4 Dates of Actions to Implement Plan ......................................................................51 12.5 Amendments ..........................................................................................................51 12.6 Revocation or Withdrawal of Plan .........................................................................51 12.7 Severability ............................................................................................................52 12.8 Governing Law ......................................................................................................52 12.9 Immediate Binding Effect ......................................................................................52 12.10 Successors and Assigns..........................................................................................52 12.11 Entire Agreement ...................................................................................................53 12.12 Computing Time ....................................................................................................53 12.13 Exhibits to Plan ......................................................................................................53 12.14 Notices ...................................................................................................................53 12.15 Reservation of Rights .............................................................................................55


Each of Chisholm Oil and Gas Operating II, LLC, Chisholm Oil and Gas Operating, LLC, Cottonmouth SWD, LLC, Chisholm Oil and Gas Nominee, Inc., and Chisholm Oil and Gas Management II, LLC (each, a “Debtor” and collectively, the “Debtors”) proposes the following joint chapter 11 plan of reorganization pursuant to section 1121(a) of the Bankruptcy Code. Capitalized terms used herein shall have the meanings set forth in Section 1.1 below.

ARTICLE I. DEFINITIONS AND INTERPRETATION.

1.1 Definitions.

The following terms shall have the respective meanings specified below:

Adequate Protection Claim means any right to payment constituting a superpriority Administrative Expense Claim against each of the Debtors on a joint and several basis with priority over any and all other Administrative Expense Claims against the Debtors now existing or hereafter arising in the Chapter 11 Cases granted pursuant to the Cash Collateral Order.

Administrative Expense Claim means any Claim for costs and expenses of administration of the Chapter 11 Cases pursuant to sections 327, 328, 330, 365, 503(b), 507(a)(2), or 507(b) of the Bankruptcy Code, including (i) the actual and necessary costs and expenses incurred on or after the Petition Date and through the Effective Date of preserving the Estates and operating the Debtors’ business, (ii) Fee Claims, and (iii) Restructuring Expenses.

Administrative Expense Claims Bar Date means the first Business Day that is thirty (30) days following the Effective Date.

Affiliate means any “affiliate” as defined in section 101(2) of the Bankruptcy Code.

Allowed means, with respect to any Claim or Interest, (i) any Claim or Interest arising on or before the Effective Date (a) as to which no objection to allowance has been asserted, or may be asserted, on or before the time period set forth in this Plan or an order of the Bankruptcy Court, and no request for estimation or other challenge, including pursuant to section 502(d) of the Bankruptcy Code or otherwise, has been interposed and not withdrawn within the applicable period or (b) as to which any objection has been determined by a Final Order of the Bankruptcy Court to the extent such objection is determined in favor of the respective holder, (ii) any Claim or Interest as to which the liability of the Debtors and the amount thereof are determined by a Final Order of a court of competent jurisdiction other than the Bankruptcy Court, (iii) any Claim or Interest expressly allowed under this Plan or by the Cash Collateral Order, or (iv) any Claim that is listed in the Debtors’ Schedules as liquidated, non-contingent, and undisputed; provided, however, that, the Reorganized Debtors shall retain all claims and defenses with respect to Allowed Claims that are Unimpaired pursuant to this Plan.

Amended Organizational Documents means the forms of certificate of incorporation, certificate or articles of formation, bylaws, limited liability company agreement, shareholder agreement, or other similar organizational documents, as applicable, of the Reorganized Debtors.


2

Ballot means a ballot providing for the acceptance or rejection of the Plan and to make an election with respect to the releases by holders of Claims and Interests provided by Section 10.7(b).

Bankruptcy Code means title 11 of the United States Code, as amended from time to time, as applicable to these Chapter 11 Cases.

Bankruptcy Court means the United States Bankruptcy Court for the District of Delaware having jurisdiction over the Chapter 11 Cases and, to the extent of any reference made under section 157 of title 28 of the United States Code or if the Bankruptcy Court is determined not to have authority to enter a Final Order on an issue, the unit of such District Court having jurisdiction over the Chapter 11 Cases under section 151 of title 28 of the United States Code.

Bankruptcy Rules means the Federal Rules of Bankruptcy Procedure as promulgated by the United States Supreme Court under section 2075 of title 28 of the United States Code, as amended from time to time, applicable to the Chapter 11 Cases, and any local rules of the Bankruptcy Court.

Bar Date Order means the Order Pursuant to 11 U.S.C. § 502(b)(9) and Fed. R. Bankr. P. 2002 and 3003(c)(3) (I) Establishing Bar Dates, (II) Approving Form and Manner for Filing Proofs of Claim, (III) Approving Proposed Notice of Bar Dates, (IV) Approving M&M Claims Resolution Protocol, and (V) Granting Related Relief [Docket No. 163].

Business Day means any day other than a Saturday, a Sunday, or any other day on which banking institutions in New York, New York are authorized or required by law or executive order to close.

Cash means legal tender of the United States of America.

Cash Collateral Order means the interim and final orders entered by the Bankruptcy Court [Docket Nos. 65 and 172] authorizing the Debtors’ use of cash collateral during the Chapter 11 Cases.

Cause of Action means any action, claim, cross-claim, third-party claim, cause of action, controversy, dispute, demand, right, lien, indemnity, contribution, guaranty, suit, obligation, liability, loss, debt, fee or expense, damage, interest, judgment, cost, account, defense, remedy, offset, power, privilege, proceeding, license, and franchise of any kind or character whatsoever, whether liquidated or unliquidated, contingent or non-contingent, matured or unmatured, known or unknown, foreseen or unforeseen, suspected or unsuspected, asserted or unasserted, assertable directly or derivatively (including any alter ego theories), accrued or unaccrued, disputed or undisputed, secured or unsecured, existing or hereinafter arising, arising before, on, or after the Petition Date, in contract or tort, in law, equity, or pursuant to any other theory of law (including under any state or federal securities laws), and whether arising under federal law, state statutory law, common law, or any other applicable international, foreign, or domestic law, rule, statute, regulation, treaty, right, duty, requirement or otherwise. For the avoidance of doubt, “Cause of Action” includes (i) any right of setoff, counterclaim, or recoupment and any claim for breach of contract or for breach of duties imposed by law or in equity, (ii) the right to object to Claims or Interests, (iii) any claim pursuant to section 362 or chapter 5 of the


3

Bankruptcy Code, (iv) any claim or defense including fraud, mistake, duress, and usury and any other defenses set forth in section 558 of the Bankruptcy Code, and (v) any state law fraudulent transfer claim.

Chapter 11 Case means, with respect to a Debtor, such Debtor’s case under chapter 11 of the Bankruptcy Code commenced on the Petition Date in the Bankruptcy Court, jointly administered with all other Debtors’ cases under chapter 11 of the Bankruptcy Code.

Chisholm Borrower means Chisholm Oil and Gas Operating, LLC.

Chisholm Management means Chisholm Oil and Gas Management II, LLC.

Chisholm Management Equity Interests means any Interest in Chisholm Management.

Chisholm Parent means Chisholm Oil and Gas Operating II, LLC.

Chisholm Parent Equity Interests means any Interest in Chisholm Parent.

Claim means a “claim,” as defined in section 101(5) of the Bankruptcy Code, against any Debtor.

Claims and Noticing Agent means Omni Agent Solutions, the claims, noticing, and solicitation agent retained by the Debtors.

Claims Objection Deadline means the deadline for objecting to a Claim, which shall be on the date that is the later of (i) one-hundred and eighty (180) days after the Effective Date and (ii) such later date as may be fixed by the Bankruptcy Court, after notice and a hearing, upon a motion by the Reorganized Debtors filed before the day that is one-hundred and eighty (180) days after the Effective Date.

Claims Register means the official register of Claims maintained by the Claims and Noticing Agent in the Chapter 11 Cases.

Class means any group of Claims or Interests classified under this Plan pursuant to section 1122(a) of the Bankruptcy Code.

Confirmation Date means the date on which the Bankruptcy Court enters the Confirmation Order.

Confirmation Hearing means the hearing to be held by the Bankruptcy Court regarding confirmation of this Plan, as such hearing may be adjourned or continued from time to time.

Confirmation Order means the order of the Bankruptcy Court confirming this Plan pursuant to section 1129 of the Bankruptcy Code.


4

Consenting Creditors means the RBL Lenders that are party to the Restructuring Support Agreement and any other RBL Lender that subsequently becomes a party to the Restructuring Support Agreement in accordance with the terms thereof.

Consenting Sponsors means Chisholm Oil and Gas, LLC and Gastar Holdco LLC.

Creditors’ Committee means the statutory committee of unsecured creditors appointed by the U.S. Trustee in the Chapter 11 Cases pursuant to section 1102 of the Bankruptcy Code [Docket Nos. 90 and 115].

Cure Amount means the payment of Cash or the distribution of other property (as the parties may agree or the Bankruptcy Court may order) as necessary to (i) cure a monetary default by the Debtors in accordance with the terms of an executory contract or unexpired lease of the Debtors and (ii) permit the Debtors to assume such executory contract or unexpired lease under section 365(a) of the Bankruptcy Code.

Cure Notice means the notice, prepared in consultation with the RBL Agent, of proposed Cure Amounts to be paid in connection with an executory contract or unexpired lease that may be assumed by the Debtors pursuant to this Plan.

Debtor(s) has the meaning set forth in the introductory paragraph of this Plan.

Definitive Documents means the documents (including any related agreements, instruments, schedules, or exhibits) that are necessary to implement the Restructuring, including (i) the Restructuring Support Agreement, (ii) any material “first day” and “second day” motions and all orders sought pursuant thereto, including the Cash Collateral Order, (iii) the Solicitation materials, (iv) the order approving the Solicitation materials, (v) the motion seeking approval by the Bankruptcy Court of the Disclosure Statement and the Solicitation procedures, (vi) the Plan (including the Plan Supplement and all material documents, annexes, schedules, exhibits, amendments, modifications or supplements thereto, or other documents contained therein, including any schedules of rejected contracts), (vii) the Disclosure Statement, (viii) the Disclosure Statement Order, (ix) the Confirmation Order and any pleadings in support of entry of the Disclosure Statement Order and the Confirmation Order, (x) the Restructuring Transactions Memorandum, (xi) the Management Incentive Plan and additional documents or agreements thereto, (xii) the Warrant Agreement, (xiii) the Exit Credit Facilities Documents, (xiv) the Amended Organizational Documents, any and all conveyance instruments required to issue and distribute the New Equity Interests, and if applicable, any stockholders’ agreement or registration rights agreement of the Reorganized Chisholm Parent, and (xv) any order, or amendment or modification of any order, entered by the Bankruptcy Court related to the foregoing items.

Disbursing Agent means any Entity in its capacity as a disbursing agent under Section 6.6 of this Plan, including any Debtor or Reorganized Debtor, as applicable, that acts in such capacity to make distributions pursuant to this Plan.

Disclosure Statement means the disclosure statement for this Plan, including all exhibits, schedules, supplements, modifications, amendments, and annexes thereto, each as supplemented from time to time, which is prepared and distributed in accordance with sections


5

1125, 1126(b), or 1145 of the Bankruptcy Code, Bankruptcy Rules 3016 and 3018, or other applicable law.

Disclosure Statement Order means the order of the Bankruptcy Court approving the Disclosure Statement, the Solicitation materials and the Solicitation of the Plan.

Disputed means (i) any Claim that is disputed under ARTICLE VII of this Plan or as to which the Debtors or any party in interest have interposed and not withdrawn an objection or request for estimation that has not been determined by a Final Order, (ii) any Claim, proof of which was required to be filed by order of the Bankruptcy Court but as to which a Proof of Claim was not timely or properly filed, (iii) any Claim that is listed in the Schedules as unliquidated, contingent, or disputed, and as to which no Proof of Claim has been filed, or (iv) any Claim that is otherwise disputed by any of the Debtors or Reorganized Debtors or any party in interest in accordance with applicable law or contract, which dispute has not been withdrawn, resolved or overruled by a Final Order.

Disputed Claims Reserve means the holdback from the GUC Cash Pool with respect to Disputed General Unsecured Claims, governed by Section 7.9 of this Plan.

Distribution Record Date means, except as otherwise provided in this Plan or the Plan Documents, the Effective Date.

DTC means Depository Trust Company, a limited-purpose trust company organized under the New York State Banking Law.

Effective Date means the date which is the first Business Day on which (i) all conditions to the effectiveness of this Plan set forth in Section 9.2 of this Plan have been satisfied or waived in accordance with Section 9.3 of this Plan and (ii) no stay of the Confirmation Order is in effect.

Entity has the meaning set forth in section 101(15) of the Bankruptcy Code.

Estate(s) means individually or collectively, the estate or estates of the Debtors created under section 541 of the Bankruptcy Code.

Exculpated Fiduciaries means, collectively, (i) the Debtors, (ii) the Reorganized Debtors, (iii) the Creditors’ Committee and each of its members in their capacity as such, and (iv) with respect to each of the foregoing Persons in clauses (i) through (iii), such Persons’ Related Persons and their respective heirs, executors, estates, and nominees, in each case in their capacity as such.

Exculpated Parties means, collectively, the Exculpated Fiduciaries and the Section 1125(e) Parties.

Exit Facility Agents means each of the administrative agents, collateral agents, trustees, or other similar agents under the Exit Facility Agreement, solely in such entity’s capacity as such.


6

Exit Facility Agreement means that certain credit or loan agreement pursuant to which the Exit Credit Facilities shall be provided, to be dated as of the Effective Date, by and among Reorganized Chisholm Borrower, as borrower, Reorganized Chisholm Parent, as guarantor, the Exit Facility Agents, the issuing banks party thereto, the Exit Facility Lenders, and the other parties thereto.

Exit Credit Facilities means the FLFO RBL Facility and the FLSO Term Loan Facility.

Exit Credit Facilities Documents means, collectively, the Exit Facility Agreement, and all related amendments, supplements, agreements or ancillary agreements, assignments, notes, pledges, collateral agreements, loan and security agreements, guarantees, intercreditor agreements, instruments, mortgages or extension of mortgages, certificates, control agreements, insurance documents, opinions, deeds of trust, and other documents or instruments to be executed, delivered, or continued in force and effect in connection with the Exit Facility Agreement.

Exit Facility Lenders means FLFO RBL Lenders and FLSO Term Loan Lenders.

Exit Secured Parties means, collectively, the Exit Facility Agents, the Exit Facility Lenders, and any other Secured Party (as defined in, or such similar term that is contained in, the Exit Credit Facilities Documents).

Fee Claim means a Claim for professional services rendered or costs incurred on or after the Petition Date through the Confirmation Date by Professional Persons to the extent such costs have not been paid pursuant to an order of the Bankruptcy Court.

Fee Escrow Account means an interest-bearing account funded by the Debtors on the Effective Date with Cash in an amount equal to the total estimated amount of Fee Claims.

Final Order means an order or judgment of a court of competent jurisdiction that has been entered on the docket maintained by the clerk of such court, which has not been reversed, vacated, or stayed and as to which (i) the time to appeal, petition for certiorari, or move for a new trial, reargument, or rehearing has expired and as to which no appeal, petition for certiorari, or other proceedings for a new trial, reargument, or rehearing shall then be pending, or (ii) if an appeal, writ of certiorari, new trial, reargument, or rehearing thereof has been sought, such order or judgment shall have been affirmed by the highest court to which such order was appealed, or certiorari shall have been denied, or a new trial, reargument, or rehearing shall have been denied or resulted in no modification of such order, and the time to take any further appeal, petition for certiorari, or move for a new trial, reargument, or rehearing shall have expired. However, notwithstanding anything herein to the contrary, no order or judgment shall fail to be a “Final Order” solely because of the possibility that a motion under Rules 59 or 60 of the Federal Rules of Civil Procedure or any analogous Bankruptcy Rule (or any analogous rules applicable in another court of competent jurisdiction) or sections 502(j) or 1144 of the Bankruptcy Code has been or may be filed with respect to such order or judgment.

FLFO RBL Facility means a first-lien first-out new money exit reserve-based credit facility in an amount no less than $15 million to be provided by the FLFO RBL Lenders.


7

FLFO RBL Lenders means the RBL Lenders and any other lenders that elect to become lenders under the FLFO RBL Facility by executing and delivering the Exit Facility Agreement.

FLSO Term Loan means the loan under the FLSO Term Loan Facility.

FLSO Term Loan Facility means a first-lien second-out take-back term loan facility, with a 7-year maturity, interest accrual at LIBOR plus 600bps, sized at 1.5x annualized corporate EBITDAX (calculated on the Effective Date based on balance of fiscal year 2020 business plan with 10% production risking) in a principal amount no greater than $40 million.

FLSO Term Loan Lenders means the holders of RBL Claims receiving the FLSO Term Loan in accordance with Section 4.3 of this Plan that are deemed party to the Exit Facility Agreement as FLSO Term Loan Lenders as of the Effective Date.

General Unsecured Claim means any Claim other than (i) an Other Secured Claim, (ii) an Adequate Protection Claim, (iii) an Administrative Expense Claim, (iv) a Priority Tax Claim, (v) an Other Priority Claim, (vi) a RBL Claim, (vii) a Term Loan Claim, or (viii) an Intercompany Claim.

Governmental Unit has the meaning set forth in section 101(27) of the Bankruptcy Code.

GUC Cash Pool means Cash to be held in a segregated account for purposes of making Distributions to holders of Allowed General Unsecured Claims in accordance with Section 4.5 of this Plan, subject to the GUC Cash Pool Reduction.

GUC Cash Pool Reduction means a dollar-for-dollar reduction of the total amount of the GUC Cash Pool by the amount of any Allowed Fee Claims incurred by Professional Persons retained by the Creditors’ Committee from and after July 27, 2020 through the Effective Date exceeding $150,000 in the aggregate.

GUC Claims Administrator means the Person, if any, reasonably acceptable to the Debtors and the Creditors’ Committee appointed to serve as the administrator of General Unsecured Claims in accordance with Section 7.3 of this Plan, to be identified in the Plan Supplement.

Impaired means, with respect to a Claim, Interest, or a Class of Claims or Interests, “impaired” within the meaning of such term in section 1124 of the Bankruptcy Code.

Intercompany Claim means any Claim against a Debtor held by another Debtor.

Intercompany Interest means any Interests in any of the Debtors held by another Debtor. For the avoidance of doubt, Intercompany Interest excludes Chisholm Parent Equity Interests and Chisholm Management Equity Interests.


8

Interim Compensation Procedures Order means the Order Pursuant to 11 U.S.C. §§ 105(a), 330, and 331 and Fed. R. Bankr. P. 2016 Establishing Procedures for Interim Compensation and Reimbursement of Expenses of Professionals [Docket No. 204].

Interest means any equity security (as defined in section 101(16) of the Bankruptcy Code) in a Debtor, including all ordinary shares, units, common stock, preferred stock, membership interest, partnership interest or other instrument, evidencing any fixed or contingent ownership interest in any Debtor, whether or not transferable and whether fully vested or vesting in the future, including any option, warrant, or other right, contractual or otherwise, to acquire any such interest in the applicable Debtor, that existed immediately before the Effective Date.

IRS means the Internal Revenue Service.

Lien has the meaning set forth in section 101(37) of the Bankruptcy Code.

Lien Cap means $8,000,000 in the aggregate.

Management Incentive Plan means a post-emergence management incentive plan to be adopted by the New Board as further described in Section 5.8 of this Plan.

MIP Equity means 5% of the New Equity Interests on a fully diluted basis issued in connection with the Management Incentive Plan to directors, officers, or other management and employees of the Reorganized Debtors, based on the terms and conditions of the Management Incentive Plan.

M&M Claims Resolution Protocol means the set of procedures for reconciling Prepetition M&M Liens approved by the Bankruptcy Court pursuant to the Bar Date Order.

New Board means the initial board of directors of Reorganized Chisholm Parent.

New Equity Interests means the limited liability company interests of Reorganized Chisholm Parent to be issued (i) on the Effective Date pursuant to this Plan, (ii) upon implementation of the Management Incentive Plan, (iii) upon exercise of the Warrants, or (iv) as otherwise permitted pursuant to the Amended Organizational Documents.

Other Priority Claim means any Claim other than an Administrative Expense Claim, Adequate Protection Claim, or a Priority Tax Claim that is entitled to priority of payment as specified in section 507(a) of the Bankruptcy Code.

Other Secured Claim means any Secured Claim other than a Priority Tax Claim, an RBL Claim, or a Term Loan Claim.

Person has the meaning set forth in section 101(41) of the Bankruptcy Code, including any individual, corporation, partnership, joint venture, association, joint stock company, limited liability company, limited partnership, trust, estate, unincorporated organization, Governmental Unit, or other Entity.


9

Petition Date means, with respect to a Debtor, the date on which such Debtor commenced its Chapter 11 Case.

Plan means this joint chapter 11 plan of reorganization, including all appendices, exhibits, schedules, and supplements hereto (including any appendices, schedules, and supplements to this Plan contained in the Plan Supplement), as may be modified from time to time in accordance with the Bankruptcy Code, the terms hereof, and the Restructuring Support Agreement.

Plan Distribution means the payment or distribution of consideration to holders of Allowed Claims and Allowed Interests under this Plan.

Plan Document means any Definitive Document or document in the Plan Supplement.

Plan Supplement means a supplement or supplements to this Plan containing certain documents relevant to the implementation of this Plan, to be filed with the Bankruptcy Court no later than seven (7) calendar days before the Voting Deadline, which shall include (i) the Amended Organizational Documents of Reorganized Chisholm Parent, (ii) to the extent known, the identities of the members of the New Board, (iii) with respect to the members of the New Board, information required to be disclosed in accordance with section 1129(a)(5) of the Bankruptcy Code, (iv) the Exit Facility Agreement, (v) the Warrant Agreement, (vi) the Schedule of Rejected Contracts, (vii) a schedule of retained Causes of Action, (viii) the Shareholders’ Agreement, and (ix) the identity of the GUC Claims Administrator; provided, however, that, through the Effective Date, the Debtors shall have the right to amend documents contained in, and exhibits to, the Plan Supplement in accordance with the terms of this Plan and the Restructuring Support Agreement.

Prepetition M&M Liens means, collectively, any valid prepetition Liens on property or assets of the Debtors imposed by law, such as landlord’s, vendors’, suppliers’, carriers’, warehousemen’s, repairmen’s, construction contractors’, workers’ and mechanics’ liens and other similar Liens, and having priority over the Liens granted to the RBL Credit Agreement Secured Parties pursuant to the RBL Credit Documents.

Priority Tax Claim means any Claim of a Governmental Unit of the kind entitled to priority of payment as specified in sections 502(i) and 507(a)(8) of the Bankruptcy Code.

Pro Rata means the proportion that an Allowed Claim or Interest in a particular Class bears to the aggregate amount of Allowed Claims or Interests in that Class.

Professional Person means any Person retained by the Debtors or the Creditors’ Committee by order of the Bankruptcy Court in connection with these Chapter 11 Cases pursuant to sections 327, 328, 330, 331, 503(b), or 1103 of the Bankruptcy Code, excluding any ordinary course professional retained pursuant to an order of the Bankruptcy Court.

Proof of Claim means a proof of Claim filed against any of the Debtors in the Chapter 11 Cases.


10

Quarterly Distribution Date means the first Business Day after the end of each quarterly calendar period (i.e., March 31, June 30, September 30, and December 31 of each calendar year) occurring after the Effective Date or as soon thereafter as is practicable.

RBL Agent means Citibank, N.A., in its capacity as administrative agent under the RBL Credit Agreement.

RBL Claims means all Claims of the RBL Credit Agreement Secured Parties against the Debtors arising under or in connection with the RBL Credit Documents, the Secured Hedge Agreements, and the Secured Cash Management Agreements (both as defined in the RBL Credit Agreement) and all documents related thereto.

RBL Collateral Agent means Wilmington Trust, National Association, in its capacity as collateral agent under the RBL Credit Agreement.

RBL Credit Agreement means that certain credit agreement, dated as of March 21, 2017 (as amended, modified, or otherwise supplemented from time to time), by and among Chisholm Borrower, as borrower, Chisholm Parent, as guarantor, the RBL Agent, the RBL Collateral Agent, the RBL Lenders party thereto from time to time, and the other RBL Credit Agreement Secured Parties party thereto.

RBL Credit Agreement Secured Parties means, collectively, the RBL Agent, the RBL Collateral Agent, the RBL Lenders, the “Issuing Banks,” “Cash Management Banks,” the “Hedge Banks,” and any holder of claims in respect of “Indemnified Liabilities” (as such terms are defined in the RBL Credit Agreement), and with respect to each of the foregoing entities, solely as to the release, exculpation and injunction provisions of the Plan or to the extent such obligation otherwise exists under the RBL Credit Documents, such Persons’ Related Persons, and their respective heirs, executors, estates, servants, and nominees, in each case in their capacity as such.

RBL Credit Documents means the “Credit Documents” as defined in the RBL Credit Agreement.

RBL Facility means the prepetition first-lien revolving credit facility provided pursuant to the RBL Credit Agreement.

RBL Lenders means the lenders from time to time party to the RBL Credit Agreement as lenders thereunder.

Related Persons means respect to a Person, that Person’s current and former Affiliates, and such Persons’ and their current and former Affiliates’ predecessors, successors, assigns, and current and former subsidiaries, officers, directors, principals, equity holders (regardless of whether such interests are held directly or indirectly), members, partners (including both general and limited partners), managers, employees, agents, advisory board members, management companies, managed accounts or funds, affiliated investment funds or investment vehicles, and Representatives.

Released Parties means, collectively, (i) the Debtors, (ii) the Consenting Creditors, (iii) the Consenting Sponsors, (iv) the Reorganized Debtors, (v) the RBL Credit Agreement


11

Secured Parties, (vi) the Creditors’ Committee and each of its members in their capacity as such, (vii) the agents and lenders under the Exit Credit Facilities, (viii) the holders of all Claims and Interests who vote to accept the Plan, and (ix) with respect to each of the foregoing Persons in clauses (i) through (viii), such Persons’ Related Persons, and their respective heirs, executors, estates, and nominees, in each case in their capacity as such. However, notwithstanding anything herein to the contrary, any Person that opts out of the releases set forth in Section 10.7 of this Plan shall not be a Released Party.

Releasing Parties means, collectively, (i) the holders of all Claims and Interests who vote to accept the Plan, (ii) the holders of all Claims and Interests whose vote to accept or reject the Plan is solicited but who do not vote either to accept or to reject the Plan, (iii) the holders of all Claims and Interests who vote, or are deemed, to reject the Plan but do not opt out of granting the releases set forth herein, (iv) the holders of all Claims and Interests who were given notice of the opportunity to opt out of granting the releases set forth Section 10.7 of this Plan but did not opt out, (v) all other holders of Claims and Interests to the maximum extent permitted by law, and (vi) the Released Parties.

Reorganized Chisholm Borrower means Chisholm Borrower as reorganized on the Effective Date in accordance with this Plan (which shall remain a Delaware limited liability company).

Reorganized Chisholm Management mean Chisholm Management as reorganized on the Effective Date in accordance with the Plan.

Reorganized Chisholm Parent means Chisholm Parent as reorganized on the Effective Date in accordance with this Plan (which shall remain a Delaware limited liability company).

Reorganized Debtors means, Reorganized Chisholm Parent, Reorganized Chisholm Borrower, and each of the other Debtors as reorganized as of the Effective Date in accordance with this Plan.

Representative means any Persons’ attorneys, accountants, investment bankers, consultants, professional advisors, independent auditors, trustees, agents, Affiliates (as defined in the RBL Credit Agreement) (and any such Affiliates’ attorneys, professional advisors, independent auditors, trustees or agents), fund advisors, investment managers, investment advisors, sub-advisors, and sub-managers, and other professionals, and each of their respective current and former officers, directors, principals, equity holders (regardless of whether such interests are held directly or indirectly), members, partners (including both general and limited partners), managers, employees, agents, and advisory board members, each in their capacity as such.

Requisite Creditors has the meaning set forth in the Restructuring Support Agreement.

Restructuring has the meaning set forth in the Restructuring Support Agreement.


12

Restructuring Expenses means the reasonable and documented out-of-pocket fees and expenses incurred by the RBL Agent, RBL Collateral Agent, and the Consenting Sponsors in connection with the Restructuring, as set forth in the Restructuring Support Agreement.

Restructuring Support Agreement means that certain Restructuring Support Agreement and all exhibits thereto, dated as of June 15, 2020, by and among the Debtors, the Consenting Creditors, and the Consenting Sponsors, as the same may be amended, restated, or otherwise modified in accordance with its terms.

Restructuring Transactions means one or more transactions pursuant to section 1123(a)(5)(D) of the Bankruptcy Code to occur following the Confirmation Date or as soon as reasonably practicable thereafter, that may be necessary or appropriate to effect any transaction described in, approved by, contemplated by, or necessary to effectuate this Plan, as set forth in the Restructuring Transactions Memorandum, including (i) the consummation of the transactions provided for under or contemplated by the Restructuring Support Agreement, (ii) the execution and delivery of appropriate agreements or other documents containing terms that are consistent with or reasonably necessary to implement the terms of this Plan and the Restructuring Support Agreement and that satisfy the requirements of applicable law, (iii) the execution and delivery of appropriate agreements or other documents containing terms that are consistent with or reasonable necessary to implement the terms of the Plan Supplement, including the terms of the Exit Credit Facilities Documents, (iv) the execution and delivery of appropriate instruments of transfer, assignment, assumption, or delegation of any property, right, liability, duty, or obligation on terms consistent with the terms of this Plan and the Restructuring Support Agreement, and (v) all other actions that the Debtors or Reorganized Debtors, as applicable, determine are necessary or appropriate and consistent with the Restructuring Support Agreement.

Restructuring Transactions Memorandum means a document, in form and substance reasonably acceptable to the RBL Agent, that will set forth the material components of the Restructuring Transactions, if any.

Schedules means, the schedules of assets and liabilities, statements of financial affairs, lists of holders of Claims and Interests and all amendments or supplements thereto filed by the Debtors with the Bankruptcy Court.

Schedule of Rejected Contracts means the schedule of executory contracts and unexpired leases to be rejected by the Debtors pursuant to this Plan, if any, as the same may be amended, modified, or supplemented from time to time.

Section 1125(e) Parties means collectively, (i) the RBL Credit Agreement Secured Parties, (ii) the agents and lenders under the Exit Credit Facilities, (iii) the Consenting Sponsors, and (iv) with respect to each of the foregoing Persons in clauses (i) through (iii), such Persons’ Related Persons, and their respective heirs, executors, estates, and nominees, in each case in their capacity as such.

Secured Claim means a Claim to the extent (i) secured by a Lien on property of a Debtor’s Estate, the amount of which is equal to or less than the value of such property (a) as set forth in this Plan, (b) as agreed to by the holder of such Claim and the Debtors, or (c) as determined


13

by a Final Order in accordance with section 506(a) of the Bankruptcy Code or (ii) subject to any valid setoff right of the holder of such Claim under section 553 of the Bankruptcy Code.

Securities Act means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

Security means any “security” as such term is defined in section 101(49) of the Bankruptcy Code.

Shareholders’ Agreement means the shareholders agreement, if any, to be entered into (or deemed entered into) by Reorganized Chisholm Parent and holders of the New Equity Interests on the Effective Date in accordance with this Plan.

Solicitation means the solicitation of votes for this Plan pursuant to, and in compliance with, the Bankruptcy Code.

Statutory Fees means all fees and charges assessed against the Estates pursuant to sections 1911 through 1930 of chapter 123 of title 28 of the United States Code.

Term Loan Agent means Wilmington Trust, National Association, in its capacity as administrative agent and collateral agent under the Term Loan Agreement.

Term Loan Agreement means the certain term loan agreement, dated as of March 21, 2017, by and among Chisholm Borrower, as borrower, Chisholm Parent, as guarantor, the Term Loan Agent, and the Term Loan Lenders party thereto from time to time.

Term Loan Claim means any Claim against the Debtors arising under or in connection with the Term Loan Agreement and all documents relating thereto.

Term Loan Documents means the Term Loan Agreement and all documentation executed in connection therewith.

Term Loan Lenders means the lenders from time to time party to the Term Loan Agreement.

Unimpaired means, with respect to a Claim, Interest, or Class of Claims or Interests, not “impaired” within the meaning of such term in section 1124 of the Bankruptcy Code.

U.S. Trustee means the United States Trustee for Region 3.

Voting Deadline means September 11, 2020 at 4:00 p.m. Prevailing Eastern Time, or such other date and time as may set by the Bankruptcy Court.

Warrant Agreement means a warrant agreement to be entered into by and among Reorganized Chisholm Parent and the warrant agent named therein that shall govern the terms of the Warrants.


14

Warrants means warrants to purchase New Equity Interests representing in the aggregate 11% of the total outstanding New Equity Interests issued pursuant to the Plan as of the Effective Date (subject to dilution by the MIP Equity), exercisable in Cash for a 5-year period commencing on the Effective Date at an aggregate exercise strike price in an amount equal to a 100% recovery to the RBL Lenders on account of the RBL Claims (inclusive of accrued and unpaid interest) as of the Petition Date.

Warrant Equity means New Equity Interests issuable upon the exercise of the Warrants, subject to dilution by the MIP Equity.

1.2 Interpretation; Application of Definitions; Rules of Construction.

Unless otherwise specified, all section or exhibit references in this Plan are to the respective section in or exhibit to this Plan, as the same may be amended, waived, or modified from time to time in accordance with the terms hereof and the Restructuring Support Agreement. The words “herein,” “hereof,” “hereto,” “hereunder,” and other words of similar import refer to this Plan as a whole and not to any particular section, subsection, or clause contained therein and have the same meaning as “in this Plan,” “of this Plan,” “to this Plan,” and “under this Plan,” respectively. The words “includes” and “including” are not limiting. The headings in this Plan are for convenience of reference only and shall not limit or otherwise affect the provisions hereof. For purposes herein: (i) in the appropriate context, each term, whether stated in the singular or plural, shall include both the singular and plural, and pronouns stated in the masculine, feminine, or neuter gender shall include the masculine, feminine, and the neuter gender; (ii) any reference herein to a contract, lease, instrument, release, or other agreement or document being in a particular form or on particular terms and conditions means that the referenced document shall be substantially in that form or substantially on those terms and conditions; (iii) the rules of construction set forth in section 102 of the Bankruptcy Code shall apply; (iv) any term used in capitalized form herein that is not otherwise defined but that is used in the Bankruptcy Code or the Bankruptcy Rules shall have the meaning assigned to that term in the Bankruptcy Code or the Bankruptcy Rules, as the case may be; and (v) all references herein to consent, acceptance, or approval may be conveyed by counsel for the respective parties that have such consent, acceptance, or approval rights, including by electronic mail. Nothing in clause (ii) of this Section 1.2 shall affect any parties’ consent rights over any of the Definitive Documents or any amendments thereto, as provided for in the Restructuring Support Agreement.

1.3 Reference to Monetary Figures.

All references in this Plan to monetary figures shall refer to the legal tender of the United States of America unless otherwise expressly provided.

1.4 Consent Rights.

Notwithstanding anything herein to the contrary, any and all notice and consent rights of the Debtors, the Consenting Creditors, the RBL Agent, and the Consenting Sponsors set forth in the Restructuring Support Agreement (including the exhibits thereto) with respect to the form and substance of this Plan, and any other Definitive Documents, including any amendments, restatements, supplements, or other modifications to such documents, and any and all consents,


15

waivers, or other deviations under or from any such documents, shall be incorporated herein by this reference and fully enforceable as if stated in full herein.

1.5 Controlling Document.

In the event of an inconsistency between this Plan and the Plan Supplement, the terms of the relevant document in the Plan Supplement shall control unless otherwise specified in such Plan Supplement document. In the event of an inconsistency between this Plan and any other instrument or document created or executed pursuant to this Plan, or between this Plan and the Disclosure Statement, this Plan shall control. The provisions of this Plan and of the Confirmation Order shall be construed in a manner consistent with each other so as to effectuate the purposes of each. If there is any inconsistency between any provision of this Plan and any provision of the Confirmation Order that cannot be so reconciled, then, solely to the extent of such inconsistency, the provisions of the Confirmation Order shall govern, and any such provisions of the Confirmation Order shall be deemed a modification of this Plan.

ARTICLE II. ADMINISTRATIVE EXPENSE CLAIMS, ADEQUATE PROTECTION CLAIMS, FEE CLAIMS, AND PRIORITY TAX CLAIMS.

2.1 Treatment of Adequate Protection Claims.

(a) In lieu of the Cash payment to which the RBL Lenders otherwise would be entitled to receive, the RBL Agent, as the holder of an Allowed Adequate Protection Claim on behalf of the RBL Lenders, has agreed that the New Equity Interests and the FLSO Term Loan received by the RBL Lenders on account of their Allowed RBL Claims, as set forth in Section 4.3 of this Plan, shall also be in full and final satisfaction of such Allowed Adequate Protection Claim.

(b) In lieu of the Cash payment, if any, to which the Term Loan Lenders otherwise would be entitled to receive for any Allowed Adequate Protection Claim, the Term Loan Agent, on behalf of the Term Loan Lenders, has agreed that the distribution to be received by the Term Loan Lenders as set forth in Section 4.4 of this Plan, shall also be in full and final satisfaction of such Allowed Adequate Protection Claim, if any.

