EXHIBIT 10.50
EXECUTION COPY
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$35,000,000
CREDIT AGREEMENT
among
MICHIGAN ELECTRIC TRANSMISSION COMPANY, LLC,
as Borrower,
The Several Lenders from Time to Time Parties Hereto,
COMERICA BANK
as Syndication Agent,
and
JPMORGAN CHASE BANK,
as Administrative Agent
Dated as of December 10, 2003
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▇.▇. ▇▇▇▇▇▇ SECURITIES INC.,
as Sole Lead Arranger and Sole Bookrunner
TABLE OF CONTENTS
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SECTION 1. DEFINITIONS................................................... 1
1.1 Defined Terms................................................... 1
1.2 Other Definitional Provisions................................... 21
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS............................... 22
2.1 Commitments..................................................... 22
2.2 Procedure for Borrowing......................................... 22
2.3 Swingline Commitment............................................ 22
2.4 Procedure for Swingline Borrowing; Refunding of
Swingline Loans.............................................. 23
2.5 Commitment Fees, etc............................................ 24
2.6 Termination or Reduction of Commitments......................... 24
2.7 Optional Prepayments............................................ 25
2.8 Mandatory Prepayments and Commitment Reductions................. 25
2.9 Conversion and Continuation Options............................. 26
2.10 Limitations on LIBOR Tranches................................... 26
2.11 Interest Rates and Payment Dates................................ 27
2.12 Computation of Interest and Fees................................ 27
2.13 Inability to Determine Interest Rate............................ 27
2.14 Pro Rata Treatment and Payments................................. 28
2.15 Requirements of Law............................................. 29
2.16 Taxes........................................................... 30
2.17 Indemnity....................................................... 32
2.18 Change of Lending Office........................................ 32
2.19 Replacement of Lenders.......................................... 33
SECTION 3. LETTERS OF CREDIT............................................. 33
3.1 L/C Commitment.................................................. 33
3.2 Procedure for Issuance of Letter of Credit...................... 34
3.3 Fees and Other Charges.......................................... 34
3.4 L/C Participations.............................................. 34
3.5 Reimbursement Obligation of the Borrower........................ 35
3.6 Obligations Absolute............................................ 35
3.7 Letter of Credit Payments....................................... 36
3.8 Applications.................................................... 36
SECTION 4. REPRESENTATIONS AND WARRANTIES................................ 36
4.1 Organization; Power and Authority............................... 36
4.2 Authorization, etc.............................................. 36
4.3 Disclosure...................................................... 37
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4.4 Organization and Ownership of Subsidiaries; Affiliates.......... 37
4.5 Financial Statements and Condition.............................. 37
4.6 No Change....................................................... 38
4.7 No Default...................................................... 38
4.8 No Legal Bar.................................................... 38
4.9 No Consents Required............................................ 38
4.10 Litigation; Observance of Agreements, Statutes and Orders....... 39
4.11 Taxes........................................................... 39
4.12 Title to Real and Personal Property............................. 39
4.13 Licenses, Permits, Etc.......................................... 40
4.14 Compliance with ERISA........................................... 40
4.15 Use of Proceeds; Margin Regulations............................. 41
4.16 Existing Debt; Future Liens..................................... 41
4.17 Solvency........................................................ 41
4.18 Affiliate Transactions.......................................... 42
4.19 Independent Accountants......................................... 42
4.20 Insurance....................................................... 42
4.21 Compliance With Environmental Laws.............................. 42
4.22 Pro Forma Projections........................................... 43
4.23 Pari Passu...................................................... 43
4.24 Independent Engineer............................................ 43
4.25 Regulatory Matters.............................................. 43
4.26 No Labor Disputes............................................... 43
4.27 Security Documents.............................................. 43
4.28 Transmission Documents.......................................... 44
SECTION 5. CONDITIONS PRECEDENT.......................................... 44
5.1 Conditions to Initial Extension of Credit....................... 44
5.2 Conditions to Each Extension of Credit.......................... 47
SECTION 6. AFFIRMATIVE COVENANTS......................................... 48
6.1 Financial and Business Information.............................. 48
6.2 Certificates; Other Information................................. 51
6.3 Inspection Rights............................................... 52
6.4 Payment of Obligations.......................................... 52
6.5 Maintenance and Operation of Properties......................... 52
6.6 Maintenance of Insurance........................................ 52
6.7 Use of Proceeds................................................. 53
6.8 Compliance with Laws, Regulations and Contractual Obligations... 53
6.9 Permits; Approvals.............................................. 53
6.10 Real Estate Filings............................................. 53
6.11 Compliance with ERISA........................................... 54
6.12 Delivery of Opinions of Counsel................................. 54
6.13 Maintenance of Existence, etc................................... 54
6.14 Books and Records............................................... 54
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6.15 Payment of Taxes and Other Claims............................... 54
6.16 Certain Additional Covenants with Respect to the
Mortgaged Property........................................... 54
6.17 Annual Officer's Certificate as to Compliance................... 55
SECTION 7. NEGATIVE COVENANTS............................................ 55
7.1 Restrictions on the Establishment of Subsidiaries............... 55
7.2 Limitations on Asset Sales...................................... 55
7.3 EBITDA / Interest Expense....................................... 55
7.4 Debt / EBITDA................................................... 56
7.5 Debt / Capitalization........................................... 57
7.6 Limitation on Debt.............................................. 57
7.7 Limitations on Liens............................................ 57
7.8 Restricted Payments............................................. 57
7.9 Restrictions on Investments..................................... 58
7.10 Limitation on Lines of Business................................. 58
7.11 Limitation on Transactions with Affiliates...................... 59
7.12 Limitation on Capital Expenditures.............................. 59
7.13 Limitation on Sale-Lease and Lease-Lease Back Transactions...... 59
7.14 Transmission Documents.......................................... 59
7.15 Mergers, Consolidations, Etc.................................... 59
7.16 Optional Payments and Modifications of Certain Debt
Instruments.................................................. 61
SECTION 8. EVENTS OF DEFAULT............................................. 61
SECTION 9. THE AGENTS.................................................... 64
9.1 Appointment..................................................... 64
9.2 Delegation of Duties............................................ 65
9.3 Exculpatory Provisions.......................................... 65
9.4 Reliance by Administrative Agent................................ 65
9.5 Notice of Default............................................... 66
9.6 Non-Reliance on Agents and Other Lenders........................ 66
9.7 Indemnification................................................. 66
9.8 Agent in Its Individual Capacity................................ 67
9.9 Successor Administrative Agent.................................. 67
9.10 Syndication Agent............................................... 67
SECTION 10. MISCELLANEOUS................................................ 68
10.1 Amendments and Waivers.......................................... 68
10.2 Notices......................................................... 68
10.3 No Waiver; Cumulative Remedies.................................. 69
10.4 Survival of Representations and Warranties...................... 69
10.5 Payment of Expenses and Taxes................................... 69
10.6 Successors and Assigns; Participations and Assignments.......... 70
10.7 Adjustments; Set-off............................................ 73
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10.8 Counterparts.................................................... 73
10.9 Severability.................................................... 74
10.10 Integration..................................................... 74
10.11 GOVERNING LAW................................................... 74
10.12 Submission To Jurisdiction; Waivers............................. 74
10.13 Acknowledgements................................................ 74
10.14 Confidentiality................................................. 75
10.15 WAIVERS OF JURY TRIAL........................................... 75
10.16 Limitation on Recourse.......................................... 76
10.17 Acknowledgment.................................................. 76
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APPENDICES:
A Regulatory Update
B Correction to Private Placement Memorandum
SCHEDULES:
1.1 Commitments
4.9 Required Consents
4.16 Existing Debt
4.28 Material Agreements
EXHIBITS:
A Form of Compliance Certificate
B Form of Closing Certificate
C Form of Assignment and Acceptance
D-1 Form of Legal Opinion of Pillsbury Winthrop LLP
D-2 Form of Legal Opinion of ▇▇▇▇▇▇ & Talisman, P.C.
E Form of Exemption Certificate
F Form of First Mortgage Indenture
G Form of Second Supplemental Indenture
H Form of Consumers Consent
I Subordination Terms
CREDIT AGREEMENT (this "Agreement"), dated as of December 10, 2003,
among MICHIGAN ELECTRIC TRANSMISSION COMPANY, LLC, a Michigan limited liability
company (the "Borrower"), the several banks and other financial institutions or
entities from time to time parties to this Agreement (the "Lenders"), COMERICA
BANK, as syndication agent (in such capacity, the "Syndication Agent"), and
JPMORGAN CHASE BANK, as administrative agent (in such capacity, the
"Administrative Agent").
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the terms listed in this
Section 1.1 shall have the respective meanings set forth in this Section 1.1.
"ABR": for any day, a rate per annum equal to the greater of (a) the
Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall mean
the rate of interest per annum publicly announced from time to time by JPMorgan
Chase Bank as its prime rate in effect at its principal office in New York City
(the Prime Rate not being intended to be the lowest rate of interest charged by
JPMorgan Chase Bank in connection with extensions of credit to debtors). Any
change in the ABR due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective as of the opening of business on the effective
day of such change in the Prime Rate or the Federal Funds Effective Rate,
respectively.
"ABR Loans": Loans the rate of interest applicable to which is based
upon the ABR.
"Acquisition": the acquisition, jointly by the Purchasers, of SFG's
interest as a limited partner in Holdco.
"Administrative Agent": JPMorgan Chase Bank, together with its
affiliates, as the administrative agent for the Lenders under this Agreement and
the other Loan Documents, together with any of its successors.
"Affiliate": as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. For purposes of this definition, "control" of a Person means the
power, directly or indirectly, either to (a) vote 10% or more of the securities
having ordinary voting power for the election of directors (or persons
performing similar functions) of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise. With respect to the Borrower, Affiliate shall include any Holdco
Partner, regardless of whether such entity controls the Borrower, and their
respective Affiliates.
"Agents": the collective reference to the Syndication Agent and the
Administrative Agent.
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"Aggregate Exposure": with respect to any Lender at any time, an
amount equal to (a) until the Closing Date, the amount of such Lender's
Commitment at such time and (b) thereafter, the amount of such Lender's
Commitment then in effect or, if the Commitments have been terminated, the
amount of such Lender's Extensions of Credit then outstanding.
"Aggregate Exposure Percentage": with respect to any Lender at any
time, the ratio (expressed as a percentage) of such Lender's Aggregate Exposure
at such time to the Aggregate Exposure of all Lenders at such time.
"Agreement": as defined in the preamble hereto.
"Amended Management Services Agreement": the Amended and Restated
Management Services Agreement, dated as of March 11, 2003, between the Borrower
and Trans-Elect, as may be amended or replaced by an agreement between the
Borrower and Trans-Elect or any Affiliate thereof, in each case, to reflect
changes required to be reflected as a result of any future registration of
Trans-Elect as a holding company under PUHCA.
"Applicable Margin": with respect to any Loan, 0.25% for ABR Loans and
1.25% for LIBOR Loans.
"Application": an application, in such form as the Issuing Lender may
specify from time to time, requesting the Issuing Lender to open a Letter of
Credit.
"Arranger": ▇.▇. ▇▇▇▇▇▇ Securities Inc., as Sole Lead Arranger and
Sole Bookrunner.
"Assignee": as defined in Section 10.6(c).
"Assignment and Acceptance": an Assignment and Acceptance,
substantially in the form of Exhibit C.
"Assignor": as defined in Section 10.6(c).
"Available Commitment": as to any Lender at any time, an amount equal
to the excess, if any, of (a) such Lender's Commitment then in effect over (b)
such Lender's Extensions of Credit then outstanding; provided, that in
calculating any Lender's Extensions of Credit for the purpose of determining
such Lender's Available Commitment pursuant to Section 2.5(a), the aggregate
principal amount of Swingline Loans then outstanding shall be deemed to be zero.
"Benefitted Lender": as defined in Section 10.7(a).
"Board": the Board of Governors of the Federal Reserve System of the
United States (or any successor).
"Borrower": as defined in the preamble hereto.
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"Borrowing Date": any Business Day specified by the Borrower as a date
on which the Borrower requests the Lenders to make Loans hereunder.
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
close, provided, that with respect to notices and determinations in connection
with, and payments of principal and interest on, LIBOR Loans, such day is also a
day for trading by and between banks in Dollar deposits in the interbank
eurodollar market.
"Capital Expenditures": for any period, with respect to any Person,
the aggregate of all expenditures by such Person and its Subsidiaries for the
acquisition or leasing (pursuant to a capital lease) of fixed or capital assets
or additions to equipment (including replacements, capitalized repairs and
improvements during such period) that should be capitalized under GAAP on a
consolidated balance sheet of such Person and its Subsidiaries; provided that,
with respect to the Borrower, expenditures in respect of generator connections
and related upgrades which are fully paid in advance by the applicable
generation owner (or generation owner's customer) shall not be considered to be
Capital Expenditures for purposes of this Agreement.
"Capital Lease": a lease with respect to which the lessee is required
concurrently to recognize the acquisition of an asset and the incurrence of a
liability in accordance with GAAP.
"Capital Lease Obligations": with respect to any Person and a Capital
Lease, the amount of the obligation of such Person as the lessee under such
Capital Lease which would, in accordance with GAAP, appear as a liability on a
balance sheet of such Person.
"Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants, rights or options to purchase any of the foregoing.
"Cash Equivalents": (a) obligations of or directly and fully
guaranteed by the United States, or of any agency or instrumentality thereof,
maturing not later than 365 days from the date of acquisition thereof, (b)
commercial paper rated (on the date of acquisition thereof) A-1 (or the
equivalent thereof) or better by S&P and P-1 (or the equivalent thereof) or
better by ▇▇▇▇▇'▇, maturing not later than 270 days from the date of acquisition
thereof, (c) guaranteed investment contracts maturing not later than 365 days
from the date of acquisition thereof and entered into with (or fully guaranteed
by) financial institutions whose long-term unsecured non-credit enhanced
indebtedness is rated A- or better by S&P and A3 or better by ▇▇▇▇▇'▇, and (d)
investments in money market funds having a rating from each of S&P and ▇▇▇▇▇'▇
in the highest investment category granted thereby.
"Change of Control": the failure by Trans-Elect (or any permitted
assignee or successor thereto) to own, directly or indirectly, 100% of the
voting securities of the sole general partner of Holdco (or any permitted
assignee or successor thereto), and to have the authority, subject to
limitations set forth from time to time in the Holdco Partnership Agreement, to
direct
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the operations and management of the Borrower. For the avoidance of doubt, any
transfer of a limited partnership interest of Holdco does not constitute a
Change of Control.
"Closing Capital Contribution": the capital contribution from Holdco
to be received by the Borrower on the Closing Date in the amount of $43,100,000
to be used by the Borrower to prepay in part the Debt then outstanding under the
Existing Credit Facility.
"Closing Date": the date on which the conditions precedent set forth
in Section 5.1 shall have been satisfied, which date is December 10, 2003.
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral Security": the security to be issued pursuant to the
Second Supplemental Indenture to the Administrative Agent, for the benefit of
the Lenders, as collateral security for the payment and performance in full by
the Borrower of the Obligations.
"Commitment": as to any Lender, the obligation of such Lender, if any,
to make Revolving Loans and participate in Swingline Loans and Letters of Credit
in an aggregate principal and/or face amount not to exceed the amount set forth
opposite such Lender's name on Schedule 1.1 hereto or in the Assignment and
Acceptance pursuant to which such Lender became a party hereto, as the same may
be changed from time to time pursuant to the terms hereof. The original amount
of the Total Commitments is $35,000,000.
"Commitment Fee Rate": 1/2 of 1%.
"Commitment Percentage": as to any Lender at any time, the percentage
which such Lender's Commitment then constitutes of the Total Commitments or, at
any time after the Commitments shall have expired or terminated, the percentage
which the aggregate principal amount of such Lender's Loans then outstanding
constitutes of the aggregate principal amount of the Loans then outstanding,
provided, that, in the event that the Loans are paid in full prior to the
reduction to zero of the Total Extensions of Credit, the Commitment Percentages
shall be determined in a manner designed to ensure that the other outstanding
Extensions of Credit shall be held by the Lenders on a comparable basis.
"Commitment Period": the period from and including the Closing Date to
the Final Maturity Date.
"Compliance Certificate": a certificate duly executed by a Responsible
Officer substantially in the form of Exhibit A.
"Conduit Lender": any special purpose corporation organized and
administered by any Lender for the purpose of making Loans otherwise required to
be made by such Lender and designated by such Lender in a written instrument;
provided, that the designation by any Lender of a Conduit Lender shall not
relieve the designating Lender of any of its obligations to fund a Loan under
this Agreement if, for any reason, its Conduit Lender fails to fund any such
Loan, and the designating Lender (and not the Conduit Lender) shall have the
sole right and responsibility to deliver all consents and waivers required or
requested under this Agreement with respect to its Conduit Lender, and provided,
further, that no Conduit Lender shall (a) be
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entitled to receive any greater amount pursuant to Section 2.15, 2.16, 2.17 or
10.5 than the designating Lender would have been entitled to receive in respect
of the extensions of credit made by such Conduit Lender or (b) be deemed to have
any Commitment.
"Consumers": the Consumers Energy Company, a Michigan corporation.
"Consumers Consent": the Consent and Agreement to be executed and
delivered by Consumers in favor of the Trustee, substantially in the form of
Exhibit H.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Current Revenue Requirement": the maximum amount of revenue the
Borrower is authorized to recover consistent with applicable FERC orders and
upon which rates for transmission service under the OATT are based as of the
date this Agreement is executed.
"Debt": without duplication, with respect to any Person, the sum of
(a) liabilities for borrowed money, (b) liabilities (excluding accounts payable
and other accrued liabilities arising in the ordinary course of business) for
the deferred purchase price of property and conditional sale or title retention
agreements, (c) Capital Lease Obligations, (d) liabilities for borrowed money
secured by a Lien on property, (e) reimbursement obligations (contingent or
otherwise) in respect of letters of credit, performance bonds or bankers'
acceptances, (f) obligations under any Hedging Agreements, (g) liabilities for
Synthetic Leases, (h) obligations evidenced by bonds, debentures, notes or
similar instruments and (i) any guarantee with respect to liabilities in clauses
(a) through (h) above, but excluding, for the period from the Closing Date to,
but excluding, the Final Rate Case Determination Date, liabilities to
independent power producers in respect of deposits held on behalf of such
independent power producers for interconnection or transmission system upgrades.
All references to the principal amount of Debt outstanding at any time shall be
understood to include not only the principal amount of any liabilities for
borrowed money or of any bonds, debentures, notes or similar instruments, but
also obligations (including those related to reimbursement obligations in
respect of letters of credit, but excluding those in respect of interest, fees
and other similar amounts) under all other types of Debt described in this
definition.
"Default": any of the events specified in Section 8, whether or not
any requirement for the giving of notice, the lapse of time, or both, has been
satisfied.
"Disposition": with respect to any property, any sale, lease, sale and
leaseback, assignment, conveyance, transfer or other disposition thereof. The
terms "Dispose" and "Disposed of" shall have correlative meanings.
"Dollars" and "$": dollars in lawful currency of the United States.
"Easement Agreement": the Amended and Restated Easement Agreement,
dated as of April 29, 2002, between the Borrower and Consumers, as amended by
(a) Supplement No. 1, dated as of April 29, 2002, between the Borrower and
Consumers, (b) Supplement No. 2,
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dated as of April 29, 2002, between the Borrower and Consumers and (c)
Supplement No. 3, dated as of March 3, 2003, between the Borrower and Consumers.
"EBITDA": with reference to any period, the total of the following
calculated without duplication for the Borrower for such period: (a) Net Income
plus (b) (i) Interest Expense, (ii) Federal, state and provincial income taxes
and (iii) depreciation and amortization, in each case, only to the extent
deducted in the determination of Net Income for such period. If, during any
period for which EBITDA is being determined, the Borrower has acquired or
disposed of productive assets or a group of productive assets, EBITDA for such
period shall be determined to include or exclude, as applicable, the actual
historical results of such productive assets on a pro forma basis.
"Environmental Laws": any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including, but not limited to
those related to Hazardous Substances or wastes, air emissions and discharges to
waste or public systems.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate": with respect to any Person, any trade or business
(whether or not incorporated) which is a member of a group of which such Person
is a member and which is treated as a single employer with such Person under
Section 414 of the Code.
"ERISA Event":
(a) the occurrence of a reportable event, within the meaning of
Section 4043 of ERISA, with respect to any Plan unless the notice requirement
with respect to such event has been waived;
(b) the application for a minimum funding waiver with respect to a
Plan;
(c) the provision by the administrator of any Plan of a notice of
intent to terminate such Plan, pursuant to Section 4041(c) of ERISA;
(d) the withdrawal by the Borrower or any ERISA Affiliate from a
Multiple Employer Plan during a plan year for which it was a substantial
employer, as defined in Section 4001(a)(2) of ERISA;
(e) the conditions for the imposition of a lien under Section 302(f)
of ERISA shall have been met with respect to any Plan;
(f) the adoption of an amendment to a Plan requiring the provision of
security to such Plan pursuant to Section 307 of ERISA;
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(g) the institution by the PBGC of proceedings to terminate, or cause
a trustee to be appointed to administer a Plan pursuant to Section 4042 of
ERISA; or
(h) the incurrence of withdrawal liability under Title IV of ERISA by
the Borrower or any of its ERISA Affiliates upon the withdrawal by the Borrower
or any of its ERISA Affiliates from a Multiemployer Plan or the incurrence of
liability by the Borrower or any of its ERISA Affiliates upon the termination of
a Multiemployer Plan.
"Event of Default": any of the events specified in Section 8, provided
that any requirement for the giving of notice, the lapse of time, or both, has
been satisfied.
"Event of Loss": an event (other than a Total Loss), including,
without limitation, any Taking, which causes all or a material portion of the
Transmission System to be damaged, destroyed or rendered unfit for normal use
for any reason whatsoever.
"Exchange Act": the United States Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations of the SEC promulgated
thereunder.
"Existing Credit Facility": the Credit Agreement, dated as of May 1,
2002, among the Borrower, the several lenders from time to time parties thereto,
Deutsche Bank Securities Inc., as syndication agent, Union Bank of California,
as documentation agent, and Canadian Imperial Bank of Commerce, as
administrative agent.
"Extensions of Credit": as to any Lender at any time, an amount equal
to the sum of (a) the aggregate principal amount of all Revolving Loans held by
such Lender then outstanding, (b) such Lender's Commitment Percentage of the L/C
Obligations then outstanding and (c) such Lender's Commitment Percentage of the
aggregate principal amount of Swingline Loans then outstanding.
"Federal Funds Effective Rate": for any day, the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for the day of such transactions received by JPMorgan Chase Bank from
three federal funds brokers of recognized standing selected by it.
"Federal Power Act": the United States Federal Power Act of 1920, as
amended from time to time.
"FERC": the United States Federal Energy Regulatory Commission.
"FERC Delay": the failure by FERC to accept or approve of, or to issue
a final order in connection with, on or before March 31, 2006, the increase in
Current Revenue Requirement that the Borrower, as of the date hereof, is
expected to seek in connection with the Final Rate Case Determination Date, and
such failure is not the fault of the Borrower, or any of its Affiliates, or a
result of the Borrower's, or any of its Affiliate's, actions or inactions;
provided, that the Borrower has made diligent and documented good faith efforts
to expedite FERC's review and evaluation process.
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"Final Maturity Date": December 10, 2008.
"Final Rate Case Determination Date": in regard to the increase in
Current Revenue Requirement the Borrower is expected to seek in connection with
the termination of the Network Integration Transmission Service Agreement, the
earlier of (a) FERC's acceptance or approval of the rates sought by the Borrower
pursuant to an order that does not suspend or make subject to refund such rates
sought by the Borrower, or (b) the issuance of a final order by FERC with
respect to such requested rates for which the period for rehearing has expired
or the disposition of any appeals of such order has been completed.
"Financing Agreements": the First Mortgage Indenture, the First
Supplemental Indenture, the Second Supplemental Indenture, the Note Purchase
Agreement, the Senior Secured Notes and the Consumers Consent.
"First Mortgage Indenture": the First Mortgage Indenture, dated as of
December 10, 2003 to be entered into between the Borrower and JPMorgan Chase
Bank, as Trustee, substantially in the form attached hereto as Exhibit F.
