exv10wxvyv1



 






Exhibit 10(v)-1




REVOLVING CREDIT AGREEMENT

BY AND AMONG




ENERGYSOUTH, INC.,

as Borrower,




and




REGIONS BANK, as agent,




and




REGIONS BANK, AMSOUTH BANK,

WACHOVIA BANK, NATIONAL ASSOCIATION,

AND

GULF FEDERAL BANK,

as Lenders




$20,000,000.00




January 31, 2005




 









 








REVOLVING CREDIT AGREEMENT




     This Revolving Credit Agreement is entered into as of the 31st day of January, 2005, by
and among ENERGYSOUTH, INC., as Borrower (herein called “Borrower”), REGIONS BANK, as agent for
Lenders to the extent and in the manner provided in ARTICLE 8, below (herein called “Agent”), and
REGIONS BANK, AMSOUTH BANK, WACHOVIA BANK, NATIONAL ASSOCIATION, successor by merger to SouthTrust
Bank (“Wachovia Bank”), and GULF FEDERAL BANK, as Lenders (herein collectively called “Lenders”).



W I T N E S S E T H:




     WHEREAS, Borrower has requested that Lenders enter into this Revolving Credit Agreement to
provide for a revolving credit facility for lending to Borrower; and



     WHEREAS, Lenders have agreed to do so upon the terms and conditions hereinafter set forth.



     NOW, THEREFORE, in consideration of the mutual promises herein contained, and for other
valuable consideration, the parties hereto agree as follows:



ARTICLE 1.

DEFINITIONS OF TERMS




     For the purposes of this Agreement, unless the context otherwise requires, the following terms
shall have the respective meanings assigned to them in this ARTICLE 1 or in the section or recital
referred to below:



     Section 1.1. “Advance” shall mean the disbursement by the Agent of a sum or sums loaned to
Borrower pursuant to this Agreement.



     Section 1.2. “Affiliate” shall mean any Person (1) which directly or indirectly controls, or
is controlled by, or is under common control with, another Person or its Subsidiary; (2) which
directly or indirectly beneficially owns or holds five percent (5%) or more of any class of voting
stock of another Person or its Subsidiary; or (3) five percent (5%) or more of the voting stock of
which is directly or indirectly beneficially owned or held by another Person or its Subsidiary.
The term “control” means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the ownership of voting
securities, by contract, or otherwise.



     Section 1.3. “Agent” shall have the meaning assigned to such term in the preamble hereof.



     Section 1.4. “Agreement” or “this Agreement” shall mean this Revolving Credit Agreement as the
same may be amended or modified from time to time.



 









 





     Section 1.5. “Applicable Rate of Interest” shall mean the rate of interest designated in
accordance with Section 3.2 hereof.



     Section 1.6. “Base Rate” shall mean the Regions Financial Corporation Commercial Base Rate.
The Base Rate is not necessarily the lowest rate charged by Regions Bank on its loans and is set by
Regions Bank in its sole discretion.



     Section 1.7. “Base Spread” shall mean eighty basis points (.80%) below the applicable Base
Rate.



     Section 1.8. “Borrower” shall have the meaning assigned to such term in the preamble hereof.



     Section 1.9. “Borrowing Account” shall mean a demand deposit account in Regions Bank in the
name of, and under the control of, Borrower.



     Section 1.10. “Borrowing Date” shall mean any date specified in a Request for Advance
delivered in accordance with the provisions of Section 2.2(a) as a date on which Borrower requests
an Advance hereunder.



     Section 1.11. “Business Day” shall mean a day on which banks are open for business in Mobile,
Alabama.



     Section 1.12. “Commitment” shall mean the obligation of each Lender to extend credit to
Borrower under this Agreement in an aggregate principal amount not to exceed such Lender’s
Committed Sum.



     Section 1.13. “Commitment Period” shall mean the period beginning on the date hereof and
ending on the Commitment Termination Date.



     Section 1.14. “Commitment Termination Date” shall mean the earlier of (i) February 28, 2007,
or (ii) date on which the Commitment is terminated by either Borrower or Lenders pursuant to the
provisions hereof.



     Section 1.15. “Committed Sum” shall mean, with respect to a Lender, the amount set forth below
opposite the name of such Lender:



	 	 	 	 	 	 	 	 	 
	Regions Bank
	 	 	—	 	 	$	8,800,000.00	 
	AmSouth Bank
	 	 	—	 	 	$	6,800,000.00	 
	Wachovia Bank
	 	 	—	 	 	$	3,900,000.00	 
	Gulf Federal Bank
	 	 	 	 	 	$	500,000.00	 






     Section 1.16. “Debtor Law” shall mean any of, and “Debtor Laws” means all of the applicable
liquidation, conservatorship, bankruptcy, moratorium, arrangement, receivership, insolvency,
reorganization or similar laws of any jurisdiction from time to time in effect affecting the rights
of creditors generally.



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     Section 1.17. “Default” shall mean any of the events specified in ARTICLE 7, regardless of
whether there shall have occurred any passage of time or giving of notice or both that would be
necessary in order to constitute such event an Event of Default.



     Section 1.18. “Event of Default” shall have the meaning assigned to such term in Section 7.1.



     Section 1.19. “Governmental Authority” shall mean any government (or any political subdivision
or jurisdiction thereof), court, bureau, agency or other governmental authority having jurisdiction
over either Borrower or any of its business, operations or properties.



     Section 1.20. “Indebtedness” shall mean all long-term debt listed in Borrower’s Consolidated
Financial Statements contained in Borrower’s Annual Report on Form 10K for the respective year
ended September 30.



     Section 1.21. “Lenders” shall have the meaning assigned to such term in the preamble hereof.



     Section 1.22. “LIBOR Rate” shall mean a fluctuating rate of interest equal to the average
offered rate in the London Interbank Market for deposits in U. S. Dollars for a one-, three-, or
six-month period, as published in the Money Rates section of The Wall Street Journal on the last
Business Day of each calendar month.



