Semco Energy, Inc. Port Huron, MI 48060 Gentlemen:
Exhibit
10.2
November
16,
2006
Semco
Energy, Inc.
0000
Xxxxx Xxxxxx, Xxxxx X
Xxxx
Xxxxx, XX 00000
Gentlemen:
This
Negative Pledge Agreement (the “Agreement”)
is
made by SEMCO ENERGY, INC., a Michigan corporation (herein “Borrower”),
located at 0000 Xxxxx Xxxxxx, Xxxxx X, Xxxx Xxxxx, XX 00000, in favor of U.S.
BANK NATIONAL ASSOCIATION (herein “Bank”),
located at 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000, pertaining
to
certain loans and other credit which Bank has made or may from time to time
hereafter make available to Borrower, which are evidenced by that certain
Revolving Note dated as of November 16, 2006, made in the principal amount
of
Seven Million Five Hundred Thousand Dollars ($7,500,000.00) by Borrower, payable
to Bank, as may be amended, restated supplemented or replaced from time to
time
(the “Note”).
In
consideration of all present and future loans and credit from time to time
made
available by Bank to or in favor of Borrower under the Note and all obligations
and liabilities of Borrower under this Agreement (herein collectively called
the
“Liabilities”),
Borrower covenants and agrees as follows:
1. So
long
as Bank shall have any obligation (if at all) to make any advance under the
Note
and thereafter, until the Liabilities 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 any of its assets other than Permitted Liens. “Permitted
Liens”
shall
mean:
| a. |
Liens,
mortgages, security interests and other encumbrances to or in favor
of
Bank;
|
| b. |
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;
|
| c. |
Liens,
not delinquent, created by statute in connection with worker’s
compensation, unemployment insurance, social security and similar
statutory obligations;
|
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| d. |
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;
|
| e. |
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;
|
| f. |
The
“Permitted Liens” as defined in that certain Second Amendment and Restated
Credit Agreement, dated September 15, 2005, among the (i) Borrower,
(ii)
Various Financial Institutions Party as Lenders, (iii) LaSalle Bank
Midwest National Association, a national banking association, as
administrative agent and arranger, (iv) National City Bank (fka National
City Bank of the Midwest), a national banking association, as syndication
agent, and (v) U.S. Bank, N.A., as documentation agent, as the same
may be
amended, restated, supplemented or replaced from time to time; and
|
| g. |
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.
|
2. Any
failure by Borrower to fully observe, perform or otherwise comply with any
of
the covenants or agreements of Borrower set forth in this Agreement and
continuance thereof more than thirty (30) days shall constitute an event of
default under the Liabilities, and Bank shall be entitled to exercise any and
all rights and remedies available to or otherwise conferred upon Bank as a
result thereof, whether by agreement, by law or otherwise.
3. No
forbearance on the part of the Bank in enforcing any of its rights or remedies
under this Agreement or the Note, nor any renewal, extension or rearrangement
of
any payment or covenant to be made or performed by Borrower hereunder or under
the Note, shall constitute a waiver of any of the terms of this Agreement or
the
Note or of any such right or remedy.
4. This
Agreement shall be governed by and construed and enforced in accordance with
the
laws of the State of Wisconsin.
5. Borrower
agrees to reimburse Bank, upon demand, for all reasonable costs and expenses
(including, without limitation, reasonable attorneys’ fees, whether in-house or
outside counsel (but excluding fees of in-house counsel for matters for which
the Bank has engaged outside counsel)) incurred by Bank in connection with
any
default or events of default under or in respect of any of the Liabilities
or in
collecting or in attempting to collect any of the Liabilities, in perfecting,
maintaining or defending any of the Bank’s liens or security interests (or the
priority thereof), if any, in any collateral securing any part of any of the
Liabilities, or otherwise in enforcing any of Bank's rights or remedies under
this Agreement, the Note or otherwise in respect of any of the
Liabilities.
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6. This
Agreement shall inure to the benefit of and shall be binding upon the parties
hereto and their respective successors and assigns; provided,
however,
that
Borrower shall not assign or transfer any of its rights or obligations hereunder
or otherwise in respect of any of the Liabilities without the prior written
consent of Bank.
7. BORROWER
AND BANK 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, WAIVE 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, THE NOTE OR THE LIABILITIES.
If
the
foregoing is acceptable to Borrower, please indicate such with the signature
of
Borrower as provided below.
| Very truly yours, | ||
| U.S. BANK NATIONAL ASSOCIATION | ||
| |
|
|
| By: | /s/ Xxxxxxx X. Xxxxxx | |
|
|
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| Its: | Vice President | |
|
|
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| ACCEPTED, ACKNOWLEDGED AND AGREED: | ||
| SEMCO ENERGY, INC. | ||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |
|
|
||
| Its: | SVP and CFO | |
|
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| Dated: | Nov. 16, 2006 | |
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