EXHIBIT 4.1
EXECUTION COPY
THIRD AMENDMENT AND CONSENT TO AMENDED AND RESTATED
CREDIT AGREEMENT
This Third Amendment and Consent to Amended and Restated Credit Agreement
(this "Third Amendment") is made as of this 8th day of March, 2005 by and among
SEMCO ENERGY, INC., a Michigan corporation (the "Company"), STANDARD FEDERAL
BANK N.A. ("Standard Federal") and the other banks signatory hereto and Standard
Federal, as agent for the Banks (in such capacity, "Agent").
RECITALS
A. Company, Agent and the Banks entered into that certain Amended and
Restated Credit Agreement dated as of June 25, 2004 under which the Banks
extended (or committed to extend) credit to the Company, as set forth therein,
as amended by that certain First Amendment to Amended and Restated Credit
Agreement (the "First Amendment") dated as of November 17, 2004 and that certain
Second Amendment to Amended and Restated Credit Agreement dated as of January
21, 2005 (as amended, restated or otherwise modified from time to time, the
"Credit Agreement"; capitalized terms not otherwise defined herein shall have
the meanings ascribed thereto in the Credit Agreement).
B. Company has requested that Agent and the requisite Banks amend the
Credit Agreement to, among other things, extend the Revolving Loan Termination
Date and the Line of Credit Termination Date, and to amend certain other
definitions in the Credit Agreement and Agent and the requisite Banks are
willing to do so, but only on the terms and conditions set forth in this Third
Amendment.
NOW, THEREFORE, Company, Agent and Banks agree:
1. Section 1.1 of the Credit Agreement shall be amended by deleting clause
(m) of the definition of "Consolidated Net Income" and inserting the
following in its place:
(m) any items other than those described in clauses (a) through (l)
above of this definition which are properly classified under GAAP as
extraordinary items;
provided, further, that the Company may add back an amount equal to
the K-1 Distributions, to the extent they were deducted in the
Company's calculation of Consolidated Net Income.
2. Section 1.1 of the Credit Agreement shall be amended by deleting clause
(m) of the definition of "Consolidated Net Worth" and inserting the
following in its place:
Consolidated Net Worth means, as of the date of any determination
thereof, the stockholders' capital (including any stock issued
pursuant to the K-1 Replacement Offering, whether or not includible
under GAAP)
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and surplus of the Company and its Subsidiaries determined on a
consolidated basis in accordance with GAAP, and which shall exclude
(whether or not includible under GAAP) the principal amount of the
Subordinated Notes, but without taking into account the amount of
any deferred or payable in kind interest, whether or not includible
under GAAP, and adding back an amount equal to all non-cash charges,
less any tax deductions or credits on account of such charges, taken
by the Construction Services Subsidiaries in accordance with GAAP
under FAS No. 142 or FAS No. 144 occurring on or after September 30,
2003.
3. Section 1.1 of the Credit Agreement shall be amended by deleting the
definition of "Consolidated Operating Income" therein and inserting the
following in its place:
Consolidated Operating Income means, as of the date of any
determination thereof, the operating revenues minus operating
expenses of the Company and its Subsidiaries determined on a
consolidated basis in accordance with GAAP as shown on the financial
statements delivered to Agent pursuant to Sections 10.1.1 and 10.1.2
of this Agreement, as applicable but (i) excluding from the
calculation hereof, whether or not otherwise includable under GAAP,
the payment of $5,500,000 to Atlas Pipeline Partners, L.P. on
December 31, 2004 made pursuant to the terms of that certain
Settlement Agreement dated as of December 31, 2004, (ii) adding back
an amount equal to all non-cash charges, less any tax deductions or
credits on account of such charges, taken by the Construction
Services Subsidiaries in accordance with GAAP under FAS No. 142 or
FAS No. 144 occurring on or after September 30, 2003 and (iii)
adding back an amount equal to the K-1 Distributions, to the extent
they were deducted in calculating operating income.