"First Supplemental Indenture": that certain First Supplemental
Indenture to the Mortgage Indenture, dated as of December 10, 2003 between the
Borrower and JPMorgan Chase Bank, as Trustee.
"Funding Office": the office of the Administrative Agent specified in
Section 10.2 or such other office as may be specified from time to time by the
Administrative Agent as its funding office by written notice to the Borrower and
the Lenders.
"GAAP": with respect to any computation required or permitted
hereunder, shall mean such accounting principles as are generally accepted in
the United States at the date of such computation or, at the election of the
Borrower from time to time, at the date of the execution and delivery of this
Agreement, as originally executed and delivered.
"Good Utility Practice": any of the practices, methods and acts
engaged in or approved by a significant portion of the electric transmission
industry during the relevant time period, or any of the practices, methods and
acts which, in the exercise of reasonable judgment in light of the facts known
at the time the decision was made, could have been expected to accomplish the
desired result at a reasonable cost consistent with good business practices,
reliability, safety and expedition. Good Utility Practice is not intended to be
limited to the optimum practice, method or act to the exclusion of all others,
but rather to be acceptable practices, methods or acts generally accepted in the
region.
"Governmental Approval": any authorization, consent, approval,
license, franchise, ruling, tariff, rate, permit, certificate, exemption of, or
filing or registration with, any Governmental Authority required in connection
with:
(a) the execution, delivery or performance of any Transmission
Document by any party thereto;
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(b) the grant and perfection of any Lien contemplated to be granted by
the First Mortgage Indenture; or
(c) the ownership, development, expansion, operation or maintenance of
the Transmission System.
"Governmental Authority": any nation or the federal government of the
United States, any state or other political subdivision or agency thereof
(including, but not limited to, the FERC), and any legally constituted entity
legally empowered to exercise executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, any securities exchange
and any self-regulatory organization (including the National Association of
Insurance Commissioners) and any other governmental entity with authority over
any aspect of ownership, development, expansion, maintenance or operation of the
Transmission System.
"Guarantee Obligation": as to any Person (the "guaranteeing person"),
any obligation of (a) the guaranteeing person or (b) another Person (including
any bank under any letter of credit) to induce the creation of which the
guaranteeing person has issued a reimbursement, counterindemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing any Debt,
leases, dividends or other obligations (the "primary obligations") of any other
third Person (the "primary obligor") in any manner, whether directly or
indirectly, including any obligation of the guaranteeing person, whether or not
contingent, (i) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (ii) to advance or supply
funds (A) for the purchase or payment of any such primary obligation or (B) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor, (iii) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation or (iv) otherwise to assure or hold harmless
the owner of any such primary obligation against loss in respect thereof;
provided, however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing person
shall be deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee
Obligation is made and (b) the maximum amount for which such guaranteeing person
may be liable pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case
the amount of such Guarantee Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as determined by the
Borrower in good faith.
"Hazardous Substance": any substance, waste, pollutant, contaminant or
material subject to regulation under any Environmental Law.
"Hedging Agreements": all interest rate swaps, caps or collar
agreements or similar arrangements dealing with interest rates or currency
exchange rates or the exchange of nominal interest obligations, either generally
or under specific contingencies.
10
"Holdco": Michigan Transco Holdings, Limited Partnership, a Michigan
limited partnership.
"Holdco Financing Agreements": the Holdco Mortgage Indenture, the
Holdco Supplemental Indenture, the Holdco Note Agreement and the Holdco Notes.
"Holdco General Partner": Trans-Elect Michigan, and each other Person
admitted as a general partner of Holdco pursuant to the terms of the Holdco
Partnership Agreement, the First Supplemental Indenture and the Holdco
Supplemental Indenture.
"Holdco Limited Partners": the Purchasers, or any other Person
admitted as a limited partner of Holdco pursuant to the terms of the Holdco
Partnership Agreement.
"Holdco Mortgage Indenture": that certain Mortgage Indenture, dated as
of December 10, 2003, between Holdco and JPMorgan Chase Bank, as trustee.
"Holdco Note Agreement": that certain Note Purchase Agreement, dated
as of December 10, 2003, between Holdco and the initial noteholders party
thereto.
"Holdco Notes": the $90 million senior secured notes to be issued by
Holdco on the Closing Date pursuant to the Holdco Mortgage Indenture and the
Holdco Supplemental Indenture.
"Holdco Partner": any of the Holdco General Partner or any Holdco
Limited Partner.
"Holdco Partnership Agreement": the Second Amended and Restated
Agreement of Limited Partnership, dated as of March 11, 2003, between
Trans-Elect Michigan and SFG, as amended by the First Amendment, dated as of
August 15, 2003, between Trans-Elect Michigan and the Purchasers, which Second
Amended and Restated Agreement of Limited Partnership is amended and restated in
its entirety as of December 10, 2003, by a Third Amended and Restated Agreement
of Limited Partnership.
"Holdco Senior Secured Debt": (a) the Holdco Notes and (b) any
additional Holdco senior secured debt permitted in accordance with the terms of
the Holdco Financing Agreements.
"Holdco Supplemental Indenture": that certain First Supplemental
Indenture to the Holdco Mortgage Indenture, dated as of December 10, 2003
between Holdco and JPMorgan Chase Bank, as trustee.
"Indemnified Liabilities": as defined in Section 10.5.
"Indemnitee": as defined in Section 10.5.
"Independent Engineer": Energy and Environmental Engineering, LLC, a
Colorado limited liability company.
11
"Independent Engineer's Report": the METC System Operations & Capital
Expenditures Report, dated October 22, 2003, prepared by the Independent
Engineer.
"Insurance Broker": ▇▇▇▇▇ USA, Inc., a Delaware corporation.
"Interest Expense": interest on the Borrower's Debt (other than
Subordinated Debt), excluding (a) the amortization of financing fees and (b) for
the period from the Closing Date to, but excluding, the Final Rate Case
Determination Date only, interest payable or creditable to independent power
producers with respect to deposits held on their behalf for purposes of
interconnection and transmission system upgrades.
"Interest Payment Date": (a) as to any ABR Loan (including any
Swingline Loan), the last Business Day of each March, June, September and
December to occur while such Loan is outstanding and the final maturity date of
such Loan, (b) as to any LIBOR Loan having an Interest Period of three months or
less, the last day of such Interest Period, (c) as to any LIBOR Loan having an
Interest Period longer than three months, each day that is three months, or a
whole multiple thereof, after the first day of such Interest Period and the last
day of such Interest Period, (d) as to any Loan (other than an ABR Loan), the
date of any repayment or prepayment made in respect thereof and (e) as to any
Swingline Loan, the day that such Loan is required to be repaid.
"Interest Period": as to any LIBOR Loan, (a) initially, the period
commencing on the borrowing or conversion date, as the case may be, with respect
to such LIBOR Loan and ending one, two, three or six months thereafter, as
selected by the Borrower in its notice of borrowing or notice of conversion, as
the case may be, given with respect thereto; and (b) thereafter, each period
commencing on the last day of the next preceding Interest Period applicable to
such LIBOR Loan and ending one, two, three or six months thereafter, as selected
by the Borrower by irrevocable notice to the Administrative Agent not less than
three Business Days prior to the last day of the then current Interest Period
with respect thereto; provided that, all of the foregoing provisions relating to
Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day that is
not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business Day;
(ii) the Borrower may not select an Interest Period that would
extend beyond the Final Maturity Date;
(iii) any Interest Period that begins on the last Business Day of
a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of a calendar month; and
(iv) the Borrower shall select Interest Periods so as not to
require a scheduled payment or prepayment of any LIBOR Loan during an
Interest Period for such Loan.
12
"Invest" or "Investment": (a) a purchase or acquisition of, or an
investment or reinvestment in, Rate Base Assets or (b) without duplication, the
making of a firm, good faith contractual commitment, in the ordinary course of
business and not subject to any conditions in the Borrower's control, to
purchase or acquire, or invest or reinvest in, Rate Base Assets.
"Investment Company Act": the United States Investment Company Act of
1940, as amended from time to time, and the rules and regulations of the SEC
promulgated thereunder.
"Issuing Lender": JPMorgan Chase Bank, in its capacity as issuer of
any Letter of Credit.
"L/C Commitment": $5,000,000.
"L/C Fee Payment Date": the last Business Day of each March, June,
September and December and the last day of the Commitment Period.
"L/C Obligations": at any time, an amount equal to the sum of (a) the
aggregate then undrawn and unexpired amount of the then outstanding Letters of
Credit and (b) the aggregate amount of drawings under Letters of Credit that
have not then been reimbursed pursuant to Section 3.5.
"L/C Participants": the collective reference to all the Lenders other
than the Issuing Lender.
"Lender Affiliate": (a) any Affiliate of any Lender, (b) any Person
that is administered or managed by any Lender or any Affiliate of any Lender and
that is engaged in making, purchasing, holding or otherwise investing in
commercial loans and similar extensions of credit in the ordinary course of its
business and (c) with respect to any Lender which is a fund that invests in
commercial loans and similar extensions of credit, any other fund that invests
in commercial loans and similar extensions of credit and is managed or advised
by the same investment advisor as such Lender or by an Affiliate of such Lender
or investment advisor.
"Lenders": as defined in the preamble hereto; provided, that unless
the context otherwise requires, each reference herein to the Lenders shall be
deemed to include any Conduit Lender.
"Letters of Credit": as defined in Section 3.1(a).
"LIBOR Loans": Loans the rate of interest applicable to which is based
upon the LIBO Rate.
"LIBO Rate": with respect to each day during each Interest Period
pertaining to a LIBOR Loan, the rate per annum determined on the basis of the
rate for deposits in Dollars for a period equal to such Interest Period
commencing on the first day of such Interest Period appearing on Page 3750 of
the Telerate screen as of 11:00 A.M., London time, two Business Days prior to
the beginning of such Interest Period. In the event that such rate does not
appear on Page 3750 of the Telerate screen (or otherwise on such screen), the
"LIBO Rate" shall be determined by reference to the rate at which the
Administrative Agent is offered Dollar deposits
13
at or about 11:00 A.M., New York City time, two Business Days prior to the
beginning of such Interest Period in the interbank eurodollar market where its
eurodollar and foreign currency and exchange operations are then being conducted
for delivery on the first day of such Interest Period for the number of days
comprised therein.
"LIBOR Tranche": the collective reference to LIBOR Loans, the then
current Interest Periods with respect to all of which begin on the same date and
end on the same later date (whether or not such Loans shall originally have been
made on the same day).
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any conditional sale or
other title retention agreement and any capital lease having substantially the
same economic effect as any of the foregoing).
"Limited Equipment Indebtedness": Debt (including, without limitation,
Capital Lease Obligations) secured by Liens permitted by clause (g) of the
definition of "Permitted Liens" in an aggregate principal amount not to exceed
$5,000,000 at any one time outstanding.
"Limited Liability Company Agreement": the Second Amended and Restated
Operating Agreement dated as of March 11, 2003 between Holdco and the Borrower.
"Loan": any loan made by any Lender pursuant to this Agreement.
"Loan Documents": this Agreement, the Security Documents and the
Notes.
"Material": material in relation to the business, operations, affairs,
financial condition, assets, prospects or properties of the Borrower.
"Material Adverse Effect": a material adverse effect on (a) the
business, operations, affairs, financial condition, prospects, assets or
properties of the Borrower, (b) the ability of the Company to perform its
obligations under this Agreement, any of the other Loan Documents or any
Financing Agreement (including, the timely payments of principal of, and
interest on, the Loans), (c) the legality, validity or enforceability of this
Agreement, any of the other Loan Documents or any Financing Agreement or the
rights or remedies of the Administrative Agent, the Lenders or the holders of
securities issued under the First Mortgage Indenture, as applicable, hereunder
or thereunder or (d) the perfection or priority of the Liens purported to be
created pursuant to the First Mortgage Indenture or the rights and remedies of
the holders of securities issued thereunder with respect thereto.
"MISO": the Midwest Independent Transmission System Operator, Inc.
"MISO Agreement": the Agreement of Transmission Facilities Owners to
Organize the Midwest Independent Transmission System Operator, Inc., a Delaware
Non-Stock Organization, on file with and accepted by the FERC, as it may be
amended from time to time, including specific amendments or agreements between
the Borrower and MISO and the Borrower and the transmission owners and members
of MISO.
14
"Moody's": ▇▇▇▇▇'▇ Investors Services, Inc.
"Mortgaged Property": as of any particular time, all property which at
such time is subject to the Lien of the First Mortgage Indenture.
"MPPA Agreement": the agreement among Trans-Elect, the Michigan South
Central Power Agency and the Michigan Public Power Agency, dated as of August 3,
2001, as amended by Amendment No. 1, and in effect on the date hereof.
"Multiemployer Plan": a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, to which the Borrower or any of its ERISA Affiliates is
making or accruing an obligation to make contributions, or has within any of the
preceding five plan years made or accrued an obligation to make contributions,
such plan being maintained pursuant to one or more collective bargaining
agreements.
"Multiple Employer Plan": a single employer plan, as defined in
Section 4001(a)(15) of ERISA, which (a) is maintained for employees of the
Borrower or any of its ERISA Affiliates and at least one Person other than the
Borrower and its ERISA Affiliates or (b) was so maintained and in respect of
which the Borrower or any of its ERISA Affiliates could have liability under
Section 4064 or 4069 of ERISA in the event such plan has been or were to be
terminated.
"Net Income": with reference to any period, the net income (or loss)
of the Borrower for such period determined in accordance with GAAP.
"Net Proceeds": with respect to any Disposition of assets, the gross
proceeds thereof (including any such proceeds received by way of deferred
payment, installment, price adjustment or otherwise), whether in cash or
otherwise, net of any taxes paid or reasonably estimated to be paid by the
Borrower as a result thereof (after taking into account any available tax
credits or deductions applicable thereto).
"Network Integration Transmission Service Agreement": the April 29,
2002 Amendment and Restatement of the Network Integration Transmission Service
Agreement, dated as of April 1, 2001, between the Borrower and Consumers.
"Non-Excluded Taxes": as defined in Section 2.16(a).
"Non-U.S. Lender": as defined in Section 2.16(d).
"Note Purchase Agreement": that certain Note Purchase Agreement, dated
as of December 10, 2003 between the Borrower and the initial noteholders
thereto.
"Notes": the collective reference to any promissory note evidencing
Loans.
"OATT": at any given time, the open access transmission tariff of the
Borrower or MISO that is applicable to the Borrower, approved by the FERC and
then in effect.
15
"Obligations": the unpaid principal of and interest on (including
interest accruing after the maturity of the Loans and Reimbursement Obligations
and interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) the Loans and all other obligations and
liabilities of the Borrower to the Administrative Agent or to any Lender,
whether direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in connection
with, this Agreement, any other Loan Document, the Letters of Credit or any
other document made, delivered or given in connection herewith or therewith,
whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses (including all fees, charges and disbursements of
counsel to the Administrative Agent or to any Lender that are required to be
paid by the Borrower pursuant hereto) or otherwise.
"Officer's Certificate": with respect to any Person, a certificate
signed by a Responsible Officer of such Person.
"Other Taxes": any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement or any other Loan Document.
"Participant": as defined in Section 10.6(b).
"Payment Event of Default": an Event of Default under (i) subsections
(a) or (b) of Section 801 of the First Mortgage Indenture, (ii) Section 8(a) or
8(b) or (iii) with respect to failures to make payment only, Section 8(i).
"Payoff Letter": the payoff letter between the Borrower and Canadian
Imperial Bank of Commerce, as administrative agent under the Existing Credit
Facility and related security documents, relating to the prepayment in full of
the Borrower's Debt under the Existing Credit Facility and the release of
collateral securing the obligations with respect thereto.
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA (or any successor).
"Permitted Additional Senior Secured Debt": as defined in Section 7.6
hereof.
"Permitted Liens":
(a) Liens for taxes, assessments or other governmental charges which
are not yet due and payable or that are being contested in good faith by
appropriate proceedings and for which adequate cash reserves in accordance with
GAAP or other acceptable security is maintained by the Borrower;
(b) Liens incidental to the conduct of business or the ownership of
properties and assets (including landlords', carriers', warehousemen's,
mechanics', materialmen's and other similar Liens) arising in the ordinary
course of business and not in connection with borrowed money which (i) relate to
obligations that are not yet due or (ii) are being contested in
16
good faith and for which adequate cash reserves in accordance with GAAP or other
security acceptable to the Person whose Lien is being contested is maintained by
the Borrower;
(c) Liens to secure the performance of bids, tenders, leases, or trade
contracts, or to secure statutory obligations (including obligations under
workers compensation, unemployment insurance and other social security
legislation), surety or appeal bonds or other Liens, incurred in the ordinary
course of business and not in connection with borrowed money;
(d) Liens resulting from judgments arising in connection with court
proceedings that are being contested in good faith and for which adequate cash
reserves in accordance with GAAP or other acceptable security are maintained by
the Borrower, unless such judgments are not, within 30 days, discharged or
stayed pending appeal, or shall not have been discharged within 30 days after
the expiration of any such stay or are such that create an Event of Default;
(e) Liens in the Mortgaged Property granted pursuant to the First
Mortgage Indenture;
(f) Leases, subleases, easements, rights-of-way, restrictions and
other similar charges or encumbrances incidental to the ownership of property or
assets or the ordinary conduct of the Borrower's business; provided, that the
aggregate of such Liens does not materially (i) detract from the operation or
value of such property or assets or (ii) interfere with the use of the property
and assets of the Borrower in the ordinary course of business; and
(g) Liens securing Debt of the Borrower incurred to finance the
acquisition of fixed or capital assets; provided, that (i) such Liens shall be
created substantially simultaneously with the acquisition of such fixed or
capital assets, (ii) such Liens do not at any time encumber any Property other
than the Property financed by such Debt, (iii) the amount of Debt secured
thereby is not increased and (iv) the aggregate principal amount of Debt secured
by all such Liens does not exceed $5,000,000 at any one time outstanding.
"Person": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.
"Plan": an "employee benefit plan" as defined in Section 3(3) of ERISA
that is subject to Title IV of ERISA or is subject to Section 412 of the Code,
other than a Multiemployer Plan, which is maintained, sponsored or contributed
to, by the Borrower or any of its ERISA Affiliates.
"Private Placement Memorandum": the Confidential Private Placement
Information Memorandum, dated October 2003, including all Appendices and
Exhibits thereto and other documentation distributed in connection therewith
(including the Regulatory Update, dated November 5, 2003, attached hereto as
Appendix A and the Correction to Private Placement Memorandum, dated October
2003, attached hereto as Appendix B, in each case as previously distributed by
electronic mail by or on behalf of the Borrower), relating to the transactions
contemplated by the Financing Agreements.
17
"Pro Forma Balance Sheet": as defined in Section 4.5(b)(i).
"Pro Forma Basis": (a) with respect to the calculation of pro forma
compliance with the EBITDA/Interest Expense ratio covenant set forth in Section
7.3, upon the incurrence of any additional Debt in accordance with Section 7.6,
the calculation of such ratio shall be based upon (i) the EBITDA determined for
the applicable period ending as of the last day of the fiscal quarter most
recently ended for which compliance with Sections 7.3, 7.4 and 7.5 shall have
been determined and (ii) the Interest Expense determined for the applicable
period ending as of such day, adjusted to take into account the incurrence of
such Debt as if such Debt was incurred on the first day of the period for which
such Interest Expense was so determined (assuming, if such additional Debt bears
interest at a floating rate, that the rate of interest on the date of incurrence
thereof was in effect throughout the related calculation period after taking
into account the effect of any Hedging Agreements entered into in connection
with the incurrence of such Debt), (b) with respect to the calculation of pro
forma compliance with the Debt/EBITDA ratio covenant set forth in Section 7.4,
upon the incurrence of any additional Debt in accordance with Section 7.6, the
calculation of such ratio shall be based upon (i) Debt as of the last day of the
fiscal quarter most recently ended for which compliance with Sections 7.3, 7.4
and 7.5 shall have been determined after giving effect to the incurrence of such
additional Debt as if such Debt was incurred on such day and (ii) EBITDA
determined for the applicable period ending as of such day and (c) with respect
to the calculation of pro forma compliance with the Debt/Capitalization ratio
covenant set forth in Section 7.5, upon the incurrence of any additional Debt in
accordance with Section 7.6, the calculation of such ratio shall be based upon
(i) Debt as of the last day of the fiscal quarter most recently ended for which
compliance with Sections 7.3, 7.4 and 7.5 shall have been determined after
giving effect to the incurrence of such additional Debt as if such Debt was
incurred on such day and (ii) stockholder's equity of the Borrower determined as
of such day.
"Pro Forma Projections": as defined in Section 4.22.
"Projections": as defined in Section 6.2(b).
"Property": any right or interest in or to assets or property of any
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"PUHCA": the United States Public Utility Holding Company Act of 1935,
as amended from time to time, and the rules and regulations of the SEC
promulgated thereunder.
"Purchasers": NA Capital Holdings, Inc., a Delaware corporation,
Macquarie Transmission Michigan Inc., a Delaware corporation, Evercore METC
Investment Inc., a Delaware corporation, Evercore METC Coinvestment Inc., a
Delaware corporation, and Mich 1400 Corp., a Delaware corporation.
"Rate Base Assets": assets of the Borrower which are included in
FERC's determination of the Borrower's revenue requirement under the OATT.
"Ratings Reaffirmation": for any point in time, the reaffirmation of
the ratings on the Senior Secured Notes, as existing at such point in time, by
each of the rating agencies then rating the Senior Secured Notes, after
consideration of the then existing facts and circumstances
18
and the effect of a proposed applicable event, as being equal to (without the
addition of any negative qualification, such as "having a negative outlook" or
"being on negative watch") or higher than the then current ratings on the Senior
Secured Notes, no earlier than 30 days prior to the proposed applicable event.
"Refunded Swingline Loans": as defined in Section 2.4(b).
"Register": as defined in Section 10.6(d).
"Regulation U": Regulation U of the Board as in effect from time to
time.
"Reimbursement Obligation": the obligation of the Borrower to
reimburse the Issuing Lender pursuant to Section 3.5 for amounts drawn under
Letters of Credit.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.
"Reputable Insurer": any financially sound and responsible insurance
provider permitted to do business in the State of Michigan rated "A-X" or better
by A.M. Best Company (or if such ratings cease to be published generally for the
insurance industry, meeting comparable financial standards then applicable to
the insurance industry).
"Required Lenders": at any time, the holders of more than 66 2/3% of
(a) until the Closing Date, the Commitments then in effect and (b) thereafter,
the Total Commitments then in effect or, if the Commitments have been
terminated, the Total Extensions of Credit then outstanding.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any foreign, federal, state, local (including municipal) or other
statute, law, rule, regulation, ordinance, order, code, policy or rule of common
law, now or hereafter in effect, and any judicial or administrative
interpretation thereof by a Governmental Authority or otherwise (including any
judicial or administrative order, consent decree or judgment to which the
Borrower is a party).
"Responsible Officer": the chief executive officer, president, chief
financial officer or senior vice president - finance of the Borrower, but in any
event, with respect to financial matters, the chief financial officer, principal
accounting officer, treasurer, comptroller or senior vice president - finance of
the Borrower.
"Restricted Payments": (a) any payment or distribution of assets,
properties, cash, rights, obligations or securities on account of any Capital
Stock of the Borrower, (b) any payment on account of, or the setting apart of
assets for a sinking or other analogous fund for, the purchase, redemption,
retirement, or other acquisition for value of any Capital Stock of the Borrower
or the distribution of any warrants, rights, or options to acquire any such
Capital Stock, now or hereafter outstanding, or (c) any distribution of assets,
properties, cash, rights, obligations or securities or any payments (whether
principal, interest or otherwise), on or with respect to Subordinated Debt.
19
"Revolving Loans": as defined in Section 2.1(a).
"S&P": Standard & Poor's Rating Services, a division of ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc., or any successor thereto.
"SEC": the Securities and Exchange Commission, any successor thereto
and any analogous Governmental Authority.
"Second Supplemental Indenture": the Second Supplemental Indenture to
the First Mortgage Indenture to be entered into among the Borrower, JPMorgan
Chase Bank, as Trustee, and JPMorgan Chase Bank, as Administrative Agent,
substantially in the form attached hereto as Exhibit G.
