Execution Copy Exhibit 10.2
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TERM CREDIT AGREEMENT
DATED AS OF
SEPTEMBER 25, 2002
AMONG
BLACK HILLS CORPORATION,
as Borrower,
THE FINANCIAL INSTITUTIONS PARTY HERETO,
as Banks,
AND
CREDIT LYONNAIS NEW YORK BRANCH,
as Administrative Agent,
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TABLE OF CONTENTS
(This Table of Contents is not part of the Agreement)
PAGE
SECTION 1 DEFINITIONS; INTERPRETATION.....................................................................1
Section 1.1 Definitions............................................................................1
Section 1.2 Interpretation........................................................................12
SECTION 2 THE CREDITS....................................................................................12
Section 2.1 The Term Loan.........................................................................12
Section 2.2 [Intentionally Omitted]...............................................................13
Section 2.3 Applicable Interest Rates. (a) Base Rate Loans........................................13
Section 2.4 Minimum Borrowing Amounts.............................................................14
Section 2.5 Manner of Borrowing Loans and Designating Interest Rates Applicable
to Loans 15
Section 2.6 Interest Periods......................................................................16
Section 2.7 Maturity of Loans.....................................................................17
Section 2.8 Prepayments...........................................................................17
Section 2.9 Default Rate..........................................................................17
Section 2.10 The Notes.............................................................................18
Section 2.11 Funding Indemnity.....................................................................18
SECTION 3 FEES...........................................................................................19
Section 3.1 Fees..................................................................................19
SECTION 4 PLACE AND APPLICATION OF PAYMENTS..............................................................19
Section 4.1 Place and Application of Payments.....................................................19
SECTION 5 REPRESENTATIONS AND WARRANTIES.................................................................19
Section 5.1 Corporate Organization and Authority..................................................19
Section 5.2 Subsidiaries..........................................................................20
Section 5.3 Corporate Authority and Validity of Obligations.......................................20
Section 5.4 Financial Statements..................................................................20
Section 5.5 No Litigation; No Labor Controversies.................................................21
Section 5.6 Taxes.................................................................................21
Section 5.7 Approvals.............................................................................21
Section 5.8 ERISA.................................................................................21
Section 5.9 Government Regulation.................................................................21
Section 5.10 Margin Stock; Use of Proceeds.........................................................22
Section 5.11 Licenses and Authorizations; Compliance with Laws. (a)................................22
Section 5.12 Ownership of Property; Liens..........................................................22
Section 5.13 No Burdensome Restrictions; Compliance with Agreements................................23
Section 5.14 Full Disclosure.......................................................................23
Section 5.15 Solvency..............................................................................23
SECTION 6 CONDITIONS PRECEDENT...........................................................................23
Section 6.1 Initial Credit Event..................................................................23
Section 6.2 All Credit Events.....................................................................24
SECTION 7 COVENANTS......................................................................................25
Section 7.1 Corporate Existence; Subsidiaries.....................................................25
Section 7.2 Maintenance...........................................................................25
Section 7.3 Taxes.................................................................................25
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Section 7.4 ERISA.................................................................................25
Section 7.5 Insurance.............................................................................26
Section 7.6 Financial Reports and Other Information...............................................26
Section 7.7 Bank Inspection Rights................................................................28
Section 7.8 Conduct of Business...................................................................28
Section 7.9 Liens.................................................................................28
Section 7.10 Use of Proceeds; Regulation U.........................................................28
Section 7.11 Sales and Leasebacks..................................................................28
Section 7.12 Mergers, Consolidations and Sales of Assets...........................................29
Section 7.13 Use of Property and Facilities; Environmental and Health and Safety Laws..............30
Section 7.14 Investments, Acquisitions, Loans, Advances and Guaranties.............................30
Section 7.15 Restrictions on Indebtedness..........................................................32
Section 7.16 Consolidated Net Worth................................................................34
Section 7.17 Recourse Leverage Ratio...............................................................34
Section 7.18 Fixed Charge Coverage Ratio...........................................................34
Section 7.19 Dividends and Other Shareholder Distributions.........................................34
Section 7.20 No Negative Pledge....................................................................34
Section 7.21 Transactions with Affiliates..........................................................35
Section 7.22 Compliance with Laws..................................................................35
Section 7.23 Pari-Passu............................................................................35
Section 7.24 Certain Subsidiaries..................................................................35
Section 7.25 Ratings...............................................................................35
Section 7.26 Liquidity Covenant....................................................................35
Section 7.27 Existing Credit Agreements............................................................35
SECTION 8 EVENTS OF DEFAULT AND REMEDIES.................................................................35
Section 8.1 Events of Default.....................................................................36
Section 8.2 Non-Bankruptcy Defaults...............................................................37
Section 8.3 Bankruptcy Defaults...................................................................38
Section 8.4 [Intentionally Omitted]...............................................................38
Section 8.5 Expenses..............................................................................38
SECTION 9 CHANGE IN CIRCUMSTANCES........................................................................38
Section 9.1 Change of Law.........................................................................38
Section 9.2 Unavailability of Deposits or Inability to Ascertain, or Inadequacy of, LIBOR.........38
Section 9.3 Increased Cost and Reduced Return.....................................................39
Section 9.4 Lending Offices.......................................................................40
Section 9.5 Discretion of Bank as to Manner of Funding............................................40
SECTION 10 THE AGENT......................................................................................40
Section 10.1 Appointment and Authorization of Administrative Agent.................................40
Section 10.2 Administrative Agent and its Affiliates...............................................41
Section 10.3 Action by Administrative Agent........................................................41
Section 10.4 Consultation with Experts.............................................................41
Section 10.5 Liability of Administrative Agent; Credit Decision....................................41
Section 10.6 Indemnity.............................................................................42
Section 10.7 Resignation of Administrative Agent and Successor Administrative Agent................42
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SECTION 11 MISCELLANEOUS..................................................................................43
Section 11.1 Withholding Taxes.....................................................................43
Section 11.2 No Waiver of Rights...................................................................44
Section 11.3 Non-Business Day......................................................................44
Section 11.4 Documentary Taxes.....................................................................44
Section 11.5 Survival of Representations...........................................................44
Section 11.6 Survival of Indemnities...............................................................45
Section 11.7 Set-Off...............................................................................45
Section 11.8 Notices...............................................................................45
Section 11.9 Counterparts..........................................................................46
Section 11.10 Successors and Assigns................................................................46
Section 11.11 Participants and Note Assignees.......................................................47
Section 11.12 Assignments by Banks..................................................................47
Section 11.13 Amendments............................................................................48
Section 11.14 Headings..............................................................................48
Section 11.15 Legal Fees, Other Costs and Indemnification...........................................48
Section 11.16 Entire Agreement......................................................................49
Section 11.17 Construction..........................................................................49
Section 11.18 Governing Law.........................................................................49
Section 11.19 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL......................................49
Section 11.20 Replacement of Bank...................................................................49
Section 11.21 Confidentiality.......................................................................50
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EXHIBITS
A - Form of Note
B - Form of Compliance Certificate
SCHEDULES
SCHEDULE 1 Pricing Grid
SCHEDULE 4 Administrative Agent Notice and Payment Info
SCHEDULE 5.2 Schedule of Existing Subsidiaries
SCHEDULE 5.5 Litigation and Labor Controversies
SCHEDULE 5.11 Environmental Matters
SCHEDULE 7.9 Existing Liens
SCHEDULE 7.14 Existing Investments
SCHEDULE 7.15(a) Marketing Subsidiary Indebtedness
SCHEDULE 7.15(b) Existing Secured Indebtedness
SCHEDULE 7.19 Restrictions on Distributions and Existing Negative
Pledges
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TERM CREDIT AGREEMENT
TERM CREDIT AGREEMENT, dated as of September 25, 2002 among Black Hills
Corporation, a South Dakota corporation ("Borrower"), the financial institutions
from time to time party hereto (each a "Bank," and collectively the "Banks"),
and Credit Lyonnais New York Branch in its capacity as agent for the Banks
hereunder (in such capacity, the "Administrative Agent").
WITNESSETH THAT:
WHEREAS, the Borrower desires to obtain the several commitments of the
Banks to make available a term loan, as described herein; and
WHEREAS, the Banks are willing to extend such commitments subject to
all of the terms and conditions hereof and on the basis of the representations
and warranties hereinafter set forth.
NOW, THEREFORE, in consideration of the recitals set forth above and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1 DEFINITIONS; INTERPRETATION.
Section 1.1 Definitions. The following terms when used herein have the
following meanings:
"Adjusted Consolidated EBITDA" means, for any period, (A) Consolidated
EBITDA less (B) Restricted Earnings.
"Adjusted LIBOR" is defined in Section 2.3(b) hereof.
"Affiliate" means, as to any Person, any other Person which directly or
indirectly controls, or is under common control with, or is controlled by, such
Person. As used in this definition, "control" (including, with their correlative
meanings, "controlled by" and "under common control with") means possession,
directly or indirectly, of power to direct or cause the direction of management
or policies of a Person (whether through ownership of securities or partnership
or other ownership interests, by contract or otherwise), provided that, in any
event for purposes of this definition: (i) any Person which owns directly or
indirectly twenty percent (20%) or more of the securities having ordinary voting
power for the election of directors or other governing body of a corporation or
twenty percent (20%) or more of the partnership or other ownership interests of
any other Person will be deemed to control such corporation or other Person; and
(ii) each director and executive officer of Borrower or any Subsidiary of
Borrower shall be deemed an Affiliate of Borrower and each of its Subsidiaries.
"Administrative Agent" is defined in the first paragraph of this Agreement
and includes any successor Administrative Agent pursuant to Section 10.7 hereof.
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"Agreement" means this Term Credit Agreement, including all Exhibits
and Schedules hereto, as it may be amended, supplemented or otherwise modified
from time to time in accordance with the terms hereof.
"Applicable Margin" means, at any time (i) with respect to Base Rate
Loans, the Base Rate Margin and (ii) with respect to Eurodollar Loans, the
Eurodollar Margin.
"Applicable Telerate Page" is defined in Section 2.3(b) hereof.
"Authorized Representative" means those persons shown on the list of
officers provided by Borrower pursuant to Section 6.1(e) hereof, or on any
updated such list provided by Borrower to the Administrative Agent, or any
further or different officer of Borrower so named by any Authorized
Representative of Borrower in a written notice to the Administrative Agent.
"Bank" and "Banks" are defined in the first paragraph of this
Agreement.
"Base Rate" is defined in Section 2.3(a) hereof.
"Base Rate Loan" means a Loan bearing interest prior to maturity at a
rate specified in Section 2.3(a) hereof.
"Base Rate Margin" means the percentage set forth in Schedule 1 hereto
beside the then applicable Level.
"BHP" means Black Hills Power, Inc., a South Dakota corporation.
"Borrower" is defined in the first paragraph of this Agreement.
"Borrowing" means the total of Loans of a single type advanced,
continued for an additional Interest Period, or converted from a different type
into such type by the Banks on a single date and for a single Interest Period.
Borrowings of Loans are made by and maintained ratably for each of the Banks
according to their Percentages. A Borrowing is "advanced" on the day Banks
advance funds comprising such Borrowing to Borrower, is "continued" on the date
a new Interest Period for the same type of Loans commences for such Borrowing
and is "converted" when such Borrowing is changed from one type of Loan to the
other, all as requested by Borrower pursuant to Section 2.5(a).
"Business Day" means any day other than a Saturday or Sunday on which
Banks are not authorized or required to close in New York, New York or Rapid
City, South Dakota and, if the applicable Business Day relates to the borrowing
or payment of a Eurodollar Loan, on which banks are dealing in U.S. Dollars in
the interbank market in London, England.
"Capital" means, as of any date of determination thereof, without
duplication, the sum of (A) Consolidated Net Worth plus (B) all Recourse
Indebtedness (provided that for purposes of clause (B) of this definition, to
the extent otherwise included, Indebtedness of Marketing Subsidiaries in an
aggregate amount not to exceed the Marketing Subsidiary Indebtedness Limit
incurred under Marketing Subsidiary Excluded Credit Facilities shall not be
deemed to be Recourse Indebtedness).
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"Capital Lease" means at any date any lease of Property which, in
accordance with GAAP, would be required to be capitalized on the balance sheet
of the lessee.
"Capitalized Lease Obligations" means, for any Person, the amount of
such Person's liabilities under Capital Leases determined at any date in
accordance with GAAP.
"Change of Control Event" means one or more of the following events:
(a) less than a majority of the members of the Board of Directors
of Borrower shall be persons who either (i) were serving as directors
on the Effective Date or (ii) were nominated as directors and approved
by the vote of the majority of the directors who are directors
referred to in clause (i) above or this clause (ii); or
(b) the stockholders of Borrower shall approve any plan or
proposal for the liquidation or dissolution of Borrower; or
(c) a Person or group of Persons acting in concert (other than
the direct or indirect beneficial owners of the Voting Stock of
Borrower as of the Effective Date) shall, as a result of a tender or
exchange offer, open market purchases, privately negotiated purchases
or otherwise, have become the direct or indirect beneficial owner
(within the meaning of Rule 13d-3 under the Securities Exchange Act of
1934, as amended from time to time) of Voting Stock of Borrower
representing more than ten percent (10%) of the combined voting power
of the outstanding Voting Stock or other ownership interests for the
election of directors or shall have the right to elect a majority of
the Board of Directors of Borrower; or
(d) Except as permitted by Section 7.12, Borrower ceases at any
time to own one hundred percent (100%) of the Voting Stock and other
equity interest of any Material Subsidiary.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commitment" and "Commitments" are defined in Section 2.1 hereof.
"Compliance Certificate" means a certificate in the form of Exhibit B
hereto.
"Consolidated Assets" means all assets which should be listed on the
consolidated balance sheet of Borrower and its Consolidated Subsidiaries, as
determined on a consolidated basis in accordance with GAAP.
"Consolidated EBITDA" means, for any period, for Borrower and its
Consolidated Subsidiaries on a consolidated basis, (A) the sum of the amounts
for such period of (i) Consolidated Net Income, (ii) to the extent deducted in
arriving at Consolidated Net Income, net federal, state and local income taxes
in respect of such period, (iii) to the extent deducted in arriving at
Consolidated Net Income, Consolidated Interest Expense, (iv) to the extent
deducted in arriving at Consolidated Net Income, the amount charged for the
amortization of intangible assets, (v) to the extent deducted in arriving at
Consolidated Net Income, the amount charged for the depreciation of assets, and
(vi) to the extent deducted in arriving at Consolidated Net Income, losses on
sales of assets (excluding sales in the ordinary course of business) and other
3
extraordinary losses, less (B) the amount for such period of (i) to the extent
added in arriving at Consolidated Net Income, interest income arising from
traditional investment activities with banks, investments banks and other
financial institutions or relating to governmental or other marketable
securities, (ii) to the extent added in arriving at Consolidated Net Income,
gains on sales of assets (excluding sales in the ordinary course of business)
and other extraordinary gains, all as determined on a consolidated basis in
accordance with GAAP, (iii) any maintenance capital expenditures made by the
Borrower or its Consolidated Subsidiaries in such period, (iv) without
duplication, any payments made by a Consolidated Subsidiary constituting a
repayment of principal Indebtedness (other than (x) the Obligations and (y)
repayments of principal made with the proceeds of a refinancing of such
Indebtedness otherwise permitted pursuant to this Agreement) or with respect to
a reserve, and (v) without duplication, any other mandatory payment made by a
Consolidated Subsidiary in such period not included as an expense or loss in
calculating Consolidated Net Income.
"Consolidated Fixed Charges" means, for any period and without
duplication the sum of (i) the aggregate amount of Consolidated Interest Expense
with respect to Recourse Indebtedness paid or scheduled to be paid for such
period, and (ii) the aggregate amount of all mandatory scheduled payments
(whether designated as payments or prepayments) and scheduled sinking fund
payments with respect to principal of any Recourse Indebtedness of the Borrower
or its Subsidiaries (including payments in the nature of principal under Capital
Leases).
"Consolidated Interest Expense" means, with reference to any period of
the Borrower and its Subsidiaries, the sum of (i) all interest charges
(including capitalized interest, imputed interest charges with respect to
Capitalized Lease Obligations and all amortization of debt discount and expense
and other deferred financing charges) of the Borrower and its Subsidiaries on a
consolidated basis for such period determined in accordance with GAAP, other
than interest charges relating to Non-Recourse Indebtedness, (ii) all commitment
or other fees payable in respect of the issuance of standby letters of credit or
other credit facilities for the account of the Borrower or its Subsidiaries, and
(iii) net costs/expenses incurred by the Borrower and its Subsidiaries under
Derivative Arrangements.
"Consolidated Net Income" means, for any period of the Borrower and its
Consolidated Subsidiaries, the amount for such period of consolidated net income
(or net loss) of the Borrower and its Consolidated Subsidiaries, as determined
on a consolidated basis in accordance with GAAP.
"Consolidated Net Worth" means, as of any time the same is to be
determined, the total shareholders' equity (including capital stock, additional
paid-in-capital and retained earnings after deducting treasury stock, but
excluding (to the extent otherwise included in calculating shareholders'
equity), minority interests in Subsidiaries) which would appear on the
consolidated balance sheet of Borrower determined on a consolidated basis in
accordance with GAAP.
"Consolidated Subsidiary" means, as to any Person, each subsidiary of
such Person (whether now existing or hereafter created or acquired) the
financial statements of which shall be (or should have been) consolidated, with
the financial statements of such Person in accordance with GAAP, including
principles of consolidation.
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"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or undertaking to
which such Person is a party or by which it or any of its Property is bound.
"Controlled Group" means all members of a controlled group of
corporations and all trades and businesses (whether or not incorporated) under
common control that, together with Borrower or any of its Subsidiaries, are
treated as a single employer under Section 414 of the Code.
"Credit Documents" means this Agreement, the Notes, the Fee Letter and
all other documents executed in connection herewith or therewith.
"Credit Event" means any Borrowing.
"Default" means any event or condition the occurrence of which would,
with the passage of time or the giving of notice, or both, constitute an Event
of Default.
"Derivative Arrangement" means any agreement (including any master
agreement and any agreement, whether or not in writing, relating to any single
transaction) that is an interest rate swap agreement, basis swap, forward rate
agreement, commodity swap, commodity option, equity or equity index swap or
option, bond option, interest rate option, forward foreign exchange agreement,
rate cap, collar or floor agreement, future agreement, currency swap agreement,
cross-currency rate swap agreement, swaption, currency option, that relates to
fluctuations in raw material prices or utility or energy prices or other costs,
or any other similar agreement, including any option to enter into any of the
foregoing, or any combination of any of the foregoing. "Derivative Arrangements"
shall include all such agreements or arrangements made or entered into at any
time, or in effect at any time, whether or not related to a Loan.
"Derivative Obligations" means, with respect to any Person, all
liabilities of such Person under any Derivative Arrangement (including but not
limited to obligations and liabilities arising in connection with or as a result
of early or premature termination of a Derivative Arrangement, whether or not
occurring as a result of a default thereunder), absolute or contingent, now or
hereafter existing or incurred or due or to become due.
"Effective Date" means September 25, 2002.
"Environmental and Health Laws" means any and all federal, state, local
and foreign statutes, laws, regulations, ordinances, judgments, permits and
other governmental rules or restrictions relating to human health, safety
(including without limitation occupational safety and health standards), or the
environment or to emissions, discharges or releases of pollutants, contaminants,
hazardous or toxic substances, wastes or any other controlled or regulated
substance into the environment, including without limitation Hazardous Material,
ambient air, surface water, ground water or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, hazardous or toxic
substances, wastes or any other controlled or regulated substance or the
clean-up or other remediation thereof.
"ERISA" is defined in Section 5.8 hereof.
5
"Eurodollar Loan" means a Loan bearing interest prior to its maturity
at the rate specified in Section 2.3(b) hereof.
"Eurodollar Margin" means the percentage set forth in Schedule 1 hereto
beside the then applicable Level.
"Eurodollar Reserve Percentage" is defined in Section 2.3(b) hereof.
"Event of Default" means any of the events or circumstances specified
in Section 8.1 hereof.
"Existing Credit Agreements" means that certain Amended and Restated
364-Day Credit Agreement dated as of August 27, 2002 and that certain 3-Year
Credit Agreement dated as of August 28, 2001, each among the Borrower, the
financial institutions from time to time party thereto, U.S. Bank and
ScotiaBank, in their capacity as documentation agents for the Banks thereunder
(in such capacity, "Documentation Agents"), UBOC and BMO, in their capacity as
syndication agents for the Banks thereunder (in such capacity, "Syndication
Agents") and ABN AMRO Bank N.V. in its capacity as Administrative Agent for such
financial institutions.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to:
(a) the weighted average of the rates on overnight federal funds
transactions with members of the United States Federal Reserve System
arranged by federal funds brokers, as published for such day (or, if
such day is not a Business Day, for the next preceding Business Day)
by the United States Federal Reserve Bank of New York; or
(b) if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three federal
funds brokers of recognized standing selected by it.
"Fee Letter" means that certain letter among the Administrative Agent
and Borrower pertaining to fees to be paid by Borrower to the Administrative
Agent for its sole account and benefit.
"Fixed Charge Coverage Ratio" means, for any period of four consecutive
quarters of the Borrower ending with the most recently completed such fiscal
quarter, the ratio of (A) Adjusted Consolidated EBITDA to (B) Consolidated Fixed
Charges for such period.
"GAAP" means generally accepted accounting principles as in effect in
the United States from time to time, applied by Borrower and its Subsidiaries on
a basis consistent with the preparation of Borrower's financial statements
furnished to the Banks as described in Section 5.4 hereof.
"Guarantee" means, in respect of any Person, any obligation, contingent
or otherwise, of such Person directly or indirectly guaranteeing any
Indebtedness or other obligations of another Person, including, without
limitation, by means of an agreement to purchase or pay (or advance or supply
funds for the purchase or payment of) such Indebtedness or to maintain financial
6
covenants, or to assure the payment of such Indebtedness by an agreement to make
payments in respect of goods or services regardless of whether delivered, or
otherwise, provided, that the term "Guarantee" shall not include endorsements
for deposit or collection in the ordinary course of business; and such term when
used as a verb shall have a correlative meaning.
"Hazardous Material" means any substance or material which is hazardous
or toxic, and includes, without limitation, (a) asbestos, polychlorinated
biphenyls, dioxins and petroleum or its by-products or derivatives (including
crude oil or any fraction thereof) and (b) any other material or substance
classified or regulated as "hazardous" or "toxic" pursuant to any Environmental
and Health Law.