2.2 Treatment of Administrative Expense Claims.

(a) Except to the extent that a holder of an Allowed Administrative Expense Claim agrees to a different treatment, each holder of an Allowed Administrative Expense Claim (other than Restructuring Expenses or Fee Claims) shall receive, in full and final satisfaction of such Claim, on or as soon as reasonably practicable after the later of (i) the Effective Date and (ii) the first Business Day that is thirty (30) calendar days after the date such Administrative Expense Claim becomes an Allowed Administrative Expense Claim, Cash in an amount equal to such Allowed Administrative Expense Claim; provided, however, that Allowed Administrative Expense Claims representing liabilities incurred in the ordinary course of business by the Debtors shall be paid by the Debtors or the Reorganized Debtors, as applicable, in the ordinary course of business, consistent with past practice and in accordance with the terms and subject to the conditions of any orders or agreements governing, instruments evidencing, or other documents establishing, such liabilities.


16

(b) Except as otherwise provided in this Section 2.2, and except with respect to Fee Claims and Administrative Expense Claims that arose in the ordinary course of business during the Chapter 11 Cases, requests for payment of Allowed Administrative Expense Claims must be filed pursuant to the procedures specified in the Confirmation Order and any notice related thereto no later than the Administrative Expense Claims Bar Date.

2.3 Treatment of Fee Claims.

(a) All Professional Persons seeking awards by the Bankruptcy Court of compensation for services rendered or reimbursement of expenses incurred through and including the Confirmation Date under sections 327, 328, 330, 331, 503(b)(2), 503(b)(3), 503(b)(4), 503(b)(5), or 1103 of the Bankruptcy Code shall (i) file, on or before the date that is forty-five (45) days after the Confirmation Date, their respective applications for final allowances of compensation for services rendered and reimbursement of expenses incurred and (ii) be paid in full, in Cash, in such amounts as are Allowed by the Bankruptcy Court or authorized to be paid in accordance with the order(s) relating to or allowing any such Fee Claim. The Debtors are authorized to pay compensation for professional services rendered and reimbursement of expenses incurred after the Confirmation Date in the ordinary course and without the need for Bankruptcy Court approval.

(b) Any Allowed Fee Claims of Professional Persons retained by the Creditors’ Committee incurred on or after July 27, 2020 through the Effective Date that exceeds $150,000 in the aggregate shall be paid from the GUC Cash Pool.

(c) On the Effective Date, the Debtors shall establish and fund the Fee Escrow Account. The Debtors, after consultation with the RBL Agent and the Creditors’ Committee, shall fund the Fee Escrow Account with Cash equal to the Professional Persons’ good faith estimates of the Fee Claims. Funds held in the Fee Escrow Account shall not be considered property of the Debtors’ Estates or property of the Reorganized Debtors, but shall revert to the Reorganized Debtors only after all Allowed Fee Claims have been irrevocably paid in full. The Fee Escrow Account shall be held in trust for Professional Persons and for no other parties until all Allowed Fee Claims have been paid in full. Fee Claims shall be paid in full, in Cash, in such amounts as are Allowed by the Bankruptcy Court (i) on or as soon as reasonably practicable after the date upon which a Final Order relating to any such Allowed Fee Claim is entered, (ii) on such other terms as may be mutually agreed upon between the holder of such an Allowed Fee Claim and the Debtors or the Reorganized Debtors, as applicable, or (iii) in accordance with the Interim Compensation Procedures Order. The Reorganized Debtors’ obligations with respect to Fee Claims shall not be limited by nor deemed limited to the balance of funds held in the Fee Escrow Account. To the extent that funds held in the Fee Escrow Account are insufficient to satisfy the amount of Allowed Fee Claims owing to the Professional Persons, such Professional Persons shall have an Allowed Administrative Expense Claim for any such deficiency, which shall be satisfied in accordance with Section 2.2 of this Plan. When such Allowed Fee Claims have been paid in full, any remaining amount in the Fee Escrow Account shall be promptly returned to the Reorganized Debtors without any further action or order of the Bankruptcy Court. No Liens, claims, or interests shall encumber the Professional Fee Escrow in any way, other than customary liens in favor of the depository bank at which the Fee Escrow Account is maintained.


17

(d) Any objections to Fee Claims shall be served and filed (i) no later than twenty-one (21) days after the filing of the final applications for compensation or reimbursement or (ii) such later date ordered by the Bankruptcy Court.

2.4 Treatment of Priority Tax Claims.

Except to the extent that a holder of an Allowed Priority Tax Claim agrees to a different treatment, each holder of an Allowed Priority Tax Claim shall receive, in full and final satisfaction of such Allowed Priority Tax Claim, at the sole option of the Debtors or the Reorganized Debtors, as applicable (i) Cash in an amount equal to such Allowed Priority Tax Claim on or as soon as reasonably practicable after the later of (a) the Effective Date, (b) the first Business Day that is thirty (30) calendar days after the date such Priority Tax Claim becomes an Allowed Priority Tax Claim, and (c) the date such Allowed Priority Tax Claim is due and payable in the ordinary course, or (ii) such other treatment consistent with the provisions of section 1129(a)(9) of the Bankruptcy Code.

2.5 Restructuring Expenses.

The Restructuring Expenses incurred, or estimated to be incurred, up to and including the Effective Date, shall be paid in full in Cash on the Effective Date or as soon as reasonably practicable thereafter (to the extent not previously paid during the course of the Chapter 11 Cases) in accordance with, and subject to, the terms of the Restructuring Support Agreement, without any requirement to file a fee application with the Bankruptcy Court and without any requirement for Bankruptcy Court review or approval. All Restructuring Expenses to be paid on the Effective Date shall be estimated prior to and as of the Effective Date and such estimates shall be delivered to the Debtors at least two (2) Business Days before the anticipated Effective Date. Notwithstanding the foregoing, such estimates shall not be considered an admission or limitation with respect to such Restructuring Expenses. On the Effective Date or as soon as practicable thereafter, final invoices for all Restructuring Expenses incurred prior to and as of the Effective Date shall be submitted to the Reorganized Debtors. In addition, the Debtors and the Reorganized Debtors (as applicable) shall continue to pay when due pre- and post-Effective Date Restructuring Expenses of the RBL Agent and the RBL Collateral Agent related to implementation, consummation, and defense of the Plan, including in connection with the claims allowance process, whether incurred before, on or after the Effective Date. With respect to Restructuring Expenses arising prior to the Effective Date, such amounts shall be paid consistent with the terms and conditions of the Restructuring Support Agreement and the Cash Collateral Order.

ARTICLE III. CLASSIFICATION OF CLAIMS AND INTERESTS.

3.1 Classification in General.

A Claim or Interest is placed in a particular Class for all purposes, including voting, confirmation, and distribution under this Plan and under sections 1122 and 1123(a)(1) of the Bankruptcy Code. A Claim or Interest is placed in a particular Class for the purpose of receiving distributions pursuant to this Plan only to the extent that such Claim or Interest is an Allowed Claim or Allowed Interest in that Class and such Claim or Interest has not been satisfied, released, or otherwise settled prior to the Effective Date.


18

3.2 Formation of Debtor Groups for Convenience Only.

Solely with respect to Class 5, and solely for purposes of (i) describing treatment under this Plan, (ii) tabulating votes for such Class and confirmation of this Plan, and (iii) making Plan Distributions in respect of such Class, this Plan groups the Debtors together. Such groupings shall not affect any Debtor’s status as a separate legal entity, change the organizational structure of the Debtors’ business enterprise, constitute a change of control of any Debtor for any purpose, cause a merger or consolidation of any legal entities, or cause the transfer of any assets. Except as otherwise provided by or permitted under this Plan, all Debtors shall continue to exist as separate legal entities.

3.3 Summary of Classification of Claims and Interests.

The following table designates the Classes of Claims against and Interests in the Debtors and specifies which Classes are (i) Impaired and Unimpaired under this Plan, (ii) entitled to vote to accept or reject this Plan in accordance with section 1126 of the Bankruptcy Code, and (iii) presumed to accept or deemed to reject this Plan. In accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative Expense Claims and Priority Tax Claims have not been classified. The classification of Claims and Interests set forth herein shall apply separately to each Debtor.

Class Type of Claim or Interest Impairment Entitled to Vote

Class 1 Other Priority Claims Unimpaired No (Presumed to accept)

Class 2 Other Secured Claims Unimpaired No (Presumed to accept)

Class 3 RBL Claims Impaired Yes

Class 4 Term Loan Claims Impaired Yes

Class 5 General Unsecured Claims Impaired Yes

Class 6 Intercompany Claims Unimpaired No (Presumed to accept)

Class 7 Chisholm Parent Equity Interests Impaired Yes

Class 8 Chisholm Management Equity Interests Impaired No (Presumed to accept as Plan proponent)

Class 9 Intercompany Interests Unimpaired No (Presumed to accept)

3.4 Special Provision Governing Unimpaired Claims.

Except as otherwise provided in this Plan, nothing under this Plan shall affect the rights of the Debtors or the Reorganized Debtors, as applicable, in respect of any Unimpaired Claims, including all rights in respect of legal and equitable defenses to, or setoffs or recoupments against, any such Unimpaired Claims.


19

3.5 Elimination of Vacant Classes.

Any Class that, as of the commencement of the Confirmation Hearing, does not have at least one Claim or Interest that is Allowed in an amount greater than zero for voting purposes shall be considered vacant, deemed eliminated from this Plan for purposes of acceptance or rejection of this Plan, and disregarded for purposes of determining whether this Plan satisfies section 1129(a)(8) of the Bankruptcy Code with respect to such Class.

3.6 Voting Classes; Presumed Acceptance by Non-Voting Classes.

With respect to each Debtor, if a Class contained Claims or Interests eligible to vote and no holder of such Claims or Interests, as applicable, votes to accept or reject this Plan, this Plan shall be presumed accepted by the holders of such Claims or Interests, as applicable, in such Class.

3.7 Voting; Presumptions; Solicitation.

(a) Acceptance by Certain Impaired Classes. Only holders of Claims in Class 3, Class 4, and Class 5, and Interests in Class 7 are entitled to vote to accept or reject this Plan. An Impaired Class of Claims shall have accepted this Plan if (i) the holders of at least two-thirds (2/3) in amount of the Allowed Claims actually voting in such Class have voted to accept this Plan and (ii) the holders of more than one-half (1/2) in number of the Allowed Claims actually voting in such Class have voted to accept this Plan. An Impaired Class of Interests shall have accepted this Plan if the holders of at least two-thirds (2/3) in amount of the Allowed Interests actually voting in Class 7 have voted to accept this Plan.

(b) Presumed Acceptance by Unimpaired Classes. Holders of Claims and Interests in Classes 1, 2, 6, 8, and 9 are conclusively presumed to have accepted this Plan pursuant to section 1126(f) of the Bankruptcy Code. Accordingly, such holders are not entitled to vote to accept or reject this Plan.

3.8 Cramdown.

If any Class is deemed to reject this Plan or is entitled to vote on this Plan and does not vote to accept this Plan, the Debtors may (i) seek confirmation of this Plan under section 1129(b) of the Bankruptcy Code or (ii) amend or modify this Plan in accordance with the terms hereof and the Bankruptcy Code. If a controversy arises as to whether any Claim or Interest, or any Class of Claims or Interests, is Impaired, the Bankruptcy Court shall, after notice and a hearing, determine such controversy on or before the Confirmation Date.

3.9 No Waiver.

Nothing contained in this Plan shall be construed to waive a Debtor’s or other Person’s right to object on any basis to any Claim.


20

ARTICLE IV. TREATMENT OF CLAIMS AND INTERESTS.

4.1 Class 1: Other Priority Claims.

(a) Treatment: The legal, equitable, and contractual rights of the holders of Allowed Other Priority Claims are unaltered by this Plan. Except to the extent that a holder of an Allowed Other Priority Claim agrees to different treatment, in full and final satisfaction of such Allowed Other Priority Claim, each holder of an Allowed Other Priority Claim shall receive, at the option of the Debtors or the Reorganized Debtors (as applicable), (i) on or as soon as reasonably practicable after the later of the Effective Date and the date that is ten (10) Business Days after the date such Other Priority Claim becomes an Allowed Claim, payment in full in Cash or (ii) other treatment consistent with the provisions of section 1129 of the Bankruptcy Code.

(b) Impairment and Voting: Allowed Other Priority Claims are Unimpaired. In accordance with section 1126(f) of the Bankruptcy Code, the holders of Allowed Other Priority Claims are conclusively presumed to accept this Plan and are not entitled to vote to accept or reject this Plan, and the votes of such holders shall not be solicited with respect to such Allowed Other Priority Claims.

4.2 Class 2: Other Secured Claims.

(a) Treatment: The legal, equitable, and contractual rights of the holders of Allowed Other Secured Claims are unaltered by this Plan. Except to the extent that a holder of an Allowed Other Secured Claim agrees to different treatment, on or as soon as reasonably practicable after the later of the Effective Date and the date that is ten (10) Business Days after the date such Other Secured Claim becomes an Allowed Claim, in full and final satisfaction of such Allowed Other Secured Claim, each holder of an Allowed Other Secured Claim shall receive, at the option of the Debtors or Reorganized Debtors (as applicable), with the consent of the RBL Agent (which consent shall not be unreasonably withheld), (i) payment in full in Cash, (ii) reinstatement of such Allowed Other Secured Claim, or (iii) such other treatment necessary to render such Allowed Other Secured Claim Unimpaired.

(b) Impairment and Voting: Allowed Other Secured Claims are Unimpaired. In accordance with section 1126(f) of the Bankruptcy Code, the holders of Allowed Other Secured Claims are conclusively presumed to accept this Plan and are not entitled to vote to accept or reject this Plan, and the votes of such holders shall not be solicited with respect to such Allowed Other Secured Claims.

4.3 Class 3: RBL Claims.

(a) Allowance: The RBL Claims shall be deemed Allowed on the Effective Date in the aggregate principal amount of not less than $263,000,000, plus all outstanding interest, fees, expenses and other obligations due under the RBL Credit Agreement, the Secured Hedge Agreements, the Secured Cash Management Agreements and the other RBL Credit Documents as of the Petition Date, and shall not be subject to any avoidance, reductions, setoff, offset, recoupment, recharacterization, subordination (whether equitable, contractual or otherwise), counterclaims, cross-claims, defenses, disallowance, impairment, objection or any other challenge under any applicable law or regulation by any Person.


21

(b) Treatment: On the Effective Date, each holder of an Allowed RBL Claim shall receive, in full and final satisfaction of such Allowed RBL Claim, such holder’s Pro Rata share of:

(i) 95% of the New Equity Interests, subject to dilution by (y) the MIP Equity and (z) if (A) Class 4, Class 5, and Class 7 vote to accept the Plan and (B) as of the Confirmation Date, the Consenting Sponsors have not terminated their obligations under the Restructuring Support Agreement pursuant to Section 6(d)(xii) thereof, the Warrant Equity;

(ii) if Class 4 does not vote to accept the Plan, an additional 5% of the New Equity Interests, subject to dilution by the MIP Equity;

(iii) if (A) Class 4 votes to accept the Plan but (B) (x) either Class 5 or Class 7 does not vote to accept the Plan or (y) prior to the Confirmation Date, the Consenting Sponsors terminate their obligations under the Restructuring Support Agreement pursuant to Section 6(d)(xii) thereof, an additional 1% of the New Equity Interests, subject to dilution by the MIP Equity; and

(iv) the FLSO Term Loan.

(c) Impairment and Voting: RBL Claims are Impaired. Holders of Allowed RBL Claims are entitled to vote on this Plan.

4.4 Class 4: Term Loan Claims.

(a) Treatment:

(i) If Class 4 votes to accept the Plan, then on the Effective Date (x) the Term Loan Claims shall be deemed Allowed in the aggregate principal amount of not less than $253,827,034.71 (which includes payment in kind interest that has been added to the principal), plus all outstanding interest, fees, expenses, and other obligations due under the Term Loan Documents as of the Petition Date, and shall not be subject to any avoidance, reductions, setoff, offset, recoupment, recharacterization, subordination (whether equitable, contractual or otherwise), counterclaims, cross-claims, defenses, disallowance, impairment, objection, or any other challenge under any applicable law or regulation by any Person, and (y) each holder of an Allowed Term Loan Claim shall receive, in full and final satisfaction of such Allowed Term Loan Claim, such holder’s Pro Rata share of 4% of the New Equity Interests, subject to dilution by the Warrant Equity and the MIP Equity.


22

(ii) If Class 4 does not vote to accept the Plan, then no holder of a Term Loan Claim shall receive any distribution on account of such Term Loan Claim.

(b) Impairment and Voting: Term Loan Claims are Impaired. Holders of Term Loan Claims are entitled to vote on this Plan.

4.5 Class 5: General Unsecured Claims.

(a) Treatment:

(i) If Class 5 votes to accept the Plan, then on or as soon as reasonably practicable after the later of the Effective Date and the date on which a General Unsecured Claim becomes an Allowed General Unsecured Claim, each holder of an Allowed General Unsecured Claim shall receive, in full and final satisfaction of such Allowed General Unsecured Claim, such holder’s Pro Rata share of the GUC Cash Pool, which GUC Cash Pool shall be in the total amount of $3 million, subject to the GUC Cash Pool Reduction.

(ii) If Class 5 does not vote to accept the Plan, then on or as soon as reasonably practicable after the later of the Effective Date and the date on which a General Unsecured Claim becomes an Allowed General Unsecured Claim, each holder of an Allowed General Unsecured Claim shall receive, in full and final satisfaction of such Allowed General Unsecured Claim, such holder’s Pro Rata share of the GUC Cash Pool, which GUC Cash Pool shall be in the total amount of $1.5 million, subject to the GUC Cash Pool Reduction.

(b) Impairment and Voting: General Unsecured Claims are Impaired. Holders of General Unsecured Claims are entitled to vote on this Plan.

4.6 Class 6: Intercompany Claims.

(a) Treatment: On or after the Effective Date, all Intercompany Claims shall be paid, adjusted, continued, settled, reinstated, discharged, or eliminated, in each case to the extent determined to be appropriate by the Debtors or Reorganized Debtors, as applicable, with the consent of the RBL Agent.

(b) Impairment and Voting: All Allowed Intercompany Claims are deemed Unimpaired. In accordance with section 1126(f) of the Bankruptcy Code, the holders of Allowed Intercompany Claims are conclusively presumed to accept this Plan and are not entitled to vote to accept or reject this Plan, and the votes of such holders shall not be solicited with respect to such Allowed Intercompany Claims.


23

4.7 Class 7: Chisholm Parent Equity Interests.

(a) Treatment: On the Effective Date, Chisholm Parent Equity Interests shall be cancelled and extinguished and will be of no further force and effect.

(i) If (A) Class 4, Class 5, and Class 7 vote to accept the Plan and (B) as of the Confirmation Date, the Consenting Sponsors have not terminated their obligations under the Restructuring Support Agreement pursuant to Section 6(d)(xii) thereof, then on the Effective Date, each holder of Chisholm Parent Equity Interests shall receive, in full and final satisfaction of such Chisholm Parent Equity Interests, such holder’s Pro Rata share of:

1. 1% of the New Equity Interests, subject to dilution by the Warrant Equity and the MIP Equity; and

2. Warrants for up to 11% of the New Equity Interests, subject to dilution by the MIP Equity.

(ii) If (A) Class 4, Class 5, or Class 7 does not vote to accept the Plan or (B) prior to the Confirmation Date, the Consenting Sponsors terminate their obligations under the Restructuring Support Agreement pursuant to Section 6(d)(xii) thereof, then no holder of Chisholm Parent Equity Interests shall receive any distribution on account of such Chisholm Parent Equity Interests.

(b) Impairment and Voting: Chisholm Parent Equity Interests are Impaired. Holders of Chisholm Parent Equity Interests are entitled to vote on this Plan.

4.8 Class 8: Chisholm Management Equity Interests.

(a) Treatment: On the Effective Date, the Chisholm Management Equity Interests shall be cancelled and extinguished, and holders of Chisholm Management Equity Interests shall not receive or retain any property under this Plan on account of such Chisholm Management Equity Interests.

(b) Impairment and Voting: Chisholm Management Equity Interests are Impaired. As proponents of the Plan, the holders of Chisholm Management Equity Interests are conclusively presumed to accept the Plan, and the votes of such holders shall not be solicited with respect to such Chisholm Management Equity Interests.

4.9 Class 9: Intercompany Interests.

(a) Treatment: On the Effective Date, all Intercompany Interests shall be adjusted, continued, settled, reinstated, discharged, or eliminated as determined by the Debtors or the Reorganized Debtors (as applicable) with the consent of the RBL Agent.


24

(b) Impairment and Voting: Allowed Intercompany Interests are Unimpaired. In accordance with section 1126(f) of the Bankruptcy Code, the holders of Allowed Intercompany Interests are conclusively presumed to accept this Plan and are not entitled to vote to accept or reject this Plan, and the votes of such holders shall not be solicited with respect to such Allowed Intercompany Interests.

ARTICLE V. MEANS FOR IMPLEMENTATION.

5.1 Sources of Consideration for Plan Distribution.

The Reorganized Debtors shall fund Cash Plan Distributions with (i) Cash available on or after the Effective Date and (ii) Cash proceeds from the FLFO RBL Facility, to the extent applicable.

5.2 Compromise and Settlement of Claims, Interests, and Controversies.

Subject to approval by the Bankruptcy Court in connection with confirmation of the Plan, the provisions of the Plan and other documents entered into in connection with the Plan constitute a good faith compromise and settlement among the Debtors, the Consenting Creditors, the Consenting Sponsors, the Creditors’ Committee, and the Term Loan Lenders of claims, Causes of Action, and controversies among such parties. The Plan shall be deemed a motion to approve the compromises and settlements contained in the Plan and the good faith compromise and settlement of all of the claims, Causes of Action and controversies described in the foregoing sentence pursuant to sections 363 and 1123(b)(3) of the Bankruptcy Code and Bankruptcy Rule 9019. Entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval of such compromises and settlements, as well as a finding by the Bankruptcy Court that the compromises and settlements are fair, equitable, reasonable, and in the best interests of the Debtors and their Estates.

5.3 Continued Corporate Existence; Effectuating Documents; Further Transactions.

(a) Except as otherwise provided in this Plan, the Debtors shall continue to exist after the Effective Date as Reorganized Debtors in accordance with the applicable laws of the respective jurisdictions in which they are incorporated or organized and pursuant to the Amended Organizational Documents or other applicable corporate documents.

(b) On or after the Effective Date, without prejudice to the rights of any party to a contract or other agreement with any Reorganized Debtor, each Reorganized Debtor may, in its sole discretion, take such action as permitted by applicable law and the Amended Organizational Documents, as such Reorganized Debtor may determine is reasonable and appropriate, including causing (i) a Reorganized Debtor to be merged into another Reorganized Debtor or an affiliate of a Reorganized Debtor, (ii) a Reorganized Debtor to be dissolved, (iii) the legal name of a Reorganized Debtor to be changed, or (iv) the closure of a Reorganized Debtor’s Chapter 11 Case on the Effective Date or any time thereafter, and such action and documents are deemed to require no further action or approval (other than any requisite filings required under applicable state, federal, or foreign law).


25

(c) On the Effective Date or as soon as reasonably practicable thereafter, the Reorganized Debtors may take all actions as may be necessary or appropriate to effect any transaction described in, approved by, or necessary or appropriate to effectuate this Plan, including (i) the execution and delivery of appropriate agreements or other documents of merger, consolidation, restructuring, conversion, disposition, transfer, dissolution, or liquidation containing terms that are consistent with the terms of this Plan and the Definitive Documents and that satisfy the requirements of applicable law and any other terms to which the applicable entities may agree, (ii) the execution and delivery of appropriate instruments of transfer, assignment, assumption, or delegation of any asset, property, right, liability, debt, or obligation on terms consistent with the terms of this Plan and having other terms to which the applicable parties agree, (iii) the filing of appropriate certificates or articles of incorporation or formation and amendments thereto, reincorporation, merger, consolidation, conversion, or dissolution pursuant to applicable law, (iv) the Restructuring Transactions, and (v) all other actions that the applicable entities determine to be necessary or appropriate, including, without limitation, making filings or recordings that may be required by applicable law.

5.4 Corporate and Limited Liability Company Action.

Upon the Effective Date, all actions contemplated by the Plan shall be deemed authorized and approved in all respects, including (i) those set forth in Sections 5.3 and 5.13 of the Plan and (ii) all other actions contemplated by the Plan (whether to occur before, on, or after the Effective Date), in each case, in accordance with and subject to the terms hereof. All matters provided for in the Plan involving the corporate or limited liability company structure of the Debtors or the Reorganized Debtors shall be deemed to have occurred and shall be in effect, without any requirement of further action by the Security holders, directors, managers, or officers of the Debtors or the Reorganized Debtors. On or (as applicable) before the Effective Date, the appropriate managers, directors, and officers of the Debtors shall be authorized and directed to issue, execute, and deliver the agreements, documents, Securities, and instruments contemplated by the Plan (or necessary or desirable to effect the transactions contemplated by the Plan) in the name of and on behalf of the Reorganized Debtors, including (i) the Amended Organizational Documents, (ii) the Exit Credit Facilities Documents, (iii) the New Equity Interests, (iv) Warrants, and (v) any and all other agreements, documents, Securities, and instruments relating to the foregoing. The authorizations and approvals contemplated by this Section 5.4 shall be effective notwithstanding any requirements under nonbankruptcy law.

5.5 Cancellation of Existing Securities and Agreements.

Except for the purpose of evidencing a right to a distribution under this Plan and except as otherwise set forth in this Plan, or in any Plan Document, on the Effective Date, all agreements, instruments, notes, certificates, indentures, mortgages, Securities and other documents evidencing any Claim or Interest (other than Intercompany Claims and Intercompany Interests, to the extent they are not modified by this Plan) and any rights of any holder in respect thereof shall be deemed cancelled and of no force or effect and the obligations of the Debtors thereunder shall be deemed fully satisfied, released, and discharged and, as applicable, shall be deemed to have been surrendered to the Disbursing Agent. The holders of or parties to such cancelled instruments, Securities, and other documentation shall have no rights arising from or related to such instruments, Securities, or other documentation or the cancellation thereof, except


26

the rights provided for pursuant to this Plan. Notwithstanding the foregoing, any provision in any agreement, instrument, note, certificate, indenture, mortgage, Security or other document that causes or effectuates, or purports to cause or effectuate, a default, termination, waiver, or other forfeiture of, or by, the Debtors of their interests as a result of the cancellations, terminations, satisfaction, releases, or discharges provided for in this Section 5.5 shall be deemed null and void and shall be of no force and effect.

5.6 Cancellation of Certain Existing Security Interests.

Upon the full payment or other satisfaction of an Allowed Other Secured Claim, or promptly thereafter, the holder of such Allowed Other Secured Claim shall deliver to the Debtors or Reorganized Debtors, as applicable, any collateral or other property of a Debtor held by such holder, together with any termination statements, instruments of satisfaction, or releases of all security interests with respect to its Allowed Other Secured Claim that may be reasonably required to terminate any related financing statements, mortgages, mechanics’ or other statutory Liens, or lis pendens, or similar interests or documents.

5.7 Officers and Boards of Directors.

(a) On the Effective Date, the New Board shall consist of five (5) directors selected by the Requisite Creditors. The identity and affiliations of any Person proposed to serve on the New Board shall be disclosed in accordance with section 1129(a)(5) of the Bankruptcy Code.

(b) Except as otherwise provided in the Plan Supplement, the officers of the respective Reorganized Debtors immediately before the Effective Date, as applicable, shall serve as the initial officers of each of the respective Reorganized Debtors on and after the Effective Date. After the Effective Date, the selection of officers of the Reorganized Debtors shall be as provided by their respective Amended Organizational Documents.

(c) Except to the extent that a member of the board of directors or a manager, as applicable, of a Debtor continues to serve as a director or manager of such Debtor on and after the Effective Date, the members of the board of directors or managers, as applicable, of each Debtor prior to the Effective Date, in their capacities as such, shall have no continuing obligations or duties to the Reorganized Debtors on or after the Effective Date and each such director or manager shall be deemed to have resigned or shall otherwise cease to be a director or manager of the applicable Debtor on the Effective Date. Commencing on the Effective Date, each of the directors and managers, as applicable, of each of the Reorganized Debtors shall be deemed elected and serve pursuant to the terms of the applicable Amended Organizational Documents of such Reorganized Debtor and may be replaced or removed in accordance with such organizational documents.

5.8 Management Incentive Plan.

As soon as practicable after the Effective Date, the New Board shall adopt the Management Incentive Plan. The MIP Equity shall be reserved for grants made from time to time to directors, officers, or other management and employees of the Reorganized Debtors. The New Board shall determine the form, allocation, amounts, and timing of such grants.


27

5.9 Authorization and Issuance of New Equity Interests and Warrants.

(a) On the Effective Date, Reorganized Chisholm Parent is authorized to issue or cause to be issued and shall issue (i) the New Equity Interests and (ii) the Warrants (if Class 4 and Class 7 are entitled to receive a distribution in accordance with ARTICLE IV hereof) for distribution in accordance with the terms of this Plan without the need for any further corporate or shareholder action. All of the New Equity Interests and the Warrants issuable under this Plan, when so issued, shall be duly authorized, validly issued, and, in the case of the New Equity Interests, fully paid, and non-assessable. The Warrant Equity (upon payment of the exercise price in accordance with the terms of such Warrants) issued pursuant to this Plan shall be duly authorized, validly issued, fully paid, and non-assessable.

(b) The Warrants (if Class 4 and Class 7 are entitled to receive a distribution in accordance with ARTICLE IV hereof) shall be issuable pursuant to the terms of the Warrant Agreement. Each Warrant shall, subject to the terms of the Warrant Agreement, be exercisable for one (1) New Equity Interest.

5.10 Securities Exemptions.

The offer, issuance, and distribution of the New Equity Interests, and the Warrants (and the Warrant Equity issuable upon exercise thereof) under ARTICLE IV of this Plan shall be exempt, pursuant to section 1145 of the Bankruptcy Code, without further act or actions by any Person, from registration under the Securities Act, and all rules and regulations promulgated thereunder, and any other applicable securities laws, to the fullest extent permitted by section 1145 of the Bankruptcy Code. The New Equity Interests and the Warrants (and the Warrant Equity issuable upon exercise thereof) issued pursuant to section 1145(a) of the Bankruptcy Code may be resold without registration under the Securities Act or other federal securities laws pursuant to the exemption provided by section 4(a)(1) of the Securities Act, subject to: (i) the holder not being an “underwriter” with respect to such securities, as that term is defined in subsection (b) of section 1145 the Bankruptcy Code; (ii) the holder (a) not being an “affiliate” of Reorganized Chisholm Parent as defined in Rule 144(a)(1) under the Securities Act, (b) not having been such an “affiliate” within ninety (90) days of such transfer and/or (c) not having acquired such securities from an “affiliate” within one year of such transfer (other than, with respect to clause (ii), such resales as may be permitted by and subject to the conditions of Rule 144 of the Securities Act); (iii) compliance with any rules and regulations of the Securities and Exchange Commission applicable at the time of any future transfer of such securities or instruments; (iv) any restrictions on the transferability of the New Equity Interests contained in the Shareholders’ Agreement; and (v) any applicable regulatory approval. In addition, such section 1145 exempt Securities generally may be resold without registration under state securities laws pursuant to various exemptions provided by the respective laws of the several states.

5.11 Exit Credit Facilities.

(a) The Reorganized Debtors shall enter into the Exit Credit Facilities Documents, and the Exit Credit Facilities will be made available to the Reorganized Debtors, pursuant to and subject to the terms and conditions set forth in the Exit Credit Facilities Documents.


28

(b) Confirmation shall be deemed approval of the entry into and incurrence of the Exit Credit Facilities (including the transactions contemplated thereby, and all actions to be taken, undertakings to be made, and obligations and guarantees to be incurred and fees paid in connection therewith), and to the extent not approved by the Court previously, the Reorganized Debtors shall be authorized to execute and deliver any Exit Credit Facilities Documents and any liens and security interests in favor of the Exit Secured Parties under the Exit Credit Facilities securing such obligations, and perform their obligations thereunder, including the payment of any fees, expenses, losses, damages, or indemnities, without further notice to or order of the Court, act or action under applicable law, regulation, order or rule or vote, consent, authorization, or approval of any Person, subject to such modifications as the Debtors (with the prior written consent of the RBL Agent) or Reorganized Debtors may deem necessary to consummate the Exit Credit Facilities. The Exit Credit Facilities Documents, including any and all such documents that serve to evidence and secure the Reorganized Debtors’ respective obligations under the Exit Credit Facilities and any liens and security interests in favor of the Exit Secured Parties under the Exit Credit Facilities securing such obligations, shall constitute legal, valid, and binding obligations of the Reorganized Debtors and be enforceable in accordance with their respective terms.

5.12 General Unsecured Claims Recoveries.

(a) On or prior to the Effective Date, the Debtors shall establish and fund the GUC Cash Pool, which shall be held in trust for distributions on account of Allowed General Unsecured Claims, subject to the GUC Cash Pool Reduction.

(b) The GUC Cash Pool (i) shall not be deemed property of the Debtors or Reorganized Debtors, (ii) shall be held in trust to fund distributions, subject to the GUC Cash Pool Reduction, on account of Allowed General Unsecured Claims as provided herein, and (iii) shall not be encumbered by any Liens, Claims, or Interests.

(c) Any funds remaining in the GUC Cash Pool after all Allowed General Unsecured Claims have been paid pursuant to the terms of this Plan shall revert to the Reorganized Debtors.

5.13 Restructuring Transactions.

On the Effective Date or as soon as reasonably practicable thereafter, the Debtors or Reorganized Debtors, as applicable, may take all actions consistent with this Plan as may be necessary or appropriate to effect any transaction described in, approved by, contemplated by, or necessary to effectuate the Restructuring Transactions under and in connection with this Plan.

5.14 Separate Plans.

Notwithstanding the combination of separate plans of reorganization for the Debtors set forth in this Plan for purposes of economy and efficiency, this Plan constitutes a separate chapter 11 plan for each Debtor. Accordingly, if the Bankruptcy Court does not confirm this Plan with respect to one or more Debtors, it may still confirm this Plan with respect to any other Debtor that satisfies the confirmation requirements of section 1129 of the Bankruptcy Code.


29

5.15 Tax Structure.

To the extent practicable, the Restructuring will be structured so as to obtain the most beneficial structure for the Company, its equity holders post-transaction and the Consenting Sponsors, given the totality of the circumstances, as determined by the Debtors in its business judgment and reasonably acceptable to the RBL Agent and the Requisite Creditors.

5.16 Closing of Chapter 11 Cases.

The Reorganized Debtors shall, promptly after the full administration of the Chapter 11 Cases, file with the Bankruptcy Court all documents required by Bankruptcy Rule 3022 and any applicable order of the Bankruptcy Court to close the Chapter 11 Cases. As of the Effective Date, the Reorganized Debtors may submit separate orders to the Bankruptcy Court under certification of counsel closing certain individual Chapter 11 Cases and changing the caption of the Chapter 11 Cases accordingly. Matters concerning Claims may be heard and adjudicated in a Debtor’s Chapter 11 Case that remains open regardless of whether the applicable Claim is against a Debtor in a chapter 11 case that is closed. Nothing in this Plan shall authorize the closing of any case nunc pro tunc to a date that precedes the date any such order is entered. Any request for nunc pro tunc relief shall be made on motion served on the United States Trustee, and the Bankruptcy Court shall rule on such request after notice and a hearing. Upon the filing of a motion to close the last Chapter 11 Case remaining open, the Reorganized Debtors shall file a final report with respect to all of the Chapter 11 Cases pursuant to Local Rule 3022-1(c).

ARTICLE VI. DISTRIBUTIONS.

6.1 Distributions Generally.

The Disbursing Agent shall make all Plan Distributions to the appropriate holders of Allowed Claims and Allowed Interests in accordance with the terms of this Plan.

6.2 No Postpetition Interest on Claims.

Unless otherwise provided in this Plan, the Plan Documents, the Confirmation Order, or other order of the Bankruptcy Court, or required by applicable bankruptcy law, postpetition interest shall not accrue or be paid on any Claim and no holder of a Claim shall be entitled to interest accruing on or after the Petition Date on any such Claim.

6.3 Date of Distributions.

Unless otherwise provided in this Plan, any distributions and deliveries to be made under this Plan shall be made on the Effective Date or as soon as reasonably practicable thereafter, and any subsequent distributions will be made at least as frequently as each subsequent Quarterly Distribution Date. In the event that any payment or act under this Plan is required to be made or performed on a date that is not a Business Day, then the making of such payment or the performance of such act may be completed on the next succeeding Business Day, but shall be deemed to have been completed as of the required date. If and to the extent that there are Disputed Claims, distributions on account of any such Disputed Claims shall be made pursuant to the provisions set forth in ARTICLE VII hereof.