     Section 1.23. “LIBOR Spread” shall mean one hundred twenty-five basis points (1.25%) above the
applicable LIBOR Rate.



     Section 1.24. “Loan Documents” shall mean this Agreement, the Note and all other documents
executed by Borrower in connection therewith.



     Section 1.25. “Loans” shall mean the aggregate unpaid principal balance of all Advances; each
Advance, individually, shall mean a “Loan.”



     Section 1.26. “Maximum Rate” shall mean, on any day, the highest nonusurious rate of interest
permitted by applicable law on such day that at any time, or from time to time, may be contracted
for, taken, reserved, charged or received on the Loans evidenced by the Note under the laws which
are presently in effect of the United States of America and the State of Alabama applicable to the
holders of the Note and such Loans or, to the extent permitted by law, under such applicable laws
of the United States of America and the State of Alabama which may hereafter be in effect and which
allow a higher maximum nonusurious interest rate than applicable laws now allow.



     Section 1.27. “Note” shall mean the Revolving Credit Note executed by Borrower and delivered
pursuant to the terms of this Agreement, together with any renewals, extensions or modifications
thereof.



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     Section 1.28. “Obligations” shall mean:



          (a) All present and future indebtedness, obligations and liabilities of Borrower to Agent and
Lenders arising pursuant to this Agreement, regardless of whether such indebtedness, obligations
and liabilities are direct, indirect, fixed, contingent, joint, several, or joint and several;




          (b) All present and future indebtedness, obligations and liabilities of Borrower to Lenders
arising pursuant to or represented by the Note and all interest accruing thereon, and reasonable
attorneys’ fees incurred in the enforcement or collection thereof;




          (c) All present and future indebtedness, obligations and liabilities of Borrower evidenced by
or arising pursuant to any of the Loan Documents; and




          (d) All renewals, extensions, modifications and refundings of the indebtedness referred to in
the foregoing clauses, or any part thereof.




     Section 1.29. “Percentage” shall mean, with respect to each Lender, the percentage set forth
below opposite the name of such Lender but as it may be changed from time pursuant to Section
2.3(b):



	 	 	 	 	 	 	 	 	 	 	 	 	 
	Regions Bank
	 	 	—	 	 	 	44.0	%	 	 	(.44	)
	AmSouth Bank
	 	 	—	 	 	 	34.0	%	 	 	(.34	)
	Wachovia Bank
	 	 	—	 	 	 	19.5	%	 	 	(.195	)
	Gulf Federal Bank
	 	 	 	 	 	 	2.5	%	 	 	(.025	)






     Section 1.30. “Person” means an individual, partnership, corporation, business trust, joint
stock company, trust, unincorporated association, joint venture, governmental authority, or other
entity of whatever nature.



     Section 1.31. “Regular Settlement” shall mean a Settlement held on a Regular Settlement Date.



     Section 1.32. “Regular Settlement Date” shall mean the first and fifteenth day of each month
(or if such day is not a Business Day, then on the next Business Day).



     Section 1.33. “Request for Advance” shall have the meaning assigned to such term in Section
2.2(a).



     Section 1.34. “Required Deposit” shall mean the funds necessary to be advanced by a Lender to
Agent on a Settlement Date to restore Lender’s Percentage of the then outstanding balance of the
Note to the Percentage set forth in Section 1.29.



     Section 1.35. “Required Remittance” shall mean the funds necessary to be remitted by Agent to
Lender on a Settlement Date to restore Lender’s Percentage of the then outstanding balance of the
Note to the Percentage set forth in Section 1.29.



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     Section 1.36. “Settlement” shall mean the process by which the then outstanding balance of the
Note is reallocated among the Lenders in accordance with their respective Percentages. At such
time, each Lender shall transmit or receive funds to achieve such reallocation.



     Section 1.37. “Settlement Date” shall mean a Regular Settlement Date or a Special Settlement
Date.



     Section 1.38. “Special Settlement” shall mean a Settlement required pursuant to Section 2.2(c)
or Section 3.6.



     Section 1.39. “Special Settlement Date” shall mean a date on which a Special Settlement is
required.



     Section 1.40. “Subsidiary” shall mean a corporation, general partnership, limited liability
company, limited partnership or other business entity of which the shares, partnership or
membership interests having ordinary voting power to elect a majority of the board of directors,
general partners, managing partners or managers of such business entity are at the time owned, or
the management of which is otherwise controlled, directly or indirectly, through one or more
intermediaries, or both, by Borrower.



     Section 1.41. “Taxes” shall have the meaning assigned to such term in Section 3.7.



     Section 1.42. “Total Commitment” shall mean $20,000,000.00.



     Section 1.43. Other Definitional Provisions.



          (a) All terms defined in this Agreement shall have the above defined meanings when used in the
Note or any Loan Documents, certificate, report or other document made or delivered pursuant to
this Loan Agreement, unless the context thereof shall otherwise require.




          (b) Defined terms used herein in the singular shall import the plural and vice-versa.




          (c) The words “hereof,” “herein,” “hereunder,” and similar terms when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of this Agreement.




ARTICLE
2.

THE REVOLVING LOANS




     Section 2.1. Revolving Commitments. Subject to the terms and conditions of the
Agreement, each Lender severally (and not jointly) agrees to lend to Borrower on a revolving basis,
in one or more Advances, from time to time during the Commitment Period, an amount equal to such
Lender’s Percentage of amounts requested by Borrower in each Request for Advance; provided,
however, that (a) total Loans outstanding at any one time shall not exceed
$20,000,000.00, and (b) except as provided in Section 2.2(c) with respect to Agent, no Lender



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shall be obligated to make an advance if such advance would cause the Lender’s Percentage of the
unpaid principal balance of the Loans to be in excess of such Lender’s Committed Sum. Within the
limits of this Section 2.1, during the Commitment Period Borrower may borrow, repay and reborrow in
accordance with the terms and conditions of this Agreement.




