LOAN AGREEMENT
Exhibit
10.1
This
Loan
Agreement (“Agreement”)
is
entered into on January 5, 2007, by and between SEMCO ENERGY, INC., a Michigan
corporation (“Borrower”),
whose
address is 0000
Xxxxx Xxxxxx, Xxxxx X, Xxxx Xxxxx, Xxxxxxxx 00000
and
Charter One Bank, N.A., a national banking association
(“Bank”)
whose
address is
00000
Xxxxxxxx Xxxx, Xxxxx 0000, Xxxxxxxxxx, Xxxxxxxx 00000.
In
consideration of the mutual agreements contained herein, Bank may, in its sole
and absolute discretion, make available to Borrower loan funds not to exceed
an
aggregate principal amount outstanding of Fifteen Million and 00/100
($15,000,000) Dollars (“Loan”)
upon
the following terms and conditions:
1. Method
of Borrowing.
Each
advance under this Agreement (the “Advance”
and
collectively, the “Advances”)
shall
be offered to Borrower through its representative(s) by a duly authorized
representative of the Bank, at the interest rate provided below to be repaid
by
Borrower as provided herein. Requests for, offers of, and acceptance of Advances
between Bank and Borrower may be made in writing (including facsimile
transmission or e-mail transmission provided that any signatures required
thereon are actual signatures and not computer-generated signatures) or orally
(including telephonic communication) (each, an “Advance
Notice”).
Each
Advance Notice shall specify the dollar amount of such Advance and the duration
of the borrowing period therefor, which borrowing period shall be a period
(the
“Borrowing
Period”)
agreed
to by Bank ending no later than the Maturity Date (as hereinafter defined).
All
Advances, accrued and unpaid interest thereon and all other amounts owing from
Borrower to Bank shall be due and payable in full on October 31, 2007 (the
“Maturity Date”) and otherwise in accordance with Section 4 hereof. All Advances
shall be in immediately available funds. The terms of an offered Advance shall
be open for acceptance by Borrower until 3:00 p.m. (Eastern time) on the day
of
notification to Borrower by Bank of such offering; and the offering shall be
deemed withdrawn if not accepted within that time period. All terms offered
with
respect to the Advances shall be determined by Bank in its sole discretion
provided such terms are not inconsistent with any provision contained in this
Agreement.
Any
Advance shall be conclusively presumed to have been made to, for the benefit
of,
and at the request of Borrower when: (a) (i) the Advance is deposited or
credited to an account of Borrower with Bank, notwithstanding that such Advance
was requested, orally or in writing and (ii) any part of such Advance is
withdrawn from the account; or (b) the Advance is made in accordance with oral
or written instructions of an authorized representative of Borrower. The
Borrower will provide a written listing of authorized representatives to the
Bank. Borrower agrees that Bank may rely on any such telephonic or telecopy
notice given by any person Lender in good faith reasonably 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 the written notice shall govern if Bank acted in reliance
thereon.
NOTWITHSTANDING
ANY PROVISION OR INFERENCE TO THE CONTRARY, THE BANK SHALL HAVE NO OBLIGATION
TO
EXTEND ANY CREDIT TO OR FOR THE ACCOUNT OF BORROWER BY REASON OF THIS
AGREEMENT.
2. Interest
Rate.
Each
Advance shall bear interest at an “Offering
Rate”
which
shall mean such interest rates and terms offered by Bank and accepted by
Borrower. Principal and interest on Advances at an Offering Rate shall be
payable as required herein. Interest shall be computed on the basis of a 360
per
day year for the actual number of days in the interest period. (“Actual/360
Computation”).
Bank’s Actual/360 Computation determines the annual effective interest yield by
taking the stated (nominal) interest rate for a year’s period and then dividing
said rate by 360 to determine the daily periodic rate to be applied for each
day
in the interest period.
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3. Recordation
of Advances.
All
Advances shall be charged to an account in Borrower’s name on Bank’s books (the
“Loan
Account”),
and
Bank shall debit to such Loan Account the amount of each Advance when made
and
credit to such account the amount of each repayment. Bank shall render to
Borrower from time to time a statement of account setting forth the Borrower’s
loan balance in said Loan Account which shall be deemed to be correct and
accepted by and binding upon Borrower, unless Bank receives a written statement
of exceptions within twenty (20) calendar days after such statement has been
rendered to Borrower. Such statement of account shall be prima facie evidence
of
the principal sum and accrued interest in the absence of such statement of
exceptions.
4. Payment
of Advances.
Borrower
shall pay all amounts owing hereunder for principal and interest on each Advance
(time being of the essence), in the account of the Bank designated for such
payment via wire transfer, as follows:
(i)
principal payments shall be made on the last day of the applicable Borrowing
Period; and
(ii)
interest payments shall be made monthly on the last day of each
month.