"Immaterial Subsidiary" shall mean, any direct or indirect subsidiary
of Borrower (i) whose total assets (as determined in accordance with GAAP) do
not represent at least five percent (5%) of the total assets (as determined in
accordance with GAAP) of Borrower and its subsidiaries on a consolidated basis
or (ii) whose total revenues (as determined in accordance with GAAP) do not
represent at least five percent (5%) of the total revenues (as determined in
accordance with GAAP) of Borrower and its subsidiaries on a consolidated basis,
provided that no subsidiary shall be deemed an Immaterial Subsidiary to the
extent (a) the total assets of such subsidiary, when combined with the total
assets of other subsidiaries which are Immaterial Subsidiaries, represent at
least ten percent (10%) of the total assets (as determined in accordance with
GAAP) of Borrower and its subsidiaries on a consolidated basis or (ii) the total
revenues of such subsidiary, when combined with the total revenues of other
Immaterial Subsidiaries, (as determined in accordance with GAAP) represent at
least ten percent (10%) of the total revenues (as determined in accordance with
GAAP) of Borrower and its subsidiaries on a consolidated basis. As used in this
definition "subsidiary" shall mean any Person whose financial statements are
consolidated into the financial statements of Borrower in accordance with GAAP.
"Indebtedness" means, as to any Person, without duplication: (i) all
obligations of such Person for borrowed money or evidenced by bonds, debentures,
notes or similar instruments; (ii) all obligations of such Person for the
deferred purchase price of property or services (other than in respect of trade
accounts payable arising in the ordinary course of business which are not
past-due); (iii) all Capitalized Lease Obligations of such Person; (iv) all
Indebtedness of others secured by a Lien on any properties, assets or revenues
of such Person (other than stock, partnership interests or other equity
interests of Borrower or any Subsidiary of Borrower in other entities) to the
extent of the lesser of the value of the property subject to such Lien or the
amount of such Indebtedness; (v) all Guarantees issued by such Person, provided
that Long-Term Guaranties shall not be deemed "Indebtedness" for purposes of
calculating Borrower's compliance with the financial covenants set forth in
Sections 7.16, 7.17 and 7.18 hereof; (vi) all obligations of such Person,
contingent or otherwise, in respect of any letters or credit (whether commercial
or standby) or bankers' acceptances, (vii) all Derivative Obligations of such
Person, provided that for purposes of determining Borrower's compliance with the
financial covenants set forth herein, only Borrower's Derivative Obligations
under Derivative Arrangements which must be marked-to-market in accordance with
GAAP shall be included as Indebtedness of Borrower, and (viii) all obligations
of such Person under synthetic (and similar type) lease arrangements, provided
that for purposes of calculating such Person's Indebtedness under such synthetic
(or similar type) lease arrangements, such lease arrangement shall be treated as
if it were a Capitalized Lease.
7
"Interest Period" is defined in Section 2.6 hereof.
"Investments" is defined in Section 7.14.
"L/C Obligations" has the same meaning herein as in the 3-Year Credit
Agreement.
"Lending Office" is defined in Section 9.4 hereof.
"Level I Status" means Borrower's S&P Rating is BBB or higher and its
Moody's Rating is Baa2 or higher.
"Level II Status" means Level I Status does not exist, but Borrower's
S&P Rating is BBB- or higher and its Moody's Rating is Baa3 or higher.
"Level III Status" means neither Level I Status nor Level II Status
exists.
"LIBOR" is defined in Section 2.3(b) hereof.
"Lien" means any interest in Property securing an obligation owed to,
or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, including, but not
limited to, the security interest or lien arising from a mortgage, encumbrance,
pledge, conditional sale, security agreement or trust receipt, or a lease,
consignment or bailment for security purposes. For the purposes of this
definition, a Person shall be deemed to be the owner of any Property which it
has acquired or holds subject to a conditional sale agreement, Capital Lease or
other arrangement pursuant to which title to the Property has been retained by
or vested in some other Person for security purposes, and such retention of
title shall constitute a "Lien."
"Liquid Assets" means, as the date of any calculation thereof, the sum
of (i) the amount of unrestricted cash which the Borrower then has available,
plus (ii) the aggregate amount of then available (meaning the Borrower is
entitled to borrow such amounts pursuant to the applicable documentation) unused
capacity under the Borrower's senior unsecured credit facilities (including the
Existing Credit Agreements).
"Loan" and "Loans" are defined in Section 2.1 hereof and includes a
Base Rate Loan or Eurodollar Loan, each of which is a "type" of Loan hereunder.
"Long-Term Guarantee" means (i) any Guarantee issued by Borrower or its
Subsidiaries under which the holder or beneficiary of such Guarantee is not
permitted under any circumstance or contingency to make demand or exercise any
other remedies under such Guarantee prior to the Termination Date, as extended
from time to time in accordance with the terms hereof and (ii) any coal mining
reclamation bonds or contingent indemnity or reimbursement obligations with
respect to such reclamation bonds (so long as such reclamation bonds have not
been called upon).
"Marketing Subsidiary" means each of Black Hills Energy Resources, Inc.
a South Dakota corporation, and Enserco Energy, Inc., a South Dakota
corporation, and their respective subsidiaries.
8
"Marketing Subsidiary Excluded Credit Facilities" means those certain
credit facilities of the Marketing Subsidiaries described on Schedule 7.15(a)
hereof, as such credit facilities are in effect on the Effective Date, provided
that such credit facilities shall cease to be Marketing Subsidiary Excluded
Credit Facilities to the extent availability thereunder is increased, any
substantive term thereof is materially modified, or such credit facility is
extended more than once in any fiscal year for a period of more than one year.
Any replacement credit facility of a Marketing Subsidiary Excluded Credit
Facility shall be deemed a Marketing Subsidiary Excluded Credit Facility only if
such replacement credit facility contains terms substantially the same as the
Marketing Subsidiary Excluded Credit Facility being replaced (including tenor)
or is approved in writing by the Required Banks.
"Marketing Subsidiary Indebtedness Limit" means the sum of (i)
aggregate amount of credit availability (used or unused) under Marketing
Subsidiary Excluded Credit Facilities as of the Effective Date and (ii)
$25,000,000.
"Material Adverse Effect" means a material adverse effect on (i) the
business, financial position or results of operations of Borrower or Borrower
and its Subsidiaries taken as a whole, (ii) the ability of Borrower to perform
its material obligations under the Credit Documents, (iii) the validity or
enforceability of the material obligations of Borrower under any Credit
Document, (iv) the rights and remedies of the Banks or the Administrative Agent
against Borrower; or (v) the timely payment of the principal of and interest on
the Loans or other amounts payable by Borrower hereunder, provided, that a
downgrade of Borrower's S&P Rating and/or Moody's Rating shall not, in and of
itself, be deemed a "Material Adverse Effect" for purposes of this Agreement.
"Material Subsidiaries" means BHP, Black Hills Energy, Inc., a
South Dakota corporation, Wyodak Resources Development Corp., a Delaware
corporation, Black Hills Energy Capital, Inc., a Delaware corporation and
any other Subsidiary of Borrower which is not either an Immaterial Subsidiary
or a Project Finance Subsidiary.
"Moody's Rating" means the rating assigned by Moody's Investors
Service, Inc. and any successor thereto that is a nationally recognized rating
agency to the outstanding senior unsecured non-credit enhanced long-term
indebtedness of a Person (or if neither Moody's Investors Service, Inc. nor any
such successor shall be in the business of rating long-term indebtedness, a
nationally recognized rating agency in the United States of America as mutually
agreed between the Required Banks and Borrower). Any reference in this Agreement
to any specific rating is a reference to such rating as currently defined by
Moody's Investors Service, Inc. (or such a successor) and shall be deemed to
refer to the equivalent rating if such rating system changes.
"Non-Recourse Indebtedness" means, without duplication, all
Indebtedness of Borrower and its Consolidated Subsidiaries determined on a
consolidated basis in accordance with GAAP incurred in connection with project
financings (including project financings of existing assets the proceeds of
which are used to refinance such assets) as to which the holder of such
Indebtedness has recourse solely against the assets which were purchased or
refinanced with, or leased in connection with, such Indebtedness and not against
Borrower or a Consolidated Subsidiary of Borrower other than a Project Finance
Subsidiary or any of their other assets (whether directly, through a Guarantee
or otherwise), other than the pledge of the stock (or similar equity interest)
9
of the Project Finance Subsidiary which incurred such Indebtedness. For purposes
of clarification, any Indebtedness of a Project Finance Subsidiary which would
otherwise constitute Non-Recourse Indebtedness but for the issuance by the
Borrower or a Consolidated Subsidiary of the Borrower of a Guarantee or other
document which provides recourse with respect to such Indebtedness, such
Indebtedness shall for all purposes of this Agreement be deemed Non-Recourse
Indebtedness so long as (i) the Borrower's or such Consolidated Subsidiary's
obligations under such Guarantee or other document are treated for all purposes
as Recourse Indebtedness hereunder, (ii) such Recourse Indebtedness of the
Borrower or such Consolidated Subsidiary is unsecured and is otherwise permitted
by this Agreement, and (iii) such Recourse Indebtedness of the Borrower or such
Consolidated Subsidiary does not in the aggregate exceed $100,000,000 at any one
time outstanding.
"Note" is defined in Section 2.10(a) hereof.
"Obligations" means all fees payable hereunder, all obligations of
Borrower to pay principal or interest on Loans, fees, expenses, indemnities, and
all other payment obligations of Borrower arising under or in relation to any
Credit Document.
"Percentage" means, for each Bank, the percentage held by such Bank of
the aggregate principal amount of all outstanding Obligations.
"Permitted Derivative Obligations" means all Derivative Obligations as
to which the Derivative Arrangements giving rise to such Derivative Obligation
are entered into in the ordinary course of business to hedge interest rate risk,
currency risk, commodity price risk or the production of Borrower or its
Subsidiaries (and not for speculative purposes) and if such Derivative
Obligation is an obligation of Borrower, such Derivative Obligation ranks no
greater than pari passu to the Obligations.
"Person" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization or any other
entity or organization, including a government or any agency or political
subdivision thereof.
"Plan " means at any time an employee pension benefit plan covered by
Title IV of ERISA or subject to the minimum funding standards under Section 412
of the Code that is either (i) maintained by a member of the Controlled Group or
(ii) maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
a member of the Controlled Group is then making or accruing an obligation to
make contributions or has within the preceding five plan years made
contributions.
"PBGC" is defined in Section 5.8 hereof.
"Project Finance Subsidiary" means any special purpose Subsidiary of
Borrower created to limit the recourse of the creditors of such Subsidiary and
as to which the creditors and other holders of Indebtedness of such Subsidiary
have recourse solely against the assets of such Subsidiary and not against
Borrower or any other Subsidiary of Borrower or any of their other assets
(whether directly, through a Guarantee or otherwise) other than (i) pursuant to
a Guarantee permitted hereunder and (ii) the stock of such special purpose
Subsidiary (or similar equity interest).
10
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible, whether now owned or
hereafter acquired.
"Recourse Indebtedness" means, without duplication, all Indebtedness of
Borrower and its Consolidated Subsidiaries determined on a consolidated basis in
accordance with GAAP other than Non-Recourse Indebtedness.
"Recourse Leverage Ratio" means, as of any time the same is to be
determined, the ratio of the amount of (A) Recourse Indebtedness outstanding at
such time (provided that for purposes of clause (A) of this definition, to the
extent otherwise included, Indebtedness of Marketing Subsidiaries in an
aggregate amount not to exceed the Marketing Subsidiary Indebtedness Limit
incurred under Marketing Subsidiary Excluded Credit Facilities shall not be
deemed to be Recourse Indebtedness) to (B) the amount of Capital at such time.
"Required Banks" means, as of the date of determination thereof, any
Banks holding in the aggregate more than fifty percent (50%) of the Percentages,
provided, that at any time there are two (2) or less Banks, Required Banks shall
mean Banks holding one hundred percent (100%) of the Percentages.
"Restricted Earnings" means, for any period, the amount of all
Consolidated Net Income earned by each of Borrower's Consolidated Subsidiaries
during such period which may not be distributed or dividended to Borrower due to
contractual or other restrictions on such distributions or dividends.
"SEC" means the United States Securities and Exchange Commission.
"Security" has the same meaning as in Section 2(l) of the Securities
Act of 1933, as amended.
"S&P Rating" means the rating assigned by Standard & Poor's Ratings
Group, a division of The McGraw-Hill Companies, Inc. and any successor thereto
that is a nationally recognized rating agency to the outstanding senior
unsecured non-credit enhanced long-term indebtedness of a Person (or, if neither
such division nor any successor shall be in the business of rating long-term
indebtedness, a nationally recognized rating agency in the United States as
mutually agreed between the Required Banks and Borrower). Any reference in this
Agreement to any specific rating is a reference to such rating as currently
defined by Standard & Poor's Ratings Group, a division of The McGraw-Hill
Companies, Inc. (or such a successor) and shall be deemed to refer to the
equivalent rating if such rating system changes.
"Solvent" means that (a) the fair value of a Person's assets is in
excess of the total amount of such Person's debts, as determined in accordance
with the United States Bankruptcy Code, and (b) the present fair saleable value
of a Person's assets is in excess of the amount that will be required to pay
such Person's debts as they become absolute and matured. As used in this
definition, the term "debts" includes any legal liability, whether matured or
unmatured, liquidated or unliquidated, absolute, fixed or contingent, as
determined in accordance with the United States Bankruptcy Code.
11
"Subsidiary" means, as to Borrower, any corporation or other entity (i)
which is consolidated into the financial statements of such Borrower in
accordance with GAAP or (ii) of which more than fifty percent (50%) of the
outstanding stock or comparable equity interests having ordinary voting power
for the election of the Board of Directors of such corporation or similar
governing body in the case of a non-corporation (irrespective of whether or not,
at the time, stock or other equity interests of any other class or classes of
such corporation or other entity shall have or might have voting power by reason
of the happening of any contingency) is at the time directly or indirectly owned
by such Borrower or by one or more of its Subsidiaries.
"Telerate Service" means the Dow Jones Telerate Service.
"Termination Date" means September 30, 2004.
"Unfunded Vested Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (i) the present value of all vested
nonforfeitable accrued benefits under such Plan exceeds (ii) the fair market
value of all Plan assets allocable to such benefits, all determined as of the
then most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the Controlled Group to
the PBGC or the Plan under Title IV of ERISA.
"U.S. Dollars" and "$" each means the lawful currency of the United
States of America.
"Voting Stock" of any Person means capital stock of any class or
classes or other equity interests (however designated) having ordinary voting
power for the election of directors or similar governing body of such Person.
"Welfare Plan" means a "welfare plan", as defined in Section 3(l) of
ERISA.
"Wholly-Owned" when used in connection with any Subsidiary means a
Subsidiary of which all of the issued and outstanding shares of stock or other
equity interests (other than directors' qualifying shares as required by law)
shall be owned by Borrower and/or one or more of its Wholly-Owned Subsidiaries.
Section 1.2 Interpretation. The foregoing definitions shall be equally
applicable to both the singular and plural forms of the terms defined. All
references to times of day in this Agreement shall be references to New York,
New York time unless otherwise specifically provided. The word "including" means
including without limiting the generality of any description preceding such
term. Where the character or amount of any asset or liability or item of income
or expense is required to be determined or any consolidation or other accounting
computation is required to be made for the purposes of this Agreement, the same
shall be done in accordance with GAAP in effect on the Effective Date, to the
extent applicable, except where such principles are inconsistent with the
specific provisions of this Agreement.
SECTION 2 THE CREDITS.
Section 2.1 The Term Loan. Subject to the terms and conditions hereof
(including Sections 6.1 and 6.2), each Bank, by its acceptance hereof, severally
agrees to make a loan (individually a "Loan" and collectively "Loans") to
Borrower on the Effective Date in U.S.
12
Dollars in an aggregate amount equal to the amount of its commitment set forth
on the applicable signature page hereof (for each Bank, its "Commitment" and,
cumulatively for all the Banks, the "Commitments"). After the making of such
Loans on the Effective Date, the Commitments shall terminate and no Bank shall
have any further obligation to advance any new Borrowings. Each Borrowing of
Loans shall be made ratably from the Banks in proportion to their respective
Percentages. As provided in Section 2.5(a) hereof, Borrower may elect that each
Borrowing of Loans be either Base Rate Loans or Eurodollar Loans. Any Loans
repaid may not be reborrowed. Unless an earlier maturity is provided for
hereunder, all Loans shall mature and be due and payable on the Termination
Date.
Section 2.2 [Intentionally Omitted].
Section 2.3 Applicable Interest Rates. (a) Base Rate Loans. Each Base Rate
Loan made or maintained by a Bank shall bear interest during each Interest
Period it is outstanding (computed (x) at all times the Base Rate is based on
the rate described in clause (i) of the definition thereof, on the basis of a
year of 365 or 366 days, as applicable, and actual days elapsed or (y) at all
times the Base Rate is based on the rate described in clause (ii) of the
definition thereof, on the basis of a year of 360 days and actual days elapsed)
on the unpaid principal amount thereof from the date such Loan is advanced,
continued or created by conversion from a Eurodollar Loan until maturity
(whether by acceleration or otherwise) at a rate per annum equal to the sum of
the Applicable Margin plus the Base Rate from time to time in effect, payable on
the last day of its Interest Period and at maturity (whether by acceleration or
otherwise).
"Base Rate" means for any day the greater of:
(i) the rate of interest announced by the Administrative Agent from
time to time as its prime rate, or equivalent, for U.S. Dollar loans within
the United States as in effect on such day, with any change in the Base
Rate resulting from a change in said prime rate to be effective as of the
date of the relevant change in said prime rate; and
(ii) the sum of (x) the Federal Funds Rate, plus (y)1/2of 1% (0.50%).
(b) Eurodollar Loans. Each Eurodollar Loan made or maintained by a Bank
shall bear interest during each Interest Period it is outstanding (computed on
the basis of a year of 360 days and actual days elapsed) on the unpaid principal
amount thereof from the date such Loan is advanced, continued, or created by
conversion from a Base Rate Loan until maturity (whether by acceleration or
otherwise) at a rate per annum equal to the sum of the Applicable Margin plus
the Adjusted LIBOR applicable for such Interest Period, payable on the last day
of the Interest Period and at maturity (whether by acceleration or otherwise),
and, if the applicable Interest Period is longer than three months, on each day
occurring every three months after the commencement of such Interest Period.
"Adjusted LIBOR" means, for any Borrowing of Eurodollar Loans, a rate
per annum determined in accordance with the following formula:
Adjusted LIBOR = LIBOR
---------------------------------------------
1 - Eurodollar Reserve Percentage
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"LIBOR" means, for an Interest Period for a Borrowing of Eurodollar
Loans, (a) the LIBOR Index Rate for such Interest Period, if such rate is
available, and (b) if the LIBOR Index Rate cannot be determined, the
arithmetical average of the rates of interest per annum (rounded upwards, if
necessary, to the nearest one-sixteenth of one percent) at which deposits in
U.S. Dollars, in immediately available funds are offered to the Administrative
Agent at 11:00 a.m. (London, England time) two (2) Business Days before the
beginning of such Interest Period by major banks in the interbank eurodollar
market for delivery on the first day of and for a period equal to such Interest
Period in an amount equal or comparable to the principal amount of the smallest
Eurodollar Loan scheduled to be made by a Lender as part of such Borrowing.
"LIBOR Index Rate" means, for any Interest Period, the rate per annum
(rounded upwards, if necessary, to the next higher one-sixteenth of one percent)
for deposits in U.S. Dollars for delivery on the first day of and for a period
equal to such Interest Period in an amount equal or comparable to the principal
amount of the smallest Eurodollar Loan scheduled to be made by a Lender as part
of such Borrowing, which appears on the Applicable Telerate Page as of 11:00
a.m. (London, England time) on the day two (2) Business Days before the
commencement of such Interest Period.
"Applicable Telerate Page" means the display page designated as "Page
3750" on the Telerate Service (or such other pages as may replace any such page
on that service or such other service as may be nominated by the British
Bankers' Association as the information vendor for the purpose of displaying
British Bankers' Association Interest Settlement Rates for deposits in U.S.
Dollars).
"Eurodollar Reserve Percentage" means for any Borrowing of Eurodollar
Loans from any Bank, the daily average for the applicable Interest Period of the
actual effective rate, expressed as a decimal, at which reserves (including,
without limitation, any supplemental, marginal and emergency reserves) are
maintained by such Bank during such Interest Period pursuant to Regulation D of
the Board of Governors of the Federal Reserve System (or any successor) on
"eurocurrency liabilities", as defined in such Board's Regulation D (or in
respect of any other category of liabilities that includes deposits by reference
to which the interest rate on Eurodollar Loans is determined or any category of
extensions of credit or other assets that include loans by non-United States
offices of any Bank to United States residents), subject to any amendments of
such reserve requirement by such Board or its successor, taking into account any
transitional adjustments thereto. For purposes of this definition, the
Eurodollar Loans shall be deemed to be "eurocurrency liabilities" as defined in
Regulation D without benefit or credit for any prorations, exemptions or offsets
under Regulation D.
(c) Rate Determinations. The Administrative Agent shall determine each
interest rate applicable to Obligations, and a determination thereof by the
Administrative Agent shall be conclusive and binding except in the case of
manifest error.
Section 2.4 Minimum Borrowing Amounts. Each Borrowing of Base Rate Loans
and Eurodollar Loans shall be in an amount not less than (i) if such Borrowing
is comprised of Base Rate Loans, $1,000,000 and integral multiples of $500,000
in excess thereof, and (ii) if such Borrowing is comprised of Eurodollar Loans,
$2,000,000 and integral multiples of $1,000,000 in excess thereof.
