October 3, 2003
XXXXXX NAVIGATION COMPANY, INC.
000 Xxxxxx Xxxxxx Xxxxx Xxxxxxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxx Xxxx, Treasurer
Re: Loan Agreement
Xxxxx Fargo Bank, National Association (the "Bank") hereby agrees to
make available the credit accommodation described below to Xxxxxx Navigation
Company, Inc, (the "Borrower") subject to the terms and conditions set forth in
this letter agreement (this "Loan Agreement"):
1. THE CREDIT
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1.1 Type: Two year revolving line of credit ("Line of Credit"),
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with advances thereunder available until September 30, 2005 ("Maturity Date").
As a subfeature under the Line of Credit, Bank agrees from time to time during
the term thereof to issue or cause an affiliate to issue standby letters of
credit for the account of Borrower to finance working capital and other
corporate purposes (each, a "Letter of Credit"); provided however, that the
aggregate undrawn amount of all outstanding Letters of Credit shall not at any
time exceed $20,000,000.00. The form and substance of each Letter of Credit
shall be subject to approval by Bank, in its sole discretion. No Letter of
Credit shall have an expiration date subsequent to the maturity date of the Line
of Credit. The undrawn amount of all Letters of Credit shall be reserved under
the Line of Credit and shall not be available for borrowings thereunder. Each
Letter of Credit shall be subject to the additional terms and conditions of the
Letter of Credit agreements, applications and any related documents required by
Bank in connection with the issuance thereof. Each drawing paid under a Letter
of Credit shall be deemed an advance under the Line of Credit and shall be
repaid by Borrower in accordance with the terms and conditions of this Agreement
applicable to such advances; provided however, that if advances under the Line
of Credit are not available, for any reason, at the time any drawing is paid,
then Borrower shall immediately pay to Bank the full amount drawn, together with
interest thereon from the date such drawing is paid to the date such amount is
fully repaid by Borrower, at the rate of interest applicable to advances under
the Line of Credit. In such event Xxxxxxxx agrees that Bank, in its sole
discretion, may debit any account maintained by Borrower with Bank for the
amount of any such drawing.
1.2 Amount: Aggregate outstanding principal amount not to exceed
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$40,000,000.00 at any time.
1.3 Purpose: For working capital and other general corporate
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purposes, including as support for the issuance of commercial paper.
1.4 Maturity Date: All advances under the Line of Credit shall be
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due and payable on the Maturity Date. All advances shall be made pursuant to a
Line of Credit Note executed by the Borrower in the form attached to this letter
(the "Note").
1.5 Interest Rates: The outstanding principal balance of advances
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under the Line of Credit shall bear interest at the rate(s) set forth in the
Note.
1.6 Commitment Fees. Borrower shall pay to Bank (i) an initial fee
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in the amount of 0.05% of the amount of Bank's commitment under the Line of
Credit, and (ii) a fee at the rate of 0.125% per annum (computed on the basis of
a 360-day year, actual days elapsed) on the average daily unused amount of the
Line of Credit, computed and payable quarterly in arrears, as of each March 31,
June 30, September 30 and December 31. All such fees are non-refundable.
1.7 Letter of Credit Fees. Borrower shall pay to Bank (i) fees
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upon the issuance of each Letter of Credit equal to one-half percent (0.50%) per
annum (computed on the basis of a 360-day year, actual days elapsed) of the face
amount thereof, and (ii) fees upon the payment or negotiation of each drawing
under any Letter of Credit and fees upon the occurrence of any other activity
with respect to any Letter of Credit (including without limitation, the
transfer, amendment or cancellation of any Letter of Credit) determined in
accordance with Bank's standard fees and charges then in effect for such
activity.
2. CONDITIONS PRECEDENT
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Before Bank is obligated to extend any credit, Bank must
receive the Note, executed on behalf of the Borrower, and evidence that the
execution, delivery and performance by Borrower of this Loan Agreement and Note
and the execution, delivery, and performance by Borrower of any other instrument
or agreement required under this Agreement, as appropriate, have been duly
authorized (collectively, "Loan Documents"). In addition, Borrower shall have
paid the fee required under Section 1.6(i).