4. Section 1.1 of the Credit Agreement shall be amended by deleting the
definition of "Current Debt of any Person" therein and inserting the
following in its place:
Current Debt of any Person means as of the date of any determination
thereof (i) all Indebtedness of such Person for borrowed money other
than Funded Debt of such Person and (ii) Guaranties by such Person
of Current Debt of others, provided that Current Debt shall not
include the amount of any stock issued pursuant to the K-1
Replacement Offering.
5. Section 1.1 of the Credit Agreement shall be amended by deleting the
definition of "Funded Debt" therein and inserting the following in its
place:
Funded Debt of any Person means (i) all Indebtedness of such Person
for borrowed money or which has been incurred in connection with the
acquisition of assets in each case having a final maturity of one or
more than one year from the date of origin thereof (or which is
renewable or extendible at the option of the obligor for a period or
periods more than one year from the date of origin), including all
principal payments in
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respect thereof that are required to be made within one year from
the date of any determination of Funded Debt, whether or not the
obligation to make such payments shall constitute a current
liability of the obligor under GAAP; provided, that any notes of
such Person evidencing Indebtedness of such Person which when issued
constitute a current liability of such Person under GAAP shall not
be included as Funded Debt of such Person, (ii) all Capitalized
Rentals of such Person, (iii) Off Balance Sheet Liabilities and (iv)
all Guaranties by such Person of Funded Debt of others, provided
that Funded Debt shall not include the amount of any stock issued
pursuant to the K-1 Replacement Offering.
6. Section 1.1 of the Credit Agreement shall be amended by deleting the
definition of "Junior Capital" therein and inserting the following in its
place:
Junior Capital means the Company's existing Trust Preferred
Securities, other Subordinated Debt, other Securities issued on
terms substantially similar thereto, as determined by the Required
Banks, the Feline Prides and all stock issued pursuant to the K-1
Replacement Offering.
7. Section 1.1 of the Credit Agreement shall be amended by deleting the
definition of "Line of Credit Commitment Amount" therein and inserting the
following in its place:
Line of Credit Commitment Amount shall mean $40,806,452.00, as
reduced from time to time pursuant to Section 5.1 and as increased
from time to time pursuant to Section 2.1.2.
8. Section 1.1 of the Credit Agreement shall be amended by deleting the
definition of "Line of Credit Termination Date" therein and inserting the
following in its place:
Line of Credit Termination Date shall mean the earlier to occur of
(a) September 23, 2005, as such date may be extended from time to
time pursuant to Section 2.1.1 or (b) the date on which the
Commitment to make the Line of Credit Loans shall be terminated
pursuant to Section 5 or 11.
9. Section 1.1 of the Credit Agreement shall be amended by deleting the
definition of "New Capital Adjustment" and inserting the following in its
place
New Capital Adjustment means that amount to be added to the minimum
Consolidated Net Worth required to be maintained under Section
10.6.3 consisting of an amount equal to one hundred percent (100%)
of the proceeds of each New Capital Offering conducted by the
Company or any of its Subsidiaries, net of costs of issuance, on or
after January 1, 2004, on a cumulative basis, less the aggregate
principal amount (excluding any capitalized interest) of any Junior
Capital which is retired, prepaid, or redeemed in connection with a
New Capital Offering, provided, further, that the New Capital
Adjustment shall not include the K-1 Replacement
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Offering to the extent the proceeds of the K-1 Replacement Offering
are used to repurchase the K-1 Shares and the Company warrants held
by K-1 and each other New Capital Offering to the extent the
proceeds of such offering are used to repurchase stock of the
Company.
10. Section 1.1 of the Credit Agreement shall be amended by deleting the
definition of "Revolving Commitment Amount" therein and inserting the
following in its place:
Revolving Commitment Amount shall mean $60,000,000.00 reduced from
time to time pursuant to Section 5.1 and as increased from time to
time pursuant to Section 2.2.2.
11. Section 1.1 of the Credit Agreement shall be amended by deleting the
definition of "Revolving Loan Termination Date" therein and inserting the
following in its place:
Revolving Loan Termination Date means the earlier to occur of (a)
September 23, 2005 or (b) such other date on which the Commitments
terminate pursuant to Section 5 or 11.