"Security Documents": the collective reference to the First Mortgage
Indenture, the Second Supplemental Indenture, the Collateral Security, the
Consumers Consent and all other security documents hereafter delivered to or
executed by the Administrative Agent granting a Lien on any property of any
Person to secure the obligations and liabilities of the Borrower under any Loan
Document.
"Senior Secured Debt": (i) all obligations of the Borrower incurred
under this Agreement (and including the Collateral Security), (ii) the Senior
Secured Notes and (iii) any Permitted Additional Senior Secured Debt, all of
which Permitted Additional Senior Secured Debt shall be, or shall be secured by,
securities issued under the First Mortgage Indenture.
"Senior Secured Notes": the senior secured notes of the Borrower to be
issued on the Closing Date pursuant to the First Supplemental Indenture.
"SFG": SFG V-A Inc., a Delaware corporation.
"Sponsors": each of Trans-Elect Michigan, SFG, NA Capital Holdings,
Inc., Macquarie Transmission Michigan Inc., Evercore METC Investment, Inc.,
Evercore METC Coinvestment Inc. and Mich 1440 Corp.
"Subordinated Debt": unsecured Debt of the Borrower fully subordinated
in right of payment to the Obligations and other Senior Secured Debt on the
terms set forth in Exhibit H hereto.
"Subsidiary": as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer
to a Subsidiary or Subsidiaries of the Borrower.
20
"Swingline Commitment": the obligation of the Swingline Lender to make
Swingline Loans pursuant to Section 2.3 in an aggregate principal amount at any
one time outstanding not to exceed $5,000,000.
"Swingline Lender": JPMorgan Chase Bank, in its capacity as the lender
of Swingline Loans.
"Swingline Loans": as defined in Section 2.3(a).
"Swingline Participation Amount": as defined in Section 2.4(c).
"Syndication Agent": as defined in the preamble hereto.
"Synthetic Leases": any synthetic lease, tax retention operating
lease, off-balance sheet loan or similar off-balance sheet financing product,
where such transaction is considered debt for borrowed money for tax purposes
but is classified as an operating lease in accordance with GAAP.
"Taken": any circumstance or event in consequence of which the
Transmission System or any substantial portion thereof shall be condemned,
nationalized, seized, compulsorily acquired or otherwise expropriated by any
Governmental Authority under power of eminent domain or otherwise. The terms
"Taken" or "Taking" shall have a correlative meaning.
"Total Commitments": at any time, the aggregate amount of the
Commitments then in effect.
"Total Extensions of Credit": at any time, the aggregate amount of the
Extensions of Credit of the Lenders outstanding at such time.
"Total Loss": (a) a total or constructive total loss of all or a
substantial portion of the Transmission System as a result of an Event of Loss
or (b) all or a substantial portion of the Transmission System is Taken.
"Trans-Elect": Trans-Elect, Inc., a Michigan corporation.
"Trans-Elect Michigan": Trans-Elect Michigan, LLC, a Michigan limited
liability company.
"Transferee": any Assignee or Participant.
"Transmission Documents": the collective reference to: (i) the Network
Integration Transmission Service Agreement, (ii) the Easement Agreement, (iii)
the MISO Agreement, (iv) the April 29, 2002 Amendment and Restatement of the
Distribution-Transmission Interconnection Agreement, dated as of April 1, 2001,
between the Borrower and Consumers, (v) the April 29, 2002 Amendment and
Restatement of the Generation Interconnection Agreement, dated as of April 1,
2001, between the Borrower and Consumers, (vi) the April 29, 2002 Amendment and
Restatement of the Purchase and Sale Agreement for Ancillary Services, dated as
of April 1, 2001, between the Borrower and Consumers, (vii) the
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April 29, 2002 Amendment and Restatement of the Operating Agreement, dated as of
April 1, 2001, between the Borrower and Consumers, (viii) the April 29, 2002
Amendment and Restatement of the Network Operating Agreement, dated as of April
1, 2001 between the Borrower and Consumers, (ix) the Amended and Restated
Service Contract, dated as of April 29, 2002, between the Borrower and
Consumers, (x) the Non-Competition Agreement, dated as of May 1, 2002, between
Consumers, Holdco, and the Borrower, and (xi) the Amended and Restated
Management Services Agreement, dated as of March 11, 2003, between the Borrower
and Trans-Elect.
"Transmission System": the transmission lines and towers, substations,
distribution substations, switching stations and substations, circuit breakers,
and all such other necessary facilities used for providing transmission service,
in each case, owned by the Borrower.
"Trustee": the trustee under the First Mortgage Indenture; initially,
JPMorgan Chase Bank.
"Type": as to any Loan, its nature as an ABR Loan or a LIBOR Loan.
"United States": the United States of America.
1.2 Other Definitional Provisions. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in the other Loan Documents or any certificate or other document made
or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto, (i)
accounting terms relating to the Borrower not defined in Section 1.1 and
accounting terms partly defined in Section 1.1, to the extent not defined, shall
have the respective meanings given to them under GAAP, (ii) the words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation", (iii) the word "incur" shall be construed to mean incur, create,
issue, assume, become liable in respect of or suffer to exist (and the words
"incurred" and "incurrence" shall have correlative meanings), (iv) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, Capital Stock, securities, revenues, accounts, leasehold
interests and contract rights, and (v) references to agreements or other
Contractual Obligations shall, unless otherwise specified, be deemed to refer to
such agreements or Contractual Obligations as amended, supplemented, restated or
otherwise modified from time to time.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import, when used in this Agreement, shall refer to this Agreement as a whole
and not to any particular provision of this Agreement, and Section, Schedule and
Exhibit references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
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SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Commitments. (a) Subject to the terms and conditions hereof, each
Lender severally agrees to make revolving credit loans ("Revolving Loans") to
the Borrower from time to time during the Commitment Period in an aggregate
principal amount at any one time outstanding which, when added to such Lender's
Commitment Percentage of the sum of (i) the L/C Obligations then outstanding and
(ii) the aggregate principal amount of the Swingline Loans then outstanding,
does not exceed the amount of such Lender's Commitment. During the Commitment
Period the Borrower may use the Commitments by borrowing, prepaying the
Revolving Loans in whole or in part, and reborrowing, all in accordance with the
terms and conditions hereof. The Revolving Loans may from time to time be LIBOR
Loans or ABR Loans, as determined by the Borrower and notified to the
Administrative Agent in accordance with Sections 2.2 and 2.9.
(b) The Borrower shall repay all outstanding Revolving Loans on the
Final Maturity Date.
2.2 Procedure for Borrowing. The Borrower may borrow under the
Commitments during the Commitment Period on any Business Day, provided that the
Borrower shall give the Administrative Agent irrevocable notice (which notice
must be received by the Administrative Agent prior to 12:00 Noon, New York City
time, (a) three Business Days prior to the requested Borrowing Date, in the case
of LIBOR Loans, or (b) one Business Day prior to the requested Borrowing Date,
in the case of ABR Loans), specifying (i) the amount and Type of Revolving Loans
to be borrowed, (ii) the requested Borrowing Date and (iii) in the case of LIBOR
Loans, the respective amounts of each such Type of Loan and the respective
lengths of the initial Interest Period therefor. Any Revolving Loans made on the
Closing Date shall initially be ABR Loans and, unless otherwise agreed by the
Administrative Agent in its sole discretion, no Revolving Loan may be made as,
converted into or continued as a LIBOR Loan prior to the date that is three days
after the Closing Date. Each borrowing under the Commitments shall be in an
amount equal to (x) in the case of ABR Loans, $1,000,000 or a whole multiple of
$250,000 in excess thereof (or, if the then aggregate Available Commitments are
less than $1,000,000, such lesser amount) and (y) in the case of LIBOR Loans,
$1,000,000 or a whole multiple of $250,000 in excess thereof; provided, that the
Swingline Lender may request, on behalf of the Borrower, borrowings under the
Commitments that are ABR Loans in other amounts pursuant to Section 2.4. Upon
receipt of any such notice from the Borrower, the Administrative Agent shall
promptly notify each Lender thereof. Each Lender will make the amount of its pro
rata share of each borrowing available to the Administrative Agent at the
Funding Office prior to 12:00 Noon, New York City time, on the Borrowing Date
requested by the Borrower in funds immediately available to the Administrative
Agent. Such borrowing will then be made available to the Borrower by the
Administrative Agent crediting in accordance with the payment instructions of
the Borrower the aggregate of the amounts made available to the Administrative
Agent by the Lenders in immediately available funds.
2.3 Swingline Commitment. (a) Subject to the terms and conditions
hereof, the Swingline Lender agrees to make a portion of the credit otherwise
available to the Borrower under the Commitments from time to time during the
Commitment Period by making swing line loans ("Swingline Loans") to the
Borrower; provided that (i) the aggregate principal amount of
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Swingline Loans outstanding at any time shall not exceed the Swingline
Commitment then in effect (notwithstanding that the Swingline Loans outstanding
at any time, when aggregated with the Swingline Lender's outstanding Revolving
Loans, may exceed the Swingline Commitment then in effect) and (ii) the Borrower
shall not request, and the Swingline Lender shall not make, any Swingline Loan
if, after giving effect to the making of such Swingline Loan, the aggregate
amount of the Available Commitments would be less than zero. During the
Commitment Period, the Borrower may use the Swingline Commitment by borrowing,
repaying and reborrowing, all in accordance with the terms and conditions
hereof. Swingline Loans shall be ABR Loans only.
(b) The Borrower shall repay all outstanding Swingline Loans on the
Final Maturity Date.
2.4 Procedure for Swingline Borrowing; Refunding of Swingline Loans.
(a) Whenever the Borrower desires that the Swingline Lender make
Swingline Loans it shall give the Swingline Lender irrevocable telephonic notice
confirmed promptly in writing (which telephonic notice must be received by the
Swingline Lender not later than 1:00 P.M., New York City time, on the proposed
Borrowing Date), specifying (i) the amount to be borrowed and (ii) the requested
Borrowing Date (which shall be a Business Day during the Commitment Period).
Upon receipt of such written notice, the Administrative Agent will promptly
notify the Swingline Lender. Each borrowing under the Swingline Commitment shall
be in an amount equal to $250,000 or a whole multiple of $50,000 in excess
thereof. Not later than 3:00 P.M., New York City time, on the Borrowing Date
specified in a notice in respect of Swingline Loans, the Swingline Lender shall
make available to the Administrative Agent at the Funding Office an amount in
immediately available funds equal to the amount of the Swingline Loan to be made
by the Swingline Lender. Such borrowing will then be made available to the
Borrower by the Administrative Agent crediting in accordance with the payment
instructions of the Borrower the amount made available to the Administrative
Agent by the Swingline Lender in immediately available funds.
(b) The Swingline Lender, at any time and from time to time in its
sole and absolute discretion may, on behalf of the Borrower (which hereby
irrevocably directs the Swingline Lender to act on its behalf), on one Business
Day's notice given by the Swingline Lender no later than 12:00 Noon, New York
City time, request each Lender to make, and each Lender hereby agrees to make, a
Revolving Loan, in an amount equal to such Lender's Commitment Percentage of the
aggregate amount of the Swingline Loans (the "Refunded Swingline Loans")
outstanding on the date of such notice, to repay the Swingline Lender. Each
Lender shall make the amount of such Revolving Loan available to the
Administrative Agent at the Funding Office in immediately available funds, not
later than 10:00 A.M., New York City time, one Business Day after the date of
such notice. The proceeds of such Revolving Loans shall be immediately made
available by the Administrative Agent to the Swingline Lender for application by
the Swingline Lender to the repayment of the Refunded Swingline Loans. The
Borrower irrevocably authorizes the Swingline Lender to charge the Borrower's
accounts with the Administrative Agent (up to the amount available in each such
account) to pay immediately the amount of such Refunded Swingline Loans to the
extent amounts received from the Lenders are not sufficient to repay in full
such Refunded Swingline Loans.
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(c) If prior to the time a Revolving Loan would have otherwise been
made pursuant to Section 2.4(b), one of the events described in Section 8(c) or
8(d) shall have occurred and be continuing with respect to the Borrower or if
for any other reason, as determined by the Swingline Lender in its sole
discretion, Revolving Loans may not be made as contemplated by Section 2.4(b),
each Lender shall, on the date such Revolving Loan was to have been made
pursuant to the notice referred to in Section 2.4(b), purchase for cash an
undivided participating interest in the then outstanding Swingline Loans by
paying to the Swingline Lender an amount (the "Swingline Participation Amount")
equal to (i) such Lender's Commitment Percentage times (ii) the sum of the
aggregate principal amount of Swingline Loans then outstanding that were to have
been repaid with such Revolving Loans.
(d) Whenever, at any time after the Swingline Lender has received from
any Lender such Lender's Swingline Participation Amount, the Swingline Lender
receives any payment on account of the Swingline Loans, the Swingline Lender
will distribute to such Lender its Swingline Participation Amount (appropriately
adjusted, in the case of interest payments, to reflect the period of time during
which such Lender's participating interest was outstanding and funded and, in
the case of principal and interest payments, to reflect such Lender's pro rata
portion of such payment if such payment is not sufficient to pay the principal
of and interest on all Swingline Loans then due); provided, however, that in the
event that such payment received by the Swingline Lender is required to be
returned, such Lender will return to the Swingline Lender any portion thereof
previously distributed to it by the Swingline Lender.
(e) Each Lender's obligation to make the Revolving Loans referred to
in Section 2.4(b) and to purchase participating interests pursuant to Section
2.4(c) shall be absolute and unconditional and shall not be affected by any
circumstance, including (i) any setoff, counterclaim, recoupment, defense or
other right that such Lender or the Borrower may have against the Swingline
Lender, the Borrower or any other Person for any reason whatsoever; (ii) the
occurrence or continuance of a Default or an Event of Default or the failure to
satisfy any of the other conditions specified in Section 5; (iii) any adverse
change in the condition (financial or otherwise) of the Borrower; (iv) any
breach of this Agreement or any other Loan Document by the Borrower or any other
Lender; or (v) any other circumstance, happening or event whatsoever, whether or
not similar to any of the foregoing.
2.5 Commitment Fees, etc. (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a commitment fee for the
period from and including the date hereof to the last Business Day of the
Commitment Period, computed at the Commitment Fee Rate in effect from time to
time on the average daily amount of the Available Commitment of such Lender
during the period for which payment is made, payable quarterly in arrears on the
last day of each March, June, September and December and on the Final Maturity
Date, commencing on the first of such dates to occur after the date hereof.
(b) The Borrower agrees to pay to the Administrative Agent the fees in
the amounts and on the dates previously agreed to in writing by the Borrower and
the Administrative Agent.
2.6 Termination or Reduction of Commitments. The Borrower shall have
the right, upon not less than three Business Days' notice to the Administrative
Agent, to terminate
25
the Commitments or, from time to time, to reduce the amount of the Commitments;
provided that no such termination or reduction of Commitments shall be permitted
if, after giving effect thereto and to any prepayments of the Revolving Loans
and Swingline Loans made on the effective date thereof, the Total Extensions of
Credit would exceed the Total Commitments. Any such reduction shall be in an
amount equal to $1,000,000, or a whole multiple thereof, and shall reduce
permanently the Commitments then in effect.
2.7 Optional Prepayments. The Borrower may at any time and from time
to time prepay the Loans, in whole or in part, without premium or penalty, upon
irrevocable notice delivered to the Administrative Agent at least three Business
Days prior thereto in the case of LIBOR Loans and at least one Business Day
prior thereto in the case of ABR Loans, which notice shall specify the date and
amount of prepayment and whether the prepayment is of LIBOR Loans or ABR Loans;
provided, that (i) if a LIBOR Loan is prepaid on any day other than the last day
of the Interest Period applicable thereto, the Borrower shall also pay any
amounts owing pursuant to Section 2.17 and (ii) Swingline Loans may be prepaid
on any Business Day upon delivery to the Swingline Lender of irrevocable notice
and payment thereof not later than 3:00 p.m., New York City time, on the date of
such prepayment. Upon receipt of any such notice the Administrative Agent shall
promptly notify each Lender thereof. If any such notice is given, the amount
specified in such notice shall be due and payable on the date specified therein,
together with (except in the case of ABR Loans) accrued interest to such date on
the amount prepaid. Partial prepayments of Revolving Loans shall be in an
aggregate principal amount of $1,000,000 or a whole multiple of $250,000 in
excess thereof. Partial prepayments of Swingline Loans shall be in an aggregate
principal amount of $100,000 or a whole multiple of $50,000 in excess thereof.
2.8 Mandatory Prepayments and Commitment Reductions(a). (a) If the
Borrower shall receive Loss Proceeds from any one or more Events of Loss during
any consecutive 12-month period in excess of an aggregate amount of $5,000,000
and the entire amount of such Loss Proceeds are not used to rebuild or repair
the Transmission System or otherwise to render the Transmission System fit for
normal use within the time periods specified in Section 501(a) of the First
Mortgage Indenture, then, unless such unused Loss Proceeds are applied to redeem
Securities (as defined in the First Mortgage Indenture) in accordance with said
Section 501(a) on or before the date or dates required by said Section 501(a),
any such unused Loss Proceeds not so applied shall be applied on such required
date or dates toward the reduction of the Commitments as set forth in Section
2.8(c).
(b) If the Borrower shall receive Net Proceeds from any one or more
Dispositions (except from Dispositions permitted under Sections 7.2(a), (b), (c)
or (d)) during any consecutive 12-month period in excess of an aggregate amount
of $5,000,000 and the entire amount of such Net Proceeds are not used (or
allocated to prior use pursuant to clause (x) of Section 2.03 of the First
Supplemental Indenture) to Invest in Rate Base Assets within the time periods
specified in Section 2.03 of the First Supplemental Indenture, then, unless such
unused Net Proceeds are applied to redeem securities issued pursuant to the
First Supplemental Indenture in accordance with said Section 2.03 on or before
the date or dates required by said Section 2.03, such unused Net Proceeds not so
applied shall be applied on such required date or dates toward the reduction of
the Commitments as set forth in Section 2.8(c).
26
(c) Amounts to be applied in connection with Commitment reductions
made pursuant to Section 2.8(a) or Section 2.8(b) shall be applied to reduce
permanently the Commitments. Any such reduction of the Commitments shall be
accompanied by prepayment of the Loans to the extent, if any, that the Total
Extensions of Credit exceed the amount of the Total Commitments as so reduced,
provided that if the aggregate principal amount of Loans then outstanding is
less than the amount of such excess (because L/C Obligations constitute a
portion thereof), the Borrower shall, to the extent of the balance of such
excess, replace outstanding Letters of Credit and/or deposit an amount in cash
in a cash collateral account established with the Administrative Agent for the
benefit of the Lenders on terms and conditions satisfactory to the
Administrative Agent. The application of any prepayment pursuant to Section
2.8(a) or Section 2.8(b) shall be made, first, to ABR Loans and, second, to
LIBOR Loans. Each prepayment of the Loans under Section 2.8(a) or Section 2.8(b)
(except in the case of ABR Loans) shall be accompanied by accrued interest to
the date of such prepayment on the amount prepaid.
2.9 Conversion and Continuation Options. (a) The Borrower may elect
from time to time to convert LIBOR Loans to ABR Loans by giving the
Administrative Agent at least three Business Days' prior irrevocable notice of
such election, provided that any such conversion of LIBOR Loans may only be made
on the last day of an Interest Period with respect thereto. The Borrower may
elect from time to time to convert ABR Loans to LIBOR Loans by giving the
Administrative Agent at least three Business Days' prior irrevocable notice of
such election, provided that no ABR Loan may be converted into a LIBOR Loan when
any Event of Default has occurred and is continuing and the Administrative Agent
or the Required Lenders have determined in its or their sole discretion not to
permit such conversions. Upon receipt of any such notice the Administrative
Agent shall promptly notify each Lender thereof.
(b) Any LIBOR Loan may be continued as such upon the expiration of the
then current Interest Period with respect thereto by the Borrower giving
irrevocable notice to the Administrative Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in Section 1.1, of
the length of the next Interest Period to be applicable to such Loans, provided
that no LIBOR Loan may be continued as such when any Event of Default has
occurred and is continuing and the Administrative Agent has or the Required
Lenders have determined in its or their sole discretion not to permit such
continuations, and provided, further, that if the Borrower shall fail to give
any required notice as described above in this paragraph or if such continuation
is not permitted pursuant to the preceding proviso such Loans shall be
automatically converted to ABR Loans on the last day of such then expiring
Interest Period. Upon receipt of any such notice the Administrative Agent shall
promptly notify each Lender thereof.
2.10 Limitations on LIBOR Tranches. Notwithstanding anything to the
contrary in this Agreement, all borrowings, conversions and continuations of
LIBOR Loans and all selections of Interest Periods shall be in such amounts and
be made pursuant to such elections so that, (a) after giving effect thereto, the
aggregate principal amount of the LIBOR Loans comprising each LIBOR Tranche
shall be equal to $1,000,000 or a whole multiple of $250,000 in excess thereof
and (b) no more than seven LIBOR Tranches shall be outstanding at any one time.
27
2.11 Interest Rates and Payment Dates. (a) Each LIBOR Loan shall bear
interest for each day during each Interest Period with respect thereto at a rate
per annum equal to the LIBO Rate determined for such day plus the Applicable
Margin.
(b) Each ABR Loan shall bear interest at a rate per annum equal to the
ABR plus the Applicable Margin.
(c) (i) If all or a portion of the principal amount of any Loan or
Reimbursement Obligation shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), such overdue amount shall bear interest
at a rate per annum equal to (x) in the case of the Loans, the rate that would
otherwise be applicable thereto pursuant to the foregoing provisions of this
Section plus 2% or (y) in the case of Reimbursement Obligations, the rate
applicable to ABR Loans plus 2%, and (ii) if all or a portion of any interest
payable on any Loan or Reimbursement Obligation or any commitment fee or other
amount payable hereunder shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), such overdue amount shall bear interest
at a rate per annum equal to the rate then applicable to ABR Loans plus 2%, in
each case, with respect to clauses (i) and (ii) above, from the date of such
non-payment until such amount is paid in full (as well after as before
judgment).
(d) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (c) of this Section
shall be payable from time to time on demand.
2.12 Computation of Interest and Fees. (a) Interest and fees payable
pursuant hereto shall be calculated on the basis of a 360-day year for the
actual days elapsed, except that, with respect to ABR Loans the rate of interest
on which is calculated on the basis of the Prime Rate, the interest thereon
shall be calculated on the basis of a 365- (or 366-, as the case may be) day
year for the actual days elapsed. The Administrative Agent shall as soon as
practicable notify the Borrower and the Lenders of each determination of a LIBO
Rate. Any change in the interest rate on a Loan resulting from a change in the
ABR shall become effective as of the opening of business on the day on which
such change becomes effective. The Administrative Agent shall as soon as
practicable notify the Borrower and the Lenders of the effective date and the
amount of each such change in interest rate.
(b) Each determination of an interest rate by the Administrative Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to Section 2.11(a).
2.13 Inability to Determine Interest Rate. If prior to the first day
of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by reason
of circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the LIBO Rate for such Interest Period, or
28
(b) the Administrative Agent shall have received notice from the
Required Lenders that the LIBO Rate determined or to be determined for such
Interest Period will not adequately and fairly reflect the cost to such Lenders
(as conclusively certified by such Lenders) of making or maintaining their
affected Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the Lenders as soon as practicable thereafter. If such notice is
given (x) any LIBOR Loans requested to be made on the first day of such Interest
Period shall be made as ABR Loans, (y) any Loans that were to have been
converted on the first day of such Interest Period to LIBOR Loans shall be
continued as ABR Loans and (z) any outstanding LIBOR Loans shall be converted,
on the last day of the then-current Interest Period, to ABR Loans. Until such
notice has been withdrawn by the Administrative Agent, no further LIBOR Loans
shall be made or continued as such, nor shall the Borrower have the right to
convert Loans to LIBOR Loans.
2.14 Pro Rata Treatment and Payments. (a) Each borrowing by the
Borrower from the Lenders of Revolving Loans hereunder, each payment by the
Borrower on account of any commitment fee and any reduction of the Commitments
of the Lenders shall be made pro rata according to the respective Commitment
Percentages of the Lenders.
(b) Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Revolving Loans shall be made pro
rata according to the respective outstanding principal amounts of the Revolving
Loans then held by the Lenders.
