Exhibit 10(a)
CREDIT AGREEMENT
AMONG
ALLETE, INC.,
AS BORROWER;
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION,
AS SOLE LEAD ARRANGER AND ADMINISTRATIVE AGENT;
BANK ONE, N.A.
AS SYNDICATION AGENT,
AND
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
DATED AS OF: JULY 18, 2003
================================================================================
$250,000,000 TERM CREDIT FACILITY
================================================================================
ARRANGED BY
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION
[GRAPHIC OMITTED]
TABLE OF CONTENTS
ARTICLE I DEFINITIONS..........................................................1
Section 1.1 Definitions....................................................1
Section 1.2 Times.........................................................10
Section 1.3 Accounting Terms and Determinations...........................11
ARTICLE II AMOUNT AND TERMS OF THE CREDIT FACILITY............................11
Section 2.1 Term Loan Facility............................................11
Section 2.2 Interest on Notes.............................................11
Section 2.3 Principal and Interest........................................13
Section 2.4 Collateral....................................................13
Section 2.5 Fees..........................................................13
Section 2.6 Prepayments...................................................13
Section 2.7 Payments......................................................14
Section 2.8 Increased Costs; Capital Adequacy; Funding Exceptions.........16
Section 2.9 Taxes.........................................................19
Section 2.10 Funding Losses...............................................20
Section 2.11 Discretion of Lenders as to Manner of Funding................21
Section 2.12 Conclusiveness of Statements; Survival of Provisions.........21
Section 2.13 Use of Proceeds..............................................21
Section 2.14 Computation of Interest and Fees.............................21
ARTICLE III CONDITIONS PRECEDENT..............................................22
Section 3.1 Documentary Conditions Precedent.............................22
Section 3.2 Additional Conditions Precedent to Advances..................22
ARTICLE IV REPRESENTATIONS AND WARRANTIES.....................................23
Section 4.1 Existence and Power..........................................23
Section 4.2 Authorization of Borrowing; No Conflict as to Law
or Agreements................................................23
Section 4.3 Legal Agreements.............................................24
Section 4.4 Subsidiaries.................................................24
Section 4.5 Financial Condition..........................................24
Section 4.6 Adverse Change...............................................25
Section 4.7 Litigation...................................................25
Section 4.8 Hazardous Substances.........................................25
Section 4.9 Regulation U.................................................25
Section 4.10 Taxes.......................................................25
Section 4.11 Titles and Liens............................................26
Section 4.12 ERISA.......................................................26
Section 4.13 Investment Company Act.......................................26
Section 4.14 Public Utility Holding Company Act...........................26
Section 4.15 Securities Law Matters.......................................26
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TABLE OF CONTENTS -i-
Section 4.16 Indenture....................................................27
Section 4.17 Authentication of Bonds......................................27
Section 4.18 Insurance....................................................28
Section 4.19 Compliance With Laws.........................................28
ARTICLE V AFFIRMATIVE COVENANTS...............................................28
Section 5.1 Reporting....................................................28
Section 5.2 Books and Records; Inspection and Examination................30
Section 5.3 Compliance with Laws.........................................30
Section 5.4 Payment of Taxes and Other Claims............................30
Section 5.5 Maintenance of Properties....................................30
Section 5.6 Insurance....................................................31
Section 5.7 Preservation of Existence....................................31
Section 5.8 Leverage Ratio...............................................31
Section 5.9 Interest Coverage Ratio......................................31
Section 5.10 Delivery of Information......................................31
ARTICLE VI NEGATIVE COVENANTS................................................31
Section 6.1 Dividends....................................................31
Section 6.2 Sale of Assets...............................................32
Section 6.3 Transactions with Affiliates.................................32
Section 6.4 Consolidation and Merger.....................................33
Section 6.5 Hazardous Substances.........................................33
Section 6.6 Restrictions on Nature of Business...........................33
Section 6.7 Securities Laws..............................................33
ARTICLE VII EVENTS OF DEFAULT, RIGHTS AND REMEDIES...........................34
Section 7.1 Events of Default............................................34
Section 7.2 Rights and Remedies..........................................36
ARTICLE VIII THE AGENT........................................................37
Section 8.1 Authorization.................................................37
Section 8.2 Distribution of Payments and Proceeds.........................37
Section 8.3 Expenses......................................................37
Section 8.4 Payments Received Directly by Lenders.........................38
Section 8.5 Indemnification...............................................38
Section 8.6 Exculpation...................................................38
Section 8.7 Agent and Affiliates..........................................39
Section 8.8 Credit Investigation..........................................39
Section 8.9 Resignation...................................................39
Section 8.10 Assignments..................................................40
Section 8.11 Participations...............................................43
Section 8.12 Limitation on Assignments and Participations.................43
Section 8.13 Disclosure of Information....................................43
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TABLE OF CONTENTS -ii-
Section 8.14 Agent Not Offering Bonds.....................................44
ARTICLE IX MISCELLANEOUS......................................................45
Section 9.1 No Waiver; Cumulative Remedies...............................45
Section 9.2 Amendments, Etc..............................................45
Section 9.3 Notice.......................................................46
Section 9.4 Costs and Expenses...........................................46
Section 9.5 Indemnification by Borrower..................................46
Section 9.6 Execution in Counterparts....................................47
Section 9.7 Binding Effect, Assignment...................................47
Section 9.8 Governing Law................................................47
Section 9.9 Severability of Provisions...................................47
Section 9.10 Consent to Jurisdiction......................................47
Section 9.11 Recalculation of Covenants Following Accounting
Practices Change.............................................48
Section 9.12 Headings.....................................................48
Section 9.13 Titles.......................................................48
Section 9.14 Nonliability of Lenders......................................48
Section 9.15 Waiver of Jury Trial.........................................49
Funded Debt to Total Capital..............................................12
Florida Water Services Corporation.........................................1
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CREDIT AGREEMENT
Dated as of July 18, 2003
ALLETE, Inc., a Minnesota corporation; ▇▇▇▇▇ Fargo Bank,
National Association, a national banking association; and the Lenders, as
defined below, agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS.
For all purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires, the terms defined in this Article have
the meanings assigned to them in this Article, and include the plural as well as
the singular.
"ADESA" means ADESA Corporation, an Indiana corporation and a
Subsidiary of the Borrower.
"AFC Program" means the accounts receivable securitization
program with Automotive Finance Corporation.
"Accounting Practices Change" means any change in the
Borrower's accounting practices that is permitted or required under the
standards of the Financial Accounting Standards Board.
"Acquisition Target" means any Person becoming a Subsidiary of
the Borrower after the date hereof; any Person that is merged into or
consolidated with the Borrower or any Subsidiary of the Borrower after the
date hereof; or any Person with respect to whom all or a substantial part
of that Person's assets are acquired by the Borrower or any Subsidiary of
the Borrower after the date hereof.
"Act" means the Securities Act of 1933, as amended.
"Additional Lender" means a financial institution that becomes
a Lender pursuant to the procedures set forth in Section 8.10.
"Advance" means an advance by a Lender to the Borrower
pursuant to Article II.
"Affiliate" means (a) any director or officer of the Borrower,
(b) any Person who, individually or with his immediate family, directly or
indirectly beneficially owns or holds 5% or more of the voting interest of
the Borrower, or (c) any corporation, partnership or other Person in which
any Person or group of Persons described above directly or indirectly owns
a 5% or greater equity interest.
"Agent" means ▇▇▇▇▇ Fargo acting in its capacity as
administrative agent for itself and the other Lenders hereunder.
"Agreement" means this Credit Agreement.
"Assignment Certificate" has the meaning set forth in Section
8.10.
"Authorizing Order" means any order of the MPUC or any other
regulatory body having jurisdiction over the Borrower or any Affiliate of
the Borrower authorizing and/or restricting the indebtedness that may be
created from time to time hereunder (whether on account of Advances or
otherwise).
"Base LIBO Rate" means a rate of interest equal to the per
annum rate of interest at which United States dollar deposits in an amount
comparable to the principal balance of the LIBO Rate Funding to be made by
the Agent in its capacity as a Lender and for a period equal to the
relevant Interest Period are offered in the London interbank market at
11:00 a.m. (London time) two Business Days prior to the commencement of
each Interest Period, as displayed in the Bloomberg Financial Markets
system, or other authoritative source selected by the Agent in its
reasonable discretion.
"Bonds" means the First Mortgage Bonds, Collateral Series A,
issued under the Indenture.
"Borrower" means ALLETE, Inc., a Minnesota corporation, and a
party to this Agreement.
"Business Day" means a day other than a Saturday, Sunday,
United States national holiday or other day on which banks in Minnesota are
permitted or required by law to close. Whenever the context relates to a
LIBO Rate Funding or the fixing of a LIBO Rate, "Business Day" means a day
(i) that meets the foregoing definition, and (ii) on which dealings in U.S.
dollar deposits are carried on in the London interbank eurodollar market.
"Capitalized Lease" means any lease that in accordance with
GAAP should be capitalized on the balance sheet of the lessee thereunder or
for which the amount of the asset and liability thereunder as if so
capitalized should be disclosed in a note to such balance sheet. All
obligations under any lease that is treated as an operating lease under
GAAP but pursuant to which the lessee thereunder retains tax ownership of
the leased property for federal income tax purposes shall be treated as a
Capitalized Lease for purposes of this Agreement.
"Change of Control" means either (i) the acquisition by any
"person" or "group" (as those terms are used in Sections 13(d) and 14(d) of
the Exchange Act) of beneficial ownership (as defined in Rules 13d-3 and
13d-5 of the SEC, except that a Person shall be deemed to have beneficial
ownership of all securities that such Person
ALLETE CREDIT AGREEMENT -2-
has the right to acquire, whether such right is exercisable immediately or
only after the passage of time), directly or indirectly, of 25% or more of
the then-outstanding voting capital stock of the Borrower; or (ii) a change
in the composition of the board of directors of the Borrower such that
continuing directors cease to constitute more than 50% of such board of
directors. As used in this definition, "continuing directors" means, as of
any date, (i) those members of the board of directors of the Borrower who
assumed office prior to such date, and (ii) those members of the board of
directors of the Borrower who assumed office after such date and whose
appointment or nomination for election by the Borrower's shareholders was
approved by a vote of at least 50% of the directors of the Borrower in
office immediately prior to such appointment or nomination.
"Commitment Amount" means, with respect to each Lender, the
amount set forth opposite that Lender's name in Exhibit A or on any
Assignment Certificate.
"Compliance Certificate" means a certificate in substantially
the form of Exhibit C, or such other form as the Borrower and the Required
Lenders may from time to time agree upon in writing, executed by the chief
financial officer of the Borrower, stating (i) that any financial
statements delivered therewith have been prepared in accordance with GAAP,
subject to year-end adjustments, (ii) whether or not such officer has
knowledge of the occurrence of any Default or Event of Default hereunder
not theretofore reported and remedied and, if so, stating in reasonable
detail the facts with respect thereto and (iii) all relevant facts in
reasonable detail to evidence, and the computations as to, whether or not
the Borrower is in compliance with the Financial Covenants.
"Consolidated Net Income" means, for any period of the
Borrower and its Subsidiaries (which for purposes of this definition shall
include any Subsidiary consolidated into the financial statements of the
Borrower other than ALLETE Water Services, Inc. and any other Subsidiary of
the Borrower as to which the Borrower has announced on or prior to June 30,
2003, that it will discontinue the operations of such Subsidiary), the
amount for such period of consolidated net income (or net loss) of the
Borrower and its subsidiaries, as determined on a consolidated basis in
accordance with GAAP.
"Corporate Trustee" means The Bank of New York (formerly
Irving Trust Company), as corporate trustee under the Indenture.
"Covenant Compliance Date" means the last day of each fiscal
quarter of the Borrower.
"Default" means an event that, with the giving of notice, the
passage of time or both, would constitute an Event of Default.
"Distribution" means any payment made by the Borrower on
account of any equity interest in the Borrower, including but not limited
to any dividend and any
ALLETE CREDIT AGREEMENT -3-
payment in purchase, redemption or other retirement of any stock or
membership interest.
"EBITDA" means, for any period, for the Borrower and its
Subsidiaries, (which for purposes of this definition shall include any
Subsidiary consolidated into the financial statements of the Borrower other
than ALLETE Water Services, Inc. and any other Subsidiary of the Borrower
as to which the Borrower has announced on or prior to June 30, 2003, that
it will discontinue the operations of such Subsidiary) on a consolidated
basis, (A) the sum of the amounts for such period of (i) Consolidated Net
Income, (ii) to the extent deducted in arriving at Consolidated Net Income,
net federal, state and local income taxes in respect of such period, (iii)
to the extent deducted in arriving at Consolidated Net Income, Interest
Expenses, (iv) to the extent deducted in arriving at Consolidated Net
Income, the amount charged for the amortization of intangible assets, (v)
to the extent deducted in arriving at Consolidated Net Income, the amount
charged for the depreciation of assets, and (vi) to the extent deducted in
arriving at Consolidated Net Income, extraordinary losses, less (B) the
amount for such period of, to the extent added in arriving at Consolidated
Net Income, extraordinary gains, all as determined on a consolidated basis
in accordance with GAAP.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is, along with the Borrower, a member of a controlled
group of corporations or a controlled group of trades or businesses, as
described in sections 414(b) and 414(c), respectively, of the Internal
Revenue Code of 1986, as amended.
"ERISA Event" means (i) a "reportable event" described in
Section 4043 of ERISA and the regulations issued thereunder other than an
event for which the PBGC has waived the advance notice requirement, (ii) a
withdrawal from any Plan, as described in Section 4063 of ERISA, (iii) an
action to terminate a Plan for which a notice is required to be filed under
Section 4041 of ERISA, (iv) commencement by the PBGC of proceedings under
Title IV of ERISA to terminate, to impose liability (other than for
premiums due for the current premium period under Section 4007 of ERISA) in
respect of, or to cause a trustee to be appointed to administer any Plan;
or a condition shall exist by reason of which the PBGC would be entitled to
obtain a decree adjudicating that any Plan must be terminated, or (v) a
complete or partial withdrawal from a Multiemployer Plan as described in
Sections 4203 and 4205 of ERISA.
"Eligible Lender" means (a) a financial institution organized
under the laws of the United States, or any state thereof, and having a
combined capital and surplus of at least $250,000,000; (b) a commercial
bank organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and
ALLETE CREDIT AGREEMENT -4-
Development, or a political subdivision of any such country, and having a
combined capital and surplus of at least $250,000,000, provided that such
bank is acting through a branch or agency located in the United States; or
(c) a person controlled by, controlling, or under common control with any
entity identified in clause (a) or (b) above.
"Environmental Law" means the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. Section 9601 ET SEQ.,
the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 ET SEQ.,
the Hazardous Materials Transportation Act, 49 U.S.C. Section 1802 ET SEQ.,
the Toxic Substances Control Act, 15 U.S.C. Section 2601 ET SEQ., the
Federal Water Pollution Control Act, 33 U.S.C. Section 1252 ET SEQ., the
Clean Water Act, 33 U.S.C. Section 1321 ET SEQ., the Clean Air Act, 42
U.S.C. Section 7401 ET SEQ., and any other federal, state, county,
municipal, local or other statute, law, ordinance or regulation which may
relate to or deal with human health or the environment, all as may be from
time to time amended.
"Event of Default" has the meaning specified in Section 7.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Federal Funds Rate" means at any time an interest rate per
annum equal to the weighted average of the rates for 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 for such
transactions received by the Agent from three federal funds brokers of
recognized standing selected by it, it being understood that the Federal
Funds Rate for any day which is not a Business Day shall be the Federal
Funds Rate for the next preceding Business Day.
"Fee Letters" means one or more separate agreements between
the Borrower and the Agent, setting forth the terms of certain fees to be
paid by the Borrower to the Agent for the Agent's own behalf or for the
benefit of the Lenders, as more fully set forth therein.
"Financial Covenant" means any of the Borrower's obligations
set forth in Sections 5.8 and 5.9.
"Floating Rate" means, at any time, an annual rate equal to
the greater of:
(a) the Prime Rate,
or
(b) the Federal Funds Rate, plus 50 basis points (0.50%
per annum).
ALLETE CREDIT AGREEMENT -5-
The Floating Rate shall change when and as the Prime Rate or Federal Funds
Rate, as the case may be, changes.
"Floating Rate Funding" means any portion of the principal
balance of the Notes bearing interest at the Floating Rate.
