Exhibit 10 (s)(s)(s)
PROMISSORY NOTE
$4,500,000.00
April 21, 2003
Diversified Energy Company
519 Kimball Avenue NE
Roanoke, Virginia 24016
(Individually and collectively "Borrower")
Wachovia Bank, National Association
201 S. Jefferson Street
Roanoke, Virginia 24011
(Hereinafter referred to as "Bank")
IMPORTANT NOTICE
THIS NOTE CONTAINS A CONFESSION OF JUDGMENT PROVISION WHICH CONSTITUTES A
WAIVER OF IMPORTANT RIGHTS YOU MAY HAVE AS A BORROWER AND ALLOWS BANK TO
OBTAIN A JUDGMENT AGAINST YOU WITHOUT FURTHER NOTICE.
Borrower promises to pay to the order of Bank, in lawful money of the United
States of America, at its office indicated above or wherever else Bank may
specify, the sum of Four Million, Five Hundred Thousand and No/100 Dollars
($4,500,000.00) or such sum as may be advanced and outstanding from time to
time, with interest on the unpaid principal balance at the rate and on the terms
provided in this Promissory Note (including all renewals, extensions or
modifications hereof, this "Note").
RENEWAL/MODIFICATION. This Promissory Note renews, extends and/or modifies that
certain Promissory Note dated March 25, 2002 (the "Original Promissory Note"),
evidencing an original principal amount of $5,000,000.00. This Promissory Note
is not a novation.
LINE OF CREDIT ADVANCES. Borrower may borrow, repay and reborrow, and, upon the
request of Borrower, Bank shall advance and readvance under this Note from time
to time until the maturity hereof (each an "Advance" and together the
"Advances"), so long as the total principal balance outstanding under this Note
at any one time does not exceed (i) $2,000,000.00 for the period beginning on
the date hereof and continuing to and including June 15, 2003; (ii) beginning
June 16, 2003, the principal amount available for lending under this Note shall
be $3,000,000.00 through and including September 15, 2003; (iii) beginning
September 16, 2003, the principal amount available for lending under this Note
shall be the principal amount stated on the face of this Note through and
including the maturity date, March 31, 2004. Bank's obligation to make Advances
under this Note shall terminate if Borrower is in Default. As of the date of
each proposed Advance, Borrower shall be deemed to represent that each
representation made in the Loan Documents is true as of such date.
If Borrower subscribes to Bank's cash management services and such services are
applicable to this line of credit, the terms of such service shall control the
manner in which funds are transferred between the applicable demand deposit
account and the line of credit for credit or debit to the line of credit.
USE OF PROCEEDS. Borrower shall use the proceeds of the loan(s) evidenced by
this Note for the commercial purposes of Borrower, as follows: Finance inventory
and accounts receivable.
INTEREST RATE. Interest shall accrue on the unpaid principal balance of this
Note from the date hereof at the LIBOR Market Index Rate plus 0.8%, as that rate
may change from day to day in accordance with changes in the LIBOR Market Index
Rate ("Interest Rate"). "LIBOR Market Index Rate", for any day, means the rate
for 1 month U.S. dollar deposits as reported on Telerate page 3750 as of 11:00
a.m.,
535080 (Rev 16.0)
London time, on such day, or if such day is not a London business day, then the
immediately preceding London business day (or if not so reported, then as
determined by Bank from another recognized source or interbank quotation).
DEFAULT RATE. In addition to all other rights contained in this Note, if a
Default (as defined herein) occurs and as long as a Default continues, all
outstanding Obligations shall bear interest at the Interest Rate plus 3%
("Default Rate"). The Default Rate shall also apply from acceleration until the
Obligations or any judgment thereon is paid in full.
INTEREST AND FEE(S) COMPUTATION (ACTUAL/360). Interest and fees, if any, shall
be computed on the basis of a 360-day year for the actual number of days in the
applicable period ("Actual/360 Computation"). The Actual/360 Computation
determines the annual effective interest yield by taking the stated (nominal)
rate for a year's period and then dividing said rate by 360 to determine the
daily periodic rate to be applied for each day in the applicable period.
