FORBEARANCE AGREEMENT
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This FORBEARANCE AGREEMENT (this "Agreement") is executed as of the 16th
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day of January, 2004, by and among ENERGY CORPORATION OF AMERICA, a West
Virginia corporation ("Borrower"), the lenders identified on the signature pages
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hereof (such lenders, together with their respective successors and assigns, the
"Lenders"), and XXXXX FARGO FOOTHILL, INC. (f/k/a Foothill Capital Corporation),
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a California corporation, as the arranger and administrative agent for the
Lenders (the "Agent").
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RECITALS
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A. THE FINANCING DOCUMENTS. Borrower owes certain indebtedness, liabilities
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and obligations to the Lenders pursuant to that certain Credit Agreement
dated as of July 10, 2002 (as the same may have been and may hereafter be
amended, modified, renewed, extended, restated or supplemented from time to
time, the "Credit Agreement"), such indebtedness being secured by liens and
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security interests granted in favor of the Lenders pursuant to the Credit
Agreement.
B. EXISTING DEFAULT. Although Borrower has existing disputes with the
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holders of the Subordinated Notes regarding its failure to comply with Section
4.9 of the Indenture, Borrower acknowledges to Lender for the purpose of this
Agreement and the Credit Agreement that the Specified Default (as defined below)
has occurred and continues under the Credit Agreement.
C. FORBEARANCE REQUEST BY BORROWER. Borrower has requested that the Lenders
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forbear until the Termination Date (as defined below) from exercising their
remedies arising as a result of the Specified Default and the Lenders are
willing to grant such forbearance subject to the terms and conditions of this
Agreement.
AGREEMENTS
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NOW, THEREFORE, in consideration of the premises and the mutual covenants,
representations, warranties and agreements contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. Capitalized terms used and not otherwise defined herein
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shall have the same meanings as set forth in the Credit Agreement. In addition,
the following terms, for the purposes of this Agreement, shall have the
following meanings:
(a) "Effective Date" shall mean the date that the Agent shall have notified
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the Borrower in writing that the Agent has received such fees and expenses,
instruments, evidence and certificates as the Agent may reasonably require to
consummate the transactions contemplated hereby, including, without limitation,
the closing deliveries specified in Section 5 hereof.
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(b) "Forbearance Period" shall mean the period commencing on the Effective
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Date and continuing through and including 5:00 p.m., Atlanta, Georgia time, on
the applicable Termination Date.
(c) "Specified Default" shall mean the Event of Default under Section 8.15
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of the Credit Agreement resulting from the failure of the Borrower to comply
with the terms of Section 4.9 of the Indenture.
FORBEARANCE AGREEMENT - Page 1
DALLAS 913715_5 5707.6
(d) "Termination Date" shall mean the earlier to occur of (i) March 15, 2004
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or (ii) the date of the occurrence of a Termination Event.
(e) "Termination Event" shall mean the occurrence of any of the following:
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(i) any representation or warranty made or deemed made by the Borrower in this
Agreement shall be false, misleading or erroneous in any material respect
when made or deemed to have been made;
(ii) the Borrower shall fail to perform, observe or comply with any covenant,
agreement or term contained in this Agreement;
(iii) the occurrence of any Default or Event of Default under the Credit
Agreement or any other Loan Document, other than the Specified Default;
(iv) The Trustee under the Indenture, any of the holders of the Subordinated
Notes or any other Person acting on their behalf commences any action under
Section 6.2 or Section 6.3 of the Indenture or otherwise pursues any
remedies under any of the Indenture Documents to collect the payment of any
of the Subordinate Notes and the Agent and Lender notify Borrower in
writing of their election to terminate this Agreement as a result of any
such action; or
(v) the occurrence of an event or circumstance which causes or would reasonably
be expected to cause a Material Adverse Change.