"Funded Debt" means, for any Person on a consolidated basis:
(without duplication) (i) all indebtedness of such Person for borrowed
money; (ii) the deferred and unpaid balance of the purchase price owing by
such Person on account of any assets or services purchased (other than
trade payables and other accrued liabilities incurred in the ordinary
course of business that are not overdue by more than 180 days unless being
contested in good faith) if such purchase price is (A) due more than nine
months from the date of incurrence of the obligation in respect thereof or
(B) evidenced by a note or a similar written instrument; (iii) all
Capitalized Lease obligations; (iv) all indebtedness secured by a Lien on
any property owned by such Person, whether or not such indebtedness has
been assumed by such Person or is nonrecourse to such Person; (v) notes
payable and drafts accepted representing extensions of credit whether or
not representing obligations for borrowed money (other than such notes or
drafts for the deferred purchase price of assets or services to the extent
such purchase price is excluded from clause (ii) above); (vi) indebtedness
evidenced by bonds, notes or similar written instrument; (vii) the face
amount of all letters of credit and bankers' acceptances issued for the
account of such Person, and without duplication, all drafts drawn
thereunder (other than such letters of credit, bankers' acceptances and
drafts for the deferred purchase price of assets or services to the extent
such purchase price is excluded from clause (ii) above); (viii) net
obligations of such Person under Swap Contracts which constitute interest
rate agreements or currency agreements; and (ix) guaranty obligations of
such Person with respect to indebtedness for borrowed money of another
Person (including Affiliates) in excess of $25,000,000 in the aggregate;
PROVIDED, HOWEVER, that in no event shall any calculation of Funded Debt
include (a) deferred taxes, (b) securitized trade receivables, (c) deferred
credits including regulatory assets and contributions in aid of
construction, (d) the lease obligations for Lake Superior Paper, Inc.
relating to paper mill equipment as provided for under an operating lease
extending to 2012, (e) 75% of the indebtedness associated with Square Butte
Electric Cooperative, or (f) so long as the Bonds are held as security
under the Pledge Agreement and have not been sold or otherwise disposed of
by foreclosure, any obligation of the Borrower under the Bonds.
"Funding" means a Floating Rate Funding or a LIBO Rate
Funding.
"Funding Date" means the date all of the conditions in Article
III are satisfied.
"GAAP" means generally accepted accounting principles as in
effect from time to time applied on a basis consistent with the accounting
practices applied in the financial statements of the Borrower and its
Subsidiaries referred to in Section 4.5.
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"Hazardous Substance" means any asbestos, urea-formaldehyde,
polychlorinated biphenyls ("PCBs"), nuclear fuel or material, chemical
waste, radioactive material, explosives, known carcinogens, petroleum
products and by-products and other dangerous, toxic or hazardous
pollutants, contaminants, chemicals, materials or substances listed or
identified in, or regulated by, any Environmental Law.
"Indenture" means the Mortgage and Deed of Trust dated as of
September 1, 1945, between the Borrower, the Corporate Trustee, and ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇ (successor to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇.▇. ▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇▇, ▇.▇.
May, ▇.▇. ▇▇▇▇▇▇▇ and ▇.▇. ▇▇▇▇▇▇▇▇▇▇), as previously amended and
supplemented and as it may be amended and/or supplemented from time to
time.
"Interest Coverage Ratio" means, as of any Covenant Compliance
Date, the ratio of (i) EBITDA during the 4-quarter period ending on that
date, to (ii) Interest Expense during such period.
"Interest Expense" means, with respect to any period of the
Borrower and its Subsidiaries (which for purposes of this definition shall
include any Subsidiary consolidated into the financial statements of the
Borrower other than ALLETE Water Services, Inc. and any other Subsidiary of
the Borrower as to which the Borrower has announced on or prior to June 30,
2003, that it will discontinue the operations of such Subsidiary), the sum
of (i) all interest charges (including capitalized interest, imputed
interest charges with respect to Capitalized Leases and all amortization of
debt discount and expense and other deferred financing charges) of the
Borrower and its Subsidiaries on a consolidated basis, and (ii) all
commitment or other fees payable in respect to the issuance of standby
letters of credit or other credit facilities for the account of the
Borrower or its Subsidiaries, all as determined on a consolidated basis in
accordance with GAAP.
"Interest Period" means, with respect to any LIBO Rate
Funding, a period of one, two, three or six months beginning on a Business
Day, as elected by the Borrower.
"Invest Direct Program" means the Borrower's Direct Stock
Purchase and Dividend Reinvestment Plan.
"Investment Company Act" means the Investment Company Act of
1940, as amended.
"Lenders" means ▇▇▇▇▇ Fargo, acting on its own behalf and not
as Agent, each of the undersigned lenders, and any Additional Lender,
collectively.
"Leverage Ratio" means, at any Covenant Compliance Date, the
ratio of (A) Funded Debt to (B) Total Capital of the Borrower and its
Subsidiaries, all determined on a consolidated basis.
ALLETE CREDIT AGREEMENT -7-
"LIBO Rate" means the rate per annum (rounded upward, if
necessary, to the nearest whole 1/16 of 1%) and determined pursuant to the
following formula:
Base LIBO Rate 87.5 basis points (0.875% per
LIBO Rate = ------------------------------- + annum)
100% - LIBOR Reserve Percentage
"LIBO Rate Funding" means any portion of the principal balance
of the Notes bearing interest at a LIBO Rate.
"LIBOR Reserve Percentage" means the reserve percentage
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for "Eurocurrency Liabilities" (as defined in Regulation D of
the Board of Governors of the Federal Reserve Board, as amended), adjusted
by the Agent for expected changes in such reserve percentage during the
applicable Interest Period.
"Lien" means any mortgage, deed of trust, lien, pledge,
security interest or other charge or encumbrance, of any kind whatsoever,
including but not limited to the interest of the lessor or titleholder
under any Capitalized Lease, title retention contract or similar agreement.
"Loan Documents" means this Agreement, the Notes, the Pledge
Agreement and the Fee Letters.
"MPUC" means the Minnesota Public Utilities Commission.
"Material Adverse Effect" means a material adverse effect on
(i) the condition (financial or otherwise), properties, or operations of
the Borrower and its Subsidiaries, taken as a whole, (ii) the ability of
the Borrower to perform its obligations under the Loan Documents, or (iii)
the validity or enforceability of any of the Loan Documents or the rights
or remedies of the Agent or any Lender thereunder.
"Material Subsidiary" means Florida Water Services Corporation
and any Subsidiary of the Borrower whose consolidated assets equal or
exceed ten percent of the Borrower's consolidated assets or whose
consolidated revenues equal or exceed ten percent of the Borrower's
consolidated revenues.
"Maturity Date" means July 16, 2004.
"Multiemployer Plan" means at any time a "multiemployer plan"
as defined in Section 4001(a)(3) of ERISA to which Borrower, a Material
Subsidiary or an ERISA Affiliate is then making or accruing an obligation
to make contributions or has within the preceding five plan years made
contributions.
"Note" means the Borrower's promissory note in the form of
Exhibit B hereto.
"Obligations" means each and every debt, liability and
obligation of every type and description arising under or in connection
with any of the Loan Documents
ALLETE CREDIT AGREEMENT -8-
which the Borrower may now or at any time hereafter owe to any Lender or
the Agent, whether such debt, liability or obligation now exists or is
hereafter created or incurred, whether it is direct or indirect, due or to
become due, absolute or contingent, primary or secondary, liquidated or
unliquidated, or sole, joint, several or joint and several, and including
but not limited to principal of and interest on the Notes, all fees due
under this Agreement, and any Fee Letter or any related agreement.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PUHCA" means the Public Utility Holding Company Act of 1935,
as amended.
"Percentage" means, with respect to each Lender, the ratio of
(i) the principal balance of that Lender's Note, to (ii) the aggregate
principal balance of all of the Lenders' Notes.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Plan" means at any time an employee pension benefit plan
(including a Multiemployer Plan) which is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Internal
Revenue Code and either is or has at any time within the preceding five
years been maintained, or contributed to, by Borrower, a Material
Subsidiary or an ERISA Affiliate for employees of Borrower, a Material
Subsidiary or an ERISA Affiliate.
"Pledge Agreement" means the Borrower's Security Agreement of
even date herewith, granting the Agent a security interest in the Bonds and
all proceeds thereof to secure the payment of the Notes and all other
present and future obligations of the Borrower to the Agent and the Lenders
arising under or pursuant to this Agreement, together with all amendments,
modifications and restatements thereof.
"Prime Rate" means, at any time, the rate of interest most
recently announced within the Agent at its principal office as its "prime
rate" or, if the Agent ceases to announce a rate so designated, any similar
successor rate designated by the Agent. Such rate is one of the Agent's
base rates and serves as the basis upon which effective rates of interest
are calculated for those loans making reference thereto, and is evidenced
by the recording thereof in such internal publication or publications as
the Agent may designate.
"Refinanced Bonds" means the Borrower's Floating Rate First
Mortgage Bonds due October 20, 2003.
"Required Lenders" means two or more Lenders (including, where
relevant, Additional Lenders) having an aggregate Percentage in excess of
fifty percent (50%).
ALLETE CREDIT AGREEMENT -9-
"SEC" means the United States Securities Exchange Commission.
"Subsidiary" means (i) any corporation of which more than 50%
of the outstanding shares of capital stock having general voting power
under ordinary circumstances to elect a majority of the board of directors
of such corporation, irrespective of whether or not at the time stock of
any other class or classes shall have or might have voting power by reason
of the happening of any contingency, is at the time directly or indirectly
owned by the Borrower, by the Borrower and one or more other Subsidiaries,
or by one or more other Subsidiaries, (ii) any partnership of which more
than 50% of the partnership interests therein are directly or indirectly
owned by the Borrower, by the Borrower and one or more other Subsidiaries,
or by one or more other Subsidiaries, and (iii) any limited liability
company or other form of business organization the effective control of
which is held by the Borrower, the Borrower and one or more other
Subsidiaries, or by one or more other Subsidiaries.
"Swap Contracts" means any agreement, whether or not in
writing, relating to any transaction that is a rate swap, basis swap,
forward rate transaction, commodity swap, commodity option, equity or
equity index swap or option, bond, note or ▇▇▇▇ option, interest rate
option, forward foreign exchange transaction, cap, collar or floor
transaction, currency swap, cross-currency rate swap, swaption, currency
option or any other similar transaction (including any option to enter into
any of the foregoing) or any combination of the foregoing, and, unless the
context otherwise clearly requires, any master agreement relating to or
governing any or all of the foregoing.
"Total Capital" means the sum of retained earnings,
shareholders' equity (including preferred stock and QUIPs), all determined
with respect to the Borrower and its Subsidiaries on a consolidated basis
in accordance with GAAP consistently applied, and Funded Debt.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended.
"Water Assets" means the water and waste water services
operated by Florida Water Services Corporation, Heater Utilities, Inc., and
Georgia Water Services Corporation, each of which is a Subsidiary of the
Borrower.
"Welfare Plan" means a "welfare plan" as defined in Section
3(1) of ERISA.
"▇▇▇▇▇ Fargo" means ▇▇▇▇▇ Fargo Bank, National Association, a
national banking association and a party to this Agreement.
SECTION 1.2 TIMES
All references to times of day in this Agreement shall be references to
Minneapolis, Minnesota time unless otherwise specifically provided.
ALLETE CREDIT AGREEMENT -10-
SECTION 1.3 ACCOUNTING TERMS AND DETERMINATIONS
Unless otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with GAAP; PROVIDED that in the event of any Accounting Practices
Change, then the Borrower's compliance with the Financial Covenants shall be
determined on the basis of generally accepted accounting principles in effect
immediately before giving effect to the Accounting Practices Change, until such
covenants are amended in a manner satisfactory to the Borrower and the Required
Lenders in accordance with Section 9.11.
ARTICLE II
AMOUNT AND TERMS OF THE CREDIT FACILITY
SECTION 2.1 TERM LOAN FACILITY.
On the Funding Date, each Lender shall make a single Advance to the Borrower in
a principal amount equal to that Lender's Commitment Amount. The Borrower's
obligation to pay the Advance made by each Lender shall be evidenced by the Note
payable to the order of that Lender. The Notes shall bear interest on the unpaid
principal amount thereof from the Funding Date until paid as set forth in
Section 2.2. At or before 2:00 p.m. on the Funding Date, each Lender shall
provide the Agent at the office of the Agent in Minneapolis, Minnesota with
immediately available funds equal to such Lender's Commitment Amount. The Agent
shall disburse the aggregate amount of the Advances by crediting the same to the
Borrower's demand deposit account maintained with the Agent or in such other
manner as the Agent and the Borrower may agree; provided, however, that the
Agent shall have no obligation to disburse the Advances if any condition set
forth in Article III has not been satisfied or if any Lender has failed to fund
its Commitment Amount. No portion of any Advance, once repaid, shall be
readvanced.
SECTION 2.2 INTEREST ON NOTES.
(a) FLOATING RATE FUNDINGS. Unless the Borrower elects a LIBO
Rate pursuant to this Section, the principal balance of the Notes shall
bear interest at the Floating Rate. The amount of the Floating Rate Funding
shall be equal to at least $5,000,000, and the amount of the Floating Rate
Funding over $5,000,000 shall be an integral multiple of $1,000,000.
(b) LIBO RATE FUNDINGS. So long as no Default or Event of
Default exists, the Borrower may convert all or any part of any outstanding
Floating Rate Funding into a LIBO Rate Funding, or may request that a LIBO
Rate Funding be converted at the end of the applicable Interest Period to
another LIBO Rate Funding, by giving notice to the Agent of such request or
conversion not later than 10:30 a.m. on a Business Day which is at least
three Business Days prior to the date of the requested conversion. Each
such notice shall be effective upon receipt by the Agent, shall be in
writing or by telephone or telecopy transmission, shall specify the date
and amount of
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such conversion, and the Interest Period therefor. The Interest Period
applicable to each LIBO Rate Funding shall begin on a Business Day, and the
amount of each LIBO Rate Funding shall be equal to an integral multiple of
$5,000,000. Subject to the terms and conditions hereof, the principal
amount specified by the Borrower in the applicable request for a LIBO Rate
Funding shall bear interest from and including the first day of the
Interest Period specified therein to but not including the last day of such
Interest Period, at the LIBO Rate applicable thereto, determined as set
forth herein. Unless the Borrower requests a new LIBO Rate Funding in
accordance with the procedures set forth above, or prepays the principal of
an outstanding LIBO Rate Funding at the expiration of an Interest Period,
the Lenders shall automatically and without request of the Borrower convert
each LIBO Rate Funding to a Floating Rate Funding on the last day of the
relevant Interest Period.
(c) SETTING OF LIBO RATES. The applicable LIBO Rate for each
Interest Period shall be determined by the Agent between the opening of
business and 12:00 noon on the second Business Day prior to the beginning
of such Interest Period, whereupon notice thereof (which may be by
telephone) shall be given by the Agent to the Borrower. Each such
determination of the applicable LIBO Rate shall be conclusive and binding
upon the parties hereto, in the absence of demonstrable error. The Agent,
upon written request of the Borrower, shall deliver to the Borrower a
statement showing the computations used by the Agent in determining the
applicable LIBO Rate hereunder.
(d) LIMITATIONS ON LIBO RATE FUNDINGS. In no event shall more
than six LIBO Rate Fundings be outstanding at any one time.
(e) INITIAL ADVANCE. Provided the Borrower makes its request
to the Agent by not later than 9:00 a.m. on the Funding Date, the initial
Advances may be funded as LIBO Rate Fundings. The applicable LIBO Rate for
each Interest Period requested by the Borrower shall be determined by the
Agent by 11:00 a.m. on the Funding Date, whereupon notice thereof (which
may be by telephone) shall be given by the Agent to the Borrower. Such
determination of the applicable LIBO Rate shall be conclusive and binding
upon the parties hereto, in the absence of demonstrable error.
(f) DEFAULT RATE. From and after ten days after the occurrence
of any Default or Event of Default and continuing thereafter until such
Default or Event of Default shall be remedied to the written satisfaction
of the Required Lenders, the outstanding principal balance of the Notes
shall bear interest, until paid in full, at an annual rate equal to the sum
of (i) the interest rate otherwise in effect with respect to each Funding
and (ii) 200 basis points (2.00%) (the "Default Rate"). Calculation of
interest at the Default Rate shall not be deemed a waiver or excuse of any
such Default or Event of Default.
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SECTION 2.3 PRINCIPAL AND INTEREST.
(a) INTEREST. Interest accruing on the principal balance of
the Notes each calendar quarter shall be due and payable on the last day of
that quarter, commencing on September 30, 2003 and on the Maturity Date.
