Exhibit 10.1
(CHARTER ONE LOGO) [l28620al2862000.gif]
EXTENSION AGREEMENT
     This EXTENSION AGREEMENT entered into at Providence, Rhode Island, as of
October 26, 2007, between and among Richard M Osborne, an individual, with an
address of 8500 Station Street, Suite 113, Mentor, Ohio 44060 and John D. Oil &
Gas Company, a Maryland corporation, with an address of 8500 Station Street,
Suite 345, Mentor, Ohio 44060 (the “Borrowers”) and RBS Citizens, N.A., d/b/a
Charter One, a national banking association with an address of One Citizens
Plaza, Providence, Rhode Island 02903 (the “Bank”).
     WHEREAS, the Bank established a revolving line of credit (the “Revolving
Loan”) for Borrowers which matures on September 28, 2007 (the “Maturity Date”)
respecting which Bank agreed to Lend to Borrowers upon Borrowers’ request, but
subject to the terms and conditions set forth in various loan documents, of up
to Five Million Dollars and Zero Cents ($5,000,000.00) (the “Revolving Loan
Amount”);
     WHEREAS, the Revolving Loan is evidenced by that certain Revolving Term
Note, dated February 20, 2007 (as previously amended, modified or supplemented,
the “Note”), by the Borrowers in favor of the Bank in the face amount of the
Revolving Loan Amount;
     WHEREAS, pursuant to one or more previous amendments, modifications or
supplements the original principal amount of the Note was changed to
$9,500,000.00;
     WHEREAS, in connection with the Revolving Loan, John D. Oil & Gas Company
entered into that certain Security Agreement, dated February 20, 2007 (as
previously amended, modified or supplemented, the “John D. Oil & Gas Company
Security Agreement”);
     WHEREAS, pursuant to the John D. Oil & Gas Company Security Agreement, John
D. Oil & Gas Company granted the Bank a first priority security interest in and
lien on the personal property described therein (the “John D. Oil & Gas Company
Personalty”);
     WHEREAS, the John D. Oil & Gas Company Security Agreement and the Note and
all other documents and instruments executed in connection with or relating to
the Loan are referred to herein, collectively, as the “Loan Documents”; and the
John D. Oil & Gas Company Personalty and all other collateral granted to the
Bank to secure the Loan is referred to herein, collectively, as the
“Collateral”;
     WHEREAS, the Borrowers have requested and the Bank has agreed to extend the
Maturity Date of the Loan;
     WHEREAS, the Borrowers and the Bank have agreed to modify the Loan and the
Loan Documents in accordance with the terms of this Agreement.
     NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Bank and the Borrowers
mutually agree as follows:
1. EXTENSION
1.1 Recitals and Representations Accurate. The above recitals are hereby made a
part of this Agreement and the Borrowers acknowledge and agree that each of the
recitals is true and correct.
1.2 Ratification. All of the terms, covenants, provisions, representations,
warranties, and conditions

 

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of the Loan Documents, as amended or modified hereby, are ratified,
acknowledged, confirmed, and continued in full force and effect as if fully
restated herein.
1.3 Collateral. The Borrowers confirm and ratify their continuing mortgage,
pledge, assignment, and/or grant of security interest in and lien on the
Collateral to and in favor of the Bank as set forth in the Loan Documents.
1.4 Maturity Date. The Bank hereby agrees to extend the Maturity Date of the
Note to December 28, 2007 (the “New Maturity Date”) and accordingly, the Bank
shall continue to make advances respecting the Revolving Loan, subject to the
terms and conditions of the Loan Documents, until the New Maturity Date at which
time there shall be no advances respecting the Note. On the New Maturity Date,
the Loan and all fees, costs, expenses and other amounts owing by the Borrowers
to the Bank shall be due and payable, in full, without further notice or demand.
All references to the Maturity Date in the Loan Documents shall be modified
accordingly. The Borrowers hereby agree to pay to the Bank all payments due
prior to the New Maturity Date in accordance with the terms of the Note, as
affected hereby, and that any failure to make any such payments in accordance
with the terms of the Note shall be a default under this Agreement, the Note and
each of the Loan Documents.
1.5 Principal Balance. The Borrowers acknowledge and agree that the current
outstanding principal balance of the Note as of the date hereof is
$9,500,000.00.
1.6 Representations and Warranties. The Borrowers hereby represents and warrants
to the Bank that:

