Exhibit (b)(2)
REVOLVING CREDIT LOAN AGREEMENT, NOTE, AND SECURITY AGREEMENT
THIS REVOLVING CREDIT LOAN AGREEMENT, NOTE, AND SECURITY AGREEMENT (the
"Agreement") is made this 18th day of January, 2007, by and between the XXXXXXX
X. HOREJSITRUST (the "Borrower"), a trust domiciled in, and governed by the laws
of, Alaska, and XXXX XXXXX TRUST NO. 1B ("Lender"), a trust domiciled in, and
governed by the laws of, Alaska.
RECITALS
WHEREAS, Borrower has requested that Lender provide an independent loan
solely between Borrower and Lender and that said amount be treated as a
revolving line of credit in the maximum amount of $50,000,000; and
WHEREAS, Lender has agreed to extend such revolving line of credit under
the terms and conditions set forth herein.
COVENANTS
In consideration of the hereinafter mutual covenants and consideration, the
receipt of which by each party hereto is acknowledged, the parties agree as
follows:
1. Terms of Revolving Credit. Subject to the terms and conditions of this
Agreement, Lender hereby agrees to establish a revolving credit facility (the
"Revolving Credit") in the maximum amount of XXXXX XXXXXXX XXX XX/000XXX XXXXXX
XXXXXX DOLLARS ($50,000,000.00) in favor of Borrower on the following terms and
conditions:
a) The term of the Revolving Credit shall begin on the date hereof and
shall end ninety days thereafter (the "Repayment Date") at which time all
amounts due and owing hereunder shall be due and payable. Notwithstanding
the foregoing, the term of the Revolving Credit may be automatically
renewed for successive periods of three (3) months (each an "Extended
Term") provided such renewal receives the express approval by the Board of
Managers of Lender's administrative trustee, Badlands Trust Company, LLC,
an Alaska private trust company ("Badlands"), which approval shall be in
Badlands' sole, absolute and unfettered discretion.
b) This Agreement shall constitute a promissory note in the face
amount of $50,000,000.00 (the "Note Amount"), payable on or before the
Repayment Date, subject to extensions as provided above.
c) Advances under the Revolving Credit may be made, at the discretion
of Lender in accordance with the terms of this Agreement, at any time prior
to the Repayment Date upon receipt by Lender of written request signed by
Borrower; at no time shall the aggregate obligation of Borrower to Lender
exceed the Note Amount. Borrower may at any time prior to the Repayment
Date repay all or any part of said loans under the Revolving Credit and
subsequently receive further advances, consistent with the terms and
conditions hereof.
d) The principal amounts due under the Revolving Credit shall bear
interest and shall be payable in accordance with the terms set forth below
in Section 4.a) below.
e) Borrower may prepay under this Agreement at any time in any amount
without premium or penalty.
2. Fees and Expenses. Borrower agrees to reimburse Lender for all
out-of-pocket costs and expenses incurred by Lender in connection with this
Revolving Credit and the making, protection, enforcement and collection of all
amounts advanced under the Revolving Credit. These costs are to include the fees
of counsel at any time now or hereafter incurred by Lender, and all costs and
expenses incurred in enforcing the rights of Lender under this Agreement whether
or not upon the occurrence of any Event of Default (hereinafter defined).
3. Promises to Pay. Borrower promises to pay to Lender when due, whether by
normal maturity, acceleration or otherwise, the entire outstanding principal
amount of the Revolving Credit, together with interest, and all other amounts
payable by Borrower to Lender hereunder, including costs of collection.
4. This Agreement Constitutes a Note; Agreement to Pay. This Agreement
shall be deemed a promissory note and, in this regard, this Agreement is also
referred to as the "Note". FOR VALUE RECEIVED, the Borrower promises to pay to
the order of Lender at the address listed below or at such other place as the
holder of this Note may from time to time designate, in lawful money of the
United States of America, the Note Amount (or so much thereof as has been
advanced or re-advanced hereunder from time to time), together with interest
thereon at the rate and upon the terms hereinafter provided. The following terms
shall apply to this Note:
a) Interest Rate. For the period from the date of this Note until the
date on which the entire principal balance outstanding is paid in full (at
stated maturity, on acceleration or otherwise), interest shall accrue on
the principal balance from time to time outstanding at a floating rate
equal to the Short-Term, Annual Applicable Federal Rate as advertised by
the Internal Revenue Service from time to time for the particular period to
which the rate is to be applied divided by 365 (the "Interest Rate").