2. FORBEARANCE. Subject to the terms of this Agreement, the Agent and the
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Lenders hereby agree, during the Forbearance Period, to (a) forbear from
exercising their rights and remedies arising as a result of the Specified
Default and (b) continue to fund Advances and to issue Letters of Credit so long
as the Borrower continues to comply with the terms of this Agreement and
the Borrower and its Subsidiaries continue to comply with the terms of the
Credit Agreement and the other Loan Documents. Notwithstanding the foregoing,
the forbearance granted by Lenders pursuant hereto shall not constitute, and
shall not be deemed to constitute, a waiver of the Specified Default or of any
other Default or Event of Default under the Loan Documents. Upon the expiration
or termination of the Forbearance Period, the agreements of the Lenders and the
Agent hereunder, including, without limitation, their agreement to forbear,
shall terminate automatically without further act or action by the Agent or the
Lenders.
3. REPRESENTATIONS AND WARRANTIES OF BORROWER. As of the Effective Date, to
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induce the Agent and the Lenders to enter into this Agreement, the Borrower
hereby represents and warrants to the Agent and the Lenders that (a) Borrower
and each of its Subsidiaries is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
power and authority to perform its obligations under this Agreement, (b) the
execution, delivery and performance of this Agreement has been duly authorized
by all requisite action on the part of the Borrower and each of its Subsidiaries
and does not and will not violate the articles or certificate of incorporation,
bylaws, or other governance documents or agreements of the Borrower or any of
its Subsidiaries, or any other agreement to which the Borrower or any of its
Subsidiaries is a party, or any law, rule or regulation, or any order of any
court, governmental authority or arbitrator by which the Borrower or any of its
Subsidiaries or any of their respective properties is bound, (c) this Agreement
constitutes the valid and legally binding obligation of the Borrower and each of
the Subsidiaries party hereto enforceable in accordance with its terms, except
as enforcement may be limited by equitable principles or by bankruptcy,
insolvency, reorganization, moratorium, or similar laws relating to or limiting
creditors' rights generally, (d) no corporate action or authorization, approval,
FORBEARANCE AGREEMENT - Page 2
DALLAS 913715_5 5707.6
consent or other action, except such corporate action or authorization as has
already been obtained, and no notice to or filing with any governmental or
regulatory authority or any third party is required for the due execution,
delivery or performance of this Agreement or any transaction contemplated
hereby, (e) each representation and warranty of the Borrower and each of its
Subsidiaries contained in the Credit Agreement and the other Loan Documents is
true and correct in all material respects (except to the extent such
representation or warranty relates specifically to an earlier date), (f) neither
Borrower nor any Subsidiary has any defenses to payment, counterclaim or rights
of set-off with respect to the Obligations, and (g) except for the Specified
Default, no Default or Event of Default has occurred which is continuing.
4. COVENANTS OF BORROWER. The Borrower hereby covenants and agrees, from
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and after the Effective Date, that it will perform, observe and comply with and
will cause each Subsidiary to perform, observe and comply with, each covenant,
agreement and term contained in this Agreement, the Credit Agreement and each of
the other Loan Documents to which it is a party.
5. CLOSING DELIVERIES. Simultaneously with the execution and delivery
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hereof, and as a condition to the effectiveness hereof, the Borrower shall
deliver (or deposit with) or cause the delivery to (or deposit with) the Agent
each of the following:
(a) all fees and expenses of counsel to the Agent and the Lenders incurred by
the Agent and the Lenders in connection with the preparation, negotiation
and execution of this Agreement, all related documents and the transactions
contemplated hereby and thereby;
(b) a forbearance fee to the Agent in the amount of $25,000.00;
(c) the Consent and Ratification attached hereto duly executed by the Pledging
Subsidiaries (as defined therein); and
(d) a legal opinion from counsel to the Borrower in form and substance
satisfactory to the Agent.
6. LOAN DOCUMENTS/COLLATERAL. The Borrower hereby acknowledges, ratifies,
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reaffirms and agrees that the Credit Agreement, each of the other Loan Documents
(together with all of its indebtedness, liabilities and obligations to the
Agent and the Lenders thereunder) and the first priority, perfected liens and
security interests created thereby in favor of the Agent and the Lenders in the
Collateral, are and shall remain in full force and effect and binding on the
Borrower, and are enforceable in accordance with their respective terms and
applicable law. The Borrower hereby ratifies and reaffirms all of the terms and
provisions of the Credit Agreement and each of the other Loan Documents, except
as may be modified herein, which are incorporated by reference as of the
Effective Date as if set forth herein including, without limitation, all
promises, agreements, warranties, representations, covenants, releases, and
indemnifications contained therein.