Application of the Actual/360 Computation produces an annualized effective rate
exceeding the nominal rate.
REPAYMENT TERMS. This Note shall be due and payable in consecutive monthly
payments of accrued interest only, commencing on May 1, 2003, and continuing on
the same day of each month thereafter until fully paid. In any event, all
principal and accrued interest shall be due and payable on March 31, 2004.
APPLICATION OF PAYMENTS. Monies received by Bank from any source for application
toward payment of the Obligations shall be applied to accrued interest and then
to principal. If a Default occurs, monies may be applied to the Obligations in
any manner or order deemed appropriate by Bank.
If any payment received by Bank under this Note or other Loan Documents is
rescinded, avoided or for any reason returned by Bank because of any adverse
claim or threatened action, the returned payment shall remain payable as an
obligation of all persons liable under this Note or other Loan Documents as
though such payment had not been made.
DEFINITIONS. LOAN DOCUMENTS. The term "Loan Documents", as used in this Note and
the other Loan Documents, refers to all documents executed in connection with or
related to the loan evidenced by this Note and any prior notes which evidence
all or any portion of the loan evidenced by this Note, and any letters of credit
issued pursuant to any loan agreement to which this Note is subject, any
applications for such letters of credit and any other documents executed in
connection therewith or related thereto, and may include, without limitation, a
commitment letter that survives closing, a loan agreement, this Note, guaranty
agreements, security agreements, security instruments, financing statements,
mortgage instruments, any renewals or modifications, whenever any of the
foregoing are executed, but does not include swap agreements (as defined in 11
U.S.C. Section 101). OBLIGATIONS. The term "Obligations", as used in this Note
and the other Loan Documents, refers to any and all indebtedness and other
obligations under this Note, all other obligations under any other Loan
Document(s), and all obligations under any swap agreements (as defined in 11
U.S.C. Section 101) between Borrower and Bank whenever executed. CERTAIN OTHER
TERMS. All terms that are used but not otherwise defined in any of the Loan
Documents shall have the definitions provided in the Uniform Commercial Code.
LATE CHARGE. If any payments are not timely made, Borrower shall also pay to
Bank a late charge equal to 5% of each payment past due for 8 or more days.
Acceptance by Bank of any late payment without an accompanying late charge shall
not be deemed a waiver of Bank's right to collect such late charge or to collect
a late charge for any subsequent late payment received.
ATTORNEYS' FEES AND OTHER COLLECTION COSTS. Borrower shall pay all of Bank's
reasonable expenses incurred to enforce or collect any of the Obligations
including, without limitation, reasonable arbitration, paralegals', attorneys'
and experts' fees and expenses, whether incurred without the
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commencement of a suit, in any trial, arbitration, or administrative proceeding,
or in any appellate or bankruptcy proceeding.
USURY. If at any time the effective interest rate under this Note would, but for
this paragraph, exceed the maximum lawful rate, the effective interest rate
under this Note shall be the maximum lawful rate, and any amount received by
Bank in excess of such rate shall be applied to principal and then to fees and
expenses, or, if no such amounts are owing, returned to Borrower.