     Section 2.2. Advances.



          (a) Request for Advance. Borrower shall give Agent telephonic notice by 11:00 a.m.,
local time in Mobile, Alabama, on the day of each requested Borrowing hereunder, confirmed in
writing by hand delivery or facsimile within one (1) hour of such telephonic notice (a
ARequest for Advance@), specifying the aggregate amount of such Borrowing.




          (b) Notice Irrevocable. Each Request for Advance shall be irrevocable and binding on
Borrower, and Borrower shall indemnify each Lender against any cost, loss or expense incurred by
such Lender as a result of any failure to fulfill, on or before the date specified for an Advance,
the conditions to the making of such Advance set forth herein, including without limitation, any
cost, loss or expense incurred by reason of the liquidation or re-employment of deposits or other
funds acquired by any Lender to fund the Advance to be made by such Lender as part of such
Borrowing.




          (c) Funding. After receiving a Request for Advance in the manner provided herein,
Agent shall deposit such funds into the Borrowing Account. This will, from time to time, result in
Agent’s Percentage being above that set out in Section 1.29. However, the Percentage will be
adjusted on the next Regular Settlement Date. If an Advance causes the amount outstanding as
Agent’s Percentage to exceed the Agent’s Committed Sum, then there will be an immediate Special
Settlement.




     Section 2.3. Settlements.



          (a) On each Settlement Date, Agent shall notify each Lender by telephone (confirmed
immediately by telecopier, telex, or cable), telecopier, telex, or cable of the then current
balance under the Note. Thereafter, before 2:00 p.m., local time in Mobile, Alabama, on said
Settlement Date, either each Lender will make the Required Deposit with Agent or Agent will make
the Required Remittance to each Lender.




          (b) If and to the extent any Lender shall not have so made the Required Deposit available to
Agent, Borrower agrees to repay to Agent forthwith on demand such corresponding amount together
with interest thereon, for each day from the date such amount is made available to or on behalf of
Borrower until the date such amount is repaid to Agent, at the Applicable Rate of Interest. The
failure of any Lender to make any Required Deposit hereunder shall not relieve any other Lender of
its obligations to make its Required Deposit hereunder. Neither Agent nor any Lender shall be
responsible for the performance by any other Lender of its obligations hereunder. In the event of
any failure by a Lender to make a Required Deposit hereunder, the other Lenders may (but shall not
be required to) purchase (on a pro rata basis, according to their respective Percentages) such
Lender’s interest in the Note.




     Section 2.4. Commitment Fees. Borrower agrees to pay to Agent, for the account of
each Lender, availability fees for the Commitment Period computed at a rate per annum equal to



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.125% on the average daily unborrowed amount of such Lender’s Committed Sum in effect during the
period for which payment is made. Such commitment fees shall be payable quarterly in arrears on
the fifth Business Day after each calendar quarter following the date of the Note and again at the
maturity date of the Note.




     Section 2.5. Termination or Reduction of Commitment by Borrower. Borrower may at any
time, upon not less than thirty (30) Business Days’ prior written notice to Lenders, (a) reduce the
Commitment, in multiples of $1,000,000.00, at which time the Commitment Fees will be reduced
accordingly, or (b) terminate the Commitment; provided, however, that upon the termination of the
Commitment, all amounts due under the Note and other Loan Documents shall be immediately due and
payable.



     Section 2.6. Use of Proceeds. The proceeds of each borrowing hereunder shall be used
for the general corporate purposes of Borrower.



ARTICLE
3.

NOTE AND NOTE PAYMENTS




     Section 3.1. Note. The Advances shall be evidenced by a Revolving Credit Note (the
ANote@) executed by Borrower, which Note shall (a) be dated the date hereof, (b) be in
the principal amount of $20,000,000.00, (c) be payable to the order of Agent, as Agent for the
Lenders, at the office of Agent, (d) bear interest in accordance herewith, and (e) be in the form
of Exhibit A, attached hereto, with blanks appropriately completed in conformity herewith. The
Agent is authorized, but is not required, to endorse on the schedule attached to the Note
appropriate notations evidencing the date and amount of each Advance as well as the amount of each
payment made by Borrower thereunder.



     Section 3.2. Interest Rate. The Borrower shall pay interest to the Agent for the
ratable benefit of the Lenders, on the outstanding and unpaid principal amount of the Loans, as
follows: Borrower may select a per annum rate equal to: (i) a LIBOR Rate, based upon the
applicable rate for the term selected (i.e., one, three, or six months), plus the LIBOR Spread; or
(ii) the Base Rate minus the Base Spread, each computed on the basis of a 360-day year. Borrower
shall give Agent telephonic notice of its interest rate selection by 11:00 a.m., local time in
Mobile, Alabama, on the first day of each calendar month (or on the first day of the calendar month
in which a new rate must be chosen) of its selection of the rate. Such notice shall be confirmed
in writing (by hand delivery or facsimile) within one (1) hour of such telephonic notice. The rate
selected will remain in effect for the entire calendar month or, if Borrower has selected a three-
or six-month LIBOR Rate, for that corresponding period of time. In the event Borrower fails to
give such notice, Agent will recalculate an interest rate as though Borrower had reselected the
same index previously chosen. Such rate will remain in effect for the corresponding period of time
until Borrower has given proper notice.



     Section 3.3. Principal Payments.



          (a) Payment of the Note. The unpaid principal amount of the Note, and all accrued but
unpaid interest thereon, shall be due and payable on the earlier of (i) the




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Commitment Termination Date, or (ii) the date on which the Note becomes due and payable under the
provisions of Section 7.2 hereof.




