EXHIBIT 10.13
SUBORDINATION AGREEMENT
This Agreement, dated as of November 13, 1998, is entered into by and
between each of CONSOLIDATION COAL COMPANY (the "Borrower"), CONSOL ENERGY INC.
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("CEI"), CONSOL INC. ("CI"), CONSOLIDATION COAL SALES COMPANY ("CCSC"), CONSOL
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OF CANADA INC., ("CAN") CONSOL PENNSYLVANIA COAL COMPANY ("CPCC"), CONSOL SALES
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COMPANY ("CSC"), EIGHTY-FOUR MINING COMPANY ("EFMC"), FAIRMONT SUPPLY COMPANY
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("FSC"), HELVETIA COAL COMPANY ("HCC"), ISLAND CREEK COAL COMPANY ("ICC"),
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KEYSTONE COAL MINING CORPORATION ("KCMC"), LAUREL RUN MINING COMPANY ("LRMC"),
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XxXXXXX COAL COMPANY, ("MCC"), NEW CENTURY HOLDINGS, INC., ("NCH"), NINEVEH COAL
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COMPANY ("NCC") and ROCHESTER & PITTSBURGH COAL COMPANY ("R&P"); the Borrower,
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CEI, CI, CCSC, CAN, CPCC, CSC, EFMC, FSC, HCC, ICC, KCMC, LRMC, MCC, NCH, NCC
and R&P are collectively referred to herein as the "Subordinated Lenders") for
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the benefit of THE FIRST NATIONAL BANK OF CHICAGO under the Loan Agreement
referred to below, (together with its respective successors and assigns, the
"Bank");
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W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Borrower and the Bank have entered into a Senior Revolving
Loan Agreement, dated as of November 13, 1998, (as the same may at any time be
amended or modified and in effect, the "Loan Agreement"), pursuant to which,
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among other things, the Bank has agreed to extend credit to the Borrower;
WHEREAS, each of the Subordinated Lenders acknowledges that the loans and
other extensions of financial accommodations or credit to the Borrower and the
Bank pursuant to the Loan Agreement is of value to the Subordinated Lenders;
WHEREAS, capitalized terms used but not otherwise defined herein shall have
the meanings assigned thereto in the Loan Agreement;
NOW, THEREFORE, to induce the Bank to enter into the Loan Agreement, and
for other valuable consideration, receipt whereof is hereby acknowledged, each
of the Subordinated Lenders hereby agrees as follows:
SECTION 1. Definitions. All claims by or belonging to any Person against
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the Borrower, either Guarantor, CCSC, CPCC, CSC, EFMC, FSC, HCC, NCC, ICC, KCMC,
LRMC, MCC, NCH, NCC AND R&P and any other Person that from time to time is a
Significant Subsidiary (individually, a "Debtor" and collectively, the
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"Debtors"), howsoever created, arising or evidenced, whether direct or indirect,
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absolute or contingent or now or hereafter existing, are hereinafter called the
"Claims". All Claims of the Bank under the Loan Agreement, the Notes and each
other Loan Document are hereinafter called the "Senior Claims", and all Claims
of each of the Subordinated Lenders are hereinafter called the "Junior Claims";
it being expressly understood and agreed that the term "Senior Claims", as used
herein, shall include, without limitation, any and all interest accruing on any
of the Senior Claims after the commencement of any suits or proceedings referred
to in Section 5, notwithstanding any provision or rule of law which might
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restrict the rights of the Bank, as against any of the Debtors or anyone else,
to collect such interest.
SECTION 2. Notice of Junior Liabilities, etc. any time when a Default
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shall be existing, each of the Subordinated Lenders will promptly notify the
Bank of the creation of any Junior Claims and of the issuance of any promissory
note or other instrument of any of the Debtors to evidence any Junior Claims.
