================================================================================
BOND COLLATERAL AGREEMENT
between
NORTHWESTERN CORPORATION
and
CREDIT SUISSE FIRST BOSTON,
acting through its Cayman Islands Branch,
as Collateral Agent
=================================================================
Dated as of February 10, 2003
=================================================================
================================================================================
TABLE OF CONTENTS
-----------------
PAGE
----
ARTICLE I DEFINITIONS.................................................................1
SECTION 1.1 Defined Terms.........................................................1
SECTION 1.2 Additional Terms......................................................1
ARTICLE II COLLATERAL FIRST MORTGAGE BONDS............................................3
SECTION 2.1 Form; Issuance and Delivery...........................................3
SECTION 2.2 Property of Collateral Agent..........................................4
SECTION 2.3 Loans and Collateral First Mortgage Bonds Constitute Same
Indebtedness Unless and Until Remedy Exercise Day Occurs;
Application of Payments.........................................4
SECTION 2.4 Transfer Provisions and Restrictions..................................5
SECTION 2.5 Registration Rights and Related Matters...............................5
SECTION 2.6 Private Sales.........................................................7
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.................7
SECTION 3.1 Name and Jurisdiction of Organization.................................7
SECTION 3.2 Collateral First Mortgage Bonds; Related Matters......................7
SECTION 3.3 Other Consents........................................................8
SECTION 3.4 Change of Name, Jurisdiction of Organization or Location of Place of
Business........................................................8
SECTION 3.5 Further Assurances....................................................8
SECTION 3.6 Filing; No Further Security Interest..................................9
SECTION 3.7 Filing or Recording of Supplemental Indentures........................9
SECTION 3.8 Delivery of Notices...................................................9
ARTICLE IV RIGHT TO DISPOSE OF COLLATERAL FIRST MORTGAGE BONDS........................9
SECTION 4.1 Right to Dispose of Collateral First Mortgage Bonds...................9
SECTION 4.2 Reservation of Other Rights..........................................10
SECTION 4.3 Subsequent Dispositions..............................................10
ARTICLE V COLLATERAL AGENT AND LENDERS...............................................10
SECTION 5.1 Authority and Duties of Collateral Agent.............................10
SECTION 5.2 Successor Collateral Agent...........................................11
SECTION 5.3 Protections of Collateral Agent......................................11
SECTION 5.4 Applicable Share Certificates........................................11
SECTION 5.5 Private Placement Representations....................................11
ARTICLE VI MISCELLANEOUS.............................................................12
SECTION 6.1 Indemnification, Expenses, Etc.......................................12
SECTION 6.2 Obligations Absolute.................................................13
i
TABLE OF CONTENTS
-----------------
PAGE
----
SECTION 6.3 Remedies Cumulative; Delay Not Waiver................................13
SECTION 6.4 Termination..........................................................14
SECTION 6.5 Taxes 14
SECTION 6.6 Amendments, Etc......................................................15
SECTION 6.7 Address for Notices..................................................15
SECTION 6.8 Severability.........................................................15
SECTION 6.9 Survival of Provisions...............................................15
SECTION 6.10 Binding Agreement...................................................15
SECTION 6.11 Headings............................................................15
SECTION 6.12 GOVERNING LAW.......................................................15
SECTION 6.13 WAIVER OF JURY TRIAL; SUBMISSION TO JURISDICTION....................16
SECTION 6.14 Third Party Rights..................................................16
SECTION 6.15 Integration.........................................................16
SECTION 6.16 Execution in Counterparts...........................................16
SECTION 6.17 Conflict with Other Documents.......................................16
ii
BOND COLLATERAL AGREEMENT, dated as of February 10, 2003 (this
"Agreement"), between NORTHWESTERN CORPORATION, a corporation duly organized and
validly existing under the laws of the State of Delaware (the "Company"), and
CREDIT SUISSE FIRST BOSTON, acting through its Cayman Islands Branch, as
collateral agent (together with its successors and assigns in such capacity, the
"Collateral Agent") for the benefit of the Lenders (as defined below).
W I T N E S S E T H:
-------------------
WHEREAS, the Company has entered into the Credit Agreement, dated
as of December 17, 2002 (as amended, restated, supplemented or otherwise
modified from time to time, the "Credit Agreement"), with the financial
institutions from time to time parties thereto (each, a "Lender" and,
collectively, the "Lenders") and Credit Suisse First Boston, acting through its
Cayman Islands Branch, as Administrative Agent for the Lenders (the
"Administrative Agent");
WHEREAS, pursuant to the Credit Agreement, the Lenders have
agreed to make Loans to the Company, in accordance with the terms and conditions
set forth therein and, pursuant to Article 8 of the Credit Agreement, have
designated and appointed Credit Suisse First Boston, acting through its Cayman
Islands Branch, as Collateral Agent; and
WHEREAS, as conditions to the making of the Loans under the
Credit Agreement, the Company is required (i) to issue and deliver to the
Collateral Agent, as security for the Obligations, the Collateral First Mortgage
Bonds (such terms and all other capitalized terms used in these recitals but not
defined in these recitals having the meanings stated or ascribed in Article I
hereof), and (ii) to execute and deliver this Agreement.
A G R E E M E N T
-----------------
NOW, THEREFORE, in consideration of the foregoing, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Defined Terms. For all purposes of this Agreement,
capitalized terms not otherwise defined herein shall have the meanings set forth
in the Credit Agreement or the Collateral First Mortgage Bonds (or the
Supplemental Indentures relating thereto).
