1
EXHIBIT 10.4.1
AMENDED AND RESTATED
LOAN AGREEMENT
between
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, an individual
and
CHESAPEAKE ENERGY MARKETING, INC.
July 13, 1998
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TABLE OF CONTENTS
Page
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1. Loan Amount and Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.3 No Readvances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3. Collateral Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3.1 Initial Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.2 Additional Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.3 Security Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4. Conditions of Lending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.1 Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.2 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.3 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.4 Initial Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.5 Subsequent Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
5. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5.1 Capacity and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5.2 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6. Covenants of the Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6.1 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6.2 Collateral Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6.3 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
7. Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
7.1 Nonpayment of Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7.2 Other Nonpayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7.3 Breach of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7.4 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7.5 Insolvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7.6 Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7.7 Receivership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7.8 Judgment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
8. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
8.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
8.2 Acceleration of Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
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8.3 Selective Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
8.4 Waiver of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
9. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
9.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
9.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
9.3 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
9.4 Construction and Venue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
9.5 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
9.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Schedule "A" - Promissory Note
Schedule "B" - Initial Collateral
Schedule "C" - Security Agreement
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AMENDED AND RESTATED
LOAN AGREEMENT
THIS AGREEMENT is entered into effective this 13th day of
July, 1998, between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, an individual (the "Borrower"), and
CHESAPEAKE ENERGY MARKETING, INC., an Oklahoma corporation (the "Lender"), and
amends and restates in its entirety that certain Loan Agreement dated July 7,
1998 between the Borrower and the Lender.
W I T N E S S E T H :
1. Loan Amount and Purpose. Subject to the terms and conditions
of this Agreement, the Lender agrees to lend to the Borrower such amounts as
the Borrower may from time to time request prior to June 1, 1999, but not to
exceed principal advances in the aggregate amount of Five Million Dollars
($5,000,000.00). The loan proceeds will be used solely to reduce the principal
balances of existing loans to the Borrower from various margin lenders,
including prepayments, scheduled repayments and margin calls by such lenders.
2. Note. The loans to be made hereunder will be evidenced by the
Promissory Note (the "Note") in the form of Schedule "A" attached hereto as a
part hereof and payable on the following terms:
2.1 Interest. Except as otherwise provided in the Note,
the unpaid principal balance of the Note will bear
interest at the per annum rate equal to nine percent
(9%). Interest will be payable quarterly throughout
the loan term commencing on September 30, 1998, and
on the last day of each successive December, March,
June and September thereafter until the Note is paid
in full. All interest will be computed at a per diem
charge for the actual number of days elapsed on the
basis of a year consisting of three hundred
sixty-five (365) days.
2.2 Payments. Each payment on the Note will be applied
first to any obligations of the Borrower to the
Lender other than principal and interest, then to
accrued unpaid interest and the remainder to the
principal balance of the Note. The entire unpaid
principal balance of the Note, together with all
accrued and unpaid interest thereon, will be due and
payable on demand or on December 31, 1998, if no
demand for payment is made on or prior to such date.
2.3 No Readvances. It is understood that the Note is not
a revolving note and that on any prepayment of
principal, such prepaid amount will not be
readvanced.
3. Collateral Security. Payment of the Note will be secured by a
first lien on and security interest in the following collateral security (the
"Collateral"):
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3.1 Initial Collateral. The property described at
Schedule "B" attached hereto (the "Initial
Collateral").
3.2 Additional Collateral. Additional property
satisfactory to the Lender's loan committee.
3.3 Security Agreement. The Collateral will be subject
to a Security Agreement in the form of Schedule "C"
attached hereto as a part hereof (the "Security
Agreement").
4. Conditions of Lending. The obligation of the Lender to
perform this Agreement and to make the initial or any subsequent advance under
the Note is subject to the following conditions precedent:
4.1 Loan Documents. This Agreement, the Note, the
Security Agreement, financing statements, stock
powers and related documents and all extensions,
amendments and modifications thereof (collectively
the "Loan Documents") will have been duly executed,
acknowledged (where appropriate) by all parties
thereto and delivered to the Lender, all in form and
substance satisfactory to the Lender.
4.2 No Violation. The advance shall not cause the Lender
to be in violation of any law, rule or regulation
applicable to the Lender.
4.3 No Default. There will have occurred and be
continuing no event of default as of the date of this
Agreement or the date of any advances under the Note.