DEFAULT. If any of the following occurs, a default ("Default") under this Note
shall exist: NONPAYMENT; NONPERFORMANCE. The failure of timely payment or
performance of the Obligations or Default under this Note or any other Loan
Documents. FALSE WARRANTY. A warranty or representation made or deemed made in
the Loan Documents or furnished Bank in connection with the loan evidenced by
this Note proves materially false, or if of a continuing nature, becomes
materially false. CROSS DEFAULT. At Bank's option, any default in payment or
performance of any obligation under any other loans, contracts or agreements of
Borrower, any Subsidiary or Affiliate of Borrower, any general partner of or the
holder(s) of the majority ownership interests of Borrower with Bank or its
affiliates ("Affiliate" shall have the meaning as defined in 11 U.S.C. Section
101, except that the term "Borrower" shall be substituted for the term "Debtor"
therein; "Subsidiary" shall mean any business in which Borrower holds, directly
or indirectly, a controlling interest). CESSATION; BANKRUPTCY. The death of,
appointment of a guardian for, dissolution of, termination of existence of, loss
of good standing status by, appointment of a receiver for, assignment for the
benefit of creditors of, or commencement of any bankruptcy or insolvency
proceeding by or against Borrower, its Subsidiaries or Affiliates, if any, or
any general partner of or the holder(s) of the majority ownership interests of
Borrower, or any party to the Loan Documents. MATERIAL BUSINESS ALTERATION.
Without prior written consent of Bank, a material alteration in the kind or type
of Borrower's business. MATERIAL CAPITAL STRUCTURE OR BUSINESS ALTERATION.
Without prior written consent of Bank, (i) a material alteration in the kind or
type of Borrower's business or that of Borrower's Subsidiaries or Affiliates, if
any; (ii) the sale of substantially all of the business or assets of Borrower,
any of Borrower's Subsidiaries or Affiliates or any guarantor, or a material
portion (10% or more) of such business or assets if such a sale is outside the
ordinary course of business of Borrower, or any of Borrower's Subsidiaries or
Affiliates or any guarantor, or more than 50% of the outstanding stock or voting
power of or in any such entity in a single transaction or a series of
transactions; (iii) the acquisition of substantially all of the business or
assets or more than 50% of the outstanding stock or voting power of any other
entity; or (iv) should any Borrower or any of Borrower's Subsidiaries or
Affiliates or any guarantor enter into any merger or consolidation. MATERIAL
ADVERSE CHANGE. Bank determines in good faith, in its sole discretion, that the
prospects for payment or performance of the Obligations are impaired or there
has occurred a material adverse change in the business or prospects of Borrower,
financial or otherwise.
REMEDIES UPON DEFAULT. If a Default occurs under this Note or any Loan
Documents, Bank may at any time thereafter, take the following actions: BANK
LIEN. Foreclose its security interest or lien against Borrower's accounts
without notice. ACCELERATION UPON DEFAULT. Accelerate the maturity of this Note
and, at Bank's option, any or all other Obligations, other than Obligations
under any swap agreements (as defined in 11 U.S.C. Section 101) between Borrower
and Bank, which shall be governed by the default and termination provisions of
said swap agreements; whereupon this Note and the accelerated Obligations shall
be immediately due and payable; provided, however, if the Default is based upon
a bankruptcy or insolvency proceeding commenced by or against Borrower or any
guarantor or endorser of this Note, all Obligations (other than Obligations
under any swap agreement as referenced above) shall automatically and
immediately be due and payable. CUMULATIVE. Exercise any rights and remedies as
provided under the Note and other Loan Documents, or as provided by law or
equity.
ANNUAL FINANCIAL STATEMENTS. Borrower shall deliver to Bank, within 90 days
after the close of each fiscal year, audited financial statements reflecting its
operations during such fiscal year, including, without limitation, a balance
sheet, profit and loss statement and statement of cash flows, with supporting
schedules and in reasonable detail, prepared in conformity with generally
accepted accounting principles, applied on a basis consistent with that of the
preceding year. If audited statements are required, all such statements shall be
examined by an independent certified public accountant acceptable to Bank. The
opinion of such independent certified public accountant shall not be acceptable
to Bank if qualified due to
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any limitations in scope imposed by Borrower or any other person or entity. Any
other qualification of the opinion by the accountant shall render the
acceptability of the financial statements subject to Bank's approval.
FINANCIAL AND OTHER INFORMATION. Borrower shall deliver to Bank such information
as Bank may reasonably request from time to time, including without limitation,
financial statements and information pertaining to Borrower's financial
condition. Such information shall be true, complete, and accurate.