7. REMEDIES UPON EXPIRATION OR TERMINATION OF FORBEARANCE PERIOD. Upon the
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expiration or termination of the Forbearance Period, the Agent, without further
act or action by the Agent or the Lenders, shall be entitled to immediately
institute foreclosure proceedings against the Collateral and to exercise any and
all of the Agent's and the Lenders' rights and remedies available under the
Credit Agreement, the other Loan Documents and this Agreement, at law, in
equity, or otherwise, without further notice, demand, presentment, notice of
dishonor, notice of acceleration, notice of intent to accelerate, notice of
intent to foreclose, notice of sale, notice of protest or other formalities of
any kind, all of which are hereby expressly waived by the Borrower.
FORBEARANCE AGREEMENT - Page 3
DALLAS 913715_5 5707.6
8. ACKNOWLEDGMENT OF DEFAULTS. The Borrower specifically acknowledges the
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existence and continuation of the Specified Default, and neither the Borrower
nor any Subsidiary shall at any time contest or in any way dispute the existence
of the Specified Default.
9. RELEASE AND COVENANT NOT TO XXX. THE BORROWER AND EACH OF THE
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SUBSIDIARIES PARTY HERETO (IN ITS OWN RIGHT AND ON BEHALF OF ITS RESPECTIVE
DIRECTORS, OFFICERS, EMPLOYEES, INDEPENDENT CONTRACTORS, ATTORNEYS AND AGENTS)
(THE "RELEASING PARTIES"), JOINTLY AND SEVERALLY, UNCONDITIONALLY RELEASE,
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ACQUIT, AND FOREVER DISCHARGE THE AGENT AND THE LENDERS AND THEIR RESPECTIVE
DIRECTORS, OFFICERS, EMPLOYEES, INDEPENDENT CONTRACTORS, ATTORNEYS AND AGENTS
(COLLECTIVELY, THE "RELEASED PARTIES"), TO THE FULLEST EXTENT PERMITTED BY
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APPLICABLE STATE AND FEDERAL LAW, FROM ANY AND ALL ACTS AND OMISSIONS OF THE
RELEASED PARTIES, AND FROM ANY AND ALL CLAIMS, CAUSES OF ACTION, COUNTERCLAIMS,
DEMANDS, CONTROVERSIES, COSTS, DEBTS, SUMS OF MONEY, ACCOUNTS, RECKONINGS,
BONDS, BILLS, DAMAGES, OBLIGATIONS, LIABILITIES, OBJECTIONS, AND EXECUTIONS OF
ANY NATURE, TYPE, OR DESCRIPTION WHICH THE RELEASING PARTIES HAVE OR MAY COME TO
HAVE AGAINST THE RELEASED PARTIES, INCLUDING, BUT NOT LIMITED TO, NEGLIGENCE,
GROSS NEGLIGENCE, USURY, FRAUD, DECEIT, MISREPRESENTATION, CONSPIRACY,
UNCONSCIONABILITY, DURESS, ECONOMIC DURESS, DEFAMATION, CONTROL, INTERFERENCE
WITH CONTRACTUAL AND BUSINESS RELATIONSHIPS, CONFLICTS OF INTEREST, MISUSE OF
INSIDER INFORMATION, CONCEALMENT, DISCLOSURE, SECRECY, MISUSE OF COLLATERAL,
WRONGFUL RELEASE OF COLLATERAL, FAILURE TO INSPECT, ENVIRONMENTAL DUE DILIGENCE,
NEGLIGENT LOAN PROCESSING AND ADMINISTRATION, WRONGFUL SETOFF, VIOLATIONS OF
STATUTES AND REGULATIONS OF GOVERNMENTAL ENTITIES, INSTRUMENTALITIES AND
AGENCIES (BOTH CIVIL AND CRIMINAL), RACKETEERING ACTIVITIES, SECURITIES AND
ANTITRUST LAWS VIOLATIONS, TYING ARRANGEMENTS, DECEPTIVE TRADE PRACTICES, BREACH
OR ABUSE OF ANY ALLEGED FIDUCIARY DUTY, BREACH OF ANY ALLEGED SPECIAL
RELATIONSHIP, COURSE OF CONDUCT OR DEALING, ALLEGED OBLIGATION OF FAIR DEALING,
ALLEGED OBLIGATION OF GOOD FAITH, AND ALLEGED OBLIGATION OF GOOD FAITH AND FAIR
DEALING, WHETHER OR NOT IN CONNECTION WITH OR RELATED TO THE LOAN DOCUMENTS AND
THIS AGREEMENT, AT LAW OR IN EQUITY, IN CONTRACT IN TORT, OR OTHERWISE, KNOWN OR
UNKNOWN, SUSPECTED OR UNSUSPECTED (COLLECTIVELY, THE "RELEASED CLAIMS"). THE
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RELEASING PARTIES FURTHER AGREE TO LIMIT ANY DAMAGES THEY MAY SEEK IN CONNECTION
WITH ANY CLAIM OR CAUSE OF ACTION, IF ANY, TO EXCLUDE ALL PUNITIVE AND EXEMPLARY
