EXHIBIT 99-A-1
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CREDIT AGREEMENT
Dated as of April 30, 2002
Among
OTTER TAIL CORPORATION,
THE BANKS,
As defined herein,
and
U.S. BANK NATIONAL ASSOCIATION,
as a Bank and as Agent
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of April 30, 2002, is by and between
OTTER TAIL CORPORATION, a Minnesota corporation (the "Borrower"), the banks or
financial institutions listed on the signature pages hereof or which hereafter
become parties hereto by means of assignment and assumption as hereinafter
described (individually referred to as a "Bank" or collectively as the "Banks"),
and U.S. BANK NATIONAL ASSOCIATION, a national banking association, as agent for
the Banks (in such capacity, the "Agent").
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
Section 1.1 Defined Terms. In addition to the terms defined elsewhere
in this Agreement, the following terms shall have the following respective
meanings (and such meanings shall be equally applicable to both the singular and
plural form of the terms defined, as the context may require):
"Advance" means the portion of the outstanding Revolving Loans by the
Banks as to which one of the available interest rate options and, if pertinent,
an Interest Period, is applicable. An Advance may be a "Eurodollar Advance",
"Base Rate Advance" (each, a "type" of Advance).
"Adverse Event" means the occurrence of any event that could have a
material adverse effect on the business, operations, property, assets or
condition (financial or otherwise) of the Borrower and the Subsidiaries as a
consolidated enterprise or on the ability of the Borrower or the Guarantor to
perform its obligations under the Loan Documents.
"Agent" means U.S. Bank National Association, as agent for the Banks
hereunder and each successor, as provided in Section 12.8, who shall act as
Agent.
"Agent's Fee Letter" means the letter agreement, dated as of the date
hereof (as hereafter amended from time to time) between the Borrower and the
Agent respecting certain fees payable to the Agent for its own account.
"Agreement" means this Credit Agreement, as it may be amended,
modified, supplemented, restated or replaced from time to time.
"Applicable Facility Fee Rate; Applicable Margin": The percentages set
forth below, determined based on the applicable Level:
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Applicable Margin
----------------- Applicable
Eurodollar Base Rate Facility
Level: Advances Advances Fee Rate
----- -------- --------- ----------
Level I: ...................... 0.30% 0.0% 0.10%
Level II: ..................... 0.375% 0.0% 0.125%
Level III: .................... 0.45% 0.0% 0.15%
Level IV ...................... 0.60% 0.0% 0.20%
The Applicable Facility Fee Rate and Applicable Margin shall be those shown for
Level II as of the date of this Agreement. The Applicable Facility Fee Rate and
Applicable Margin shall be adjusted ten (10) Business Days after any change in
ratings that would require such adjustment. For purposes of the foregoing, the
Levels shall be defined and determined as follows:
Level I shall apply if the Borrower's Long Term Debt Rating is A+ or
better (S&P) or A1 or better (Moody's) but no numerically lower Level
applies.
Level II shall apply if the Borrower's Long Term Debt Rating is A or
better (S&P) or A2 or better (Moody's) but no numerically lower Level
applies.
Level III shall apply if the Borrower's Long Term Debt Rating is A-
(S&P) or A3 (Moody's) but no numerically lower Level applies
Level IV shall apply if the Borrower's Long Term Debt Rating is BBB+ or
below (S&P) or Baa1 or below (▇▇▇▇▇'▇) or if the Borrower shall not
have a current Long Term Debt Rating from both S&P and Moody's.
In the event of a split rating (i.e., Long Term Debt Ratings by S&P and Moody's
that would not be in the same Level), the Level shall be based on the higher
Long Term Debt Rating unless the ratings are more than one Level apart, in which
case the Level would be based on the Long Term Debt Rating one Level lower than
the higher of the two Long Term Debt Ratings.
"Base Rate": For any day, a fluctuating rate per annum as determined by
the Agent to equal to the greater of (i) the Prime Rate in effect on such day,
or (ii) a rate per annum equal to the Federal Funds Effective Rate in effect on
such day plus 0.50% per annum. If for any reason the Agent shall have determined
(which determination shall be conclusive in the absence of manifest error) that
it is unable to ascertain the Federal Funds Effective Rate for any reason
(including, without limitation, the inability or failure of the Agent to obtain
sufficient bids or publications in accordance with the terms hereof), the Base
Rate shall be a fluctuating rate per annum equal to the Prime Rate in effect
from time to time per annum until the circumstances giving rise to such
inability no longer exist.
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"Base Rate Advance" means an Advance designated as such in a notice of
borrowing under Section 2.3 or a notice of continuation or conversion under
Section 2.4.
"Business Day" means any day (other than a Saturday, Sunday or legal
holiday in the State of Minnesota) on which national banks are permitted to be
open in Minneapolis, Minnesota and New York, New York and, with respect to
Eurodollar Advances, a day on which dealings in Dollars may be carried on by the
Agent in the interbank eurodollar market.
"Capital Expenditure" means any amount debited to the fixed asset
account on the consolidated balance sheet of the Borrower in respect of (a) the
acquisition (including, without limitation, acquisition by entry into a
Capitalized Lease), construction, improvement, replacement or betterment of
land, buildings, machinery, equipment or of any other fixed assets or
leaseholds, and (b) to the extent related to and not included in (a) above,
materials, contract labor and direct labor (excluding expenditures properly
chargeable to repairs or maintenance in accordance with GAAP).
"Capitalized Lease" means any lease which is or should be capitalized
on the books of the lessee in accordance with GAAP.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute, together with regulations thereunder.
"Commitment" means the maximum unpaid principal amount of the Loans of
all Banks which may from time to time be outstanding hereunder, being initially
$50,000,000, as the same may be reduced from time to time pursuant to Section
4.3, or, if so indicated, the maximum unpaid principal amount of Loans of any
Bank (which amounts are set forth on Schedule 1.1(a) hereto or in the relevant
Assignment and Assumption Agreement for such Bank) and, as the context may
require, the agreement of each Bank to make Loans to the Borrower and to
participate in the Letters of Credit subject to the terms and conditions of this
Agreement up to its Commitment.
"Compliance Certificate" means a certificate in the form of Exhibit B,
duly completed and signed by an authorized officer of the Borrower.
"Default" means any event which, with the giving of notice to the
Borrower or lapse of time, or both, would constitute an Event of Default.
"EBIT" means, for any period of determination, the consolidated net
income of the Borrower and its Subsidiaries before provision for income taxes,
plus, to the extent subtracted in determining consolidated net income, Interest
Expense, all as determined in accordance with GAAP, excluding (to the extent
included): (a) non-operating gains (including, without limitation, extraordinary
or nonrecurring gains, gains from discontinuance of operations and gains arising
from the sale of assets other than inventory) during the applicable period; and
(b) similar non-operating losses during such period.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute, together with regulations thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is a member of a group of which the Borrower is a member and
which is treated as a single employer under Section 414 of the Code.
"Eurodollar Advance" means an Advance designated as such in a notice of
borrowing under Section 2.3 or a notice of continuation or conversion under
Section 2.4.
"Eurodollar Interbank Rate" means the offered rate for deposits in
United States Dollars for delivery of such deposits on the first day of an
Interest Period of a Eurodollar Advance, for the number of days comprised
therein, quoted by the Agent from Page 3750 of the Dow ▇▇▇▇▇ Markets (Telerate)
screen as of approximately 11:00 a.m., London time, on the day that is two
Banking Days preceding the first day of the Interest Period of such Eurodollar
Advance, or the rate for such deposits determined by the Agent at such time
based on such other published service of general application as shall be
selected by the Agent for such purpose; provided, that in lieu of determining
the rate in the foregoing manner, the Agent may determine the rate based on
rates offered to the Agent for deposits in United States Dollars in the
interbank eurodollar market at such time for delivery on the first day of the
Interest Period for the number of days comprised therein.
"Eurodollar Rate (Reserve Adjusted)" means a rate per annum calculated
for the Interest Period of a Eurodollar Advance in accordance with the following
formula:
ERRA = Eurodollar Interbank Rate
-------------------------
1.00 - ERR
In such formula, "ERR" means "Eurodollar Reserve Rate" and "ERRA" means
"Eurodollar Rate (Reserve Adjusted)", in each instance determined by the Agent
for the applicable Interest Period. The Agent's determination of all such rates
for any Interest Period shall be conclusive in the absence of manifest error.
"Eurodollar Rate (Reserve Adjusted) Daily Floating" means the
Eurodollar Rate (Reserve Adjusted) determined by the Agent on each Business Day
based on Interest Periods of one month reported on such Business Day (without
taking into account the two-day future delivery convention applicable to such
reports), which rate shall remain in effect until the next following Business
Day.
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"Eurodollar Reserve Rate" means a percentage equal to the daily average
during such Interest Period of the aggregate maximum reserve requirements
(including all basic, supplemental, marginal and other reserves), as specified
under Regulation D of the Federal Reserve Board, or any other applicable
regulation that prescribes reserve requirements applicable to Eurocurrency
liabilities (as presently defined in Regulation D) or applicable to extensions
of credit by the Agent the rate of interest on which is determined with regard
to rates applicable to Eurocurrency liabilities. Without limiting the generality
of the foregoing, the Eurocurrency Reserve Rate shall reflect any reserves
required to be maintained by the Agent against (i) any category of liabilities
that includes deposits by reference to which the Eurodollar Interbank Rate is to
be determined, or (ii) any category of extensions of credit or other assets that
includes Eurodollar Advances.
"Event of Default" means any event described in Section 10.1.
"Federal Funds Effective Rate": For any day, an interest rate per annum
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a Business Day,
the average of the quotations for such day on such transactions received by the
Agent from three Federal funds brokers of recognized standing selected by it. In
the case of a day which is not a Business Day, the Federal Funds Effective Rate
for such day shall be the Federal Funds Effective Rate for the preceding
Business Day. Each change in the Base Rate due to a change in the Federal Funds
Effective Rate shall take effect on the effective date of such change in the
Federal Funds Effective Rate.
"Facility Fees" shall have the meaning set forth in Section 3.3.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or an successor thereto.
"GAAP" means generally accepted accounting principles as applied in the
preparation of the audited consolidated financial statement of the Borrower
referred to in Section 7.5.
"Guarantor" means Varistar Corporation, a Minnesota corporation and
each successor and assign thereof.
"Guaranty" means the Guaranty by the Guarantor in the form of Exhibit C
hereto, duly completed and executed by the Guarantor.
"Indebtedness" means, without duplication, all obligations, contingent
or otherwise, which in accordance with GAAP should be classified upon the
obligor's balance sheet as liabilities, but in any event including the following
(whether or not they should be classified as liabilities upon such balance
sheet): (a) obligations secured by any mortgage, pledge, security interest,
lien, charge or other encumbrance existing on property owned or acquired subject
thereto, whether or not the obligation secured thereby shall have been assumed
and whether or not the obligation secured is the obligation of the owner or
another party; (b) any obligation on account of deposits or advances; (c) any
obligation for the deferred purchase price of any property or services, except
trade accounts payable arising in the ordinary course of business, (d) any
obligation as lessee under any Capitalized Lease; (e) all guaranties,
endorsements and other contingent obligations in respect to Indebtedness of
others; (f) undertakings or agreements to reimburse or indemnify issuers of
letters of credit; and (g) net liabilities under any interest rate swap, collar
or other interest rate hedging agreement. For all purposes of this Agreement,
the Indebtedness of any Person shall include the Indebtedness of any partnership
or joint venture in which such Person is a general partner or a joint venturer.
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"Intercreditor Agreement" means that certain Intercreditor Agreement,
to be dated on or about the date of this Agreement, among certain holders of the
Borrower's 6.63% Senior Notes, due December 1, 2011 and the Agent, as Agent for
the Banks, in the form of Exhibit D hereto.
"Interest and Dividend Coverage Ratio" means the ratio, calculated for
each period of four consecutive fiscal quarters of the Borrower, of: (a) EBIT
for such period; to (b) the sum for such period of (i) Interest Expense, plus
(ii) dividends or interest on Preferred Stock.
"Interest-bearing Debt" means, without duplication, all obligations of
the Borrower or a Subsidiary on a consolidated basis: (a) in respect of borrowed
money; (b) secured by a mortgage, pledge, security interest, lien or charge on
the assets of the Borrower or a Subsidiary, whether the obligation secured is
the obligation of the owner or another Person (provided that non-recourse
obligations will only be taken into account up to the fair market value of the
related property); (c) any obligation for the deferred purchase price of any
property or services evidenced by a note, payment contract (other than an
account payable arising in the ordinary course of business) or other instrument,
(d) any obligation as lessee under any Capitalized Lease; (e) all guaranties and
contingent or other legal obligations in respect to Interest-bearing Debt of
other Persons, excluding ordinary course endorsements; (f) net liabilities under
any interest rate swap, collar or other interest rate hedging agreement. and (g)
undertakings or agreements to reimburse or indemnify issuers of letters of
credit other than commercial letters of credit.
"Interest Expense means, for any period of determination, the aggregate
consolidated amount, without duplication, of interest paid, accrued or scheduled
to be paid in respect of any Indebtedness of the Borrower and its Subsidiaries,
including in all cases interest expense determined in accordance with GAAP and
(a) all but the principal component of payments in respect of conditional sale
contracts, Capitalized Leases and other title retention agreements, (b)
commissions, discounts and other fees and charges with respect to letters of
credit and bankers' acceptance financings and (c) net costs under any interest
rate swap, collar or other interest rate hedging agreements, in each case
determined in accordance with GAAP.
"Interest Period" means, for any Eurodollar Advance, the period
commencing on the borrowing date of such Eurodollar Advance or the date a Base
Rate Advance is converted into such Eurodollar Advance, or the last day of the
preceding Interest Period for such Eurodollar Advance, as the case may be, and
ending on the numerically corresponding day one, two, three or six months
thereafter, as selected by the Borrower pursuant to Section 2.3 or Section 2.4;
provided, that:
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(a) any Interest Period which would otherwise end on a day which is not
a Business Day shall end on the next succeeding Business Day unless
such next succeeding Business Day falls in another calendar month, in
which case such Interest Period shall end on the next preceding
Business Day;
(b) any Interest Period which begins on the last Business Day of a
calendar month (or 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
(c) no Interest Period shall extend beyond the Termination Date.