SECTION 3. Subordination. Except as expressly provided in Section 4 of
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this Agreement, the payment of all Junior Claims shall be postponed and
subordinated to the payment in full of all Senior Claims, and each Subordinated
Lender agrees not to seek to collect any amounts owing to it by any of the
Debtors under or in connection with any settlement of any Junior Claim or any
judgment entered in favor of any or all Claimants with respect to a Junior
Claim, or to seek to obtain any other distributions in money or property or of
any other kind whatsoever in respect of any Junior Claims, nor shall any
property or assets of any of the Debtors be applied to the purchase or other
acquisition or retirement of any Junior Claims.
SECTION 4. Permitted Payments. Provided that both before and after giving
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effect to any such payment, no Default shall have occurred and be continuing,
notwithstanding Section 3 above, any of the Debtors may pay to the Subordinated
Lenders, and the Subordinated Lenders may accept from such Debtors, any payments
of principal and interest on all Junior Claims. In the event that a Default
shall be existing, none of the Subordinated Lenders shall ask, demand, take or
receive from any Debtor by setoff or in any other manner any payment in respect
of any Junior Claims until such Default ceases to exist or all Senior Claims
shall have been fully paid in cash and performed and all of the Commitments
shall have been terminated.
SECTION 5. Bankruptcy, Insolvency, etc. In the event of any dissolution,
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winding up, liquidation, readjustment, reorganization or other similar
proceedings relating to (a) any Debtor or (b) the respective assets or
properties of any Debtor, whether such proceeding or proceedings are voluntary
or involuntary, partial or complete, and whether in bankruptcy, insolvency or
receivership, or upon an assignment for the benefit of creditors, or any other
marshalling of the assets and liabilities of any Debtor or any sale of all or
substantially all of the assets of any Debtor, or otherwise, the Subordinated
Lenders hereby acknowledge and agree that the Senior Claims shall first be paid
in full before any Subordinated Lender shall be entitled to receive and/or to
retain any payment or distribution in respect of any of the Junior Claims. In
order to implement the foregoing, (i) all payments and distributions of any kind
or character in respect of any of the Junior Claims to which any Subordinated
Lender would be entitled if the Junior Claims were not subordinated pursuant to
this Agreement shall be made directly to the Bank, (ii) each Subordinated Lender
shall promptly file a claim or claims, in the form required in such proceedings,
for the full outstanding amount of the Junior Claims, if any, by or belonging to
such Subordinated Lender, and shall cause said claim or claims to be approved
and all payments and other distributions in respect thereof to be made directly
to the Bank, and (iii) each Subordinated Lender hereby irrevocably agrees that,
if such Subordinated Lender shall fail to file any such claim referred to in the
preceding clause (ii), the Bank may, at its sole discretion, in the name of each
Subordinated Lender or otherwise, demand, xxx for, collect, receive and accept
receipt for any and all such payments or distributions, and file, prove, and
vote or consent in any such proceedings with respect to, any and all claims of
each Subordinated Lender relating to the Junior Claims.
SECTION 6. Payments Held in Trust. In the event that any Subordinated
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Lender receives any payment or other distribution of any kind or character from
any source whatsoever in respect of any of the Junior Claims, other than as
expressly permitted by the terms of this Agreement, such payment or other
distribution shall be received in trust for the Bank, and each Subordinated
Lender shall promptly turn over any such payment or distribution to the Bank.
Each of the Subordinated Lenders will keep, and cause each Debtor to keep, this
Agreement with and as part of its respective books and records, and will cause
to be clearly inserted in any promissory note or other instrument which at any
time evidences any of the Junior Claims a statement to the effect that the
payment thereof is subordinated in accordance with the terms of this Agreement.
Each of the Subordinated Lenders will execute such further
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documents or instruments and take such further action as the Bank may from time
to time reasonably request to carry out the intent of this Agreement.
