Exhibit 99.1
THIRD
AMENDED AND RESTATED
PROMISSORY NOTE
$9,000,000.00 Oklahoma City, Oklahoma
as of October 7, 2005
For value received, the undersigned, BEARD PINNACLE, LLC, an Oklahoma
limited liability company (the "Maker"), agrees to all of the terms of this
Promissory Note (this "Note") and promises to pay to the order of PinnOak
Resources, LLC, a Delaware limited liability company (the payee, its successors
and assigns are hereinafter called the "Holder"), at Pointe Plaza Suite 300, 601
Technology Drive, Canonsburg, PA 15317-9523, or at such other place as may be
designated in writing by the Holder of this Note, the principal sum of NINE
MILLION DOLLARS ($9,000,000.00) or, if less than such amount, the aggregate
unpaid principal amount of all advances or loans made by the Holder to the
Maker, and all interest accruing thereon. This Note will be payable as follows:
1. Interest will accrue on the unpaid principal balance of this Note at the
per annum interest rate equal to the Wall Street Journal Prime Rate (the
"Index") plus two percent (2%) (the "Applicable Rate"). Interest will
commence to accrue as advances or loans are made on the Note and thereafter
until this Note is paid in full.
2. If Holder and Maker enter into a Subscription Agreement on or before
June 1, 2006, providing for the sale and issuance of a membership interest
in Maker to Holder and/or its affiliates (the "Subscription Agreement"),
then (i) all unpaid principal amounts advanced pursuant to the terms of
this Note and all unpaid interest accrued thereon, up to a maximum amount
of $2,800,000, shall be immediately applied to the purchase or subscription
price for that membership interest, (ii) any funding provided by Holder
plus accrued and unpaid interest in excess of $2,800,000 will be repaid to
Holder, and (iii) this Note shall then be cancelled and of no further force
or effect. If there is insufficient funding available to Beard Pinnacle to
pay amounts due under this Note as per (ii) above, the provisions under
alternative 3 of the Smith Branch Project letter agreement between the
Holder and Maker dated February 7, 2006 (the "Agreement") shall apply.
3. This Note, as amended and restated, has been made to memorialize the
loans made to date and additional loans agreed to be made by the Holder to
the Maker in connection with the Agreement. The parties have agreed that if
the Holder makes additional loans to the Maker pursuant to the Agreement,
the provisions of the Agreement concerning repayment or conversion of this
Note and the release of any collateral will govern.
Both principal and interest owing pursuant to the terms of this Note are
payable in the lawful currency of the United States of America and in
immediately available funds. All advances made on the Note will be applied to
the Note when received by the Maker hereof. All payments made on this Note will
be applied to this Note when received by the Holder hereof. Any sum not paid
when due will bear interest at the rate equal to the Applicable Rate plus six
percent (6%) and will be paid at the time of, and as a condition precedent to,
the curing of any "Default", as that term is hereinafter defined in this Note.
During the existence of any Default, the Holder of this Note may apply payments
received on any amount due hereunder or under the terms of any instrument
hereafter evidencing or securing said indebtedness as the Holder may determine.
The Maker 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, the Maker will pay to the Holder all reasonable attorney's fees and
all expenses incurred by the Holder in connection therewith.
This Promissory Note supersedes and replaces those certain Promissory Notes
(i) dated September 29, 2005, in the original amount of FOUR HUNDRED THOUSAND
DOLLARS ($400,000.00), (ii) dated October 7, 2005, in the original amount of ONE
MILLION ONE HUNDRED THOUSAND DOLLARS ($1,100,000), (iii) dated January 20, 2006,
in the original amount of ONE MILLION THREE HUNDRED FIFTY THOUSAND DOLLARS
($1,350,000), (iv) that certain Amended and Restated Promissory Note executed on
February 7, 2006, but effective as of October 7, 2005, in the original amount of
FIVE MILLION ONE HUNDRED THOUSAND DOLLARS ($5,100,000), and (v) that certain
Second Amended and Restated Promissory Note executed on March 22, 2006, in the
original amount of NINE MILLION DOLLARS ($9,000,000), between the Maker and the
Holder.
All advances previously or hereafter made against this Note will be
reflected in the Schedule of Advances attached as Exhibit A hereto and will be
periodically updated.
THIS NOTE IS GIVEN BY THE MAKER AND ACCEPTED BY THE HOLDER PURSUANT TO A LENDING
TRANSACTION CONTRACTED, CONSUMMATED, AND TO BE PERFORMED IN OKLAHOMA CITY,
OKLAHOMA COUNTY, OKLAHOMA, AND THIS NOTE SHALL BE CONSTRUED ACCORDING TO THE
LAWS OF THE STATE OF OKLAHOMA. The payment of all indebtedness evidenced by this
Note is unsecured. However, in the event of any Default, the Holder may request,
and the Maker agrees to furnish to the Holder, agreeable collateral and such
security agreements as the Maker may reasonably require to secure the
indebtedness.
At the option of the Holder, the unpaid balance of this Note, and all other
obligations of the Maker to the Holder, whether direct or indirect, absolute or
contingent, now existing or hereafter arising, shall become immediately due and
payable without presentment, protest, notice or demand upon the occurrence or
existence of one or more of the following events or conditions ("Default"):
1. any payment required by this Note or any other note or obligation of the
Maker to the Holder or to others is not made when due in the amount required;
and
2. any default or breach occurs in the performance of any covenant,
obligation, representation, warranty, or provision contained in this Note or in
any other note or obligation of the Maker to Holder or to others;
No waiver of any payment or other right under this Note by the Holder shall
operate as a waiver of any other payment or right. Any payments hereunder may,
at the option of the Holder, be recorded on this Note and shall be prima facie
evidence of such payments and the unpaid balance of this Note.
The Maker waives presentment for payment, protest and notice of nonpayment.
IN WITNESS WHEREOF, the Maker has executed this instrument this 1st day of
May, 2006, but effective for all purposes as of October 7, 2005.
BEARD PINNACLE, LLC, an Oklahoma
limited liability company
/s/ W. M. Beard
By________________________________
W. M. Beard,
Chairman of the Board
Exhibit A
Schedule of Advances
--------------------
Amount of
Date Advance
---- -------
October 7, 2005 $ 400,000.00
November 4, 2005 700,000.00
January 24, 2006 250,000.00
February 2, 2006 625,000.00
February 8, 2006 750,000.00
February 22, 2006 865,000.00
March 8, 2006 1,015,000.00
March 22, 2006 766,834.56
March 23, 2006 123,165.44
April 12, 2006 415,000.00
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Total $5,910,000.00
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(Exhibit A as amended effective April 12, 2006) /s/ HMJ
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(Initials)