LIMITED WAIVER AND FOURTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
This LIMITED WAIVER AND FOURTH AMENDMENT TO AMENDED AND RESTATED CREDIT
AGREEMENT (this "Amendment") is dated as of November 30, 2004, and is entered
into by and among ENERGY WEST, INCORPORATED, a Montana corporation (the
"Company"), LASALLE BANK NATIONAL ASSOCIATION, a national banking association
("LaSalle"), in its capacity as the Agent for the "Banks" party to the Credit
Agreement described below (in such capacity, the "Agent"), such Banks and each
other Loan Party.
WHEREAS, the Agent, the Banks and the Company have entered into that
certain Amended and Restated Credit Agreement dated as of March 31, 2004 (as
such agreement has been and may hereafter be amended, restated, supplemented or
otherwise modified from time to time, the "Credit Agreement"); and
WHEREAS, the Company has advised the Agent that, notwithstanding its
representations and warranties made under and its affirmative covenants
contained in the Credit Agreement to the contrary: (i) the copies of the audited
consolidated financial statements of the Company and its Subsidiaries as at June
30, 2003 delivered by the Company to each Bank were not prepared in accordance
with GAAP (the "June, 2003 Non-GAAP Compliance Event") and (ii) the
representations made by the Company in compliance certificates delivered by it
to the Agent with respect to the trailing twelve (12) month periods ending June
30, 2004 and September 30, 2004 were not prepared in accordance with GAAP (the
"2004 Non-GAAP Compliance Events"); and
WHEREAS, the Company has also advised the Agent and the Banks that
certain Events of Default have arisen and currently exist under: (i) Section
12.1.5(a) of the Credit Agreement as a result of the failure by the Company to
deliver to the Agent the audited financial statements required to be delivered
pursuant to subsection 10.1.1 of the Credit Agreement with respect to the Fiscal
Year ended June 30, 2004 by November 12, 2004, (ii) Section 12.1.5(a) of the
Credit Agreement as a result of the failure by the Company to deliver to the
Agent the financial statements required to be delivered pursuant to subsection
10.1.2(a) of the Credit Agreement with respect to the Fiscal Quarter ended
September 30, 2004 by November 12, 2004 (the Events of Default described in
clauses (i) and (ii), together the "Financials Defaults"), (iii) Section
12.1.5(a) of the Credit Agreement as a result of the failure by the Company to
maintain an Interest Coverage Ratio of at least 2.00 to 1.00 as of September 30,
2004, as required by Section 10.6.1 of the Credit Agreement, (iv) Section
12.1.5(a) of the Credit Agreement as a result of the failure by the Company to
maintain a Total Debt to Capital Ratio of 0.70 to 1.00 or less as of September
30, 2004, as required by Section 10.6.2 of the Credit Agreement, (v) Section
12.1.6 of the Credit Agreement as a result of the occurrence of the June, 2003
Non-GAAP Compliance Event and a corresponding violation of Section 9.4 of the
Credit Agreement (together with other Events of Default which have occurred and
are continuing due to such violation of Section 9.4 and subsequent warranties
made by the Company that no Event of Default had occurred which were not true
due solely to the occurrence of the June, 2003 Non-GAAP Compliance Event) (the
"June, 2003 Restatement Defaults"), and (vi) Sections 12.1.5(a) and 12.1.6 of
the Credit Agreement as a result of the occurrence of the 2004 Non-GAAP
Compliance Events and a corresponding violation of Section 10.1.3 of the Credit
Agreement (together with other Events of Default which have occurred and are
continuing due to such violation of Section 10.1.3 and subsequent warranties
made by the Company that no Event of Default had occurred which were not true
due solely to the occurrence of the 2004 Non-GAAP Compliance Events) (the "2004
Restatement Defaults") (collectively, the Events of Default described in clauses
(i) through (vi) above are sometimes referred to herein as the "Existing Events
of Default"); and
WHEREAS, Company desires that the Agent and the Banks waive the
Existing Events of Default; and
WHEREAS, the Company has requested that the Credit Agreement be amended
as set forth herein and the Agent and the Banks are, subject to the terms
hereof, willing to so amend the Credit Agreement.