  (a)   The person executing this Agreement is duly authorized to do so and to
bind the Borrowers to the terms hereof;     (b)   Each of the Loan Documents is
a valid and legal binding obligation of the Borrowers, enforceable in accordance
with its terms, and is not subject to any defenses, counterclaims, or offsets of
any kind;     (c)   All financial statements delivered to the Bank were true,
accurate and complete, in all material respects, as of the date of delivery to
the Bank;     (d)   Since the date of the Loan Documents there has been no
material adverse change in the condition, financial or otherwise, of any of the
Borrowers, except as disclosed to the Bank in writing;     (e)   There exists no
action, suit, proceeding or investigation, at law or in equity, before any
court, board, administrative body or other entity, pending or threatened,
affecting any of the Borrowers or any of their property, wherein an unfavorable
decision, ruling or finding would materially adversely affect the business
operations, property or financial condition of any of the Borrowers; and     (f)
  There exists no event of default, or other circumstance that with the passage
of time or giving of notice or both will become an event of default, under any
of the Loan Documents.

1.7 Interest, Fees, Costs and Expenses. The Borrowers shall, simultaneously with
the execution of this Agreement, pay to the Bank all accrued interest owing on
the Loan as of the date of this Agreement together with all fees, costs and
expenses due and owing to the Bank by the Borrowers under the Loan Documents.

