EXHIBIT 10.16

 

# **SECOND AMENDMENT AND WAIVER TO**

# **REFUNDING CREDIT AGREEMENT**

 

This Second Amendment andWaiver to Refunding Credit Agreement (this “Amendment and Waiver”) is enteredinto as of March 1, 2001, among Cornerstone Propane, L.P., a Delaware limitedpartnership (the “Borrower”), the undersigned financial institutions (each a“Lender” and together constituting the “Required Lenders”, as said terms aredefined in the Credit Agreement referred to below) and Bank of America, N.A.(formerly Bank of America National Trust and Savings Association), as agent forthe Lenders as are or may become parties to said Credit Agreement (in suchcapacity, the “Agent”).

 

**R E C I T A L S**

 

A.            The Borrower is a party to a Refunding Credit Agreementdated as of November 20, 1998 with the Agent and the Lenders partythereto, as amended by a First Amendment to Refunding Credit Agreement (the“First Amendment”) dated as of June 30, 2000 with the Agent and theLenders party thereto (such Refunding Credit Agreement as so amended by theFirst Amendment is referred to herein as the “Credit Agreement”).

 

B.            NorthWestern Corporation (“NOR”) executed a Guaranty (the“Guaranty Agreement”) dated as of June 30, 2000, in favor of the Agent forthe benefit of itself and the Lenders. Cornerstone Holding Corp. and Flame, Inc. have executed Guaranties (the“Original Guaranties”) in favor of the Trustee.

 

C.            The Borrower is aparty to a Waiver Agreement (the “Original Waiver”) dated as of June 30, 2000with the Agent and the Lenders party thereto. As part of the Original Waiver, NOR agreed to reset the GuarantiedAmount (as defined in the Guaranty Agreement) at $70,000,000 and that theGuarantied Amount could not be reduced below $70,000,000 without the consent of100% of the Lenders.

 

D.            The Borrower has requested that the Agent and the Lenderscurrently parties to the Credit Agreement, (i) amend certain provisions of theCredit Agreement and (ii) waive any failure, actual or alleged, of the Borrowerto comply with Section 8.2.4 of Credit Agreement as of September 30,2000 and December 31, 2000, and the Agent and the Required Lenders, subject tothe terms, conditions and limitations set forth herein, have agreed to do so.

 

**AGREEMENT**

 

NOW, THEREFORE, inconsideration of the premises and for other good and valuable consideration,the receipt and sufficiency of which are hereby acknowledged, the partieshereto agree as follows:

 

**1.             DefinedTerms; Section and Paragraph References. **Initially capitalized terms used but notdefined in this Amendment and Waiver shall have the meanings assigned to suchterms in the Credit Agreement.  All“Section” references herein are to sections of the Credit Agreement unlessotherwise specified.  All “paragraph”references herein are to paragraphs of this Amendment and Waiver unlessotherwise specified.

 

**2.             Amendmentsand Agreements. **Onthe terms of this Amendment and Waiver and subject to the satisfaction of theconditions precedent set forth below in paragraph 4 and, with respect toparagraph 2(a) below, the continuing conditions in paragraph 5, the CreditAgreement is amended and the Borrower agrees as follows:

 

(a)           Amendment of Section 8.2.4.  Section 8.2.4 of the Credit Agreement ishereby amended by inserting, at the end of said Section, a new paragraph toread as follows, in lieu of the paragraph added by Section 1.3 of the FirstAmendment:

 

“Notwithstanding the foregoingprovisions of this Section 8.2.4, so long as (i) the Guaranty Agreement shallbe in full force and effect, (ii) NOR is in compliance with all of its materialobligations thereunder and (iii) NOR has not attempted to revoke in writing anyof its obligations under the Guaranty Agreement:

 

(A)          the Total Funded Indebtedness to Consolidated Cash FlowRatio as of any relevant date and for the period then ending shall, solely forpurposes of the foregoing clause (a) of this Section 8.2.4 (and any relatedcompliance report), be computed by subtracting the lesser of (i) the applicable“Guarantied Amount” on such date as specified in or pursuant to the GuarantyAgreement and (ii) the Guarantied Obligations (as defined in the GuarantyAgreement) outstanding on such date from the sum of the consolidated Debt,Capitalized Lease Liabilities and Synthetic Lease Obligations of the Borrowerand the Restricted Subsidiaries (to the extent not resulting in a negativenumber);

 

(B)           the ratio of Consolidated Cash Flow to ConsolidatedInterest Expense as of any relevant date and for the period then ending shall,solely for purposes of the foregoing clause (b) of this Section 8.2.4 (and anyrelated compliance report), be computed by excluding from the denominator ofsuch ratio an amount equal to the average interest rate applicable to the Loansfor the period then ending multiplied by the lesser of (i) the average “GuarantiedAmount” applicable during the period then ending as specified in or pursuant tothe Guaranty Agreement and (ii) the average Guarantied Obligations (as definedin the Guaranty Agreement) outstanding during the period then ending; and

 

(C)           in making thecalculations required by Section 8.2.4, all adjustments for discontinuedoperations of the Borrower or any Subsidiary (or any of their divisions) shallbe made in accordance with GAAP except that, regardless of compliance withGAAP, the Borrower may exclude from Consolidated Net Income losses relating tothe discontinued natural gas financial trading operations of Coast Energy Groupfor the quarters ended June 30, 2000, September 30, 2000 and December 31, 2000,but not in excess of $4,600,000, $4,200,000 and $1,200,000, respectively.