14
Section 2.5 Manner of Borrowing Loans and Designating Interest Rates
Applicable to Loans. (a) Notice to the Administrative Agent. (a) The Borrower
shall give notice to the Administrative Agent by no later than 12:00 noon (New
York time) on the Effective Date specifying the amount of Loans it desires to
borrow pursuant to this Agreement. The initial Borrowing of Loans shall be Base
Rate Loans. Thereafter, Borrower may from time to time elect to change or
continue the type of interest rate borne by each Borrowing or, subject to
Section 2.4's minimum amount requirement for each outstanding Borrowing, a
portion thereof, as follows: (i) if such Borrowing is of Eurodollar Loans, on
the last day of the Interest Period applicable thereto, Borrower may continue
part or all of such Borrowing as Eurodollar Loans for an Interest Period or
Interest Periods specified by Borrower or convert part or all of such Borrowing
into Base Rate Loans, and (ii) if such Borrowing is of Base Rate Loans, on any
Business Day, Borrower may convert all or part of such Borrowing into Eurodollar
Loans for an Interest Period or Interest Periods specified by Borrower. Borrower
shall give all such notices requesting the continuation or conversion of a
Borrowing to the Administrative Agent by telephone or telecopy (which notice
shall be irrevocable once given and, if by telephone, shall be promptly
confirmed in writing). Notices of the continuation of a Borrowing of Eurodollar
Loans for an additional Interest Period or of the conversion of part or all of a
Borrowing of Eurodollar Loans into Base Rate Loans or of Base Rate Loans into
Eurodollar Loans must be given by no later than 12:00 noon (New York time) at
least three (3) Business Days before the date of the requested continuation or
conversion. All such notices concerning the continuation or conversion of a
Borrowing shall be irrevocable once given and shall specify the date of the
requested continuation or conversion of a Borrowing (which shall be a Business
Day), the amount of the requested Borrowing to be continued or converted, the
type of Loans to comprise such new, continued or converted Borrowing and, if
such Borrowing is to be comprised of Eurodollar Loans, the Interest Period
applicable thereto. Borrower agrees that the Administrative Agent may rely on
any such telephonic or telecopy notice given by any person it in good faith
believes is an Authorized Representative without the necessity of independent
investigation, and in the event any such notice by telephone conflicts with any
written confirmation, such telephonic notice shall govern if the Administrative
Agent has acted in reliance thereon. There may be no more than six different
Interest Periods in effect at any one time, provided that for purposes of
determining the number of Interest Periods in effect at any one time, all Base
Rate Loans shall be deemed to have one and the same Interest Period.
(b) Notice to the Banks. The Administrative Agent shall give prompt
telephonic or telecopy notice to each Bank of any notice from Borrower received
pursuant to Section 2.5(a) above. The Administrative Agent shall give notice to
Borrower and each Bank by like means of the interest rate applicable to each
Borrowing of Eurodollar Loans.
(c) Borrower' Failure to Notify. Any outstanding Borrowing of Base Rate
Loans shall, subject to Section 6.2 hereof, automatically be continued for an
additional Interest Period on the last day of its then current Interest Period
unless Borrower has notified the Administrative Agent within the period required
by Section 2.5(a) that it intends to convert such Borrowing into a Borrowing of
Eurodollar Loans or notifies the Administrative Agent within the period required
by Section 2.8(a) that it intends to prepay such Borrowing. If Borrower fails to
give notice pursuant to Section 2.5(a) above of the continuation or conversion
of any outstanding principal amount of a Borrowing of Eurodollar Loans before
the last day of its then current Interest Period within the period required by
Section 2.5(a) and has not notified the Administrative Agent within
15
the period required by Section 2.8(a) that it intends to prepay such Borrowing,
such Borrowing shall automatically be converted into a Borrowing of Base Rate
Loans, subject to Section 6.2 hereof. The Administrative Agent shall promptly
notify the Banks of Borrower's failure to so give a notice under Section 2.5(a).
(d) Disbursement of Loans. Not later than 2:00 p.m. (New York time) on the
Effective Date, subject to Section 6 hereof, each Bank shall make available its
Loan comprising part of the initial Borrowing in funds immediately available at
the principal office of the Administrative Agent in New York, New York. The
Administrative Agent shall make available to Borrower Loans at the
Administrative Agent's principal office in New York, New York or such other
office as the Administrative Agent has previously agreed in writing to with
Borrower, in each case in the type of funds received by the Administrative Agent
from the Banks.
(e) Administrative Agent Reliance on Bank Funding. Unless the
Administrative Agent shall have been notified by a Bank before the date on which
such Bank is scheduled to make payment to the Administrative Agent of the
proceeds of a Loan (which notice shall be effective upon receipt) that such Bank
does not intend to make such payment, the Administrative Agent may assume that
such Bank has made such payment when due and the Administrative Agent may in
reliance upon such assumption (but shall not be required to) make available to
Borrower the proceeds of the Loan to be made by such Bank and, if any Bank has
not in fact made such payment to the Administrative Agent, such Bank shall, on
demand, pay to the Administrative Agent the amount made available to Borrower
attributable to such Bank together with interest thereon in respect of each day
during the period commencing on the date such amount was made available to
Borrower and ending on (but excluding) the date such Bank pays such amount to
the Administrative Agent at a rate per annum equal to (i) from the date the
related payment was made by the Administrative Agent to the date two (2)
Business Days after payment by such Bank is due hereunder, the Federal Funds
Rate for each such day and (ii) from the date two (2) Business Days after the
date such payment is due from such Bank to the date such payment is made by such
Bank, the Base Rate in effect for each such day. If such amount is not received
from such Bank by the Administrative Agent immediately upon demand, Borrower
will, on demand, repay to the Administrative Agent the proceeds of the Loan
attributable to such Bank with interest thereon at a rate per annum equal to the
interest rate applicable to the relevant Loan.
Section 2.6 Interest Periods. As provided in Section 2.5(a) hereof, at the
time of each request of a Borrowing of Eurodollar Loans, Borrower shall select
an Interest Period applicable to such Loans from among the available options.
The term "Interest Period" means the period commencing on the date a Borrowing
of Loans is advanced, continued, or created by conversion and ending: (a) in the
case of Base Rate Loans, on the last Business Day of the calendar quarter in
which such Borrowing is advanced, continued, or created by conversion (or on the
last day of the following calendar quarter if such Loan is advanced, continued
or created by conversion on the last Business Day of a calendar quarter), and
(b) in the case of Eurodollar Loans, 1, 2, 3, or 6 months thereafter; provided,
however, that:
(a) any Interest Period for a Borrowing of Base Rate Loans that
otherwise would end after the Termination Date shall end on the Termination
Date;
16
(b) for any Borrowing of Eurodollar Loans, Borrower may not select an
Interest Period that extends beyond the Termination Date;
(c) whenever the last day of any Interest Period would otherwise be a
day that is not a Business Day, the last day of such Interest Period shall
be extended to the next succeeding Business Day, provided that, if such
extension would cause the last day of an Interest Period for a Borrowing of
Eurodollar Loans to occur in the following calendar month, the last day of
such Interest Period shall be the immediately preceding Business Day; and
(d) for purposes of determining an Interest Period for a Borrowing of
Eurodollar Loans, a month means a period starting on one day in a calendar
month and ending on the numerically corresponding day in the next calendar
month; provided, however, that if there is no numerically corresponding day
in the month in which such an Interest Period is to end or if such an
Interest Period begins on the last Business Day of a calendar month, then
such Interest Period shall end on the last Business Day of the calendar
month in which such Interest Period is to end.
Section 2.7 Maturity of Loans. Unless an earlier maturity is provided for
hereunder (whether by acceleration or otherwise), all Obligations (including
principal and interest on all outstanding Loans) shall mature and become due and
payable by Borrower on the Termination Date.
Section 2.8 Prepayments. (a) (a) Borrower may prepay without premium or
penalty and in whole or in part (but, if in part, then (i) in an amount not less
than $5,000,000 and integral multiples of $1,000,000 in excess thereof, and (ii)
in an amount such that the minimum amount required for a Borrowing pursuant to
Section 2.4 hereof remains outstanding) any Borrowing of Eurodollar Loans upon
three (3) Business Days' prior irrevocable notice to the Administrative Agent
or, in the case of a Borrowing of Base Rate Loans, irrevocable notice delivered
to the Administrative Agent no later than 12:00 noon (New York time) on the date
of prepayment, such prepayment to be made by the payment of the principal amount
to be prepaid and accrued interest thereon to the date fixed for prepayment. In
the case of Eurodollar Loans, any amounts owing under Section 2.11 hereof as a
result of such prepayment shall be paid contemporaneously with such prepayment.
The Administrative Agent will promptly advise each Bank of any such prepayment
notice it receives from Borrower. Any amount paid or prepaid before the
Termination Date may not be borrowed again.
Section 2.9 Default Rate. If any payment of principal or interest on any
Loan, or payment of any other Obligation, is not made when due (whether by
acceleration or otherwise), such principal, interest or other Obligation shall
bear interest (computed on the basis of a year of 360 days and actual days
elapsed or, if based on the rate described in clause (i) of the definition of
Base Rate, on the basis of a year of 365 or 366 days, as applicable, and the
actual number of days elapsed) from the date such payment was due until paid in
full, payable on demand, at a rate per annum equal to:
(a) for any Obligation other than a Eurodollar Loan (including
principal and interest relating to Base Rate Loans and interest on
Eurodollar Loans), the sum of two
17
percent (2%) plus the Applicable Margin plus the Base Rate from time to time in
effect; and
(b) for the principal of any Eurodollar Loan, the sum of two percent
(2%) plus the rate of interest in effect thereon at the time of such
default until the end of the Interest Period applicable thereto and,
thereafter, at a rate per annum equal to the sum of two percent (2%) plus
the Applicable Margin plus the Base Rate from time to time in effect.
Section 2.10 The Notes. (a) The Loans made to Borrower by each Bank shall
be evidenced by a single promissory note of Borrower issued to such Bank in the
form of Exhibit A hereto. Each such promissory note is hereinafter referred to
as a "Note" and collectively such promissory notes are referred to as the
"Notes."
(a) Each Bank shall record on its books and records or on a schedule to its
Note the amount of each Loan advanced, continued, or converted by it, all
payments of principal and interest and the principal balance from time to time
outstanding thereon, the type of such Loan, and, for any Eurodollar Loan, the
Interest Period and the interest rate applicable thereto. The record thereof,
whether shown on such books and records of a Bank or on a schedule to any Note,
shall be prima facie evidence of the same; provided, however, that the failure
of any Bank to record any of the foregoing or any error in any such record shall
not limit or otherwise affect the obligation of Borrower to repay all Loans made
hereunder together with accrued interest thereon. At the request of any Bank and
upon such Bank tendering to Borrower the Note to be replaced, Borrower shall
furnish a new Note to such Bank to replace any outstanding Note, and at such
time the first notation appearing on a schedule on the reverse side of, or
attached to, such Note shall set forth the aggregate unpaid principal amount of
all Loans, if any, then outstanding thereon.
Section 2.11 Funding Indemnity. If any Bank shall incur any loss, cost or
expense (including, without limitation, any loss, cost or expense (excluding
loss of margin) incurred by reason of the liquidation or re-employment of
deposits or other funds acquired by such Bank to fund or maintain any Eurodollar
Loan or the relending or reinvesting of such deposits or amounts paid or prepaid
to such Bank) as a result of:
(a) any payment (whether by acceleration or otherwise), prepayment or
conversion of a Eurodollar Loan on a date other than the last day of its
Interest Period,
(b) any failure (because of a failure to meet the conditions of
Section 6 or otherwise) by Borrower to borrow or continue a Eurodollar
Loan, or to convert a Base Rate Loan into a Eurodollar Loan, on the date
specified in a notice given pursuant to Section 2.5(a) or established
pursuant to Section 2.5(c) hereof,
(c) any failure by Borrower to make any payment or prepayment of
principal on any Eurodollar Loan when due (whether by acceleration or
otherwise), or
(d) any acceleration of the maturity of a Eurodollar Loan as a result
of the occurrence of any Event of Default hereunder, then, upon the demand
of such Bank, Borrower shall pay to such Bank such amount as will reimburse
such Bank for such loss, cost or expense. If any Bank makes such a claim
for compensation, it shall provide to
18
Borrower, with a copy to the Administrative Agent, a certificate executed
by an officer of such Bank setting forth the amount of such loss, cost or
expense in reasonable detail (including an explanation of the basis for and
the computation of such loss, cost or expense) and the amounts shown on
such certificate if reasonably calculated shall be prima facie evidence of
the amount of such loss, cost or expense.
SECTION 3 FEES.
Section 3.1 Fees.
(a) Administrative Agent Fees. Borrower shall pay to the Administrative
Agent, for the Administrative Agent's sole account, the fees agreed to in the
Fee Letter, which fees shall be fully earned and non-refundable once paid.
SECTION 4 PLACE AND APPLICATION OF PAYMENTS.
Section 4.1 Place and Application of Payments. All payments of principal of
and interest on the Loans, and of all other Obligations and other amounts
payable by Borrower under the Credit Documents, shall be made by Borrower in
U.S. Dollars to the Administrative Agent by no later than 2:00 p.m. (New York
time) on the due date thereof at the principal office of the Administrative
Agent in New York, New York pursuant to the payment instructions set forth on
Part A of Schedule 4 hereof (or such other location in the, United States as the
Administrative Agent may designate to Borrower) for the benefit of the Person or
Persons entitled thereto. Any payments received after such time shall be deemed
to have been received by the Administrative Agent on the next Business Day. All
such payments shall be made free and clear of, and without deduction for, any
set-off, defense, counterclaim, levy, or any other deduction of any kind in
immediately available funds at the place of payment. The Administrative Agent,
will promptly thereafter cause to be distributed like funds relating to the
payment of principal or interest on Loans or applicable fees ratably to the
Banks and like funds relating to the payment of any other amount payable to any
Person to such Person, in each case to be applied in accordance with the terms
of this Agreement.
SECTION 5 REPRESENTATIONS AND WARRANTIES.
The Borrower hereby represents and warrants to each Bank as to itself and,
where the following representations and warranties apply to its Subsidiaries, as
to each Subsidiary of Borrower, as follows:
Section 5.1 Corporate Organization and Authority. Borrower is duly
organized and existing in good standing under the laws of the state of South
Dakota; has all necessary corporate power to carry on its present business; and
is duly licensed or qualified and in good standing in each jurisdiction in which
the nature of the business transacted by it or the nature of the Property owned
or leased by it makes such licensing, qualification or good standing necessary
and in which the failure to be so licensed, qualified or in good standing would
have a Material Adverse Effect.
19
Section 5.2 Subsidiaries. Schedule 5.2 (as updated from time to time
pursuant to Section 7.1) hereto identifies each Subsidiary of Borrower, the
jurisdiction of incorporation, the percentage of issued and outstanding shares
of each class of its capital stock owned by the Borrower and its Subsidiaries
and, if such percentage is not one hundred percent (100%) (excluding directors'
qualifying shares as required by law), a description of each class of its
authorized capital stock and the number of shares of each class issued and
outstanding. Each Subsidiary is duly incorporated and existing in good standing
as a corporation under the laws of the jurisdiction of its incorporation, has
all necessary corporate power to carry on its present business, and is duly
licensed or qualified and in good standing in each jurisdiction in which the
nature of the business transacted by it or the nature of the Property owned or
leased by it makes such licensing or qualification necessary and in which the
failure to be so licensed or qualified would have a Material Adverse Effect. All
of the issued and outstanding shares of capital stock of each Subsidiary owned
directly or indirectly by Borrower are validly issued and outstanding and fully
paid and nonassessable except as set forth on Schedule 5.2 hereto. All such
shares owned by Borrower are owned beneficially, and of record, free of any
Lien, except as permitted in Section 7.9.
Section 5.3 Corporate Authority and Validity of Obligations. Borrower has
full right and authority to enter into this Agreement and the other Credit
Documents to which it is a party, to make the borrowings herein provided for, to
issue its Notes in evidence thereof, to apply (and to have applied), and to
perform all of its obligations under the Credit Documents to which it is a
party. Each Credit Document to which it is a party has been duly authorized,
executed and delivered by Borrower and constitutes valid and binding obligations
of Borrower enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforceability of creditors' rights
generally and by equitable principles of general applicability (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
No Credit Document, nor the performance or observance by Borrower of any of the
matters or things therein provided for, contravenes any provision of law or any
charter or by-law provision of Borrower or any material Contractual Obligation
of or affecting Borrower or any of Borrower's Properties or results in or
requires the creation or imposition of any Lien on any of the Properties or
revenues of Borrower.
Section 5.4 Financial Statements. All financial statements heretofore
delivered to the Banks showing historical performance of Borrower for Borrower's
fiscal years ending on or before December 31, 2001, have been prepared in
accordance generally accepted accounting principles applied on a basis
consistent, except as otherwise noted therein, with that of the previous fiscal
year. The unaudited financial statements for the fiscal period ended June 30,
2002 have been prepared in accordance generally accepted accounting principles
applicable to interim financial statements applied on a basis consistent, except
as otherwise noted therein, with the previous same fiscal period of Borrower in
the prior fiscal year (subject to normal year-end adjustments). Each of such
financial statements fairly presents on a consolidated basis the financial
condition of Borrower and its Subsidiaries as of the dates thereof and the
results of operations for the periods covered thereby. Borrower and its
Subsidiaries have no material contingent liabilities other than those disclosed
in such financial statements referred to in this Section 5.4 or in comments or
footnotes thereto, or in any report supplementary thereto, heretofore furnished
to the Banks. Since December 31, 2001, there has been no event or series
20
of events which has resulted in, or reasonably could be expected to result in,
a Material Adverse Effect.
Section 5.5 No Litigation; No Labor Controversies.(a) Except as set forth
on Schedule 5.5, there is no litigation or governmental proceeding pending, or
to the knowledge of Borrower, threatened, against Borrower or any Subsidiary of
Borrower in which there is a reasonable possibility of an adverse decision
which, if adversely determined, could (individually or in the aggregate) have a
Material Adverse Effect.
(b) Except as set forth on Schedule 5.5, there are no labor controversies
pending or, to the best knowledge of Borrower, threatened against Borrower or
any Subsidiary of Borrower which could (individually or in the aggregate) have a
Material Adverse Effect.
Section 5.6 Taxes. Borrower and its Subsidiaries have filed all United
States federal tax returns, and all other foreign, state, local and other tax
returns, required to be filed and have paid all taxes due pursuant to such
returns or pursuant to any assessment received by Borrower or any Subsidiary of
Borrower, except such taxes, if any, as are being contested in good faith and
for which adequate reserves have been provided. No notices of tax liens have
been filed and no claims are being asserted concerning any such taxes, which
liens or claims are material to the financial condition of Borrower or any of
its Subsidiaries (individually or in the aggregate). The charges, accruals and
reserves on the books of Borrower and its Subsidiaries for any taxes or other
governmental charges are adequate and in conformance with GAAP.
Section 5.7 Approvals. No authorization, consent, approval, license,
exemption, filing or registration with any court or governmental department,
agency or instrumentality, nor any approval or consent of the stockholders of
Borrower or any Subsidiary of Borrower or from any other Person, is necessary to
the valid execution, delivery or performance by Borrower or any Subsidiary of
Borrower of any Credit Document to which it is a party.
Section 5.8 ERISA. With respect to each Plan, Borrower and each other
member of the Controlled Group has fulfilled its obligations under the minimum
funding standards of and is in compliance in all material respects with the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and with
the Code to the extent applicable to it and has not incurred any liability to
the Pension Benefit Guaranty Corporation ("PBGC") or a Plan under Title IV of
ERISA other than a liability to the PBGC for premiums under Section 4007 of
ERISA. Neither Borrower nor any Subsidiary of Borrower has any contingent
liabilities for any post-retirement benefits under a Welfare Plan, other than
liability for continuation coverage described in Part 6 of Title I of ERISA.
Section 5.9 Government Regulation. Neither Borrower nor any Subsidiary of
Borrower is an "investment company" within the meaning of the Investment Company
Act of 1940, as amended, or a "registered holding company", or a "Subsidiary
company" of a "registered holding company", or an "affiliate" of a "registered
holding company" or of a "Subsidiary company" of a "registered holding company",
within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
Section 5.10 Margin Stock; Use of Proceeds. Neither Borrower nor any
Subsidiary of Borrower is engaged principally, or as one of its primary
activities, in the business of extending
21
credit for the purpose of purchasing or carrying margin stock ("margin stock" to
have the same meaning herein as in Regulation U of the Board of Governors of the
Federal Reserve System). The proceeds of the Loans are to be used solely (i) to
provide liquidity support for Borrower's commercial paper program, (ii) to fund
Borrower's working capital needs, and (iii) for general corporate purposes of
Borrower. Borrower will not use the proceeds of any Loan in a manner that
violates any provision of Regulation U or X of the Board of Governors of the
Federal Reserve System.
Section 5.11 Licenses and Authorizations; Compliance with Laws. (a) (a)
Borrower and each of its Subsidiaries has all necessary licenses, permits and
governmental authorizations to own and operate its Properties and to carry on
its business as currently conducted and contemplated. Borrower and each of its
Subsidiaries is in compliance with all applicable laws, regulations, ordinances
and orders of any governmental or judicial authorities except for any such law,
regulation, ordinance or order which, the failure to comply therewith, could not
reasonably expected to have a Material Adverse Effect.
(b) In the ordinary course of its business, Borrower and each of its
Subsidiaries conduct an ongoing review of the effect of Environmental and Health
Laws on the Properties and all aspects of the business and operations of
Borrower and its Subsidiaries in the course of which such Borrower identifies
and evaluates associated liabilities and costs (including, without limitation,
any capital or operating expenditures required for clean-up or closure of
Properties currently or previously owned or used, any capital or operating
expenditures required to achieve or maintain compliance with standards imposed
by law and any actual or potential liabilities to third parties, including
employees or governmental entities, and any related costs and expenses). On the
basis of this review, Borrower has reasonably concluded that Environmental and
Health Laws are unlikely to have any Material Adverse Effect.
(c) Except as set forth on Schedule 5.11 (as amended from time to time in
accordance with the provisions hereof), neither the Borrower nor any Subsidiary
of Borrower has given, nor is it required to give, nor has it received, any
notice, letter, citation, order, warning, complaint, inquiry, claim or demand to
or from any governmental entity or in connection with any court proceeding which
could reasonably have a Material Adverse Effect claiming that: (i) Borrower or
any Subsidiary of Borrower has violated, or is about to violate, any
Environmental and Health Law; (ii) there has been a release, or there is a
threat of release, of Hazardous Materials from Borrower's or any of its
Subsidiary's Property, facilities, equipment or vehicles; (iii) Borrower or any
of its Subsidiary may be or is liable, in whole or in part, for the costs of
cleaning up, remediating or responding to a release of Hazardous Materials; or
(iv) any of Borrower's or any of its Subsidiary's Property or assets are subject
to a Lien in favor of any governmental entity for any liability, costs or
damages, under any Environmental and Health Law arising from, or costs incurred
by such governmental entity in response to, a release of a Hazardous Materials.