Notwithstanding any other provision of this Agreement or the Notes,
interest on any LIBO Rate Funding shall be due and payable on the last day
of the applicable Interest Period or, if such Interest Period is in excess
of three months, on the last day of each three-month period during such
Interest Period and on the last day of such Interest Period.
(b) PRINCIPAL. The principal balance of the Notes shall be due
and payable on the Maturity Date.
SECTION 2.4 COLLATERAL.
Payment of the Notes and all other amounts now or hereafter owing by the
Borrower to the Lenders shall be secured by the Liens granted under the Pledge
Agreement.
SECTION 2.5 FEES.
The Borrower shall pay to the Agent all fees required to be paid pursuant to any
Fee Letters.
SECTION 2.6 PREPAYMENTS.
(a) VOLUNTARY PREPAYMENTS. Subject to the conditions set forth
herein, the Borrower from time to time may voluntarily prepay the Notes in
whole or in part; provided that:
(i) prepayment of any Lender's Note must be accompanied by
pro rata prepayment of each other Lender's Note,
(ii) prepayment of any LIBO Rate Funding shall be made
only upon three Business Days' notice to the Agent and shall
be accompanied by any payment owed under Section 2.10,
(iii) prepayment of any Floating Rate Funding shall be
made only upon one Business Days' notice to the Agent,
(iv) any prepayment of the full amount of any Note shall
include accrued interest thereon, and
(v) each partial voluntary prepayment shall be in an
aggregate amount equal to an integral multiple of $5,000,000.
(b) MANDATORY PREPAYMENTS.
(i) SALE OF ASSETS. Within 30 calendar days following the
receipt thereof, the Borrower shall prepay the Obligations in
an amount equal to 75% of the Net Proceeds from each of the
sale of the Water Assets and the sale of the Borrower's
Taconite Harbor generating facility. Nothing in this clause
(i)
ALLETE CREDIT AGREEMENT -13-
shall be deemed to authorize or constitute consent to sales of
assets by the Borrower that otherwise would be prohibited or
restricted under this Agreement or under any other Loan
Document. For purposes of this clause (i), "Net Proceeds" from
an asset sale shall mean all proceeds of such sale after
payment of the following to the extent related to the sale or
the assets sold: debt, transaction costs and income taxes.
(ii) INITIAL PUBLIC OFFERING. In the event of an initial
public offering of the common stock of any of the Borrower's
Subsidiaries, the Borrower shall prepay the Obligations in an
amount equal to 100% of the Net Proceeds thereof within
fifteen (15) calendar days following receipt thereof. For
purposes of this clause (ii), "Net Proceeds" shall mean all
proceeds of such offering after payment of all related
transaction costs.
(iii) NEW CAPITAL. Within 15 calendar days following the
issuance of any debt by or equity interests in the Borrower or
any Subsidiary, the Borrower shall prepay the Obligations in
an amount equal to the net cash proceeds of such debt
instruments or equity interests. This clause shall not apply
to commercial paper, debt issued under the AFC Program, debt
issued to refinance existing indebtedness for the same amount
or common stock issued pursuant to the Borrower's or its
Subsidiaries' stock benefit plans, the Invest Direct Program,
any borrowings of less than a year under any credit agreement
in existence on the date hereof and any renewals or extensions
thereof. Nothing in this clause (iii) shall be deemed to
authorize or constitute consent to the issuance of debt
instruments or equity interests by the Borrower that otherwise
would be prohibited or restricted under this Agreement or
under any other Loan Document.
(c) APPLICATION OF PREPAYMENTS. All prepayments hereunder
(whether voluntary or mandatory) shall be applied first to accrued but
unpaid interest on the Notes, ratably in accordance with the interest
outstanding thereunder and then to the principal balance of the Notes.
Notwithstanding the foregoing, interest on any LIBO Rate Funding prepaid
hereunder and any compensation due under Section 2.10 on account of
prepayment of a LIBO Rate Funding shall be paid with the same priority as
the related principal prepayment.
SECTION 2.7 PAYMENTS.
(a) MAKING OF PAYMENTS. All payments of principal of and
interest due under the Notes shall be made to the Agent at its office in
Minneapolis, Minnesota, not later than 12:00 noon on the date due, in
immediately available funds, and funds received after that hour shall be
deemed to have been received by the Agent on the next following Business
Day. The Borrower hereby authorizes the Agent to charge the Borrower's
demand deposit account maintained with the Agent for the amount of any such
payment on its due date without receipt of any request for such charge, but
ALLETE CREDIT AGREEMENT -14-
the Lender's failure to so charge such account shall in no way affect the
obligation of the Borrower to make any such payment.
(b) ASSUMED PAYMENTS. Unless the Agent has been notified by
the Borrower prior to the date on which the Borrower is scheduled to make
payment to the Agent of a payment to the Agent for the account of one or
more of the Lenders hereunder (such payment being herein called a "Required
Payment"), which notice shall be effective upon receipt, that it does not
intend to make the Required Payment to the Agent, the Agent may assume that
the Required Payment has been made and may (but shall not be required to),
in reliance upon such assumption, make the amount thereof available to the
intended recipient on such date and, if the Borrower has not in fact made
the Required Payment to the Agent, the recipient of such payment shall, on
demand, repay to the Agent the amount so made available together with
interest thereon for each day during the period commencing on the date such
amount was so made available by the Agent until the date the Agent recovers
such amount at a rate equal to the Federal Funds Rate for such day.
(c) SETOFF. The Borrower agrees that each Lender shall have
all rights of setoff and bankers' lien provided by applicable law, and in
addition thereto, the Borrower agrees that if at any time any amount is due
and owing by the Borrower under this Agreement to any Lender at a time when
an Event of Default has occurred and is continuing hereunder, any Lender
may apply any and all balances, credits, and deposits, accounts or moneys
of the Borrower then or thereafter in the possession of that Lender
(excluding, however, any trust or escrow accounts held by the Borrower for
the benefit of any third party) to the payment thereof.
(d) DUE DATE EXTENSION. If any payment of principal of or
interest on any Floating Rate Funding or any fees payable hereunder falls
due on a day which is not a Business Day, then such due date shall be
extended to the next following Business Day, and (in the case of principal)
additional interest shall accrue and be payable for the period of such
extension.
(e) APPLICATION OF PAYMENTS. Except as otherwise provided
herein, so long as no Default or Event of Default has occurred and is
continuing hereunder, each payment received from the Borrower shall be
applied to such obligation as the Borrower shall specify by notice received
by the Agent on or before the date of such payment, or in the absence of
such notice, as the Required Lenders shall determine in their discretion.
Except as otherwise provided herein, after the occurrence of a Default or
Event of Default, the Lenders shall have the right to apply all payments
received by the Lender from the Borrower as the Required Lenders may
determine in their discretion. The Borrower agrees that the amount shown on
the books and records of the Agent and the Lenders as being the principal
balance of and interest on the Notes shall be conclusive absent
demonstrable error.
ALLETE CREDIT AGREEMENT -15-
SECTION 2.8 INCREASED COSTS; CAPITAL ADEQUACY; FUNDING EXCEPTIONS.
(a) INCREASED COSTS ON LIBO RATE FUNDINGS. If Regulation D of
the Board of Governors of the Federal Reserve System or after the date of
this Agreement the adoption of any applicable law, rule or regulation, or
any change in any existing law, or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender with any request or directive (whether
or not having the force of law) of any such authority, central bank or
comparable agency, shall:
(i) subject that Lender to or cause the withdrawal or
termination of any exemption previously granted to that Lender
with respect to, any tax, duty or other charge with respect to
its LIBO Rate Fundings or its obligation to make LIBO Rate
Fundings, or shall change the basis of taxation of payments to
that Lender of the principal of or interest under this
Agreement in respect of its LIBO Rate Fundings or its
obligation to make LIBO Rate Fundings (except for changes in
the rate of taxes based on or measured by the net income of
that Lender (or franchise taxes in lieu thereof) and imposed
by the government or other authority of the country, state or
political subdivision in which that Lender is incorporated or
in which its principal executive office or the office through
which that Lender is acting is located); or
(ii) impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the
Board of Governors of the Federal Reserve System, but
excluding any reserve included in the determination of
interest rates pursuant to Section 2.2), special deposit or
similar requirement against assets of, deposits with or for
the account of, or credit extended by, that Lender; or
(iii) impose on that Lender any other condition affecting
its making, maintaining or funding of its LIBO Rate Fundings
or its obligation to make LIBO Rate Fundings;
and the result of any of the foregoing is to increase the cost to that
Lender of making or maintaining any LIBO Rate Funding, or to reduce the
amount of any sum received or receivable by that Lender under this
Agreement or under its Notes with respect to a LIBO Rate Funding, then that
Lender will notify the Borrower of such increased cost and within fifteen
(15) days after demand by that Lender (which demand shall be accompanied by
a statement setting forth the basis of such demand and representing that
that Lender has made similar demand on one or more other commercial
borrowers with revolving or term loans in excess of $500,000) the Borrower
shall pay to that Lender such additional amount or amounts as will
compensate that Lender for such increased cost or such reduction; provided,
however, that no such increased cost or such reduction shall be payable by
the Borrower for any period longer than ninety (90) days prior to the date
on which notice thereof is delivered to the Borrower. Each Lender will
promptly notify the Borrower of any event of which it has knowledge,
ALLETE CREDIT AGREEMENT -16-
occurring after the date hereof, which will entitle that Lender to
compensation pursuant to this Section 2.8. If the Borrower receives notice
from any Lender of any event which will entitle that Lender to compensation
pursuant to this Section 2.8, the Borrower may prepay any then outstanding
LIBO Rate Fundings or notify that Lender that any pending request for a
LIBO Rate Funding shall be deemed to be a request for a Floating Rate
Funding, in each case subject to the provisions of Section 2.10.
(b) CAPITAL ADEQUACY. If any Lender determines at any time
that its Return has been reduced as a result of any Capital Adequacy Rule
Change, that Lender may require the Borrower to pay it the amount necessary
to restore that Lender's Return to what it would have been had there been
no Capital Adequacy Rule Change. For purposes of this Section 2.8, the
following definitions shall apply:
(i) "Return", for any calendar quarter or shorter period,
means the percentage determined by dividing (A) the sum of
interest and ongoing fees earned by any Lender under this
Agreement during such period by (B) the average capital that
Lender is required to maintain during such period as a result
of its being a party to this Agreement, as determined by that
Lender based upon its total capital requirements and a
reasonable attribution formula that takes account of the
Capital Adequacy Rules then in effect. Return may be
calculated for each calendar quarter and for the shorter
period between the end of a calendar quarter and the date of
termination in whole of this Agreement.
(ii) "Capital Adequacy Rule" means any law, rule,
regulation or guideline regarding capital adequacy that
applies to any Lender, or the interpretation thereof by any
governmental or regulatory authority. Capital Adequacy Rules
include rules requiring financial institutions to maintain
total capital in amounts based upon percentages of outstanding
loans and binding loan commitments.
(iii) "Capital Adequacy Rule Change" means any change in
any Capital Adequacy Rule occurring after the date of this
Agreement, but does not include any changes in applicable
requirements that at the date hereof are scheduled to take
place under the existing Capital Adequacy Rules or any
increases in the capital that any Lender is required to
maintain to the extent that the increases are required due to
a regulatory authority's assessment of that Lender's financial
condition.
(iv) "Lender" includes (but is not limited to) the Agent,
the Lenders, as defined elsewhere in this Agreement, and any
assignee of any interest of any Lender hereunder and any
participant in the loans made hereunder.
The initial notice sent by a Lender shall be sent as promptly as
practicable after that Lender learns that its Return has been reduced,
shall include a demand for payment of the amount necessary to restore that
Lender's Return for the quarter in which the notice is sent, shall state in
reasonable detail the cause for the reduction in that Lender's Return and
that Lender's calculation of the amount of such reduction, and
ALLETE CREDIT AGREEMENT -17-
shall include that Lender's representation that it has made similar demand
on one or more other commercial borrowers with revolving or term loans in
excess of $500,000. Thereafter, that Lender may send a new notice during
each calendar quarter setting forth the calculation of the reduced Return
for that quarter and including a demand for payment of the amount necessary
to restore that Lender's Return for that quarter. A Lender's calculation in
any such notice shall be conclusive and binding absent demonstrable error.
(c) BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR.
If with respect to any Interest Period:
(i) any Lender determines that deposits in U.S. dollars
(in the applicable amounts) are not being offered in the
London interbank eurodollar market for such Interest Period;
or
(ii) any Lender otherwise determines that by reason of
circumstances affecting the London interbank eurodollar market
adequate and reasonable means do not exist for ascertaining
the applicable LIBO Rate; or
(iii) any Lender determines that the LIBO Rate as
determined by the Agent will not adequately and fairly reflect
the cost to that Lender of maintaining or funding a LIBO Rate
Funding for such Interest Period, or that the making or
funding of LIBO Rate Fundings has become impracticable as a
result of an event occurring after the date of this Agreement
which in the opinion of that Lender materially affects such
LIBO Rate Fundings;
then that Lender shall promptly notify the Borrower and (A) upon the
occurrence of any event described in the foregoing clause (i) the Borrower
shall enter into good faith negotiations with that Lender in order to
determine an alternate method to determine the LIBO Rate for that Lender,
and during the pendency of such negotiations with that Lender, the Lenders
shall be under no obligation to make any new LIBO Rate Fundings, and (B)
upon the occurrence of any event described in the foregoing clauses (ii) or
(iii), for so long as such circumstances shall continue, the Lenders shall
be under no obligation to make any new LIBO Rate Fundings.
(d) ILLEGALITY. If any change in (including the adoption of
any new) applicable laws or regulations, or any change in the
interpretation of applicable laws or regulations by any governmental
authority, central bank, comparable agency or any other regulatory body
charged with the interpretation, implementation or administration thereof,
or compliance by any Lender with any request or directive (whether or not
having the force of law) of any such authority, central bank, comparable
agency or other regulatory body, should make it or, in the good faith
judgment of that Lender, shall raise a substantial question as to whether
it is unlawful for that Lender to make, maintain or fund LIBO Rate
Fundings, then (i) that Lender shall promptly notify the Borrower and the
Agent, (ii) the obligation of the Lenders to make, maintain or convert into
LIBO Rate Fundings shall, upon the effectiveness of such event, be
suspended for the duration of such unlawfulness, and (iii) for the
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duration of such unlawfulness, any notice by the Borrower requesting the
Lenders to make or convert into LIBO Rate Fundings shall be construed as a
request to make or to continue making Floating Rate Fundings.
SECTION 2.9 TAXES.
(a) All payments made by the Borrower to the Agent or any
Lender (herein any "Payee") under or in connection with this Agreement or
the Notes shall be made without any setoff or other counterclaim, and free
and clear of and without deduction for or on account of any present or
future Taxes now or hereafter imposed by any governmental or other
authority, except to the extent that such deduction or withholding is
compelled by law. As used herein, the term "Taxes" shall include all
income, excise and other taxes of whatever nature (other than taxes based
on or measured by the net income of the Payee (or franchise taxes in lieu
thereof) and imposed by the government or other authority of the country,
state or political subdivision in which such Payee is incorporated or in
which its principal executive office or the office through which the Payee
is acting is located ("Excluded Taxes")) as well as all levies, imposts,
duties, charges, or fees of whatever nature. If the Borrower is compelled
by law to make any such deductions or withholdings it will:
(i) pay to the relevant authorities the full amount
required to be so withheld or deducted;
(ii) except to the extent that such deduction or
withholding results from a breach by any Payee of the
representations and covenants contained in Section 2.9(b) or
the relevant Assignment Certificate, pay such additional
amounts (including, without limitation, any penalties,
interest or expenses) as may be necessary in order that the
net amount received by each Payee after such deductions or
withholdings (including any required deduction or withholding
on such additional amounts) shall equal the amount such Payee
would have received had no such deductions or withholdings
been made; and
(iii) promptly forward to the Agent (for delivery to such
Payee) an official receipt or other documentation reasonably
satisfactory to the Agent evidencing such payment to such
authorities.
(b) If any Taxes otherwise payable by the Borrower pursuant to
Section 2.9(a) are directly asserted against any Payee, such Payee may pay
such Taxes and the Borrower promptly shall reimburse such Payee to the full
extent otherwise required by such Section. The obligations of the Borrower
under this Section 2.9 shall survive any termination of this Agreement.