"Investment" means the acquisition, purchase, making or holding of any
stock or other security, any loan, advance, contribution to capital, extension
of credit (except for trade and customer accounts receivable for inventory sold
or services rendered in the ordinary course of business and payable in
accordance with customary trade terms), any acquisitions of real or personal
property (other than real and personal property acquired in the ordinary course
of business) and any purchase or commitment or option to purchase stock or other
debt or equity securities of or any interest in another Person or any integral
part of any business or the assets comprising such business or part thereof.
"Letters of Credit" shall have the meaning set forth in Section 2.8.
"Letter of Credit Agreements" shall have the meaning set forth in
Section 2.8.
"Letter of Credit Obligations" shall mean the aggregate amount of all
possible drawings under all Letters of Credit plus all amounts drawn under any
Letter of Credit and not reimbursed by the Borrower under the applicable Letter
of Credit Agreement.
"Lien" means any security interest, mortgage, pledge, lien,
hypothecation, judgment lien or similar legal process, charge, encumbrance,
title retention agreement or analogous instrument or device (including, without
limitation, the interest of the lessors under Capitalized Leases and the
interest of a vendor under any conditional sale or other title retention
agreement).
"Loans": The Revolving Loans and the Swing Line Loans.
"Loan Documents" means this Agreement, the Notes, each Letter of Credit
Agreement, the Guaranty, the Intercreditor Agreement and each other instrument,
document, guaranty, security agreement, mortgage, or other agreement executed
and delivered by the Borrower or any guarantor or party granting security
interests in connection with this Agreement, the Loans or any collateral for the
Loans.
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"Long Term Debt Rating" means the rating assigned by S&P and Moody's to
the long term, unsecured and unsubordinated indebtedness of the Borrower.
"Material Subsidiary" means (a) the Subsidiaries listed on Schedule
1.1(b) hereto, and (b) any Subsidiary acquired after the date of this Agreement
if the acquisition of such Subsidiary has required consent of the Required Banks
under Section 9.7(j) to be deemed permitted under this Agreement.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
"Notes": The Revolving Note and the Swing Line Note.
"Payment Date" means the Termination Date, plus (a) the last day of
each Interest Period for each Eurodollar Advance and, if such Interest Period is
in excess of three months after the first day of such Interest Period, and
thereafter each day three months after each succeeding Payment Date; (b) the
date of payment for interest accrued on the principal amount of any Swing Line
Loan, but not less frequently than one time each month (on each day falling on
one month intervals) after the making of any Swing Line Loan, and (c) the last
day of each March, June, September and December of each year for each Base Rate
Advance and for any fees including, without limitation, Utilization Fees and
Facility Fees.
"PBGC" means the Pension Benefit Guaranty Corporation, established
pursuant to Subtitle A of Title IV of ERISA, and any successor thereto or to the
functions thereof.
"Percentage" means, as to any Bank, the proportion, expressed as a
percentage, that such Bank's Commitment bears to the total Commitments of all
Banks. The Percentages of the Banks as of the date of this Agreement are set
forth on Schedule 1.1(a).
"Permitted Divestitures" means sales of stock or assets, transfers of
stock or assets, mergers resulting in divestiture of stock or assets or other
divestitures of assets of the Borrower and Subsidiaries, which, in the aggregate
for all such transactions after December 31, 2001, shall not result in the sale,
transfer or other divestiture of stock or assets having a value in excess of 15%
of the consolidated assets of the Borrower and its Subsidiaries at the time of
determination.
"Person" means any natural person, corporation, limited liability
company, partnership, joint venture, firm, association, trust, unincorporated
organization, government or governmental agency or political subdivision or any
other entity, whether acting in an individual, fiduciary or other capacity.
"Plan" means an employee benefit plan or other plan, maintained for
employees of the Borrower or of any ERISA Affiliate, and subject to Title IV of
ERISA or Section 412 of the Code.
"Preferred Stock" means stock of the Borrower other than common stock.
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"Prime Rate" means the rate of interest from time to time announced by
the Agent as its "prime rate." For purposes of determining any interest rate
which is based on the Prime Rate, such interest rate shall be adjusted each time
that the prime rate changes.
"Related Party" means any Person (other than a Subsidiary): (a) which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, the Borrower, (b) which
beneficially owns or holds 5% or more of the equity interest of the Borrower; or
(c) 5% or more of the equity interest of which is beneficially owned or held by
the Borrower or a Subsidiary. The term "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"Reportable Event" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such Section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation has waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event, provided that a failure to meet the minimum
funding standard of Section 412 of the Code and Section 302 of ERISA shall be a
reportable event regardless of the issuance of any such waivers in accordance
with Section 412(d) of the Code.
"Required Banks" means those Banks whose total Percentage equals at
least 66 2/3%, or if no Commitments remain in effect, whose share of principal
of the Loans equals at least 66 2/3% of the aggregate outstanding principal of
all Loans.
"Restricted Payments" means any expenditure by the Borrower or any
Subsidiary for purchase, redemption or other acquisition for value of any shares
of the Borrower's or any Subsidiary's stock, payment of any dividend thereon
(other than stock dividends and dividends payable solely to the Borrower), any
distribution on, or payment on account of the purchase, redemption, defeasance
or other acquisition or retirement for value of, any shares of the Borrower's or
any Subsidiary's stock, or the setting aside of any funds for any such purpose
(other than payment to, or on account of or for the benefit of, the Borrower
only).
"Revolving Loans": The Loans described in Section 2.1(a).
"Revolving Note": The promissory note of the Borrower described in
Section 2.5(a), substantially in the form of Exhibit A-1, as such promissory
note may be amended, modified or supplemented from time to time, and such term
shall include any substitutions for, or renewals of, such promissory note.
"S&P" means Standard & Poor's Ratings Group.
"Subsidiary" means any Person of which or in which the Borrower and its
other Subsidiaries own directly or indirectly 50% or more of: (a) the combined
voting power of all classes of stock having general voting power under ordinary
circumstances to elect a majority of the board of directors of such Person, if
it is a corporation, (b) the capital interest or profit interest of such Person,
if it is a partnership, joint venture or similar entity, or (c) the beneficial
interest of such Person, if it is a trust, association or other unincorporated
organization.
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"Swing Line Commitment": The maximum unpaid principal amount of the
Swing Line Loans which may from time to time be outstanding hereunder, and, as
the context may require, the agreement of the Swing Line Bank to make the Swing
Line Loans to the Borrower subject to the terms and conditions of this
Agreement.
"Swing Line Bank": U.S. Bank.
"Swing Line Loans": The Loans described in Section 2.1(b).
"Swing Line Note": The promissory note of the Borrower described in
Section 2.5(b), substantially in the form of Exhibit A-2, as such promissory
note may be amended, modified or supplemented from time to time, and such term
shall include any substitutions for, or renewals of, such promissory note.
"Swing Line Participation Amount": As defined in Section 2.7(b).
"Termination Date" means the earliest of (a) April 29, 2003, (b) the
date on which the Commitments are terminated pursuant to Section 10.2 hereof or
(c) the date on which the Commitments are reduced to zero pursuant to Section
4.3 hereof.
"Total Capitalization" means as of any date of determination, the sum
of (a) the amounts set forth on the consolidated balance sheet of the Borrower
as the sum of the common stocks, preferred stock, additional paid-in capital and
retained earnings of the Borrower (excluding treasury stock); plus (b) the
principal amount of Interest-bearing Debt of the Borrower and the Subsidiaries.
"Total Utilization" means the sum, at any time of (a) the outstanding
principal amount of the Loans, plus (b) outstanding Letter of Credit
Obligations.
"Unrefunded Swing Line Loans": As defined in Section 2.7(b).
"U.S. Bank" means U.S. Bank National Association, in its individual
capacity and not as Agent hereunder.
"Utilization Fees" shall have the meaning set forth in Section 3.2.
Section 1.2 Accounting Terms and Calculations. Except as may be
expressly provided to the contrary herein, all accounting terms used herein
shall be interpreted and all accounting determinations hereunder (including,
without limitation, determination of compliance with financial ratios and
restrictions in Articles VIII and IX hereof) shall be made in accordance with
GAAP consistently applied. Any reference to "consolidated" financial terms shall
be deemed to refer to those financial terms as applied to the Borrower and its
Subsidiaries in accordance with GAAP.
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Section 1.3 Computation of Time Periods. In this Agreement, in the
computation of a period of time from a specified date to a later specified date,
unless otherwise stated the word "from" means "from and including" and the word
"to" or "until" each means "to but excluding."
Section 1.4 Other Definitional Terms. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. References to Sections, Exhibits, schedules and like references are
to this Agreement unless otherwise expressly provided.
ARTICLE II TERMS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT
Section 2.1 The Commitments. Subject to the terms and conditions
hereof and in reliance upon the warranties of the Borrower herein:
(a) each Bank agrees, severally and not jointly, to make loans (each, a
"Revolving Loan" and, collectively, the "Revolving Loans") to the
Borrower from time to time from the date hereof until the Termination
Date, during which period the Borrower may repay and reborrow in
accordance with the provisions hereof, provided, that the aggregate
unpaid principal amount of any Bank's Revolving Loans, its Percentage
of Letter of Credit Obligations and its Percentage of Swing Line Loans
exceed such Bank's Commitment and provided, further, that the total of
all outstanding Revolving Loans, Letter of Credit Obligations and Swing
Line Loans shall not exceed the aggregate Commitments of all Banks at
any time. The Revolving Loans shall be made by the Banks on a pro rata
basis, calculated for each Bank based on its Percentage.
(b) the Swing Line Bank agrees to make loans (each a "Swing Line Loan"
and, collectively, the "Swing Line Loans") to the Borrower from time to
time from the date hereof until the Termination Date, during which
period the Borrower may repay and reborrow in accordance with the
provisions hereof, provided, that the aggregate unpaid principal amount
of the Swing Line Loans at any one time outstanding shall not exceed
the lesser of (i) $7,500,000, or (ii) the amount of U.S. Bank's
Commitment less the amount of U.S. Bank's Revolving Loans outstanding
at the time of determination.
Section 2.2 Advance Options. The Revolving Loans shall be constituted
of Eurodollar Advances and/or Base Rate Advances, as shall be selected by the
Borrower, except as otherwise provided herein. Any combination of types of
Advances may be outstanding at the same time, except that the total number of
outstanding Eurodollar Advances shall not exceed eight (8) at any one time. Each
Eurodollar Advance shall be in a minimum amount of $500,000. Each Base Rate
Advance shall be in a minimum amount of $100,000. Swing Line Loans may be in any
amount requested by the Borrower.
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Section 2.3 Borrowing Procedures.
(a) Request by ▇▇▇▇▇▇▇▇. Any request by the Borrower for a Loan shall
be in writing, or by telephone promptly confirmed in writing, and must
be given so as to be received by the Agent not later than:
(i) 1:00 p.m., Minneapolis time, one Business day prior to the
date of the requested Loan, if the Loan shall be comprised of
Base Rate Advances;
(ii) 12:00 noon, Minneapolis time, three Business days prior
to the date of the requested Revolving Loan, if the Revolving
Loan shall be, or shall include, a Eurodollar Advance; or
(iii) 12:00 noon., Minneapolis time, on the date of any
requested Swing Line Loan.
Each request for a Loan shall specify (1) the borrowing date (which
shall be a Business Day), (2) the amount of such Loan and the type or
types of Advances comprising such Loan, and (3) if such Loan shall
include Eurodollar Advances, the initial Interest Periods for such
Advances.
(b) Funding of Agent. The Agent shall promptly notify each other Bank
of the receipt of such request, the matters specified therein, and of
such Bank's Percentage of the requested Revolving Loans. On the date of
the requested Revolving Loans, each Bank shall provide its share of the
requested Revolving Loans to the Agent in immediately available funds
not later than 11:00 a.m., Minneapolis time. On the date of any
requested Swing Line Loans, the Swing Line Bank shall provide the
requested Swing Line Loan to the Agent in immediately available funds
not later than 4:00 p.m., Minneapolis time. Unless the Agent determines
that any applicable condition specified in Article VI has not been
satisfied, the Agent will make the requested Loans available to the
Borrower at the Agent's principal office in Minneapolis, Minnesota in
immediately available funds not later than 5:00 p.m. (Minneapolis time)
on the lending date so requested. If the Agent has made a Revolving
Loan to the Borrower on behalf of a Bank but has not received the
amount of such Revolving Loan from such Bank by the time herein
required, such Bank shall pay interest to the Agent on the amount so
advanced at the overnight Federal Funds rate from the date of such
Revolving Loan to the date funds are received by the Agent from such
Bank, such interest to be payable with such remittance from such Bank
of the principal amount of such Revolving Loan (provided, however, that
the Agent shall not make any Revolving Loan on behalf of a Bank if the
Agent has received prior notice from such Bank that it will not make
such Revolving Loan). If the Agent does not receive payment from such
Bank by the next Business Day after the date of any Revolving Loan, the
Agent shall be entitled to recover such Revolving Loan, with interest
thereon at the rate then applicable to the such Revolving Loan, on
demand, from the Borrower, without prejudice to the Agent's and the
Borrower's rights against such Bank. If such Bank pays the Agent the
amount herein required with interest at the overnight rate before the
Agent has recovered from the Borrower, such Bank shall be entitled to
the interest payable by the Borrower with respect to the Revolving Loan
in question accruing from the date the Agent made such Revolving Loan.