Section 5.12 Ownership of Property; Liens. Borrower and each Subsidiary of
Borrower has good title to or valid leasehold interests in all its Property.
None of Borrower's or any Subsidiary's Property is subject to any Lien, except
as permitted in Section 7.9.
Section 5.13 No Burdensome Restrictions; Compliance with Agreements.
Neither Borrower nor any Subsidiary of Borrower is (a) party or subject to any
law, regulation, rule or
22
order, or any Contractual Obligation, that (individually or in the aggregate)
materially adversely affects the business, operations, Property or financial or
other condition of Borrower and its Subsidiaries (individually or in the
aggregate) or (b) in default in the performance, observance or fulfillment of
any of the obligations, covenants or conditions contained in any agreement to
which it is a party (including any Contractual Obligation), which default could
materially adversely affects the business, operations, Property or financial or
other condition of Borrower and its Subsidiaries (individually or in the
aggregate).
Section 5.14 Full Disclosure. All information heretofore furnished by
Borrower to the Administrative Agent or any Bank for purposes of or in
connection with the Credit Documents or any transaction contemplated thereby is,
and all such information hereafter furnished by Borrower to the Administrative
Agent or any Bank will be, true and accurate in all material respects and not
misleading.
Section 5.15 Solvency. Borrower and each of its Subsidiaries, individually
and on a consolidated basis, is Solvent.
SECTION 6 CONDITIONS PRECEDENT.
The obligation of each Bank to effect a Borrowing shall be subject to the
following conditions precedent:
Section 6.1 Initial Credit Event. Before or concurrently with the initial
Credit Event:
(a) The Administrative Agent shall have received for each Bank the
favorable written opinion of (i) Morgan, Lewis & Bockius LLP, counsel to
Borrower, and (ii) General Counsel to the Borrower;
(b) The Administrative Agent shall have received for each Bank copies of
Borrower's (i) Articles of Incorporation, together with all amendments and (ii)
bylaws (or comparable constituent documents) and any amendments thereto,
certified in each instance by its Secretary or an Assistant Secretary;
(c) The Administrative Agent shall have received for each Bank copies of
resolutions of Borrower's Board of Directors authorizing the execution and
delivery of the Credit Documents and the consummation of the transactions
contemplated thereby together with specimen signatures of the persons authorized
to execute such documents on such Borrower's behalf, all certified in each
instance by its Secretary or Assistant Secretary;
(d) The Administrative Agent shall have received for each Bank such Bank's
duly executed Note of Borrower dated the date hereof and otherwise in compliance
with the provisions of Section 2.10(a) hereof;
(e) The Administrative Agent shall have received for each Bank a duly
executed original of (i) this Agreement, and (ii) a list of Borrower's
Authorized Representatives;
23
(f) All legal matters incident to the execution and delivery of the Credit
Documents shall be satisfactory to the Banks;
(g) The Administrative Agent shall have received a duly executed original
of the Fee Letter;
(h) The Administrative Agent shall have received a duly executed Compliance
Certificate containing financial information as of June 30, 2002;
(i) With the exception of the $75,000,000 First Mortgage Bonds issued by
BHP, the extensions of the maturity date of the $50,000,000 Bridge Credit
Agreement between Borrower and ABN AMRO Bank N.V. relating to the Las Vegas
Cogeneration II, L.L.C. project, and the Amended and Restated 364-Day Credit
Agreement, neither Borrower nor any of its Subsidiaries shall have, during the
period from July 1, 2002 to the Effective Date, issued, incurred, assumed,
created, become liable for, contingently or otherwise, any material
Indebtedness;
(j) The Borrower shall have provided a certificate stating that the
conditions set forth precedent set forth in this Section 6.1 have been
satisfied;
(k) The Borrower shall have paid to each Bank the applicable fees for
providing its Commitment under this Agreement; and
(l) The Borrower's S&P Rating shall be BBB or better and its Moody's Rating
shall be Baa2 or better; and
(m) The Administrative Agent shall have received such other documents and
information as it may reasonably request.
Section 6.2 All Credit Events. As of the time of each Credit Event
hereunder:
(a) The Administrative Agent shall have received the notice required by
Section 2.5 hereof;
(b) Each of the representations and warranties set forth in Section 5
hereof shall be and remain true and correct in all material respects as of said
time, except that if any such representation or warranty relates solely to an
earlier date it need only remain true as of such date; and
(c) Borrower shall be in full compliance with all of the terms and
conditions hereof, and no Default or Event of Default shall have occurred and be
continuing or would occur as a result of such Credit Event.
Each request for a Credit Event shall be deemed to be a representation and
warranty by Borrower on the date of such Credit Event as to the facts specified
in paragraphs (b) and (c) of this Section 6.2.
SECTION 7 COVENANTS.
24
Borrower covenants and agrees that, so long as any Note or Loan is
outstanding hereunder, except to the extent compliance in any case is waived in
writing by the Required Banks:
Section 7.1 Corporate Existence; Subsidiaries. Borrower shall, and shall
cause each of its Subsidiaries to, preserve and maintain its corporate
existence, subject to the provisions of Section 7.12 hereof. Together with any
financial statements delivered pursuant to Section 7.6 hereof, Borrower shall
deliver an updated Schedule 5.2 to reflect any changes from the existing
Schedule 5.2.
Section 7.2 Maintenance. Borrower will maintain, preserve and keep its
plants, Properties and equipment necessary to the proper conduct of its business
in reasonably good repair, working order and condition and will from time to
time make all reasonably necessary repairs, renewals, replacements, additions
and betterments thereto so that at all times such plants, Properties and
equipment shall be reasonably preserved and maintained, and Borrower will cause
each of its Subsidiaries to do so in respect of Property owned or used by it;
provided, however, that nothing in this Section 7.2 shall prevent Borrower or a
Subsidiary of Borrower from discontinuing the operation or maintenance of any
such Properties if such discontinuance is not disadvantageous to the Banks or
the holders of the Notes, does not materially impair the operations of Borrower
or any Subsidiary of Borrower and is, in the judgment of Borrower, desirable in
the conduct of its business or the business of its Subsidiaries.
Section 7.3 Taxes. Borrower will duly pay and discharge, and will cause
each of its Subsidiaries duly to pay and discharge, all taxes, rates,
assessments, fees and governmental charges upon or against it or against its
Properties, in each case before the same becomes delinquent and before penalties
accrue thereon, unless and to the extent that the same is being contested in
good faith by appropriate proceedings and reserves in conformity with GAAP have
been provided therefor on the books of Borrower.
Section 7.4 ERISA. Borrower will, and will cause each of its Subsidiaries
to, promptly pay and discharge all obligations and liabilities arising under
ERISA of a character which if unpaid or unperformed might result in the
imposition of a Lien against any of its properties or assets and will promptly
notify the Administrative Agent of (i) the occurrence of any reportable event
(as defined in ERISA) affecting a Plan, other than any such event of which the
PBGC has waived notice by regulation, (ii) receipt of any notice from PBGC of
its intention to seek termination of any Plan or appointment of a trustee
therefor, (iii) its or any of its Subsidiaries' intention to terminate or
withdraw from any Plan, and (iv) the occurrence of any event affecting any Plan
which could result in the incurrence by Borrower or any of its Subsidiaries of
any material liability, fine or penalty, or any material increase in the
contingent liability of Borrower or any of its Subsidiaries under any
post-retirement Welfare Plan benefit. The Administrative Agent will promptly
distribute to each Bank any notice it receives from Borrower pursuant to this
Section 7.4.
Section 7.5 Insurance. Borrower will insure, and keep insured, and will
cause each of its Subsidiaries to insure, and keep insured, with good and
responsible insurance companies, all insurable Property owned by it of a
character usually insured by companies similarly situated and operating like
Property. To the extent usually insured by companies similarly situated and
conducting similar businesses, Borrower will also insure, and cause each of its
Subsidiaries to
25
insure, employers' and public and product liability risks with good and
responsible insurance companies. Borrower will, upon request of any Bank,
furnish to such Bank a summary setting forth the nature and extent of the
insurance maintained pursuant to this Section 7.5.
Section 7.6 Financial Reports and Other Information. (a) Borrower will
maintain a system of accounting in accordance with GAAP and will furnish to the
Banks and their respective duly authorized representatives such information
respecting the business and financial condition of Borrower and its Subsidiaries
as any Bank may reasonably request; and without any request, the Borrower shall
deliver to the Administrative Agent in form and detail satisfactory to the
Administrative Agent, with copies for each Bank in form and substance
satisfactory to them, each of the following:
(i) within 120 days after the end of each fiscal year of Borrower, a
copy of Borrower financial statements for such fiscal year, including the
consolidated balance sheet of Borrower and its Subsidiaries for such year
and the related statements of income and statements of cash flow, each as
certified by independent public accountants of recognized national standing
selected by Borrower in accordance with GAAP with such accountants'
unqualified opinion to the effect that the financial statements have been
prepared in accordance with GAAP and present fairly in all material
respects in accordance with GAAP the consolidated financial position of
Borrower and its Subsidiaries as of the close of such fiscal year and the
results of their operations and cash flows for the fiscal year then ended
and that an examination of such accounts in connection with such financial
statements has been made in accordance with generally accepted auditing
standards and, accordingly, such examination included such tests of the
accounting records and such other auditing procedures as were considered
necessary in the circumstances, provided that if Borrower files its annual
report on Form 10-K for the applicable annual period, and such annual
report contains the financial statements and accountants certifications,
opinions and statements described above, the Borrower may satisfy the
requirements of this Section 7.6(a)(i) by delivering a copy of such annual
report to each Bank. Together with such information the Borrower shall
provide to each Bank such consolidating information as may be necessary for
the Banks to determine the Borrower's compliance with Section 7.17 hereof;
(ii) within 60 days after the end of each of the first three quarterly
fiscal periods of Borrower, a consolidated unaudited balance sheet of
Borrower and its Subsidiaries, and the related statements of income and
statements of cash flow, as of the close of such period, all of the
foregoing prepared by Borrower in reasonable detail in accordance with GAAP
and certified by Borrower's chief financial officer or corporate controller
as fairly presenting the financial condition as at the dates thereof and
the results of operations for the periods covered thereby, provided that if
Borrower files a Form 10-Q for the applicable quarterly period, and such
quarterly report contains the financial statements and certifications
described above, the Borrower may satisfy the requirements of this Section
7.6(a)(ii) by delivering a copy of such quarterly report to each Bank.
Together with such information the Borrower shall provide to each Bank such
consolidating information as may be necessary for the Banks to determine
the Borrower's compliance with Section 7.17 hereof;
26
(iii) within the period provided in subsection (i) above, the written
statement of the accountants who certified the audit report thereby
required that in the course of their audit they have obtained no knowledge
of any Default or Event of Default, or, if such accountants have obtained
knowledge of any such Default or Event of Default, they shall disclose in
such statement the nature and period of the existence thereof; and
(iv) promptly after the sending or filing thereof, copies of all proxy
statements, financial statements and reports Borrower or any of its
Subsidiaries sends to their shareholders, and copies of all other regular,
periodic and special reports and all registration statements Borrower or
any of its Subsidiaries file with the SEC or any successor thereto, or with
any national securities exchanges.
(b) Each financial statement furnished to the Banks pursuant to subsection
(i) or (ii) of this Section 7.6 shall be accompanied by (A) a written
certificate signed by Borrower's chief financial officer or corporate controller
to the effect that (i) no Default or Event of Default has occurred during the
period covered by such statements or, if any such Default or Event of Default
has occurred during such period, setting forth a description of such Default or
Event of Default and specifying the action, if any, taken by Borrower to remedy
the same, (ii) the representations and warranties contained in Section 5 hereof
are true and correct in all material respects as though made on the date of such
certificate (other than those made solely as of an earlier date, which need only
remain true as of such date), except as otherwise described therein, and (B) a
Compliance Certificate in the form of Exhibit B hereto showing Borrower's
compliance with the covenants set forth in Sections 7.9, 7.11, 7.12 and 7.14
through 7.19 hereof.
(c) Borrower will promptly (and in any event within three Business Days
after an officer of Borrower has knowledge thereof) give notice to the
Administrative Agent and each Bank:
(i) of the occurrence of any Default or Event of Default;
(ii) any event or condition which could reasonably be expected to have
a Material Adverse Effect;
(iii) of any litigation or governmental proceeding of the type
described in Section 5.5 hereof;
(iv) of any material change in the information set forth on the
Schedules hereto; and
(v) of the entering into of any Long-Term Guaranties, and Borrower
shall promptly provide the Administrative Agent with a copy of any such
Guarantee and any modification to such Guarantee.
Section 7.7 Bank Inspection Rights. For purposes of confirming compliance
with the Credit Documents or after the occurrence and during the continuance of
an Event of Default, upon reasonable notice from the Administrative Agent or the
Required Banks, Borrower will, at Borrower's expense, permit such Banks (and
such Persons as any Bank may designate) during normal business hours to visit
and inspect, under Borrower's guidance, any of the Properties of
27
Borrower or any of its Subsidiaries, to examine all of their books of account,
records, reports and other papers, to make copies and extracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
officers, employees and with their independent public accountants (and by this
provision Borrower authorizes such accountants to discuss with the Banks (and
such Persons as any Bank may designate) the finances and affairs of Borrower and
its Subsidiaries) all at such reasonable times and as often as may be reasonably
requested; provided, however, that except upon the occurrence and during the
continuation of any Default or Event of Default, not more than one such visit
and inspection may be conducted each calendar quarter.
Section 7.8 Conduct of Business. Neither Borrower nor any Subsidiary of
Borrower will engage in any line of business other than business activities in
the field of (i) cogeneration and related thermal uses, (ii) energy production,
(iii) energy development, (iv) energy recovery, (v) utility operation and
management, (vi) demand side management services, (vii) energy trading, (viii)
management of investment funds which invest in energy related businesses and
investments in such funds, (ix) hedging but not speculative activities relating
to any of the foregoing lines of business, (x) telecommunications, (xi)
management and operating services related to any of the foregoing lines of
business, and (xii) other businesses not described in the foregoing so long as
the Investments and expenses made in such other businesses does not exceed
$20,000,000.
Section 7.9 Liens. To the extent Borrower or any of its Subsidiaries grants
a Lien on any of their Property to secure Borrower's obligations under the
Existing Credit Agreements, Borrower will, or will cause such Subsidiary to,
concurrently with the granting of such Lien, grant a pari passu Lien to the
Administrative Agent for the benefit of the Banks to secure the Obligations.
Section 7.10 Use of Proceeds; Regulation U. The proceeds of each Borrowing
will be used by Borrower solely to fund Borrower's working capital needs, and
(ii) for general corporate purposes of Borrower. Borrower will not use any part
of the proceeds of any of the Borrowings directly or indirectly to purchase or
carry any margin stock (as defined in Section 5.10 hereof) or to extend credit
to others for the purpose of purchasing or carrying any such margin stock.
Section 7.11 Sales and Leasebacks. Borrower will not, nor will it permit
any of its Subsidiaries to, enter into any arrangement with any bank, insurance
company or other lender or investor providing for the leasing by Borrower or any
Subsidiary of Borrower of any Property theretofore owned by it and which has
been or is to be sold or transferred by such owner to such lender or investor if
the total amount of rent and other obligations of the Borrower and its
Subsidiaries under such lease, when combined with all rent and other obligations
of Borrower and its Subsidiaries under all such leases, would exceed $30,000,000
in the aggregate, provided that Borrower and its Subsidiaries may engage in
synthetic lease transactions so long as the Borrower's or such Subsidiary's, as
applicable, obligations under such synthetic leases are included as Indebtedness
for all purposes (including financial covenant calculations) under the Credit
Documents.
Section 7.12 Mergers, Consolidations and Sales of Assets.
28
(a) Borrower will not, and will not permit any of its Material
Subsidiaries to, (i) consolidate with or be a party to merger with any
other Person or (ii) sell, lease or otherwise dispose of all or a
"substantial part" of the assets of Borrower and its Subsidiaries;
provided, however, that (w) the foregoing shall not prohibit any sale,
lease, transfer or disposition to which the Required Banks have consented,
such consent not to by unreasonably withheld if (A) such transaction does
not result in a downgrade of either Borrower's S&P Rating or Moody's
Rating, (B) such transaction is for cash consideration (or other
consideration acceptable to the Required Banks) in an amount not less than
the fair market value of the applicable assets, and (C) such transaction,
when combined with all other such transactions, would not have a Material
Adverse Effect, taken as a whole, (x) any Subsidiary of Borrower may merge
or consolidate with or into or sell, lease or otherwise convey all or a
substantial part of its assets to Borrower or any Subsidiary of which
Borrower holds (directly or indirectly) at least the same percentage equity
ownership; provided that in any such merger or consolidation involving
Borrower, Borrower shall be the surviving or continuing corporation, (y)
Borrower and its Subsidiaries may sell inventory, reserves and electricity
in the ordinary course of business, and (z) Borrower may enter into a
merger with, or acquisition of all of, another Person so long as:
(1) Borrower is the surviving entity,
(2) unless consented to by the Required Banks, no downgrade in the
Borrower's S&P Rating or Moody's Rating would occur as a result of the
consummation of such a transaction,
(3) if such transaction is an acquisition, the Board of Directors (or
similar governing body) of the Person being acquired has approved
being so acquired,
(4) no Default or Event of Default has occurred and is continuing at the
time of, or would occur as a result of, such transaction.
As used in this Section 7.12(a), a sale, lease, transfer or disposition of
assets during any fiscal year shall be deemed to be of a "substantial part" of
the consolidated assets of Borrower and its Subsidiaries if the net book value
of such assets, when added to the net book value of all other assets sold,
leased, transferred or disposed of by the Borrower and its Subsidiaries
(excluding the Marketing Subsidiaries) during such fiscal year (other than
inventory, reserves and electricity in the ordinary course of business) exceeds
ten percent (10%) of the total assets of Borrower and its Consolidated
Subsidiaries, determined on a consolidated basis as of the last day of the
immediately preceding fiscal year.
(b) Except as permitted pursuant to Section 7.14 hereof, Borrower will
not sell, transfer or otherwise dispose of, or permit any of its
Subsidiaries to issue, sell, transfer or otherwise dispose of, any shares
of stock of any class (including as "stock" for purposes of this Section,
any warrants, rights or options to purchase or otherwise acquire stock or
other Securities exchangeable for or convertible into stock) of any
Subsidiary of Borrower, except to Borrower or a Wholly-Owned Subsidiary of
Borrower or except for the purpose of qualifying directors.
29
Section 7.13 Use of Property and Facilities; Environmental and Health and
Safety Laws.
(a) Borrower will, and will cause each of its Subsidiaries to, comply
in all material respects with the requirements of all Environmental and
Health Laws applicable to or pertaining to the Properties or business
operations of Borrower or any Subsidiary of Borrower. Without limiting the
foregoing, Borrower will not, and will not permit any Person to, except in
accordance with applicable law, dispose of any Hazardous Material into,
onto or upon any real property owned or operated by Borrower or any of its
Subsidiaries.
(b) Borrower will promptly provide the Banks with copies of any notice
or other instrument of the type described in Section 5.11(c) hereof, and in
no event later than five (5) Business Days after an officer of Borrower or
a Subsidiary of Borrower receives such notice or instrument.
Section 7.14 Investments, Acquisitions, Loans, Advances and Guaranties.
Borrower will not, nor will it permit any Subsidiary of Borrower to, directly or
indirectly, make, retain or have outstanding any investments (whether through
purchase of stock or obligations or otherwise) in, or loans or advances to, any
other Person, or acquire all or any substantial part of the assets or business
of any other Person or division thereof, or be or become liable as endorser,
guarantor, surety or otherwise (such as liability as a general partner) for any
debt, obligation or undertaking of any other Person, or otherwise agree to
provide funds for payment of the obligations of another, or supply funds thereto
or invest therein or otherwise assure a creditor of another against loss, or
apply for or become liable to the issuer of a letter of credit which supports an
obligation of another, or subordinate any claim or demand it may have to the
claim or demand of any other Person (cumulatively, all of the foregoing
"Investments"); provided, however, that the foregoing provisions shall not apply
to nor operate to prevent:
(a) investments in direct obligations of the United States of America
or of any agency or instrumentality thereof whose obligations constitute
full faith and credit obligations of the United States of America provided
that any such obligation matures within one year from the date it is
acquired by Borrower or Subsidiary;
(b) investments in commercial paper rated P-1 by Moody's Investors
Services, Inc. or A-1 by Standard & Poor's Corporation maturing within one
year of its date of issuance;
(c) investments in certificates of deposit issued by any Bank or any
United States commercial bank having capital and surplus of not less than
$200,000,000 maturing within one year from the date of issuance thereof or
in banker's acceptances endorsed by any Bank or other such commercial bank
and maturing within six months of the date of acceptance;
(d) investments in repurchase obligations with a term of not more than
seven (7) days for underlying securities of the types described in
subsection (a) above entered into with any bank meeting the qualifications
specified in subsection (c) above, provided
30
all such agreements require physical delivery of the securities securing
such repurchase agreement, except those delivered through the Federal
Reserve Book Entry System;
(e) investments in money market funds that invest solely, and which
are restricted by their respective charters to invest solely, in
investments of the type described in the immediately preceding subsections
(a), (b), (c) and (d) above;
(f) ownership of stock, obligations or securities received in
settlement of debts (created in the ordinary course of business) owing to
Borrower or any Subsidiary;
(g) endorsements of negotiable instruments for collection in the
ordinary course of business;
(h) loans and advances to employees in the ordinary course of business
for travel, relocation, and similar purposes;
(i) Investments (i) existing on the Effective Date in Subsidiaries of
Borrower, (ii) existing on the Effective Date and identified in Schedule
7.14 hereof, or (iii) consisting of intercompany loans permitted pursuant
to Section 7.15(e);
(j) Investments constituting (i) accounts receivable arising, (ii)
trade debt granted, or (iii) deposits made in connection with the purchase
price of goods or services, in each case in the ordinary course of
business;
(k) Investments in Persons other than Marketing Subsidiaries engaged
in lines of business related to the lines of business described in Section
7.8 so long as (i) both before and after giving effect to such Investment
no Default of Event of Default shall have occurred and be continuing, (ii)
such Investments do not permit any creditor of such Person recourse to
Borrower or any other Subsidiary of Borrower or any of their assets (other
than the assets and/or the stock or similar equity interest of such Person)
and (iii) if such Investments are in Persons engaged in the lines of
business described in clause (xii) of Section 7.8, such Investments and
expenses in the aggregate do not exceed $20,000,000 outstanding at any
time;
(l) Guaranties, other than Long-Term Guaranties, so long as such
Indebtedness is permitted pursuant to Section 7.15;
(m) acquisitions permitted pursuant to Section 7.12(a);
(n) Investments constituting Long-Term Guaranties other than Long-Term
Guarantees of Indebtedness of the Marketing Subsidiaries;
(o) (i) Investments in Marketing Subsidiaries (other than Investments
in Marketing Subsidiaries consisting of Guaranties of Indebtedness of
Marketing Subsidiaries) existing on August 28, 2001 and listed on Schedule
7.14 and (ii) Investments consisting of Guaranties of Indebtedness of
Marketing Subsidiaries in existence on the Effective Date and Investments
in Marketing Subsidiaries made after the Effective Date (including through
Guaranties (including Long-Term Guaranties)) provided, that the aggregate
amount of Investments permitted by this clause (ii) when
31
combined with the amount of intercompany Indebtedness owing by Marketing
Subsidiaries permitted pursuant to Section 7.15(e)(iii) shall not in the
aggregate exceed $10,000,000 outstanding at any time (it being understood
that any increase in the value of any such Investment attributable to the
undistributed net earnings of the Marketing Subsidiaries shall not be
deemed a violation of this Section 7.14(o)); and
(p) Investments consisting of promissory notes issued in consideration
for the sale by the Borrower or a Subsidiary of a portion of the stock (or
similar equity interests) of a Subsidiary where (i) such note is secured by
the stock (or similar equity interest) sold, and (ii) one of the purposes
of such sale is to ensure that such Subsidiary qualifies as a "qualifying
facility" under the Public Utility Regulatory Policies Act of 1978, as
amended.