(c) All payments (including prepayments (except to the extent
otherwise provided with respect to Swingline Loans in Section 2.7)) to be made
by the Borrower hereunder, whether on account of principal, interest, fees or
otherwise, shall be made without setoff or counterclaim and shall be made prior
to 12:00 Noon, New York City time, on the due date thereof to the Administrative
Agent, for the account of the Lenders, at the Funding Office, in Dollars and in
immediately available funds. The Administrative Agent shall distribute such
payments to the Lenders promptly upon receipt in like funds as received. If any
payment hereunder (other than payments on the LIBOR Loans) becomes due and
payable on a day other than a Business Day, such payment shall be extended to
the next succeeding Business Day. If any payment on a LIBOR Loan becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day unless the result of such extension
would be to extend such payment into another calendar month, in which event such
payment shall be made on the immediately preceding Business Day. In the case of
any extension of any payment of principal pursuant to the preceding two
sentences, interest thereon shall be payable at the then applicable rate during
such extension.
(d) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available to the Administrative
Agent by the required time on the Borrowing Date therefor, such Lender shall pay
to the Administrative Agent, on demand, such amount with interest thereon at a
rate equal to the daily average Federal
29
Funds Effective Rate for the period until such Lender makes such amount
immediately available to the Administrative Agent. A certificate of the
Administrative Agent submitted to any Lender with respect to any amounts owing
under this paragraph shall be conclusive in the absence of manifest error. If
such Lender's share of such borrowing is not made available to the
Administrative Agent by such Lender within three Business Days after such
Borrowing Date, the Administrative Agent shall also be entitled to recover such
amount with interest thereon at the rate per annum applicable to ABR Loans, on
demand, from the Borrower.
(e) Unless the Administrative Agent shall have been notified in
writing by the Borrower prior to the date of any payment due to be made by the
Borrower hereunder that the Borrower will not make such payment to the
Administrative Agent, the Administrative Agent may assume that the Borrower is
making such payment, and the Administrative Agent may, but shall not be required
to, in reliance upon such assumption, make available to the Lenders their
respective pro rata shares of a corresponding amount. If such payment is not
made to the Administrative Agent by the Borrower within three Business Days
after such due date, the Administrative Agent shall be entitled to recover, on
demand, from each Lender to which any amount which was made available pursuant
to the preceding sentence, such amount with interest thereon at the rate per
annum equal to the daily average Federal Funds Effective Rate. Nothing herein
shall be deemed to limit the rights of the Administrative Agent or any Lender
against the Borrower.
2.15 Requirements of Law. (a) If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof or compliance
by any Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority made subsequent to
the date hereof (other than any such adoption, interpretation, application or
compliance relating to taxes, as to which Section 2.16 shall govern):
(i) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender or
(ii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount that such Lender deems to be material, of making, converting into,
continuing or maintaining LIBOR Loans or issuing or participating in Letters of
Credit, or to reduce any amount receivable hereunder in respect thereof, then,
in any such case, the Borrower shall promptly pay such Lender, upon its demand,
any additional amounts necessary to compensate such Lender on an after-tax basis
for such increased cost or reduced amount receivable; provided that the Borrower
shall not be required to compensate a Lender pursuant to this paragraph for any
amounts incurred more than six months prior to the date that such Lender
notifies the Borrower of such Lender's intention to claim compensation therefor;
and provided further that, if the circumstances giving rise to such claim have a
retroactive effect, then such six-month period shall be extended to include the
period of such retroactive effect. If any Lender becomes entitled to claim any
additional amounts pursuant to this paragraph, it shall promptly notify the
Borrower (with a copy to the Administrative Agent) of the event by reason of
which it has become so entitled.
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(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under or in respect of any Letter of
Credit to a level below that which such Lender or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's or such corporation's policies with respect to capital adequacy)
by an amount deemed by such Lender to be material, then from time to time, after
submission by such Lender to the Borrower (with a copy to the Administrative
Agent) of a written request therefor, the Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender on an after-tax
basis or such corporation for such reduction; provided that the Borrower shall
not be required to compensate a Lender pursuant to this paragraph for any
amounts incurred more than six months prior to the date that such Lender
notifies the Borrower of such Lender's intention to claim compensation therefor;
and provided further that, if the circumstances giving rise to such claim have a
retroactive effect, then such six-month period shall be extended to include the
period of such retroactive effect.
(c) A certificate as to any additional amounts payable pursuant to
this Section submitted by any Lender to the Borrower (with a copy to the
Administrative Agent) shall be conclusive in the absence of manifest error. The
obligations of the Borrower pursuant to this Section shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
2.16 Taxes. (a) All payments made by the Borrower under this Agreement
shall be made free and clear of, and without deduction or withholding for or on
account of, any present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority, excluding
net income taxes and franchise taxes (imposed in lieu of net income taxes)
imposed on the Administrative Agent or any Lender as a result of a present or
former connection between the Administrative Agent or such Lender and the
jurisdiction of the Governmental Authority imposing such tax or any political
subdivision or taxing authority thereof or therein (other than any such
connection arising solely from the Administrative Agent or such Lender having
executed, delivered or performed its obligations or received a payment under, or
enforced, this Agreement or any other Loan Document). If any such non-excluded
taxes, levies, imposts, duties, charges, fees, deductions or withholdings
("Non-Excluded Taxes") or Other Taxes are required to be withheld from any
amounts payable to the Administrative Agent or any Lender hereunder, the amounts
so payable to the Administrative Agent or such Lender shall be increased to the
extent necessary to yield to the Administrative Agent or such Lender (after
payment of all Non-Excluded Taxes and Other Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement, provided, however, that the Borrower shall not be required to
increase any such amounts payable to the Administrative Agent or any Lender with
respect to any Non-Excluded Taxes (i) that are attributable to the
Administrative Agent's or such Lender's failure, as the case may be, to comply
with the requirements of paragraph (d) or (e) of this Section or (ii) that are
United States withholding taxes imposed on amounts payable to such Lender at the
time the Administrative
31
Agent or such Lender becomes a party to this Agreement, except to the extent
that such Administrative Agent's predecessor (if any) or Lender's assignor (if
any), as the case may be, was entitled, at the time of succession or assignment,
as the case may be, to receive additional amounts from the Borrower with respect
to such Non-Excluded Taxes pursuant to this paragraph.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the
Borrower, as promptly as possible thereafter the Borrower shall send to the
Administrative Agent for its own account or for the account of the relevant
Lender, as the case may be, a certified copy of an original official receipt
received by the Borrower showing payment thereof or, if such a receipt is
unavailable, such other evidence reasonably satisfactory to the Administrative
Agent or Lender, as the case may be. If the Borrower fails to pay any
Non-Excluded Taxes or Other Taxes when due to the appropriate taxing authority
or fails to remit to the Administrative Agent the required receipts or other
required documentary evidence, the Borrower shall indemnify the Administrative
Agent and the Lenders for any incremental taxes, interest or penalties that may
become payable by the Administrative Agent or any Lender as a result of any such
failure (except to the extent any such incremental taxes, interest or penalties
arise as a result of the gross negligence or willful misconduct of the
Administrative Agent or such Lender, as the case may be, provided that for
purposes of this parenthetical clause, gross negligence shall not be deemed to
include any failure on the part of the Administrative Agent or any Lender to
inquire as to whether the Borrower has failed to pay any Non-Excluded Taxes or
Other Taxes when due to the appropriate taxing authority or has failed to remit
to the Administrative Agent the required receipts or other required documentary
evidence).
(d) Each Lender (or Transferee) that is not a "U.S. Person" as defined
in Section 7701(a)(30) of the Code (a "Non-U.S. Lender") shall deliver to the
Borrower and the Administrative Agent (or, in the case of a Participant, to the
Lender from which the related participation shall have been purchased) two
copies of either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI, or,
in the case of a Non-U.S. Lender claiming exemption from U.S. federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest", a statement substantially in the form of
Exhibit E and a Form W-8BEN, or any subsequent versions thereof or successors
thereto, properly completed and duly executed by such Non-U.S. Lender claiming
complete exemption from, or a reduced rate of, U.S. federal withholding tax on
all payments by the Borrower under this Agreement and the other Loan Documents.
Such forms shall be delivered by each Non-U.S. Lender on or before the date it
becomes a party to this Agreement (or, in the case of any Participant, on or
before the date such Participant purchases the related participation). In
addition, each Non-U.S. Lender shall deliver such forms promptly upon the
obsolescence or invalidity of any form previously delivered by such Non-U.S.
Lender. Each Non-U.S. Lender shall promptly notify the Borrower at any time it
determines that it is no longer legally entitled to provide any previously
delivered certificate to the Borrower (or any other form of certification
adopted by the U.S. taxing authorities for such purpose). Notwithstanding any
other provision of this paragraph, a Non-U.S. Lender shall not be required to
deliver any form pursuant to this paragraph that such Non-U.S. Lender is not
legally entitled to deliver.
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(e) Each Lender that sells or grants a participation shall (i)
withhold or deduct from each payment to a Participant the amount of any tax
required under applicable law to be withheld or deducted from such payment and
not withheld or deducted therefrom by the Borrower or the Administrative Agent,
(ii) pay any tax so withheld or deducted by it to the appropriate taxing
authority in accordance with applicable law and (iii) indemnify the Borrower and
the Administrative Agent for any losses, costs and expenses that may incur as a
result of any failure to withhold or deduct and pay any tax to the extent the
amount of such tax and losses, costs and expenses exceeds the amount of tax and
losses, costs and expenses that would have been imposed in the absence of such
participation.
(f) A Lender that is entitled to an exemption from or reduction of
non-U.S. withholding tax under the law of the jurisdiction in which the Borrower
is located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law or
reasonably requested by the Borrower, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate, provided that such Lender is
legally entitled to complete, execute and deliver such documentation and in such
Lender's judgment such completion, execution or delivery would not materially
prejudice the legal position of such Lender.
(g) The agreements in this Section shall survive the termination of
this Agreement and the payment of the Loans and all other amounts payable
hereunder.
2.17 Indemnity. The Borrower agrees to indemnify each Lender for, and
to hold each Lender harmless from, any loss or expense that such Lender may
sustain or incur as a consequence of (a) default by the Borrower in making a
borrowing of, conversion into or continuation of LIBOR Loans after the Borrower
has given a notice requesting the same in accordance with the provisions of this
Agreement, (b) default by the Borrower in making any prepayment of or conversion
from LIBOR Loans after the Borrower has given a notice thereof in accordance
with the provisions of this Agreement or (c) the making of a prepayment of LIBOR
Loans on a day that is not the last day of an Interest Period with respect
thereto. Such indemnification may include an amount equal to the excess, if any,
of (i) the amount of interest that would have accrued on the amount so prepaid,
or not so borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
such Interest Period (or, in the case of a failure to borrow, convert or
continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Loans provided
for herein (excluding, however, the Applicable Margin included therein, if any)
over (ii) the amount of interest (as reasonably determined by such Lender) that
would have accrued to such Lender on such amount by placing such amount on
deposit for a comparable period with leading banks in the interbank eurodollar
market. A certificate as to any amounts payable pursuant to this Section
submitted to the Borrower by any Lender shall be conclusive in the absence of
manifest error. This covenant shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.
2.18 Change of Lending Office. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 2.15 or 2.16(a)
with respect to such Lender, it
33
will, if requested by the Borrower, use reasonable efforts (subject to overall
policy considerations of such Lender) to designate another lending office for
any Loans affected by such event with the object of avoiding the consequences of
such event; provided, that such designation is made on terms that, in the sole
judgment of such Lender, cause such Lender and its lending office(s) to suffer
no economic, legal or regulatory disadvantage, and provided, further, that
nothing in this Section shall affect or postpone any of the obligations of the
Borrower or the rights of any Lender pursuant to Section 2.15 or 2.16(a).
2.19 Replacement of Lenders. The Borrower shall be permitted to
replace any Lender that (a) requests reimbursement for amounts owing pursuant to
Section 2.15 or 2.16(a) or (b) defaults in its obligation to make Loans
hereunder, with a replacement financial institution; provided that (i) such
replacement does not conflict with any Requirement of Law, (ii) no Event of
Default shall have occurred and be continuing at the time of such replacement,
(iii) prior to any such replacement, such Lender shall have taken no action
under Section 2.18 so as to eliminate the continued need for payment of amounts
owing pursuant to Section 2.15 or 2.16(a), (iv) the replacement financial
institution shall purchase, at par, all Loans and other amounts owing to such
replaced Lender on or prior to the date of replacement, (v) the Borrower shall
be liable to such replaced Lender under Section 2.17 if any LIBOR Loan owing to
such replaced Lender shall be purchased other than on the last day of the
Interest Period relating thereto, (vi) the replacement financial institution, if
not already a Lender, shall be reasonably satisfactory to the Administrative
Agent, (vii) the replaced Lender shall be obligated to make such replacement in
accordance with the provisions of Section 10.6 (provided that the Borrower shall
be obligated to pay the registration and processing fee referred to therein),
(viii) until such time as such replacement shall be consummated, the Borrower
shall pay all additional amounts (if any) required pursuant to Section 2.15 or
2.16(a), as the case may be, and (ix) any such replacement shall not be deemed
to be a waiver of any rights that the Borrower, the Administrative Agent or any
other Lender shall have against the replaced Lender.
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Subject to the terms and conditions hereof,
the Issuing Lender, in reliance on the agreements of the other Lenders set forth
in Section 3.4(a), agrees to issue letters of credit ("Letters of Credit") for
the account of the Borrower on any Business Day during the Commitment Period in
such form as may be approved from time to time by the Issuing Lender; provided
that the Issuing Lender shall have no obligation to issue any Letter of Credit
if, after giving effect to such issuance, (i) the L/C Obligations would exceed
the L/C Commitment or (ii) the aggregate amount of the Available Commitments
would be less than zero. Each Letter of Credit shall (i) be denominated in
Dollars and (ii) expire no later than the earlier of (x) the first anniversary
of its date of issuance and (y) the date that is five Business Days prior to the
Final Maturity Date, provided that any Letter of Credit with a one-year term may
provide for the renewal thereof for additional one-year periods (which shall in
no event extend beyond the date referred to in clause (y) above).
(b) The Issuing Lender shall not at any time be obligated to issue any
Letter of Credit if such issuance would conflict with, or cause the Issuing
Lender or any L/C Participant to exceed any limits imposed by, any applicable
Requirement of Law.
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3.2 Procedure for Issuance of Letter of Credit. The Borrower may from
time to time request that the Issuing Lender issue a Letter of Credit by
delivering to the Issuing Lender at its address for notices specified herein an
Application therefor, completed to the satisfaction of the Issuing Lender, and
such other certificates, documents and other papers and information as the
Issuing Lender may request. Upon receipt of any Application, the Issuing Lender
will process such Application and the certificates, documents and other papers
and information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit requested
thereby (but in no event shall the Issuing Lender be required to issue any
Letter of Credit earlier than three Business Days after its receipt of the
Application therefor and all such other certificates, documents and other papers
and information relating thereto) by issuing the original of such Letter of
Credit to the beneficiary thereof or as otherwise may be agreed to by the
Issuing Lender and the Borrower. The Issuing Lender shall furnish a copy of such
Letter of Credit to the Borrower promptly following the issuance thereof. The
Issuing Lender shall promptly furnish to the Administrative Agent, which shall
in turn promptly furnish to the Lenders, notice of the issuance of each Letter
of Credit (including the amount thereof).
3.3 Fees and Other Charges. (a) The Borrower will pay a fee on all
outstanding Letters of Credit at a per annum rate equal to the Applicable Margin
then in effect with respect to LIBOR Loans, shared ratably among the Lenders and
payable quarterly in arrears on each L/C Fee Payment Date after the issuance
date. In addition, the Borrower shall pay to the Issuing Lender for its own
account a fronting fee of 0.25% per annum on each outstanding Letter of Credit,
payable quarterly in arrears on each L/C Fee Payment Date after the Issuance
Date.
(b) In addition to the foregoing fees, the Borrower shall pay or
reimburse the Issuing Lender for such normal and customary costs and expenses as
are incurred or charged by the Issuing Lender in issuing, negotiating, effecting
payment under, amending or otherwise administering any Letter of Credit.
3.4 L/C Participations. (a) The Issuing Lender irrevocably agrees to
grant and hereby grants to each L/C Participant, and, to induce the Issuing
Lender to issue Letters of Credit, each L/C Participant irrevocably agrees to
accept and purchase and hereby accepts and purchases from the Issuing Lender, on
the terms and conditions set forth below, for such L/C Participant's own account
and risk an undivided interest equal to such L/C Participant's Commitment
Percentage in the Issuing Lender's obligations and rights under and in respect
of each Letter of Credit and the amount of each draft paid by the Issuing Lender
thereunder. Each L/C Participant unconditionally and irrevocably agrees with the
Issuing Lender that, if a draft is paid under any Letter of Credit for which the
Issuing Lender is not reimbursed in full by the Borrower in accordance with the
terms of this Agreement, such L/C Participant shall pay to the Issuing Lender
upon demand at the Issuing Lender's address for notices specified herein an
amount equal to such L/C Participant's Commitment Percentage of the amount of
such draft, or any part thereof, that is not so reimbursed.
(b) If any amount required to be paid by any L/C Participant to the
Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion
of any payment made by the Issuing Lender under any Letter of Credit is paid to
the Issuing Lender within three Business Days after the date such payment is
due, such L/C Participant shall pay to the Issuing
35
Lender on demand an amount equal to the product of (i) such amount, times (ii)
the daily average Federal Funds Effective Rate during the period from and
including the date such payment is required to the date on which such payment is
immediately available to the Issuing Lender, times (iii) a fraction the
numerator of which is the number of days that elapse during such period and the
denominator of which is 360. If any such amount required to be paid by any L/C
Participant pursuant to Section 3.4(a) is not made available to the Issuing
Lender by such L/C Participant within three Business Days after the date such
payment is due, the Issuing Lender shall be entitled to recover from such L/C
Participant, on demand, such amount with interest thereon calculated from such
due date at the rate per annum applicable to ABR Loans. A certificate of the
Issuing Lender submitted to any L/C Participant with respect to any amounts
owing under this Section shall be conclusive in the absence of manifest error.
(c) Whenever, at any time after the Issuing Lender has made payment
under any Letter of Credit and has received from any L/C Participant its pro
rata share of such payment in accordance with Section 3.4(a), the Issuing Lender
receives any payment related to such Letter of Credit (whether directly from the
Borrower or otherwise, including proceeds of collateral applied thereto by the
Issuing Lender), or any payment of interest on account thereof, the Issuing
Lender will distribute to such L/C Participant its pro rata share thereof;
provided, however, that in the event that any such payment received by the
Issuing Lender shall be required to be returned by the Issuing Lender, such L/C
Participant shall return to the Issuing Lender the portion thereof previously
distributed by the Issuing Lender to it.
3.5 Reimbursement Obligation of the Borrower. If any draft is paid
under any Letter of Credit, the Borrower shall reimburse the Issuing Lender for
the amount of (a) the draft so paid and (b) any taxes, fees, charges or other
costs or expenses incurred by the Issuing Lender in connection with such
payment, not later than 12:00 Noon, New York City time, on (i) the Business Day
that the Borrower receives notice of such payment, if such notice is received on
such day prior to 10:00 A.M., New York City time, or (ii) if clause (i) above
does not apply, the Business Day immediately following the day that the Borrower
receives such notice. Each such payment shall be made to the Issuing Lender at
its address for notices referred to herein in Dollars and in immediately
available funds (and, for the avoidance of doubt, such payment may be made by
means of a borrowing of ABR Loans in accordance with Section 2.2). Interest
shall be payable on any such amounts from the date on which the relevant draft
is paid until payment in full at the rate set forth in (i) until the Business
Day next succeeding the date of the relevant notice, Section 2.11(b) and (ii)
thereafter, Section 2.11(c).
3.6 Obligations Absolute. The Borrower's obligations under this
Section 3 shall be absolute and unconditional under any and all circumstances
and irrespective of any setoff, counterclaim or defense to payment that the
Borrower may have or have had against the Issuing Lender, any beneficiary of a
Letter of Credit or any other Person. The Borrower also agrees with the Issuing
Lender that the Issuing Lender shall not be responsible for, and the Borrower's
Reimbursement Obligations under Section 3.5 shall not be affected by, among
other things, the validity or genuineness of documents or of any endorsements
thereon, even though such documents shall in fact prove to be invalid,
fraudulent or forged, or any dispute between or among the Borrower and any
beneficiary of any Letter of Credit or any other party to which such Letter of
Credit may be transferred or any claims whatsoever of the Borrower against any
beneficiary of such Letter of Credit or any such transferee. The Issuing Lender
shall not be
36
liable for any error, omission, interruption or delay in transmission, dispatch
or delivery of any message or advice, however transmitted, in connection with
any Letter of Credit, except for errors or omissions found by a final and
nonappealable decision of a court of competent jurisdiction to have resulted
from the gross negligence or willful misconduct of the Issuing Lender. The
Borrower agrees that any action taken or omitted by the Issuing Lender under or
in connection with any Letter of Credit or the related drafts or documents, if
done in the absence of gross negligence or willful misconduct and in accordance
with the standards of care specified in the Uniform Commercial Code of the State
of New York, shall be binding on the Borrower and shall not result in any
liability of the Issuing Lender to the Borrower.
3.7 Letter of Credit Payments. If any draft shall be presented for
payment under any Letter of Credit, the Issuing Lender shall promptly notify the
Borrower of the date and amount thereof. The responsibility of the Issuing
Lender to the Borrower in connection with any draft presented for payment under
any Letter of Credit shall, in addition to any payment obligation expressly
provided for in such Letter of Credit, be limited to determining that the
documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are substantially in conformity with such
Letter of Credit.
3.8 Applications. To the extent that any provision of any Application
related to any Letter of Credit is inconsistent with the provisions of this
Section 3, the provisions of this Section 3 shall apply.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into this
Agreement and to make the Loans and issue or participate in the Letters of
Credit, the Borrower hereby represents and warrants to the Administrative Agent
and each Lender that:
4.1 Organization; Power and Authority. The Borrower is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Michigan, and is duly qualified as a foreign limited
liability company and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The
Borrower has the limited liability company power and authority to own or hold
under lease the properties it purports to own or hold under lease, to transact
the business it transacts and proposes to transact, to execute and deliver this
Agreement and the other Loan Documents and to perform the provisions hereof and
thereof including, without limitation, to obtain extensions of credit hereunder.
4.2 Authorization, etc. The execution, delivery and performance of
this Agreement and the other Loan Documents and the extensions of credit to be
made to the Borrower on the terms and conditions of this Agreement have been
duly authorized by all necessary limited liability company action on the part of
the Borrower, and each of this Agreement and the other Loan Documents
constitutes, and upon execution and delivery thereof,
37
each Note will constitute, a legal, valid and binding obligation of the
Borrower, enforceable against the Borrower in accordance with its terms, except
as such enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
4.3 Disclosure. The Borrower, through its agents, ▇.▇. ▇▇▇▇▇▇
Securities Inc. and Macquarie Securities (USA) Inc., has delivered to the
Administrative Agent and each Lender a copy of the Private Placement Memorandum
relating to the transactions contemplated hereby and in the Financing
Agreements. The Private Placement Memorandum fairly describes, in all material
respects, the general nature of the business of the Borrower. This Agreement,
the other Loan Documents and the Private Placement Memorandum, taken as a whole,
do not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading in light
of the circumstances under which they were made; provided, that, with respect to
projected and pro forma financial information provided in connection with the
Private Placement Memorandum, the Borrower represents only that such information
was prepared in good faith based upon estimates and assumptions believed by the
Borrower to be accurate and reasonable at the time. Since the date of the
Private Placement Memorandum, there has been no change in the financial
condition, operations, business, properties or prospects of the Borrower except
changes that, individually or in aggregate, could not reasonably be expected to
have a Material Adverse Effect. There is no fact known to the Borrower that
could reasonably be expected to have a Material Adverse Effect that has not been
set forth herein or in the Private Placement Memorandum or in the other
documents, certificates and other writings delivered to the Administrative Agent
and the Lenders by or on behalf of the Borrower specifically for use in
connection with the Loan Documents.