DAMAGES, DAMAGES ATTRIBUTABLE TO LOST PROFITS OR OPPORTUNITY, DAMAGES
ATTRIBUTABLE TO MENTAL ANGUISH, AND DAMAGES ATTRIBUTABLE TO PAIN AND SUFFERING,
AND THE RELEASING PARTIES DO HEREBY WAIVE AND RELEASE ALL SUCH DAMAGES WITH
RESPECT TO ANY AND ALL CLAIMS OR CAUSES OF ACTION WHICH MAY ARISE AT ANY TIME
AGAINST ANY OF THE RELEASED PARTIES. THE RELEASING PARTIES REPRESENT AND
WARRANT THAT NO FACTS EXIST WHICH COULD, PRESENTLY OR IN THE FUTURE, SUPPORT THE
ASSERTION OF ANY OF THE RELEASED CLAIMS AGAINST THE RELEASED PARTIES. THE
RELEASING PARTIES FURTHER COVENANT NOT TO XXX THE RELEASED PARTIES ON ACCOUNT OF
ANY OF THE RELEASED CLAIMS, AND EXPRESSLY WAIVE ANY AND ALL DEFENSES THEY MAY
HAVE OR COME TO HAVE IN CONNECTION WITH THEIR DEBTS AND OBLIGATIONS UNDER THE
LOAN DOCUMENTS AND THIS AGREEMENT. THIS SECTION 9 IS IN ADDITION TO AND SHALL
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NOT IN ANY WAY LIMIT ANY OTHER RELEASE, COVENANT NOT TO XXX, OR WAIVER BY THE
RELEASING PARTIES IN FAVOR OF THE RELEASED PARTIES.
FORBEARANCE AGREEMENT - Page 4
DALLAS 913715_5 5707.6
10. NO OBLIGATION OF LENDERS. The Borrower hereby acknowledges and
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understands that upon the expiration or termination of the Forbearance Period,
if the Specified Default and any other Default or Event of Default now or
hereafter occurring and continuing after the date hereof have not been cured,
then the Agent, on its behalf and on behalf of the Lenders, shall have the right
to proceed to exercise any or all rights and remedies available to the
Agent and the Lenders, which may include foreclosure on the Collateral and/or
institution of legal proceedings. The Agent and the Lenders shall have no
obligation whatsoever to waive any future Default or Event of Default, defer any
payments, or further forbear from exercising its rights and remedies.
11. NO IMPLIED WAIVERS. No failure or delay on the part of the Agent or any
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Lender in exercising, and no course of dealing with respect to, any right,
power or privilege arising under this Agreement, the Credit Agreement or any
other Loan Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege arising under this Agreement,
the Credit Agreement or any other Loan Document preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
12. INDEMNIFICATION. In addition to, and without limitation of, any and all
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indemnities provided in the Credit Agreement and the other Loan Documents,
the Borrower and each of the Subsidiaries party hereto shall and do hereby
indemnify and hold the Agent and the Lenders and each of their respective
employees, agents, independent contractors, attorneys, officers, and directors
harmless from and against any and all claims, liability, losses, damages, causes
of action, suits, judgments, costs, and expenses (including, without limitation,
attorneys' fees), arising out of or from or related to this Agreement, the
Credit Agreement and the other Loan Documents, except to the extent any such
claim, liability, loss, damage, cause of action, suit, judgment, cost or expense
resulted from the gross negligence or willful misconduct of the Agent, the
Lenders or any of their respective employees, agents, independent contractors,
attorneys, officers and directors. If any action, suit, or proceeding is
brought against the Agent, any Lender or any of their respective employees,
agents, independent contractors, attorneys, officers, and directors, the
Borrower shall, at the Agent's request, defend the same at Borrower's sole cost
and expense.