4.4 Initial Advance. An initial advance under the Note
in the principal amount of $4,108,399 has been made
on satisfaction of the foregoing conditions and
perfection of the Lender's first priority security
interest in the Initial Collateral.
4.5 Subsequent Advances. Subsequent advances (in the
maximum aggregate amount of $891,601) will be made
under the Note on satisfaction of the foregoing
conditions and creation and perfection of a first
priority security interest in favor of the Lender in
Collateral satisfactory to the Lender's loan
committee and compliance with the provisions of
Section 6.2.
5. Representations and Warranties. In order to induce the Lender
to enter into and perform the Loan Documents, the Borrower represents and
warrants to the Lender as follows:
5.1 Capacity and Power. The Borrower has adequate
capacity, power and legal right to enter into,
execute, deliver and perform the terms of the
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Loan Documents, to borrow money, to give security for
borrowings and to consummate the transactions
contemplated by the Loan Documents. The execution,
delivery and performance of the Loan Documents by the
Borrower will not violate any law, regulation, rule
or any other agreement or instrument binding on the
Borrower or the Collateral.
5.2 Full Disclosure. Neither this Agreement nor any
statement or document referred to herein or delivered
to the Lender by the Borrower or any other party on
behalf of the Borrower contains any material untrue
statement or omits to state a material fact necessary
to make the statements herein or therein not
misleading.
6. Covenants of the Borrower. Until the expiration of the
Lender's obligation to advance funds under this Agreement and payment in full
of the Note,
6.1 Financial Statements. The Borrower will furnish the
Borrower's financial statements to the Lender on a quarterly basis, within
thirty (30) days after the end of each calendar quarter, commencing with the
calendar quarter ending June 30, 1998 and such additional financial statements
as the Lender might reasonably request.
6.2 Collateral Ratio. Upon any advance under the Note,
the ratio of the value of the Collateral, as reasonably determined by the
Lender, to the outstanding principal then owing under the Note after any such
advance will be 1.5 to 1 and will satisfy the margin lending requirements of
Regulation U.
6.3 Mandatory Prepayments. The Borrower will promptly
apply any cash proceeds, distributions or principal payments (other than
scheduled dividends or interest payments) received in respect of the Collateral
as prepayments of principal amounts owing under the Note.
7. Default. The Lender may terminate all of the Lender's
obligations under the Loan Documents and may declare the Note and all other
indebtedness and obligations of the Borrower owing to the Lender to be due and
payable if any of the following events of default occur and have not been cured
or waived by the Lender:
7.1 Nonpayment of Note. Default in payment when due of
any interest on or principal of the Note; or
7.2 Other Nonpayment. Default in the payment of any
amount payable to the Lender under the terms of the
Loan Documents or any agreement in connection
therewith; or
7.3 Breach of Agreement. Default in the performance or
observance of any covenant contained in the Loan
Documents, any other agreement between
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the Borrower and the Lender or under the terms of any
other instrument delivered to the Lender in
connection with this Agreement; or
7.4 Representations and Warranties. Any representation,
statement, certificate, schedule or report made or
furnished to the Lender on behalf of the Borrower
proves to be false or erroneous in any material
respect or any warranty ceases to be complied with in
any material respect; or
7.5 Insolvency. The Borrower admits the inability to pay
the Borrower's debts as such debts mature; or
7.6 Bankruptcy. The institution of bankruptcy,
reorganization, readjustment of debt, liquidation or
receivership proceedings by or against the Borrower
under the Bankruptcy Code, as amended, or any part
thereof, or under any other laws, whether state or
federal, for the relief of debtors, now or hereafter
existing; or
7.7 Receivership. The appointment of a receiver or
trustee for the Borrower or for any substantial part
of the Collateral; or
7.8 Judgment. Entry by any court of a final judgment
against the Borrower or an attachment of any part of
the Collateral by any means, including, without
limitation, levy, distraint, replevin or self-help,
which is not discharged or stayed within ten (10)
days thereof.
8. Remedies. On demand, or on the occurrence of an event of
default the Lender may, at the Lender's option:
8.1 Termination. Terminate the Lender's obligations
hereunder, including the obligation to make any
advances under the Note.