          (b) Principal Payments on the Note. At any time and from time to time Borrower may
pay without premium or penalty the principal of the Note then outstanding, in whole or in part,
provided that Borrower shall give Agent telephonic notice by 11:00 a.m. local time in Mobile,
Alabama, on the day of each principal payment hereunder, confirmed in writing by hand delivery or
facsimile within one (1) hour of such telephonic notice.




     Section 3.4. Payment of Interest on the Note. Interest upon the Note shall be
calculated at the end of each calendar month and shall be due and payable on the first Business Day
of the next calendar month and at the Commitment Termination Date.



     Section 3.5. Manner and Application of Payments. All payments of principal of, and
interest on, the Note shall be made by Borrower to Agent before 2:00 p.m., local time in Mobile,
Alabama, in federal or other immediately available funds at Agent’s principal banking office in
Mobile, Alabama, provided that any payment of principal (i) made on a Regular Settlement Date, or
(ii) that results in the need for a Special Settlement, shall be made before 12:00 p.m. local time
in Mobile, Alabama. Any payment received by Agent after the required time shall be deemed to have
been received by Agent on the next succeeding Business Day. Should the principal of or interest on
the Note, or any commitment fee, become due and payable on a day other than a Business Day, the
maturity thereof shall be extended to the next succeeding Business Day.



     Section 3.6. Application of Payments. Each payment received by Agent shall be applied
to Agent’s portion of the Note. This will, from time to time, result in Agent’s Percentage falling
below that set out in Section 1.29. However, the Percentage will be adjusted on the next Regular
Settlement Date. If a payment causes the amount outstanding as Agent’s Percentage to fall below
$0, then there will be an immediate Special Settlement.



     Section 3.7. Taxes.



          (a) Any and all payments by Borrower hereunder or under the Note shall be made in accordance
with this ARTICLE 3, free and clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect
thereto.




          (b) Borrower shall pay any present or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies which arise from any payment made hereunder or under the
Loan Documents or from the execution, delivery or registration of, or otherwise with respect to,
any of the Loan Documents.




          (c) Without prejudice to the survival of any other agreement of Borrower hereunder, the
agreements and obligations of Borrower contained in this Section 3.7 shall survive the payment in
full of the Obligations.




     Section 3.8. Indemnity. Borrower shall indemnify each Lender and hold each Lender
harmless from any loss or expense or loss of margin which such Lender may sustain or incur as a
consequence of Borrower’s failure or refusal to borrow after Borrower has given a Request for



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Advance pursuant to Section 2.2(a). This covenant shall survive termination of this Agreement and
payment of the Obligations for a period of one (1) year. A statement setting forth the
calculations of any amounts payable pursuant to this section submitted by a Lender to Borrower and
Agent shall be conclusive in the absence of manifest error.




ARTICLE
4.

CONDITIONS PRECEDENT




     Section 4.1. Initial Advance. The obligation of each Lender to make the initial
Advance hereunder is subject to the condition precedent that, on or before the date of such
Advance, Agent shall have received for each Lender the following, each dated as of the date of such
Advance, in form and substance satisfactory to Agent and such Lender:



          (a) Note. The duly executed Note.




          (b) Resolutions of Borrower. Resolutions of Borrower approving the Loans contemplated
hereby, duly adopted by Borrower’s Board of Directors and accompanied by a certificate of the
Secretary or Assistant Secretary of Borrower stating that such resolutions are true and correct,
have not been altered or repealed and are in full force and effect.




          (c) Officer’s Certificate of Borrower. A certificate of an authorized officer of
Borrower averring to the fact that the Borrower has not amended its Articles of Incorporation or
Bylaws in any material respect since September 30, 2000, and further averring to the accuracy of
the representation and warranties of the Borrower contained in ARTICLE 5 below.




     Section 4.2. All Advances. The obligation of each Lender to make any Advance under
this Agreement (including the initial Advance) shall be subject to the following conditions
precedent:



          (a) No Defaults. As of the date of the making of such Advance, there shall exist no
Default or Event of Default.




          (b) Compliance with Agreement. Borrower shall have performed and complied with all
agreements and conditions contained herein and in each of the Loan Documents which are required to
be performed or complied with by Borrower before or on the date of such Advance.




          (c) Request for Advance. Agent shall have received from Borrower a Request for
Advance in the form attached hereto as Exhibit B, dated as of the date of such Borrowing and signed
by an authorized officer of Borrower.




          (d) Representations and Warranties. The representations and warranties contained in
ARTICLE 5 hereof and in each of the Loan Documents shall be true in all respects on the date of
making of such Advance, with the same force and effect as though made on and as of that date.





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          (e) Bankruptcy Proceedings. No proceeding or case under Debtor Law shall have been
commenced by or against Borrower or any direct or indirect Subsidiary of Borrower.




ARTICLE
5.

REPRESENTATIONS AND WARRANTIES




     To induce Lenders to make the Loans hereunder, Borrower represents and warrants Agent and to
Lenders that:



     Section 5.1. Organization and Good Standing. Borrower is a corporation duly organized
and existing in good standing under the laws of the State of Alabama, and has the corporate power
and authority to own its properties and assets and to transact the business in which it is engaged.



     Section 5.2. Authorization and Power. Borrower has the corporate power and requisite
authority to execute, deliver and perform the Loan Documents to be executed by Borrower. Borrower
is duly authorized, and has taken all corporate action necessary to authorize Borrower, to execute,
deliver and perform the Loan Documents executed by Borrower. Borrower is and will continue to be
duly authorized to perform the Loan Documents executed by Borrower and the Obligations.