12. Section 1.1 of the Credit Agreement shall be amended by inserting the
following definitions in their appropriate alphabetical order:
K-1 shall mean K-1 GHM, LLLP.
K-1 Distributions means all dividends or payments in lieu of
dividends payable to K-1 and all payments made to K-1 for the
repurchase of Company warrants, such payments being due, in each
case, as a result of the Company's repurchase and retirement of the
K-1 Shares.
K-1 Replacement Offering means the issuance and sale of additional
shares of common or convertible preferred stock of the Company (in
either a single offering, or in several different offerings) the
proceeds of which are used to repurchase and retire the K-1 Shares
and pay K-1 Distributions, together with certain other uses as
specifically consented to by the Agent and the Required Banks.
K-1 Shares means all Series B Preference Stock issued to K-1.
13. Section 2.5.1 of the Credit Agreement shall be amended by deleting the
words "thirty days" in each place that such words appear in the Section,
and inserting "seven days" in their respective places.
14. Section 10.10 of the Credit Agreement shall be amended by inserting the
words "and the cash dividends paid on the stock issued in connection with
the K-1 Replacement Offering" after the words "Series B Preference Stock."
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15. The last sentence of Section 10.10 of the Credit Agreement is hereby
deleted and the following is inserted in its place:
Dividend payments on the Junior Capital (including any dividend paid
on the stock issued pursuant to the K-1 Replacement Offering) are
subject to the provisions of this Section 10.10.
16. Section 10.22 of the Credit Agreement shall be amended by deleting the
words "Feline Prides" and inserting the words "Junior Capital" in their
place.
17. Schedule 2.1/2.2 currently attached to the Credit Agreement shall be
deleted and the new Schedule 2.1/2.2 attached hereto as Exhibit A shall be
inserted in its place.
18. Exhibit C-1 currently attached to the Credit Agreement shall be deleted
and the new Exhibit C-1 attached hereto as Annex 1 shall be inserted in
its place.
19. Exhibit C-2 currently attached to the Credit Agreement shall be deleted
and the new Exhibit C-2 attached hereto as Annex 2 shall be inserted in
its place.
20. The undersigned, by execution and delivery of this Third Amendment, have
consented to the K-1 Replacement Offering and the Company's repurchase of
the K-1 Shares and the payment of the K-1 Distributions from the proceeds
of the K-1 Replacement Offering, provided that (a) the Company, prior to
such repurchase, completes the K-1 Replacement Offering, (b) all proceeds
of the K-1 Replacement Offering shall promptly be used first to repurchase
and retire outstanding K-1 Shares and to pay any related K-1
Distributions, provided that any proceeds remaining after the repurchase
and retirement of the K-1 Shares in full and the payment of the K-1
Distributions shall be used to pay costs and expenses associated with the
K-1 Replacement Offering, to repurchase, redeem, prepay or retire Junior
Capital or to prepay the Revolving Loan Facility, (c) the repurchase of
the K-1 Shares and completion of the K-1 Replacement Offering shall comply
with all state, federal or local regulations, statutes, or court orders
and any other third party restrictions on the Company and be on terms and
conditions which could not reasonably be expected to have a Material
Adverse Effect and shall otherwise be substantially in accordance with the
terms set forth in that certain Offering Memorandum dated as of March 8,
2005, as determined by Agent in its sole discretion, and (d) no Unmatured
Event of Default or Event of Default shall have occurred and be continuing
at the time of either the K-1 Replacement Offering or the repurchase and
retirement of the K-1 Shares, or, in each case, result therefrom. If the
Company repurchases the K-1 Shares or makes the K-1 Replacement Offering
on terms not in compliance with this Section, it shall be deemed an
immediate Event of Default under the Credit Agreement, which may only be
waived with the written consent of the Required Banks. In no event shall
the K-1 Shares be repurchased or the K-1 Distributions made with the
proceeds of Advances under the Credit Agreement.
