EXHIBIT 10.1
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CREDIT AGREEMENT
dated as of September 30, 2003
by and among
ENERGY WEST, INCORPORATED,
VARIOUS FINANCIAL INSTITUTIONS
and
LASALLE BANK NATIONAL ASSOCIATION,
as Agent
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TABLE OF CONTENTS
SECTION 1. DEFINITIONS........................................................1
1.1 Definitions......................................................1
1.2 Other Interpretive Provisions...................................18
SECTION 2. COMMITMENTS OF THE BANKS; BORROWING, CONVERSION AND
LETTER OF CREDIT PROCEDURES..........................................19
2.1 Commitments.....................................................19
2.2 Loan Procedures.................................................20
2.3 Letter of Credit Procedures.....................................21
2.4 Commitments Several.............................................23
2.5 Certain Conditions..............................................23
SECTION 3. NOTES EVIDENCING LOANS............................................24
3.1 Notes...........................................................24
3.2 Recordkeeping...................................................24
SECTION 4. INTEREST..........................................................24
4.1 Interest Rates..................................................24
4.2 Interest Payment Dates..........................................24
4.3 Setting and Notice of LIBOR.....................................24
4.4 Computation of Interest.........................................25
4.5 Maximum Rate of Interest........................................25
SECTION 5. FEES..............................................................25
5.1 Commitment Fee..................................................25
5.2 Letter of Credit Fees...........................................25
5.3 Upfront Fees....................................................26
5.4 Agent's Fees....................................................26
SECTION 6. REDUCTION OR TERMINATION OF THE REVOLVING COMMITMENT
AMOUNT; PREPAYMENTS..................................................26
6.1 Reduction or Termination of the Commitment Amount...............26
6.2 Prepayments.....................................................26
6.3 All Prepayments.................................................28
SECTION 7. MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES...................28
7.1 Making of Payments..............................................28
7.2 Application of Certain Payments.................................28
7.3 Due Date Extension..............................................28
7.4 Setoff..........................................................28
7.5 Proration of Payments...........................................28
7.6 Taxes...........................................................29
SECTION 8. INCREASED COSTS; SPECIAL PROVISIONS FOR EURODOLLAR LOANS..........30
8.1 Increased Costs.................................................30
8.2 Basis for Determining Interest Rate Inadequate or Unfair........31
8.3 Changes in Law Rendering LIBOR Loans Unlawful...................32
8.4 Funding Losses..................................................32
8.5 Right of Banks to Fund through Other Offices....................32
8.6 Discretion of Banks as to Manner of Funding.....................32
8.7 Mitigation of Circumstances; Replacement of Banks...............33
8.8 Conclusiveness of Statements; Survival of Provisions............33
SECTION 9. WARRANTIES........................................................33
9.1 Organization....................................................34
9.2 Authorization; No Conflict......................................34
9.3 Validity and Binding Nature.....................................34
9.4 Financial Condition.............................................34
9.5 No Material Adverse Change......................................34
9.6 Litigation and Contingent Liabilities...........................34
9.7 Ownership of Properties; Liens..................................35
9.8 Subsidiaries....................................................35
9.9 Pension Plans...................................................35
9.10 Investment Company Act.........................................35
9.11 Public Utility Holding Company Act.............................35
9.12 Regulation U...................................................36
9.13 Taxes..........................................................36
9.14 Solvency, etc..................................................36
9.15 Environmental Matters..........................................36
9.16 Reserved.......................................................37
9.17 Insurance......................................................37
9.18 Real Property..................................................37
9.19 Information....................................................37
9.20 Intellectual Property..........................................38
9.21 Burdensome Obligations.........................................38
9.22 Labor Matters..................................................38
9.23 No Default.....................................................38
9.24 Foreign Assets Control Regulations and Anti-Money Laundering...38
9.25 Capitalization.................................................39
SECTION 10. COVENANTS........................................................39
10.1 Reports, Certificates and Other Information....................39
10.2 Books, Records and Inspections.................................42
10.3 Maintenance of Property; Insurance.............................42
10.4 Compliance with Laws; Payment of Taxes and Liabilities.........43
10.5 Maintenance of Existence, etc..................................43
10.6 Financial Covenants............................................44
10.7 Limitations on Debt............................................44
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10.8 Liens..........................................................45
10.9 Operating Leases...............................................46
10.10 Restricted Payments...........................................46
10.11 Mergers, Consolidations, Sales................................46
10.12 Modification of Organizational Documents......................46
10.13 Use of Proceeds...............................................46
10.14 Further Assurances............................................47
10.15 Transactions with Affiliates..................................47
10.16 Employee Benefit Plans........................................47
10.17 Environmental Matters.........................................47
10.18 Unconditional Purchase Obligations............................48
10.19 Inconsistent Agreements.......................................48
10.20 Business Activities...........................................48
10.21 Investments...................................................48
10.22 Restriction of Amendments to Certain Documents................49
10.23 Fiscal Year...................................................49
10.24 Cancellation of Debt..........................................49
10.25 Foreign Subsidiaries..........................................49
10.26 Refinancing of Pari Passu Debt................................49
10.27 OFAC, Etc.....................................................49
SECTION 11. EFFECTIVENESS; CONDITIONS OF LENDING, ETC........................50
11.1 Initial Credit Extension.......................................50
11.2 Conditions.....................................................53
SECTION 12. EVENTS OF DEFAULT AND THEIR EFFECT...............................53
12.1 Events of Default..............................................53
12.2 Effect of Event of Default.....................................56
12.3 Additional Remedies............................................57
12.4 Additional Remedies............................................58
12.5 Attorney-in-Fact...............................................60
12.6 No Marshaling..................................................60
SECTION 13. THE AGENT........................................................60
13.1 Appointment and Authorization..................................60
13.2 Delegation of Duties...........................................61
13.3 Liability of Agent.............................................61
13.4 Reliance by Agent..............................................61
13.5 Notice of Default..............................................62
13.6 Credit Decision................................................62
13.7 Indemnification................................................62
13.8 Agent in Individual Capacity...................................63
13.9 Successor Agent................................................63
13.10 Collateral Matters............................................63
13.11 Funding Reliance..............................................64
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SECTION 14. GENERAL..........................................................64
14.1 Waiver; Amendments.............................................64
14.2 Confirmations..................................................65
14.3 Notices........................................................65
14.4 Computations...................................................65
14.5 Regulation U...................................................65
14.6 Costs, Expenses and Taxes......................................66
14.7 Subsidiary References..........................................66
14.8 Captions.......................................................66
14.9 Assignments; Participations....................................66
14.10 Governing Law.................................................68
14.11 Counterparts..................................................68
14.12 Successors and Assigns........................................68
14.13 Indemnification by the Company................................68
14.14 Nonliability of Lenders.......................................69
14.15 FORUM SELECTION AND CONSENT TO JURISDICTION...................69
14.16 Waiver of Jury Trial..........................................70
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SCHEDULES
SCHEDULE 2.1 Banks and Pro Rata Shares
SCHEDULE 9.6 Litigation and Contingent Liabilities
SCHEDULE 9.8 Subsidiaries
SCHEDULE 9.15 Environmental Matters
SCHEDULE 9.17 Insurance
SCHEDULE 9.18 Real Property
SCHEDULE 9.22 Labor Matters
SCHEDULE 9.25 Capitalization
SCHEDULE 10.7 Permitted Existing Debt
SCHEDULE 10.8 Permitted Existing Liens
SCHEDULE 10.21 Investments
SCHEDULE 11.1 Debt to be Repaid
SCHEDULE 14.3 Addresses for Notices
EXHIBITS
EXHIBIT A Form of Note
EXHIBIT B Form of Compliance Certificate
EXHIBIT C Form of Guaranty
EXHIBIT D Form of Security Agreement
EXHIBIT E Form of Pledge Agreement
EXHIBIT F Form of Borrowing Base Certificate
EXHIBIT G Form of Assignment Agreement
CREDIT AGREEMENT
THIS CREDIT AGREEMENT dated as of September 30, 2003 (this "Agreement") is
entered into by and among ENERGY WEST, INCORPORATED, a Montana corporation (the
"Company"), the financial institutions that are or may from time to time become
parties hereto (together with their respective successors and assigns, the
"Banks") and LASALLE BANK NATIONAL ASSOCIATION, a national banking association
(in its individual capacity, "LaSalle"), as agent for the Banks.
WHEREAS, the Banks have agreed to make available to the Company a revolving
credit facility (which includes a subfacility for letters of credit) upon the
terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual agreements herein contained,
the parties hereto agree as follows:
SECTION 1. DEFINITIONS.
1.1 Definitions. When used herein the following terms shall have the
following meanings:
"Account Debtor" means any Person who is obligated to the Company or any
Subsidiary under an Account Receivable.
"Account Receivable" means, with respect to any Person, any right of such
Person to payment for goods sold or leased or for services rendered, whether or
not evidenced by an instrument or chattel paper and whether or not yet earned by
performance or invoiced.
"Acquisition" means any transaction or series of related transactions for
the purpose of or resulting, directly or indirectly, in: (i) the acquisition of
all or substantially all of the assets of a Person, or of all or substantially
all of any business or division of a Person, (ii) the acquisition of in excess
of fifty percent (50%) of the capital stock, partnership interests, membership
interests or equity of any Person, or otherwise causing any Person to become a
Subsidiary, or (iii) a merger or consolidation or any other combination with
another Person (other than a Person that is a Subsidiary to the extent otherwise
permitted hereunder).
"Affected Loan" has the meaning ascribed thereto in Section 8.3.
"Affiliate" of any Person means: (i) any other Person which, directly or
indirectly, controls or is controlled by or is under common control with such
Person and (ii) any officer or director of such Person. A Person shall be deemed
to be "controlled by" any other Person if such Person possesses, directly or
indirectly, power to vote five percent (5%) or more of the securities (on a
fully-diluted, as-exercised basis) having ordinary voting power for the election
of directors or managers or power to direct or cause the direction of the
management and policies of such Person whether by contract or otherwise.
"Agent" means LaSalle in its capacity as agent for the Banks hereunder and
under the other Loan Documents and any successor thereto in such capacity.
"Agreement" has the meaning ascribed thereto in the Preamble.
"Appraisal" means that certain Appraisal dated as of August 22, 2003
prepared and delivered by Hilco with respect to the property, plant and
equipment of the Company and its Subsidiaries, a certified, true, correct and
complete copy of which has been delivered by the Company to Agent.
"Approved Fund" means any Fund that is administered or managed by (a)
LaSalle, (b) any Affiliate of LaSalle or (c) an entity or an Affiliate of an
entity that administers or manages LaSalle.
"Asset Sale" means the sale, lease, assignment or other transfer for value
(each a "Disposition") by the Company or any Subsidiary to any Person (other
than the Company or any Subsidiary) of any Collateral other than: (i) the
Disposition of any asset which is to be replaced, and is in fact replaced,
within thirty (30) days with another asset performing the same or a similar
function and (ii) the sale or lease of inventory in the ordinary course of
business.
"Assignment Agreement" has the meaning ascribed thereto in Section 14.9.1.
"Attorney Costs" means, with respect to any Person, all reasonable fees and
charges of any counsel to such Person, the reasonable allocable cost of internal
legal services of such Person, all reasonable disbursements of such internal
counsel and all court costs and similar legal expenses.
"Bank" has the meaning ascribed thereto in the Preamble. References to the
"Banks" shall include the Issuing Bank; for purposes of clarification only, to
the extent that LaSalle (or any successor Issuing Bank) may have any rights or
obligations in addition to those of the other Banks due to its status as Issuing
Bank, its status as such will be specifically referenced.
"Banking Costs" means the actual amount of fees, costs and expenses paid by
the Company and its Subsidiaries in the Fiscal Quarter ending on June 30, 2003
with respect to the preparation, negotiation and delivery of loan documentation
with Xxxxx Fargo Bank Montana, National Association; provided, however, such
amount shall not exceed $260,852 and, for each Fiscal Quarter ending thereafter,
an amount approved by Agent and their Lenders in their sole discretion.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11
U.S.C. Β§101, et seq.), as amended and in effect from time to time, any
successor thereto and the regulations issued from time to time thereunder.
"Base Rate" means at any time the greater of: (i) the Federal Funds Rate
plus one half of one percent (0.50%) and (ii) the Prime Rate.
"Base Rate Loan" means any Loan which bears interest at or by reference to
the Base Rate.
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"Borrowing Base" means an amount equal to the total of: (i) eighty percent
(80%) of the unpaid amount (net of such reserves and allowances as the Agent
deems necessary in its reasonable discretion) of all Eligible Accounts
Receivable plus (ii) seventy percent (70%) of the value of all Eligible
Inventory valued at the lower of cost or market (net of such reserves and
allowances as the Agent deems necessary in its reasonable discretion) plus (iii)
prior to the Refinancing Trigger Date and in no event on or after the
Refinancing Trigger Date (and, in the sole discretion of Agent and the Banks,
only to the extent: (y) it is subject to a perfected Lien in favor of the Agent
and (z) it is not subject to any other assignment, claim or Lien, other than
Liens securing only the Pari Passu Debt), eighty percent (80%) of the value of:
(A) the property, plant and equipment of the Company and its Subsidiaries, as
set forth in the Appraisal less (B) all such property, plant and equipment which
has been sold, leased, assigned, otherwise transferred, lost, materially
damaged, destroyed or with respect to which an event has occurred which may give
rise to the issuance of Property Loss Proceeds less (C) all depreciation which
has been attributed to such property, plant and equipment after the date of the
Appraisal by the Company, its Subsidiaries, any of their respective accountants,
agents or representatives or any governmental authority (or which, in the
reasonable discretion of Agent, should have been so depreciated).
"Borrowing Base Certificate" means a certificate substantially in the form
of Exhibit F.
"Business Day" means any day on which LaSalle is open for commercial
banking business in Chicago, Illinois and, in the case of a Business Day which
relates to a LIBOR Loan, on which dealings are carried on in the London
interbank eurodollar market.
"Capital Expenditures" means all expenditures which, in accordance with
GAAP, would be required to be capitalized and shown on the consolidated balance
sheet of the Company, but excluding expenditures made in connection with the
replacement, substitution or restoration of assets to the extent financed: (i)
from insurance proceeds (or other similar recoveries) paid on account of the
loss of or damage to the assets being replaced or restored or (ii) with awards
of compensation arising from the taking by eminent domain or condemnation of the
assets being replaced.
"Capital Lease" means, with respect to any Person, any lease of (or other
agreement conveying the right to use) any real or personal property by such
Person that, in conformity with GAAP, is accounted for as a capital lease on the
balance sheet of such Person.
"Capital" means, as of any date of determination thereof, without
duplication, the sum of: (i) Consolidated Net Worth plus (ii) all Debt.
"Cash Collateralize" means to deliver cash collateral to the Agent, to be
held as cash collateral for outstanding Letters of Credit, pursuant to
documentation reasonably satisfactory to the Agent. Derivatives of such term
have corresponding meanings.
"Cash Equivalent Investment" means, at any time: (i) any evidence of Debt,
maturing not more than one year after such time, issued or guaranteed by the
United States Government or any agency thereof, (ii) commercial paper, maturing
not more than one (1) year from the date of issue,
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or corporate demand notes, in each case (unless issued by a Bank or its holding
company) rated at least A-l by Standard & Poor's Ratings Group or P-l by Xxxxx'x
Investors Service, Inc., (iii) any certificate of deposit (or time deposits
represented by such certificates of deposit) or banker's acceptance, maturing
not more than one year after such time, or overnight Federal Funds transactions
that are issued or sold by any Bank or its holding company or by a commercial
banking institution that is a member of the Federal Reserve System and has a
combined capital and surplus and undivided profits of not less than $500,000,000
and (iv) any repurchase agreement entered into with any Bank (or other
commercial banking institution of the stature referred to in clause (iii))
which: (y) is secured by a fully perfected security interest in any obligation
of the type described in any of clauses (i) through (iii) and (z) has a market
value at the time such repurchase agreement is entered into of not less than one
hundred percent (100%) of the repurchase obligation of such Bank (or other
commercial banking institution) thereunder.
"CERCLA" has the meaning ascribed thereto in Section 9.15.
"Closing Date" has the meaning ascribed thereto in Section 11.1.
"Code" means the Internal Revenue Code of 1986.
"Collateral" means all property and interests in property and proceeds
thereof now owned or hereafter acquired by the Company or any other Person
(including, without limitation, any other Loan Party) as debtor and their
respective Subsidiaries in or upon which a Lien now or hereafter exists in favor
of the Agent, for the benefit of the Banks, or any Bank, whether under this
Agreement, or other Loan Documents or under any other agreement or document
executed by any such Persons and delivered to the Agent.
"Collateral Access Agreement" means an agreement in form and substance
reasonably satisfactory to the Agent pursuant to which a mortgagee or lessor of
real property on which personal property and/or fixtures are stored or otherwise
located, or a warehouseman, processor or other bailee of Inventory, acknowledges
the Liens of the Agent and waives or subordinates any Liens held by such Person
on such property, and, in the case of any such agreement with a mortgagee or
lessor, permits the Agent access to and use of such real property for a
reasonable amount of time following the occurrence and during the continuance of
an Event of Default to assemble, complete and sell any personal property and/or
fixtures stored or otherwise located thereon.
"Collateral Documents" means the Security Agreement, each Mortgage, each
Pledge Agreement and any other agreement document or instrument, including,
without limitation, all other security agreements, pledge agreements, patent,
copyright and trademark security agreements, lease assignments, guarantees and
similar agreements, and all amendments, restatements, modifications and
supplements thereof or thereto, pursuant to which the Company, any Subsidiary or
any other Person grants collateral to the Agent for the benefit of the Banks.
"Commitment" means, as to any Bank, such Bank's commitment to make Loans,
and to issue or participate in Letters of Credit, under this Agreement. The
initial amount of each Bank's Pro Rata Share of the Commitment Amount is set
forth on Schedule 2.1.
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"Commitment Amount" means: (i) from the Closing Date until the Refinancing
Trigger Date, $23,000,000.00, and (ii) thereafter, $15,000,000.00, in both cases
as reduced from time to time pursuant to Section 6.1.
"Commitment Fee Rate" means a rate of interest equal to 7/20 of one percent
(0.35%) per annum.
"Company" has the meaning ascribed thereto in the Preamble.
"Computation Period" means each period of four (4) consecutive Fiscal
Quarters ending on the last day of a Fiscal Quarter.
"Consolidated Net Income" means, with respect to the Company and its
Subsidiaries for any period, the net income (or loss) of the Company and its
Subsidiaries for such period, excluding any gains from Asset Sales, any
extraordinary gains and any gains from discontinued operations.
"Consolidated Net Worth" means, as of any time the same is to be
determined, the total shareholders' equity (including capital stock, additional
paid-in-capital and retained earnings after deducting treasury stock, but
excluding (to the extent otherwise included in calculating shareholders'
equity), minority interests in Subsidiaries) which would appear on the
consolidated balance sheet of the Company determined on a consolidated basis in
accordance with GAAP.
"Controlled Group" means all members of a controlled group of corporations
and all members of a controlled group of trades or businesses (whether or not
incorporated) under common control which, together with the Company, are treated
as a single employer under Section 414 of the Code or Section 4001 of ERISA.
"Debt" of any Person means, without duplication: (i) all indebtedness of
such Person for borrowed money, whether or not evidenced by bonds, debentures,
notes or similar instruments, (ii) all obligations of such Person as lessee
under Capital Leases which have been or should be recorded as liabilities on a
balance sheet of such Person in accordance with GAAP, (iii) all obligations of
such Person to pay the deferred purchase price of property or services
(excluding trade accounts payable in the ordinary course of business), (iv) all
indebtedness secured by a Lien on the property of such Person, whether or not
such indebtedness shall have been assumed by such Person, (v) all obligations,
contingent or otherwise, with respect to the face amount of all letters of
credit (whether or not drawn) and banker's acceptances issued for the account of
such Person (including the Letters of Credit), (vi) all Hedging Obligations of
such Person, (vii) all Suretyship Liabilities of such Person and (viii) all Debt
of any partnership of which such Person is a general partner.
"Debt to be Repaid" means Debt described on Schedule 11.1.
"Disposal" has the meaning ascribed thereto in the definition of "Release."
"Dollar" and the sign "$" mean lawful money of the United States of
America.
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"EBITDA" means, for any period, Consolidated Net Income for such period
plus, to the extent deducted in determining such Consolidated Net Income: (i)
Interest Expense, (ii) income tax expense, depreciation and amortization for
such period, (iii) the PPLM Legal Fees for such period, (iv) Banking Costs for
such period and (v) Work Force Reduction Costs for such period.
"Eligible Account Receivable" means an Account Receivable owing to the
Company or any Subsidiary which meets each of the following requirements:
(1) it arises from the sale of goods or the rendering of services by
the Company or the applicable Subsidiary; and if it arises from the sale of
goods: (i) such goods comply with such Account Debtor's specifications (if
any) and have been delivered to such Account Debtor and (ii) the Company or
the applicable Subsidiary has possession of, or if requested by the Agent
has delivered to the Agent, written evidence of such delivery (which may
include a "master meter reading" and does not need to be on a
consumer-by-consumer basis);
(2) it: (i) is subject to a perfected Lien in favor of the Agent and
(ii) is not subject to any other assignment, claim or Lien, other than,
prior to the Refinancing Trigger Date and in no event thereafter, Liens
securing only the Pari Passu Debt;
(3) it is a valid, legally enforceable and unconditional obligation of
the Account Debtor with respect thereto, and is not subject to any
counterclaim, credit, allowance, discount, rebate or adjustment by the
Account Debtor with respect thereto, or to any claim by such Account Debtor
denying liability thereunder in whole or in part;
(4) there is no bankruptcy, insolvency or liquidation proceeding by or
against the Account Debtor with respect thereto;
(5) the Account Debtor with respect thereto is a resident or citizen
of, and is located within, the United States, unless the sale of goods or
services giving rise to such Account Receivable is on letter of credit,
banker's acceptance or other credit support terms reasonably satisfactory
to the Agent;
(6) it is not an Account Receivable arising from a "sale on approval,"
"sale or return," "consignment" or "xxxx and hold" or subject to any other
repurchase or similar agreement;
(7) it is not an Account Receivable with respect to which possession
and/or control of the goods sold giving rise thereto is held, maintained or
retained by the Company or any Subsidiary (or by any agent or custodian of
the Company or any Subsidiary) for the account of or subject to further
and/or future direction from the Account Debtor with respect thereto;
(8) it arises in the ordinary course of business of the Company or the
applicable Subsidiary;
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(9) if the Account Debtor is the United States or any department,
agency or instrumentality thereof, the Company or the applicable Subsidiary
has assigned its right to payment of such Account Receivable to the Agent
pursuant to the Assignment of Claims Act of 1940;
(10) if the Company maintains a credit limit for an Account Debtor,
the aggregate dollar amount of Accounts Receivable due from such Account
Debtor, including such Account Receivable, does not exceed such credit
limit;
(11) if the Account Receivable is evidenced by chattel paper or an
instrument, the originals of such chattel paper or instrument shall have
been endorsed and/or assigned and delivered to the Agent in a manner
satisfactory to the Agent;
(12) such Account Receivable is not more than: (i) sixty (60) days
past the due date thereof or (ii) ninety (90) days past the original
invoice date thereof, in each case according to the original terms of sale;
(13) it is not an Account Receivable with respect to an Account Debtor
that is located in any jurisdiction which has adopted a statute or other
requirement with respect to which any Person that obtains business from
within such jurisdiction must file a notice of business activities report
or make any other required filings in a timely manner in order to enforce
its claims in such jurisdiction's courts unless such notice of business
activities report has been duly and timely filed or the Company or the
applicable Subsidiary is exempt from filing such report and has provided
the Agent with satisfactory evidence of such exemption;
(14) the Account Debtor with respect thereto is not the Company or an
Affiliate of the Company or any Subsidiary;
(15) it is not owed by an Account Debtor with respect to which twenty
five percent (25%) or more of the aggregate amount of outstanding Accounts
Receivable owed at such time by such Account Debtor is classified as
ineligible under clause (12) of this definition; and
(16) if the aggregate amount of all Accounts Receivable owed by the
Account Debtor thereon exceeds twenty five percent (25%) of the aggregate
amount of all Accounts Receivable at such time, then all Accounts
Receivable owed by such Account Debtor in excess of such amount shall be
deemed ineligible.
An Account Receivable which is at any time an Eligible Account Receivable, but
which subsequently fails to meet any of the foregoing requirements, shall
forthwith cease to be an Eligible Account Receivable. Further, with respect to
any Account Receivable, if the Agent or the Required Banks at any time hereafter
determine in their discretion that the prospect of payment or performance by the
Account Debtor with respect thereto is materially impaired for any reason
whatsoever, such
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Account Receivable shall cease to be an Eligible Account Receivable after notice
of such determination is given to the Company.