8.2 Acceleration of Note. Declare the Note and all sums
due pursuant to the Loan Documents to be immediately
due and payable, whereupon the same will become
forthwith due and payable, and the Lender will be
entitled to proceed to selectively and successively
enforce the Lender's rights under the Loan Documents
or any other instruments delivered to the Lender in
connection with the Loan Documents; provided that if
any event of default specified in Sections 7.5, 7.6
or 7.7 shall occur, all amounts owing under the Loan
Documents, including the Note, shall thereafter
become due and payable concurrently therewith, and
the Lender's obligations hereunder shall
automatically terminate, without presentment, demand,
protest, notice of default, notice of acceleration or
intention to accelerate or other notice of any kind,
all of which the Borrower hereby expressly waives.
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8.3 Selective Enforcement. In the event the Lender
elects to selectively and successively enforce the
Lender's rights under any one or more of the
instruments securing payment of the indebtedness
evidenced by the Note, such action will not be deemed
a waiver or discharge of any other lien or
encumbrance securing payment of any of the
indebtedness evidenced by the Note until such time as
the Lender has been paid in full all sums advanced by
the Lender plus all accrued interest thereon.
8.4 Waiver of Default. The Lender may, by an instrument
or instruments in writing, signed by the Lender,
waive any default which has occurred and any of the
consequences of such default, and, in such event, the
Lender and the Borrower will be restored to their
respective former positions, rights and obligations
hereunder. Any default so waived will, for all
purposes of this Agreement, be deemed to have been
cured and not to be continuing, but no such waiver
will extend to any subsequent or other default or
impair any consequence of such subsequent or other
default.
9. Miscellaneous. It is further agreed as follows:
9.1 Expenses. All reasonable out-of-pocket expenses
incurred by the Lender in connection with the
enforcement of the Loan Documents including, without
limitation, reasonable attorneys' fees, will be paid
by the Borrower. In addition, the Borrower will pay
all recording fees and all other costs and fees
incurred in connection with the loan or the Loan
Documents.
9.2 Notices. All notices, requests and demands will be
served by hand delivery, telefacsimile or by
registered or certified mail, with return receipt
requested, as follows:
To the Borrower: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
To the Lender: Chesapeake Energy Marketing, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as either party designates
for such purpose in a written notice to the other
party. Notice will be deemed to have been given on
the date actually received in the event of personal
or
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telefacsimile delivery or on the date two (2) days
after notice is deposited in the mail, properly
addressed, postage prepaid.
9.3 Severability. In the event any one or more of the
provisions contained in any of the Loan Documents is
determined to be invalid, illegal or unenforceable in
any respect in any jurisdiction, the validity,
legality and enforceability of such provision or
provisions will not in any way be affected or
impaired thereby in any other jurisdiction nor will
the validity, legality and enforceability of the
remaining provisions contained in the Loan Documents
in any way be affected or impaired thereby.
9.4 Construction and Venue. This Agreement and the
documents issued hereunder are executed and delivered
as an incident to a lending transaction negotiated
and to be performed in Oklahoma County, Oklahoma.
The Loan Documents are intended to constitute a
contract made under the laws of the State of Oklahoma
and to be construed in accordance with the internal
laws of the State of Oklahoma. The descriptive
headings of the paragraphs of this Agreement are for
convenience only and are not to be used in the
construction of the content of this Agreement. All
actions relating to or arising under the Loan
Documents will be instituted in the courts of the
State of Oklahoma sitting in Oklahoma County,
Oklahoma, or the United States District Court for the
Western District of Oklahoma, and the Borrower
irrevocably and unconditionally waives any objection
to the venue in such court and any claim that any
action has been brought in an inconvenient forum.
9.5 No Waiver. No advance of loan proceeds under the
Loan Documents will constitute a waiver of any of the
Borrower's representations, warranties, conditions or
covenants under the Loan Documents.
9.6 Counterparts. This Agreement may be executed via
telefacsimile in two or more counterparts and it will
not be necessary that the signatures of all parties
hereto be contained on any one counterpart hereof.
Each counterpart will be deemed an original, but all
counterparts together will constitute one and the
same instrument.
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IN WITNESS WHEREOF, the Borrower and the Lender have
executed this Agreement effective on the date first above written.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, individually
(the "Borrower")
CHESAPEAKE ENERGY MARKETING, INC., an
Oklahoma corporation
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
and Chief Financial Officer
(the "Lender")
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SCHEDULE A
PROMISSORY NOTE
$5,000,000.00 Oklahoma City, Oklahoma
July 13, 1998
FOR VALUE RECEIVED, the undersigned, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, an
individual (the "Borrower"), promises to pay to the order of CHESAPEAKE ENERGY
MARKETING, INC., an Oklahoma corporation (the "Lender"), at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other place as may be designated in
writing by the holder of this Note, the principal sum of FIVE MILLION DOLLARS
($5,000,000.00), or so much as may be disbursed hereunder, as follows:
Prior to default, the unpaid principal balance of this Note
will bear interest at a per annum rate equal to nine percent
(9%). Interest will be payable quarterly throughout the loan
term commencing on September 30, 1998, and on the last day of
each successive December, March, June and September thereafter
until this Note is paid in full. All interest will be
computed at a per diem charge for the actual number of days
elapsed on the basis of a year consisting of three hundred
sixty five (365) days.
