Semco Energy, Inc. Troy, MI 48084 Gentlemen:
Exhibit
10.2
October
1,
2006
Semco
Energy, Inc.
0000
Xxxx
Xxx Xxxxxx Xxxx, Xxxxx 000
Xxxx,
XX
00000
Gentlemen:
This
Negative Pledge Agreement (the “Agreement”)
is
made by SEMCO ENERGY, INC., a Michigan corporation (herein the “Borrower”),
located at 0000 Xxxx Xxx Xxxxxx Xxxx, Xxxxx 000, Xxxx, XX 00000, in favor of
COMERICA BANK, a Michigan banking corporation (herein the “Bank”),
located at 000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 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 Master Revolving
Note dated as of October 1, 2006, made in the principal amount of $15,000,000
by
Borrower, payable to Bank, as may be amended, restated supplemented or replaced
from time to time (the “Master 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 Master 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
Master 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 the 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 syndicated
agent, and (v) U.S. Bank, N.A.), as documentation agent, as 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 Master Note, nor any renewal, extension or
rearrangement of any payment or covenant to be made or performed by Borrower
hereunder or under the Master Note, shall constitute a waiver of any of the
terms of this Agreement or the Master 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 Michigan.
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
the
documentation and preparation of this Agreement and/or the Master Note, and
otherwise in respect of the Liabilities, and the consummation and the closing
of
the transactions contemplated hereby or thereby, 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 Master Note or otherwise in respect of any of the Liabilities.
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11. 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.
12. 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 MASTER NOTE OR THE LIABILITIES.
If
the
foregoing is acceptable to Borrower, please indicate such with the signature(s)
of Borrower as provided below.
| Very truly yours, | ||
| COMERICA BANK | ||
| |
|
|
| By: | /s/ Xxx X. Xxxxx | |
|
|
||
| Xxx X. Xxxxx | ||
| Its: | 1st Vice President | |
|
|
||
ACCEPTED,
ACKNOWLEDGED AND AGREED:
SEMCO
ENERGY, INC.
| By: | /s/ Xxxxxxx X. Xxxxxxx | |
|
|
||
| Its: | Senior Vice President & Chief Financial Officer | |
|
|
||
| Dated: | October 13, 2006 | |
|
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