"Eligible Inventory" means Inventory of the Company or any Subsidiary which
meets each of the following requirements:
(1) it: (i) is subject to a perfected Lien in favor of the Agent and
(ii) is not subject to any other assignment, claim or Lien, other than,
prior to the Refinancing Trigger Date and in no event thereafter, Liens
securing only the Pari Passu Debt;
(2) it is salable;
(3) it is in the possession and control of the Company or any
Subsidiary and it is stored and held in facilities owned by the Company or
any Subsidiary or, if such facilities are not so owned, the Agent is in
possession of a Collateral Access Agreement with respect thereto;
(4) it is not Inventory produced in violation of the Fair Labor
Standards Act and subject to the "hot goods" provisions contained in Title
29 U.S.C. Β§215;
(5) it is not subject to any agreement which would restrict the
Agent's ability to sell or otherwise dispose of such Inventory;
(6) it is located in the United States or in any territory or
possession of the United States that has adopted Article 9 of the UCC;
(7) it is not "in transit" to the Company or any Subsidiary or held by
the Company or any Subsidiary on consignment; and
(8) the Agent shall not have determined in its discretion that it is
unacceptable due to age, type, category, quality, quantity and/or any other
reason whatsoever.
Inventory which is at any time Eligible Inventory but which subsequently fails
to meet any of the foregoing requirements shall forthwith cease to be Eligible
Inventory.
"Environmental Claims" means all claims, however asserted, by any
governmental, regulatory or judicial authority or other Person alleging
potential liability or responsibility for violation of any Environmental Law, or
for release or injury to the environment.
"Environmental Laws" means all present or future federal, state or local
laws, statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any governmental authority,
in each case relating to Environmental Matters.
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"Environmental Matters" means any matter arising out of or relating to
pollution or protection of the environment, including any of the foregoing
relating to the presence, use, production, generation, handling, transport,
treatment, storage, disposal, distribution, discharge, release, control or
cleanup of any Hazardous Substance.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated thereunder.
"Event of Default" means any of the events described in Section 12.1.
"Event of Loss" means, with respect to any Property, any of the following;
(a) any loss, destruction or damage of such Property; (b) any pending or
threatened institution of any proceedings for the condemnation or seizures of
such Property or for the exercise of any right of eminent domain; or (c) any
actual condemnation, seizure or taking, by exercise of the power of eminent
domain or otherwise, of such Property, or confiscation of such Property or
requisition of the use of such Property.
"Existing Claims" means the claims, causes of action and other judicial
proceedings made, brought, filed or levied by or on behalf of the Company, any
of its Subsidiaries or any Joint Venture on or before the Closing Date, each of
which is described in reasonable detail on Schedule 1.1(a) hereto.
"Federal Funds Rate" means, for any day, the rate set forth in the weekly
statistical release designated as H.15(519), or any successor publication,
published by the Federal Reserve Bank of New York (including any such successor
publication, "H.15(519)") on the preceding Business Day opposite the caption
"Federal Funds (Effective)"; or, if for any relevant day such rate is not so
published on any such preceding Business Day, the rate for such day will be the
arithmetic mean as determined by the Agent of the rates for the last transaction
in overnight Federal funds arranged prior to 9:00 A.M. (New York City time) on
that day by each of three leading brokers of Federal funds transactions in New
York City selected by the Agent.
"Fiscal Quarter" means a fiscal quarter of a Fiscal Year.
"Fiscal Year" means the fiscal year of the Company and its Subsidiaries,
which period shall be the twelve (12) month period ending on June 30 of each
year. References to a Fiscal Year with a number corresponding to any calendar
year (e.g., "Fiscal Year 1998") refer to the Fiscal Year ending on June 30 of
such calendar year.
"FRB" means the Board of Governors of the Federal Reserve System or any
successor thereto.
"Fund" means any Person (other than a natural Person) that is (or will be)
engaged in the making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.
9
"GAAP" means generally accepted accounting principles set forth from time
to time in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.
"Group" has the meaning ascribed thereto in Section 2.2.1.
"Guaranty" means a guaranty substantially in the form of Exhibit C.
"Hazardous Substances" has the meaning ascribed thereto in Section 9.15.
"Hedging Agreement" means any interest rate, currency or commodity swap
agreement, cap agreement or collar agreement, and any other agreement or
arrangement designed to protect a Person against fluctuations in interest rates,
currency exchange rates or commodity prices.
"Hedging Obligation" means, with respect to any Person, any liability of
such Person under any Hedging Agreement.
"Interest Coverage Ratio" means, for any Computation Period, the ratio of:
(i) EBITDA for such Computation Period to (ii) Interest Expense for such
Computation Period.
"Interest Expense" means for any period the consolidated interest expense
of the Company and its Subsidiaries for such period (including all imputed
interest on Capital Leases).
"Interest Period" means, as to any LIBOR Loan, the period commencing on the
date such Loan is borrowed or continued as, or converted into, a LIBOR Loan and
ending on the date one (1), two (2) or three (3) months thereafter as selected
by the Company pursuant to Section 2.2.2 or 2.2.3, as the case may be; provided
that:
(i) if any Interest Period would otherwise end on a day that is
not a Business Day, such Interest Period shall be extended to the
following Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month, in which event
such Interest Period shall end on the preceding Business Day;
(ii) any Interest Period that begins on a day for which there is
no numerically corresponding day in the calendar month at the end of
such Interest Period shall end on the last Business Day of the
calendar month at the end of such Interest Period; and
(iii) the Company may not select any Interest Period for a Loan
which would extend beyond the scheduled Termination Date.
10
"Inventory" has the meaning assigned to such term in the UCC as in effect
in the State of Illinois from time to time.
"Investment" means, relative to any Person, any investment in another
Person, whether by acquisition of any debt or equity security, by making any
loan or advance or by becoming obligated with respect to a Suretyship Liability
in respect of obligations of such other Person.
"Issuing Bank" means LaSalle in its capacity as the issuer of Letters of
Credit hereunder and its successors and assigns in such capacity.
"Joint Venture" means any partnership, association, company, community of
interest, business arrangement or joint venture entered into by the Company or
any of its Subsidiaries, in the ordinary course of the their business, with an
unrelated, non-Affiliate third party on an arm's length basis to engage in a
joint undertaking.
"LaSalle" has the meaning ascribed thereto in the Preamble.
"L/C Application" means, with respect to any request for the issuance of a
Letter of Credit, a letter of credit application in the form being used by the
Issuing Bank at the time of such request for the type of letter of credit
requested.
"L/C LaSalle Master Letter of Credit Agreement" means a master letter of
credit agreement in the form approved by Agent.
"L/C Fee Rate" means a rate of interest equal to two and one half percent
(2.50%) per annum.
"Letter of Credit" has the meaning ascribed thereto in Section 2.1.3.
"LIBOR" means a rate of interest equal to the per annum rate of interest at
which United States Dollar deposits in an amount comparable to the principal
balance of the applicable Loan and for a period equal to the relevant Interest
Period are offered in the London Interbank Eurodollar market at 11:00 a.m.
(London time) two (2) Business Days prior to the commencement of each Interest
Period, as displayed in the Bloomberg Financial Markets system, or other
authoritative source selected by Agent in its sole discretion, divided by a
number determined by subtracting from one (1.00) the maximum reserve percentage
for determining reserves to be maintained by member banks of the Federal Reserve
System for Eurocurrency liabilities, such rate to remain fixed for such Interest
Period. Agent's determination of LIBOR shall be conclusive, absent manifest
error.
"LIBOR Loan" means any Loan which bears interest at a rate determined by
reference to LIBOR (Reserve Adjusted).
"LIBOR Margin" means two and one half percent (2.50%) per annum.
11
"LIBOR Office" means with respect to any Bank the office or offices of such
Bank which shall be making or maintaining the LIBOR Loans of such Bank
hereunder. A LIBOR Office of any Bank may be, at the option of such Bank, either
a domestic or foreign office.
"Lien" means, with respect to any Person, any interest granted by such
Person in any real or personal property, asset or other right owned or being
purchased or acquired by such Person which secures payment or performance of any
obligation and shall include any mortgage, lien, encumbrance, charge or other
security interest of any kind, whether arising by contract, as a matter of law,
by judicial process or otherwise, and any contingent or other agreement to
provide any of the foregoing.
"Loan Documents" means this Agreement, the Notes, the Guaranty, the L/C
Applications, the L/C LaSalle Master Letter of Credit Agreement and the
Collateral Documents.
"Loan Party" means any of the Company and its Subsidiaries.
"Loans" has the meaning ascribed thereto in Section 2.1.1.
"Mandatory Prepayment Event" has the meaning ascribed thereto in subsection
6.2.2(a).
"Margin Stock" means any "margin stock" as defined in Regulation U.
"Material Adverse Effect" means: (i) a material adverse change in, or a
material adverse effect upon, the financial condition, operations, assets,
business, properties or prospects of any Joint Venture, the Company or any of
the Company's Subsidiaries, (ii) a material impairment of the ability of the
Company or any Subsidiary to perform any of its obligations under any Loan
Document to which it is a party or (iii) a material adverse effect upon any
substantial portion of the collateral then subject to the Collateral Documents
or upon the legality, validity, binding effect or enforceability against the
Company or any Subsidiary of any Loan Document to which it is a party.
"Mortgage" means a mortgage, deed of trust, leasehold mortgage or similar
instrument granting the Agent a Lien on real property of the Company or any
Subsidiary.
"Multiemployer Pension Plan" means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which the Company or any member of the
Controlled Group may have any liability.
"Net Cash Proceeds" means:
(i) with respect to any Asset Sale the aggregate cash proceeds
(including cash proceeds received by way of deferred payment of principal
pursuant to a note, installment receivable or otherwise, but only as and
when received) received by the Company or any Subsidiary pursuant to such
Asset Sale net of: (x) the direct costs relating to such sale, transfer or
other disposition (including sales commissions and legal, accounting and
investment banking fees), (y) taxes paid or reasonably estimated by the
Company to be
12
payable as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements) and (z) amounts
required to be applied to the repayment of any Debt secured by a Lien on
the asset subject to such Asset Sale (other than the Loans);
(ii) with respect to any payment which constitutes Property Loss
Proceeds, an amount equal to the amount of such payment;
(iii) with respect to any issuance of equity securities, the aggregate
cash proceeds received by the Company or any Subsidiary pursuant to such
issuance, net of the direct costs relating to such issuance (including
sales and underwriter's commission; and
(iv) with respect to any issuance of Debt, the aggregate cash proceeds
received by the Company or any Subsidiary pursuant to such issuance, net of
the direct costs of such issuance (including up-front fees and placement
fees); and
(v) with respect to any Event of Loss, the proceeds paid to any Loan
Party on account of such Event of Loss, net of (i) all of the costs and
expenses reasonably incurred in connection with the collection of such
proceeds, award or other payments, (ii) any amounts retained by or paid to
the parties having superior rights to such proceeds, awards or other
payments and (iii) any amounts which, under the Security Agreement, are
permitted to be used, and are in fact so used, to replace the property that
was the subject of such Event of Loss in accordance with the terms of and
subject to the limitations contained in the Security Agreement.
"Note" has the meaning ascribed thereto in Section 3.1.
"Obligations" means all Loans and other Debt, advances, debts, liabilities,
obligations, covenants and duties owing by the Company to any Bank or the Agent,
any Affiliate thereof or any other Person required to be indemnified, that
arises under any Loan Document and any Hedging Obligation of the Company owed to
LaSalle, in each case whether or not for the payment of money, whether arising
by reason of an extension of credit, loan, guaranty, indemnification or in any
other manner, whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, now existing or
hereafter arising and however acquired.
"OFAC" means the Office of Foreign Assets Control of the U.S. Department of
the Treasury
"Open Positions" means, at any time, the amount equal to the Inventory of
the Company on hand and firm commitments to purchase Inventory in certain energy
commodities which are not offset by either a sale contract or derivative
arrangement of the Company, as such amount is more fully determined in
accordance with the Company's internal policies (which are commercially
reasonable, consistent with the Company's past practices and included in the
Company's "Risk Management Policy," a true, correct and complete copy of which
has been delivered to Agent..
13
"Operating Lease" means any lease of (or other agreement conveying the
right to use) any real or personal property by the Company or any Subsidiary, as
lessee, other than any Capital Lease.
"Outstandings" means, at any time, the sum of: (i) the aggregate principal
amount of all outstanding Loans, plus (ii) the Stated Amount of all Letters of
Credit.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Pari Passu Debt" means all Debt of the Company and its Subsidiaries
incurred or arising under or pursuant to the Pari Passu Loan Documents.
"Pari Passu Loan Documents" means, collectively, the Series 1992B Variable
Rate Industrial Revenue Bond Documents, the Series 1993 Variable Rate Note
Documents and the Series 1997 7.5% Note Documents.
"Pari Passu Release" means the unconditional release in full of the Pari
Passu Debt through a refinancing or restructuring thereof.
"Patriot Act" means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, P.L.
107-56, as amended.
"Pension Plan" means a "pension plan," as such term is defined in Section
3(2) of ERISA, which is subject to Title IV of ERISA (other than a Multiemployer
Pension Plan), and to which the Company or any member of the Controlled Group
may have any liability, including any liability by reason of having been a
substantial employer within the meaning of Section 4063 of ERISA at any time
during the preceding five years, or by reason of being deemed to be a
contributing sponsor under Section 4069 of ERISA.
"Person" means any natural person, corporation, partnership, trust, limited
liability company, association, governmental authority or unit, or any other
entity, whether acting in an individual, fiduciary or other capacity.
"Pledge Agreement" means a pledge agreement in substantially the form of
Exhibit E.
"PPLM Legal Fees" means, with respect to any period, the actual amount of
legal fees and expenses paid by the Company and its Subsidiaries with respect to
the case of Energy West Resources, Inc. v PPL Montana, LLC, CV 01-090-GF-SHE &
CV 01-124-GF-SHE; provided, however, such amount shall not exceed: (i) for the
Fiscal Quarter ending September 30, 2002, $240,268, (ii) for the Fiscal Quarter
ending December 31, 2002, $718,264, (iii) for the Fiscal Quarter ending March
31, 2003, $338,064, (iv) for the Fiscal Quarter ending June 30, 2003, $256,056,
and (iv) for each Fiscal Quarter ending thereafter, an amount approved by Agent
and their Lenders in their sole discretion.
14
"Pro Rata Share" means, with respect to any Bank, the percentage specified
opposite such Bank's name on Schedule 2.1 hereto, as adjusted from time to time
in accordance with the terms hereof.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, and whether tangible or intangible.
"Property Loss Proceeds" means: (i) the aggregate insurance proceeds
received in connection with one (1) or more related events under any property or
other, similar insurance policy and (ii) any award or other compensation with
respect to any condemnation of Property (or any transfer or disposition of
Property in lieu of condemnation).
"Prime Rate" means, for any day, the rate of interest in effect for such
day as publicly announced from time to time by LaSalle as its prime rate
(whether or not such rate is actually charged by LaSalle). Any change in the
Prime Rate announced by LaSalle shall take effect at the opening of business on
the day specified in the public announcement of such change.
"RCRA" has the meaning ascribed thereto in Section 9.15.
"Refinancing Trigger Date" means that date upon which both: (i) the Pari
Passu Release occurs in a manner that: (A) causes the unconditional release in
full of all Liens on Accounts Receivable and Inventory securing the Pari Passu
Debt and (B) does not otherwise result in an Event of Default or Unmatured Event
of Default and (ii) the Replacement Long-Term Debt Documents become effective
and the Company has the ability to borrow all funds to be made available
thereunder.
"Regulation D" means Regulation D of the FRB.
"Regulation U" means Regulation U of the FRB.
"Release" has the meaning specified in CERCLA and the term "Disposal" (or
"Disposed") has the meaning specified in RCRA; provided, in the event either
CERCLA or RCRA is amended so as to broaden the meaning of any term defined
thereby, such broader meaning shall apply as of the effective date of such
amendment; and provided, further, that to the extent that the laws of a state
wherein any affected property lies establish a meaning for "Release" or
"Disposal" which is broader than is specified in either CERCLA or RCRA, such
broader meaning shall apply.
"Replacement Long-Term Debt" means Debt which is on terms and pursuant to
conditions and representations, warranties and covenants which are satisfactory
to Agent and the Lenders and is used by the Company to effect the Pari Passu
Release and, in addition, incur an additional amount of Debt not to exceed
$8,000,000.
"Replacement Long-Term Debt Documents" means each agreement and instrument,
each of which are in form and substance reasonably satisfactory to Agent and the
Lenders, pursuant to which the Company incurs or effects the Replacement
Long-Term Debt.
15
"Required Banks" means Banks having Pro Rata Shares aggregating sixty six
and two thirds percent (66 2/3%) or more.
"Responsible Officer" means the chief executive officer, chief financial
officer, treasurer or president of the Company, or any other officer of the
Company having substantially the same authority and responsibility.
"SEC" means the Securities and Exchange Commission or any other
governmental authority succeeding to any of the principal functions thereof.
"Security Agreement" means a security agreement substantially in the form
of Exhibit D.
"Series 1992B Variable Rate Industrial Revenue Bond Documents" means that
certain Loan Agreement dated as of September 1, 1992 by and between Cascade
County, Montana and Great Falls Gas Company (now known as Energy West,
Incorporated) relating to that certain Indenture of Trust dated as of September
1, 1992 by and between Cascade County, Montana and Davidson Trust Co., as
successor Trustee relating to Industrial Development Revenue Bonds (Great Falls
Gas Company Project), together with each agreement and instrument executed
and/or delivered in connection therewith.
"Series 1993 Variable Rate Note Documents" means that certain Indenture
dated as of June 1, 1993 by and between Great Falls Gas Company (now known as
Energy West, Incorporated) and U.S. Bank, National Association, as successor
Trustee relating to $7,800,000 Series 1993 Notes, together with each agreement
and instrument executed and/or delivered in connection therewith.
"Series 1997 7.5% Note Documents" means that certain Indenture dated as of
August 1, 1997 by and between Energy West Incorporated and HSBC Bank USA, as
successor Trustee relating to $8,000,000 7.50% Notes due June 1, 2012, together
with each agreement and instrument executed and/or delivered in connection
therewith.
"Solvent" means, as to any Person at any time, that (a) the fair value of
the Property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of Section
101(32)(A) of the Bankruptcy Code and, in the alternative, for purposes of the
Uniform Fraudulent Transfer Act; (b) the present fair saleable value of the
Property of such Person is not less than the amount that will be required to pay
the probable liability of such person on its debts as they become absolute and
matured; (c) such Person is able to realize upon its Property and pay its debts
and other liabilities (including disputed, contingent and unliquidated
liabilities) as they mature in the normal course of business; (d) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature; and (e) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person's
property would constitute unreasonably small capital.
16
"Stated Amount" means, with respect to any Letter of Credit at any date of
determination: (i) the maximum aggregate amount available for drawing thereunder
under any and all circumstances plus (ii) the aggregate amount of all
unreimbursed payments and disbursements under such Letter of Credit.
"Subordinated Debt" means any unsecured Debt of the Company that has
subordination terms, covenants, pricing and other terms which have been approved
in writing by the Required Banks.
"Subsidiary" means, with respect to any Person, a corporation, partnership,
limited liability company or other entity of which such Person and/or its other
Subsidiaries own, directly or indirectly, such number of outstanding shares or
other ownership interests as have more than fifty percent (50%) of the ordinary
voting power for the election of directors or other managers of such
corporation, partnership, limited liability company or other entity. Unless the
context otherwise requires, each reference to Subsidiaries herein shall be a
reference to Subsidiaries of the Company. Further, the foregoing
notwithstanding, no Joint Venture shall be deemed a Subsidiary for purposes of
the Loan Documents unless expressly provided otherwise.
"Suretyship Liability" means any agreement, undertaking or arrangement by
which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to or otherwise to invest in a
debtor, or otherwise to assure a creditor against loss) any indebtedness,
obligation or other liability of any other Person (other than by endorsements of
instruments in the course of collection), or guarantees the payment of dividends
or other distributions upon the shares of any other Person. The amount of any
Person's obligation in respect of any Suretyship Liability shall (subject to any
limitation set forth therein) be deemed to be the principal amount of the debt,
obligation or other liability supported thereby.
"Termination Date" means the earlier to occur of: (i) September 30, 2004 or
(ii) such other date on which the Commitments terminate pursuant to Section 6 or
12.
"Total Debt" means, without duplication, all Debt of the Company and its
Subsidiaries, determined on a consolidated basis, excluding: (i) contingent
obligations in respect of Suretyship Liabilities (except to the extent
constituting Suretyship Liabilities in respect of Debt of a Person other than
the Company or any Subsidiary), (ii) Hedging Obligations, and (iii) Debt of the
Company to Subsidiaries and Debt of Subsidiaries to the Company or to other
Subsidiaries and (iv) contingent obligations in respect of undrawn letters of
credit.
"Total Debt to Capital Ratio" means, as of the last day of any Fiscal
Quarter, the ratio of: (i) Total Debt as of such day to (ii) Capitalization as
of such day.
"Type of Loan" or "Type of Borrowing" has the meaning ascribed thereto in
Section 2.2.1. The types of Loans or borrowings under this Agreement are Base
Rate Loans or borrowings and LIBOR Loans or borrowings.
17
"UCC" means the Uniform Commercial Code as in effect from time to time in
the State of Illinois; provided, that to the extent that the Uniform Commercial
Code is used to define any term herein or in any Loan Document and such term is
defined differently in different Articles or Divisions of the Uniform Commercial
Code, the definition of such term contained in Article or Division 9 shall
govern.
"Unmatured Event of Default" means any event that, if it continues uncured,
will, with lapse of time or notice or both, constitute an Event of Default.
"VaR" means, at any time, an amount equal to the Company's exposure to a
loss (or gain, as applicable) resulting from a change in prices of certain
energy commodities, as such loss is more fully determined in accordance with the
"Value at Risk Model" of the Company, a true, correct and complete copy of which
has been delivered to the Agent. For purposes of clarification, the "Value at
Risk Model" of the Company shall always calculate loss (or gain, as applicable)
by taking into account a change of energy commodities prices as it effects: (i)
the Company's Inventory of such energy commodities, (ii) the Company's purchase
commitments for such energy commodities, and (iii) the value (netting of gains
and losses) of the portfolio of the Company's derivative arrangements.
"Wholly-Owned Subsidiary" means, as to any Person, another Person all of
the shares of capital stock or other ownership interests of which (except
directors' qualifying shares) are at the time directly or indirectly owned by
such Person and/or another Wholly-Owned Subsidiary of such Person.
"Work Force Reduction Costs" means the actual amount of fees, costs and
expenses paid by the Company and its Subsidiaries with respect to the reduction
of their collective work force during the Fiscal Year ending on June 30, 2004;
provided, however, such amount shall not exceed an amount approved by Agent and
the Banks in their sole discretion.
1.2 Other Interpretive Provisions.
(a) The meanings of defined terms are equally applicable to
the singular and plural forms of the defined terms.
(b) Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(c) The term "including" is not limiting and means
"including without limitation."
(d) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and
including"; the words "to" and "until" each mean "to but
excluding," and the word "through" means "to and including."
(e) Unless otherwise expressly provided herein: (i)
references to agreements (including this Agreement) and other
contractual instruments shall be
18
deemed to include all subsequent amendments and other
modifications thereto, but only to the extent such amendments and
other modifications are not prohibited by the terms of any Loan
Document, and (ii) references to any statute or regulation shall
be construed as including all statutory and regulatory provisions
amending, replacing, supplementing or interpreting such statute
or regulation.
(f) This Agreement and the other Loan Documents may use
several different limitations, tests or measurements to regulate
the same or similar matters. All such limitations, tests and
measurements are cumulative and each shall be performed in
accordance with its terms.
(g) This Agreement and the other Loan Documents are the
result of negotiations among and have been reviewed by counsel to
the Agent, the Company, the Banks and the other parties thereto
and are the products of all parties. Accordingly, they shall not
be construed against the Agent or the Banks merely because of the
Agent's or Banks' involvement in their preparation.
(h) Whenever this Agreement or any other Loan Document
permits a Person to use its "discretion," the parties hereto
agree such discretion shall be exercised by such Person
reasonably and in good faith.
SECTION 2. COMMITMENTS OF THE BANKS; BORROWING, CONVERSION AND LETTER OF CREDIT
PROCEDURES.