4.4 Organization and Ownership of Subsidiaries; Affiliates.
(a) The Borrower holds no Capital Stock of any Person.
(b) The Borrower has disclosed in the Private Placement Memorandum (i)
the Borrower's ownership structure up through and including (A) Trans-Elect, (B)
the Holdco General Partner and (C) the Holdco Limited Partners, and (ii) its,
Holdco's and Trans-Elect's directors and officers.
4.5 Financial Statements and Condition.
(a) Financial Statements. The Borrower has delivered to the
Administrative Agent and each Lender copies of (i) the audited financial
statements of the Borrower as of the fiscal year ended December 31, 2002 and
(ii) the unaudited financial statements for the fiscal quarter and the portion
of the fiscal year ended September 30, 2003, which, in each case, present
fairly, in all material respects, the financial position of the Borrower as of
the respective date thereof and have been prepared in accordance with GAAP
consistently applied throughout the periods involved except as set forth in the
notes thereto (subject, in the case of the interim financial statements, to
normal year end adjustments).
(b) Financial Condition.
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(i) The unaudited pro forma consolidated balance sheet of the
Borrower as at September 30, 2003 (the "Pro Forma Balance Sheet"), copies
of which have heretofore been furnished to each Lender, has been prepared
giving effect (as if such events had occurred on such date) to (i) the
receipt of the Closing Capital Contribution and the use of the proceeds
thereof, (ii) the Loans to be made on the Closing Date and the use of
proceeds thereof and (iii) the payment of fees and expenses in connection
with the foregoing. The Pro Forma Balance Sheet has been prepared based on
the best information available to the Borrower as of the date of delivery
thereof, and presents fairly on a pro forma basis the estimated financial
position of Borrower and its consolidated Subsidiaries as at December 31,
2002, assuming that the events specified in the preceding sentence had
actually occurred at such date.
(ii) The Borrower does not have any material Guarantee
Obligations, contingent liabilities or liabilities for taxes of a type and
level of materiality that would require such Obligations or liabilities to
be reflected in financial statements prepared in accordance with GAAP or
any long-term leases or unusual forward or long-term commitments, including
any interest rate or foreign currency swap or exchange transaction or other
obligation in respect of derivatives, that are not reflected in the most
recent financial statements referred to in Section 4.5(a). During the
period from December 31, 2002 to and including the Closing Date there has
been no Disposition by the Borrower of any material part of its business or
property.
4.6 No Change. Since September 30, 2003, there has been no development
or event that has had or could reasonably be expected to have a Material Adverse
Effect.
4.7 No Default(a). The Borrower is not in default under or with
respect to any of its Contractual Obligations in any respect that could
reasonably be expected to have a Material Adverse Effect. No Default or Event of
Default has occurred and is continuing.
4.8 No Legal Bar. The execution, delivery and performance by the
Borrower of this Agreement and the other Loan Documents and the issuance of the
Letters of Credit, the borrowings hereunder and the use of proceeds thereof will
not (a) contravene, or result in a breach or constitute a default under (and no
event has occurred that, with notice or lapse of time or both, would constitute
such a default), or result in the creation of any Lien (except Liens permitted
under the Loan Documents) on any Property of the Borrower under, any indenture,
mortgage, loan, purchase or credit agreement, lease, or other Material agreement
(including the Limited Liability Company Agreement and the Borrower's other
organizational documents) to which the Borrower is bound or affected by or by
which any of its properties may be bound or affected, (b) conflict with or
result in a breach of any of the terms, conditions or provisions of any order,
judgment, decree, or ruling of any court, arbitrator or Governmental Authority
applicable to the Borrower or (c) violate any provision of any statute or other
rule or regulation of any applicable Governmental Authority.
4.9 No Consents Required. Except as set forth in Schedule 4.9, no
consent, approval, authorization, order, registration or qualification of or
with any court or arbitrator or Governmental Authority is required for the
execution, delivery and performance by the Borrower of this Agreement or any of
the other Loan Documents, the extensions of credit hereunder,
39
compliance by the Borrower with the terms hereof and thereof or the consummation
of the transactions contemplated by this Agreement and the other Loan Documents.
Any consents, approvals, authorizations, orders, registrations or qualifications
set forth in Schedule 4.9 have been duly obtained or made and are final and in
full force and effect.
4.10 Litigation; Observance of Agreements, Statutes and Orders.
(a) There are no actions, suits or proceedings pending or, to the
knowledge of the Borrower, threatened against or affecting the Borrower or any
Property of the Borrower in any court or before any arbitrator of any kind or
before or by any Governmental Authority (i) in any case where this
representation is made on or prior to the Closing Date, with respect to any of
the Loan Documents or the transactions contemplated hereby or thereby or (ii)
that, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
(b) The Borrower is not in default under any term of any agreement or
instrument to which it is a party or by which it is bound or any order,
judgment, decree or ruling of any court, arbitrator or Governmental Authority
and is not in violation of any applicable Requirement of Law, ordinance, rule or
regulation (including, without limitation, Environmental Laws) of any
Governmental Authority, which default or violation, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
4.11 Taxes. The Borrower has filed all tax returns that are required
to have been filed in any jurisdiction, and has paid all taxes shown to be due
and payable on such returns and all other taxes and assessments levied upon it
or its properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become delinquent,
except for any taxes and assessments (a) the amount of which is not individually
or in the aggregate Material or (b) the amount, applicability or validity of
which is currently being contested in good faith by appropriate means and with
respect to which the Borrower has established adequate reserves in accordance
with GAAP. The Borrower has no knowledge of any other tax or assessment as to
which reasonable estimates are not included in the Pro Forma Projections. The
charges, accruals and reserves on the books of the Borrower in respect of all
taxes for all fiscal periods are adequate in all material respects. The Borrower
is not taxable for Federal income tax purposes.
4.12 Title to Real and Personal Property. The Borrower has good and
sufficient title in fee simple to, or has valid rights to lease or use, by
easement or otherwise, all items of real and personal property that it owns,
leases or otherwise uses, in each case free and clear of all Liens and defects
and imperfections of title except (i) those Liens permitted by this Agreement
and the other Loan Documents, (ii) until the Closing Date, those Liens that
exist in connection with the Existing Credit Facility and (iii) defects and
imperfections of title that could not reasonably be expected to have a Material
Adverse Effect. All leases that individually or in the aggregate are Material
are valid and subsisting and are in full force and effect in all material
respects.
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4.13 Licenses, Permits, Etc.
(a) The Borrower owns or possesses all licenses, permits,
certificates, authorizations, patents, copyrights, service marks, trademarks and
trade names, domain names or rights thereto, that it purports to own and that
individually or in the aggregate are Material, without known conflict with the
rights of others and the Borrower has not received notice of any revocation or
modification of any such license, permit, certificate, authorization, patent,
copyright, service ▇▇▇▇, trademark, trade name or domain name or any notice that
any such license, permit, franchise, authorization, patent, copyright, service
▇▇▇▇, trademark, trade name or domain name will not be renewed in the ordinary
course of business;
(b) the Borrower has made all declarations and filings with the
appropriate Governmental Authorities that are necessary for the ownership or
lease of its Properties or the conduct of its businesses as described in the
Private Placement Memorandum, except where the failure to possess or make the
same could not, individually or in the aggregate, have a Material Adverse
Effect;
(c) to the best knowledge of the Borrower, no product of the Borrower
infringes in any material respect on any license, permit, franchise,
authorization, patent, copyright, service ▇▇▇▇, trademark, trade name, domain
name or other right owned by any other Person; and
(d) to the best knowledge of the Borrower, there is no Material
violation by any Person of any right of the Borrower with respect to any patent,
copyright, service ▇▇▇▇, trademark, trade name, domain name or other right owned
or used by the Borrower.
4.14 Compliance with ERISA.
(a) The Borrower and each ERISA Affiliate (i) have operated and
administered each of its Plans in compliance with all applicable Requirements of
Law, except where non-compliance could not reasonably be expected to result in a
Material Adverse Effect and (ii) has not incurred any Material liability, nor
has any event, transaction or condition occurred or exists that would reasonably
be expected to result in the incurrence of any such Material liability or the
imposition of any Material Lien, pursuant to Title I or IV of ERISA or pursuant
to penalty or excise tax provisions of the Code relating to Plans or pursuant to
Section 401(a)(29) or 412 of the Code.
(b) The present value of the aggregate benefit liabilities under each
Plan of the Borrower and each ERISA Affiliate (other than Multiemployer Plans),
determined as of the end of such Plan's most recently ended Plan year (on the
basis of actuarial assumptions specified for funding purposes in such Plan's
actuarial valuation report for the Plan's most recently ended Plan year), did
not exceed the aggregate current value of the assets of such Plan allocable to
such benefit liabilities. The term "benefit liabilities" has the meaning
specified in Section 4001 of ERISA and the terms "current value" and "present
value" have the meaning specified in Section 3 of ERISA.
41
(c) The Borrower and its ERISA Affiliates have not incurred any
Material withdrawal liabilities (and are not subject to Material contingent
withdrawal liabilities) under Section 4201 or 4204 of ERISA in respect of
Multiemployer Plans.
(d) The expected post-retirement benefit obligation (determined as of
the last day of the Borrower's most recently ended fiscal year in accordance
with Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by Section 4980B of
the Code) of the Borrower is not Material.
(e) The execution and delivery of this Agreement and the other Loan
Documents and the borrowing of extensions of credit hereunder does not involve
any transaction that is subject to the prohibitions of Section 406 of ERISA or
in connection with which a tax could be imposed pursuant to Section
4975(c)(1)(A)-(D) of the Code.
4.15 Use of Proceeds; Margin Regulations. The Borrower will apply the
proceeds of the Loans and the Letters of Credit to finance working capital
needs, permitted Capital Expenditures and for other general corporate purposes
of the Borrower. No part of the proceeds of any Loans, and no other extensions
of credit hereunder, will be used, directly or indirectly, for the purpose of
buying or carrying any margin stock within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System (12 CFR 221) ("Regulation U"),
or for the purpose of buying or carrying or trading in any securities under such
circumstances as to involve the Company in a violation of Regulation X of said
Board (12 CFR 224) or to involve any broker or dealer in a violation of
Regulation T of said Board (12 CFR 220). The Company owns no margin stock and
has no present intention to acquire any margin stock. As used in this Section,
the terms "margin stock" and "purpose of buying or carrying" shall have the
meanings assigned to them in said Regulation U.
4.16 Existing Debt; Future Liens.
(a) The September 30, 2003 unaudited balance sheet of the Borrower
provided to the Administrative Agent and each Lender pursuant to Section 4.5
sets forth all outstanding Debt of the Borrower as of September 30, 2003. Since
September 30, 2003, there has been no Material change in the amounts, interest
rates, sinking funds, installment payments or maturities of the Debt of the
Borrower. Except as set forth in Schedule 4.16, the Borrower is not in default
and no waiver of default is currently in effect, in the payment of any principal
of or interest on any Debt of the Borrower, and no event or condition exists
with respect to any such Debt of the Borrower, that would permit (or that with
notice or the lapse of time, or both, would permit) one or more Persons to cause
such Debt to become due and payable before its stated maturity or before its
regularly scheduled dates of payment.
(b) The Borrower has not agreed or consented to cause or permit in the
future (upon the happening of a contingency or otherwise) any of its Property,
whether now owned or hereafter acquired, to be subject to a Lien not permitted
by this Agreement or the other Loan Documents.
4.17 Solvency. The Borrower is solvent, has capital not unreasonably
small in relation to its business or any contemplated or undertaken transaction
and has assets having a
42
value both at fair valuation and at present fair salable value greater than the
amount required to pay its Debts as they become due and greater than the amount
that will be required to pay its probable liability on existing Debts as they
become absolute and matured. The Borrower does not intend to incur, or believe
or should have believed that it will incur, Debts beyond its ability to pay such
Debts as they become due. The Borrower will not be rendered insolvent by the
execution and delivery of, and performance of, its obligations under this
Agreement, the other Loan Documents and the Financing Agreements. The Borrower
does not intend to hinder, delay or defraud its creditors by or through the
execution and delivery of, or the performance of, its obligations under this
Agreement, the other Loan Documents or the Financing Agreements.
4.18 Affiliate Transactions. Except for the Amended Management
Services Agreement, the Borrower has not entered into any agreement, arrangement
or understanding with any Affiliate other than those which are on terms no less
favorable to such party than if the transaction had been negotiated in good
faith on an arm's-length basis with any Person who is not an Affiliate.
4.19 Independent Accountants. PricewaterhouseCoopers LLP, who has
certified the financial statements of the Borrower for the fiscal year ended
December 31, 2002, are independent public accountants with respect to the
Borrower within the meaning of Rule 101 of the Code of Professional Conduct of
the American Institute of Certified Public Accountants and its interpretations
and rulings thereunder.
4.20 Insurance. As of the Closing Date, the Borrower has insurance
with Reputable Insurers covering its Properties against loss or damage of the
kinds customarily insured against by companies similarly situated in the
industry in which the Borrower conducts its business, in such amounts and with
such deductibles as is customary for similarly situated companies, and the
Borrower (a) has not received notice from any insurer or agent of such insurer
that capital improvements or other expenditures are required or necessary to be
made in order to continue such insurance or (b) does not have any reason to
believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage at commercially
available rates from similar insurers as may be necessary to continue its
business in accordance with Section 6.6.
4.21 Compliance With Environmental Laws. The Borrower has no knowledge
of any claim and has not received any notice of any claim, and no proceeding has
been instituted raising any claim against the Borrower or any of its real
properties now or formerly owned, leased or operated by it, or other assets,
alleging damage to the environment or any violation of any Environmental Laws,
except, in each case, such as could not reasonably be expected to result in a
Material Adverse Effect. (a) The Borrower has no knowledge of any facts which
would give rise to any claim, public or private, for violation of Environmental
Laws or damage to the environment emanating from, occurring on or in any way
related to real properties or to other assets now or formerly owned, leased or
operated by it, or their use, except, in each case, such as could not reasonably
be expected to result in a Material Adverse Effect; (b) the Borrower has not
stored any Hazardous Substances on real properties now or formerly owned, leased
or operated by it or has disposed of any Hazardous Substances in each case in a
manner contrary to any Environmental Laws and in any manner that could
reasonably be expected to result in a Material Adverse Effect; and (c) all
buildings and equipment on all real properties now owned, leased or
43
operated by the Borrower are in compliance with applicable Environmental Laws,
except where failure to comply could not reasonably be expected to result in a
Material Adverse Effect.
4.22 Pro Forma Projections. The Independent Engineer has reviewed an
economic pro forma model (the "Pro Forma Projections") which is attached to the
Private Placement Memorandum. The Pro Forma Projections are based in part upon
historical financial information supplied by the Borrower to the Independent
Engineer, which is as of the Closing Date, complete and correct in all material
respects and which the Borrower, as of the Closing Date, reasonably believes to
be adequate for the preparation of the Pro Forma Projections. The assumptions
provided by the Borrower for the purposes of the Pro Forma Projections were made
in good faith on bases that the Borrower, as of the Closing Date, reasonably
believes to be reasonable and which the Borrower believes to be consistent in
all material respects with the Transmission Documents. To the extent material
for purposes of consideration of the Pro Forma Projections taken as a whole,
such assumptions are disclosed in the Private Placement Memorandum and/or the
Independent Engineer's Report.
4.23 Pari Passu. The Loans and other extensions of credit hereunder
shall rank pari passu with the Borrower's other Senior Secured Debt.
4.24 Independent Engineer. The Independent Engineer was, as of the
date of the Independent Engineer's Report, and is, as of the date hereof,
"independent". For purposes of this Section 4.24, the Independent Engineer shall
be considered "independent" if from the date which was six months prior to the
date of the Private Placement Memorandum, neither of the Independent Engineer
nor any Member (as defined below) of the Independent Engineer (i) had, or was
committed to acquire, any material financial interest directly in, or with
respect to, the Borrower, Holdco or any Holdco Partner, or (ii) was, or will be
connected as a promoter, underwriter, voting trustee, director, officer or
employee of the Borrower, Holdco or any Holdco Partner. "Member" shall mean with
respect to the Independent Engineer all partners, shareholders and other
principals of such Independent Engineer.
4.25 Regulatory Matters. The Borrower is not, and will not be after
giving effect to the transactions contemplated hereby and under the Financing
Agreements, subject to regulation under the Investment Company Act, and the
Borrower is not subject to any applicable Requirement of Law (other than the
Federal Power Act) that limits its ability to incur Debt and is not required to
obtain the approval of the SEC in order to borrow Loans and to obtain other
extensions of credit hereunder. The Borrower is not subject to the registration
requirements of the PUHCA, nor is the Borrower a "subsidiary" or an "affiliate",
as defined in PUHCA, of any Person subject to such requirement.
4.26 No Labor Disputes. There are no pending or, to the knowledge of
the Borrower, threatened labor controversies affecting the Borrower, or any of
its Properties, assets or revenues, which could reasonably be expected to have a
Material Adverse Effect.
4.27 Security Documents. The First Mortgage Indenture, when such First
Mortgage Indenture and the other filings referred to in Section 5.1(s) are filed
or recorded in accordance with Section 5.1(s), will be adequate to create a
first priority perfected security
44
interest in the Mortgaged Property purported to be pledged thereby, to the
extent such perfection can be accomplished by filing.
4.28 Transmission Documents. The Transmission Documents, true and
complete copies of which have been delivered to the Administrative Agent, and
the agreements set forth on Schedule 4.28 constitute all of the Material
agreements into which the Borrower has entered and by which it or any of its
Property is bound.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Initial Extension of Credit. The agreement of each
Lender to make the initial extension of credit requested to be made by it is
subject to the satisfaction, prior to or concurrently with the making of such
extension of credit on the Closing Date (and in any event on or prior to
December 31, 2003), of the following conditions precedent:
(a) Credit Agreement; Security Documents. The Administrative Agent
shall have received (i) this Agreement, executed and delivered by the
Administrative Agent, the Borrower and each Lender, (ii) the First Mortgage
Indenture, executed and delivered by the Borrower and JPMorgan Chase Bank, as
Trustee, (iii) the Second Supplemental Indenture, executed and delivered by the
Borrower, JPMorgan Chase Bank, as Trustee and JPMorgan Chase Bank, as
Administrative Agent on behalf of the Lenders and (iv) the Consumers Consent,
executed and delivered by Consumers and JPMorgan Chase Bank, as Trustee.
(b) Collateral Security. The Administrative Agent, for the benefit of
the Lenders, shall have received (i) a Company Order (as defined in the First
Mortgage Indenture) requesting the authentication and delivery by the Trustee of
the Collateral Security to the Administrative Agent, (ii) the Collateral
Security issued pursuant to the Second Supplemental Indenture and (iii) any
legal opinions delivered to the Trustee in connection with the issuance of the
Collateral Security.
(c) Performance; No Default. The Borrower shall have performed and
complied with all agreements and conditions contained in this Agreement required
to be performed or complied with by it prior to or at the Closing Date. The
Borrower shall not have entered into any transaction since the date of the
Private Placement Memorandum that would have been prohibited by Section 7 had
such Section applied since such date.
(d) Compliance Certificates. The Borrower shall have delivered to the
Administrative Agent or its counsel (i) an Officer's Certificate, substantially
in the form attached hereto as Exhibit B, dated the Closing Date, certifying
that the conditions specified in Sections 5.1(c), 5.1(h), 5.1(j), 5.1(k), 5.2(a)
and 5.2(b) have been fulfilled and (ii) a certificate signed by a Responsible
Officer of the Borrower, substantially in the form attached hereto as Exhibit B,
certifying as to, among other things, the completeness and correctness of (A)
the Limited Liability Company Agreement attached thereto, and (B) the
resolutions attached thereto and other limited liability company proceedings
relating to the authorization, execution and delivery of this Agreement and each
of the other Loan Documents.
45
(e) Legal Opinions. The Administrative Agent shall have received the
following executed legal opinions:
(i) the legal opinion of Pillsbury Winthrop LLP, special New York
counsel to the Borrower, substantially in the form of Exhibit D-1;
(ii) the legal opinion of ▇▇▇▇▇▇ & Talisman, P.C., counsel to the
Borrower, substantially in the form of Exhibit D-2; and
(iii) the legal opinion of local counsel in Michigan and of such
other special and local counsel as may be required by the Administrative
Agent.
(f) Senior Secured Notes. The Borrower shall have issued an aggregate
principal amount of at least $175,000,000 in Senior Secured Notes.
(g) Fees. The Lenders and the Agents shall have received all fees
required to be paid, and all expenses for which invoices have been presented
(including the reasonable fees and expenses of legal counsel), on or before the
Closing Date. All such amounts will be paid with proceeds of Loans made on the
Closing Date and will be reflected in the funding instructions given by the
Borrower to the Administrative Agent on or before the Closing Date.
(h) Changes in Structure. The Borrower shall not have changed its
jurisdiction of organization or been a party to any merger or consolidation and
shall not have succeeded to all or any substantial part of the liabilities of
any other entity since December 31, 2002.
(i) Proceedings and Documents. All limited liability company and other
proceedings in connection with the transactions contemplated by this Agreement
and the other Loan Documents and all documents and instruments incident to such
transactions shall be reasonably satisfactory to the Administrative Agent and
its counsel, and the Administrative Agent and its counsel shall have received
all such counterpart originals or certified or other copies of such documents as
the Administrative Agent or its counsel may reasonably request.
(j) No Material Adverse Effect. Since the date of the Private
Placement Memorandum that was distributed by the Borrower, no event or condition
shall have occurred or existed which event or condition has had or could
reasonably be expected to have a Material Adverse Effect.
(k) No Legal Impediment to Issuance. No action shall have been taken
or, to the best knowledge of the Borrower, be threatened, and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
Governmental Authority that would, as of the Closing Date, prevent the
transactions contemplated by this Agreement and the other Loan Documents, and no
injunction or order of any other nature by any Governmental Authority shall have
been issued or shall be pending or, to the best knowledge of the Borrower,
threatened that would, as of the Closing Date, prevent the transactions
contemplated by this Agreement and the other Loan Documents.
46
(l) Governmental Approvals. The Administrative Agent shall have
received satisfactory evidence that all material Governmental Approvals required
to be obtained prior to the Closing Date have been received by the Borrower and
are in full force and effect, including FERC approval under Section 204 of the
Federal Power Act, and (i) with respect to FERC approval under Section 204 of
the Federal Power Act, either no Person other than Consumers (which has
withdrawn its protest to such FERC approval) shall have been granted intervenor
status or the time period for any intervenor to seek rehearing shall have
expired without any such rehearing being sought, or (ii) with respect to all
other Governmental Approvals, the time period for any Person to have made a
challenge or object to any such Governmental Approval shall have expired without
any such challenge or objection. All material Governmental Approvals required to
be obtained prior to the Acquisition have been received by the Purchasers, and
are in full force and effect, including FERC approval under Section 203 of the
Federal Power Act, and the time period for any Person to have made a challenge
or object to any such Governmental Approval shall have passed without any such
challenge or objection being made.
(m) Completion of Acquisition. The Acquisition shall have occurred on
or prior to the Closing Date.
(n) Good Standing. The Administrative Agent or its counsel shall have
received on or prior to the Closing Date satisfactory evidence of the good
standing of the Borrower in its jurisdiction of organization and its good
standing in such other jurisdictions as the Administrative Agent or its counsel
may reasonably request, in each case, in writing or any standard form of
telecommunication, from the appropriate Governmental Authorities of such
jurisdictions.
(o) Transmission Documents. The Administrative Agent or its counsel
shall have received copies of all Transmission Documents, duly executed by each
of the parties thereto, accompanied by a certificate from a Responsible Officer
of the Borrower to the effect that: (a) such copies are true, complete and
correct; (b) each such Transmission Document is in full force and effect; (c)
there are no agreements, side letters, amendments or other documents to which it
(or to the best of its knowledge any other Person) is a party that are not
included in the definition of Transmission Documents that has the effect of
modifying or supplementing in any material respect any of the respective rights
or obligations of the Borrower under any such Transmission Documents and (d) the
Borrower and, to the best of his or her knowledge, any other party to any such
Transmission Document is not in default thereunder.
(p) Independent Engineer's Report. The Administrative Agent or its
counsel shall have received a report, in form and substance satisfactory to the
Administrative Agent, from the Independent Engineer assessing the technical
status of the Transmission System.