13. REVIEW AND CONSTRUCTION OF DOCUMENTS. The Borrower hereby acknowledges,
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represents and warrants to the Agent and the Lenders that (a) the Borrower has
had the opportunity to consult with legal counsel of its own choice and has been
afforded an opportunity to review this Agreement with its legal counsel, (b) the
Borrower has reviewed this Agreement and fully understands the effects hereof
and all terms and provisions contained herein, (c) the Borrower has executed
this Agreement of its own free will and volition, and (d) this Agreement shall
be construed as if jointly drafted by the Borrower, the Agent and the Lenders.
The recitals contained in this Agreement shall be construed to be part of the
operative terms and provisions of this Agreement.
14. ENTIRE AGREEMENT; AMENDMENT. THIS AGREEMENT EMBODIES THE FINAL, ENTIRE
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AGREEMENT AMONG THE PARTIES HERETO RELATING TO THE SUBJECT MATTER HEREOF AND
SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF
AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO
ORAL AGREEMENTS AMONG THE PARTIES HERETO. The provisions of this Agreement may
be amended or waived only by an instrument in writing signed by the Agent and
the Lenders. The Credit Agreement and the other Loan Documents, to the extent
modified by this Agreement, continue to evidence the agreement of the parties
with respect to the subject matter thereof.
FORBEARANCE AGREEMENT - Page 5
DALLAS 913715_5 5707.6
15. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon, and shall
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inure to the benefit of, the parties hereto and their respective heirs, legal
representatives, successors and assigns, provided that the Borrower may not
assign any rights or obligations under this Agreement without the prior written
consent of the Agent and the Lenders.
16. ARMS-LENGTH/GOOD FAITH. This Agreement has been negotiated at
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arms-length and in good faith by the parties hereto.
17. GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN MADE AND TO
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BE PERFORMABLE IN AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF GEORGIA.
18. INTERPRETATION. Wherever the context hereof shall so require, the
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singular shall include the plural, the masculine gender shall include the
feminine gender and the neuter and vice versa. The headings, captions and
arrangements used in this Agreement are for convenience only and shall not
affect the interpretation of this Agreement.
19. SEVERABILITY. In case any one or more of the provisions contained in
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this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provision hereof, and this Agreement shall be
construed as if such invalid, illegal, or unenforceable provision had never been
contained herein.
20. COUNTERPARTS. This Agreement may be executed and delivered in any
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number of counterparts, and by different parties hereto on separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which counterparts taken together shall constitute
one and the same instrument; provided, however, no party shall be bound by this
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Agreement until the Borrower, the Agent and the Lenders have executed a
counterpart hereof. Delivery of executed counterparts to this Agreement via
facsimile shall be effective and binding upon the parties hereto as originals.
21. FURTHER ASSURANCES. The Borrower agrees to execute, acknowledge,
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deliver, file and record such further certificates, instruments and documents,
and to do all other acts and things, as may be requested by the Agent as
necessary or advisable to carry out the intents and purposes of this Agreement.
22. LOAN DOCUMENT. This Agreement is a Loan Document for all purposes of
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the Credit Agreement and the other Loan Documents.
23. WAIVER OF JURY TRIAL. THE BORROWER HEREBY WAIVES ITS RIGHT TO A JURY
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TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS AGREEMENT, THE CREDIT AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE
OF SUCH RIGHTS AND OBLIGATIONS. EXCEPT AS PROHIBITED BY LAW, THE BORROWER
HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION
REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. THE BORROWER (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY
FORBEARANCE AGREEMENT - Page 6
DALLAS 913715_5 5707.6
OF THE AGENT OR ANY LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE
AGENT OR THE LENDERS WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVERS AND (B) ACKNOWLEDGES THAT THE AGENT AND THE LENDERS HAVE BEEN
INDUCED TO ENTER INTO THIS FORBEARANCE AGREEMENT BY, AMONG OTHER THINGS, THE
WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.
