FIRST AMENDMENT TO CREDIT AGREEMENT
AND
ASSIGNMENT AND WAIVER
THIS FIRST AMENDMENT TO CREDIT AGREEMENT AND ASSIGNMENT AND WAIVER (herein
called the "Amendment") made as of September 26, 1997, by and among Energy
Corporation of America, a West Virginia corporation (herein called "Borrower"),
General Electric Capital Corporation ("GE Capital"), individually and as agent
(herein called "Agent"), and the Lenders named on Schedule 3 to the Original
Agreement ("Original Lenders"),
W I T N E S S E T H:
WHEREAS, Borrower, Agent and Original Lenders have entered into that
certain Credit Agreement dated as of May 20, 1997 (the "Original Agreement") for
the purpose and consideration therein expressed, whereby Original Lenders became
obligated to make loans to Borrower as therein provided; and
WHEREAS, Borrower, Agent and Original Lenders desire to amend the Original
Agreement to modify certain covenants, waive the failure by Borrower to comply
with certain covenants and to reflect the addition of a new Lender;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein and in the Original Agreement and in
consideration of the loans which may hereafter be made by Lenders to Borrower,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I.
Definitions and Reference
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Section 1.1. Terms Defined in the Original Agreement. Unless the context
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otherwise requires or unless otherwise expressly defined herein, the terms
defined in the Original Agreement shall have the same meanings whenever used in
this Amendment.
Section 1.2. Other Defined Terms. Unless the context otherwise requires,
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the following terms when used in this Amendment shall have the meanings assigned
to them in this Section 1.2
"Amendment" shall mean this First Amendment to Credit Agreement and
Assignment and Waiver.
"Credit Agreement" shall mean the Original Agreement as amended hereby.
"Lenders" shall mean collectively, the Original Lenders and Union Bank of
California, N.A.
ARTICLE II.
Borrowing Base, Amendments; Waiver
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Section 2.1. Waiver of Limitation on Distributions. Agent and Lenders
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hereby waive Borrower's noncompliance with Section 7.6 of the Credit Agreement
for the Fiscal Year ended June 30, 1997 arising from the payment of dividends on
Borrower's common stock in the approximate amount of $250,000 paid on or about
June 30, 1997 and any Default or Event of Default resulting from such
noncompliance. For purposes of calculating Consolidated Net Income for the
determination of the amount of Distributions permitted under Section 7.6 of the
Credit Agreement through and including the quarter ending March 31, 1998, the
following items identified on Borrower's Consolidated Net Income Statement for
the period ended June 30, 1997 shall be eliminated from such calculation:
1. Impairment and exploratory costs in the amount of $10,121,492;
2. Deferred financing costs in the amount of $4,425,714; and
3. Extraordinary item (▇▇▇▇ ▇▇▇▇▇▇▇/Eastern Systems Corporation make
whole payment) in the amount of $5,034,719 (pre-tax $7,745,721); such that the
after-tax amount of loss to be excluded will be $14,490,402.
Section 2.2. Tangible Net Worth. Section 7.12 of the Original Agreement is
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hereby
amended in its entirety to read as follows:
"Section 7.12. Tangible New Worth. Borrower's Consolidated Tangible
Net Worth will never be less than the sum of (i) $20,000,000 plus (ii) fifty
percent (50%) of Borrower's Consolidated Net Income, earned during the period
from June 30, 1997, through and including the last day of the calendar month
immediately preceding the date of calculation, determined on a cumulative basis;
provided that clause (ii) of this section shall be added only if such cumulative
amount is a positive number."
Section 2.3. Replacement of Schedule 3. Schedule 3 to the Original
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Agreement is hereby amended in its entirety to read as set forth in Schedule 3
attached hereto.
ARTICLE III.
Assignment and Acceptance
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GE Capital and The Bank of Nova Scotia; ("BNS" and in this article, GE
Capital and BNS are collectively called "Assignors") and Union Bank of
California, N.A. ("Assignee") hereby agree as follows:
Section 3.1. Assignors hereby sell and assign to Assignee, without recourse
and without representation or warranty except as expressly set forth herein, and
Assignee hereby purchases and assumes from Assignors, an interest in and to
Assignors' rights and obligations under the Credit Agreement and the other Loan
Documents as of the date hereof equal to the percentage interest specified on
Annex I hereto of all outstanding rights and obligations under the Credit
Agreement and the other Loan Documents. After giving effect to such sale and
assignment, Assignee's and Assignors' Percentage Shares of the Commitment and
the amount of Assignee's and Assignors' Percentage Share of Outstanding Loans
will be as set forth on Annex I hereto.
Section 3.2. GE Capital, with respect to the interests assigned by it
hereunder (a) represents and warrants that with respect to the interests
assigned by it hereunder, it is the legal and beneficial owner of the interest
being assigned by it hereunder and that such interest is free and clear of any
adverse claim; (b) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Loan Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Loan
Documents or any other instrument or document furnished pursuant thereto; (c)
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of any Restricted Person or the performance or
observance by any Restricted Person of any of its obligations under the Loan
Documents or any other instrument or document furnished pursuant thereto; and
(d) delivers herewith the Note held by GE Capital and requests that Agent
exchange such Note for new Notes payable to the order of Assignee in an amount
equal to the Percentage Share of the Commitment assumed by Assignee pursuant
hereto and to GE Capital in an amount equal to the Percentage Share of the
Commitment retained by the GE Capital as specified on Annex I.