SECTION 1.2 Additional Terms. In addition, the following terms
have the meaning hereafter specified:
"Acceleration Day" means the day on which the Loans are
accelerated in accordance with the Credit Agreement.
"Administrative Agent" has the meaning given in the recitals to
this Agreement.
"Agreement" has the meaning given in the introductory paragraph
to this Agreement.
"Collateral Agent" has the meaning given in the introductory
paragraph to this Agreement.
"Collateral First Mortgage Bonds" means, collectively, the
Montana First Mortgage Bonds and the South Dakota First Mortgage Bonds.
"Collateral First Mortgage Bondowner Rights" has the meaning
given in Section 2.2 of this Agreement.
"Company" has the meaning given in the introductory paragraph to
this Agreement.
"Credit Agreement" has the meaning given in the recitals to this
Agreement.
"Indentures" means, collectively, the Montana First Mortgage
Indenture and the South Dakota First Mortgage Indenture.
"Lenders" has the meaning given in the recitals to this
Agreement.
"Montana First Mortgage Bonds" means the First Mortgage Bonds,
Credit Agreement (2002) Series, due 2006, authenticated and delivered
under the Montana First Mortgage Indenture.
"Montana First Mortgage Indenture" means the Mortgage and Deed of
Trust dated as of October 1, 1945 from the Company (as successor
thereunder to NorthWestern Energy, L.L.C., in turn successor thereunder
to The Montana Power Company) to the trustees named therein, as
supplemented and amended, including by the Montana Supplemental
Indenture.
"Montana Supplemental Indenture" means the Twenty-third
Supplemental Indenture, dated as of February 1, 2003, to the Montana
First Mortgage Indenture amending and supplementing the same, among
other things, to provide for the issuance and terms of the Montana First
Mortgage Bonds.
"Obligations" means the unpaid principal of and interest on the
Loans (including, without limitation, interest accruing after the
maturity of the Loans, interest accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to
2
the Company, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding and, to the extent permitted by
law, interest on interest) payable in accordance with the Credit
Agreement (and, if applicable, evidenced by the Notes).
"Permitted Sale" has the meaning given in Section 2.5(b) of this
Agreement.
"Remedy Exercise Day" means the day (on or after the Acceleration
Day) on which all (but not less than all) of the Collateral First
Mortgage Bonds are transferred by the Collateral Agent to or upon the
order of the Lenders in full satisfaction and discharge of the Loans and
Obligations pursuant to Section 4.1 hereof.
"Securities Act" has the meaning given in Section 2.5(b) of this
Agreement.
"Security Interest" means the security interest granted or
purported to be granted by the Company pursuant to the final sentence of
Section 2.2 of this Agreement.
"South Dakota First Mortgage Bonds" means the New Mortgage Bonds,
Credit Agreement (2002) Series, due 2006, authenticated and delivered
under the South Dakota First Mortgage Indenture.
"South Dakota First Mortgage Indenture" means the General
Mortgage Indenture and Deed of Trust dated as of August 1, 1993 between
the Company and The Chase Manhattan Bank (National Association)
(JPMorgan Chase Bank, as successor), as trustee, as supplemented and
amended, including by the South Dakota Supplemental Indenture.
"South Dakota Supplemental Indenture" means the Supplemental
Indenture, dated as of February 1, 2003, to the South Dakota First
Mortgage Indenture amending and supplementing the same, among other
things, to provide for the issuance and terms of the South Dakota First
Mortgage Bonds.
"Supplemental Indentures" means, collectively, the Montana
Supplemental Indenture and the South Dakota Supplemental Indenture.
ARTICLE II
COLLATERAL FIRST MORTGAGE BONDS
SECTION 2.1 Form; Issuance and Delivery. (a) Each Collateral
First Mortgage Bond shall be in substantially the form set forth in or attached
as an exhibit to the relevant Supplemental Indenture, in each case with such
appropriate insertions,
3
omissions, substitutions and other variations as are required or permitted by
the relevant Indenture and the Credit Agreement, and may have such letters,
numbers or other marks of identification and such legends or endorsements placed
thereon as may be required to comply with applicable law or the terms and
provisions of the relevant Indenture.
(a) Simultaneously with the execution and delivery of this Agreement, the
Company shall issue and deliver the Collateral First Mortgage Bonds to the
Collateral Agent for the ratable benefit of the Lenders, as security for the
prompt and full payment by the Company of, and to further evidence, the
Obligations. The Collateral First Mortgage Bonds shall be registered in the name
of the Collateral Agent and shall be held by the Collateral Agent for the
ratable benefit of the Lenders.
SECTION 2.2 Property of Collateral Agent. Upon issuance and
delivery to the Collateral Agent of the Collateral First Mortgage Bonds: (i) the
Company shall not be, or be deemed to be, the owner of the Collateral First
Mortgage Bonds; (ii) the Company shall not have, and shall not be deemed to
have, any right, title or interest in, to or under the Collateral First Mortgage
Bonds (other than as the payor and obligor thereunder); (iii) the Collateral
Agent (or any transferee in accordance with the terms hereof) shall be and shall
have all of the rights and interests of a registered owner of each Collateral
First Mortgage Bond under the Indenture relating thereto, including, without
limitation, (x) the right to vote, consent or take any other action (including,
without limitation, to issue instructions and make requests for action) which
may be taken by a registered owner of such Collateral First Mortgage Bond under
such Indenture, and (y) the right to collect all amounts payable to such
registered owner under such Indenture (all such rights described in this clause
(iii) being referred to, collectively, as the "Collateral First Mortgage
Bondowner Rights"); and (iv) the Collateral First Mortgage Bonds shall not be
considered the property of the Company or the Company's estate in the event the
Company becomes the subject of a proceeding or action under any applicable
domestic or foreign bankruptcy, insolvency, reorganization or similar law. If,
notwithstanding the foregoing, the Company shall be deemed to have any right,
title or interest in, to or under any Collateral First Mortgage Bond (other than
as the payor and obligor thereunder), the Company hereby pledges such right,
title and interest (and all proceeds thereof) to the Collateral Agent for the
ratable benefit of the Lenders and hereby grants a security interest in such
right, title and interest (and all proceeds thereof) to the Collateral Agent for
the ratable benefit of the Lenders, in each case, as security for the
Obligations.