b) Repayment. Interest accrued hereunder on the outstanding principal
amount shall be paid monthly in arrears on the first day of each month,
beginning on the first day of the first calendar month immediately after
Borrower makes any draw hereunder. All principal due hereunder together
with all accrued unpaid interest thereon calculated at the Interest Rate
(in the aggregate, as may change from time to time, the "Indebtedness")
shall be paid on the Repayment Date. Notwithstanding the Repayment Date,
the term of the Note may be automatically renewed for successive Extended
Terms upon satisfaction of the terms set forth in Section 1.a) above.
c) Calculation of Interest. Interest shall be calculated on the basis
of a three hundred sixty (360) days per year factor applied to the actual
days on which there exists an unpaid principal balance. Interest shall be
calculated by Lender and billed to Borrower for each appropriate period;
provided, however, that failure of Lender to xxxx Borrower shall not
relieve Borrower's payment obligations hereunder.
d) Application of Payments. All payments made hereunder shall be
applied first to late penalties or other sums owing the holder, next to
accrued and unpaid interest, and then to principal.
e) Optional Prepayment. Borrower may prepay this Note in whole or in
part at any time or from time to time without penalty or additional
interest.
f) Late Payment Penalty. Should any payment of interest or principal
and interest due hereunder be received by the holder of this Note more than
ten (10) days after its due date, Borrower shall pay a late payment penalty
equal to five percent (5%) of the amount overdue for each month outstanding
until paid, beginning with the due date of the late payment.
g) Default Rate. Upon the occurrence of an Event of Default, the rate
of interest accruing on the disbursed unpaid principal balance shall
automatically and without further action by Lender be increased by six (6)
percentage points above the rate of interest otherwise applicable (the
"Default Rate"), independent of whether Lender elects to accelerate the
unpaid principal balance as a result of such default.
h) Confession of Judgment. Upon the occurrence of any Event of
Default, Borrower authorizes and empowers any attorney admitted to practice
before any court of record in the United States to appear on behalf of
Borrower and confess judgment on behalf of Borrower against Borrower in the
full amount due under this Agreement plus attorneys' fees of fifteen
percent (15%) of such amount. In any action brought by Lender under this
Agreement, Borrower consents to the exercise of personal jurisdiction over
it by the courts of the State of Colorado and agrees that venue shall be
proper in any County of the State of Colorado, in addition to any other
court where venue may be proper. Borrower waives and releases, to the
extent permitted by law, all errors and all rights of exemption, appeal,
stay of execution, inquisition and extension upon any levy on real estate
or personal property to which Borrower may otherwise be entitled under the
laws of the United States of America now in force or which may hereafter be
passed, as well as the benefit of any or every statute, ordinance, or rule
of court which may be lawfully waived conferring upon Borrower any right or
privilege of exemption, stay of exercise, or supplementary proceedings, or
other relief from the enforcement or immediate enforcement of a judgment or
related proceedings on a judgment. The authority and power to appear for
and enter judgment against Borrower shall be exercisable concurrently in
one or more jurisdictions and shall not be exhausted or extinguished by one
or more exercises thereof, or by any imperfect exercise thereof or by any
judgment entered pursuant thereto. Such authority and power may be
exercised on one or more occasions, from time to time, in the same or
different jurisdictions, as often as Lender shall deem necessary or
desirable, for all of which this Agreement shall be sufficient warrant.
i) Interest Rate After Judgment. If judgment is entered against
Borrower on this Note, the amount of the judgment entered (which may
include principal, interest, default interest, late charges, fees and
costs) shall bear interest at the highest rate authorized under this Note
as of the date of entry of the judgment.
j) Expenses of Collection. Should this Note be referred to an attorney
for collection, whether or not judgment has been confessed or suit has been
filed, Borrower shall pay all of Lender's actual costs, fees (including
reasonable attorneys' fees) and expenses resulting from such referral.
k) Waiver of Protest. Borrower hereby waives presentment, notice of
dishonor and protest.
l) Waiver. No failure or delay by the holder hereof to insist upon the
strict performance of any term, provision, or agreement of this Note, or to
exercise any right, power or remedy consequent upon a breach thereof, shall
constitute a waiver of any such term, provision or agreement or of any such
breach, or preclude the holder hereof from exercising any such right, power
or remedy at any later time or times. By accepting payment after the due
date of any amount payable under this Note, the holder hereof shall not be
deemed to have waived the right either to require prompt payment when due
of all other amounts due under this Note, or to declare a default
hereunder.