     Section 5.3. No Conflicts or Consents. Neither the execution and delivery of the Loan
Documents, nor the consummation of any of the transactions therein contemplated, nor compliance
with the terms and provisions thereof, will materially contravene or conflict with any provision of
law, statute or regulation to which Borrower is subject or any judgment, license, order or permit
applicable to Borrower, or any indenture, loan agreement, mortgage, deed of trust, or other
agreement or instrument to which Borrower is a party or to which Borrower may be subject, or
violate any provision of the charter or bylaws of Borrower. No consent, approval, authorization or
order of any court or Governmental Authority or third party is required and has not been obtained
in connection with the execution and delivery by Borrower of the Loan Documents or to consummate
the transactions contemplated hereby or thereby.



     Section 5.4. Enforceable Obligations. The Loan Documents have been duly executed and
delivered by Borrower and are the legal and binding obligations of Borrower, enforceable in
accordance with their respective terms, except as limited by Debtor Laws.



     Section 5.5. No Default. No event known to Borrower has occurred and is continuing
which constitutes a Default or an Event of Default.



     Section 5.6. Use of Proceeds; Margin Stock. The proceeds of the Loans will be used by
Borrower solely for the purposes specified in this Agreement. None of such proceeds will be used
for the purpose of purchasing or carrying any Amargin stock@ as defined in Regulation
U, Regulation X, or Regulation G, or for the purpose of reducing or retiring any indebtedness
which was originally incurred to purchase or carry a Amargin stock@ or for any other
purpose which might constitute this transaction a Apurpose credit@ within the meaning
of such Regulation U, Regulation X, or Regulation G. Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stocks. Borrower has neither
taken nor will take,



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and no Person acting on behalf of Borrower has taken or will take, any action
which might cause the Note or any of the other Loan Documents, including this Agreement, to violate
Regulation U, Regulation X, or Regulation G or any other regulations of the Board of Governors of
the Federal Reserve System or to violate Section 8 of the Securities Exchange Act of 1934 or any
rule or regulation thereunder, in each case as now in effect or as the same may hereinafter be in
effect. Borrower neither owns, nor does any Subsidiary of Borrower own, “margin stock” as herein
defined.




     Section 5.7. Taxes. All tax returns required to be filed by Borrower in any
jurisdiction have been filed and all taxes (including mortgage recording taxes), assessments, fees
and other governmental charges upon Borrower or upon any of its properties, income or franchises
have been paid prior to the time that such taxes could give rise to a lien thereon. There is no
known material proposed tax assessment against Borrower and Borrower is not aware of any basis for
such assessment.



ARTICLE
6.

COVENANTS




     So long as Lenders have any commitment to make Advances hereunder, and until payment in full
of the Note, Borrower agrees that (unless Lenders shall otherwise consent in writing):



     Section 6.1. Financial Information. Borrower shall deliver to each Lender, within
three (3) days of its transmittal for filing with the Securities and Exchange Commission, a true
and correct copy of each Form 10-Q and Form 10-K of Borrower and a copy of its annual report within
three (3) days of its availability.



     Section 6.2. Additional Financial Information. Borrower shall deliver to each Lender
such additional financial information as Lenders may reasonably request from time to time.



     Section 6.3. Payment of Taxes and Other Indebtedness. Borrower shall pay and
discharge (a) all taxes, assessments and governmental charges or levies imposed upon it before
delinquent, and (b) all other indebtedness of Borrower; provided, however, that Borrower shall not
be required to pay any such tax, assessment, charge or levy if and so long as the amount,
applicability or validity thereof shall be contested in good faith by appropriate proceedings, and
appropriate accruals therefor shall have been established in accordance with generally accepted
accounting principles.



     Section 6.4. Maintenance of Existence and Rights; Conduct of Business. Borrower shall
preserve and maintain its corporate existence and all of its rights, privileges and franchises
necessary or desirable in the normal conduct of its business, and conduct its business in an
orderly and efficient manner consistent with good business practices.



     Section 6.5. Compliance with Material Agreements. Borrower shall comply in all
material respects with all material agreements, indentures, mortgages or documents binding on it or
affecting its properties or business.



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     Section 6.6. Minimum Stockholders’ Equity Plus Minority Interest. Borrower and its
consolidated subsidiaries shall, at the end of each fiscal quarter, have a total stockholders’
equity, plus minority interest, on a consolidated basis of not less than Seventy Million and No/100
Dollars ($70,000,000.00).



     Section 6.7. Leverage Ratio. Borrower and its consolidated subsidiaries will have, at
the end of each fiscal quarter, on a consolidated basis, a ratio of total liabilities plus
long-term debt, (excluding debt used to purchase cash equivalents or temporary investments) to
stockholders’ equity plus minority interest of not greater than 2.0 to 1.0.



     Section 6.8. Debt/Earnings Ratio. Borrower and its consolidated subsidiaries will
have, at the end of each fiscal quarter, on a consolidated basis, a ratio of funded debt (excluding
debt used to purchase cash equivalents or temporary investments) to EBITDA (after dividends) of not
more than 5.0 to 1. AEBITDA@ means earnings before interest, taxes, depreciation, and
amortization. For the purposes of this calculation, EBITDA is to be computed on a trailing
four-quarter basis and shall be the sum of EBITDA for the respective fiscal quarter ended, plus
EBITDA for the previous three fiscal quarters. Funded debt is defined as the sum of long-term
debt, current maturities of long-term debt, and notes payable to Banks for the respective fiscal
quarter ended.



     Section 6.9. Reporting Requirements. Borrower shall compute the ratios required under
Section 6.6, Section 6.7 and Section 6.8 for each fiscal quarter and shall submit a written report
of the same to Bank within forty-five (45) days following the end of each fiscal quarter (within
ninety (90) days following the end of its fiscal fourth quarter), together with a certificate
signed by Borrower’s chief financial officer noting compliance with the terms and conditions of
this Agreement.



     Section 6.10. Mobile Gas Service Corporation. (a) Borrower shall not convey, sell,
assign, transfer or otherwise dispose of any interest in Mobile Gas Service Corporation or its
capital stock, and (b) Borrower shall not allow the gross assets of Mobile Gas Service Corporation
to be less than $100,000,000.00 at any time during the term of the Loans.