2.1 Commitments. On and subject to the terms and conditions of this
Agreement, each of the Banks, severally and for itself alone, agrees to make
loans to, and to issue or participate in letters of credit for the account of,
the Company as follows:
2.1.1 Loan Commitment. Each Bank will make loans on a revolving basis
("Loans") from time to time until the Termination Date in such Bank's Pro
Rata Share of such aggregate amounts as the Company may request from all
Banks; provided, the Outstandings will not at any time exceed the lesser
of: (x) the Commitment Amount and (y) the Borrowing Base.
2.1.2 Reserved.
2.1.3 L/C Commitment.
(a) The Issuing Bank will issue standby letters of credit, in
each case containing such terms and conditions as are permitted by
this Agreement and are reasonably satisfactory to the Issuing Bank
(each a "Letter of Credit"), at the request of and for the account of
the Company from time to time before the date which is thirty (30)
days prior to the Termination Date and (b) as more fully set forth in
Section 2.3.2, each Bank agrees to purchase a participation in each
such Letter of Credit; provided: (i) the aggregate Stated Amount of
all Letters of Credit shall not at any time exceed $6,000,000.00 and
(ii) the Outstandings will not at any time exceed the lesser of: (x)
the Commitment Amount and (y) the Borrowing Base.
19
2.2 Loan Procedures.
2.2.1 Various Types of Loans. Each Loan shall be divided into tranches
which are, either a Base Rate Loan or a LIBOR Loan (each a "type" of Loan),
as the Company shall specify in the related notice of borrowing or
conversion pursuant to Section 2.2.2 or 2.2.3. LIBOR Loans having the same
Interest Period are sometimes called a "Group" or collectively "Groups."
Base Rate Loans and LIBOR Loans may be outstanding at the same time,
provided, not more than five (5) different Groups of LIBOR Loans shall be
outstanding at any one (1) time and no LIBOR Loans shall be made when an
Event of Default has occurred and is continuing. All borrowings,
conversions and repayments of Loans shall be effected so that each Bank
will have a pro rata share (according to its Pro Rata Share) of all types
and Groups of Loans.
2.2.2 Borrowing Procedures. The Company shall give written notice or
telephonic notice (followed immediately by written confirmation thereof) to
the Agent of each proposed borrowing not later than: (a) in the case of a
Base Rate borrowing, 11:00 A.M., Chicago time, on the proposed date of such
borrowing, and (b) in the case of a LIBOR borrowing, 11:00 A.M., Chicago
time, at least three Business Days prior to the proposed date of such
borrowing. Each such notice shall be effective upon receipt by the Agent,
shall be irrevocable, and shall specify the date, amount and type of
borrowing and, in the case of a LIBOR borrowing, the initial Interest
Period therefor. Promptly upon receipt of such notice, the Agent shall
advise each Bank thereof. Not later than 1:00 P.M., Chicago time, on the
date of a proposed borrowing, each Bank shall provide the Agent at the
office specified by the Agent with immediately available funds covering
such Bank's Pro Rata Share of such borrowing and, so long as the Agent has
not received written notice that the conditions precedent set forth in
Section 11 with respect to such borrowing have not been satisfied, the
Agent shall pay over the funds received by the Agent to the Company on the
requested borrowing date. Each borrowing shall be on a Business Day. Each
LIBOR borrowing shall be in an aggregate amount of at least $100,000 and an
integral multiple of at least $100,000.
2.2.3 Conversion and Continuation Procedures.
(a) Subject to Section 2.2.1, the Company may, upon irrevocable
written notice to the Agent in accordance with clause (b) below:
(i) elect, as of any Business Day, to convert any Loans (or
any part thereof in an aggregate amount not less than $100,000 a
higher integral multiple of $100,000) into Loans of the other
type; or
(ii) elect, as of the last day of the applicable Interest
Period, to continue any LIBOR Loans having Interest Periods
expiring on such day (or any part thereof in an aggregate amount
not less than $100,000 or a higher integral multiple of $100,000)
for a new Interest Period;
provided, after giving effect to any prepayment, conversion or
continuation, the aggregate principal amount of each Group of LIBOR
Loans shall be at least $100,000 and an integral multiple of $100,000.
20
(b) The Company shall give written or telephonic (followed
immediately by written confirmation thereof) notice to the Agent of
each proposed conversion or continuation not later than: (i) in the
case of conversion into Base Rate Loans, 11:00 A.M., Chicago time, on
the proposed date of such conversion and (ii) in the case of
conversion into or continuation of LIBOR Loans, 11:00 A.M., Chicago
time, at least three (3) Business Days prior to the proposed date of
such conversion or continuation, specifying in each case:
(w) the proposed date of conversion or continuation;
(x) the aggregate amount of Loans to be converted or
continued;
(y) the type of Loans resulting from the proposed conversion
or continuation; and
(z) in the case of conversion into, or continuation of,
LIBOR Loans, the duration of the requested Interest Period
therefor.
(c) If, upon the expiration of any Interest Period applicable to
LIBOR Loans, the Company has failed to select timely a new Interest
Period to be applicable to such LIBOR Loans, the Company shall be
deemed to have elected to convert such LIBOR Loans into Base Rate
Loans effective on the last day of such Interest Period.
(d) The Agent will promptly notify each Bank of its receipt of a
notice of conversion or continuation pursuant to this Section 2.2.3
or, if no timely notice is provided by the Company, of the details of
any automatic conversion.
(e) Any conversion of a LIBOR Loan on a day other than the last
day of an Interest Period therefor shall be subject to Section 8.4.
(f) Notwithstanding anything contained in this Agreement or any
of the other Loan Documents to the contrary, no LIBOR Loans shall be
made and no continuations of or conversions to LIBOR Loans for so long
as an Event of Default has occurred and is continuing
2.3 Letter of Credit Procedures.
2.3.1 L/C Applications. The Company shall give notice to the Agent and
the Issuing Bank of the proposed issuance of each Letter of Credit on a
Business Day which is at least three (3) Business Days (or such lesser
number of days as the Agent and the Issuing Bank shall agree in any
particular instance in their sole discretion) prior to the proposed date of
issuance of such Letter of Credit. Each such notice shall be accompanied by
an L/C Application, duly executed by the Company and in all respects
satisfactory to the Agent and the Issuing Bank, together with such other
documentation as the Agent or the Issuing Bank may request in support
thereof, it being understood that each L/C Application shall specify, among
other things, the date on which the proposed Letter of Credit is to be
issued, the
21
expiration date of such Letter of Credit (which shall not be later than the
earlier to occur of: (x) one (1) year after the date of issuance thereof
and (y) in the event LaSalle is not the only Bank hereunder, thirty (30)
days prior to the scheduled Termination Date) and whether such Letter of
Credit is to be transferable in whole or in part. So long as the Issuing
Bank has not received written notice that the conditions precedent set
forth in Section 11 with respect to the issuance of such Letter of Credit
have not been satisfied, the Issuing Bank shall issue such Letter of Credit
on the requested issuance date. The Issuing Bank shall promptly advise the
Agent of the issuance of each Letter of Credit and of any amendment
thereto, extension thereof or event or circumstance changing the amount
available for drawing thereunder. In the event of any inconsistency between
the terms of any L/C Application or documents executed pursuant thereto and
the terms of this Agreement, the terms of this Agreement shall control;
provided, that, as long as LaSalle is the Issuing Bank, the terms of the
L/C LaSalle Master Letter of Credit Agreement shall govern and control in
the event of any inconsistency between the terms of this Agreement and the
L/C LaSalle Master Letter of Credit Agreement.
2.3.2 Participations in Letters of Credit. Concurrently with the
issuance of each Letter of Credit, the Issuing Bank shall be deemed to have
sold and transferred to each other Bank, and each other Bank shall be
deemed irrevocably and unconditionally to have purchased and received from
the Issuing Bank, without recourse or warranty, an undivided interest and
participation, to the extent of such other Bank's Pro Rata Share, in such
Letter of Credit and the Company's reimbursement obligations with respect
thereto. For the purposes of this Agreement, the unparticipated portion of
each Letter of Credit shall be deemed to be the Issuing Bank's
"participation" therein. The Issuing Bank hereby agrees, upon request of
the Agent or any Bank, to deliver to the Agent or such Bank a list of all
outstanding Letters of Credit issued by the Issuing Bank, together with
such information related thereto as the Agent or such Bank may reasonably
request.
2.3.3 Reimbursement Obligations. The Company hereby unconditionally
and irrevocably agrees to reimburse the Issuing Bank for each payment or
disbursement made by the Issuing Bank under any Letter of Credit honoring
any demand for payment made by the beneficiary thereunder, in each case on
the date that such payment or disbursement is made. Any amount not
reimbursed on the date of such payment or disbursement shall bear interest
from the date of such payment or disbursement to the date that the Issuing
Bank is reimbursed by the Company therefor, payable on demand, at a rate
per annum equal to the Base Rate from time to time in effect from time to
time in effect plus, beginning on the third Business Day after receipt of
notice from the Issuing Bank of such payment or disbursement, two percent
(2%). The Issuing Bank shall notify the Company and the Agent whenever any
demand for payment is made under any Letter of Credit by the beneficiary
thereunder; provided, the failure of the Issuing Bank to so notify the
Company shall not affect the rights of the Issuing Bank or the Banks in any
manner whatsoever.
2.3.4 Limitation on Obligations of Issuing Bank. In determining
whether to pay under any Letter of Credit, the Issuing Bank shall not have
any obligation to the Company or any Bank other than to confirm that any
documents required to be delivered under such Letter of Credit appear to
have been delivered and appear to comply on their face with the
requirements of such Letter of Credit. Any action taken or omitted to be
taken by the Issuing
22
Bank under or in connection with any Letter of Credit, if taken or omitted
in the absence of gross negligence and willful misconduct, shall not impose
upon the Issuing Bank any liability to the Company or any Bank and shall
not reduce or impair the Company's reimbursement obligations set forth in
Section 2.3.3 or the obligations of the Banks pursuant to Section 2.3.5.
2.3.5 Funding by Banks to Issuing Bank. If the Issuing Bank makes any
payment or disbursement under any Letter of Credit and the Company has not
reimbursed the Issuing Bank in full for such payment or disbursement by
11:00 A.M., Chicago time, on the date of such payment or disbursement, or
if any reimbursement received by the Issuing Bank from the Company is or
must be returned or rescinded upon or during any bankruptcy or
reorganization of the Company or otherwise, each other Bank shall be
obligated to pay to the Agent for the account of the Issuing Bank, in full
or partial payment of the purchase price of its participation in such
Letter of Credit, its Pro Rata Share of such payment or disbursement (but
no such payment shall diminish the obligations of the Company under Section
2.3.3), and, upon notice from the Issuing Bank, the Agent shall promptly
notify each other Bank thereof. Each other Bank irrevocably and
unconditionally agrees to so pay to the Agent in immediately available
funds for the Issuing Bank's account the amount of such other Bank's Pro
Rata Share of such payment or disbursement. If and to the extent any Bank
shall not have made such amount available to the Agent by 2:00 P.M.,
Chicago time, on the Business Day on which such Bank receives notice from
the Agent of such payment or disbursement (it being understood that any
such notice received after noon, Chicago time, on any Business Day shall be
deemed to have been received on the next following Business Day), such Bank
agrees to pay interest on such amount to the Agent for the Issuing Bank's
account forthwith on demand, for each day from the date such amount was to
have been delivered to the Agent to the date such amount is paid, at a rate
per annum equal to: (a) for the first three (3) days after demand, the
Federal Funds Rate from time to time in effect and (b) thereafter, the Base
Rate from time to time in effect. Any Bank's failure to make available to
the Agent its Pro Rata Share of any such payment or disbursement shall not
relieve any other Bank of its obligation hereunder to make available to the
Agent such other Bank's Pro Rata Share of such payment, but no Bank shall
be responsible for the failure of any other Bank to make available to the
Agent such other Bank's Pro Rata Share of any such payment or disbursement.
2.4 Commitments Several. The failure of any Bank to make a requested Loan
on any date shall not relieve any other Bank of its obligation (if any) to make
a Loan on such date, but no Bank shall be responsible for the failure of any
other Bank to make any Loan to be made by such other Bank.
2.5 Certain Conditions. Notwithstanding any other provision of this
Agreement, no Bank shall have an obligation to make any Loan, or to permit the
continuation of or any conversion into any LIBOR Loan, and the Issuing Bank
shall not have any obligation to issue any Letter of Credit, if: (i) an Event of
Default or Unmatured Event of Default exists or (ii) the last day of the
Interest Period for such Loan would be on or past the Termination Date.
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SECTION 3. NOTES EVIDENCING LOANS.
3.1 Notes. The Loans of each Bank shall be evidenced by a promissory note
(each a "Note") substantially in the form set forth in Exhibit A, with
appropriate insertions, payable to the order of such Bank in a face principal
amount equal to the sum of such Bank's Pro Rata Share of the Commitment Amount
and state that each Loan of such Bank shall be paid in full on the Termination
Date.
3.2 Recordkeeping. Each Bank shall record in its records, or at its option
on the schedule attached to its Note, the date and amount of each Loan made by
such Bank, each repayment or conversion thereof and, in the case of each LIBOR
Loan, the dates on which each Interest Period for such Loan shall begin and end.
The aggregate unpaid principal amount so recorded shall be rebuttable
presumptive evidence of the principal amount owing and unpaid on such Note. The
failure to so record any such amount or any error in so recording any such
amount shall not, however, limit or otherwise affect the obligations of the
Company hereunder or under any Note to repay the principal amount of the Loans
evidenced by such Note together with all interest accruing thereon.
SECTION 4. INTEREST.
4.1 Interest Rates. The Company promises to pay interest on the unpaid
principal amount of each Loan for the period commencing on the date of such Loan
until (but not including such date as) such Loan is paid in full as follows:
(a) at all times while such Loan is a Base Rate Loan, at a
rate per annum equal to the sum of the Base Rate from time to
time in effect; and
(b) at all times while such Loan is a LIBOR Loan, at a rate
per annum equal to the sum of LIBOR applicable to the Interest
Period for such Loan plus the LIBOR Margin from time to time in
effect;
provided, at any time an Event of Default exists, if requested by the Required
Banks, the interest rate applicable to each Loan shall be equal to the interest
rate applicable to Base Rate Loans plus three percent (3%), all of which shall
be payable on demand. Additionally, at any time any Event of Default exist, all
other amounts, fees and sums owing to the Agent and the Banks under this
Agreement and the other Loan Documents, if requested by the Required Banks and
to the extent permitted under applicable law, shall bear interest at a rate per
annum equal to the sum of the Base Rate from time to time in effect, plus two
percent (2%), all of which shall be payable on demand.
4.2 Interest Payment Dates. Accrued interest on each Base Rate Loan shall
be payable in arrears on the last day of each calendar month and on the
Termination Date. Accrued interest on each LIBOR Loan shall be payable on the
last day of each Interest Period relating to such Loan and on the Termination
Date. On and after the Termination Date, accrued interest on all Loans shall be
payable on demand.
4.3 Setting and Notice of LIBOR. The applicable LIBOR for each Interest
Period shall be determined by the Agent, and notice thereof shall be given by
the Agent promptly to the Company
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and each Bank. Each determination of the applicable LIBOR by the Agent shall be
conclusive and binding upon the parties hereto, in the absence of demonstrable
error. The Agent shall, upon written request of the Company or any Bank, deliver
to the Company or such Bank a statement showing the computations used by the
Agent in determining any applicable LIBOR hereunder.
4.4 Computation of Interest. Interest on each Loan shall be computed for
the actual number of days elapsed (including the day a Loan is made but
excluding the day it is repaid) on the basis of a year of three hundred sixty
(360) days. The applicable interest rate for each Base Rate Loan shall change
simultaneously with each change in the Base Rate.
4.5 Maximum Rate of Interest. Anything herein to the contrary
notwithstanding, the obligations of the Company hereunder and under the Notes
shall be subject to the limitation that payments of interest shall not be
required, for any period for which interest in computed hereunder, to the extent
(but only to the extent) that contracting for or receiving such payment by the
respective Bank would be contrary to the provisions of any law applicable to
such Bank limiting the highest rate of interest which may be lawfully contracted
for, charged or received by such Bank, and in such event the Company shall pay
such Bank interest at the highest rate permitted by applicable law.
SECTION 5. FEES.
5.1 Commitment Fee. The Company agrees to pay to the Agent for the account
of each Bank a commitment fee, for the period from the Closing Date to the
Termination Date, at the Commitment Fee Rate in effect from time to time of such
Bank's Pro Rata Share (as adjusted from time to time) of the unused amount of
the Commitment Amount; provided, if requested by the Required Banks, the rate
applicable shall be increased by two percent (2%) at any time that an Event of
Default exists. For purposes of calculating usage under this Section, the
Commitment Amount shall be deemed used to the extent of the aggregate principal
amount of all outstanding Loans plus the Stated Amount of all Letters of Credit.
Such commitment fee shall be payable in arrears on the last day of each calendar
quarter and on the Termination Date for any period then ending for which such
commitment fee shall not have previously been paid. The commitment fee shall be
computed for the actual number of days elapsed on the basis of a year of three
hundred sixty (360) days.
5.2 Letter of Credit Fees.
(a) The Company agrees to pay to the Agent for the account
of each Bank a letter of credit fee for each Letter of Credit
equal to the L/C Fee Rate in effect from time to time of such
Bank's Pro Rata Share (as adjusted from time to time) of the
undrawn amount of such Letter of Credit (computed for the actual
number of days elapsed on the basis of a year of three hundred
sixty (360) days); provided, if requested by the Required Banks,
the rate applicable to each Letter of Credit shall be increased
by two percent (2%) at any time that an Event of Default exists.
Such letter of credit fee shall be payable in arrears on the last
day of each calendar quarter and on the Termination Date (or such
later date on which such Letter of Credit expires or is
terminated) for the period from the date of the issuance of each
Letter of Credit (or the last day on which the letter of credit
fee was paid with respect thereto) to the date such payment is
due or, if earlier, the date on which such Letter of Credit
expired or was terminated.
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(b) In addition, with respect to each Letter of Credit, the
Company agrees to pay to the Issuing Bank, for its own account:
(i) such fees and expenses as the Issuing Bank customarily
requires in connection with the issuance, negotiation, processing
and/or administration of letters of credit in similar situations
and (ii) a letter of credit fronting fee in the amount and at the
times agreed to by the Company and the Issuing Bank.
5.3 Upfront Fees. The Company agrees to pay to the Agent for the account of
each Bank on the Closing Date an upfront fee in the amount of $230,000 (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), which fee
shall be deemed to be fully-earned and non-refundable on the Closing Date.
5.4 Agent's Fees. The Company agrees to pay to the Agent such agent's fees
as are mutually agreed to from time to time by the Company and the Agent.
SECTION 6. REDUCTION OR TERMINATION OF THE REVOLVING COMMITMENT AMOUNT;
PREPAYMENTS.
6.1 Reduction or Termination of the Commitment Amount.
6.1.1 Voluntary Reduction or Termination of the Commitment Amount. The
Company may from time to time on at least five (5) Business Days prior
written notice received by the Agent (which shall promptly advise each Bank
thereof) permanently reduce the Commitment Amount to an amount not less
than the Outstandings. Any such reduction shall be in an amount not less
than $1,000,000 or a higher integral multiple of $1,000,000. Concurrently
with any reduction of the Commitment Amount to zero (0), the Company shall
pay all interest on the Loans, all commitment fees and all letter of credit
fees and shall Cash Collateralize in full all obligations arising with
respect to the Letters of Credit.
6.1.2 Mandatory Reductions of Commitment Amount. On the date of any
Mandatory Prepayment Event, the Commitment Amount shall be permanently
reduced by an amount (if any) equal to the Designated Proceeds of such
Mandatory Prepayment Event.
6.1.3 All Reductions of the Commitment Amount. All reductions of the
Commitment Amount shall reduce the Commitments pro rata among the Banks
according to their respective Pro Rata Shares.
6.2 Prepayments.
6.2.1 Voluntary Prepayments. The Company may from time to time prepay
the Loans in whole or in part; provided, the Company shall give the Agent
(which shall promptly advise each Bank) notice thereof not later than 11:00
A.M., Chicago time, on the day of such prepayment (which shall be a
Business Day), specifying the Loans to be prepaid and the date and amount
of prepayment. Any such partial prepayment shall be in an amount equal to
$100,000 or a higher integral multiple of $100,000. Any amount of Loans
which are voluntarily prepaid may be reborrowed, subject to the conditions
contained herein and in the other Loan Documents for such borrowings
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6.2.2 Mandatory Prepayments.
(a) The Company shall make a prepayment of the Loans upon the
occurrence of any of the following (each a "Mandatory Prepayment
Event") at the following times and in the following amounts (such
applicable amounts being referred to as "Designated Proceeds"):
(i) concurrently with the receipt by the Company or any
Subsidiary of any Net Cash Proceeds from any Asset Sale, in an
amount equal to one hundred percent (100%) of such Net Cash
Proceeds; provided, however, in the event that, at the time of
any such sale, no Event of Default shall exist or shall result
from such sale, the Company may retain up to $500,000 in the
aggregate of the net proceeds resulting from all such Asset Sales
which have occurred since the Closing Date;
(ii) concurrently with the receipt by the Company or any
Subsidiary of any Net Cash Proceeds from any issuance of any Debt
of the Company or any Subsidiary (excluding the proceeds of Debt
permitted by clauses (a) through (i) of Section 10.7 or Debt
which constitutes the Replacement Long-Term Debt), in an amount
equal to one hundred percent (100%) of such Net Cash Proceeds;
and
(iii) concurrently upon receipt by the Company or any
Subsidiary of the Company of any Property Loss Proceeds, in an
amount equal to such Property Loss Proceeds; provided, the
recipient (other than Agent) of any payment which constitutes
Property Loss Proceeds may reinvest such payment within one
hundred eighty (180) days, in replacement assets comparable to
the assets giving rise to such payment; provided, further, if the
Company or its applicable Subsidiary does not intend to reinvest
such payment, or if the time period set forth in this sentence
expires without such Person having reinvested such payment, the
Company shall prepay the Loans in an amount equal to such payment
(iv) concurrently with the receipt by the Company or any
Subsidiary of the Company (or any Joint Venture) of any proceeds
of or relating to any Existing Claim, whether as a result of any
award, settlement, order, judgment, liquidation or otherwise, an
amount equal to one hundred percent (100%) of such proceeds (or,
if received by such Joint Venture, in an amount at least equal to
the Company's ownership percentage of such proceeds when, but
only when, distributed by such Joint Venture to the Company or
any Subsidiary of the Company).
(b) If on any day the Outstandings exceed the Borrowing Base, the
Company shall immediately prepay Loans and/or Cash Collateralize the
outstanding Letters of Credit, or do a combination of the foregoing,
in an amount sufficient to eliminate such excess.
27
(c) If on any day on which the Commitment Amount is reduced
pursuant to Section 6.1.2 the Outstandings exceed the Commitment
Amount, the Company shall immediately prepay Loans or Cash
Collateralize the outstanding Letters of Credit, or do a combination
of the foregoing, in an amount sufficient to eliminate such excess.
6.3 Miscellaneous Prepayment Provisions. Any partial prepayment of a Group
of LIBOR Loans shall be subject to the proviso to subsection 2.2.3(a). Any
prepayment of a LIBOR Loan on a day other than the last day of an Interest
Period therefor shall include interest on the principal amount being repaid and
shall be subject to Section 8.4.
SECTION 7. MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES.
7.1 Making of Payments. All payments of principal of or interest on the
Notes, and of all fees, shall be made by the Company to the Agent in immediately
available funds at the office specified by the Agent not later than noon,
Chicago time, on the date due; and funds received after that hour shall be
deemed to have been received by the Agent on the following Business Day.
Provided that such Bank has made all payments required to be made by it under
this Agreement and the other Loan Documents, the Agent shall promptly remit to
each Bank its share of all such payments received in collected funds by the
Agent for the account of such Bank. All payments under Section 8.1 shall be made
by the Company directly to the Bank entitled thereto.
7.2 Application of Certain Payments. Each payment of principal shall be
applied to such Loans as the Company shall direct by notice to be received by
the Agent on or before the date of such payment or, in the absence of such
notice, as the Agent shall determine in its discretion. Concurrently with each
remittance to any Bank of its share of any such payment, the Agent shall advise
such Bank as to the application of such payment.
7.3 Due Date Extension. If any payment of principal or interest with
respect to any of the Loans, or of any fees, falls due on a day which is not a
Business Day, then such due date shall be extended to the immediately following
Business Day (unless, in the case of a LIBOR Loan, such immediately following
Business Day is the first Business Day of a calendar month, in which case such
due date shall be the immediately preceding Business Day) and, in the case of
principal, additional interest shall accrue and be payable for the period of any
such extension.