Each Lender by its execution of this Agreement represents (and each
Additional Lender by its execution of any Assignment Certificate pursuant
to Section 8.10 shall be deemed to represent) to each other Lender, the
Agent and the Borrower that if such Lender or Additional Lender is
organized under the laws of any jurisdiction other than the United States
or any state thereof, such Lender or Additional Lender has furnished to the
Agent and the Borrower either U.S. Internal Revenue Service Form W-8BEN, or
U.S. Internal
ALLETE CREDIT AGREEMENT -19-
Revenue Service Form W-8ECI, as applicable (wherein such Lender claims
entitlement to complete exemption from U.S. Federal withholding tax on all
interest payments hereunder).
(c) The amount that the Borrower shall be required to pay to
any Lender pursuant to Section 2.9(a) or 2.9(b) shall be reduced by the
amount of any offsetting tax benefit which such Lender receives as a result
of the Borrower's payment to the relevant authorities as reasonably
determined by such Lender; provided, however, that (i) such Lender shall be
the sole judge of the amount of such tax benefit and the date on which it
is received, (ii) no Lender shall be obliged to disclose information
regarding its tax affairs or tax computations, (iii) nothing herein shall
interfere with a Lender's right to manage its tax affairs in whatever
manner it sees fit, and (iv) if such Lender shall subsequently determine
that it has lost the benefit of all or a portion of such tax benefit, the
Borrower shall promptly remit to such Lender the amount certified by such
Lender to be the amount necessary to restore such Lender to the position it
would have been in if no payment had been made pursuant to this Section
2.9(c).
(d) If the U.S. Internal Revenue Service or any other
governmental authority of the United States or any other country or any
political subdivision thereof asserts a claim that the Agent or the
Borrower did not properly withhold tax from amounts paid to or for the
account of any Lender (because the appropriate form was not delivered or
properly completed, because such Lender failed to notify the Agent or the
Borrower of a change in circumstances which rendered its exemption from
withholding ineffective, or for any other reason), such Lender shall
indemnify the Agent or the Borrower, as applicable, fully for all amounts
paid, directly or indirectly, by the Agent or the Borrower, as applicable,
as tax, withholding therefor, or otherwise, including penalties and
interest, and including taxes imposed by any jurisdiction on amounts
payable to the Agent or the Borrower, as applicable, under this subsection,
together with all costs and expenses related thereto (including attorneys
fees and time charges of attorneys for the Agent or the Borrower, as
applicable, which attorneys may be employees of the Agent or the Borrower,
as applicable). The obligations of each Lender under this Section 2.9(d)
shall survive the payment of the Obligations and termination of this
Agreement.
SECTION 2.10 FUNDING LOSSES.
Upon demand by any Lender (which demand shall be accompanied by a statement
setting forth the basis for the calculations of the amount being claimed), the
Borrower shall indemnify that Lender against any loss or expense which that
Lender may have sustained or incurred (including, without limitation, any net
loss or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by that Lender to fund or maintain LIBO Rate
Fundings) or which that Lender may be deemed to have sustained or incurred, as
reasonably determined by that Lender, (i) as a consequence of any failure by the
Borrower to make any payment when due of any amount due hereunder in connection
with
ALLETE CREDIT AGREEMENT -20-
any LIBO Rate Fundings, (ii) due to any failure of the Borrower to borrow or
convert any LIBO Rate Fundings on a date specified therefor in a notice thereof
or (iii) due to any payment or prepayment of any LIBO Rate Funding on a date
other than the last day of the applicable Interest Period for such LIBO Rate
Funding. For this purpose, all notices under Section 2.2(b) shall be deemed to
be irrevocable.
SECTION 2.11 DISCRETION OF LENDERS AS TO MANNER OF FUNDING.
Notwithstanding any provision of this Agreement to the contrary, each Lender
shall be entitled to fund and maintain all or any part of its LIBO Rate Fundings
in any manner it deems fit, it being understood, however, that for the purposes
of this Agreement (specifically including, without limitation, Section 2.10
hereof) all determinations hereunder shall be made as if that Lender had
actually funded and maintained each LIBO Rate Funding during each Interest
Period for such LIBO Rate Funding through the purchase of deposits having a
maturity corresponding to such Interest Period and bearing an interest rate
equal to the appropriate LIBO Rate for such Interest Period.
SECTION 2.12 CONCLUSIVENESS OF STATEMENTS; SURVIVAL OF PROVISIONS.
Determinations and statements of any Lender pursuant to Section 2.8 and 2.10
shall be conclusive absent demonstrable error. Without limiting the generality
of the foregoing, the Borrower shall have no right to review any records of any
Lender or its other customers to determine the accuracy of any statement by that
Lender under Section 2.8(a) or 2.8(b) regarding that Lender's demands upon other
customers of that Lender. Each Lender may use reasonable averaging and
attribution methods in determining compensation pursuant to such Sections 2.8
and 2.10 and the provisions of Sections 2.8 and 2.10 shall survive termination
of this Agreement.
SECTION 2.13 USE OF PROCEEDS.
The Borrower shall use the proceeds of the Advances to satisfy its obligations
with respect to the Refinanced Bonds.
SECTION 2.14 COMPUTATION OF INTEREST AND FEES.
All interest determined at the Floating Rate will be calculated based on the
actual days elapsed in a year of 365 or 366 days, as the case may be. All
interest determined at the LIBO Rate and all fees hereunder shall be computed on
the basis of actual number of days elapsed in a year of 360 days.
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ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.1 DOCUMENTARY CONDITIONS PRECEDENT.
The obligation of each Lender to make its Advance is subject to the condition
precedent that each Lender shall have received on or before the day of the
Advance, and in any event on or before July 18, 2003, all of the following, each
dated (unless otherwise indicated) as of the date hereof, in form and substance
satisfactory to each Lender:
(a) The Notes, properly executed on behalf of the Borrower.
(b) The Pledge Agreement, properly executed on behalf of the
Borrower.
(c) The Bonds, properly issued by the Borrower.
(d) A certificate of the secretary or assistant secretary of
the Borrower (i) certifying that the execution, delivery and performance of
the Loan Documents and other documents contemplated hereunder to which the
Borrower is a party have been duly approved by all necessary action of the
board of directors of the Borrower, and attaching true and correct copies
of the applicable resolutions granting such approval, (ii) certifying that
attached to such certificate are true and correct copies of the articles of
incorporation and bylaws of the Borrower, together with such copies, and
(iii) certifying the names of the officers of the Borrower that are
authorized to sign the Loan Documents and other documents contemplated
hereunder, together with the true signatures of such officers. The Lenders
may conclusively rely on such certificate until they shall receive a
further certificate of the secretary or assistant secretary of the Borrower
canceling or amending the prior certificate and submitting the signatures
of the officers named in such further certificate.
(e) A certificate of good standing of the Borrower from the
Secretary of State of the State of Minnesota dated not more than ten days
before such date.
(f) A signed copy of an opinion of counsel for the Borrower,
addressed to the Lenders substantially in the form of Exhibit E.
(g) All fees required to be paid as of the date hereof
pursuant to this Agreement or any Fee Letter.
(h) Such other documents as the Agent or the Required Lenders
may deem necessary or advisable in connection with the issuance of the
Bonds.
SECTION 3.2 ADDITIONAL CONDITIONS PRECEDENT TO ADVANCES.
The obligation of each Lender to make its Advance shall be subject to the
further conditions precedent that on the date of the Advance:
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(a) the representations and warranties contained in Article IV
are correct on and as of the date of the Advance as though made on and as
of such date, except to the extent that such representations and warranties
relate solely to an earlier date; and
(b) no event has occurred and is continuing, or would result
from the Advance, which constitutes a Default or an Event of Default.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders as follows:
SECTION 4.1 EXISTENCE AND POWER.
The Borrower and its Material Subsidiaries are each corporations duly
incorporated, validly existing and in good standing under the laws of their
respective jurisdictions, and are each duly licensed or qualified to transact
business in all jurisdictions where the character of the property owned or
leased or the nature of the business transacted by it makes such licensing or
qualification necessary, except where failure to be so licensed or qualified
would not have a Material Adverse Effect. The Borrower has all requisite power
and authority, corporate or otherwise, to conduct its business, to own its
properties and to execute and deliver, and to perform all of its obligations
under, the Loan Documents, the Bonds and the Indenture.
SECTION 4.2 AUTHORIZATION OF BORROWING; NO CONFLICT AS TO LAW OR AGREEMENTS.
(a) The execution, delivery and performance by the Borrower of
the Loan Documents, the Indenture and the Bonds, the borrowings hereunder,
the issuance of the Bonds, and the consummation of the transactions herein
and therein contemplated, have been duly authorized by all necessary
corporate action and do not and will not (i) require any consent or
approval of the shareholders of the Borrower, or any authorization,
consent, approval, order, filing, registration or qualification by or with
any governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, other than those consents described
in Schedule 4.2, each of which has been obtained and is in full force and
effect, and such consents, approvals, authorizations, registrations or
qualifications as may be required and have been made or obtained under
state securities or Blue Sky laws in connection with the offer and sale of
the Bonds to the Agent, (ii) violate any provision of any law, rule or
regulation (including, without limitation, Regulation X of the Board of
Governors of the Federal Reserve System and Section 7 of the Exchange Act
or any regulation promulgated thereunder) or of any order, writ, injunction
or decree presently in effect having applicability to the Borrower or of
the Articles of Incorporation or Bylaws of the Borrower, (iii) result in a
breach of or constitute a default under any indenture or loan or credit
agreement or any other agreement, lease or instrument to which the Borrower
or any Material Subsidiary is a party or by which it or its properties may
be bound or affected, or (iv) result in, or require, the creation or
imposition of any Lien or other charge or encumbrance of any nature (other
than the Lien created under the
ALLETE CREDIT AGREEMENT -23-
Pledge Agreement and the Lien of the Bonds under the Indenture) upon or
with respect to any of the properties now owned or hereafter acquired by
the Borrower or any Material Subsidiary.
(b) The MPUC has issued its Authorizing Order authorizing the
issuance of securities of the Borrower and the incurrence by the Borrower
of debt so long as (1) the Borrower's total capitalization does not exceed
$3,560,000,000 (or any higher amount so long as total capitalization does
not exceed $3,560,000,000 for more than 60 days without prior MPUC
approval) and (2) the Borrower's equity ratio falls in the range between
46.78 and 63.29 percent (or any higher or lower percentages so long as the
equity ratio does not deviate from this range for more than 60 days without
prior MPUC approval). All Obligations incurred hereunder will constitute
debt for purposes of such Authorizing Order. As of the date hereof, the
Borrower's total capitalization (including Advances hereunder in an
aggregate amount equal to the aggregate Commitment Amounts) does not exceed
$3,560,000,000 and Borrower's equity ratio is within the range of 46.78 to
63.29 percent.
SECTION 4.3 LEGAL AGREEMENTS.
This Agreement, the other Loan Documents, the Bonds and the Indenture constitute
the legal, valid and binding obligations of the Borrower enforceable against the
Borrower in accordance with their respective terms. Without limiting the
generality of the foregoing, the Bonds, when issued, will be duly executed,
issued and delivered by the Borrower and duly authenticated by the Corporate
Trustee, and will be entitled to the benefits provided by the Indenture.
SECTION 4.4 SUBSIDIARIES.
Schedule 4.4 hereto is a complete and correct list of all Material Subsidiaries
as of March 31, 2003, and of the percentage of the ownership of the Borrower or
any other Subsidiary in each as of the date of this Agreement. Except as
otherwise indicated in that Schedule, all shares of each Material Subsidiary
owned by the Borrower or by any such other Subsidiary are validly issued and
fully paid and nonassessable.
SECTION 4.5 FINANCIAL CONDITION.
The Borrower has heretofore furnished to the Lenders its audited financial
statement as of December 31, 2002, and its unaudited interim financial statement
as of March 31, 2003. Those financial statements fairly present the financial
condition of the Borrower and its Subsidiaries on the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended, and were prepared in accordance with GAAP.
ALLETE CREDIT AGREEMENT -24-
SECTION 4.6 ADVERSE CHANGE.
There has been no material adverse change in the business, properties or
condition (financial or otherwise) of the Borrower since the date of the latest
financial statement referred to in Section 4.5.
SECTION 4.7 LITIGATION.
Except as set forth in the financial statements or other reports of the type
referred to in Section 5.1 hereof and that have been delivered to the Lenders on
or prior to the date hereof, there are no actions, suits or proceedings pending
or, to the knowledge of the Borrower, threatened against or affecting the
Borrower or any Subsidiary or the properties of the Borrower or any Subsidiary
before any court or governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, in which, there is a reasonable
possibilities of an adverse decision to the Borrower or that Subsidiary, that
could result in a Material Adverse Effect.
SECTION 4.8 HAZARDOUS SUBSTANCES.
Except as set forth in the financial statements or other reports of the type
referred to in Section 5.1 hereof that have been delivered to Lenders on or
prior to the date hereof, (i) the Borrower and it subsidiaries (1) are in
substantial compliance with any and all applicable Environmental Laws, (2) have
received all material permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses and
(3) are in compliance with all terms and conditions of any such permit, license
or approval, except where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to comply with
the terms and conditions of such permits, licenses or approvals would not,
singly or in the aggregate, have a Material Adverse Effect, and (ii) the
Borrower has concluded that the costs and expenses associated with the effect of
Environmental Laws on the business, operations and properties of the Borrower
and its subsidiaries, and their compliance with such laws, would not, singly or
in the aggregate, have a Material Adverse Effect.
SECTION 4.9 REGULATION U.
The Borrower is not engaged in the business of extending credit for the purpose
of purchasing or carrying margin stock (within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System), and no part of the
proceeds of the Advance will be used to purchase or carry any margin stock or to
extend credit to others for the purpose of purchasing or carrying any margin
stock.
SECTION 4.10 TAXES.
The Borrower and its Subsidiaries have each paid or caused to be paid to the
proper authorities when due all material federal, state and local taxes required
to be withheld by them. The Borrower and its Subsidiaries have each filed all
material federal, state and local
ALLETE CREDIT AGREEMENT -25-
tax returns which to the knowledge of the officers of the Borrower are required
to be filed, and the Borrower and its Subsidiaries have each paid or caused to
be paid to the respective taxing authorities all material taxes as shown on said
returns or on any assessment received by them to the extent such taxes have
become due, other than taxes whose amount, applicability or validity is being
contested in good faith by appropriate proceedings and for which the Borrower or
Subsidiary has provided adequate reserves in accordance with GAAP.
SECTION 4.11 TITLES AND LIENS.
The Borrower or one of its Subsidiaries has good title to each of the properties
and assets reflected in the latest balance sheet referred to in Section 4.5
(other than any sold, as permitted by Section 6.2), free and clear of all Liens
and encumbrances, except for the Lien of the Indenture or Liens permitted by the
Indenture and Liens granted by Subsidiaries.
SECTION 4.12 ERISA.
No Plan had an accumulated funding deficiency (as such term is defined in
Section 302 of ERISA) in excess of $1,000,000 as of the last day of the most
recent fiscal year of such Plan ended prior to the date hereof, and no liability
to the PBGC (other than for premiums due for the current premium period under
Section 4007 of ERISA) or the Internal Revenue Service in excess of such amount
has been, or is expected by the Borrower, any Subsidiary or any ERISA Affiliate
to be, incurred with respect to any Plan. Except as otherwise disclosed in
public filings by the Borrower, neither the Borrower nor any Material Subsidiary
has any contingent liability with respect to any post-retirement benefit under a
Welfare Plan, other than liability for continuation coverage described in Part 6
of Subtitle B of Title I of ERISA.
SECTION 4.13 INVESTMENT COMPANY ACT.
The Borrower is not, and after giving effect to the offer and sale of the Bonds,
will not be an "investment company," as such term is defined in the Investment
Company Act.
SECTION 4.14 PUBLIC UTILITY HOLDING COMPANY ACT.
The Borrower is exempt from all provisions of PUHCA and the rules and
regulations thereunder, except for Section 9(a)(2) and the rules and regulations
thereunder, and the execution and delivery by the Borrower of the Agreement and
the transactions contemplated thereby do not violate any provision of PUHCA or
any rule or regulation thereunder.
SECTION 4.15 SECURITIES LAW MATTERS.
(a) When the Bonds are issued and delivered pursuant to this
Agreement and the Indenture, the Bonds will not be of the same class
(within the meaning of Rule 144A under the Act) as securities which are
listed on a national securities exchange registered under Section 6 of the
Exchange Act or quoted in a U.S. automated inter-dealer quotation system.
ALLETE CREDIT AGREEMENT -26-
(b) The Borrower is subject to Section 13 or 15(d) of the
Exchange Act.