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2. MISCELLANEOUS
2.1 Set-Off. Each Borrower hereby grants to the Bank a continuing lien and
security interest in any and all deposits or other sums at any time credited by
or due from the Bank or any Bank Affiliate (as hereinafter defined) to such
Borrower and any cash, securities, instruments or other property of such
Borrower in the possession of the Bank or any Bank Affiliate, whether for
safekeeping or otherwise, or in transit to or from the Bank or any Bank
Affiliate (regardless of the reason the Bank or Bank Affiliate had received the
same or whether the Bank or any Bank Affiliate has conditionally released the
same) as security for the full and punctual payment and performance of all of
the liabilities and obligations of such Borrower to the Bank or any Bank
Affiliate and such deposits and other sums may be applied or set off against
such liabilities and obligations of such Borrower to the Bank or any Bank
Affiliate at any time, whether or not such are then due, whether or not demand
has been made and whether or not other collateral is then available to the Bank
or any Bank Affiliate.
     The term “Bank Affiliate” as used in this Note shall mean any “Affiliate”
of the Bank or any lender acting as a participant under any loan arrangement
between the Bank and any of the Borrowers. The term “Affiliate” shall mean with
respect to any person, (a) any person which, directly or indirectly through one
or more intermediaries controls, or is controlled by, or is under common control
with, such person, or (b) any person who is a director or officer (i) of such
person, (ii) of any subsidiary of such person, or (iii) any person described in
clause (a) above. For purposes of this definition, control of a person shall
mean the power, direct or indirect, (x) to vote 5% or more of the Capital Stock
having ordinary voting power for the election of directors (or comparable
equivalent) of such person, or (y) to direct or cause the direction of the
management and policies of such person whether by contract or otherwise. Control
may be by ownership, contract, or otherwise.
2.2 Release of the Bank. Each Borrower hereby confirms that as of the date
hereof it has no claim, set-off, counterclaim, defense, or other cause of action
against the Bank including, but not limited to, a defenses of usury, any claim
or cause of action at common law, in equity, statutory or otherwise, in contract
or in tort, for fraud, malfeasance, misrepresentation, financial loss, usury,
deceptive trade practice, or any other loss, damage or liability of any kind,
including, without limitation, any claim to exemplary or punitive damages
arising out of any transaction between any Borrower and the Bank. To the extent
that any such set-off, counterclaim, defense, or other cause of action may exist
or might hereafter arise based on facts known or unknown that exist as of this
date, such set-off, counterclaim, defense and other cause of action is hereby
expressly and knowingly waived and released by each Borrower. Each Borrower
acknowledges that this release is part of the consideration to the Bank for the
financial and other accommodations granted by the Bank in this Agreement.
2.3 Costs and Expenses. The Borrowers shall pay to the Bank on demand any and
all costs and expenses (including, without limitation, reasonable attorneys’
fees and disbursements, court costs, litigation and other expenses) incurred or
paid by the Bank in establishing, maintaining, protecting or enforcing any of
the Bank’s rights or any of the obligations owing by any Borrower to the Bank,
including, without limitation, any and all such costs and expenses incurred or
paid by the Bank in defending the Bank’s security interest in, title or right
to, the Collateral or in collecting or attempting to collect or enforcing or
attempting to enforce payment of the Loan.
2.4 Indemnification. Each Borrower shall indemnify, defend and hold the Bank and
the Bank Affiliates and their directors, officers, employees, agents and
attorneys (each an “Indemnitee”) harmless against any claim brought or
threatened against any Indemnitee by any Borrower or any guarantor or endorser
of the obligations of any Borrower to the Bank, or any other person (as well as
from attorneys’ fees and expenses in connection therewith) on account of the
Bank’s relationship with any Borrower, or any guarantor or endorser of the
obligations of any Borrower to the Bank (each of which may be defended,
compromised, settled or pursued by the Bank with counsel of the Bank’s election,
but at the expense of the Borrowers), except for any claim arising out of the
gross negligence or willful misconduct of the Bank. The within indemnification
shall survive payment of the obligations of the Borrowers to the Bank, and/or
any termination, release or discharge executed by the Bank in favor of any
Borrower.

