EX-10.1



 





Exhibit 10.1









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


 









 






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.




2









 








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.




3









 







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


4









 






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


5









 






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 	 
	 	 	 



6









 






	 	 	 	 	 







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


7