     Section 6.11. Due on Sale Provision. Upon any sale, lease, transfer or disposition of
either a controlling interest in Borrower, or a majority of its assets, whether now owned or
hereafter acquired, or consolidation or merger into another entity, the Loans and the Note shall
immediately become due and payable in full.



ARTICLE
7.

EVENTS OF DEFAULT




     Section 7.1. Events of Default. An “Event of Default” shall exist if any one or more
of the following events (herein collectively called “Events of Default”) shall occur and be
continuing:



          (a) Borrower shall fail to pay within five (5) days of when due any principal of, or interest
on, any Note or any fee, expense or other payment required hereunder;




12









 








          (b) Any representation or warranty made under this Agreement, or in any certificate or
financial statement furnished or made to Lenders pursuant hereto or in connection herewith or with
the Loans hereunder, shall prove to be untrue or inaccurate in any material respect as of the date
on which such representation or warranty is made;




          (c) Default shall occur in the performance of any of the covenants or agreements of Borrower
contained herein, and such default remains uncured ten (10) days after notice of such default is
given to Borrower;




          (d) Default shall occur in the payment of any material Indebtedness of Borrower (other than
the Obligations) or default on the part of Borrower shall occur in respect of any note, loan
agreement or credit agreement relating to any such indebtedness and such default shall continue for
more than the period of grace, if any, specified therein; or any such Indebtedness shall become due
before its stated maturity by acceleration of the maturity and shall not be promptly paid or
extended, thereof or shall become due by its terms and shall not be promptly paid or extended;




          (e) Borrower shall (i) apply for or consent to the appointment of a receiver, trustee,
custodian, intervenor or liquidator of itself or of all or a substantial part of Borrower’s assets,
(ii) file a voluntary petition in bankruptcy, admit in a writing delivered or furnished to a third
party (including the Agent or Lenders) that such Borrower is unable to pay its debts as they become
due or generally not pay its debts as they become due, (iii) make a general assignment for the
benefit of creditors, (iv) file a petition or answer seeking reorganization or an arrangement with
creditors or to take advantage of any bankruptcy or insolvency laws or other Debtor Law, (v) file
an answer admitting the material allegations of, or consent to, or default in answering, a petition
filed against Borrower in any bankruptcy, reorganization or insolvency proceeding, or (vi) take
corporate action for the purpose of effecting any of the foregoing;




          (f) An involuntary petition or complaint shall be filed against Borrower seeking bankruptcy or
reorganization of Borrower or the appointment of a receiver, custodian, trustee, intervenor or
liquidator of Borrower, or all or substantially all of the assets of Borrower, and such petition or
complaint shall not have been dismissed within ninety (90) days of the filing thereof; or an order,
order for relief, judgment or decree shall be entered by any court of competent jurisdiction or
other competent authority approving a petition or complaint seeking reorganization of Borrower or
appointing a receiver, custodian, trustee, intervenor or liquidator of Borrower, or of all or
substantially all of the assets of Borrower.




     Section 7.2. Remedies Upon Event of Default. If an Event of Default shall have
occurred and be continuing, then Agent shall, at the request of Lenders, and may, with the consent
of Lenders, exercise any one or more of the following rights and remedies, and any other remedies
provided in any of the Loan Documents, as Lenders in their sole discretion may deem necessary or
appropriate: (a) terminate Lenders’ commitment to lend hereunder, (b) declare the principal of, and
all interest then accrued on, the Note and any other liabilities hereunder to be forthwith due and
payable, whereupon the same shall forthwith become due and payable without presentment, demand,
protest, notice of default, notice of acceleration or of intention to accelerate or other notice of
any kind, all of which Borrower hereby expressly waives, anything contained herein or in the Note
to the contrary notwithstanding, (c) reduce any claim to




13









 





judgment, and/or (d) without notice of
Event of Default or demand, pursue and enforce any of Agent’s or Lenders’ rights and remedies under
the Loan Documents, or otherwise provided under or pursuant to any applicable law; provided,
however, that if any Event of Default specified in Section 7.1(f) shall occur with respect to
Borrower, the principal of, and all interest on, the Note and other liabilities hereunder shall
thereupon become due and payable concurrently therewith, and Lenders’ obligations to lend shall
immediately terminate hereunder, without any further action by Agent or any Lender and without
presentment, demand, protest, notice of default, notice of acceleration or of intention to
accelerate or other notice of any kind, all of which Borrower hereby expressly waives.




ARTICLE 8.




THE AGENT: PARTICIPATIONS




     Section 8.1. Appointment and Authorization. Each Lender hereby irrevocably appoints
and authorizes Agent to take such action on its behalf and to exercise such powers under the Loan
Documents as are delegated to Agent by the terms hereof and thereof, together with such powers as
are reasonably incidental thereto. With respect to its Commitment and the Advances made by it,
Regions Bank shall have the same rights and powers under this Agreement as any other Lender and may
exercise the same as though it were not Agent; and the term ALender@ or
ALenders@ shall, unless otherwise expressly indicated, include Regions Bank in its
capacity as a Lender. Agent may accept deposits from, lend money to, act as trustee under
indentures of, and generally engage in any kind of business with, Borrower , any of Borrower’s
Affiliates and any Person which may do business with Borrower or any of Borrower’s Affiliates, all
as if Agent were not Agent hereunder and without any duty to account therefor to Lenders.



     Section 8.2. Agent’s Fees. Borrower shall pay to Agent for its own account fees, if
any, in the amounts and at the times agreed between them.



     Section 8.3. Documents. Agent shall not be under a duty to examine or pass upon the
validity, effectiveness, enforceability, genuineness or value of any of the Loan Documents or any
other instrument or document furnished pursuant thereto or in connection therewith, and Agent shall
be entitled to assume that the same are valid, effective, enforceable and genuine and what they
purport to be.