(c) Neither the Borrower, nor any person acting on its behalf,
has offered or sold (nor will offer or sell prior to the delivery of the
Bonds to the Agent) the Bonds by means of any general solicitation or
general advertising within the meaning of Rule 502(c) under the Act.
(d) Within the preceding six months, neither the Borrower nor
any other person acting on behalf of the Borrower has offered or sold to
any person any Bonds, or any securities of the same or a similar class as
the Bonds, other than Bonds delivered to the Agent hereunder. The Borrower
will take reasonable precautions designed to insure that any offer or sale,
direct or indirect, in the United States or to any U.S. person (as defined
in Rule 902 under the Act) of any Bonds or any substantially similar
security issued by the Borrower, within six months subsequent to the
delivery of the Bonds to the Agent, is made under restrictions and other
circumstances reasonably designed not to affect the status of the offer and
sale of the Bonds contemplated by this Agreement as a transaction exempt
from the registration provisions of the Act.
(e) No registration of the Bonds under the Act is required for
the offer and sale of the Bonds to the Agent in the manner contemplated by
this Agreement.
SECTION 4.16 INDENTURE.
(a) The aggregate principal amount of bonds outstanding under
the Indenture (excluding the Bonds but including the Refinanced Bonds) is
$576,000,000.
(b) There has been no discharge of the Indenture with respect
to the Borrower.
(c) Substantially all of the electric utility assets, whether
real, personal or mixed, of the Borrower is subject to the Lien of the
Indenture.
(d) True and complete copies of the Indenture and all
amendments and supplements to and restatements of the Indenture have been
delivered to counsel for the Agent.
(e) It is not necessary in connection with the offer, sale,
and delivery of the Bonds to the Agent on behalf of the Lenders to qualify
the Indenture under the Trust Indenture Act.
SECTION 4.17 AUTHENTICATION OF BONDS.
All covenants and conditions precedent to the authentication and delivery of the
Bonds will be complied with upon payment in full of the Refinanced Bonds with
the proceeds of the Advances.
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SECTION 4.18 INSURANCE.
The properties of the Borrower and its Material Subsidiaries are insured with
financially sound and reputable insurance companies not Affiliates of the
Borrower, to the extent and in such amounts, with such deductibles and covering
such risks as are customarily carried by companies engaged in similar businesses
and owning similar properties in localities where the Borrower and such Material
Subsidiaries operate.
SECTION 4.19 COMPLIANCE WITH LAWS.
The Borrower and its Material Subsidiaries have complied in all material
respects with all applicable statutes, rules, regulations, orders and
restrictions of any domestic or foreign government or any instrumentality or
agency thereof having jurisdiction over the conduct of their respective
businesses or the ownership of their respective properties, assets and rights.
ARTICLE V
AFFIRMATIVE COVENANTS
So long as any Note shall remain unpaid or the Facility shall be outstanding,
the Borrower will comply with the following requirements, unless the Required
Lenders shall otherwise consent in writing:
SECTION 5.1 REPORTING.
The Borrower will deliver to each Lender:
(a) As soon as available, and in any event within 120 days
after the end of each fiscal year of the Borrower, a copy of the annual
audit report of the Borrower prepared on a consolidated basis with the
unqualified opinion of independent certified public accountants reasonably
selected by the Borrower, which annual report shall include the
consolidated and consolidating balance sheet of the Borrower and its
Subsidiaries as at the end of such fiscal year and the related consolidated
and consolidating statements of income, shareholders' equity and cash flows
of the Borrower and its Subsidiaries for the fiscal year then ended, all in
reasonable detail and all prepared in accordance with GAAP, together with,
if requested by any Lender, a copy of such accountants' management letter
issued to the Borrower for such year.
(b) As soon as available and in any event within 60 days after
the end of each of the first three fiscal quarters of each fiscal year,
consolidated and consolidating balance sheets of the Borrower and its
Subsidiaries as at the end of such quarter and related consolidated and
consolidating statements of earnings and cash flows of the Borrower and its
Subsidiaries for such quarter and for the year to date, in reasonable
detail and stating in comparative form the figures for the corresponding
date and period in the previous year to the extent required in Form 10-Q,
all prepared in accordance with GAAP, subject to year-end audit
adjustments.
ALLETE CREDIT AGREEMENT -28-
(c) Concurrent with the delivery of any financial statements
under subsection (a) or (b), a Compliance Certificate, duly executed by the
chief financial officer of the Borrower.
(d) Promptly upon their distribution, copies of all financial
statements, reports and proxy statements which the Borrower shall have sent
to its shareholders.
(e) Promptly after the sending or filing thereof, copies of
all regular and periodic financial reports which the Borrower shall file
with the SEC or any national securities exchange.
(f) Immediately after the commencement thereof, notice in
writing of all litigation and of all proceedings before any governmental or
regulatory agency affecting the Borrower of the type described in Section
4.7 or which seek a monetary recovery against the Borrower in excess of
$5,000,000.
(g) As promptly as practicable (but in any event not later
than five business days) after an officer of the Borrower obtains knowledge
of the occurrence of any Default or Event of Default, notice of such
occurrence, together with a detailed statement by a responsible officer of
the Borrower or the appropriate Subsidiary of the steps being taken by the
Borrower or the appropriate Subsidiary to cure the effect of such event.
(h) Promptly upon becoming aware of any ERISA Event or any
prohibited transaction (as defined in Section 4975 of the Internal Revenue
Code or Section 406 of ERISA) in connection with any Plan or any trust
created thereunder, a written notice specifying the nature thereof, what
action the Borrower has taken, is taking or proposes to take with respect
thereto, and, when known, any action taken or threatened by the Internal
Revenue Service, the PBGC or the Department of Labor with respect thereto.
(i) Promptly upon their receipt or filing, copies of (i) all
notices received by the Borrower, any Subsidiary or any ERISA Affiliate of
the PBGC's intent to terminate any Plan or to have a trustee appointed to
administer any Plan, and (ii) all notices received by the Borrower, any
Subsidiary or any ERISA Affiliate from a Multiemployer Plan concerning the
imposition of withdrawal liability on Borrower, any Subsidiary or an ERISA
Affiliate pursuant to Section 4202 of ERISA or the amount of any such
withdrawal liability.
(j) Upon request of any Lender, copies of the most recent
annual report (Form 5500 Series), including any supporting schedules, filed
by the Borrower, any Material Subsidiary or any ERISA Affiliate with the
Employee Benefit Security Administration with respect to any Plan.
ALLETE CREDIT AGREEMENT -29-
(k) Such information (in addition to that specified elsewhere
in this Section) respecting the financial condition and results of
operations of the Borrower as any Lender may from time to time reasonably
request.
SECTION 5.2 BOOKS AND RECORDS; INSPECTION AND EXAMINATION.
The Borrower will keep, and will cause each Material Subsidiary to keep,
accurate books of record and account for itself in which true and complete
entries will be made in accordance with GAAP and, upon request of any Lender,
will give any representative of any Lender access to, and permit such
representative to examine, copy or make extracts from, any and all books,
records and documents in its possession, to inspect any of its properties and to
discuss its affairs, finances and accounts with any of its principal officers,
all at such times during normal business hours and as often as any Lender may
reasonably request.
SECTION 5.3 COMPLIANCE WITH LAWS.
The Borrower will, and will cause each Subsidiary to, comply with the
requirements of applicable laws and regulations, the noncompliance with which
would have a Material Adverse Effect.
SECTION 5.4 PAYMENT OF TAXES AND OTHER CLAIMS.
The Borrower will pay or discharge, and will cause each Subsidiary to pay or
discharge, when due, (a) all material taxes, assessments and governmental
charges levied or imposed upon it or upon its income or profits, or upon any
properties belonging to it, prior to the date on which penalties attach thereto,
(b) all material federal, state and local taxes required to be withheld by it,
and (c) all material lawful claims for labor, materials and supplies which, if
unpaid, might by law become a Lien or charge upon any properties of the
Borrower; provided, that neither the Borrower nor any Subsidiary shall be
required to pay any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings and for which the Borrower or such Subsidiary has provided adequate
reserves in accordance with GAAP.
SECTION 5.5 MAINTENANCE OF PROPERTIES.
The Borrower will keep and maintain, and will cause each Material Subsidiary to
keep and maintain, all of its properties necessary or useful in its business in
good condition, repair and working order; provided, however, that nothing in
this Section shall prevent the Borrower from discontinuing the operation and
maintenance of any of its properties if such discontinuance is, in the judgment
of the Borrower or the appropriate Subsidiary, desirable in the conduct of its
business and not disadvantageous in any material respect to any Lender as holder
of the Notes.
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SECTION 5.6 INSURANCE.
The Borrower will, and will cause each Material Subsidiary to, obtain and
maintain insurance with insurers believed by the Borrower to be responsible and
reputable, to the extent and in such amounts and against such risks as is
usually carried by companies engaged in similar business and owning similar
properties in the same general areas in which the Borrower or such Subsidiary
operates.
SECTION 5.7 PRESERVATION OF EXISTENCE.
The Borrower will, and will cause each Material Subsidiary to, preserve and
maintain its existence as a separate legal entity and all of its rights,
privileges and franchises; provided, however, that nothing in this Section 5.7
shall prohibit any transaction expressly permitted under Section 6.4.
SECTION 5.8 LEVERAGE RATIO.
The Borrower will at all times maintain its Leverage Ratio, determined as of
each Covenant Compliance Date, at not more than sixty percent (60%).
SECTION 5.9 INTEREST COVERAGE RATIO.
The Borrower will at all times maintain its Interest Coverage Ratio, determined
as of the end of each fiscal quarter of the Borrower, at not less than 3.0 to 1.
SECTION 5.10 DELIVERY OF INFORMATION.
At any time when the Borrower is not subject to Section 13 or 15(d) of the
Exchange Act, for the benefit of holders from time to time of Bonds, the
Borrower agrees to furnish at its expense, upon request, to holders of Bonds and
prospective purchasers of securities information satisfying the requirements of
subsection (d)(4)(i) of Rule 144A under the Act.
ARTICLE VI
NEGATIVE COVENANTS
So long as any Note shall remain unpaid, the Borrower agrees that, without the
prior written consent of the Required Lenders:
SECTION 6.1 DIVIDENDS.
The Borrower will not declare or pay any dividend (other than dividends payable
solely in stock of the Borrower) on any class of its stock or make any payment
on account of the purchase, redemption or other retirement of any shares of such
stock or make any distribution in respect thereof, either directly or
indirectly, at any time following and during the continuance of any Event of
Default arising under Section 7.1(a) or (b).
ALLETE CREDIT AGREEMENT -31-
SECTION 6.2 SALE OF ASSETS.
The Borrower will not, and will not permit any Material Subsidiary to, sell,
lease, assign, transfer or otherwise dispose of its assets (whether in one
transaction or in a series of transactions) to any other Person other than (i)
in the ordinary course of business, (ii) dispositions of property no longer used
or useful in the business of the Borrower or any Subsidiary, (iii) dispositions
of assets the net proceeds of which are invested or re-invested, or held in cash
or cash-equivalents for reinvestment, in the Borrower's or its Material
Subsidiaries' existing businesses, (iv) the sale of the Water Assets or the
assets of any other Subsidiary of the Borrower as to which the Borrower has
announced on or prior to June 30, 2003, that it will discontinue the operations
of such Subsidiary, (v) assets sold under the AFC Program, (vi) the offering of
shares of any Subsidiary, (vii) the disposition of all or part of the Borrower's
Taconite Harbor Energy Center, or (viii) the disposition of unimproved real
property not necessary for the operation of the Borrower's or its Subsidiaries'
business, as determined by the Borrower in its reasonable discretion; provided,
however, that a wholly-owned Subsidiary of the Borrower may sell, lease, or
transfer all or a substantial part of its assets to the Borrower or another
wholly-owned Subsidiary of the Borrower, and the Borrower or such other
wholly-owned Subsidiary, as the case may be, may acquire all or substantially
all of the assets of the Subsidiary so to be sold, leased or transferred to it,
and any such sale, lease or transfer shall not be included in determining if the
Borrower and/or its Subsidiaries disposed of its Assets.
SECTION 6.3 TRANSACTIONS WITH AFFILIATES.
The Borrower will not make any loan or capital contribution to, or any other
investment in, any Affiliate, or pay any dividend to any Affiliate of the
Borrower, or make any other cash transfer to any Affiliate of the Borrower;
provided, however, that the foregoing shall not prohibit any of the following:
(a) Transactions made upon fair and reasonable terms no less
favorable to the Borrower than would obtain, taking into account all facts
and circumstances, in a comparable arm's-length transaction with a Person
not an Affiliate of the Borrower.
(b) Distributions to the extent not prohibited by Section 6.1.
(c) Transactions with Affiliates which are subject to the
jurisdiction of the Federal Energy Regulatory Commission ("FERC"), the SEC
or the MPUC.
(d) Contributions of capital to Subsidiaries.
(e) Assumption of any debt of ADESA by the Borrower in
connection with an initial public offering of ADESA.
ALLETE CREDIT AGREEMENT -32-
SECTION 6.4 CONSOLIDATION AND MERGER.
The Borrower will not consolidate with or merge into any Person, or permit any
other Person to merge into it, or acquire (in a transaction analogous in purpose
or effect to a consolidation or merger) all or substantially all of the assets
of any other Person; provided, however, that the restrictions contained in this
Section shall not apply to or prevent the consolidation or merger of any Person
with, or a conveyance or transfer of its assets to, the Borrower so long as (i)
no Default or Event of Default exists at the time of, or will be caused by, such
consolidation, merger, conveyance or transfer, and (ii) the Borrower shall be
the continuing or surviving corporation.
SECTION 6.5 HAZARDOUS SUBSTANCES.
The Borrower will not, and will not permit any Material Subsidiary to, cause or
permit any Hazardous Substance to be disposed of on, under or at any real
property which is operated by the Borrower or in which the Borrower has any
interest, in any manner which might result in a Material Adverse Effect.
SECTION 6.6 RESTRICTIONS ON NATURE OF BUSINESS.
The Borrower will not, and will not permit any Subsidiary to, engage in any line
of business materially different from that presently engaged in by the Borrower
or such Subsidiary.
SECTION 6.7 SECURITIES LAWS.
The Borrower agrees with the Agent:
(a) Not to be or become, at any time prior to the expiration
of three years after the delivery of the Bonds, an open-end investment
company, unit investment trust, closed-end investment company or
face-amount certificate company that is or is required to be registered
under Section 8 of the Investment Company Act;
(b) During the period of two years after the delivery of the
Bonds, the Borrower will not, and will not permit any of its "affiliates"
(as defined in Rule 144 under the Act) to, resell any of the Bonds which
constitute "restricted securities" under Rule 144 that have been reacquired
by any of them; and
(c) Until at least six months after the offer of the Bonds
hereunder has been terminated, neither the Borrower nor any person will on
the Borrower's behalf offer the Bonds, or any substantially similar
security of the Borrower for sale to, or solicit offers to buy any such
security from, any person, it being understood that such agreement is made
with a view to bringing the offer and sale of the Bonds hereunder within
the exception provided by Section 4(2) of the Act and Rule 506 thereunder.
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ARTICLE VII
EVENTS OF DEFAULT, RIGHTS AND REMEDIES
SECTION 7.1 EVENTS OF DEFAULT.
"Event of Default", wherever used herein, means any one of the following events:
(a) Default in the payment of any principal of or interest on
any Note when it becomes due and payable.
(b) The Borrower or any Affiliate of the Borrower shall assert
that the Pledge Agreement or the Bonds are unenforceable in accordance with
their terms; or the principal amount outstanding under the Bonds shall at
any time be less than the aggregate Obligations.
(c) Default in the performance, or breach, of any covenant or
agreement on the part of the Borrower contained in any Financial Covenant.
(d) Default in any material respect in the performance, or
breach, of any covenant or agreement of the Borrower in this Agreement
(other than a covenant or agreement a default in whose performance or whose
breach is elsewhere in this Section specifically dealt with), and the
continuance of such default or breach for a period of 30 days after the
Lenders have given notice to the Borrower specifying such default or breach
and requiring it to be remedied.
(e) Any representation or warranty made by the Borrower in
this Agreement or by the Borrower (or any of its officers) in any
certificate, instrument, or statement contemplated by or made or delivered
pursuant to or in connection with this Agreement, shall prove to have been
incorrect or misleading in any material respect when made.
