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EXHIBIT "99.2"
LOAN PURCHASE AGREEMENT
THIS AGREEMENT is entered into effective July 23, 2001, among
CHESAPEAKE ENERGY CORPORATION, an Oklahoma corporation ("Chesapeake"), XXXXXX X.
XXXXXX III, an individual ("Xxxxxx"), and RAMIIILAJ, A LIMITED PARTNERSHIP, an
Oklahoma limited partnership ("Ramiiilaj").
BACKGROUND
WHEREAS, Chesapeake, Seven Seas Petroleum Inc., a Cayman Islands
exempted company limited by shares (the "Borrower") and all of the subsidiaries
of the Borrower entered into that certain Note Purchase Agreement and Loan
Agreement (the "Loan Agreement") which provides for the extension of credit (the
"CEC Loan") by Chesapeake to the Borrower in the amount of Twenty-Two Million
Five Hundred Thousand Dollars ($22,500,000.00) as evidenced by that certain
promissory note of even date herewith (the "Note") and the related issuance of
warrants (the "Warrants") to purchase up to Twelve Million Six Hundred Twelve
Thousand One Hundred Forty (12,612,140) of the Borrower's ordinary shares,
representing twenty percent (20%) of the outstanding ordinary shares of the
Borrower on a fully diluted basis;
WHEREAS, Xxxxxx and Ramiiilaj (jointly and severally, the "Xxxxxx
Parties") are affiliates of the Borrower and under the terms of the Loan
Agreement agreed with others to purchase the Borrower's 12% Series B Senior
Secured Notes (the "Series B Notes") in the amount of Twenty- Two Million Five
Hundred Thousand Dollars ($22,500,000.00) as a condition to Chesapeake's
obligation to extend the Loan;
WHEREAS, under the terms of the Loan Agreement, the Borrower was
required to offer (the "Rights Offering") to the Borrower's stockholders the
right to purchase an approximate pro rata share of the Corporation's Series A
Senior Secured Notes due 2004 in the aggregate principal amount of Twenty-Two
Million Five Hundred Thousand Dollars ($22,500,000.00) (the "Series A Notes")
coupled with detachable warrants to purchase the Borrower's ordinary shares all
on terms substantially similar to the terms of the Loan Agreement with the
proceeds to be used to redeem all of the Series B Notes;
WHEREAS, to the extent that the Series A Notes are not fully
subscribed for in the Rights Offering, the holders of the Series B Notes are
required to exchange all of such parties' Series B Notes for Series A Notes and
the related warrants; and
WHEREAS, in order to induce Chesapeake to enter into and perform
the Loan Agreement the Xxxxxx Parties agreed at Chesapeake's request as provided
herein to purchase a portion of the CEC Loan (together with a pro rata portion
of the Warrants) to the extent necessary to cause the principal amount of the
Series A Notes and the CEC Loan held by the Xxxxxx Parties to equal up to a
minimum amount of Ten Million Dollars ($10,000,000.00).
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Purchase Agreement. Subject to the terms and conditions of this Agreement and
in consideration of Chesapeake entering into and performing the terms of the
Loan Agreement, the
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Xxxxxx Parties hereby unconditionally and irrevocably agree to purchase from
Chesapeake a portion of the unpaid principal balance of the CEC Loan (the
"Purchased Portion") equal to the lesser of: (a) the principal portion of the
CEC Loan requested by Chesapeake to be purchased by the Xxxxxx Parties as
provided in this Agreement; or (b) Ten Million Dollars ($10,000,000.00) reduced
by the principal amount of the Series A Notes held by the Xxxxxx Parties. In
addition to the Purchased Portion of the CEC Loan to be purchased by the Xxxxxx
Parties pursuant to the foregoing sentence, the Xxxxxx Parties will purchase all
accrued and unpaid interest attributable to the Purchased Portion as of the
Closing Date (as hereinafter defined). In addition, to the extent that the
Xxxxxx Parties actually purchase any portion of the CEC Loan under this
Agreement, Chesapeake agrees that simultaneously with such purchase Chesapeake
will convey to the Xxxxxx Parties a portion of the Warrants equal to the
Purchased Portion divided by Twenty-Two Million Five Hundred Thousand Dollars
($22,500,000.00), rounded to the nearest whole Warrant.
2. Purchase Price. The purchase price of the Purchased Portion of the CEC Loan
will be the amount equal to the Purchased Portion, plus any accrued and unpaid
interest on the Purchased Portion plus any unpaid sums expended by Chesapeake in
connection with the CEC Loan (the "Purchase Price"). The Purchase Price will be
paid by the Xxxxxx Parties in immediately available United States Dollars on the
day of closing of the purchase of the Purchased Portion.