(q) Insurance Broker's Report. The Administrative Agent or its counsel
shall have received (a) a copy of the report from the Insurance Broker stating
that the insurance policies obtained by the Borrower and the coverages
thereunder are customary for companies similarly situated in the industry in
which the Borrower conducts its business and (b) a certificate from the
Insurance Broker certifying that the insurance specified in such certificate is
in full force and effect, that such insurance complies with what is required by
Section 6.6 and that all premiums on such insurance are current.
47
(r) Lien Searches. The Administrative Agent shall have received the
results of a recent lien search in the jurisdiction of incorporation of the
Borrower, and such search shall reveal no liens on any of the assets of the
Borrower except for Permitted Liens or discharged on or prior to the Closing
Date pursuant to documentation satisfactory to the Administrative Agent.
(s) Security Filings. The Administrative Agent or its counsel shall
have received satisfactory evidence (including copies of all related filings and
lien searches in each relevant jurisdiction) that (i) all Liens on the Property
of the Borrower granted in connection with the Existing Credit Facility have
been, or have been instructed to be, irrevocably released and (ii) all filings
necessary to perfect the Liens in favor of the Trustee, for the benefit of the
Lenders and the holders of the Senior Secured Notes, on the Mortgaged Property
shall have been made or taken to the extent such perfection can be accomplished
by filing; provided, however, that, to the extent necessary, filings required to
perfect the liens on real estate Mortgaged Property may be made promptly after
the Closing Date in accordance with Section 6.10.
(t) Financial Statements. The Administrative Agent and each Lender
shall have received copies of (i) the December 31, 2002 audited financial
statements of the Borrower and Trans-Elect, (ii) the September 30, 2003
unaudited financial statements of the Borrower and Trans-Elect and (iii) the Pro
Forma Balance Sheet, together with a certificate indicating that since the date
of such December 31, 2002 audited financial statements, no material adverse
change has occurred with respect to the consolidated assets, liabilities,
operations or financial condition of the Borrower or Trans-Elect, as the case
may be.
(u) Holdco Debt. Contemporaneously with the transactions contemplated
hereby, Holdco shall issue the Holdco Notes pursuant to the Holdco Financing
Agreements.
(v) Capital Contribution. Contemporaneously with the transactions
contemplated hereby, the Borrower shall have received the Closing Capital
Contribution.
(w) Pro Forma Projections. The Administrative Agent and each Lender
shall have received a copy of the Pro Forma Projections.
(x) Notice of Prepayment/Payoff Letter.
(i) The Administrative Agent or its counsel shall have received a
copy of the prepayment notice relating to the prepayment of the Debt
outstanding under the Existing Credit Facility, which notice shall have
been delivered by the Borrower to the administrative agent under the
Existing Credit Facility in accordance with the terms thereof; and
(ii) The Administrative Agent or its counsel shall have received
a copy of the Payoff Letter duly executed by each of the parties thereto.
5.2 Conditions to Each Extension of Credit. The agreement of each
Lender to make any extension of credit requested to be made by it on any date
(including its initial extension of credit) is subject to the satisfaction of
the following conditions precedent:
48
(a) Representations and Warranties. Each of the representations and
warranties made by the Borrower in or pursuant to the Loan Documents shall be
true and correct in all material respects on and as of such date as if made on
and as of such date, except to the extent that such representations and
warranties expressly relate to a specific earlier date in which case such
representations and warranties shall be true and correct in all material
respects as of such earlier date.
(b) No Default. No Default or Event of Default shall have occurred and
be continuing on such date or after giving effect to the extensions of credit
requested to be made on such date.
Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such extension of credit that the conditions contained in this
Section 5.2 have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain in
effect, any Letter of Credit remains outstanding or any Loan or other amount is
owing to any Lender or the Administrative Agent hereunder, the Borrower shall
and shall cause each of its Subsidiaries to:
6.1 Financial and Business Information. Deliver to the Administrative
Agent and each Lender:
(a) Financial Statements.
(i) Quarterly Statements. As soon as available, but in any event
within 60 days after the end of its first three quarterly fiscal periods,
the unaudited balance sheet of the Borrower as at the end of each such
quarter and the period then ended and the related unaudited statements of
income, member's equity and cash flows for such quarter and the portion of
the fiscal year through the end of each such quarter, prepared in
accordance with GAAP and setting forth in comparative form with the figures
for the comparable period of the previous year (which requirement may be
deemed satisfied by delivery to the Administrative Agent and each Lender of
the Borrower's SEC Form 10-Q), which, in either case (actual or deemed
delivery), shall be accompanied by actual delivery to the Administrative
Agent and each Lender of a certificate from a Responsible Officer of the
Borrower certifying that such financial statements fairly present in all
material respects (subject to normal year-end audit adjustments and the
absence of footnotes) the financial position and the results of operations
of the Borrower;
(ii) Annual Statements. As soon as available, but in any event
within 105 days after the end of each fiscal year of the Borrower, the
balance sheet of the Borrower as at the end of such year and the related
statements of income, member's equity and cash flows for such year,
prepared in accordance with GAAP and audited by
49
independent certified public accountants of recognized standing in the
United States of America (which requirement may be deemed satisfied by
delivery to the Administrative Agent and each Lender of the Borrower's SEC
Form 10-K), which, in either case (actual or deemed delivery), shall be
accompanied by actual delivery to the Administrative Agent and each Lender
of an opinion thereon of independent certified public accountants of
recognized standing in the United States of America, which opinion shall
not contain any "going concern" qualification and shall state that such
statements present fairly, in all material respects, the financial position
of the Borrower, as reported, and its results of operations and cash flows
and have been prepared in conformity with GAAP and that the examination of
such accounts in connection with such financial statements has been made in
accordance with GAAP and that such audit provides a reasonable basis for
such opinion;
provided, however, that, notwithstanding anything to the contrary in each of
Sections 6.1(a)(i) and (ii) above, if at any time that any Obligation is
outstanding the Borrower becomes subject to the reporting requirements of the
Exchange Act as a reporting issuer, the reference to "60 days" and "105 days" in
Sections 6.1(a)(i) and (ii) above, respectively, shall be deemed to be
references to such shorter or longer period or such fewer or larger number, if
any, of days as is mandated by Requirements of Law or by SEC rulemaking or
regulation, or otherwise, as the time period by which the Borrower would then be
required to file its annual reports and quarterly reports, respectively,
pursuant to Section 13(a) or 15(d) of the Exchange Act.
(b) Monthly Statements. Furnish to the Administrative Agent and each
Lender as soon as available, but in any event not later than 45 days after the
end of each month occurring during each fiscal year of the Borrower (other than
the third, sixth, ninth and twelfth such month), the unaudited consolidated
balance sheets of the Borrower and its Subsidiaries as at the end of such month
and the related unaudited consolidated statements of income and of cash flows
for such month and the portion of the fiscal year through the end of such month,
setting forth in each case in comparative form the figures for the previous
year, certified by a Responsible Officer as being fairly stated in all material
respects (subject to normal year-end audit adjustments). All such financial
statements shall be complete and correct in all material respects and shall be
prepared in reasonable detail and in accordance with GAAP (subject to the
absence of footnotes and normal year-end audit adjustments) applied consistently
throughout the periods reflected therein and with prior periods (except as
approved by such officer and disclosed therein).
(c) SEC and Other Reports. Promptly upon their becoming available, and
in any event within five days thereafter, one copy of (i) each financial
statement, report, notice or proxy statement sent by the Borrower to public
securities holders generally, and (ii) each regular or periodic report, each
registration statement (without exhibits except as expressly requested by the
Administrative Agent or any Lender), and each prospectus and all amendments
thereto filed by the Borrower with the SEC and of all press releases made
available generally by the Borrower to the public concerning developments that
are Material.
(d) Notice of Default or Event of Default. Promptly, and in any event
within five days of a Responsible Officer becoming aware of the existence of any
Default or Event of Default or that any Person has given any notice or taken any
action with respect to a claimed
50
Default or Event of Default, a written notice specifying the nature and period
of existence thereof and what action the Borrower is taking or proposes to take
with respect thereto.
(e) ERISA Matters. Promptly, and in any event within five days of a
Responsible Officer becoming aware thereof, a written notice setting forth the
nature of, and proposed action by the Borrower or an ERISA Affiliate with regard
to, any ERISA Events.
(f) Notices from Governmental Authority. Promptly, and in any event
within 30 days after receipt thereof, copies of any notice relating to any
order, ruling, statute or other Requirements of Law from any Governmental
Authority that could reasonably be expected to have a Material Adverse Effect.
(g) Material Adverse Effect. Promptly, and in any event within five
days of a Responsible Officer becoming aware thereof, a notice of any other
development that results in, or could reasonably be expected to result in, a
Material Adverse Effect.
(h) Notices Regarding Default under Contractual Obligations. Promptly
give notice to the Administrative Agent and each Lender of the occurrence of any
default or event of default under any Contractual Obligation of the Borrower or
any litigation, investigation or proceeding that may exist at any time between
the Borrower and any Governmental Authority (other than the FERC), that in
either case, if not cured or if adversely determined, as the case may be, could
reasonably be expected to have a Material Adverse Effect (such notice to be
accompanied by a statement of a Responsible Officer setting forth details of the
occurrence referred to therein and stating what action the Borrower proposes to
take with respect thereto).
(i) Notices Regarding Litigation. Promptly give notice to the
Administrative Agent and each Lender of the occurrence of any litigation or
proceeding affecting the Borrower (other than any litigation or proceeding
before the FERC) in which the amount involved is $1,000,000 or more and not
covered by insurance, in which injunctive or similar relief is sought if the
granting of such injunctive or similar relief could reasonably be expected to
have a Material Adverse Effect or which relates to any Loan Document (such
notice to be accompanied by a statement of a Responsible Officer setting forth
details of the occurrence referred to therein and stating what action the
Borrower proposes to take with respect thereto).
(j) Notices Regarding FERC. A written notice of (i) any proceeding
initiated by the FERC on its own motion, or any filing submitted to the FERC,
requesting a reduction in any of the rates or charges under the OATT or any
other change in the OATT or the MISO Agreement or (ii) any other action taken by
the FERC that could reasonably be expected to or does result in a reduction in
any of the rates or charges under the OATT, in each case which affects the rates
that the Borrower may charge for, or the revenues it may receive from,
transmission services over its Transmission System and which has had or could
reasonably be expected to have a Material Adverse Effect, promptly, and in any
case within five days of any such filing initiated by, or involving, the
Borrower or receipt by the Borrower or a Responsible Officer of written notice
of any such other proceeding or action taken by FERC or filing initiated by such
other Person.
51
(k) Insurance Certificate. On an annual basis (at or around the
anniversary of the date of this Agreement), a certificate from a reputable
insurance broker that the insurance maintained by the Borrower, at such time,
complies with the requirements of Section 6.6.
(l) Requested Information. With reasonable promptness such other data
and information relating to the business, operations, affairs, financial
condition, assets or Properties of the Borrower or relating to the ability of
the Borrower to perform its obligations under this Agreement or under the other
Loan Documents as from time to time may be reasonably requested by the
Administrative Agent or any Lender.
6.2 Certificates; Other Information. Furnish to the Administrative
Agent and each Lender:
(a) concurrently with the delivery of the financial statements
referred to in Section 6.1(a)(ii), a certificate of the independent certified
public accountants reporting on such financial statements stating that in making
the examination necessary therefor no knowledge was obtained of any Default or
Event of Default in respect of the requirements of Sections 7.3, 7.4 and 7.5
(Financial Condition Covenants), Section 7.12 (Capital Expenditures), Section
7.9 (Investments) or Section 7.13 (Sales and Leasebacks), except as specified in
such certificate;
(b) as soon as available, and in any event no later than 60 days after
the end of each fiscal year of the Borrower, a detailed consolidated budget for
the following fiscal year (including a projected consolidated balance sheet of
the Borrower and its Subsidiaries as of the end of the following fiscal year,
the related consolidated statements of projected cash flow, projected changes in
financial position and projected income and a description of the underlying
assumptions applicable thereto), and, as soon as available, significant
revisions, if any, of such budget and projections with respect to such fiscal
year (collectively, the "Projections"), which Projections shall in each case be
accompanied by a certificate of a Responsible Officer stating that such
Projections are based on reasonable estimates, information and assumptions and
that such Responsible Officer has no reason to believe that such Projections are
incorrect or misleading in any material respect;
(c) within 60 days after the end of each fiscal quarter of the
Borrower, a narrative discussion and analysis of the financial condition and
results of operations of the Borrower and its Subsidiaries for such fiscal
quarter and for the period from the beginning of the then current fiscal year to
the end of such fiscal quarter, as compared to the portion of the Projections
covering such periods and to the comparable periods of the previous year;
(d) concurrently with the delivery of the financial statements
referred to in Sections 6.1(a)(i) and Section 6.1(a)(ii), a Compliance
Certificate which contains (i) the information (including detailed calculations)
required in order to establish whether the Borrower was in compliance with the
requirements of Sections 7.3, 7.4 and 7.5 during the quarterly or annual period
covered by the statements then being furnished (including with respect to each
such Section, where applicable, the calculations of the maximum or minimum
amount, ratio or percentage, as the case may be, permissible under the terms of
such Sections, and the calculation of the amount, ratio or percentage then in
existence) and (ii) a statement that such officer has reviewed the relevant
terms of this Agreement and the other Loan Documents and has made, or
52
caused to be made, under his or her supervision, a review of the transactions
and conditions of the Borrower from the beginning of the quarterly or annual
period covered by the statements then being furnished to the date of the
certificate and that such review shall not have disclosed the existence during
such period of any condition or event that constitutes a Default or an Event of
Default or, if any such condition or event existed or exists (including, without
limitation, any such event or condition resulting from the failure of the
Borrower to comply with any Environmental Law), specifying the nature and period
of existence thereof and what action the Borrower shall have taken or proposes
to take with respect thereto.
6.3 Inspection Rights. Permit the Administrative Agent and each Lender
and its representatives:
(a) No Default. If no Default or Event of Default has occurred and is
continuing, at the Administrative Agent's or such Lender's own expense and upon
reasonable prior notice, to visit the principal executive office of the Borrower
or the Holdco General Partner and discuss the Borrower's affairs, finances and
accounts with their respective officers and with the consent of the Borrower
(which consent shall not be unreasonably withheld) to visit other offices and
Properties of the Borrower, all at reasonable times during business hours and as
often as may be reasonably requested in writing; and
(b) Default. If a Default or Event of Default has occurred and is
continuing, at the Borrower's expense, to visit and inspect any offices or
Properties of the Borrower or the principal executive office of the Holdco
General Partner, to examine the Borrower's books of records and accounts and
make copies and extracts therefrom and to discuss the Borrower's affairs,
finances and accounts with their respective officers and the Borrower's
independent accountants (and by this provision the Borrower authorizes such
accountants to discuss the affairs, finances and accounts of the Borrower), all
at such times and as often as may be requested.
6.4 Payment of Obligations. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of the Borrower.
6.5 Maintenance and Operation of Properties. Maintain and preserve,
develop, and operate in substantial conformity with all Transmission Documents,
applicable Requirements of Law, Good Utility Practices, and all material
Governmental Approvals, all elements of the Transmission System which are used
or necessary in the conduct of its businesses in good working order and
condition, ordinary wear and tear excepted, except where the failure to so
maintain and preserve, develop and operate the Transmission System could not
reasonably be expected to have a Material Adverse Effect.
6.6 Maintenance of Insurance. Maintain at all times, for itself and
its assets (including the Transmission System and related equipment), insurance
with Reputable Insurers in amounts and within the limits and coverages
customarily obtained for comparable businesses under similar circumstances;
provided, however, that in no event shall such amounts, limits and
53
coverages be less than the insurance described in the certificate from the
Insurance Broker pursuant to Section 5.1(q), unless (i) such amounts, limits and
coverages are no longer available on commercially reasonable terms or (ii) the
Borrower receives a certificate from a reputable insurance broker certifying
that a step-down in the amounts, limits and coverages of its insurance is
reasonable based on the amounts, limits and coverages customarily obtained for
comparable businesses under similar circumstances.
6.7 Use of Proceeds. Apply the proceeds of the Loans to finance
working capital needs, permitted Capital Expenditures and for other general
corporate purposes of the Borrower.
6.8 Compliance with Laws, Regulations and Contractual Obligations.
(a) Comply with all Requirements of Law (including Environmental Laws)
to which its Property or assets may be subject, except where failure to comply
could not, individually or in the aggregate, reasonably be expected to result in
a Material Adverse Effect. In addition, the Borrower shall immediately pay or
cause to be paid when due all costs and expenses incurred in such compliance,
except to the extent that the same is being contested in good faith by the
Borrower through appropriate means under circumstances where none of the
Mortgaged Property or the Liens thereon will be endangered.
(b) Comply with all Contractual Obligations except to the extent that
failure to comply therewith could not, in the aggregate, reasonably be expected
to have a Material Adverse Effect.
6.9 Permits; Approvals. Obtain in a timely manner and maintain all
Governmental Approvals which are necessary or desirable for the ownership or
operation of its Property or the conduct of its business as so conducted, except
where failure to possess or maintain such Governmental Approvals could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
6.10 Real Estate Filings. To the extent that any filing required to
perfect any security interest in real property or fixtures constituting
Mortgaged Property is not made on or prior to the Closing Date, the Borrower
shall undertake to present all such documents for filing in the appropriate
registers of deeds as soon as practicable after the Closing Date, but in no
event shall any such presentation for filing take place more than five Business
Days after the Closing Date; provided that the Borrower shall confirm by an
Officer's Certificate delivered to the Trustee within six weeks after the
Closing Date that each such document has been recorded with the applicable
registers of deeds and the security interests created or purported to be created
in real property or fixtures by such documents have been fully perfected by
recording in the land records, except for documents to be recorded in the
registers of deeds in the Counties of Oakland, Kent and Genesee in the State of
Michigan, in which case the Borrower shall confirm by an Officer's Certificate
delivered to the Trustee no more than three months after the Closing Date with
respect to the Counties of Kent and Genesee, and no more than five months after
the Closing Date with respect to the County of Oakland, that such documents have
been so recorded.
54
6.11 Compliance with ERISA. With respect to each Plan, comply with
ERISA and the Code, except where such failure could not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect.
6.12 Delivery of Opinions of Counsel. Deliver, or cause to be
delivered, to the Administrative Agent the opinions of counsel required pursuant
to Section 5.1(e).
6.13 Maintenance of Existence, etc. Except as permitted pursuant to
Section 7.15, at all times (i) preserve and maintain in full force and effect
its existence as a limited liability company under the laws of the State of
Michigan and its qualification to do business in each other jurisdiction in
which the conduct of its business requires such qualification, and (ii) obtain,
preserve and maintain all of its rights, privileges and franchises necessary for
the ownership and operation of the Transmission System in accordance with all
applicable Requirements of Law and Governmental Approvals and the Transmission
Documents to which it is a party, except where the termination of or failure to
obtain or maintain such rights, privileges and franchises could not reasonably
be expected to have a Material Adverse Effect.
6.14 Books and Records. Keep, independently from those of its
Affiliates, proper books of records and accounts in which full, true and correct
entries shall be made of all of its transactions, assets and businesses, and
costs and expenses, in each case in accordance with GAAP and all applicable
Requirements of Law. The Borrower shall maintain in all material respects all
operating and maintenance logs and records with respect to the Transmission
System which are required to be maintained by all applicable Requirements of Law
and Governmental Approvals or recommended to be maintained in accordance with
Good Utility Practice.
6.15 Payment of Taxes and Other Claims. File all tax returns required
to be filed in any jurisdiction and pay or discharge, or cause to be paid or
discharged, no later than the date that the same shall become due all taxes,
assessments and governmental charges or levies, as well as all material claims
of any kind (including, without limitation, claims for labor, materials and
supplies), levied or imposed upon (a) the Borrower or (b) the Property of the
Borrower; provided that the Borrower shall not be required to pay or discharge,
or cause to be paid or discharged, any such tax or other claim, (i) the
applicability or validity of which is being contested in good faith through
appropriate means and for which adequate cash reserves in accordance with GAAP
have been established or (ii) the non-filing or non-payment of which, as the
case may be, could not reasonably be expected to have a Material Adverse Effect.
6.16 Certain Additional Covenants with Respect to the Mortgaged
Property.
(a) Until the Final Rate Case Determination Date, deliver to the
Administrative Agent a copy of each material demand, notice or document received
by it that questions or calls into doubt the validity or enforceability of more
than ten percent of the aggregate amount of the then outstanding Receivables (as
defined in the First Mortgage Indenture).
(b) Until the Final Rate Case Determination Date, deliver to the
Administrative Agent a copy of each material demand, notice or document received
by it relating
55
in any way to any Contract (as defined in the First Mortgage Indenture) that
questions the validity or enforceability of such Contract.
6.17 Annual Officer's Certificate as to Compliance. Within 105 days
after the end of each fiscal year of the Borrower, the Borrower shall deliver to
the Administrative Agent an Officer's Certificate executed by a Responsible
Officer of the Borrower stating that the such officer has reviewed the relevant
terms in this Agreement and has made, or caused to be made, under his or her
supervision, a review of the transactions and conditions of the Borrower from
the beginning of the annual period to the date of the certificate and that such
review shall not have disclosed the existence during such period of any
condition or event that constitutes a Default or Event of Default or, if any
such condition or event existed or exists (including, without limitation, any
such event or condition resulting from the failure of the Borrower to comply
with any Environmental Law), specifying the nature and period of existence
thereof and what action the Borrower shall have taken or proposes to take with
respect thereto.
SECTION 7. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain in
effect, any Letter of Credit remains outstanding or any Loan or other amount is
owing to any Lender or the Administrative Agent hereunder, the Borrower shall
not, and shall not permit any of its Subsidiaries to, directly or indirectly:
7.1 Restrictions on the Establishment of Subsidiaries. Create, acquire
or suffer to exist, directly or indirectly, any Subsidiary or acquire or invest
in any other Capital Stock in any Person.
7.2 Limitations on Asset Sales. Dispose of all or any substantial part
of its assets during any fiscal year, other than:
(a) Dispositions in the ordinary course of business of obsolete or
worn out Property and real property interests not needed by the Borrower for its
Transmission System or for the conduct of its business;
(b) Dispositions of assets that would be permitted under Section 7.15;
(c) Dispositions of undivided interests in segments of the
Transmission System as may be required pursuant to Sections 6, 7 or 8 of the
MPPA Agreement; or
(d) any other Disposition of assets; provided, that, to the extent
applicable, the Net Proceeds thereof shall be applied in accordance with the
terms and conditions of Section 2.03 of the First Supplemental Indenture.
7.3 EBITDA / Interest Expense. Permit, as of the end of any fiscal
quarter (beginning with the fiscal quarter ending March 31, 2004), the ratio of
(a) EBITDA for the period of four consecutive fiscal quarters ending on such
quarter-end date, to (b) Interest
56
Expense for such period, to be less than 3.0 to 1.0; provided, however, that for
the quarterly calculation dates occurring on March 31, 2004, June 30, 2004 and
September 30, 2004, the calculation of the above ratio shall be adjusted as
follows:
(i) with regard to EBITDA, the EBITDA to be included in the
calculation shall be the sum of EBITDA for the period of four consecutive
fiscal quarters ending on such calculation date, multiplied by: (A) in the
case of the March 31, 2004 calculation date, 0.25, (B) in the case of the
June 30, 2004 calculation date, 0.50 and (C) in the case of the September
30, 2004 calculation date, 0.75; and
(ii) with regard to Interest Expense, the Interest Expense to be
included in the calculation shall be: (A) in the case of the March 31, 2004
calculation date, the Interest Expense for the fiscal quarter ending on
such date, (B) in the case of the June 30, 2004 calculation date, the
Interest Expense for the two consecutive fiscal quarters ending on such
date, and (C) in the case of the September 30, 2004 calculation date, the
Interest Expense for the three consecutive fiscal quarters ending on such
date.