21. This Third Amendment shall become effective according to the terms hereof
and as of such date (the "Third Amendment Effective Date") that the
Company shall have satisfied the following conditions:
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(a) Agent shall have received:
(i) counterpart originals of this Third Amendment and of the
Revolving Credit Notes and Line of Credit Notes substantially in the
form attached hereto, in each case duly executed and delivered by
Company and the requisite Banks, in form satisfactory to Agent and
the Banks;
(ii) Agent shall have received certified copies of resolutions
of the Board of Directors of the Company authorizing the execution
and delivery of this Third Amendment and the performance by the
Company of its obligations under the Credit Agreement as amended by
this Third Amendment;
(iii) Company shall have paid to Agent all interest, fees and
other amounts owing as of such date, including additional Letter of
Credit Fees (if applicable) and shall have reimbursed Agent for all
fees and expenses (including reasonable attorney fees) incurred
through the Third Amendment Effective Date and
(iv) such other documents as Agent may reasonably request.
(b) No Unmatured Event of Default or Event of Default shall have
occurred and be continuing or shall result from the execution and delivery
of this Third Amendment.
(c) If the Third Amendment Effective Date shall not have occurred on
or before March 11, 2005, this Third Amendment shall not become effective
and the offer by the Agent and the Banks to amend the Credit Agreement on
the terms set forth herein shall be deemed withdrawn.
22. The Company for itself and each of the Subsidiaries hereby represents and
warrants that, after giving effect to the amendments contained herein, (a)
execution and delivery of this Third Amendment, and the performance by the
Company of its obligations under the Credit Agreement as amended hereby
are within such undersigned's corporate powers, have been duly authorized,
are not in contravention of law or the terms of its articles of
incorporation, bylaws or any other organizational documents of the parties
thereto, as applicable, and except as have been previously obtained, do
not require the consent or approval, material to the amendments
contemplated in this Third Amendment or Credit Agreement, as amended
hereby, of any governmental body, agency or authority, and this Third
Amendment and the Credit Agreement, as amended hereby, will constitute the
valid and binding obligations of such undersigned parties, enforceable in
accordance with their respective terms, except as enforcement thereof may
be limited by applicable bankruptcy, reorganization, insolvency,
moratorium, ERISA or similar laws affecting the enforcement of creditors'
rights generally and by general principles of equity (whether enforcement
is sought in a proceeding in equity or at law), and (b) the
representations and warranties contained in Section 9 of the Credit
Agreement are true and correct on and as of the date hereof, except to the
extent such representations and warranties speak only as of another date
certain.
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23. Except as specifically set forth herein, this Third Amendment shall not be
deemed to amend or alter in any respect the terms and conditions of the
Credit Agreement, any of the Notes issued thereunder or any of the Loan
Documents, or to constitute a waiver by the Banks or Agent of any right or
remedy under or a consent to any transaction not meeting the terms and
conditions of the Credit Agreement, any of the Notes issued thereunder or
any of the other Loan Documents. By execution and delivery of this Third
Amendment, the Company shall have been deemed to ratify and reaffirm each
of its covenants, agreements and obligations under the Credit Agreement,
as amended hereby, under the First Amendment, the Second Amendment and the
related Loan Documents. Each reference in the Credit Agreement to "this
Agreement" or "the Credit Agreement" and each reference in the other Loan
Documents to the Credit Agreement shall be deemed to refer to the Credit
Agreement as amended by this Third Amendment, the Second Amendment, the
First Amendment, and each other amendment from time to time executed and
delivered in connection with the Credit Agreement.
24. Unless otherwise defined to the contrary herein, all capitalized terms
used in this Third Amendment shall have the meaning set forth in the
Credit Agreement, as amended.
25. This Third Amendment shall be construed in accordance with and governed by
the laws of the State of Michigan.
26. This Third Amendment may be executed in any number of counterparts and by
the different parties hereto on separate counterparts and each such
counterpart shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same agreement.
[SIGNATURES FOLLOW ON SUCCEEDING PAGES]
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WITNESS the due execution hereof as of the day and year first above
written.