SECTION 7. Application of Payments, No Subrogation. All payments and
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distributions received by the Bank in respect of the Junior Claims, to the
extent received in or converted into cash, may be applied by the Bank first to
the payment of any and all expenses (including attorneys' fees and legal
expenses) paid or incurred by the Bank in enforcing this Agreement or in
endeavoring to collect or realize upon any of the Senior Claims or the Junior
Claims or any security therefor, and any balance thereof may, solely as between
each of the Subordinated Lenders and the Bank, be applied by the Bank in such
order of application as the Bank, in its sole discretion, may elect from time to
time, toward the payment of the Senior Claims remaining unpaid; provided,
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however, as among the Debtors on the one hand and each of the Subordinated
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Lenders on the other hand, and their respective creditors, no such payments or
distributions of any kind or character shall be deemed to be payments or
distributions in respect of the Senior Claims. Notwithstanding any such
payments or distributions received by the Bank in respect of the Senior Claims
or the Junior Claims, which payments or distributions are applied by the Bank
toward the payment of the Senior Claims, each of the Subordinated Lenders shall
be subrogated to the then existing rights of the Bank, if any, in respect of the
Senior Claims only at such time as this Agreement shall have been discontinued
and the Bank shall have received payment of the full amount of the Senior
Claims.
SECTION 8. Waivers by the Subordinated Lenders. Each of the Subordinated
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Lenders hereby waives: (a) notice of acceptance by the Bank of this Agreement;
(b) notice of the existence or creation or non-payment of all or any of the
Claims; and (c) all diligence in collection or protection of or realization upon
the Claims or any thereof or any security therefor.
SECTION 9. Obligations of the Subordinated Lenders. None of the
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Subordinated Lenders will, without the Bank's prior written consent: (a) after
the occurrence of and during the continuation of a Default, cancel, waive,
forgive, transfer or assign, or attempt to enforce or collect, any Junior Claims
or any rights in respect thereof; (b) take any collateral security for any
Junior Claims or subordinate any Junior Claims or any rights in respect thereof
to any Claims other than Senior Claims; or (c) after the occurrence of and
during the continuation of a Default, convert any Junior Claims into stock of
any Debtor.
SECTION 10. Continuing Subordination. This Agreement shall in all
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respects be a continuing agreement and shall remain in full force and effect,
notwithstanding, without limitation, the dissolution or insolvency of the
Borrower, any Debtor or any of the Subordinated Lenders. All of the agreements
and obligations of each of the Subordinated Lenders under this Agreement shall
remain in effect in full until all such Senior Claims (including without
limitation any extensions, renewals or refinancings of any thereof and all
interest and expenses relating to such Senior Claims) shall have been finally
paid in cash in full and all of the Commitments shall have been terminated
(subject to reinstatement if any such Senior Claims shall thereafter cease to
have been paid in full in cash).
SECTION 11. Representations and Warranties. Each of the Subordinated
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Lenders represents and warrants unto the Bank as set forth below.
a. Each of the Subordinated Lenders is a corporation duly organized,
validly existing and in good standing under the laws of its state of
incorporation.
b. The execution, delivery and performance by each of the Subordinated
Lenders of this Agreement are within their respective corporate
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powers, have been duly authorized by all necessary corporate action of each such
Subordinated Lender (including, without limitation, stockholder approval), have
received all necessary governmental approvals (if any shall be required) and
other consents or approvals and do not and will not contravene or conflict with,
or create a lien under, (i) any provision of law, (ii) the constituent documents
of such Subordinated Lender, (iii), any court or administrative decree
applicable to such Subordinated Lender or (iv) any contractual restriction
binding upon such Subordinated Lender.
c. This Agreement has been duly executed and delivered by each of the
Subordinated Lenders, and is the legal, valid and binding obligation of each of
the Subordinated Lenders enforceable against such Subordinated Lender in
accordance with its terms, subject, as to enforcement, only to bankruptcy,
insolvency, reorganization, moratorium or other similar laws at the time in
effect affecting the enforceability of the rights of creditors generally, and by
general equitable principles.