     Section 8.4. Resignation or Removal of Agent. Subject to the appointment and
acceptance of a successor Agent as provided below, the Agent may resign at any time by giving
fifteen (15) Business Days’ written notice thereof to Lenders and Borrower. Upon any such
resignation, Borrower shall have the right to appoint a successor Agent from among the remaining
Lenders. If no successor Agent shall have been so appointed by Borrower and shall have accepted
such appointment within fifteen (15) Business Days after the retiring Agent’s giving of notice of
resignation, then the retiring Agent may, on behalf of the Borrower, appoint a successor Agent.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor
Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent’s resignation hereunder as Agent, the provisions
of this ARTICLE 8 shall continue in effect for its benefit in respect to any actions taken or
omitted to be taken by it while it was acting as Agent.



14









 





     Section 8.5. Responsibility of Agent. It is expressly understood and agreed that the
obligations of Agent under the Loan Documents are only those expressly set forth in the Loan
Documents and that Agent shall be entitled to assume that no Default or Event of Default has
occurred and is continuing, unless Agent has actual knowledge of such fact or has received notice
from a Lender that such Lender considers that a Default or an Event of Default has occurred and is
continuing and specifying the nature thereof. Lenders recognize and agree that Agent shall not be
required to determine independently whether the conditions described in ARTICLE 4 have been
satisfied and, in disbursing funds to Borrower, may rely fully upon statements contained in the
relevant Request for Advance . Neither Agent nor any of its directors, officers or employees shall
be liable for any action taken or omitted to be taken by it under or in connection with Loan
Documents, except for its own gross negligence or willful misconduct. Agent shall incur no
liability under or in respect of any of the Loan Documents by acting upon any notice, consent,
certificate, warranty or other paper or instrument believed by it to be genuine or authentic or to
be signed by the proper party or parties, or with respect to anything which it may do or refrain
from doing in the reasonable exercise of its judgment, or which may seem to it to be necessary or
desirable in the circumstances.



     Agent shall not be responsible to Lenders for any recitals, statements, representations or
warranties contained in this Agreement, or in any certificate or other document referred to or
provided for in, or received by any Lender under, this Agreement, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or any document
referred to or provided for herein or for any failure by Borrower to perform any of its obligations
hereunder. Agent may, after consultation with Lenders, employ agents and attorneys-in-fact and
shall not be answerable, except as to money or securities received by it or its authorized agents,
for the negligence or misconduct of any such agents or attorneys-in-fact selected by it with
reasonable care.



     The relationship between Agent and each of the Lenders is only that of agent and principal and
has no fiduciary aspects, and Agent’s duties hereunder are acknowledged to be only ministerial and
not involving the exercise of discretion on its part. Nothing in this Agreement or elsewhere
contained shall be construed to impose on Agent any duties or responsibilities other than those for
which express provision is herein made. In performing its duties and functions hereunder, Agent
does not assume and shall not be deemed to have
assumed, and hereby expressly disclaims, any obligation or responsibility toward or any
relationship of agency or trust with or for Borrower. As to any matters not expressly provided for
by this Agreement (including, without limitation, enforcement or collection of the Note), Agent
shall not be required to exercise any discretion or take any action, but shall be required to act
or to refrain from acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of Lenders and such instructions shall be binding upon all Lenders; provided,
however, that Agent shall not be required to take any action which exposes Agent to personal
liability or which is contrary to this Agreement or applicable law.



     Section 8.6. Notices of Event of Default. In the event that Agent shall have acquired
actual knowledge of any Event of Default or of an event which, with the giving of notice or the
lapse of time, or both, would constitute an Event of Default, Agent shall promptly give notice
thereof to the other Lenders. In the event that any Lender shall have acquired actual knowledge of
any Event of Default or of any event which, with the giving of notice or the lapse of time, or



15









 




both, would constitute an Event of Default, such Lender shall promptly give notice thereof to the
Agent and other Lenders.




     Section 8.7. Sale or Assignment. Each participation shall constitute an assignment,
without recourse to Regions Bank, of any undivided interest in the Loans, the Loan Documents, and
any and all property of Borrower or proceeds thereof that may be received in payment from the
Borrower or applied to the Loans. Nothing in this Agreement nor in any other agreement among
Lenders and Agent shall be construed to create a loan by any Lender to Agent or any other Lender
unless expressly set forth therein.



     Section 8.8. Catch-All. Except for Loan repayments and Commitment Fees described
herein, no Lender shall have any interest in other payments received by the Agent from Borrower.



     Section 8.9. Corporate Power. Each Lender and the Agent represents and warrants to
all other Lenders and Agent that the making and performance of this Agreement is within its power
and has been duly authorized by all necessary corporate and other action by it, that this Agreement
is in compliance with all applicable laws and regulations promulgated thereunder, and does not
conflict with any agreements by which it is bound, and that this Agreement has been duly executed
by it, and constitutes the legal, valid and binding obligation of it, enforceable in accordance
with its respective terms.



     Section 8.10. Credit Analysis. Each Lender has conducted and will conduct its own
credit analysis, without reliance on Agent, and based upon such documents and information as it has
deemed appropriate, made and will make its decisions called for hereunder, and will continue to be
responsible for making its own independent appraisal of the credit, financial condition, and all
        ,other matters concerning Borrower. Each Lender represents and warrants that its participation in
the Loan and Loan Documents is an ordinary commercial lending transaction and not a
Asale@ of a Asecurity@ under any federal or state securities law, rule or
regulation.