30

6.4 Distribution Record Date.

As of the close of business on the Distribution Record Date, the various lists of holders of Claims in each Class, as maintained by the Debtors or their agents, shall be deemed closed, and there shall be no further changes in the record holders of any Claims after the Distribution Record Date. Neither the Debtors nor the Disbursing Agent shall have any obligation to recognize any transfer of a Claim occurring after the close of business on the Distribution Record Date. In addition, with respect to payment of any Cure Amounts or disputes over any Cure Amounts, neither the Debtors nor the Disbursing Agent shall have any obligation to recognize or deal with any party other than the non-Debtor party to the applicable executory contract or unexpired lease, even if such non-Debtor party has sold, assigned, or otherwise transferred its Claim for a Cure Amount.

6.5 Distributions after Effective Date.

Distributions made after the Effective Date to holders of Disputed Claims that are not Allowed Claims as of the Effective Date but which later become Allowed Claims shall be deemed to have been made on the Effective Date.

6.6 Disbursing Agent.

All Plan Distributions shall be made by the Disbursing Agent on and after the Effective Date as provided herein. The Disbursing Agent shall not be required to give any bond or surety or other security for the performance of its duties. The Reorganized Debtors shall use commercially reasonable efforts to provide the Disbursing Agent (if other than the Reorganized Debtors) with the amounts of Claims and the identities and addresses of holders of Claims, in each case, as set forth in the Debtors’ or Reorganized Debtors’ books and records. The Reorganized Debtors shall cooperate in good faith with the applicable Disbursing Agent (if other than the Reorganized Debtors) to comply with the reporting and withholding requirements outlined in Section 6.18 of this Plan.

6.7 Delivery of Distributions.

(a) Subject to Bankruptcy Rule 9010, the Disbursing Agent shall make all distributions to any holder of an Allowed Claim as and when required by this Plan at (i) the address of such holder on the books and records of the Debtors or their agents or (ii) at the address in any written notice of address change delivered to the Debtors or the Disbursing Agent, including any addresses included on any transfers of Claim filed pursuant to Bankruptcy Rule 3001. Subject to Section 6.8, in the event that any distribution to any holder is returned as undeliverable, no distribution or payment to such holder shall be made unless and until the Disbursing Agent has been notified of the then-current address of such holder, at which time or as soon thereafter as reasonably practicable, such distribution shall be made to such holder without interest.

(b) Provided the Warrants are DTC-eligible and the Debtors, in their sole discretion, elect to deliver such Warrants through the facilities of DTC, the Warrants shall be distributed in accordance with the customary practices of DTC for a mandatory distribution, as and to the extent practicable. To the extent the Warrants are not delivered through the facilities of


31

DTC, the Debtors shall facilitate registration of the Warrants into the names of the relevant beneficial owners as soon as practicable following the Effective Date.

(c) In connection with any Plan Distribution to be effected through the facilities of DTC (whether by means of book entry exchange, free delivery, or otherwise), the Debtors and the Reorganized Debtors, as applicable, shall be entitled to recognize and deal for all purposes under this Plan with holders of New Equity Interests and Warrants to the extent consistent with the customary practices of DTC used in connection with such distributions. All New Equity Interests and Warrants to be distributed under this Plan shall be issued in the names of such Holders or their nominees in accordance with DTC’s book entry exchange procedures to the extent that the Holders of New Equity Interests and Warrants held any Claims and/or Interests through the facilities of DTC; provided, however, that to the extent the New Equity Interests and/or Warrants are not eligible for distribution in accordance with DTC’s customary practices, Reorganized Chisholm Parent shall take all such reasonable actions as may be required to cause the distributions of the New Equity Interests and Warrants under this Plan. Notwithstanding anything in this Plan to the contrary, no Person (including, for the avoidance of doubt, DTC) may require a legal opinion regarding the validity of any transaction contemplated by this Plan, including whether the New Equity Interests and Warrants are exempt from registration and/or eligible for DTC book-entry delivery, settlement, and depository services.

6.8 Unclaimed Property.

(a) One year from the later of: (i) the Effective Date and (ii) the date that is ten (10) Business Days after the date a Claim or Interest is first Allowed, all distributions payable on account of such Claim or Interest that are not claimed or accepted by such date shall be deemed unclaimed property under section 347(b) of the Bankruptcy Code and shall revert to the Reorganized Debtors or their successors or assigns, and all claims of any other Person (including the holder of a Claim in the same Class) to such distribution shall be discharged and forever barred. The Reorganized Debtors and the Disbursing Agent shall have no obligation to attempt to locate any holder of an Allowed Claim other than by reviewing the Debtors’ books and records and the Bankruptcy Court’s filings.

(b) A distribution shall be deemed unclaimed if a holder has not (i) accepted a particular distribution or, in the case of distribution made by check by ninety (90) days after issuance, negotiated such check, (ii) given notice to the Reorganized Debtors of an intent to accept a particular distribution, (iii) responded to the Debtors’ or Reorganized Debtors’, as applicable, request for information necessary to facilitate a particular distribution, or (iv) taken any other action necessary to facilitate such distribution.

6.9 Satisfaction of Claims.

Unless otherwise provided in this Plan, any distributions and deliveries to be made on account of Allowed Claims under this Plan shall be in complete and final satisfaction, settlement, and discharge of and exchange for such Allowed Claims.


32

6.10 Manner of Payment under Plan.

Except as specifically provided herein, at the option of the Debtors or the Reorganized Debtors, as applicable, any Cash payment to be made under this Plan may be made by a check or wire transfer or as otherwise required or provided in applicable agreements or customary practices of the Debtors or Reorganized Debtors, as applicable.

6.11 Fractional Shares.

No fractional shares of New Equity Interests shall be distributed. When any distribution would otherwise result in the issuance of a number of shares of New Equity Interests that is not a whole number, the New Equity Interests subject to such distribution shall be rounded to the next higher or lower whole number as follows: (i) fractions equal to or greater than 1/2 shall be rounded to the next higher whole number, and (ii) fractions less than 1/2 shall be rounded to the next lower whole number. The total number of New Equity Interests to be distributed on account of Allowed Claims or Interests shall be adjusted as necessary to account for the rounding provided for herein. No consideration shall be provided in lieu of fractional shares that are rounded down. Fractional amounts of New Equity Interests that are not distributed in accordance with this Section 6.11 shall be returned to, and ownership thereof shall vest in, Reorganized Chisholm Parent.

6.12 Minimum Distribution.

Neither the Reorganized Debtors nor the Disbursing Agent, as applicable, shall have an obligation to make a distribution pursuant to this Plan that is less than one (1) share of New Equity Interests or $100.00 in Cash.

6.13 No Distribution in Excess of Amount of Allowed Claim.

Notwithstanding anything to the contrary in this Plan, no holder of an Allowed Claim shall receive, on account of such Allowed Claim, Plan Distributions in excess of the Allowed amount of such Claim (plus any postpetition interest on such Claim solely to the extent permitted by Section 6.2 of the Plan).

6.14 Allocation of Distributions Between Principal and Interest.

Except as otherwise required by law (as determined by the Debtors or Reorganized Debtors), distributions with respect to an Allowed Claim shall be allocated first to the principal portion of such Allowed Claim (as determined for United States federal income tax purposes) and, thereafter, to the remaining portion of such Allowed Claim, if any.

6.15 Setoffs and Recoupments.

Each Debtor or Reorganized Debtor, or such entity’s designee as instructed by such Debtor or Reorganized Debtor, may, pursuant to section 553 of the Bankruptcy Code or applicable nonbankruptcy law, set off or recoup against any Allowed Claim and the distributions to be made pursuant to this Plan on account of such Allowed Claim, any and all claims, rights, and Causes of Action of any nature whatsoever that a Debtor or Reorganized Debtor or its successors may hold


33

against the holder of such Allowed Claim after the Effective Date. Notwithstanding the foregoing, neither the failure to effect a setoff or recoupment nor the allowance of any Claim hereunder shall constitute a waiver or release by a Debtor or Reorganized Debtor or its successor of any claims, rights, or Causes of Action that a Debtor or Reorganized Debtor or its successor or assign may possess against the holder of such Claim.

6.16 Rights and Powers of Disbursing Agent.

The Disbursing Agent shall be empowered to (i) effect all actions and execute all agreements, instruments, and other documents necessary to perform its duties hereunder, (ii) make all applicable distributions or payments provided for under this Plan, (iii) employ professionals to represent it with respect to its responsibilities, and (iv) exercise such other powers as may be vested in the Disbursing Agent by order of the Bankruptcy Court (including any Final Order issued after the Effective Date) or pursuant to this Plan, or as deemed by the Disbursing Agent to be necessary and proper to implement the provisions hereof.

6.17 Expenses of Disbursing Agent.

To the extent the Disbursing Agent is a Person other than a Debtor or Reorganized Debtor or as otherwise ordered by the Bankruptcy Court, subject to the written agreement of the Reorganized Debtors, the amount of any reasonable fees and out-of-pocket expenses incurred by the Disbursing Agent on or after the Effective Date (including taxes) and any reasonable compensation and out-of-pocket expense reimbursement Claims (including for reasonable attorneys’ fees and other professional fees and expenses) made by the Disbursing Agent shall be paid in Cash by the Reorganized Debtors in the ordinary course of business.

6.18 Withholding and Reporting Requirements.

(a) Withholding Rights. In connection with this Plan, any Person issuing any instrument or making any distribution or payment in connection therewith, shall comply with all applicable withholding and reporting requirements imposed by any federal, state, or local taxing authority. In the case of a non-Cash distribution that is subject to withholding, the distributing party may require the intended recipient of such distribution to provide the withholding agent with an amount of Cash sufficient to satisfy such withholding tax as a condition to receiving such distribution or withhold an appropriate portion of such distributed property and either (i) sell such withheld property to generate Cash necessary to pay over the withholding tax (or reimburse the distributing party for any advance payment of the withholding tax) or (ii) pay the withholding tax using its own funds and retain such withheld property. The distributing party shall have the right not to make a distribution under this Plan until its withholding or reporting obligation is satisfied pursuant to the preceding sentences. Any amounts withheld pursuant to this Plan shall be deemed to have been distributed to and received by the applicable recipient for all purposes of this Plan.

(b) Forms. Any party entitled to receive any property as an issuance or distribution under this Plan shall, upon request, deliver to the withholding agent or such other Person designated by the Reorganized Debtors a Form W-8, Form W-9 and/or any other forms or documents, as applicable, requested by any Reorganized Debtor to reduce or eliminate any required federal, state, or local withholding. If the party entitled to receive such property as an


34

issuance or distribution fails to comply with any such request for a one hundred eighty (180) day period beginning on the date after the date such request is made, the amount of such issuance or distribution shall irrevocably revert to the applicable Reorganized Debtor and any Claim in respect of such distribution under this Plan shall be discharged and forever barred from assertion against such Reorganized Debtor or its respective property.

(c) Notwithstanding the above, each holder of an Allowed Claim or Interest that is to receive a distribution under this Plan shall have the sole and exclusive responsibility for the satisfaction and payment of any tax obligations imposed on such holder by any Governmental Unit, including income, withholding, and other tax obligations, on account of such Plan Distribution.

6.19 Indefeasible Distribution.

Any and all distributions made under the Plan shall be indefeasible and not subject to clawback or turnover.

ARTICLE VII. PROCEDURES FOR DISPUTED CLAIMS.

7.1 Objections to Claims.

Except as provided in Section 7.3 of this Plan, the Debtors or Reorganized Debtors, as applicable, shall be entitled to object to Claims. After the Effective Date, each of the Debtors or the Reorganized Debtors, as applicable, shall have and retain any and all rights and defenses that the Debtors had with respect to any Claim immediately before the Effective Date. Except as expressly provided in this Plan or in any order entered in the Chapter 11 Cases before the Effective Date (including the Confirmation Order), no Claim shall become an Allowed Claim unless and until such Claim is deemed Allowed pursuant to the Plan or a Final Order, including the Confirmation Order, Allowing such Claim. Any objection to Claims shall be served and filed on or before the Claims Objection Deadline, as such deadline may be extended from time to time.

7.2 Resolution of Disputed Claims.

(a) Except as provided in Section 7.3 of this Plan, or as otherwise provided in an order of the Bankruptcy Court and notwithstanding any requirements that may be imposed pursuant to Bankruptcy Rule 9019, on and after the Effective Date, the Reorganized Debtors shall have the authority to (i) file, withdraw, or litigate to judgment objections to Claims, (ii) settle or compromise any Disputed Claims, without further notice to or action, order, or approval by the Bankruptcy Court, and (iii) administer and adjust the Claims Register to reflect any such settlements or compromises without any further notice to or action, order, or approval by the Bankruptcy Court.

(b) Prior to the Effective Date, the Creditors’ Committee shall have consultation rights with respect to any proposed resolution of Disputed General Unsecured Claims.

(c) The M&M Claims Resolution Protocol shall remain in effect and binding on the Reorganized Debtors and all holders of Prepetition M&M Liens Claims on and after the Effective Date.


35

(d) Notwithstanding any other provisions hereof, if any portion of a Claim filed, scheduled, or otherwise asserted on account of the Prepetition M&M Liens or otherwise asserting Other Secured Claims is a Disputed Claim, no payment or distribution provided hereunder shall be made on account of such Claim unless and until such Disputed Claim becomes an Allowed Claim.

7.3 Resolution of Disputed General Unsecured Claims.

(a) Following thirty (30) days after the Effective Date, if the amount of filed or scheduled (other than as contingent, unliquidated, or disputed) General Unsecured Claims exceeds $30 million in the aggregate, then the Reorganized Debtors shall appoint the GUC Claims Administrator. Notwithstanding any requirements that may be imposed pursuant to Bankruptcy Rule 9019 and except with respect to General Unsecured Claims that are Allowed prior to the Effective Date, on and after the Effective Date the GUC Claims Administrator shall have the authority, in consultation with the Reorganized Debtors, to (i) file, withdraw, or litigate to judgment objections to General Unsecured Claims, (ii) settle or compromise any Disputed General Unsecured Claims, without further notice to or action, order, or approval by the Bankruptcy Court, and (iii) direct the Claims and Noticing Agent to administer and adjust the Claims Register to reflect any such settlements or compromises without any further notice to or action, order, or approval by the Bankruptcy Court.

(b) The Reorganized Debtors shall reimburse the GUC Claims Administrator up to $75,000 for its reasonable fees and out-of-pocket expenses incurred in connection with the resolution of General Unsecured Claims pursuant to its authority set forth in Section 7.3(a) of this Plan.

7.4 Estimation of Claims.

The Debtors, the Reorganized Debtors, or the GUC Claims Administrator (only with respect to General Unsecured Claims), as applicable, may at any time request that the Bankruptcy Court estimate any contingent, unliquidated, or Disputed Claim pursuant to section 502(c) of the Bankruptcy Code, regardless of whether the Debtors had previously objected to or otherwise disputed such Claim or whether the Bankruptcy Court has ruled on any such objection. The Bankruptcy Court shall retain jurisdiction to estimate any Claim at any time during litigation concerning any objection to any Claim, including during the pendency of any appeal relating to any such objection. In the event that the Bankruptcy Court estimates any contingent, unliquidated, or Disputed Claim, the amount so estimated shall constitute either the Allowed amount of such Claim or a maximum limitation on such Claim, as determined by the Bankruptcy Court. If the estimated amount constitutes a maximum limitation on the amount of such Claim, the Debtors, the Reorganized Debtors, or the GUC Claims Administrator (only with respect to General Unsecured Claims), as applicable, may pursue supplementary proceedings to object to the allowance of such Claim.

7.5 Adjustment to Claims Register Without Objection.

Any duplicate Claim or Interest or any Claim or Interest that has been paid or satisfied, or any Claim that has been amended or superseded, may be adjusted or expunged on the


36

Claims Register by the Debtors, Reorganized Debtors, or the GUC Claims Administrator (only with respect to General Unsecured Claims), as applicable, upon stipulation between the parties in interest without a Claims objection having to be filed and without any further notice or action, order, or approval of the Bankruptcy Court.

7.6 Claim Resolution Procedures Cumulative.

All of the objection, estimation, and resolution procedures in this Plan are intended to be cumulative and not exclusive of one another. Claims may be estimated and subsequently settled, compromised, withdrawn, or resolved in accordance with this Plan without further notice or Bankruptcy Court approval.

7.7 No Distributions Pending Allowance.

Except with respect to Fee Claims, which are governed by the Interim Compensation Procedures Order, if an objection, motion to estimate, or other challenge to a Claim is filed, no payment or distribution provided under this Plan shall be made on account of such Claim unless and until (and only to the extent that) such Claim becomes an Allowed Claim.

7.8 Distributions after Allowance.

To the extent that a Disputed Claim ultimately becomes an Allowed Claim, distributions (if any) shall be made to the holder of such Allowed Claim in accordance with the provisions of this Plan. As soon as practicable after the date on which the order or judgment of the Bankruptcy Court allowing any Disputed Claim becomes a Final Order (but in no event later than the first Quarterly Distribution Date after such date), the Disbursing Agent shall provide to the holder of such Claim the distribution (if any) to which such holder is entitled under this Plan as of the Effective Date, without any interest to be paid on account of such Claim unless required by the Bankruptcy Code.

7.9 Disputed Claims Reserve.

(a) Cash in the amount that would be distributable from the GUC Cash Pool to any Disputed General Unsecured Claim had such Disputed General Unsecured Claim been Allowed on the Effective Date, together with all earnings thereon (net of any taxes imposed thereon or otherwise payable by the Disputed Claims Reserve), shall be deposited in the Disputed Claims Reserve (which may be held in the same segregated account as the GUC Cash Pool).The amount of the Disputed Claims Reserve shall be determined prior to the Confirmation Hearing, based on the Debtors’ good faith estimates (in consultation with the Creditors’ Committee) or an order of the Bankruptcy Court estimating such Disputed Claims, and shall be established on or about the Effective Date.

(b) Subject to definitive guidance from the IRS or a court of competent jurisdiction to the contrary, or the receipt of a determination by the IRS, the Disbursing Agent shall treat the Disputed Claims Reserve as a “disputed ownership fund” governed by Treasury Regulation section 1.468B-9 and to the extent permitted by applicable law, report consistently with the foregoing for state and local income tax purposes. All parties (including the Debtors, the


37

Reorganized Debtors, the Disbursing Agent, and the holders of Disputed General Unsecured Claims) shall be required to report for tax purposes consistently with the foregoing.

(c) The Disbursing Agent shall hold in the Disputed Claims Reserve all payments to be made on account of Disputed General Unsecured Claims for the benefit of holders of Disputed General Unsecured Claims whose Claims are subsequently Allowed. All taxes imposed on assets or income of the Disputed Claims Reserve shall be payable by the Disbursing Agent from the assets of the Disputed Claims Reserve, and all taxes imposed on assets or income of the GUC Cash Pool will be payable by the Disbursing Agent from the assets of the GUC Cash Pool.

(d) To the extent that a Disputed Claim becomes an Allowed Claim after the Effective Date, the Disbursing Agent shall distribute to the holder thereof the distribution, if any, of Cash out of the Disputed Claims Reserve to which such holder is entitled hereunder. No interest shall be paid with respect to any Disputed Claim that becomes an Allowed Claim after the Effective Date.

(e) In the event the remaining reserved Cash in the Disputed Claims Reserve is insufficient to satisfy all the Disputed General Unsecured Claims that have become Allowed, such Allowed General Unsecured Claims shall be satisfied Pro Rata from such remaining Cash. After all Cash has been distributed from the Disputed Claims Reserve, no further distributions shall be made in respect of Disputed General Unsecured Claims. At such time as all Disputed General Unsecured Claims have been resolved, any remaining Cash in the Disputed Claims Reserve shall be distributed Pro Rata to all holders of Allowed General Unsecured Claims.

ARTICLE VIII. EXECUTORY CONTRACTS AND UNEXPIRED LEASES.

8.1 General Treatment.

(a) As of and subject to the occurrence of the Effective Date and the payment of any applicable Cure Amount, all executory contracts and unexpired leases to which any of the Debtors are parties shall be deemed assumed, unless such contract or lease (i) was previously assumed or rejected by the Debtors, pursuant to a Final Order of the Bankruptcy Court, (ii) previously expired or terminated pursuant to its own terms or by agreement of the parties thereto, (iii) is the subject of a motion to reject filed by the Debtors on or before the Confirmation Date, (iv) is specifically designated, with the consent of the RBL Agent, as a contract or lease to be rejected on the Schedule of Rejected Contracts, or (v) is specifically designated as a contract or lease to be rejected as reasonably requested by the RBL Agent by the deadline to file the Plan Supplement.

(b) Subject to (i) satisfaction of the conditions set forth in Section 8.1(a) of this Plan, (ii) resolution of any disputes in accordance with Section 8.2 of this Plan with respect to the contracts or leases subject to such dispute, and (iii) the occurrence of the Effective Date, entry of the Confirmation Order by the Bankruptcy Court shall constitute approval of the assumptions or rejections provided for in this Plan pursuant to sections 365(a) and 1123 of the Bankruptcy Code. Each executory contract and unexpired lease assumed pursuant to this Plan shall vest in and be fully enforceable by the applicable Reorganized Debtor in accordance with its terms, except as


38

modified by the provisions of this Plan, any Final Order of the Bankruptcy Court authorizing and providing for its assumption, or applicable law.

(c) The Debtors shall file, as part of the Plan Supplement, the Schedule of Rejected Contracts.

8.2 Determination of Cure Disputes and Deemed Consent.

(a) Any Cure Amount shall be satisfied, pursuant to section 365(b)(1) of the Bankruptcy Code, by payment of the Cure Amount, as reflected on the applicable Cure Notice, in Cash on the Effective Date, subject to the limitations described below, or on such other terms as the counterparties to such executory contracts or unexpired leases and the Debtors may otherwise agree.

(b) The Debtors shall serve a Cure Notice on counterparties to executory contracts and unexpired leases no later than twenty-one (21) days before the commencement of the Confirmation Hearing in accordance with the order approving the Disclosure Statement and Solicitation procedures. If a counterparty to any executory contract or unexpired lease is not listed on the applicable Cure Notice, the proposed Cure Amount for such executory contract or unexpired lease shall be deemed to be zero dollars ($0).

(c) Any counterparty to an executory contract or unexpired lease shall have the time prescribed by the order approving the Disclosure Statement and Solicitation procedures to object to the proposed assumption or related Cure Amount listed on the Cure Notice.

(d) Any counterparty to an executory contract or unexpired lease that fails to object timely to the proposed assumption or Cure Amount (i) shall be deemed to have assented to such assumption or Cure Amount, notwithstanding any provision thereof that purports to (1) prohibit, restrict, or condition the transfer or assignment of such contract or lease or (2) terminate or permit the termination of a contract or lease as a result of any direct or indirect transfer or assignment of the rights of the Debtors under such contract or lease or a change, if any, in the ownership or control to the extent contemplated by the Plan, and shall forever be barred and enjoined from asserting such objection against the Debtors or terminating or modifying such contract or lease on account of transactions contemplated by the Plan, and (ii) shall be forever barred, estopped, and enjoined from challenging the validity of such assumption thereafter.

(e) If there is a dispute regarding (i) any Cure Amount, (ii) the ability of the Debtors to provide adequate assurance of future performance (within the meaning of section 365 of the Bankruptcy Code) under such contract or least to be assumed, or (iii) any other matter pertaining to assumption, such dispute shall be heard by the Bankruptcy Court prior to such assumption being effective. Notwithstanding the foregoing, to the extent the dispute relates solely to any Cure Amounts, the applicable Debtor may assume the executory contract or unexpired lease prior to the resolution of any such dispute, as long as that the Debtor reserves Cash in an amount sufficient to pay the full amount reasonably asserted as the required Cure Amount by the contract counterparty. Following entry of a Final Order resolving any such dispute, the Debtors shall have right to reject any executory contract or unexpired lease within thirty (30) days of such resolution.


39

(f) Subject to resolution of any dispute regarding any Cure Amount (which resolution shall require prior consultation with the RBL Agent), all Cure Amounts shall be satisfied by the Debtors or Reorganized Debtors, as the case may be, upon assumption of the underlying contracts and unexpired leases. Assumption of any executory contract or unexpired lease pursuant to this Plan, or otherwise, shall result in the full release and satisfaction of any Claims or defaults, subject to satisfaction of the Cure Amount, whether monetary or nonmonetary, including defaults of provisions restricting the change in control or ownership interest composition or other bankruptcy-related defaults, arising under any assumed executory contract or unexpired lease at any time before the effective date of the assumption. Any Proofs of Claim filed with respect to an executory contract or unexpired lease that has been assumed shall be deemed disallowed and expunged, without further notice to or action, order or approval of the Bankruptcy Court or any other Person, upon the deemed assumption of such contract or unexpired lease.

8.3 Rejection Damages Claims.

Any counterparty to an executory contract or unexpired lease that is identified on the Schedule of Rejected Contracts or is otherwise rejected by the Debtors must file and serve a Proof of Claim on the applicable Debtor that is party to the contract or lease to be rejected no later than thirty (30) days after the later of (i) the Confirmation Date or (ii) the effective date of rejection of such executory contract or unexpired lease.

8.4 Survival of the Debtors’ Indemnification Obligations.

Any obligations of the Debtors pursuant to their corporate charters, bylaws, limited liability company agreements, or other organizational documents to indemnify current and former officers, directors, members, managers, agents, or employees with respect to all present and future actions, suits, and proceedings against the Debtors or such officers, directors, members, managers, agents, or employees based upon any act or omission for or on behalf of the Debtors shall not be discharged, impaired, or otherwise affected by this Plan. All such obligations shall be deemed and treated as executory contracts to be assumed by the Debtors under this Plan and shall continue as obligations of the Reorganized Debtors. Any claim based on the Debtors’ obligations herein shall not be a Disputed Claim or subject to any objection in either case by reason of section 502(e)(1)(B) of the Bankruptcy Code.

8.5 Compensation and Benefit Plans.

Unless otherwise modified prior to the Effective Date, all employment policies, and all compensation and benefits plans, policies, and programs of the Debtors applicable to their respective employees, retirees, and nonemployee directors, including all savings plans, retirement plans, healthcare plans, disability plans, severance benefit plans, incentive plans, and life and accidental death and dismemberment insurance plans, are deemed to be, and shall be treated as, executory contracts under this Plan and, on the Effective Date, shall be assumed pursuant to sections 365 and 1123 of the Bankruptcy Code.

8.6 Insurance Policies.

(a) All insurance policies to which any Debtor is a party as of the Effective Date, including any directors’ and officers’ insurance policies, shall be deemed to be and treated


40

as executory contracts and shall be assumed by the applicable Debtor or Reorganized Debtor and shall continue in full force and effect thereafter in accordance with their respective terms. All other insurance policies shall vest in the Reorganized Debtors.

(b) In addition, after the Effective Date, the Reorganized Debtors shall not terminate or otherwise reduce the coverage under any directors’ and officers’ insurance policies (including any “tail policy”) in effect or purchased as of the Petition Date. Any individual covered by such insurance policies, including all current or former members, managers, directors, and officers of the Debtors who served in such capacity at any time prior to the Effective Date shall be entitled to the full benefits of any such policy for the full term of the policy regardless of whether such members, managers, directors, officers, or other individuals remain in such positions after the Effective Date.

8.7 Reservation of Rights.

(a) Neither the exclusion nor the inclusion by the Debtors of any contract or lease on any exhibit, schedule, or other annex to this Plan or in the Plan Supplement, nor anything contained in this Plan, shall constitute an admission by the Debtors that any such contract or lease is or is not an executory contract or unexpired lease or that the Debtors or the Reorganized Debtors or their respective affiliates has any liability thereunder.

(b) Except as explicitly provided in this Plan, nothing in this Plan shall waive, excuse, limit, diminish, or otherwise alter any of the defenses, claims, Causes of Action, or other rights of the Debtors or the Reorganized Debtors under any executory or non-executory contract or unexpired or expired lease.

(c) Nothing in this Plan shall increase, augment, or add to any of the duties, obligations, responsibilities, or liabilities of the Debtors or the Reorganized Debtors, as applicable, under any executory or non-executory contract or unexpired or expired lease.

(d) If there is a dispute regarding whether a contract or lease is or was executory or unexpired at the time of its assumption under this Plan, the Debtors or Reorganized Debtors, as applicable, shall have thirty (30) days following entry of a Final Order resolving such dispute to alter their treatment of such contract or lease.

ARTICLE IX. CONDITIONS PRECEDENT TO CONFIRMATION OF PLAN AND OCCURRENCE OF EFFECTIVE DATE.

9.1 Conditions Precedent to Confirmation.

The Confirmation Date shall not occur unless the following conditions precedent have been satisfied:

(a) as of the Confirmation Hearing, (i) the amount of the Prepetition M&M Liens, plus, without duplication, (ii) the amount of any Allowed Other Secured Claims on account of such Prepetition M&M Liens, shall not exceed the Lien Cap. For the avoidance of doubt, the Lien Cap shall include all Prepetition M&M Liens paid during the Chapter 11 Cases pursuant to the interim and final orders granting the Motion of the Debtors Pursuant to 11 U.S.C. §§ 105(a)


41

and 363(b) and Fed. R. Bankr. P. 6003 and 6004 for Entry of Interim and Final Orders (I) Authorizing Debtors to Pay or Honor (A) Amounts Owed to Interests Owners, (B) Joint Interest Billings, and (C) Other Operating Expenses and (II) Granting Related Relief [Docket No. 9] or other order of the Court;

(b) the M&M Claims Resolution Protocol shall remain in effect;

(c) the Cash Collateral Order is in full force and effect; and

(d) the Plan Supplement has been filed.

9.2 Conditions Precedent to Effective Date.

The Effective Date shall not occur unless all of the following conditions precedent have been satisfied:

(a) the Definitive Documents contain terms and conditions consistent in all material respects with the Restructuring Support Agreement;

(b) the Bankruptcy Court shall have entered the Confirmation Order, and such Confirmation Order shall not have been stayed or materially modified and shall:

(i) authorize the Debtors to take all actions necessary to enter into, implement, and consummate the contracts, instruments, releases, leases, and other agreements or documents created in connection with the Plan in a manner consistent in all respect with the Restructuring Support Agreement and subject to the consent rights set forth therein;

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

(iii) authorize the Debtors to (1) implement the Restructuring, (2) make all distributions and issuances as required under the Plan, including Cash, New Equity Interests, and Warrants, (3) enter into the Exit Credit Facilities, and (4) enter into any agreements and transactions, including the Management Incentive Plan, in each case, in a manner consistent with the terms of the Restructuring Support Agreement and subject to the consent rights set forth therein; and

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

(c) the documents related to the Exit Credit Facilities shall have been duly executed and delivered by all of the relevant parties thereto and the closing of each Exit Credit Facility shall have occurred;


42

(d) all conditions precedent to the effectiveness of the Exit Credit Facilities shall have been satisfied or waived in writing in accordance with the terms of each of the Exit Credit Facilities;

(e) the final version of the Plan, the Definitive Documents, and all documents contained in any supplement to the Plan, including any exhibits, schedules, amendments, modifications, or supplements thereto or other documents contained therein, shall have been executed or filed, as applicable, in form and substance consistent in all material respects with the Restructuring Support Agreement and the Plan;

(f) the Debtors shall have implemented the Restructuring and all transactions contemplated in the Restructuring Support Agreement in a manner consistent with the Restructuring Support Agreement (and subject to, and in accordance with, the consent rights set forth therein) and the Plan;

(g) all governmental approvals, including Bankruptcy Court approval, necessary to effectuate the Restructuring shall have been obtained and all applicable waiting periods have expired;

(h) to the extent invoiced in accordance with the terms of this Plan, the Restructuring Support Agreement, and the Cash Collateral Order, all Restructuring Expenses shall have been paid in full in Cash;

(i) the Restructuring Support Agreement shall be in full force and effect and binding on the Debtors and the Consenting Creditors;

(j) each of the Definitive Documents shall (i) have been executed and delivered, and any condition precedent contained to effectiveness therein have been satisfied or waived in accordance therewith, and (ii) be in full force and effect and binding upon the relevant parties; and

(k) all actions, documents and agreements necessary to implement and consummate the Plan, including entry into the Definitive Documents and the Amended Organizational Documents, and the transactions and other matters contemplated thereby, shall have been effected and executed.

9.3 Waiver of Conditions Precedent.

(a) Each of the conditions precedent to the occurrence of the Effective Date may be waived in writing by the Debtors and the RBL Agent without leave of or order of the Bankruptcy Court. Any such waiver that would, directly or indirectly, abrogate the consent rights of the Consenting Sponsors set forth in Section 2(b) of the Restructuring Support Agreement shall also require consent of the Consenting Sponsors. If any such condition precedent is waived pursuant to this Section 9.3 and the Effective Date occurs, each party agreeing to waive such condition precedent shall be estopped from withdrawing such waiver after the Effective Date or otherwise challenging the occurrence of the Effective Date on the basis that such condition was not satisfied, the waiver of such condition precedent shall benefit from the “equitable mootness” doctrine, and the occurrence of the Effective Date shall foreclose any ability to challenge this Plan


43

in any court. If this Plan is confirmed for fewer than all of the Debtors, only the conditions applicable to the Debtor or Debtors for which this Plan is confirmed must be satisfied or waived for the Effective Date to occur.

(b) Except as otherwise provided herein, all actions required to be taken on the Effective Date shall take place and shall be deemed to have occurred simultaneously and no such action shall be deemed to have occurred prior to the taking of any other such action.

(c) The stay of the Confirmation Order pursuant to Bankruptcy Rule 3020(e) shall be deemed waived by and upon the entry of the Confirmation Order, and the Confirmation Order shall take effect immediately upon its entry.

9.4 Effect of Failure of a Condition.

If the conditions listed in Section 9.2 of this Plan are not satisfied or waived in accordance with Section 9.3 of this Plan on or before the first Business Day that is more than ten (10) days after the date on which the Confirmation Order is entered or by such later date set forth by the Debtors in a notice filed with the Bankruptcy Court prior to the expiration of such period, this Plan shall be null and void in all respects and nothing contained in this Plan or the Disclosure Statement shall (i) constitute a waiver or release of any Claims by or against or any Interests in the Debtors, (ii) prejudice in any manner the rights of any Person, or (iii) constitute an admission, acknowledgement, offer, or undertaking by the Debtors, any of the Consenting Creditors, or any other Person.

ARTICLE X. EFFECT OF CONFIRMATION.

10.1 Binding Effect.

Except as otherwise provided in section 1141(d)(3) of the Bankruptcy Code, and subject to the occurrence of the Effective Date, on and after the entry of the Confirmation Order, the provisions of this Plan and the Plan Documents shall bind the Debtors, the Estates, the Reorganized Debtors, and every holder of a Claim against or Interest in any Debtor, and inure to the benefit of and be binding on such holder’s respective successors and assigns, regardless of whether the Claim or Interest of such holder is Impaired under this Plan and whether such holder has accepted this Plan. Except as expressly provided in this Plan, all agreements, instruments and other documents filed in connection with this Plan shall be given full force and effect, and shall bind all parties referred to therein as of the Effective Date, whether or not such agreements are actually issued, delivered, or recorded on the Effective Date or thereafter and whether or not a party has actually executed such agreement.

10.2 Vesting of Assets.

Except as otherwise provided in this Plan, or any Plan Document, on and after the Effective Date, pursuant to sections 1141(b) and (c) of the Bankruptcy Code, all assets of the Estates, including all claims, rights, and Causes of Action and any property acquired by the Debtors under or in connection with this Plan or the Plan Supplement, shall vest in each respective Reorganized Debtor free and clear of all Claims, Liens, encumbrances, charges, and other interests. Subject to the terms of this Plan, on and after the Effective Date, the Reorganized Debtors may


44

operate their businesses and may use, acquire, and dispose of property and prosecute, compromise, or settle any Claims (including any Administrative Expense Claims) and Causes of Action without supervision of or approval by the Bankruptcy Court and free and clear of any restrictions of the Bankruptcy Code or the Bankruptcy Rules other than restrictions expressly imposed by this Plan or the Confirmation Order. Without limiting the foregoing, the Reorganized Debtors may pay the charges that they incur on or after the Confirmation Date for Professional Persons’ fees, disbursements, expenses, or related support services without application to the Bankruptcy Court.

10.3 Discharge of Claims against and Interests in Debtors.

Upon the Effective Date and in consideration of the distributions to be made under this Plan, except as otherwise expressly provided in this Plan or in the Confirmation Order, each holder (as well as any trustee or agents on behalf of each holder) of a Claim or Interest and any affiliate of such holder shall be deemed to have forever waived, released, and discharged the Debtors, to the fullest extent permitted by section 1141 of the Bankruptcy Code, of and from any and all Claims, Interest, rights, and liabilities that arose prior to the Effective Date. Except as otherwise provided in this Plan, upon the Effective Date, all such holders of Claims and Interests and their affiliates shall be forever precluded and enjoined, pursuant to sections 105, 524, and 1141 of the Bankruptcy Code, from prosecuting or asserting any such discharged Claim against or terminated Interest in any Debtor or Reorganized Debtor.

