Exhibit 10(i)
BB&T
LOAN AGREEMENT
DELTA NATURAL GAS COMPANY, INC. Account Number ▇▇▇▇▇▇▇▇▇▇
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This Loan Agreement (the "Agreement") is made this 31st day of October, 2002
by and between BRANCH BANKING AND TRUST COMPANY, a North Carolina banking
corporation ("Bank"), and:
DELTA NATURAL GAS COMPANY, INC., a Kentucky corporation ("Borrower"), having
its chief executive office at Winchester, Kentucky.
The Borrower has applied to Bank for and the Bank has agreed to make,
subject to the terms of this Agreement, the following loan(s) (hereinafter
referred to, singularly or collectively, if more than one, as "Loan"):
LINE OF CREDIT ("Line of Credit" or "Line") in the maximum principal amount
not to exceed $40,000,000 at any one time outstanding for the purpose of
Working Capital which shall be evidenced by the Borrower's Promissory Note
dated on or after the date hereof which shall mature October 31, 2003, when
the entire unpaid principal balance then outstanding plus accrued interest
thereon shall be paid in full. Prior to maturity or the occurrence of any
Event of Default hereunder and subject to any Borrowing Base limitations, as
applicable, the Borrower may borrow, repay, and reborrow under the Line of
Credit through maturity. The Line of Credit shall bear interest at the rate
set forth in any such Note evidencing all or any portion of the Line of
Credit, the terms of which are incorporated herein by reference.
SECTION 1 CONDITIONS PRECEDENT
The Bank shall not be obligated to make any disbursement of Loan proceeds
until all of the following conditions have been satisfied by proper
evidence, execution, and/or delivery to the Bank of the following items in
addition to this Agreement, all in form and substance satisfactory to the
Bank and the Bank's counsel in their sole discretion:
NOTE(S): The Note(s) evidencing the Loans(s) duly executed by the Borrower.
CORPORATE RESOLUTION: A Corporate Resolution duly adopted by the Board of
Directors of the Borrower authorizing the execution, delivery, and
performance of the Loan Documents on or in a form provided by or
acceptable to Bank.
ARTICLES OF INCORPORATION: A copy of the Articles of Incorporation and all
other charter documents of the Borrower, all filed with and certified
by the Secretary of State of the State of the Borrower's incorporation.
BY-LAWS: A copy of the By-Laws of the Borrower, certified by the Secretary
of the Borrower as to their completeness and accuracy.
CERTIFICATE OF INCUMBENCY: A certificate of the Secretary of the Borrower
certifying the names and true signatures of the officers of the
Borrower authorized to sign the Loan Documents.
CERTIFICATE OF EXISTENCE: A certification of the Secretary of State (or
other government authority) of the State of the Borrower's
Incorporation or Organization as to the existence or good standing of
the Borrower and its charter documents on file.
OPINION OF COUNSEL: An opinion of counsel for the Borrower satisfactory to
the Bank and the Bank's counsel.
ADDITIONAL DOCUMENTS: Receipt by the Bank of other approvals, opinions, or
documents as the Bank may reasonably request.
SECTION 2 REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to Bank that:
2.01. FINANCIAL STATEMENTS. The balance sheet of the Borrower and its
subsidiaries, if any, and the related Statements of Income and Retained
Earnings of the Borrower and its subsidiaries, the accompanying
footnotes together with the accountant's opinion thereon, and all other
financial information previously furnished to the Bank, are in all
material respects true and correct and fairly reflect the financial
condition of the Borrower and its subsidiaries as of the dates thereof,
including all contingent liabilities of every type required under
Generally Accepted Accounting Principles (GAAP) to be included
thereunder, and the financial condition of the Borrower and its
subsidiaries as stated therein has not changed materially and adversely
since the date thereof.