SEMCO ENERGY, INC.
By /s/ Michael V. Palmeri
-----------------------------
Title Senior Vice President and
--------------------------
Chief Financial Officer
--------------------------
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STANDARD FEDERAL BANK N.A., A NATIONAL
BANKING ASSOCIATION, as Agent and Arranger
By /s/ Greg Castle
--------------------------------------
Title First Vice President
-----------------------------------
STANDARD FEDERAL BANK N.A., A NATIONAL
BANKING ASSOCIATION, as Issuing Bank, as Swing
Line Bank and as a Bank
By /s/ Greg Castle
--------------------------------------
Title First Vice President
-----------------------------------
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NATIONAL CITY BANK OF THE MIDWEST,
A NATIONAL BANKING ASSOCIATION,
FORMERLY KNOWN AS NATIONAL CITY
BANK OF MICHIGAN/ILLINOIS, as
Syndication Agent for the Line of Credit and as
Documentation Agent for the Revolving Loan and
as a Bank
By /s/ Kenneth Ehrhardt
------------------------------------------
Title Senior Vice President
---------------------------------------
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U.S. BANK, N.A., as Documentation Agent for the
Revolving Loan and the Line of Credit and as a
Bank
By /s/ J. J.
--------------------------------------
Title Vice President
------------------------------------
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FIFTH THIRD BANK, EASTERN MICHIGAN,
as Documentation Agent for the Line of Credit
and as a Bank
By /s/ Carol C. Gaggos
--------------------------------------
Title Vice President
-----------------------------------
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THE HUNTINGTON NATIONAL BANK, as a Bank
By /s/ Kevin D. Szachta
------------------------------------------
Title Vice President
---------------------------------------
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Exhibit A
SCHEDULE 2.1/2.2
REVOLVING LOAN
LINE OF CREDIT REVOLVING LOAN FACILITY PRO
LINE OF CREDIT PRO PRO RATA SHARE FACILITY PRO RATA RATA SHARE PRO RATA SHARE
BANKS RATA SHARE AMOUNT PERCENTAGE SHARE AMOUNT PERCENTAGE PERCENTAGE
----- ------------------ --------------- ----------------- -------------- --------------
STANDARD FEDERAL
BANK $14,690,323.30 36.00% $21,600,000.85 36.00% 36.00%
NATIONAL CITY $ 8,161,290.22 20.00% $11,999,999.74 20.00% 20.00%
US BANK $ 6,529,032.17 16.00% $ 9,599,999.79 16.00% 16.00%
FIFTH THIRD $ 6,529,032.17 16.00% $ 9,599,999.79 16.00% 16.00%
HUNTINGTON $ 4,896,774.13 12.00% $ 7,199,999.83 12.00% 12.00%
TOTALS $40,806,452.00 100.00% $60,000,000.00 100.00% 100.00%
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ANNEX 1
EXHIBIT C-1
LINE OF CREDIT NOTE
$_____________ ___________, _______
On the Line of Credit Termination Date, FOR VALUE RECEIVED, SEMCO Energy,
Inc., a Michigan corporation (the "Company"), promises to pay to the order of
[insert Bank] (the "Bank") at Troy, Michigan, care of the Agent (for the account
of the Bank's Eurodollar Office with respect to any Eurodollar Loans hereunder
and for the account of the Bank with respect to any Base Rate Loans hereunder)
in lawful money of the United States of America so much of the sum of [insert
amount derived from Pro Rata Shares] Dollars ($________), as may from time to
time have been advanced by the Bank to the Company and then be outstanding
hereunder pursuant to the Amended and Restated Credit Agreement dated as of June
25, 2004 made by and among the Company and certain banks signatory thereto,
including the Bank, and Standard Federal Bank N.A., a national banking
association, as Agent for such banks, as the same may be amended or otherwise
modified from time to time (the "Credit Agreement"), together with interest
thereon as hereinafter set forth.