SECTION 2.3 Loans and Collateral First Mortgage Bonds Constitute
Same Indebtedness Unless and Until Remedy Exercise Day Occurs; Application of
Payments. At all times prior to the Remedy Exercise Day (and by reason of the
terms and provisions of the Collateral First Mortgage Bonds and the Supplemental
Indentures, including, without limitation, the principal of and interest on the
Collateral First Mortgage Bonds being determined by reference to the principal
of and interest on the Loans and the satisfaction of obligations of the Company
to make payments of principal of and interest on the Collateral First Mortgage
Bonds which results from payments made by the Company of principal of and
interest on the Loans), the Loans and the Collateral First Mortgage Bonds shall
be and constitute the same indebtedness of the Company and, in respect of all of
the Loans and all of the Collateral First Mortgage Bonds, the
4
Company shall not be obligated to make principal payments that exceed
$390,000,000 in the aggregate (or to pay interest on a principal amount that
exceeds $390,000,000 in the aggregate). If, at any time prior to the Remedy
Exercise Day, the Collateral Agent receives payments or other distributions of
moneys under an Indenture and, in accordance with such Indenture, such payments
or other distributions are to be applied or to be deemed to be applied to the
payment or reduction of the principal of or the interest on the Collateral First
Mortgage Bonds issued under such Indenture, there shall be deemed to have been
paid or reduced an equal amount of the principal of or the interest on the
Loans. If (but only if) the Remedy Exercise Day shall have occurred, then, on
and as of the Remedy Exercise Day, (i) the Loans and Obligations shall be deemed
satisfied and discharged in full in accordance with Section 4.1 hereof (without
any further liability on the part of the Company therefor), and (ii) the
Collateral First Mortgage Bonds shall constitute separate and independent
indebtedness of the Company governed by the terms thereof and of the Indentures
(without any further reference to the Credit Agreement).
SECTION 2.4 Transfer Provisions and Restrictions. (a) The Loans
(as evidenced by the Notes) may be assigned (and thereby transferred) by the
Lenders to Assignees subject to and in accordance with Section 9.6 of the Credit
Agreement. Following any such assignment to an Assignee, such Assignee (as a
Lender) shall be entitled to the benefits afforded by the Collateral First
Mortgage Bonds to the Loans so assigned on the terms and subject to the
conditions of this Agreement (but shall not be entitled, by virtue solely of
such assignment, to the transfer of any portion of the Collateral First Mortgage
Bonds to such Assignee).
(b) The Collateral Agent hereby expressly acknowledges and agrees to the
restrictions on transfer of the Collateral First Mortgage Bonds contained in the
Collateral First Mortgage Bonds and the Supplemental Indentures. The Collateral
Agent hereby further agrees that, except for (i) any transfer in accordance with
such restrictions on transfer, or (ii) in connection with the surrender of the
Collateral First Mortgage Bonds pursuant to Section 6.4 hereof, the Collateral
Agent shall not sell, assign, transfer, pledge, mortgage or otherwise encumber
or dispose of any Collateral First Mortgage Bond or any interest therein; and,
subject to such exceptions, the Collateral Agent (or a custodian acting on
behalf of the Collateral Agent pursuant to a written agreement apprising such
custodian of, and obligating such custodian to observe (to the extent
applicable), this Agreement) shall at all times maintain physical possession of
the Collateral First Mortgage Bonds until the same are paid or deemed to have
been paid or otherwise satisfied and discharged as provided in this Agreement,
the Collateral First Mortgage Bonds and/or the Indentures.
SECTION 2.5 Registration Rights and Related Matters. (a) The
Collateral Agent and the Lenders (or any purchaser from, or other successor to,
any Lender with respect to any Collateral First Mortgage Bonds) shall have the
right to sell or otherwise dispose of any or all of the Collateral First
Mortgage Bonds, so long as (i) any such sale or other disposition occurs on or
after the Acceleration Day, and (ii) prior to (or simultaneously with) any such
sale or other disposition, the Remedy Exercise Day has occurred (or occurs) and
the Loans and the Obligations have been (or are) satisfied and discharged in
full in accordance with Section 4.1 hereof (without any further liability on
5
the part of the Company therefor). For the avoidance of doubt, it is expressly
stated that (x) on the Remedy Exercise Day, one or more Lenders may become
registered owners of the Collateral First Mortgage Bonds (and thereafter such
Lender or Lenders may sell or otherwise dispose of such Collateral First
Mortgage Bonds), and/or (y) on the Remedy Exercise Day, one or more Persons that
are purchasers from the Collateral Agent or one or more Lenders may become
registered owners of the Collateral First Mortgage Bonds (thereby obviating the
necessity for any subsequent sale of such Collateral First Mortgage Bonds by
such Lender or Lenders).