Any Investment which when made complies with the requirements of
paragraphs (a) through (e) may continue to be held notwithstanding that such
Investment if made thereafter would not comply with such requirements;
In determining the amount of investments, acquisitions, loans, advances
and guarantees permitted under this Section 7.14, investments and acquisitions
shall always be taken at the original cost thereof (regardless of any subsequent
appreciation or depreciation therein), loans and advances shall be taken at the
principal amount thereof then remaining unpaid, and guarantees shall be taken at
the amount of obligations guaranteed thereby.
Section 7.15 Restrictions on Indebtedness. Borrower will not, nor will it
permit any Subsidiary of Borrower to, issue, incur, assume, create, become
liable for, contingently or otherwise, or have outstanding any Indebtedness;
provided, however, that the foregoing provisions shall not restrict nor operate
to prevent the following Indebtedness, so long as the incurrence and maintenance
of such Indebtedness would not cause the Borrower to be in violation of Section
7.17 hereof if compliance with such covenant were measured on the date of the
incurrence of such Indebtedness:
(a) the Obligations;
(b) Non-Recourse Indebtedness of any Project Finance Subsidiary;
(c) so long as the Borrower would be in compliance with Section 7.17
hereof (calculated as of the date of, and after giving affect to, the
incurrence of such Indebtedness), secured Indebtedness (excluding
Indebtedness of the type described in (e), (f), and (g) below but including
the pledge of stock or similar equity interest of any Project Finance
Subsidiary or any Subsidiary which is a special purpose entity whose sole
purpose is to own the stock or similar equity interest of a Project Finance
Subsidiary) (A) set forth on Schedule 7.15(b) hereto, and (B) (i) of BHP,
(ii) evidencing the deferred purchase price of newly acquired property or
incurred to finance the acquisition of personal property of the Borrower or
a Subsidiary of the Borrower used in the ordinary course of business of the
Borrower or Subsidiary, (iii) constituting Capitalized Lease Obligations or
with respect to synthetic (or similar type) lease arrangements, or (iv)
incurred in connection with the performance of tenders, statutory
obligations, bids, leases or other similar obligations (other than for
borrowed money) entered into in the ordinary
32
course of business or to secure obligations on performance bonds; provided,
that the aggregate amount of Indebtedness permitted by this clause (B) at
any time outstanding shall not exceed 5% of Consolidated Assets as
reflected on the most recent balance sheet delivered by the Borrower
pursuant to Section 7.6, provided that Borrower shall promptly provide the
Administrative Agent with a copy of any documentation evidencing such
Indebtedness in excess of $25,000,000 and any modification to such
Indebtedness;
(d) so long as the Borrower would be in compliance with Section 7.17
hereof (calculated as of the date of, and after giving affect to, the
incurrence of such Indebtedness), other Indebtedness (excluding
Indebtedness of the type described in (e), (f), and (g) below) which is
unsecured and either junior in right of payment to the Obligations or pari
passu to the Obligations or is equally and ratably secured with the
Obligations, provided that Borrower shall promptly provide the
Administrative Agent with a copy of any documentation evidencing such
Indebtedness in excess of $25,000,000 and any modification to such
Indebtedness;
(e) intercompany loans (i) from (x) Subsidiary to Borrower so long as
such loans are subordinated to the Obligations on terms reasonably
satisfactory to the Administrative Agent, and (y) Borrower to a Subsidiary
of Borrower, (ii) among Wholly-Owned Subsidiaries, and (iii) from a
Subsidiary of Borrower to a Marketing Subsidiary, so long as the aggregate
amount of such loans from time to time owing by the Marketing Subsidiaries
does not exceed the difference between (I) $10,000,000, less (II) the sum
of (A) the aggregate amount of Guaranties outstanding pursuant to Section
7.15(f), and (B) the aggregate amount of other Investments then made in the
Marketing Subsidiaries pursuant to Section 7.14(o)(ii) (it being understood
that to the extent such limit is exceeded solely as a result of an increase
in the value of any such Investment attributable to the undistributed net
earnings of the Marketing Subsidiaries, it shall not be deemed a violation
of this Section 7.15(e));
(f) Indebtedness consisting of Guaranties of the Indebtedness of the
Marketing Subsidiaries (including Long-Term Guaranties), provided that such
Indebtedness shall only be permitted to the extent the aggregate amount of
such Indebtedness, when added to the sum of (i) the aggregate amount of all
intercompany loans made to the Marketing Subsidiaries pursuant to Section
7.15(e), plus (ii) the aggregate amount of all other Investments made in
Marketing Subsidiaries pursuant to Section 7.14(o)(ii), does not exceed
$10,000,000 (it being understood that to the extent such limit is exceeded
solely as a result of an increase in the value of any such Investment
attributable to the undistributed net earnings of the Marketing
Subsidiaries, it shall not be deemed a violation of this Section 7.15(f))
provided, further that Borrower shall promptly provide the Administrative
Agent with a copy of any such Guarantee and any modification to such
Guarantee;
(g) Indebtedness of the Marketing Subsidiaries under Marketing
Subsidiary Excluded Credit Facilities in an aggregate amount not to exceed
the Marketing Subsidiary Indebtedness Limit;
(h) Permitted Derivative Obligations; and
33
(i) Indebtedness pursuant to Long-Term Guaranties (other than
Long-Term Guaranties of Indebtedness of Marketing Subsidiaries).
Indebtedness shall only be permitted under (e), (f), (h), and (i) above
to the extent such Indebtedness will have a priority of payment with the
Obligations which is no greater than pari passu.
Section 7.16 Consolidated Net Worth. Borrower will at the end of each
fiscal quarter maintain Consolidated Net Worth in an amount of not less than the
sum of (i) $425,000,000 and (ii) fifty percent (50%) of the aggregate
Consolidated Net Income, if positive, for the period beginning April 1, 2002 and
ending on the last day of such fiscal quarter.
Section 7.17 Recourse Leverage Ratio. Borrower will not at the end of any
fiscal quarter permit the Recourse Leverage Ratio to exceed 0.65 to 1.00.
Section 7.18 Fixed Charge Coverage Ratio. Borrower will maintain a Fixed
Charge Coverage Ratio of not less than 1.50:1.00, as determined at the end of
each fiscal quarter.
Section 7.19 Dividends and Other Shareholder Distributions. (a) (a)
Borrower shall not (i) declare or pay any dividends or make a distribution of
any kind (including by redemption or purchase) on or relating to its outstanding
capital stock, or (ii) repay (directly, through sinking fund payments or
otherwise) any Indebtedness or other obligations owing to a shareholder unless
in either circumstance no Default or Event of Default exists prior to or would
result after giving effect to such action.
(b) Except (i) as set forth in the Existing Credit Agreements or on
Schedule 7.19 and (ii) in connection with Non-Recourse Indebtedness of a Project
Finance Subsidiary, Borrower will not, and will not permit any of its
Subsidiaries, directly or indirectly to create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction of any kind
on the ability of any such Subsidiary to: (1) pay dividends or make any other
distribution on any of such Subsidiary's capital stock owned by Borrower or any
Subsidiary of Borrower; (2) pay any Indebtedness owed to Borrower or any other
Subsidiary; (3) make loans or advances to Borrower or any other Subsidiary; or
(4) transfer any of its property or assets to Borrower or any other Subsidiary.
Section 7.20 No Negative Pledge. Except (i) as set forth in the Existing
Credit Agreements or on Schedule 7.19 and (ii) in connection with Non-Recourse
Indebtedness of a Project Finance Subsidiary, the Borrower will not, and will
not permit any of its Subsidiaries (other than Project Finance Subsidiaries),
directly or indirectly to enter into or assume any agreement (other than
customary non-assignment and no sub-letting provisions in leases consistent with
Borrower's past practices and the Credit Documents and, solely with respect to
the asset so financed, Capitalized Leases, to the extent such Indebtedness is
permitted herein) prohibiting the creation or assumption of any Lien upon its
properties or assets, whether now owned or hereafter acquired.
Section 7.21 Transactions with Affiliates. Borrower will not, and will not
permit any of its Subsidiaries to, enter into or be a party to any material
transaction or arrangement with any Affiliate of such Person (other than
Borrower), including without limitation, the purchase from,
34
sale to or exchange of Property with, any merger or consolidation with or into,
or the rendering of any service by or for, any Affiliate, except in the ordinary
course of and pursuant to the reasonable requirements of Borrower's or such
Subsidiary's business and upon terms no less favorable to such Borrower or such
Subsidiary than could be obtained in a similar transaction involving a
third-party.
Section 7.22 Compliance with Laws. Without limiting any of the other
covenants of Borrower in this Section 7, Borrower will, and will cause each of
its Subsidiaries to, conduct its business, and otherwise be, in compliance with
all applicable laws, regulations, ordinances and orders of any governmental or
judicial authorities; provided, however, that neither Borrower nor any
Subsidiary of Borrower shall be required to comply with any such law,
regulation, ordinance or order if the failure to comply therewith could not
reasonably be expected to have a Material Adverse Effect.
Section 7.23 Pari-Passu. Borrower will at all times cause the Obligations
to rank at least pari passu with all other senior unsecured Indebtedness of
Borrower.
Section 7.24 Certain Subsidiaries. Unless pursuant to Indebtedness which is
authorized pursuant to this Agreement, Borrower will not, and the Subsidiaries
of Borrower will not, permit any creditor of a Marketing Subsidiary or a Project
Finance Subsidiary to have recourse to any Borrower or any Subsidiary of
Borrower or any of their assets (other than (i) the stock or similar equity
interest of the applicable Subsidiary and (ii) with respect to a Permitted
Derivative Obligation) other than recourse under Guaranties permitted pursuant
to Sections 7.15(f) and (i).
Section 7.25 Ratings. Borrower will at all times this Agreement is in
effect maintain a S&P Rating and a Moody's Rating (or if one or both of such
ratings are unavailable, rating(s) from such other recognized national rating
agency or agencies as may be acceptable to the Administrative Agent and the
Required Banks).
Section 7.26 Liquidity Covenant. Borrower will, as of the last day of each
fiscal quarter commencing with the fiscal quarter ending December 31, 2002,
maintain Liquid Assets of at least $30,000,000.
Section 7.27 Existing Credit Agreements. Borrower will not make any
modification(s) to the Existing Credit Agreements which is favorable to the
lenders thereunder (other than pricing) unless the same modification(s) is made
to this Agreement. In the event the Borrower makes any such modification to the
Existing Credit Agreements, the terms of this Agreement shall be automatically
modified to incorporate such favorable provision(s) for the benefit of the Banks
into this Agreement. At the request of the Administrative Agent, Borrower shall
execute such documentation as Administrative Agent may request to evidence any
such modification to this Agreement.
SECTION 8 EVENTS OF DEFAULT AND REMEDIES.
Section 8.1 Events of Default. Any one or more of the following shall
constitute an Event of Default:
35
(a) (i) default in the payment when due of any fees, interest or of
any other Obligation not covered by clause (ii) below and such payment
default continues for three (3) days or (ii) default in the payment when
due of the principal amount of any Loan;
(b) default by Borrower or any Subsidiary in the observance or
performance of any covenant set forth in Section 7.1, Section 7.6(c),
Section 7.9 through 7.12, Sections 7.14 through 7.21, 7.23, 7.24 and 7.25
hereof;
(c) default by Borrower or any Subsidiary in the observance or
performance of any provision hereof or of any other Credit Document not
mentioned in (a) or (b) above, which is not remedied within thirty (30)
days after notice thereof shall have been given to the Borrower by the
Administrative Agent;
(d) (i) failure to pay when due Indebtedness in an aggregate principal
amount of (x) $10,000,000 or more of Borrower or any Material Subsidiary,
(ii) default shall occur under one or more indentures, agreements or other
instruments under which any Indebtedness of Borrower or any of its Material
Subsidiary in an aggregate principal amount of $10,000,000 or more may be
issued or created and such default shall continue for a period of time
sufficient to permit the holder or beneficiary of such Indebtedness or a
trustee therefor to cause the acceleration of the maturity of any such
Indebtedness or any mandatory unscheduled prepayment, purchase or funding
thereof, or (iii) a default shall occur under either of the Existing Credit
Agreements;
(e) any representation or warranty made herein or in any other Credit
Document by Borrower or any Subsidiary of Borrower, or in any statement or
certificate furnished pursuant hereto or pursuant to any other Credit
Document by Borrower or any Subsidiary of Borrower, or in connection with
any Credit Document, proves untrue in any material respect as of the date
of the issuance or making, or deemed making or issuance, thereof;
(f) Borrower or any Material Subsidiary shall (i) fail to pay its
debts generally as they become due or admit in writing its inability to pay
its debts generally as they become due, (ii) make an assignment for the
benefit of creditors, (iii) apply for, seek, consent to, or acquiesce in,
the appointment of a receiver, custodian, trustee, examiner, liquidator or
similar official for it or any substantial part of its Property, (iv)
institute any proceeding seeking to have entered against it an order for
relief under the United States Bankruptcy Code, as amended, to adjudicate
it insolvent, or seeking dissolution, winding up, liquidation,
reorganization, arrangement, adjustment or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors or fail to file an answer or other pleading denying the
material allegations of any such proceeding filed against it or any
analogous action is taken under any other applicable law relating to
bankruptcy or insolvency or any such order for relief is in fact granted,
(v) take any corporate action (such as the passage by its board of
directors of a resolution) in furtherance of any matter described in parts
(i)-(iv) above, or (vi) fail to contest in good faith any appointment or
proceeding described in Section 8.1(g) hereof;
(g) a custodian, receiver, trustee, examiner, liquidator or similar
official shall be appointed for Borrower or any Material Subsidiary, or any
substantial part of any of
36
their Property, or a proceeding described in Section 8.1(f)(iv) shall be
instituted against Borrower or any Material Subsidiary, and such
appointment continues undischarged or such proceeding continues undismissed
or unstayed for a period of sixty (60) days;
(h) Borrower or any Material Subsidiary shall fail within thirty (30)
days to pay, bond or otherwise discharge any judgment or order for the
payment of money in excess of $10,000,000, which is not stayed on appeal or
otherwise being appropriately contested in good faith in a manner that
stays execution thereon;
(i) Borrower or any other member of the Controlled Group shall fail to
pay when due an amount or amounts which it shall have become liable, to pay
to the PBGC or to a Plan under Title IV of ERISA; or notice of intent to
terminate a Plan or Plans having aggregate Unfunded Vested Liabilities in
excess of $10,000,000 (collectively, a "Material Plan") shall be filed
under Title IV of ERISA by Borrower or any Subsidiary of Borrower or any
other member of the Controlled Group, any plan administrator or any
combination of the foregoing; or the PBGC shall institute proceedings under
Title IV of ERISA to terminate or to cause a trustee to be appointed to
administer any Material Plan or a proceeding shall be instituted by a
fiduciary of any Material Plan against Borrower or any other member of the
Controlled Group to enforce Section 515 or 4219(c)(5) of ERISA and such
proceeding shall not have been dismissed within thirty (30) days
thereafter; or a condition shall exist by reason of which the PBGC would be
entitled to obtain a decree adjudicating that any Material Plan must be
terminated;
(j) Borrower or any Subsidiary of Borrower or any Person acting on
behalf of Borrower, a Subsidiary or any governmental authority challenges
the validity of any Credit Document or Borrower's or one of its
Subsidiary's obligations thereunder or any Credit Document ceases to be in
full force and effect or is modified other than in accordance with the
terms thereof and hereof;
(k) a Change of Control Event shall have occurred; or
(l) Borrower shall for any reason cease to be wholly liable for the
full amount of the Obligations.
Section 8.2 Non-Bankruptcy Defaults. When any Event of Default other than
those described in subsections (f) or (g) of Section 8.1 hereof has occurred and
is continuing, the Administrative Agent shall, if so directed by the Required
Banks, by written notice to Borrower: declare the principal of and the accrued
interest on all outstanding Notes to be forthwith due and payable and thereupon
all outstanding Notes, including both principal and interest thereon, and all
other Obligations, shall be and become immediately due and payable together with
all other amounts payable under the Credit Documents without further demand,
presentment, protest or notice of any kind. The Administrative Agent, after
giving notice to Borrower pursuant to Section 8.1(c) or this Section 8.2, shall
also promptly send a copy of such notice to the other Banks, but the failure to
do so shall not impair or annul the effect of such notice.
Section 8.3 Bankruptcy Defaults. When any Event of Default described in
subsections (f) or (g) of Section 8.1 hereof has occurred, then all outstanding
Notes, including both interest and principal thereon, and all other Obligations
shall immediately become due and payable
37
together with all other amounts payable under the Credit Documents without
presentment, demand, protest or notice of any kind.
Section 8.4 [Intentionally Omitted](a).
Section 8.5 Expenses. Borrower agrees to pay to the Administrative Agent
and each Bank, and any other holder of any Note outstanding hereunder, all costs
and expenses incurred or paid by the Administrative Agent or such Bank or any
such holder, including attorneys' fees (including allocable fees of in-house
counsel) and court costs, in connection with (i) any amendment or waiver to the
Credit Documents requested by Borrower, (ii) any Default or Event of Default by
Borrower hereunder, or (iii) the enforcement of any of the Credit Documents.
SECTION 9 CHANGE IN CIRCUMSTANCES.
Section 9.1 Change of Law. Notwithstanding any other provisions of this
Agreement or any Note, if at any time after the date hereof any change in
applicable law or regulation or in the interpretation thereof makes it unlawful
for any Bank to make or continue to maintain Eurodollar Loans or to perform its
obligations as contemplated hereby, such Bank shall promptly give notice thereof
to Borrower and such Bank's obligations to make or maintain Eurodollar Loans
under this Agreement shall terminate until it is no longer unlawful for such
Bank to make or maintain Eurodollar Loans. Borrower shall prepay on demand the
outstanding principal amount of any such affected Eurodollar Loans, together
with all interest accrued thereon at a rate per annum equal to the interest rate
applicable to such Loan; provided, however, subject to all of the terms and
conditions of this Agreement, Borrower may then elect to borrow the principal
amount of the affected Eurodollar Loans from such Bank by means of Base Rate
Loans from such Bank, which Base Rate Loans shall not be made ratably by the
Banks but only from such affected Bank.
Section 9.2 Unavailability of Deposits or Inability to Ascertain, or
Inadequacy of, LIBOR. If on or prior to the first day of any Interest Period for
any Borrowing of Eurodollar Loans:
(a) the Administrative Agent determines that deposits in U.S. Dollars
(in the applicable amounts) are not being offered to major banks in the
eurodollar interbank market for such Interest Period, or that by reason of
circumstances affecting the interbank eurodollar market adequate and
reasonable means do not exist for ascertaining the applicable LIBOR, or
(b) Banks with Percentages aggregating at least 33% percent (33)% or
more reasonably determine and so advise the Administrative Agent that LIBOR
as reasonably determined by the Administrative Agent will not adequately
and fairly reflect the cost to such Banks or Bank of funding their or its
Eurodollar Loans or Loan for such Interest Period,
then the Administrative Agent shall forthwith give notice thereof to Borrower
and the Banks, whereupon until the Administrative Agent notifies Borrower that
the circumstances giving rise to such suspension no longer exist, the
obligations of the Banks or of the relevant Bank to make Eurodollar Loans shall
be suspended.
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Section 9.3 Increased Cost and Reduced Return.
(a) If, on or after the date hereof, the adoption of any applicable
law, rule or regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Lending Office)
with any request or directive (whether or not having the force of law but,
if not having the force of law, compliance with which is customary in the
relevant jurisdiction) of any such authority, central bank or comparable
agency:
(i) shall subject any Bank (or its Lending Office) to any tax, duty or
other charge with respect to its Eurodollar Loans, its Notes or its
obligation to make Eurodollar Loans, or shall change the basis of taxation
of payments to any Bank (or its Lending Office) of the principal of or
interest on its Eurodollar Loans or any other amounts due under this
Agreement in respect of its Eurodollar Loans or its obligation to make
Eurodollar Loans (except for changes in the rate of tax on the overall net
income or profits of such Bank or its Lending Office imposed by the
jurisdiction in which such Bank or its lending office is incorporated in
which such Bank's principal executive office or Lending Office is located);
or
(ii) shall impose, modify or deem applicable any reserve, special
deposit or similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve
System, but excluding with respect to any Eurodollar Loans any such
requirement included in an applicable Eurodollar Reserve Percentage)
against assets of, deposits with or for the account of, or credit extended
by, any Bank (or its Lending Office) or shall impose on any Bank (or its
Lending Office) or on the interbank market any other condition affecting
its Eurodollar Loans, its Notes, or its obligation to make Eurodollar
Loans;
and the result of any of the foregoing is to increase the cost to such Bank (or
its Lending Office) of making or maintaining any Eurodollar Loan or to reduce
the amount of any sum received or receivable by such Bank (or its Lending
Office) under this Agreement or under its Notes with respect thereto, by an
amount deemed by such Bank to be material, then, within fifteen (15) days after
demand by such Bank (with a copy to the Administrative Agent), Borrower shall be
obligated to pay to such Bank such additional amount or amounts as will
compensate such Bank for such increased cost or reduction. In the event any law,
rule, regulation or interpretation described above is revoked, declared invalid
or inapplicable or is otherwise rescinded, and as a result thereof a Bank is
determined to be entitled to a refund from the applicable authority for any
amount or amounts which were paid or reimbursed by Borrower to such Bank
hereunder, such Bank shall refund such amount or amounts to Borrower without
interest.