NOW THEREFORE, in consideration of the mutual conditions and agreements
set forth in the Credit Agreement and this Amendment, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Definitions. Capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the meaning ascribed to such terms in the
Credit Agreement.
2. Amendments to Credit Agreement. Subject to satisfaction of the
conditions set forth in Section 5 below, the Credit Agreement is hereby amended,
as follows, by:
(a) deleting the definition of "Base Rate Margin" appearing in Section
1.1 of the Credit Agreement and substituting the following language therefor:
" `Base Rate Margin' means: (i) with respect to Term Loan A, one and
one half percent (1.50%) per annum; (ii) with respect to Term Loan B:
(A) from the Restatement Effective Date through June 30, 2004, one
percent (1.00%) per annum; (B) from July 1, 2004 through March 31,
2005, two percent (2.00%) per annum, (C) from April 1, 2005 through
June 30, 2005, three percent (3.00%) per annum and (D) from July 1,
2005 and thereafter, four percent (4.00%) per annum; and (iii) with
respect to Revolving Loans, zero percent (0.00%) per annum."
(b) adding the following definitions of "Fourth Amendment Closing Date"
and "Resources" to Section 1.1 of the Credit Agreement in the correct
alphabetical order:
" `Fourth Amendment Closing Date' means November 30, 2004."
" `Resources' means Energy West Resources, Inc., a Montana
corporation, together with its successors and assigns."
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(c) deleting the date of "November 30, 2004" appearing in the
definition of "Revolving Termination Date" in Section 1.1 of the Credit
Agreement and substituting the date "November 28, 2005" therefor;
(d) deleting the date of "November 30, 2004" appearing in Section 10.26
of the Credit Agreement and substituting the date "October 1, 2005" therefor;
(e) deleting Schedule 3.3 to the Credit Agreement in its entirety and
substituting Annex A attached hereto therefor;
(f) deleting clause (c) of Section 10.7 of the Credit Agreement in its
entirety and substituting the following language therefor:
" (c) Debt of Subsidiaries to the Company; provided, however, in no
event shall the Debt of Resources to the Company, when taken together
with all capital contributions and other distributions of the Company
or any of its Subsidiaries other than Resources made to, as well as all
Investments by such Persons in, Resources from and after the Fourth
Amendment Closing Date, exceed $1,000,000 in the aggregate at any
time;";
(g) deleting Section 10.11 of the Credit Agreement in its
entirety and substituting the following language therefor:
"10.11 Mergers, Consolidations, Sales. Not, and not permit any
Subsidiary to, be a party to any merger or consolidation, or purchase
or otherwise acquire all or substantially all of the assets or any
stock of any class of, or any partnership or joint venture interest in,
any other Person, or, except in the ordinary course of its business,
sell, transfer, convey or lease all or any substantial part of its
assets, or sell or assign with or without recourse any receivables,
except for: (a) any such merger, consolidation, sale, transfer,
conveyance, lease or assignment of or by any Wholly-Owned Subsidiary
(other than Resources) into the Company or into, with or to any other
Wholly-Owned Subsidiary (other than Resources); (b) any such purchase
or other acquisition by the Company or any Wholly-Owned Subsidiary
(other than Resources) of the assets or stock of any Wholly-Owned
Subsidiary (other than Resources); and (c) sales and dispositions of
assets (including the stock of Subsidiaries) for at least fair market
value (as determined by the Board of Directors of the Company) so long
as the net book value of all assets sold or otherwise disposed of in
any Fiscal Year (other than Inventory sold in the ordinary course of
business and in accordance with past practices) does not exceed five
percent (5%) of the net book value of the consolidated assets of the
Company and its Subsidiaries as of the last day of the preceding Fiscal
Year.";
(h) deleting clause (a) of Section 10.21 of the Credit
Agreement in its entirety and substituting the following language therefor:
" (a) contributions by the Company to the capital of any of its
Subsidiaries, or by any such Subsidiary to the capital of any of its
Subsidiaries; provided, however, in no event shall the amount of all
capital contributions and other distributions of the Company