 

In the event that (i) theGuaranty Agreement shall cease to be in full force and effect, (ii) NOR failsto comply with any of its material obligations under the Guaranty Agreement or(iii) NOR attempts to revoke in writing any of its obligations under theGuaranty Agreement, any Default or Event of Default which would have existedunder the Credit Agreement shall be retroactively reinstated, and the Agent andthe Lenders shall have all of their rights and remedies under the CreditAgreement, including any rights and remedies arising from a Default or Event ofDefault occasioned by a violation of this Section 8.2.4.”

 

(b)           Optional Termination of Acquisition Loan Commitment.  Pursuant to Section 2.2.1 of the CreditAgreement, after giving effect to the prepayment of the $10,000,000 inprincipal amount of the Acquisition Loans referred to in paragraph 4(b), theAcquisition Loan Commitment Amount is hereby reduced to the aggregateoutstanding principal amount of the Acquisition Loans on the Second Amendmentand Waiver Effective Date.

 

(c)           Reduction in Working Capital Loan Commitment Amount.Pursuant to Section 2.2.1 of the Credit Agreement, the Working Capital LoanCommitment Amount is hereby reduced to $70,000,000.

 

(d)           Increase in Clean Down.  Section 8.1.9 of the Credit Agreement is amended by replacing theamount “$10,000,000” with the amount “$20,000,000”.

 

(e)           Amendment Fees. The Borrower agrees to pay to the Agent, for the pro rata account ofeach Lender, non-refundable amendment fees (without regard to usage) asfollows:  (i) on or before the SecondAmendment and Waiver Effective Date, a non-refundable amendment fee equal tothe Working Capital Loan Commitment Amount (as reduced pursuant hereto)multiplied by 25 basis points, (ii) on or before the 90th day following theSecond Amendment and Waiver Effective Date, a non-refundable amendment feeequal to the Working Capital Loan Commitment Amount then in effect, if any,multiplied by 25 basis points and (iii) on or before the 180th day followingthe Second Amendment and Waiver Effective Date, a non-refundable amendment feeequal to the Working Capital Loan Commitment Amount then in effect, if any,multiplied by 50 basis points.  Suchamendment fees shall be fully earned on the date paid and are nonrefundable.

 

**3.**             **Waiver.**

 

(a)**          **Inaccordance with Section 11.1 of the Credit Agreement and, subject to theterms and conditions set forth in this Amendment and Waiver, on a one timebasis, the Required Lenders hereby waive compliance with Section 8.2.4 ofCredit Agreement as of September 30, 2000 and December 31, 2000.

 

(b)           The waiver given herein is a one time waiver strictlylimited to its terms and shall not have any force and effect other than asexpressly set forth herein.  The Agentand the Lenders specifically retain all their present and future rights underthe Credit Agreement, including rights in connection with the representations,conditions and covenants thereof, except as specifically modified by thelimited waiver described in paragraph 2(a).  No further waiver, either of additional terms or for anyadditional period, or consents of any kind, shall be implied from the waivergranted herein.  Without limiting theforegoing, the Borrower expressly acknowledges that neither the Agent nor anyLender has made any statement, promise or commitment, or given any promise orassurance, express or implied, that any waiver would be granted in the future.

 

**4.**             **Conditions Precedent to theEffectiveness of this Amendment and Waiver.**  The effectiveness of the amendment andagreements contained in paragraph 2 above and the one time waiver grantedpursuant to paragraph 3 above is conditioned upon, and such amendments,agreements and waiver shall not be effective until, satisfaction in full of eachof the following (the first date on which all of the following have beensatisfied being referred to herein as the “Second Amendment and WaiverEffective Date”), and shall, solely in the case of the amendment and agreementscontained in paragraph 2(a) above and the one time waiver granted pursuant toparagraph 3 above, only be effective thereafter so long as the continuingconditions contained in paragraph 5 below are complied with:

 

(a)           The Agent shall have received, on behalf of the Lenders,this Amendment and Waiver, duly executed and delivered by or on behalf of theBorrower, the Agent and the Required Lenders under the Credit Agreement and byNOR.