All payments will be applied first to any obligations of the
Borrower to the Lender other than principal and interest, then
to accrued unpaid interest on this Note and the remainder to
the principal balance of this Note. The entire unpaid
principal balance of this Note, together with all accrued and
unpaid interest thereon, will be due and payable on demand or
on December 31, 1998 if no demand for payment is made on or
prior to such date.
The Borrower will promptly apply any cash proceeds,
distributions or principal payments (other than scheduled
dividends or interest payments) received in respect of the
Collateral as prepayments of the principal amount owing under
the Note.
Except as otherwise defined herein all terms defined in the
Amended and Restated Loan Agreement of even date herewith between the Borrower
and the Lender (the "Loan Agreement") will have the same meanings herein as
therein. This Note amends and restates that certain Promissory Note dated July
7, 1998 in the principal amount of $5,000,000.00 made by the Borrower in favor
of the Lender, and all Collateral securing such Promissory Note will remain in
full force and effect. Any sum not paid when due will bear interest at fifteen
percent (15%) per annum and will be paid at the time of and as a condition
precedent to the curing of any default under the Loan Documents. During the
existence of any such default, the holder of this Note may apply payments
received on any amount due hereunder as the holder may determine. The Borrower
will have the right to prepay this Note in whole or in part at any time without
penalty.
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Advances and payments hereunder may, at the option of the
Lender, be recorded on this Note and shall be prima facie evidence of such
advances, payments and unpaid balance of this Note. All advances hereunder
shall be made by the Lender in accordance with the terms of the Loan Agreement.
The Borrower agrees that if, and as often as, this Note is
placed in the hands of an attorney for collection or to defend or enforce any
of the holder's rights hereunder or under any instrument securing payment of
the same, the Borrower will pay to such holder its reasonable attorneys' fees
and all expenses incurred in connection therewith, whether or not an action
shall be instituted to enforce this Note.
This Note is given by the Borrower and accepted by the holder
hereof pursuant to a lending transaction contracted, consummated and to be
performed in Oklahoma City, Oklahoma County, Oklahoma, and this Note is to be
construed according to the laws of the State of Oklahoma.
This Note is issued subject to the terms of the Loan Agreement
and is secured by the Loan Documents. On demand or on the breach of any
provision of this Note or any provision of the Loan Documents at the option of
the holder, the entire unpaid indebtedness evidenced by this Note will become
due, payable and collectible then or thereafter as the holder may elect,
regardless of the date of maturity of this Note. Notice of the exercise of
such option is hereby expressly waived. Failure by the holder to exercise such
option will not constitute a waiver of the right to exercise the same in the
event of any subsequent default.
The failure of the Lender to exercise any of the remedies or
options set forth in this Note, or in any instrument securing payment hereof,
upon the occurrence of one or more events of default, shall not constitute a
waiver of the right to exercise the same or any other remedy at any subsequent
time in respect to the same or any other event of default. The acceptance by
the Lender of any payment which is less than the total of all amounts due and
payable at the time of such payment shall not constitute a waiver of the right
to exercise any of the foregoing remedies or options at that time or any
subsequent time, or nullify any prior exercise of such remedy or option,
without the express consent of the Lender.
Time is of the essence of each obligation of the Borrower
hereunder.
For the purposes of computing interest under this Note,
payments of all or any portion of the principal sum owing under this Note will
not be deemed to have been made until such principal payments are received by
the Lender in collected funds.
The makers, endorsers, sureties, guarantors and all other
persons who may become liable for all or any part of this obligation severally
waive presentment for payment, protest, demand and notice of nonpayment. Said
parties consent to any extension of time (whether one or more) of payment
hereof, the modification (whether one or more) of payment hereof, release or
substitution of all or part of the security for the payment hereof or release
of any party liable for payment of this obligation. Any such extension or
release may be made without notice to any such party and without discharging
such party's liability hereunder.