SECTION 12. Rights of the Bank. The Bank may, from time to time, at its
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sole discretion and without notice to any or all of the Subordinated Lenders,
take any or all of the following actions: (a) retain or obtain a security
interest in any property to secure any of the Senior Claims, (b) retain or
obtain the primary or secondary obligation of any other obligor or obligors with
respect to any of the Senior Claims, (c) extend or renew for one or more periods
(whether or not longer than the original period), alter or exchange any of the
Senior Claims, or release or compromise any obligation of any nature of any
obligor with respect to any of the Senior Claims, and (d) release its security
interest in, or surrender, release or permit any substitution or exchange for,
all or any part of any property securing any of the Senior Claims, or extend or
renew for one or more periods (whether or not longer than the original period)
or release, compromise, alter or exchange any obligations of any nature of any
obligor with respect to any such property.
SECTION 13. Transfer of Senior Liabilities. The Bank may, from time to
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time, without notice to any or all of the Subordinated Lenders, assign or
transfer any or all of the Senior Claims or any interest therein.
Notwithstanding any such assignment or transfer or any subsequent assignment or
transfer of any Senior Claims, such Senior Claims shall be and remain Senior
Claims for the purpose of this Agreement, and every immediate and successive
assignee or transferee of any of the Senior Claims or of any interest therein
shall, to the extent of the interest of such assignee or transferee in the
Senior Claims, 5 be entitled to the benefits of this Agreement to the same
extent as if such assignee or transferee were the Bank.
SECTION 14. Miscellaneous. The Bank shall not be prejudiced in its rights
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under this Agreement by any act or failure to act of any or all of the
Subordinated Lenders or by any noncompliance of any or all of the Subordinated
Lenders with any agreement or obligation, regardless of any knowledge thereof
which the Bank may have or with which the Bank may be charged. No action of the
Lender permitted hereunder shall in any way affect or impair the rights of the
Bank and the obligations of each of the Subordinated Lenders under this
Agreement. No delay on the part of the Bank in the exercise of any right or
remedy shall operate as a waiver thereof, and no single or partial exercise by
the Bank of any right or remedy shall preclude other or further exercise thereof
or the exercise of any other right or remedy; nor shall any modification or
waiver of any of the provisions of this Agreement be binding upon the Bank
unless such modification or waiver is expressly set forth in a writing duly
signed and delivered on behalf of the Bank. For purposes of this Agreement, the
Senior Claims shall include all obligations of each Debtor to the Bank,
notwithstanding any right or power of any Debtor or anyone else to assert any
claim or defense as to the invalidity or unenforceability of any such
obligation, and no such claim or defense shall affect or impair the agreements
and obligations of the Subordinated Lenders hereunder.
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SECTION 15. Successors and Assigns. This Agreement shall be binding
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upon each of the Subordinated Lenders and upon the legal representatives,
successors and assigns of each of the Subordinated Lenders, whether immediate or
remote. The term "Subordinated Lenders" as used herein shall mean all of the
Subordinated Lenders and each of them obligated hereunder.
SECTION 16. Governing Law. This Agreement shall be construed in
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accordance with and governed by the internal laws of the State of New York,
without regard to principles of conflicts of law. Wherever possible, each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
SECTION 17. Waiver of Jury Trial; Submission to Jurisdiction. waives any
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right to a trial by jury in any action or proceeding to enforce or defend any
rights under or relating to this Agreement or arising from or relating to any
banking relationship existing in connection with this Agreement or otherwise
between each of the Subordinated Lenders, and agrees that any such action or
proceeding shall be tried before a court and not before a jury.
Each of the Subordinated Lenders hereby agrees that any judicial
proceedings brought against such Subordinated Lender with respect to this
Agreement may be brought in any state or federal court of competent jurisdiction
in the State of New York and by the execution and delivery of this Agreement,
each Subordinated Lender accepts the nonexclusive jurisdiction of the aforesaid
courts. Service of process may be made by any means authorized by federal law
or the law of New York. A copy of such process so served shall be mailed by
registered mail to such Subordinated Lender at its address set forth opposite
its nature or the signature page hereto or at such other address as may be
designated by such Subordinated Lender in a notice to the Bank.