Notwithstanding the foregoing, for purposes of calculating the EBITDA/Interest
Expense ratio referred to above at the end of any fiscal quarter occurring prior
to the Final Rate Case Determination Date only, "EBITDA", for any applicable
calculation period, may include equity contributions made to the Borrower by
Holdco, solely from equity contributions made to Holdco by its partners for
purposes of making such equity contribution to the Borrower, during such
calculation period (or after such period, but only if prior to the earlier of
the date on which the Borrower (i) submits its compliance certificate for such
calculation period in accordance with Section 6.2(d) and (ii) is required to
submit such compliance certificate for such calculation period), which equity
contributions are not used in connection with any investments, distributions or
other expenditures by the Borrower during such calculation period, provided,
however, that the aggregate amount of any such equity contributions to be taken
into account for purposes of any such calculation does not equal an amount which
is more than 20% of the EBITDA for such calculation period, determined without
giving effect to such equity contributions. In the event the credit for any such
equity contribution is not needed for the Borrower to be in compliance with this
Section 7.3 on any subsequent quarterly calculation date, such funds may be
invested, distributed or otherwise used at the discretion of the Borrower not in
contravention of this Agreement or any of the Financing Agreements.
7.4 Debt / EBITDA. Permit, as of the end of any fiscal quarter
(beginning with the first full fiscal quarter beginning and ending after the
earlier of (a) the fiscal quarter in which the Final Rate Case Determination
Date occurs and (b) March 31, 2006, or, in the event that the Final Rate Case
Determination Date occurs after March 31, 2006 solely as a result of a FERC
Delay, September 30, 2006), the ratio of (i) Debt (other than Subordinated Debt)
outstanding on such quarter-end date to (ii) EBITDA for the period of four
consecutive fiscal quarters ending on such quarter-end date, to exceed 3.5 to
1.0; provided, however, that for each of the first three quarterly calculation
dates, the calculation of the above ratio shall be adjusted as follows:
(A) with regard to Debt, the Debt (other than Subordinated Debt)
outstanding on such calculation date shall be multiplied by: (1) in the
case of the first quarterly
57
calculation date, 0.25, (2) in the case of the second quarterly calculation
date, 0.50 and (3) in the case of the third quarterly calculation date,
0.75; and
(B) with regard to EBITDA, the EBITDA to be included in the
calculation on such calculation date shall be: (1) in the case of the first
quarterly calculation date, the EBITDA for the fiscal quarter ending on
such calculation date, (2) in the case of the second quarterly calculation
date, the EBITDA for the two consecutive fiscal quarters ending on such
calculation date, and (3) in the case of the third quarterly calculation
date, the EBITDA for the three consecutive fiscal quarters ending on such
calculation date.
7.5 Debt / Capitalization. As of the end of any fiscal quarter, permit
the ratio (determined in accordance with GAAP) of (a) Debt of the Borrower to
(b) the sum of (i) Debt of the Borrower and (ii) stockholder's equity of the
Borrower, to exceed 58%.
7.6 Limitation on Debt. Prior to the Final Rate Case Determination
Date, incur any additional Debt (other than the Senior Secured Notes, Debt
incurred under this Agreement and Limited Equipment Indebtedness). After the
Final Rate Case Determination Date, the Borrower shall not incur any additional
Debt (other than Subordinated Debt) unless (a) no Default or Event of Default
has occurred and is continuing, or would exist immediately after giving effect
to, the incurrence of such Debt and (b) it is in full compliance with Sections
7.3, 7.4 and 7.5 both immediately prior, and immediately after giving effect, to
the incurrence of any such Debt, and the use of proceeds from such incurrence
(calculated, in each case, on a Pro Forma Basis as of the last day of the fiscal
quarter most recently ended for which compliance with such Sections shall have
been determined); provided, that (i) if a Default or an Event of Default shall
have occurred and be continuing at the time of the incurrence of any
Subordinated Debt, the net proceeds from the incurrence of such Subordinated
Debt shall be applied to cure such Default or Event of Default to the extent
such Default or Event of Default, after giving pro forma effect to the
incurrence of such Subordinated Debt, can be so cured, and (ii) if a Payment
Event of Default shall have occurred and be continuing, no such Subordinated
Debt shall be incurred. Any such additional Debt permitted by the preceding
sentence (other than (A) any bank or other credit facilities (whether of a
revolving nature or not) between the Borrower and any lenders under which
facilities the borrowings outstanding, the face amount of any letters of credit
outstanding and any unfunded commitments to extend credit exceed, in the
aggregate, $70,000,000 or (B) any Subordinated Debt) may be secured on a pari
passu basis with the Obligations hereunder and the Senior Secured Notes pursuant
to the terms and conditions of the First Mortgage Indenture (any such secured
Debt, "Permitted Additional Senior Secured Debt"). Further, the Borrower shall
not, at any time, enter into (1) any Hedging Agreement for speculative purposes
or (2) any Hedging Agreement if the obligations of the Borrower relating thereto
would not be reflected in the calculation of the Borrower's revenue requirement
to be collected under the OATT.
7.7 Limitations on Liens. Create, incur, assume or suffer to exist any
Lien upon any of the Borrower's Property, whether now owned or hereafter
acquired, other than Permitted Liens.
7.8 Restricted Payments. Make any Restricted Payments so long as any
Default or Event of Default shall have occurred and be continuing at the time
of, or would exist
58
immediately after giving effect to, such Restricted Payment; provided, however,
that so long as no Payment Event of Default has occurred or is continuing, or
would result from the making of such Restricted Payment, the Borrower shall be
entitled to make Restricted Payments to Holdco to pay:
(a) any scheduled interest payments that are due and payable under the
Holdco Notes or other Holdco Senior Secured Debt, but only to the extent that
Holdco does not have cash available for such purpose and such funds are used,
immediately following receipt thereof by Holdco, solely for such purpose, and
(b) corporate overhead and administrative expenses incurred by Holdco
in the ordinary course of business not to exceed $250,000 in any fiscal year;
provided, further, however, that, after the creation or acquisition of any
Subsidiary by Holdco after the Closing Date, the Borrower shall only be
permitted to make Restricted Payments in accordance with the foregoing proviso
in an amount equal to no more than the sum of (x) any amount then required to
pay corporate overhead and administrative expenses (not to exceed $250,000 for
any fiscal year) and (y) the scheduled interest due and payable on the Holdco
Notes and any other Holdco Senior Secured Debt incurred prior to, and not in
connection with, the creation or acquisition of the first such Subsidiary, less
any funds Holdco has available for the payment of such corporate overhead and
administrative expenses and such interest on the Holdco Notes and other Holdco
Senior Secured Debt.
7.9 Restrictions on Investments. Unless permitted by Section 7.15,
make any advance, loan, extension of credit (by way of guarantee or otherwise)
or capital contribution to, or purchase any Capital Stock, bonds, notes,
debentures or other debt securities of, or any assets constituting a business
unit of, or make any other investment in, any Person, except:
(a) extensions of trade credit in the ordinary course of business;
(b) investments in Cash Equivalents;
(c) loans and advances to employees of the Borrower in the ordinary
course of business (including for travel, entertainment and relocation expenses)
in an aggregate amount not to exceed $300,000 at any one time outstanding;
(d) loans to Holdco to pay corporate overhead and administrative
expenses incurred by Holdco in the ordinary course of business not to exceed
$200,000 at any one time outstanding; and
(e) investments in Rate Base Assets.
7.10 Limitation on Lines of Business. Engage in any business other
than the business of owning transmission facilities and providing transmission
service over such facilities, if as a result, the general nature of the business
engaged in by the Borrower taken as a whole would be substantially changed from
the general nature of the business the Borrower is engaged in on the Closing
Date.
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7.11 Limitation on Transactions with Affiliates. Enter into any
Material transaction with any Affiliate (other than the Amended Management
Services Agreement), except (a) in the ordinary course of business and (b) on
terms and conditions (i) no less favorable than would be obtainable in a
comparable arms-length transaction negotiated in good faith with a Person that
is not an Affiliate and (ii) consistent with applicable FERC policy regarding
Affiliate transactions.
7.12 Limitation on Capital Expenditures. Make any Material Capital
Expenditures for, or in, assets that are not Rate Base Assets. In addition, the
Borrower shall not make any Capital Expenditures prior to the Final Rate Case
Determination Date in excess of $50,000,000 in the aggregate; provided, however,
that, notwithstanding such limitation, (a) in the event of a FERC Delay, the
Borrower may, during calendar year 2006, make additional Capital Expenditures in
excess of the limit specified above in an aggregate amount not to exceed
$25,000,000, so long as such additional capital expenditures for such calendar
year are budgeted as of December 31, 2005 and (b)the Borrower may make Capital
Expenditures that it reasonably believes are necessary to comply with its
obligations as a regulated electric transmission system owner/operator.
7.13 Limitation on Sale-Lease and Lease-Lease Back Transactions. Enter
into any sale-leaseback or lease-leaseback transaction involving any of its
Properties whether now owned or hereafter acquired, whereby the Borrower sells,
otherwise transfers or leases such Properties and then or thereafter leases or
subleases such Properties or any part thereof or any other Properties which the
Borrower intends to use for substantially the same purpose or purposes as the
Properties sold, otherwise transferred or leased.
7.14 Transmission Documents. Terminate, assign, modify, supplement or
waive, or agree or consent to any termination, assignment, modification,
supplement or waiver of, any Transmission Document, if such termination,
assignment, modification, supplement or waiver of any such Transmission Document
could, individually or collectively with all other such terminations,
assignments, modifications, supplements or waivers, reasonably be expected to
have a Material Adverse Effect.
7.15 Mergers, Consolidations, Etc.
(a) Consolidate or merge with any other Person or convey, transfer or
lease substantially all of its assets, in a single transaction or series of
transactions, to any Person; provided, however, that, the Borrower (a) may merge
with any other Person if the Borrower is the surviving entity, or, (b) may
convey, transfer or lease substantially all its assets to any other Person, or
may consolidate or merge with any other Person if the Borrower is not the
surviving entity, if such transferee or surviving entity, as the case may be, is
a solvent United States corporation or limited liability company and (i) the
surviving or transferee entity (such entity being hereafter sometimes called the
"Successor Corporation"), as the case may be, expressly assumes the Borrower's
obligations under this Agreement, the other Loan Documents and the then
outstanding Obligations hereunder, and (ii) the Administrative Agent receives an
opinion of counsel to the effect that all the agreements and instruments
effecting such assumptions are enforceable, and, in the case of either clause
(a) or (b), (A) no Default or Event of Default shall exist immediately after
giving effect to such consolidation, merger, conveyance, transfer or lease,
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(B) the Borrower or the Successor Corporation, as the case may be, then has an
investment grade rating on the Senior Secured Notes by ▇▇▇▇▇'▇ and S&P to the
extent each such rating agency is then rating the Senior Secured Notes at the
time of such consolidation, merger, conveyance, transfer or lease (provided that
at least one of ▇▇▇▇▇'▇ or S&P is at such time rating the Senior Secured Notes)
and (C) no ratings downgrade on the then existing ratings of the Senior Secured
Notes shall occur as a result of such consolidation, merger, conveyance,
transfer or lease or (c) may reincorporate in Delaware; provided, that, (1) upon
such reincorporation, the reincorporated entity (which shall be a Successor
Corporation for purposes of this Section 7.15) expressly assumes the Borrower's
obligations under this Agreement, the other Loan Documents and the then
outstanding Obligations hereunder, and (2) the Administrative Agent receives an
opinion of counsel to the effect that all the agreements and instruments
effecting such assumptions are enforceable.
(b) With respect to any consolidation, merger, conveyance, transfer or
lease permitted pursuant to this Section 7.15 involving a Successor Corporation
and as a condition to any such consolidation, merger, conveyance, transfer or
lease, the Borrower shall execute and deliver to the Administrative Agent and
each Lender an amendment hereto, in form satisfactory to the Administrative
Agent and the Lenders, which:
(i) in the case of a consolidation, merger, conveyance or other
transfer, or in the case of a lease if the term thereof extends beyond the
Final Maturity Date, contains an express assumption by the Successor
Corporation of the due and punctual payment of the principal of and
interest on the Loans and all other Obligations and the performance and
observance of every covenant and condition of this Agreement and the other
Loan Documents to be performed or observed by the Borrower; and
(ii) in the case of a consolidation, merger, conveyance or other
transfer, contains a grant, conveyance, transfer and mortgage by the
Successor Corporation, of the same tenor of the Granting Clauses of the
First Mortgage Indenture confirming the Lien of the First Mortgage
Indenture on the Mortgaged Property (as constituted immediately prior to
the time such transaction became effective) and subjecting to the Lien of
the First Mortgage Indenture all property, real, personal and mixed, then
owned or leased or thereafter acquired by the Successor Corporation or a
renewal, replacement or substitution of or for any part thereof; and
(iii) in the case of a lease of substantially all of the
Borrower's assets, such lease shall be made expressly subject to
termination by the Borrower or by the Lenders at any time during the
continuance of an Event of Default, and also by the purchaser of the
property so leased at any sale thereof hereunder, whether such sale be made
under the power of sale hereby conferred or pursuant to judicial
proceedings.
(c) As a condition to any consolidation, merger, conveyance or other
transfer pursuant to this Section 7.15, the Borrower shall deliver to the
Administrative Agent and each Lender an Officer's Certificate and an opinion of
counsel stating that such consolidation, merger, conveyance, transfer or lease
and such amendment, if any, comply with this Section 7.15 and that all
applicable Governmental Approvals have been obtained and all conditions
precedent herein provided for relating to such transaction have been complied
with.
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(d) Upon any consolidation of the Borrower with, or merger of the
Borrower into, any other Person or any conveyance, transfer or lease, of
substantially all the assets of the Borrower in accordance with Sections 7.15(a)
through 7.15(c), the Successor Corporation formed by such consolidation (or into
which the Borrower is merged or to which such conveyance, transfer or lease is
made) shall succeed to, and be substituted for, and may exercise every right and
power of, the Borrower under this Agreement and the other Loan Documents with
the same effect as if such Successor Corporation had been named as the Borrower
herein.
(e) Notwithstanding anything to the contrary set forth in Section
10.16, if the Borrower conveys, transfers or leases substantially all of its
assets to Holdco or any successor thereto or merges or consolidates with Holdco
or any successor thereto and the Borrower is not the surviving entity, Holdco
and any successor thereto, subject to compliance with this Section 7.15, as
applicable, shall be deemed a "Successor Corporation" hereunder, with all the
rights and obligations set forth herein.
7.16 Optional Payments and Modifications of Certain Debt Instruments.
(a) Make or offer to make any optional or voluntary payment, prepayment,
repurchase or redemption of or otherwise optionally or voluntarily defease or
segregate funds with respect to the Senior Secured Notes or any Permitted
Additional Senior Secured Debt (as defined in the First Mortgage Indenture); (b)
amend, modify, waive or otherwise change, or consent or agree to any amendment,
modification, waiver or other change to (i) any of the terms of the Senior
Secured Notes that would have the effect of shortening the maturity of any
portion of the principal amount thereof or (ii) any of the terms of
subordination applicable to Subordinated Debt; or (c) execute any amendment,
consent, waiver request, request for authorization or modification with respect
to the First Mortgage Indenture that would require the consent or approval of
all or some portion (as specified in the First Mortgage Indenture) of the
holders of securities issued pursuant thereto without giving written notice to
the Administrative Agent at least five Business Days prior to the record date to
be set in connection with such consent or approval.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) the Borrower shall fail to pay any principal of any Loan or any
Reimbursement Obligation when the same becomes due and payable in accordance
with the terms hereof; or
(b) the Borrower shall fail to pay any interest on any Loan or
Reimbursement Obligation, or any other amount payable hereunder or under any
other Loan Document, when the same becomes due and payable, and such failure to
pay continues for a period of five days; or
(c) the Borrower (i) is generally not paying, or admits in writing its
inability to pay, its debts as they become due, (ii) files, or consents by
answer or otherwise to the filing against it of, a petition for relief or
reorganization or arrangement or any other petition in bankruptcy, for
liquidation or to take advantage of any bankruptcy, insolvency, reorganization,
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moratorium or other similar law of any jurisdiction, (iii) makes an assignment
for the benefit of its creditors, (iv) consents to the appointment of a
custodian, receiver, trustee or other officer with similar powers with respect
to it or with respect to any substantial part of its property, (v) is
adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for
the purpose of any of the foregoing; or
(d) a court or Governmental Authority of competent jurisdiction enters
an order appointing, without consent by the Borrower, a custodian, receiver,
trustee or other officer with similar powers with respect to it or with respect
to any substantial part of its Property, or constituting an order for relief or
approving a petition for relief or reorganization or any other petition in
bankruptcy or for liquidation or to take advantage of any bankruptcy or
insolvency law of any jurisdiction, or ordering the dissolution, winding-up or
liquidation of the Borrower, or any such petition or similar proceedings shall
be filed against the Borrower, and any such petition or proceeding listed in
this clause (d) shall not be dismissed within 60 days of its filing; or
(e) the Borrower shall fail to perform or observe any of its covenants
or obligations set forth in Section 6.13 or Section 7; or
(f) the Borrower shall fail to perform or observe any of its
obligations or covenants contained in this Agreement (other than as provided in
paragraphs (a), (b) or (e) above) and such failure is not cured within 30 days
after the earlier to occur of (i) a Responsible Officer of the Borrower
obtaining actual knowledge of such failure and (ii) the Borrower receiving
notice of such failure from the Administrative Agent or any Lender; or
(g) any representation, warranty or certification by the Borrower in
any of the Loan Documents or in any certificate furnished to the Administrative
Agent or the Lenders pursuant to the provisions of this Agreement or any other
Loan Document shall prove to have been false in any Material respect as of the
time made or furnished, as the case may be; or
(h) as a consequence of the occurrence or continuation of any event or
condition (other than the passage of time or the right of the holder of Debt to
convert such Debt into equity interests), other than as provided in Section 2.03
or Section 2.04 of the Note Purchase Agreement or Section 501(a) or 501(b) of
the First Mortgage Indenture, (i) the Borrower shall have become obligated to
purchase or repay any Debt before its regularly scheduled maturity date in the
aggregate principal amount of $5,000,000 or more or (ii) one or more Persons
have the right to require such Debt to be purchased or repaid; or
(i) the Borrower shall (1) default in making any payment of any
principal of any Debt (including any Guarantee Obligation, but excluding the
Loans and Subordinated Debt) on the scheduled or original due date with respect
thereto; (2) default in making any payment of any interest on any such Debt
beyond the period of grace, if any, provided in the instrument or agreement
evidencing such Debt or any other agreement to which such Debt is subject; or
(3) default beyond the period of grace, if any, in the observance or performance
of any other agreement or condition relating to any such Debt or contained in
any instrument or agreement evidencing, securing or relating thereto, or any
other event shall occur or condition exist, the effect of which default or other
event or condition is to cause, or to permit the holder or
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beneficiary of such Debt (or a trustee or agent on behalf of such holder or
beneficiary) to cause, with the giving of notice if required, such Debt to
become due prior to its stated maturity or (in the case of any such Debt
constituting a Guarantee Obligation) to become payable; provided that a default,
event or condition described in clause (1), (2) or (3) of this paragraph (i)
shall have not at any time constitute an Event of Default unless, at such time,
one or more defaults, events or conditions of the type described in clauses (1),
(2) and (3) of this paragraph (i) shall have occurred and be continuing with
respect to Debt the outstanding principal amount of which exceeds in the
aggregate $5,000,000; or
(j) any judgment or judgments for the payment of money in excess of
$5,000,000 (or its equivalent in any other currency) in the aggregate by the
Borrower, which is, or are, not covered in full by insurance, shall be rendered
by one or more courts, administrative tribunals or other bodies having
jurisdiction over the Borrower and the same shall not be discharged (or
provision shall not be made for such discharge), bonded or a stay of execution
thereof shall not be procured, within 60 days from the date of entry thereof and
the Borrower shall not, within said period of 60 days, or such longer period
during which execution of the same shall have been stayed, appeal therefrom and
cause the execution thereof to be stayed during such appeal; or
(k) (i) the Borrower shall file with FERC or such other applicable
Governmental Authority for the abandonment or termination of transmission
service over all or a significant portion of the Transmission System, (ii) FERC
or such other applicable Governmental Authority shall issue a final,
non-appealable order for the abandonment or termination of transmission service
over all or a significant portion of the Transmission System, or (iii) the
Borrower shall otherwise directly or indirectly abandon or terminate
transmission service over all or a significant portion of the Transmission
System or cease to pursue the operation of the Transmission System for a period
in excess of 30 days; or
(l) any Transmission Document shall have been terminated prior to its
stated termination date and such termination has, or could reasonably be
expected to have, a Material Adverse Effect; or
(m) except as otherwise permitted by Section 611(2) of the First
Mortgage Indenture and Section 6.10, the Borrower shall fail to maintain a valid
and perfected first priority Lien in any part of the Mortgaged Property, to the
extent such perfection can be accomplished by filing; or
(n) any provision of this Agreement or any of the Loan Documents shall
(i) be repudiated by the Borrower or (ii) for any reason other than the express
terms thereof cease to be enforceable and such repudiation or unenforceability
shall not be remedied within 30 days; or
(o) there shall occur a Total Loss; or
(p) a Change of Control shall have occurred, unless a Ratings
Reaffirmation is obtained prior to, and taking into account, such Change of
Control; or
(q) any ERISA Event shall have occurred and the liability of the
Borrower and the ERISA Affiliates related to such ERISA Event, when aggregated
with all other ERISA
64
Events (determined as of the date of occurrence of such ERISA Event), has
resulted in or could reasonably be expected to result in a Material Adverse
Effect;
(r) there shall occur an Event of Default (as defined in the First
Mortgage Indenture); or
(s) Holdco or a successor (as permitted by the Holdco Mortgage
Indenture as in effect on the Closing Date) shall cease to own 100% of the
Capital Stock in the Borrower.
then, and in any such event, (A) if such event is an Event of Default specified
in paragraph (c) or (d) above with respect to the Borrower, automatically the
Commitments shall immediately terminate and the Loans (with accrued interest
thereon) and all other amounts owing under this Agreement and the other Loan
Documents (including all amounts of L/C Obligations, whether or not the
beneficiaries of the then outstanding Letters of Credit shall have presented the
documents required thereunder) shall immediately become due and payable, and (B)
if such event is any other Event of Default, either or both of the following
actions may be taken: (i) with the consent of the Required Lenders, the
Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, by notice to the Borrower declare the Commitments to
be terminated forthwith, whereupon the Commitments shall immediately terminate;
and (ii) with the consent of the Required Lenders, the Administrative Agent may,
or upon the request of the Required Lenders, the Administrative Agent shall, by
notice to the Borrower, declare the Loans (with accrued interest thereon) and
all other amounts owing under this Agreement and the other Loan Documents
(including all amounts of L/C Obligations, whether or not the beneficiaries of
the then outstanding Letters of Credit shall have presented the documents
required thereunder) to be due and payable forthwith, whereupon the same shall
immediately become due and payable. With respect to all Letters of Credit with
respect to which presentment for honor shall not have occurred at the time of an
acceleration pursuant to this paragraph, the Borrower shall at such time deposit
in a cash collateral account opened by the Administrative Agent an amount equal
to the aggregate then undrawn and unexpired amount of such Letters of Credit.
Amounts held in such cash collateral account shall be applied by the
Administrative Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay other
obligations of the Borrower hereunder and under the other Loan Documents. After
all such Letters of Credit shall have expired or been fully drawn upon, all
Reimbursement Obligations shall have been satisfied and all other obligations of
the Borrower hereunder and under the other Loan Documents shall have been paid
in full, the balance, if any, in such cash collateral account shall be returned
to the Borrower (or such other Person as may be lawfully entitled thereto).
Except as expressly provided above in this Section, presentment, demand, protest
and all other notices of any kind are hereby expressly waived by the Borrower.
SECTION 9. THE AGENTS
9.1 Appointment. Each Lender hereby irrevocably designates and
appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Loan Documents, and each such Lender irrevocably
authorizes the Administrative Agent, in such
65
capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to the Administrative Agent by the terms
of this Agreement and the other Loan Documents, together with such other powers
as are reasonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere in this Agreement, the Administrative Agent shall not have
any duties or responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any Lender, 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
Administrative Agent.
9.2 Delegation of Duties. The Administrative Agent may execute any of
its duties under this Agreement and the other Loan Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agents or attorneys
in-fact selected by it with reasonable care.