10.4 Pre-Confirmation Injunctions and Stays.

Unless otherwise provided in this Plan or a Final Order of the Bankruptcy Court, all injunctions and stays arising under or entered during the Chapter 11 Cases, whether under sections 105 or 362 of the Bankruptcy Code or otherwise, and in existence on the date of entry of the Confirmation Order, shall remain in full force and effect until the later of the Effective Date and the date indicated in the order providing for such injunction or stay.

10.5 Injunction against Interference with Plan.

Upon the entry of the Confirmation Order, all holders of Claims and Interests and all other parties in interest, along with their respective present and former affiliates, employees, agents, officers, directors, and principals, shall be enjoined from taking any action to interfere with the implementation or the occurrence of the Effective Date.

10.6 Plan Injunction.

(a) Except as otherwise provided in this Plan, in the Plan Documents, or in the Confirmation Order, as of the entry of the Confirmation Order but subject to the occurrence of the Effective Date, all Persons who have held, hold, or may hold Claims against or Interests in any or all of the Debtors and their respective Related Persons, are permanently enjoined after the entry of the Confirmation Order from (i) commencing, conducting, or continuing in any manner, directly or indirectly, any suit, action, or other proceeding of any kind (including any proceeding in a judicial, arbitral, administrative, or other forum) against or affecting, directly or indirectly, a Debtor, a Reorganized Debtor, or an Estate or the property of any of the foregoing, or any direct or indirect transferee of any property of, or direct or indirect successor in interest to, any of the foregoing Persons mentioned in this subsection (i) or any property of any such transferee or


45

successor, (ii) enforcing, levying, attaching (including any prejudgment attachment), collecting, or otherwise recovering in any manner or by any means, whether directly or indirectly, any judgment, award, decree, or order against a Debtor, a Reorganized Debtor, or an Estate or its property, or any direct or indirect transferee of any property of, or direct or indirect successor in interest to, any of the foregoing Persons mentioned in this subsection (ii) or any property of any such transferee or successor, (iii) creating, perfecting, or otherwise enforcing in any manner, directly or indirectly, any encumbrance of any kind against a Debtor, a Reorganized Debtor, or an Estate or any of its property, or any direct or indirect transferee of any property of, or successor in interest to, any of the foregoing Persons mentioned in this subsection (iii) or any property of any such transferee or successor, (iv) acting or proceeding in any manner, in any place whatsoever, that does not conform to or comply with the provisions of this Plan, and the Plan Documents, to the full extent permitted by applicable law, and (v) commencing or continuing, in any manner or in any place, any action that does not comply with or is inconsistent with the provisions of this Plan and the Plan Documents.

(b) By accepting distributions pursuant to this Plan, each holder of an Allowed Claim or Interest shall be deemed to have affirmatively and specifically consented to be bound by this Plan, including the injunctions set forth in Section 10.6 of this Plan.

10.7 Releases.

(a) Releases by Debtors. As of the Effective Date, except for the rights and remedies that remain in effect from and after the Effective Date to enforce the Plan, the Definitive Documents, and the obligations contemplated by the Restructuring, on and after the Effective Date, the Released Parties will be conclusively, absolutely, unconditionally, irrevocably, and forever released and discharged, to the maximum extent permitted by law, by the Debtors, the Reorganized Debtors, and the Estates, in each case on behalf of themselves and their respective successors, assigns, and Representatives and any and all other Persons that may purport to assert any Cause of Action derivatively, by or through the foregoing Persons, from any and all Causes of Action (including any derivative claims, asserted or assertable on behalf of the Debtors, the Reorganized Debtors, or the Estates) that the Debtors, the Reorganized Debtors, the Estates, or their affiliates would have been legally entitled to assert in their own right (whether individually or collectively) or on behalf of the holder of any Claim or Interest or other Person, based on, relating to, or in any manner arising from, in whole or in part: the Debtors (including the management, direct or indirect ownership, or operation thereof) or their Estates; the Reorganized Debtors; the Chapter 11 Cases; the Plan; the Restructuring; the RBL Facility; any debt or security of the Debtors and the ownership thereof; the purchase, sale, or rescission of the purchase or sale of any debt or 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 or other interactions between any Debtor and any Released Party; the restructuring of any Claim or Interest before or during the Chapter 11 Cases; any other in-or-out-of-court restructuring efforts of the Debtors; any intercompany transaction; the negotiation, formulation, preparation, dissemination, or consummation of the Exit Credit Facilities, the Plan, any of the other Definitive Documents (including the Restructuring Support Agreement), or any other contract, instrument, release, or document created or entered into in connection with the Plan or any of the other Definitive Documents;


46

the Solicitation; or any other act or omission, transaction, agreement, event, or other occurrence related to any of the forgoing and taking place on or before the Effective Date. Notwithstanding anything herein to the contrary, the releases contained in this Section 10.7(a) shall not release any Person from Causes of Action based on willful misconduct, gross negligence or intentional fraud as determined by a Final Order.

(b) Releases by Holders of Claims or Interests. As of the Effective Date, except for the rights and remedies that remain in effect from and after the Effective Date to enforce the Plan, the Definitive Documents, and the obligations contemplated by the Restructuring, on and after the Effective Date, the Released Parties will be conclusively, absolutely, unconditionally, irrevocably, and forever released and discharged, to the maximum extent permitted by law, by the Releasing Parties, in each case from any and all Causes of Action (including any derivative claims, asserted or assertable on behalf of the Debtors, the Reorganized Debtors, or their Estates) that such Releasing Parties or their estates, affiliates, heirs, executors, administrators, successors, assigns, managers, accountants, attorneys, representatives, consultants, agents, and any other Persons claiming under or through them would have been legally entitled to assert in their own right (whether individually or collectively) or on behalf of the holder of any Claim or Interest or other Person, based on, relating to, or in any manner arising from, in whole or in part: the Debtors (including the management, direct or indirect ownership, or operation thereof) or their Estates; the Reorganized Debtors; the Chapter 11 Cases; the Plan; the Restructuring; the RBL Facility; any debt or security of the Debtors and the ownership thereof; the purchase, sale, or rescission of the purchase or sale of any debt or 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 or other interactions between any Debtor and any Released Party; the restructuring of any Claim or Interest before or during the Chapter 11 Cases; any other in-or-out-of-court restructuring efforts of the Debtors; any intercompany transaction; the negotiation, formulation, preparation, dissemination, or consummation of the Exit Credit Facilities, the Plan, any of the other Definitive Documents (including the Restructuring Support Agreement), or any other contract, instrument, release, or document created or entered into in connection with the Plan or any of the other Definitive Documents; the Solicitation; or any other act or omission, transaction, agreement, event, or other occurrence related to any of the forgoing and taking place on or before the Effective Date. Notwithstanding anything herein to the contrary, the releases contained in this Section 10.7(b) shall not release any Person from Causes of Action based on willful misconduct, gross negligence or intentional fraud as determined by a Final Order.

10.8 Exculpation.

To the fullest extent permitted by applicable law, from and after the Effective Date, no Exculpated Fiduciary and, solely to the extent provided by section 1125(e) of the Bankruptcy Code, no Section 1125(e) Party, will have or incur, and each such Person will be released and exculpated from, any Cause of Action based on, relating to, or in any manner arising from, in whole or in part: the administration or filing of the Chapter 11 Cases; the negotiation, formulation, preparation, dissemination, or consummation of the Restructuring, the Exit Credit Facilities, the issuances of New Equity Interests and Warrants


47

(and the Warrant Equity issued upon exercise thereof), the Amended Organizational Documents, the Management Incentive Plan, the Disclosure Statement, the Restructuring Support Agreement, the Restructuring, the Plan, or any of the other Definitive Documents; the Solicitation; the funding of the Plan; the occurrence of the Effective Date; the administration of the Plan or the property to be distributed under the Plan; the issuance of securities under or in connection with the Plan; the purchase, sale, or rescission of the purchase or sale of any security of the Debtors or the Reorganized Debtors; or any other act or omission, transaction, agreement, event, or other occurrence related to any of the forgoing and taking place on or after the Petition Date through the Effective Date. Notwithstanding anything herein to the contrary, the exculpation provided in this Section 10.8 shall not release any Person from Causes of Action based on willful misconduct, gross negligence or intentional fraud as determined by a Final Order, but in all respects such Persons will be entitled to reasonably rely upon the advice of counsel with respect to their duties and responsibilities pursuant to the Plan. The exculpation provided in this Section 10.8 shall be in addition to, and not in limitation of, all other releases, indemnities, exculpations, and any other applicable law or rules protecting the Exculpated Parties from liability.

10.9 Injunction Related to Releases and Exculpation.

The Confirmation Order shall permanently enjoin the commencement or prosecution by any Person, whether directly, derivatively, or otherwise, of any Claims, obligations, suits, judgments, damages, demands, debts, rights, Causes of Action, losses, or liabilities released pursuant to this Plan, including, without limitation, the claims, obligations, suits, judgments, damages, demands, debts, rights, Causes of Action, and liabilities released or exculpated in this Plan or the Confirmation Order.

10.10 Subordinated Claims.

The allowance, classification, and treatment of all Allowed Claims and Interests and the respective distributions and treatments thereof under this Plan take into account and conform to the relative priority and rights of the Claims and Interests in each Class in connection with any contractual, legal, and equitable subordination rights relating thereto, whether arising under general principles of equitable subordination, sections 510(a), 510(b), or 510(c) of the Bankruptcy Code, or otherwise. Pursuant to section 510 of the Bankruptcy Code, the Debtors reserve the right to reclassify any Allowed Claim or Interest in accordance with any contractual, legal, or equitable subordination relating thereto.

10.11 Retention of Causes of Action and Reservation of Rights.

Except as otherwise provided in this Plan, including Sections 10.6, 10.7, 10.8, and 10.9, nothing contained in this Plan or the Confirmation Order shall be deemed to be a waiver or relinquishment of any rights, claims, Causes of Action, rights of setoff or recoupment, or other legal or equitable defenses that the Debtors had immediately prior to the Effective Date on behalf of the Estates or of themselves in accordance with any provision of the Bankruptcy Code or any applicable nonbankruptcy law. The Reorganized Debtors shall have, retain, reserve, and be entitled to assert all such claims, Causes of Action, rights of setoff or recoupment, and other legal or equitable defenses as fully as if the Chapter 11 Cases had not been commenced, and all of the


48

Debtors’ legal and equitable rights in respect of any Unimpaired Claim may be asserted after the Confirmation Date and Effective Date to the same extent as if the Chapter 11 Cases had not been commenced.

10.12 Ipso Facto and Similar Provisions Ineffective.

Any term of any prepetition policy, prepetition contract, or other prepetition obligation applicable to a Debtor shall be void and of no further force or effect with respect to any Debtor to the extent that such policy, contract, or other obligation is conditioned on, creates an obligation of the Debtor as a result of, or gives rise to a right of any Entity based on (i) the insolvency or financial condition of a Debtor, (ii) the commencement of the Chapter 11 Cases, (iii) the confirmation or consummation of this Plan, including any change of control that shall occur as a result of such consummation, or (iv) the Restructuring Transactions.

ARTICLE XI. RETENTION OF JURISDICTION.

11.1 Retention of Jurisdiction.

On and after the Effective Date, the Bankruptcy Court shall retain exclusive jurisdiction, pursuant to 28 U.S.C. §§ 1334 and 157, over all matters arising in or related to the Chapter 11 Cases for, among other things, the following purposes:

(a) to hear and determine motions and/or applications for the assumption or rejection of executory contracts or unexpired leases and any disputes over Cure Amounts resulting therefrom;

(b) to determine any motion, adversary proceeding, application, contested matter, and other litigated matter pending on or commenced after the entry of the Confirmation Order;

(c) to hear and resolve any disputes arising from or related to (i) any orders of the Bankruptcy Court granting relief under Bankruptcy Code 2004 or (ii) any protective orders entered by the Bankruptcy Court in connection with the foregoing;

(d) to ensure that distributions to holders of Allowed Claims and Interests are accomplished as provided in this Plan and the Confirmation Order and to adjudicate any and all disputes arising from or relating to distributions under this Plan;

(e) to consider Claims or the allowance, classification, priority, compromise, estimation, or payment of any Claim;

(f) to enter, implement, or enforce such orders as may be appropriate in the event that the Confirmation Order is for any reason stayed, reversed, revoked, modified, or vacated;

(g) to issue and enforce injunctions, enter and implement other orders, and take such other actions as may be necessary or appropriate to restrain interference by any Person with


49

the consummation, implementation, or enforcement of this Plan, the Confirmation Order, or any other order of the Bankruptcy Court;

(h) to hear and determine any application to modify this Plan in accordance with section 1127 of the Bankruptcy Code or approve any modification of the Confirmation Order or any contract, instrument, release, or other agreements or document created in connection with this Plan, the Disclosure Statement, or the Confirmation Order (in each case, to the extent Bankruptcy Court approval is necessary), or to remedy any defect or omission or reconcile any inconsistency in this Plan, the Disclosure Statement, the Confirmation Order, or any order of the Bankruptcy Court, in such a manner as may be necessary to carry out the purposes and effects thereof;

(i) to hear and determine all Fee Claims;

(j) to resolve disputes concerning any reserves with respect to Disputed Claims or the administration thereof;

(k) to hear and determine disputes arising in connection with the interpretation, implementation, or enforcement of this Plan, the Confirmation Order, any transactions or payments in furtherance of either, or any agreement, instrument, or other document governing or related to any of the foregoing;

(l) to take any action and issue such orders, including any such action or orders as may be necessary after entry of the Confirmation Order or the occurrence of the Effective Date, as may be necessary to construe, enforce, implement, execute, and consummate this Plan and the Plan Documents;

(m) to determine such other matters and for such other purposes as may be provided in the Confirmation Order;

(n) to hear and determine matters concerning state, local, and federal taxes in accordance with sections 346, 505, and 1146 of the Bankruptcy Code (including any requests for expedited determinations under section 505(b) of the Bankruptcy Code);

(o) to hear and determine any other matters related to the Chapter 11 Cases and not inconsistent with the Bankruptcy Code or title 28 of the United States Code;

(p) to resolve any disputes concerning whether a Person had sufficient notice of the Chapter 11 Cases, the Disclosure Statement, any solicitation conducted in connection with the Chapter 11 Cases, any bar date established in the Chapter 11 Cases, or any deadline for responding or objecting to a Cure Amount, in each case, for the purpose for determining whether a Claim or Interest is discharged hereunder or for any other purposes;

(q) to hear, adjudicate, decide, or resolve any and all matters related to ARTICLE X of this Plan, including, without limitation, the releases, discharge, exculpations, and injunctions issued thereunder;


50

(r) to hear and determine any rights, Claims, or Causes of Action held by or accruing to the Debtors pursuant to the Bankruptcy Code or pursuant to any federal statute or legal theory;

(s) to recover all assets of the Debtors and property of the Estates, wherever located; and

(t) to enter a final decree closing each of the Chapter 11 Cases.

11.2 Courts of Competent Jurisdiction.

If the Bankruptcy Court abstains from exercising, or declines to exercise, jurisdiction or is otherwise without jurisdiction over any matter arising out of the Plan, such abstention, refusal, or failure of jurisdiction shall have no effect upon and shall not control, prohibit, or limit the exercise of jurisdiction by any other court having competent jurisdiction with respect to such matter.

ARTICLE XII. MISCELLANEOUS PROVISIONS.

12.1 Statutory Fees.

All Statutory Fees due and payable prior to the Effective Date shall be paid by the Debtors or the Reorganized Debtors. On and after the Effective Date, the Reorganized Debtors shall pay any and all Statutory Fees when due and payable, and shall file with the Bankruptcy Court quarterly reports in a form reasonably acceptable to the U.S. Trustee. Each Debtor or Reorganized Debtor, as applicable, shall remain obligated to pay quarterly fees to the U.S. Trustee until the earliest of that particular Debtor’s, or Reorganized Debtor’s, as applicable, case being closed, dismissed, or converted to a case under Chapter 7 of the Bankruptcy Code.

12.2 Exemption from Certain Transfer Taxes.

Pursuant to section 1146 of the Bankruptcy Code, (i) the issuance, transfer or exchange of any Securities, instruments or documents, (ii) the creation of any Lien, mortgage, deed of trust or other security interest, (iii) all sale transactions consummated by the Debtors and approved by the Bankruptcy Court on and after the Confirmation Date through and including the Effective Date, including any transfers effectuated under this Plan, (iv) any assumption, assignment, or sale by the Debtors of their interests in unexpired leases of nonresidential real property or executory contracts pursuant to section 365(a) of the Bankruptcy Code, (v) the grant of collateral under the Exit Credit Facilities, and (vi) the issuance, renewal, modification, or securing of indebtedness by such means, and the making, delivery or recording of any deed or other instrument of transfer under, in furtherance of, or in connection with, this Plan, including the Confirmation Order, shall not be subject to any document recording tax, stamp tax, conveyance fee or other similar tax, mortgage tax, real estate transfer tax, mortgage recording tax, Uniform Commercial Code filing or recording fee, regulatory filing or recording fee, sales tax, use tax or other similar tax or governmental assessment. Consistent with the foregoing, each recorder of deeds or similar official for any county, city or Governmental Unit in which any instrument hereunder is to be recorded shall, pursuant to the Confirmation Order, be ordered and directed to


51

accept such instrument without requiring the payment of any filing fees, documentary stamp tax, deed stamps, stamp tax, transfer tax, intangible tax or similar tax.

12.3 Request for Expedited Determination of Taxes.

The Debtors shall have the right to request an expedited determination under section 505(b) of the Bankruptcy Code with respect to tax returns filed, or to be filed, for any and all taxable periods ending after the Petition Date through the Effective Date.

12.4 Dates of Actions to Implement Plan.

In the event that any payment or act under this Plan is required to be made or performed on a date that is not a Business Day, then the making of such payment or the performance of such act may be completed on or as soon as reasonably practicable after the next succeeding Business Day but shall be deemed to have been completed as of the required date.

12.5 Amendments.

(a) Plan Modifications. Subject to the prior written consent of (i) the RBL Agent, (ii) the Term Loan Lenders, solely with respect to the treatment of Class 4 Claims, and (iii) the Creditors’ Committee, solely with respect to the treatment of Class 5 Claims and Section 7.3 of this Plan, this Plan may be amended, modified, or supplemented by the Debtors in the manner provided for by section 1127 of the Bankruptcy Code or as otherwise permitted by law, without additional disclosure pursuant to section 1125 of the Bankruptcy Code, except as otherwise ordered by the Bankruptcy Court and in accordance with the Restructuring Support Agreement. In addition, after the Confirmation Date, so long as such action does not materially and adversely affect the treatment of holders of Allowed Claims pursuant to this Plan, the Debtors, with the prior consent of the RBL Agent (which consent shall not be unreasonably withheld), may remedy any defect or omission or reconcile any inconsistencies in this Plan or the Confirmation Order with respect to such matters as may be necessary to carry out the purposes of effects of this Plan, and any holder of a Claim or Interest that has accepted this Plan shall be deemed to have accepted this Plan as amended, modified, or supplemented.

(b) Certain Technical Amendments. Subject to the Restructuring Support Agreement, prior to the Effective Date, the Debtors, with the prior consent of the RBL Agent (which consent shall not be unreasonably withheld) may make appropriate technical adjustments and modifications to this Plan without further order or approval of the Bankruptcy Court, as long as such technical adjustments and modifications do not adversely affect in a material way the treatment of holders of Claims or Interests under this Plan and are consistent with the terms of the Restructuring Support Agreement.

12.6 Revocation or Withdrawal of Plan.

To the extent permitted under the Restructuring Support Agreement and any consent rights thereunder, the Debtors reserve the right to revoke or withdraw this Plan prior to the Effective Date as to any or all of the Debtors. If, with respect to a Debtor, this Plan has been revoked or withdrawn prior to the Effective Date, or if confirmation or the occurrence of the Effective Date as to such Debtor does not occur on the Effective Date, then, with respect to such


52

Debtor (i) this Plan shall be null and void in all respects, (ii) any settlement or compromise embodied in this Plan (including the fixing or limiting to an amount any Claim or Interest or Class of Claims or Interests), assumption or rejection of executory contracts or unexpired leases affected by this Plan, and any document or agreement executed pursuant to this Plan shall be deemed null and void, and (iii) nothing contained in this Plan shall (a) constitute a waiver or release of any Claim by or against, or any Interest in, such Debtor or any other Person, (b) prejudice in any manner the rights of such Debtor or any other Person, or (c) constitute an admission of any sort by any Debtor or any other Person.

12.7 Severability.

If, prior to the entry of the Confirmation Order, any term or provision of this Plan is held by the Bankruptcy Court to be invalid, void, or unenforceable, the Bankruptcy Court, at the request of the Debtors, shall have the power to alter and interpret such term or provision to make it valid or enforceable to the maximum extent practicable, consistent with the original purpose of the term or provision held to be invalid, void, or unenforceable, and such term or provision shall then be applicable as altered or interpreted. Notwithstanding any such holding, alteration, or interpretation by the Bankruptcy Court, the remainder of the terms and provisions of this Plan shall remain in full force and effect and shall in no way be affected, impaired, or invalidated by such holding, alteration, or interpretation. The Confirmation Order shall constitute a judicial determination and shall provide that each term and provision of this Plan, as it may have been altered or interpreted in accordance with this Section 12.7, is (i) valid and enforceable pursuant to its terms, (ii) integral to this Plan and may not be deleted or modified without the consent of the Debtors or the Reorganized Debtors (as the case may be), and (iii) nonseverable and mutually dependent.

12.8 Governing Law.

Except to the extent that the Bankruptcy Code or other federal law is applicable or to the extent that a Plan Document provides otherwise, the rights, duties, and obligations arising under this Plan and the Plan Documents shall be governed by, and construed and enforced in accordance with, the internal laws of the State of New York, without giving effect to the principles of conflicts of laws thereof (other than section 5-1401 and section 5-1402 of the New York General Obligations Law).

12.9 Immediate Binding Effect.

Notwithstanding Bankruptcy Rules 3020(e), 6004(h), 7062, or otherwise, upon the occurrence of the Effective Date, the terms of this Plan and the Plan Documents shall be immediately effective and enforceable and deemed binding upon and inure to the benefit of the Debtors, the Reorganized Debtors, the holders of Claims and Interests, the Released Parties, and each of their respective successors and assigns.

12.10 Successors and Assigns.

The rights, benefits, and obligations of any Person named or referred to in this Plan shall be binding on and shall inure to the benefit of any heir, executor, administrator, successor, or permitted assign, if any, of each such Person.


53

12.11 Entire Agreement.

On the Effective Date, this Plan, the Plan Supplement, and the Confirmation Order shall supersede all previous and contemporaneous negotiations, promises, covenants, agreements, understandings, and representations on such subjects, all of which have become merged and integrated into this Plan.

12.12 Computing Time.

In computing any period of time prescribed or allowed by this Plan, unless otherwise set forth in this Plan or determined by the Bankruptcy Court, the provisions of Bankruptcy Rule 9006 shall apply.

12.13 Exhibits to Plan.

All exhibits, schedules, supplements, and appendices to this Plan (including the Plan Supplement) are incorporated into and are a part of this Plan as if set forth in full in this Plan.

12.14 Notices.

All notices, requests, and demands hereunder shall be in writing (including by email transmission) and, unless otherwise provided herein, shall be deemed to have been duly given or made only when actually delivered or, in the case of notice by email transmission, when received and confirmed by email, addressed as follows:

(a) if to the Debtors or Reorganized Debtors:

Chisholm Oil and Gas Operating, LLC 1 West Third Street, Suite 1700 Tulsa, Oklahoma 74103 Attn: Michael Rigg ([email protected])

– and –

WEIL, GOTSHAL & MANGES LLP 767 Fifth Avenue New York, New York 10153 Telephone: (212) 310-8000 Facsimile: (212) 310-8007 Attn:

Matt Barr, Esq. ([email protected]) Kelly DiBlasi, Esq. ([email protected]) Lauren Tauro, Esq. ([email protected])

– and –


54

YOUNG CONAWAY STARGATT & TAYLOR, LLP 1000 North King Street Wilmington, Delaware 19801 Telephone: (302) 571-6600 Facsimile: (302) 571-1253 Attn:

M. Blake Cleary, Esq. ([email protected]) J. Luton Chapman, Esq. ([email protected]) S. Alexander Faris, Esq. ([email protected])

Attorneys for Debtors

(b) if to the RBL Agent:

LINKLATERS LLP 1345 Avenue of the Americas New York, New York 10105 Telephone: (212) 903-9000 Facsimile: (212) 903-9100 Attn:

Margot Schonholtz, Esq. ([email protected]) Penelope Jensen, Esq. ([email protected])

Attorneys for RBL Agent

(c) if to the Consenting Sponsors:

PAUL, WEISS, RIFKIND, WHARTON & GARRISON, LLP 1285 Avenue of the Americas New York, New York 10019 Telephone: (212) 373-3000 Facsimile: (212) 757-3990 Attn:

Jeffrey D. Saferstein, Esq. ([email protected]) Elizabeth McColm, Esq. ([email protected])

Attorneys for Consenting Sponsors

(d) if to the Creditors’ Committee:

PAUL HASTINGS LLP 600 Travis Street, Fifty-Eight Floor Houston, Texas 77002 Telephone: (713) 860-7300


55

Facsimile: (713) 353-3100 Attn:

James T. Grogan, Esq. ([email protected]) Kevin P. Broughel, Esq. ([email protected])

– and –

BLANK ROME LLP 1201 Market Street, Suite 800 Wilmington, Delaware 19801 Telephone: (302) 425-6423 Facsimile: (302) 252-0921 Attn:

Regina Stango Kelbon, Esq. ([email protected]) Stanley B. Tarr, Esq. ([email protected])

Attorneys for Creditors’ Committee

After the occurrence of the Effective Date, the Reorganized Debtors have authority to send a notice to Entities that, to continue to receive documents pursuant to Bankruptcy Rule 2002, such entities must file a renewed request to receive documents pursuant to Bankruptcy Rule 2002. Notwithstanding the foregoing, the U.S. Trustee need not file such a renewed request and shall continue to receive documents without any further action being necessary. After the occurrence of the Effective Date, the Reorganized Debtors are authorized to limit the list of entities receiving documents pursuant to Bankruptcy Rule 2002 to those Entities that have filed such renewed requests.

12.15 Reservation of Rights.

Except as otherwise provided herein, this Plan shall be of no force or effect unless the Bankruptcy Court enters the Confirmation Order. None of the filing of this Plan, any statement or provision of this Plan, or the taking of any action by the Debtors with respect to this Plan shall be or shall be deemed to be an admission or waiver of any rights of the Debtors with respect to any Claims or Interests prior to the Effective Date.


[Signature Page for Amended Joint Chapter 11 Plan of Reorganization of Chisholm Oil and Gas Operating, LLC and Its Affiliated Debtors]


Respectfully submitted,

By: /s/ Michael Rigg Name: Michael Rigg Title: Chief Financial Officer

on behalf of

Chisholm Oil and Gas Operating II, LLC Chisholm Oil and Gas Operating, LLC Chisholm Oil and Gas Management II, LLC Chisholm Oil and Gas Nominee, Inc. Cottonmouth SWD, LLC


Exhibit B

Restructuring Support Agreement


Execution Version

RESTRUCTURING SUPPORT AGREEMENT

This RESTRUCTURING SUPPORT AGREEMENT (as amended, supplemented, or

otherwise modified from time to time in accordance with the terms hereof, this “Agreement”),

dated as of June 15, 2020, is entered into by and among:

(a) Chisholm Oil and Gas Operating II, LLC, a Delaware limited liability

company (“Parent”), Chisholm Oil and Gas Operating, LLC, a Delaware limited liability company

(“Borrower”), and their affiliates listed on Schedule I (together with Borrower, each a “Company

Party,” and collectively with Parent, the “Company” or the “Debtors”);

(b) (i) Citibank, N.A., as administrative agent (the “RBL Agent”), issuing bank

and swingline lender under the RBL Credit Agreement (as defined below), (ii) Wilmington Trust,

National Association, as collateral agent (the “RBL Collateral Agent”) under the RBL Credit

Agreement and (iii) the undersigned lenders, party to the RBL Credit Agreement (collectively, the

“Initial Consenting Creditors” and, together with each other RBL Lender under the RBL Credit

Agreement that subsequently becomes a party hereto in accordance with the terms hereof, the

“Consenting Creditors”); and

(c) Chisholm Oil and Gas, LLC and Gastar Holdco LLC (each a “Consenting

Sponsor” and, collectively, the “Consenting Sponsors”).

The Company, each Consenting Creditor, each Consenting Sponsor and any subsequent

Person that becomes a party hereto in accordance with the terms hereof are referred to herein

collectively as the “Parties” and each individually as a “Party.” Capitalized terms used but not

defined herein shall have the meanings ascribed to them in the Restructuring Term Sheet (as

defined below).

RECITALS

WHEREAS, the Parties have agreed to a restructuring of the Company’s capital structure

(the “Restructuring”), which is anticipated to be implemented through a pre-negotiated plan of

reorganization (as may be supplemented, amended, or modified from time to time, the “Plan”) on

terms and conditions set forth in the Restructuring Term Sheet (as defined herein), a corresponding

disclosure statement in respect of the Plan (the “Disclosure Statement”), the Solicitation of the

Plan, and the commencement by the Company of voluntary cases (the “Chapter 11 Cases”) under

chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States

Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”);

WHEREAS, as of the date hereof, the Initial Consenting Creditors, in the aggregate, hold

not less than 99.6% of the aggregate principal amount outstanding under the RBL Credit Agreement;

WHEREAS, as of the date hereof, the Consenting Sponsors, in the aggregate, hold,

directly or indirectly, 100% of the Interests in Parent; and


2

WHEREAS, the Parties desire to express to each other their mutual support and

commitment in respect of the matters set forth in the Restructuring Term Sheet and this Agreement.

NOW, THEREFORE, in consideration of the promises and the mutual covenants and

agreements set forth herein, and for other good and valuable consideration, the receipt and

sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as

follows:

1. Certain Definitions.

As used in this Agreement, the following terms have the following meanings:

(a) “Bar Dates” means a general bar date by which all creditors must file proofs

of claim in the Chapter 11 Cases and a governmental bar date by which all governmental units

must file proofs of claim in the Chapter 11 Cases.

(b) “Consenting Sponsors’ Counsel” means Paul, Weiss, Rifkind, Wharton &

Garrison LLP, as counsel to the Consenting Sponsors.

(c) “Definitive Documents” means the documents (including any related

agreements, instruments, schedules, or exhibits) that are necessary to implement the Restructuring,

including (i) this Agreement, (ii) any material “first day” and “second day” motions and all orders

sought pursuant thereto, including the Cash Collateral Order, (iii) the Solicitation materials, (iv)

the order approving the Solicitation materials, (v) the motion seeking approval by the Bankruptcy

Court of the Disclosure Statement and the Solicitation procedures, (vi) the Plan (including the plan

supplement and all material documents, annexes, schedules, exhibits, amendments, modifications

or supplements thereto, or other documents contained therein, including any schedules of rejected

contracts), (vii) the Disclosure Statement, (viii) the Disclosure Statement Order, (ix) the

Confirmation Order and any pleadings in support of entry of the Disclosure Statement Order and

the Confirmation Order, (x) the Management Incentive Plan and additional documents or

agreements thereto, (xi) the Warrant Agreement, (xii) any documents relating to the Exit Credit

Facilities, including collateral agreements, intercreditor agreements, or similar agreements

between the parties to FLFO RBL Facility and the parties to the FLSO Term Loan, (xiii) the

Amended Organizational Documents, any and all conveyance instruments required to issue and

distribute the New Equity Interests, and if applicable, any stockholders’ agreement or registration

rights agreement of the Reorganized Parent, and (xiv) any order, or amendment or modification of

any order, entered by the Bankruptcy Court related to the foregoing items.

(d) “Disclosure Statement Order” means the order of the Bankruptcy Court

approving the Disclosure Statement, the Solicitation materials and the Solicitation of the Plan.

(e) “Qualified Marketmaker” means an entity that (i) 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 Claims against or Interests in the Company (or

enter with customers into long and short positions in Claims against or Interests in the Company),


3

in its capacity as a dealer or marketmaker in Claims against or Interests in the Company and (ii)

is, in fact, regularly in the business of making a market in claims against or interests in issuers or

borrowers (including debt securities or other debt).

(f) “RBL Agent’s Counsel” means Linklaters LLP, as counsel to the RBL

Agent.

(g) “Restructuring Term Sheet” means that certain term sheet (including any

schedules and exhibits attached thereto), a copy of which is attached hereto as Exhibit A, which

term sheet contains the material terms and provisions of the Restructuring agreed upon by the

Parties that are to be incorporated into the Plan and the Definitive Documents.

(h) “Support Effective Date” means the date on which counterpart signature

pages to this Agreement shall have been executed and delivered by (i) the Company,

(ii) Consenting Creditors (a) holding at least 66⅔% of the aggregate principal amount outstanding

of the RBL Obligations and (b) comprising at least half in number of the RBL Lenders and (iii)

the Consenting Sponsors.

(i) “Support Period” means the period commencing on the Support Effective

Date and ending on the earlier of the (i) date on which this Agreement is terminated in accordance

with Section 6 and (ii) the Plan Effective Date.

(j) “Solicitation” means the solicitation of votes for the Plan pursuant to, and

in compliance with, the Bankruptcy Code.

(k) “Voting Deadline” means the deadline for submitting votes to accept or

reject the Plan in accordance with the Disclosure Statement Order.

All terms used but not defined herein shall have the meaning set forth in the Restructuring

Term Sheet.

2. Bankruptcy Process; Plan of Reorganization.

(a) Restructuring Term Sheet. The Restructuring Term Sheet is expressly

incorporated herein and made a part of this Agreement. The terms and conditions of the

Restructuring are set forth in the Restructuring Term Sheet, and the Restructuring Term Sheet is

supplemented by the terms and conditions of this Agreement. In the event of any inconsistencies

between the terms of this Agreement and the Restructuring Term Sheet, the terms of the

Restructuring Term Sheet shall govern.

(b) Definitive Documents. Each of the Definitive Documents shall (i) contain

terms and conditions consistent in all material respects with this Agreement and the Restructuring

Term Sheet and (ii) otherwise be in form and substance reasonably acceptable to (A) the RBL

Agent (acting at the direction of the Requisite Creditors), (B) the Company, and (C) the Consenting

Sponsors solely with respect to: (1) the Warrant Agreement, the releases set forth in the Plan and


4

Confirmation Order, the treatment of the Consenting Sponsors’ Claims and Interests set forth in

the Plan and Confirmation Order, and any amendment, modification or supplement to the Warrant

Agreement, the releases set forth in the Plan and Confirmation Order, or the treatment of the

Consenting Sponsors’ Claims and Interests set forth in the Plan and Confirmation Order; and (2)

the other Definitive Documents and the portions of the Plan and Confirmation Order not mentioned

in clause (1) hereof (including, in each case, any amendment, modification or supplement thereto)

to the extent that they directly or indirectly (x) materially and adversely affect the economic or

non-economic rights, waivers, or releases granted to or received by, or to be granted to or received

by, the Consenting Sponsors pursuant to this Agreement or (y) materially increase the obligations

that the Consenting Sponsors may have or may be required to incur pursuant to this Agreement.

Upon completion, the Definitive Documents and every other document, deed, agreement, filing,

notification, letter or instrument related to the Restructuring 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 10 hereof.

(c) Commencement of the Chapter 11 Cases. Provided that the Support

Effective Date has occurred, the Company shall file with the Bankruptcy Court voluntary petitions

for relief under chapter 11 of the Bankruptcy Code and any such other documents as are necessary

to commence the Chapter 11 Cases as soon as reasonably practicable, but in no event later than

June 17, 2020 (the “Outside Petition Date”) (the date on which such filing occurs, the “Petition

Date”); provided, however, that unless otherwise agreed by the RBL Agent and the Company, the

Company shall not commence such Chapter 11 Cases until each Secured Hedge Agreement has

been terminated and the proceeds from the Hedge Terminations have been deposited in the Hedge

Proceeds Account (as defined herein) in accordance with Section 5(c) hereof.

(d) Filing of the Plan and Disclosure Statement. The Company shall file the

Plan and the Disclosure Statement with the Bankruptcy Court in accordance with Section 6 hereof.

(e) Confirmation of the Plan. The Company shall use commercially reasonable

efforts to obtain confirmation of the Plan as soon as reasonably practicable following the Petition

Date in accordance with the Bankruptcy Code and on terms consistent with this Agreement in all

material respects. Each Consenting Creditor and each Consenting Sponsor shall use their

commercially reasonable efforts to cooperate fully in connection therewith.