5. Posting
of Payments.
All
payments received during normal banking hours after 3:00 P.M. Eastern time
shall
be deemed received at the opening of the next banking day.
6. Prepayment.
(a)
Borrower may prepay in whole or in part subject to Section 6(b) below, any
amounts due and owing hereunder. No partial prepayment shall affect the
obligation of Borrower to make any payment of the remaining principal or
interest due with respect to such Advance until such Advance has been paid
in
full.
(b) If
Borrower makes any payment of principal with respect to any Advance on any
day
other than the last day of the applicable Borrowing Period therefor (whether
voluntarily, by acceleration, or otherwise), or if Borrower fails to borrow
an
Advance after notice has been given by Borrower to Bank in accordance with
the
terms of this Agreement requesting such Advance and Bank has agreed to make
such
Advance, or if Borrower fails to make any payment of principal in respect of
any
Advance when due, Borrower shall reimburse Bank, on demand, for any resulting
loss, cost or expense incurred by Bank as a result thereof, including, without
limitation, any such loss, cost or expense incurred in obtaining, liquidating,
employing or redeploying deposits from third parties, but excluding any portion
of such loss attributable to the Bank’s margin, as determined by the Bank which
determination shall be conclusive absent manifest error. Calculation of any
amounts payable to Bank under this paragraph shall be made as though Bank shall
have actually funded or committed to fund the relevant Advance through the
purchase of an underlying deposit in an amount equal to the amount of such
Advance and having a term comparable to the Borrowing Period of such Advance;
provided,
however,
Bank
may fund any Advance in any manner it deems fit and the foregoing assumption
shall be utilized only for the purpose of the calculation of amounts payable
under this paragraph.
7. Conditions
Precedent.
Each and
every Advance which has been offered and accepted pursuant to this Agreement
is
subject to the following conditions precedent: (a) Borrower shall be in
compliance with all of the terms and conditions set forth herein and an Event
of
Default as specified herein, or an event which upon notice or lapse of time
or
both would constitute such an Event of Default, shall not have occurred or
be
continuing at the time of such Advance; (b) Bank shall have received a certified
resolution authorizing borrowings by Borrower under this Agreement; (c) Bank
shall have received a copy of the Borrower’s audited financial statements for
the fiscal year ending December 31, 2005; and (d) Borrower shall deliver to
Bank
such information and documents as Bank may reasonably request from time to
time.
Upon acceptance of any Advance, the Borrower shall be deemed to have made an
affirmative representation that there does not exist any Event of Default
hereunder.
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8. Representations,
Warranties.
Borrower represents and warrants to the Bank, all of which representations
and
warranties shall be true on the date hereof and on the date any Advance is
made
hereunder:
(a) Existence
and Authority.
Borrower
is duly organized, validly existing and in good standing under the laws of
its
state of incorporation. Borrower has the legal power and authority and is duly
authorized to: (a) execute and perform its obligations under the Loan Agreement
and any other documents executed in connection herewith (collectively, the
“Loan
Documents”)
to
which it is a party and such documents constitute the Borrower’s valid and
binding legal obligation enforceable in accordance with their terms, (b) borrow
money in accordance with the terms of this Loan Agreement, and (c) do any and
all other things required of it hereunder. Borrower has the legal power and
authority to carry out its business as now being conducted and is qualified
to
do business in the State of Michigan and in every jurisdiction where the nature
of its business or the property owned or operated by it makes such qualification
necessary and where the failure to be so qualified would reasonably be expected
to have a material adverse effect on the business, assets or financial condition
of the Borrower.
(b) Financial
Information.
All
financial data and information which has been or shall hereafter be furnished
to
the Bank has been and/or shall be prepared in substantially the same form as
the
management prepared financial statements provided by Borrower to current lenders
under the Corporate Credit Facility and fully and fairly presents the financial
condition of the Borrower (any accounting terms used in this Loan Agreement
which are not specifically defined herein shall have the meanings customarily
given them in accordance with GAAP). There has been no material adverse change
in the properties, business, assets or financial condition of Borrower taken
as
a whole since the date of Borrower’s latest financial statements filed with the
Securities and Exchange Commission.
(c) Compliance.
The
execution of the Loan Documents shall not violate any other agreements of which
Borrower is a party.
(d) Subsidiaries.
As
of the
date hereof, except as disclosed in Borrower’s most recent annual report on Form
10-K most recently filed with the Securities and Exchange Commission, the
Borrower has no subsidiaries.
9. Reporting;
Covenants.