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and its Subsidiaries other than Resources made to, as well as all
Investments by such Persons in, Resources from and after the Fourth
Amendment Closing Date, when taken together with the amount of Debt of
Resources to the Company and its Subsidiaries other than Resources
outstanding, exceed $1,000,000 in the aggregate at any time";
(i) deleting clause (b) of Section 10.21 of the Credit
Agreement in its entirety and substituting the following language therefor:
" (a) in the ordinary course of business, Investments by the Company in
any Subsidiary or by any Subsidiary in the Company, by way of
intercompany loans, advances or guaranties, all to the extent permitted
by Section 10.7; provided, however, in no event shall the amount of all
capital contributions and other distributions of the Company and its
Subsidiaries other than Resources made to, as well as all Investments
by such Persons in, Resources from and after the Fourth Amendment
Closing Date, when taken together with the amount of Debt of Resources
to the Company and its Subsidiaries other than Resources outstanding,
exceed $1,000,000 in the aggregate at any time"; and
(j) deleting Exhibit B to the Credit Agreement in its entirety and
substituting Annex C attached hereto therefor:
3. Waivers of Existing Events of Default. Subject to the conditions set
forth in Section 5 below, the Agent and the Banks hereby waive the Existing
Events of Default; provided, however, nothing herein, nor any actions taken or
not taken by the Agent or the Banks pursuant hereto or pursuant to any of the
other Loan Documents, shall or be deemed to: (i) constitute a waiver of any
other Event of Default now existing or hereafter arising or a waiver of
compliance with any term or provision in the Agreement or any of the other Loan
Documents, (ii) except as expressly set forth herein, constitute a waiver of any
rights, claims and/or remedies under the Loan Documents and/or applicable law,
or (iii) constitute a course of dealing among the parties; provided, further:
(x) neither of the Financials Defaults shall be waived in any
capacity, manner or form unless and until the Company has delivered to
the Agent: (1) the audited financial statements required to be
delivered pursuant to subsection 10.1.1 of the Credit Agreement with
respect to the Fiscal Year ended June 30, 2004, which audited financial
statements shall comply with the requirements set forth in subsection
10.1.1 of the Credit Agreement and (2) the financial statements
required to be delivered pursuant to subsection 10.1.2(a) of the Credit
Agreement with respect to the Fiscal Quarter ended September 30, 2004,
which financial statements shall comply with the requirements set forth
in subsection 10.1.2(a) of the Credit Agreement; and
(y) none of the June, 2003 Restatement Defaults nor any of the
2004 Restatement Defaults shall be waived in any capacity, manner or
form unless and until the Agent shall have received from the Company
copies of restated consolidated financial statements of the Company and
its Subsidiaries as at June 30, 2003 which are: (i) audited by Deloitte
& Touche LLP, (ii) prepared in accordance with GAAP; (iii) present
fairly the consolidated financial condition of the Company and its
Subsidiaries as at June 30, 2003 and the results of their operations
for the fiscal years then ended; and (iv) are
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otherwise in form and substance satisfactory to the Agent and the
Banks; provided, however, audited consolidated financial
statements which are in form and substance substantially similar to
the draft financial statements attached hereto as Annex B shall
be deemed to be in form and substance satisfactory to the Agent and
the Banks for purposes of this clause (y).
4. Ratification; No Defenses; Waiver.
(a) Ratification. The Company and each other Loan Party hereby
ratifies, acknowledges, affirms and reconfirms its rights, interests and
obligations under each Loan Document and agrees to perform each of its
obligations thereunder as and when required. By executing this Amendment, the
Company and each other Loan Party hereby further ratifies, acknowledges, affirms
and reconfirms that each Loan Document, as amended hereby, constitutes a legal,
valid and binding obligation of such Person enforceable against such Person in
accordance with its terms, and that each such Loan Document, as amended hereby,
is in full force and effect.