3. COVENANTS
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Xxxxxxxx agrees, so long as the line of credit is available
and until full and final payment of all of Borrower's obligations under this
Loan Agreement and under the Note Borrower will:
3.1 Promptly give written notice to Bank of:
(a) any Event of Default under this Agreement or any event
which, upon notice or a lapse of time or both, would become an Event of
Default;
(b) any other matter which has or might materially impair the
Borrower's ability to perform its obligations under this Agreement;
3.2 Provide Bank with (i) annual audited and quarterly unaudited
consolidated financial statements, together with compliance certificates, within
120 days after each annual and 45 days after each quarterly accounting period,
(ii) an annual operating plan, as soon as available but no later than 90 days
after the end of each year, and (iii) such other financial information
concerning Borrower's business activities and financial condition as Bank may
reasonably request from time to time;
3.3 Maintain and keep in force in adequate amounts of insurance as
is usual in the business carried on by Borrower;
3.4 Maintain Borrower's financial condition as follows using
generally accepted accounting principles consistently applied and used
consistently with prior practices (except to the extent modified by the
following definitions):
(a) On a consolidated basis, net income after taxes not less
than $1.00 on an annual basis, determined as of the end of each fiscal
year, and net profit after taxes not less than $1.00 in each fiscal
quarter immediately following a fiscal quarter in which Borrower
incurred a net loss after taxes; and
(b) On a consolidated basis, Tangible Net Worth of at least
$250,000,000; for purposes of this Agreement, "Tangible Net Worth"
means total assets (exclusive of goodwill, patents, trademarks, trade
names, organization expense, treasury shares, unamortized debt discount
and premium, deferred charges and other like intangibles) less all
liabilities (including accrued and deferred income taxes and
subordinated liabilities);
3.5 Not permit at any time, on a consolidated basis, the ratio of
Funded Debt to Tangible Net Worth to exceed 2.0 to 1.0; for purposes of this
Loan Agreement, "Funded Debt" means all indebtedness (including capitalized
lease obligations) determined in accordance with generally accepted accounting
principles, consistently applied;
3.6 Should Borrower's ratio, on a consolidated basis, of Funded
Debt to Consolidated Total Capital at any time without the prior written consent
of Bank equal or exceed 0.50 to 1.0, not thereafter at any time declare or pay
cash dividends which, in the aggregate, would exceed in any fiscal year the sum
of $10,000,000 plus 40% of the net after-tax income earned by Xxxxxxxx in such
fiscal year; for purposes of this Loan Agreement, "Consolidated Total Capital"
means the sum of Funded Debt, Tangible Net Worth and deferred income taxes, each
as calculated on a consolidated basis;
3.7 Not liquidate or dissolve;
3.8 Not merge, consolidate with or into, convey, transfer, lease,
or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired);
3.9 Not, without the prior written consent of Bank (which consent
shall not be unreasonably withheld), sell, convey, or dispose of, or grant or
permit the creation of any mortgage, pledge, lien, charge, encumbrance, lease,
security interest, claim, exercise of rights or other interest affecting title
("Liens" and individually a "Lien") in, on or against any of Borrower's property
or assets, whether now owned or hereafter acquired, if as a result thereof
Borrower would no longer be in compliance with any of Paragraphs 3.4, 3.5, or
3.6, except:
(a) mechanics, suppliers, tax and any other like Lien arising
in the ordinary course of business securing obligations which are not
overdue or are being contested in good faith by appropriate legal
proceedings diligently conducted, provided that Borrower sets aside on
its books such reserves or other appropriate provision, if any, as
shall be required by generally accepted accounting principles;
(b) any Lien on any asset securing liabilities incurred or
assumed for the purpose of financing all or any part of the cost of
acquiring such asset, including any interest in title of a lessor under
any operating lease or any financing lease, provided that such Lien
attaches to such asset currently with or within one hundred twenty
(120) days after the acquisition thereof;
(c) any Lien existing on the date of this Agreement as to
which Borrower has given written notice to Bank or arising out of
refinancing (so long as there is no increase in principal amount or in
the amount of security provided), extension, renewal or rollover of
liabilities;
(d) any Lien existing on any asset of any corporation at the
time such corporation is acquired by or merged into Borrower;
(e) any Lien arising pursuant to any order of attachment,
distraint or similar legal process arising in connection with court
proceedings so long as the execution or other enforcement thereof is
effectively stayed and the claims secured thereby are being contested
in good faith by appropriate proceedings;
(f) easements, rights of way, restrictions and other similar
encumbrances incurred in the ordinary course of business that in the
aggregate do not exceed $5,000,000;
(g) the disposition of property or assets in the ordinary
course of business.
Unless otherwise specified in this Agreement, all accounting terms used in this
Agreement shall be interpreted, all financial information required under this
Agreement shall be prepared and all financial computations required under this
Agreement shall be made in accordance with generally accepted accounting
principles, consistently applied.