(b) If, in connection with any sale or transfer by the Collateral Agent or
any Lender (or any purchaser from, or other successor to, any Lender with
respect to any Collateral First Mortgage Bonds) that is permitted pursuant to
Section 2.5(a) hereof (a "Permitted Sale"), the Collateral Agent or such Lender
(or purchaser) requests, by written notice to the Company, that such Collateral
First Mortgage Bonds be registered under the Securities Act of 1933, as amended
(together with any successor statute thereto, the "Securities Act") (such
written request to generally describe such Permitted Sale and the intended
method of disposition contemplated for such Permitted Sale), the Company, at the
Company's costs and expense, shall as soon as practicable:
(I) cause a registration statement with respect to such
Collateral First Mortgage Bonds (A) to become effective so as to permit
such Permitted Sale in accordance with the intended method of disposition
of such Collateral First Mortgage Bonds contemplated by such Permitted
Sale, and (B) to remain effective until the earlier of the expiration of
two (2) years from the effective date thereof or the disposition of such
Collateral First Mortgage Bonds pursuant thereto (referred to in the
proviso to this Section 2.5(b) as "to effect registration" or words
similar thereto);
(II) register or qualify such Collateral First Mortgage Bonds
covered by such registration statement under all applicable "blue sky" and
other state securities laws and keep such registration or qualification in
effect for so long as such registration statement remains in effect;
(III) cause such Collateral First Mortgage Bonds covered by such
registration statement to be registered with or approved by such other
Governmental Authorities having jurisdiction with respect to the Company
and/or such Collateral First Mortgage Bonds as may be reasonably necessary
to permit such Permitted Sale in accordance with the intended method of
disposition of such Collateral First Mortgage Bonds contemplated by such
Permitted Sale;
(IV) comply with all applicable rules and regulations of the
Securities and Exchange Commission relating to or arising out of such
registration statement, including, without limitation, qualifying the
Indentures under the Trust Indenture Act of 1939, as amended, and to make
available to its security holders, as soon as reasonably practicable, an
earnings statement satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 promulgated thereunder; and
6
(V) take such other actions as the Collateral Agent or such
Lender shall reasonably request in order to expedite or facilitate the
disposition of such Collateral First Mortgage Bonds pursuant to and as
contemplated by such registration statement;
provided, however, that the Company shall not be required to effect any
registration pursuant to this Section 2.5 if (i) such registration shall not
have been requested or approved by Lenders (or any purchaser from, or other
successor to, any Lender with respect to any Collateral First Mortgage Bonds)
for whom an aggregate principal amount of at least $95 million of the Collateral
First Mortgage Bonds are held or owned, or (ii) more than two (2) years shall
have elapsed subsequent to the Remedy Exercise Day.
SECTION 2.6 Private Sales. The Company and the Collateral Agent
hereby acknowledge and agree that: (a) the Collateral Agent and/or the Lenders
(or any purchaser from, or other successor to, any Lender with respect to any
Collateral First Mortgage Bonds) may effect any Permitted Sale in a transaction
exempt from registration under the Securities Act; (b) such Permitted Sale in
such transaction will be deemed to have been made in a commercially reasonable
manner; and (c) although such Permitted Sale in such transaction may result in
prices and terms less favorable than if such Permitted Sale were a public
offering, neither that fact nor any other fact, event or circumstance shall
result in (x) the Obligations not being satisfied and discharged in full in
accordance with Section 4.1 hereof or the Company being liable for any
deficiency between the proceeds of such Permitted Sale and the Obligations
previously payable to such Lender, or (y) any claim by the Company against the
Collateral Agent or any Lender.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND
COVENANTS OF THE COMPANY
The Company represents, warrants and covenants, which representations,
warranties and covenants shall survive execution and delivery of this Agreement,
as follows:
SECTION 3.1 Name and Jurisdiction of Organization. The Company's
name, within the meaning of Section 9-503(a) of the Uniform Commercial Code as
in effect in the State of New York, is NorthWestern Corporation. The Company is
a corporation organized solely under the laws of the State of Delaware and no
other state or jurisdiction, and, pursuant to applicable law, such State must
maintain a public record showing the Company to have been so organized. The
Company's organizational identification number in the State of Delaware is
0161208.
SECTION 3.2 Collateral First Mortgage Bonds; Related Matters. (a)
The Collateral First Mortgage Bonds have been validly authorized, executed,
issued, authenticated and delivered to the Collateral Agent and registered in
its name as
7
Collateral Agent. All First Mortgage Approvals have been obtained and are in
full force and effect. The Supplemental Indentures have been validly authorized,
executed and delivered.
(b) No consent of any other Person and no authorization, approval, or
other action by, or notice to or filing with, any Person or Governmental
Authority of any jurisdiction is required (i) for the execution, delivery or
performance of this Agreement by the Company, (ii) for the issuance of the
Collateral First Mortgage Bonds, (iii) for the exercise by the Collateral Agent
of any Collateral First Mortgage Bondowner Right, or (iv) for the exercise by
the Collateral Agent or any Lender of any other right, power or remedy provided
for in this Agreement or the relevant Indenture other than (x) the First
Mortgage Approvals, which have been duly obtained and are in full force and
effect, or (y) in the case of a Permitted Sale of the Collateral First Mortgage
Bonds as contemplated pursuant to Section 2.5(a) hereof, any Federal or State
securities law registrations, qualifications or filings and any other
registrations and approvals of other Governmental Authorities in connection
therewith as described in Section 2.5(b) hereof.