3. Agreements of the Consenting Creditors.

(a) Voting; Support. Each Consenting Creditor agrees that for the duration of

the Support Period applicable to such Consenting Creditor, such Consenting Creditor shall:

(i) timely (A) vote, or cause to be voted, all of its Claims or Interests to

accept the Plan by delivering, or causing to be delivered, its duly authorized,

executed, and completed ballot or ballots and (B) consent to and, if applicable, not

opt out of the releases set forth in the Plan against each Released Party on a timely

basis;


5

(ii) not change or withdraw (or cause or direct to be changed or

withdrawn) any such vote or release described in clause (i) above; provided,

however, that notwithstanding anything in this Agreement to the contrary, each

Consenting Creditor’s vote and release shall be automatically revoked (and, upon

such revocation, deemed void ab initio) at any time following (and solely in the

event of) the termination of this Agreement pursuant to Section 6 with respect to

such Consenting Creditor;

(iii) timely vote (or cause to be voted) its Claims or Interests against any

plan, plan proposal, restructuring proposal, offer of dissolution, winding up,

liquidation, sale or disposition, reorganization, merger or restructuring of the

Company other than the Plan (each, an “Alternative Restructuring”);

(iv) negotiate in good faith with the Company the form of the Definitive

Documents and (as applicable) execute the Definitive Documents;

(v) not directly or indirectly, through any Person (including the RBL

Agent or the RBL Collateral Agent), seek, solicit, propose, support, assist, engage

in negotiations in connection with or participate in the formulation, preparation,

filing, or prosecution of any Alternative Restructuring or object to, or take any other

action that is inconsistent with or that would reasonably be expected to prevent,

interfere with, delay or impede the Solicitation, the approval of and entry of orders

regarding the Definitive Documents, or the confirmation and consummation of the

Plan and the Restructuring;

(vi) not object to and use commercially reasonable efforts to support and

take all actions necessary or reasonably requested by the Company to facilitate the

Solicitation, approval of and entry of orders regarding the Definitive Documents,

and confirmation and consummation of the Plan within the timeframes

contemplated by this Agreement; and

(vii) to the extent any legal or structural impediment arises that would

prevent, hinder, or delay the consummation of the Restructuring, negotiate in good

faith appropriate additional or alternative provisions to address any such

impediment.

(b) Transfers. Each Consenting Creditor agrees that, for the duration of the

Support Period applicable to such Consenting Creditor, such Consenting Creditor shall not sell,

transfer, loan, issue, pledge, hypothecate, assign, or otherwise dispose of (each, a “Transfer”),

directly or indirectly, in whole or in part, any of its Claims (including any option thereon or any

right or interest therein), grant any proxies, deposit any Claims into a voting trust, or enter into a

voting agreement with respect thereto, unless the transferee thereof either (i) is a Consenting

Creditor or (ii) prior to such Transfer, agrees in writing for the benefit of the Parties to become a

Consenting Creditor and to be bound by all of the terms of this Agreement applicable to Consenting

Creditors (including with respect to any and all Claims it already may hold against or in the


6

Company prior to such Transfer) by executing a joinder agreement, a form of which is attached

hereto as Exhibit B (the “Joinder Agreement”), and delivering an executed copy thereof within

two (2) Business Days following such execution, to Weil, Gotshal & Manges LLP (“Weil”), as

counsel to the Company, the RBL Agent’s Counsel and the Consenting Sponsors’ Counsel

(provided that failure to deliver a copy of the Joinder Agreement to the Consenting Sponsors’

Counsel shall not affect the validity of the Transfer), in which event (A) the transferee (including

the Consenting Creditor transferee, if applicable) shall be deemed to be a Consenting Creditor

hereunder with respect to all of its Claims and (B) the transferor shall be deemed to relinquish its

rights (and be released from its obligations) under this Agreement to the extent of such Claims.

Any Transfer of any Claims by a Consenting Creditor that does not comply with the terms and

procedures set forth herein shall be deemed void ab initio. The Company and each other

Consenting Creditor shall have the right to enforce the voiding of such Transfer. Notwithstanding

anything to the contrary herein, a Consenting Creditor may Transfer its Claims to an entity that is

acting in its capacity as a Qualified Marketmaker without the requirement that the Qualified

Marketmaker become a Party; provided, however, that (x) such Qualified Marketmaker must

Transfer such right, title, or interest by the earlier of ten (10) Business Days following its receipt

thereof and, if received prior to the Voting Deadline, five (5) Business Days prior to the Voting

Deadline, (y) any subsequent Transfer by such Qualified Marketmaker of the right, title, or interest

in such Claims must be to a transferee that is or becomes a Consenting Creditor at the time of such

transfer in accordance with procedure set forth in this Section 3(b), and (z) the Consenting Creditor

that transferred its Claims to the Qualified Marketmaker shall be solely responsible for the

Qualified Marketmaker’s failure to comply with the requirements of this Section 3. Without

limitation to the foregoing, if the Qualified Marketmaker fails to comply with this Section 3(b)

and holds such Claims on the date upon which the Voting Deadline occurs, on and after such date,

such Qualified Marketmaker shall comply with the obligations of a Consenting Creditor under

Section 3(a) of this Agreement. To the extent that a Consenting Creditor is acting in its capacity

as a Qualified Marketmaker, it may Transfer (by purchase, sale, assignment, participation, or

otherwise) any right, title or interests in Claims that the Qualified Marketmaker acquires from a

holder of such Claims that is not a Consenting Creditor without the requirement that the transferee

is or becomes a Consenting Creditor.

(c) Additional Claims or Interests. To the extent any Consenting Creditor

acquires additional Claims or Interests during the Support Period applicable to such Consenting

Creditor, such Consenting Creditor shall promptly (in no event less than three (3) Business Days

following such acquisition) notify Weil, the Consenting Sponsors’ Counsel and the RBL Agent’s

Counsel. Such additional Claims or Interests shall be subject to this Agreement. For the duration

of the Support Period applicable to such Consenting Creditor, the Consenting Creditor shall vote

(or cause to be voted) any such additional Claims or Interests entitled to vote on the Plan (to the

extent still held by it or on its behalf at the time of such vote or prior to the Voting Deadline), in a

manner consistent with Section 3(a) hereof.

(d) Additional Parties. Any RBL Lender may, at any time after the Support

Effective Date, become a party to this Agreement as a Consenting Creditor (an “Additional

Consenting Creditor”), by executing a Joinder Agreement, pursuant to which such Additional


7

Consenting Creditor shall be bound by the terms of this Agreement as a Consenting Creditor

hereunder and shall be deemed a Consenting Creditor for all purposes hereunder.

(e) Forbearance. During the Support Period, each Consenting Creditor shall

forbear from exercising any rights (including any right of set-off) or remedies it may have under

the RBL Credit Agreement or under applicable U.S. or foreign law, in each case, with respect to

any defaults or events of default by any Company, including with respect to any such breach or

default arising out of any such Company’s failure to pay any installment of interest pursuant to the

RBL Credit Agreement as required by the terms of the RBL Credit Agreement.

Each of the Consenting Creditors’ obligations hereunder (including with respect to the

aforementioned forbearance) shall automatically terminate without requirement for any further

notice, demand, presentment, act or action of any kind after the Support Period terminates in

accordance with Section 6. The Company at that time shall be obligated to comply with and

perform all terms, conditions, and provisions of the RBL Credit Agreement without giving effect

to the foregoing forbearance, and the Consenting Creditors may at any time thereafter proceed to

exercise any and all of their rights and remedies at law, in equity or otherwise, including, without

limitation, their rights and remedies under the RBL Credit Agreement, this Agreement or any other

RBL Credit Document, to the extent continuing, in each case, without any further lapse of time,

expiration of applicable grace periods or requirements of notice, all of which are hereby expressly

waived by each Company.

The forbearance set forth in this Section 3(e) shall not by implication or otherwise limit, impair,

constitute a waiver of or otherwise affect the rights and remedies of the Consenting Creditors under

the RBL Credit Agreement or the Forbearance Agreement and shall not, alter, modify, amend, or

in any way affect any of the terms, conditions, obligations, covenants, or agreements contained in

the RBL Credit Agreement or any other provision of the RBL Credit Agreement, all of which are

ratified and affirmed in all respects and shall continue in full force and effect, including each of

the RBL Agent’s, the RBL Collateral Agent’s and the Consenting Creditors’ rights, remedies and

claims under the RBL Credit Agreement.

(f) Hedge Terminations. Notwithstanding anything in the RBL Credit

Agreement or the Forbearance Agreement (including Section 4.5 thereof) to the contrary, the

Consenting Creditors hereby consent to the Company’s use of cash proceeds of the Hedge

Terminations (as defined below) in accordance with Section 5(c) hereof.

(g) FLFO RBL Facility. Notwithstanding anything to the contrary provided

herein, the execution of this Agreement by a Consenting Creditor shall not constitute a

commitment by such Consenting Creditor to become a lender under the FLFO RBL Facility.

4. Agreements of the Consenting Sponsors.

(a) Voting; Support. Each Consenting Sponsor agrees that, for the duration of

the Support Period, it shall:


(i) cause Chisholm Oil and Gas Holdings, LLC (“Chisholm

Holdings”) or its subsidiaries, as applicable, to (A) timely vote all of its Claims or

Interests to accept the Plan by delivering, or causing to be delivered, its duly

authorized, executed, and completed ballot or ballots, and (B) consent to and, if

applicable, not opt out of the releases set forth in the Plan against each Released

Party on a timely basis;

(ii) not cause or direct to be changed or withdrawn any such vote or

release described in clause (i) above; provided, however, that notwithstanding

anything in this Agreement to the contrary, any such vote or release shall be

automatically revoked (and, upon such revocation, deemed void ab initio) at any

time following (and solely in the event of) the termination of this Agreement

pursuant to Section 6 with respect to such Consenting Sponsor;

(iii) timely cause Chisholm Holdings or its subsidiaries, as applicable, to

vote its Claims or Interests against any Alternative Restructuring;

(iv) negotiate in good faith with the Company and the Consenting

Creditors the form of the Warrant Agreement and the releases set forth in the Plan

and Confirmation Order and, to the extent applicable, execute such documents;

(v) not directly or indirectly, through any Person seek, solicit, propose,

support, assist, engage in negotiations in connection with or participate in the

formulation, preparation, filing, or prosecution of any Alternative Restructuring or

object to, or take any other action that is inconsistent with or that would reasonably

be expected to prevent, interfere with, delay or impede the Solicitation, the approval

of and entry of orders regarding the Definitive Documents, or the confirmation and

consummation of the Plan and the Restructuring;

(vi) support, not object to, and take all actions necessary or reasonably

requested by the Company to facilitate the Solicitation, approval of and entry of

orders regarding the Definitive Documents, and confirmation and consummation

of the Plan within the timeframes contemplated by this Agreement; and

(vii) to the extent any legal or structural impediment arises that would

prevent, hinder, or delay the consummation of the Restructuring, negotiate in good

faith appropriate additional or alternative provisions to address any such

impediment.

(b) Transfers. Each Consenting Sponsor agrees that during the Support Period applicable to such Consenting Sponsor, such Consenting Sponsor shall not Transfer, directly or

indirectly, in whole or in part, any of its Claims or equity interests (including any Interests) in

Chisholm Holdings or any of its subsidiaries (including any option thereon or any right or

interest therein), grant any proxies, deposit any such Claims or equity interests into a voting

trust, or enter into a voting agreement with respect thereto).

8


9

(c) Additional Claims or Interests. To the extent any Consenting Sponsor acquires

Claims or Interests during the Support Period applicable to such Consenting Sponsor, such

Consenting Sponsor shall promptly (in no event less than three (3) Business Days following

such acquisition) notify Weil and the RBL Agent’s Counsel. Such additional Claims or Interests

shall be subject to this Agreement. For the duration of the Support Period applicable to such

Consenting Sponsor, the Consenting Sponsor shall vote (or cause to be voted) any such

additional Claims or Interests entitled to vote on the Plan (to the extent still held by it or on its

behalf at the time of such vote or prior to the Voting Deadline) to accept the Plan and otherwise

comply with Section 4(a) hereof.

5. Agreements of the Company.

(a) Covenants. Each Company agrees that for the duration of the Support

Period such Debtor shall:

(i) commence the Chapter 11 Cases on or before the Outside Petition

Date;

(ii) support and use commercially reasonable efforts to take all steps

reasonably necessary to consummate the Restructuring in accordance with this

Agreement;

(iii) to the extent any legal or structural impediment arises that would

prevent, hinder, or delay the consummation of the Restructuring contemplated

herein, take all steps reasonably necessary to address any such impediment,

including to negotiate in good faith appropriate additional or alternative provisions

to address any such impediment, in each case, in a manner acceptable to the RBL

Agent;

(iv) use commercially reasonable efforts to obtain the required

governmental, regulatory and third-party approvals to effectuate the Restructuring

contemplated by the Plan, if any;

(v) provide to the RBL Agent and the RBL Collateral Agent, upon

reasonable advance notice to the Company, timely and reasonable responses to all

reasonable diligence requests submitted to Evercore and/or Alvarez and Marsal, the

Company’s financial advisors;

(vi) subject to fiduciary duties and professional responsibilities,

prosecute and defend any objections or appeals relating to the Restructuring,

including without limitation, the “first day” and “second day” motions and orders,

the Cash Collateral Order, the Confirmation Order and the Disclosure Statement

Order;


10

(vii) not take any action that is inconsistent with, or is intended to

interfere with, consummation of the Restructuring, in each case, to the extent

consistent with, upon the advice of counsel, applicable law, and the fiduciary duties

of the boards of directors, managers, members, or partners, as applicable, of the

Company; provided, however, that the Company shall not be obligated to agree to

any modification of any document that is inconsistent with the Restructuring Term

Sheet or Definitive Documents;

(viii) not pursue an Alternative Restructuring;

(ix) provide draft copies of all orders, motions or applications related to

the Restructuring (including all “first day” and “second day” motions and orders,

the Plan, the Disclosure Statement, form of ballots, and other Solicitation materials

in respect of the Plan and a proposed Confirmation Order) the Company intends to

file with the Bankruptcy Court to the RBL Agent’s Counsel, if reasonably

practicable, at least two (2) Business Days prior to the date when the Company

intends to file any such motion or application (provided that if delivery of such

motions, orders, or materials at least two (2) Business Days prior to filing is not

reasonably practicable, the Debtors shall deliver such motion, order, or application

as soon as reasonably practicable prior to filing) and shall consult in good faith with

the RBL Agent’s Counsel regarding the form and substance of any such proposed

filing with the Bankruptcy Court;

(x) subject to professional responsibilities, timely file with the

Bankruptcy Court a written objection to any motion filed in the Chapter 11 Cases

seeking the entry of an order (A) directing the appointment of an examiner with

expanded powers or a trustee, (B) converting any of the Chapter 11 Cases to cases

under chapter 7 of the Bankruptcy Code, (C) dismissing any of the Chapter 11

Cases, or (D) modifying or terminating the Company’s exclusive right to file and/or

solicit acceptances of a plan of reorganization;

(xi) except as contemplated by this Agreement or any Definitive

Documents, (A) operate its businesses in the ordinary course and (B) not dispose

of its material assets (unless in such instance, the RBL Agent has consented thereto

in writing) in accordance with its business judgment;

(xii) unless the RBL Agent provides written consent otherwise, and,

subject to fiduciary duties, as applicable, use commercially reasonable efforts to

preserve in all material respects its current business organizations, keep available

the services of its current officers and material employees (in each case, other than

voluntary resignations, terminations for cause, or terminations consistent with

applicable fiduciary duties) and preserve in all material respects its relationships

with customers, sales representatives, suppliers, distributors, and others, in each

case, having material business dealings with the Debtors (other than terminations

for cause and consistent with applicable fiduciary duties);


11

(xiii) provide written notice to the RBL Agent and the Consenting

Sponsors within one (1) Business Day of any failure of any Debtor to comply with

or satisfy, in any material respect, any covenant, condition or agreement hereunder;

(xiv) promptly pay (A) all prepetition and postpetition reasonable fees

and out-of-pocket expenses of the RBL Agent and the RBL Collateral Agent,

including the reasonable fees and out-of-pocket disbursements of Linklaters LLP,

as counsel to the RBL Agent, Morris, Nichols, Arsht & Tunnell LLP, as local

counsel to the RBL Agent, Bracewell LLP, as real estate counsel to the RBL Agent,

Ballard Spahr LLP, as counsel to the RBL Collateral Agent, and FTI Consulting,

Inc., as financial advisor to the RBL Agent (collectively, the “Consenting Creditor

Expenses”), and (B) all prepetition and postpetition reasonable fees and out-of-

pocket expenses of the Consenting Sponsors, limited to the reasonable fees and out-

of-pocket disbursements of Paul, Weiss, Rifkind, Wharton & Garrison LLP and

one local counsel (collectively, the “Consenting Sponsor Expenses,” and together

with the Consenting Creditor Expenses, the “Restructuring Expenses”). Invoices

for the Restructuring Expenses shall not be required to contain individual time

details, but the invoices shall contain (except for financial advisors compensated in

increments other than an hourly basis) a summary of hours worked and hourly rate

of each timekeeper. The Debtors shall comply with each of the following

obligations unless agreed by the Debtors and the applicable firm:

1. On the Support Effective Date, the Debtors shall pay (x) all

Restructuring Expenses that have accrued but are unpaid as of such

date (to the extent invoiced at least one (1) Business Day prior to such

date) and (y) fund or replenish, as the case may be, any retainers

reasonably requested by any of the foregoing professionals.

2. During the period starting immediately after the Support Effective

Date and ending immediately prior to the Petition Date, the Debtors

shall pay all accrued but unpaid Restructuring Expenses on a bi-

weekly basis and within ten (10) Business Days of receipt of invoices

in respect thereof.

3. During the Chapter 11 Cases, the Debtors shall pay all accrued but

unpaid Consenting Creditor Expenses on a monthly basis and within

ten (10) Business Days of receipt of invoices in respect thereof,

without any requirement for Bankruptcy Court review or further

Bankruptcy Court order.

4. On the Plan Effective Date, the Debtors shall pay all accrued and

unpaid Restructuring Expenses incurred up to and including the Plan

Effective Date by Parties still subject to this Agreement without any

requirement for Bankruptcy Court review or further Bankruptcy Court

order.


12

The foregoing shall be subject to and qualified by any provisions related to the

payment of the Consenting Creditor Expenses set forth in the Cash Collateral Order.

Nothing herein shall affect or limit any obligations of the Company to pay the

Consenting Creditor Expenses as provided in the Cash Collateral Order.

(xv) as soon as reasonably practicable (and in no event more than two (2)

Business Days) after receiving actual knowledge of any pending or threatened in

writing governmental or third-party claims, litigations, investigations, or hearings

that may prevent, hinder, or delay the consummation of the Restructuring, provide

written notice to the RBL Agent, the RBL Collateral Agent and the Consenting

Sponsors;

(xvi) provide a copy of any received written offer or proposal for an

Alternative Restructuring to RBL Agent’s Counsel and the Consenting Sponsors’

Counsel within one (1) Business Day of the Debtors’ or their advisors’ receipt of

such offer or proposal;

(xvii) provide written notice to the RBL Agent, the RBL Collateral Agent,

and the Consenting Sponsors within one (1) Business Day of any of the following:

(A) any of the Debtors’ obtaining actual knowledge of any event, the occurrence or

failure or failure of which would cause any covenant of the Company contained in

this Agreement not to be satisfied in any respect; (B) any of the Debtors receiving

any written notice from any governmental body in connection with this Agreement

or the Restructuring; and (C) any of the Debtors receiving any notice from any party

alleging that the consent of such party is or may be required in connection with the

transactions contemplated by the Restructuring; and

(xviii) (A) keep the Consenting Sponsors informed with respect to its

ongoing analysis and discussions regarding the Tax Structure and (B) provide the

Consenting Sponsors with notice of the Tax Structure at least seven (7) Business

Days prior to the Voting Deadline for the Plan.

(b) Limited Waiver of Automatic Stay. Each Company acknowledges and

agrees and shall not dispute that, after the commencement of the Chapter 11 Cases, the giving of

notice of termination of this Agreement by any Party solely in accordance with the terms of this

Agreement shall not be a violation of the automatic stay of section 362 of the Bankruptcy Code

(and each Company hereby waives, to the fullest extent permitted by law, the applicability of the

automatic stay to the giving of such notice); provided, however, that nothing herein shall prejudice

any Party’s rights to argue that the giving of notice of default or termination was not proper under

the terms of this Agreement.

(c) Hedge Terminations. Each Company shall (i) use commercially reasonable

efforts to terminate each hedge agreement (such termination, the “Hedge Terminations”) to which

such Company is a party and which is outstanding on or after the date hereof and (ii) upon receipt

by such Company of the cash proceeds from Hedge Terminations, deposit such cash proceeds (or


13

direct the net proceeds thereof be immediately deposited) into an interest-bearing account held at

Citibank N.A., in the name of Borrower (the “Hedge Proceeds Account”). Any cash proceeds

deposited in the Hedge Proceeds Account (including any interest accrued thereon) shall be

available (and each Company agrees that it shall use such proceeds) for operating, working capital

and general corporate purposes of the Company, in each case consistent with, and subject to and

within the limitations contained in, the 13-week cash flow attached hereto as Schedule II, and

upon entry by the Bankruptcy Court, the Cash Collateral Order.

6. Termination of Agreement.

(a) This Agreement shall terminate two (2) Business Days following the

delivery of written notice (in accordance with Section 21 hereof): (i) from the RBL Agent (acting

at the direction of the Requisite Creditors) to Parent and the Consenting Sponsors at any time after

the occurrence and during the continuance of any Consenting Creditor Termination Event (as

defined below), (ii) from Parent to the Consenting Creditors and the Consenting Sponsors at any

time after the occurrence and during the continuance of any Company Termination Event (as

defined below) or (iii) solely as to such Consenting Sponsor, from a Consenting Sponsor to Parent

and the Consenting Creditors at any time after the occurrence and during the continuance of any

Consenting Sponsor Termination Event (as defined below). Notwithstanding any provision to the

contrary in this Section 6, no Party may exercise a termination right hereunder to the extent such

termination right arises from a Consenting Creditor Termination Event, Consenting Sponsor

Termination Event or Company Termination Event that resulted from, or was caused by, such

Party’s actions or inactions in breach of this Agreement. This Agreement shall terminate on the

Plan Effective Date without any further required action or notice.

(b) A “Consenting Creditor Termination Event” shall mean any of the

following:

(i) the breach by the Company of any of the undertakings,

representations, warranties, or covenants of the Company set forth herein in any

material respect that remains uncured for a period of five (5) Business Days after

the delivery of written notice of such breach from the RBL Agent or the Requisite

Creditors pursuant to this Section 6 and in accordance with Section 21 (as

applicable);

(ii) if, as of 11:59 p.m. Eastern Time on the Outside Petition Date, the

Chapter 11 Cases have not been filed;

(iii) if, as of 11:59 p.m. Eastern Time five (5) calendar days after the

Petition Date, the Bankruptcy Court shall not have entered the interim Cash

Collateral Order;

(iv) if, as of 11:59 p.m. Eastern Time ten (10) calendar days after the

Petition Date, the Debtors have not filed the Plan, the Disclosure Statement, a


14

motion for approval of the Plan and Disclosure Statement, and a motion for an order

of the Bankruptcy Court establishing the Bar Dates;

(v) if, as of 11:59 p.m. Eastern Time twenty-five (25) calendar days

after the Petition Date, the Bankruptcy Court shall not have entered an order

establishing the Bar Dates;

(vi) if, as of 11:59 p.m. Eastern Time forty (40) calendar days after the

Petition Date, the Bankruptcy Court shall not have entered the final Cash Collateral

Order;

(vii) if, as of 11:59 p.m. Eastern Time forty-five (45) calendar days after

the Petition Date, the Bankruptcy Court shall not have entered the Disclosure

Statement Order;

(viii) if, as of 11:59 p.m. Eastern Time ninety (90) calendar days after the

Petition Date, the Bankruptcy Court shall not have entered the Confirmation Order;

(ix) if, as of 11:59 p.m. Eastern Time on the date that is ten (10) Business

Days after the date of entry of the Confirmation Order (the “Outside Date”), the

Plan Effective Date shall not have occurred;

(x) the Cash Collateral Order is reversed, stayed, dismissed, vacated, or

modified or amended in any adverse respect without the consent of the RBL Agent;

(xi) the occurrence of the Termination Date (as defined in the Cash

Collateral Order);

(xii) the Debtors withdraw the Plan or Disclosure Statement, or the

Debtors file any motion or pleading with the Bankruptcy Court that is not consistent

with this Agreement (including the Restructuring Term Sheet) in any material

respect, and such motion or pleading has not been withdrawn before the earlier of

(A) two (2) Business Days after the RBL Agent delivers written notice to the

Debtors that such motion or pleading is inconsistent with this Agreement or the

Restructuring Term Sheet in any material respect and (B) entry of an order of the

Bankruptcy Court approving such motion or pleading;

(xiii) any Debtor files any motion for, or the Bankruptcy Court enters an

order granting, the (A) conversion of one or more of the Chapter 11 Cases to a case

under chapter 7 of the Bankruptcy Code, (B) appointment of an examiner with

expanded powers beyond those set forth in section 1106(a)(3) and (4) of the

Bankruptcy Code or a trustee or receiver in one or more of the Chapter 11 Cases or

(C) dismissal of one or more of the Chapter 11 Cases;


15

(xiv) the Bankruptcy Court grants relief that is inconsistent with this

Agreement (including the Restructuring Term Sheet) in any material respect,

including by preventing the consummation of the Restructuring, unless the Debtors

have sought a stay of such relief within five (5) Business Days after the date of such

issuance, and such order is stayed, reversed, or vacated within ten (10) Business

Days after the date of such issuance, except if such relief is granted pursuant to a

motion by any Consenting Creditor;

(xv) any Debtor files, propounds, or otherwise supports any motion or

application seeking authority to sell all or a material portion of its assets without

the prior written consent of the RBL Agent;

(xvi) any Debtor (x) files, propounds, or otherwise supports any motion

or pleading challenging the amount, validity, enforceability, priority, or perfection,

or seeks avoidance, subordination, recharacterization or other similar relief with

respect to the RBL Claims or the liens and security interests securing the RBL

Obligations or (y) fails to timely object to any motion by any creditor, including an

official committee of unsecured creditors, seeking standing to challenge the same;

(xvii) any Debtor enters into, or files a motion seeking approval of, debtor-

in-possession financing on terms that are not reasonably acceptable to the RBL

Agent;

(xviii) any of the Definitive Documents shall have been amended in a

manner adverse in any material respect to the Consenting Creditors, without the

prior written consent of the RBL Agent;

(xix) any governmental authority, including any regulatory authority or

court of competent jurisdiction issues any ruling, judgment, or order enjoining the

consummation of or prohibiting the Company from implementing the Plan or the

Restructuring, and either (A) such ruling, judgment, or order has been issued at the

request of or with the acquiescence of the Company, or (B) in all other

circumstances, such ruling, judgment, or order has not been stayed, reversed, or

vacated within fifteen (15) days after such issuance;

(xx) if the Company gives notice of termination of this Agreement

pursuant to this Section 6; or

(xxi) if the Confirmation Order is denied by the Bankruptcy Court.

(c) A “Company Termination Event” shall mean any of the following:

(i) the breach by one or more of the Consenting Creditors of any of the

undertakings, representations, warranties, or covenants of the Consenting Creditors

set forth herein in any material respect that remains uncured for a period of five


16

(5) Business Days after the Company delivers written notice of such breach

pursuant to this Section 6 and in accordance with Section 21 hereof (as applicable),

but only if the non-breaching Consenting Creditors collectively (x) hold less than

66⅔% of the aggregate principal amount outstanding of the RBL Obligations or (y)

comprise less than half in number of the RBL Lenders;

(ii) the board of directors, managers, managing member, members, or

partners, as applicable, of Parent or any Debtor reasonably determines in good faith

based upon the advice of counsel that continued performance under this Agreement

would be inconsistent with the exercise of its fiduciary duties under applicable law,

and such Debtor provides notice of such determination to the Consenting Creditors

and Consenting Sponsors within five (5) Business Days after the date thereof;

(iii) if the Confirmation Order is denied by the Bankruptcy Court;

(iv) any governmental authority, including any regulatory authority or

court of competent jurisdiction issues any ruling, judgment, or order enjoining the

consummation of, or prohibiting any Debtor from implementing, the Plan or the

Restructuring, and such ruling, judgment, or order has not been stayed, reversed, or


(v) if the Consenting Creditors give notice of termination of this

Agreement pursuant to this Section 6; or

(vi) the Bankruptcy Court enters an order (A) directing the appointment

of a trustee in the Chapter 11 Cases, (B) converting any of the Chapter 11 Cases to

cases under chapter 7 of the Bankruptcy Code, or (C) dismissing any of the Chapter

11 Cases.

(d) A “Consenting Sponsor Termination Event” shall mean any of the

following:

(i) if, as of 11:59 p.m. Eastern Time ten (10) calendar days after the

Outside Petition Date, the Chapter 11 Cases have not been filed;

(ii) if, as of 11:59 p.m. Eastern Time one hundred twenty-five (125)

calendar days after the Petition Date, the Bankruptcy Court has not entered the

Confirmation Order;

(iii) if, as of 11:59 p.m. Eastern Time thirty (30) calendar days after the

Outside Date, the Plan Effective Date shall not have occurred;

(iv) if any Debtor files any motion or pleading with the Bankruptcy

Court that is not consistent with this Agreement (including the Restructuring Term

Sheet) in a manner that directly or indirectly (1) materially and adversely affects


17

the economic or non-economic rights, waivers, or releases granted to or received

by, or to be granted to or received by, the Consenting Sponsors pursuant to this

Agreement or (2) materially increases the obligations of the Consenting Sponsors

under this Agreement or in connection with the Restructuring, and such motion or

pleading has not been withdrawn before the earlier of (A) two (2) Business Days

after a Consenting Sponsor delivers written notice to the Debtors that such motion

or pleading is inconsistent with this Agreement (including the Restructuring Term

Sheet) in any material respect and (B) entry of an order of the Bankruptcy Court

approving such motion or pleading;

(v) any Debtor files any motion for, or the Bankruptcy Court enters a

Final Order granting, the (A) conversion of one or more of the Chapter 11 Cases to

a case under chapter 7 of the Bankruptcy Code, (B) appointment of an examiner

with expanded powers beyond those set forth in section 1106(a)(3) and (4) of the

Bankruptcy Code or a trustee or receiver in one or more of the Chapter 11 Cases or

(C) dismissal of one or more of the Chapter 11 Cases;

(vi) if the Bankruptcy Court grants relief in a Final Order that is

inconsistent with this Agreement (including the Restructuring Term Sheet) in a

manner that directly or indirectly (1) materially and adversely affects the economic

or non-economic rights, waivers, or releases granted to or received by, or to be

granted to or received by, the Consenting Sponsors pursuant to this Agreement or

(2) materially increases the obligations of the Consenting Sponsors under this

Agreement or in connection with the Restructuring, including by preventing the

consummation of the Restructuring;

(vii) the Company files with the Bankruptcy Court a Definitive

Document (or subsequently amends, supplements or modifies such Definitive

Document) without complying with Section 2(b)(ii)(C) and such Consenting

Sponsor has not otherwise consented to such Definitive Document;

(viii) any governmental authority, including any regulatory authority or

court of competent jurisdiction, of any ruling, judgment, or order enjoining the

consummation of or prohibiting any Debtor from implementing the Plan or the

Restructuring, and such ruling, judgment, or order has not been stayed, reversed, or


(ix) any Debtor gives notice of termination of this Agreement pursuant

to this Section 6;

(x) if the Confirmation Order is denied by the Bankruptcy Court;

(xi) if the Company does not provide the Consenting Sponsors with

notice of the Tax Structure at least five (5) Business Days prior to the Voting

Deadline; or


18

(xii) if the Consenting Sponsors have given the Company and the RBL

Agent notice, at least three (3) Business Days prior to the Voting Deadline, that the

Tax Structure is not reasonably acceptable to the Consenting Sponsors.

(e) Notwithstanding the foregoing, any of the dates and deadlines set forth in

Section 6(b) and 6(c) may be extended by agreement of the Company and the RBL Agent in the

exercise of their respective sole discretion and without the consent of the Consenting Sponsors.

(f) Mutual Termination. This Agreement may be terminated by mutual

agreement of the Company and the Requisite Creditors upon the receipt of written notice delivered

in accordance with Section 21 hereof.

(g) Effect of Termination. Subject to the provisions contained in Section 6(a)

and Section 14 hereof, upon the termination of this Agreement in accordance with this Section 6,

this Agreement shall forthwith become null and void and of no further force or effect and each

Party shall, except as provided otherwise in this Agreement, be immediately released from its

liabilities, obligations, commitments, undertakings, and agreements under or related to this

Agreement. Upon such termination, each Party shall have all the rights and remedies that it would

have had and shall be entitled to take all actions, whether with respect to the Restructuring or

otherwise, that it would have been entitled to take had it not entered into this Agreement, including

all rights and remedies available to it under applicable law; provided, however, that in no event

shall any such termination relieve a Party from liability for its breach or non-performance of any

of its obligations hereunder prior to the date of such termination.

(h) If the Restructuring is not consummated, nothing herein shall be construed

as a waiver by any Party of any or all of such Party’s rights, and the Parties expressly reserve any

and all of their respective rights. This Agreement and all negotiations relating hereto shall not be

admissible into evidence in any proceeding other than a proceeding to enforce the Agreement’s

terms, and, if applicable, Federal Rule of Evidence 408 and any other applicable rules shall apply.

7. Definitive Documents; Good Faith Cooperation; Further Assurances.

Each Party hereby covenants and agrees to cooperate with each other in good faith

in connection with, and shall exercise commercially reasonable efforts with respect to the pursuit,

approval, negotiation, execution, delivery, implementation, and consummation of the Plan and the

Restructuring, as well as the negotiation, drafting, execution and delivery of the Definitive

Documents. Furthermore, subject to the terms hereof, each of the Parties shall (a) take such action

as may be reasonably necessary or reasonably requested by the other Parties to carry out the

purposes and intent of this Agreement, including making and filing any required regulatory filings,

and (b) refrain from taking any action that would frustrate the purposes and intent of this

Agreement.


19

8. Representations and Warranties.

(a) Each Party, severally (and not jointly), represents and warrants to the other

Parties that each of the following statements are true, correct, and complete as of the date hereof

(or as of the date a Consenting Creditor becomes a party hereto):

(i) such Party is validly existing and in good standing under the laws of

its jurisdiction of incorporation or organization and, has all requisite corporate,

partnership, limited liability company or similar authority to enter into this

Agreement and carry out the transactions contemplated hereby and perform its

obligations contemplated hereunder;

(ii) the execution, delivery, and performance by such Party of this

Agreement does not and will not (A) violate any material provision of law, rule, or

regulation applicable to it or any of its subsidiaries or its charter or bylaws (or other

similar governing documents) or those of any of its subsidiaries, or (B) conflict

with, result in a breach of, or constitute (with due notice or lapse of time or both) a

default under any material contractual obligation to which it or any of its

subsidiaries is a party except, in the case of the Company, for the filing of the

Chapter 11 Cases;

(iii) other than such notices or consents required to be sent in connection

with the filing of the Chapter 11 Cases, the execution, delivery, and performance

by such Party of this Agreement does not and will not require any material

registration or filing with, consent or approval of, or notice to, or other action, with

or by, any federal, state or governmental authority or regulatory body; and

(iv) this Agreement is the legally valid and binding obligation of such

Party, enforceable against it in accordance with its terms, except as enforcement

may be limited by bankruptcy, insolvency, reorganization, moratorium, or other

similar laws relating to or limiting creditors’ rights generally, by equitable

principles relating to enforceability, or by a ruling of the Bankruptcy Court.

(b) Each Consenting Creditor severally (and not jointly) represents and

warrants to the other Parties that, as of the date hereof (or as of the date such Consenting Creditor

becomes a party hereto), such Consenting Creditor is the owner of the aggregate principal amount

of RBL Obligations set forth below its name on the signature page hereto (or below its name on

the signature page of a Joinder Agreement for any Consenting Creditor that becomes a party hereto

after the date hereof), free and clear of any restrictions on transfer, liens or options, warrants,

purchase rights, contracts, or commitments, or, to such Person’s knowledge, any claims, demands,

and other encumbrances and does not own any other RBL Obligations.

(c) Each Consenting Sponsor severally (and not jointly) represents and

warrants to the other Parties that, as of the date hereof, such Consenting Sponsor (i) indirectly,

through its equity interests in Chisholm Holdings and its applicable subsidiaries is the owner of


20

the aggregate principal amount of Interests set forth below its name on the signature page hereto,

free and clear of any restrictions on transfer, liens or options, warrants, purchase rights, contracts,

commitments, claims, demands, and other encumbrances and does not own any other Interests and

(ii) has, with respect to the beneficial owners of such equity interests, (A) sole investment or voting

discretion with respect thereto, (B) full power and authority to vote on and consent to matters

concerning such equity interests or to exchange, assign, and transfer such equity interests and (C)

full power and authority to bind or act on the behalf of, such beneficial owners.

9. Disclosure; Publicity.

The Company shall submit drafts to the RBL Agent’s Counsel of any press releases

regarding the Restructuring at least two (2) Business Days prior to making any such disclosure.