(b) If, after the date hereof, any Bank or the Administrative Agent shall
have determined that the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change therein (including, without
limitation, any revision in the Final Risk-Based Capital Guidelines of the Board
of Governors of the Federal Reserve System (12 CFR Part 208, Appendix A; 12 CFR
Part 225, Appendix A) or of the Office of the Comptroller of the Currency (12
CFR Part 3, Appendix A), or in any other applicable capital rules heretofore
adopted and issued by any governmental authority), or any change in the
interpretation or
39
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Bank (or its Lending Office) with any request or directive regarding
capital adequacy (whether or not having the force of law but, if not having the
force of law, compliance with which is customary in the applicable jurisdiction)
of any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Bank's capital, or on the capital
of any corporation controlling such Bank, as a consequence of its obligations
hereunder to a level below that which such Bank could have achieved but for such
adoption, change or compliance (taking into consideration such Bank's policies
with respect to capital adequacy) by an amount deemed by such Bank to be
material, then from time to time, within fifteen (15) days after demand by such
Bank (with a copy to the Administrative Agent), Borrower shall pay to such Bank
such additional amount or amounts as will compensate such Bank for such
reduction.
(c) Each Bank that determines to seek compensation under this Section 9.3
shall notify Borrower and the Administrative Agent of the circumstances that
entitle the Bank to such compensation pursuant to this Section 9.3 and will
designate a different Lending Office if such designation will avoid the need
for, or reduce the amount of, such compensation and will not, in the sole
judgment of such Bank, be otherwise disadvantageous to such Bank. A certificate
of any Bank claiming compensation under this Section 9.3 and setting forth the
additional amount or amounts to be paid to it hereunder submitted to Borrower
and the Administrative Agent by such Bank in good faith shall be prima facie
evidence of the amount of such compensation. In determining such amount, such
Bank may use any reasonable averaging and attribution methods.
Section 9.4 Lending Offices. Each Bank may, at its option, elect to make
its Loans hereunder at the branch, office or affiliate specified on the
appropriate signature page hereof or in the assignment agreement which any
assignee bank executes pursuant to Section 11.12 hereof (each a "Lending
Office") for each type of Loan available hereunder or at such other of its
branches, offices or affiliates as it may from time to time elect and designate
in a written notice to Borrower and the Administrative Agent, so long as such
election does not increase costs or other amounts payable by Borrower to such
Bank hereunder.
Section 9.5 Discretion of Bank as to Manner of Funding. Notwithstanding any
other provision of this Agreement, each Bank shall be entitled to fund and
maintain its funding of all or any part of its Loans in any manner it sees fit,
it being understood, however, that for the purposes of this Agreement all
determinations hereunder shall be made as if each Bank had actually funded and
maintained each Eurodollar Loan through the purchase of deposits in the
eurodollar interbank market having a maturity corresponding to such Loan's
Interest Period and bearing an interest rate equal to LIBOR for such Interest
Period.
SECTION 10 THE AGENT.
Section 10.1 Appointment and Authorization of Administrative Agent. Each
Bank hereby appoints Credit Lyonnais New York Branch as the Administrative Agent
under the Credit Documents and hereby authorizes the Administrative Agent to
take such action as Administrative Agent on its behalf and to exercise such
powers under the Credit Documents as are delegated to the Administrative Agent
by the terms thereof, together with such powers as are reasonably incidental
thereto. The Administrative Agent shall have no duties or responsibilities
except those expressly set forth in this Agreement and the Credit Documents. The
duties of the
40
Administrative Agent shall be mechanical and administrative in nature; the
Administrative Agent shall not have by reason of this Agreement or any other
Credit Document a fiduciary relationship in respect of any Bank, the holder of
any Note or any other Person; and nothing in this Agreement or any other Credit
Document, expressed or implied, is intended to or shall be so construed as to
impose upon the Administrative Agent any obligations in respect of this
Agreement or any other Credit Document except as expressly set forth herein or
therein.
Section 10.2 Administrative Agent and its Affiliates. The Administrative
Agent shall have the same rights and powers under this Agreement and the other
Credit Documents as any other Bank and may exercise or refrain from exercising
the same as though it were not the Administrative Agent, and the Administrative
Agent and its affiliates may accept deposits from, lend money to, and generally
engage in any kind of business with Borrower or any Affiliate of Borrower as if
it were not the Administrative Agent under the Credit Documents.
Section 10.3 Action by Administrative Agent. If the Administrative Agent
receives from Borrower a written notice of an Event of Default pursuant to
Section 7.6(c)(i) hereof, the Administrative Agent shall promptly give each of
the Banks written notice thereof. The obligations of the Administrative Agent
under the Credit Documents are only those expressly set forth therein. Without
limiting the generality of the foregoing, the Administrative Agent shall not be
required to take any action hereunder with respect to any Default or Event of
Default, except as expressly provided in Sections 8.2 and 8.3. In no event,
however, shall the Administrative Agent be required to take any action in
violation of applicable law or of any provision of any Credit Document, and the
Administrative Agent shall in all cases be fully justified in failing or
refusing to act hereunder or under any other Credit Document unless it shall be
first indemnified to its reasonable satisfaction by the Banks against any and
all costs, expense, and liability which may be incurred by it by reason of
taking or continuing to take any such action. The Administrative Agent shall be
entitled to assume that no Default or Event of Default exists unless notified to
the contrary in writing by a Bank or Borrower. In all cases in which this
Agreement and the other Credit Documents do not require the Administrative Agent
to take certain actions, the Administrative Agent shall be fully justified in
using its discretion in failing to take or in taking any action hereunder and
thereunder.
Section 10.4 Consultation with Experts. The Administrative Agent may
consult with legal counsel, independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken by it in good faith in accordance with the advice of such counsel,
accountants or experts.
Section 10.5 Liability of Administrative Agent; Credit Decision. Neither
the Administrative Agent nor any of its directors, officers, agents, or
employees shall be liable for any action taken or not taken by it in connection
with the Credit Documents (i) with the consent or at the request of the Required
Banks or (ii) in the absence of its own gross negligence or willful misconduct.
Neither the Administrative Agent nor any of its directors, officers, agents or
employees shall be responsible for or have any duty to ascertain, inquire into
or verify (i) any statement, warranty or representation made in connection with
this Agreement, any other Credit Document or any Credit Event; (ii) the
performance or observance of any of the covenants or agreements of Borrower or
any other party contained herein or in any other Credit Document; (iii) the
satisfaction of any condition specified in Section 6 hereof; or (iv) the
validity, effectiveness, genuineness, enforceability, perfection, value, worth
or collectibility hereof or of
41
any other Credit Document or of any other documents or writing furnished in
connection with any Credit Document; and the Administrative Agent makes no
representation of any kind or character with respect to any such matter
mentioned in this sentence. The Administrative Agent may execute any of its
duties under any of the Credit Documents by or through employees, agents, and
attorneys-in-fact and shall not be answerable to the Banks, Borrower, or any
other Person for the default or misconduct of any such agents or
attorneys-in-fact selected with reasonable care. The Administrative Agent shall
not incur any liability by acting in reliance upon any notice, consent,
certificate, other document or statement (whether written or oral) believed by
it to be genuine or to be sent by the proper party or parties. In particular and
without limiting any of the foregoing, the Administrative Agent shall have no
responsibility for confirming the accuracy of any Compliance Certificate or
other document or instrument received by it under the Credit Documents. The
Administrative Agent may treat the payee of any Note as the holder thereof until
written notice of transfer shall have been filed with the Administrative Agent
signed by such payee in form satisfactory to the Administrative Agent. Each Bank
acknowledges that it has independently and without reliance on the
Administrative Agent or any other Bank, and based upon such information,
investigations and inquiries as it deems appropriate, made its own credit
analysis and decision to extend credit to Borrower in the manner set forth in
the Credit Documents. It shall be the responsibility of each Bank to keep itself
informed as to the creditworthiness of Borrower and any other relevant Person,
and the Administrative Agent shall have no liability to any Bank with respect
thereto.
Section 10.6 Indemnity. The Banks shall ratably, in accordance with their
respective Percentages, indemnify and hold the Administrative Agent, and its
directors, officers, employees, agents and representatives harmless from and
against any liabilities, losses, costs or expenses suffered or incurred by it
under any Credit Document or in connection with the transactions contemplated
thereby, regardless of when asserted or arising, except to the extent the
Administrative Agent is promptly reimbursed for the same by Borrower and except
to the extent that any event giving rise to a claim was caused by the gross
negligence or willful misconduct of the party seeking to be indemnified. The
obligations of the Banks under this Section 10.6 shall survive termination of
this Agreement.
Section 10.7 Resignation of Administrative Agent and Successor
Administrative Agent. The Administrative Agent may resign at any time by giving
written notice thereof to the Banks and Borrower. Upon any such resignation of
the Administrative Agent, the Required Banks shall have the right to appoint a
successor Administrative Agent with the consent of Borrower. If no successor
Administrative Agent shall have been so appointed by the Required Banks, and
shall have accepted such appointment, within thirty (30) days after the retiring
Administrative Agent's giving of notice of resignation, then the retiring
Administrative Agent may, on behalf of the Banks, appoint a successor
Administrative Agent, which shall be any Bank hereunder or any commercial bank
organized under the laws of the United States of America or of any State thereof
and having a combined capital and surplus of at least $200,000,000. Upon the
acceptance of its appointment as the Administrative Agent hereunder, such
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights and duties of the retiring or removed Administrative Agent under
the Credit Documents, and the retiring Administrative Agent shall be discharged
from its duties and obligations thereunder. After any retiring Administrative
Agent's resignation hereunder as Administrative Agent, the provisions of
42
this Section 10 and all protective provisions of the other Credit Documents
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Administrative Agent.
SECTION 11 MISCELLANEOUS.
Section 11.1 Withholding Taxes.
(a) Payments Free of Withholding. Subject to Section 11.1 (b) hereof,
each payment by Borrower under this Agreement or the other Credit Documents
shall be made without withholding for or on account of any present or
future taxes (other than overall net income taxes on the recipient). If any
such withholding is so required, Borrower shall make the withholding, pay
the amount withheld to the appropriate governmental authority before
penalties attach thereto or interest accrues thereon and forthwith pay such
additional amount as may be necessary to ensure that the net amount
actually received by each Bank and the Administrative Agent free and clear
of such taxes (including such taxes on such additional amount) is equal to
the amount which that Bank or the Administrative Agent (as the case may be)
would have received had such withholding not been made. If the
Administrative Agent or any Bank pays any amount in respect of any such
taxes, penalties or interest Borrower shall reimburse the Administrative
Agent or that Bank for that payment on demand in the currency in which such
payment was made. If Borrower pay any such taxes, penalties or interest,
they shall deliver official tax receipts evidencing that payment or
certified copies thereof to the Bank or Administrative Agent on whose
account such withholding was made (with a copy to the Administrative Agent
if not the recipient of the original) on or before the thirtieth day after
payment. If any Bank or the Administrative Agent determines it has received
or been granted a credit against or relief or remission for, or repayment
of, any taxes paid or payable by it because of any taxes, penalties or
interest paid by Borrower and evidenced by such a tax receipt, such Bank or
Administrative Agent shall, to the extent it can do so without prejudice to
the retention of the amount of such credit, relief, remission or repayment,
pay to Borrower such amount as such Bank or Administrative Agent determines
is attributable to such deduction or withholding and which will leave such
Bank or Administrative Agent (after such payment) in no better or worse
position than it would have been in if Borrower had not been required to
make such deduction or withholding. Nothing in this Agreement shall
interfere with the right of each Bank and the Administrative Agent to
arrange its tax affairs in whatever manner it thinks fit nor obligate any
Bank or the Administrative Agent to disclose any information relating to
its tax affairs or any computations in connection with such taxes.
(b) U.S. Withholding Tax Exemptions. Each Bank that is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code)
shall submit to Borrower and the Administrative Agent on or before the date
of the initial Borrowing hereunder two duly completed and signed copies of
either Form W8BEN (relating to such Bank and entitling it to a complete
exemption from withholding under the Code on all amounts to be received by
such Bank, including fees, pursuant to the Credit Documents and the Loans)
or Form W8ECI (relating to all amounts to be received by such Bank,
including fees, pursuant to the Credit Documents and the Loans) of the
United States Internal Revenue Service. Thereafter and from time to time,
each Bank shall submit to Borrower and the Administrative Agent such
additional duly completed
43
and signed copies of one or the other of such Forms (or such successor
forms as shall be adopted from time to time by the relevant United States
taxing authorities) as may be (i) requested by Borrower in a written
notice, directly or through the Administrative Agent, to such Bank and (ii)
required under then current United States law or regulations to avoid or
reduce United States withholding taxes on payments in respect of all
amounts to be received by such Bank, including fees, pursuant to the Credit
Documents or the Loans.
(c) Inability of Bank to Submit Forms. If any Bank determines, as a
result of any change in applicable law, regulation or treaty, or in any
official application or interpretation thereof, that it is unable to submit
to Borrower or Administrative Agent any form or certificate that such Bank
is obligated to submit pursuant to subsection (b) of this Section 11.1 or
that such Bank is required to withdraw or cancel any such form or
certificate previously submitted or any such form or certificate otherwise
becomes ineffective or inaccurate, such Bank shall promptly notify Borrower
and Administrative Agent of such fact and the Bank shall to that extent not
be obligated to provide any such form or certificate and will be entitled
to withdraw or cancel any affected form or certificate, as applicable.
Section 11.2 No Waiver of Rights. No delay or failure on the part of the
Administrative Agent or any Bank or on the part of the holder or holders of any
Note in the exercise of any power or right under any Credit Document shall
operate as a waiver thereof, nor as an acquiescence in any default, nor shall
any single or partial exercise thereof preclude any other or further exercise of
any other power or right, and the rights and remedies hereunder of the
Administrative Agent, the Banks and the holder or holders of any Notes are
cumulative to, and not exclusive of, any rights or remedies which any of them
would otherwise have.
Section 11.3 Non-Business Day. If any payment of principal or interest on
any Loan or of any other Obligation shall fall due on a day which is not a
Business Day, interest or fees (as applicable) at the rate, if any, such Loan or
other Obligation bears for the period prior to maturity shall continue to accrue
on such Obligation from the stated due date thereof to and including the next
succeeding Business Day, on which the same shall be payable.
Section 11.4 Documentary Taxes. Borrower agrees that it will pay any
documentary, stamp or similar taxes payable in respect to any Credit Document,
including interest and penalties, in the event any such taxes are assessed,
irrespective of when such assessment is made and whether or not any credit is
then in use or available hereunder.
Section 11.5 Survival of Representations. All representations and
warranties made herein or in certificates given pursuant hereto shall survive
the execution and delivery of this Agreement and the other Credit Documents, and
shall continue in full force and effect with respect to the date as of which
they were made as long as any credit is in use or available hereunder.
Section 11.6 Survival of Indemnities. All indemnities and all other
provisions relative to reimbursement to the Banks of amounts sufficient to
protect the yield of the Banks with respect to the Loans, including, but not
limited to, Section 2.11, Section 9.3 and Section 11.15 hereof, shall survive
the termination of this Agreement and the other Credit Documents and the payment
of the Loans and all other Obligations.
44
Section 11.7 Set-Off. (a) (a) In addition to any rights now or hereafter
granted under applicable law and not by way of limitation of any such rights,
upon the occurrence of any Event of Default, each Bank and each subsequent
holder of any Note is hereby authorized by Borrower at any time or from time to
time, without notice to Borrower or to any other Person, any such notice being
hereby expressly waived, to set off and to appropriate and to apply any and all
deposits (general or special, including, but not limited to, Indebtedness
evidenced by certificates of deposit, whether matured or unmatured, and in
whatever currency denominated) and any other Indebtedness at any time held or
owing by that Bank or that subsequent holder to or for the credit or the account
of Borrower, whether or not matured, against and on account of the obligations
and liabilities of Borrower to that Bank or that subsequent holder under the
Credit Documents, including, but not limited to, all claims of any nature or
description arising out of or connected with the Credit Documents, irrespective
of whether or not (a) that Bank or that subsequent holder shall have made any
demand hereunder or (b) the principal of or the interest on the Loans or Notes
and other amounts due hereunder shall have become due and payable pursuant to
Section 8 and although said obligations and liabilities, or any of them, may be
contingent or unmatured.
(b) Each Bank agrees with each other Bank a party hereto that if such Bank
shall receive and retain any payment, whether by set-off or application of
deposit balances or otherwise, on any of the Loans in excess of its ratable
share of payments on all such obligations then outstanding to the Banks, then
such Bank shall purchase for cash at face value, but without recourse, ratably
from each of the other Banks such amount of the Loans held by each such other
Banks (or interest therein) as shall be necessary to cause such Bank to share
such excess payment ratably with all the other Banks; provided, however, that if
any such purchase is made by any Bank, and if such excess payment or part
thereof is thereafter recovered from such purchasing Bank, the related purchases
from the other Banks shall be rescinded ratably and the purchase price restored
as to the portion of such excess payment so recovered, but without interest.
Section 11.8 Notices. Except as otherwise specified herein, all notices
under the Credit Documents shall be in writing (including facsimile or other
electronic communication) and shall be given to a party hereunder at its address
or facsimile number set forth below or such other address or facsimile number as
such party may hereafter specify by notice to the Administrative Agent and
Borrower, given by courier, by United States certified or registered mail, or by
other telecommunication device capable of creating a written record of such
notice and its receipt. Notices under the Credit Documents to the Banks shall be
addressed to their respective addresses, facsimile or telephone numbers set
forth on the signature pages hereof or in the assignment agreement which any
assignee bank executes pursuant to Section 11.12 hereof, and to Borrower and to
the Administrative Agent to:
If to Borrower:
Black Hills Corporation
625 9th Street
Rapid City, South Dakota 57709
Attention: Garner M. Anderson
Facsimile: 605.721.2597
Telephone: 605.721.2311
45
with copies to:
Black Hills Corporation
625 9th Street
Rapid City, South Dakota 57709
Attention: Mark T. Thies
Facsimile: 605.721.2599
Telephone: 605.721.2331
Black Hills Corporation
1075 Noel Avenue
Wheeling, Illinois 60090
Attention: Richard T. Ashbeck
Facsimile: 847.459.4140
Telephone: 847.465.3033
If to the Administrative Agent:
Notices shall be sent to the applicable address set forth on
Part B of Schedule 4 hereto.
Each such notice, request or other communication shall be effective (i) if
given by facsimile, when such facsimile is transmitted to the facsimile number
specified in this Section 11.8 or on the signature pages hereof and a
confirmation of receipt of such facsimile has been received by the sender, (ii)
if given by courier, when delivered, (iii) if given by mail, three business days
after such communication is deposited in the mail, registered with return
receipt requested, addressed as aforesaid or (iv) if given by any other means,
when delivered at the addresses specified in this Section 11.8; provided that
any notice given pursuant to Section 2 hereof shall be effective only upon
receipt.
Section 11.9 Counterparts. This Agreement may be executed in any number of
counterpart signature pages, and by the different parties on different
counterparts, each of which when executed shall be deemed an original but all
such counterparts taken together shall constitute one and the same instrument.
Delivery of an executed counterpart via facsimile shall for all purposes be
deemed as effective as delivery of an original counterpart.
Section 11.10 Successors and Assigns. This Agreement shall be binding upon
Borrower and its successors and assigns, and shall inure to the benefit of each
of the Banks and the benefit of their permitted respective successors, and
assigns, including any subsequent holder of any Note. Borrower may not assign
any of its rights or obligations under any Credit Document unless (i) such
assignation occurs in connection with a merger or acquisition by Borrower which
is otherwise permitted under the terms of this Agreement and the appropriate
Credit Document, if applicable and (ii) Borrower obtains the prior written
consent of all of the Banks, which consent shall be in form and substance
satisfactory to Administrative Agent.
Section 11.11 Participants and Note Assignees. Each Bank shall have the
right at its own cost to grant participations (to be evidenced by one or more
agreements or certificates of
46
participation) in the Loans made by such Bank at any time and from time to time,
and to assign its rights under such Loans or the Note evidencing such Loans to a
federal reserve bank; provided that (i) no such participation or assignment
shall relieve any Bank of any of its obligations under this Agreement, (ii) no
such assignee or participant shall have any rights under this Agreement except
as provided in this Section 11.11, and (iii) the Administrative Agent shall have
no obligation or responsibility to such participant or assignee, except that
nothing herein is intended to affect the rights of an assignee of a Note to
enforce the Note assigned. Any party to which such a participation or assignment
has been granted shall have the benefits of Section 2.11 and Section 9.3, but
shall not be entitled to receive any greater payment under either such Section
than the Bank granting such participation would have been entitled to receive in
connection with the rights transferred. Any agreement pursuant to which any Bank
may grant such a participating interest shall provide that such Bank shall
retain the sole right and responsibility to enforce the obligations of Borrower
hereunder, including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
participation agreement may provide that such Bank will not agree to any
modification, amendment or waiver of this Agreement that would (A) forgive any
amount of or postpone the date for payment of any principal of or interest on
any Loan or of any fee payable hereunder in which such participant has an
interest or (B) reduce the stated rate at which interest or fees in which such
participant has an interest accrue hereunder.
