Loan No. RI0214S01
PROMISSORY NOTE AND
CONSOLIDATING COMMITTED REVOLVING CREDIT SUPPLEMENT
THIS PROMISSORY NOTE AND SUPPLEMENT (this "Promissory Note and
Supplement") to the Master Loan Agreement dated as of May 3, 2005 (the "MLA"),
is entered into as of May 3, 2005 between CHUGACH ELECTRIC ASSOCIATION, INC.,
Anchorage, Alaska, an Alaska Cooperative Association (the "Company") and CoBANK,
ACB, a federally chartered instrumentality of the United States ("CoBank").
SECTION 1. Consolidation. The revolving line of credit in the amount of
$25,000,000.00 (the "Existing Commitment") made available by CoBank to the
Company under the Line of Credit Agreement dated as of May 5, 1993 and numbered
S0040 (as amended, the "Existing Agreement") is hereby consolidated under the
MLA. Henceforth, the Existing Commitment will be governed by the terms hereof
and the MLA. The Existing Agreement and Promissory Note dated May 5, 1993 and
numbered S0040 in the principal amount of $25,000,000.00 (as amended, the
"Existing Note") shall be deemed to be amended and restated in their entirety by
the MLA and this Promissory Note and Supplement and CoBank shall return the
Existing Note to the Company immediately following the Company's execution and
delivery of this Promissory Note and Supplement to CoBank. The execution of the
MLA and this Promissory Note and Supplement shall not constitute a novation of
the indebtedness outstanding under the Existing Agreement and the Existing Note.
SECTION 2. The Revolving Credit Facility. On the terms and conditions
set forth in the MLA and this Promissory Note and Supplement, CoBank agrees to
make loans to the Company during the period set forth below in an aggregate
principal amount not to exceed $20,000,000.00 at any one time outstanding (the
"Commitment"). The principal balance outstanding under the Existing Agreement
shall be charged against the Commitment. Within the limits of the Commitment,
the Company may borrow, repay and re-borrow.
SECTION 3. Purpose. The purpose of the Commitment is to finance the
operating needs of the Company and to fund interim capital expenditures.
SECTION 4. Term. The term of the Commitment shall be from the date
hereof, up to and including October 31, 2005, or such later date as CoBank may,
in its sole discretion, authorize in writing.
SECTION 5. Interest. The Company agrees to pay interest on the unpaid
balance of the loan(s) in accordance with one or more of the following interest
rate options, as selected by the Company:
(A) Weekly Quoted Variable Rate. At a rate per annum equal at all
times to the rate of interest established by CoBank on the first Business Day of
each week. The rate established by CoBank may not exceed the CoBank Base Rate
(as hereinafter defined) on that day plus 3% and shall be effective until the
first Business Day of the next week. Each change in the rate shall be applicable
to all balances subject to this option and information about the then current
rate shall be made available upon telephonic request. For purposes hereof, the
CoBank Base Rate shall mean the rate of interest established by CoBank from time
to time as its CoBank Base Rate, which Rate is intended by CoBank to be a
reference rate and not its lowest rate. The CoBank Base Rate will change on the
date established by CoBank as the effective date of any change therein.
(B) Quoted Rate Option. At a fixed rate per annum to be quoted by
CoBank in its sole discretion in each instance. Under this option, rates may be
fixed on such balances and for such periods, as may be agreeable to CoBank in
its sole discretion in each instance, provided that: (1) the minimum fixed
period shall be 30 days; (2) amounts may be fixed in increments of $100,000.00
or multiples thereof; and (3) the maximum number of fixes in place at any one
time shall be 5.
The Company shall select the applicable rate option at the time it requests a
loan hereunder and may, subject to the limitations set forth above, elect to
convert balances bearing interest at the variable rate option to one of the
fixed rate options. Upon the expiration of any fixed rate period, interest shall
automatically accrue at the variable rate option unless the amount fixed is
repaid or fixed for an additional period in accordance with the terms hereof.
Notwithstanding the foregoing, rates may not be fixed for periods expiring after
the maturity date of the loans. All elections provided for herein shall be made
telephonically or in writing and must be received by 12:00 Noon Company's local
time. Interest shall be calculated on the actual number of days each loan is
outstanding on the basis of a year consisting of 360 days and shall be payable
monthly in arrears by the 20th day of the following month or on such other day
in such month as CoBank shall require in a written notice to the Company.
SECTION 6. Commitment Fee. In consideration of the Commitment, the
Company agrees to pay to CoBank a commitment fee on the average daily unused
portion of the Commitment at the rate of 1/8 of 1% per annum (calculated on a
360 day basis), payable monthly in arrears by the 20th day following each month.
Such fee shall be payable for each month (or portion thereof) occurring during
the original or any extended term of the Commitment.
SECTION 7. Promissory Note. The Company promises to repay the unpaid
principal balance of the loans on the last day of the term of the Commitment, as
the term may be extended from time to time. In addition to the above, the
Company promises to pay interest on the unpaid principal balance of the loans at
the times and in accordance with the provisions set forth above.
SECTION 8. Letters of Credit. In addition to loans, the Company may
utilize, if agreeable to CoBank in its sole discretion in each instance, the
Commitment to open irrevocable letters of credit for its account. Each letter of
credit will be issued within a reasonable period of time after receipt of a duly
completed and executed copy of CoBank's then current form of application and
shall reduce the amount available under the Commitment by the maximum amount
capable of being drawn thereunder. Each letter of credit must be in form and
content acceptable to CoBank and must expire no later than the maturity date of
the Commitment. The rights and obligations of the parties with respect to each
letter of credit shall be governed by a reimbursement agreement in form and
content acceptable to CoBank and, upon execution, incorporated herein by
reference (which rights and obligations shall be in addition to the rights and
obligations of the parties hereunder and under the MLA).
SECTION 9. Security. Except for CoBank's statutory first lien on all
equity that the Company may now own or hereafter acquire or be allocated in
CoBank, the Company's obligations hereunder shall be unsecured.
IN WITNESS WHEREOF, the parties have caused this Promissory Note and
Supplement to the MLA to be executed by their duly authorized officers as of the
date shown above.
CoBANK, ACB CHUGACH ELECTRIC ASSOCIATION, INC.
By: /s/ Xxx Xxxxxx By: /s/ Xxxx X. Xxxxxxxx
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Title: Assistant Corporate Secretary Title: CEO
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