Except as required by applicable law, and notwithstanding any provision of any other agreement

between the Company and such Consenting Creditor to the contrary, no Party or its advisors shall

disclose to any Person (including, for the avoidance of doubt, any other Consenting Creditor),

other than advisors to the Company, the principal amount or percentage of any RBL Obligations

held by any Consenting Creditor without such Consenting Creditor’s prior written consent unless

required by law, subpoena, or other legal process or regulation. If such disclosure is required by

law, subpoena, or other legal process or regulation, the disclosing Party shall, to the extent

permitted by law, afford the relevant Consenting Creditor a reasonable opportunity to review and

comment in advance of such disclosure and shall take commercially reasonable measures to limit

such disclosure (the expense of which, if any, shall be borne by the relevant Consenting Creditor).

The foregoing shall not prohibit the disclosure of the aggregate percentage or aggregate principal

amount of RBL Obligations collectively held by the Consenting Creditors. Notwithstanding the

provisions in this Section 9, any Party may disclose a Consenting Creditor’s individual holdings

to the extent consented to in writing by such Consenting Creditor. Any public filing of this

Agreement, with the Bankruptcy Court or otherwise that includes executed signature pages to this

Agreement shall include such signature pages only in redacted form with respect to the holdings

of each Consenting Creditor and Consenting Sponsor (provided that the aggregate amount of

holdings held by all Consenting Creditors with respect to each class of Claims may be filed in

unredacted form with the Bankruptcy Court under seal).

10. Amendments and Waivers.

(a) Other than as set forth in Section 10(b), this Agreement, including any

exhibits or schedules hereto, may only be waived, modified, amended, or supplemented with the

written consent of the Company and the Requisite Creditors, in each case, such consent not to be

unreasonably withheld, conditioned, or delayed.

(b) Notwithstanding Section 10(a):

(i) any waiver, modification, amendment, or supplement to this

Section 10 shall require the written consent of (A) the Company and (B) each

Consenting Creditor;


21

(ii) any modification, amendment, or change to the definition of

“Requisite Creditors” shall require the written consent of each Consenting Creditor

and Parent;

(iii) any change, modification, or amendment to this Agreement

(including the Restructuring Term Sheet) or the Plan that treats or affects any

Consenting Creditor’s Claims arising under the RBL Credit Agreement in a manner

that is materially and adversely disproportionate, on an economic or non-economic

basis, to the manner in which any of the other Consenting Creditors are treated

(after taking into account each of the Consenting Creditor’s respective holdings in

the Company and the recoveries contemplated by the Plan (as in effect on the date

hereof)) shall require the written consent of such materially adversely and

disproportionately affected Consenting Creditor;

(iv) any waiver, modification, amendment, or supplement to Section 4,

Section 6(d), or Section 10(b)(iv), (v), (vi), or (vii) shall also require the written

consent of each Consenting Sponsor;

(v) any modification, amendment, or change to the definition of

“Consenting Sponsors” shall require the written consent of each Consenting

Sponsor;

(vi) (x) any waiver, modification, amendment, or supplement to this

Agreement shall require the written consent of each Consenting Sponsor to the

extent that such waiver, modification, amendment, or supplement directly or

indirectly (x) materially and adversely affects the economic or non-economic

rights, waivers, or releases granted to or received by, or to be granted to or received

by, the Consenting Sponsors pursuant to this Agreement or (y) materially increase

the obligations that the Consenting Sponsors may have or may be required to incur

under this Agreement; and

(vii) any change, modification, amendment, or supplement to this

Agreement (including the Restructuring Term Sheet) or the Plan that treats or

affects any Consenting Sponsor in a manner that is materially and adversely

disproportionate, on an economic basis, to the manner in which the other

Consenting Sponsor is treated shall require the written consent of such materially

adversely and disproportionately affected Consenting Sponsor.

(c) In the event that a materially adversely and disproportionately affected

Consenting Creditor (“Non-Consenting Creditor”) does not consent to a waiver, change,

modification, or amendment to this Agreement requiring the consent of each Consenting Creditor,

but such waiver, change, modification, or amendment receives the consent of Consenting Creditors

holding at least 66⅔% of the aggregate principal amount outstanding of the RBL Obligations and

constituting at least one half in number of RBL Lenders, this Agreement shall be deemed to have

been terminated only as to such Non-Consenting Creditor, but this Agreement shall continue in


22

full force and effect in respect to all other Consenting Creditors from time to time without the

consent of any Consenting Creditors who have so consented. Notwithstanding the foregoing, the

Company may amend, modify, or supplement this Agreement, the Restructuring Term Sheet, or

the Plan from time to time without the consent of any Consenting Creditor to cure any ambiguity,

defect (including any technical defect), or inconsistency so long as (A) the Company obtains the

consent (which consent shall not be unreasonably withheld) of the RBL Agent and (B) any such

amendments, modifications, or supplements do not materially adversely affect the rights, interests,

or treatment of the Consenting Creditors or the Consenting Sponsors under this Agreement, the

Restructuring Term Sheet, or the Plan.

11. Effectiveness.

This Agreement shall become effective and binding upon each Party upon the

execution and delivery by such Party of an executed signature page hereto and shall become

effective and binding on all Parties on the Support Effective Date; provided, however, that

signature pages executed by Consenting Creditors shall be delivered to (i) other Consenting

Creditors and each Consenting Sponsor in a redacted form that removes such Consenting

Creditors’ holdings of the RBL Obligations and (ii) the Company, Weil, and RBL Agent’s Counsel

in an unredacted form (to be held by Weil and RBL Agent’s Counsel on a professionals’ eyes only-

basis).

12. GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL.

(a) This Agreement shall be construed and enforced in accordance with, and

the rights of the parties shall be governed by, the law of the State of New York, without giving

effect to the conflict of laws principles thereof.

(b) Each of the Parties irrevocably agrees that any legal action, suit, or

proceeding arising out of or relating to this Agreement brought by any Party shall be brought and

determined in any federal or state court in the Borough of Manhattan in the City of New York

(“NY Court”) and each of the Parties hereby irrevocably submits to the exclusive jurisdiction of

the aforesaid courts for itself and with respect to its property, generally and unconditionally, with

regard to any such proceeding arising out of or relating to this Agreement or the Restructuring.

Each of the Parties agrees not to commence any proceeding relating to this Agreement or the

Restructuring except in the NY Court, other than proceedings in any court of competent

jurisdiction to enforce any judgment, decree, or award rendered by any NY Court. Each of the

Parties further agrees that notice as provided in Section 21 shall constitute sufficient service of

process and the Parties further waive any argument that such service is insufficient. Each of the

Parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion

or as a defense, counterclaim or otherwise, in any proceeding arising out of or relating to this

Agreement or the Restructuring, (i) any claim that it is not personally subject to the jurisdiction of

the NY Court for any reason, (ii) that it or its property is exempt or immune from jurisdiction of

any such court or from any legal process commenced in such courts (whether through service of

notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of

judgment, or otherwise) and (iii) that (A) the proceeding in any such court is brought in an


23

inconvenient forum, (B) the venue of such proceeding is improper, or (C) this Agreement, or the

subject matter hereof, may not be enforced in or by such courts. Notwithstanding the foregoing,

during the pendency of the Chapter 11 Cases, all proceedings contemplated by this Section 12(b)

shall be brought in the Bankruptcy Court.

(c) EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT

PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY

IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR

RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED

HEREBY (WHETHER BASED ON CONTRACT, TORT, OR ANY OTHER THEORY). EACH

PARTY (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT, OR ATTORNEY OF ANY

OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH

OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE

FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES

HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER

THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

13. Specific Performance/Remedies.

It is understood and agreed by the Parties that money damages would not be a

sufficient remedy for any breach of this Agreement by any Party. Each non-breaching Party shall

be entitled to specific performance and injunctive or other equitable relief (including reasonable

attorneys’ fees and costs), including an order of the Bankruptcy Court requiring any Party to

comply promptly with any of its obligations hereunder, as a remedy of any such breach without

the necessity of proving the inadequacy of money damages as a remedy. Each Party also agrees

that it will not seek, and will waive any requirement for, the securing or posting of a bond in

connection with any Party seeking or obtaining such relief.

14. Survival.

Notwithstanding the termination of this Agreement pursuant to Section 6 hereof,

the agreements and obligations of the Parties in this Section 14 and Sections 6(g), 6(h), 9, 12, 13,

16, 17, 18, 19, 21 and 22 hereof (and any defined terms used in any such Sections) shall survive

such termination and shall continue in full force and effect in accordance with the terms hereof;

provided, however, that any liability of a Party for breach of the terms of this Agreement shall

survive such termination.

15. Headings.

The headings of the sections, paragraphs, and subsections of this Agreement are

inserted for convenience only and shall not affect the interpretation hereof or, for any purpose, be

deemed a part of this Agreement.


24

16. Successors and Assigns; Severability; Several Obligations.

This Agreement is intended to bind and inure to the benefit of the Parties and their

respective successors and permitted assigns; provided, however, that nothing contained in this

Section 16 shall be deemed to permit Transfers of the Claims or Interests other than in accordance

with the express terms of this Agreement. If any provision of this Agreement, or the application

of any such provision to any Person or circumstance, shall be held invalid or unenforceable in

whole or in part, such invalidity or unenforceability shall attach only to such provision or part

thereof and the remaining part of such provision hereof and this Agreement shall continue in full

force and effect so long as the economic or legal substance of the transactions contemplated hereby

is not affected in any manner materially adverse to any Party. Upon any such determination of

invalidity, the Parties shall negotiate in good faith to modify this Agreement so as to effect the

original intent of the Parties as closely as possible in a reasonably acceptable manner in order that

the transactions contemplated hereby are consummated as originally contemplated to the greatest

extent possible. The agreements, representations, and obligations of the Parties are, in all respects,

ratable and several and neither joint nor joint and several.

17. No Third-Party Beneficiaries.

Unless expressly stated herein, this Agreement shall be solely for the benefit of the

Parties and no other Person shall be a third-party beneficiary hereof. No Party shall have any

responsibility for any trading by any other entity by virtue of this Agreement. No prior history,

pattern, or practice of sharing confidences among or between the Consenting Creditors shall in any

way affect or negate this understanding and agreement. The Parties have no agreement,

arrangement, or understanding with respect to acting together for the purpose of acquiring,

holding, voting, or disposing of any equity securities of Parent and do not constitute a “group”

within the meaning of Rule 13d-5 under the Securities Exchange Act of 1943, as amended.

18. Prior Negotiations; Entire Agreement.

This Agreement, including the exhibits and schedules hereto (including the

Restructuring Term Sheet) the entire agreement of the Parties and supersedes all other prior

negotiations, with respect to the subject matter hereof and thereof.

19. Confidentiality Agreements.

Notwithstanding anything to the contrary in any agreement between any Company

and any Consenting Creditor, including the RBL Credit Agreement, the Parties acknowledge that

(a) the terms of (i) Section 13.16 of the RBL Credit Agreement and (ii) any “click-through” prompt

a Consenting Creditor acknowledged by its entry into the virtual data room related to these

transactions or receipt of documents contained in such virtual data room, as applicable, (the

foregoing clauses (i) and (ii), the “Confidentiality Terms”) are incorporated into this Agreement

by reference and shall continue in full force and effect, as applicable (and all obligations thereunder

shall be binding upon the Parties, each of their Representatives and any other third party who

signed (or signs) a joinder thereto until the earlier of (x) the Plan Effective Date or (y) the date


25

which is eighteen (18) months following the date this Agreement is terminated), and (b) any

information provided to the Consenting Creditors which was subject to Confidentiality Terms prior

to the date hereof or following the date of this Agreement shall be deemed, subject to the

exceptions enumerated therein, to be Confidential Information.

20. Counterparts.

This Agreement may be executed in several counterparts, each of which shall be

deemed to be an original, and all of which together shall be deemed to be one and the same

agreement. Execution copies of this Agreement may be delivered by electronic mail, or otherwise,

which shall be deemed to be an original for the purposes of this paragraph.

21. Notices.

All notices hereunder shall be deemed given if in writing and delivered, sent by

electronic mail to the following addresses:

(1) If to the Company, to:

Chisholm Oil & Gas Operating, LLC

1 West Third Street, Suite 1700,

Tulsa, OK 74103

Attention: Michael Rigg

([email protected])

With a copy to:

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, NY 10153

Attention: Matt Barr

([email protected])

Kelly DiBlasi

([email protected])

Mariel E. Cruz

([email protected])

(2) If to RBL Agent, to:

Citibank, N.A.

2700 Post Oak Blvd.

Suite 550

Houston, TX 77056

Attention: Bryan McDavid

([email protected])


26

Harry P. Vlandis

([email protected])

(3) If to a Consenting Creditor, or a transferee thereof, to the addresses set forth

below the Consenting Creditor’s signature (or as directed by any transferee

thereof), as the case may be, with a copy to:

Linklaters LLP

Counsel to RBL Agent


New York, NY 10105

Attention: Margot Schonholtz

([email protected])

Penelope Jensen

([email protected])

(4) If to a Consenting Sponsor, to the address(es) set forth below the Consenting

Sponsor’s signature, with a copy to:

Paul, Weiss, Rifkind, Wharton & Garrison, LLP


New York, NY 10019

Attention: Jeffrey D. Saferstein

([email protected])

Elizabeth McColm

([email protected])

Any notice given by electronic mail shall be effective upon oral, machine, or electronic

mail (as applicable) confirmation of transmission.

22. No Solicitation; Representation by Counsel; Adequate Information.

(a) This Agreement is not and shall not be deemed to be a solicitation for votes

in favor of the Plan in the Chapter 11 Cases or a solicitation of an offer to buy securities. The

acceptances of the Consenting Creditors with respect to the Plan will not be solicited until such

Consenting Creditor has received the Disclosure Statement and, as applicable, related ballots and

Solicitation materials. In addition, this Agreement does not constitute an offer to issue or sell

securities to any Person or the solicitation of an offer to acquire or buy securities in any jurisdiction

where such offer or solicitation would be unlawful.

(b) Each Party acknowledges that it has had an opportunity to receive

information from the Company and that it has been represented by counsel in connection with this

Agreement and the transactions contemplated hereby. Accordingly, any rule of law, or order, or

any legal decision that would provide any Party with a defense to the enforcement of the terms of


27

this Agreement against such Party based upon lack of legal counsel shall have no application and

is expressly waived.

(c) Each Consenting Creditor and each Consenting Sponsor acknowledges,

agrees, and represents to the other Parties that it (i) is an “accredited investor” as such term is

defined in Rule 501 of Regulation D of the Securities Act or a “qualified institutional buyer” as

such term is defined in Rule 144A under the Securities Act, and (ii) has such knowledge and

experience in financial and business matters that such Consenting Creditor or such Consenting

Sponsor, as applicable, is capable of evaluating the merits and risks of the securities to be acquired

by it (if any) pursuant to the Restructuring and understands and is able to bear any economic risks

with such investment.

23. Acknowledgments. The Parties understand that the Consenting Creditors

are engaged in a wide range of financial services and businesses. In furtherance of the foregoing,

the Parties acknowledge and agree that, to the extent a Consenting Creditor expressly indicates on

its signature page hereto that it is executing this Agreement on behalf of specific trading desk(s)

and/or business group(s) of the Consenting Creditor, the obligations set forth in this Agreement

shall only apply to such trading desk(s) and/or business group(s) and shall not apply to any other

trading desk or business group of the Consenting Creditor so long as they are not acting at the

direction or for the benefit of such Consenting Creditor or such Consenting Creditor’s investment

in the Company; provided, that the foregoing shall not diminish or otherwise affect the obligations

and liability therefor of any legal entity that (i) executes this Agreement or (ii) on whose behalf

this Agreement is executed by a Consenting Creditor.

24. Agent Instruction. The Consenting Creditors hereby (i) authorize and

instruct the RBL Agent and the RBL Collateral Agent to execute and deliver this Restructuring

Support Agreement and (ii) acknowledge and agree that these instructions set forth in this Section

24 constitute an instruction from the RBL Lenders under the RBL Credit Documents.

25. Miscellaneous.

When a reference is made in this Agreement to a Section, Exhibit, or Schedule,

such reference shall be to a Section, Exhibit, or Schedule, respectively, of or attached to this

Agreement unless otherwise indicated. Unless the context of this Agreement otherwise requires,

(i) words using the singular or plural number also include the plural or singular number,

respectively, (ii) the terms “hereof,” “herein,” “hereby,” and derivative or similar words refer to

this entire Agreement, (iii) the words “include,” “includes,” and “including” when used herein

shall be deemed in each case to be followed by the words “without limitation,” (iv) the word “or”

shall not be exclusive and shall be read to mean “and/or” and (v) unless the context otherwise

requires, the word “extent” in the phrase “to the extent” means the degree to which a subject or

other thing extends, and such phrase does not mean simply “if.” The Parties agree that they have

been represented by legal counsel during the negotiation and execution of this Agreement and,

therefore, waive the application of any law, regulation, holding, or rule of construction providing

that ambiguities in an agreement or other document shall be construed against the party drafting

such agreement or document.


[Signature Page to Restructuring Support Agreement]

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed and delivered by their respective duly authorized officers, solely in their respective capacity as officers of the undersigned and not in any other capacity, as of the date first set forth above.

CHISHOLM OIL AND GAS OPERATING II, LLC By: Name: Michael Rigg Title: Chief Financial Officer



CHISHOLM OIL AND GAS OPERATING, LLC By: Name: Michael Rigg Title: Chief Financial Officer



COTTONMOUTH SWD, LLC By: Name: Michael Rigg Title: Chief Financial Officer



CHISHOLM OIL AND GAS NOMINEE, INC. By: Name: Michael Rigg Title: Chief Financial Officer



CHISHOLM OIL AND GAS MANAGEMENT II, LLC By: Name: Michael Rigg Title: Chief Financial Officer



RBL AGENT AND CONSENTING CREDITOR

CITIBANK, N.A.

By:

Name:

Title:

Notice Address:

Fax:

Attention:

Email:

Bryan McDavid

Senior Vice President

2700 Post Oak, Suite 550

Bryan [email protected]

Houston, TX 77056-5844


>6LJQDWXUH�3DJH�WR�5HVWUXFWXULQJ�6XSSRUW�$JUHHPHQW@

&216(17,1*�&5(',725

&$5*,//��,1&25325$7('

%\�

1DPH�

7LWOH�

1RWLFH�$GGUHVV�

)D[��$WWHQWLRQ�(PDLO�

952-367-0849

825 Town and Country Ln Ste 1430

Tyler Smith

[email protected]

Tyler Smith

Authorized Signer

Houston, TX 77024


CONSENTING CREDITOR

GOLDMAN SACHS LENDING PARTNERS LLC

By:

Name:

Title:

Notice Address:

Fax: Attention: Email:



CONSENTING CREDITOR

MACQUARIE CAPITAL FUNDING LLC

By:

Name: Mimi Shih

Title: Authorized Signatory

By:

Name: Jeff Abt


Notice Address:

125 West 55th Street

New York, NY, 10019

Fax: 212-231-6518

Attention: Macquarie Capital Debt Capital Markets Middle Office

Email: [email protected]



CONSENTING CREDITOR

MORGAN STANLEY SENIOR FUNDING, INC. on behalf of its Special Assets Oversight Team, and not on behalf of any of its other business units or teams or those of its affiliates.

By:

Name:

Title:

Notice Address:

Fax:

Attention:

Email:

Kevin Newman

Vice President

750 7th Avenue29th Floor

New York, NY 10019

Kevin [email protected]



CONSENTING CREDITOR

ROYAL BANK OF CANADA

By:

Name: Leslie P. Vowell


Notice Address:

Three Brookfield Place

200 Vesey Street, 12th Floor


Fax:

Attention: Leslie P. Vowell

Email: [email protected]



CONSENTING CREDITOR

TORONTO-DOMINION BANK, NEW YORK BRANCH

By:

Name: Brian MacFarlane


Notice Address:

909 Fannin Street, Suite 1100 Houston, Texas 77010 Fax: Attention: Alan Huynh / Sundeep Bhakoo Email: [email protected] / [email protected]



CONSENTING SPONSOR

GASTAR HOLDCO LLC

By:

Name:

Title:

Number of Interests: ______________

Notice Address:

Fax:

Attention:

Email:

605,248,011.65 Series A Units of Chisholm Oil and Gas Holdings, LLC

ACOF Investment Management LLC2000 Avenue of the Stars, 12th FloorLos Angeles, California, 90067

[email protected]; [email protected] Walton and Gary Levin

Authorized Signatory

Nate Walton


>Signature Page to Restructuring Support Agreement@��

�&216(17,1*�6321625��&+,6+2/0�2,/�$1'�*$6��//&��%\�� 1DPH�� 0LFKDHO�5LJJ�� 7LWOH�� &KLHI�)LQDQFLDO�2IILFHU��

�

� �� 1XPEHU�RI�,QWHUHVWV��6HULHV�$�8QLWV�RI�&KLVKROP�2LO�DQG�*DV�+ROGLQJV��//&�

�

� �1RWLFH�$GGUHVV�� $SROOR�*OREDO�0DQDJHPHQW��//&� �

�

��:HVW��WK�6WUHHW��UG�)ORRU� � �1HZ�<RUN��1<�� $WWHQWLRQ��*HRIIUH\�6WURQJ� � �(PDLO��JVWURQJ#DSROOR�FRP� � �

�

�

�

�


SCHEDULE I

OTHER PARTIES TO THE AGREEMENT

Cottonmouth SWD, LLC

Chisholm Oil and Gas Nominee, Inc.

Chisholm Oil and Gas Management II, LLC


SCHEDULE II

13-WEEK CASH FLOW


Cash Flow Forecast – 13 Weeks

Chisholm Oil & Gas, LLCConsolidated 13-Week Cash Flow Forecast Pre Pre Post Post

Pre-Petition <<< >>> Post-Petition

Act Fcst Fcst Fcst Fcst Fcst Fcst Fcst Fcst Fcst Fcst Fcst Fcst Fcst

Wk-(1) Wk-1 Wk-2 Wk-3 Wk-4 Wk-5 Wk-6 Wk-7 Wk-8 Wk-9 Wk-10 Wk-11 Wk-12 Wk-13 13 Week

Week Ending ==> 5/29/20 6/5/20 6/12/20 6/19/20 6/26/20 7/3/20 7/10/20 7/17/20 7/24/20 7/31/20 8/7/20 8/14/20 8/21/20 8/28/20 TotalMay-20 Jun-20 Jun-20 Jun-20 Jun-20 Jul-20 Jul-20 Jul-20 Jul-20 Jul-20 Aug-20 Aug-20 Aug-20 Aug-200 1.00 4.00 3.00 2.00 1.00 5.00 4.00 3.00 2.00 1.00 4.00 3.00 2.00 1.00

RECEIPTS(1)

Oil, Gas, & NGL Receipts 492$ 407$ -$ -$ -$ -$ -$ -$ 6,935$ 645$ -$ -$ 4,937$ 1,970$ 14,894$ Hedge Settlements - 3,679 24,225 - - - - - - - - - - - 27,904 Revenue Distribution - (1,387) - - - - - - - - (2,189) - - - (3,577) JIB Receivables 10 - - - - - - - - - - - - - - Non-Operating Receipts - 49 - - 97 32 - - 598 85 - - 499 55 1,416 Other Receipts 0 - - - - - - - - - - - - - -

Total Gross Receipts 502$ 2,747$ 24,225$ -$ 97$ 32$ -$ -$ 7,533$ 729$ (2,189)$ -$ 5,437$ 2,025$ 40,636

OPERATING DISBURSEMENTS (2)

Employee Related:Payroll 271$ -$ -$ 245$ -$ 200$ -$ 245$ -$ 200$ -$ 245$ -$ -$ 1,134$

Non-Employee Related:Lease Operating Expense 1,852$ 1,275$ 845$ -$ 1,087$ 1,094$ 758$ 764$ 756$ 764$ 758$ 959$ 952$ 959$ 10,970$ CapEx 1,131 - - - - - - - - - - - - - - JIB Payables - - - - 41 41 7 7 7 7 52 37 37 37 274 Production Taxes 411 - - 244 - - - - - - - - 414 - 658 Rent & Utilities 150 - - 50 - - - - 50 - - - 50 - 150 Insurance - - - - - - - - - - - - - - - Hedge Settlements - - - - - - - - - - - - - - - G&A Expenses 377 230 200 - 294 100 91 41 72 41 41 53 139 53 1,355

Total Operating Disbursements 4,192$ 1,505$ 1,045$ 539$ 1,421$ 1,435$ 856$ 1,057$ 885$ 1,012$ 851$ 1,294$ 1,592$ 1,049$ 14,541$

OPERATING CASH FLOW (3,690)$ 1,242$ 23,180$ (539)$ (1,324)$ (1,403)$ (856)$ (1,057)$ 6,648$ (283)$ (3,040)$ (1,294)$ 3,844$ 976$ 26,095$

Pre-Petition Cash Interest & Bank Fees

RBL Interest / Undrawn Fees -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

Total Interest & Bank Fees -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

Chapter 11 Adjustments 0 0 0 0 0 0

Professional / Independent Fees (3) 110$ 1,249$ 3,514$ 650$ 813$ 730$ 505$ 1,870$ 330$ 580$ 1,648$ 1,566$ 403$ 1,478$ 15,333$ D&O Tail 511 - - - - - - - - - - - - - - Pre-Petition Payables - - - 1,075 1,075 1,075 1,075 - - - - - - - 4,300 Cash Payment on GUC Recoveries - - - - - - - - - - - - - - - Payment of Contract Assumption Cures - - - - - - - - - - - - - - -

Total Non-Recurring Items 621$ 1,249$ 3,514$ 1,725$ 1,888$ 1,805$ 1,580$ 1,870$ 330$ 580$ 1,648$ 1,566$ 403$ 1,478$ 19,633$

TOTAL DISBURSEMENTS 4,813$ 2,754$ 4,558$ 2,263$ 3,309$ 3,240$ 2,436$ 2,927$ 1,215$ 1,592$ 2,498$ 2,860$ 1,995$ 2,527$ 34,174$

NET CASH FLOW (4,311)$ (7)$ 19,667$ (2,263)$ (3,212)$ (3,208)$ (2,436)$ (2,927)$ 6,318$ (863)$ (4,687)$ (2,860)$ 3,442$ (502)$ 6,462$

CASH AND BORROWINGSBeginning Book Cash Balance 15,933$ 11,622$ 11,615$ 31,281$ 29,018$ 25,806$ 22,598$ 20,163$ 17,236$ 23,554$ 22,691$ 18,004$ 15,144$ 18,586$ 11,622$ ( +/- ) Net Cash Flow (4,311) (7) 19,667 (2,263) (3,212) (3,208) (2,436) (2,927) 6,318 (863) (4,687) (2,860) 3,442 (502) 6,462 ( + ) Liquidity Need - - - - - - - - - - - - - - - ( +/- ) Voids/Reversals/Other - - - - - - - - - - - - - - - Ending Book Cash Balance 11,622$ 11,615$ 31,281$ 29,018$ 25,806$ 22,598$ 20,163$ 17,236$ 23,554$ 22,691$ 18,004$ 15,144$ 18,586$ 18,084$ 18,084$


EXHIBIT A

RESTRUCTURING TERM SHEET


Execution Version

CHISHOLM OIL AND GAS OPERATING, LLC

RESTRUCTURING TERM SHEET

June 15, 2020

This term sheet (this “Restructuring Term Sheet”) sets forth the principal terms of a proposed restructuring

(the “Restructuring”) of the existing indebtedness of Chisholm Oil and Gas Operating II, LLC (“Parent”), Chisholm

Oil and Gas Operating, LLC (“Borrower”) and their affiliates identified below (collectively, the “Company” or the

“Debtors”). The Restructuring will be consummated by the Debtors by commencing cases under chapter 11 of title 11

of the United States Code (the “Bankruptcy Code”) and pursuing a pre-negotiated chapter 11 plan of reorganization

containing the terms set forth herein. This is the Restructuring Term Sheet referenced in, and appended to, the

Restructuring Support Agreement dated as of June 15, 2020, among the Company and the other parties signatory thereto

(as amended, supplemented, or otherwise modified from time to time, the “Restructuring Support Agreement”).

Capitalized terms used but not otherwise defined herein will have the meanings ascribed to such terms in Annex 1.

THIS RESTRUCTURING TERM SHEET DOES NOT CONSTITUTE (NOR WILL IT BE CONSTRUED AS)

AN OFFER WITH RESPECT TO ANY SECURITIES OR A SOLICITATION OF ACCEPTANCES OR

REJECTIONS AS TO ANY PLAN OF REORGANIZATION. IT IS UNDERSTOOD THAT SUCH AN OFFER,

IF ANY, WILL BE MADE ONLY IN COMPLIANCE WITH APPLICABLE PROVISIONS OF SECURITIES,

BANKRUPTCY, AND/OR OTHER APPLICABLE LAWS.

THIS RESTRUCTURING TERM SHEET IS A CONFIDENTIAL SETTLEMENT PROPOSAL IN

FURTHERANCE OF SETTLEMENT DISCUSSIONS. ACCORDINGLY, THIS RESTRUCTURING TERM

SHEET IS PROTECTED BY RULE 408 OF THE FEDERAL RULES OF EVIDENCE AND ANY OTHER

SIMILAR APPLICABLE STATUTES OR DOCTRINES PROTECTING AGAINST THE USE OR

DISCLOSURE OF CONFIDENTIAL SETTLEMENT DISCUSSIONS. NOTHING IN THIS

RESTRUCTURING TERM SHEET WILL CONSTITUTE OR BE CONSTRUED AS AN ADMISSION OF

ANY FACT OR LIABILITY, A STIPULATION, OR A WAIVER. EACH STATEMENT CONTAINED

HEREIN IS MADE WITHOUT PREJUDICE, SOLELY FOR SETTLEMENT PURPOSES AND WITH A

FULL RESERVATION AS TO ANY RIGHTS, REMEDIES, OR DEFENSES OF ALL PARTIES.

THIS RESTRUCTURING TERM SHEET DOES NOT PURPORT TO SUMMARIZE ALL OF THE TERMS,

CONDITIONS, REPRESENTATIONS, WARRANTIES, AND OTHER PROVISIONS WITH RESPECT TO

THE TRANSACTIONS DESCRIBED HEREIN. SUCH TRANSACTIONS WILL BE SUBJECT TO THE

COMPLETION OF DEFINITIVE DOCUMENTS INCORPORATING THE TERMS SET FORTH HEREIN.

THE CLOSING OF ANY TRANSACTION WILL BE SUBJECT TO THE TERMS AND CONDITIONS SET

FORTH IN SUCH DEFINITIVE DOCUMENTS. EXCEPT AS SET FORTH IN THE RESTRUCTURING

SUPPORT AGREEMENT, NO BINDING OBLIGATIONS WILL BE CREATED BY THIS

RESTRUCTURING TERM SHEET UNLESS AND UNTIL BINDING DEFINITIVE DOCUMENTS ARE

EXECUTED AND DELIVERED BY ALL APPLICABLE PARTIES.


2

OVERVIEW

Company: Parent; Borrower; Cottonmouth SWD, LLC; Chisholm Oil and Gas Nominee, Inc.;

and Chisholm Oil and Gas Management II, LLC (“Chisholm Management”).

Claims and Interests to

be Restructured:

RBL Claims: The RBL Claims consist of not less than $263 million in unpaid

principal due as of the Petition Date, claims with respect to the Secured Hedge

Agreements (as defined in the RBL Credit Agreement) in amounts yet to be

determined, claims with respect to the Secured Cash Management Agreements (as

defined in the RBL Credit Agreement) in amounts yet to be determined, claims on

account of the Indemnified Liabilities (as defined in the RBL Credit Agreement) in

amounts yet to be determined, plus accrued and unpaid interest, fees, costs and other

expenses, including without limitation, reasonable and documented out-of-pocket

attorney’s fees, agent’s fees, other professional fees and disbursements and other

obligations arising under or in connection with that certain Credit Agreement, dated

as of March 21, 2017 (as amended or otherwise modified by that certain Amendment

No. 1 to Credit Agreement dated as of April 10, 2018, that certain Amendment No.

2 to Credit Agreement and Master Assignment Agreement dated as of May 23, 2018,

that certain Amendment No. 3 to Credit Agreement, Master Assignment and

Borrowing Base Redetermination Agreement dated as of November 1, 2018, that

certain Amendment No. 4 to Credit Agreement, Master Assignment and Borrowing

Base Redetermination Agreement dated as of August 9, 2019, that certain

Amendment No. 5 to Credit Agreement, dated as of September 30, 2019, that certain

Forbearance Agreement, dated as April 7, 2020 (as amended by that certain

Amendment No. 1 to the Forbearance Agreement, dated as of May 14, 2020 and as

the same may be further amended, restated, supplemented or otherwise modified

from time to time, the “Forbearance Agreement”) and as the same may be further

amended, restated, supplemented or otherwise modified from time to time,

the “RBL Credit Agreement”), by and among Parent, Borrower, Citibank, N.A., as

administrative agent (the “RBL Agent”), Wilmington Trust, National Association,

as collateral agent (the “RBL Collateral Agent”), and the lenders party thereto from

time to time (the “RBL Lenders”) holding loans and other obligations outstanding

thereunder (the “RBL Obligations” and the Claims thereunder, the “RBL Claims”).

Term Loan Claims: The Term Loan Claims consist of not less than $251,916,666 in

principal amount (which includes payment in kind interest that has been added to

the principal) plus interest, fees, and other expenses arising and payable under that

certain Term Loan Agreement, dated as of March 21, 2017 (as amended, restated,

amended and restated, supplemented or otherwise modified form time to time,

the “Term Loan Agreement”), by and among Parent, Wilmington Trust, National

Association, as administrative agent and collateral agent, and the lenders party

thereto from time to time (the “Term Loan Lenders”) holding loans and other

obligations borrowed thereunder (the “Term Loan Agreement Obligations” and the

Claims thereunder, the “Term Loan Claims”).

General Unsecured Claims: General Unsecured Claims consist of any prepetition

Claim against the Company that is not an RBL Claim, a Term Loan Claim, an

Intercompany Claim, or a Claim that is secured, subordinated, or entitled to priority

under the Bankruptcy Code (the “General Unsecured Claims”).


3

Existing Equity Interests: The Existing Equity Interests consist of any Interests in

Parent (the “Existing Equity Interests”).

TRANSACTION OVERVIEW

Restructuring

Summary:

The Company will implement the Restructuring pursuant to the Plan. The Plan will

provide for the classification and treatment of Claims and Interests as described

below under “Treatment of Claims and Interests.”

Use of Cash Collateral:

The Restructuring will be financed by the consensual use of cash collateral,

including proceeds from the monetization of hedges. The cash collateral will be held

in an interest-bearing account at Citibank, N.A. in the Borrower’s name and subject

to the liens securing the RBL Claims. The Company will seek Bankruptcy Court

approval promptly after the Petition Date to use such cash collateral to fund

operations, the administration of the Chapter 11 Cases, and the potential GUC Cash-

Out (as defined below) in accordance with the terms and conditions set forth in the

Cash Collateral Order, including a budget to be agreed upon by the Company and

the RBL Agent.

The Cash Collateral Order will provide for (among other things) “adequate

protection” (as such term is defined in sections 361 and 363 of the Bankruptcy Code)

to the RBL Agent, the RBL Collateral Agent and the other RBL Credit Agreement

Secured Parties.

Exit Credit Facilities: On the Plan Effective Date, the Company will enter into:

(i) a first-lien first-out new money exit reserve-based credit facility (the

“FLFO RBL Facility”), in an amount to be determined by prior to the

approval of the Disclosure Statement to be provided by the RBL

Lenders and any other lenders that elect to be become lenders under the

FLFO RBL Facility; and

(ii) a first-lien second-out take-back term loan facility, with a 7-year

maturity, sized at 1.5x annualized corporate EBITDAX (calculated at

exit based on balance of fiscal year 2020 business plan with 10%

production risking) in a principal amount no greater than $40 million

(the “FLSO Term Loan”, and together with the FLFO RBL Facility,

the “Exit Credit Facilities”). Interest on the FLSO Term Loan will

accrue at LIBOR plus 600bps.

The Exit Credit Facilities will provide that excess cash of the Company above $15

million shall be used first to repay any outstanding obligations under the FLFO RBL

Facility and second to repay any outstanding obligations under the FLSO Term

Loan.

The borrower under the Exit Credit Facilities shall be the Reorganized Borrower.

TREATMENT OF CLAIMS AND INTERESTS

Administrative

Expense Claims and

Priority Tax Claims:

Except to the extent that a holder of an Allowed Adequate Protection Claim,

Allowed Administrative Expense Claim or Allowed Priority Tax Claim agrees to a

less favorable treatment, each holder of an Allowed Adequate Protection Claim,


4

Allowed Administrative Expense Claim and Allowed Priority Tax Claim will

receive, in full and final satisfaction of such Claim, either:

(i) Cash in an amount equal to such Allowed Claim on the Plan Effective

Date or as soon as practicable thereafter; or

(ii) other treatment consistent with the provisions of section 1129(a)(9) of

the Bankruptcy Code.

Unimpaired – Presumed to Accept.