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2.5 Joint and Several. Each Borrower shall be jointly and severally liable for
payment and/or performance of all obligations arising under this Agreement, and
the term “Borrower” shall include each as well as all of them.
2.6 Severability. If any provision of this Agreement or portion of such
provision or the application thereof to any person or circumstance shall to any
extent be held invalid or unenforceable, the remainder of this Agreement (or the
remainder of such provision) and the application thereof to other persons or
circumstances shall not be affected thereby.
2.7 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be an original, but all of which shall constitute but one
agreement.
2.8 Complete Agreement. This Agreement and the other Loan Documents constitute
the entire agreement and understanding between and among the parties hereto
relating to the subject matter hereof, and supersedes all prior proposals,
negotiations, agreements and understandings among the parties hereto with
respect to such subject matter.
2.9 Binding Effect of Agreement. This Agreement shall be binding upon and inure
to the benefit of the respective heirs, executors, administrators, legal
representatives, successors and assigns of the parties hereto, and shall remain
in full force and effect (and the Bank shall be entitled to rely thereon) until
released in writing by the Bank. The Bank may transfer and assign this Agreement
and deliver the Collateral to the assignee, who shall thereupon have all of the
rights of the Bank; and the Bank shall then be relieved and discharged of any
responsibility or liability with respect to this Agreement and the Collateral.
Except as expressly provided herein or in the other Loan Documents, nothing,
expressed or implied, is intended to confer upon any party, other than the
parties hereto, any rights, remedies, obligations or liabilities under or by
reason of this Agreement or the other Loan Documents.
2.10 Further Assurances. Each Borrower will from time to time execute and
deliver to the Bank such documents, and take or cause to be taken, all such
other further action, as the Bank may request in order to effect and confirm or
vest more securely in the Bank all rights contemplated by this Agreement
(including, without limitation, to correct clerical errors) or to vest more
fully in or assure to the Bank the security interest in the Collateral or to
comply with applicable statute or law and to facilitate the collection of the
Collateral (including, without limitation, the execution of stock transfer
orders and stock powers, endorsement of promissory notes and instruments and
notifications to obligors on the Collateral). To the extent permitted by
applicable law, each Borrower authorizes the Bank to file financing statements,
continuation statements or amendments without any such Borrower’s signature
appearing thereon, and any such financing statements, continuation statements or
amendments may be signed by the Bank on behalf of such Borrower, if necessary,
and may be filed at any time in any jurisdiction. The Bank may at any time and
from time to time file financing statements, continuation statements and
amendments thereto which contain any information required by the Ohio Uniform
Commercial Code, Ohio Revised Code Chapter 1309 as amended from time to time
(the “Code”) for the sufficiency or filing office acceptance of any financing
statement, continuation statement or amendment, including whether any such
Borrower is an organization, the type of organization and any organization
identification number issued to such Borrower. Each Borrower agrees to furnish
any such information to the Bank promptly upon request. In addition, each
Borrower shall at any time and from time to time take such steps as the Bank may
reasonably request for the Bank (i) to obtain an acknowledgment, in form and
substance satisfactory to the Bank, of any bailee having possession of any of
the Collateral that the bailee holds such Collateral for the Bank, (ii) to
obtain “control” (as defined in the Code) of any Collateral comprised of deposit
accounts, electronic chattel paper, letter of credit rights or investment
property, with any agreements establishing control to be in form and substance
satisfactory to Bank, and (iii) otherwise to insure the continued perfection and
priority of the Bank’s security interest in any of the Collateral and the
preservation of its rights therein. Each Borrower hereby constitutes the Bank
its attorney-in-fact to execute, if necessary, and file all filings required or
so requested for the foregoing purposes, all acts of such attorney being hereby
ratified and confirmed; and such power, being coupled with an interest, shall

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be irrevocable until this Agreement terminates in accordance with its terms, all
obligations of the Borrowers to the Bank are irrevocably paid in full and the
Collateral is released.
2.11 Amendments and Waivers. This Agreement may be amended and any Borrower may
take any action herein prohibited, or omit to perform any act herein required to
be performed by it, if such Borrower shall obtain the Bank’s prior written
consent to each such amendment, action or omission to act. No delay or omission
on the part of the Bank in exercising any right hereunder shall operate as a
waiver of such right or any other right and waiver on any one or more occasions
shall not be construed as a bar to or waiver of any right or remedy of the Bank
on any future occasion.
2.12 Terms of Agreement. This Agreement shall continue in force and effect so
long as any obligation of any Borrower to Bank shall be outstanding and is
supplementary to each and every other agreement between any Borrower and Bank
and shall not be so construed as to limit or otherwise derogate from any of the
rights or remedies of Bank or any of the liabilities, obligations or
undertakings of any Borrower under any such agreement, nor shall any
contemporaneous or subsequent agreement between any Borrower and the Bank be
construed to limit or otherwise derogate from any of the rights or remedies of
Bank or any of the liabilities, obligations or undertakings of any Borrower
hereunder, unless such other agreement specifically refers to this Agreement and
expressly so provides.
2.13 Notices. Any notices under or pursuant to this Agreement shall be deemed
duly received and effective if delivered in hand to any officer of agent of any
of the Borrowers or Bank, or if mailed by registered or certified mail, return
receipt requested, addressed to any of the Borrowers or Bank at the address set
forth in this Agreement or as any party may from time to time designate by
written notice to the other party.
2.14 Ohio Law. This Agreement has been executed or completed and is to be
performed in Ohio, and it and all transactions thereunder or pursuant thereto
shall be governed as to interpretation, validity, effect, rights, duties and
remedies of the parties thereunder and in all other respects by the laws of
Ohio.
2.15 Reproductions. This Agreement and all documents which have been or may be
hereinafter furnished by Borrowers to the Bank may be reproduced by the Bank by
any photographic, photostatic, microfilm, xerographic or similar process, and
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made in the regular course of
business).
2.16 Venue. Each Borrower irrevocably submits to the nonexclusive jurisdiction
of any Federal or state court sitting in Ohio, over any suit, action or
proceeding arising out of or relating to this Agreement. Each Borrower
irrevocably waives to the fullest extent it may effectively do so under
applicable law, any objection it may now or hereafter have to the laying of the
venue of any such suit, action or proceeding brought in any such court and any
claim that the same has been brought in an inconvenient forum. Each Borrower
irrevocably appoints the Secretary of State of the State of Ohio as their
authorized agent to accept and acknowledge on its behalf any and all process
which may be served in any such suit, action or proceeding, consents to such
process being served (i) by mailing a copy thereof by registered or certified
mail, postage prepaid, return receipt requested, to such Borrower’s address
shown above or as notified to the Bank and (ii) by serving the same upon such
agent, and agrees that such service shall in every respect be deemed effective
service upon such Borrower.
2.17 JURY WAIVER. EACH BORROWER AND BANK EACH HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY, AND AFTER AN OPPORTUNITY TO CONSULT WITH LEGAL COUNSEL, WAIVE
(A) ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING IN
CONNECTION WITH THIS AGREEMENT, THE OBLIGATIONS, ALL MATTERS CONTEMPLATED HEREBY
AND DOCUMENTS EXECUTED IN CONNECTION HEREWITH AND (B) AGREE NOT TO SEEK TO
CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CAN NOT
BE, OR HAS NOT BEEN WAIVED. EACH BORROWER CERTIFIES THAT NEITHER THE BANK NOR
ANY OF ITS REPRESENTATIVES, AGENTS OR COUNSEL HAS