7.4 Setoff. The Company agrees that the Agent and each Bank have all rights
of set-off and bankers' lien provided by applicable law, and in addition
thereto, the Company agrees that at any time any Event of Default exists, the
Agent and each Bank may apply to the payment of any obligations of the Company
hereunder, whether or not then due, any and all balances, credits, deposits,
accounts or moneys of the Company then or thereafter with the Agent or such
Bank.
7.5 Proration of Payments. If any Bank shall obtain any payment or other
recovery (whether voluntary, involuntary, by application of offset or otherwise,
but excluding any payment pursuant to Section 8.7 or 14.9 and payments of
interest on any Affected Loan) on account of principal of or interest on any
Loan (or on account of its participation in any Letter of Credit) in excess of
its pro rata share of payments and other recoveries obtained by all Banks on
account of principal of and interest on the Loans (or such participation) then
held by them, such Bank shall purchase from the other Banks such participations
in the Loans (or sub-participations in Letters of
28
Credit) held by them as shall be necessary to cause such purchasing Bank to
share the excess payment or other recovery ratably with each of them; provided,
if all or any portion of the excess payment or other recovery is thereafter
recovered from such purchasing Bank, the purchase shall be rescinded and the
purchase price restored to the extent of such recovery.
7.6 Taxes. All payments of principal of, and interest on, the Loans and all
other amounts payable hereunder shall be made free and clear of and without
deduction for any present or future income, excise, stamp or franchise taxes and
other taxes, fees, duties, withholdings or other charges of any nature
whatsoever imposed by any taxing authority, excluding franchise taxes and taxes
imposed on or measured by any Bank's net income or receipts (all non-excluded
items being called "Taxes"). If any withholding or deduction from any payment to
be made by the Company hereunder is required in respect of any Taxes pursuant to
any applicable law, rule or regulation, then the Company will:
(a) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(b) promptly forward to the Agent an official receipt or
other documentation satisfactory to the Agent evidencing such
payment to such authority; and
(c) pay to the Agent for the account of the Banks such
additional amount as is necessary to ensure that the net amount
actually received by each Bank will equal the full amount such
Bank would have received had no such withholding or deduction
been required.
Moreover, if any Taxes are directly asserted against the Agent or any Bank with
respect to any payment received by the Agent or such Bank hereunder, the Agent
or such Bank may pay such Taxes and the Company will promptly pay such
additional amounts (including any penalty, interest or expense) as is necessary
in order that the net amount received by such Person after the payment of such
Taxes (including any Taxes on such additional amount) shall equal the amount
such Person would have received had such Taxes not been asserted.
If the Company fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to the Agent, for the account of the respective
Banks, the required receipts or other required documentary evidence, the Company
shall indemnify the Banks for any incremental Taxes, interest or penalties that
may become payable by any Bank as a result of any such failure. For purposes of
this Section 7.6, a distribution hereunder by the Agent or any Bank to or for
the account of any Bank shall be deemed a payment by the Company.
Each Bank that: (a) is organized under the laws of a jurisdiction other
than the United States of America or a state thereof and (b)(i) is a party
hereto on the Closing Date or (ii) becomes an assignee of an interest under this
Agreement under Section 14.9.1 after the Closing Date (unless such Bank was
already a Bank hereunder immediately prior to such assignment) shall execute and
deliver to the Company and the Agent one or more (as the Company or the Agent
may reasonably request) United States Internal Revenue Service Form W8EC or Form
W8BEN or such other forms or documents, appropriately completed, as may be
applicable to establish that such Bank is exempt
29
from withholding or deduction of Taxes. The Company shall not be required to pay
additional amounts to any Bank pursuant to this Section 7.6 to the extent that
the obligation to pay such additional amounts would not have arisen but for the
failure of such Bank to comply with this paragraph.
SECTION 8. INCREASED COSTS; SPECIAL PROVISIONS FOR EURODOLLAR LOANS.
8.1 Increased Costs.
(a) If, after the date hereof, the adoption of, or any
change in, any applicable law, rule or regulation, or any change
in the interpretation or administration of any applicable law,
rule or regulation by any governmental authority, central bank or
comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or any LIBOR
Office of such Bank) with any request or directive (whether or
not having the force of law) of any such authority, central bank
or comparable agency:
(i) shall subject any Bank (or any LIBOR Office of such
Bank) to any tax, duty or other charge with respect to its
LIBOR Loans, its Note or its obligation to make LIBOR Loans,
or shall change the basis of taxation of payments to any
Bank of the principal of or interest on its LIBOR Loans or
any other amounts due under this Agreement in respect of its
LIBOR Loans or its obligation to make LIBOR Loans (except
for changes in the rate of tax on the overall net income of
such Bank or its LIBOR Office imposed by the jurisdiction in
which such Bank's principal executive office or LIBOR Office
is located);
(ii) shall impose, modify or deem applicable any
reserve (including any reserve imposed by the FRB, but
excluding any reserve included in the determination of
interest rates pursuant to Section 4), special deposit or
similar requirement against assets of, deposits with or for
the account of, or credit extended by any Bank (or any LIBOR
Office of such Bank); or
(iii) shall impose on any Bank (or its LIBOR Office)
any other condition affecting its LIBOR Loans, its Note or
its obligation to make LIBOR Loans;
and the result of any of the foregoing is to increase the cost to
(or to impose a cost on) such Bank (or any LIBOR Office of such
Bank) of making or maintaining any LIBOR Loan, or to reduce the
amount of any sum received or receivable by such Bank (or its
LIBOR Office) under this Agreement or under its Note with respect
thereto, then upon demand by such Bank (which demand shall be
accompanied by a statement setting forth the basis for such
demand and a calculation of the amount thereof in reasonable
detail, a copy of which shall be furnished to the Agent), the
30
Company shall pay directly to such Bank such additional amount as
will compensate such Bank for such increased cost or such
reduction.
(b) If any Bank shall reasonably determine that any change
in, or the adoption or phase-in of, any applicable law, rule or
regulation regarding capital adequacy, or any change in the
interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any
Bank or any Person controlling such Bank with any request or
directive regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of
return on such Bank's or such controlling Person's capital as a
consequence of such Bank's obligations hereunder or under any
Letter of Credit to a level below that which such Bank or such
controlling Person could have achieved but for such change,
adoption, phase-in or compliance (taking into consideration such
Bank's or such controlling Person's policies with respect to
capital adequacy) by an amount deemed by such Bank or such
controlling Person to be material, then from time to time, upon
demand by such Bank (which demand shall be accompanied by a
statement setting forth the basis for such demand and a
calculation of the amount thereof in reasonable detail, a copy of
which shall be furnished to the Agent), the Company shall pay to
such Bank such additional amount as will compensate such Bank or
such controlling Person for such reduction.
8.2 Basis for Determining Interest Rate Inadequate or Unfair. If with
respect to any Interest Period:
(a) deposits in Dollars (in the applicable amounts) are not
being offered to the Agent in the interbank eurodollar market for
such Interest Period, or the Agent otherwise reasonably
determines (which determination shall be binding and conclusive
on the Company) that by reason of circumstances affecting the
interbank eurodollar market adequate and reasonable means do not
exist for ascertaining the applicable LIBOR; or
(b) Banks having aggregate Pro Rata Shares of forty percent
(40%) or more advise the Agent that LIBOR as determined by the
Agent will not adequately and fairly reflect the cost to such
Banks of maintaining or funding LIBOR Loans for such Interest
Period (taking into account any amount to which such Banks may be
entitled under Section 8.1) or that the making or funding of
LIBOR Loans has become impracticable as a result of an event
occurring after the date of this Agreement which in the opinion
of such Banks materially affects such Loans;
then the Agent shall promptly notify the other parties thereof and, so long as
such circumstances shall continue: (i) no Bank shall be under any obligation to
make or convert into LIBOR Loans and (ii) on the last day of the current
Interest Period for each LIBOR Loan, such Loan shall, unless then repaid in
full, automatically convert to a Base Rate Loan.
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8.3 Changes in Law Rendering LIBOR Loans Unlawful. If any change in, or the
adoption of any new, law, rule or regulation, or any change in the
interpretation of any applicable law, rule or regulation by any governmental or
other regulatory body charged with the administration thereof, should make it
(or in the good faith judgment of any Bank cause a substantial question as to
whether it is) unlawful for any Bank to make, maintain or fund LIBOR Loans, then
such Bank shall promptly notify each of the other parties hereto and, so long as
such circumstances shall continue: (a) such Bank shall have no obligation to
make or convert into LIBOR Loans (but shall make Base Rate Loans concurrently
with the making of or conversion into LIBOR Loans by the Banks which are not so
affected, in each case in an amount equal to the amount of LIBOR Loans which
would be made or converted into by such Bank at such time in the absence of such
circumstances) and (b) on the last day of the current Interest Period for each
LIBOR Loan of such Bank (or, in any event, on such earlier date as may be
required by the relevant law, regulation or interpretation), such LIBOR Loan
shall, unless then repaid in full, automatically convert to a Base Rate Loan.
Each Base Rate Loan made by a Bank which, but for the circumstances described in
the foregoing sentence, would be a LIBOR Loan (an "Affected Loan") shall remain
outstanding for the same period as the Group of LIBOR Loans of which such
Affected Loan would be a part absent such circumstances.
8.4 Funding Losses. The Company hereby agrees that upon demand by any Bank
(which demand shall be accompanied by a statement setting forth the basis for
the amount being claimed, a copy of which shall be furnished to the Agent), the
Company will indemnify such Bank against any net loss or expense which such Bank
may sustain or incur (including any net loss or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such Bank
to fund or maintain any LIBOR Loan), as reasonably determined by such Bank, as a
result of: (a) any payment, prepayment or conversion of any LIBOR Loan of such
Bank on a date other than the last day of an Interest Period for such Loan
(including any conversion pursuant to Section 8.3) or (b) any failure of the
Company to borrow, prepay, convert or continue any Loan on a date specified
therefor in a notice of borrowing, prepayment, conversion or continuation
pursuant to this Agreement. For this purpose, all notices to the Agent pursuant
to this Agreement shall be deemed to be irrevocable.
8.5 Right of Banks to Fund through Other Offices. Each Bank may, if it so
elects, fulfill its commitment as to any LIBOR Loan by causing a foreign branch
or Affiliate of such Bank to make such Loan; provided, in such event for the
purposes of this Agreement such Loan shall be deemed to have been made by such
Bank and the obligation of the Company to repay such Loan shall nevertheless be
to such Bank and shall be deemed held by it, to the extent of such Loan, for the
account of such branch or Affiliate.
8.6 Discretion of Banks as to Manner of Funding. Notwithstanding any
provision of this Agreement to the contrary, each Bank shall be entitled to fund
and maintain its funding of all or any part of its Loans in any manner it sees
fit, it being understood, however, that for the purposes of this Agreement all
determinations hereunder shall be made as if such Bank had actually funded and
maintained each LIBOR Loan during each Interest Period for such Loan through the
purchase of deposits having a maturity corresponding to such Interest Period and
bearing an interest rate equal to the LIBOR for such Interest Period.
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8.7 Mitigation of Circumstances; Replacement of Banks.
(a) Each Bank shall promptly notify the Company and the
Agent of any event of which it has knowledge which will result
in, and will use reasonable commercial efforts available to it
(and not, in such Bank's sole judgment, otherwise disadvantageous
to such Bank) to mitigate or avoid: (i) any obligation by the
Company to pay any amount pursuant to Section 7.6 or 8.1 or (ii)
the occurrence of any circumstances described in Section 8.2 or
8.3 (and, if any Bank has given notice of any such event
described in clause (i) or (ii) above and thereafter such event
ceases to exist, such Bank shall promptly so notify the Company
and the Agent). Without limiting the foregoing, each Bank will
designate a different funding office if such designation will
avoid (or reduce the cost to the Company of) any event described
in clause (i) or (ii) of the preceding sentence and such
designation will not, in such Bank's sole judgment, be otherwise
disadvantageous to such Bank.
(b) If the Company becomes obligated to pay additional
amounts to any Bank pursuant to Section 7.6 or 8.1, or any Bank
gives notice of the occurrence of any circumstances described in
Section 8.2 or 8.3, the Company may designate another bank which
is acceptable to the Agent and the Issuing Bank in their
reasonable discretion (such other bank being called a
"Replacement Bank") to purchase the Loans of such Bank and such
Bank's rights hereunder, without recourse to or warranty by, or
expense to, such Bank, for a purchase price equal to the
outstanding principal amount of the Loans payable to such Bank
plus any accrued but unpaid interest on such Loans and all
accrued but unpaid fees owed to such Bank and any other amounts
payable to such Bank under this Agreement, and to assume all the
obligations of such Bank hereunder, and, upon such purchase and
assumption (pursuant to an Assignment Agreement), such Bank shall
no longer be a party hereto or have any rights hereunder (other
than rights with respect to indemnities and similar rights
applicable to such Bank prior to the date of such purchase and
assumption) and shall be relieved from all obligations to the
Company hereunder, and the Replacement Bank shall succeed to the
rights and obligations of such Bank hereunder.
8.8 Conclusiveness of Statements; Survival of Provisions. Determinations
and statements of any Bank pursuant to Section 8.1, 8.2, 8.3 or 8.4 shall be
conclusive absent demonstrable error. Banks may use reasonable averaging and
attribution methods in determining compensation under Sections 8.1 and 8.4, and
the provisions of such Sections shall survive repayment of the Loans,
cancellation of the Notes, expiration or termination of the Letters of Credit
and termination of this Agreement.
SECTION 9. WARRANTIES.
To induce the Agent and the Banks to enter into this Agreement and to
induce the Banks to make Loans and issue and participate in Letters of Credit
hereunder, the Company warrants to the Agent and the Banks that:
33
9.1 Organization. The Company is a corporation validly existing and in good
standing under the laws of the State of Montana; each Subsidiary is validly
existing and in good standing under the laws of the jurisdiction of its
organization; and each of the Company and each Subsidiary is duly qualified to
do business in each jurisdiction where, because of the nature of its activities
or properties, such qualification is required, except for such jurisdictions
where the failure to so qualify would not have a Material Adverse Effect.
9.2 Authorization; No Conflict. Each of the Company and each other Loan
Party is duly authorized to execute and deliver each Loan Document to which it
is a party, the Company is duly authorized to borrow monies hereunder and each
of the Company and each other Loan Party is duly authorized to perform its
obligations under each Loan Document to which it is a party. The execution,
delivery and performance by the Company of this Agreement and by each of the
Company and each other Loan Party of each Loan Document to which it is a party,
and the borrowings by the Company hereunder, do not and will not: (a) require
any consent or approval of any governmental agency or authority (other than any
consent or approval which has been obtained and is in full force and effect),
(b) conflict with: (i) any provision of law, (ii) the charter, bylaws or other
organizational documents of the Company or any other Loan Party or (iii) any
agreement, indenture, instrument or other document, or any judgment, order or
decree, which is binding upon the Company or any other Loan Party or any of
their respective properties or (c) require, or result in, the creation or
imposition of any Lien on any asset of the Company, any Subsidiary or any other
Loan Party (other than Liens in favor of the Agent created pursuant to the
Collateral Documents and, prior to the Refinancing Trigger Date and in no event
thereafter, Liens securing only the Pari Passu Debt).
9.3 Validity and Binding Nature. Each of this Agreement and each other Loan
Document to which the Company or any other Loan Party is a party is the legal,
valid and binding obligation of such Person, enforceable against such Person in
accordance with its terms, subject to bankruptcy, insolvency and similar laws
affecting the enforceability of creditors' rights generally and to general
principles of equity.
9.4 Financial Condition. The audited consolidated financial statements of
the Company and its Subsidiaries as at June 30, 2003, copies of each of which
have been delivered to each Bank, were prepared in accordance with GAAP
(subject, in the case of such unaudited statements, to the absence of footnotes
and to normal year-end adjustments) and present fairly the consolidated
financial condition of the Company and its Subsidiaries as at such dates and the
results of their operations for the periods then ended.
9.5 No Material Adverse Change. Except as set forth on Schedule 9.5, since
June 30, 2003, there has been no material adverse change in the financial
condition, operations, assets, business, properties or prospects of the Company
and its Subsidiaries taken as a whole.
9.6 Litigation and Contingent Liabilities. No litigation (including
derivative actions), arbitration proceeding or governmental investigation or
proceeding is pending or, to the Company's knowledge, threatened against the
Company or any Subsidiary which might reasonably be expected to have a Material
Adverse Effect, except as set forth in Schedule 9.6. Other than any liability
incident to such litigation or proceedings, neither the Company nor any
Subsidiary has any material contingent liabilities not listed on Schedule 9.6 or
permitted by Section 10.7.
34
9.7 Ownership of Properties; Liens. Each of the Company and each Subsidiary
owns good title and, in the case of real property, good and marketable fee,
leasehold or easement (as applicable) title to all of its properties and assets,
real and personal, tangible and intangible, of any nature whatsoever (including
patents, trademarks, trade names, service marks and copyrights), free and clear
of all Liens, charges and claims (including infringement claims with respect to
patents, trademarks, service marks, copyrights and the like) except as permitted
by Section 10.8.
9.8 Subsidiaries. As of the Closing Date, the Company has no Subsidiaries
other than those listed on Schedule 9.8.
9.9 Pension Plans.
(a) During the period of twelve (12) consecutive months
prior to the date of the execution and delivery of this Agreement
or the making of any Loan or the issuance of any Letter of
Credit, (i) no steps have been taken to terminate any Pension
Plan and (ii) no contribution failure has occurred with respect
to any Pension Plan sufficient to give rise to a Lien under
Section 302(f) of ERISA. No condition exists or event or
transaction has occurred with respect to any Pension Plan which
could result in the incurrence by the Company of any material
liability, fine or penalty.
(b) All contributions (if any) have been made to any
Multiemployer Pension Plan that are required to be made by the
Company or any other member of the Controlled Group under the
terms of the plan or of any collective bargaining agreement or by
applicable law; neither the Company nor any member of the
Controlled Group has withdrawn or partially withdrawn from any
Multiemployer Pension Plan, incurred any withdrawal liability
with respect to any such plan or received notice of any claim or
demand for withdrawal liability or partial withdrawal liability
from any such plan, and no condition has occurred which, if
continued, might result in a withdrawal or partial withdrawal
from any such plan; and neither the Company nor any member of the
Controlled Group has received any notice that any Multiemployer
Pension Plan is in reorganization, that increased contributions
may be required to avoid a reduction in plan benefits or the
imposition of any excise tax, that any such plan is or has been
funded at a rate less than that required under Section 412 of the
Code, that any such plan is or may be terminated, or that any
such plan is or may become insolvent.
9.10 Investment Company Act. Neither the Company nor any Subsidiary is an
"investment company" or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940.
9.11 Public Utility Holding Company Act. Neither the Company nor any
Subsidiary is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding Company
Act of 1935.
35
9.12 Regulation U. The Company is not engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying Margin Stock.
9.13 Taxes. Each of the Company and each Subsidiary has filed all tax
returns and reports required by law to have been filed by it and has paid all
taxes and governmental charges thereby shown to be owing, except any such taxes
or charges which are being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall have
been set aside on its books.
9.14 Solvency, etc. On the Closing Date, and immediately prior to and after
giving effect to the issuance of each Letter of Credit and each borrowing
hereunder and the use of the proceeds thereof: (a) the Company's and each other
Loan Party's assets will exceed its liabilities and (b) the Company and each
other Loan Party will be Solvent.
9.15 Environmental Matters.
(a) No Violations. Except as set forth on Schedule 9.15,
neither the Company nor any Subsidiary, nor any operator of the
Company's or any Subsidiary's properties, is in violation, or
alleged violation, of any judgment, decree, order, law, permit,
license, rule or regulation pertaining to Environmental Matters,
including those arising under the Resource Conservation and
Recovery Act ("RCRA"), the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), the Superfund
Amendments and Reauthorization Act of 1986 or any other
Environmental Law which: (i) in any single case, requires
expenditures in any three (3) year period of $50,000 or more by
the Company and its Subsidiaries in penalties and/or for
investigative, removal or remedial actions or (ii) individually
or in the aggregate otherwise might reasonably be expected to
have a Material Adverse Effect.
(b) Notices. Except as set forth on Schedule 9.15 and for
matters arising after the Closing Date, in each case none of
which could singly or in the aggregate be expected to have a
Material Adverse Effect, neither the Company nor any Subsidiary
has received notice from any third party, including any Federal,
state or local governmental authority: (i) that any one (1) of
them has been identified by the U.S. Environmental Protection
Agency as a potentially responsible party under CERCLA with
respect to a site listed on the National Priorities List, 40
C.F.R. Part 000 Xxxxxxxx X; (ii) that any hazardous waste, as
defined by 42 U.S.C.ss.6903(5), any hazardous substance as
defined by 42 U.S.C.ss.9601(14), any pollutant or contaminant as
defined by 42 U.S.C.ss.9601(33) or any toxic substance, oil or
hazardous material or other chemical or substance regulated by
any Environmental Law (all of the foregoing, "Hazardous
Substances") which any one (1) of them has generated, transported
or disposed of has been found at any site at which a Federal,
state or local agency or other third party has conducted a
remedial investigation, removal or other response action pursuant
to any Environmental Law; (iii) that the Company or any
Subsidiary must conduct a remedial investigation, removal,
36
response action or other activity pursuant to any Environmental
Law; or (iv) of any Environmental Claim.
(c) Handling of Hazardous Substances. Except as set forth on
Schedule 9.15: (i) no portion of the real property or other
assets of the Company or any Subsidiary has been used for the
handling, processing, storage or disposal of Hazardous Substances
except in accordance in all material respects with applicable
Environmental Laws; and no underground tank or other underground
storage receptacle for Hazardous Substances is located on such
properties; (ii) in the course of any activities conducted by the
Company, any Subsidiary or the operators of any real property of
the Company or any Subsidiary, no Hazardous Substances have been
generated or are being used on such properties except in
accordance in all material respects with applicable Environmental
Laws; (iii) there have been no unpermitted or unauthorized
Releases or threatened Releases of Hazardous Substances on, upon,
into or from any real property or other assets of the Company or
any Subsidiary, which Releases singly or in the aggregate might
reasonably be expected to have a Material Adverse Effect on the
value of such real property or assets; (iv) there have been no
Releases on, upon, from or into any real property in the vicinity
of the real property or other assets of the Company or any
Subsidiary which, through soil or groundwater contamination, may
have come to be located on, and which might reasonably be
expected to have a Material Adverse Effect on the value of, the
real property or other assets of the Company or any Subsidiary;
and (v) any Hazardous Substances generated by the Company and its
Subsidiaries have been transported offsite only by properly
licensed carriers and delivered, to the knowledge of the Company
and its Subsidiaries, only to treatment or disposal facilities
maintaining valid permits as required under applicable
Environmental Laws, which transporters and facilities, to the
knowledge of the Company and its Subsidiaries, have been and are
operating in compliance in all material respects with such
permits and applicable Environmental Laws.
9.16 Reserved.
9.17 Insurance. Set forth on Schedule 9.17 is a complete and accurate
summary of the property and casualty insurance program of the Company and its
Subsidiaries as of the Closing Date (including the names of all insurers, policy
numbers, expiration dates, amounts and types of coverage, annual premiums,
deductibles, self-insured retention, and a description in reasonable detail of
any self-insurance program, retrospective rating plan, fronting arrangement or
other risk assumption arrangement involving the Company or any Subsidiary).
9.18 Real Property. Set forth on Schedule 9.18 is a complete and accurate
list, as of the Closing Date, of the addresses of all real property held through
fee ownership, leasehold or easement title by the Company or any Subsidiary,
together with, in the case of leased property, the name and mailing address of
the lessor of such property.
9.19 Information. All information heretofore or contemporaneously herewith
furnished in writing by the Company or any other Loan Party to the Agent or any
Bank for purposes of or in connection with this Agreement and the transactions
contemplated hereby is, and all written
37
information hereafter furnished by or on behalf of the Company or any Subsidiary
to the Agent or any Bank pursuant hereto or in connection herewith will be, true
and accurate in every material respect on the date as of which such information
is dated or certified, and none of such information is or will be incomplete by
omitting to state any material fact necessary to make such information not
misleading in light of the circumstances under which made (it being recognized
by the Agent and the Banks that any projections and forecasts provided by the
Company are based on good faith estimates and assumptions believed by the
Company to be reasonable as of the date of the applicable projections or
assumptions and that actual results during the period or periods covered by any
such projections and forecasts may differ from projected or forecasted results).
9.20 Intellectual Property. The Company and each Subsidiary owns and
possesses or has a license or other right to use all patents, patent rights,
trademarks, trademark rights, trade names, trade name rights, service marks,
service xxxx rights and copyrights as are necessary for the conduct of the
business of the Company and its Subsidiaries, without any infringement upon
rights of others which could reasonably be expected to have a Material Adverse
Effect.