Section 11.12 Assignments by Banks. Each Bank shall have the right at any
time, with the written consent of Administrative Agent, and, prior to the
occurrence of a Default or Event of Default, Borrower, which consents shall not
be unreasonably withheld, to assign all or any part of its Note and outstanding
Loans to one or more other Persons; provided that such assignment is in an
amount of at least $5,000,000 or the entire outstanding amount of Loans made by
such Bank, and if such assignment is not for such Bank's entire outstanding
amount of Loans then the amount of outstanding Loans made by such Bank after
giving effect to such assignment shall not be less than $5,000,000; and provided
further that neither the consent of Borrower nor the Administrative Agent shall
be required for any Bank to assign all or part of its Note and outstanding Loans
to any Affiliate of the assigning Bank. Each such assignment shall set forth the
assignees address for notices to be given under Section 11.8 hereof hereunder
and its designated Lending Office pursuant to Section 9.4 hereof. Upon any such
assignment, delivery to the Administrative Agent of an executed copy of such
assignment agreement and the forms referred to in Section 11.1 hereof, if
applicable, and the payment of a $3,500 recordation fee to the Administrative
Agent, the assignee shall become a Bank hereunder, all Loans it thereby holds
shall be governed by all the terms and conditions hereof and the Bank granting
such assignment shall have its rights in connection therewith reduced by the
amount of such assignment.
Section 11.13 Amendments. Any provision of the Credit Documents may be
amended or waived if, but only if, such amendment or waiver is in writing and is
signed by (a) Borrower, (b) the Required Banks, and (c) if the rights or duties
of the Administrative Agent are affected thereby, the Administrative Agent;
provided that:
(i) no amendment or waiver pursuant to this Section. 11.13 shall
reduce the amount of or postpone any fixed date for payment of any
principal of or interest on any Loan or of any fee or other Obligation
payable hereunder without the consent of each Bank; and
47
(ii) no amendment or waiver pursuant to this Section 11.13 shall,
unless signed by each Bank, change this Section 11.13, or the definition of
Required Banks, or affect the number of Banks required to take any action
under the Credit Documents.
Anything in this Agreement to the contrary notwithstanding, if at any time
when the conditions precedent set forth in Section 6.2 hereof to any Loan
hereunder are satisfied, any Bank shall fail to fulfill its obligations to make
such Loan (any such Bank, a "Defaulting Bank") then, for so long as such failure
shall continue, the Defaulting Bank shall (unless Borrower, the Administrative
Agent and the Required Banks (determined as if the Defaulting Bank were not a
Bank hereunder) shall otherwise consent in writing) be deemed for all purposes
related to amendments, modifications, waivers or consents under this Agreement
(other than amendments or waivers referred to in clause (i) and (ii) above) to
have no Loans and shall not be treated as a Bank hereunder when performing the
computation of the Required Banks. To the extent the Administrative Agent
receives any payments or other amounts for the account of a Defaulting Bank such
Defaulting Bank shall be deemed to have requested that the Administrative Agent
use such payment or other amount to fulfill its obligations to make such Loan.
Section 11.14 Headings. Section headings used in this Agreement are for
reference only and shall not affect the construction of this Agreement.
Section 11.15 Legal Fees, Other Costs and Indemnification. Borrower agrees
to pay all reasonable costs and expenses of the Administrative Agent in
connection with the preparation and negotiation of the Credit Documents
(including past and future reasonable out-of-pocket expenses incurred by the
Administrative Agent in connection with the syndication of the transaction),
including without limitation, the reasonable fees and disbursements of counsel
to the Administrative Agent, in connection with the preparation and execution of
the Credit Documents, and any amendment, waiver or consent related hereto,
whether or not the transactions contemplated herein are consummated. Borrower
further agrees to indemnify each Bank, the Administrative Agent, and their
respective directors, agents, officers and employees, against all losses,
claims, damages, penalties, judgments, liabilities and expenses (including,
without limitation, all expenses of litigation or preparation therefor, whether
or not the indemnified Person is a party thereto) which any of them may incur or
reasonably pay arising out of or relating to any Credit Document (including any
relating to a misrepresentation by Borrower under any Credit Document) or any of
the transactions contemplated thereby or the direct or indirect application or
proposed application of the proceeds of any Loan, other than those which arise
from the gross negligence or willful misconduct of the party claiming
indemnification. Borrower, upon demand by any of the Administrative Agent or a
Bank at any time, shall reimburse the Administrative Agent or Bank for any
reasonable legal or other expenses (including allocable fees and expenses of
in-house counsel) incurred in connection with investigating or defending against
any of the foregoing except if the same is directly due to the gross negligence
or willful misconduct of the party to be indemnified, provided that with respect
to legal costs and expenses incurred in connection with the enforcement of the
Banks rights hereunder or any work-out or similar situation, Borrower shall only
be obligated to pay the legal fees of the Administrative Agent and not of any
other Bank.
Section 11.16 Entire Agreement. The Credit Documents constitute the entire
understanding of the parties thereto with respect to the subject matter thereof
and any prior or
48
contemporaneous agreements, whether written or oral, with respect thereto are
superseded thereby.
Section 11.17 Construction. The parties hereto acknowledge and agree that
neither this Agreement nor the other Credit Documents shall be construed more
favorably in favor of one than the other based upon which party drafted the
same, it being acknowledged that all parties hereto contributed substantially to
the negotiation of this Agreement and the other Credit Documents.
Section 11.18 Governing Law. This Agreement and the other Credit Documents,
and the rights and duties of the parties hereto, shall be construed and
determined in accordance with the internal laws of the State of New York.
Section 11.19 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL. BORROWER,
ADMINISTRATIVE AGENT AND EACH BANK HEREBY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN THE CITY OF NEW YORK FOR
PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT,
THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
BORROWER, ADMINISTRATIVE AGENT AND EACH BANK IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM
THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. BORROWER, ADMINISTRATIVE AGENT AND EACH BANK HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO ANY CREDIT DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED THEREBY.
Section 11.20 Replacement of Bank. Each Bank agrees that, upon the
occurrence of any event set forth in Sections 9.1, 9.3 and 11.1, such Bank will
use reasonable efforts to book and maintain its Loans through a different
Lending Office or to transfer its Loans to an Affiliate with the objective of
avoiding or minimizing the consequences of such event; provided that such
booking or transfer is not otherwise disadvantageous to such Bank as determined
by such Bank in its sole and absolute discretion. If any Bank has demanded to be
paid additional amounts pursuant to Sections 9.1, 9.3 and 11.1, and the payment
of such additional amounts are, and are likely to continue to be, more onerous
in the reasonable judgment of Borrower than with respect to the other Banks,
then Borrower shall have the right at any time when no Default or Event of
Default shall have occurred and be continuing to seek one or more financial
institutions which are not Affiliates of Borrower (each, a "Replacement Bank")
to purchase with the written consent of the Administrative Agent (which consent
shall not be (x) required if such proposed Replacement Bank is already a Bank,
or an Affiliate of a Bank, or (y) unreasonably delayed or withheld) the
outstanding Loans of such Bank (the "Affected Bank"), and if Borrower locate a
Replacement Bank, the Affected Bank shall, upon
i. prior written notice to the Administrative Agent,
49
ii. (i) payment to the Affected Bank of the purchase price agreed
between it and the Replacement Bank (or, failing such agreement,
a purchase price in the amount of the outstanding principal
amount of the Affected Bank's Loans and accrued interest thereon
to the date of payment) by the Replacement Bank plus (ii) payment
by Borrower of all Obligations (other than principal and interest
with respect to Loans) then due to the Affected Bank or accrued
for its account hereunder or under any other Loan Document,
iii. satisfaction of the provisions set forth in Section 11.12, and
iv. payment by Borrower to the Affected Bank and the Administrative
Agent of all reasonable out-of-pocket expenses in connection with
such assignment and assumption (including the recordation fee
described in Section 11.12),
assign and delegate all its rights and obligations under this Agreement and any
other Credit Document to which it is a party (including its outstanding Loans)
to the Replacement Bank (such assignment to be made without recourse,
representation or warranty), and the Replacement Bank shall assume such rights
and obligations, whereupon the Replacement Bank shall in accordance with Section
11.12 become a party to each Credit Document to which the Affected Bank is a
party and shall have the rights and obligations of a Bank thereunder and the
Affected Bank shall be released from its obligations hereunder and each other
Credit Document to the extent of such assignment and delegation.
Section 11.21 Confidentiality. The Administrative Agent and the Banks shall hold
all non-public information provided to them by Borrower pursuant to or in
connection with this Agreement in accordance with their customary procedures for
handling confidential information of this nature, but may make disclosure to any
of their examiners, regulators, Affiliates, outside auditors, counsel and other
professional advisors in connection with this Agreement or any other Credit
Document or as reasonably required by any potential bona fide transferee,
participant or assignee, or in connection with the exercise of remedies under a
Credit Document, or to any direct or indirect contractual counterparty in swap
agreements or such contractual counterparty's professional advisor (so long as
such contractual counterparty or professional advisor to such contractual
counterparty agrees to be bound by the provisions of this Section 11.21), or to
any nationally recognized rating agency that requires access to information
about a Bank's investment portfolio in connection with ratings issued with
respect to such Bank, or as requested by any governmental agency or
representative thereof or pursuant to legal process; provided, however, that
unless specifically prohibited by applicable law or court order, the
Administrative Agent and each Bank shall use reasonable efforts to promptly
notify Borrower of any request by any governmental agency or representative
thereof (other than any such request in connection with an examination of the
financial condition of the Administrative Agent or such Bank by such
governmental agency) for disclosure of any such non-public information and,
where practicable, prior to disclosure of such information. Prior to any such
disclosure pursuant to this Section 11.21, the Administrative Agent and each
Bank shall require any such bona fide transferee, participant and assignee
receiving a disclosure of non-public information to agree, for the benefit of
Borrower, in writing to be bound by this Section 11.21; and to require such
Person
50
to require any other Person to whom such Person discloses such non-public
information to be similarly bound by this Section 11.21.
- Remainder of Page Intentionally Left Blank -
[Signature Page Follows]
51
In Witness Whereof, the parties hereto have caused this Agreement to be
duly executed and delivered in New York, New York by their duly authorized
officers as of the day and year first above written.
BLACK HILLS CORPORATION, a
South Dakota corporation
By: _____________________________
Name: _____________________________
Title: _____________________________
52
Commitment: $35,000,000 CREDIT LYONNAIS NEW YORK
BRANCH., in its individual capacity as a
Bank and as Administrative Agent
By: _____________________________
Name: Richard Randall
Title: Vice President
Address for notices:
Richard Randall
Credit Lyonnais
1301 Avenue of the Americas
New York, New York 10019
Phone: 212-261-3367
Fax: 212-261-3421
Justine Ventrelli
Credit Lyonnais
1301 Avenue of the Americas
New York, New York 10019
Phone: 212-261- 7886
Fax: 212-261-3421
Lending Offices: Same as above
Base Rate Loans: Same as above
Eurocurrency Loans: Same as above
53
EXHIBIT A
NOTE
September 25, 2002
FOR VALUE RECEIVED, the undersigned, Black Hills Corporation, a South
Dakota corporation ("Borrower"), promises to pay to the order of Credit Lyonnais
New York Branch (the "Bank") on the Termination Date of the hereinafter defined
Credit Agreement, at the principal office of Credit Lyonnais New York Branch, in
New York, New York, in accordance with Section 4.1 of the Credit Agreement (as
hereafter defined), the aggregate unpaid principal amount of all Loans made by
the Bank to Borrower pursuant to the Credit Agreement, together with interest on
the principal amount of each Loan from time to time outstanding hereunder at the
rates, and payable in the manner and on the dates, specified in the Credit
Agreement.
The Bank shall record on its books or records or on a schedule attached
to this Note, which is a part hereof, each Loan made by it pursuant to the
Credit Agreement, together with all payments of principal and interest and the
principal balances from time to time outstanding hereon, whether the Loan is a
Base Rate Loan or a Eurodollar Loan, and the interest rate and Interest Period
applicable thereto, provided that prior to the transfer of this Note all such
amounts shall be recorded on a schedule attached to this Note. The record
thereof, whether shown on such books or records or on a schedule to this Note,
shall be shall be prima facie evidence of the same; provided, however, that the
failure of the Bank to record any of the foregoing or any error in any such
record shall not limit or otherwise affect the obligation of Borrower to repay
all Loans made to it pursuant to the Credit Agreement together with accrued
interest thereon.
This Note is one of the Notes referred to in the Term Credit Agreement
dated as of September 25, 2002, among Borrower, Credit Lyonnais New York Branch,
as Administrative Agent and the financial institutions party thereto (the
"Credit Agreement"), and this Note and the holder hereof are entitled to all the
benefits provided for thereby or referred to therein, to which Credit Agreement
reference is hereby made for a statement thereof. All defined terms used in this
Note, except terms otherwise defined herein, shall have the same meaning as in
the Credit Agreement. This Note shall be governed by and construed in accordance
with the internal laws of the State of New York.
Prepayments may be made hereon and this Note may be declared due prior
to the expressed maturity hereof, all in the events, on the terms and in the
manner as provided for in the Credit Agreement.
- Remainder of Page Intentionally Left Blank -
[Signature Page Follows]
54
The Borrower hereby waives demand, presentment, protest or notice of
any kind hereunder.
BLACK HILLS CORPORATION, a
South Dakota corporation
By: _____________________________
Name: _____________________________
Title: _____________________________
55
EXHIBIT B
COMPLIANCE CERTIFICATE
This Compliance Certificate is furnished to Credit Lyonnais New York
Branch, as Administrative Agent pursuant to the Term Credit Agreement dated as
of September 25, 2002, among Black Hills Corporation, a South Dakota corporation
("Borrower"), Credit Lyonnais New York Branch, as Administrative Agent and the
financial institutions party thereto (the "Credit Agreement"). Unless otherwise
defined herein, the terms used in this Compliance Certificate have the meanings
ascribed thereto in the Credit Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected or appointed ___________________of
Borrower;
2. I have reviewed the terms of the Credit Agreement and I have
made, or have caused to be made under my supervision, a detailed
review of the transactions and conditions of Borrower and its
Subsidiaries during the accounting period covered by the attached
financial statements;
3. The examinations described in paragraph 2 did not disclose,
and I have no knowledge of, the existence of any condition or event
which constitutes a Default or an Event of Default during or at the
end of the accounting period covered by the attached financial
statements or as of the date of this Certificate, except as set forth
below; and
4. Schedule 1 attached hereto sets forth financial data and
computations evidencing compliance with certain covenants of the
Credit Agreement, all of which data and computations are true,
complete and correct. All computations are made in accordance with the
terms of the Credit Agreement.
Described below are the exceptions, if any, to paragraph 3 by listing,
in detail, the nature of the condition or event, the period during which it has
existed and the action which Borrower has taken, is taking, or proposes to take
with respect to each such condition or event:
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
The foregoing certifications, together with the computations set forth
in Schedule 1 hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered this ___________day of
__________, 200__.
______________________________
56
SCHEDULE 1 TO COMPLIANCE CERTIFICATE
Compliance Calculations for Credit Agreement
CALCULATION AS OF ________ __,200_
- ------------------------------------------------------------------ --------------------- ---------------------------
A. Liens (Sec. 7.9(c), (d), and (g))
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
1. Liens securing taxes or assessments or other _____________________ (Answer should be yes)
government charges or levies equal to or less
than $20,000,000 (Section 7.9(c))
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
2. Liens securing judgments or awards or surety _____________________ (Answer should be yes)
or appeal bonds issued in connection therewith
equal to or less than $20,000,000 (Section
7.9(d))
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
3. Is the aggregate amount of Indebtedness and _____________________ (Answer should be yes)
other obligations consisting of (i) the
deferred purchase price of newly acquired
property or incurred to finance the
acquisition of personal property of Borrower
used in the ordinary course of business of
such Borrower, (ii) Capitalized Lease
Obligations, and (iii) the performance of
tenders, statutory obligations, bids, leases
or other similar obligations (other than for
borrowed money) entered into in the ordinary
course of business or to secure obligations on
performance bonds which is secured by Liens
equal to or less than 5% of Consolidated
Assets as reflected on the most recent balance
sheet delivered by Borrower (Section 7.9(g)).
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
B. Sale and Leasebacks (Section 7.11)
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
1. Aggregate obligations under all Sale and $____________________ (Line B1 not to exceed
Leasebacks arrangements (other than synthetic $30,000,000)
lease transactions excluded by Section 7.11)
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
C. Sale of Assets (Section 7.12)
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
1. Net book value of assets (other than $____________________ (Line C1 not to exceed
inventory, reserves and electricity in the 10% of total consolidated
ordinary course of business) sold during this assets)
fiscal year
- ------------------------------------------------------------------ --------------------- ---------------------------
57
- ------------------------------------------------------------------ --------------------- ---------------------------
D. Permitted Investments (Section 7.14)
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
1. Aggregate amount of Investments in Marketing $____________________
Subsidiaries made after the August 28, 2001
(Section 7.14(o)(ii))
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
2. Investments consisting of Guaranties of $____________________
Indebtedness of Marketing Subsidiaries
existing on the Effective Date
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
3. Intercompany loans permitted pursuant to $____________________ Line E3
Section 7.15(e)(iii) owing by Marketing
Subsidiaries (Line E3)
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
4. Sum of Lines D1, D2 and D3 $____________________
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
5. Is Line D4 equal to or less than $10,000,000? _____________________ (Answer should be yes)
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
6. Aggregate amount of Investments in Persons $____________________ (Line D6 not to exceed
engaged in the lines of business described in $20,000,000)
clause (xii) of Section 7.8 (Section 7.14(k))
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
E. Permitted Indebtedness (Section 7.15)
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
1. Secured Indebtedness except as set forth on $____________________ (Line E1 not to exceed 5%
Schedule 7.15(b): (i) of BHP (ii) evidencing of Consolidated Assets)
the deferred purchase price of newly acquired
property or incurred to finance the acquisition
of personal property of Borrower or a Subsidiary
used in the ordinary course of business of the
Borrower of a Subsidiary, (iii) constituting
Capitalized Lease Obligations or with respect
to synthetic (or similar type) lease
transactions, or (iv) incurred in connection
with the performance of tenders, statutory
obligations, bids, leases or other similar
obligations (other than for borrowed money)
entered into in the ordinary course
of business or to secure obligations on
performance bonds (Section 7.15(c))
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
2. Intercompany loans owing by Borrower (Section $____________________ (Must be subordinated to
7.15(e)(i)(x)) Obligations)
- ------------------------------------------------------------------ --------------------- ---------------------------
58
- ------------------------------------------------------------------ --------------------- ---------------------------
3. Intercompany Indebtedness owing by Marketing $____________________ (Line E3 not to exceed
Subsidiaries to Subsidiaries (Section the difference between
7.15(e)(iii)) (i) $10,000,000 less (ii)
the sum of Lines E4 and
D1)
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
4. Indebtedness consisting of Guarantees $____________________ (Line E4 not to exceed
(including Long-Term Guaranties) of Marketing the difference between
Subsidiary Indebtedness (Section 7.15(f)) (i) $10,000,000 less (ii)
the sum of Lines E3 and
D1)
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
5. Indebtedness of Marketing Subsidiaries under $____________________ (Line E5 not to exceed
Marketing Subsidiary Excluded Credit Marketing Subsidiary
Facilities (Section 7.15(g)) Indebtedness Limit)
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
F. Consolidated Net Worth (Section 7.16)
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
1. Consolidated Net Worth $____________________
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
2. 50% of aggregate Consolidated Net Income, if $____________________
positive, from and including April 1, 2002
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
3. Does Line F1 exceed sum of (i) $425,000,000 _____________________ (Answer should be yes)
plus (ii) line F2
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
G. Recourse Leverage Ratio (Section 7.17)
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
1. consolidated Indebtedness $____________________
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
2. Non-Recourse Indebtedness $____________________
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
3. Recourse Indebtedness (Line G1 minus Line G2) $____________________
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
4. Indebtedness of Marketing Subsidiaries under $____________________ (Not to exceed Marketing
Marketing Subsidiary Excluded Credit Subsidiary Indebtedness
Facilities (Line E5) Limit)
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
5. Consolidated Net Worth $____________________
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
6. Capital (Line G3 minus Line G4 plus Line G5) $____________________
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
7. Recourse Leverage Ratio ________:1.00 (ratio of (A) difference
between (x) Line G3 minus
(y) Line G4 to (B) Line
G6 not to exceed 0.65 to
1.00)
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
H. Fixed Charge Coverage Ratio (Section 7.18)
- ------------------------------------------------------------------ --------------------- ---------------------------
59
- ------------------------------------------------------------------ --------------------- ---------------------------
1. Consolidated Net Income for past four fiscal $____________________
quarters
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
2. Income taxes for past four fiscal quarters (to $____________________
the extent subtracted in calculating H1)
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
3. Consolidated Interest Expense for past four $____________________ Insert amount from Line
fiscal quarters (to the extent subtracted in H18
calculating H1)
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
4. Amortization expense for intangible assets $____________________
for past four fiscal quarters (to the extent
subtracted in calculating H1)
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
5. Depreciation expense for past four fiscal
quarters (to the extent subtracted in
calculating H1)
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
6. Losses on sales of assets (excluding sales in $____________________
the ordinary course of business) and other
extraordinary losses for past four fiscal
quarters (to the extent subtracted in
calculating H1)
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
7. Interest income for past four fiscal quarters $____________________
arising from traditional investment activities
with banks, investment banks and other
financial institutions or relating to
governmental or other marketable securities
(to the extent added in calculating H1)
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
8. Gains on sales of assets (excluding sales in $____________________
the ordinary course of business) and other
extraordinary gains for past four fiscal
quarters (to the extent added in calculating
H1)
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
9. Capital Expenditures for past four fiscal $____________________
quarters
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
10. Without duplication, any payments made by a $____________________
Consolidated Subsidiary constituting a
repayment of principal Indebtedness (other
than (x) the Obligations and (y) repayments of
principal made with the proceeds of a
refinancing of such Indebtedness otherwise
permitted pursuant to this Agreement) or with
respect to a reserve, and
- ------------------------------------------------------------------ --------------------- ---------------------------
60
- ------------------------------------------------------------------ --------------------- ---------------------------
11. Without duplication, any other mandatory
payment made by a Consolidated Subsidiary in
such period not included as an expense or loss $____________________
in calculating Consolidated Net Income
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
12. Consolidated EBITDA (sum of Lines H1, H2, H3, $____________________
H4, H5 and H6 less sum of Lines H7, H8, H9,
H10 and H11)
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
13. Restricted Earnings for the past four fiscal $____________________
quarters
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
14. Adjusted Consolidated EBITDA (Line H12 minus $____________________
Line H13)
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
15. All interest charges (including capitalized $____________________
interest, imputed interest charges with
respect to Capitalized Lease Obligations and
all amortization of debt discount and expense
and other deferred financing charges) of the
Borrower and its Subsidiaries on a
consolidated basis for such period determined
in accordance with GAAP, other than interest
charges relating to Non-Recourse Indebtedness
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
16. All commitment or other fees payable in $____________________
respect of the issuance of standby letters of
credit or other credit facilities for the
account of the Borrower or its Subsidiaries
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
17. Net costs/expenses incurred by the Borrower $____________________
and its Subsidiaries under Derivative
Arrangements
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
18. Consolidated Interest Expense (Sum of Lines $____________________
H15, H16 and H17)
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
19. The aggregate amount of all mandatory $____________________
scheduled payments (whether designated as
payments or prepayments) and scheduled sinking
fund payments with respect to principal of any
Recourse Indebtedness of the Borrower or its
Subsidiaries (including payments in the nature
of principal under Capital Leases) for the
last 4 quarters
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
20. Consolidated Fixed Charges (Sum of Lines H18 $____________________
and H19)
- ------------------------------------------------------------------ --------------------- ---------------------------
61
- ------------------------------------------------------------------ --------------------- ---------------------------
21. Fixed Charge Coverage Ratio (ratio of Lines _________:1.00 (ratio must not be less
H14 to (ii) Line H20) than 1.50 to 1.00)
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
I. Liquidity Covenant (Section 7.26)
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
1. Unrestricted cash at Borrower $____________________
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
2. Unused availability of senior unsecured credit $____________________
facilities available to Borrower
- ------------------------------------------------------------------ --------------------- ---------------------------
- ------------------------------------------------------------------ --------------------- ---------------------------
3. Liquid Assets (Line I1 plus Line I2) $____________________ (amount must exceed
$30,000,000)
- ------------------------------------------------------------------ --------------------- ---------------------------
62
SCHEDULE 1
PRICING GRID
- ---------------------- ------------------- ----------------------
If the Level Status The Eurodollar The Base Rate Margin
Is Margin is: is:
- ---------------------- ------------------- ----------------------
- ---------------------- ------------------- ----------------------
Level I Status 1.000% 0.000%
- ---------------------- ------------------- ----------------------
- ---------------------- ------------------- ----------------------
Level II Status 1.250% 0.250%
- ---------------------- ------------------- ----------------------
- ---------------------- ------------------- ----------------------
Level III Status 1.875% 0.875%
- ---------------------- ------------------- ----------------------
Each change in a rating shall be effective as of the date it is
announced by the applicable rating agency.