Other Secured Claims: Except to the extent that a holder of an Allowed Other Secured Claim agrees to a

less favorable treatment, in full and final satisfaction of such Allowed Other Secured

Claim, each holder of an Allowed Other Secured Claim will receive, at the option

of the Debtors or the Reorganized Debtors (as applicable) with the consent of the

RBL Agent (which consent shall not be unreasonably withheld), either:

(i) payment in full in Cash on or as soon as reasonably practicable after the

later of the Plan Effective Date and the date that is ten (10) Business

Days after the date on which such Other Secured Claim becomes an

Allowed Other Secured Claim;

(ii) reinstatement of its Allowed Other Secured Claim; or

(iii) other treatment so as to render such holder’s Allowed Other Secured

Claim unimpaired pursuant to section 1124 of the Bankruptcy Code.


Other Priority Claims Except to the extent that a holder of an Allowed Other Priority Claim agrees to a

less favorable treatment, in full and final satisfaction of such Allowed Other Priority

Claim, each holder of an Allowed Other Priority Claim will receive either:

(i) payment in full in Cash on or as soon as reasonably practicable after the

later of the Plan Effective Date and the date that is ten (10) Business

Days after the date on which such Other Priority Claim becomes an

Allowed Other Priority Claim; or

(ii) other treatment consistent with the provisions of section 1129(a)(9) of

the Bankruptcy Code.


RBL Claims:

Allowed Claim

On the Plan Effective Date, each holder of an Allowed RBL Claim will receive, in

full and final satisfaction of such Allowed RBL Claim, its Pro Rata share of each of

the following:

(i) 95% of the total New Equity Interests issued pursuant to the Plan on the

Plan Effective Date, subject to dilution by (y) the MIP Equity and (z) if

(A) the class of Term Loan Claims and General Unsecured Claims vote

to accept the Plan, (B) the class of Existing Equity Interests vote to

accept the Plan, and (C) as of the Confirmation Date, the Consenting

Sponsors have not terminated their obligations under the Restructuring

Support Agreement pursuant to Section 6(d)(xii) thereof, the Warrant

Equity;

(ii) if (A) the class of Term Loan Claims and General Unsecured Claims do

not vote to accept the Plan, (B) the class of Existing Equity Interests do

not vote to accept the Plan, or (C) prior to the Confirmation Date, the


5

Consenting Sponsors terminate their obligations under the

Restructuring Support Agreement pursuant to Section 6(d)(xii) thereof,

an additional 5% of the total New Equity Interests, subject to dilution

by the MIP Equity; and

(iii) the FLSO Term Loan.

Impaired – Entitled to Vote.

Term Loan Claims,

General Unsecured

Claims:

If (A) the class of Term Loan Claims and General Unsecured Claims vote to accept

the Plan, (B) the class of Existing Equity Interests vote to accept the Plan, and (C)

as of the Confirmation Date, the Consenting Sponsors have not terminated their

obligations under the Restructuring Support Agreement pursuant to Section 6(d)(xii)

thereof, each holder of an Allowed Term Loan Claim or Allowed General

Unsecured Claim will receive on, or as soon as reasonably practicable after the later

of, the Plan Effective Date and the date on which such Term Loan Claim or General

Unsecured Claim becomes Allowed, in full and final satisfaction of such Allowed

Term Loan Claim or Allowed General Unsecured Claim, its Pro Rata share of:


Plan Effective Date, subject to dilution by the Warrant Equity and the

MIP Equity; and

(ii) Warrants for up to 6% of the total New Equity Interests to be issued

pursuant to the Plan on the Plan Effective Date, subject to dilution by

the MIP Equity.

If (A) the class of Term Loan Claims and General Unsecured Claims do not vote to

accept the Plan, (B) the class of Existing Equity Interests do not vote to accept the

Plan, or (C) prior to the Confirmation Date, the Consenting Sponsors terminate their


thereof, no holder of a Term Loan Claim or General Unsecured Claim will receive

any distribution on account of such Term Loan Claim or General Unsecured Claim

under the Plan.


Convenience Class

Claims:

As soon as practicable prior to the filing of the Chapter 11 Cases, the Debtors and

the RBL Agent will determine if the Debtors are projected to have sufficient Cash

at emergence to make the GUC Cash-Out (as defined below) and if (A) the class of

Term Loan Claims and General Unsecured Claims vote to accept the Plan, (B) the

class of Existing Equity Interests vote to accept the Plan, and (C) as of the

Confirmation Date, the Consenting Sponsors have not terminated their obligations

under the Restructuring Support Agreement pursuant to Section 6(d)(xii) thereof,

then (i) each holder of an Allowed General Unsecured Claim in an amount less than

an amount to be determined by the Company and the RBL Agent and (ii) each holder

of an Allowed General Unsecured Claim in an amount greater than such amount that

elects to “voluntarily and irrevocably” reduce its Claim to an amount to be

determined by the Company and the RBL Agent (such Claims described in (i) and

(ii) collectively, the “Convenience Class Claims”) may elect to receive Cash in an

amount equal to a percentage of such Claim to be determined by the Company and

the RBL Agent of such holder’s Allowed Convenience Class Claim in full and final

satisfaction of such Convenience Class Claims (the “GUC Cash-Out”) and in lieu


6

of its Pro Rata share of the New Equity Interests and Warrants distributed to the

class of Term Loan Claims and General Unsecured Claims.





thereof, no holder of a Convenience Class Claim will receive any distribution on

account of such Convenience Class Claim under the Plan.


Existing Equity

Interests:

On the Plan Effective Date, Existing Equity Interests will be cancelled, released, and

extinguished and will be of no further force and effect.

If (A) the class of Term Loan Claims and General Unsecured Claims vote to accept

the Plan, (B) the class of Existing Equity Interests vote to accept the Plan, and (C)

as of the Confirmation Date, the Consenting Sponsors have not terminated their


thereof, each holder of Existing Equity Interests will receive its Pro Rata share of:


Plan Effective Date, subject to dilution by the Warrant Equity and the

MIP Equity; and

(ii) Warrants for up to 5% of the total New Equity Interests issued pursuant

to the Plan on the Plan Effective Date, subject to dilution by the MIP

Equity.





thereof, no holder of Existing Equity Interests will receive any distribution on

account of such Existing Equity Interests under the Plan.


Chisholm Management

Interests:

On the Plan Effective Date, Chisholm Management Interests will be cancelled,

released, and extinguished and will be of no further force and effect, unless

otherwise agreed between the Company and the RBL Agent.

Impaired – Deemed to Reject.

Intercompany

Interests:

On the Plan Effective Date, all Intercompany Interests will be adjusted, continued,

settled, reinstated, discharged, or eliminated as determined by the Company with the



Intercompany Claims: On the Plan Effective Date, all Intercompany Claims will be adjusted, reinstated, or

discharged as determined by the Company with the consent of the RBL Agent.



7

GOVERNANCE PROVISIONS

Board of Directors: The initial Board of Directors of the Reorganized Parent (the “New Board”) will

consist of 5 members selected by the Requisite Creditors. Fiduciary duties of the

New Board shall be waived to the fullest extent permitted by Delaware law.

Charter, By-Laws and

Organizational

Documents:

The Amended Organizational Documents will become effective as of the Plan

Effective Date.

Preemptive Rights: Only holders of 5% or more of the then outstanding New Equity Interests will have

preemptive rights over the issuance of additional New Equity Interests, subject to

customary exceptions.

Tag-Along and Drag-

Along Rights

No individual holder of New Equity Interests will have any tag-along right.

Only holders (or a group of holders) holding, in aggregate, more than 50% of the

outstanding New Equity Interests (the “Drag-Along Holders”) will be entitled to

exercise any drag-along right over the New Equity Interests held by the other

holders, pursuant to which such other holders will be obligated to vote in favor of,

and sell their New Equity Interests in, a Proposed Company Sale on the same price,

terms and conditions as those to which the Drag-Along Holders are subject.

Information Rights: Consistent with the reporting requirements under the Exit Credit Facilities, each

holder of outstanding New Equity Interests will be provided with the same annual

financial statements, reserve reports and, to the extent provided to lenders under the

Exit Credit Facilities, quarterly financial statements of the Reorganized Debtors.

Only holders of 10% or more of the then-outstanding New Equity Interests will be

provided with a right to inquiry.

Other Shareholder

Rights:

Only a holder (or a group of holders) of 10% or more of the then outstanding New

Equity Interests will have the right to call a meeting of the equityholders (or its

equivalent) of the Reorganized Parent.

Other than as expressly required by Delaware law, the holders of New Equity

Interests shall not have any veto rights over any action (or inaction) by the

Reorganized Parent. All matters of the Reorganized Parent will be determined by

the New Board.

GENERAL PROVISIONS

Definitive Documents: The Definitive Documents will contain terms, conditions, representations,

warranties, and covenants that are, in each case, customary for the transactions

described herein and consistent with the terms of this Restructuring Term Sheet. The

Definitive Documents will be subject to the rights and obligations set forth in

Section 2(b) of the Restructuring Support Agreement, including but not limited to

the consent rights set forth therein. Failure to reference such rights and obligations

as it relates to any documents referenced in this Restructuring Term Sheet shall not

impair or diminish such rights and obligations.


8

Executory Contracts

and Unexpired Leases:

As of and subject to the occurrence of the Plan Effective Date and the payment of

any applicable cure amount, all executory contracts and unexpired leases to which

any of the Debtors are parties shall be deemed assumed, unless such contract or

lease:

(i) was previously assumed or rejected by the Debtors, pursuant to a Final

Order of the Bankruptcy Court;

(ii) previously expired or terminated pursuant to its own terms or by

agreement of the parties thereto;

(iii) is the subject of a motion to reject filed by the Debtors on or before the

Confirmation Date;

(iv) is specifically designated, with the consent of the Requisite Creditors,

as a contract or lease to be rejected on the Debtors’ schedule of rejected

contracts; or

(v) is specifically designated as a contract or lease to be rejected by the

Requisite Creditors by the deadline to file the plan supplement.

Management Incentive

Plan:

The Plan will provide for the establishment of a post-Plan Effective Date

management incentive plan to be adopted by the New Board (the “Management

Incentive Plan”). The Management Incentive Plan will provide for the issuance of

5% of the New Equity Interests on a fully diluted basis (the “MIP Equity”). The

MIP Equity will be reserved for grants made from time to time to directors, officers,

or other management and employees of the Company. The New Board will

determine the form, allocation, amounts, and timing of such grants.

Cancellation of Notes,

Instruments,

Certificates and other

Documents:

On the Plan Effective Date, all notes, instruments, certificates evidencing debt of

the Company, and Interests in Parent will be cancelled. Any obligations of the

Company thereunder will be discharged.

Vesting of Assets: On the Plan Effective Date, pursuant to section 1141(b)-(c) of the Bankruptcy Code,

all operating assets of the Company will vest in the Reorganized Debtors free and

clear of all liens, Claims, and encumbrances, other than those provided for in the

Plan.

Survival of

Indemnification

Obligations and D&O

Insurance:

Any obligations of the Company pursuant to corporate charters, bylaws, limited

liability company agreements, or other organizational documents to indemnify

current and former officers, directors, agents, or employees with respect to all

present and future actions, suits, and proceedings against the Company or such

directors, officers, agents, or employees, based upon any act or omission for or on

behalf of the Company will not be discharged or impaired by confirmation of the

Plan. All such obligations will be deemed and treated as executory contracts to be

assumed by the Company under the Plan and will continue as obligations of the

Reorganized Debtors. Any Claim based on the Company’s obligations with respect

thereto will be an Allowed Claim.

In addition, after the Plan Effective Date, the Reorganized Debtors will not terminate

or otherwise reduce the coverage under any directors’ and officers’ insurance

policies (including any “tail policy”) in effect or purchased as of the Petition Date.

Any individuals covered by such insurance policies, including all members,

managers, directors, and officers of the Company who served in such capacity at


9

any time prior to the Plan Effective Date, will be entitled to the full benefits of any

such policy for the full term of the policy regardless of whether such members,

managers, directors, officers, or other individuals remain in such positions after the

Plan Effective Date.

Conditions to

Effectiveness:

The effectiveness of the Plan will be subject to the satisfaction of customary

conditions, including the following (as applicable):

i. the Definitive Documents (as defined in the Restructuring Support

Agreement) will contain terms and conditions consistent in all material

respects with this Restructuring Term Sheet and the Restructuring Support

Agreement;

ii. the Bankruptcy Court will have entered the Confirmation Order, and such

Confirmation Order will not have been stayed or materially modified, which

shall:

(a) authorize the Debtors to take all actions necessary to enter into,

implement, and consummate the contracts, instruments, releases, leases,

and other agreements or documents created in connection with the Plan

in a manner consistent in all respect with the Restructuring Support

Agreement and subject to the consent rights set forth therein;

(b) decree that the provisions in the Confirmation Order and the Plan are

non-severable and mutually dependent;

(c) authorize the Debtors to: (1) implement the Restructuring; (2) make all

distributions and issuances as required under the Plan, including Cash

and New Equity Interests; (3) enter into the Exit Credit Facilities and

(4) enter into any agreements and transactions, including the

Management Incentive Plan, in each case, in a manner consistent with

the terms of the Restructuring Support Agreement and subject to the

consent rights set forth therein; and

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

iii. the documents related to the Exit Credit Facilities shall have been duly

executed and delivered by all of the relevant parties thereto;

iv. all conditions precedent (other than any conditions related to the occurrence

of the Plan Effective Date) to the effectiveness of the Exit Credit Facilities

shall have been satisfied or waived in writing in accordance with the terms

of each of the Exit Credit Facilities;

v. the closing of each of the Exit Credit Facilities shall have occurred;

vi. the final version of the Plan, the Definitive Documents, and all documents

contained in any supplement to the Plan, including any exhibits, schedules,

amendments, modifications, or supplements thereto or other documents

contained therein shall have been executed or filed, as applicable, in form

and substance consistent in all material respects with the Restructuring

Support Agreement, this Restructuring Term Sheet, and the Plan;

vii. the Debtors shall have implemented the Restructuring and all transactions

contemplated in this Restructuring Term Sheet in a manner consistent with


10

the Restructuring Support Agreement (and subject to, and in accordance

with, the consent rights set forth therein), this Restructuring Term Sheet,

and the Plan; and

viii. all governmental approvals, including Bankruptcy Court approval,

necessary to effectuate the Restructuring will have been obtained and all

applicable waiting periods will have expired.

The conditions to effectiveness may be waived, in whole or in part, in writing by the

Debtors and the RBL Agent. However, any waiver that would directly or indirectly

abrogate the consent rights of the Consenting Sponsors set forth in Section 2(b) of

the Restructuring Support Agreement shall require the consent of the Consenting

Sponsors.

Releases by Debtors:

As of the Plan Effective Date, except for the rights and remedies that remain in effect

from and after the Plan Effective Date to enforce the Plan, the Definitive Documents,

and the obligations contemplated by the Restructuring, on and after the Plan

Effective Date, the Released Parties will be conclusively, absolutely,

unconditionally, irrevocably, and forever released and discharged, to the maximum

extent permitted by law, by the Debtors, the Reorganized Debtors, and the Estates,

in each case on behalf of themselves and their respective successors, assigns, and

Representatives and any and all other Persons that may purport to assert any Cause

of Action derivatively, by or through the foregoing Persons, from any and all Causes

of Action (including any derivative claims, asserted or assertable on behalf of the

Debtors, the Reorganized Debtors, or the Estates) that the Debtors, the Reorganized

Debtors, the Estates, or their affiliates would have been legally entitled to assert in

their own right (whether individually or collectively) or on behalf of the holder of

any Claim or Interest or other Person, based on, relating to, or in any manner arising

from, in whole or in part: the Debtors (including the management, direct or indirect

ownership, or operation thereof) or their Estates; the Reorganized Debtors; the

Chapter 11 Cases; the Plan; the Restructuring; the RBL Facility; any debt or security

of the Debtors and the ownership thereof; the purchase, sale, or rescission of the

purchase or sale of any debt or 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 or other

interactions between any Debtor and any Released Party; the restructuring of any

Claim or Interest before or during the Chapter 11 Cases; any other in-or-out-of-court

restructuring efforts of the Debtors; any intercompany transaction; the negotiation,

formulation, preparation, dissemination, or consummation of the Exit Credit

Facilities, the Plan, any of the other Definitive Documents (including the

Restructuring Support Agreement); or any other contract, instrument, release, or

document created or entered into in connection with the Plan or any of the other

Definitive Documents; the solicitation of votes with respect to, or confirmation of,

the Plan; or any other act or omission, transaction, agreement, event, or other

occurrence related to any of the forgoing and taking place on or before the Plan

Effective Date (collectively, the “Debtor Releases”). Notwithstanding anything

herein to the contrary, the Debtor Releases shall not release any Person from Causes

of Action based on willful misconduct, gross negligence or intentional fraud as

determined by a Final Order.


11

Releases by Third-

Parties:

As of the Plan Effective Date, except for the rights and remedies that remain in effect

from and after the Plan Effective Date to enforce the Plan, the Definitive Documents,

and the obligations contemplated by the Restructuring, on and after the Plan

Effective Date, the Released Parties will be conclusively, absolutely,

unconditionally, irrevocably, and forever released and discharged, to the maximum

extent permitted by law, by the Releasing Parties, in each case from any and all

Causes of Action (including any derivative claims, asserted or assertable on behalf

of the Debtors, the Reorganized Debtors, or their Estates) that such Releasing Parties

or their estates, affiliates, heirs, executors, administrators, successors, assigns,

managers, accountants, attorneys, representatives, consultants, agents, and any other

Persons claiming under or through them would have been legally entitled to assert

in their own right (whether individually or collectively) or on behalf of the holder

of any Claim or Interest or other Person, based on, relating to, or in any manner

arising from, in whole or in part: the Debtors (including the management, direct or

indirect ownership, or operation thereof) or their Estates; the Reorganized Debtors;

the Chapter 11 Cases; the Plan; the Restructuring; the RBL Facility; any debt or

security of the Debtors and the ownership thereof; the purchase, sale, or rescission

of the purchase or sale of any debt or 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 or

other interactions between any Debtor and any Released Party; the restructuring of

any Claim or Interest before or during the Chapter 11 Cases; any other in-or-out-of-

court restructuring efforts of the Debtors; any intercompany transaction; the

negotiation, formulation, preparation, dissemination, or consummation of the Exit

Credit Facilities, the Plan, any of the other Definitive Documents (including the

Restructuring Support Agreement), or any other contract, instrument, release, or

document created or entered into in connection with the Plan or any of the other

Definitive Documents; the solicitation of votes with respect to, or confirmation of,

the Plan; or any other act or omission, transaction, agreement, event, or other

occurrence related to any of the forgoing and taking place on or before the Plan

Effective Date (collectively, the “Third-Party Releases”). Notwithstanding

anything herein to the contrary, the Third-Party Releases shall not release any

Person from Causes of Action based on willful misconduct, gross negligence or

intentional fraud as determined by a Final Order.

Exculpation: To the fullest extent permitted by applicable law, from and after the Plan Effective

Date, no Exculpated Fiduciary and, solely to the extent provided by section 1125(e)

of the Bankruptcy Code, no Section 1125(e) Party, will have or incur, and each such

Person will be released and exculpated from, any Cause of Action based on, relating

to, or in any manner arising from, in whole or in part: the administration or filing of

the Chapter 11 Cases; the negotiation, formulation, preparation, dissemination, or

consummation of the Restructuring, the Exit Credit Facilities, the issuances of New

Equity Interests, the Amended Organizational Documents, the Management

Incentive Plan, the Disclosure Statement, the Restructuring Support Agreement, the

Restructuring, the Plan, or any of the other Definitive Documents; the solicitation

of votes with respect to, or confirmation of, the Plan; the funding of the Plan; the

occurrence of the Plan Effective Date; the administration of the Plan or the property

to be distributed under the Plan; the issuance of securities under or in connection

with the Plan; the purchase, sale, or rescission of the purchase or sale of any security

of the Debtors or the Reorganized Debtors; or any other act or omission, transaction,


12

agreement, event, or other occurrence related to any of the forgoing and taking place

on or before the Plan Effective Date (the “Exculpation”). Notwithstanding anything

herein to the contrary, the Exculpation shall not release any Person from Causes of

Action based on willful misconduct, gross negligence or intentional fraud as

determined by a Final Order, but in all respects such Persons will be entitled to

reasonably rely upon the advice of counsel with respect to their duties and

responsibilities pursuant to the Plan.

The Exculpation will be in addition to, and not in limitation of, all other releases,

indemnities, exculpations, and any other applicable law or rules protecting the

Exculpated Parties from liability.

Discharge and

Injunction:

The Plan will contain customary discharge and injunction provisions.

Exemption from SEC

Registration:

The issuance and distribution under the Plan of the (i) New Equity Interests and (ii)

Warrants (and the Warrant Equity issuable upon exercise thereof) will be issued in

reliance on the exemption from registration under the Securities Act or applicable

securities laws pursuant to section 1145(a) of the Bankruptcy Code or any other

applicable exemption therefrom.

Tax Structure: To the extent practicable, the Restructuring will be structured so as to obtain the

most beneficial structure for the Company, its equity holders post-transaction and

the Consenting Sponsors, given the totality of the circumstances, as determined by

the Company in its business judgment and reasonably acceptable to the RBL Agent

and the Requisite Creditors (the “Tax Structure”).

Tax Treatment: The Plan will 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.

Restructuring

Expenses:

On the Plan Effective Date, the Company will pay, to the extent not already paid all

reasonable and documented Restructuring Expenses.

Retention of

Jurisdiction:

The Plan will provide for a broad retention of jurisdiction by the Bankruptcy Court,

including (i) resolution of Claims, (ii) allowance of compensation and expenses for

pre-Plan Effective Date services, (iii) resolution of motions, adversary proceedings,

or other contested matters, and (iv) entry of such orders as necessary to implement

or consummate the Plan and any related documents or agreements.


ANNEX 1

Defined Terms


1

Defined Terms

“Adequate Protection

Claims”

Any right to payment constituting allowed superpriority Administrative Expense

Claims against each of the Debtors on a joint and several basis with priority over any

and all other Administrative Expense Claims against the Debtors now existing or

hereafter arising in the Chapter 11 Cases granted pursuant to the Cash Collateral Order.

“Administrative Expense

Claim”

Any right to payment constituting a cost or expense of administration incurred during

the Chapter 11 Cases of a kind specified under section 503(b) of the Bankruptcy Code

and entitled to priority under sections 507(a)(2), 507(b), or 1114(e)(2) of the

Bankruptcy Code, including (i) the actual and necessary costs and expenses incurred

after the Petition Date and through the Plan Effective Date of preserving the Estates

and operating the businesses of the Debtors (such as wages, salaries, or commissions

for services and payments for goods and other services and leased premises), (ii) Fee

Claims, and (iii) Restructuring Expenses.

“Affiliate” Any “affiliate” as defined in section 101(2) of the Bankruptcy Code (except as provided

otherwise herein).

“Allowed”

With reference to any Claim or Interest, (i) any Claim or Interest arising on or before

the Plan Effective Date (a) as to which no objection to allowance has been interposed

within the time period set forth in the Plan or (b) as to which any objection has been

determined by a Final Order of the Bankruptcy Court to the extent such objection is

determined in favor of the respective holder, (ii) any Claim or Interest as to which the

liability of the Debtors and the amount thereof are determined by a Final Order of a

court of competent jurisdiction other than the Bankruptcy Court, (iii) any Claim or

Interest expressly allowed under the Plan or by the Cash Collateral Order or (iv) any

Claim that is listed in the Debtors’ schedules of assets and liabilities as liquidated, non-

contingent, and undisputed.

“Amended Organizational

Documents”

The forms of certificate of incorporation, certificate or articles of formation, bylaws,

limited liability company agreement, or other organizational documents, as applicable,

of the Reorganized Parent.

“Bankruptcy Court” The United States Bankruptcy Court for the District of Delaware.

“Business Day” Any day other than a Saturday, a Sunday, or any other day on which banking institutions

in New York, NY are authorized or required by law or executive order to close.

“Cash” Legal tender of the United States of America.

“Cash Collateral Order” Any interim or final order entered by the Bankruptcy Court authorizing the Debtors’

use of cash collateral during the Chapter 11 Cases.

“Cause of Action” Any action, claim, cross-claim, third-party claim, cause of action, controversy, dispute,

demand, right, lien, indemnity, contribution, guaranty, suit, obligation, liability, loss,

debt, fee or expense, damage, interest, judgment, cost, account, defense, remedy, offset,

power, privilege, proceeding, license, and franchise of any kind or character

whatsoever, whether liquidated or unliquidated, contingent or non-contingent, matured

or unmatured, known or unknown, foreseen or unforeseen, suspected or unsuspected,


2

Defined Terms

asserted or unasserted, assertable directly or derivatively (including any alter ego

theories), accrued or unaccrued, disputed or undisputed, secured or unsecured, existing

or hereinafter arising, arising before, on, or after the Petition Date, in contract or tort,

in law, equity, or pursuant to any other theory of law (including under any state or

federal securities laws), and whether arising under federal law, state statutory law,

common law, or any other applicable international, foreign, or domestic law, rule,

statute, regulation, treaty, right, duty, requirement or otherwise. For the avoidance of

doubt, “Cause of Action” includes (i) any right of setoff, counterclaim, or recoupment

and any claim for breach of contract or for breach of duties imposed by law or in equity,

(ii) the right to object to Claims or Interests, (iii) any claim pursuant to section 362 or

chapter 5 of the Bankruptcy Code, (iv) any claim or defense including fraud, mistake,

duress, and usury and any other defenses set forth in section 558 of the Bankruptcy

Code, and (v) any state law fraudulent transfer claim.

“Chapter 11 Cases” The jointly administered cases under chapter 11 of the Bankruptcy Code commenced

by the Debtors on the Petition Date in the Bankruptcy Court.

“Chisholm Management

Interests”

Any Interests in Chisholm Management.

“Claim” A “claim,” as defined in section 101(5) of the Bankruptcy Code, as against any Debtor.

“Confirmation Date” The date on which the Bankruptcy Court enters the Confirmation Order.

“Confirmation Order” The order of the Bankruptcy Court confirming the Plan in the Chapter 11 Cases.

“Consenting Creditors” RBL Lenders that are party to the Restructuring Support Agreement, and any other

RBL Lender that subsequently becomes a party to the Restructuring Support

Agreement in accordance with the terms thereof.

“Consenting Sponsors” Chisholm Oil and Gas, LLC and Gastar Holdco LLC.

“Cure Dispute” An unresolved objection regarding assumption, cure amount, “adequate assurance of

future performance” (within the meaning of section 365 of the Bankruptcy Code), or

other issues related to assumption of an executory contract or unexpired lease.

“Disclosure Statement” The disclosure statement in respect of the Plan, including all exhibits and schedules

thereto, as approved or ratified by the Bankruptcy Court pursuant to section 1125 of the

Bankruptcy Code.

“Entity” An “entity,” as defined in section 101(15) of the Bankruptcy Code.

“Estate(s)” Individually or collectively, the estate or estates of the Debtors created under section

541 of the Bankruptcy Code.

“Exculpated Fiduciaries” Collectively, (i) the Debtors, (ii) the Reorganized Debtors, and (iii) with respect to each

of the foregoing Persons in clauses (i) through (ii), such Persons’ Related Persons, and

their respective heirs, executors, estates, and nominees, in each case in their capacity as


3

Defined Terms

such.

“Exculpated Parties” Collectively, the Exculpated Fiduciaries and the Section 1125(e) Parties.

“Existing Equity

Interests”

Any Interests in Parent as of the Petition Date.

“Fee Claim” A Claim for professional services rendered or costs incurred on or after the Petition

Date through the Confirmation Date by professional persons retained by an order of the

Bankruptcy Court pursuant to sections 327, 328, 329, 330, 331, or 503(b) of the

Bankruptcy Code in the Chapter 11 Cases.

“Final Order” An order or judgment of a court of competent jurisdiction that has been entered on the

docket maintained by the clerk of such court, which has not been reversed, vacated, or

stayed and as to which (i) the time to appeal, petition for certiorari, or move for a new

trial, reargument, or rehearing has expired and as to which no appeal, petition for

certiorari, or other proceedings for a new trial, reargument, or rehearing shall then be

pending, or (ii) if an appeal, writ of certiorari, new trial, reargument, or rehearing

thereof has been sought, such order or judgment shall have been affirmed by the highest

court to which such order was appealed, or certiorari shall have been denied, or a new

trial, reargument, or rehearing shall have been denied or resulted in no modification of

such order, and the time to take any further appeal, petition for certiorari, or move for

a new trial, reargument, or rehearing shall have expired. However, notwithstanding

anything herein to the contrary, no order or judgment shall fail to be a “Final Order”

solely because of the possibility that a motion under Rules 59 or 60 of the Federal Rules

of Civil Procedure or any analogous Bankruptcy Rule (or any analogous rules

applicable in another court of competent jurisdiction) or sections 502(j) or 1144 of the

Bankruptcy Code has been or may be filed with respect to such order or judgment.

“Impaired” With respect to a Claim, Interest, or a class of Claims or Interests, “impaired” within

the meaning of sections 1123(a)(4) and 1124 of the Bankruptcy Code.

“Intercompany Claim” Any Claim against a Debtor held by another Debtor.

“Intercompany Interests” Any Interest in a Debtor held by another Debtor. For the avoidance of doubt,

Intercompany Interest excludes Existing Equity Interests and Chisholm Management

Interests.

“Interest” Any equity interest (as defined in section 101(16) of the Bankruptcy Code) of Parent,

any other Debtor, or any Reorganized Debtor, as applicable, including any ordinary

shares, units, common stock, preferred stock, membership interest, partnership interest

or other instrument, evidencing any fixed or contingent ownership interest in Parent or

any other Debtor, whether or not transferable, including any option, warrant, or other

right, contractual or otherwise, to acquire any such interest in Parent or any other

Debtor, that existed immediately before the Plan Effective Date.

“New Equity Interests” The limited liability company interests of the Reorganized Parent.


4

Defined Terms

“Other Priority Claim” Any Claim other than an Administrative Expense Claim or a Priority Tax Claim that is

entitled to priority of payment as specified in section 507(a) of the Bankruptcy Code.

“Other Secured Claim” A Secured Claim other than a Priority Tax Claim, a RBL Claim, or a Term Loan Claim.

“Person” Any “person” as defined in section 101(41) of the Bankruptcy Code, including any

individual, corporation, limited liability company, partnership, joint venture,

association, joint-stock company, trust, unincorporated organization, governmental unit

(as defined in section 101(27) of the Bankruptcy Code), or any agency or political

subdivision thereof or other Entity.

“Petition Date” The date on which the Company files with the Bankruptcy Court voluntary petitions

for relief under chapter 11 of the Bankruptcy Code and any such other documents as

are necessary to commence the Chapter 11 Cases.

“Plan”

The chapter 11 plan of reorganization of the Company, including all appendices,

exhibits, schedules, and supplements thereto, as may be modified from time to time in

accordance with its terms and the Restructuring Support Agreement.

“Plan Effective Date” The date upon which all conditions to the effectiveness of the Plan have been satisfied

or waived in accordance with the terms thereof and the Plan becomes effective.

“Priority Tax Claim” Any Secured Claim or unsecured Claim of a governmental unit of the kind entitled to

priority of payment as specified in sections 502(i) and 507(a)(8) of the Bankruptcy

Code.

“Pro Rata” The proportion that an Allowed Claim or Interest in a particular class bears to the

aggregate amount of Allowed Claims or Interests in that class.

“Proposed Company Sale” The direct or indirect acquisition by one (or more) Person(s) and its (or their) Related

Persons, acting in concert, of either (i) a majority of New Equity Interests, including by

merger or operation of law, or (ii) all or substantially all of the assets and business of

the Reorganized Debtors.

“RBL Credit Documents” “Credit Documents” as such term is defined under the RBL Credit Agreement.

“RBL Credit Agreement

Secured Parties”

The RBL Agent, the RBL Collateral Agent, the RBL Lenders, the “Issuing Banks,”

“Cash Management Banks,” the “Hedge Banks” and any holder of claims in respect of

“Indemnified Liabilities” (as such terms are defined in the RBL Credit Agreement), and

with respect to each of the foregoing entities, solely as to the release, exculpation and

injunction provisions of the Plan or to the extent such obligation otherwise exists under

the RBL Credit Documents, such Persons’ Related Persons, and their respective heirs,

executors, estates, servants, and nominees, in each case in their capacity as such.

“Related Persons” With respect to a Person, that Person’s current and former Affiliates, and such Persons’

and their current and former Affiliates’ predecessors, successors, assigns, and current

and former subsidiaries, officers, directors, principals, equity holders (regardless of


5

Defined Terms

whether such interests are held directly or indirectly), members, partners (including

both general and limited partners), managers, employees, agents, advisory board

members, management companies, managed accounts or funds, affiliated investment

funds or investment vehicles, and Representatives.

“Released Parties” Collectively, (i) the Debtors, (ii) the Consenting Creditors, (iii) the Consenting

Sponsors, (iv) the Reorganized Debtors, (v) the RBL Credit Agreement Secured Parties,

(vi) the agents and lenders under the Exit Credit Facilities, (vii) the holders of all Claims

and Interests who vote to accept the Plan, and (viii) with respect to each of the foregoing

Persons in clauses (i) through (vii), such Persons’ Related Persons, and their respective

heirs, executors, estates, and nominees, in each case in their capacity as such. However,

notwithstanding anything herein to the contrary, any Person that opts out of the releases

set forth in the Plan shall not be a Released Party.

“Releasing Parties” Collectively, (i) the holders of all Claims and Interests who vote to accept the Plan,

(ii) the holders of all Claims and Interests whose vote to accept or reject the Plan is

solicited but who do not vote either to accept or to reject the Plan, (iii) the holders of

all Claims and Interests who vote, or are deemed, to reject the Plan but do not opt out

of granting the releases set forth herein, (iv) the holders of all Claims and Interests who

were given notice of the opportunity to opt out of granting the releases set forth herein

but did not opt out, (v) all other holders of Claims and Interests to the maximum extent

permitted by law, and (vi) the Released Parties.

“Reorganized Borrower” Borrower as reorganized on the Plan Effective Date in accordance with the Plan (which

shall remain a Delaware limited liability company).

“Reorganized Debtors” Reorganized Parent, Reorganized Borrower and each of the other Debtors as

reorganized on the Plan Effective Date in accordance with the Plan.

“Reorganized Parent” Parent as reorganized on the Plan Effective Date in accordance with the Plan (which

shall remain a Delaware limited liability company).

“Representative” Any Persons’ attorneys, accountants, investment bankers, consultants, professional

advisors, independent auditors, trustees, agents, Affiliates (as defined in the RBL Credit

Agreement) (and any such Affiliates’ attorneys, professional advisors, independent

auditors, trustees or agents), fund advisors, investment managers, investment advisors,

sub-advisors, and sub-managers, and other professionals, and each of their respective

current and former officers, directors, principals, equity holders (regardless of whether

such interests are held directly or indirectly), members, partners (including both general

and limited partners), managers, employees, agents, and advisory board members, each

in their capacity as such.

“Requisite Creditors” As of the date of determination, Consenting Creditors holding at least a majority of the

aggregate principal amount outstanding of the RBL Obligations held by the Consenting

Creditors as of such date.

“Restructuring Expenses” The reasonable and documented out-of-pocket fees and expenses incurred by: (i) the

RBL Agent and the RBL Collateral Agent, including the fees, charges and


6

Defined Terms

disbursements of the RBL Agent’s legal and financial advisors including Linklaters

LLP, as counsel to the RBL Agent, Morris, Nichols, Arsht & Tunnell LLP, as local

counsel to the RBL Agent, Bracewell LLP, as real estate counsel to the RBL Agent,

Ballard Spahr LLP, as counsel to the RBL Collateral Agent, and FTI Consulting, Inc.,

as financial advisor to the RBL Agent); and (ii) the Consenting Sponsors, including the

fees, charges and disbursements of the Consenting Sponsor’s legal advisors (but no

more than: Paul, Weiss, Rifkind, Wharton & Garrison LLP, as counsel to the

Consenting Sponsors, and local counsel to the Consenting Sponsors).

“Section 1125(e) Parties” Collectively, (i) the RBL Credit Agreement Secured Parties, (ii) the agents and lenders

under the Exit Credit Facilities, (iii) the Consenting Sponsors, and (iv) with respect to

each of the foregoing Persons in clauses (i) through (iii), such Persons’ Related Persons,

and their respective heirs, executors, estates, and nominees, in each case in their

capacity as such.

“Secured Claim” A Claim (i) secured by a lien on collateral to the extent of the value of such collateral

as (a) set forth in the Plan, (b) agreed to by the holder of such Claim and the Debtors,

or (c) determined by a Final Order in accordance with section 506(a) of the Bankruptcy

Code, or (ii) secured by the amount of any right of setoff of the holder thereof in

accordance with section 553 of the Bankruptcy Code.

“Securities Act” Securities Act of 1933, as amended, and any rules and regulations promulgated

thereunder.

“Unimpaired” With respect to a Claim, Interest, or a class of Claims or Interests, not “impaired” within

the meaning of sections 1123(a)(4) and 1124 of the Bankruptcy Code.