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IN WITNESS WHEREOF, the Borrower has executed this instrument
effective the date first above written.
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, individually
(the "Borrower")
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SCHEDULE C
AMENDED AND RESTATED
SECURITY AGREEMENT
THIS AMENDED AND RESTATED SECURITY AGREEMENT is executed
effective the 13th day of July, 1998, between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, an
individual (the "Debtor"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Trustee of the ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ 1992 Revocable Trust, CHESAPEAKE INVESTMENTS, AN OKLAHOMA LIMITED
PARTNERSHIP (the Debtor, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Trustee, and Chesapeake
Investments, an Oklahoma Limited Partnership, are herein collectively referred
to as "Pledgor"), each having a notice address at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and CHESAPEAKE ENERGY MARKETING, INC., an Oklahoma
corporation having a notice address at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Secured Party"). This Agreement amends and restates in
its entirety that certain Security Agreement dated July 7, 1998 between the
Debtor and the Secured Party, and all collateral security subject to such
Security Agreement continues in full force and effect.
W I T N E S S E T H :
WHEREAS, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ is liable to the Secured Party
under that certain Promissory Note of even date herewith in the original face
amount of FIVE MILLION DOLLARS ($5,000,000.00) (the "Note") in connection with
that certain Amended and Restated Loan Agreement (the "Loan Agreement") of even
date herewith between the Debtor and the Secured Party; and
WHEREAS, as a material condition precedent to the Secured
Party's entering into the Loan Agreement, the Pledgor has agreed to secure
payment of the Note and all other obligations of the Debtor to the Secured
Party by granting the Secured Party a lien, security interest and pledge
covering certain assets of the Pledgor.
NOW, THEREFORE, (i) in order to comply with the terms and
conditions of the Loan Agreement; (ii) for and in consideration of the premises
and the agreements herein contained; and (iii) for other good and valuable
consideration, the receipt and sufficiency of all of which are hereby
acknowledged, the Pledgor hereby agrees with the Secured Party as follows:
1. Definitions. Unless otherwise defined herein, all terms which
are defined in the Loan Agreement will have the same meanings herein as therein
unless the context otherwise requires, and all terms used herein which are
defined in the Oklahoma Uniform Commercial Code ("UCC") will have the same
meanings herein unless the context otherwise requires.
2. Security Interest. As collateral security for the Secured
Indebtedness, the Pledgor hereby grants to the Secured Party a security
interest in, an assignment of, a general lien upon, and a right of set-off
against, the following described property (the "Property"):
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2.1 all of the Pledgor's right, title and interest in and
to the financial assets, securities, investment
property and other property described at Exhibit A
attached hereto, and all certificates representing
such property, and all tangible and intangible rights
in connection therewith and all accounts, contract
rights and general intangibles relating thereto (the
"Assets");
2.2 any additional assets from time to time delivered to
or deposited with the Secured Party as security for
the obligations of the Debtor to the Secured Party or
otherwise pursuant to the terms of this Agreement; and
2.3 all cash, securities, dividends (whether cash,
property or stock), preferential, conversion or other
rights attaching to the Assets, all distributions or
payments in partial or complete liquidation or
redemption or as a result of reclassifications,
readjustments, reorganizations or changes in the
capital structure of the issuer of the Assets and all
rights and privileges pertaining thereto and all
subscriptions, warrants, options and any other rights
issued by the issuer of the Assets or any other person
upon or in connection with the Assets and all other
proceeds, products, additions to, replacements of,
substitutions for and accessions of any and all
Property described in this paragraph 2.
3. Secured Indebtedness. The security interest granted hereby in
the Property is given to secure the Debtor's payment of: (a) the Note together
with interest thereon; (b) any and all other or additional obligations of the
Debtor to the Secured Party; (c) all extensions, renewals, amendments,
modifications, substitutions and changes in form to the Note; (d) all costs and
expenses incurred in connection with the collection of the Note and any other
obligations of the Debtor to the Secured Party and enforcement of the Loan
Documents and the Secured Party's rights under this Agreement and all other
Loan Documents, including attorneys' fees and expenses; (e) all advances made
by the Secured Party to protect the security hereof, including advances made
for or on account of levies, insurance, repairs, taxes and for maintenance or
recovery of the Property, together with interest thereon at the rate specified
in the Note; (f) any and all other indebtedness, liabilities and obligations of
the Debtor to the Secured Party whether now owing or hereafter incurred; and
(g) performance of the agreements herein set forth (the foregoing items (a)
through (g) are collectively referred to herein as the "Secured Indebtedness").