SECTION 3.3 Other Consents. The Company shall promptly obtain
such other consents, authorizations, and approvals, and obtain such other
actions by, and provide such notices to or make such filings with, any
Governmental Authority of any jurisdiction as may be, in the reasonable judgment
of the Collateral Agent, necessary after the date of the execution and delivery
of this Agreement for the exercise by the Collateral Agent of any Collateral
First Mortgage Bondowner Right or, subject to Sections 2.5 and 4.1 hereof, any
other right, power or remedy provided for in this Agreement or the relevant
Indenture.
SECTION 3.4 Change of Name, Jurisdiction of Organization or
Location of Place of Business. The Company will not change its name or
jurisdiction of organization or the location of its principal place of business
or its chief executive office without, in any such case, giving at least thirty
(30) days' prior written notice thereof to the Collateral Agent; and, in
connection with any such change, the Company will promptly and at its own
expense execute and deliver and/or file or record such instruments and documents
as the Collateral Agent may reasonably require to protect and/or to maintain its
interests hereunder and in the Collateral First Mortgage Bonds.
SECTION 3.5 Further Assurances. The Company agrees that from time
to time, at the expense of the Company, the Company will promptly execute and
deliver and/or file or record all further instruments and documents, provide
further information, and take all further action, that may be necessary, or that
the Collateral Agent may reasonably request, in order to carry out more
effectively the intent and purpose of this Agreement (including, without
limitation, to establish, maintain and protect the Security Interest and to
enable the Collateral Agent to exercise and enforce its rights, powers and
remedies hereunder in accordance with the terms hereof). The Company hereby
authorizes the Collateral Agent to file one or more financing or continuation
statements, and amendments thereto, relative to the Security Interest without
the signature of the Company where permitted by applicable law. The Company
shall, promptly upon the reasonable request of the Collateral Agent, provide to
the Collateral Agent such
8
information as the Collateral Agent may reasonably request concerning the
receipt and application of any payments made under or pursuant to the Collateral
First Mortgage Bonds or the Indentures.
SECTION 3.6 Filing; No Further Security Interest. The Company has
not and will not authorize the filing of any financing statement or other
instrument similar in effect covering all or any part of the collateral in which
the Security Interest is granted hereunder, except such as have been or may be
filed in favor of the Collateral Agent; and the Company has not granted, and
will not assign, grant, or convey any other security interest or lien in or
hypothecate all or any part of its interest therein.
SECTION 3.7 Filing or Recording of Supplemental Indentures. Each
Supplemental Indenture shall be duly filed and/or recorded in accordance with
the requirements of the relevant Indenture, and all fees or taxes in connection
therewith shall be promptly paid by the Company.
SECTION 3.8 Delivery of Notices. For so long as the Collateral
Agent is the registered owner of all of the Collateral First Mortgage Bonds, the
Company covenants to deliver to the Collateral Agent, concurrently with the
delivery thereof or promptly after receipt thereof, copies of all notices to the
Company or any trustee under the Indentures.
ARTICLE IV
RIGHT TO DISPOSE OF
COLLATERAL FIRST MORTGAGE BONDS
SECTION 4.1 Right to Dispose of Collateral First Mortgage Bonds.
The Collateral Agent shall have the right, on or after the Acceleration Day, and
at the direction of Lenders having Loans representing sixty-six and two-thirds
percent (66 2/3%) of all Loans then outstanding (it being understood that such
right shall be exercisable by the Collateral Agent in the sole discretion of
such Lenders), to transfer to, or upon the order of the Lenders (whether in
connection with the sale or other disposition by one or more of the Lenders of
the Collateral First Mortgage Bonds or otherwise) all (but not less than all) of
the Collateral First Mortgage Bonds in full satisfaction and discharge of the
Loans and the Obligations (any other right of the Collateral Agent, as a secured
party, under applicable law to sell or otherwise dispose of the Collateral First
Mortgage Bonds being expressly waived). Upon such transfer (on or after the
Acceleration Day), and without the necessity for any further action or writing
on the part of any Person, (i) the Loans, the Notes and the Obligations shall
be, and shall be deemed and construed to be, satisfied and discharged in full,
and (ii) this Agreement (including the Security Interest and the covenants of
the Company hereunder) shall terminate, except as to those provisions that
expressly survive termination of this Agreement.
9
SECTION 4.2 Reservation of Other Rights. Nothing contained in
Section 4.1 hereof shall, or shall be deemed or construed to, alter, limit or
restrict (i) the right of the Collateral Agent (prior to any transfer of the
Collateral First Mortgage Bonds on the Remedy Exercise Day) or the right of the
Lender or any other Person (on or after such transfer of the Collateral First
Mortgage Bonds on the Remedy Exercise Day) to exercise any Collateral First
Mortgage Bondowner Rights, (ii) the right of the Collateral Agent or any Lender
(or any purchaser from, or other successor to, any Lender with respect to any
Collateral First Mortgage Bonds) to cause a Permitted Sale (or, in such
connection, to exercise its rights under Section 2.5(b) hereof)), or (iii) the
right of the Administrative Agent, the Collateral Agent or any Lender to
exercise any other right, power or remedy (other than any right, power or remedy
to cause the sale or other disposition of Collateral First Mortgage Bonds
(excluding any transfer under Section 5.2 or 6.4 hereof)) that is available to
it under the Credit Agreement or any other Loan Document or at law or in equity
by reason of the occurrence and continuance of any Event of Default.
SECTION 4.3 Subsequent Dispositions. The Company shall not be
liable for any deficiency between the amount of the proceeds of any sale or
other disposition (or deemed sale or other disposition) of the Collateral First
Mortgage Bonds on or after the Remedy Exercise Day and the aggregate amount of
the Obligations (and any right of the Collateral Agent or any Lender to any such
deficiency is hereby waived).