In the event that the Moody's Rating and the S&P Rating fall in
different Levels, the lower Level (with Level I being the highest Level and
Level III being the lowest Level) shall govern for purposes of determining the
applicable pricing pursuant to the above pricing grid.
63
SCHEDULE 4
ADMINISTRATIVE AGENT'S NOTICE AND PAYMENT INFORMATION
Part A - Payments
[Credit Lyonnais to provide wiring instructions]
Part B - Notices
Richard Randall
Credit Lyonnais
1301 Avenue of the Americas
New York, New York 10019
Phone: 212-261-3367
Fax: 212-261-3421
Justine Ventrelli
Credit Lyonnais
1301 Avenue of the Americas
New York, New York 10019
Phone: 212-261- 7886
Fax: 212-261-3421
64
SCHEDULE 5.2
BLACK HILLS CORPORATION SUBSIDIARIES
------------------------------------- --------------------- ---------------- ------------------------------------------------
Description of Subsidiary's
BHC's Authorized Capital Stock, if not
Subsidiary Name State of Origin Ownership wholly owned
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
1. Acquisition Partners, L.P. New York 100% N/A
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
2. Adirondack Hydro Delaware 100% N/A
Development Corporation
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
3. Adirondack Hydro- Fourth New York 100% N/A
Branch, LLC
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
4. Adirondack Operating New York 100% N/A
Services, LLC
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
5. Black Hills Berkshire, LLC Delaware 100% N/A
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
6. Black Hills Capital Illinois 100% N/A
Development, Inc.
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
7. Black Hills Colorado, LLC Delaware 100% N/A
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
8. Black Hills Energy Delaware 100% N/A
Capital, Inc.
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
9. Black Hills Energy Delaware 100% N/A
Pipeline, LLC
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
10. Black Hills Energy South Dakota 100% N/A
Resources, Inc.
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
11. Black Hills Energy South Dakota 100% N/A
Terminal, LLC
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
12. Black Hills Energy, Inc. South Dakota 100% N/A
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
13. Black Hills Exploration Wyoming 100% N/A
and Production, Inc.
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
14. Black Hills Fiber Systems, South Dakota 100% N/A
Inc.
------------------------------------- --------------------- ---------------- ------------------------------------------------
65
------------------------------------- --------------------- ---------------- ------------------------------------------------
15. Black Hills Fibercom, LLC South Dakota 51% Black Hills Fibercom, LLC has a single class
of units of membership of which 41 units are
issued and outstanding. Black Hills Fiber
Systems, Inc. holds 21 units.
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
16. Black Hills Fountain Delaware 100% N/A
Valley, LLC
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
17. Black Hills Generation, Wyoming 100% N/A
Inc.
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
18. Black Hills Harbor, LLC Delaware 76.11% Black Hills Harbor, LLC has a single class of
units of membership. 100 units of which are
currently issued and outstanding. Black Hills
Corporation indirectly holds interests in
76.12% of the units.
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
19. Black Hills High Desert, Delaware 100% N/A
Inc.
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
20. Black Hills Idaho Delaware 100% N/A
Operations, LLC
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
21. Black Hills Independent Texas 100% N/A
Power Fund, Inc.
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
22. Black Hills Kilgore Energy Delaware 100% N/A
Pipeline, LLC
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
23. Black Hills Kilgore Delaware 100% N/A
Pipeline, Inc.
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
24. Black Hills Kilgore Texas 100% N/A
Pipeline Company, L.P.
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
25. Black Hills Long Beach, Delaware 100% N/A
Inc.
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
26. Black Hills Millennium South Dakota 100% N/A
Pipeline, Inc.
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
27. Black Hills Millennium South Dakota 100% N/A
Terminal, Inc.
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
28. Black Hills Nevada Delaware 100% N/A
Operations, LLC
------------------------------------- --------------------- ---------------- ------------------------------------------------
66
------------------------------------- --------------------- ---------------- ------------------------------------------------
29. Black Hills Nevada Real Delaware 100% N/A
Estate Holdings, LLC
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
30. Black Hills Nevada, LLC Delaware 100% N/A
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
31. Black Hills North America, Delaware 100% N/A
Inc.
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
32. Black Hills Operating Delaware 100%
Compnay, LLC
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
33. Black Hills Ontario, LLC Delaware 50% Black Hills Ontario, LLC has a single class of
units of membership, of which 100 units are
issued and outstanding.
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
34. Black Hills Power, Inc. South Dakota 100% N/A
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
35. Black Hills Southwest, LLC Delaware 100% N/A
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
36. Black Hills Valmont Delaware 100% N/A
Colorado, Inc.
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
37. DAKSOFT, Inc. South Dakota 100% N/A
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
38. Desert Arc I, LLC Delaware 50% Desert Arc I, LLC has a single class of units
of membership, of which Black Hills
Corporation indirectly holds 50%
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
39. Desert Arc II, LLC Delaware 50% Desert Arc II, LLC has a single class of units
of membership, of which Black Hills
Corporation indirectly holds 50%
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
40. EIF Investors, Inc. Delaware 100% N/A
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
41. E-Next A Equipment Leasing Delaware 100% N/A
Company, LLC
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
42. Enserco Energy Inc. South Dakota 100% N/A
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
43. Fountain Valley Power, Delaware 100% N/A
L.L.C.
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
44. Harbor Cogeneration Company California 100% N/A
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
45. Hudson Falls, LLC New York 100% N/A
------------------------------------- --------------------- ---------------- ------------------------------------------------
67
------------------------------------- --------------------- ---------------- ------------------------------------------------
46. ICPM, Inc. Illinois 100% N/A
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
47. Indeck Auburndale, LLC Delaware 100% N/A
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
48. Indeck Gordonsville, LLC Delaware 100% N/A
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
49. Indeck North American Delaware 81.9% Indeck North American Power Fund, L.P. is a
Power Fund, LP limited. Black Hills Corporation holds direct
and indirect general and limited partnerhsip
interests totaling up to 81.9%..
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
50. Indeck Hills North Delaware 85.7% Indeck North American Power Partners, LP is a
American Power Partners, LP limited. Black Hills Corporation holds direct
and indirect general and limited partnership
interests totaling up to 85.7%.
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
51. Indeck Pepperell Power Delaware 82.9% Indeck Pepperell Power Associates, Inc. has a
Associates, Inc. single class of stock with 100 shares issued
and outstanding. Black Hills Corporation
indirectly owns 82.9% of the capital
stock of Indeck Pepperell, by and through
its interests in Indeck North American
Power Fund, L.P.
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
52. Landrica Development South Dakota 100% N/A
Company
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
53. Las Vegas Cogeneration Delaware 100% N/A
Energy Financing, LLC
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
54. Las Vegas Cogeneration II, Delaware 100% N/A
LLC
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
55. Las Vegas Cogeneration Nevada 50% Las Vegas Cogeneration Limited Partnership has
Limited Partnership an 85% general partnership interest, of which
Black Hills Corporation indirectly owns 50%,
and a 15% limited partnership interest, of which
Black Hills Corporation indirectly owns 50%
Hills Corporation indirectly owns 50%.
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
56. Middle Falls Corporation New York 100% N/A
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
57. Middle Falls II, LLC New York 100% N/A
------------------------------------- --------------------- ---------------- ------------------------------------------------
68
------------------------------------- --------------------- ---------------- ------------------------------------------------
58. Middle Falls Limited New York 50% Middle Falls Limited Partnership has a 2%
Partnership general partnership interest, of which Black
Hills Corporation indrectly holds 1%, and a
98% limited partnership interest, of which Black
Hills Corporation indirectly holds 49%.
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
59. Middle Falls Partners, LLC New York 50% Middle Falls Partners, LLC has a single class
of units of membership, of which Black Hills
Corporation indirectly holds 50%.
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
60. Millennium Pipeline Texas 100%
Company, L.P.
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
61. Millennium Terminal Texas 100%
Company, L.P.
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
62. NHP, L.P. New York 100% N/A
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
63. North American Funding, Delaware 100% N/A
L.L.C.
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
64. Northern Electric Power New York 33% Northern Electric Power Company, L.P. has a
Company, L.P 99% limited partnership interest, of which
Black Hills Corporation indirectly owns 32.5%
and a 1% general partnership interest, of which
Black Hills Corporation indirectly owns 0.5%.
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
65. NYSD Limited Partnership New York 100% N/A
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
66. NYSD Partners, LLC New York 100% N/A
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
67. Sissonville Corporation New York 100% N/A
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
68. Sissonville II, LLC New York 100% N/A
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
69. Sissonville Limited New York 100% N/A
Partnership
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
70. Sissonville Partners, LLC New York 100% N/A
------------------------------------- --------------------- ---------------- ------------------------------------------------
69
------------------------------------- --------------------- ---------------- ------------------------------------------------
71. South Glens Falls, L.P. New York 30.2% South Glens Falls, L.P. has a 99% limited
partnership interest, of which Black Hills
Corporation indirectly owns 29.7%, and a 1%
general partnership interest, of which Black
Hills Corporation indirectly owns 0.5%.
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
72. South Glens Falls, LLC New York 100% N/A
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
73. State Dam Corporation New York 100% N/A
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
74. State Dam II, LLC New York 100% N/A
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
75. Sunco, Ltd., a limited Nevada 100% N/A
liability company
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
76. VariFuel, LLC South Dakota 100% N/A
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
77. Warrensburg Corporation New York 100% N/A
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
78. Warrensburg Hydro Power New York 100% N/A
Limited Partnership
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
79. Warrensburg II Corporation New York 100% N/A
------------------------------------- --------------------- ---------------- ------------------------------------------------
------------------------------------- --------------------- ---------------- ------------------------------------------------
80. Wyodak Resources Delaware 100% N/A
Development Corp.
------------------------------------- --------------------- ---------------- ------------------------------------------------
70
SCHEDULE 5.5
LITIGATION AND LABOR CONTROVERSIES
Black Hills Harbor, LLC--City of Long Beach
In June of 2000, the City of Long Beach, a municipal corporation in the
State of California, acting for the Port of Long Beach ("City"), brought an
action against Black Hills Harbor, LLC (formerly known as Indeck Harbor, LLC)
("Fund"), alleging breaches of a partnership interest purchase agreement dated
as of January 1, 1995 ("Agreement"), relating to the amount and timing of
certain contingent payments, if any, due the City resulting in claims by the
City in excess of $9 million. The court ordered that the disputes raised in
litigation must be resolved by arbitration in accordance with the terms of the
Agreement. Representatives of the City and the Fund engaged in mediation to
attempt to resolve the disputes involving a transportation tax for natural gas
delivered to a power facility located in Long Beach and owned by the Fund.
Because the parties were unable to reach resolution of the dispute, they have
pursued arbitration.
Grizzly Gulch Fire
On June 29, 2002, a forest fire began near Deadwood, South Dakota.
Before being contained more than eight days later, the fire consumed over 10,000
acres of public and private land, mostly consisting of rugged forested areas.
The fire destroyed 7 homes, and approximately 15 outbuildings. There are no
reported personal injuries at this time. In addition, the fire burned to the
edge of the City of Deadwood, forcing the evacuation of the City of Deadwood,
and an adjacent City of Lead, South Dakota. These communities are active in the
tourist and gaming industries. Individuals were ordered to leave their homes and
motels, and businesses were closed for a short period of time. On July 16, 2002,
the State of South Dakota announced the results of its investigation of the
cause and origin of the fire. The State concluded that the fire was caused by
tree encroachment into and contact with a transmission line owned and maintained
by Black Hills Power, Inc.
Black Hills Power is in the process of completing its own investigation
of the fire, and will request access to the materials that form the basis for
the State's conclusions. This investigation is not complete. Depending on the
outcome of this process, it is possible that claims will be made against Black
Hills Power for damages allegedly caused by the fire, for fire suppression costs
and costs of remediation of burned areas, for individual and business losses
relating to injury to personal and real property, and lost income. A civil
action has been commenced by the State against Black Hills Power, Inc., and we
anticipate others will intervene in this suit or will file separately.
71
SCHEDULE 5.11
ENVIRONMENTAL MATTERS
None.
72
SCHEDULE 7.9
EXISTING LIENS
1. Enserco Energy Inc. has granted a security interest in favor of Fortis
Capital Corp., with respect to Enserco Energy Inc.'s personal property
assets to secure the $135,000,000 credit facility referred to in on
Schedule 7.15.
2. Black Hills Energy Resources, Inc. has granted a security interest in favor
of Fortis Capital Corp., with respect to Black Hills Energy Resources,
Inc.'s personal property assets to secure the $25,000,000 credit facility
referred to on Schedule 7.15.
3. Black Hills Power, Inc. Indenture of Mortgage and Deed of Trust has a first
mortgage lien on substantially all of the properties used in the electric
utility business excluding "Excepted Property." Excepted property includes
all cash and securities; all contracts, leases and other agreements; all
permits, licenses, franchises and rights granted by governmental entities;
all movable equipment and parts including motor vehicles; all materials,
supplies and merchandise offered for sale in the ordinary course of
business, fuel and other consumables; all office furniture and office
equipment, communications equipment and computer equipment; all minerals,
crops and timber harvested or extracted from land; all leasehold interests;
and all property not used in the electric utility business.
4. Black Hills Exploration and Production has granted security interests in
various certificates of deposits for oil & gas leases and operations
totaling less than $150,000 in aggregate.
5. Wyodak Resources Development Corp. has granted a security interest in a
certificate of deposit in the amount of $397,000 to securitize its
self-insurance permit for black lung liability.
73
Schedule 7.14
Existing Investments
- ---------------------------------------------------------------------------------------------------------------
1. Landrica Development Company holds 700,000 registered and unrestricted
shares of the common stock of KFx, Inc. and 1,300,000 warrants to
purchase a single share of the common stock of KFx at $3.48 at any time
prior to April 30, 2005.
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
2. Landrica Development Company holds a $450,000 equity investment in Phase Technology, LLC.
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
3. Landrica Development Company holds a $50,000 equity investment in Genesis Equity Fund, LLC.
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
4. Black Hills Corporation holds investments in life insurance policies and nonqualified deferred
compensation plans in the amount of $ 2,363,000.
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
5. Black Hills Power, Inc. holds investments in life insurance policies and nonqualified deferred
compensation plans in the amount of $ 2,586,000.
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
6. Wyodak Resources Development Corp. holds investments in life insurance policies in the amount of
$451,000.
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
7. Black Hills Exploration and Production, Inc. holds investments in life insurance policies in the
amount of $72,000.
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
8. Black Hills FiberCom, LLC holds investments in life insurance policies in the amount of $108,000.
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
9. Daksoft, Inc. holds investments in life insurance policies in the amount of $149,000.
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
10. Black Hills Energy Capital, Inc. has an equity investment in Black Hills Idaho Operations, LLC in
the amount of $ 2,968,000.
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
11. Black Hills Energy Capital, Inc. has an equity investment in EIF Funds in the amount of $9,888,000.
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
12. Black Hills Energy Capital, Inc. holds other various notes receivable in the aggregate amount of
$1,676,000.
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
13. Black Hills Fiber Systems, Inc. holds a convertible debenture note in the amount of $40,000,000 due
from Black Hills FiberCom, LLC.
- ---------------------------------------------------------------------------------------------------------------
74
SCHEDULE 7.15
PERMITTED INDEBTEDNESS
(A) Indebtedness of Marketing Subsidiaries
1. Enserco Energy Inc. Credit Facility with Fortis Capital Corp. $135,000,000
2. Black Hills Energy Resources, Inc. Credit Facility with Fortis Capital Corp. $ 25,000,000
(In addition there is a $12,500,000 overdraft line)
(B) Other Indebtedness
1. 3-Year Credit Agreement (revolving credit facility) among Black Hills
Corporation and various banks $200,000,000
2. 1-Year Credit Agreement (revolving credit facility) among Black Hills
Corporation and various banks $195,000,000
3. Black Hills Power, Inc./Black Hills Generation, Inc. Note Payable to
Bear Paw Energy, LLC $ 992,909
4. Credit Agreement between Black Hills Colorado, LLC, the Bank
Nova Scotia, and various other banks $135,000,000
5. Black Hills Corporation First Mortgage Bonds $215,000,000
6. Black Hills Power, Inc. Pollution Control Revenue Bonds $ 24,500,000
7. Black Hills Power, Inc. Environmental Improvement Revenue Bonds
(Floating Rate) $ 2,855,000
8. Wyodak Resources Development Corp. reclamation bond obligations
relating to its mining permits. $ 21,644,000
9. Landrica Development Company reclamation bond obligation relating to its
mining permits. $ 3,794,997
10. Black Hills Exploration and Production, Inc. miscellaneous performance
bonds and letters of credit relating to oil and gas well leases and operations $ 500,000
11. Black Hills Corporation and Black Hills Nevada, LLC bridge
loan relating to the Las Vegas Cogen II facility $ 50,000,000
12. Term loan and letter of credit facility between Black Hills Fountain Valley,
LLC, Fountain Valley Power, LLC, and E-Next A Equipment Leasing
Company, LLC and various banks (including Union Bank of California
75
as agent bank) $164,471,218
13. Northern Electric Power Co. L.P. project financing term loan secured
by the Hudson Falls generating plant. $ 66,878,240
14. South Glens Falls LP project financing term loan secured by the South
Glens Falls generating plant. $ 22.878,498
15. Black Hills Corporation guarantee of lease payments on the
Wygen 1 facility. $140,000,000
16. Black Hills Corporation guarantee in favor of Cheyenne Light, Fuel and Power
in connection with performance of the Wygen 1 Power Purchase Agreement $ 5,000,000
17. Black Hills Corporation guarantee in favor of Cheyenne Light, Fuel and
Power in connection with performance of Black Hills Generation under the
Gillette Turbine Power Purchase Agreement. $ 10,000,000
16. Black Hills Corporation guarantee in favor of Las Vegas Cogen II
interconnection agreement with Nevada Power Company. $ 749,970
17. Black Hills Corporation completion guarantee in favor of Bank
of Nova Scotia in connection expanded Colorado facilities. All payments
18. Black Hills Corporation guarantee in favor of UBS AG in connection
with Enserco Energy, Inc.'s Derivative, Power and Gas Agreements
with UBS AG. $ 3,000,000
19. Black Hills Corporation guarantee in favor of Koch Exploration
Company, LLC in connection with Enserco Energy, Inc. agreements with
Koch Exploration Company, LLC. $ 4,500,000
76
All indebtedness balances are as of June 30, 2002 (except for inclusion of
additional $75,000,000 on First Mortgage Bonds issued August 8, 2002).
SCHEDULE 7.19
RESTRICTIONS ON DISTRIBUTIONS AND EXISTING NEGATIVE PLEDGES
1. Enserco Energy Inc. has granted a security interest in favor of Fortis
Capital Corp., with respect to Enserco Energy Inc.'s personal property
assets to secure the $135,000,000 credit facility referred to in on
Schedule 7.15.
3. Black Hills Energy Resources, Inc. has granted a security interest in favor
of Fortis Capital Corp., with respect to Black Hills Energy Resources,
Inc.'s personal property assets to secure the $25,000,000 credit facility
referred to on Schedule 7.15.
4. Black Hills Power, Inc. Indenture of Mortgage and Deed of Trust contains a
provision which prohibits the payment of dividends should the Company's
retained earnings amount not meet certain minimal levels. Currently the
Company is required to maintain a retained earnings level of greater than
$318,000 for dividend payments to be allowed under the indenture.
5. Substantially all of Black Hills Energy Capital, Inc.'s project finance
subsidiaries' nonrecourse debt contain restrictions which prohibit
distributions unless certain financial covenants limits are met.
Dividends on Black Hills Corporation's preferred stock must be paid or declared
and set apart for payment before any dividends may be paid or declared and set
apart for payment on the Company's common stock. The Company's preferred stock
is cumulative.
77