CONFESSION OF JUDGMENT. Each Borrower hereby constitutes and appoints John G.
Fox, Gregory A. Baugher (each of whom is an officer of Bank), and Bank through
an officer duly authorized by Bank (any of the foregoing may act), as the true
and lawful attorneys-in-fact for them, in any or all of their names, place and
stead, and upon the occurrence of a Default in the payment of the Obligations
due under this Note, at maturity, or upon acceleration, to confess judgment
against them or any of them, in favor of Bank, before the Clerk of the Circuit
Court for City of Roanoke, Virginia, in accordance with 1950 Code of Virginia,
Section 8.01-431 ET SEQ., and any successor statute, for all amounts owed with
respect to the Obligations under and pursuant to this Note including, without
limitation, all costs of collection and attorneys' fees in an amount equal to
15% of the Obligations then outstanding (which shall be deemed reasonable
attorneys' fees for the purposes of this paragraph), and court costs, hereby
ratifying and confirming the acts of said attorney-in-fact as if done by
themselves. Upon request of Bank, each Borrower will execute an amendment or
other agreement substituting attorneys-in-fact appointed to act for each
Borrower hereunder.
WAIVERS AND AMENDMENTS. No waivers, amendments or modifications of this Note and
other Loan Documents shall be valid unless in writing and signed by an officer
of Bank. No waiver by Bank of any Default shall operate as a waiver of any other
Default or the same Default on a future occasion. Neither the failure nor any
delay on the part of Bank in exercising any right, power, or remedy under this
Note and other Loan Documents shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.
Each Borrower or any person liable under this Note waives presentment, protest,
notice of dishonor, demand for payment, notice of intention to accelerate
maturity, notice of acceleration of maturity, notice of sale and all other
notices of any kind. Further, each agrees that Bank may extend, modify or renew
this Note or make a novation of the loan evidenced by this Note for any period,
and grant any releases, compromises or indulgences with respect to any
collateral securing this Note, or with respect to any other Borrower or any
other person liable under this Note or other Loan Documents, all without notice
to or consent of each Borrower or each person who may be liable under this Note
or any other Loan Document and without affecting the liability of Borrower or
any person who may be liable under this Note or any other Loan Document.
MISCELLANEOUS PROVISIONS. ASSIGNMENT. This Note and the other Loan Documents
shall inure to the benefit of and be binding upon the parties and their
respective heirs, legal representatives, successors and assigns. Bank's
interests in and rights under this Note and the other Loan Documents are freely
assignable, in whole or in part, by Bank. In addition, nothing in this Note or
any of the other Loan Documents shall prohibit Bank from pledging or assigning
this Note or any of the other Loan Documents or any interest therein to any
Federal Reserve Bank. Borrower shall not assign its rights and interest
hereunder without the prior written consent of Bank, and any attempt by Borrower
to assign without Bank's prior written consent is null and void. Any assignment
shall not release Borrower from the Obligations. ORGANIZATION; POWERS. Borrower
represents that Borrower (i) is (a) an adult individual and is SUI JURIS, or (b)
a corporation, general partnership, limited partnership, limited liability
company or other legal entity, duly organized, validly existing and in good
standing under the laws of its state of organization, and is authorized to do
business in each other jurisdiction wherein its ownership of property or conduct
of business legally requires such organization (ii) has the power and authority
to own its properties and assets and to carry on its business as now being
conducted and as now contemplated; and (iii) has the power and authority to
execute, deliver and perform, and by all necessary action has authorized the
execution, delivery and performance of, all of its obligations under this Note
and any other Loan Document to which it is a party. APPLICABLE LAW; CONFLICT
BETWEEN DOCUMENTS. This Note and,