ARTICLE V
COLLATERAL AGENT AND LENDERS
SECTION 5.1 Authority and Duties of Collateral Agent. The Company
acknowledges that the rights and responsibilities of the Collateral Agent under
this Agreement with respect to any action taken by it or the exercise or
non-exercise by it of any option, voting right, request, judgment or other right
or remedy provided for herein or resulting or arising out of this Agreement
shall, as between the Collateral Agent and the other Lenders, be governed by the
Credit Agreement and by such other agreements with respect thereto as may exist
from time to time among them, but, as between the Collateral Agent and the
Company, the Collateral Agent shall be conclusively presumed to be acting as an
agent for the Lenders with full and valid authority so to act or refrain from
acting, and neither the Company nor any Person (including, without limitation,
any trustee under either Indenture) shall be under any obligation, or
entitlement, to make any inquiry respecting such authority or shall incur any
liability for or by reason of not making any inquiry respecting such authority.
The powers conferred on the Collateral Agent hereunder or as registered owner of
the Collateral First Mortgage Bonds under the Indentures shall not impose any
duty upon it to exercise any such powers. Solely as between the Lenders and the
Collateral Agent (and subject to the next succeeding sentence), the Collateral
Agent shall exercise Collateral First Mortgage Bondowner Rights as shall be
reasonably directed by the Required Lenders; provided that unless and until the
Collateral Agent shall have received such directions, the Collateral Agent may
(but shall not be obligated to) take such action, or refrain from taking any
such action as it shall deem advisable in the best interests of the Lenders. The
Collateral Agent shall be fully justified in failing or refusing to take any
action or exercising any power under this
10
Agreement or as registered owner of the Collateral First Mortgage Bonds unless
it shall first receive such advice or concurrence of the Required Lenders as it
deems appropriate or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action or exercising such power.
Except for the exercise of reasonable care (the cost and expense of which shall
be for the Company's account payable upon demand) with respect to the custody of
the Collateral First Mortgage Bonds in its actual possession, the Collateral
Agent shall have no duty as to any first mortgage bonds or other collateral or
as to the taking of any necessary steps to preserve rights against prior parties
or any other rights pertaining to any first mortgage bonds or other collateral
and no such duties shall be implied as arising hereunder. The Collateral Agent
shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral First Mortgage Bonds in its possession if such
Collateral First Mortgage Bonds are accorded treatment substantially equal to
that which it accords its own property.
SECTION 5.2 Successor Collateral Agent. Upon the appointment of
any successor Administrative Agent pursuant to and in accordance with Section
8.9 of the Credit Agreement (including, if applicable in accordance therewith,
the consent of the Company) and the transfer to such successor Collateral Agent
of the Collateral First Mortgage Bonds, such successor Administrative Agent
shall succeed to the rights, powers and duties of the Collateral Agent under
this Agreement and, other than rights to indemnification and recovery of
expenses under Section 6.1, the former Collateral Agent's rights, powers and
duties as Collateral Agent under this Agreement shall be terminated, without any
other or further act on the part of any Person.
SECTION 5.3 Protections of Collateral Agent. With respect to its
rights, powers and duties hereunder, the Collateral Agent has all of the
exculpations, protections and indemnities as are provided to it in the Credit
Agreement.
SECTION 5.4 Applicable Share Certificates. The Collateral Agent
shall furnish to each of the Corporate Trustee under the Montana First Mortgage
Indenture and the Trustee under the South Dakota First Mortgage Indenture (with
a copy to the Company) promptly after any change in the Applicable Share (as
defined in the Supplemental Indenture forming part of such Indenture), an
Applicable Share Certificate (as defined in such Supplemental Indenture), signed
by a person purporting to be the Collateral Agent's duly authorized officer, and
setting forth the information recited in the Supplemental Indenture forming part
of such Indenture to be set forth in an Applicable Share Certificate.
SECTION 5.5 Private Placement Representations. Each Lender is
deemed, upon the making by such Lender of a Loan, to represent and warrant as
follows (it being understood that any such representation or warranty relates to
such Lender with respect to itself only):
(a) The Collateral Agent is acquiring Collateral First Mortgage Bonds for
the account of such Lender and not with a view on the part of such Lender to, or
for resale in connection with, any distribution thereof. Each Lender understands
that the Collateral
11
First Mortgage Bonds have not been registered under the Securities Act and that
specific exemption from the registration provisions of the Securities Act
depends upon, among other things, the bona fide nature of the investment intent
of the Lenders as described herein.
(b) Each Lender is familiar with the business of the Company, has had an
opportunity to discuss the Company's business, management and financial affairs
with the Company's management and has had the opportunity to obtain such
information about the Company's business, management and financial affairs as it
has requested.
(c) Each Lender has knowledge and experience in financial and business
matters relating to an investment in securities of the Company, is capable of
evaluating the merits and risks of such an investment, is able to bear the
economic risk of such an investment for an indefinite period of time, and is a
"qualified institutional buyer" within the meaning of Rule 144A or an
"accredited investor" within the meaning of Rule 501(a), in either case,
promulgated by the Securities and Exchange Commission under the Securities Act.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 Indemnification, Expenses, Etc.. (a) The Company
agrees that it shall indemnify and defend the Collateral Agent and each of the
Lenders, and each of their respective officers, directors, employees, agents,
professional advisors and Affiliates (each an "Indemnified Person", and
together, "Indemnified Persons"), and hold each of them harmless from and
against any and all costs, claims, losses, expenses, and liabilities (including
reasonable attorneys' fees and disbursements) arising out of or resulting from
this Agreement (including, without limitation, enforcement of this Agreement or
any document prepared in connection therewith) or the interests created hereby,
except, in the case of any Indemnified Person, to the extent, such claims,
losses, expenses or liabilities are determined, pursuant to a judgment by a
court of competent jurisdiction that has become final to be the result of such
Indemnified Person's gross negligence or willful misconduct. No Indemnified
Person shall be liable for any special, indirect, consequential or punitive
damages (whether or not the claim therefor is based on contract, tort or duty
imposed by law) in connection with, arising out of or in any way related to the
transactions contemplated by this Agreement, including, without limitation, any
act, omission or event occurring in connection herewith.