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2.4 Continuation or Conversion of Loans. The Borrower may elect to (i)
continue any outstanding Eurodollar Advance from one Interest Period into a
subsequent Interest Period to begin on the last day of the earlier Interest
Period, or (ii) convert any outstanding Advance into another type of Advance (on
the last day of an Interest Period only, in the instance of a Eurodollar
Advance), by giving the Agent notice in writing, or by telephone promptly
confirmed in writing, given so as to be received by the Agent not later than:
(a) 1:00 p.m., Minneapolis time, one Business day prior to the date of
the requested continuation or conversion, if the continuing or
converted Advance shall be a Base Rate Advance; or
(b) 12:00 noon, Minneapolis time, three Business days prior to the date
of the requested continuation or conversion, if the continuing or
converted Advance shall be a Eurodollar Advance.
Each notice of continuation or conversion of an Advance shall specify (i) the
effective date of the continuation or conversion date (which shall be a Business
Day), (ii) the amount and the type or types of Advances following such
continuation or conversion (subject to the limitation on amount set forth in
Section 2.2), and (iii) for continuation as, or conversion into, Eurodollar
Advances, the Interest Periods for such Advances. Absent timely notice of
continuation or conversion, following expiration of an Interest Period unless
the Eurodollar Advance is paid in full the Agent may at any time thereafter
convert the Eurodollar Advance into a Base Rate Advance. Until such time as such
Advance is converted into a Base Rate Advance by the Agent or the Borrower or is
continued as a Eurodollar Advance with a new Interest Period by notice by the
Borrower as provided above, such Advance shall continue to accrue interest at a
rate equal to the interest rate applicable during the expired Interest Period
adjusted, however, to reflect changes in the Applicable Margin. No Advance shall
be continued as, or converted into, a Eurodollar Advance if the shortest
Interest Period for such Advance may not transpire prior to the Termination Date
or if a Default or Event of Default shall exist.
Section 2.5 The Notes. The Loans shall be evidenced by the following
Notes:
(a) The Revolving Loans of each Bank shall be evidenced by a promissory
note of the Borrower (the "Revolving Notes"), substantially in the form
of Exhibit A-1 hereto, in the amount of such Bank's Commitment
originally in effect and dated as of the date of this Agreement. The
Banks shall enter in their respective records the amount of each
Revolving Loan and Advance, the rate of interest borne by each Advance
and the payments made on the Revolving Loans, and such records shall be
deemed conclusive evidence of the subject matter thereof, absent
manifest error.
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(a) The Swing Line Loans shall be evidenced by a promissory note of the
Borrower (the "Swing Line Note "), substantially in the form of Exhibit
A-2 hereto, in the amount of the Swing Line Commitment. The Swing Line
Bank shall enter in its records the amount of each Swing Line Loan and
the payments made on the Swing Line Loans, and such records shall be
deemed conclusive evidence of the subject matter thereof, absent
manifest error.
Section 2.6 Funding Losses. In the event of (a) any failure of the
Borrower to borrow, continue or convert a Eurodollar Advance on a date specified
in a notice thereof, or (b) any payment (including, without limitation, any
payment pursuant to Section 4.2, 4.3 or 10.2), prepayment or conversion of any
Eurodollar Advance on a date other than the last day of the Interest Period for
such Advance, the Borrower agrees to pay each Bank's costs, expenses and
Interest Differential (as determined by such Bank) incurred as a result of such
event. The term "Interest Differential" shall mean that sum equal to the greater
of 0 or the financial loss incurred by each Bank resulting from such event,
calculated as the difference between the amount of interest such Bank would have
earned (from like investments in the Money Markets as of the first day of the
Interest Period of the relevant Advance) had such event not occurred and the
interest the Bank will actually earn (from like investments in the Money Markets
as of the date of such event) as a result of the redeployment of funds from such
event. Because of the short-term nature of this facility, the Borrower agrees
that the Interest Differential shall not be discounted to its present value. The
term "Money Markets" refers to one or more wholesale funding markets available
to the Banks, including negotiable certificates of deposit, commercial paper,
eurodollar deposits, bank notes, federal funds and others. Such determinations
by each Bank of shall be conclusive in the absence of manifest error.
Section 2.7 Refunding of Swing Line Loans.
(a) At any time permitted hereunder, the Borrower may request the Banks
to make Revolving Loans which may be applied to repay the Swing Line
Loans outstanding. Upon occurrence and during continuance of a Default
or Event of Default, the Swing Line Bank may, on behalf of the Borrower
(which hereby irrevocably directs the Swing Line Bank to act on its
behalf), upon notice given by the Swing Line Bank no later than 12:00
noon, Minneapolis time, on the relevant refunding date, request each
Bank to make, and each Bank hereby agrees to make, a Revolving Loan
(which shall be a Reference Rate Advance), in an amount equal to such
Bank's Percentage of the aggregate amount of the Swing Line Loans (the
"Refunded Swing Line Loans") outstanding on the date of such notice, to
refund such Swing Line Loans. Each Bank shall make the amount of such
Revolving Loan available to the Agent in immediately available funds,
no later than 1:00 p.m., Minneapolis time, on the date of such notice.
The proceeds of such Revolving Loans shall be distributed by the Agent
to the Swing Line Bank and immediately applied by the Swing Line Bank
to repay the Refunded Swing Line Loans.
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(b) If, for any reason, Revolving Loans may not be (as determined by
the Agent in its sole discretion), or are not, made pursuant to Section
2.7(a) to repay Swing Line Loans, then, effective on the date such
Revolving Loans would otherwise have been made, each Bank severally,
unconditionally and irrevocably agrees that it shall purchase a
participating interest in such Swing Line Loans ("Unrefunded Swing Line
Loans") in an amount equal to the amount of Revolving Loans which would
otherwise have been made by such Bank pursuant to Section 2.7(a). Each
Bank will immediately transfer to the Agent, in immediately available
funds, the amount of its participation (the "Swing Line Participation
Amount"), and the proceeds of such participation shall be distributed
by the Agent to the Swing Line Bank in such amount as will reduce the
amount of the participating interest retained by the Swing Line Bank in
its Swing Line Loans.
(c) Whenever, at any time after the Swing Line Bank has received from
any Bank such Bank's Swing Line Participation Amount, the Swing Line
Bank receives any payment on account of the Swing Line Loans, the Swing
Line Bank will distribute to such Bank its Swing Line Participation
Amount (appropriately adjusted, in the case of interest payments, to
reflect the period of time during which such Bank's participating
interest was outstanding and funded and, in the case of principal and
interest payments, to reflect such Bank's pro rata portion of such
payment if such payment is not sufficient to pay the principal of and
interest on all Swing Line Loans then due); provided, however, that in
the event that such payment received by the Swing Line Bank is required
to be returned, such Bank will return to the Swing Line Bank any
portion thereof previously distributed to it by the Swing Line Bank.
(d) Each Bank's obligation to make the Loans referred to in Section
2.7(a) and to purchase participating interests pursuant to Section
2.7(b) shall be absolute and unconditional and shall not be affected by
any circumstance, including, without limitation, (i) any setoff,
counterclaim, recoupment, defense or other right which such Bank or the
Borrower may have against the Swing Line Bank, the Borrower or any
other Person for any reason whatsoever; (ii) the occurrence or
continuance of a Default or an Event of Default or the failure to
satisfy any of the other conditions precedent specified in Article VI;
(iii) any adverse change in the condition (financial or otherwise) of
the Borrower; (iv) any breach of this Agreement or any other Loan
Document by the Borrower or any Bank; or (v) any other circumstance,
happening or event whatsoever, whether or not similar to any of the
foregoing.
Section 2.8 Letters of Credit
(a) Letters of Credit. Subject to the terms and conditions of this
Agreement, and on the condition that aggregate Letter of Credit
Obligations shall never exceed the lesser of (i) $3,000,000 or (ii) the
Commitments, and that the sum of Letter of Credit Obligations plus
Loans shall never exceed the aggregate Commitments of all Banks, the
Borrower may, in addition to Loans, request that the Agent issue
letters of credit for the account of the Borrower, by making such
request to the Agent (such letters of credit as any of them may be
amended, supplemented, extended or confirmed from time to time, being
herein collectively called the 'Letters of Credit'). The Agent may, at
its discretion, elect to issue or decline to issue any requested Letter
of Credit. No Letter of Credit shall expire more than one year after
the date of issuance thereof (provided, that Letters of Credit may
automatically extend absent notice of termination by the issuer). Upon
the date of the issuance of a Letter of Credit, the Agent shall be
deemed, without further action by any party hereto, to have sold to
each Bank, and each Bank shall be deemed without further action by any
party hereto, to have purchased from the Agent, a participation, in its
Percentage, in such Letter of Credit and the related Letter of Credit
Obligations.
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(b) Purchase Unconditional. Each Bank's purchase of a participating
interest in a Letter of Credit pursuant to Section 2.8(a) shall be
absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, (i) any setoff,
counterclaim, recoupment, defense or other right which such Bank or the
Borrower may have against the Agent, the Borrower or any other Person
for any reason whatsoever; (ii) the occurrence or continuance of a
Default or an Event of Default or the failure to satisfy any of the
other conditions precedent in Article VI; (iii) any adverse change in
the condition (financial or otherwise) of the Borrower; (iv) any breach
of this Agreement or any other Loan Document by the Borrower or any
Bank; (v) the expiry date of any Letter of Credit occurring after such
Bank's Commitment has terminated; or (vi) any other circumstance,
happening or event whatsoever, whether or not similar or any of the
foregoing.
(c) Additional Provisions. The following additional provisions shall
apply to each Letter of Credit:
(i) Upon receipt of any request for a Letter of Credit, the
Agent shall notify each Bank of the contents of such request
and of such Bank's Percentage of the amount of such proposed
Letter of Credit.
(ii) No Letter of Credit may be issued if after giving effect
thereto the Letter of Credit Obligations shall exceed
$3,000,000 or if the sum of (A) the aggregate outstanding
principal amount of Loans plus (B) the aggregate Letter of
Credit Obligations would exceed the aggregate Commitments of
all Banks. The Commitment of each Bank shall be deemed to be
utilized for all purposes hereof in an amount equal to such
Bank's Percentage of the Letter of Credit Obligations.
(iii) Upon receipt from the beneficiary of any Letter of
Credit of any demand for payment thereunder, Agent shall
promptly notify the Borrower and each Bank as to the amount to
be paid as a result of such demand and the payment date. If at
any time the Agent shall have made a payment to a beneficiary
of such Letter of Credit in respect of a drawing or in respect
of an acceptance created in connection with a drawing under
such Letter of Credit, each Bank will pay to Agent immediately
upon demand by the Agent at any time during the period
commencing after such payment until reimbursement thereof in
full by the Borrower, an amount equal to such Bank's
Percentage of such payment, together with interest on such
amount for each day from the date of demand for such payment
(or, if such demand is made after 2:00 a.m. Minneapolis time
on such date, from the next succeeding Business Day) to the
date of payment by such Bank of such amount at a rate of
interest per annum equal to the Federal Funds Effective Rate
for such period.
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(iv) The Borrower shall be irrevocably and unconditionally
obligated forthwith to reimburse the Agent for any amount paid
by the Agent upon any drawing under any Letter of Credit,
without presentment, demand, protest or other formalities of
any kind, all of which are hereby waived. Such reimbursement
may, subject to satisfaction of the conditions in Article VI
hereof and to the available Commitment (after adjustment in
the same to reflect the elimination of the corresponding
Letter of Credit Obligation), be made by the borrowing of
Loans. The Agent will pay to each Bank such Bank's Percentage
of all amounts received from the Borrower for application in
payment, in whole or in part, of a Letter of Credit
Obligation, but only to the extent such Bank has made payment
to the Agent in respect of such Letter of Credit pursuant to
clause (iii) above.
(v) The Borrower's obligation to reimburse the Agent for any
amount paid by the Agent upon any drawing under any Letter of
Credit shall be performed strictly in accordance with the
terms of this Agreement and the applicable Letter of Credit
Agreement under any and all circumstances whatsoever and
irrespective of (A) any lack of validity or enforceability of
any Letter of Credit, any Letter of Credit Agreement or this
Agreement, or any term or provision therein, (B) any draft or
other document presented under a Letter of Credit proving to
be forged, fraudulent, or invalid in any respect or any
statement therein being untrue or inaccurate in any respect,
(C) payment by the Agent under a Letter of Credit against
presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (D) any other
event or circumstance whatsoever, whether or not similar to
any of the foregoing, that might, but for the provisions of
this clause (v), constitute a legal or equitable discharge of,
or provide a right of setoff against, the Borrower's
obligations hereunder. Neither the Agent nor the Bank shall
have any liability or responsibility by reason of or in
connection with the issuance or transfer of any Letter of
Credit or any payment or failure to make any payment
thereunder (irrespective of any of the circumstances referred
to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any
draft, notice or other communication under or relating to any
Letter of Credit (including any document required to make a
drawing thereunder), any error in interpretation of technical
terms or any consequence arising from causes beyond the
control of the Agent; provided that the foregoing shall not be
construed to excuse the Agent from liability to the Borrower
to the extent of any direct damages (as opposed to
consequential damages, claims in respect of which are hereby
waived by the Borrower to the extent permitted by applicable
18
law) suffered by the Borrower that are caused by the Agent's
failure to exercise care when determining whether drafts and
other documents presented under a Letter of Credit comply with
the terms thereof. The parties hereto expressly agree that, in
the absence of gross negligence or willful misconduct on the
part of the Agent (as finally determined by a court of
competent jurisdiction), the Agent shall be deemed to have
exercised care in each such determination. In furtherance of
the foregoing and without limiting the generality thereof, the
parties hereto expressly agree that, with respect to documents
presented which appear on their face to be in substantial
compliance with the terms of the Letter of Credit, the
Agreement may, in its sole discretion, either accept and make
payment upon such documents without responsibility for further
investigation or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with
the terms of such Letter of Credit.