(f) A default under any bond, debenture, note or other
evidence of indebtedness of the Borrower (other than to the Lenders) or
under any indenture or other instrument under which any such evidence of
indebtedness has been issued or by which it is governed and the expiration
of the applicable period of grace, if any, specified in such evidence of
indebtedness, indenture or other instrument; provided, however, that no
Event of Default shall be deemed to have occurred under this subsection if
the aggregate amount owing as to all such indebtedness as to which such
defaults have occurred and are continuing is less than $10,000,000;
provided, however, that if such default shall be cured by the Borrower, or
waived by the holders of such indebtedness, in each case prior to the
commencement of any action under Section 7.2 and as may be permitted by
such evidence of indebtedness, indenture or other instrument, then the
Event of Default hereunder by reason of such default shall be deemed
likewise to have been thereupon cured or waived.
ALLETE CREDIT AGREEMENT -34-
(g) An event of default shall occur under the Pledge Agreement
or any other security agreement, mortgage, deed of trust, assignment or
other instrument or agreement directly or indirectly securing the
Obligations.
(h) The Borrower or any Material Subsidiary shall be
adjudicated a bankrupt or insolvent, or admit in writing its inability to
pay its debts as they mature, or make an assignment for the benefit of
creditors; or the Borrower or any Material Subsidiary shall apply for or
consent to the appointment of any receiver, trustee, or similar officer for
it or for all or any substantial part of its property; or such receiver,
trustee or similar officer shall be appointed without the application or
consent of the Borrower or such Material Subsidiary, and such appointment
shall continue undischarged for a period of 60 days; or the Borrower or any
Material Subsidiary shall institute (by petition, application, answer,
consent or otherwise) any bankruptcy, insolvency, reorganization,
arrangement, readjustment of debt, dissolution, liquidation or similar
proceeding relating to it under the laws of any jurisdiction; or any such
proceeding shall be instituted (by petition, application or otherwise)
against the Borrower or any Material Subsidiary and shall continue
undischarged for 60 days; or any judgment, writ, warrant of attachment or
execution or similar process shall be issued or levied against a
substantial part of the property of the Borrower or any Material Subsidiary
and such judgment, writ, or similar process shall not be released, vacated,
stayed or fully bonded within 60 days after its issue or levy.
(i) A petition shall be filed by the Borrower or any Material
Subsidiary under the United States Bankruptcy Code naming the Borrower or
that Material Subsidiary as debtor; or an involuntary petition shall be
filed against the Borrower or any Material Subsidiary under the United
States Bankruptcy Code, and such petition shall not have been dismissed
within 30 days after such filing; or an order for relief shall be entered
in any case under the United States Bankruptcy Code naming the Borrower or
any Material Subsidiary as debtor.
(j) A Change of Control shall occur without the prior written
consent of the Required Lenders.
(k) The rendering against the Borrower of a final judgment,
decree or order for the payment of money in excess of $5,000,000 and the
continuance of such judgment, decree or order unsatisfied and in effect for
any period of 30 consecutive days without a stay of execution.
(l) A writ of attachment, garnishment, levy or similar process
shall be issued against or served upon the Agent with respect to (i) any
property of the Borrower in the possession of the Agent, or (ii) any
indebtedness of any Lender to the Borrower.
(m) Any Plan shall have been terminated, or a trustee shall
have been appointed by an appropriate United States District Court to
administer any Plan, or the PBGC shall have instituted proceedings to
terminate any Plan or to appoint a
ALLETE CREDIT AGREEMENT -35-
trustee to administer any Plan, or withdrawal liability shall have been
asserted against the Borrower, any Material Subsidiary or any ERISA
Affiliate by a Multiemployer Plan; or the Borrower, any Material Subsidiary
or any ERISA Affiliate shall have incurred liability to PBGC (other than
for premiums due for the current premium period under Section 4007 of
ERISA), the Internal Revenue Service, the Department of Labor or Plan
participants (other than for benefit claims in the normal course) with
respect to any Plan; or any ERISA Event that the Required Lenders may
determine in good faith could reasonably be expected to constitute grounds
for the termination of any Plan, for the appointment by the appropriate
United States District Court of a trustee to administer any Plan or for the
imposition of withdrawal liability with respect to a Multiemployer Plan,
shall have occurred and be continuing 30 days after written notice to such
effect shall have been given to the Borrower by the Lenders, but only if in
each case, the event could reasonably be expected to result in a Material
Adverse Effect on the Borrower, any Material Subsidiary or an ERISA
Affiliate.
SECTION 7.2 RIGHTS AND REMEDIES.
Upon the occurrence of an Event of Default or at any time thereafter until such
Event of Default is cured to the written satisfaction of the Required Lenders,
the Agent may, with the consent of the Required Lenders, and shall, at the
request of the Required Lenders, exercise any or all of the following rights and
remedies:
(a) The Agent may, by notice to the Borrower, declare the
Obligations to be forthwith due and payable, whereupon the Obligations
shall become and be forthwith due and payable, without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly
waived by the Borrower.
(b) The Lenders may, without notice to the Borrower and
without further action, apply any and all money owing by any Lender to the
Borrower to the payment of the Obligations. For purposes of this subsection
(b), "Lender" means the Lenders, as defined elsewhere in this Agreement,
and any participant in the Advances; provided, however, that each such
participant, by exercising its rights under this subsection (b), agrees
that it shall be obligated under Section 8.4 with respect to such payment
as if it were a Lender for purposes of that Section.
(c) The Agent may exercise and enforce its rights and remedies
under the Pledge Agreement.
(d) The Lenders may exercise any other rights and remedies
available to them by law or agreement.
Notwithstanding the foregoing, upon the occurrence of an Event of Default
described in Section 7.1(h) or (i) hereof, the Obligations shall be immediately
due and payable without presentment, demand, protest or notice of any kind.
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ARTICLE VIII
THE AGENT
SECTION 8.1 AUTHORIZATION.
Each Lender and the holder of each Note irrevocably appoints and authorizes the
Agent to act on behalf of such Lender or holder to the extent provided herein or
in any document or instrument delivered hereunder or in connection herewith, and
to take such other action as may be reasonably incidental thereto.
SECTION 8.2 DISTRIBUTION OF PAYMENTS AND PROCEEDS.
(a) After deduction of any costs of collection as hereinafter
provided, the Agent shall remit to each Lender that Lender's Percentage of
all payments of principal, interest and fees that are received by the Agent
under the Loan Documents. Each Lender's interest in the Loan Documents
shall be payable solely from payments, collections and proceeds actually
received by the Agent under the Loan Documents; and the Agent's only
liability to the Lenders hereunder shall be to account for each Lender's
Percentage of such payments, collections and proceeds in accordance with
this Agreement. If the Agent is ever required for any reason to refund any
such payments, collections or proceeds, each Lender will refund to the
Agent, upon demand, its Percentage of such payments, collections or
proceeds, together with its Percentage of interest or penalties, if any,
payable by the Agent in connection with such refund. The Agent may, in its
sole discretion, make payment to the Lenders in anticipation of receipt of
payment from the Borrower. If the Agent fails to receive any such
anticipated payment from the Borrower, each Lender shall promptly refund to
the Agent, upon demand, any such payment made to it in anticipation of
payment from the Borrower, together with interest for each day on such
amount until so refunded at a rate equal to the Federal Funds Rate for each
such date.
(b) Notwithstanding the foregoing, if any Lender has
wrongfully refused to fund its Percentage of any Advance as required
hereunder, or if the principal balance of any Lender's Note is for any
other reason less than its Percentage of the aggregate principal balances
of the Notes then outstanding, the Agent may remit all payments received by
it to the other Lenders until such payments have reduced the aggregate
amounts owed by the Borrower to the extent that the aggregate amount owing
to such Lender hereunder is equal to its Percentage of the aggregate amount
owing to all of the Lenders hereunder. The provisions of this subsection
are intended only to set forth certain rules for the application of
payments, proceeds and collections in the event that a Lender has breached
its obligations hereunder and shall not be deemed to excuse any Lender from
such obligations.
SECTION 8.3 EXPENSES.
All payments, collections and proceeds received or effected by the Agent may be
applied, first, to pay or reimburse the Agent for all costs, expenses, damages
and liabilities at any
ALLETE CREDIT AGREEMENT -37-
time incurred by or imposed upon the Agent in connection with this Agreement or
any other Loan Document (including but not limited to all reasonable attorney's
fees, foreclosure expenses and advances made to protect the security of
collateral, if any, but excluding any costs, expenses, damages or liabilities
arising from the gross negligence or willful misconduct of the Agent). If the
Agent does not receive payments, collections or proceeds from the Borrower or
its properties sufficient to cover any such costs, expenses, damages or
liabilities within 30 days after their incurrence or imposition, each Lender
shall, upon demand, remit to the Agent its Percentage of the difference between
(i) such costs, expenses, damages and liabilities, and (ii) such payments,
collections and proceeds.
SECTION 8.4 PAYMENTS RECEIVED DIRECTLY BY LENDERS.
If any Lender or other holder of a Note shall obtain any payment or other
recovery (whether voluntary, involuntary, by application of offset or otherwise)
on account of principal of or interest on any Note other than through
distributions made in accordance with Section 8.2, such Lender or holder shall
promptly give notice of such fact to the Agent and shall purchase from the other
Lenders or holders such participations in the Notes held by them as shall be
necessary to cause the purchasing Lender or holder to share the excess payment
or other recovery ratably with each of them; provided, however, that if all or
any portion of the excess payment or other recovery is thereafter recovered from
such purchasing Lender or holder, the purchase shall be rescinded and the
purchasing Lender restored to the extent of such recovery (but without interest
thereon).
SECTION 8.5 INDEMNIFICATION.
The Agent shall not be required to do any act hereunder or under any other
document or instrument delivered hereunder or in connection herewith, or to
prosecute or defend any suit in respect of this Agreement or the Notes or any
documents or instrument delivered hereunder or in connection herewith unless
indemnified to its satisfaction by the holders of the Notes against loss, cost,
liability and expense (other than any such loss, cost, liability or expense
attributable to the Agent's own gross negligence or willful misconduct). If any
indemnity furnished to the Agent for any purpose shall, in the opinion of the
Agent, be insufficient or become impaired, the Agent may call for additional
indemnity and not commence or cease to do the acts indemnified against until
such additional indemnity is furnished.
SECTION 8.6 EXCULPATION.
(a) The Agent shall be entitled to rely upon advice of counsel
concerning legal matters, and upon this Agreement, any Loan Document and
any schedule, certificate, statement, report, notice or other writing which
it in good faith believes to be genuine or to have been presented by a
proper person. Neither the Agent nor any of its directors, officers,
employees or agents shall (i) be responsible for any recitals,
representations or warranties contained in, or for the execution, validity,
genuineness, effectiveness or enforceability of this Agreement, any Loan
Document, or any other instrument or document delivered hereunder or in
connection herewith, (ii) be
ALLETE CREDIT AGREEMENT -38-
responsible for the validity, genuineness, perfection, effectiveness,
enforceability, existence, value or enforcement of any collateral security,
(iii) be under any duty to inquire into or pass upon any of the foregoing
matters, or to make any inquiry concerning the performance by the Borrower
or any other obligor of its obligations, or (iv) in any event, be liable as
such for any action taken or omitted by it or them, except for its or their
own gross negligence or willful misconduct. The appointment of ▇▇▇▇▇ Fargo
as Agent hereunder shall in no way impair or affect any of the rights and
powers of, or impose any duties or obligations upon, ▇▇▇▇▇ Fargo in its
individual capacity.
(b) The term, "agent", is used herein in reference to the
Agent merely as a matter of custom. It is intended to reflect only an
administrative relationship between the Agent and the Lenders, in each case
as independent contracting parties. However, the obligations of the Agent
shall be limited to those expressly set forth herein. In no event shall the
use of such term create or imply any fiduciary relationship or any other
obligation arising under the general law of agency, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities
shall be read into this Agreement or any other Loan Document or otherwise
exist against the Agent.
SECTION 8.7 AGENT AND AFFILIATES.
The Agent shall have the same rights and powers hereunder in its individual
capacity as any other Lender, and may exercise or refrain from exercising the
same as though it were not the Agent, and the Agent and its Affiliates may
accept deposits from and generally engage in any kind of business with the
Borrower as fully as if the Agent were not the Agent hereunder.
SECTION 8.8 CREDIT INVESTIGATION.
Each Lender acknowledges that it has made its own independent credit decision
and investigation and taken such care on its own behalf as would have been the
case had the Advances been made directly by such Lender to the Borrower without
the intervention of the Agent or any other Lender. Each Lender agrees and
acknowledges that the Agent makes no representations or warranties about the
creditworthiness of the Borrower or any other party to this Agreement or with
respect to the legality, validity, sufficiency or enforceability of this
Agreement, any Loan Document, or any other instrument or document delivered
hereunder or in connection herewith.
SECTION 8.9 RESIGNATION.
The Agent may resign as such at any time upon at least 30 days' prior notice to
the Borrower and the Lenders. In the event of any resignation of the Agent, the
Required Lenders shall as promptly as practicable appoint a Lender as a
successor Agent; provided, however, that so long as no Default or Event of
Default has occurred and is continuing at such time, no such successor Agent may
be appointed without the prior written consent of the Borrower. If no such
successor Agent shall have been so appointed by the Required Lenders and shall
have accepted such appointment within 30 days after the resigning Agent's giving
of notice of
ALLETE CREDIT AGREEMENT -39-
resignation, then the resigning Agent may, on behalf of the Lenders, appoint a
Lender as a successor Agent, which shall be a commercial bank organized under
the laws of the United States of America or of any State thereof. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon be entitled to receive from the prior Agent such
documents of transfer and assignment as such successor Agent may reasonably
request and the resigning Agent shall be discharged from its duties and
obligations under this Agreement. After any resignation pursuant to this
Section, the provisions of this Section shall inure to the benefit of the
retiring Agent as to any actions taken or omitted to be taken by it while it was
an Agent hereunder.
SECTION 8.10 ASSIGNMENTS.
(a) Any Lender may, at any time, assign a portion of its Notes
to an Eligible Lender (an "Applicant") on any date (the "Adjustment Date")
selected by such Lender, subject to the terms and provisions of this
Section 8.10. The aggregate principal amount of the Note so assigned in any
assignment shall be not less than $5,000,000, and the assigning Lender
shall retain at least $5,000,000 of such Note for its own account;
provided, however, that the foregoing restriction shall not apply to a
Lender assigning its entire Note to the Applicant. Any Lender proposing an
assignment hereunder shall give notice of such assignment to the Agent and
the Borrower at least ten Business Days prior to such assignment (unless
the Agent consents to a shorter period of time). Such notice shall specify
the identity of such Applicant and the Percentage which it proposes that
such Applicant acquire. Any assignment hereunder may be made only with the
prior written consent of the Agent and the Borrower; provided, however,
that (i) in no event shall such consent be unreasonably withheld, and (ii)
the consent of the Borrower shall not be required if a Default or Event of
Default has occurred and is continuing at the time of such assignment.
(b) Subject to the prior written consent of the Agent and the
Borrower (if applicable), to confirm the status of an Applicant as a party
to this Agreement and to evidence the assignment of the applicable portion
of the assigning Lender's Note in accordance herewith:
(i) the Borrower, such Lender, such Applicant, and the
Agent shall, on or before the Adjustment Date, execute and
deliver to the Agent an Assignment Certificate (provided that,
if a Default or Event of Default has occurred and is
continuing on the applicable Adjustment Date, the assignment
will be effective whether the Borrower signs it or not), in
substantially the form of Exhibit D (an "Assignment
Certificate"); and
(ii) the Borrower will, at its own expense and in exchange
for the assigning Lender's Note, execute and deliver to the
assigning Lender a new Note, payable to the order of the
Applicant in an amount corresponding to the applicable
interest in the assigning Lender's rights and obligations
acquired by such Applicant pursuant to such assignment, and,
if the assigning Lender has
ALLETE CREDIT AGREEMENT -40-
retained interests in such rights and obligations, a new Note,
payable to the order of that Lender in an amount corresponding
to such retained interests. Such new Notes shall be in an
aggregate principal amount equal to the principal amount of
the Note to be replaced by such new Notes, shall be dated the
effective date of such assignment and shall otherwise be in
the form of the Note to be replaced thereby. Such new Notes
shall be issued in substitution for, but not in satisfaction
or payment of, the Note being replaced thereby.