“Warrant Agreement” One or more warrant agreement(s) to be entered into by and among the Reorganized

Parent and the warrant agent named therein that will govern the terms of the Warrants.

“Warrants” Warrants to purchase New Equity Interests representing in the aggregate 11% of the

total outstanding New Equity Interests issued pursuant to the Plan as of the Plan

Effective Date (subject to dilution by the MIP Equity) exercisable in Cash for a 5-year

period commencing on the Plan Effective Date at an aggregate exercise strike price in

an amount equal to a 100% recovery to the RBL Lenders on account of the RBL Claims

(inclusive of accrued and unpaid interest) as of the Petition Date.

“Warrant Equity” New Equity Interests issuable upon the exercise of the Warrants.


EXHIBIT B

FORM OF JOINDER AGREEMENT FOR CONSENTING CREDITORS

This Joinder Agreement to the Restructuring Support Agreement, dated as of June

15, 2020 (as amended, supplemented, or otherwise modified from time to time, the “Agreement”),

by and among the Company, the Consenting Creditors and the Consenting Sponsors is executed

and delivered by ______ (the “Joining Party”) as of [●], 2020. Each capitalized term used herein

but not otherwise defined shall have the meaning set forth in the Agreement.

1. Agreement to be Bound. The Joining Party hereby agrees to be bound by all of the

terms of the Agreement, 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 a

“Consenting Creditor” and a “Party” for all purposes under the Agreement and with respect to any

and all Claims and Interests held by such Joining Party.

2. Representations and Warranties. With respect to the aggregate principal amount of the

RBL Obligations set forth below its name on the signature page hereto, the Joining Party hereby

makes the representations and warranties of the Consenting Creditors set forth in Section 8 and

Section 22 of the Agreement to each other Party to the Agreement.

3. Governing Law. This Joinder Agreement shall be governed by and construed in

accordance with the internal laws of the State of New York, without regard to any conflict of laws

provisions that would require the application of the law of any other jurisdiction.

[Signature Page Follows]


IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed

as of the date first written above.

CONSENTING CREDITOR

[●]

By:

Name:

Title:

Principal Amount of RBL Obligations: $______________

Notice Address:

Fax:

Attention:

Email:

Acknowledged:

[●]

By:

Name:

Title:


Exhibit C

Organizational Structure


100%

100%

99%

100%

42% Series A Units58% Series A Units

Chisholm Oil and Gas, LLC

Chisholm Oil and Gas Holdings, LLC

Chisholm Oil and Gas Intermediate II, LLC

Chisholm Oil and Gas Management, LLC

Chisholm Oil and Gas Operating III, LLC

Gastar Holdco LLC

Chisholm Oil and Gas Nominee, Inc.Cottonmouth SWD, LLC

100%


Legend

Obligors under the RBL

Obligor under the 2L Term Loan

Borrower under the RBL

Borrower under the 2L Term Loan

Debtor

Chisholm Oil and Gas Operating II, LLC

Chisholm Oil and Gas Intermediate, LLC

Chisholm Oil and Gas Management II, LLC

100%

100%

1%Chisholm Midstream, LLC

Great Salt Plains Midstream Holdings, LLC

35%

100%

100%

100%


Exhibit D

Liquidation Analysis

1) Introduction

Chisholm Oil and Gas Operating, LLC and certain of its affiliates (collectively, the

“Debtors”), with the assistance of their restructuring, legal, and financial advisors, have prepared

this hypothetical liquidation analysis (the “Liquidation Analysis”) in connection with the

Amended Joint Chapter 11 Plan of Reorganization of Chisholm Oil and Gas Operating, LLC and

its Affiliated Debtors (as further amended, supplemented, or modified from time to time, the

“Plan”) and related disclosure statement (as further amended, supplemented, or modified from

time to time, the “Disclosure Statement”) pursuant to chapter 11 of title 11 of the United States

Code (the “Bankruptcy Code”).1

The Liquidation Analysis permits parties in interest to evaluate whether the Plan satisfies

the requirements of section 1129(a)(7) of the Bankruptcy Code, also referred to as the “best

interests of creditors” test. Under this test, the Bankruptcy Court must find, as a condition to

confirmation of the Plan, that each holder of an impaired Claim against or Interest in the Debtors

either (i) has accepted the Plan or (ii) will receive or retain under the Plan property of a value, as

of the Effective Date, that is not less than the amount that such Person would receive if the Debtors

were liquidated under chapter 7 of the Bankruptcy Code. To demonstrate that the proposed Plan

satisfies the “best interests” of creditors test under section 1129(a)(7) of the Bankruptcy Code, the

Debtors, with the assistance of their advisors, have prepared the following Liquidation Analysis,

which is based upon certain assumptions discussed in the Disclosure Statement and in the

accompanying notes to the Liquidation Analysis.

To demonstrate satisfaction of the “best interests” test, the Debtors have:

i) estimated the cash proceeds (the “Liquidation Proceeds”) a chapter 7 trustee (the

“Trustee”) would generate if each Debtor’s Chapter 11 Case was converted to a case

under chapter 7 on the Effective Date and the assets of such Debtor’s Estate were

liquidated;

ii) determined the distribution (the “Liquidation Distribution”) each holder of a Claim

or Interest would receive from the Liquidation Proceeds under the priority scheme

dictated under chapter 7 of the Bankruptcy Code; and

iii) compared each holder’s Liquidation Distribution to such holder’s distribution under

the Plan if it were confirmed and consummated.

1 Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Disclosure

Statement or Plan, as applicable.


2

Accordingly, asset values discussed herein may be different than amounts referred to in the Plan

and the Disclosure Statement.

THE DEBTORS MAKE NO REPRESENTATIONS OR WARRANTIES REGARDING THE

ACCURACY OF THE ESTIMATES AND ASSUMPTIONS CONTAINED HEREIN OR IN

THE DISCLOSURE STATEMENT OR A CHAPTER 7 TRUSTEE’S ABILITY TO ACHIEVE

FORECASTED RESULTS. IF THE CHAPTER 11 CASES ARE CONVERTED TO CASES

UNDER CHAPTER 7 OF THE BANKRUPTY CODE, ACTUAL RESULTS COULD VARY

MATERIALLY FROM THE ESTIMATES AND PROJECTIONS SET FORTH IN THIS

LIQUIDATION ANALYSIS. THE DEBTORS RESERVE ALL RIGHTS TO SUPPLEMENT,

MODIFY, OR AMEND THIS LIQUIDATION ANALYSIS.

NOTHING CONTAINED IN THIS LIQUIDATION ANALYSIS IS INTENDED TO BE OR

CONSTITUTES A CONCESSION, ADMISSION, OR ALLOWANCE BY THE DEBTORS (OR

ANY OTHER PARTY) OR OF ANY CLAIMS BY OR AGAINST THE DEBTORS. THE

ESTIMATED AMOUNT OF ALLOWED CLAIMS SET FORTH HEREIN SHOULD NOT BE

RELIED UPON FOR ANY OTHER PURPOSE, INCLUDING ANY DETERMINATION OF

THE VALUE OF ANY DISTRIBUTION TO BE MADE ON ACCOUNT OF ALLOWED

CLAIMS OR ALLOWED INTERESTS UNDER THE PLAN, OTHER THAN THE

PRESENTATION OF A HYPOTHETICAL LIQUIDATION ANALYSIS. ACCORDINGLY,

THE ASSET VALUES, AMOUNTS, AND/OR PRIORITY OF ALLOWED CLAIMS IN THIS

LIQUIDATION ANALYSIS COULD DIFFER MATERIALLY FROM THE AMOUNTS SET

FORTH IN THE PLAN OR THE DISCLOSURE STATEMENT.

2) Process and Assumption Overview

This Liquidation Analysis was prepared by the Debtors with the assistance of their advisors

and assumes that the Debtors’ assets would be liquidated in a jointly administered but

nonconsolidated basis. This analysis has been prepared assuming that the Chapter 11 Cases are

converted to cases under chapter 7 of the Bankruptcy Code on or about September 30, 2020 (the

“Conversion Date”). The Debtors have assumed that the liquidation would occur over a three-

month time period in order sell substantially all of the Debtors’ assets, monetize and collect

receivables and other assets on the pro forma balance sheet, and an additional three-month time

period to administer and wind-down the Estates.

Except as otherwise noted herein, this Liquidation Analysis is based upon the Debtors’

projected consolidated balance sheets as of September 30, 2020, which values are assumed to be

representative of the Debtors’ assets and liabilities. Any projected balance sheet amounts

presented in this Liquidation Analysis are assumed to be the actual balances on the Conversion

Date. In addition, this Liquidation Analysis incorporates certain adjustments to account for the

effects of the chapter 7 liquidation process, including post-conversion operating cash flow, costs

of winding down the Debtors’ Estates, employee-related costs, and professional and chapter 7

trustee fees.

This Liquidation Analysis assumes that, on the Conversion Date, the Bankruptcy Court

would appoint a Trustee who would sell the assets of the Estates and distribute the cash proceeds,

net of liquidation related costs, to creditors in accordance with the priority scheme set forth in the


3

Bankruptcy Code. To maximize recovery values for the Debtors’ assets in an expedited process,

this analysis assumes that the Trustee would first develop a liquidation plan to generate proceeds

from the sale of the Debtors’ assets for distribution to creditors. This Liquidation Analysis assumes

the appointed Trustee will retain lawyers and other necessary advisors to assist with the

establishment of the liquidation plan and ultimate liquidation of the Debtors’ assets.

All assets are contemplated to be sold within the three-month wind-down period. Asset

values in the liquidation process are assumed to be driven by, among other things:

the time frame in which the assets are marketed and sold;

the potential loss of key personnel;

forward commodity price curves;

partner and vendor reaction;

current market conditions; and

the general forced nature of the sale

The cessation of business in a liquidation under chapter 7 of the Bankruptcy Code is likely

to trigger certain Claims against the Estates that otherwise would not exist under a Plan absent the

liquidation. Examples of these kinds of Claims include various potential employee claims (such

as potential severance claims), new bonding or letters of credit for plugging and abandonment

(“P&A”) liabilities, claims related to the rejection of executory contracts, and unexpired lease

rejection damages. Such Claims could be material and may be entitled to administrative or priority

payment status. Priority Claims would be paid in full from the Liquidation Proceeds before the

balance would be made available for distribution to holders of General Unsecured Claims.

This analysis was prepared before the passage of any Bar Dates, and the Debtors have not

had an opportunity to fully evaluate potential Claims against the Estates or to adjudicate such

Claims before the Bankruptcy Court. Accordingly, the amount of the final Allowed Claims against

the Debtors’ Estates may differ substantially from the Claim amounts used in this Liquidation

Analysis. Additionally, asset values discussed herein may be different than amounts referred to in

the Plan, which presumes the reorganization of the Debtors’ assets and liabilities under chapter 11

of the Bankruptcy Code.

No recovery or related litigation costs have been attributed to any potential avoidance

actions under the Bankruptcy Code, including potential preferences or fraudulent transfer actions

due to, among other issues, the cost of such litigation, the uncertainty of the outcome, and

anticipated disputes regarding these matters. The Plan also retains certain Causes of Action, for

which it is likely that any potential proceeds from such retained Causes of Action would be

recoverable under both the Plan and in a chapter 7 liquidation. Additionally, the Liquidation

Analysis does not include estimates for tax consequences, both under Federal and state law, that


4

may be triggered upon the liquidation and sale of the Debtors’ assets. The tax consequences could

be material.

3) Distribution of Net Proceeds

(1) Any available net proceeds from the sale of the Debtors’ assets after the Conversion

Date would be allocated to holders of Claims and Interests in accordance with section 726 of the

Bankruptcy Code, which provides for the following priority scheme:

Liquidation Adjustments – includes estimated fees paid to the U.S. Trustee, wind-down

costs, Trustee fees, and fees and expenses of advisors and other professionals retained

by the Trustee;

Other Priority and Other Secured Claims – includes Claims from counterparties that

are able to assert senior priority liens on the Debtors’ assets, including certain trade

vendors, taxing authorities, and other holders of potential Other Priority Claims;

RBL Claims – includes estimated Claims arising under the RBL Agreement and any

documents related thereto;

Term Loan Claims – includes estimated Claims arising under the Term Loan

Agreement and any documents related thereto;

General Unsecured Claims – includes other prepetition General Unsecured Claims; and

Interests – includes estimated Interests in the Debtors.

Under the absolute priority rule, no junior creditor shall receive any distribution until all

senior creditors are paid in full, and no equity holder shall receive any distribution until all creditors

are paid in full. The assumed distributions to creditors as reflected in the Liquidation Analysis are

estimated in accordance with the absolute priority rule.

The Debtors believe that the present value of distributions from the net Liquidation

Proceeds, to the extent available, may be further reduced because such distributions in a chapter 7

may not occur until after the three-month liquidation period assumed in the analysis. Moreover,

in the event that litigation becomes necessary to resolve Claims asserted against the Debtors in a

chapter 7 liquidation, distributions to holders of Claims may be further delayed, which both

decreases the present value of those distributions and increases administrative expenses that could

diminish the Liquidation Proceeds available. The effects of this potential delay on the value of

distributions under this Liquidation Analysis have not been considered in this analysis.

4) Conclusion

The determination of hypothetical Liquidation Proceeds is a highly uncertain process

involving the use of numerous estimates and assumptions, which, while considered reasonable by


5

the Debtors and the Debtors’ advisors, are inherently subject to significant business, economic,

and competitive uncertainties and contingencies beyond the control of the Debtors.

The Debtors have determined, as summarized in the table below, that upon the Effective

Date, the Plan will provide all holders of Claims against and Interests in the Debtors with a

recovery (if any) that is not less than what they would otherwise receive pursuant to a liquidation

of the Debtors’ assets under chapter 7 of the Bankruptcy Code and thus believe the Plan satisfies

the requirement of section 1129(a)(7) of the Bankruptcy Code.

Summary of Recoveries

$ in millions

Class Type of Claim or Interest

Projected

Claim (1)

Plan

Recovery

Estimated

Liquidation

Recovery

Class 1 Other Priority Claims $4.8 100.0% 100.0%

Class 2 Other Secured Claims 5.7 100.0% 100.0%

Class 3 RBL Claims (2) 263.0 25.0% or 26.6% 21.1%

Class 4 Term Loan Claims (2) 253.8 0.0% or 0.7% 0.0%

Class 5 General Unsecured Claims 28.0 5.4% or 10.7% 0.0%

Class 6 Intercompany Claims – 100.0% 0.0%

Class 7 Chisholm Parent Equity Interests (3) – N/A 0.0%

Class 8 Chisholm Management Equity Interests – N/A 0.0%

Class 9 Intercompany Interests – N/A 0.0%

(1) Plus accrued interest, fees, or other expenses

(2) Recovery depends on w hether Class 4 votes to reject the Plan (in w hich case the Class of RBL Claims w ill

recover an additional 5% of New Equity Interests) or if either Class 5 or Class 7 votes to reject the Plan (in

w hich case the Class of RBL Claims w ill recover an additional 1% of New Equity Interests)

(3) Warrant value only realized for price exercised beyond strike price, and dilutive to that amount


6

The following table summarizes the Liquidation Analysis for the Debtors, presented on a

consolidated basis. The Liquidation Analysis should be reviewed with the accompanying

“Specific Notes to the Liquidation Analysis” set forth on the following pages.

$ in millions Pro Forma

BS Recovery Estimate % Recovery Estimate $

Notes 9/25/20 Low Mid High Low Mid High

Current Assets

Cash [1] 8.2$ 100.0% 100.0% 100.0% 8.2$ 8.2$ 8.2$

Accounts Receivable - Oil and Gas Sales [2] 4.9 90.0% 95.0% 100.0% 4.4 4.7 4.9

Accounts Receivable - JIB and Other [3] 1.9 0.0% 5.0% 5.0% - 0.1 0.1

Prepaid & Other Current Assets [4] 3.8 20.0% 25.0% 30.0% 0.8 1.0 1.1

Total Current Assets 18.9 71.1% 73.9% 76.2% 13.4 14.0 14.4

Long Term Assets

O&G Properties [5] 296.3 18.0% 19.0% 20.2% 53.2 56.3 59.9

Other PP&E [6] 120.3 2.0% 3.4% 4.7% 2.4 4.0 5.7

Other Assets [7] 5.1 0.0% 0.0% 0.0% - - -

Total Long Term Assets 421.7 13.2% 14.3% 15.6% 55.6 60.3 65.6

Gross Liquidated Assets 440.6$ 15.7% 16.9% 18.2% 69.0$ 74.3$ 80.0$

Less Liquidation Costs

Wind Down Costs [8] (4.7) (4.7) (4.7)

Chapter 7 Trustee Fees [9] (1.8) (2.0) (2.2)

Chapter 7 Professional Fees [10] (1.5) (1.7) (1.8)

Total Liquidation Adjustments (8.0)$ (8.3)$ (8.6)$

Net Liquidated Assets 61.0$ 66.0$ 71.4$

Estimated Recovery Estimate % Recovery Estimate $

Claims and Recoveries Claims1 Low Mid High Low Mid High

Administrative and Other Priority Claims [11] 4.8 100.0% 100.0% 100.0% 4.8 4.8 4.8

Other Secured Claims [12] 5.7 100.0% 100.0% 100.0% 5.7 5.7 5.7

RBL Claims [13] 263.0 19.2% 21.1% 23.1% 50.5 55.5 60.9

Term Loan Claims [14] 253.8 0.0% 0.0% 0.0% - - -

General Unsecured Claims [15] 28.0 0.0% 0.0% 0.0% - - -

Intercompany Claims [16] - 0.0% 0.0% 0.0% - - -

Chisholm Parent Equity Interests [17] - 0.0% 0.0% 0.0% - - -

Chisholm Management Equity Interests [17] - 0.0% 0.0% 0.0% - - -

555.3$ 11.0% 11.9% 12.9% 61.0$ 66.0$ 71.4$

Liquidation Proceeds

Summary of Estimated Claims Recovery


7

SPECIFIC NOTES TO THE LIQUIDATION ANALYSIS

Liquidation Proceeds

Gross Liquidation Proceeds

1. Cash & Cash Equivalents: Pro-forma cash estimate as of September 25, 2020. All

projected cash and equivalents on hand have an expected recovery of 100%.

2. Accounts Receivable, Oil and Gas Sales: Oil and gas production amounts are assumed to

be highly collectible based on counterparty credit quality and payment history. Receipts

are related to sale of oil and natural gas, due within 30 days following the end of the month

of production. Outstanding receivables have an expected recovery range of 90% to 100%.

3. Accounts Receivable, Joint Interest Billing and Other: Joint interest billing receivables

include receivables from joint interest owners for their share of lease operating expenses,

capital expenditures, production taxes, and gathering and transport fees, among other

items. These receivables are expected to be less collectible than receipts for production as

joint interest owners are likely to attempt to offset their potential Claims against the Estates

for unpaid royalties and lost revenue by holding back these receivables. Outstanding joint

interest receivables have an expected recovery of up to 5%.

4. Prepaid and Other Current Assets: Includes prepaid expenses, inventory, and other

miscellaneous assets. The recovery range is estimated at 20% to 30% for each of the

following assets:

a. Prepaid Expenses – comprised of prepayments made on account of expenses,

insurance, and deposits, with total net book value of $1.1 million.

b. Inventory – consists of production equipment, including casings, piping, and

structures, with total net book value of $2.7 million.

5. O&G Properties: The Liquidation Analysis assumes that the Trustee sells or otherwise

monetizes the reserves and associated equipment owned by the Debtors, in logical regional

or geological packages, or on a piecemeal basis, with sales to buyers during the three-

month period. The estimated values realized for such assets reflect, among other things,

the following factors:

a. long-term supply and demand fundamentals for oil and natural gas;

b. projected prices for oil and natural gas;

c. production and operating performance for each asset;

d. operating and maintenance costs for each asset;

e. production results based on restoring production at well sites; and


8

f. capital and environmental expenditure requirements.

In assessing the liquidation value of the reserves, the Debtors considered a range of

discount rates across stratified reserve categories, including proved developed producing

reserves, in addition to assessing the Debtors’ other land and operating assets. The reserves

reviewed were a roll-forward of the Debtors’ internal reserve report and valued as of

October 1, 2020, plus expenses necessary to operate during a sale process through

December 31, 2020.

Due to the appointment of a Trustee and the Debtors’ assumed insufficient liquidity and

access to capital to maintain, develop, or expand production and future reserves, sale values

of gas and pipeline assets would be depressed and would likely result in a valuation

discount relative to “fair value.” This Liquidation Analysis assumes an estimated range of

gross liquidation proceeds from oil and gas property and pipeline assets between

approximately $53.2 million and $59.9 million, resulting in an expected recovery range

between 18% and 20.2%.

6. Other PP&E: Represents vehicles, furniture, and fixtures, and other equipment. Liquidated

assets have been depreciated according to accounting policies by the Debtors, and in a

liquidation would be expected to be sold at a further discount. As a result, Other PP&E

assets are assumed to have a blended recovery in the range of 2% to 4.7% of net book

value.

7. Other Assets: Includes line fill inventory. The Liquidation Analysis assumes no recovery.

Chapter 7 Liquidation Adjustments

8. Wind-Down Costs: The total wind-down costs are estimated to be approximately $4.7

million, which includes personnel and overhead costs, including expenses for incremental

noticing, document retention, and final tax filings. For those employees that are retained

during the liquidation process, the analysis includes estimated salary, paid time off, and

severance expense, notably to retain the services of existing personnel.

9. Chapter 7 Trustee Fees: This would be limited to the fee guidelines in section 326(a) of the

Bankruptcy Code. The Liquidation Analysis includes trustee fees of 3.0% of entity gross

Liquidation Proceeds, excluding cash.

10. Chapter 7 Professional Fees: This includes the estimated cost for advisors, attorneys, and

other professionals retained by the Trustee. In this Liquidation Analysis, chapter 7

professional fees are estimated to be between $1.5 million and $1.8 million. However, this

amount can fluctuate based on length and complexity of the wind-down process and could

be substantially greater than the amounts assumed herein.


9

Claims & Recoveries

Priority and Other Senior Claims

11. Administrative and Other Priority Claims: Includes Administrative Expense Claims and

Other Priority Claims, such as post-petition accrued and unpaid accounts payable,

production taxes, and interest owner royalty payments, all totaling $4.8 million as of the

Conversion Date.

12. Other Secured Claims: Includes estimated Claims from counterparties that are able to assert

senior priority liens on corresponding assets of the Debtors. To the extent a vendor is not

able to assert a valid senior priority lien, these amounts may be treated as General

Unsecured Claims.

RBL Claims

13. This Liquidation Analysis assumes that the outstanding principal balance under the RBL

Credit Agreement is approximately $263 million. Implied Liquidation Proceeds to holders

of such Claims would range from $50.5 million to $60.9 million, which represents

recoveries of 19.2% and 23.1% of the total RBL Claims, with a mid-point recovery of

21.1%.

Term Loan Claims

14. This Liquidation Analysis assumes that the outstanding principal balance under the Term

Loan Agreement is approximately $253.8 million. Holders of such Claims are projected

to receive no recovery under the Liquidation Analysis.

General Unsecured Claims and Convenience Class Claims

15. General Unsecured Claims, including Convenience Class Claims, primarily consist of

prepetition trade payables, lease rejection and executory contract claims, severance claims,

and other accrued liabilities; and the deficiency balance of RBL Claims. Holders of

General Unsecured Claims are projected to receive no recovery under the Liquidation

Analysis.

Intercompany Claims

16. Intercompany Claims are projected to receive no recovery under the Liquidation Analysis.

Equity Interests

17. Chisholm Parent Equity Interests and Chisholm Management Equity Interests are projected

to receive no recovery under the Liquidation Analysis.


Exhibit E

Financial Projections

For purposes of demonstrating feasibility of the Amended Joint Chapter 11 Plan of Reorganization

of Chisholm Oil and Gas Operating, LLC and its Affiliated Debtors (as further amended,

supplemented, or modified from time to time, the “Plan”),1 Chisholm Oil and Gas Operating, LLC

and certain of its affiliates (collectively, the “Debtors”) have prepared the forecasted consolidated

financial projections (the “Financial Projections”) for the Reorganized Debtors for the period of

October 2020 through December 2025 (the “Projection Period”). The Financial Projections were

prepared based on assumptions made by the Debtors’ management as to the future performance of

the Reorganized Debtors and reflect management’s judgment and expectations regarding the

Reorganized Debtors’ future operations and financial position. The Financial Projections are

subject to inherent risks and uncertainties, most of which are difficult to predict and many of which

are beyond management’s control, incident to the exploration for and development, production,

and sale of oil and natural gas. Factors that may cause actual results to differ from expected results

include:

1. fluctuations in commodity prices and the Reorganized Debtors’ ability to hedge

movements in prices;

2. the uncertainty inherent in estimating reserves, future net revenues, and discounted future

cash flows;

3. the timing and amount of future production of oil, natural gas, and natural gas liquids;

4. changes in the availability and cost of capital;

5. environmental, drilling and other operating risks, including liability claims as a result of

operations;

6. proved and unproved drilling locations and future drilling plans; and

7. the effects of existing and future laws and governmental regulations, including

environmental, hydraulic fracturing, and climate change regulation.

Should one or more of the risks or uncertainties referenced above or in the Disclosure Statement

occur, or should underlying assumptions prove incorrect, actual results and plans could differ

materially from those expressed in the Financial Projections. Further, new factors could cause

actual results to differ materially from those described in the Financial Projections, and it is not

possible to predict all such factors, or the extent to which any such factor or combination of factors

may cause actual results to differ from those contained in the Financial Projections. The Financial

Projections herein are not, and must not be viewed as, a representation of fact, prediction, or

guaranty of Reorganized Debtors’ future performance.

1 Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Plan.


2

The Financial Projections have not been audited or reviewed by a registered independent

accounting firm, and were not prepared with a view toward compliance with the guidelines of the

Securities and Exchange Commission, the American Institute of Certified Public Accountants, or

the Financial Accounting Standards Board (“FASB”), particularly for reorganization accounting.

The Projections should be read in conjunction with the significant assumptions, qualifications, and

notes set forth below.

THE DEBTORS PREPARED THE PROJECTIONS WITH THE ASSISTANCE OF THEIR

ADVISERS. EXCEPT FOR PURPOSES OF THE DISCLOSURE STATEMENT, THE

DEBTORS DO NOT PUBLISH PROJECTIONS OF THEIR ANTICIPATED FINANCIAL

POSITION OR RESULTS OF OPERATIONS. MOREOVER, THE FINANCIAL

PROJECTIONS CONTAIN CERTAIN STATEMENTS THAT ARE “FORWARD-LOOKING

STATEMENTS” WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION

REFORM ACT OF 1995. THESE STATEMENTS ARE SUBJECT TO A NUMBER OF

ASSUMPTIONS, RISKS, AND UNCERTAINTIES, MANY OF WHICH WILL BE BEYOND

THE CONTROL OF THE REORGANIZED DEBTORS, INCLUDING THE

IMPLEMENTATION OF THE PLAN, THE CONTINUING AVAILABILITY OF SUFFICIENT

BORROWING CAPACITY OR OTHER FINANCING TO FUND OPERATIONS, ACHIEVING

OPERATING EFFICIENCIES, EXISTING AND FUTURE GOVERNMENTAL

REGULATIONS AND ACTIONS OF GOVERNMENTAL BODIES, INDUSTRY-SPECIFIC

RISK FACTORS, AND OTHER MARKET AND COMPETITIVE CONDITIONS. HOLDERS

OF CLAIMS AND INTERESTS ARE CAUTIONED THAT THE FORWARD-LOOKING

STATEMENTS SPEAK AS OF THE DATE MADE AND ARE NOT GUARANTEES OF

FUTURE PERFORMANCE. ACTUAL RESULTS OR DEVELOPMENTS MAY DIFFER

MATERIALLY FROM THE EXPECTATIONS EXPRESSED OR IMPLIED IN THE

FORWARD-LOOKING STATEMENTS, AND THE DEBTORS AND REORGANIZED

DEBTORS UNDERTAKE NO OBLIGATION TO UPDATE ANY SUCH STATEMENTS.

THE FINANCIAL PROJECTIONS, WHILE PRESENTED WITH NUMERICAL

SPECIFICITY, ARE NECESSARILY BASED ON A VARIETY OF ESTIMATES AND

ASSUMPTIONS WHICH, THOUGH CONSIDERED REASONABLE BY THE DEBTORS,

MAY NOT BE REALIZED AND ARE INHERENTLY SUBJECT TO SIGNIFICANT

BUSINESS, ECONOMIC, INDUSTRY, REGULATORY, LEGAL, MARKET, AND

FINANCIAL UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH ARE

BEYOND THE REORGANIZED DEBTORS CONTROL. THE DEBTORS CAUTION THAT

NO REPRESENTATIONS CAN BE MADE OR ARE MADE AS TO THE ACCURACY OF

THE PROJECTIONS OR TO THE REORGANIZED DEBTORS’ ABILITY TO ACHIEVE THE

PROJECTED RESULTS. SOME ASSUMPTIONS INEVITABLY WILL BE INCORRECT.

MOREOVER, EVENTS AND CIRCUMSTANCES OCCURRING AFTER THE DATE ON

WHICH THE DEBTORS PREPARED THESE PROJECTIONS MAY BE DIFFERENT FROM

THOSE ASSUMED OR, ALTERNATIVELY, MAY HAVE BEEN UNANTICIPATED, AND

THUS THE OCCURRENCE OF THESE EVENTS MAY AFFECT FINANCIAL RESULTS IN

A MATERIALLY ADVERSE OR MATERIALLY BENEFICIAL MANNER. THE DEBTORS

AND REORGANIZED DEBTORS, AS APPLICABLE, DO NOT INTEND AND UNDERTAKE

NO OBLIGATION TO UPDATE OR OTHERWISE REVISE THE PROJECTIONS TO

REFLECT EVENTS OR CIRCUMSTANCES EXISTING OR ARISING AFTER THE DATE

HEREOF OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.


3

THEREFORE, THE FINANCIAL PROJECTIONS MAY NOT BE RELIED UPON AS A

GUARANTEE OR OTHER ASSURANCE OF THE ACTUAL RESULTS THAT WILL

OCCUR. IN DECIDING WHETHER TO VOTE TO ACCEPT OR REJECT THE PLAN,

HOLDERS OF CLAIMS AND INTEREST ENTITLED TO VOTE ON THE PLAN MUST

MAKE THEIR OWN DETERMINATIONS AS TO THE REASONABLENESS OF SUCH

ASSUMPTIONS AND THE RELIABILITY OF THE FINANCIAL PROJECTIONS AND

SHOULD CONSULT WITH THEIR OWN ADVISERS.

I. OVERVIEW

The Debtors are a Tulsa, Oklahoma-based oil and gas company operating in the STACK

basin in Oklahoma.

II. ACCOUNTING AND PRESENTATION POLICIES

The Financial Projections have been prepared using accounting policies that are generally

consistent with those applied in the Debtors’ historical financial statements (GAAP

consolidated basis). The Financial Projections have not been prepared with the intention

of complying with published guidelines of the SEC, the American Institute of Certified

Public Accountants, the FASB, or any other standard-setting body. The Financial

Projections do not include adjustments or write-downs related to the predecessor Debtors’

extinguishment of debt or other liabilities. The Financial Projections do not reflect the

formal implementation of reorganization accounting pursuant to FASB Accounting

Standards Codification Topic 852, Reorganizations (“ASC 852”). Overall, the

implementation of ASC 852 may or may not have a material impact on the underlying

economics of the Plan.

III. METHODOLOGY

The Financial Projections were prepared using a bottoms-up approach incorporating

multiple sources of statistical analyses, including regional, geological, stratigraphic, and

well-level analyses from the Debtors’ operations. The projections should be read in

conjunction with the significant assumptions, qualifications, and notes set forth herein.

IV. ASSUMPTIONS

The Financial Projections include projected financial statements on a consolidated basis

for the Projection Period assuming that the Effective Date of the Plan is September 30,

2020.

V. GENERAL ASSUMPTIONS

A. Total Revenue

Total revenue consists of production revenue. Production revenue is generated from

the exploration for and development, production, and sale of oil and natural gas.

Production revenue includes all operating and non-operating wells and net of

revenue distribution payments.


4

B. Commodity Pricing

Pricing assumptions are based on June 12, 2020 New York Mercantile Exchange

forward pricing. Management estimates realized pricing based on twelve-month

historical oil and gas differentials.

C. Lease Operating Expenses

Lease operating expenses for the Reorganized Debtors’ reserves are forecasted at

the well level and include joint interest billings. Included in lease operating

expenses are severance taxes, which are forecasted at the well level based on

production with an applicable tax rate.

D. Transportation Costs

Transportation costs consist of gathering, processing and transportation charges.

The Financial Projections assume the Reorganized Debtors realize gathering and

transportation availability and costs consistent with those realized by the Debtors.

E. General and Administrative Expenses

General and administrative (“G&A”) expenses primarily consist of personnel costs,

rent, insurance, and other corporate overhead costs necessary to manage operations

and comply with regulatory requirements. The Reorganized Debtors’ projected

G&A expenses are based on the current development and operational plans, and

exclude non-cash expenses.

F. Capital Expenditures

Capital expenditures include all capital costs incurred to acquire, develop and

produce the Reorganized Debtors’ assets, which include future well pad

construction, completions, facilities and pipeline installation investment. The

primary component of capital expenditures is P&A. All projections are net of the

Reorganized Debtors’ interests in the properties developed. While the Reorganized

Debtors will continually review development opportunities given commodity

pricing and well economics, the forecast does not include drilling activity.

G. Cash Interest Expense, Net

Cash interest includes estimated interest disbursements payable on the Reorganized

Debtors’ outstanding debt. Interest is assumed to accrue at LIBOR plus 600bps.

H. Capital Structure

The Financial Projections assume a new-money investment and post-emergence

capital structure consisting of:


5

A new money exit reserve-based credit facility (“FLFO RBL Facility”)

with a $15 million borrowing base with an interest accrual varying on

borrowing utilization rate percentages.

A first-lien second-out take-back term loan facility (“FLSO Term

Loan”), with a 7-year maturity and a principle amount of $35 million,

sized at 1.5x annualized corporate EBITDAX (calculated at exit based

on balance of fiscal year 2020 business plan with 10% production

risking), and interest accrual at LIBOR plus 600bps.

The Financial Projections assume that the excess cash of the

Reorganized Debtors above $15 million shall be used first to repay any

outstanding obligations under the FLFO RBL Facility and second to

repay any outstanding obligations under the FLSO Term Loan, as

defined in the Restructuring Support Agreement.


6

REORGANIZED DEBOTORS’ FINANCIAL PROJECTIONS

Fiscal Year

($ in 000s) 4Q2020 2021 2022 2023 2024 2025

Net Oil Production (MBbl) 341 1,070 781 618 509 426

Net Gas Production (MMcf) 2,347 7,996 6,422 5,471 4,787 4,225

Net NGL Production (MBbl) 220 750 602 513 449 396

Net Equivalent Daily Production (MBoe/d) 10.4 8.6 6.7 5.6 4.8 4.2

Total Revenue 19,723$ 66,616$ 50,871$ 42,285$ 36,583$ 31,276$

(-) Lease Operating (7,100) (23,438) (20,139) (18,245) (16,748) (15,506)

(-) Transportation Costs (4,382) (15,031) (11,693) (9,668) (8,405) (7,385)

(-) General & Administrative (1,836) (5,978) (4,805) (4,863) (3,658) (3,128)

Consolidated EBITDAX 6,405$ 22,170$ 14,235$ 9,510$ 7,771$ 5,257$

(+ / -) Capital Expenditures, Net (22) (905) (901) (550) (436) (637)

Unlevered Cash Flow 6,383$ 21,265$ 13,334$ 8,960$ 7,335$ 4,620$

(-) Cash Interest Expense, Net(1)

(616) (2,292) (1,106) (300) - -

Levered Cash Flow 5,767$ 18,973$ 12,228$ 8,659$ 7,335$ 4,620$

Beginning Cash 8,248$ 14,015$ 15,000$ 15,000$ 19,106$ 26,441$

(+) Levered Cash Flow 5,767 18,973 12,228 8,659 7,335 4,620

(-) FLSO Term Loan Paydown - (17,989) (12,228) (4,554) - -

Ending Cash 14,015$ 15,000$ 15,000$ 19,106$ 26,441$ 31,060$

FLFO RBL Facility Availability 15,000 15,000 15,000 15,000 15,000 15,000

Total Liquidity 29,015$ 30,000$ 30,000$ 34,106$ 41,441$ 46,060$

Memo:

FLFO RBL Facility Drawn -$ -$ -$ -$ -$ -$

FLSO Term Loan Balance 34,770 16,781 4,554 - - -

Total Debt 34,770$ 16,781$ 4,554$ -$ -$ -$

RBL Utilization 0% 0% 0% 0% 0% 0%

Total Debt-to-EBITDAX(2)

1.4x 0.2x 0.1x n/a n/a n/a

Net Debt-to-EBITDAX(2)

0.8x 0.1x n/a n/a n/a n/a

(1) Interest rate assumed to be L+600bps

(2) 4Q2020 annualized for total debt and net debt metrics