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unless otherwise provided in any other Loan Document, the other Loan Documents
shall be governed by and construed under the laws of the state named in Bank's
address on the first page hereof without regard to that state's conflict of laws
principles. If the terms of this Note should conflict with the terms of any loan
agreement or any commitment letter that survives closing, the terms of this Note
shall control. BORROWER'S ACCOUNTS. Except as prohibited by law, Borrower grants
Bank a security interest in all of Borrower's accounts with Bank and any of
Bank's affiliates. JURISDICTION. Borrower irrevocably agrees to non-exclusive
personal jurisdiction in the state named in Bank's address on the first page
hereof. SEVERABILITY. If any provision of this Note or of the other Loan
Documents shall be prohibited or invalid under applicable law, such provision
shall be ineffective but only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Note or other such document. NOTICES. Any notices to Borrower shall be
sufficiently given, if in writing and mailed or delivered to the Borrower's
address shown above or such other address as provided hereunder, and to Bank, if
in writing and mailed or delivered to Wachovia Bank, National Association, Mail
Code VA7391, P. O. Box 13327, Roanoke, VA 24040 or Wachovia Bank, National
Association, Mail Code VA7391, 10 South Jefferson Street, Roanoke, VA 24011 or
such other address as Bank may specify in writing from time to time. Notices to
Bank must include the mail code. In the event that Borrower changes Borrower's
address at any time prior to the date the Obligations are paid in full, Borrower
agrees to promptly give written notice of said change of address by registered
or certified mail, return receipt requested, all charges prepaid. PLURAL;
CAPTIONS. All references in the Loan Documents to Borrower, guarantor, person,
document or other nouns of reference mean both the singular and plural form, as
the case may be, and the term "person" shall mean any individual, person or
entity. The captions contained in the Loan Documents are inserted for
convenience only and shall not affect the meaning or interpretation of the Loan
Documents. ADVANCES. Bank may, in its sole discretion, make other advances which
shall be deemed to be advances under this Note, even though the stated principal
amount of this Note may be exceeded as a result thereof. POSTING OF PAYMENTS.
All payments received during normal banking hours after 2:00 p.m. local time at
the office of Bank first shown above shall be deemed received at the opening of
the next banking day. JOINT AND SEVERAL OBLIGATIONS. Each person who signs this
Note as a Borrower (as defined herein) is jointly and severally obligated. FEES
AND TAXES. Borrower shall promptly pay all documentary, intangible recordation
and/or similar taxes on this transaction whether assessed at closing or arising
from time to time.
WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWER BY
EXECUTION HEREOF AND BANK BY ACCEPTANCE HEREOF, KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE,
THE LOAN DOCUMENTS OR ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONNECTION
WITH THIS NOTE, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY WITH RESPECT HERETO. THIS PROVISION
IS A MATERIAL INDUCEMENT TO BANK TO ACCEPT THIS NOTE.
BORROWER AND BANK AGREE THAT THEY SHALL NOT HAVE A REMEDY OF PUNITIVE OR
EXEMPLARY DAMAGES AGAINST THE OTHER IN ANY DISPUTE AND HEREBY WAIVE ANY RIGHT
OR CLAIM TO PUNITIVE OR EXEMPLARY DAMAGES THEY HAVE NOW OR WHICH MAY ARISE IN
THE FUTURE IN CONNECTION WITH ANY DISPUTE WHETHER THE DISPUTE IS RESOLVED BY
ARBITRATION OR JUDICIALLY.
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IN WITNESS WHEREOF, Borrower, on the day and year first above written, has
caused this Note to be executed under seal.
PLACE OF EXECUTION AND DELIVERY. Borrower hereby certifies that this Note and
the Loan Documents were executed in the Commonwealth of Virginia and delivered
to Bank in the Commonwealth of Virginia.
Diversified Energy Company
Taxpayer Identification Number: 54-1096305
By: s/John B. Williamson, III (SEAL)
John B. Williamson, III, President/Chairman/CEO
s/Howard T. Lyon (SEAL)
Howard T. Lyon, Controller/Treasurer
Tracking #: 68834RKE
CAT - Deal # 176063 Facility ID 138413
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