Upon the execution and delivery of such Assignment Certificate and such
Notes, (A) this Agreement shall deemed to be amended to the extent, and
only to the extent, necessary to reflect the addition of such Additional
Lender and the resulting adjustment of Percentages arising therefrom, (B)
the assigning Lender shall be relieved of all obligations hereunder to the
extent of the reduction of all obligations hereunder and to the extent of
the reduction of such Lender's Percentage, and (C) the Additional Lender
shall become a party hereto and shall be entitled to all rights, benefits
and privileges accorded to a Lender herein and in each other document or
instrument executed pursuant hereto and subject to all obligations of a
Lender hereunder, including the right to approve or disapprove actions
which, in accordance with the terms hereof, require the approval of the
Required Lenders or all Lenders, and the obligations to make Advances
hereunder.
(c) In order to facilitate the addition of Additional Lenders
hereto, the Borrower shall (subject to the written agreement of any
prospective Additional Lender to be subject to the confidentiality
provisions of Section 8.13) provide all reasonable assistance requested by
each Lender and the Agent relating thereto, which shall not require undue
effort or expense on the part of the Borrower, including, without
limitation, the furnishing of such written materials and financial
information regarding the Borrower as any Lender or the Agent may
reasonably request, and the participation by officers of the Borrower in a
meeting or teleconference call with any Applicant upon the reasonable
request upon reasonable notice of any Lender or the Agent.
(d) Without limiting any other provision hereof:
(i) each Lender shall have the right at any time upon
written notice to the Borrower and the Agent (but without
requiring the consent of the Borrower or the Agent) to sell,
assign, transfer, or negotiate all or any part of its Notes,
and other rights and obligations under this Agreement and the
Loan Documents to one or more Affiliates of such Lender,
provided that, unless consented to by the Borrower and the
Agent (which consent shall not be unreasonably withheld), no
such sale, assignment, transfer or negotiation shall relieve
the transferring Lender from its obligations (to the extent
such Affiliate does not fulfill its obligations) hereunder;
and
(ii) each Lender shall have the right at any time upon
written notice to the Borrower and the Agent (but without
requiring the consent of the
ALLETE CREDIT AGREEMENT -41-
Borrower or the Agent) to sell, assign, transfer, or negotiate
all or any part of its Notes, and other rights and obligations
under this Agreement and the Loan Documents to one or more
Lenders, and any such sale, assignment, transfer or
negotiation shall relieve the transferring Lender from its
obligations hereunder to the extent of the obligations so
transferred (except, in any event, to the extent that the
Borrower, any other Lender or the Agent has rights against
such transferring Lender as a result of any default by such
transferring Lender under this Agreement).
(e) Simultaneous with any assignment under this Section, the
Lender making such assignment shall pay the Agent a transfer fee in the
amount of $3,500.
(f) Notwithstanding anything to the contrary contained herein,
any Lender (a "Granting Lender") may grant to a special purpose funding
vehicle (an "SPC") of such Granting Lender, identified as such in writing
from time to time by the Granting Lender to the Agent and the Borrower, the
option to provide to the Borrower all or any part of any Advance that such
Granting Lender would otherwise be obligated to make to the Borrower
pursuant to this Agreement; provided that (i) nothing herein shall
constitute a commitment by any SPC to make any Advance, (ii) if an SPC
elects not to exercise such option or otherwise fails to provide all or any
part of such Advance, the Granting Lender shall be obligated to make such
Advance pursuant to the terms hereof, (iii) such Granting Lender's other
obligations under this Agreement shall remain unchanged, (iv) such Granting
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, and (v) the Borrower, the Agent and the
other Lenders shall continue to deal solely and directly with such Granting
Lender in connection with such Granting Lender's rights and obligations
under this Agreement (including any rights and obligations assigned to such
SPC). Each party hereto hereby agrees that no SPC shall be liable for any
indemnity or similar payment obligation under this Agreement (all liability
for which shall remain with the applicable Granting Lender). All notices
hereunder to any Granting Lender or the related SPC, and all payments in
respect of the Obligations due to such Granting Lender or the related SPC,
shall be made to such Granting Lender. In addition, each Granting Lender
shall vote as a Lender hereunder without giving effect to any assignment
under this subsection (f), and no SPC shall have any vote as a Lender under
this Agreement for any purpose. In furtherance of the foregoing, each party
hereto hereby agrees (which agreement shall survive the termination of this
Agreement) that, prior to the date that is one year and one day after the
payment in full of all outstanding senior indebtedness of any SPC, it will
not institute against, or join any other person in instituting against,
such SPC any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under the laws of the United States or any State
thereof. In addition, notwithstanding anything to the contrary contained in
this Section 8.10, any SPC may (i) with notice to, but without the prior
written consent of, the Borrower or the Agent and without paying any
transfer fee therefor, assign all or a portion of its interests in its
right to repayment of any Advances to its Granting Lender or to any
financial institutions providing liquidity
ALLETE CREDIT AGREEMENT -42-
and/or credit support to or for the account of such SPC to fund the
Advances made by such SPC or to support the securities (if any) issued by
such SPC to fund such Advances and (ii) disclose on a confidential basis,
to the extent such disclosure would be permitted under Section 8.13 as if
such SPC were a Lender, any non-public information relating to its Advances
to any rating agency, commercial paper dealer or provider of any surety,
guarantee or credit or liquidity enhancement to such SPC. No amendment to
this subsection (f) that affects the rights of an SPC that has made an
advance hereunder shall be effective without the consent of such SPC.
(g) Notwithstanding any other provision of this Agreement, any
Lender may at any time create a security interest in all or any portion of
its rights under this Agreement and that Lender's Note in favor of any
Federal Reserve Lender in accordance with Regulation A of the Board of
Governors of the Federal Reserve System.
SECTION 8.11 PARTICIPATIONS
Each Lender may grant participations in a portion of its Notes to any Eligible
Lender, upon prior written notice to the Agent but without the consent of the
Agent or the Borrower, but only so long as the principal amount of the
participation so granted is no less than $5,000,000 (or, if the participant is a
Participating Affiliate, no less than $1,000,000). No holder of any such
participation, other than an Affiliate of such Lender, shall be entitled to
require such Lender to take or omit to take any action hereunder, except that
such Lender may agree with such participant that such Lender will not, without
such participant's consent, agree to any action described in Section 9.2(a). No
Lender shall, as between the Borrower and such Lender, be relieved of any of its
obligations hereunder as a result of any such granting of a participation. The
Borrower hereby acknowledges and agrees that any participant described in this
Section will, for purposes of Sections 2.8 and 2.9 only, be considered to be a
Lender hereunder (provided that such participant shall not be entitled to
receive any more than the Lender selling such participation would have received
had such sale not taken place).
SECTION 8.12 LIMITATION ON ASSIGNMENTS AND PARTICIPATIONS.
Except as set forth in Sections 8.10 and 8.11, no Lender may assign any of its
rights or obligations under, or grant any participation in, any Loan Document.
SECTION 8.13 DISCLOSURE OF INFORMATION.
(a) The Agent and the Lenders shall keep confidential (and
cause their respective officers, directors, employees, agents and
representatives to keep confidential) all information, materials and
documents furnished by the Borrower and its Subsidiaries to the Agent or
the Lenders (the "Disclosed Information"). Notwithstanding the foregoing,
the Agent and each Lender may disclose Disclosed Information (i) to the
Agent or any other Lender; (ii) to any Affiliate of any Lender in
connection with the transactions contemplated hereby, provided that such
Affiliate has been informed of the confidential nature of such information;
(iii) to legal
ALLETE CREDIT AGREEMENT -43-
counsel, accountants and other professional advisors to the Agent or such
Lender; (iv) to any regulatory body having jurisdiction over any Lender or
the Agent; (v) to the extent required by applicable laws and regulations or
by any subpoena or similar legal process, or requested by any governmental
agency or authority, provided that Agent or Lender provides Borrower with
prompt written notice of such proceeding so that Borrower may seek a
protective order or other appropriate remedy; (vi) to the extent such
Disclosed Information (A) becomes publicly available other than as a result
of a breach of this Agreement, (B) becomes available to the Agent or such
Lender on a non-confidential basis from a source other than the Borrower or
a Subsidiary, or (C) can be shown by Agent or Lender to have been available
to the Agent or such Lender on a non-confidential basis prior to its
disclosure to the Agent or such Lender by the Borrower or a Subsidiary;
(vii) to the extent the Borrower or such Subsidiary shall have consented to
such disclosure in writing; (viii) to the extent reasonably deemed
necessary by the Agent or any Lender in the enforcement of the remedies of
the Agent and the Lenders provided under the Loan Documents; or (ix) in
connection with any potential assignment or participation in the interest
granted hereunder, provided that any such potential assignee or participant
shall have executed a confidentiality agreement imposing on such potential
assignee or participant substantially the same obligations as are imposed
on the Agent and the Lenders under this Section 8.13.
(b) Notwithstanding anything herein to the contrary,
information subject to this Section 8.13 shall not include, and the Agent
and each Lender may disclose without limitation of any kind, any
information with respect to the "tax treatment" and "tax structure" (in
each case, within the meaning of Treasury Regulation Section 1.6011-4) of
the transactions contemplated hereby and all materials of any kind
(including opinions or other tax analyses) that are provided to the Agent
or such Lender relating to such tax treatment and tax structure; provided
that with respect to any document or similar item that in either case
contains information concerning the tax treatment or tax structure of the
transaction as well as other information, this sentence shall only apply to
such portions of the document or similar item that relate to the tax
treatment or tax structure of the Notes and transactions contemplated
hereby. The Borrower and its Subsidiaries may also disclose without
limitation the "tax treatment" and "tax structure" of the transactions
contemplated hereby.
SECTION 8.14 AGENT NOT OFFERING BONDS.
Each Lender acknowledges that neither the Agent's taking possession of the
Bonds, nor its exercise of remedies with respect to the Bonds and subsequent
distribution of proceeds thereunder, constitutes or will constitute an offer of
any security, a solicitation of an offer to buy any security, or a placement of
any security.
ALLETE CREDIT AGREEMENT -44-
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 NO WAIVER; CUMULATIVE REMEDIES.
No failure or delay on the part of the Lenders in exercising any right, power or
remedy under the Loan Documents shall operate as a waiver thereof; nor shall any
Lender's acceptance of payments while any Default or Event of Default is
outstanding operate as a waiver of such Default or Event of Default, or any
right, power or remedy under the Loan Documents; nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy under the
Loan Documents. The remedies provided in the Loan Documents are cumulative and
not exclusive of any remedies provided by law.
SECTION 9.2 AMENDMENTS, ETC.
No amendment or waiver of any provision of any Loan Document or consent to any
departure by the Borrower therefrom shall be effective unless the same shall be
in writing and signed by the Required Lenders (or by the Agent with the consent
or at the request of the Required Lenders), and any such waiver shall be
effective only in the specific instance and for the specific purpose for which
given. Notwithstanding the foregoing:
(a) No such amendment or waiver shall be effective to do any
of the following unless signed by each of the Lenders (or by the Agent with
the consent or at the request of each of the Lenders):
(i) Increase the Commitment Amount of any Lender or extend
the Maturity Date.
(ii) Permit the Borrower to assign its rights under this
Agreement.
(iii) Amend this Section, the definition of "Required
Lenders" in Section 1.1, or any provision herein providing for
consent or other action by all Lenders.
(iv) Forgive any indebtedness of the Borrower arising
under this Agreement or the Notes, or reduce the rate of
interest or any fees charged under this Agreement or the
Notes.
(v) Postpone or delay any date fixed by this Agreement or
any other Loan Document for any payment of principal,
interest, facility fees or other material amounts due to the
Lenders (or any of them) hereunder or under any other Loan
Document.
(vi) Release the Agent's security interest in any Bonds or
other collateral granted under the Pledge Agreement (other
than in accordance with the Pledge Agreement) or amend any
terms of any Bonds.
ALLETE CREDIT AGREEMENT -45-
(b) No amendment, waiver or consent shall affect the rights or
duties of the Agent under this Agreement or any other Loan Document unless
in writing and signed by the Agent.
(c) No amendment, modification or (except as provided
elsewhere herein) termination of this Agreement or waiver of any rights of
the Borrower or obligations of any Lender or the Agent hereunder shall be
effective unless the Borrower shall have consented thereto in writing.
No notice to or demand on the Borrower in any case shall entitle the Borrower to
any other or further notice or demand in similar or other circumstances.
SECTION 9.3 NOTICE.
Except as otherwise expressly provided herein, all notices and other
communications hereunder shall be in writing and shall be (i) personally
delivered, (ii) transmitted by registered mail, postage prepaid, (iii) sent by
reputable overnight courier service, or (iv) transmitted by telecopy, in each
case addressed or transmitted by telecopy to the party to whom notice is being
given at its address or telecopier number (as the case may be) as set forth in
Exhibit A or in any applicable Assignment Certificate; or, as to each party, at
such other address or telecopier number as may hereafter be designated in a
notice by that party to the other party complying with the terms of this
Section. All such notices or other communications shall be deemed to have been
given on (i) the date received if delivered personally, (ii) five business days
after the date of posting, if delivered by mail, (iii) the date of receipt, if
delivered by overnight courier, or (iv) the date of transmission if delivered by
telecopy.
SECTION 9.4 COSTS AND EXPENSES.
The Borrower agrees to pay on demand (i) all costs and expenses incurred by the
Agent in connection with the negotiation, preparation, execution, administration
or amendment of the Loan Documents and the other instruments and documents to be
delivered hereunder and thereunder, and (ii) all costs and expenses incurred by
the Agent or any Lender in connection with the workout or enforcement of the
Loan Documents and the other instruments and documents to be delivered hereunder
and thereunder; including, in each case, reasonable fees and out-of-pocket
expenses of outside counsel with respect thereto.
SECTION 9.5 INDEMNIFICATION BY BORROWER.
The Borrower hereby agrees to indemnify the Agent and the Lenders and each
officer, director, employee and agent thereof (herein individually each called
an "Indemnitee" and collectively called the "Indemnitees") from and against any
and all losses, claims, damages, reasonable expenses (including, without
limitation, reasonable attorneys' fees) and liabilities (all of the foregoing
being herein called the "Indemnified Liabilities") incurred by an Indemnitee in
connection with or arising out of the execution or delivery of this Agreement or
any agreement or instrument contemplated hereby, the performance by the parties
hereto
ALLETE CREDIT AGREEMENT -46-
of their respective obligations hereunder or the use of the proceeds of
any Advance hereunder (including but not limited to any such loss, claim,
damage, expense or liability arising out of any claim that any Environmental Law
has been breached with respect to any activity or property of the Borrower),
except for any portion of such losses, claims, damages, expenses or liabilities
incurred solely as a result of the gross negligence or willful misconduct of the
applicable Indemnitee. If and to the extent that the foregoing indemnity may be
unenforceable for any reason, the Borrower hereby agrees to make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. All obligations provided
for in this Section shall survive any termination of this Agreement.
SECTION 9.6 EXECUTION IN COUNTERPARTS.
This Agreement and the other Loan Documents may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which counterparts of this Agreement or such other Loan
Document, as the case may be, taken together, shall constitute but one and the
same instrument.
SECTION 9.7 BINDING EFFECT, ASSIGNMENT.
The Loan Documents shall be binding upon and inure to the benefit of the
Borrower and the Lenders and their respective successors and assigns, except
that the Borrower shall not have the right to assign its rights thereunder or
any interest therein without the prior written consent of each of the Lenders.
SECTION 9.8 GOVERNING LAW.
The Loan Documents shall be governed by, and construed in accordance with, the
laws of the State of Minnesota.
SECTION 9.9 SEVERABILITY OF PROVISIONS.
Any provision of this Agreement which is prohibited or unenforceable shall be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof.
SECTION 9.10 CONSENT TO JURISDICTION.
Each party irrevocably (i) agrees that any suit, action or other legal
proceeding arising out of or relating to this Agreement or any other Loan
Document may be brought in a court of record in Hennepin County in the State of
Minnesota or in the courts of the United States located in such State, (ii)
consents to the jurisdiction of each such court in any suit, action or
proceeding, (iii) waives any objection which it may have to the laying of venue
of any such suit, action or proceeding in any such courts and any claim that any
such suit, action or proceeding has been brought in an inconvenient forum, and
(iv) agrees that a final judgment
ALLETE CREDIT AGREEMENT -47-
in any such suit, action or proceeding shall be conclusive and may be enforced
in other jurisdictions by suit on the judgment or in any other manner provided
by law.
SECTION 9.11 RECALCULATION OF COVENANTS FOLLOWING ACCOUNTING PRACTICES CHANGE.