9.21 Burdensome Obligations. Neither the Company nor any Subsidiary is a
party to any agreement or contract or subject to any corporate or partnership
restriction which might reasonably be expected to have a Material Adverse
Effect.
9.22 Labor Matters. Except as set forth on Schedule 9.22, neither the
Company nor any Subsidiary is subject to any labor or collective bargaining
agreement. There are no existing or threatened strikes, lockouts or other labor
disputes involving the Company or any Subsidiary that singly or in the aggregate
could reasonably be expected to have a Material Adverse Effect. Hours worked by
and payment made to employees of the Company and its Subsidiaries are not in
violation of the Fair Labor Standards Act or any other applicable law, rule or
regulation dealing with such matters.
9.23 No Default. No Event of Default or Unmatured Event of Default exists
or would result from the incurring by the Company of any Debt hereunder or under
any other Loan Document.
9.24 Foreign Assets Control Regulations and Anti-Money Laundering.
(a) OFAC. Neither the Company nor any of its
Subsidiaries: (i) is a Person whose property or interest in
property is blocked or subject to blocking pursuant to
Section 1 of Executive Order 13224 of September 23, 2001
Blocking Property and Prohibiting Transactions With Persons
Who Commit, Threaten to Commit, or Support Terrorism (66
Fed. Reg. 49079 (2001)); (ii) engages in any dealings or
transactions prohibited by Section 2 of such executive
order, or is otherwise associated with any such Person in
any manner violative of Section 2; or (iii) is a Person on
the list of Specially Designated Nationals and Blocked
Persons or subject to the limitations or prohibitions under
any other U.S. Department of Treasury's Office of Foreign
Assets Control regulation or executive order.
(b) Patriot Act. The Company and each of its
Subsidiaries are in compliance, in all material respects,
with the Patriot Act. No part of the proceeds of the Loans
will be used, directly or indirectly, for any payments to
any governmental official or employee, political party,
official of a political party, candidate for
38
political office, or anyone else acting in an official
capacity, in order to obtain, retain or direct business or
obtain any improper advantage, in violation of the United
States Foreign Corrupt Practices Act of 1977, as amended.
9.25 Capitalization. Schedule 9.25 sets forth the authorized equity
securities of each Loan Party as of the date hereof. All issued and outstanding
equity securities of each Loan Party are duly authorized and validly issued,
fully paid, non-assessable, and, other than with respect to the capital stock of
the Company, free and clear of all Liens. All such securities were issued in
compliance with all applicable state and federal laws concerning the issuance of
securities. All of the issued and outstanding equity securities of each Loan
Party are owned in the amounts and by the Persons as set forth in such Schedule
9.25. Except as otherwise set forth on Schedule 9.25, there are no pre-emptive
or other outstanding rights, options, warrants, conversion rights or other
similar agreements or understandings for the purchase or acquisition of any
equity securities in any such entity.
SECTION 10. COVENANTS.
Until the expiration or termination of the Commitments and thereafter until
all obligations of the Company hereunder and under the other Loan Documents are
paid in full and all Letters of Credit have been terminated, the Company agrees
that, unless at any time the Required Banks shall otherwise expressly consent in
writing, it will:
10.1 Reports, Certificates and Other Information. Furnish to the Agent and
each Bank:
10.1.1 Annual Report. Promptly when available and in any event within
ninety (90) days after the close of each Fiscal Year: (a) a copy of the
annual audit report of the Company and its Subsidiaries for such Fiscal
Year, including therein consolidated balance sheets and statements of
earnings and cash flows of the Company and its Subsidiaries as at the end
of such Fiscal Year, certified without qualification by Deloitte & Touche
or other independent auditors of recognized standing selected by the
Company and reasonably acceptable to the Required Banks, together with: (i)
a written statement from such accountants to the effect that in making the
examination necessary for the signing of such annual audit report by such
accountants, nothing came to their attention that caused them to believe
that the Company was not in compliance with any provision of Section 10.6,
10.7, 10.9 or 10.10 of this Agreement insofar as such provision relates to
accounting matters or, if something has come to their attention that caused
them to believe that the Company was not in compliance with any such
provision, describing such non-compliance in reasonable detail and (ii) a
comparison with the budget for such Fiscal Year and a comparison with the
previous Fiscal Year; and (b) consolidating balance sheets of the Company
and its Subsidiaries as of the end of such Fiscal Year and a consolidating
statement of earnings for the Company and its Subsidiaries for such Fiscal
Year, certified by a Responsible Officer of the Company.
10.1.2 Interim Reports.
(a) Promptly when available and in any event within forty five
(45) days after the end of each Fiscal
39
Quarter (except the last Fiscal Quarter of each Fiscal Year),
consolidated and consolidating balance sheets of the Company and its
Subsidiaries as of the end of such Fiscal Quarter, together with
consolidated and consolidating statements of earnings and cash flows
for such Fiscal Quarter and for the period beginning with the first
day of such Fiscal Year and ending on the last day of such Fiscal
Quarter, together with a comparison with the corresponding period of
the previous Fiscal Year and a comparison with the budget for such
period of the current Fiscal Year, certified by a Responsible Officer
of the Company; and
(b) promptly when available and in any event within thirty (30)
days after the end of each month (except the last month of each Fiscal
Quarter), consolidated and consolidating balance sheets of the Company
and its Subsidiaries as of the end of such month, together with
consolidated and consolidating statements of earnings and a
consolidated statement of cash flows for such month and for the period
beginning with the first day of such Fiscal Year and ending on the
last day of such month, together with a comparison with the
corresponding period of the previous Fiscal Year and a comparison with
the budget for such period of the current Fiscal Year, certified by a
Responsible Officer of the Company.
10.1.3 Compliance Certificates. Contemporaneously with the furnishing
of a copy of each annual audit report pursuant to Section 10.1.1 and each
set of quarterly statements pursuant to Section 10.1.2, a duly completed
compliance certificate in the form of Exhibit B, with appropriate
insertions, dated the date of such annual report or such quarterly
statements and signed by a Responsible Officer of the Company, containing a
computation of each of the financial ratios and restrictions set forth in
Section 10.6 and a statement to the effect that such officer has not become
aware of any Event of Default or Unmatured Event of Default that has
occurred and is continuing or, if there is any such event, describing it
and the steps, if any, being taken to cure it.
10.1.4 Reports to the SEC and to Shareholders. Promptly upon the
filing or sending thereof, copies of all regular, periodic or special
reports of the Company or any Subsidiary filed with the SEC; copies of all
registration statements of the Company or any Subsidiary filed with the SEC
(other than on Form S-8); and copies of all proxy statements or other
communications made to security holders generally.
10.1.5 Notice of Default, Litigation and ERISA Matters. Promptly upon
becoming aware of any of the following, written notice describing the same
and the steps being taken by the Company or the Subsidiary affected thereby
with respect thereto:
(a) the occurrence of an Event of Default or an Unmatured Event
of Default;
(b) any litigation, arbitration or governmental investigation or
proceeding not previously disclosed by the Company to the Banks which
has been instituted or, to the knowledge of the Company, is threatened
against the Company or any Subsidiary or to which any of the
properties of any thereof is subject which might reasonably be
expected to have a Material Adverse Effect;
40
(c) the institution of any steps by any member of the Controlled
Group or any other Person to terminate any Pension Plan, or the
failure of any member of the Controlled Group to make a required
contribution to any Pension Plan (if such failure is sufficient to
give rise to a Lien under Section 302(f) of ERISA) or to any
Multiemployer Pension Plan, or the taking of any action with respect
to a Pension Plan which could result in the requirement that the
Company furnish a bond or other security to the PBGC or such Pension
Plan, or the occurrence of any event with respect to any Pension Plan
or Multiemployer Pension Plan which could result in the incurrence by
any member of the Controlled Group of any material liability, fine or
penalty (including any claim or demand for withdrawal liability or
partial withdrawal from any Multiemployer Pension Plan), or any
material increase in the contingent liability of the Company with
respect to any post-retirement welfare plan benefit, or any notice
that any Multiemployer Pension Plan is in reorganization, that
increased contributions may be required to avoid a reduction in plan
benefits or the imposition of an excise tax, that any such plan is or
has been funded at a rate less than that required under Section 412 of
the Code, that any such plan is or may be terminated, or that any such
plan is or may become insolvent;
(d) any cancellation or material change in any insurance
maintained by the Company or any Subsidiary; or
(e) any other event (including: (i) any violation of any
Environmental Law or the assertion of any Environmental Claim or (ii)
the enactment or effectiveness of any law, rule or regulation) which
might reasonably be expected to have a Material Adverse Effect.
10.1.6 Borrowing Base Certificates. Within thirty (30) days of the end
of each month, a Borrowing Base Certificate dated as of the end of such
month and executed by a Responsible Officer of the Company on behalf of the
Company; provided: (i) the Company may deliver a Borrowing Base Certificate
more frequently if it chooses and (ii) at any time an Event of Default
exists, the Agent may require the Company to deliver Borrowing Base
Certificates more frequently.
10.1.7 Management Reports. Promptly upon the request of the Agent or
any Bank, copies of all detailed financial and management reports submitted
to the Company by independent auditors in connection with each annual or
interim audit made by such auditors of the books of the Company.
10.1.8 Projections. As soon as practicable, and in any event within
thirty (30) days prior to the commencement of each Fiscal Year, financial
projections for the Company and its Subsidiaries for such Fiscal Year
(including an operating budget and a cash flow budget) prepared in a manner
consistent with the projections delivered by the Company to the Banks prior
to the Closing Date or otherwise in a manner reasonably satisfactory to the
Agent, accompanied by a certificate of a Responsible Officer of the Company
on behalf of the Company to the effect that: (i) such projections were
prepared by the Company in good faith, (ii) the Company has a reasonable
basis for the assumptions contained in such projections and (iii) such
projections have been prepared in accordance with such assumptions.
41
10.1.9 Subordinated Debt, Pari Passu Debt and Replacement Long-Term
Debt Notices. Promptly from time to time, copies of any notices (including
notices of default or acceleration) received from any holder or trustee of,
under or with respect to any Subordinated Debt, Pari Passu Debt or
Replacement Long-Term Debt.
10.1.10 Reserved.
10.1.11 Other Information. Promptly from time to time, such other
information concerning the Company and its Subsidiaries as any Bank or the
Agent may reasonably request.
10.2 Books, Records and Inspections. Keep, and cause each Subsidiary to
keep, its books and records in accordance with sound business practices
sufficient to allow the preparation of financial statements in accordance with
GAAP; permit, and cause each Subsidiary to permit, any Bank or the Agent or any
representative thereof to inspect the properties and operations of the Company
or such Subsidiary; and permit, and cause each Subsidiary to permit, at any
reasonable time and with reasonable notice (or at any time without notice if an
Event of Default exists), any Bank or the Agent or any representative thereof to
visit any or all of its offices, to discuss its financial matters with its
officers and its independent auditors (and the Company hereby authorizes such
independent auditors to discuss such financial matters with any Bank or the
Agent or any representative thereof), and to examine (and, at the expense of the
Company or the applicable Subsidiary, photocopy extracts from) any of its books
or other records; and permit, and cause each Subsidiary to permit, the Agent and
its representatives to inspect the Inventory and other tangible assets of the
Company or such Subsidiary, to perform appraisals of the equipment of the
Company or such Subsidiary, and to inspect, audit, check and make copies of and
extracts from the books, records, computer data, computer programs, journals,
orders, receipts, correspondence and other data relating to Inventory, Accounts
Receivable and any other Collateral. All such inspections or audits by the Agent
shall be at the Company's expense.
10.3 Maintenance of Property; Insurance.
(a) Keep, and cause each Subsidiary to keep, all property
useful and necessary in the business of the Company or such
Subsidiary in good working order and condition, ordinary wear and
tear excepted.
(b) Maintain, and cause each Subsidiary to maintain, with
responsible insurance companies, such insurance as may be
required by any law or governmental regulation or court decree or
order applicable to it and such other insurance, to such extent
and against such hazards and liabilities, as is customarily
maintained by companies similarly situated, but which shall
insure against all risks and liabilities of the type identified
on Schedule 9.17 and shall have insured amounts no less than, and
deductibles no higher than, those set forth on such schedule;
and, upon request of the Agent or any Bank, furnish to the Agent
or such Bank a certificate setting forth in reasonable detail the
nature and extent of all insurance maintained by the Company and
its Subsidiaries. The Company shall cause each issuer of an
insurance policy to provide the Agent with an endorsement: (i)
Agent as loss payee with respect to each policy of property or
casualty insurance naming the Agent and each Bank as an
42
additional insured with respect to each policy of insurance for
liability for personal injury or property damage, (ii) providing
that thirty (30) days notice will be given to the Agent prior to
any cancellation of, material reduction or change in coverage
provided by or other material modification to such policy and
(iii) reasonably acceptable in all other respects to the Agent.
The Company shall execute and deliver to the Agent a collateral
assignment, in form and substance satisfactory to the Agent, of
each business interruption insurance policy maintained by the
Company.
(c) UNLESS THE COMPANY PROVIDES THE AGENT WITH EVIDENCE OF
THE INSURANCE COVERAGE REQUIRED BY THIS AGREEMENT, THE AGENT MAY
PURCHASE INSURANCE AT THE COMPANY'S EXPENSE TO PROTECT THE
AGENT'S AND THE BANKS' INTERESTS IN THE COLLATERAL. THIS
INSURANCE MAY, BUT NEED NOT, PROTECT THE COMPANY'S INTERESTS. THE
COVERAGE THAT THE AGENT PURCHASES MAY NOT PAY ANY CLAIM THAT IS
MADE AGAINST THE COMPANY IN CONNECTION WITH THE COLLATERAL. THE
COMPANY MAY LATER CANCEL ANY INSURANCE PURCHASED BY THE AGENT,
BUT ONLY AFTER PROVIDING THE AGENT WITH EVIDENCE THAT THE COMPANY
HAS OBTAINED INSURANCE AS REQUIRED BY THIS AGREEMENT. IF THE
AGENT PURCHASES INSURANCE FOR THE COLLATERAL, THE COMPANY WILL BE
RESPONSIBLE FOR THE COSTS OF THAT INSURANCE, INCLUDING INTEREST
AND ANY OTHER CHARGES THAT MAY BE IMPOSED WITH THE PLACEMENT OF
THE INSURANCE, UNTIL THE EFFECTIVE DATE OF THE CANCELLATION OR
EXPIRATION OF THE INSURANCE. THE COSTS OF THE INSURANCE MAY BE
ADDED TO THE PRINCIPAL AMOUNT OF THE LOANS OWING HEREUNDER. THE
COSTS OF THE INSURANCE MAY BE MORE THAN THE COST OF THE INSURANCE
THE COMPANY MAY BE ABLE TO OBTAIN ON ITS OWN.
10.4 Compliance with Laws; Payment of Taxes and Liabilities.
(a) Comply, and cause each Subsidiary to comply, in all
material respects with all applicable laws, rules, regulations,
decrees, orders, judgments, licenses and permits, except where
failure to comply could not reasonably be expected to have a
Material Adverse Effect; and
(b) Pay, and cause each Subsidiary to pay, prior to
delinquency, all taxes and other governmental charges against it
or any of its property, as well as claims of any kind which, if
unpaid, might become a Lien on any of its property; provided; the
foregoing shall not require the Company or any Subsidiary to pay
any such tax or charge so long as it shall contest the validity
thereof in good faith by appropriate proceedings and shall set
aside on its books adequate reserves with respect thereto in
accordance with GAAP.
10.5 Maintenance of Existence, etc. Maintain and preserve, and (subject to
Section 10.11) cause each Subsidiary to maintain and preserve: (a) its existence
and good standing in the
43
jurisdiction of its organization and (b) its qualification to do business and
good standing in each jurisdiction where the nature of its business makes such
qualification necessary (except in those instances in which the failure to be
qualified or in good standing does not have a Material Adverse Effect).
10.6 Financial Covenants.
10.6.1 Interest Coverage Ratio. Not permit the Interest Coverage Ratio
for any Computation Period to be less than 2.00 to 1.00 as of the last day
of any Fiscal Quarter.:
10.6.2 Total Debt to Capital Ratio. Not permit the Total Debt to
Capital Ratio as of the last day of any Fiscal Quarter to exceed 0.65 to
1.00.
10.6.3 VaR and Open Positions. Not permit the sum of VaR plus Open
Positions to exceed $1,000,000 at any time.
10.6.4 Capital Expenditures. Not permit the aggregate amount of all
Capital Expenditures made by the Company and its Subsidiaries in any Fiscal
Year to exceed $5,000,000.00.
10.7 Limitations on Debt. Not, and not permit any Subsidiary to, create,
incur, assume or suffer to exist any Debt, except:
(a) obligations under this Agreement and the other Loan
Documents;
(b) Debt secured by Liens permitted by subsection 10.8(d), and
extensions, renewals and refinancings thereof; provided that the
aggregate amount of all such Debt at any time outstanding shall not
exceed $250,000;
(c) Debt of Subsidiaries to the Company;
(d) unsecured Debt of the Company to Subsidiaries;
(e) (i) Subordinated Debt; (ii) before the Refinancing Trigger
Date, the Pari Passu Debt; and (iii) on and after the Refinancing
Trigger Date, the Replacement Long-Term Debt;
(f) Hedging Obligations incurred for bona fide hedging purposes
and not for speculation;
(g) Debt described on Schedule 10.7 and any extension, renewal or
refinancing thereof so long as the principal amount thereof is not
increased;
(h) Debt to be Repaid (so long as such Debt is repaid on the
Closing Date with the proceeds of initial Loans hereunder); and
(i) other Debt, in addition to the Debt listed above, in an
aggregate amount not at any time exceeding $500,000.
44
10.8 Liens. Not, and not permit any Subsidiary to, create or permit to
exist any Lien on any of its real or personal properties, assets or rights of
whatsoever nature (whether now owned or hereafter acquired), except:
(a) Liens for taxes or other governmental charges not at the time
delinquent or thereafter payable without penalty or being contested in
good faith by appropriate proceedings and, in each case, for which it
maintains adequate reserves;
(b) Liens arising in the ordinary course of business (such as:
(i) Liens of carriers, warehousemen, mechanics and materialmen and
other similar Liens imposed by law and (ii) Liens incurred in
connection with worker's compensation, unemployment compensation and
other types of social security (excluding Liens arising under ERISA)
or in connection with surety bonds, bids, performance bonds and
similar obligations) for sums not overdue or being contested in good
faith by appropriate proceedings and not involving any deposits or
advances or borrowed money or the deferred purchase price of property
or services and, in each case, for which it maintains adequate
reserves;
(c) Liens described on Schedule 10.8;
(d) subject to the limitation set forth in subsection 10.7(b):
(i) Liens arising in connection with Capital Leases (and attaching
only to the property being leased), (ii) Liens existing on property at
the time of the acquisition thereof by the Company or any Subsidiary
(and not created in contemplation of such acquisition) and (iii) Liens
that constitute purchase money security interests on any property
securing debt incurred for the purpose of financing all or any part of
the cost of acquiring such property; provided, any such Lien attaches
to such property within sixty (60) days of the acquisition thereof and
attaches solely to the property so acquired;
(e) attachments, appeal bonds, judgments and other similar Liens,
for sums not exceeding $250,000 arising in connection with court
proceedings, provided, execution or other enforcement of such Liens is
effectively stayed and the claims secured thereby are being actively
contested in good faith and by appropriate proceedings;
(f) easements, rights of way, restrictions, minor defects or
irregularities in title and other similar Liens not interfering in any
material respect with the ordinary conduct of the business of the
Company or any Subsidiary;
(g) Liens arising under the Loan Documents and, after the
Refinancing Trigger Date and solely to the extent and for so long as
they are not on Account Receivables or Inventory, the Replacement
Long-Term Debt;
(h) any other Liens securing Debt which do not exceed an
aggregate amount of $500,000; and
45
(i) the replacement, extension or renewal of any Lien permitted
by clauses (c) or (h) above upon or in the same property theretofore
subject thereto arising out of the extension, renewal or replacement
of the Debt secured thereby (without increase in the amount thereof).
10.9 Operating Leases. Not permit the aggregate amount of all rental
payments under Operating Leases made (or scheduled to be made) by the Company
and its Subsidiaries (on a consolidated basis) to exceed $250,000 in any Fiscal
Year.
10.10 Restricted Payments. Not, and not permit any Subsidiary to: (a) make
any distribution to any of its shareholders, (b) purchase or redeem any of its
capital stock or other equity interests or any warrants, options or other rights
in respect thereof, (c) pay any management fees or similar fees to any of its
shareholders or any Affiliate thereof, (d) make any redemption, prepayment,
defeasance or repurchase of any Subordinated Debt, Replacement Long-Term Debt
or, except in connection with a successful Pari Passu Release, Pari Passu Debt,
other than at regularly-scheduled times (without giving effect to mandatory
prepayment, acceleration or similar provisions), or (e) set aside funds for any
of the foregoing. Notwithstanding the foregoing any Subsidiary may pay dividends
or make other distributions to the Company or to a Wholly-Owned Subsidiary and,
provided each of the following conditions are met, the Company may declare and
pay dividends to its shareholders: (x) the Refinancing Trigger Date has
occurred, (y) no Unmatured Event of Default or Event of Default has occurred or
would occur after giving effect to such dividend, and (z) after giving effect to
the declaration and payment of such dividend, the Company is in compliance with
the financial covenants set forth in Section 10.6, as computed for the most
recent Fiscal Quarter for which financial statements have been (and are required
to be) delivered hereunder.
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 into the
Company or into, with or to any other Wholly-Owned Subsidiary; (b) any such
purchase or other acquisition by the Company or any Wholly-Owned Subsidiary of
the assets or stock of any Wholly-Owned Subsidiary; 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.
10.12 Modification of Organizational Documents. Not permit the Certificate
or Articles of Incorporation, Bylaws or other organizational documents of the
Company or any Subsidiary to be amended or modified in any way which might
reasonably be expected to materially adversely affect the interests of the
Banks.
10.13 Use of Proceeds. Use the proceeds of the Loans, and the Letters of
Credit, solely to: (a) solely on the Closing Date, repay the Debt to be Repaid
and (b) at all other times, finance
46
working capital needs and other general corporate purposes of the Company and
its Subsidiaries; and in no event use or permit any proceeds of any Loan to be
used, either directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of "purchasing or carrying" any Margin Stock.
10.14 Further Assurances. Take, and cause each Subsidiary to take, such
actions as are necessary or as the Agent or the Required Banks may reasonably
request from time to time (including the execution and delivery of guaranties,
security agreements, pledge agreements, mortgages, deeds of trust, financing
statements and other documents, the filing or recording of any of the foregoing,
and the delivery of stock certificates and other Collateral with respect to
which perfection is obtained by possession) to ensure that: (a) the obligations
of the Company hereunder and under the other Loan Documents: (i) are secured by,
(A) before the Refinancing Trigger Date, substantially all of the assets of the
Company and, (B) thereafter, the Inventory and Accounts Receivable of the
Company and (ii) guaranteed by all of its Subsidiaries (including, promptly upon
the acquisition or creation thereof, any Subsidiary acquired or created after
the date hereof) by execution of a counterpart of the Guaranty and (b) the
obligations of each Subsidiary under the Guaranty are secured by substantially
all of the assets of such Subsidiary. Notwithstanding the foregoing, in no event
shall the Company or any of its Subsidiaries be obligated to (i) obtain or
deliver control agreements in favor of the Agent with respect to deposit
accounts in which, taken in the aggregate, the amount of funds on deposit do not
exceed $500,000 for more than three (3) consecutive Business Days, or (ii)
obtain or deliver landlord lien waivers or estoppels with respect to any
property where the fair market value of the Collateral located thereon does not
exceed $50,000 for more than three (3) consecutive Business Days. On and after
the Refinancing Trigger Date, at the expense of the Company, Agent shall take
such actions as are necessary or reasonably requested to evidence or give notice
of Agent's release of any existing Lien against any property of any Loan Party
other than Account Receivables or Inventory.
10.15 Transactions with Affiliates. Not, and not permit any Subsidiary to,
enter into, or cause, suffer or permit to exist any transaction, arrangement or
contract with any of its other Affiliates (other than the Company and its
Subsidiaries) which is on terms that are less favorable than are obtainable from
any Person which is not one (1) of its Affiliates.
10.16 Employee Benefit Plans. Maintain, and cause each Subsidiary to
maintain, each Pension Plan in substantial compliance with all applicable
requirements of law and regulations.
10.17 Environmental Matters.
(a) If any Release or Disposal of Hazardous Substances shall
occur or shall have occurred on any real property or any other assets
of the Company or any Subsidiary, the Company shall, or shall cause
the applicable Subsidiary to, cause the prompt containment and removal
of such Hazardous Substances and the remediation of such real property
or other assets as necessary to comply with all Environmental Laws and
to preserve the value of such real property or other assets. Without
limiting the generality of the foregoing, the Company shall, and shall
cause each Subsidiary to, comply with any valid Federal or state
judicial or administrative order requiring the performance at any real
property of the Company or any Subsidiary of activities in response to
the Release or threatened Release of a Hazardous Substance.