 

(b)           The Borrower prepays the principal of the AcquisitionLoans by $10,000,000.

 

(c)           The Agent shall have received, on behalf of the Lenders,copies of partnership authorizations for this Amendment and Waiver for theBorrower and resolutions of the board of directors of each of the ManagingGeneral Partner, the Restricted Subsidiaries and NOR authorizing and ratifyingthe transactions contemplated hereby, certified by the Secretary or anAssistant Secretary of such Person.

 

(d)           The Agentshall have received a legal opinion satisfactory to it from the Borrower’slegal counsel as to the due authorization, execution delivery and bindingeffect of this Second Amendment and Waiver and as to no conflict with, other ordefault under, the Borrower’s charter documents or, to such counsel’sknowledge, any document or agreement to which the Borrower is a party providingfor the borrowing of money or the issuance of debt securities.

 

(e)           Each of the representations and warranties set forth inthis Amendment and Waiver shall be true and correct on a date when all otherconditions set forth in the other paragraphs of this paragraph 4 shallhave been satisfied.  No Default orEvent of Default (other than that which might exist by virtue ofparagraph 8.2.4 absent this Amendment and Waiver) shall have occurred andbe continuing or would result from the consummation of the transactionscontemplated in this Amendment and Waiver.

 

(f)            The Agent shall have received the amendment fees referredto in clause (i) of paragraph 2(e) and the last sentence of paragraph 2(e).

 

(g)           All invoices of the Agent’s counsel dated prior to April1, 2001 shall have been paid in full.

 

**5.             ContinuingCondition to Effectiveness of Amendment and Waiver.  The amendment contained in paragraph** 2(a) above and the waiver set forth inparagraph 3 above shall be subject to, in addition to the conditions setforth in paragraph 4 above, the conditions that (a) at no time afterNovember 10, 2000 shall the Borrower, without the prior written consent of100% of the Lenders, request an Acquisition Loan under the Credit Agreement,(b) pursuant to Section 3.1(a) of the Credit Agreement, on or beforeNovember 30, 2001, the Borrower makes a voluntary prepayment of all thenoutstanding Acquisition Loans, and (c) no more than $2,275,000 in guaranty oranalogous fees relating to the Guaranty Agreement is paid to NOR prior to the dateon which all of the Obligations have been paid in full and the Commitmentsshall have terminated.  If the Borrowershall fail to comply with any of the conditions contained in the foregoingsentence (regardless of the satisfaction of the conditions contained inparagraph 4 above), the amendment contained in paragraph 2(a) above andthe waiver set forth in paragraph 3 above shall automatically andimmediately terminate and be rescinded, the provisions of Section 8.2.4shall be retroactively reinstated and any Event of Default or Default whichwould have existed under Section 8.2.4 shall be retroactively reinstated,except that the amendments contained in Sections 2(b),(c),(d) and (e) shallremain in effect for all purposes.  Uponsuch termination and rescission, the Agent and the Lenders shall have all oftheir rights and remedies under the Credit Agreement, including any rights andremedies arising from a Default or Event of Default occasioned by a violationof Section 8.2.4.

 

**6.             Representationsand Warranties.** In order to induce the Agent and the Required Lenders to enter into thisAmendment and Waiver, the Borrower represents and warrants to the Agent andeach Lender as follows:

 

(a)           Power and Authority.  The Borrower has all requisite partnership power and authority toenter into this Amendment and Waiver and to carry out the transactionscontemplated by, and perform its obligations under, the Credit Agreement.

 

(b)           Authorization of Agreements.  The execution and delivery of this Amendmentand Waiver  by the Borrower, and theperformance of the Credit Agreement by the Borrower have been duly authorizedby all necessary partnership action, and this Amendment and Waiver has beenduly executed and delivered on behalf of the Borrower.

 

(c)           Enforceability. The Credit Agreement constitutes the legal, valid and binding obligationof the Borrower, enforceable against the Borrower in accordance with its terms,except as enforceability may be limited by (i) applicable bankruptcy,insolvency, reorganization, moratorium, fraudulent conveyance, fraudulenttransfer or other similar laws relating to or affecting the rights of creditorsgenerally, (ii) general principles of equity (regardless of whether consideredin a proceeding in equity or at law), including, without limitation (A) thepossible unavailability of specific performance, injunctive relief or any otherequitable remedy, and (B) concepts of materiality, reasonableness, good faithand fair dealing, and (iii) rights of indemnification or contribution being limitedby Federal and state securities laws and the public policy underlying suchlaws.

 

(d)           NoConflict.  The execution anddelivery by the Borrower of this Amendment and Waiver and the performance bythe Borrower of the Credit Agreement do not and will not (i) contravene, in anymaterial respect, any provision of any law, regulation, decree, ruling,judgment or order that is applicable to the Borrower or its properties or otherassets, (ii) result in a breach of or constitute a default under the certificateof limited partnership or partnership agreement of the Borrower or any materialagreement, indenture, lease or instrument binding upon it, or its properties orother assets or (iii) result in the creation or imposition of any Liens on itsproperties other than as permitted under the Credit Agreement.