The Borrower shall notify the Agent of any Accounting Practices Change promptly
upon becoming aware of the same. Promptly following such notice, the Borrower
and the Lenders shall negotiate in good faith in order to effect any adjustments
to the Financial Covenants necessary to reflect the effects of such Accounting
Practices Change.
SECTION 9.12 HEADINGS.
Article and Section headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
SECTION 9.13 TITLES.
The Person identified on the title page as "Syndication Agent" shall have no
right, power, obligation or liability under this Agreement or any other Loan
Document on account of such identification other than those applicable to such
Person in its capacity (if any) as a Lender. Each Lender acknowledges that it
has not relied, and will not rely, on any Person so identified in deciding to
enter into this Agreement or in taking or omitting any action hereunder.
SECTION 9.14 NONLIABILITY OF LENDERS.
The relationship between the Borrower on the one hand and the Lenders and the
Agent on the other hand shall be solely that of borrower and lender. Neither the
Agent nor any Lender shall have any fiduciary responsibilities to the Borrower.
Neither the Agent nor any Lender undertakes any responsibility to the Borrower
to review or inform the Borrower of any matter in connection with any phase of
the Borrower's business or operations. The Borrower agrees that neither the
Agent nor any Lender shall have liability to the Borrower (whether sounding in
tort, contract or otherwise) for losses suffered by the Borrower in connection
with, arising out of, or in any way related to, the transactions contemplated
and the relationship established by the Loan Documents, or any act, omission or
event occurring in connection therewith, unless it is determined in a final
non-appealable judgment by a court of competent jurisdiction that such losses
resulted from the gross negligence or willful misconduct of the party from which
recovery is sought. Neither the Agent nor any Lender shall have any liability
with respect to, and the Borrower hereby waives, releases and agrees not to ▇▇▇
for, any special, indirect or consequential damages suffered by the Borrower in
connection with, arising out of, or in any way related to the Loan Documents or
the transactions contemplated thereby.
ALLETE CREDIT AGREEMENT -48-
SECTION 9.15 WAIVER OF JURY TRIAL.
THE BORROWER, THE AGENT AND THE BANKS HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED
WITH THIS AGREEMENT AND THE NOTES OR THE RELATIONSHIPS ESTABLISHED HEREUNDER.
ALLETE CREDIT AGREEMENT -49-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized as of the date first
written above.
ALLETE, INC.
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
Its Vice President, Chief Financial Officer
---------------------------------
& Treasurer
ALLETE CREDIT AGREEMENT -Signature Page 1-
▇▇▇▇▇ FARGO BANK, NATIONAL
ASSOCIATION, as Agent and Lender
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Its Vice President
-------------------------------
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------
Its
-------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
▇▇▇▇▇ Fargo Bank, National
Association
ALLETE CREDIT AGREEMENT -Signature Page 2-
BANK ONE, N.A.
(Main Branch, Chicago)
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
Its ▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
Associate Director
ALLETE CREDIT AGREEMENT -Signature Page 3-
LASALLE BANK NATIONAL
ASSOCIATION
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Its First Vice President
-------------------------------
ALLETE CREDIT AGREEMENT -Signature Page 4-
SUNTRUST BANK
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
Its Vice President
-------------------------------
ALLETE CREDIT AGREEMENT -Signature Page 5-
U.S. BANK NATIONAL ASSOCIATION
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
Its Assistant V.P.
-------------------------------
ALLETE CREDIT AGREEMENT -Signature Page 6-
EXHIBITS AND SCHEDULES
Exhibit A Commitment Amounts and Addresses
Exhibit B Form of Note
Exhibit C Form of Compliance Certificate
Exhibit D Assignment Certificate
Exhibit E Opinion of Borrower's Counsel
------------------------------------------
Schedule 4.4 Material Subsidiaries
Exhibit A
COMMITMENT AMOUNTS AND ADDRESSES
--------------------------------------------------------------------------------
NAME COMMITMENT AMOUNT NOTICE ADDRESS
--------------------------------------------------------------------------------
ALLETE, Inc. N/A ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
--------------------------------------------------------------------------------
▇▇▇▇▇ Fargo Bank, $90,000,000 Address:
National Association, MAC: N9305-031
as Agent and Lender Sixth and Marquette
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
--------------------------------------------------------------------------------
Bank One, N.A. (Main $60,000,000 ▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇-▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇) ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
--------------------------------------------------------------------------------
LaSalle Bank National $37,500,000 ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
Association ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
--------------------------------------------------------------------------------
SunTrust Bank $37,500,000 ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
--------------------------------------------------------------------------------
U.S. Bank National $25,000,000 BC-MN-H03P
Association ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
--------------------------------------------------------------------------------
Exhibit B
---------
PROMISSORY NOTE
$ Minneapolis, Minnesota
---------------------------- July 18, 2003
For value received, ALLETE, Inc., a Minnesota corporation (the
"Borrower"), promises to pay to the order of
----------------------------------
(the "Lender"), at the main office of ▇▇▇▇▇ Fargo Bank, National Association in
Minneapolis, Minnesota, or at such other place as the holder hereof may
hereafter from time to time designate in writing, in lawful money of the United
States of America and in immediately available funds, the principal sum of
($ ), or so much
---------------------------- --------------------------------
thereof as is advanced by the Lender to the Borrower pursuant to the Credit
Agreement dated as of July , 2003 among the Borrower, ▇▇▇▇▇ Fargo Bank,
---
National Association, as Agent, and the other financial institutions party
thereto, including the Lender (together with all amendments, modifications and
restatements thereof, the "Credit Agreement"), and to pay interest on the
principal balance of this Note outstanding from time to time at the rate or
rates determined pursuant to the Credit Agreement.
This Note is issued pursuant to, and is subject to, the Credit
Agreement, which provides (among other things) for the amount and date of
payments of principal and interest required hereunder, for the acceleration of
the maturity hereof upon the occurrence of an Event of Default (as defined
therein) and for the voluntary and mandatory prepayment hereof. This Note is the
Facility A Note, as defined in the Credit Agreement.
The Borrower shall pay all costs of collection, including
reasonable attorneys' fees and legal expenses, if this Note is not paid when
due, whether or not legal proceedings are commenced.
Presentment or other demand for payment, notice of dishonor
and protest are expressly waived.
ALLETE, INC.
By
-----------------------------------
Its
-------------------------------
Exhibit C
---------
COMPLIANCE CERTIFICATE
--------------------------, ------
▇▇▇▇▇ Fargo Bank, National Association
MAC: N9305-031
Sixth and Marquette
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Ladies and Gentlemen:
Reference is made to the Credit Agreement (the "Credit
Agreement") dated as of July 18, 2003 entered into between ALLETE, Inc. (the
"Borrower"), ▇▇▇▇▇ Fargo Bank, National Association, and the other financial
institutions party thereto.
All terms defined in the Credit Agreement and not otherwise
defined herein shall have the meanings given them in the Credit Agreement.
This is a Compliance Certificate submitted in connection with
the Borrower's financial statements (the "Statements") as of
(the "Effective Date").
-------------------, -------
I hereby certify to you as follows:
1. I am the of the Borrower, and I am
---------------------
familiar with the financial statements and financial affairs
of the Borrower.
2. The Statements, and the computations attached hereto, have
been prepared in accordance with GAAP.
3. If the Effective Date is a Covenant Compliance Date, the
computations attached hereto set forth the Borrower's
compliance or non-compliance with the requirements set forth
in the Financial Covenants as of the Effective Date. Such
computations have been prepared from, and on a basis
consistent with, the Statements.
4. I have no knowledge of the occurrence of any Default or Event
of Default under the Credit Agreement, except as set forth in
the attachments, if any, hereto.
Very truly yours,
ANNEX 1 TO COMPLIANCE CERTIFICATE
($000s)
Consolidated as of
--------------------
FUNDED DEBT TO TOTAL CAPITAL
FUNDED DEBT
Long-Term Debt $
Long-Term Debt payable within one year
Notes Payable
Letters of Credit
Guaranty Obligations
----------------
TOTAL FUNDED DEBT $
================
CAPITAL
Retained Earnings $
Stockholder's Equity
Common Stock
Preferred Stock
QUIPS
Funded Debt
----------------
TOTAL CAPITAL $
================
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EBITDA EXCLUDING DISCONTINUED OPERATIONS
Net Income $
Income Taxes
Interest Expense
Depreciation and Amortization
----------------
EBITDA $
================
INTEREST EXPENSE EXCLUDING DISCONTINUED OPERATIONS $
================
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EXHIBIT D
---------
ASSIGNMENT CERTIFICATE
Assigning Lender:
------------------------------------
Applicant:
-------------------------------------------
This Certificate (the "Certificate") is delivered pursuant to
Section 8.10 of the Credit Agreement dated as of July 18, 2003 (together with
all amendments, supplements, restatements and other modifications, if any, from
time to time made thereto, the "Credit Agreement"), among ALLETE, Inc., a
Minnesota corporation (the "Borrower"), ▇▇▇▇▇ Fargo Bank, National Association,
as administrative agent (the "Agent"), and the various lenders now or hereafter
parties thereto.
The Assigning Lender named above wishes to assign a portion of
its interest arising under the Credit Agreement to the Applicant named above
pursuant to Section 8.10 of the Credit Agreement, and the Applicant wishes to
become an Additional Lender pursuant thereto. This Certificate is an Assignment
Certificate, as defined in the Credit Agreement, and is executed for purposes of
informing the Agent and the Borrower of the transactions contemplated hereby and
obtaining the consent of the Agent and the Borrower to the extent required under
the Credit Agreement.
Accordingly, the undersigned hereby agree as follows:
1. DEFINITIONS. Unless otherwise defined herein, terms
used herein have the meanings provided in the Credit Agreement.
2. ALLOCATION OF PAYMENTS. Any interest, fees and other
payments accrued to the Effective Date with respect to the Assigning Lender's
interest under the Loan Documents shall be for the account of the Assigning
Lender. Any interest, fees and other payments accruing on and after the
Effective Date with respect to the interests assigned hereunder shall be for the
account of the Applicant. Each of the Assigning Lender and the Applicant agrees
that it will hold in trust for the other party any interest, fees and other
amounts which it may receive to which the other party is entitled pursuant to
the preceding sentence and pay to the other party any such amounts which it may
receive promptly upon receipt.
3. EFFECTIVE DATE; CONDITIONS. The date on which the
Applicant shall become an Additional Lender (the "Effective Date") is
, 200 ; provided, however, that the assignment and
----------------- --
assumption described in this Certificate shall not be effective unless, on or
before the Effective Date, (i) the Agent has received counterparts of this
Certificate duly executed and delivered by the Borrower (unless the Borrower's
consent to the assignment hereunder is not required under Section 8.10 of the
Credit Agreement), the Assigning Lender, the Agent and the Applicant, (ii) the
Agent has received
ALLETE - ASSIGNMENT CERTIFICATE -1-
the transfer fee for the account of the Agent in the amount of
$3,500 (or, if the Applicant is an Affiliate of the Assigning Lender, $1,250),
and (iii) all other terms and conditions of this Certificate and the Credit
Agreement relating to the assignment hereunder have been satisfied.
4. APPLICANT'S INTEREST. Effective as of the Effective
Date, (i) the principal amount of Advances owing to the Applicant shall be the
amount designated as the "Assigned Advances" opposite the Applicant's signature
below, and (ii) the Applicant's Percentage shall be the percentage designated as
the "Assigned Percentage" opposite the Applicant's signature below.
5. RETAINED INTEREST. Effective as of the Effective
Date, (i) the principal amount of Advances owing to the Assigning Lender shall
be the amount designated as the "Retained Advances" opposite the Assigning
Lender's signature below, and (ii) the Assigning Lender's Percentage shall be
the percentage designated as the "Retained Percentage" opposite the Assigning
Lender's signature below.
6. NEW NOTES. On the Effective Date, the Borrower shall
issue and deliver to the Agent in exchange for the Assigning Lender's Note (i) a
Note payable to the order of the Applicant in a face principal amount equal to
the Applicant's "Assigned Advances", in substantially the form of Exhibit B to
the Credit Agreement, and (ii) a Note payable to the order of the Assigning
Lender in the amount of the Assigning Lender's "Retained Advances", in
substantially the form of Exhibit B to the Credit Agreement. The Agent shall
deliver the foregoing Notes to the Applicant and the Assigning Lender promptly
after the Effective Date, or (if later) the receipt by the Agent thereof.
7. NOTICE ADDRESS. The address shown below the
Applicant's signature hereto shall be its notice address for purposes of Section
9.3 of the Credit Agreement, unless and until it shall designate, in accordance
with such Section 9.3, another address for such purposes.
8. ASSUMPTION. Upon the Effective Date, the Applicant
shall become a party to the Credit Agreement and a Lender thereunder and (i)
shall be entitled to all rights, benefits and privileges accorded to a Lender in
the Credit Agreement, (ii) shall be subject to all obligations of a Lender
thereunder, and (iii) shall be deemed to have specifically ratified and
confirmed (and by executing this Certificate the Applicant hereby specifically
ratifies and confirms) all of the provisions of the Credit Agreement and the
Loan Documents.
9. INDEPENDENT CREDIT DECISION. The Applicant (a)
acknowledges that it has received a copy of the Credit Agreement and the
Schedules and Exhibits thereto, together with copies of the most recent
financial statements referred to in Section 4.5 or 5.1 of the Credit Agreement,
and such other documents and information as it has deemed appropriate to make
its own credit and legal analysis and decision to enter into this Assignment
Certificate; (b) acknowledges and agrees that in becoming an Additional Lender
and in making any Advance under the Credit Agreement, such actions have been and
will be made without recourse to, or representation or warranty by, the
Assigning Lender or the Agent; and (c)
ALLETE - ASSIGNMENT CERTIFICATE -2-
agrees that it will, independently and without reliance upon the Assigning
Lender, the Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit and legal decisions in taking or not taking action under the Credit
Agreement.
10. WITHHOLDING TAX. The Applicant (a) represents and
warrants to the Agent and the Borrower that under applicable law and treaties no
tax will be required to be withheld by the Agent or the Borrower with respect to
any payments to be made to the Applicant hereunder, (b) agrees to furnish (if it
is organized under the laws of any jurisdiction other than the United States or
any State thereof) to the Agent and the Borrower prior to the time that the
Agent or Borrower is required to make any payment of principal, interest or fees
hereunder, duplicate executed originals of U.S. Internal Revenue Service Form
W-8ECI or W-8BEN (or appropriate replacement forms) and agrees to provide new
Forms W-8ECI or W-8BEN (or appropriate replacement forms) upon the expiration of
any previously delivered form or comparable statements in accordance with
applicable U.S. law and regulations and amendments thereto, duly executed and
completed by the Applicant, and (c) agrees to comply with all applicable U.S.
laws and regulations with regard to such withholding tax exemption.
11. FURTHER ASSURANCES. The Borrower, the Assigning
Lender and the Applicant shall, at any time and from time to time upon the
written request of the Agent, execute and deliver such further documents and do
such further acts and things as the Agent may reasonably request in order to
effect the purpose of this Certificate.
12. MISCELLANEOUS. This Certificate may be executed in
any number of counterparts by the parties hereto, each of which counterparts
shall be deemed to be an original and all of which shall together constitute one
and the same certificate. Matters relating to this Certificate shall be governed
by, and construed in accordance with, the internal laws of the State of
Minnesota.
ALLETE - ASSIGNMENT CERTIFICATE -3-
IN WITNESS WHEREOF, the undersigned have executed this
Certificate as of the Effective Date set forth above.
Retained Advances:
$ ---------------------------------
--------------------------- [Assigning Lender]
Retained Percentage: %
----------
By
------------------------------
Its
--------------------------
Assigned Advances:
$ ---------------------------------
--------------------------- [Applicant]
Assigned Percentage: %
----------
By
------------------------------
Its
--------------------------
Notice Address:
---------------------------------
---------------------------------
---------------------------------
Telecopier:
---------------------
CONSENT OF AGENT
----------------
The Agent hereby consents to the foregoing Assignment.
▇▇▇▇▇ FARGO BANK, NATIONAL
ASSOCIATION
By
------------------------------
Its
--------------------------
CONSENT OF BORROWER
-------------------
The Borrower hereby consents to the foregoing Assignment.
ALLETE, INC.
By
------------------------------
Its
--------------------------
ALLETE - ASSIGNMENT CERTIFICATE -4-
EXHIBIT E
OPINION LETTER
SCHEDULE 4.4
MATERIAL SUBSIDIARIES
FLORIDA WATER SERVICES CORPORATION
ALLETE Water Services, Inc.
ALLETE Automotive Services, Inc.
ADESA Corporation