47
(b) To the extent that the transportation of "hazardous waste" as
defined by RCRA is permitted by this Agreement, the Company shall, and
shall cause its Subsidiaries to, dispose of such hazardous waste only
at licensed disposal facilities operating in compliance with
Environmental Laws.
10.18 Unconditional Purchase Obligations. Not, and not permit any
Subsidiary to, enter into or be a party to any contract for the purchase of
materials, supplies or other property or services if such contract requires that
payment be made by it regardless of whether delivery is ever made of such
materials, supplies or other property or services, other than contracts entered
into in the ordinary course of business and in accordance with past practices.
10.19 Inconsistent Agreements. Not, and not permit any Subsidiary to, enter
into any agreement containing any provision which would: (a) be violated or
breached by any borrowing by the Company hereunder or by the performance by the
Company or any Subsidiary of any of its obligations hereunder or under any other
Loan Document, (b) prohibit the Company or any Subsidiary from granting to the
Agent, for the benefit of the Banks, a Lien on (i) before the Refinancing
Trigger Date, any of its assets, and (ii) thereafter, its Accounts Receivable
and Inventory, or (c) create or permit to exist or become effective any
encumbrance or restriction on the ability of any Subsidiary to: (i) pay
dividends or make other distributions to the Company or any other applicable
Subsidiary, or pay any Debt owed to the Company or any other Subsidiary, (ii)
make loans or advances to the Company or (iii) transfer any of its assets or
properties to the Company.
10.20 Business Activities. Not, and not permit any Subsidiary to, engage in
any line of business other than the businesses engaged in on the date hereof and
businesses reasonably related thereto.
10.21 Investments. Not, and not permit any Subsidiary to, make or permit to
exist any Investment in any other Person, or maintain any master, operating,
disbursement, payroll, xxxxx cash, deposit, checking, savings, money market
investments, certificates of deposits, securities or any other account with any
Person, except (without duplication) the following:
(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;
(b) 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;
(c) Suretyship Liabilities permitted by Section 10.7;
(d) Cash Equivalent Investments;
(e) bank deposits in the ordinary course of business; provided,
the aggregate amount of all such deposits (excluding amounts in
payroll accounts) which are maintained with any bank other than a Bank
shall not exceed $500,000 for any period of three (3) consecutive
days;
48
(f) Investments in securities of account debtors received
pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of such account debtors; and
(g) Investments listed on Schedule 10.21;
provided: (x) any Investment which when made complies with the requirements of
the definition of the term "Cash Equivalent Investment" may continue to be held
notwithstanding that such Investment if made thereafter would not comply with
such requirements; (y) no Investment otherwise permitted by clause (b), (c), or
(g) shall be permitted to be made if, immediately before or after giving effect
thereto, any Event of Default or Unmatured Event of Default exists.
10.22 Restriction of Amendments to Certain Documents. Not amend or
otherwise modify, or waive any rights under, any of the Subordinated Debt
Documents, the Pari Passu Debt Documents or the Refinanced Long-Term Debt
Documents without the prior written consent of Agent and the Banks, which
consent shall be given in their sole disretion.
10.23 Fiscal Year. Not change its Fiscal Year.
10.24 Cancellation of Debt. Not, and not permit any Subsidiary to (i)
cancel any claim or debt owing to it, except for reasonable consideration or in
the ordinary course of business, and except for the cancellation of debts, or
(ii) cancel, settle or otherwise waive any rights in respect of any Existing
Claim except any settlement or waiver determined by the Company or such
Subsidiary to be advantageous to or in the best interests of the Company or such
Subsidiary in its reasonable business judgment. During the existence of any
Event of Default, upon the request of the Agent, the Company shall, and shall
cause each Subsidiary to, do, take, execute and deliver any and all actions,
steps, documents, agreements and instruments as the Agent may require to assign
to the Agent, for the benefit of the Lender Parties, and grant a first priority
Lien in favor of the Agent, for the benefit of the Lender Parties, on, all
rights, title, interest and proceeds of the Existing Claims, including, without
limitation, all steps necessary to effectuate such assignment in accordance with
the Assignment of Claims Act of 1940.
10.25 Foreign Subsidiaries. Anything contained in this Agreement to the
contrary notwithstanding, not, and not permit any Subsidiary to, invest, create
or otherwise permit to exist any Subsidiary that is not organized, formed or
existing under the laws of a State of the United Sates.
10.26 Refinancing of Pari Passu Debt. Cause the Refinancing Trigger Date
and all conditions precedent thereto to occur on or before March 31, 2004 on
terms and conditions satisfactory to Agent and the Lenders and deliver certified
copies of the Replacement Long-Term Debt Documents to Agent on such date.
10.27 OFAC, Etc. Neither the Company nor any of its Subsidiaries: (a) will
become a Person whose property or interests in property are blocked or subject
to blocking pursuant to Section 1 of Executive Order 13224 of September 23, 2001
Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten
to Commit or Support Terrorism (66 Fed. Reg. 49079(2001); (b) will engage in any
dealings or transactions prohibited by Section 2 of such executive order, or be
otherwise associated with any such Person in any manner volatile of such Section
2; or (c) will
49
otherwise become a Person on the list of Specially Designated Nationals and
Blocked Persons or subject to the limitations or prohibitions under any other
OFAC regulation or executive order.
SECTION 11. EFFECTIVENESS; CONDITIONS OF LENDING, ETC.
The obligation of each Bank to make its Loans and of the Issuing Bank to
issue Letters of Credit is subject to the following conditions precedent:
11.1 Initial Credit Extension. The obligation of the Banks to make any
initial Loans and the obligation of the Issuing Bank to issue any initial Letter
of Credit (whichever first occurs) is, in addition to the conditions precedent
specified in Section 11.2, subject to the conditions precedent that: (1) all
Debt to be Repaid has been (or concurrently with the initial borrowing will be)
paid in full, and that all agreements and instruments governing the Debt to be
Repaid and that all Liens securing such Debt to be Repaid have been (or
concurrently with the initial borrowing will be) terminated and (2) the Agent
shall have received all of the following, each duly executed and dated the
Closing Date (or such earlier date as shall be satisfactory to the Agent), in
form and substance satisfactory to the Agent (and the date on which all such
conditions precedent have been satisfied or waived in writing by the Agent and
the Required Banks is called the "Closing Date"):
11.1.1 Notes. The Notes.
11.1.2 Resolutions. Certified copies of resolutions of the Board of
Directors of the Company authorizing the execution, delivery and
performance by the Company of this Agreement, the Notes and the other Loan
Documents to which the Company is a party; and certified copies of
resolutions of the Board of Directors of each other Loan Party authorizing
the execution, delivery and performance by such Loan Party of each Loan
Document to which such entity is a party.
11.1.3 Consents, etc. Certified copies of all documents evidencing any
necessary corporate or partnership action, consents and governmental
approvals (if any) required for the execution, delivery and performance by
the Company and each other Loan Party of the documents referred to in this
Section 11.
11.1.4 Incumbency and Signature Certificates. A certificate of the
Secretary or an Assistant Secretary (or other appropriate representative)
of each Loan Party certifying the names of the officer or officers of such
entity authorized to sign the Loan Documents to which such entity is a
party, together with a sample of the true signature of each such officer
(it being understood that the Agent and each Bank may conclusively rely on
each such certificate until formally advised by a like certificate of any
changes therein).
11.1.5 Guaranty. A counterpart of the Guaranty executed by each
Subsidiary of the Company.
11.1.6 Security Agreement. Counterparts of the Security Agreements
executed by the Company and each Subsidiary.
50
11.1.7 Pledge Agreements. Pledge Agreements executed by the Company,
together with all items required to be delivered in connection therewith.
11.1.8 Real Estate Documents. With respect to each parcel of real
property owned, leased or otherwise held by the Company or any Subsidiary,
a duly executed Mortgage providing for a fully perfected Lien, in favor of
the Agent, in all right, title and interest of the Company or such
Subsidiary in such real property, together with:
(a) an ALTA Loan Title Insurance Policy, issued by an
insurer acceptable to the Agent, insuring the Agent's Lien on
such real property as Agent shall designate and containing such
endorsements as the Agent may reasonably require (it being
understood that the amount of coverage, exceptions to coverage
and status of title set forth in such policy shall be acceptable
to the Agent);
(b) copies of all documents of record concerning such real
property as shown on the commitment for the ALTA Loan Title
Insurance Policy referred to above; and
(c) original or certified copies of all insurance policies
required to be maintained with respect to such real property by
this Agreement, the applicable Mortgage or any other Loan
Document.
Additionally, in the case of any leased real property, a consent, in form
and substance satisfactory to the Agent, from the owner and/or mortgagee (a)
consenting to the Mortgage in favor of the Agent with respect to such property
and (b) waiving any landlord's Lien in respect of personal property kept at the
premises subject to such lease, in each case to the extent the terms of the
applicable lease, in the discretion of Agent, when taken together with the Loan
Documents, require such waiver and/or consent.
11.1.9 Opinions of Counsel. Written opinions of law of counsel to the
Company and its Subsidiaries, all in form and substance and covering such
subject matter as is satisfactory to Agent and its counsel and dated as of
the Closing Date.
11.1.10 Insurance. Evidence satisfactory to the Agent of the existence
of insurance required to be maintained pursuant to subsection 10.3(b),
together with evidence that the Agent has been named as a lender's loss
payee and an additional insured on all related insurance policies and
including business interruption insurance.
11.1.11 Copies of Documents. Copies, in form and substance
satisfactory to Agent and the Lenders and certified by the Secretary of the
Company, of: (a) the Pari Passu Loan Documents, (b) written consents to the
transactions contemplated by the Credit Agreement and the other Loan
Documents from the Montana Public Service Commission and the Wyoming Public
Service Commission, (c) documents regarding the disputes with Montana
Department of Revenue and "PPM" described in Schedule 9.6, (d) audited
consolidated and consolidating financial statements for fiscal years ending
June 30, 2001, 2002 and 2003 and (e) projected income statements, balance
sheets and cash flow statements for fiscal years ending June 30, 2003, 2004
and 2005.
51
11.1.12 Payment of Fees. Evidence of payment by the Company of all
accrued and unpaid fees, costs and expenses to the extent then due and
payable on the Closing Date, together with all Attorney Costs of the Agent
to the extent invoiced prior to the Closing Date plus such additional
amounts of Attorney Costs as shall constitute the Agent's reasonable
estimate of Attorney Costs incurred or to be incurred by the Agent through
the closing proceedings; provided, such estimate shall not thereafter
preclude final settling of accounts between the Company and the Agent.
11.1.13 Solvency Certificate. A Solvency Certificate, substantially in
the form provided and approved by Agent, executed by a Responsible Officer
of the Company.
11.1.14 Pro Forma. A consolidated pro forma balance sheet of the
Company as at August 31, 2003, adjusted to give effect to the consummation
of the financings contemplated hereby as if such transactions had occurred
on such date, consistent in all material respects with the sources and uses
of cash as previously described to the Banks and the forecasts previously
provided to the Banks.
11.1.15 Search Results; Lien Terminations. Certified copies of search
reports certified by a party acceptable to the Agent, dated a date
reasonably near to the Closing Date, listing all effective financing
statements which name the Company and each Subsidiary (under their present
names and any previous names) as debtors and which are filed in the
jurisdictions in which filings are to be made pursuant to the Collateral
Documents, together with: (i) copies of such financing statements, (ii)
executed copies of proper UCC termination statements, if any, necessary to
release all Liens and other rights of any Person in any collateral
described in the Collateral Documents previously granted by any Person
(other than Liens permitted by Section 10.8) and (iii) such other UCC
termination statements as the Agent may reasonably request.
11.1.16 Filings, Registrations and Recordings. The Agent shall have
received each document (including UCC financing statements) required by the
Collateral Documents or under law or reasonably requested by the Agent to
be filed, registered or recorded in order to create in favor of the Agent,
for the benefit of the Banks, a perfected Lien on the collateral described
therein, prior and superior to any other Person, in proper form for filing,
registration or recording.
11.1.17 Closing Certificate. A certificate signed by a Responsible
Officer of the Company dated as of the Closing Date, affirming the matters
set forth in Section 11.2.1 as of the Closing Date.
11.1.18 Borrowing Base Certificate. A Borrowing Base Certificate dated
as of the Closing Date.
11.1.19 Certificate, Consents and Permits. Evidence satisfactory to
the Agent that: (i) all necessary governmental, regulatory, creditor,
shareholder, partner and other material consents, approvals and exemptions
required to be obtained by the Company in connection with the execution,
delivery and performance by the Company and its Subsidiaries under this
Agreement and the other Loan Documents have been duly obtained
52
and are in full force and effect and (ii) all material permits necessary
for the operation of the business have been obtained.
11.1.20 Other. Such other documents as the Agent or any Bank may
reasonably request.
11.2 Conditions. The obligation: (a) of each Bank to make each Loan
and (b) of the Issuing Bank to issue each Letter of Credit is subject to
the following further conditions precedent that:
11.2.1 Compliance with Warranties, No Default, etc. Both before and
after giving effect to any borrowing and the issuance of any Letter of
Credit, the following statements shall be true and correct:
(a) the representations and warranties of the Company and each
Subsidiary set forth in this Agreement and the other Loan Documents
shall be true and correct in all material respects with the same
effect as if then made (except to the extent stated to relate to a
specific earlier date, in which case such representations and
warranties shall be true and correct as of such earlier date); and
(b) no Event of Default or Unmatured Event of Default shall have
then occurred and be continuing.
11.2.2 Confirmatory Certificate. If requested by the Agent or any
Bank, the Agent shall have received (in sufficient counterparts to provide
one to each Bank) a certificate dated the date of such requested Loan or
Letter of Credit and signed by a duly authorized representative of the
Company as to the matters set out in Section 11.2.1 (it being understood
that each request by the Company for the making of a Loan or the issuance
of a Letter of Credit shall be deemed to constitute a warranty by the
Company that the conditions precedent set forth in Section 11.2.1 will be
satisfied at the time of the making of such Loan or the issuance of such
Letter of Credit), together with such other documents as the Agent or any
Bank may reasonably request in support thereof.
SECTION 12. EVENTS OF DEFAULT AND THEIR EFFECT.
12.1 Events of Default. Each of the following shall constitute an Event of
Default under this Agreement:
12.1.1 Non-Payment of the Loans, etc. Default in the payment when due
of the principal of any Loan; or default, and continuance thereof for five
days, in the payment when due of any interest, fee, reimbursement
obligation with respect to any Letter of Credit or other amount payable by
the Company hereunder or under any other Loan Document.
12.1.2 Defaults Regarding Other Debt. Any default or event of default
shall occur under the terms applicable to: (a) the Subordinated Debt, Pari
Passu Debt or Replacement Long-Term Debt; or (b) any other Debt of the
Company or any Subsidiary in an aggregate amount (for all such Debt so
affected) exceeding $100,000 and such default shall: (i) consist of the
failure to pay such Debt when due, whether by acceleration or otherwise, or
(ii) accelerate the maturity of such Debt or permit the holder or holders
thereof, or any trustee or agent for such holder or holders, to cause such
Debt to become due and payable (or require
53
the Company or any Subsidiary to purchase or redeem such Debt) prior to its
expressed maturity.
12.1.3 Other Material Obligations. Default in the payment when due, or
in the performance or observance of, any material obligation of, or
condition agreed to by, the Company or any Subsidiary with respect to the
Subordinated Debt, the Pari Passu Debt, the Replacement Long-Term Debt or
any material purchase or lease of goods or services, in each such case
where such default, singly or in the aggregate with all other such
defaults, might reasonably be expected to have a Material Adverse Effect.
12.1.4 Bankruptcy, Insolvency, etc. The Company or any Subsidiary
becomes insolvent or generally fails to pay, or admits in writing its
inability or refusal to pay, debts as they become due; or the Company or
any Subsidiary applies for, consents to, or acquiesces in the appointment
of a trustee, receiver or other custodian for the Company or such
Subsidiary or any property thereof, or makes a general assignment for the
benefit of creditors; or, in the absence of such application, consent or
acquiescence, a trustee, receiver or other custodian is appointed for the
Company or any Subsidiary or for a substantial part of the property of any
thereof and is not discharged within 60 days; or any bankruptcy,
reorganization, debt arrangement, or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution or liquidation proceeding,
is commenced in respect of the Company or any Subsidiary, and if such case
or proceeding is not commenced by the Company or such Subsidiary, it is
consented to or acquiesced in by the Company or such Subsidiary, or remains
for 30 days undismissed; or the Company or any Subsidiary takes any action
to authorize, or in furtherance of, any of the foregoing.
12.1.5 Non-Compliance with Loan Documents.
(a) Failure by the Company to comply with or to perform any
covenant set forth in Section 10 of this Agreement; or (b)
failure by the Company to comply with or to perform any other
provision of this Agreement or any other Loan Document (and not
constituting an Event of Default under any other provision of
this Section 12) and continuance of such failure described in
this clause (b) for thirty (30) days.
12.1.6 Warranties. Any warranty made by the Company or any Subsidiary
herein or any other Loan Document is breached or is false or misleading in
any material respect, or any schedule, certificate, financial statement,
report, notice or other writing furnished by the Company or any Subsidiary
to the Agent or any Bank in connection herewith is false or misleading in
any material respect on the date as of which the facts therein set forth
are stated or certified.
12.1.7 Pension Plans. (i) Institution of any steps by the Company or
any other Person to terminate a Pension Plan if as a result of such
termination the Company could be required to make a contribution to such
Pension Plan, or could incur a liability or obligation to such Pension
Plan, in excess of $25,000; (ii) a contribution failure occurs with respect
to any Pension Plan sufficient to give rise to a Lien under Section 302(f)
of ERISA; or (iii) there shall occur any withdrawal or partial withdrawal
from a Multiemployer Pension Plan and the
54
withdrawal liability (without unaccrued interest) to Multiemployer Pension
Plans as a result of such withdrawal (including any outstanding withdrawal
liability that the Company and the Controlled Group have incurred on the
date of such withdrawal) exceeds $25,000.
12.1.8 Judgments. Final judgments which exceed an aggregate of $50,000
shall be rendered against the Company or any Subsidiary and shall not have
been paid, discharged or vacated or had execution thereof stayed pending
appeal within thirty (30) days after entry or filing of such judgments.
12.1.9 Invalidity of Guaranty, etc. The Guaranty shall cease to be in
full force and effect with respect to either of any Subsidiary; or any
Subsidiary (or any Person by, through or on behalf of such Subsidiary)
shall contest in any manner the validity, binding nature or enforceability
of the Guaranty with respect to such Subsidiary.
12.1.10 Invalidity of Collateral Documents, etc. (a) Any Collateral
Document shall cease to be in full force and effect; or the Company or any
Subsidiary (or any Person by, through or on behalf of the Company or any
Subsidiary) shall contest in any manner the validity, binding nature or
enforceability of any Collateral Document; (b) the entry of any judgment,
decree, levy, attachment, garnishment or other process, or the filing of
any Lien against, any of the Collateral or any collateral under a separate
security agreement securing any of the Obligations; or (c) the loss, theft,
destruction, seizure or forfeiture, or the occurrence of any material
deterioration or impairment of any of the Collateral which Agent, in its
sole discretion, deems material, or any of the collateral under any
security agreement securing any of the Obligations; or (d) any material
decline or depreciation in the value or market price thereof (whether
actual or reasonably anticipated), which causes the Collateral, in the sole
opinion of the Agent acting in good faith, to become unsatisfactory as to
value or character, or which causes the Agent to reasonably believe that it
is insecure and that the likelihood for repayment of the Obligations is or
will soon be impaired, time being of the essence (the cause of such
deterioration, impairment, decline or depreciation shall include, but is
not limited to, the failure by the Company to do any act deemed necessary
by the Agent to preserve and maintain the value and collectability of the
Collateral).
12.1.11 Invalidity of Subordination Provisions, etc. Any subordination
provision in any document or instrument governing Subordinated Debt, or any
subordination provision in any guaranty by any Subsidiary of any
Subordinated Debt, shall cease to be in full force and effect, or the
Company or any other Person (including the holder of any applicable
Subordinated Debt) shall contest in any manner the validity, binding nature
or enforceability of any such provision.
12.1.12 Change of Control.
(a) Any Person or group of Persons (within the meaning of
Section 13 or 14 of the Securities Exchange Act of 1934 shall acquire
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under such Act) of more than fifteen percent (15%) of the outstanding
securities (on a fully diluted basis and taking into account any
securities or contract rights exercisable, exchangeable or convertible
into equity securities) of the Company having voting rights in the
election of directors under normal circumstances; or
55
(b) A majority of the members of the Board of Directors of the
Company shall cease to be Continuing Members.
For purposes of the foregoing, "Continuing Member" means a
member of the Board of Directors of the Company who either:
(i) was a member of the Company's Board of Directors on the day
before the Closing Date and has been such continuously thereafter or
(ii) became a member of such Board of Directors after the day
before the Closing Date and whose election or nomination for election
was approved by a vote of the majority of the Continuing Members then
members of the Company's Board of Directors.
12.1.13 Management. A period of ninety (90) consecutive days shall
have elapsed during which Xxxx X. Xxxxx, Esq. is a not senior officer of
the Company actively involved with the management of the Company and its
Subsidiaries, for any reason, unless prior to the expiration of such
period, a replacement officer in respect of such Person satisfactory to the
Agent in its sole discretion shall have been appointed and employed by the
Company.
12.1.14 Material Adverse Effect. The occurrence of any event having a
Material Adverse Effect.
12.1.15 Insecurity. The Agent or the Required Banks in good faith
believe that the Banks are insecure or under-collateralized.
12.1.16 Non Monetary Judgments. Any non monetary judgment, order or
decree shall be rendered against any Loan Party which does or could
reasonably be expected to have a Material Adverse Effect, and there shall
be any period of thirty (30) consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect.
12.2 Effect of Event of Default. If any Event of Default described in
Section 12.1.4 shall occur, the Commitments (if they have not theretofore
terminated) shall immediately terminate and the Loans and all other obligations
hereunder shall become immediately due and payable and the Company shall become
immediately obligated to Cash Collateralize all Letters of Credit, all without
presentment, demand, protest or notice of any kind; and, if any other Event of
Default shall occur and be continuing, the Agent (upon written request of the
Required Banks) shall declare the Commitments (if they have not theretofore
terminated) to be terminated and/or declare all Loans and all other obligations
hereunder to be due and payable and/or demand that the Company immediately Cash
Collateralize all Letters of Credit, whereupon the Commitments (if they have not
theretofore terminated) shall immediately terminate and/or all Loans and all
other obligations hereunder shall become immediately due and payable and/or the
Company shall immediately become obligated to Cash Collateralize all Letters of
Credit, all without presentment, demand, protest or notice of any kind. The
Agent shall promptly advise the Company of any such declaration, but failure to
do so shall not impair the effect of such declaration. Notwithstanding the
foregoing, the effect as an Event of Default of any event described in Section
12.1.1 or Section 12.1.4 may be waived by the written concurrence of all of the
Banks, and the effect as an Event of Default of any other event described in
this Section 12 may be waived by the written concurrence of the Required Banks.
Any cash collateral delivered hereunder shall be held by the Agent (without
liability for interest thereon) and applied to Obligations arising in connection
with any drawing under a Letter of Credit. After the
56
expiration or termination of all Letters of Credit, such cash collateral shall
be applied by the Agent to any remaining obligations hereunder and any excess
shall be delivered to the Company or as a court of competent jurisdiction may
elect.
12.3 Additional Remedies. Without limiting Section 12.2 or anything in any
Collateral Document (but in addition thereto):
12.3.1 Possession and Assembly of Collateral. After the occurrence and
during the continuance of any Event of Default, the Agent may, without
notice, demand or legal process of any kind, take possession of any or all
of the Collateral (in addition to Collateral of which the Agent already has
possession), wherever it may be found, and for that purpose may pursue the
same wherever it may be found, and may enter into any Loan Party's premises
where any of the Collateral may be or is supposed to be, and search for,
take possession of, remove, keep and store any of the Collateral until the
same shall be sold or otherwise disposed of and the Agent shall have the
right to store the same in any Loan Party's premises without cost to the
Agent. At the Agent's request, the Company will, at the Company's sole
expense, assemble the Collateral and make it available to the Agent at a
place or places to be designated by the Agent which is reasonably
convenient to the Agent and the Company.