 

(e)           Governmental Consents.  No authorization or approval or other action by, and no notice toor filing with, any governmental authority or regulatory body is required forthe due execution, delivery and performance by the Borrower of this Amendmentand Waiver.

 

(f)            Representations and Warranties in the Credit Agreement.  The Borrower confirms that (i) therepresentations and warranties contained in Article VII of the Credit Agreementare true and correct in all material respects, except to the extent any suchrepresentation and warranty is expressly stated to have been made as of aspecific date, in which case it shall be true and correct as of such specificdate and (ii) no Default or Event of Default (other than that which might existby virtue of Section 8.2.4 absent this Amendment and Waiver) has occurredand is continuing.

 

(g)           Restricted Subsidiaries.  As of the date of this Amendment and Waiver, the Borrower has noRestricted Subsidiaries other than Cornerstone Holding and Flame.

** **

**7.             Counterparts;Notice of Effectiveness**.  This Amendment and Waiver may be executed by the parties heretoin any number of counterparts, all of which shall constitute together but oneand the same agreement, and any such person may become a party hereto byexecuting any such counterpart.** **Facsimilesignatures shall be effective and binding for all purposes.  In proving any matter with respect to thisAmendment and Waiver it shall not be necessary to produce or account for more thanone such counterpart signed by the party against whom enforcement is sought.

** **

**8.             Ratificationof Credit Agreement**.  The Credit Agreement, as amended and after giving effect to thisAmendment and Waiver, is hereby ratified and confirmed in all respects.

** **

**9.             GoverningLaw.**  ThisAmendment and Waiver shall be deemed to be a contract made under and governedby the internal laws of the State of New York.

 

IN WITNESS WHEREOF, the parties hereto have duly executed thisAmendment and Waiver, as of the date first above written.

 
|   | **CORNERSTONE  PROPANE, L.P.** |                               |
|--------|--------------------------------|------------------------------------|
|   |                           |                               |   |
|   | By:                            | **CORNERSTONE  PROPANE GP, INC.,** |   |
|   |                           | its Managing General Partner       |   |
|   |                           |                               |   |
|   |                           |                               |   |
|   |                           | By:                                |   |
|   |                           | Name:                              |   |
|   |                           | Title:                             |   |
|        |                                |                                    |  |  |

 

 
|   | **BANK  OF AMERICA, N.A.**,  as Agent for the Lenders |  
 

 

 
 

 

 
 

By:

 

 
 

Name

 

 
 

Title:

 

 
 

 

 
 

 

 
 

**BANK  OF AMERICA, N.A.**

 
 

 

 
 

 

 
 

By:

 

 
 

Name:

 

 
 

Title:

 

 

 

 

**UNION  BANK OF CALIFORNIA, N.A.**

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

**FLEET  NATIONAL BANK**

 

 

 

 

 

By:

 

 
 

Name:

 

 
 

Title

 

 
** **
****
 

 

**FIRST  UNION NATIONAL BANK**

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

**THE  BANK OF NOVA SCOTIA**

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

**CREDIT  AGRICOLE INDOSUEZ**

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

Each of the undersignedhereby acknowledges and consents to the foregoing Second Amendment and Waiverto Refunding Credit Agreement, reaffirms the terms of its Guaranty infavor of the Trustee and acknowledges that such Guaranty remains in full forceand effect in accordance with its terms.

 

Dated:

 

 

**CORNERSTONE  HOLDING CORP**

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

**FLAME,  INC.**

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 
 

The undersigned hereby(a) acknowledges and consents to the foregoing Second Amendment and Waiver toRefunding Credit Agreement, (b) reaffirms the terms of its Guaranty Agreementdated as of June 30, 2000 in favor of the Agent, (c) acknowledges andagrees that the Guarantied Amount under such Guaranty Agreement is and remainsat $70,000,000, (d) agrees that the Guarantied Amount cannot be reduced below$70,000,000 without the consent of 100% of the Lenders, and any attempted orpurported reduction in contravention of the foregoing shall be null and void,(e) agrees that if the Guarantied Amount under such Guaranty Agreement isincreased above $70,000,000 after the date hereof, the Guarantied Amount undersuch Guaranty Agreement may not thereafter be reduced below such increasedamount without the consent of the Required Lenders, and any attempted orpurported reduction in contravention of the foregoing shall be null and void,and (f) acknowledges that such Guaranty Agreement remains in full force and effectin accordance with its terms.

 

Dated as of March 1, 2001

**NORTHWESTERN  CORPORATION**

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

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