4. Debtors' Representations and Covenants. The Pledgor hereby
warrants, represents and agrees as follows:
4.1 Principal Place of Business. The Pledgor's principal
place of business is ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
4.2 Title. The Pledgor has absolute title to the Property
free and clear of all liens, encumbrances, negative
pledges and security interests except the
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security interest hereby granted to the Secured Party
and such other rights, if any, of the Secured Party,
and the Pledgor warrants and will defend the same unto
the Secured Party against the claims and demands of
all other persons and parties whomsoever.
4.3 Transfers. Without the prior written consent of the
Secured Party, the Pledgor agrees that the Debtor will
not sell, exchange or in any manner dispose of any of
the Property or any interest therein nor permit any
other lien, encumbrance or security interest to attach
thereto except those contemplated herein.
4.4 Secured Party's Security Interest. This Agreement
creates a valid and binding security interest in the
Property securing the Secured Indebtedness. There are
no consents required in connection with the grant by
the Pledgor of the security interests in the Property.
The Pledgor has good right and lawful authority to
pledge the Property in the manner hereby done or
contemplated. All filings and other actions necessary
or appropriate to perfect or protect such security
interest will be or have been duly taken. No further
or subsequent filing, recording, registration or other
public notice of such security interest is necessary
in any office or jurisdiction in order to perfect such
security interest or to continue, preserve or protect
such security interest except for continuation
statements.
4.5 Inspection. The Secured Party may from time to time,
upon request, inspect all of the Pledgor's records
concerning any of the Property.
4.6 Further Assurances. The Pledgor will from time to
time sign, execute, deliver and file, alone or with
the Secured Party, any financing statements, stock
powers, notices to issuers of securities constituting
collateral security, security agreement or other
documents; procure any instruments or documents as may
be reasonably requested by the Secured Party; and take
all further action that may be necessary or desirable,
or that the Secured Party may request, to confirm,
perfect, preserve and protect the security interests
intended to be granted hereby, and in addition, the
Pledgor hereby authorizes the Secured Party to execute
and deliver on behalf of the Pledgor and file such
financing statements, stock powers, security
agreements and other documents without the signature
of the Pledgor either in the Secured Party's name or
in the name of the Pledgor and as agent and
attorney-in-fact for the Pledgor. The Pledgor shall
do all such additional and further acts or things,
give such assurances and execute such documents or
instruments as the Secured Party requires to vest more
completely in and assure to the Secured Party its
rights under the Loan Documents.
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4.7 Filing Reproductions. At the option of the Secured
Party, a carbon, photographic or other reproduction of
this Agreement or of a financing statement covering
the Property shall be sufficient as a financing
statement and may be filed as a financing statement.
4.8 Financing Statement Filings; Notifications. The
Pledgor will immediately notify the Secured Party of
any condition or event that may change the proper
location for the filing of any financing statements or
other public notice or recordings for the purpose of
perfecting a security interest in the Property.
Without limiting the generality of the foregoing, the
Pledgor will immediately notify the Secured Party of
any change in the Pledgor's name or identity. In any
notice furnished pursuant to this paragraph 4.8, the
Pledgor will expressly state that the notice is
required by this Agreement and contains facts that
will or may require additional filings of financing
statements or other notices for the purpose of
continuing perfection of the Secured Party's security
interest in the Property.
4.9 Possession. Physical possession of the certificates
representing or evidencing the Property shall be
delivered to and held by Secured Party.
5. Secured Party's Expenditures. If the Pledgor fails to make
any expenditure or pay any sum necessary to discharge any lien, encumbrance,
levy, security interest or other charge on the Property as required hereby, the
Secured Party may but shall not be required to make any expenditure for such
purpose or purposes and all sums so expended shall be payable on demand, shall
bear interest at the rate specified in the Note and all such sums and interest
will additionally be secured hereby. The Pledgor will pay all costs of filing
any financing, continuation or termination statements with respect to the
security interest granted hereby in the Property.