(a) The
Borrower shall furnish to the Bank or make available to Bank on Borrower’s
website:
(i)
as
soon as available, and in any event within 105 days after the close of the
Borrower’s fiscal year, a copy of the Borrower’s consolidated financial
statements (form 10-K) for such year, audited and certified without
qualification by an independent public accountant of recognized
standing,;
(ii)
as
soon as possible, and in any event within 60 days after the close of the
Borrower’s fiscal quarter, a copy of the Borrower’s quarterly report (10-Q)
filed with the U.S. Securities and Exchange Commission;
(iii)
contemporaneously with the furnishing of
the
Borrower’s 10-Q or 10-K U.S. securities filings, a confidential copy of the
quarterly compliance certificate delivered by the Borrower to the Administrative
Agent under that certain Credit Agreement dated as of September 15, 2005
(such
agreement, as may be amended, restated, supplemented or replaced from time
to
time, shall be referred to herein as the “Corporate
Credit Facility”),
between and among the Borrower, LaSalle Bank Midwest National Association,
as
Administrative Agent, and the Lenders party thereto; and
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(iv)
notice of any amendment or modification of the Corporate Credit Facility as
soon
as possible upon execution or effectiveness thereof.
(b) Each
Subsidiary (as defined in the Corporate Credit Facility) that has delivered,
or
may at any time be required to deliver, in accordance with the terms of the
Corporate Credit Facility, a guaranty to the Administrative Agent under the
Corporate Credit Facility, shall execute and deliver, and Borrower shall cause
each such Subsidiary to execute and deliver, to Bank a guaranty agreement
whereby such Subsidiary becomes a guarantor of the obligations of the Borrower
under this Agreement, together with such certificates, resolutions, formation
documents and opinions of counsel as the Bank may reasonably
request.
(c) Until
the
Advances, interest thereon and all other amounts owing from Borrower to Bank
hereunder have been paid in full, the Borrower covenants and agrees that it
will
not create, incur, assume or suffer to exist any mortgage, pledge, encumbrance,
security interest, lien or charge of any kind upon the of its assets other
than
Permitted Liens. “Permitted Liens” shall mean:
(i) Liens,
mortgages, security interests and other encumbrances to or in favor of
Bank;
(ii) Liens
for
taxes, assessments or other governmental charges incurred in the ordinary course
of business and for which no interest, late charge or penalty is attaching
or
which is being contested in good faith by appropriate proceedings and, if
requested by the Bank, bonded in an amount and manner satisfactory to the
Bank;
(iii) Liens,
not delinquent, created by statute in connection with worker’s compensation,
unemployment insurance, social security and similar statutory
obligations;
(iv) Liens
of
mechanics, materialmen, carriers, warehousemen or other like statutory or common
law liens securing obligations incurred in good faith in the ordinary course
of
business that are not yet due and payable;
(v) Minor
encumbrances or imperfections of title consisting of existing or future zoning
restrictions, existing recorded rights-of-way, existing recorded easements,
existing recorded private restrictions or future public restrictions on the
use
of real property, none of which (individually or in the aggregate) materially
impairs, or would materially impair, the present or future use of such property
in the operation of the business for which it is used, or would be violated
in
any material respect by any existing or proposed structure or land use or would
have a material adverse effect on the sale or lease of such property, or render
title thereto unmarketable;
(vi) The
“Permitted Liens” as defined in the Corporate Credit Facility; and
(vii) The
“Permitted Liens” as defined in that certain Indenture dated as of May 21, 2003,
among Borrower and Fifth Third Bank, as trustee, relating to Borrower’s 7-1/8 %
Senior Notes due 2008.
10. Events
of Default.
Upon the
occurrence of any one or more of the following “Events
of Default,”
the
entire unpaid principal balance of the Loan shall at the option of the Bank
become immediately due and payable without demand, notice or protest (which
are
hereby waived):
(a)
Nonpayment;
Nonperformance.
Borrower
fails to pay any principal amounts hereunder when due, fails to pay any other
amount due hereunder within three business days of when due or fails to observe
or perform any obligation or covenant, as required under this Agreement, or
any
other document furnished in connection herewith, or contained in any other
agreement between Bank and Borrower and such failure continues for more than
thirty (30) days after notice to Borrower.
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(b)
False
Warranty.
Any
representation or warranty made by Borrower in connection with this Agreement
is
determined by Bank to have been false or misleading in any material respect
when
made.
(c)
Default
on Other Obligations.
(i)
Borrower defaults in the payment of interest, principal, or fees on any
indebtedness in respect of any borrowed money in excess of $10,000,000, and
such
failure continues after the expiration of any applicable grace period and such
defaults causes or permits the holders of such indebtedness to accelerate the
maturity thereof or (ii) the occurrence of an “Event of Default” under and as
defined in the Corporate Credit Facility.
(d)
Judgment
Entered.
Final
judgment for the payment of money is entered against Borrower in excess of
$5,000,000 and remains undischarged for a period of 30 days, unless execution
on
such judgment shall be effectively stayed.