12.3.2 Sale of Collateral. After the occurrence and during the
continuance of any Event of Default, the Agent may sell any or all of the
Collateral at public or private sale, upon such terms and conditions as the
Agent may deem proper, and the Agent may purchase any or all of the
Collateral at any such sale. The Agent may apply the net proceeds, after
deducting all costs, expenses, attorneys' and paralegals' fees incurred or
paid at any time in the collection, protection and sale of the Collateral
and the Obligations, to the payment of the Notes and/or any of the other
Obligations, returning the excess proceeds, if any, to the Company. The
Company shall remain liable for any amount remaining unpaid after such
application, with interest. Any notification of intended disposition of the
Collateral required by law shall be conclusively deemed reasonably and
properly given if given by the Agent at least ten (10) calendar days before
the date of such disposition. The Company hereby confirms, approves and
ratifies all acts and deeds of the Agent relating to the foregoing, and
each part thereof.
12.3.3 Standards for Exercising Remedies. To the extent that
applicable law imposes duties on the Agent to exercise remedies in a
commercially reasonable manner, the Company acknowledges and agrees that it
is not commercially unreasonable for the Agent (a) to fail to incur
expenses reasonably deemed significant by the Agent to prepare Collateral
for disposition or otherwise to complete raw material or work-in-process
into finished goods or other finished products for disposition, (b) to fail
to obtain third party consents for access to Collateral to be disposed of,
or to obtain or, if not required by other law, to fail to obtain
governmental or third party consents for the collection or disposition of
Collateral to be collected or disposed of, (c) to fail to exercise
collection remedies against Account Debtors or other Persons obligated on
Collateral or to remove Liens or encumbrances on or any adverse claims
against Collateral, (d) to exercise collection remedies against Account
Debtors and other Persons obligated on Collateral directly or through the
use of collection agencies and other collection specialists, (e) to
advertise dispositions of Collateral through
57
publications or media of general circulation, whether or not the Collateral
is of a specialized nature, (f) to contact other Persons, whether or not in
the same business as the Company, for expressions of interest in acquiring
all or any portion of the Collateral, (g) to hire one or more professional
auctioneers to assist in the disposition of Collateral, whether or not the
Collateral is of a specialized nature, (h) to dispose of Collateral by
utilizing Internet sites that provide for the auction of assets of the
types included in the Collateral or that have the reasonable capability of
doing so, or that match buyers and sellers of assets, (i) to dispose of
assets in wholesale rather than retail markets, (j) to disclaim disposition
warranties, including, without limitation, any warranties of title, (k) to
purchase insurance or credit enhancements to insure the Agent against risks
of loss, collection or disposition of Collateral or to provide to the Agent
a guaranteed return from the collection or disposition of Collateral, or
(l) to the extent deemed appropriate by the Agent, to obtain the services
of other brokers, investment bankers, consultants and other professionals
to assist the Agent in the collection or disposition of any of the
Collateral. The Company acknowledges that the purpose of this Section is to
provide non-exhaustive indications of what actions or omissions by the
Agent would not be commercially unreasonable in the Agent's exercise of
remedies against the Collateral and that other actions or omissions by the
Agent shall not be deemed commercially unreasonable solely on account of
not being indicated in this Section. Without limitation upon the foregoing,
nothing contained in this Section shall be construed to grant any rights to
the Company or to impose any duties on the Agent that would not have been
granted or imposed by this Agreement or by applicable law in the absence of
this Section.
12.3.4 UCC and Offset Rights. The Agent may exercise, from time to
time, any and all rights and remedies available to it under the UCC or
under any other applicable law in addition to, and not in lieu of, any
rights and remedies expressly granted in this Agreement or any other Loan
Document, and may, without demand or notice of any kind, appropriate and
apply toward the payment of such of the Obligations, whether matured or
unmatured, including costs of collection and attorneys' and paralegals'
fees, and in such order of application as the Agent may, from time to time,
elect, any indebtedness of the Agent to any Loan Party, however created or
arising, including, but not limited to, balances, credits, deposits,
accounts or moneys of such Loan Party in the possession, control or custody
of, or in transit to the Agent. The Company, on behalf of itself and each
other Loan Party, hereby waives the benefit of any law that would otherwise
restrict or limit the Agent in the exercise of its right, which is hereby
acknowledged, to appropriate at any time hereafter any such indebtedness
owing from the Agent to any Loan Party.
12.4 Additional Remedies. The Agent shall have the right and power to any
of the following after the occurrence and during the continuance of any Event of
Default:
(a) instruct the Company, at its own expense, to notify any
parties obligated on any of the Collateral, including, but not
limited to, any Account Debtors, to make payment directly to the
Agent of any amounts due or to become due thereunder, or the
Agent may directly notify such obligors of the security interest
of the Agent, and/or of the assignment to the Agent of the
Collateral and direct such obligors to make payment to the Agent
of any amounts due or to become due with
58
respect thereto, and thereafter, collect any such amounts due on
the Collateral directly from such Persons obligated thereon;
(b) enforce collection of any of the Collateral, including,
but not limited to, any Accounts, by suit or otherwise, or make
any compromise or settlement with respect to any of the
Collateral, or surrender, release or exchange all or any part
thereof, or compromise, extend or renew for any period (whether
or not longer than the original period) any indebtedness
thereunder;
(c) take possession or control of any proceeds and products
of any of the Collateral, including the proceeds of insurance
thereon;
(d) extend, renew or modify for one or more periods (whether
or not longer than the original period) the Notes, any other of
the Obligations, any obligation of any nature of any other
obligor with respect to the Notes or any of the Obligations;
(e) grant releases, compromises or indulgences with respect
to the Notes, any of the Obligations, any extension or renewal of
any of the Obligations, any security therefor, or to any other
obligor with respect to the Notes or any of the Obligations;
(f) transfer the whole or any part of securities which may
constitute Collateral into the name of the Agent or the Agent's
nominee without disclosing, if the Agent so desires, that such
securities so transferred are subject to the security interest of
the Agent, and any corporation, association, or any of the
managers or trustees of any trust issuing any of said securities,
or any transfer agent, shall not be bound to inquire, in the
event that the Agent or said nominee makes any further transfer
of said securities, or any portion thereof, as to whether the
Agent or such nominee has the right to make such further
transfer, and shall not be liable for transferring the same;
(g) vote the Collateral;
(h) make an election with respect to the Collateral under
Section 1111 of the Bankruptcy Code or take action under Section
364 or any other section of the Bankruptcy Code; provided,
however, that any such action of the Agent as set forth herein
shall not, in any manner whatsoever, impair or affect the
liability of the Company under the Loan Documents, nor prejudice,
waive, nor be construed to impair, affect, prejudice or waive the
Agent's rights and remedies at law, in equity or by statute, nor
release, discharge, nor be construed to release or discharge, the
Company, any guarantor or other Loan Party or Person liable to
the Agent or any other Lender Party for the Obligations;
(i) at any time, and from time to time, accept additions to,
releases, reductions, exchanges or substitution of the
Collateral, without in any way altering, impairing, diminishing
or affecting the provisions of this Agreement, the other Loan
59
Documents, or any of the other Obligations, or the Lender
Parties' rights hereunder, under the Notes or under any of the
other Obligations;
(j) surrender any and all Life Insurance Policies (or
otherwise liquidate the same) and receive the cash surrender
value of any and all Life Insurance Policies and apply the cash
proceeds thereof to the Obligations.
The Company hereby ratifies and confirms whatever the Lender Parties' may
do with respect to the Collateral and agrees that the Agent or any other Lender
Party shall not be liable for any error of judgment or mistakes of fact or law
with respect to actions taken in connection with the Collateral.
12.5 Attorney-in-Fact. The Company hereby irrevocably makes, constitutes
and appoints the Agent (and any officer of the Agent or any Person designated by
the Agent for that purpose) as the Company's true and lawful proxy and
attorney-in-fact (and agent-in-fact) in the Company's name, place and stead,
with full power of substitution, to (i) take such actions as are permitted in
this Agreement and the other Loan Documents, (ii) execute such financing
statements and other documents and to do such other acts as the Agent may
require to perfect and preserve the Agent's security interest in, and to enforce
such interests in the Collateral, and (iii) carry out any remedy provided for in
this Agreement, including, without limitation, endorsing the Company's name to
checks, drafts, instruments and other items of payment, and proceeds of the
Collateral, executing change of address forms with the postmaster of the United
States Post Office serving the address of the Company, changing the address of
the Company to that of the Agent, opening all envelopes addressed to the Company
and applying any payments contained therein to the Obligations. The Company
hereby acknowledges that the constitution and appointment of such proxy and
attorney-in-fact are coupled with an interest and are irrevocable. The Company
hereby ratifies and confirms all that said attorney-in-fact may do or cause to
be done by virtue of any provision of this Agreement.
12.6 No Marshaling. Neither the Agent nor any other Lender Party shall be
required to marshal any present or future collateral security (including but not
limited to the Collateral Documents and the Collateral) for, or other assurances
of payment of, the Obligations or any of them or to resort to such collateral
security or other assurances of payment in any particular order. To the extent
that it lawfully may, the Company hereby agrees that it will not invoke any law
relating to the marshaling of Collateral which might cause delay in or impede
the enforcement of the Agent's rights under this Agreement or under any other
Loan Document, and, to the extent that it lawfully may, the Company hereby
irrevocably waives the benefits of all such laws.
SECTION 13. THE AGENT.
13.1 Appointment and Authorization.
(a) Each Bank hereby irrevocably (subject to Section 13.9)
appoints, designates and authorizes the Agent to take such action
on its behalf under the provisions of this Agreement and each
other Loan Document and to exercise such powers and perform such
duties as are expressly delegated to it by the terms of this
Agreement or any other Loan Document, together with such powers
as are reasonably incidental thereto. Notwithstanding any
provision to the contrary contained
60
elsewhere in this Agreement or in any other Loan Document, the
Agent shall not have any duty or responsibility except those
expressly set forth herein, nor shall the Agent have or be deemed
to have any fiduciary relationship with any Bank, and no implied
covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against the Agent.
(b) The Issuing Bank shall act on behalf of the Banks with
respect to any Letters of Credit issued by it and the documents
associated therewith. The Issuing Bank shall have all of the
benefits and immunities: (i) provided to the Agent in this
Section 13 with respect to any acts taken or omissions suffered
by the Issuing Bank in connection with Letters of Credit issued
by it or proposed to be issued by it and the applications and
agreements for letters of credit pertaining to such Letters of
Credit as fully as if the term "Agent", as used in this Section
13, included the Issuing Bank with respect to such acts or
omissions and (ii) as additionally provided in this Agreement
with respect to the Issuing Bank.
13.2 Delegation of Duties. The Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects with reasonable care.
13.3 Liability of Agent. None of the Agent nor any of its directors,
officers, employees or agents shall: (i) be liable for any action taken or
omitted to be taken by any of them under or in connection with this
Agreement or any other Loan Document or the transactions contemplated
hereby (except for its own gross negligence or willful misconduct), or (ii)
be responsible in any manner to any of the Banks for any recital,
statement, representation or warranty made by the Company or any Subsidiary
or Affiliate of the Company, or any officer thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by
the Agent under or in connection with, this Agreement or any other Loan
Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or for any
failure of the Company or any other party to any Loan Document to perform
its obligations hereunder or thereunder. The Agent shall not be under any
obligation to any Bank to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books
or records of the Company or any of the Company's Subsidiaries or
Affiliates.
13.4 Reliance by Agent. The Agent shall be entitled to rely, and shall
be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or
telephone message, statement or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by the
proper Person or Persons, and upon advice and statements of legal counsel
(including counsel to the Company), independent accountants and other
experts selected by the Agent. The Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other
Loan Document unless it shall first receive such advice or concurrence of
the Required Banks as it deems appropriate and, if it so requests,
confirmation
61
from the Banks of their obligation to indemnify the Agent against any and
all liability and expense which may be incurred by it by reason of taking
or continuing to take any such action. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or
consent of the Required Banks and such request and any action taken or
failure to act pursuant thereto shall be binding upon all of the Banks.
13.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Event of Default or Unmatured
Event of Default except with respect to defaults in the payment of
principal, interest and fees required to be paid to the Agent for the
account of the Banks, unless the Agent shall have received written notice
from a Bank or the Company referring to this Agreement, describing such
Event of Default or Unmatured Event of Default and stating that such notice
is a "notice of default." The Agent will notify the Banks of its receipt of
any such notice. The Agent shall take such action with respect to such
Event of Default or Unmatured Event of Default as may be requested by the
Required Banks in accordance with Section 12; provided, unless and until
the Agent has received any such request, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with
respect to such Event of Default or Unmatured Event of Default as it shall
deem advisable or in the best interest of the Banks.
13.6 Credit Decision. Each Bank acknowledges that the Agent has not
made any representation or warranty to it, and that no act by the Agent
hereafter taken, including any review of the affairs of the Company and its
Subsidiaries, shall be deemed to constitute any representation or warranty
by the Agent to any Bank. Each Bank represents to the Agent that it has,
independently and without reliance upon the Agent and based on such
documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Company
and its Subsidiaries, and made its own decision to enter into this
Agreement and to extend credit to the Company hereunder. Each Bank also
represents that it will, independently and without reliance upon the Agent
and based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit analysis, appraisals and
decisions in taking or not taking action under this Agreement and the other
Loan Documents, and to make such investigations as it deems necessary to
inform itself as to the business, prospects, operations, property,
financial and other condition and creditworthiness of the Company. Except
for notices, reports and other documents expressly herein required to be
furnished to the Banks by the Agent, the Agent shall not have any duty or
responsibility to provide any Bank with any credit or other information
concerning the business, prospects, operations, property, financial or
other condition or creditworthiness of the Company which may come into the
possession of the Agent.
13.7 Indemnification. Whether or not the transactions contemplated
hereby are consummated, the Banks shall indemnify upon demand the Agent and
its directors, officers, employees and agents (to the extent not reimbursed
by or on behalf of the Company and without limiting the obligation of the
Company to do so), pro rata, from and against any and all Indemnified
Liabilities; provided, no Bank shall be liable for any payment to any such
Person of any portion of the Indemnified Liabilities resulting from such
Person's gross negligence or willful misconduct. Without limitation of the
foregoing, each Bank shall reimburse the Agent upon demand for its ratable
share of any costs or out-of-pocket expenses (including Attorney Costs)
incurred by the
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Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, any other Loan
Document, or any document contemplated by or referred to herein, to the
extent that the Agent is not reimbursed for such expenses by or on behalf
of the Company. The undertaking in this Section shall survive repayment of
the Loans, cancellation of the Notes, expiration or termination of the
Letters of Credit, any foreclosure under, or modification, release or
discharge of, any or all of the Collateral Documents, termination of this
Agreement and the resignation or replacement of the Agent.
13.8 Agent in Individual Capacity. LaSalle and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking,
trust, financial advisory, underwriting or other business with the Company
and its Subsidiaries and Affiliates as though LaSalle were not the Agent or
the Issuing Bank hereunder and without notice to or consent of the Banks.
The Banks acknowledge that, pursuant to such activities, LaSalle or its
Affiliates may receive information regarding the Company or its Affiliates
(including information that may be subject to confidentiality obligations
in favor of the Company or such Affiliate) and acknowledge that the Agent
shall be under no obligation to provide such information to them. With
respect to their Loans (if any), LaSalle and its Affiliates shall have the
same rights and powers under this Agreement as any other Bank and may
exercise the same as though LaSalle were not the Agent and the Issuing
Bank, and the terms "Bank" and "Banks" include LaSalle and its Affiliates,
to the extent applicable, in their individual capacities.
13.9 Successor Agent. The Agent may resign as Agent upon thirty (30)
days notice to the Banks. If the Agent resigns under this Agreement, the
Required Banks shall, with (so long as no Event of Default exists) the
consent of the Company (which shall not be unreasonably withheld or
delayed), appoint from among the Banks a successor agent for the Banks. If
no successor agent is appointed prior to the effective date of the
resignation of the Agent, the Agent may appoint, after consulting with the
Banks and the Company, a successor agent from among the Banks. Upon the
acceptance of its appointment as successor agent hereunder, such successor
agent shall succeed to all the rights, powers and duties of the retiring
Agent and the term "Agent" shall mean such successor agent, and the
retiring Agent's appointment, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Section 13 and Sections 14.6 and 14.13 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it
was Agent under this Agreement. If no successor agent has accepted
appointment as Agent by the date which is thirty (30) days following a
retiring Agent's notice of resignation, the retiring Agent's resignation
shall nevertheless thereupon become effective and the Banks shall perform
all of the duties of the Agent hereunder until such time, if any, as the
Required Banks appoint a successor agent as provided for above.
13.10 Collateral Matters. The Banks irrevocably authorize the Agent,
at its option and in its discretion: (a) to release any Lien granted to or
held by the Agent under any Collateral Document (i) upon termination of the
Commitments and payment in full of all Loans and all other obligations of
the Company hereunder and the expiration or termination of all Letters of
Credit; (ii) constituting property sold or to be sold or disposed of as
part of or in connection with any disposition permitted hereunder; or (iii)
subject to Section 14.1, if approved, authorized or ratified in writing by
the Required Banks; or (b) to subordinate its interest in any Collateral to
any holder of a Lien on such
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Collateral which is permitted by clause (d)(i) or (d)(iii) of Section 10.8
(it being understood that the Agent may conclusively rely on a certificate
from the Company in determining whether the Debt secured by any such Lien
is permitted by Section 10.7(b)). Upon request by the Agent at any time,
the Banks will confirm in writing the Agent's authority to release, or
subordinate its interest in, particular types or items of Collateral
pursuant to this Section 13.10.
13.11 Funding Reliance.
(a) Unless the Agent receives notice from a Bank by noon,
Chicago time, on the day of a proposed borrowing that such Bank
will not make available to the Agent an amount equal to its Pro
Rata Share of such borrowing, the Agent may assume that such Bank
has made such amount available to the Agent and, in reliance upon
such assumption, make a corresponding amount available to the
Company. If and to the extent such Bank has not made such amount
available to the Agent, such Bank and the Company jointly and
severally agree to repay such amount to the Agent forthwith on
demand, together with interest thereon at the interest rate
applicable to Loans comprising such borrowing or, in the case of
any Bank which repays such amount within three Business Days, the
Federal Funds Rate (together with such other compensatory amounts
as may be required to be paid by such Bank to the Agent pursuant
to the Rules for Interbank Compensation of the Council on
International Banking or the Clearinghouse Compensation
Committee, as applicable, as in effect from time to time).
Nothing set forth in this clause (a) shall relieve any Bank of
any obligation it may have to make any Loan
hereunder.
(b) Unless the Agent receives notice from the Company prior
to the due date for any payment hereunder that the Company does
not intend to make such payment, the Agent may assume that the
Company has made such payment and, in reliance upon such
assumption, make available to each Bank its share of such
payment. If and to the extent that the Company has not made any
such payment to the Agent, each Bank which received a share of
such payment shall repay such share (or the relevant portion
thereof) to the Agent forthwith on demand, together with interest
thereon at the Base Rate (or, in the case of any Bank which
repays such amount within three Business Days, the Federal Funds
Rate). Nothing set forth in this clause (b) shall relieve the
Company of any obligation it may have to make any
payment hereunder.
SECTION 14. GENERAL.
14.1 Waiver; Amendments. No delay on the part of the Agent or any Bank
in the exercise of any right, power or remedy shall operate as a waiver
thereof, nor shall any single or partial exercise by any of them of any
right, power or remedy preclude other or further exercise thereof, or the
exercise of any other right, power or remedy. No amendment, modification or
waiver of, or consent with respect to, any provision of this Agreement or
the Notes shall in any event be effective unless the same shall be in
writing and signed and delivered by Banks having an aggregate Pro Rata
Share of not less than the aggregate Pro Rata Shar e expressly designated
herein with respect thereto or, in the absence of such designation as to
any provision of this Agreement or the Notes, by the Required Banks, and
then any such amendment, modification, waiver or consent shall be effective
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only in the specific instance and for the specific purpose for which given.
No amendment, modification, waiver or consent shall change the Pro Rata
Share of any Bank without the consent of such Bank. No amendment,
modification, waiver or consent shall: (i) increase the Commitment Amount,
(ii) extend the date for payment of any principal of or interest on the
Loans or any fees payable hereunder, (iii) reduce the principal amount of
any Loan, the rate of interest thereon or any fees payable hereunder, (iv)
release the Guaranty or all or any substantial part of the collateral
granted under the Collateral Documents or (v) reduce the aggregate Pro Rata
Share required to effect an amendment, modification, waiver or consent
without, in each case, the consent of all Banks. No provision of Section 13
or other provision of this Agreement affecting the Agent in its capacity as
such shall be amended, modified or waived without the consent of the Agent.
No provision of this Agreement relating to the rights or duties of the
Issuing Bank in its capacity as such shall be amended, modified or waived
without the consent of the Issuing Bank.
14.2 Confirmations. The Company and each holder of a Note agree from
time to time, upon written request received by it from the other, to
confirm to the other in writing (with a copy of each such confirmation to
the Agent) the aggregate unpaid principal amount of the Loans then
outstanding under such Note.
14.3 Notices. Except as otherwise provided in Sections 2.2.2 and
2.2.3, all notices hereunder shall be in writing (including facsimile
transmission) and shall be sent to the applicable party at its address
shown on Schedule 14.3 or at such other address as such party may, by
written notice received by the other parties, have designated as its
address for such purpose. Notices sent by facsimile transmission shall be
deemed to have been given when sent; notices sent by mail shall be deemed
to have been given three Business Days after the date when sent by
registered or certified mail, postage prepaid; and notices sent by hand
delivery or overnight courier service shall be deemed to have been given
when received. For purposes of Sections 2.2.2 and 2.2.3, the Agent shall be
entitled to rely on telephonic instructions from any person that the Agent
in good faith believes is an authorized officer or employee of the Company,
and the Company shall hold the Agent and each other Bank harmless from any
loss, cost or expense resulting from any such reliance.
14.4 Computations. Where the character or amount of any assetor
liability or item of income or expense is required to be determined, or any
consolidation or other accounting computation is required to be made, for
the purpose of this Agreement, such determination or calculation shall, to
the extent applicable and except as otherwise specified in this Agreement,
be made in accordance with GAAP, consistently applied; provided, if the
Company notifies the Agent that the Company wishes to amend any covenant in
Section 10 to eliminate or to take into account the effect of any change in
GAAP on the operation of such covenant (or if the Agent notifies the
Company that the Required Banks wish to amend Section 10 for such purpose),
then the Company's compliance with such covenant shall be determined on the
basis of GAAP in effect immediately before the relevant change in GAAP
became effective, until either such notice is withdrawn or such covenant is
amended in a manner satisfactory to the Company and the Required Banks.
14.5 Regulation U. Each Bank represents that it in good faith is not
relying, either directly or indirectly, upon any Margin Stock as collateral
security for the extension or maintenance by it of any credit provided for
in this Agreement.
65
14.6 Costs, Expenses and Taxes. The Company agrees to pay on demand
all reasonable out-of-pocket costs and expenses of the Agent (including
Attorney Costs) in connection with the preparation, execution, syndication,
delivery and administration of this Agreement, the other Loan Documents and
all other documents provided for herein or delivered or to be delivered
hereunder or in connection herewith (including any amendment, supplement or
waiver to any Loan Document), and all reasonable out-of-pocket costs and
expenses (including Attorney Costs) incurred by the Agent and each Bank
after an Event of Default in connection with the enforcement of this
Agreement, the other Loan Documents or any such other documents. In
addition, the Company agrees to pay, and to save the Agent and the Banks
harmless from all liability for: (a) any stamp or other taxes (excluding
income taxes and franchise taxes based on net income) which may be payable
in connection with the execution and delivery of this Agreement, the
borrowings hereunder, the issuance of the Notes or the execution and
delivery of any other Loan Document or any other document provided for
herein or delivered or to be delivered hereunder or in connection herewith
and (b) any fees of the Company's auditors in connection with any
reasonable exercise by the Agent and the Banks of their rights pursuant to
Section 10.2. All obligations provided for in this Section 14.6 shall
survive repayment of the Loans, cancellation of the Notes, expiration or
termination of the Letters of Credit and termination of this Agreement.
14.7 Subsidiary References. The provisions of this Agreement relating
to Subsidiaries shall apply only during such times as the Company has one
or more Subsidiaries.
14.8 Captions. Section captions used in this Agreement are for
convenience only and shall not affect the construction of this Agreement.