3. Sale Procedure. Notice of the exercise by Chesapeake of its rights hereunder
to sell the Purchased Portion to the Xxxxxx Parties and the consummation of such
sale will be performed as follows:
3.1 Notices. On consummation of the purchase of the Series A Notes
by the Xxxxxx Parties in the Rights Offering, the Xxxxxx
Parties shall notify Chesapeake (the "Offer Notice") as to the
completion of the Rights Offering and the principal amount of
the Series A Notes purchased by the Xxxxxx Parties for their
own account (excluding any Series A Notes held as agent for
any other parties). Chesapeake shall have fifteen (15) days
after receipt of the Offer Notice (the "Option Period") to
elect to require the Xxxxxx Parties to purchase a portion of
the CEC Loan as above provided. Chesapeake election shall be
made by giving written notice (the "Election Notice") to the
Xxxxxx Parties within the Option Period. The Election Notice
shall specify (i) the amount of the Purchased Portion and (ii)
a date for the Closing (hereafter defined), which shall not be
sooner than two (2) days nor later than five (5) days after
the Election Notice is given.
3.2 Closing. The consummation of the purchase and sale of the
Purchased Portion and the portion of the Warrants to the
Xxxxxx Parties (the "Closing") will be held at the offices of
Commercial Law Group, P.C., 000 Xxxx Xxxxxx, Xxxxx 0000,
Xxxxxxxx Xxxx, Xxxxxxxx, at 10:00 A.M. on the date specified
by Chesapeake in the Election Notice (the "Closing Date").
3.3 Deliveries. At the Closing, Chesapeake will deliver to the
Xxxxxx Parties: (a) a participation certificate evidencing the
Purchased Portion of the CEC Loan or such other evidence as is
reasonably acceptable to the parties evidencing the Xxxxxx
Parties' ownership of the Purchased Portion; and (b) the
required portion of the Warrants. The Xxxxxx Parties will
deliver to Chesapeake in immediately available funds the
Purchase Price. The parties hereby agree: (x) the Purchased
Portion and the Warrants to be assigned under this Agreement
will be assigned
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"AS IS WHERE IS" without any representation, warranty,
recourse or liability in any event; (y) to use reasonable
efforts to cause the Borrower to issue a separate warrant
agreement for the warrants to be assigned to the Xxxxxx
Parties; and (z) in the event that a separate warrant
agreement is not issued, to take such actions as may be
reasonable for Chesapeake to hold the Warrants to be assigned
hereunder as agent for the Xxxxxx Parties.
4. Voting Agreement. Under the terms of the Shareholders Rights Agreement of
even date herewith among Chesapeake and the Borrower, Chesapeake has the right
to request representation on the Borrower's board of directors by persons
designated by Chesapeake. In the event that Chesapeake exercises such rights,
each of the Xxxxxx Parties agrees to take all action necessary including, but
not limited to, the voting of such Xxxxxx Party's capital stock, the execution
of written consents, the calling of special meetings, the removal of directors,
the filling of vacancies on the Borrower's board of directors, the waiving of
notice and the attending of meetings, so as to cause Chesapeake's designees to
be voted or appointed to the Borrower's board of directors. The foregoing
expressly includes causing the foregoing actions to be taken or performed by any
affiliates of the Xxxxxx Parties. Notwithstanding the foregoing, Xxxxxx shall
not be required to take any action that, in the opinion of counsel, would
violate his fiduciary duties to the Borrower and its shareholders.
5. Miscellaneous. It is further agreed as follows:
5.1 Default. The parties agree that a violation by any party of
the terms of this Agreement cannot be adequately measured or
compensated in money damages and that any breach or threatened
breach of this Agreement by a party to this Agreement would do
irreparable injury to the non-breaching party. The parties,
therefore, agree that in the event of any breach or threatened
breach by a party to this Agreement of the terms and
conditions set forth in this Agreement, the non- breaching
party will be entitled, in addition to any and all other
rights and remedies that it may have in law or in equity, to
apply for and obtain injunctive relief requiring the breaching
party to be restrained from any such breach, or threatened
breach or to refrain from a continuation of any actual breach.
5.2 Headings. The section headings in, and the table of contents
of, this Agreement are for convenience of reference only and
are not part of the substance of this Agreement. References in
this Agreement to paragraphs are references to the paragraphs
of this Agreement unless otherwise specified.