(b) No Defenses. The Company and each other Loan Party hereby represent
and warrant to, and covenant with the Agent and the Banks that as of the date
hereof: (i) neither Company nor any other Loan Party has any defenses, offsets
or counterclaims of any kind or nature whatsoever against the Agent or any Bank
with respect to any of the loans or other financial accommodations made under
any of the Loan Documents or any of the Loan Documents themselves, or any action
previously taken or not taken by the Agent or any of the Banks with respect
thereto, and (ii) the Agent and the Banks have fully performed all obligations
to the Company and each other Loan Party which they may have had or have on and
of the date hereof.
(c) Waiver. The Company and each other Loan Party, on behalf of each
such Person and their respective executors, successors and assigns, hereby
waives, releases and discharges the Agent and the Banks and all of the
affiliates, directors, officers, employees, attorneys and the Agents of the
Agent and the Banks, from any and all claims, demands, actions or causes of
action arising out of or in any way relating to the Loan Documents and any
documents, agreements, dealings or other matters connected with the Loan
Documents, including, without limitation, all known and unknown matters, claims,
transactions or things occurring on or before the date hereof.
5. Conditions. The effectiveness of this Amendment is subject to the
following conditions precedent:
(a) the Company, each other Loan Party and each Bank shall have
executed and delivered this Amendment and such other documents and instruments
as the Agent may reasonably require;
(b) the representations and warranties set forth in Section 6 of this
Amendment shall be true and correct;
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(c) LaSalle shall have received from the Company in immediately
available funds a fully-earned, non-refundable amendment fee for its own account
in an amount equal to $20,000;
(d) the Agent shall have received from the Company for the account of
each Bank an upfront, fully-earned and non-refundable administrative fee in the
amount of $75,000 (and the Agent agrees to promptly forward to each Bank a
portion of such upfront fee in the amount previously agreed to between the Agent
and such Bank); and
(e) all proceedings taken in connection with the transactions
contemplated by this Amendment and all documents, instruments and other legal
matters incident thereto shall be reasonably satisfactory to the Agent and its
legal counsel.
6. Representations and Warranties. To induce the Agent and the Banks to
enter into this Amendment, the Company and each other Loan Party hereby
represents and warrants to the Agent and the Banks that: (i) the execution,
delivery and performance of this Amendment has been duly authorized by all
requisite corporate action on the part of the Company and each such other Loan
Party and this Amendment has been duly executed and delivered by the Company and
each other Loan Party and this Amendment and the Credit Agreement, as amended
hereby, constitute valid and binding obligations of each of them, as applicable,
enforceable in accordance with their respective terms, (ii) no Default or Event
of Default (other than the Existing Events of Default) has occurred or is
continuing under the Credit Agreement or would result from the execution and
delivery of this Amendment, and (iii) each of the representations and warranties
set forth in Section 9 of the Credit Agreement, as amended hereby, is true and
correct in all material respects as of the date hereof, unless any such
representation or warranty is already qualified by materiality or is not true
solely due to the existence of an Existing Event of Default, in which case it
shall be true and correct in all respects.
7. Severability. Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
8. References. Any reference to the Credit Agreement contained in any
document, instrument or agreement executed in connection with the Credit
Agreement shall be deemed to be a reference to the Credit Agreement as modified
by this Amendment.
9. Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall constitute an original, but all of which taken
together shall be one and the same instrument. A counterpart of this Amendment
delivered by facsimile or other electronic means shall for all purposes be as
effective as delivery of an original counterpart.
10. Costs. The Company agrees to pay on demand all reasonable costs and
expenses incurred by the Agent (including fees and expenses of counsel) incurred
in connection with the negotiation and preparation of this Amendment.
11. Governing Law. The validity and interpretation of this Amendment
and the terms and conditions set forth herein, shall be governed by and
construed in accordance with the
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laws of the State of Illinois, without giving effect to any provisions relating
to conflict of laws that would call for the application of the laws of another
jurisdiction.