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REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE BANK WOULD NOT IN THE EVENT OF ANY
SUCH PROCEEDING SEEK TO ENFORCE THIS WAIVER OF RIGHT TO TRIAL BY JURY.
2.18 Warrant of Attorney. Each of the undersigned authorizes any attorney at law
to appear in any Court of Record in the State of Ohio or in any other state or
territory of the United States after the above indebtedness becomes due, whether
by acceleration or otherwise, to waive the issuing and service of process, and
to confess judgment against any one or more of the undersigned in favor of the
Bank for the amount then appearing due together with costs of suit, and
thereupon to waive all error and all rights of appeal and stays of execution. No
such judgment or judgments against less than all of the undersigned shall be a
bar to a subsequent judgment or judgments against any one or more of the
undersigned against whom judgment has not been obtained hereon; this being a
joint and several warrant of attorney to confess judgment. The attorney at law
authorized hereby to appear for the undersigned may be an attorney at law
representing the Bank, and the undersigned hereby expressly waive any conflict
of interest that may exist by virtue of such representation. The undersigned
also agree that the attorney acting for the undersigned as set forth in this
Section may be compensated by the Bank for such services.

WARNING—BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL.
IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR
PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU
REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED
GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY
OTHER CAUSE.

                  /s/ Richard M. Osborne       Richard M. Osborne, individually 
       

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WARNING—BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL.
IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR
PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU
REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED
GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY
OTHER CAUSE.

            John D. Oil & Gas Company
      By:   /s/ Richard M. Osborne         Richard M. Osborne, CEO             
        By:   /s/ Greg Osborne         Greg Osborne, President                 
    By:   /s/ C. Jean Mihitsch         C. Jean Mihitsch, CFO             

              Accepted: RBS Citizens, N.A., d/b/a Charter One    
 
           
By:
  /s/ Robert Dracon               
 
  Name:   Robert Dracon    
 
  Title:   Vice President    

©2007 Medici, a division of Wolters Kluwer Financial Services

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