(b) All reasonable costs, expenses, charges and fees (including reasonable
attorneys' fees and disbursements) paid or incurred by the Collateral Agent in
connection with:
12
(i) the administration of this Agreement or the exercise of any of
the rights, remedies or powers granted to the Collateral Agent or the
Lenders hereunder;
(ii) the custody of the Collateral First Mortgage Bonds or the
exercise on or prior to the Remedy Exercise Day of any Collateral First
Mortgage Bondowner Rights;
(iii) the perfection, maintenance, protection or enforcement
(whether through negotiations, legal proceedings or otherwise and
including, without limitation, in connection with any bankruptcy or
insolvency proceedings involving the Company) of any of the rights of the
Collateral Agent or the Lenders hereunder; or
(iv) the failure by the Company to perform or observe any of the
provisions hereof,
shall be for the account of the Company, and the Company undertakes promptly on
demand, and in any case, within five (5) Business Days following such demand, to
pay the same or, as the case may be, to reimburse the Collateral Agent and/or
its agents, representatives, successors and assigns, as the case may be, for any
monies paid by it with interest thereon at the rate of interest most recently
announced by the Collateral Agent as its prime rate in effect at its principal
office in New York City plus interest calculated at the applicable rate on
overdue amounts as set forth in Section 2.9(c) of the Credit Agreement, from the
date the same shall have been paid by the Collateral Agent and/or its agents,
representatives, successors and assigns until actually paid by the Company.
SECTION 6.2 Obligations Absolute. The obligations of the Company
under this Agreement shall be absolute and unconditional and shall remain in
full force and effect without regard to, and shall not be released, suspended,
discharged, terminated or otherwise affected by, any circumstance or occurrence
whatsoever, including, without limitation: (a) any renewal, extension, amendment
or modification of, or addition or supplement to or deletion from, the Credit
Agreement or any other Loan Document or any other instrument or agreement
referred to therein, or any assignment or transfer of any thereof; (b) any
waiver, consent, extension, indulgence or other action or inaction under or in
respect of any such instrument or agreement or this Agreement or any exercise or
non-exercise of any right, remedy, power or privilege under or in respect of
this Agreement or any other Loan Document; or (c) any invalidity, irregularity
or unenforceability of all or part of the Obligations.
SECTION 6.3 Remedies Cumulative; Delay Not Waiver. (a) Remedies
Cumulative. No failure or delay on the part of the Collateral Agent in
exercising any right, power or privilege hereunder and no course of dealing
between the Company and the Collateral Agent shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, power or privilege
hereunder or under any other applicable document preclude any other or further
exercise thereof or the exercise of any other right,
13
power or privilege hereunder or thereunder. Except as otherwise expressly
provided herein, the rights, powers and remedies herein expressly provided, or
available at law or in equity, are cumulative and not exclusive of any rights,
powers or remedies which the Collateral Agent would otherwise have. No notice to
or demand on the Company in any case shall entitle the Company to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Collateral Agent to any other or further action in
any circumstances without notice or demand.
(b) No Waiver; Separate Causes of Action. No delay or omission to exercise
any right, power or remedy accruing to the Collateral Agent upon the occurrence
of any breach or default of the Company under this Agreement or any other Loan
Document shall impair any such right, power or remedy of the Collateral Agent,
nor shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default thereafter
occurring, nor shall any waiver of any other breach or default under this
Agreement or any other Loan Document be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of the Collateral Agent of any
breach or default under this Agreement, or any waiver on the part of the Lenders
or of the Collateral Agent of any provision or condition of this Agreement, must
be in writing and shall be effective only to the extent in such writing
specifically set forth. Each and every default by the Company hereunder shall
give rise to a separate cause of action hereunder, and separate suits may be
brought hereunder as each cause of action arises.
SECTION 6.4 Termination. This Agreement (including, without
limitation, the Security Interest and the covenants of the Company hereunder)
shall terminate on the earlier of (i) the indefeasible payment in full of the
Loans and the Obligations or (ii) the Remedy Exercise Day. In connection with
the termination of this Agreement, the Collateral Agent, at the request and
expense of the Company, shall promptly execute and deliver to the Company, and
authorize the filing or recording of, such instruments and documents (including,
without limitation, Uniform Commercial Code termination statements and other
terminations and releases) as may be reasonably requested by the Company to
acknowledge and evidence such termination and the related satisfaction and
discharge of the Loans and the Obligations. In addition, if this Agreement
terminates upon the indefeasible payment in full of the Obligations (without the
occurrence of the Remedy Exercise Day), the Collateral Agent shall surrender
each Collateral First Mortgage Bond to the Company (or, if so requested by the
Company, to the Corporate Trustee under the Montana First Mortgage Indenture or
the Trustee under the South Dakota First Mortgage Indenture) for cancellation.
If this Agreement shall be terminated or revoked by operation of law, the
Company shall indemnify and save the Collateral Agent and the other Indemnified
Persons harmless from any loss which may be suffered or incurred by the
Collateral Agent and the other Indemnified Persons in acting hereunder prior to
the receipt by the Collateral Agent, its successors of notice of such
termination or revocation.