4. EVENTS OF DEFAULT
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Upon the occurrence of any events specified below ("Event of Default"),
any obligation on the part of Bank to make advances under or continue the
Line of Credit shall terminate, and, at the option of Bank, all interest and
principal with respect to the advances and all other obligations and sums
outstanding under or in respect of this Loan Agreement and the Note shall be
immediately due and payable, without notice of default, presentment or demand
for payment, protest or notice of nonpayment or dishonor, or other notices or
demands of any kind or character:
4.1 (a) Borrower fails to pay, within 3 days after the date when
due, any principal sum due under this Loan Agreement or the Note in accordance
with the terms hereof or thereof,
(b) Borrower fails to pay, within three days after the date
when due, any installment of interest or any other sum under this Loan
Agreement or the Note in accordance with the terms hereof or thereof;
4.2 Borrower fails to pay any indebtedness when due (including
any applicable grace period) under any agreement providing for the extension of
credit to Borrower in an amount exceeding $5,000,000;
4.3 (a) Borrower breaches, or defaults under, any of Paragraphs
3.4, 3.5, 3.6, 3.7, or 3.8;
(b) Borrower breaches, or defaults under, any other term,
condition, provision or covenant contained in this Agreement, and such breach or
default is not remedied within 30 days after a responsible officer of Borrower
is first aware of its occurrence.
4.4 Borrower is generally not paying or admits in writing its
inability to pay its debts as such debts become due, or files any petition or
action for relief under any bankruptcy, reorganization, arrangement, insolvency,
or moratorium law or any other law for the relief of, or relating to, debtors,
or requests the appointment of a custodian, receiver or trustee (or similar
official) to take possession, custody or control of any of its property, or
enters into any composition with creditors, or makes any assignment for the
benefit of creditors, or takes any corporate action in furtherance of any of the
foregoing;
4.5 An involuntary petition is filed against Borrower under
any bankruptcy, reorganization, arrangement, insolvency, or moratorium law or
any other law for the relief of, or relating to, debtors, or a custodian,
receiver or trustee (or similar official) is appointed to take possession,
custody or control of any property of Borrower;
4.6 A judgment or judgments or arbitration award or awards is
entered against Borrower in the aggregate amount of $5,000,000 or more on a
claim or claims not covered by insurance, except that no judgment or arbitration
award shall be included in this Paragraph if it is discharged or satisfied
within 60 days of the date of being entered.
5. MISCELLANEOUS
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5.1 Borrower will pay Bank, on demand, all out-of-pocket
expenses and all legal fees (including allocated costs for in-house legal
services) incurred by it in connection with the enforcement of this Loan
Agreement, the Note, and any agreements or instruments required or delivered
hereunder.
6. ARBITRATION
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(a) Arbitration. The parties hereto agree, upon demand by any
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party, to submit to binding arbitration all claims, disputes and controversies
between or among them (and their respective employees, officers, directors,
attorneys, and other agents), whether in tort, contract or otherwise arising
out of or relating to in any way (i) the loan and related Loan Documents which
are the subject of this Agreement and its negotiation, execution,
collateralization, administration, repayment, modification, extension,
substitution, formation, inducement, enforcement, default or termination; or
(ii) requests for additional credit.
(b) Governing Rules. Any arbitration proceeding will (i) proceed
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in a location in California selected by the American Arbitration Association
("AAA"); (ii) be governed by the Federal Arbitration Act (Title 9 of the United
States Code), notwithstanding any conflicting choice of law provision in any of
the documents between the parties; and (iii) be conducted by the AAA, or such
other administrator as the parties shall mutually agree upon, in accordance with
the AAA's commercial dispute resolution procedures, unless the claim or
counterclaim is at least $1,000,000.00 exclusive of claimed interest,
arbitration fees and costs in which case the arbitration shall be conducted in
accordance with the AAA's optional procedures for large, complex commercial
disputes (the commercial dispute resolution procedures or the optional
procedures for large, complex commercial disputes to be referred to, as
applicable, as the "Rules"). If there is any inconsistency between the terms
hereof and the Rules, the terms and procedures set forth herein shall control.
Any party who fails or refuses to submit to arbitration following a demand by
any other party shall bear all costs and expenses incurred by such other party
in compelling arbitration of any dispute. Nothing contained herein shall be
deemed to be a waiver by any party that is a bank of the protections afforded to
it under 12 U.S.C. ss.91 or any similar applicable state law.
(c) No Waiver of Provisional Remedies, Self-Help and Foreclosure.
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The arbitration requirement does not limit the right of any party to (i)
foreclose against real or personal property collateral; (ii) exercise self-help
remedies relating to collateral or proceeds of collateral such as setoff or
repossession; or (iii) obtain provisional or ancillary remedies such as
replevin, injunctive relief, attachment or the appointment of a receiver,
before, during or after the pendency of any arbitration proceeding. This
exclusion does not constitute a waiver of the right or obligation of any party
to submit any dispute to arbitration or reference hereunder, including those
arising from the exercise of the actions detailed in sections (i), (ii) and
(iii) of this paragraph.