2.02. NAME, CAPACITY AND STANDING. The Borrower's exact legal name is
correctly stated in the initial paragraph of the Agreement. The
Borrower warrants and represents that it is duly organized and validly
existing under the laws of its respective state of incorporation or
organization; that it and/or its subsidiaries, if any, are duly
qualified and in good standing in every other state in which the nature
of their business shall require such qualification, and are each duly
authorized by their board of directors to enter into the Agreement.
2.03. NO VIOLATION OF OTHER AGREEMENTS. The execution of the Loan
Documents, and the performance by the Borrower thereunder will not
violate any material provision, as applicable, of its articles of
incorporation, by-laws, articles of organization, operating agreement,
agreement of partnership, limited partnership or limited liability
partnership, or, of any law, other agreement, indenture, note, or other
instrument binding upon the Borrower, or give cause for the
acceleration of any of the respective obligations of the Borrower.
2.04. AUTHORITY. All authority from and approval by any federal, state,
or local governmental body, commission or agency necessary to the
making, validity, or enforceability of this Agreement and the other
Loan Documents has been obtained.
2.05. ASSET OWNERSHIP. The Borrower has good and marketable title to all
of the properties and assets reflected on the balance sheets and
financial statements furnished to the Bank, and all such properties and
assets are free and clear of mortgages, deeds of trust, pledges, liens,
and all other encumbrances except as otherwise disclosed by such
financial statements.
2.06. DISCHARGE OF LIENS AND TAXES. The Borrower and its subsidiaries,
if any, have filed, paid, and/or discharged all taxes or other claims
which may become a lien on any of their respective properties or
assets, excepting to the extent that such items are being appropriately
contested in good faith and for which an adequate reserve (in an amount
acceptable to Bank) for the payment thereof is being maintained.
2.07. REGULATION U. None of the Loan proceeds shall be used directly or
indirectly for the purpose of purchasing or carrying any margin stock
in violation of the provisions of Regulation U of the Board of
Governors of the Federal Reserve System.
2.08. ERISA. Each employee benefit plan, as defined by the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"),
maintained by the Borrower or by any subsidiary of the Borrower meets
in all material respects, as of the date hereof, the minimum funding
standards of Section 302 of ERISA, all applicable requirements of ERISA
and of the Internal Revenue Code of 1986, as amended, and no
"Reportable Event" nor "Prohibited Transaction" (as defined by ERISA)
has occurred with respect to any such plan.
2.09. LITIGATION. There is no claim, action, suit or proceeding
pending, (to the knowledge of Borrower) threatened or reasonably
anticipated before any court, commission, administrative agency,
whether State or Federal, or arbitration which will materially
adversely affect the financial condition, operations, properties, or
business of the Borrower or its subsidiaries, if any, or the ability of
the Borrower to perform its obligations under the Loan Documents.
2.10. OTHER AGREEMENTS. The representations and warranties made by
Borrower to Bank in the other Loan Documents are true and correct in
all material respects on the date hereof.
2.11. BINDING AND ENFORCEABLE. The Loan Documents, when executed, shall
constitute valid and binding obligations of the Borrower, the execution
of such Loan Documents has been duly authorized by the parties thereto,
and are enforceable in accordance with their terms, except as may be
limited by bankruptcy, insolvency, moratorium, or similar laws
affecting creditors' rights generally and by general equitable
principles.
2.12. COMMERCIAL PURPOSE. The Loan(s) are not "consumer transactions",
as defined in the Kentucky Uniform Commercial Code.
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LOAN AGREEMENT
SECTION 3 AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that from the date hereof and until
payment in full of all indebtedness and performance of all obligations owed
under the Loan Documents, Borrower shall:
3.01. MAINTAIN EXISTENCE AND CURRENT LEGAL FORM OF BUSINESS. (a)
Maintain its existence and good standing in the state of its
incorporation or organization, (b) maintain its current legal form of
business indicated above, and, (c), as applicable, qualify and remain
qualified as a foreign corporation, general partnership, limited
partnership, limited liability partnership or limited liability company
in each jurisdiction in which such qualification is required.