5. No Partnership. Nothing contained in this Agreement or otherwise
inferred in its structure and operation is intended to create a security,
investment contract, partnership, joint venture, common enterprise or other
association among the Borrower and Lender or any other parties, or in any way
make any party a co-principal or co-venturer with any other party with respect
to other endeavors in which such other party may be involved. Any inferences to
the contrary of the foregoing statements are expressly negated.
6. Events of Default; Acceleration.
a) Event of Default. Each of the following shall constitute an Event
of Default ("Event of Default") hereunder:
i) The Borrower fails to pay within ten (10) days of when due any
installment of principal or of interest or any other sum payable
pursuant to the terms of the Note;
ii) the insolvency of Borrower or the filing of any bankruptcy,
reorganization, debt arrangement or other proceeding or case against
Borrower under any bankruptcy or insolvency law or commencement of any
dissolution or liquidation proceeding against Borrower, any of which
is either consented to or acquiesced in by Borrower, or the
commencement by Borrower of a voluntary case under the federal
bankruptcy laws or any state insolvency or similar laws, or the
consent by Borrower to the appointment of a receiver, liquidator,
assignee, trustee, custodian or similar official for Borrower or any
of its property or the making by Borrower of any assignment for the
benefit of creditors or the failure by Borrower generally to pay
Borrower's debts as they come due;
iii) any representation or warranty by Borrower hereunder is not
complete or accurate at any time that any advances are outstanding
hereunder;
iv) issuance of any injunction or of an attachment or judgment
against any property of Borrower which is not discharged within thirty
(30) days after issuance;
v) a change in the condition or affairs (financial or otherwise)
of Borrower which in the opinion of the Lender increases Lender's risk
in connection with the Revolving Credit or impairs the prospect of
timely payment of the Revolving Credit; or
vi) default in the performance of any obligation, covenant or
agreement contained or referred to herein.
b) Acceleration.
i) Upon the occurrence of any Event of Default described in
subparagraphs (i) and (ii) above, the entire principal amount of the
Indebtedness then outstanding (if not then due and payable), and
accrued and unpaid interest thereon, and all other sums or payments
required hereunder shall be and become immediately due and payable,
and the Indebtedness shall thereafter bear interest at the Default
Rate from the due date until paid.
ii) Upon the occurrence of any Event of Default other than those
described in subparagraphs (i) and (ii) above, the Lender may declare
the entire principal amount of the Indebtedness then outstanding (if
not then due and payable), and accrued and unpaid interest thereon,
and all other sums or payments required thereunder, to be due and
payable immediately, and notwithstanding the stated maturity in the
Note, the principal amount of the Indebtedness and the accrued and
unpaid interest thereon and all other sums or payments required
thereunder shall thereupon become and be immediately due and payable,
and the Indebtedness shall thereafter bear interest at the Default
Rate.
7. Waivers. Borrower waives demand, notice, protest, service of legal
process pursuant to Colorado Rules of Civil Procedure Rule 4(i), notice of
acceptance of this Agreement, notice of loans made, credit extended, and all
other action taken in reliance hereon and all other demands and notices of any
type.
8. Borrower's Representations and Warranties. To induce Lender to enter
into this Agreement, Borrower makes the following representations and
warranties, all of which shall be true and correct as of the date of this
Agreement and shall continue to be true and correct upon each advance under 1.c)
above:
a) Existence; Power; Authority. Borrower (a) is a trust duly
organized, validly existing and in good standing under the laws of the
State of Alaska, and (b) has the power to own its property and to carry on
its business and is qualified to do business and is in good standing in
each jurisdiction in which the character of properties owned by it or the
transaction of its business makes such qualification necessary. Borrower is
duly and validly authorized by all necessary trustee action and has full
power and authority to enter into this Agreement, to make the borrowings
hereunder, to execute and deliver this Agreement and to perform and comply
with the terms, conditions, and agreements set forth herein and therein.
b) Binding Agreement. This Agreement constitutes the valid and legally
binding obligations of Borrower, enforceable in accordance with their
respective terms.
c) Litigation. There are no proceedings pending or, to the knowledge
of Borrower, threatened before any court, administrative body or other
tribunal which could materially adversely affect the financial condition or
operations of Borrower.