Each of the Loans made hereunder shall bear interest at the interest rate
from time to time applicable thereto under the Credit Agreement or as otherwise
determined thereunder, and interest shall be computed, assessed and payable as
set forth in the Credit Agreement.
This Note is a Line of Credit Note under which Line of Credit Loans
(including refundings and conversions), repayments and readvances may be made
from time to time, by Bank, but only in accordance with the terms and conditions
of the Credit Agreement. This Note evidences borrowings under, is subject to,
and may be accelerated or prepaid under, the terms of the Credit Agreement to
which reference is hereby made. Capitalized terms used herein, except as defined
to the contrary, shall have the meanings given them in the Credit Agreement.
This Note shall be interpreted and the rights of the parties hereunder
shall be determined under the laws of, and enforceable in, the State of
Michigan.
This Note amends, restates and replaces in its entirety the Line of Credit
Note made by the Company in favor of the Bank dated June 25, 2004 (the "Prior
Note"), with the intended effect that all indebtedness and other obligations
evidence by the Prior Note shall continue to be outstanding under this Note. The
Company hereby waives presentment for payment, demand, protest and notice of
dishonor and nonpayment of this Note and agrees that no obligation hereunder
shall be discharged by reason of any extension, indulgence, release, or
forbearance granted by any holder of this Note to any party now or hereafter
liable hereon.
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Nothing herein shall limit any right granted to the Bank by any other
instrument or by law.
SEMCO ENERGY, INC.
By:______________________________
Its:______________________________
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ANNEX 2
EXHIBIT C-2
FORM OF REVOLVING CREDIT NOTE
$_____________ ___________, _______
On the Revolving Loan Termination Date, FOR VALUE RECEIVED, SEMCO Energy,
Inc., a Michigan corporation (the "Company"), promises to pay to the order of
[insert Bank] (the "Bank") at Troy, Michigan, care of the Agent (for the account
of the Bank's Eurodollar Office with respect to any Eurodollar Loans hereunder
and for the account of the Bank with respect to any Base Rate Loans hereunder)
in lawful money of the United States of America so much of the sum of [insert
amount derived from Pro Rata Shares] Dollars ($___________), as may from time to
time have been advanced by the Bank to the Company and then be outstanding
hereunder pursuant to the Amended and Restated Credit Agreement dated as of June
25, 2004 made by and among the Company and certain banks signatory thereto,
including the Bank, and Standard Federal Bank N.A., a national banking
association as Agent for such banks, as the same may be amended or otherwise
modified from time to time (the "Credit Agreement"), together with interest
thereon as hereinafter set forth.
Each of the Loans made hereunder shall bear interest at the interest rate
from time to time applicable thereto under the Credit Agreement or as otherwise
determined thereunder, and interest shall be computed, assessed and payable as
set forth in the Credit Agreement.
This Note is a Revolving Credit Note under which Revolving Loans of the
Revolving Credit (including refundings and conversions), repayments and
readvances may be made from time to time, by the Bank, but only in accordance
with the terms and conditions of the Credit Agreement. This Note evidences
borrowings under, is subject to, and may be accelerated or prepaid under, the
terms of the Credit Agreement to which reference is hereby made. Capitalized
terms used herein, except as defined to the contrary, shall have the meanings
given them in the Credit Agreement.
This Note shall be interpreted and the rights of the parties hereunder
shall be determined under the laws of, and enforceable in, the State of
Michigan.
This Note amends, restates and replaces in its entirety the Revolving
Credit Note of Credit Note made by the Company in favor of the Bank dated June
25, 2004 (the "Prior Note"), with the intended effect that all indebtedness and
other obligations evidence by the Prior Note shall continue to be outstanding
under this Note. The Company hereby waives presentment for payment, demand,
protest and notice of dishonor and nonpayment of this Note and agrees that no
obligation hereunder shall be discharged by reason of any extension, indulgence,
release, or forbearance granted by any holder of this Note to any party now or
hereafter liable hereon.
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Nothing herein shall limit any right granted to the Bank by any other
instrument or by law.
SEMCO ENERGY, INC.
Its:______________________________
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