SECTION 6.5 Taxes. The Company agrees to pay, and indemnify and
hold harmless the Collateral Agent and the Lenders from, any and all present or
future stamp, documentary, excise, sales or other taxes or charges, any and all
recording and
14
filing fees, and any and all liabilities with respect thereto, which may be
payable or determined to be payable in connection with the execution and
delivery of, or consummation or administration of any of the transactions
contemplated by, or payment under, or any amendment, supplement or modification
of, or any waiver or consent under or in respect of, this Agreement.
SECTION 6.6 Amendments, Etc. This Agreement may be amended only
by an instrument in writing signed by each of the parties hereto, in accordance
with Section 9.1 of the Credit Agreement.
SECTION 6.7 Address for Notices. All notices and other
communications hereunder shall be given (in the manner specified in the Credit
Agreement) to the parties hereto at the addresses specified under their
respective names on the signature pages hereto, or as to any party at such other
address as shall be designated by such party in a written notice to each other
party.
SECTION 6.8 Severability. If any provision of this Agreement
shall be held or deemed to be or shall, in fact, be illegal, inoperative or
unenforceable, the same shall not affect any other provision or provisions
herein contained or render the same invalid, inoperative or unenforceable to any
extent whatever.
SECTION 6.9 Survival of Provisions. Sections 2.2 (but only the
first sentence thereof), 2.5, 2.6, and 3.5 of this Agreement shall survive the
satisfaction and discharge of the Obligations in connection with the Remedy
Exercise Day and the related termination of this Agreement. Sections 5.3, 6.1,
6.3, 6.4, 6.5, 6.12 and 6.13 of this Agreement shall survive any payment or
cancellation of the Obligations, the occurrence of the Remedy Exercise Day and
any termination of this Agreement.
SECTION 6.10 Binding Agreement. This Agreement shall be binding
upon and inure to the benefit of the Company, the Collateral Agent, the Lenders
and their respective successors and permitted assigns. Neither party to this
Agreement may assign or transfer any of its rights or obligations hereunder to
any other Person without the prior written consent of the other party to this
Agreement (except for any transfer by the Collateral Agent to a successor
Collateral Agent), and any purported assignment or transfer in violation of this
provision shall be void.
SECTION 6.11 Headings. The headings of the various articles,
sections and paragraphs of this Agreement are for convenience of reference only,
do not constitute a part hereof and shall not affect the meaning or construction
of any provision hereof.
SECTION 6.12 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF OTHER THAN SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK.
15
SECTION 6.13 WAIVER OF JURY TRIAL; SUBMISSION TO JURISDICTION.
EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY
COUNTERCLAIM THEREIN.
THE COMPANY AGREES THAT ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST THE COMPANY
OR WITH RESPECT TO OR ARISING OUT OF THIS AGREEMENT MAY BE BROUGHT IN OR REMOVED
TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW YORK, OR
THE COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW
YORK, AS THE COLLATERAL AGENT MAY ELECT. BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, THE COMPANY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. THE
COMPANY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS IN ANY MANNER PERMITTED BY APPLICABLE LEGAL REQUIREMENTS.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE COLLATERAL AGENT TO BRING LEGAL
ACTION OR PROCEEDINGS IN ANY OTHER COMPETENT JURISDICTION. THE COMPANY HEREBY
WAIVES ANY RIGHT TO STAY OR DISMISS ANY ACTION OR PROCEEDING UNDER OR IN
CONNECTION WITH THIS AGREEMENT BROUGHT BEFORE THE FOREGOING COURTS ON THE BASIS
OF FORUM NON CONVENIENS.
SECTION 6.14 Third Party Rights. Nothing in this Agreement,
expressed or implied, is intended or shall be construed to confer upon, or give
to any Person, other than the Company, the Collateral Agent and the Lenders, any
security, rights, remedies or claims, legal or equitable, under or by reason
hereof or any covenant or condition hereof; and this Agreement and the covenants
and agreements herein contained are and shall be held to be for the sole and
exclusive benefit of the Company, the Collateral Agent and the Lenders.
SECTION 6.15 Integration. This Agreement, the Credit Agreement
and the other Loan Documents represent the agreement of the Company the
Collateral Agent and the Lenders with respect to the subject matter hereof and
thereof, and there are no promises, undertakings, representations or warranties
by the Company, the Collateral Agent and the Lenders relative to the subject
matter hereof and thereof not expressly set forth or referred to herein, in the
Credit Agreement or in the other Loan Documents.
SECTION 6.16 Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
instrument.
SECTION 6.17 Conflict with Other Documents. In the event of any
conflict or inconsistency between this Agreement (or any provision hereof) and
any other
16
agreement now existing or hereafter entered into and relating to the
transactions contemplated hereby (other than an amendment hereto), the terms of
this Agreement shall in all respects prevail and govern.
[Signature page to follow]
17
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered by their officers thereunto duly authorized as
of the date first above written.
NORTHWESTERN CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
----------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President and Chief
Financial Officer
Address for notice:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ 57104-6403
Attention: Chief Financial Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
CREDIT SUISSE FIRST BOSTON, acting through
its Cayman Islands Branch, not in its
individual capacity, but solely as
Collateral Agent
By: /s/ S. ▇▇▇▇▇▇▇ ▇▇▇
----------------------
Name: S. ▇▇▇▇▇▇▇ ▇▇▇
Title: Director
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Director
Address for notice:
Eleven ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
18