3.02. MAINTAIN RECORDS. Keep adequate records and books of account, in
which complete entries will be made in accordance with GAAP
consistently applied, reflecting all financial transactions of the
Borrower.
3.03. MAINTAIN PROPERTIES. Maintain, keep, and preserve all of its
properties (tangible and intangible) including the collateral necessary
or useful in the conduct of its business in good working order and
condition, ordinary wear and tear excepted.
3.04. CONDUCT OF BUSINESS. Continue to engage in a business of the same
general type as now conducted.
3.05. MAINTAIN INSURANCE. Maintain insurance with financially sound and
reputable insurance companies or associations in such amounts and
covering such risks as are usually carried by companies engaged in the
same or a similar business, and business interruption insurance if
required by Bank, which insurance may provide for reasonable
deductible(s).
3.06. COMPLY WITH LAWS. Comply in all material respects with all
applicable laws, rules, regulations, and orders including, without
limitation, paying before the delinquency of all taxes, assessments,
and governmental charges imposed upon it or upon its property, and all
environmental laws.
3.07. RIGHT OF INSPECTION. Permit the officers and authorized agents of
the Bank, at any reasonable time or times in the Bank's sole
discretion, to examine and make copies of the records and books of
account of, to visit the properties of the Borrower, and to discuss
such matters with any officers, directors, managers, members or
partners, limited or general of the Borrower, and the Borrower's
independent accountant as the Bank deems necessary and proper.
3.08. REPORTING REQUIREMENTS. Furnish to the Bank:
QUARTERLY FINANCIAL STATEMENTS: As soon as available and not more
than forty five (45) days after the end of each quarter, balance
sheets, statements of income, cash flow, and retained earnings
for the period ended and a statement of changes in the financial
position, all in reasonable detail, and all prepared in
accordance with GAAP consistently applied and certified as true
and correct by an officer of the Borrower, as appropriate.
ANNUAL FINANCIAL STATEMENTS: As soon as available and not more
than one hundred twenty (120) days after the end of each fiscal
year, balance sheets, statements of income, and retained earnings
for the period ended and a statement of changes in the financial
position, all in reasonable detail, and all prepared in
accordance with GAAP consistently applied. The financial
statements must be of the following quality or better: Audited.
NOTICE OF LITIGATION: Promptly after the receipt by the Borrower
of notice or complaint of any action, suit, and proceeding before
any court or administrative agency of any type which, if
determined adversely, could have a material adverse effect on the
financial condition, properties, or operations of the Borrower.
NOTICE OF DEFAULT: Promptly upon discovery or knowledge thereof,
notice of the existence of any event of default under this
Agreement or any other Loan Documents.
OTHER INFORMATION: Such other information as the Bank may from
time to time reasonably request.
3.09. DEPOSIT ACCOUNTS. Maintain substantially all of its demand
deposit/operating accounts with the Bank.
3.10. SENIOR MANAGEMENT: No change in senior management shall occur
that is unacceptable to the Bank.
SECTION 4 EVENTS OF DEFAULT
The following shall be "Events of Default" by Borrower:
4.01. The failure to make prompt payment of any installment of
principal or interest on any of the Note(s) in accordance with the
terms and conditions of the Note(s).
4.02. Should any representation or warranty made in the Loan Documents
prove to be false or misleading in any material respect.
4.03 Should any report, certificate, financial statement, or other
document furnished prior to the execution of or pursuant to the terms
of this Agreement prove to be false or misleading in any material
respect.
4.04. Should the Borrower default on the performance of any other
obligation of indebtedness to the Bank or to any third party when due
or in the performance of any obligation incurred in connection with
money borrowed, and the default remains uncured for a period of ten
(10) days after notice from Bank to Borrower.