5.3 Severability. The parties to this Agreement expressly agree
that it is not their intention to violate any public policy,
law, statutory or common law rules or the regulations or
decisions of any governmental or regulatory body. If any
provision of this Agreement is judicially or administratively
interpreted or construed as being in violation of any such
policy, law, rule, regulation or decision, the provision
causing such violation will be inoperative (and in lieu
thereof there will be inserted such provision as may be valid
and consistent with the intent of the parties under this
Agreement) and the remainder of this Agreement, as amended,
will remain binding upon the parties to this Agreement, unless
the inoperative provision would cause enforcement of the
remainder of this Agreement to be inequitable under the
circumstances.
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5.4 Notices. Any notice, demand or communication required or
permitted to be given by any provision of this Agreement will
be in writing and will be deemed to have been given and
received when delivered personally or by telefacsimile to the
party designated to receive such notice, or on the date
following the day sent by overnight courier, or on the third
(3rd) business day after the same is sent by certified mail,
postage and charges prepaid, directed to the addresses of the
parties set forth below or to such other address as each party
may designate for itself by like notice:
To Chesapeake: Chesapeake Energy Corporation
Attention: Xxxxxx X. Xxxxxxx
0000 Xxxxx Xxxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Telefacsimile: (000) 000-0000
with a copy to
Commercial Law Group, P.C.
Attention: Xxx Xxxx
2725 Oklahoma Tower
000 Xxxx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Telefacsimile: (000) 000-0000
To the Xxxxxx Parties: Xx. Xxxxxx X. Xxxxxx III
Ramiiilaj, A Limited Partnership
c/o Xxxxxx X. May
0000 Xxxxxxxxx Xxxx., Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Telefacsimile: (000) 000-0000
with copy to:
Xxxx X. Xxxxxx
McAfee & Xxxx, A Professional
Corporation
00xx Xxxxx, Xxx Xxxxxxxxxx Xxxxxx
000 Xxxxx Xxxxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Telefacsimile: (000) 000-0000
5.5 Successors. This Agreement will be binding upon and inure to
the benefit of the parties and their respective successors and
permitted assigns.
5.6 Remedies. The failure of any party to enforce any right or
remedy under this agreement, or to enforce any such right or
remedy promptly, will not constitute a waiver thereof, nor
give rise to any estoppel against such party, nor excuse any
other party from its obligations under this Agreement. Any
waiver of any such right or remedy by any party must be in
writing and signed by the party against which such waiver is
sought to be enforced, will be narrowly construed only as a
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waiver of the particular matter stated to be waived, and will
not constitute a continuing waiver.
5.7 Survival. All warranties, representations and covenants made
by any party in this Agreement or in any certificate or other
instrument delivered by such party or on its behalf under this
Agreement will be considered to have been relied upon by the
party to which it is delivered and will survive the execution
of this Agreement, regardless of any investigation made by
such party or on its behalf. All statements in any such
certificate or other instrument will constitute warranties and
representations under this Agreement.
5.8 Fees. If any party institutes an action or proceeding against
any other party relating to the provisions of this Agreement
or any default hereunder, the unsuccessful party to such
action or proceeding will reimburse the successful party
therein for the reasonable expenses of attorneys' fees and
disbursements and litigation expenses incurred by the
successful party.
5.9 Counterparts. This Agreement may be executed in any number of
counterparts, which will individually and collectively
constitute one agreement.
5.10 CHOICE OF LAW. THIS AGREEMENT WILL BE GOVERNED BY AND
INTERPRETED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE
OF OKLAHOMA APPLICABLE TO AN AGREEMENT EXECUTED, DELIVERED AND
PERFORMED THEREIN WITHOUT GIVING EFFECT TO THE CHOICE-OF-LAW
RULES THEREOF OR ANY OTHER PRINCIPLE THAT COULD REQUIRE THE
APPLICATION OF THE SUBSTANTIVE LAW OF ANY OTHER JURISDICTION.
IN WITNESS HEREOF, the parties have executed this Agreement
effective as of the date first above written.
CHESAPEAKE ENERGY CORPORATION, an
Oklahoma corporation
By /s/ Xxx X. Xxxx
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Xxx X. Xxxx, President
("Chesapeake")
/s/ Xxxxxx X. Xxxxxx III
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XXXXXX X. XXXXXX III, individually
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RAMIIILAJ, A LIMITED PARTNERSHIP, a Texas
limited partnership
By: Xxxxxx Investment Company, an Oklahoma
corporation, sole general partner
By /s/ Xxxxxx X. Xxxxxx III
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Xxxxxx X. Xxxxxx III, President
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