Nothing in this paragraph 17 shall affect the right of the Bank to serve
legal process in any other manner permitted by law or affect the right of the
Bank to bring any action or proceeding against any of the Subordinated Lenders
or their respective property in the courts of any other jurisdictions.
SECTION 18. Severability. Wherever possible, each provision of this
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Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions to this Agreement.
SECTION 19. Section Titles. The section tiles contained in this Agreement
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are and shall be without substantive meaning or content of any kind whatsoever
and are not a part of the agreement between the parties hereto.
IN WITNESS WHEREOF, this Agreement has been made and delivered at as of the
date and year first written above.
CONSOLIDATION COAL SALES COMPANY
By: /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx, Vice
President & Treasurer of
CONSOL Inc, Attorney-in-Fact
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CONSOL PENNSYLVANIA COAL COMPANY
By: /s/ Xxxxx X. Xxxxx
----------------------------
Xxxxx X. Xxxxx, Vice
President & Treasurer of
CONSOL Inc, Attorney-in-Fact
CONSOL SALES COMPANY
By: /s/ Xxxxx X. Xxxxx
----------------------------
Xxxxx X. Xxxxx, Vice
President & Treasurer of
CONSOL Inc, Attorney-in-Fact
EIGHTY-FOUR MINING COMPANY
By: /s/ Xxxxx X. Xxxxx
----------------------------
Xxxxx X. Xxxxx, Vice
President & Treasurer of
CONSOL Inc, Attorney-in-Fact
FAIRMONT SUPPLY COMPANY
By: /s/ Xxxxx X. Xxxxx
----------------------------
Xxxxx X. Xxxxx, Vice
President & Treasurer of
CONSOL Inc, Attorney-in-Fact
HELVETICA COAL COMPANY
By: /s/ Xxxxx X. Xxxxx
----------------------------
Xxxxx X. Xxxxx, Vice
President & Treasurer of
CONSOL Inc, Attorney-in-Fact
ISLAND CREEK COAL COMPANY
By: /s/ Xxxxx X. Xxxxx
----------------------------
Xxxxx X. Xxxxx, Vice
President & Treasurer of
CONSOL Inc, Attorney-in-Fact
6
KEYSTONE COAL MINING CORPORATION
By: /s/ Xxxxx X. Xxxxx
----------------------------
Xxxxx X. Xxxxx, Vice
President & Treasurer of
CONSOL Inc, Attorney-in-Fact
LAUREL RUN MINING COMPANY
By: /s/ Xxxxx X. Xxxxx
----------------------------
Xxxxx X. Xxxxx, Vice
President & Treasurer of
CONSOL Inc, Attorney-in-Fact
XxXXXXX COAL COMPANY
By: /s/ Xxxxx X. Xxxxx
----------------------------
Xxxxx X. Xxxxx, Vice
President & Treasurer of
CONSOL Inc, Attorney-in-Fact
NEW CENTURY HOLDINGS, INC.
By: /s/ Xxxxx X. Xxxxx
----------------------------
Xxxxx X. Xxxxx, Vice
President & Treasurer of
CONSOL Inc, Attorney-in-Fact
NINEVEH COAL COMPANY
By: /s/ Xxxxx X. Xxxxx
----------------------------
Xxxxx X. Xxxxx, Vice
President & Treasurer of
CONSOL Inc, Attorney-in-Fact
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ACKNOWLEDGEMENT AND AGREEMENT
Each of the undersigned acknowledges receipt of a copy of the foregoing
Subordination Agreement, waives notice of acceptance thereof by THE FIRST
NATIONAL BANK OF CHICAGO ("Bank") or any holder of any of the Senior Claims, and
agrees to be bound by the terms and provisions thereof, to make no payments or
distributions contrary to the terms and provisions thereof, and to do every
other act and thing necessary or appropriate to carry out such terms and
provisions. Each of the undersigned acknowledges that (i) such Subordination
Agreement is solely for the benefit of the Bank and the other holders of the
Senior Claims from time to time, and that none of the undersigned requires any
rights by virtue thereof, and the terms of the Subordination Agreement may be
amended from time Lo time to alter the relative rights or obligations of the
Bank and the other holders of the Senior Claims and the holders of the Junior
Claims without the consent of any of the undersigned.