6. Power of Attorney. The Secured Party is hereby fully
authorized and empowered (without the necessity of any further consent or
authorization from the Pledgor) and the right is expressly granted to the
Secured Party, and the Pledgor hereby constitutes, appoints and makes the
Secured Party as the Pledgor's true and lawful attorney-in-fact and agent for
the Pledgor and in the Pledgor's name, place and stead with full power of
substitution, in the Secured Party's name or the Pledgor's name or otherwise,
for Secured Party's sole use and benefit, but at the Pledgor's cost and
expense, to exercise, without notice, all or any of the following powers at any
time with respect to all or any of the Property after the occurrence of any
default under this Agreement or any of the other Loan Documents which has not
been timely cured: (a) all voting rights, all other corporate rights and all
conversion, exchange, subscription or other rights pertaining to the Property,
whether or not the Property has been registered in the Secured Party's name and
this Agreement will constitute the Pledgor's proxy to the Secured Party for
such purpose; (b) to demand, ▇▇▇ for, collect, receive and give acquittance for
any and all monies due or to become due by virtue thereof and otherwise deal
with proceeds; (c) to receive, take, endorse, assign and deliver any and all
checks, notes, drafts, documents and other
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negotiable and non-negotiable instruments and chattel paper taken or received
by the Secured Party in connection therewith; (d) to settle, compromise,
compound, prosecute or defend any action or proceeding with respect thereto;
(e) to sell, transfer, assign or otherwise deal in or with the same or the
proceeds or avails thereof as fully and effectively as if the Secured Party
were the absolute owner thereof; and (f) to extend the time of payment of any
or all thereof and to grant waivers and make any allowance or other adjustment
with reference thereto; provided, however, the Secured Party shall be under no
obligation or duty to exercise any of the powers hereby conferred upon it and
shall be without liability for any act or failure to act in connection with the
collection of, or the preservation of any rights under, any Property.
7. Default; Remedies. On the occurrence of any event of default
under any of the Loan Documents or if the Pledgor fails to keep, observe,
comply with and perform all of the obligations and undertakings under this
Agreement or any of the other Loan Documents or fails to pay any principal or
interest on the Note when due, then, and in any such event, the Secured Party
may, at its option and without notice to any party, declare all or any portion
of the Secured Indebtedness to be immediately due and payable and may proceed
to enforce payment of the same, to exercise any or all rights and remedies
provided herein, in the other Loan Documents, and by the UCC and otherwise
available at law or in equity. All remedies hereunder are cumulative, and any
indulgence or waiver by the Secured Party shall not be construed as an
abandonment of any other right hereunder or of the power to enforce the same or
another right at a later time. Whether the Secured Party elects to exercise
any other rights or remedies under this Agreement or applicable law, the
Secured Party will be entitled to have a receiver appointed to take possession
of the Property without notice, which notice the Pledgor hereby waives,
notwithstanding anything contained in this Agreement or any law heretofore or
hereafter enacted.
8. Secured Party's Duties. The powers conferred upon the Secured
Party by this Agreement are solely to protect its interest in the Property and
will not impose any duty upon the Secured Party to exercise any such powers.
The Secured Party shall be under no duty whatsoever to make or give any
presentment, demand for performance, notice of nonperformance, protest, notice
of protest, notice of dishonor, or other notice or demand in connection with
any of the Property or the Secured Indebtedness, or to take any steps necessary
to preserve any rights against prior parties. The Secured Party shall not be
liable for failure to collect or realize upon any or all of the Secured
Indebtedness or Property, or for any delay in so doing, nor shall the Secured
Party be under any duty to take any action whatsoever with regard thereto.
9. Continuing Agreement. This is a continuing Agreement and the
grant of a security interest hereunder shall remain in full force and effect
and all the rights, powers and remedies of the Secured Party hereunder shall
continue to exist until all of the Secured Indebtedness is paid in full as the
same becomes due and payable and until the Secured Party, upon request of the
Pledgor, has executed a written termination statement, reassigned to the
Pledgor, without recourse, the Property and all rights conveyed hereby and
returned possession of any Property in the Secured Party's possession to the
Pledgor.
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10. Preservation of Liability. Neither this Agreement nor the
exercise by the Secured Party of (or the failure to so exercise) any right,
power or remedy conferred herein or by law shall be construed as relieving any
person liable on the Secured Indebtedness from liability on the Secured
Indebtedness and for any deficiency thereon.
11. Waivers. It is the intention of the Pledgor and Secured Party
that the validity of this Security Agreement shall not be impaired by any
defenses given to sureties or guarantors at law or in equity or by virtue of
the fact that the Note was executed by the Debtor rather than each Pledgor.