(vi) The Borrower will pay to Agent for the account of each
Bank in accordance with its Percentage letter of credit fee
with respect to each Letter of Credit equal to an amount,
calculated on the basis of face amount of each Letter of
Credit, in each case for the period from and including the
date of issuance of such Letter of Credit to and including the
date of expiration or termination thereof at a per annum rate
equal to the then-applicable Applicable Margin for Eurodollar
Advances, such fee to be due and payable in advance on the
date of the issuance thereof. The Agent will pay to each Bank,
promptly after receiving any payment in respect of letter of
credit fee referred to in this clause (v), an amount equal to
the product of such Bank's Percentage times the amount of such
fees. The Borrower shall also pay to Agent at the Principal
Office for the account of the Agent an issuance fee of 0.125%
of the face amount of the applicable Letter of Credit. All
fees hereunder shall be computed on the basis of a year of 360
days and paid for the actual number of days elapsed.
(vii) The issuance by the Agent of each Letter of Credit
shall, in addition to the discretionary nature of this
facility, be subject to the conditions precedent that the
Borrower shall have executed and delivered such applications
and other instruments and agreements relating to such Letter
of Credit as the Agent shall have reasonably requested and are
not inconsistent with the terms of this Agreement (the "Letter
of Credit Agreements"). In the event of a conflict between the
terms of this Agreement and the terms of any Letter of Credit
Agreement (including the charging of any fees other than
normal and customary reimbursable expenses), the terms hereof
shall control.
(viii) In the event that any Letter of Credit remains
outstanding after the Termination Date, the Borrower shall
deliver, prior to the Termination Date, cash collateral to be
held and applied in accordance with the terms of Section 10.3.
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(d) Indemnification; Release. Borrower hereby indemnifies and holds
harmless the Agent and each Bank from and against any and all claims
and damages, losses, liabilities, costs or expenses which the Agent or
such Bank may incur (or which may be claimed against the Agent or such
Bank by any Person whatsoever), regardless of whether caused in whole
or in part by the negligence of any of the indemnified parties, in
connection with the execution and delivery of any Letter of Credit or
transfer of or payment or failure to pay under any Letter of Credit;
provided that the Borrower shall not be required to indemnify any party
seeking indemnification for any claims, damages, losses, liabilities,
costs or expenses to the extent, but only to the extent, caused by (i)
the willful misconduct or gross negligence of the party seeking
indemnification, or (ii) by the failure by the party seeking
indemnification to pay under any Letter of Credit after the
presentation to it of a request required to be paid under applicable
law.
Section 2.9 Purpose of the Loans. The Loans shall be used for purposes
of funding working capital, capital expenditures, and other corporate purposes
of the Borrower.
ARTICLE III INTEREST AND FEES
Section 3.1 Interest.
(a) Eurodollar Advances. The unpaid principal amount of each Eurodollar
Advance shall bear interest prior to maturity at a rate per annum equal
to the Eurodollar Rate (Reserve Adjusted) in effect for each Interest
Period for such Eurodollar Advance plus the Applicable Margin per
annum.
(b) Base Rate Advances. The unpaid principal amount of each Base Rate
Advance shall bear interest prior to maturity at a rate per annum equal
to the Base Rate plus the Applicable Margin per annum.
(c) Swing Line Loans. The unpaid principal amount of all Swing Line
Loans shall bear interest prior to maturity at a rate per annum equal
to the Eurodollar Rate (Reserve Adjusted) Daily Floating plus the
Applicable Margin for Eurodollar Advances per annum.
(d) Interest After Maturity. Any amount of the Loans not paid when due,
whether at the date scheduled therefor or earlier upon acceleration,
shall bear interest until paid in full at a rate per annum equal to the
greater of (i) 2.00% in excess of the rate applicable to the unpaid
principal amount immediately before it became due, or (ii) 2.00% in
excess of the Base Rate in effect from time to time.
Section 3.2 Utilization Fees. At any time that Total Utilization equals
or exceeds 50% of the total Commitments outstanding, the Borrower shall pay fees
(the "Utilization Fees") to the Agent for the account of the Banks (in according
with their respective Percentages) in an amount determined by applying 0.10% per
annum to an amount equal to the excess of Total Utilization over 50% of the
total Commitments.
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Section 3.3 Facility Fee. The Borrower shall pay fees (the "Facility
Fees") to the Agent for the account of the Banks (in according with their
respective Percentages) in an amount determined by applying the Applicable
Facility Fee Rate per annum to the average daily amount of the Commitments
(whether used or unused) of the Banks for the period from the date hereof to the
Termination Date.
Section 3.4 Computation. Interest, Utilization Fees and Facility Fees
shall be computed on the basis of actual days elapsed and a year of 360 days,
except that interest that is based on the Base Rate shall be computed on the
basis of actual days elapsed and a year of 365 or 366 days.
Section 3.5 Payment Dates. Accrued interest under Section 3.1(a), (b)
and (c), Utilization and Facility Fees shall be payable on the applicable
Payment Dates. Accrued interest under Section 3.1(d) shall be payable on demand.
Section 3.6 Agent's Fee. The Borrower shall pay to the Agent fees
described in the Agent's Fee Letter.
ARTICLE IV PAYMENTS, PREPAYMENTS, REDUCTION OR TERMINATION
OF THE CREDIT AND SETOFF
Section 4.1 Repayment. Principal of the Loans, together with all
accrued and unpaid interest thereon, shall be due and payable on the Termination
Date.
Section 4.2 Optional Prepayments. The Borrower may, upon at least three
(3) Business Days' prior written or telephonic notice received by the Bank,
prepay the Loans, in whole or in part, at any time subject to the provisions of
Section 2.6, without any other premium or penalty. Any such prepayment must be
accompanied by accrued and unpaid interest on the amount prepaid. Each partial
prepayment shall be in an amount of $50,000 or an integral multiple thereof. Any
prepayment of a Eurodollar Advance shall be in an amount equal to the remaining
entire principal balance of such Advance.
Section 4.3 Optional Reduction or Termination of Commitment. The
Borrower may, at any time, upon no less than 2 Business Days prior written or
telephonic notice received by the Agent, reduce the Commitment, with any such
reduction in a minimum amount of $500,000 or an integral multiple thereof. Upon
any reduction in the Commitment pursuant to this Section, the Borrower shall pay
to the Agent for the account of the Banks the amount, if any, by which the
aggregate unpaid principal amount of outstanding Loans plus the Letter of Credit
Obligations exceeds the Commitment as so reduced. Amounts so paid cannot be
reborrowed. The Borrower may, at any time, upon not less than 2 Business Days
prior written notice to the Agent, terminate the Commitment in its entirety.
Upon termination of the Commitment pursuant to this Section, the Borrower shall
pay to the Agent for the account of the Banks the full amount of all outstanding
Loans, all accrued and unpaid interest thereon, all unpaid Commitment Fees
accrued to the date of such termination and all other unpaid obligations of the
Borrower to the Banks hereunder. All payment described in this Section is
subject to the provisions of Section 2.6. Notwithstanding the foregoing, the
Commitment may not be reduced to an amount below outstanding Letter of Credit
Obligations, or terminated if Letters of Credit are outstanding
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Section 4.4 Payments. Payments and prepayments of principal of, and
interest on, the Notes and all fees, expenses and other obligations under the
Loan Documents shall be made without set-off or counterclaim in immediately
available funds not later than 2:00 p.m., Minneapolis time, on the dates due at
the main office of the Agent in Minneapolis, Minnesota. Funds received on any
day after such time shall be deemed to have been received on the next Business
Day. The Agent shall promptly distribute in like funds to each Bank its
Percentage share of each such payment of principal, interest and Commitment
Fees. Subject to the definition of the term "Interest Period", whenever any
payment to be made hereunder or on the Notes shall be stated to be due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
any interest or fees. The Agent is authorized to debit the operating account of
the Borrower designated by the Borrower for such purpose from time to time for
all payments when due hereunder (provided that if such account shall not have
sufficient available funds to pay interest when due, the Borrower shall pay such
interest in immediately available funds).
4.5 Proration of Payments. If any Bank or other holder of a Loan shall
obtain any payment or other recovery (whether voluntary, involuntary, by
application of offset, pursuant to the guaranty hereunder, or otherwise) on
account of principal of, interest on, or fees with respect to any Loan, or
payment of any Letter of Credit Obligations, in any case in excess of the share
of payments and other recoveries of other Banks or holders, such Bank or other
holder shall purchase from the other Banks or holders, in a manner to be
specified by the Agent, such participations in the Loans held by such other
Banks or holders as shall be necessary to cause such purchasing Bank or other
holder to share the excess payment or other recovery ratably with each of such
other Banks or holders; provided, however, that if all or any portion of the
excess payment or other recovery is thereafter recovered from such purchasing
Bank or holder, the purchase shall be rescinded and the purchase price restored
to the extent of such recovery, but without interest.
ARTICLE V ADDITIONAL PROVISIONS RELATING TO LOANS
Section 5.1 Increased Costs. If, as a result of any law, rule,
regulation, treaty or directive, or any change therein or in the interpretation
or administration thereof, or compliance by the Banks with any request or
directive (whether or not having the force of law) from any court, central bank,
governmental authority, agency or instrumentality, or comparable agency:
(a) any tax, duty or other charge with respect to any Loan, the Notes
or the Commitments is imposed, modified or deemed applicable, or the
basis of taxation of payments to any Bank of interest or principal of
the Loans or of the Commitment Fees (other than taxes imposed on the
overall net income of such Bank by the jurisdiction in which such Bank
has its principal office) is changed;
22
(b) any reserve, special deposit, special assessment or similar
requirement against assets of, deposits with or for the account of, or
credit extended by, any Bank is imposed, modified or deemed applicable;
(c) any increase in the amount of capital required or expected to be
maintained by any Bank or any Person controlling such Bank is imposed,
modified or deemed applicable; or
(d) any other condition affecting this Agreement or the Commitments is
imposed on any Bank or the relevant funding markets;
and such Bank determines that, by reason thereof, the cost to such Bank of
making or maintaining the Loans, issuing or participating in the Letters of
Credit or extending its Commitment is increased, or the amount of any sum
receivable by such Bank hereunder or under the Notes in respect of any Loan is
reduced;
then, the Borrower shall pay to such Bank upon demand such additional amount or
amounts as will compensate such Bank (or the controlling Person in the instance
of (c) above) for such additional costs or reduction (provided that the Banks
have not been compensated for such additional cost or reduction in the
calculation of the Eurodollar Reserve Rate). Any Bank making such demand shall
inform the Borrower of the basis for such demand, and provide a statement
showing, in reasonable detail, calculation of the amount demanded. The Borrower
will promptly notify such Bank if the Borrower does not agree to such Bank's
determination of any such amount. Any Bank's reasonable determination of such
amount shall be presumed correct, absent its manifest error or negligence in
determining such amounts. In determining such amounts, the Banks may use any
reasonable averaging, attribution and allocation methods. Notwithstanding the
foregoing, no Bank shall charge the Borrower for additional amounts for such
additional costs or reductions that applied or accrued more than 90 days prior
to the time that such Bank became aware of the event giving rise to such
additional costs or reductions.
Section 5.2 Deposits Unavailable or Interest Rate Unascertainable or
Inadequate; Impracticability. If the Agent determines (which determination shall
be conclusive and binding on the parties hereto) that:
(a) deposits of the necessary amount for the relevant Interest Period
for any Eurodollar Advance are not available in the relevant markets or
that, by reason of circumstances affecting such market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Interbank
Rate for such Interest Period;
(b) the Eurodollar Rate (Reserve Adjusted) will not adequately and
fairly reflect the cost to the Banks of making or funding the
Eurodollar Advance for a relevant Interest Period; or
23
(c) the making or funding of Eurodollar Advances has become
impracticable as a result of any event occurring after the date of this
Agreement which, in the opinion of the Agent, materially and adversely
affects such Advances or any Bank's Commitment or the relevant market;
the Agent shall promptly give notice of such determination to the Borrower, and
(i) any notice of a new Eurodollar Advance previously given by the Borrower and
not yet borrowed or converted shall be deemed to be a notice to make a Base Rate
Advance, and (ii) the Borrower shall be obligated to either prepay in full any
outstanding Eurodollar Advances, without premium or penalty on the last day of
the current Interest Period with respect thereto or convert any such Eurodollar
Advance to a Base Rate Advance on such last day.
Section 5.3 Changes in Law Rendering Eurodollar Advances Unlawful. If
at any time due to the adoption of any law, rule, regulation, treaty or
directive, or any change therein or in the interpretation or administration
thereof by any court, central bank, governmental authority, agency or
instrumentality, or comparable agency charged with the interpretation or
administration thereof, or for any other reason arising subsequent to the date
of this Agreement, it shall become unlawful or impossible for any Bank to make
or fund any Eurodollar Advance, the obligation of such Bank to provide such
Advance shall, upon the happening of such event, forthwith be suspended for the
duration of such illegality or impossibility. If any such event shall make it
unlawful or impossible for the Bank to continue any Eurodollar Advance
previously made by it hereunder, such Bank shall, upon the happening of such
event, notify the Agent and the Borrower thereof in writing, and the Borrower
shall, at the time notified by such Bank, either convert each such unlawful
Advance to a Base Rate Advance or repay such Advance in full, together with
accrued interest thereon, subject to the provisions of Section 2.6.
Section 5.4 Discretion of the 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 the Loans in
any manner it elects; it being understood, however, that for purposes of this
Agreement, all determinations hereunder shall be made as if the Banks had
actually funded and maintained each Eurodollar Advance during the Interest
Period for such Advance through the purchase of deposits having a term
corresponding to such Interest Period and bearing an interest rate equal to the
Eurodollar Interbank Rate for such Interest Period (whether or not any Bank
shall have granted any participations in such Advances).
ARTICLE VI CONDITIONS PRECEDENT AND SUBSEQUENT
Section 6.1 Conditions of Initial Loan. The obligation of the Banks to
make the initial Loan hereunder shall be subject to the satisfaction of the
conditions precedent, in addition to the applicable conditions precedent set
forth in Section 6.2 below, that the Agent shall have received all of the
following, in form and substance satisfactory to the Agent, each duly executed
and certified or dated as of the date of this Agreement or such other date as is
satisfactory to the Agent:
24
(a) The Notes payable to each Bank executed by a duly authorized
officer (or officers) of the Borrower.