IN WITNESS WHEREOF, this Acknowledgment and Agreement has been made and
delivered as of the 13th day of November, 1996.
CONSOLIDATION COAL SALES COMPANY
/s/ Xxxxx X. Xxxxx
By:------------------------------
Xxxxx X. Xxxxx, Vice
President & Treasurer of
CONSOL Inc, Attorney-in-Fact
CONSOL PENNSYLVANIA COAL COMPANY
/s/ Xxxxx X. Xxxxx
By:------------------------------
Xxxxx X. Xxxxx, Vice
President & Treasurer of
CONSOL Inc, Attorney-in-Fact
CONSOL SALES COMPANY
/s/ Xxxxx X. Xxxxx
By:----------------------------
Xxxxx X. Xxxxx, Vice
President & Treasurer of
CONSOL Inc, Attorney-in-Fact
EIGHTY-FOUR MINING COMPANY
/s/ Xxxxx X. Xxxxx
By:-----------------------------
Xxxxx X. Xxxxx, Vice
President & Treasurer of
CONSOL Inc, Attorney-in-Fact
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FAIRMONT SUPPLY COMPANY
/s/ Xxxxx X. Xxxxx
By:-----------------------------
Xxxxx X. Xxxxx, Vice
President & Treasurer of
CONSOL Inc, Attorney-in-Fact
HELVETICA COAL COMPANY
/s/ Xxxxx X. Xxxxx
By:-----------------------------
Xxxxx X. Xxxxx, Vice
President & Treasurer of
CONSOL Inc, Attorney-in-Fact
ISLAND CREEK COAL COMPANY
/s/ Xxxxx X. Xxxxx
By:-----------------------------
Xxxxx X. Xxxxx, Vice
President & Treasurer of
CONSOL Inc, Attorney-in-Fact
KEYSTONE COAL MINING CORPORATION
/s/ Xxxxx X. Xxxxx
By:-----------------------------
Xxxxx X. Xxxxx, Vice
President & Treasurer of
CONSOL Inc, Attorney-in-Fact
LAUREL RUN MINING COMPANY
/s/ Xxxxx X. Xxxxx
By:-----------------------------
Xxxxx X. Xxxxx, Vice
President & Treasurer of
CONSOL Inc, Attorney-in-Fact
XxXXXXX COAL COMPANY
/s/ Xxxxx X. Xxxxx
By:-----------------------------
Xxxxx X. Xxxxx, Vice
President & Treasurer of
CONSOL Inc, Attorney-in-Fact
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NEW CENTURY HOLDINGS, INC.
/s/ Xxxxx X. Xxxxx
By:-----------------------------
Xxxxx X. Xxxxx, Vice
President & Treasurer of
CONSOL Inc, Attorney-in-Fact
NINEVEH COAL COMPANY
/s/ Xxxxx X. Xxxxx
By:-----------------------------
Xxxxx X. Xxxxx, Vice
President & Treasurer of
CONSOL Inc, Attorney-in-Fact
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SCHEDULE TO EXHIBIT 10.13
In addition, to Exhibit 10.13, Consolidation Coal Company executed a
Subordination Agreement with each of the following banks, all of which are
substantially identical to Exhibit 10.13 in all material respects:
The First Union National Bank
Bank of America National Trust and Savings Association