Nonexercise by the Secured Party of any right or remedy of the Secured Party
provided in the Note, Loan Agreement or other Loan Documents shall in no manner
affect the validity or enforceability of this Agreement or give any Pledgor any
recourse against the Secured Party.
11.1 Certain Actions. Each Pledgor agrees that from time
to time, without affecting the Pledgor's obligations hereunder or the Secured
Party's rights in the Property, and without giving notice to or obtaining the
consent of any Pledgor, and without liability on the Secured Party's part, the
Secured Party may, at its option, (i) extend the time for payment of the Note
or any interest thereon, (ii) release anyone liable under the Loan Agreement or
Note; (iii) renew, rearrange, consolidate or modify the Note; (iv) take or
release any security or additional security for the Note or Loan Agreement; (v)
increase or decrease the rate of interest payable on the Note; or (vi) grant
any other leniencies, indulgences, or compromises under the Loan Agreement or
Note as the Secured Party may deem appropriate or desirable.
11.2 Certain Defenses. Each Pledgor hereby waives
diligence, presentment, demand, notice of demand, notice of nonpayment or
dishonor, protest, notice of protest and all other notices of any kind
whatsoever as to the Note, or any renewal, extension, rearrangement,
consolidation or modification thereof. Each Pledgor agrees that it shall not
be necessary for the Secured Party, in order to enforce this Agreement, first,
(i) to exhaust its remedies against the Debtor, any guarantor or others liable
on the obligations evidenced by the Note; or (ii) to enforce the Secured
Party's rights in any other security given to secure the Note. Each Pledgor
further waives, to the fullest extent permitted by law, (i) all defenses given
to sureties or guarantors at law or in equity other than the actual payment of
the sums evidenced by the Note and secured by this Agreement and the
performance of the other covenants and agreements contained herein and (ii) any
defense it may have to any liability hereunder based on any asserted lack of
diligence, delay in prosecuting any action with regard to the Note, or any
impairment of any other security for payment of the Note.
11.3 Additional Waivers. The validity of this Agreement as
to the indebtedness secured by the Note shall not be affected in any manner
whatsoever on account of any or all of the following: (i) incapacity, death,
disability, dissolution or termination of any person or entity; (ii) the
failure of the Secured Party to file or enforce a claim against the estate
(either in administration, bankruptcy or other proceedings) of the Debtor, any
Pledgor or any other person or entity; (iii) any defenses, setoffs or
counterclaims which may be available to the Debtor or any other person or
entity; (iv) any modifications, extensions, amendments, consents, releases
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or waivers with respect to the Note or any other instrument now or hereafter
securing the payment of the Note, or any guaranty of the Note; (v) any failure
of the Secured Party to give any notice to any Pledgor of any default under any
other instrument securing payment of the Note; or (vi) any impairment,
modification, change, release or limitation of the liability of, or stay of
actions or lien enforcement proceedings against, the Debtor, its property or
its estate in bankruptcy resulting from the operation of any present or future
federal or state statute relating to bankruptcy or insolvency or from the
decision of any court relating thereto. The Secured Party shall not be
required to pursue any other remedies before invoking the benefits of this
Agreement and, specifically, it shall not be required to exhaust its remedies
against the Debtor or any guarantor or surety or to proceed against any other
security now or hereafter existing for the payment of any of the indebtedness
evidenced by the Note. The Secured Party may exercise its rights hereunder
without bringing a separate action against the Debtor.
12. Notices. Any notice or demand under this Agreement or in
connection with this Agreement may be given at the addresses set forth in the
initial paragraph of this Agreement or by telefacsimile, but actual notice,
however given or received, will always be effective.
13. Successors and Assigns. The covenants and agreements herein
contained by or on behalf of the Pledgor shall bind the Pledgor, and the
Pledgor's legal representatives, successors and assigns and shall inure to the
benefit of the Secured Party and the Secured Party's successors and assigns.
14. Invalidity. If any provision hereof shall for any reason be
held to be invalid or unenforceable, such invalidity or unenforceability shall
not affect any other provision hereof.
15. Construction. This Agreement will be governed by and
construed in accordance with the laws of the State of Oklahoma applicable to
contracts made and to be performed entirely within the State of Oklahoma.
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IN WITNESS WHEREOF, this Agreement is executed
effective the date first above written.
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, individually
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Trustee of the
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 1992 Revocable Trust
CHESAPEAKE INVESTMENTS, AN OKLAHOMA
LIMITED PARTNERSHIP
By
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Sole General Partner
(the "Pledgor")
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