d) No Conflicting Agreements. The execution of and performance under
this Agreement and the borrowings hereunder by the Borrower will not
violate: (A) any statute, regulation or other provision of law; (B) any
order of a court or instrumentality of government having jurisdiction over
the Borrower; (C) any provision of the Trust Agreement of the Borrower; and
(D) any indenture, contract, agreement or other instrument to which the
Borrower is a party or by which the Borrower or any of its property is
bound. There are no provisions of any existing mortgage, deed of trust,
contract, lease, or other agreement of any kind binding on the Borrower or
affecting its business or property which would conflict with or in any way
restrict or prohibit the execution, delivery or performance of the terms of
this Agreement or the Note.
e) Information. All information, whether provided orally or contained
in any financial statement, report, certificate, opinion, letter or any
other written document, given to Lender by Borrower or by any other person
in connection with the Revolving Credit at any time during the term hereof
is and shall constitute a representation and warranty by Borrower
hereunder. Borrower hereby represents and warrants that all such
information is in all material respects true, complete, and accurate, and
does not and shall not fail to state any material fact or any fact
necessary to make such information not misleading.
f) Assets and Properties. Borrower has provided Lender with its most
recent unaudited balance sheet dated September 30, 2006, showing assets of
approximately $64.7 million, liabilities of approximately $1 million
(including the Indebtedness evidenced under this Agreement), and total
equity of approximately $64 million (the "Financial Statements"). Borrower
represents that, as of the date of this Agreement, the Financial Statements
are true and correct in all material respects. Borrower has good and
marketable title to all of its assets and properties, free and clear of any
security interests, liens, or encumbrances of any type or kind whatsoever
except as shown in the Financial Statements.
g) Violation of Laws, etc. (1) Neither the consummation of this
Agreement nor the use, directly or indirectly, of all or any portion of the
proceeds of the Revolving Credit will violate or result in a violation of
any provision of any applicable law or of any applicable order of, or
restriction imposed by, any applicable governmental or regulatory entity or
authority.
9. Borrower's Covenants. Until all obligations and liabilities of Borrower
to Lender under this Agreement have been paid and performed in full, Borrower
shall keep and perform the following covenants, and does hereby covenant, agree
and promise to Lender as follows:
a) General Covenants. Borrower shall, at all times during the term of
the Revolving Credit and at all times that any advances hereunder are
outstanding, do (or refrain from doing, as the case may be) the following:
i) Books, Records, and Inspections. At all times (a) maintain
complete and accurate books and records and (b) permit any person
designated by Lender to enter, examine, audit, and inspect all
properties, books, operations and records of Borrower at any
reasonable time and from time to time wherever such properties, books,
and records are located.
ii) Litigation. Promptly notify Lender of any litigation
instituted or threatened against Borrower and of the entry of any
judgment or lien against any of Borrower's assets or properties.
iii) Compliance with Laws. At all times comply with all
applicable laws and orders of any court or other governmental
authority, and all regulations and standards of any applicable
regulatory entity.
iv) Maintain Existence. At all times maintain in full force and
effect its legal existence, rights, privileges, and qualify and remain
qualified in all jurisdictions where qualification is required.
v) Events of Default. Promptly inform Lender of the occurrence of
any Event of Default or the occurrence of any condition, event or act
which, with the giving of notice or lapse of time or both, would
constitute an Event of Default hereunder.
vi) Negative Covenant for Borrowing. Without the prior written
consent of Lender, Borrower shall not incur any indebtedness, directly
or indirectly, or create or suffer or permit to be created or to stand
against all or any part of the Pledged Assets (as defined below), any
lien or charge prior to, subordinate to, or on a parity with the
security interest granted hereunder.
10. Security Agreement and Financing Statement.
a) Security Agreement. This Agreement shall constitute a security
agreement as contemplated under the Uniform Commercial Code as adopted by
the State of Alaska ("UCC"). To secure the payment and performance of the
Indebtedness, Borrower grants, sells, conveys, assigns, transfers and
pledges unto the Lender a first and prior security interest under the UCC
in and to, and a general first lien upon and right of set-off against, all
of Borrower's right, title and interest in and to the Pledged Assets. The
term "Pledged Assets" shall mean all of the Corporate Stock currently shown
in the Financial Statements. The parties contemplate and agree that the
security interest granted hereunder shall cover all increases in the
Indebtedness (e.g., future advances), notwithstanding Borrower's paying
down the Indebtedness from time to time. The parties also agree that this
Note is not a margin loan with respect to which the securities purchased
with the proceeds of this Note will become Pledged Assets.
b) Financing Statement. Contemporaneously with the execution and
delivery of this Agreement, Borrower shall deliver to the Lender a fully
executed UCC-1 financing statement pursuant to which Borrower acknowledges
its grant of a security interest. Upon such execution, such UCC-1 shall be
filed in the records of the Secretary of State of Alaska.
c) Remedies. Lender shall have all of the rights, remedies and
recourses with respect to the Pledged Assets as are afforded a secured
party by the UCC, which rights, remedies and recourses shall be in addition
to, and not in limitation of, the other rights, remedies and recourses
afforded to the Agent by the terms of this Agreement and applicable law.