4.05. Should the Borrower breach any material covenant, condition, or
agreement made under any of the Loan Documents, and the breach remains
uncured for a period of ten (10) days after notice from Bank to
Borrower.
4.06. Should a custodian be appointed for or take possession of any or
all of the assets of the Borrower, or should the Borrower either
voluntarily or involuntarily become subject to any insolvency
proceeding, including becoming a debtor under the United States
Bankruptcy Code, any proceeding to dissolve the Borrower, any
proceeding to have a receiver appointed, or should the Borrower make an
assignment for the benefit of creditors, or should there be an
attachment, execution, or other judicial seizure of all or any portion
of the Borrower's assets, including an action or proceeding to seize
any funds on deposit with the Bank, and such seizure is not discharged
within 30 days.
4.07. Should final judgment for the payment of money be rendered
against the Borrower in excess of $100,000 which is not covered by
insurance and shall remain undischarged for a period of 30 days unless
such judgment or execution thereon be effectively stayed.
4.08. Upon the death of, or termination of existence of, or dissolution
of, any Borrower.
4.09. Should the Bank in good ▇▇▇▇▇ ▇▇▇▇ itself, its liens and security
interests, if any, or any debt thereunder unsafe or insecure, or should
the Bank believe in good faith that the prospect of payment of any debt
or other performance by the Borrower is impaired.
SECTION 5 REMEDIES UPON DEFAULT
Upon the occurrence of any of the above listed Events of Default, the Bank
may at any time thereafter, at its option, take any or all of the following
actions, at the same or at different times:
5.01. Declare the balance(s) of the Note(s) to be immediately due and
payable, both as to principal and interest, without presentment,
demand, protest, or notice of any kind, all of which are hereby
expressly waived by Borrower, and such balance(s) shall accrue interest
at the Default Rate as provided herein until paid in full;
5.02. Require the Borrower to pledge collateral to the Bank from the
Borrower's assets and properties, the acceptability and sufficiency of
such collateral to be determined in the Bank's sole discretion;
5.03. Take immediate possession of and foreclose upon any or all
collateral which may be granted to the Bank as security for the
indebtedness and obligations of Borrower under the Loan Documents;
5.04. Exercise any and all other rights and remedies available to the
Bank under the terms of the Loan Documents and applicable law,
including the Kentucky Uniform Commercial Code; and
5.05. Any obligation of the Bank to advance funds to the Borrower or
any other Person under the terms of the Note(s) and all other
obligations, if any, of the Bank under the Loan Documents shall
immediately cease and terminate unless and until Bank shall reinstate
such obligation in writing.
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LOAN AGREEMENT
SECTION 6 NEGATIVE COVENANTS
The Borrower covenants and agrees that from the date hereof and until
payment in full of all indebtedness and performance of all obligations owed
under the Loan Documents, Borrower shall not:
6.01 DISPOSITION OF ASSETS. Sell, assign, lease, convey or transfer or
otherwise dispose of a material portion of its assets other than in the
ordinary course of its business.
6.02 CONSOLIDATIONS AND MERGERS. Merge, consolidate with or into any
other entity or otherwise dispose of substantially all of its assets.
6.03 ISSUANCE OF STOCK. Issue any of its stock to the public or in an
exempt transaction whereby such issuances in the aggregate exceed
thirty-five percent (35%) of the Borrower's currently authorized and
outstanding shares of common stock.
6.04 ACCUMULATION OF STOCK. Have any person or entity or a group of
affiliated persons or entities, hold more than twenty percent (20%) of
the then outstanding shares of Borrower common stock
SECTION 7 MISCELLANEOUS PROVISIONS
7.01. DEFINITIONS.
"DEFAULT RATE" shall mean a rate of interest equal to Bank's
Prime Rate plus five percent (5%) per annum (not to exceed the
legal maximum rate) from and after the date of an Event of
Default hereunder which shall apply, in the Bank's sole
discretion, to all sums owing, including principal and interest,
on such date.