(e)
Bankruptcy.
Borrower (i)
files
a petition as Debtor under the Bankruptcy Code or makes an assignment for the
benefit of creditors, or (ii) becomes the object of insolvency proceedings
or is
named debtor in an involuntary petition under the Bankruptcy Code and such
proceedings or such petition is not dismissed against Borrower within 60
days.
(f)
Change
of Control. There
shall occur a change of control or comparable event under Section 13.1.11 of
the
Corporate Credit Facility.
11. Acceleration
Upon Default.
Upon any
Event of Default, Bank may, at Bank’s sole discretion, accelerate the maturity
of the Loan and all other obligations of Borrower to Bank, and the total
outstanding balance of principal and unpaid interest and such Advances and
other
obligations shall be immediately due and payable.
12. Default
Rate.
In
addition to all other rights contained in this Agreement, upon the occurrence
and during the continuance of an Event of Default, all outstanding Advances
shall bear interest at the Effective Interest Rates plus 2% (“Default
Rate”).
The
Default Rate shall apply from the occurrence of an Event of Default until the
Advances or any judgment thereon is paid in full.
13. Payment
Application.
All
payments made by or on behalf of and all credits due to Borrower shall be
applied and reapplied in whole or in part, so long as there does not exist
any
Event of Default hereunder, to such obligations as Borrower may specify or,
if
Borrower does not specify or there then exists an Event of Default, to such
of
Borrower’s obligations as are then due and payable and otherwise to any of
Borrower’s obligations hereunder to the extent and in the manner that Bank may
see fit.
14. Attorneys’
Fees.
Borrower
shall pay all of Bank’s actual, reasonable and necessary expenses incurred to
successfully enforce or collect the indebtedness under the Loan, including,
without limitation, reasonable attorneys’ fees and expenses, whether incurred
without the commencement of a suit, in any trial, arbitration, or administrative
proceeding, or in any appellate or bankruptcy proceeding.
15. Usury.
Anything
contained herein to the contrary notwithstanding, if for any reason the
effective rate of interest on any Advance should exceed the maximum lawful
rate,
the effective rate shall be deemed reduced to and shall be such maximum lawful
rate, and (i) the amount which would be excessive interest shall be deemed
applied to the reduction of the principal balance of the Advance and not to
the
payment of interest, and (ii) if the Advance has been or is thereby paid in
full, the excess shall be returned to the party paying same, such application
to
the principal balance of the Advance or the refunding of the excess to be a
complete settlement and acquittance thereof.
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16. Waivers.
Borrower
hereby waives presentment, protest, notice of dishonor, demand for payment,
notice of intention to accelerate maturity, notice of acceleration of maturity,
notice of sale and all other notices of any kind whatsoever except as otherwise
required hereunder. Any failure by Bank to exercise any right hereunder shall
not be construed as a waiver of the right to exercise the same or any other
right at any time.
17. Amendment
and Severability. No
amendment to or modification of this Agreement shall be binding upon either
party unless in writing and signed by it. If any provision of this Agreement
shall be prohibited or invalid under applicable law, such provision shall be
ineffective but only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this
Agreement.
18. Miscellaneous.
This
Agreement is fully assignable by Bank and all rights of Bank thereunder shall
inure to the benefit of its successors and assigns. This Agreement may not
be
assigned by Borrower without the prior written consent of Bank and shall
be
binding upon Borrower and its successors and its permitted assigns. The captions
contained in this Agreement are inserted for convenience only and shall not
affect the meaning or interpretation of the Agreement. This Agreement shall
be
governed by and interpreted in accordance with the laws of the State of
Michigan, without regard to that state’s conflict of laws
principles.
19. WAIVER
OF JURY TRIAL. THE
BORROWER AND THE LENDER ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING
(OR
HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY
AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY
JURY
IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR
IN
ANY WAY RELATED TO, THIS AGREEMENT OR THE LOAN.
[SIGNATURES
APPEAR ON FOLLOWING PAGE]
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In
Witness
Whereof,
the
parties hereto have duly executed this Agreement as of the date stated
above.
| BORROWER: | ||
| SEMCO ENERGY, INC. | ||
| Taxpayer Identification Number: 00-0000000 | ||
| |
|
|
| By: | /s/ Xxxxxxx X. Xxxxxxx | |
|
|
||
| Name: | Xxxxxxx X. Xxxxxxx | |
| Title: | Senior Vice President and Chief Financial Officer and Treasurer | |
| BANK: | ||
| CHARTER ONE BANK, N.A. | ||
| |
|
|
| By: | /s/ Xxxxx X. Nazareth | |
|
|
||
| Name: | Xxxxx X. Nazareth | |
| Title: | Vice President | |
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