9.3 Exculpatory Provisions. Neither any Agent nor any of their
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except to the extent that any of the foregoing are found by
a final and nonappealable decision of a court of competent jurisdiction to have
resulted from its or such Person's own gross negligence or willful misconduct)
or (ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by the Borrower or any officer
thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agents under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
for any failure of the Borrower to perform its obligations hereunder or
thereunder. The Agents shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Borrower.
9.4 Reliance by Administrative Agent. The Administrative Agent shall
be entitled to rely, and shall be fully protected in relying, upon any
instrument, writing, resolution, notice, consent, certificate, affidavit,
letter, telecopy, telex or teletype message, statement, order or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including counsel to Holdco or the Borrower),
independent accountants and other experts selected by the Administrative Agent.
The Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Administrative Agent. The
Administrative Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders (or, if so specified
by this Agreement, all Lenders) as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense that may be incurred by it by reason of taking or continuing to take any
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such action. The Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement and the other Loan
Documents in accordance with a request of the Required Lenders (or, if so
specified by this Agreement, all Lenders), and such request and any action taken
or failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Loans.
9.5 Notice of Default. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
unless the Administrative Agent has received notice from a Lender, Holdco or the
Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Administrative Agent receives such a notice, the Administrative Agent shall
give notice thereof to the Lenders. The Administrative Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders (or, if so specified by this Agreement, all
Lenders); provided that unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders.
9.6 Non-Reliance on Agents and Other Lenders. Each Lender expressly
acknowledges that neither the Agents nor any of their respective officers,
directors, employees, agents, attorneys-in-fact or affiliates have made any
representations or warranties to it and that no act by any Agent hereafter
taken, including any review of the affairs of the Borrower or any of its
affiliates, shall be deemed to constitute any representation or warranty by any
Agent to any Lender. Each Lender represents to the Agents that it has,
independently and without reliance upon any Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Borrower and its
affiliates and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon any 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 analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Borrower and its affiliates. Except for notices, reports and other documents
expressly required to be furnished to the Lenders by the Administrative Agent
hereunder, the Administrative Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business,
operations, property, condition (financial or otherwise), prospects or
creditworthiness of the Borrower or any of its affiliates that may come into the
possession of the Administrative Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates.
9.7 Indemnification. The Lenders agree to indemnify each Agent in its
capacity as such (to the extent not reimbursed by Holdco or the Borrower and
without limiting the obligation of Holdco or the Borrower to do so), ratably
according to their respective Aggregate Exposure Percentages in effect on the
date on which indemnification is sought under this Section (or, if
indemnification is sought after the date upon which the Commitments shall
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have terminated and the Loans shall have been paid in full, ratably in
accordance with such Aggregate Exposure Percentages immediately prior to such
date), from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever that may at any time (whether before or after the payment of the
Loans) be imposed on, incurred by or asserted against such Agent in any way
relating to or arising out of, the Commitments, this Agreement, any of the other
Loan Documents or any documents contemplated by or referred to herein or therein
or the transactions contemplated hereby or thereby or any action taken or
omitted by such Agent under or in connection with any of the foregoing; provided
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements that are found by a final and nonappealable
decision of a court of competent jurisdiction to have resulted from such Agent's
gross negligence or willful misconduct. The agreements in this Section shall
survive the payment of the Loans and all other amounts payable hereunder.
9.8 Agent in Its Individual Capacity. Each Agent and its affiliates
may make loans to, accept deposits from and generally engage in any kind of
business with the Borrower as though such Agent were not an Agent. With respect
to its Loans made or renewed by it and with respect to any Letter of Credit
issued or participated in by it, each Agent shall have the same rights and
powers under this Agreement and the other Loan Documents as any Lender and may
exercise the same as though it were not an Agent, and the terms "Lender" and
"Lenders" shall include each Agent in its individual capacity.
9.9 Successor Administrative Agent. The Administrative Agent may
resign as Administrative Agent upon 10 days' notice to the Lenders and the
Borrower. If the Administrative Agent shall resign as Administrative Agent under
this Agreement and the other Loan Documents, then the Required Lenders shall
appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall (unless an Event of Default under Section 8(c) or Section
8(d) with respect to the Borrower shall have occurred and be continuing) be
subject to approval by the Borrower (which approval shall not be unreasonably
withheld or delayed), whereupon such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent's rights, powers
and duties as Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Loans. If no successor agent
has accepted appointment as Administrative Agent by the date that is 10 days
following a retiring Administrative Agent's notice of resignation, the retiring
Administrative Agent's resignation shall nevertheless thereupon become
effective, and the Lenders shall assume and perform all of the duties of the
Administrative Agent hereunder until such time, if any, as the Required Lenders
appoint a successor agent as provided for above. After any retiring
Administrative Agent's resignation as Administrative Agent, the provisions of
this Section 9 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Administrative Agent under this Agreement and the
other Loan Documents.
9.10 Syndication Agent. The Syndication Agent shall not have any
duties or responsibilities hereunder in its capacity as such.
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SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers. Neither this Agreement, any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 10.1. The
Required Lenders and the Borrower may, or, with the written consent of the
Required Lenders, the Administrative Agent and the Borrower may, from time to
time, (a) enter into written amendments, supplements or modifications hereto and
to the other Loan Documents for the purpose of adding any provisions to this
Agreement or the other Loan Documents or changing in any manner the rights of
the Lenders or of the Borrower hereunder or thereunder or (b) waive, on such
terms and conditions as the Required Lenders or the Administrative Agent, as the
case may be, may specify in such instrument, any of the requirements of this
Agreement or the other Loan Documents or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such amendment,
supplement or modification shall (i) forgive the principal amount or extend the
final scheduled date of maturity of any Loan, reduce the stated rate of any
interest or fee payable hereunder (except in connection with the waiver of
applicability of any post-default increase in interest rates) or extend the
scheduled date of any payment thereof, or increase the amount or extend the
expiration date of any Lender's Commitment, in each case without the written
consent of each Lender directly affected thereby; (ii) eliminate or reduce the
voting rights of any Lender under this Section 10.1 without the written consent
of such Lender; (iii) reduce any percentage specified in the definition of
Required Lenders, consent to the assignment or transfer by the Borrower of any
of its rights and obligations under this Agreement and the other Loan Documents,
release all or substantially all of the Mortgaged Property (as defined in the
First Mortgage Indenture) or release all or substantially all of the guarantors,
if any, from their obligations under the First Mortgage Indenture, in each case
without the written consent of all Lenders; (iv) amend, modify or waive any
provision of Section 9 without the written consent of the Administrative Agent;
(v) amend, modify or waive any provision of Section 2.3 or 2.4 without the
written consent of the Swingline Lender or (vi) amend, modify or waive any
provision of Section 3 without the written consent of the Issuing Lender;
provided further that, with respect to any amendment, supplement or modification
of any of the Security Documents, (A) any vote to be cast by the Administrative
Agent, as holder of the Collateral Security for the benefit of the Lenders,
shall be determined pursuant to an amendment, supplement, waiver or consent
executed in accordance with the terms of this Section 10.1 and (B) any
amendment, supplement or modification thereto shall otherwise be effected
pursuant to the terms thereof. Any such waiver and any such amendment,
supplement or modification shall apply equally to each of the Lenders and shall
be binding upon the Borrower, the Lenders, the Administrative Agent and all
future holders of the Loans. In the case of any waiver, the Borrower, the
Lenders and the Administrative Agent shall be restored to their former position
and rights hereunder and under the other Loan Documents, and any Default or
Event of Default waived shall be deemed to be cured and not continuing; but no
such waiver shall extend to any subsequent or other Default or Event of Default,
or impair any right consequent thereon.
10.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed as follows in the case of the Borrower and the
Administrative
69
Agent, and as set forth in an administrative questionnaire delivered to the
Administrative Agent in the case of the Lenders, or to such other address as may
be hereafter notified by the respective parties hereto:
Borrower: Michigan Electric Transmission Company, LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Senior Vice President - Finance
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Administrative Agent: JPMorgan Chase Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders shall not be effective until received.
10.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Administrative Agent or any Lender, any
right, remedy, power or privilege hereunder or under the other Loan Documents
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
10.4 Survival of Representations and Warranties. All representations
and warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans and other extensions of credit hereunder.
10.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay or
reimburse the Administrative Agent and the Arranger for all out-of-pocket costs
and expenses incurred in connection with the development, preparation and
execution of, and any amendment, supplement or modification to, this Agreement
and the other Loan Documents and any other documents prepared in connection
herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including the reasonable fees and
disbursements of counsel to the Administrative Agent and the Arranger and filing
and recording fees and expenses, with statements with respect to the foregoing
to be submitted to the Borrower prior to the Closing Date (in the case of
amounts to be paid on the Closing Date) and from time to time thereafter on a
quarterly basis or such other periodic basis as the Administrative Agent and the
Arranger shall deem appropriate, (b) to pay or reimburse each
70
Lender, the Arranger and the Administrative Agent for all its costs and expenses
incurred in connection with the enforcement or preservation of any rights under
this Agreement, the other Loan Documents and any such other documents, including
the fees and disbursements of counsel to each Lender and of counsel to the
Administrative Agent and the Arranger, (c) to pay, indemnify, and hold each
Lender, the Arranger and the Administrative Agent harmless from, any and all
recording and filing fees and any and all liabilities with respect to, or
resulting from any delay in paying, stamp, excise and other taxes, if any, that
may be payable or determined to be payable in connection with the execution and
delivery of, or consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement, the other Loan Documents and
any such other documents (except to the extent any such fees and liabilities
arise as a result of the gross negligence or willful misconduct of such Lender,
Arranger or Administrative Agent, as the case may be, provided that for purposes
of this parenthetical clause, gross negligence shall not be deemed to include
any failure on the part of any Lender, the Arranger or the Administrative Agent
to inquire as to whether the Borrower has failed to pay any recording fees and
filing fees and any liabilities with respect thereto or whether there has been
any delay by the Borrower in paying, stamp, excise and other taxes, if any), and
(d) to pay, indemnify, and hold each Lender, the Arranger and the Administrative
Agent and their respective officers, directors, employees, affiliates, agents,
trustees, advisors and controlling persons (each, an "Indemnitee") harmless from
and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement, the other Loan Documents and
any such other documents, including any of the foregoing relating to the use of
proceeds of the Loans or the violation of, noncompliance with or liability
under, any Environmental Law applicable to the operations of the Borrower or any
of its properties and the reasonable fees and expenses of legal counsel in
connection with claims, actions or proceedings by any Indemnitee against the
Borrower under any Loan Document (all the foregoing in this clause (d),
collectively, the "Indemnified Liabilities"), provided, that the Borrower shall
have no obligation hereunder to any Indemnitee with respect to Indemnified
Liabilities to the extent such Indemnified Liabilities are found by a final and
nonappealable decision of a court of competent jurisdiction to have resulted
from the gross negligence or willful misconduct of such Indemnitee. Without
limiting the foregoing, and to the extent permitted by applicable law, the
Borrower agrees not to assert and to cause its Subsidiaries not to assert, and
hereby waives and agrees to cause its Subsidiaries to waive, all rights for
contribution or any other rights of recovery with respect to all claims,
demands, penalties, fines, liabilities, settlements, damages, costs and expenses
of whatever kind or nature, under or related to Environmental Laws, that any of
them might have by statute or otherwise against any Indemnitee. All amounts due
under this Section 10.5 shall be payable not later than 10 days after written
demand therefor. Statements payable by the Borrower pursuant to this Section
10.5 shall be submitted to Senior Vice President - Finance (Telephone No.
▇▇▇-▇▇▇-▇▇▇▇; Telecopy No. 734-929-1212), at the address of the Borrower set
forth in Section 10.2, or to such other Person or address as may be hereafter
designated by the Borrower in a written notice to the Administrative Agent. The
agreements in this Section 10.5 shall survive repayment of the Loans and all
other amounts payable hereunder.
10.6 Successors and Assigns; Participations and Assignments. (a) This
Agreement shall be binding upon and inure to the benefit of the Borrower, the
Lenders, the Administrative Agent, all future holders of the Loans and their
respective successors and assigns,
71
except that the Borrower may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of each
Lender.
(b) Any Lender other than any Conduit Lender may, without the consent
of the Borrower, in accordance with applicable law, at any time sell to one or
more banks, financial institutions or other entities (each, a "Participant")
participating interests in any Loan owing to such Lender, any Commitment of such
Lender or any other interest of such Lender hereunder and under the other Loan
Documents. In the event of any such sale by a Lender of a participating interest
to a Participant, such Lender's obligations under this Agreement to the other
parties to this Agreement shall remain unchanged, such Lender shall remain
solely responsible for the performance thereof, such Lender shall remain the
holder of any such Loan for all purposes under this Agreement and the other Loan
Documents, and the Borrower and the Administrative Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents. In no event shall
any Participant under any such participation have any right to approve any
amendment or waiver of any provision of any Loan Document, or any consent to any
departure by the Borrower therefrom, except to the extent that such amendment,
waiver or consent would reduce the principal of, or interest on, the Loans or
any fees payable hereunder, or postpone the date of the final maturity of the
Loans, in each case to the extent subject to such participation. The Borrower
agrees that if amounts outstanding under this Agreement and the Loans are due or
unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Participant shall be deemed to have
the right of setoff in respect of its participating interest in amounts owing
under this Agreement to the same extent as if the amount of its participating
interest were owing directly to it as a Lender under this Agreement, provided
that, in purchasing such participating interest, such Participant shall be
deemed to have agreed to share with the Lenders the proceeds thereof as provided
in Section 10.7(a) as fully as if it were a Lender hereunder. The Borrower also
agrees that each Participant shall be entitled to the benefits of Sections 2.15,
2.16 and 2.17 with respect to its participation in the Commitments and the Loans
outstanding from time to time as if it was a Lender; provided that, in the case
of Section 2.16, such Participant shall have complied with the requirements of
said Section and provided, further, that no Participant shall be entitled to
receive any greater amount pursuant to any such Section than the transferor
Lender would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such Participant had no
such transfer occurred.
(c) Any Lender other than any Conduit Lender (an "Assignor") may, in
accordance with applicable law, at any time and from time to time assign to any
Person (an "Assignee") all or any part of its rights and obligations under this
Agreement and the other Loan Documents pursuant to an Assignment and Acceptance,
executed by such Assignee, such Assignor and any other Person whose consent is
required pursuant to this paragraph, and delivered to the Administrative Agent
for its acceptance and recording in the Register; provided that (i) the consent
of the Borrower and the Administrative Agent (which, in each case, shall not be
unreasonably withheld or delayed) shall be required in the case of any
assignment to a Person that is not a Lender or a Lender Affiliate (except that
the consent of the Borrower shall not be required for any assignment that occurs
when an Event of Default shall have occurred and be continuing) and (ii) unless
otherwise agreed by the Borrower and the Administrative Agent, no such
assignment to an Assignee (other than any Lender or any Lender Affiliate) shall
be in an
72
aggregate principal amount of less than $5,000,000, in each case except in the
case of an assignment of all of a Lender's interests under this Agreement. For
purposes of the proviso contained in the preceding sentence, the amount
described therein shall be aggregated in respect of each Lender and its Lender
Affiliates, if any. Upon such execution, delivery, acceptance and recording,
from and after the effective date determined pursuant to such Assignment and
Acceptance, (x) the Assignee thereunder shall be a party hereto and, to the
extent provided in such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder with a Commitment and/or Loans as set forth
therein, and (y) the Assignor thereunder shall, to the extent provided in such
Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all of an Assignor's
rights and obligations under this Agreement, such Assignor shall cease to be a
party hereto). Notwithstanding the foregoing, any Conduit Lender may assign at
any time to its designating Lender hereunder without the consent of the Borrower
or the Administrative Agent any or all of the Loans it may have funded hereunder
and pursuant to its designation agreement and without regard to the limitations
set forth in the first sentence of this Section 10.6(c).
(d) The Administrative Agent shall, on behalf of the Borrower,
maintain at its address referred to in Section 10.2 a copy of each Assignment
and Acceptance delivered to it and a register (the "Register") for the
recordation of the names and addresses of the Lenders and the Commitment of, and
the principal amount of the Loans owing to, each Lender from time to time. The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrower, the Administrative Agent and the Lenders shall treat each
Person whose name is recorded in the Register as the owner of the Loans and any
Notes evidencing the Loans recorded therein for all purposes of this Agreement.
Any assignment of any Loan, whether or not evidenced by a Note, shall be
effective only upon appropriate entries with respect thereto being made in the
Register (and each Note shall expressly so provide). Any assignment or transfer
of all or part of a Loan evidenced by a Note shall be registered on the Register
only upon surrender for registration of assignment or transfer of the Note
evidencing such Loan, accompanied by a duly executed Assignment and Acceptance,
and thereupon one or more new Notes shall be issued to the designated Assignee.
(e) Upon its receipt of an Assignment and Acceptance executed by an
Assignor, an Assignee and any other Person whose consent is required by Section
10.6(c), together with payment to the Administrative Agent of a registration and
processing fee of $3,500 (provided that only a single such fee shall be due in
the case of simultaneous assignments to Lender Affiliates), the Administrative
Agent shall (i) promptly accept such Assignment and Acceptance and (ii) record
the information contained therein in the Register on the effective date
determined pursuant thereto.
(f) For avoidance of doubt, the parties to this Agreement acknowledge
that the provisions of this Section 10.6 concerning assignments relate only to
absolute assignments and that such provisions do not prohibit assignments
creating security interests, including any pledge or assignment by a Lender to
any Federal Reserve Bank in accordance with applicable law.
73
(g) The Borrower, upon receipt of written notice from the relevant
Lender, agrees to issue Notes to any Lender requiring Notes to facilitate
transactions of the type described in paragraph (f) above.
(h) The Borrower, each Lender and the Administrative Agent hereby
confirms that it will not institute against a Conduit Lender or join any other
Person in instituting against a Conduit Lender any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding under any state bankruptcy or
similar law, for one year and one day after the payment in full of the latest
maturing commercial paper note issued by such Conduit Lender; provided, however,
that each Lender designating any Conduit Lender hereby agrees to indemnify, save
and hold harmless each other party hereto for any loss, cost, damage or expense
arising out of its inability to institute such a proceeding against such Conduit
Lender during such period of forbearance.
10.7 Adjustments; Set-off. (a) Except to the extent that this
Agreement expressly provides for payments to be allocated to a particular
Lender, if any Lender (a "Benefitted Lender") shall receive any payment of all
or part of the Obligations owing to it, or receive any collateral in respect
thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or
proceedings of the nature referred to in Section 8(c) or Section 8(d), or
otherwise), in a greater proportion than any such payment to or collateral
received by any other Lender, if any, in respect of the Obligations owing to
such other Lender, such Benefitted Lender shall purchase for cash from the other
Lenders a participating interest in such portion of the Obligations owing to
each such other Lender, or shall provide such other Lenders with the benefits of
any such collateral, as shall be necessary to cause such Benefitted Lender to
share the excess payment or benefits of such collateral ratably with each of the
Lenders; provided, however, that if all or any portion of such excess payment or
benefits is thereafter recovered from such Benefitted Lender, such purchase
shall be rescinded, and the purchase price and benefits returned, to the extent
of such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, without prior notice to the Borrower, any
such notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise), to set
off and appropriate and apply against such amount any and all deposits (general
or special, time or demand, provisional or final), in any currency, and any
other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof to or for the
credit or the account of the Borrower. Each Lender agrees promptly to notify the
Borrower and the Administrative Agent after any such setoff and application made
by such Lender, provided that the failure to give such notice shall not affect
the validity of such setoff and application.
10.8 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery of an executed signature page of this Agreement by
facsimile transmission shall be effective as
74
delivery of a manually executed counterpart hereof. A set of the copies of this
Agreement signed by all the parties shall be lodged with the Borrower and the
Administrative Agent.
10.9 Severability. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.10 Integration. This Agreement and the other Loan Documents
represent the entire agreement of the Borrower, the Administrative Agent and the
Lenders with respect to the subject matter hereof and thereof, and there are no
promises, undertakings, representations or warranties by the Administrative
Agent or any Lender relative to the subject matter hereof not expressly set
forth or referred to herein or in the other Loan Documents.
10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.12 Submission To Jurisdiction; Waivers. The Borrower hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the State of
New York, the courts of the United States for the Southern District of New York,
and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, to the Borrower, at
its address set forth in Section 10.2 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the right
to ▇▇▇ in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to in
this Section any special, exemplary, punitive or consequential damages.
10.13 Acknowledgements. The Borrower hereby acknowledges that:
75
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to the Borrower arising out of or in connection with
this Agreement or any of the other Loan Documents, and the relationship between
Administrative Agent and Lenders, on one hand, and the Borrower, on the other
hand, in connection herewith or therewith is solely that of debtor and creditor;
and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among the
Lenders or the Borrower and the Lenders.
10.14 Confidentiality. Each of the Administrative Agent and each
Lender agrees to keep confidential all non-public information provided to it by
the Borrower pursuant to this Agreement that is designated by the Borrower as
confidential; provided that nothing herein shall prevent the Administrative
Agent or any Lender from disclosing any such information (a) to the
Administrative Agent, any other Lender or any Lender Affiliate, (b) subject to
an agreement to comply with the provisions of this Section, to any actual or
prospective Transferee or any direct or indirect counterparty to any Hedging
Agreement (or any professional advisor to such counterparty), (c) to its
employees, directors, agents, attorneys, accountants and other professional
advisors or those of any of its affiliates, (d) upon the request or demand of
any Governmental Authority, (e) in response to any order of any court or other
Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law, (f) if requested or required to do so in connection with any
litigation or similar proceeding, (g) that has been publicly disclosed, (h) to
the National Association of Insurance Commissioners or any similar organization
or any nationally recognized rating agency that requires access to information
about a Lender's investment portfolio in connection with ratings issued with
respect to such Lender, or (i) in connection with the exercise of any remedy
hereunder or under any other Loan Document. Notwithstanding anything to the
contrary set forth in this Agreement or in any other agreement to which the
parties hereto are parties or by which they are bound, the obligations of
confidentiality contained herein and therein, as they relate to the transactions
contemplated by this Agreement, shall not apply to such party's U.S. federal
income tax treatment and the U.S. federal income tax structure of such
transactions, and each party hereto (and any employee, representative, or agent
of any party hereto) may disclose to any and all persons, without limitation of
any kind, the tax treatment and tax structure of such transactions relating to
such party and all materials of any kind (including opinions or other tax
analysis) that are provided to such party relating to such tax treatment and tax
structure; provided, however, that such disclosure shall not include the name
(or other identifying information not relevant to the tax treatment and tax
structure) of any person and shall not include information for which
nondisclosure is reasonably necessary in order to comply with applicable
securities laws.
10.15 WAIVERS OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE AGENT
AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
76
10.16 Limitation on Recourse. For the avoidance of doubt, in no event
shall Holdco or any Sponsor or any successor thereto (collectively, the
"Non-Recourse Persons") be liable or obligated for any liabilities and
obligations of the Borrower under the Loan Documents. Nothing in the immediately
preceding sentence shall limit or be construed to (i) release any Non-Recourse
Person from liability for its fraudulent actions, willful misconduct or
misappropriation of funds, or from any of its obligations or liabilities under
any agreement executed by such Non-Recourse Person in its individual capacity in
connection with any Loan Document or (ii) limit or impair the exercise of
remedies with respect to any Mortgaged Property (as defined in the First
Mortgage Indenture). The provisions of this Section shall survive the
termination of this Agreement.
10.17 Acknowledgment. Each Lender acknowledges that all rights, powers
and remedies available to such Lender with respect to the Mortgaged Property (as
defined in the First Mortgage Indenture) shall be subject to Section 115 of the
First Mortgage Indenture and further acknowledges Sections 816, 821, 822 and 823
of the First Mortgage Indenture, and hereby agrees for the benefit of the
Holders (as defined in the First Mortgage Indenture) to abide by and comply with
each such Section.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
MICHIGAN ELECTRIC TRANSMISSION
COMPANY, LLC
By: /s/ Royal ▇. ▇▇▇▇▇▇, ▇▇.
------------------------------------
Name: Royal ▇. ▇▇▇▇▇▇, ▇▇.
----------------------------------
Title: Sr. Vice President
---------------------------------
JPMORGAN CHASE BANK, as
Administrative Agent and as a Lender
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Title: Vice President
---------------------------------
COMERICA BANK, as Syndication Agent
and as a Lender
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Title: Account Officer
---------------------------------