"LOAN DOCUMENTS" shall mean this Agreement including any schedule
attached hereto, the Note(s), and all other documents,
certificates, and instruments executed in connection therewith,
and all renewals, extensions, modifications, substitutions, and
replacements thereto and therefore.
"PERSON" shall mean an individual, partnership, corporation,
trust, unincorporated organization, limited liability company,
limited liability partnership, association, joint venture, or a
government agency or political subdivision thereof.
"GAAP" shall mean generally accepted accounting principles as
established by the Financial Accounting Standards Board or the
American Institute of Certified Public Accountants, as amended
and supplemented from time to time.
"PRIME RATE" shall mean the rate of interest per annum announced
by the Bank from time to time and adopted as its Prime Rate,
which is one of several rate indexes employed by the Bank when
extending credit, and may not necessarily be the Bank's lowest
lending rate.
"COMMITTED LINE AMOUNT" shall mean the amount of Forty Million
Dollars ($40,000,000) or in the event the Borrower exercises its
option to reduce the amount of the line under Section 7.16
hereof, it shall be the amount of Forty Million Dollars
($40,000,000) less the reduction amount.
"TERM" shall mean a period of time commencing on the execution of
this Agreement and continuing through October 31, 2003 unless
earlier terminated or extended in accordance with the terms and
conditions hereof.
7.02. NON-IMPAIRMENT. If any one or more provisions contained in the
Loan Documents shall be held invalid, illegal, or unenforceable in any
respect, the validity, legality, and enforceability of the remaining
provisions contained therein shall not in any way be affected or
impaired thereby and shall otherwise remain in full force and effect.
7.03. APPLICABLE LAW. The Loan Documents shall be construed in
accordance with and governed by the laws of the Commonwealth of
Kentucky without reference to its principles of conflicts of law or
choice of law.
7.04. WAIVER. Neither the failure or any delay on the part of the Bank
in exercising any right, power or privilege granted in the Loan
Documents shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any other or further exercise of any
other right, power, or privilege which may be provided by law.
7.05. MODIFICATION. No modification, amendment, or waiver of any
provision of any of the Loan Documents shall be effective unless in
writing and signed by the Borrower and Bank.
7.06. STAMPS AND FEES. The Borrower shall pay all federal or state
stamps, taxes, or other fees or charges, if any are payable or are
determined to be payable by reason of the execution, delivery, or
issuance of the Loan Documents or any security granted to the Bank; and
the Borrower agrees to indemnify and hold harmless the Bank against any
and all liability in respect thereof.
7.07. ATTORNEYS' FEES. In the event the Borrower shall default in any
of its obligations hereunder and the Bank believes it necessary to
employ an attorney to assist in the enforcement or collection of the
indebtedness of the Borrower to the Bank, to enforce the terms and
provisions of the Loan Documents, to modify the Loan Documents, or in
the event the Bank voluntarily or otherwise should become a party to
any suit or legal proceeding (including a proceeding conducted under
the Bankruptcy Code), the Borrower agrees to pay the reasonable
attorneys' fees of the Bank and all related costs of collection or
enforcement that may be incurred by the Bank. The Borrower shall be
liable for such attorneys' fees and costs whether or not any suit or
proceeding is actually commenced.
7.08. RIGHT OF OFFSET. Any indebtedness owing from Bank to Borrower may
be set off and applied by Bank on any indebtedness or liability of
Borrower to Bank, at any time and from time to time after maturity,
whether by acceleration or otherwise, and without demand or notice to
Borrower. Bank may sell participations in or make assignments of any
Loan made under this Agreement, and Borrower agrees that any such
participant or assignee shall have the same right of setoff as is
granted to the Bank herein.
7.09. MODIFICATION AND RENEWAL FEES. Bank may, at its option, charge
any fees for modification, renewal, extension, or amendment of any
terms of the Note(s) not prohibited by Kentucky law, and as otherwise
permitted by law if Borrower is located in another state.