(b) The Guaranty, duly executed by the Guarantor.
(c) A certificate or certificates of the Secretary or an Assistant
Secretary of the Borrower and the Guarantor, attesting to and attaching
(i) a copy of the corporate resolution of the Borrower and the
Guarantor authorizing the execution, delivery and performance of the
Loan Documents, (ii) an incumbency certificate showing the names and
titles, and bearing the signatures of, the officers of the Borrower and
the Guarantor authorized to execute the Loan Documents, (iii) a copy of
the Articles or Certificate of Incorporation of the Borrower and the
Guarantor with all amendments thereto, and (iv) a copy of the By-Laws
of the Borrower and the Guarantor with all amendments thereto.
(d) A Certificate of Good Standing for the Borrower and the Guarantor
in the jurisdiction of its incorporation, certified by the appropriate
governmental officials.
(e) An opinion of counsel to the Borrower and the Guarantor, addressed
to the Bank, in substantially the form of Exhibit E.
(f) The Agent's Fee Letter and payment of all fees and reimbursements
payable hereunder and thereunder.
Section 6.2 Conditions Precedent to all Loans. The obligation of the
Bank to make any Loan hereunder (including the initial Loan) shall be subject to
the satisfaction of the following conditions precedent (and any request for a
Loan shall be deemed a representation by the Borrower that the following are
satisfied):
(a) Before and after giving effect to such Loan, the representation and
warranties contained in Article VII shall be true and correct, as
though made on the date of such Loan; and
(b) Before and after giving effect to such Loan, no Default or Event of
Default shall have occurred and be continuing.
Section 6.3 Condition Subsequent. Not later than June 15, 2002: (a) the
Borrower shall have received releases, and shall provide copies thereof to the
Agent and the Banks, of the guaranties by Subsidiaries of the Borrower other
than the Guarantor of obligations of the Borrower in respect of $90,000,000
6.63% Senior Notes due December 1, 2011, as described in Section 9.12 of the
Note Purchase Agreement pertaining to such Notes; and (b) unless otherwise
agreed by the Banks, the holders of such Notes and the Borrower shall have
entered into the Intercreditor Agreement.
25
ARTICLE VII REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Banks to enter into this Agreement, to
grant the Commitments and to make Loans hereunder, the Borrower represents and
warrants to the Agent and the Banks:
Section 7.1 Organization, Standing, Etc. The Borrower and each of its
corporate Material Subsidiaries are corporations duly incorporated and validly
existing and in good standing under the laws of the jurisdiction of their
respective incorporation and have all requisite corporate power and authority to
carry on their respective businesses as now conducted, to (in the instance of
the Borrower) enter into the Loan Documents and to perform its obligations under
the Loan Documents. The Borrower and each of the Material Subsidiaries are duly
qualified and in good standing as a foreign corporation in each jurisdiction in
which the character of the properties owned, leased or operated by it or the
business conducted by it makes such qualification necessary, and failure to so
qualify or remain in good standing would constitute an Adverse Event.
Section 7.2 Authorization and Validity. The execution, delivery and
performance by the Borrower of the Loan Documents have been duly authorized by
all necessary corporate action by the Borrower, and the Loan Documents
constitute the legal, valid and binding obligations of the Borrower, enforceable
against the Borrower in accordance with their respective terms, subject to
limitations as to enforceability which might result from bankruptcy, insolvency,
moratorium and other similar laws affecting creditors' rights generally and
subject to limitations on the availability of equitable remedies.
Section 7.3 No Conflict; No Default. The execution, delivery and
performance by the Borrower of the Loan Documents will not (a) violate any
provision of any law, statute, rule or regulation or any order, writ, judgment,
injunction, decree, determination or award of any court, governmental agency or
arbitrator presently in effect having applicability to the Borrower, (b) violate
or contravene any provisions of the Articles (or Certificate) of Incorporation
or by-laws of the Borrower, or (c) result in a breach of or constitute a default
under any indenture, loan or credit agreement or any other agreement, lease or
instrument to which the Borrower is a party or by which it or any of its
properties may be bound or result in the creation of any Lien on any asset of
the Borrower or any Material Subsidiary, which in any such case under this
subsection (c) would constitute an Adverse Event. Neither the Borrower nor any
Material Subsidiary is in default under or in violation of any such law,
statute, rule or regulation, order, writ, judgment, injunction, decree,
determination or award or any such indenture, loan or credit agreement or other
agreement, lease or instrument in any case in which the consequences of such
default or violation could constitute an Adverse Event. No Default or Event of
Default has occurred and is continuing.
Section 7.4 Government Consent. No order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or
exemption by, any governmental or public body or authority is required on the
part of the Borrower to authorize, or is required in connection with the
execution, delivery and performance of, or the legality, validity, binding
effect or enforceability of, the Loan Documents, provided, however, the Borrower
is required to make an annual filing of its Capital Structure with the Minnesota
Public Utilities Commission, and such Commission may thereafter issue orders
approving or disapproving of the Borrower's capital structure.
26
Section 7.5 Financial Statements and Condition. The Borrower's audited
consolidated financial statements as at December 31, 2001, as heretofore
furnished to the Banks, have been prepared in accordance with GAAP on a
consistent basis and fairly present the financial condition of the Borrower and
the Subsidiaries as at such dates and the results of their operations for the
fiscal year then ended. As of the dates of such consolidated financial
statements, neither the Borrower nor any Material Subsidiary had any material
obligation, contingent liability, liability for taxes or long-term lease
obligation which is not reflected in such consolidated financial statements or
in the notes thereto. Since December 31, 2001, no Adverse Event has occurred.
Section 7.6 Litigation and Contingent Liabilities. Except as described
in Schedule 7.6, there are no actions, suits or proceedings pending or, to the
knowledge of the Borrower, threatened against or affecting the Borrower or any
Material Subsidiary or any of their properties before any court or arbitrator,
or any governmental department, board, agency or other instrumentality which, if
determined adversely to the Borrower or such Material Subsidiary, could
constitute an Adverse Event. Except as described in Schedule 7.6, neither the
Borrower nor any Material Subsidiary has any contingent liabilities which are
material to the Borrower and the Subsidiaries as a consolidated enterprise.
Section 7.7 Compliance. The Borrower and the Material Subsidiaries are
in material compliance with all statutes and governmental rules and regulations
applicable to them.
Section 7.8 Environmental, Health and Safety Laws. To the best of the
Borrower's knowledge after due inquiry, there does not exist any violation by
the Borrower or any Material Subsidiary of any applicable federal, state or
local law, rule or regulation or order of any government, governmental
department, board, agency or other instrumentality relating to environmental,
pollution, health or safety matters which will or threatens to impose a material
liability on the Borrower or a Material Subsidiary or which would require a
material expenditure by the Borrower or such Material Subsidiary to cure.
Neither the Borrower nor any Material Subsidiary has received any notice to the
effect that any part of its operations or properties is not in material
compliance with any such law, rule, regulation or order or notice that it or its
property is the subject of any governmental investigation evaluating whether any
remedial action is needed to respond to any release of any toxic or hazardous
waste or substance into the environment, the consequences of which
non-compliance or remedial action could constitute an Adverse Event.
Section 7.9 ERISA. Each Plan complies with all material applicable
requirements of ERISA and the Code and with all material applicable rulings and
regulations issued under the provisions of ERISA and the Code setting forth
those requirements. No Reportable Event, other than a Reportable Event for which
the reporting requirements have been waived by regulations of the PBGC, has
occurred and is continuing with respect to any Plan. All of the minimum funding
standards applicable to such Plans have been satisfied and there exists no event
or condition which would permit the institution of proceedings to terminate any
Plan under Section 4042 of ERISA. The current value of the Plans' benefits
guaranteed under Title IV or ERISA does not exceed the current value of the
Plans' assets allocable to such benefits.
27
Section 7.10 Regulation U. The Borrower is not engaged in the business
of extending credit for the purpose of purchasing or carrying margin stock (as
defined in Regulation U of the Board of Governors of the Federal Reserve System)
and no part of the proceeds of any Loan will be used to purchase or carry margin
stock or for any other purpose which would violate any of the margin
requirements of the Board of Governors of the Federal Reserve System.
Section 7.11 Ownership of Property; Liens. Each of the Borrower and the
Material Subsidiaries has good and marketable title to its real properties and
good and sufficient title to its other properties, including all properties and
assets referred to as owned by the Borrower and the Material Subsidiaries in the
audited consolidated financial statement of the Borrower referred to in Section
7.5 (other than property disposed of since the date of such financial statement
in the ordinary course of business). None of the properties, revenues or assets
of the Borrower or any of the Material Subsidiaries is subject to a Lien, except
for (a) Liens disclosed in the consolidated financial statements referred to in
Section 7.5, (b) Liens listed on Schedule 7.11, or (c) Liens allowed under
Section 9.8.
Section 7.12 Taxes. Each of the Borrower and the Material Subsidiaries
has filed all federal, state and local tax returns required to be filed and has
paid or made provision for the payment of all taxes due and payable pursuant to
such returns and pursuant to any assessments made against it or any of its
property and all other taxes, fees and other charges imposed on it or any of its
property by any governmental authority (other than taxes, fees or charges the
amount or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which reserves in accordance with
GAAP have been provided on the books of the Borrower). No tax Liens have been
filed and no material claims are being asserted with respect to any such taxes,
fees or charges. The charges, accruals and reserves on the books of the Borrower
in respect of taxes and other governmental charges are adequate.
Section 7.13 Trademarks, Patents. Each of the Borrower and the Material
Subsidiaries possesses or has the right, by way of ownership or license, to use
all of the patents, trademarks, trade names, service marks and copyrights, and
applications therefor, and all technology, know-how, processes, methods and
designs used in or necessary for the conduct of its business, without known
conflict with the rights of others.
Section 7.14 Investment Company Act. Neither the Borrower 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, as amended.
Section 7.15 Public Utility Holding Company Act. Neither the Borrower
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, as amended.
28
Section 7.16 Subsidiaries. Schedule 7.16 sets forth as of the date of
this Agreement a list of all Subsidiaries and the number and percentage of the
shares of each class of capital stock owned beneficially or of record by the
Borrower or any Subsidiary therein, and the jurisdiction of incorporation of
each Subsidiary.
Section 7.17 Partnerships and Joint Ventures. Schedule 7.17 sets forth
as of the date of this Agreement a list of all partnerships or joint ventures in
which the Borrower or any Subsidiary is a partner (limited or general) or joint
venturer.
Section 7.18 Senior Debt. The Loans are senior unsecured Indebtedness
of the Borrower, and are pari passu and of equal rank and seniority with all
senior unsecured Indebtedness of the Borrower.
ARTICLE VIII AFFIRMATIVE COVENANTS
From the date of this Agreement and thereafter until the Commitments
are terminated or expire and the Loans and all other liabilities of the Borrower
to the Banks hereunder and under the Note have been paid in full, unless the
Required Banks shall otherwise expressly agree in writing the Borrower will do,
and will cause each Material Subsidiary (except in the instance of Section 8.1)
to do, all of the following:
Section 8.1 Financial Statements and Reports. Furnish to the Banks:
(a) As soon as available and in any event within 120 days after the end
of each fiscal year of the Borrower, the annual audit report of the
Borrower and its Subsidiaries prepared on a consolidated basis and in
conformity with GAAP, consisting of at least statements of income, cash
flow, and a consolidated balance sheet as at the end of such year,
setting forth in each case in comparative form corresponding figures
from the previous annual audit, certified without qualification by
independent certified public accountants of recognized standing
selected by the Borrower and acceptable to the Bank, together with any
related management letters.
(b) As soon as available and in any event within 45 days after the end
of each quarter of each fiscal year, a copy of the unaudited financial
statement of the Borrower and its subsidiaries prepared in the same
manner as the audit report referred to in Section 8.1(a), signed by the
Borrower's chief financial officer, consisting of at least consolidated
statements of income and cash flow for the Borrower and the
Subsidiaries for such quarter and for the period from the beginning of
such fiscal year to the end of such quarter, and a consolidated balance
sheet of the Borrower as at the end of such quarter.
(c) Together with the consolidated financial statements furnished by
the Borrower under Sections 8.1(a) and 8.1(b), a Compliance Certificate
signed by the chief financial officer of the Borrower, which shall (i)
confirm the Borrower's Long Term Debt Rating; and (ii) confirm either
that as at the date of each such financial statement there did not
exist any Default or Event of Default or, that a Default or Event of
Default existed, in which case it shall specify the nature and period
of existence thereof and what action the Borrower proposes to take with
respect thereto.
29
(d) Immediately upon becoming aware of any Default or Event of Default,
a notice describing the nature thereof and what action the Borrower
proposes to take with respect thereto.
(e) Immediately upon becoming aware of the occurrence, with respect to
any Plan, of any Reportable Event (other than a Reportable Event for
which the reporting requirements have been waived by PBGC regulations)
or any "prohibited transaction" (as defined in Section 4975 of the
Code), a notice specifying the nature thereof and what action the
Borrower proposes to take with respect thereto, and, when received,
copies of any notice from PBGC of intention to terminate or have a
trustee appointed for any Plan.
(f) Promptly upon the mailing or filing thereof, copies of all
financial statements, reports and proxy statements mailed to the
Borrower's shareholders, and copies of all registration statements,
periodic reports and other documents filed with the Securities and
Exchange Commission (or any successor thereto) or any national
securities exchange.
(g) Copies of any order issued by the Minnesota Public Utilities
Commission regarding the Borrower's capital structure.