12. Miscellaneous. This Amendment shall be deemed to be a Loan
Document.
- Remainder of Page Left Blank; Signature Page Follows -
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Delivered at Chicago, Illinois, as of the day and year first above
written.
AGENT AND BANK: OTHER LOAN PARTIES:
LASALLE BANK, NATIONAL ASSOCIATION, a national banking ENERGY WEST PROPANE, INC.,
association, as Agent and as a Bank a Montana corporation
By: /s/ Xxxxxx Xxxxx By: /s/ Xxxx X. Xxxxx
------------------------------------- ---------------------------------------
Name: Xxxxxx Xxxxx Name: Xxxx X. Xxxxx
----------------------------------- -------------------------------------
Title: First Vice President Title: Authorized Representative
---------------------------------- ------------------------------------
COMPANY:
ENERGY WEST, INCORPORATED, a Montana corporation ENERGY WEST RESOURCES, INC.,
a Montana corporation
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxxx By: /s/ Xxxx X. Xxxxx
----------------------------------- ---------------------------------------
Title: President & CEO Name: Xxxx X. Xxxxx
---------------------------------- ------------------------------------- Title:
Title: Authorized Representative
------------------------------------
ENERGY WEST DEVELOPMENT, INC.,
a Montana corporation
By: /s/ Xxxx X. Xxxxx
--------------------------------------
Name: Xxxx X. Xxxxx
------------------------------------
Title: Authorized Representative
------------------------------------
ANNEX A to Limited Waiver and Fourth Amendment
REVISED SCHEDULE 3.3
INSTALLMENTS OF TERM LOANS
Amount of Term Loan Installment
Date Term Loan A Term Loan B
---- ----------- -----------
[November 30, 2004 $33,333.33 -0-]
December 31, 2004 $33,333.33 -0-
January 31, 2005 $33,333.33 -0-
February 28, 2005 $33,333.33 -0-
March 31, 2005 $33,333.33 -0-
April 30, 2005 $33,333.33 -0-
May 31, 2005 $33,333.33 -0-
June 30, 2005 $33,333.33 -0-
July 31, 2005 $33,333.33 -0-
August 31, 2005 $33,333.33 -0-
September 30, 2005 $33,333.33 -0-
October 1, 2005 -0- the outstanding
principal amount of Term
Loan B then outstanding
October 31, 2005 $33,333.33
November 31, 2005 $33,333.33
December 31, 2005 $33,333.33
January 31, 2006 $33,333.33
February 28, 2006 $33,333.33
March 31, 2006 $33,333.33
April 30, 2006 $33,333.33
May 31, 2006 $33,333.33
June 30, 2006 $33,333.33
July 31, 2006 $33,333.33
August 31, 2006 $33,333.33
September 30, 2006 $33,333.33
October 31, 2006 $33,333.33
November 30, 2006 $33,333.33
December 31, 2006 $33,333.33
January 31, 2007 $33,333.33
February 28, 2007 $33,333.33
March 31, 2007 $33,333.33
April 30, 2007 $33,333.33
May 31, 2007 $33,333.33
June 30, 2007 $33,333.33
July 31, 2007 $33,333.33
August 31, 2007 $33,333.33
September 30, 2007 $33,333.33
October 31, 2007 $33,333.33
November 30, 2007 $33,333.33
December 31, 2007 $33,333.33
January 31, 2008 $33,333.33
February 29, 2008 $33,333.33
March 31, 2008 $33,333.33
April 30, 2008 $33,333.33
May 31, 2008 $33,333.33
June 30, 2008 $33,333.33
July 31, 2008 $33,333.33
August 31, 2008 $33,333.33
September 30, 2008 $33,333.33
October 31, 2008 $33,333.33
November 30, 2008 $33,333.33
December 31, 2008 $33,333.33
January 31, 2009 $33,333.33
February 28, 2009 $33,333.33
March 31, 2009 the outstanding principal
amount of Term Loan A then
outstanding