Section 3.3. BNS, with respect to the interests assigned by it hereunder
(a) represents and warrants that with respect to the interests assigned by it
hereunder, it is the legal and beneficial owner of the interest being assigned
by it hereunder and that such interest is free and clear of any adverse claim;
(b) makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with the Loan Documents or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Loan Documents or any
other instrument or document furnished pursuant thereto; (c) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of any Restricted Person or the performance or observance by
any Restricted Person of any of its obligations under the Loan Documents or any
other instrument or document furnished pursuant thereto; and (d) delivers
herewith the Note held by BNS and requests that Agent exchange such Note for new
Notes payable to the order of Assignee in an amount equal to the Percentage
Share of the Commitment assumed by Assignee pursuant hereto and to BNS in an
amount equal to the Percentage Share of the Commitment retained by the BNS as
specified on Annex I.
Section 3.4. Assignee (a) confirms that it has received a copy of the
Credit Agreement, together with copies of the financial statements referred to
in Section 6.2 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Amendment; (b) agrees that it will, independently and without reliance upon
Agent, Assignors or any other Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Credit Agreement; (c)
confirms that it is an Eligible Transferee; (d) appoints and authorizes Agent to
take such action as agent on its behalf and to exercise such powers and
discretion under the Credit Agreement as are delegated to Agent by the terms
thereof, together with such powers and discretion as are reasonably incidental
thereto; (e) agrees that it will perform in accordance with their terms all of
the obligations that by the terms of the Credit Agreement are required to be
performed by it as a Lender; and (f) delivers herewith any U.S. Internal Revenue
Service or other forms required under Section 3.6(d).
Section 3.5. Upon such acceptance and recording by Agent, (a) Assignee
shall be a party to the Credit Agreement and, to the extent provided in this
Amendment, have the rights and obligations of a Lender thereunder and (b)
Assignors shall, to the extent provided in this Article, relinquish their rights
and be released from their obligations under the Credit Agreement.
Section 3.6. Upon such acceptance and recording by Agent, from and after
the effective date of this Amendment, Agent shall make all payments under the
Credit Agreement and the Notes in respect of the interest assigned hereby
(including, without limitation, all payments of principal, interest and
commitment fees with respect thereto) to Assignee. Assignors and Assignee shall
make all appropriate adjustments in payments under the Credit Agreement and the
Notes for periods prior to the effective date of this Amendment directly between
themselves.
ARTICLE IV.
Conditions of Effectiveness
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Section 4.1. Effective Date. This Amendment shall become effective as of
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the date first above written when, and only when all of the following have been
satisfied:
(a) Documents. Agent shall have received all of the following
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documents in form and substance satisfactory to Agent:
(i) this Amendment;
(ii) the Notes with appropriate insertions, in the form
attached hereto as Exhibit A, payable to the order of each Lender on or before
the Maturity Date (such Notes herein called the "Renewal Notes"), in a principal
amount equal to the amount set out in Annex I hereto;
(iii) the written opinion of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇, LLP dated
as of the date of this Amendment, addressed to Agent, to the effect that this
Amendment and each Renewal Note has been duly authorized, executed and delivered
by Borrower and that the Credit Agreement and each Renewal Note constitute the
legal, valid and binding obligations of Borrower, enforceable in accordance with
their terms (subject, as to enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency and similar laws and to moratorium laws and other
laws affecting creditors' rights generally from time to time in effect);
(iv) a certificate of a duly authorized officer of Borrower
dated the date of this Amendment certifying that (A) attached thereto is a true
and complete copy of resolutions adopted by the Board of Directors of Borrower
authorizing the execution, delivery and performance of this Amendment and each
Renewal Note and certifying the names and true signatures of the officers of
Borrower authorized to sign this Amendment and each Renewal Note and (B) all of
the representations and warranties set forth in Article V hereof are true and
correct at and as of the time of such effectiveness; and
(v) such other supporting documents as Agent may reasonably
request.
(b) Fees. Agent shall have received, for the benefit of Lenders,
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an amendment fee in the amount of $25,000.
ARTICLE V.
Representations and Warranties
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Section 5.1. Representations and Warranties of Borrower. In order to
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induce each Lender to enter into this Amendment, Borrower represents and
warrants to each Lender that:
(a) All representations and warranties made by any Related Person
in any Loan Document delivered on or before the date hereof are true on and as
of the date hereof (except to the extent that the facts upon which such
representations are based have been changed by the transactions contemplated
herein) as if such representations and warranties had been made as of the date
hereof.
(b) Borrower is duly authorized to execute and deliver this
Amendment and each Renewal Note and is and will continue to be duly authorized
to borrow monies and to perform its obligations under the Credit Agreement.