24. ADDITIONAL ADVANCES. As a result of the existence and continuation of
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the Specified Default, the Borrower hereby acknowledges and confirms that the
Lenders have no obligation to make Advances under the Credit Agreement except as
otherwise specifically set forth herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
BORROWER:
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ENERGY CORPORATION OF AMERICA,
a West Virginia corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxx
Title: CFO
AGENT AND LENDERS:
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XXXXX FARGO FOOTHILL, INC.,
f/k/a Foothill Capital Corporation,
a California corporation
By: /s/ Xxxx Xxxxxx
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Name: Xxxx Xxxxxx
Title: SVP
ALLEGHENY & WESTERN ENERGY CORPORATION
and EASTERN AMERICAN ENERGY CORPORATION
hereby execute this Agreement to evidence
their agreements to the provisions of
Sections 9 and 12 hereof.
EASTERN AMERICAN ENERGY CORPORATION,
a West Virginia corporation
By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: President
ALLEGHENEY & WESTERN ENERGY
CORPORATION, a West Virginia corporation
By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: Vice President
[SIGNATURE PAGE]
FORBEARANCE AGREEMENT - Page 7
DALLAS 913715_5 5707.6
CONSENT AND RATIFICATION
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The undersigned, EASTERN AMERICAN ENERGY CORPORATION, a West Virginia
corporation, and ALLEGHENY & WESTERN ENERGY CORPORATION, a West Virginia
corporation (each a "Pledging Subsidiary" and collectively the "Pledging
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Subsidiaries"), have executed certain Loan Documents in favor of XXXXX FARGO
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FOOTHILL, INC. (f/k/a Foothill Capital Corporation), a California corporation,
as the arranger and administrative agent ("Agent") for the Lenders in connection
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with that certain Credit Agreement, dated as of July 10, 2002, as amended from
time to time (the "Agreement") between and among, on the one hand, the lenders
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identified on the signature pages thereof (such lenders, together with their
respective successors and assigns, are referred to hereinafter each individually
as a "Lender" and collectively as the "Lenders"), and the Agent, and, on the
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other hand, ENERGY CORPORATION OF AMERICA, a West Virginia corporation
("Borrower"). The Pledging Subsidiaries hereby consent and agree to the terms
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of the Forbearance Agreement dated January __, 2004 (the "Forbearance
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Agreement"), executed by the Borrower, the Lenders and the Agent, a copy of
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which is attached hereto, and the undersigned agree that the Loan Documents to
which they are a party shall remain in full force and effect and shall continue
to be the legal, valid and binding obligation of the Pledging Subsidiaries and
enforceable against the Pledging Subsidiaries in accordance with their terms.
Furthermore, each Pledging Subsidiary hereby agrees and acknowledges that (a)
none of the Loan Documents to which it is a party is subject to any claims,
defenses or offsets, (b) nothing contained in the Forbearance Agreement or any
other Loan Document shall adversely affect any right or remedy of the Agent
under any of the Loan Documents, (c) the execution and delivery of the
Forbearance Agreement shall in no way reduce, impair or discharge any
indebtedness, liability or obligation of the undersigned under any of the Loan
Documents to which it is a party and shall not constitute a waiver by the Agent
of any of the Agent's rights against the undersigned, (d) by virtue hereof and
by virtue of each of the Loan Documents to which it is a party, each Pledging
Subsidiary ratifies in full all of its indebtedness, liabilities and obligations
arising under each of the Loan Documents to which it is a party, (e) the
Pledging Subsidiaries' consent is not required to the effectiveness of the
Forbearance Agreement, and (f) no consent by the Pledging Subsidiaries is
required for the effectiveness of any future amendment, modification,
forbearance or other action with respect to the Forbearance Agreement or any
present or future Loan Document.
EASTERN AMERICAN ENERGY CORPORATION,
a West Virginia corporation
By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: President
ALLEGHENEY & WESTERN ENERGY CORPORATION,
a West Virginia corporation
By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: Vice President
CONSENT AND RATIFICATION
DALLAS 913715_4 5707.6