14.9 Assignments; Participations.
14.9.1 Assignments. Any Bank may, with the prior written consents
of the Issuing Bank and the Agent and (so long as no Event of Default
exists) the Company (which consents shall not be unreasonably delayed
or withheld and, in any event, shall not be required for an assignment
by a Bank to one of its Affiliates or another Bank or by LaSalle to an
Approved Fund), at any time assign and delegate to one or more
commercial banks or other Persons (any Person to whom such an
assignment and delegation is to be made being herein called an
"Assignee") all or any fraction of such Bank's Loans and Commitment
(which assignment and delegation shall be of a constant, and not a
varying, percentage of all the assigning Bank's Loans and Commitment)
in a minimum aggregate amount equal to the lesser of: (i) the amount
of the assigning Bank's Pro Rata Share of the Commitment Amount and
(ii) $3,000,000 (except in connection with an assignment to an
Affiliate or another Bank or by LaSalle to an Approved Fund, to which
no minimum amount shall apply); provided: (a) no assignment and
delegation may be made to any Person if, at the time of such
assignment and delegation, the Company would be obligated to pay any
greater amount under Section 7.6 or Section 8 to the Assignee than the
Company is then obligated to pay to the assigning Bank under such
Sections (and if any assignment is made in violation of the foregoing,
the Company will not be required to pay the incremental amounts) and
(b) the Company and the Agent shall be entitled to continue to deal
solely and directly with such Bank in connection with the interests so
assigned and delegated to an Assignee until the date when all of the
following conditions shall have been met:
66
(x) five (5) Business Days (or such lesser period of time as the
Agent and the assigning Bank shall agree) shall have passed after
written notice of such assignment and delegation, together with
payment instructions, addresses and related information with respect
to such Assignee, shall have been given to the Company and the Agent
by such assigning Bank and the Assignee,
(y) the assigning Bank and the Assignee shall have executed and
delivered to the Company and the Agent an assignment agreement
substantially in the form of Exhibit G (an "Assignment Agreement"),
together with any documents required to be delivered thereunder, which
Assignment Agreement shall have been accepted by the Agent, and
(z) except in the case of an assignment by a Bank to one of its
Affiliates, the assigning Bank or the Assignee shall have paid the
Agent a processing fee of $3,500.
From and after the date on which the conditions described above have been met:
(x) such Assignee shall be deemed automatically to have become a party hereto
and, to the extent that rights and obligations hereunder have been assigned and
delegated to such Assignee pursuant to such Assignment Agreement, shall have the
rights and obligations of a Bank hereunder and (y) the assigning Bank, to the
extent that rights and obligations hereunder have been assigned and delegated by
it pursuant to such Assignment Agreement, shall be released from its obligations
hereunder. Within five Business Days after effectiveness of any assignment and
delegation, the Company shall execute and deliver to the Agent (for delivery to
the Assignee and the Assignor, as applicable) a new Note in the principal amount
of the Assignee's Pro Rata Share of the Commitment Amount and, if the assigning
Bank has retained a Commitment hereunder, a replacement Note in the principal
amount of the Pro Rata Share of the Commitment Amount retained by the assigning
Bank retained by the assigning Bank (such Note to be in exchange for, but not in
payment of, the predecessor Note held by such assigning Bank). Each such Note
shall be dated the effective date of such assignment. The assigning Bank shall
xxxx the predecessor Note "exchanged" and deliver it to the Company. Accrued
interest on that part of the predecessor Note being assigned shall be paid as
provided in the Assignment Agreement. Accrued interest and fees on that part of
the predecessor Note not being assigned shall be paid to the assigning Bank.
Accrued interest and accrued fees shall be paid at the same time or times
provided in the predecessor Note and in this Agreement. Any attempted assignment
and delegation not made in accordance with this Section 14.9.1 shall be null and
void.
Notwithstanding the foregoing provisions of this Section 14.9.1 or any
other provision of this Agreement, any Bank may at any time assign all or any
portion of its Loans and its Note to a Federal Reserve Bank (but no such
assignment shall release any Bank from any of its obligations hereunder).
14.9.2 Participations. Any Bank may at any time sell to one or more
commercial banks or other Persons participating interests in any Loan owing
to such Bank, the Note held by such Bank, the Commitment of such Bank, the
direct or participation interest of such Bank in any Letter of Credit or
any other interest of such Bank hereunder (any Person purchasing any such
participating interest being herein called a "Participant"). In the event
of a sale by a Bank of a participating interest to a Participant: (x) such
Bank shall remain the holder of its Note for all purposes of this
Agreement, (y) the Company and the Agent shall
67
continue to deal solely and directly with such Bank in connection with such
Bank's rights and obligations hereunder and (z) all amounts payable by the
Company shall be determined as if such Bank had not sold such participation
and shall be paid directly to such Bank. No Participant shall have any
direct or indirect voting rights hereunder except with respect to any of
the events described in the fourth sentence of Section 14.1. Each Bank
agrees to incorporate the requirements of the preceding sentence into each
participation agreement which such Bank enters into with any Participant.
The Company agrees that if amounts outstanding under this Agreement and the
Notes are due and payable (as a result of acceleration or otherwise), each
Participant shall be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement, any Note and
with respect to any Letter of Credit to the same extent as if the amount of
its participating interest were owing directly to it as a Bank under this
Agreement or such Note; provided, such right of setoff shall be subject to
the obligation of each Participant to share with the Banks, and the Banks
agree to share with each Participant, as provided in Section 7.5. The
Company also agrees that each Participant shall be entitled to the benefits
of Section 7.6 and Section 8 as if it were a Bank (provided that no
Participant shall receive any greater compensation pursuant to Section 7.6
or Section 8 than would have been paid to the participating Bank if no
participation had been sold).
14.10 Governing Law. This Agreement and each Note shall be a contract made
under and governed by the internal laws of the State of Illinois applicable to
contracts made and to be performed entirely within such State. Whenever 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 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 of this
Agreement. All obligations of the Company and rights of the Agent and the Banks
expressed herein or in any other Loan Document shall be in addition to and not
in limitation of those provided by applicable law.
14.11 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Agreement.
14.12 Successors and Assigns. This Agreement shall be binding upon the
Company, the Banks and the Agent and their respective successors and assigns,
and shall inure to the benefit of the Company, the Banks and the Agent and the
successors and assigns of the Banks and the Agent.
14.13 Indemnification by the Company. In consideration of the execution and
delivery of this Agreement by the Agent and the Banks and the agreement to
extend the Commitments provided hereunder, the Company hereby agrees to
indemnify, exonerate and hold the Agent, each Bank and each of the officers,
directors, employees, Affiliates and agents of the Agent and each Bank (each a
"Bank Party") free and harmless from and against any and all actions, causes of
action, suits, losses, liabilities, damages and expenses, including Attorney
Costs (collectively, the "Indemnified Liabilities"), incurred by the Bank
Parties or any of them as a result of, or arising out of, or relating to: (i)
any tender offer, merger, purchase of stock, purchase of assets or other similar
transaction financed or proposed to be financed in whole or in part, directly or
indirectly, with the
68
proceeds of any of the Loans, (ii) the use, handling, release, emission,
discharge, transportation, storage, treatment or disposal of any hazardous
substance at any property owned or leased by the Company or any Subsidiary,
(iii) any violation of any Environmental Laws with respect to conditions at any
property owned or leased by the Company or any Subsidiary or the operations
conducted thereon, (iv) the investigation, cleanup or remediation of offsite
locations at which the Company or any Subsidiary or their respective
predecessors are alleged to have directly or indirectly disposed of hazardous
substances or (v) the execution, delivery, performance or enforcement of this
Agreement or any other Loan Document by any of the Bank Parties, except for any
such Indemnified Liabilities arising on account of the applicable Bank Party's
gross negligence or willful misconduct. If and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Company hereby agrees to
make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law. All
obligations provided for in this Section 14.13 shall survive repayment of the
Loans, cancellation of the Notes, expiration or termination of the Letters of
Credit, any foreclosure under, or any modification, release or discharge of, any
or all of the Collateral Documents and termination of this Agreement.
14.14 Nonliability of Lenders. The relationship between the Company on the
one hand and the Banks and the Agent on the other hand shall be solely that of
borrower and lender. Neither the Agent nor any Bank shall have any fiduciary
responsibility to the Company. Neither the Agent nor any Bank undertakes any
responsibility to the Company to review or inform the Company or any matter in
connection with any phase of the Company's business or operations. The Company
agrees that neither the Agent nor any Bank shall have liability to the Company
(whether sounding in tort, contract or otherwise) for losses suffered by the
Company in connection with, arising out of, or in any way related to the
transactions contemplated and the relationship established by the Loan
Documents, or any act, omission or event occurring in connection therewith,
unless it is determined in a final non-appealable judgment by a court of
competent jurisdiction that such losses resulted from the gross negligence or
willful misconduct of the party from which recovery is sought. Neither the Agent
nor any Bank shall have any liability with respect to, and the Company hereby
waives, releases and agrees not to xxx for, any special, indirect or
consequential damages suffered by the Company in connection with, arising out
of, or in any way related to the Loan Documents or the transactions contemplated
thereby.
14.15 FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS
OF THE STATE OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS; PROVIDED, ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE AGENT'S OPTION, IN THE
COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.
THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE
COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET
FORTH ABOVE. THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
BY REGISTERED MAIL, POSTAGE PREPAID, OR BY
69
PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS. THE COMPANY HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY
SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
14.16 Waiver of Jury Trial. EACH OF THE COMPANY, THE AGENT AND EACH BANK
HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN
DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH
MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING
FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING,
AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY.
- Remainder of Page Intentionally 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:
LASALLE BANK, NATIONAL ASSOCIATION, a national banking
association, as Agent and as a Bank
By: /s/ Xxxxx X. Xxxxxxxx, XX.
--------------------------------------------
Name: Xxxxx X. Xxxxxxxx, XX.
Title: Senior Vice President
COMPANY:
ENERGY WEST, INCORPORATED, a Montana corporation
By: /s/ Xxxx X. Xxxxx
--------------------------------------------
Name: Xxxx X. Xxxxx
Title: President
Credit Agreement
EXHIBIT A to Credit Agreement
FORM OF NOTE
__________,_________
$__________________ Chicago, Illinois
The undersigned, for value received, promises to pay to the order of
______________ (the "Bank") at the principal office of LaSalle Bank National
Association (the "Agent") in Chicago, Illinois the aggregate unpaid amount of
all Loans made to the undersigned by the Bank pursuant to the Credit Agreement
referred to below (as shown on the schedule attached hereto (and any
continuation thereof) or in the records of the Bank), such principal amount to
be payable on the dates set forth in the Credit Agreement.
The undersigned further promises to pay interest on the unpaid
principal amount of each Loan from the date of such Loan until such Loan is paid
in full, payable at the rate(s) and at the time(s) set forth in the Credit
Agreement. Payments of both principal and interest are to be made in lawful
money of the United States of America.
This Note evidences indebtedness incurred under, and is subject to the
terms and provisions of, the Credit Agreement, dated as of September __, 2003
(as amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement"; terms not otherwise defined herein are used herein as
defined in the Credit Agreement), among the undersigned, certain financial
institutions (including the Bank) and the Agent, to which Credit Agreement
reference is hereby made for a statement of the terms and provisions under which
this Note may or must be paid prior to its due date or its due date accelerated.
This Note is made under and governed by the laws of the State of
Illinois applicable to contracts made and to be performed entirely within such
State.
ENERGY WEST, INCORPORATED, a Montana corporation
By: _________________________
Name: _________________________
Title: _________________________
Credit Agreement
Schedule attached to Note dated ___________ __, 20__ of Energy West, Incorporated, payable
to the order of ___________________
Date and Date and
Amount of Amount of
Loan or of Repayment or of Interest
Conversion from Conversion into Period/ Unpaid
another type of another type of Maturity Principal Notation
Loan Loan Date Balance Made by
--------------- --------------- --------------- --------- --------
1. BASE RATE LOANS
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2. LIBOR LOANS
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Credit Agreement
EXHIBIT B to Credit Agreement
FORM OF COMPLIANCE CERTIFICATE
To: LaSalle Bank National Association, as Agent
Please refer to the Credit Agreement dated as of September __, 2003
(as amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement") by and among Energy West, Incorporated, a Montana
corporation (the "Company"), various financial institutions and LaSalle Bank
National Association, as agent. Terms used but not otherwise defined herein are
used herein as defined in the Credit Agreement.
I. Reports. Enclosed herewith is a copy of the [annual
audited/quarterly/monthly] report of the Company as at _____________, 20__ (the
"Computation Date"), which report fairly presents in all material respects the
financial condition and results of operations [(subject to the absence of
footnotes and to normal year-end adjustments)] of the Company as of the
Computation Date and has been prepared in accordance with GAAP consistently
applied.
II. Financial Tests. The Company hereby certifies and warrants to
you that the following is a true and correct computation as at the Computation
Date of the following ratios and/or financial restrictions contained in the
Credit Agreement:
A. Section 10.6.2 - Minimum Interest Coverage Ratio
1. EBITDA $________
2. Interest Expense $________
3. Ratio of (1) to (2) ____ to 1.00
4. Minimum required 2.00 to 1.00
B. Section 10.6.2 - Maximum Total Debt to Capital Ratio
1. Total Debt $________
2. Capital $________
3. Ratio of (1) to (2) ____ to 1.00
4. Maximum allowed .65 to 1.00
Credit Agreement
C. Section 10.6.3 - Maximum VaR and Open Positions
1(a). VaR $_________
1(b). Maximum allowed $1,000,000.00
2(a). Open Positions $_________
2(b). Maximum allowed $1,000,000.00
D. Section 10.6.6 - Capital Expenditures
1. Capital Expenditures for the
Fiscal Year $__________
2. Maximum Permitted Capital
Expenditures $5,000,000.00
The Company further certifies to you that no Event of Default or
Unmatured Event of Default has occurred and is continuing.
IN WITNESS WHEREOF, the Company has caused this Certificate to be
executed and delivered by its duly authorized officer on _________, 20_.
ENERGY WEST, INCORPORATED, a Montana corporation
By: _________________________
Name: _________________________
Title: _________________________
Credit Agreement
EXHIBIT F to Credit Agreement
FORM OF BORROWING BASE CERTIFICATE
To: LaSalle Bank National Association, as Agent
000 X. XxXxxxx Xx.
Xxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Please refer to the Credit Agreement dated as of September __, 2003
(as amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement") by and among Energy West, Incorporated, a Montana
corporation (the "Company"), various financial institutions and LaSalle Bank
National Association, as agent. This certificate (this "Certificate"), together
with supporting calculations attached hereto, is delivered to you pursuant to
the terms of the Credit Agreement. Capitalized terms used but not otherwise
defined herein shall have the same meanings herein as in the Credit Agreement.
The Company hereby certifies and warrants to the Agent and the Banks
that at the close of business on ______________, 20__ (the "Calculation Date"),
the Borrowing Base was $_____________, computed as set forth on the schedule
attached hereto.
IN WITNESS WHEREOF, the Company has caused this Certificate to be
executed and delivered by its officer thereunto duly authorized on ___________
__, 20__.
ENERGY WEST, INCORPORATED, a Montana corporation
By: _________________________
Name: _________________________
Title: _________________________
Credit Agreement
SCHEDULE to Borrowing Base Certificate dated as of ____________ __, 20__
1. Gross Accounts Receivable $_________
2. Less Ineligibles
- Agent's Lien Not Perfected $_________
- Subject to other Lien $_________
- Subject to Offset, etc. $_________
- Account Debtor not in U.S. $_________
- Sale on Approval, Sale or
Return, Xxxx and Hold or
Consignment $_________
- Over 60 days past due or
over 90 days past invoice
date $_________
- Affiliate Receivables $_________
- Other $_________
- Total $_________
3. Eligible Accounts Receivable [Item
1 minus Item 2] $_________
4. Item 3 times 80% $_________
5. Gross Inventory $_________
6. Less Ineligibles
- Agent's Lien Not Perfected $_________
- Subject to other Lien $_________
- Not Salable $_________
- Located off-site and no
Collateral Access Agreement $_________
- Not located in U.S. $_________
- Other $_________
- Total $_________
7. Eligible Inventory [Item 5 minus Item 6] $_________
8. Item 7 times 70% $_________
Credit Agreement
9. prior to the Refinancing Trigger Date and in no event on or
after the Refinancing Trigger Date (and, in the sole
discretion of Agent and the Banks, only to the extent: (y)
it is subject to a perfected Lien in favor of the Agent and
(z) it is not subject to any other assignment, claim or
Lien, other than Liens securing only the Pari Passu Debt),
eighty percent (80%) of the value of: (A) the property,
plant and equipment of the Company and its Subsidiaries, as
set forth in the Appraisal less (B) all such property, plant
and equipment which has been sold, leased, assigned,
otherwise transferred, lost, materially damaged, destroyed
or with respect to which an event has occurred which may
give rise to the issuance of Property Loss Proceeds less (C)
all depreciation which has been attributed to such property,
plant and equipment after the date of the Appraisal by the
Company, its Subsidiaries, any of their respective
accountants, agents or representatives or any governmental
authority (or which, in the reasonable discretion of Agent,
should have been so depreciated) $_________
10. Borrowing Base
[Item 4 plus Item 8 plus Item 9] $_________
11. Lesser of Item 10 and
the Commitment Amount $_________
12. Outstandings $_________
13. Net Availability
[Excess of Item 11 over Item 12] $_________
14. Required Prepayment
[Excess of Item 12 over Item 11] $_________
Credit Agreement
EXHIBIT G to Credit Agreement
Form of Assignment Agreement
__________ __, 200[_]
Reference is made to the Credit Agreement described in Item 2 of Annex
I annexed hereto (as amended through the date hereof, the "Credit Agreement").
LASALLE BANK NATIONAL ASSOCIATION, in its capacity as "Agent" for itself and all
"Banks" (as such terms are defined in the Credit Agreement),
[______________________________], in its capacity as "Issuing Bank,"
[___________________________], a [______________] (the "Assignor"), and
[___________________________], a [_________________] (the "Assignee"), hereby
agree as follows:
1. All capitalized terms used but not otherwise defined herein or in
Annex I shall have the respective meanings ascribed to such terms in the Credit
Agreement.
2. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, that interest in and to
all of the Assignor's rights and obligations under the Credit Agreement which
represents the percentage interest specified in Item 4 of Annex I of all
outstanding rights and obligations under the Credit Agreement relating to the
facility or facilities set forth in Item 2 of Annex I, including, without
limitation, such interest in (i) the Assignor's respective Commitments, (ii) the
Assignor's participation interest in the Letters of Credit and (iii) the Loans
and other Obligations owing to the Assignor relating to such facilities. In
consideration of such purchase and assumption by the Assignee, the Assignor
hereby agrees to pay to the Assignee on the Effective Date (as such term is
defined below) the amount set forth in Item 5 of Annex I. After giving effect to
such sale and assignment, the respective Commitments of the Assignee, the amount
of the Loans owing to the Assignee and the Assignee's participation interest in
the Letters of Credit will be as set forth in Item 4 of Annex I.
3. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Agreement
of the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Credit Agreement, the Notes or any other document, agreement or
instrument furnished pursuant thereto; and (iii) makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Companies or the performance or observance by the Companies of any of the
Companies' obligations under the Credit Agreement, the Notes or any other
agreement, document or instrument furnished pursuant thereto.
4. The Assignee (i) represents that it is either (A) a Person
organized under the laws of the United States or a state thereof or (B) if it is
a Person organized under the laws of any jurisdiction other than the United
States or any state thereof (a "Foreign Lender"), the information set forth in
the documents delivered pursuant to clause (vii) of this Section 4 is true and
correct as of the date hereof; (ii) confirms that it is either a commercial
lender, other financial institution or "accredited investor" (as defined in
Regulation D promulgated under the Securities Act of 1933,
as amended) which makes loans or purchases notes in the ordinary course of
business and that it will make all Loans under the Credit Agreement solely for
its own account in the ordinary course of business and not with a view to or for
sale in connection with any distribution of the Notes; provided, however, that
(x) the Assignee shall not be deemed to have breached this representation by
making assignments or granting participations as permitted in the Credit
Agreement and (y) the disposition of the Notes, or other evidence of debt held
by the Assignee shall at all times be within its exclusive control; (iii)
confirms that it has received a copy of the Credit Agreement, together with
copies of the financial statements referred to therein and such other documents
and information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Assumption Agreement; (iv) agrees
that it will independently and without reliance upon the Agent, the Assignor or
any other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Credit Agreement; (v) appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise such powers
under the Credit Agreement as are delegated to the Agent by the terms thereof,
together with such powers as are reasonably incidental thereto; (vi) agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of the Credit Agreement are required to be performed by it as a Bank;
and (vii) if it is a Foreign Lender, attaches two accurate and complete original
signed copies of forms prescribed by the Internal Revenue Service of the United
States certifying as to the Assignee's status for purposes of determining
exemption from United States withholding taxes with respect to all payments to
be made to the Assignee under the Credit Agreement or, if applicable, such other
documents as are necessary to indicate that such payments are subject to such
rates at a rate reduced by an applicable tax treaty.
5. Following the execution of this Assignment and Assumption Agreement
by the Assignor and the Assignee, it will be delivered to the Agent for
acceptance and recording by the Agent in the Register. The effective date of
this Assignment and Assumption Agreement shall be the date of execution and
delivery hereof to the Agent by the Assignor and the Assignee unless otherwise
specified on Item 6 of Annex I hereto (the "Effective Date").
6. Upon such acceptance and recording by the Agent, as of the
Effective Date, (i) the Assignee shall be a party to the Credit Agreement and,
to the extent provided in this Assignment and Assumption Agreement, have the
rights and obligations of a Bank thereunder and (ii) the Assignor shall, to the
extent provided in this Assignment and Assumption Agreement, relinquish its
rights and be released from its obligations under the Credit Agreement.
7. Upon such acceptance and recording by the Agent, from and after the
Effective Date, the Agent shall make all payments under the Credit Agreement in
respect of the interest assigned hereby (including, without limitation, all
payments of principal, interest and fees (if applicable) with respect thereto)
to the Assignee. Upon the Effective Date, the Assignee shall pay to the Assignor
the principal amount of any outstanding Loans under the Credit Agreement which
are being assigned hereunder, net of any closing costs. The Assignor and the
Assignee shall make all appropriate adjustments in payments under the Credit
Agreement for periods prior to the Effective Date directly between themselves on
the Effective Date.
8. This Assignment and Assumption Agreement shall be governed by, and
construed in accordance with, the internal laws (as opposed to conflict of laws
provisions) of the
State of Illinois.
- Remainder of Page Intentionally Left Blank -
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Assumption Agreement and Annex I hereto be executed by their respective officers
thereunto duly authorized, as of the date first above written.
[___________________], as Assignor
By: ______________________________
Name: ______________________________
Title: ______________________________
[____________________], as Assignee
By: ______________________________
Name: ______________________________
Title: ______________________________
Accepted:
LASALLE BANK NATIONAL ASSOCIATION,
as Agent and [as Issuing Bank]
By: ______________________________
Name: ______________________________
Title: ______________________________
Consented and Agreed [to the extent required under the terms of the Credit
Agreement]
ENERGY WEST, INCORPORATED, a Montana corporation
By: ___________________________
Name: ___________________________
Title: ___________________________
ANNEX I
1. The Company: Energy West, Incorporated
2. Name and Date of Credit Agreement: Credit Agreement dated as of September __,
2003 by and among the Company, each of the
financial institutions from time to time parties
thereto, and LaSalle Bank National Association, as
Agent
3. Date of Assignment Agreement: ___________ __, 200[_]
Commitments and Assignments:
Assignor's Aggregate Commitments
Prior to Assignment: $______________
Amount Assigned $______________
Assignor's Revised Commitment $______________
Assignor's Percentage of
Aggregate Commitments Prior to
Assignment _______%
Percentage Assigned _______%
Percentage Remaining _______%
Commitment Amount
Prior to Assignment $___________
($__________Loan outstanding)
Amount Assigned $___________
($__________Loan outstanding)
Assignor's Revised Commitment $___________
($__________Loan outstanding)
Percentage of Commitment Amount Prior to Assignment _______%
(as a percentage of Commitment Amount)
Percentage Assigned _______%
Percentage Remaining _______%
5. Assignee's Purchase Amounts:
a. Revolving Loans $____________
b. Closing Fees $_____________
TOTAL: $______________
Effective Date: __________ __, _______
7. Notice and Payment Instructions: ASSIGNOR:
Payment Notice
------- ------
ABA#: [Address]
[Bank]
Acct#:
Acct: Attention:
Reference: Telephone:
Facsimile:
Reference:
ASSIGNEE:
Payment Notice
------- ------
ABA#: [Address]
[Bank]
Acct#:
Acct: Attention:
Reference: Telephone:
Facsimile:
Reference:
- Remainder of Page Intentionally Left Blank -
[Signature Page Follows]
Accepted and Agreed:
[________________], as Assignor [_________________], as Assignee
By:_________________________ By:____________________________
Name:______________________ Name:_________________________
Title:______________________ Title:__________________________