(h) Immediately upon becoming aware of the occurrence thereof, notice
of the institution of any litigation, arbitration or governmental
proceeding, or the rendering of a judgment or decision in such
litigation or proceeding, which is material to the Borrower and its
Subsidiaries as a consolidated enterprise, and the steps being taken by
the Person(s) affected by such proceeding.
(i) Immediately upon becoming aware of the occurrence thereof, notice
of any violation as to any environmental matter by the Borrower or any
Material Subsidiary and of the commencement of any judicial or
administrative proceeding relating to health, safety or environmental
matters (i) in which an adverse determination or result could result in
the revocation of or have a material adverse effect on any operating
permits, air emission permits, water discharge permits, hazardous waste
permits or other permits held by the Borrower or any Material
Subsidiary which are material to the operations of the Borrower or such
Material Subsidiary, or (ii) which will or threatens to impose a
material liability on the Borrower or such Material Subsidiary to any
Person or which will require a material expenditure by the Borrower or
such Material Subsidiary to cure any alleged problem or violation.
30
(j) From time to time, such other information regarding the business,
operation and financial condition of the Borrower and the Subsidiaries
as any Bank may reasonably request.
Section 8.2 Corporate Existence. Subject to Sections 9.1, 9.2 and 9.4
in the instance of a Material Subsidiary, maintain its corporate existence in
good standing under the laws of its jurisdiction of incorporation and its
qualification to transact business in each jurisdiction in which the character
of the properties owned, leased or operated by it or the business conducted by
it makes such qualification necessary, provided, that the Borrower may cause any
Material Subsidiary to be dissolved that has substantially no assets, revenues
or operations.
Section 8.3 Insurance. Maintain with financially sound and reputable
insurance companies such insurance as may be required by law and such other
insurance in such amounts and against such hazards as is customary in the case
of reputable corporations engaged in the same or similar business and similarly
situated.
Section 8.4 Payment of Taxes and Claims. File all tax returns and
reports which are required by law to be filed by it and pay before they become
delinquent all taxes, assessments and governmental charges and levies imposed
upon it or its property and all claims or demands of any kind (including,
without limitation, those of suppliers, mechanics, carriers, warehouses,
landlords and other like Persons) which, if unpaid, might result in the creation
of a Lien upon its property; provided that the foregoing items need not be paid
if they are being contested in good faith by appropriate proceedings, and as
long as the Borrower's or such Material Subsidiary's title to its property is
not materially adversely affected, its use of such property in the ordinary
course of its business is not materially interfered with and adequate reserves
with respect thereto have been set aside on the Borrower's or such Material
Subsidiary's books in accordance with GAAP.
Section 8.5 Inspection. Permit any Person designated by any Bank to
visit and inspect any of its properties, corporate books and financial records,
to examine and to make copies of its books of accounts and other financial
records, and to discuss the affairs, finances and accounts of the Borrower and
the Subsidiaries with, and to be advised as to the same by, its officers at such
reasonable times and intervals as such Bank may designate. So long as no Event
of Default exists, the expenses of the Banks for such visits, inspections and
examinations shall be at the expense of the Banks, but any such visits,
inspections, and examinations made while any Event of Default is continuing
shall be at the expense of the Borrower.
Section 8.6 Maintenance of Properties. Maintain its properties used or
useful in the conduct of its business in good condition, repair and working
order, and supplied with all necessary equipment, and make all necessary
repairs, renewals, replacements, betterments and improvements thereto, all as
may be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times.
Section 8.7 Books and Records. Keep adequate and proper records and
books of account in which full and correct entries will be made of its dealings,
business and affairs.
31
Section 8.8 Compliance. Comply in all material respects with all laws,
rules, regulations, orders, writs, judgments, injunctions, decrees or awards to
which it may be subject.
Section 8.9 ERISA. Maintain each Plan in compliance with all material
applicable requirements of ERISA and of the Code and with all material
applicable rulings and regulations issued under the provisions of ERISA and of
the Code.
Section 8.10 Environmental Matters. Observe and comply with all laws,
rules, regulations and orders of any government or government agency relating to
health, safety, pollution, hazardous materials or other environmental matters to
the extent non-compliance could result in a material liability or otherwise
constitute or result in an Adverse Event.
Section 8.11 Failure to Approve Capital Structure. If the Minnesota
Public Utilities Commission or any other governmental authority of appropriate
jurisdiction shall issue an order finally determining not to approve, or finally
disapproving of, this Agreement, the Borrower will terminate the Commitments and
repay the Loans within thirty (30) days after such order becoming final (or
within such shorter period as such order shall provide for such termination and
repayment).
Section 8.12 Senior Debt. Take all actions necessary to assure that the
Loans are senior unsecured Indebtedness of the Borrower, and are and remain pari
passu and of equal rank and seniority with all senior unsecured Indebtedness of
the Borrower (without limiting the obligation of the Borrower to deliver
collateral under certain circumstances, as specifically provided herein).
ARTICLE IX NEGATIVE COVENANTS
From the date of this Agreement and thereafter until the Commitments
are terminated or expire and the Loans and all other liabilities of the Borrower
to the Banks hereunder and under the Note have been paid in full, unless the
Required Banks shall otherwise expressly agree in writing the Borrower will not,
and will not permit any Material Subsidiary to, do any of the following:
Section 9.1 Merger. Merge or consolidate or enter into any analogous
reorganization or transaction with any Person; provided, however, any
wholly-owned Subsidiary may be merged with or liquidated into the Borrower (if
the Borrower is the surviving corporation) or any other wholly-owned Subsidiary,
and the Borrower and Material Subsidiaries may enter Permitted Divestitures.
Section 9.2 Sale of Assets. Sell, transfer, lease or otherwise convey
all or any substantial part of its assets except for (a) sales and leases of
inventory in the ordinary course of business, (b) sales or other transfers by a
wholly-owned Subsidiary to the Borrower or another wholly-owned Subsidiary; and
(c) Permitted Divestitures.
Section 9.3 Plans. Permit any condition to exist in connection with any
Plan which might constitute grounds for the PBGC to institute proceedings to
have such Plan terminated or a trustee appointed to administer such Plan, permit
any Plan to terminate under any circumstances which would cause the lien
provided for in Section 4068 of ERISA to attach to any property, revenue or
asset of the Borrower or any Subsidiary or permit the underfunded amount of Plan
benefits guaranteed under Title IV of ERISA to exceed $500,000.
32
Section 9.4 Ownership of Stock. Take any action, or permit any Material
Subsidiary to take any action, which would result in a decrease in the
Borrower's or any Material Subsidiary's ownership interest in any Subsidiary
(including, without limitation, decrease in the percentage of the shares of any
class of stock owned), other than Permitted Divestitures.
Section 9.5 Other Agreements. Enter into any agreement, bond, note or
other instrument with or for the benefit of any Person other than the Banks
which would: (a) be violated or breached by the Borrower's performance of its
obligations under the Loan Documents, or (b) prohibit any Subsidiary of the
Borrower from paying dividends or distributions on, or redeeming, acquiring or
retiring for value, any shares of stock or other ownership interest that the
Borrower holds in such Subsidiary.
Section 9.6 Restricted Payments. Either: (a) make any Restricted
Payment if any Default or Event of Default shall exist or shall result from the
making of such Restricted Payment; or (b) directly or indirectly make any
payment on, or redeem, repurchase, defease, or make any sinking fund payment on
account of, or any other provision for, or otherwise pay, acquire or retire for
value, any Indebtedness of the Borrower or any Subsidiary that is subordinated
in right of payment to the Loans (whether pursuant to its terms or by operation
of law), except for regularly-scheduled payments of interest and principal
(which shall not include payments contingently required upon occurrence of a
change of control or other event) that are not otherwise prohibited hereunder or
under the document or agreement stating the terms of such subordination.
Section 9.7 Investments. Acquire for value, make, have or hold any
Investments, except:
(a) Investments outstanding on the date hereof and listed on Schedule
9.7, and any increases or decreases in the value thereof or write-ups,
write-downs or write-offs with respect to such Investments;
(b) Travel advances to officers and employees in the ordinary course of
business;
(c) Investments in readily marketable direct obligations of the United
States of America having maturities of one year or less from the date
of acquisition;
(d) Certificates of deposit or bankers' acceptances, each maturing
within one year from the date of acquisition, issued by any commercial
bank organized under the laws of the United States or any State thereof
which has (i) combined capital, surplus and undivided profits of at
least $100,000,000, and (ii) a credit rating with respect to its
unsecured indebtedness from a nationally recognized rating service that
is satisfactory to the Bank;
(e) Commercial paper maturing within 270 days from the date of issuance
and given the highest rating by a nationally recognized rating service;
33
(f) Repurchase agreements relating to securities issued or guaranteed
as to principal and interest by the United States of America;
(g) Extensions of credit in the nature of accounts receivable or notes
receivable arising from the sale of goods and services in the ordinary
course of business;
(h) Share of stock, obligations or other securities received in
settlement of claims arising in the ordinary course of business;
(i) Investments outstanding on the date hereof in Subsidiaries by the
Borrower and other Subsidiaries, and Investments by the Borrower or
other Subsidiaries in Persons that will be Subsidiaries upon completion
of such Investments;
(j) Investments not otherwise permitted hereunder which shall not
exceed (based on total consideration paid by the Borrower or a Material
Subsidiary): (i) $10,000,000 for any single Investment or series of
related Investments in any Person not engaged in one or more of the
Borrower's and Subsidiaries' present lines of business, or (ii)
$20,000,000 for any single Investment or series of related Investments
in any Person that is engaged in one or more of the Borrower's and
Subsidiaries' present lines of business, provided that consent of the
Required Banks to such Investments in excess of such limit shall not be
unreasonably withheld; and
(k) Any Material Subsidiary may make Investments constituting Loans to
the Borrower and provided that no Default or Event of Default shall
have occurred and continued, the Borrower and any Material Subsidiary
may make Investments constituting loans to (i) any Material
Subsidiaries, or (ii) any Subsidiaries that are not Material
Subsidiaries, provided, that such loans to any one Subsidiary shall not
exceed $15,000,000 in aggregate principal amounts outstanding at any
time.
Section 9.8 Liens. Create, incur, assume or suffer to exist any Lien
with respect to any property, revenues or assets now owned or hereafter arising
or acquired, except:
(a) Liens in connection with the acquisition of property after the date
hereof by way of purchase money mortgage and security interests,
conditional sale or other title retention agreement, Capitalized Lease
or other deferred payment contract, and attaching only to the property
being acquired;
(b) Liens existing on assets of Material Subsidiaries acquired after
March 31, 2002, which existed at the time of such acquisition and
attach only to the assets of such Material Subsidiaries;
(c) Liens existing on the date of this Agreement and disclosed on
Schedule 7.11 hereto;
34
(d) Deposits or pledges to secure payment of workers' compensation,
unemployment insurance, old age pensions or other social security
obligations, in the ordinary course of business of the Borrower or a
Subsidiary;
(e) Liens for taxes, fees, assessments and governmental charges not
delinquent or to the extent that payments therefor shall not at the
time be required to be made in accordance with the provisions of
Section 8.4;
(f) Liens of carriers, warehousemen, mechanics and materialmen, and
other like Liens arising in the ordinary course of business, for sums
not due or to the extent that payment therefor shall not at the time be
required to be made in accordance with the provisions of Section 8.4;
(g) Deposits to secure the performance of bids, trade contracts,
leases, statutory obligations and other obligations of a like nature
incurred in the ordinary course of business; and
(h) Liens not otherwise permitted by this Section securing Indebtedness
not to exceed $2,000,000 in the aggregate at any time outstanding.
In no case shall ▇▇▇▇▇ permitted hereunder apply to the stock of the Guarantor.
Section 9.9 Contingent Liabilities. Either: (a) endorse, guarantee,
contingently agree to purchase or to provide funds for the payment of, or
otherwise become contingently liable upon, any obligation of any other Person,
except by the endorsement of negotiable instruments for deposit or collection
(or similar transactions) in the ordinary course of business, or (b) agree to
maintain the net worth or working capital of, or provide funds to satisfy any
other financial test applicable to, any other Person, except (in the case of (a)
or (b) above) for (i) guaranty by the Borrower of loans to leveraged Employee
Stock Ownership Plans; (ii) a performance guaranty by the Borrower of
performance by DMI Industries, Inc. under a certain contract involving aggregate
payments of approximately $20,000,000; (iii) guaranties by the Borrower or any
Material Subsidiary of obligations of any Material Subsidiary as lessee under
any lease that is not a Capitalized Lease, (iv) other guaranties limited as to
principal of recovery to not more than $10,000,000 in the aggregate; and (v)
guaranties by the Guarantor of the obligations of the Borrower under that
certain Note Purchase Agreement, dated as of December 1, 2001, among the
Borrower and the various purchasers which are parties thereto.
Section 9.10 Unconditional Purchase Obligations. Enter into or be a
party to any contract for the purchase or lease of materials, supplies or other
property or services if such contract requires that payment be made by it
regardless of whether or not delivery is ever made of such materials, supplies
or other property or services.
Section 9.11 Transactions with Related Parties. Enter into or be a
party to any transaction or arrangement, including, without limitation, the
purchase, sale lease or exchange of property or the rendering of any service,
with any Related Party, except in the ordinary course of and pursuant to the
reasonable requirements of the Borrower's or the applicable Material
Subsidiary's business and upon fair and reasonable terms no less favorable to
the Borrower or such Material Subsidiary than would obtain in a comparable
arm's-length transaction with a Person not a Related Party.
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Section 9.12 Use of Proceeds. Permit any proceeds of the Loans to be
used for purposes other than general corporate purposes (including acquisitions,
to the extent permitted hereunder) or permit any proceeds of the Loans to be
used, either directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of "purchasing or carrying any margin stock" within the
meaning of Regulation U of the Federal Reserve Board, as amended from time to
time, and furnish to any Bank, upon its request, a statement in conformity with
the requirements of Federal Reserve Form U-1 referred to in Regulation U.