Lender shall continuously hold the security interest granted hereunder,
pending full performance by Borrower of its obligations hereunder.
11. Notices. All notices, consents, approvals, requests, demands and other
communications which are required or may be given hereunder shall be in writing
and shall be duly given if personally delivered, sent by facsimile, telegram or
overnight courier or posted by U.S. registered or certified mail, return receipt
requested, postage prepaid and addressed to the other parties at the addresses
provided below:
Lender Borrower
Xxxx Xxxxx Trust Xx. 0X Xxxxxxx X. Xxxxxxx Xxxxx
x/x Xxxxxxxx Trust Company, LLC c/o Badlands Trust Company, LLC
Attention: Xxx Xxxxx Attention: Xxx Xxxxx
0000 X. Xxxxxx 0000 X. Xxxxxx
Xxxxxxxxx, XX 00000 Xxxxxxxxx, XX 00000
Phone (000) 000-0000 Phone (000) 000-0000
Fax (000) 000-0000 Fax (000) 000-0000
Any party may from time to time change the address to which notices to it are to
be sent by giving notice of such change to the other parties in the manner set
forth herein. Notices shall be deemed given on the next business day following
the day such notice is posted or sent by courier in the manner described above,
and if sent by telefax or telegram, on the date such notice is sent, and if
delivered in person, on the date so delivered. Any notice period shall commence
on the day such notice is deemed given. For the purposes of this Agreement, the
term "business day" shall include all days other than Saturdays, Sundays and
federal banking holidays.
12. Miscellaneous.
a) No Waiver. No failure or delay of any party hereto to exercise any
right given to it hereunder, or to insist on strict compliance with any
provision hereunder, shall constitute a waiver of such provision or of any
other provision hereof, or a waiver of any breach, and no waiver of any
provision or breach of any provision shall constitute a waiver of any other
provision or breach or of any subsequent breach of the same provision. No
waiver shall be effective unless in writing and signed by the party having
the right to waive such provision.
b) Survival. All covenants, agreements, representations, and
warranties made herein and in any other instruments or documents delivered
pursuant hereto shall survive the execution and delivery of this Agreement
and shall continue in full force and effect so long as any of the amounts
due hereunder are outstanding and unpaid.
c) Entire Agreement; Modification. This Agreement constitutes the
entire agreement between the parties hereto with respect to the subject
matter hereof, superseding all prior negotiations, correspondence,
understandings and agreements, if any, between the parties; no amendment or
modification of this Agreement shall be binding on the parties unless made
in writing and duly executed by all parties. There are no oral or implied
agreements and no oral or implied warranties between the parties hereto
other than those expressed herein.
d) Binding Effect; Assignability. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors and assigns. This Agreement shall not be assignable by the
Borrower without the prior written consent of Lender.
e) Headings. The section and other headings in this Agreement are for
reference only, and shall not limit or otherwise affect any of the terms
hereof.
f) Further Assurances and Corrective Instruments. The parties hereto
agree to execute, acknowledge, seal and deliver, after the date hereof,
without additional consideration, such further assurances, instruments and
documents, and to take such further actions, as the parties hereto shall
request in order to fulfill the intent of this Agreement and the
transactions contemplated hereby.
g) Severability. Any provision in this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provisions in any other jurisdiction.
h) Governing Law. This Agreement is made in and shall be governed by
and construed and interpreted in accordance with the laws of the State of
Colorado.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement under seal, with the intention of making it a sealed instrument, as of
the day and year first above written.
LENDER
XXXX XXXXX TRUST NO. 1B, a trust domiciled and administered in Alaska
By: BADLANDS TRUST COMPANY, LLC, an Alaska limited liability company, Trustee
By: ________________________________
Xxxxxxx X. Xxxxxx
Its: President
BORROWER
XXXXXXX X. XXXXXXX TRUST, a trust domiciled and administered in Alaska
By: BADLANDS TRUST COMPANY, LLC, an Alaska limited liability company, Trustee
By: ________________________________
Xxxxxxx X. Xxxxxx
Its: President