7.10. CONFLICTING PROVISIONS. If provisions of this Agreement shall
conflict with any terms or provisions of any of the Note(s), the
provisions of such Note(s) shall take priority over any provisions in
this Agreement.
7.11. NOTICES. Any notice permitted or required by the provisions of
this Agreement shall be deemed to have been given when delivered in
writing to the City Executive or any Vice President of the Bank at its
offices in Winchester, Kentucky, and to the Chief Financial Officer of
the Borrower at its offices in Winchester, Kentucky, when sent by
certified mail and return receipt requested.
7.12. CONSENT TO JURISDICTION. Borrower hereby irrevocably agrees that
any legal action or proceeding arising out of or relating to this
Agreement may be instituted in any Kentucky state court or federal
court sitting in the state of Kentucky, or in such other appropriate
court and venue as Bank may choose in its sole discretion. Borrower
consents to the jurisdiction of such courts and waives any objection
relating to the basis for personal or in rem jurisdiction or to venue
which Borrower may now or hereafter have in any such legal action or
proceedings.
7.13. COUNTERPARTS. This Agreement may be executed by one or more
parties on any number of separate counterparts and all of such
counterparts taken together shall be deemed to constitute one and the
same instrument.
7.14. FEES. Payment quarterly of an unused availability fee equal to
three tenths of one percent (0.30%) of the unused availability of the
Line of credit. Unused availability is calculated by subtracting the
average outstanding principal balance for the previous ninety (90) days
from the Committed Line Amount. In addition, Borrower shall pay all
attorneys' and related legal fees and other costs, if any, incurred by
Bank in connection with the making, documenting and closing of the
Line.
7.15. ADVANCES AND REPAYMENT. Funds shall be advanced under the Line at
the request of an authorized officer of the Borrower, which shall be
made in writing in a form acceptable to the Bank. Prior to maturity or
an Event of Default hereunder, Borrower may borrow, repay, and
re-borrow under the Loan.
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LOAN AGREEMENT
7.16. OPTION TO REDUCE AMOUNT AVAILABLE. At the Borrower's option, the
Borrower has a one-time option to reduce the amount of the "Line"
offered hereunder at any time during the Term. Written notice of such
exercise, including the amount of such reduction, shall be delivered by
the Borrower to the Bank. Notwithstanding the provisions afforded under
the paragraph ADVANCES AND REPAYMENT above, the Committed Line Amount
will be reduced by the amount of the reduction, thereby amending the
Committed Line Amount available to the Borrower for the remaining Term.
At no time shall the Committed Line Amount fall below $30 million.
Exercising this Option will reduce the unused availability fee on that
portion of the Line no longer available to the Borrower, effective with
the date the Borrower's written notice, if any, is received by the
Bank.
7.17. INDEMNIFICATION BY BORROWER. Except for claims, damages,
liabilities and expenses arising from Bank's gross negligence or
misconduct, Borrower agrees to indemnify and hold harmless Bank from
and against any and all claims, damages, liabilities and expenses which
may be incurred by or asserted against Bank in connection with any
proceeding arising out of this commitment or Borrower's use of the
proceeds of the Line.
7.18. ENTIRE AGREEMENT. The Loan Documents embody the entire agreement
between Borrower and Bank with respect to the Loans, and there are no
oral or parol agreements existing between Bank and Borrower with
respect to the Loans which are not expressly set forth in the Loan
Documents.
IN WITNESS WHEREOF, the Bank and Borrower have caused this Agreement to be
duly executed under seal all as of the date first above written.
BORROWER:
DELTA NATURAL GAS COMPANY, INC.
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Name of Corporation
Attest: /s/ ▇▇▇▇ ▇. ▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chief Financial Officer Title: President
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BRANCH BANKING AND TRUST COMPANY
Attest: By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Title: City Executive and Senior Vice President
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