Section 9.13 Interest-bearing Debt to Total Capitalization. Permit the
ratio, as of the last day of any fiscal quarter of the Borrower, of (a)
Interest-bearing Debt, to (b) Total Capitalization to be greater than 0.60 to
1.00.
Section 9.14 Interest and Dividend Coverage Ratio. Permit the Interest
and Dividend Coverage Ratio for any period of four consecutive fiscal quarters
to be less than 1.50 to 1.00.
ARTICLE X EVENTS OF DEFAULT AND REMEDIES
Section 10.1 Events of Default. The occurrence of any one or more of
the following events shall constitute an Event of Default:
(a) The Borrower shall fail to make when due, whether by acceleration
or otherwise, any payment of principal of or interest on the Note or
any fee or other amount required to be made to the Banks pursuant to
the Loan Documents;
(b) Any representation or warranty made or deemed to have been made by
or on behalf of the Borrower or any Material Subsidiary by any of the
Loan Documents or by or on behalf of the Borrower or any Material
Subsidiary in any certificate, statement, report or other writing
furnished by or on behalf of the Borrower to the Banks pursuant to the
Loan Documents shall prove to have been false or misleading in any
material respect on the date as of which the facts set forth are stated
or certified or deemed to have been stated or certified;
(c) The Borrower shall fail to comply with Section 8.2 hereof or any
Section of Article IX hereof;
(d) The Borrower shall fail to comply with any agreement, covenant,
condition, provision or term contained in the Loan Documents (and such
failure shall not constitute an Event of Default under any of the other
provisions of this Section 10.1) and such failure to comply shall
continue for thirty (30) calendar days after notice thereof to the
Borrower by the Bank;
(e) The Borrower or any Material Subsidiary shall become insolvent or
shall generally not pay its debts as they mature or shall apply for,
shall consent to, or shall acquiesce in the appointment of a custodian,
trustee or receiver of the Borrower or such Material Subsidiary or for
a substantial part of the property thereof or, in the absence of such
application, consent or acquiescence, a custodian, trustee or receiver
shall be appointed for the Borrower or a Material Subsidiary or for a
substantial part of the property thereof and shall not be discharged
within 30 days;
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(f) Any bankruptcy, reorganization, debt arrangement or other
proceedings under any bankruptcy or insolvency law shall be instituted
by or against the Borrower or a Material Subsidiary, and, if instituted
against the Borrower or a Material Subsidiary, shall have been
consented to or acquiesced in by the Borrower or such Material
Subsidiary, or shall remain undismissed for 30 days, or an order for
relief shall have been entered against the Borrower or such Material
Subsidiary, or the Borrower or any Material Subsidiary shall take any
corporate action to approve institution of, or acquiescence in, such a
proceeding;
(g) Any dissolution or liquidation proceeding shall be instituted by or
against the Borrower or a Material Subsidiary and, if instituted
against the Borrower or such Material Subsidiary, shall be consented to
or acquiesced in by the Borrower or such Material Subsidiary or shall
remain for 30 days undismissed, or the Borrower or any Material
Subsidiary shall take any corporate action to approve institution of,
or acquiescence in, such a proceeding;
(h) A judgment or judgments for the payment of money in excess of the
sum of $1,000,000 in the aggregate shall be rendered against the
Borrower or a Material Subsidiary and the Borrower or such Material
Subsidiary shall not discharge the same or provide for its discharge in
accordance with its terms, or procure a stay of execution thereof,
prior to any execution on such judgments by such judgment creditor,
within 30 days from the date of entry thereof, and within said period
of 30 days, or such longer period during which execution of such
judgment shall be stayed, appeal therefrom and cause the execution
thereof to be stayed during such appeal;
(i) The institution by the Borrower or any ERISA Affiliate of steps to
terminate any Plan if in order to effectuate such termination, the
Borrower or any ERISA Affiliate would be required to make a
contribution to such Plan, or would incur a liability or obligation to
such Plan, in excess of $1,000,000, or the institution by the PBGC of
steps to terminate any Plan;
(j) The maturity of any Indebtedness of the Borrower (other than
Indebtedness under this Agreement) or a Material Subsidiary in the
aggregate in excess of $5,000,000 shall be accelerated, or the Borrower
or a Material Subsidiary shall fail to pay any such Indebtedness (in
excess of such amount) when due or, in the case of such Indebtedness
payable on demand, when demanded, or any event shall occur or condition
shall exist and shall continue for more than the period of grace, if
any, applicable thereto and shall have the effect of causing, or
permitting (any required notice having been given and grace period
having expired) the holder of any such Indebtedness (in excess of such
amount) or any trustee or other Person acting on behalf of such holder
to cause, such Indebtedness to become due prior to its stated maturity
or to realize upon any collateral given as security therefor;
37
(k) Any Loan Document shall not be, or shall cease to be, enforceable
and binding in accordance with its terms, or the Borrower, any Material
Subsidiary, or any other obligor thereunder (except for the Agent or
the Banks) shall disavow or contest, or attempt to disavow or contest,
its obligations under such Loan Document;
(l) The Long Term Debt Rating of the Borrower shall be lower than BBB-
(S&P) or Baa3 (▇▇▇▇▇'▇), or the Borrower shall cease to have a Long
Term Debt Rating; or
(m) Any Person, or group of Persons acting in concert, that owned less
than 5% of the shares of any voting class of stock of the Borrower
shall have acquired more than 25% of the shares of such voting stock.
Section 10.2 Remedies. If (a) any Event of Default described in
Sections 10.1(e), (f) or (g) shall occur with respect to the Borrower, the
Commitments shall automatically terminate and the outstanding unpaid principal
balance of the Notes, the accrued interest thereon and all other obligations of
the Borrower to the Banks and the Agent under the Loan Documents shall
automatically become immediately due and payable; or (b) any other Event of
Default shall occur and be continuing, then the Agent may take any or all of the
following actions (and shall take any or all of the following actions on
direction of the Required Banks): (i) declare the Commitments terminated,
whereupon the Commitments shall terminate, (ii) declare that the outstanding
unpaid principal balance of the Notes, the accrued and unpaid interest thereon
and all other obligations of the Borrower to the Banks and the Agent under the
Loan Documents to be forthwith due and payable, whereupon the Notes, all accrued
and unpaid interest thereon and all such obligations shall immediately become
due and payable, in each case without demand or notice of any kind, all of which
are hereby expressly waived, anything in this Agreement or in the Notes to the
contrary notwithstanding, (iii) exercise all rights and remedies under any other
instrument, document or agreement between the Borrower and the Agent or the
Banks, and (iv) enforce all rights and remedies under any applicable law.
Section 10.3 Letters of Credit. In addition to the foregoing remedies,
if any Event of Default described in Section 10.1(e), (f) or (g) shall have
occurred, or if any other Event of Default shall have occurred and the Agent
shall have declared that the principal balance of the Notes is due and payable,
the Borrower shall pay to the Agent an amount equal to all Letter of Credit
Obligations. Such payment shall be in immediately available funds or in similar
cash collateral acceptable to the Agent and shall be pledged to the Agent for
the ratable benefit of the Banks. Such amount shall be held by the Agent in a
cash collateral account until the outstanding Letters of Credit are terminated
without payment or are paid and Letter of Credit Obligations with respect
thereto are payable. In the event the Borrower defaults in the payment of any
Letter of Credit Obligations, the proceeds of the cash collateral account shall
be applied to the payment thereof. The Borrower acknowledges and agrees that the
Banks would not have an adequate remedy at law for failure by the Borrower to
pay immediately to the Agent the amount provided under this Section, and that
the Agent shall, on behalf of the Banks, have the right to require the Borrower
to perform specifically such undertaking whether or not any of the Letter of
Credit Obligations are due and payable. Upon the failure of the Borrower to make
any payment required under this Section, the Agent, on behalf of the Banks, may
proceed to use all remedies available at law or equity to enforce the obligation
of the Borrower to pay or reimburse the Agent. The balance of any payment due
under this Section shall bear interest payable on demand until paid in full at a
per annum rate equal to the Base Rate plus 2.00%.
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Section 10.4 Security Agreement in Accounts and Setoff. As additional
security for the payment of all of the Obligations, the Borrower grants to the
Agent, each Bank and each holder of a Note a security interest in, a lien on,
and an express contractual right to set off against, each deposit account and
all deposit account balances, cash and any other property of the Borrower now or
hereafter maintained with, or in the possession of, the Agent, such Bank or such
other holder of a Note. Upon the occurrence of any Event of Default, upon
written direction by the Agent to such effect, the Agent, each such Bank and
each such holder of a Note may: (a) refuse to allow withdrawals from any such
deposit account; (b) apply the amount of such deposit account balances and the
other assets of the Borrower described above to the Obligations; and (c) offset
any other obligation of the Agent, such Bank or such holder of a Note against
the Obligations; all whether or not the Obligations are then due or have been
accelerated and all without any advance or contemporaneous notice or demand of
any kind to the Borrower, such notice and demand being expressly waived.
ARTICLE XI THE AGENT
Section 11.1 Appointment and Grant of Authority. Each Bank hereby
appoints the Agent, and the Agent ▇▇▇▇▇▇ agrees to act, as agent under this
Agreement and under the Guaranty. The Agent shall have and may exercise such
powers under this Agreement and the Guaranty as are specifically delegated to
the Agent by the terms hereof and thereof, together with such other powers as
are reasonably incidental thereto. Each Bank hereby authorizes, consents to, and
directs the Borrower to deal with the Agent as the true and lawful agent of such
Bank to the extent set forth herein and under the Guaranty.
Section 11.2 Non-Reliance on Agent. Each Bank agrees that it has,
independently and without reliance on the Agent or any other Bank, and based on
such documents and information as it has deemed appropriate, made its own credit
analysis of the Borrower and decision to enter into this Agreement and 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 analysis and decisions in taking or not taking action under this
Agreement. The Agent shall not be required to keep informed as to the
performance or observance by the Borrower of this Agreement and the Loan
Documents or to inspect the properties or books of the Borrower. Except for
notices, reports and other documents and information expressly required to be
furnished to the Banks by the Agent hereunder, the Agent shall not have any duty
or responsibility to provide any Bank with any credit or other information
concerning the affairs, financial condition or business of the Borrower (or any
of its related companies) which may come into the Agent's possession.
Section 11.3 Responsibility of the Agent and Other Matters.
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(a) The Agent shall have no duties or responsibilities except those
expressly set forth in this Agreement and those duties and liabilities
shall be subject to the limitations and qualifications set forth in
this Section. The duties of the Agent shall be mechanical and
administrative in nature.
(b) Neither the Agent nor any of its directors, officers or employees
shall be liable for any action taken or omitted (whether or not such
action taken or omitted is within or without the Agent's
responsibilities and duties expressly set forth in this Agreement)
under or in connection with this Agreement, or any other instrument or
document in connection herewith, except for gross negligence or
willful misconduct. Without limiting the foregoing, neither the Agent
nor any of its directors, officers or employees shall be responsible
for, or have any duty to examine: (i) the genuineness, execution,
validity, effectiveness, enforceability, value or sufficiency of the
Loan Agreements; (ii) the collectibility of any amounts owed by the
Borrower; (iii) any recitals or statements or representations or
warranties in connection with this Agreement or the Notes; (iv) any
failure of any party to this Agreement to receive any communication
sent; or (v) the assets, liabilities, financial condition, results of
operations, business or creditworthiness of the Borrower.
(c) The Agent shall be entitled to act, and shall be fully protected in
acting upon, any communication in whatever form believed by the Agent
in good faith to be genuine and correct and to have been signed or sent
or made by a proper person or persons or entity. The Agent may consult
counsel and shall be entitled to act, and shall be fully protected
in-any action taken in good faith, in accordance with advice given by
counsel. The Agent may employ agents and attorneys-in-fact and shall
not be liable for the default or misconduct of any such agents or
attorneys-in-fact selected by the Agent with reasonable care. The Agent
shall not be bound to ascertain or inquire as to the performance or
observance of any of the terms, provisions or conditions of this
Agreement or the Notes on the Borrower's part.
Section 11.4 Action on Instructions. The Agent shall be entitled to act
or refrain from acting, and in all cases shall be fully protected in acting or
refraining from acting under this Agreement or the Notes or any other instrument
or document in connection herewith or therewith in accordance with instructions
in writing from (i) the Required Banks except for instructions which under the
express provisions hereof must be received by the Agent from all the Banks, and
(ii) in the case of such instructions, from all the Banks.
Section 11.5 Indemnification. To the extent the Borrower does not
reimburse and save the Agent harmless according to the terms hereof for and from
all costs, expenses and disbursements in connection herewith or with the other
Loan Documents, such costs, expenses and disbursements to the extent reasonable
shall be borne by the Banks ratably in accordance with their Percentages and the
Banks hereby agree on such basis (a) to reimburse the Agent for all such
reasonable costs, expenses and disbursements on request and (b) to indemnify and
save harmless the Agent against and from any and all losses, obligations,
penalties, actions, judgments and suits and other reasonable costs, expenses and
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against the Agent, other than as a consequence of actual gross
negligence or willful misconduct on the part of the Agent, arising out of or in
connection with this Agreement or the Notes or any instrument or document in
connection herewith or therewith, or any request of the Banks, including without
limitation the reasonable costs, expenses and disbursements in connection with
defending itself against any claim or liability, or answering any subpoena,
related to the exercise or performance of any of its powers or duties under this
Agreement or the other Loan Documents or the taking of any action under or in
connection with this Agreement or the Notes.
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Section 11.6 U.S. Bank National Association and Affiliates. With
respect to U.S. Bank National Association's Commitment and any Loans by U.S.
Bank National Association under this Agreement and any Note and any interest of
U.S. Bank National Association in any Note, U.S. Bank National Association shall
have the same rights, powers and duties under this Agreement and such Note as
any other Bank and may exercise the same as though it were not the Agent. U.S.
Bank National Association and its affiliates may accept deposits from, lend
money to, and generally engage, and continue to engage, in any kind of business
with the Borrower as if U.S. Bank National Association were not the Agent.