Borrower has duly taken all corporate action necessary to authorize the
execution and delivery of this Amendment and each Renewal Note and to authorize
the performance of the obligations of Borrower hereunder and thereunder.
(c) The execution and delivery by Borrower of this Amendment and
each Renewal Note, the performance by Borrower of its obligations hereunder and
thereunder and the consummation of the transactions contemplated hereby and
thereby do not and will not conflict with any provision of law, statute, rule or
regulation or of the articles of incorporation and bylaws of Borrower, or of any
material agreement, judgment, license, order or permit applicable to or binding
upon Borrower, or result in the creation of any lien, charge or encumbrance upon
any assets or properties of Borrower. Except for those which have been
obtained, no consent, approval, authorization or order of any court or
governmental authority or third party is required in connection with the
execution and delivery by Borrower of this Amendment and each Renewal Note or to
consummate the transactions contemplated hereby and thereby.
(d) When duly executed and delivered, each of this Amendment, the
Credit Agreement and the Renewal Notes will be a legal and binding obligation of
Borrower, enforceable in accordance with its terms, except as limited by
bankruptcy, insolvency or similar laws of general application relating to the
enforcement of creditors' rights and by equitable principles of general
application.
ARTICLE VI.
Miscellaneous
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Section 6.1. Ratification of Agreements. The Original Agreement as hereby
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amended is hereby ratified and confirmed in all respects. Any reference to the
Credit Agreement in any Loan Document shall be deemed to be a reference to the
Original Agreement as hereby amended. Any reference to the Notes in any other
Loan Document shall be deemed to be a reference to the Renewal Notes issued and
delivered pursuant to this Amendment. The execution, delivery and effectiveness
of this Amendment and the Renewal Notes shall not, except as expressly provided
herein or therein, operate as a waiver of any right, power or remedy of Lenders
under the Credit Agreement, the Notes, or any other Loan Document nor constitute
a waiver of any provision of the Credit Agreement, the Notes or any other Loan
Document.
Section 6.2. Survival of Agreements. All representations, warranties,
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covenants and agreements of Borrower herein shall survive the execution and
delivery of this Amendment and the performance hereof, including without
limitation the making or granting of the Loans and the issuance and delivery of
the Renewal Notes, and shall further survive until all of the Obligations are
paid in full. All statements and agreements contained in any certificate or
instrument delivered by Borrower any Related Person hereunder or under the
Credit Agreement to any Lender shall be deemed to constitute representations and
warranties by, and/or agreements and covenants of, Borrower under this Amendment
and under the Credit Agreement.
Section 6.3. Loan Documents.This Amendment and each Renewal Note are each a
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Loan Document, and all provisions in the Credit Agreement pertaining to Loan
Documents apply hereto and thereto.
Section 6.4. Governing Law. THIS AMENDMENT SHALL BE DEEMED A CONTRACT AND
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INSTRUMENT MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK AND THE LAWS OF THE UNITED STATES OF AMERICA, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW.
Section 6.5. Counterparts. This Amendment may be separately executed in
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counterparts and by the different parties hereto in separate counterparts, each
of which when so executed shall be deemed to constitute one and the same
Amendment.
THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS OF THE PARTIES.
IN WITNESS WHEREOF, this Amendment is executed as of the date first above
written.
BORROWER:
ENERGY CORPORATION OF AMERICA
By: /s/ J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Vice President/Treasurer
AGENT:
GENERAL ELECTRIC CAPITAL
CORPORATION, as Agent and Lender
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Manager - Operations
THE BANK OF NOVA SCOTIA, as
Documentation Agent and Lender
By: /s/ F.C.H. ▇▇▇▇▇
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Name: F.C.H. ▇▇▇▇▇
Title: Sr. Mgr. Loan Operations
UNION BANK OF CALIFORNIA, N.A., as
Assignee and Lender
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
ANNEX I
Percentage Share assigned by GE Capital: 10%
Amount assigned by GE Capital: $5,000,000
Percentage Share assigned by BNS: 20%
Amount assigned by BNS: $10,000,000
Assignee's Percentage Share: 30%
Amount of Assignee's Percentage Share: $15,000,000
Assignee's Commitment: $15,000,000
Principal amount of Note payable to BNS: $15,000,000
Assignee's Commitment: $15,000,000
Principal amount of Note payable to Assignee: $15,000,000
Principal amount of Note payable to GE Capital: $20,000,000
Principal amount of Note payable to BNS: $15,000,000
SCHEDULE 3
LENDERS SCHEDULE
Percentage Share
GENERAL ELECTRIC CAPITAL CORPORATION 40.00%
Lending Office for ABR and Eurodollar Loans:
General Electric Capital Services
Structured Finance Group, Inc. - Energy Portfolio Operations
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
THE BANK OF NOVA SCOTIA 30.00%
Lending Office for ABR and Eurodollar Loans:
The Bank of Nova Scotia
Atlanta Agency
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
UNION BANK OF CALIFORNIA 30.00%
Lending Office for ABR and Eurodollar Loans:
Union Bank of California
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