(d) Arbitrator Qualifications and Powers. Any arbitration
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proceeding in which the amount in controversy is $5,000,000.00 or less will be
decided by a single arbitrator selected according to the Rules, and who shall
not render an award of greater than $5,000,000.00. Any dispute in which the
amount in controversy exceeds $5,000,000.00 shall be decided by majority vote of
a panel of three arbitrators; provided however, that all three arbitrators must
actively participate in all hearings and deliberations. The arbitrator will be a
neutral attorney licensed in the State of California or a neutral retired judge
of the state or federal judiciary of California, in either case with a minimum
of ten years experience in the substantive law applicable to the subject matter
of the dispute to be arbitrated. The arbitrator will determine whether or not an
issue is arbitratable and will give effect to the statutes of limitation in
determining any claim. In any arbitration proceeding the arbitrator will decide
(by documents only or with a hearing at the arbitrator's discretion) any
pre-hearing motions which are similar to motions to dismiss for failure to state
a claim or motions for summary adjudication. The arbitrator shall resolve all
disputes in accordance with the substantive law of California and may grant any
remedy or relief that a court of such state could order or grant within the
scope hereof and such ancillary relief as is necessary to make effective any
award. The arbitrator shall also have the power to award recovery of all costs
and fees, to impose sanctions and to take such other action as the arbitrator
deems necessary to the same extent a judge could pursuant to the Federal Rules
of Civil Procedure, the California Rules of Civil Procedure or other applicable
law. Judgment upon the award rendered by the arbitrator may be entered in any
court having jurisdiction. The institution and maintenance of an action for
judicial relief or pursuit of a provisional or ancillary remedy shall not
constitute a waiver of the right of any party, including the plaintiff, to
submit the controversy or claim to arbitration if any other party contests such
action for judicial relief.
(e) Discovery. In any arbitration proceeding discovery will be
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permitted in accordance with the Rules. All discovery shall be expressly limited
to matters directly relevant to the dispute being arbitrated and must be
completed no later than 20 days before the hearing date and within 180 days of
the filing of the dispute with the AAA. Any requests for an extension of the
discovery periods, or any discovery disputes, will be subject to final
determination by the arbitrator upon a showing that the request for discovery is
essential for the party's presentation and that no alternative means for
obtaining information is reasonably available.
(f) Class Proceedings and Consolidations. The resolution of any
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dispute arising pursuant to the terms of this Agreement shall be determined by a
separate arbitration proceeding and such dispute shall not be consolidated with
other disputes or included in any class proceeding.
(g) Payment Of Arbitration Costs And Fees. The arbitrator shall
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award all costs and expenses of the arbitration proceeding to the prevailing
party.
(h) Real Property Collateral; Judicial Reference. Notwithstanding
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anything herein to the contrary, no dispute shall be submitted to arbitration if
the dispute concerns indebtedness secured directly or indirectly, in whole or in
part, by any real property unless (i) the holder of the mortgage, lien or
security interest specifically elects in writing to proceed with the
arbitration, or (ii) all parties to the arbitration waive any rights or benefits
that might accrue to them by virtue of the single action rule statute of
California, thereby agreeing that all indebtedness and obligations of the
parties, and all mortgages, liens and security interests securing such
indebtedness and obligations, shall remain fully valid and enforceable. If any
such dispute is not submitted to arbitration, the dispute shall be referred to a
referee in accordance with California Code of Civil Procedure Section 638 et
seq., and this general reference agreement is intended to be specifically
enforceable in accordance with said Section 638. A referee with the
qualifications required herein for arbitrators shall be selected pursuant to the
AAA's selection procedures. Judgment upon the decision rendered by a referee
shall be entered in the court in which such proceeding was commenced in
accordance with California Code of Civil Procedure Sections 644 and 645.
(i) Miscellaneous. To the maximum extent practicable, the AAA, the
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arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within 180 days of the filing of the dispute with the
AAA. No arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business or by applicable law or
regulation. If more than one agreement for arbitration by or between the parties
potentially applies to a dispute, the arbitration provision most directly
related to the Loan Documents or the subject matter of the dispute shall
control. This arbitration provision shall survive termination, amendment or
expiration of any of the Loan Documents or any relationship between the parties.
This commitment shall expire unless accepted in writing by Xxxxxxxx on
or before October 31, 2003. Please indicate your acceptance by signing and
renaming the enclosed copy of this Agreement on or before such date.
Sincerely,
XXXXX FARGO BANK,
NATIONAL ASSOCIATION
By: /s/ Xxxx Xxxxxxx
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Vice President
ACCEPTED AND AGREED TO
THIS 3rd DAY OF October, 2003
XXXXXX NAVIGATION COMPANY, INC.
By: /s/ X. X. Xxx
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Title: Sr. VP & CFO
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By: /s/ T. H. Xxxx
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Title: Treasurer
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