Section 11.7 Notice to Holder of Notes. The Agent may deem and treat
the payees of the Notes as the owners thereof for all purposes unless a written
notice of assignment, negotiation or transfer thereof has been filed with the
Agent. Any request, authority or consent of any holder of any Note shall be
conclusive and binding on any subsequent holder, transferee or assignee of such
Note.
Section 11.8 Successor Agent. The Agent may resign at any time by
giving at least 30 days written notice thereof to the Banks and the Borrower.
Upon any such resignation, the Required Banks shall have the right to appoint a
successor Agent. If no successor Agent shall have been appointed by the Required
▇▇▇▇▇ and shall have accepted such appointment within 30 days after the retiring
Agent's giving notice of resignation, then the retiring Agent may, but shall not
be required to, on behalf of the Banks, appoint a successor Agent.
ARTICLE XII MISCELLANEOUS
Section 12.1 No Waiver and Amendment. No failure on the part of the
Banks or the holder of the Notes to exercise and no delay in exercising any
power or right hereunder or under any other Loan Document shall operate as a
waiver thereof; nor shall any single or partial exercise of any power or right
preclude any other or further exercise thereof or the exercise of any other
power or right. The remedies herein and in any other instrument, document or
agreement delivered or to be delivered to the Banks hereunder or in connection
herewith are cumulative and not exclusive of any remedies provided by law. No
notice to or demand on the Borrower not required hereunder or under the Notes
shall in any event entitle the Borrower to any other or further notice or demand
in similar or other circumstances or constitute a waiver of the right of the
Banks or the holder of the Notes to any other or further action in any
circumstances without notice or demand.
41
Section 12.2 Amendments, Etc. No amendment or waiver of any provision
of this Agreement, nor consent to any departure by the Borrower therefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Borrower and the Agent upon direction of the Required Banks and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no amendment, waiver or consent
shall, unless agreed to by the Agent and all of the Banks:
(a) increase the amounts of or extend the terms of the Commitments or
subject the Banks to any additional obligations;
(b) change the principal of, or interest on, the Notes or any fees or
other amounts payable hereunder;
(c) postpone any date fixed for any payment of principal of, or
interest on, the Notes or any fees or other amounts payable hereunder;
(d) release the Guaranty or release any collateral held subject to
Section 10.3, except as contemplated by such Section; or
(e) change the definition of Required Banks or amend this Section 12.2
provided, further that amendments, waivers or consents affecting the rights of
the Agent shall also require the consent of the Agent.
Section 12.3 Assignments and Participations.
(a) Assignments. Each Bank shall have the right, subject to the further
provisions of this Sections 12.3, to sell or assign all or any part of
its Commitments, Loans, Notes, and other rights and obligations under
this Agreement and related documents (such transfer, and "Assignment")
to any commercial lender, other financial institution or other entity
(an "Assignee"). Upon such Assignment becoming effective as provided in
Section 12.3(b), the assigning Bank shall be relieved from the portion
of its Commitment, obligations to indemnify the Agent and other
obligations hereunder to the extent assumed and undertaken by the
Assignee, and to such extent the Assignee shall have the rights and
obligations of a "Bank" hereunder. Notwithstanding the foregoing,
unless otherwise consented to by the Borrower and the Agent, each
Assignment shall be in the initial principal amount of not less than
$5,000,000 in the aggregate for all Loans and Commitments assigned, or
an integral multiple of $1,000,000 if above such amount Each Assignment
shall be documented by an agreement between the assigning Bank and the
Assignee (an "Assignment and Assumption Agreement") substantially in
the form of Exhibit F attached hereto.
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(b) Effectiveness of Assignments. An Assignment shall become effective
hereunder when all of the following shall have occurred: (i) the Agent
and the Borrower (or, following occurrence and during continuance of an
Event of Default, the Agent only and not the Borrower) shall consent to
such Assignment (which consent shall not be unreasonably withheld), by
either notice of such consent or by executing and delivering such
Assignments, (ii) either the assigning Bank or the Assignee shall have
paid a processing fee of $3,500 to the Agent for its own account, (iii)
the Assignee shall have submitted the Assignment and Assumption
Agreement to the Agent with a copy for the Borrower, and shall have
provided to the Agent information the Agent shall have reasonably
requested to make payments to the Assignee, and (iv) the assigning Bank
and the Agent shall have agreed upon a date upon which the Assignment
shall become effective. Upon the Assignment becoming effective, (x) if
requested by the assigning Bank, the Agent and the Borrower shall make
appropriate arrangements so that new Notes are issued to the assigning
Bank and the Assignee; and (y) the Agent shall forward all payments of
interest, principal, fees and other amounts that would have been made
to the assigning Bank, in proportion to the percentage of the assigning
Bank's rights transferred, to the Assignee.
(c) Participations. Each Bank shall have the right, subject to the
further provisions of this Section 12.3, to grant or sell a
participation in all or any part of its Loans, Notes and Commitments (a
"Participation") to any commercial lender, other financial institution
or other entity (a "Participant") without the consent of the Borrower,
the Agent of any other party hereto. The Borrower agrees that if
amounts outstanding under this agreement and the Notes are due and
unpaid, or shall have been declared or shall have become due and
payable upon the occurrence of an Event of Default, each Participant
shall be deemed to have the right of setoff in respect of its
Participation in amounts owing under this Agreement and any Note to the
same extent as if the amount of its Participation were owing directly
to it as a Bank under this agreement or any note; provided, that such
right of setoff shall be subject to the obligation of such Participant
to share with the Banks, and the Banks agree to share with such
Participant, as provided in Section 4.5 hereof. The Borrower also
agrees that each Participant shall be entitled to the benefits of
Article V with respect to its Participation, provided, that no
Participant shall be entitled to receive any greater amount pursuant to
such Sections than the transferor Bank would have been entitled to
receive in respect of the amount of the Participation transferred by
such transferor Bank to such Participant had no such transfer occurred.
(d) Limitation of Rights of any Assignee or Participant.
Notwithstanding anything in the foregoing to the contrary, except in
the instance of an Assignment that has become effective as provided in
Section 12.3(b), (i) no Assignee or Participant shall have any direct
rights hereunder, (ii) the Borrower, the Agent and the Banks other than
the assigning or selling Bank shall deal solely with the assigning or
selling Bank and shall not be obligated to extend any rights or make
any payment to, or seek any consent of, the Assignee or Participant,
(iii) no Assignment or Participation shall relieve the assigning or
43
selling Bank from its Commitment to make Loans hereunder or any of its
other obligations hereunder and such Bank shall remain solely
responsible for the performance hereof, the (iv) no Assignee or
Participant, other than an affiliate of the assigning or selling Bank,
shall be entitled to require such Bank to take or omit to take any
action hereunder, except that such Bank may agree with such Assignee or
Participant that such Bank will not, without such Assignee's or
Participant's consent, take any action which would, in the case of any
principal, interest or fee in which the Assignee or Participant has an
ownership or beneficial interest: (w) extend the final maturity of any
Loans or extend the Termination Date, (x) reduce the interest rate on
the Loans or the rate of Commitment Fees, (y) forgive any principal of,
or interest on, the Loans or any fees, or (z) release all or
substantially all of the Collateral for the Loans.
(e) Tax Matters. No Bank shall be permitted to enter into any
Assignment or Participation with any Assignee or Participant who is not
a United States Person unless such Assignee or Participant represents
and warrants to such Bank that, as at the date of such Assignment or
Participation, it is entitled to receive interest payments without
withholding or deduction of any taxes and such Assignee or Participant
executes and delivers to such Bank on or before the date of execution
and delivery of documentation of such Participation or Assignment, a
United States Internal Revenue Service Form W8BEN or W8ECI, or any
successor to either of such forms, as appropriate, properly completed
an claiming complete exemption from withholding and deduction of all
Federal Income Taxes. A "United States Person" means any citizen,
national or resident of the United States, any corporation or other
entity created or organized in or under the laws of the United States
or any political subdivision hereof or any estate or trust, in each
case that is not subject to withholding of United States Federal income
taxes or other taxes on payment of interest, principal of fees
hereunder.
(f) Information. Each Bank may furnish any information concerning the
Borrower in the possession of such Bank from time to time to Assignees
and Participants and potential Assignees and Participants.
(g) Federal Reserve Bank. Nothing herein stated shall limit the right
of any Bank to assign any interest herein and in any Note to a Federal
Reserve Bank.
Section 12.4 Costs, Expenses and Taxes; Indemnification.
(a) The Borrower agrees, whether or not any Advance is made hereunder,
to pay on demand: (i) all costs and expenses of the Agent (including
the reasonable fees and expenses of counsel and paralegals for such
persons who may be employees of such persons) incurred in connection
with the preparation, execution and delivery of the Loan Documents and
the preparation, negotiation and execution of any and all amendments to
each thereof, and (ii) all costs and expenses of the Agent and each of
the Banks incurred after the occurrence of an Event of Default in
connection with the enforcement of the Loan Documents. The Borrower
agrees to pay, and save the Banks harmless from all liability for, any
stamp or other taxes which may be payable with respect to the execution
or delivery of the Loan Documents. The Borrower agrees to indemnify and
hold the Banks harmless from any loss or expense which may arise or be
created by the acceptance in good faith by the Agent of telephonic or
other instructions for making Advances or disbursing the proceeds
thereof.
44
(b) The Borrower agrees to defend, protect, indemnify, and hold
harmless the Agent and each and all of the Banks, each of their
respective Affiliates and each of the respective officers, directors,
employees and agents of each of the foregoing (each an "Indemnified
Person" and, collectively, the "Indemnified Persons") from and against
any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of
any kind or nature whatsoever (including, without limitation, the fees
and disbursements of counsel to such Indemnified Persons in connection
with any investigative, administrative or judicial proceeding, whether
direct, indirect or consequential and whether based on any federal or
state laws or other statutory regulations, including, without
limitation, securities and commercial laws and regulations, under
common law or at equitable cause, or on contract or otherwise, the
capitalization of the Borrower, the Commitments, the making of,
management of and participation in the Advances or the use or intended
use of the proceeds of the Advances, provided that the Borrower shall
have no obligation under this Section 12.4(b) to an Indemnified Person
with respect to any of the foregoing to the extent resulting from the
gross negligence or willful misconduct of such Indemnified Person or
arising solely from claims between one such Indemnified Person and
another such Indemnified Person. The indemnity set forth herein shall
be in addition to any other obligations or liabilities of the Borrower
to each Indemnified Person under the Loan Documents or at common law or
otherwise.
(c) The obligations of the Borrower under this Section 12.4 shall
survive any termination of this Agreement.
Section 12.5 Notices. Except when telephonic notice is expressly
authorized by this Agreement, any notice or other communication to any party in
connection with this Agreement shall be in writing and shall be sent by manual
delivery, telegram, telex, facsimile transmission, overnight courier or United
States mail (postage prepaid) addressed to such party at the address specified
on the signature page hereof, or at such other address as such party shall have
specified to the other party hereto in writing. All periods of notice shall be
measured from the date of delivery thereof if manually delivered, from the date
of sending thereof if sent by telegram, telex or facsimile transmission, from
the first Business Day after the date of sending if sent by overnight courier,
or from four days after the date of mailing if mailed; provided, however, that
any notice to the Agent under Article II hereof shall be deemed to have been
given only when received by the Agent.
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Section 12.6 Successors. This Agreement shall be binding upon the
Borrower, the Banks and the Agent and their respective successors and assigns,
and shall inure to the benefit of the Borrower, the Banks and the Agent and the
successors and assigns of the Banks. The Borrower shall not assign its rights or
duties hereunder without the written consent of the Banks.
Section 12.7 Severability. Any provision of the Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 12.8 Subsidiary References. The provisions of this Agreement
relating to Subsidiaries shall apply only during such times as the Borrower has
one or more Subsidiaries.
Section 12.9 Captions. The captions or headings herein and any table of
contents hereto are for convenience only and in no way define, limit or describe
the scope or intent of any provision of this Agreement.
Section 12.10 Entire Agreement. The Loan Documents embody the entire
agreement and understanding between the Borrower, the Banks and the Agent with
respect to the subject matter hereof and thereof. This Agreement supersedes all
prior agreements and understandings relating to the subject matter hereof.
Section 12.11 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and either of the parties hereto may execute this Agreement by
signing any such counterpart.
Section 12.12 Governing Law. THE VALIDITY, CONSTRUCTION AND
ENFORCEABILITY OF THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY THE INTERNAL
LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS
PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE UNITED STATES
APPLICABLE TO NATIONAL BANKS.
Section 12.13 Consent to Jurisdiction. AT THE OPTION OF THE BANKS, THIS
AGREEMENT AND THE NOTES MAY BE ENFORCED IN ANY FEDERAL COURT OR MINNESOTA STATE
COURT SITTING IN MINNEAPOLIS OR ST. ▇▇▇▇, MINNESOTA; AND THE BORROWER CONSENTS
TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT
VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE BORROWER COMMENCES ANY
ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY
ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT,
THE BANKS AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF
THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE
ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.
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Section 12.14 Waiver of Jury Trial. THE BORROWER, THE BANKS AND THE
AGENT EACH WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS (a) UNDER THIS AGREEMENT OR UNDER ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR (b) ARISING FROM ANY BANKING RELATIONSHIP
EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREE THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
(signature pages follows)
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above.
OTTER TAIL CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
Title: C.F. O. & Treasurer
P.O. Box 496
Fergus Falls, MN 56538-0496
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇
Chief Financial Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
U.S. BANK NATIONAL ASSOCIATION,
as Agent and a Bank
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Title: Vice President
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
BANK ONE, N.A. as a Bank
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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Title: Associate Director
▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Ms. ▇▇▇▇▇▇ ▇▇▇▇
Associate Director
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
BANK HAPOALIM B.M., as a Bank
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title: VP-SR. Lending Officer
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Title: Vice President
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇.
Suite 900
Chicago, Illinois 60601-7601
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