     Section 8.11. Administration of Loan. Only upon the unanimous consent of each Lender
may the Agent (i) agree to any modification of any of the terms of the Credit Documents or any
other agreement or instrument evidencing or securing this Loan; (ii) waive any of such
terms or give or withhold consents or approvals to any actions or failure to act by the
Borrower; (iii) reduce the principal of or the interest rate or extend the stated maturity of the
Loan (other than pursuant to the exercise of Borrower’s rights under Section 2.5); (iv) agree upon
any extension, modification, refinancing, refunding, assumption or other restructuring of the Loan.



ARTICLE 9.




MISCELLANEOUS




     Section 9.1. Accounting Terms. All accounting terms not specifically defined in this
Agreement shall be construed in accordance with generally accepted accounting principles.



     Section 9.2. Waiver. No failure to exercise, and no delay in exercising, on the part
of any Lender, any right hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the exercise of any
other right.



16









 




The rights of Lenders hereunder and under the Loan Documents shall be in addition to
all other rights provided by law. No modification or waiver of any provision of this Agreement,
the Note or any Loan Documents, nor consent to departure therefrom, shall be effective unless in
writing and no such consent or waiver shall extend beyond the particular case and purpose involved.
No notice or demand given in any case shall constitute a waiver of the right to take other action
in the same, similar or other instances without such notice or demand.




     Section 9.3. Payment of Expenses. Borrower agrees, in the event that Lenders prevail,
to pay all reasonable costs and expenses of Lenders (including, without limitation, the reasonable
attorneys’ fees of Lenders’ legal counsel) incurred by Lenders in connection with the preservation
and enforcement of Agent’s and Lenders’ rights under this Agreement and/or the Note.



     Section 9.4. Notices. Except for telephonic notices permitted herein, any notices or
other communications required or permitted to be given by this Agreement or any other documents and
instruments referred to herein must be (a) given in writing and personally delivered or mailed by
prepaid United States mail, or (b) made by courier, overnight delivery service or telecopier or
telex delivered or transmitted, to the party to whom such notice of communication is directed, to
the address of such party as follows:



	 	 	 	 	 
	(a)

	 	Borrower:
	 	EnergySouth, Inc.
	 

	 	 	 	Post Office Box 2607
	 

	 	 	 	Mobile, Alabama 36652
	 

	 	 	 	Attention: Charles P. Huffman
	 

	 	 	 	Telecopier No.: (251) 476-1745
	 
	 	 	 	 
	(b)

	 	Agent:
	 	Regions Bank
	 

	 	 	 	Post Office Drawer 2527
	 

	 	 	 	Mobile, Alabama 36622
	 

	 	 	 	Attention: Douglas E. Rehm
	 

	 	 	 	Telecopier No.: (251) 690-1020
	 
	 	 	 	 
	(c)

	 	Lenders:
	 	Regions Bank
	 

	 	 	 	Post Office Drawer 2527
	 

	 	 	 	Mobile, Alabama 36622
	 

	 	 	 	Attention: Douglas E. Rehm
	 

	 	 	 	Telecopier No.: (251) 690-1020
	 
	 	 	 	 
	 

	 	 	 	AmSouth Bank
	 

	 	 	 	Post Office Drawer 1628
	 

	 	 	 	Mobile, Alabama 36633-1625
	 

	 	 	 	Attention: Lawrence G. Ford, Jr.
	 

	 	 	 	Telecopier No.: (251) 438-8377
	 
	 	 	 	 
	 

	 	 	 	SouthTrust Bank
	 

	 	 	 	Post Office Box 1508
	 

	 	 	 	Mobile, Alabama 36633






17









 






	 	 	 	 	 
	 

	 	 	 	Attention: Todd Henderson
	 

	 	 	 	Telecopier No.: (251) 431-9256
	 
	 	 	 	 
	 

	 	 	 	Gulf Federal Bank
	 
	 	 	 	 
	 

	 	 	 	                                                            
	 

	 	 	 	Mobile, Alabama                     
	 

	 	 	 	Attention:                                         
	 

	 	 	 	Telecopier No.: (251)                     





Any such notice or other communication shall be deemed to have been given on the day it is
received; provided, however, that any telephonic or other notice received by Agent after 11:00 a.m.
local time in Mobile, Alabama, on any day from Borrower pursuant to Section 2.2(a) (with respect to
a Request for Advance) shall be deemed for the purposes of such section to have been given by
Borrower on the next succeeding Business Day. Any party may change its address for purposes of
this Agreement by giving notice of such change to the other parties pursuant to this Section 9.4.




     Section 9.5. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the United States of America and the State of Alabama.



     Section 9.6. Confidentiality. Agent and each Lender agree to hold any confidential or
non-public information which they may receive from Borrower pursuant to this Agreement in
confidence, except for disclosure (a) to other Lenders, (b) to legal counsel, accountants, and
other professional advisors, (c) to regulatory officials as required by law, rule or regulation,
(d) as required by law or legal process or in connection with any legal proceeding, or (e) as
otherwise permitted by the Loan Documents.



     Section 9.7. Non-Liability of Lenders. The relationship between Borrower and Lenders
is, and shall at all times remain, solely that of borrower and lenders, and Lenders and Agent
neither undertake nor assume any responsibility or duty to Borrower to review, inspect, supervise,
pass judgment upon, or inform Borrower of any matter in connection with any phase of Borrower’s
businesses, operations, or condition, financial or otherwise. There is not and shall
not be deemed to be a fiduciary relationship between Lenders and Borrower. Borrower shall
rely entirely upon its own judgment with respect to such matters, and any review, inspection,
supervision, exercise of judgment, or information supplied to Borrower by any Lender or Agent in
connection with any such matter is for the protection of Lenders and Agent, and neither Borrower
nor any third party is entitled to rely thereon.



     Section 9.8. No Joint Venture. Nothing herein contained or contained in the other
Loan Documents shall be deemed to create a partnership or joint venture between Lenders and/or
Agent on the one hand, and Borrower on the other hand.



     Section 9.9. Binding Effect. The Loan Documents shall be binding upon and inure to
the benefit of Borrower, Agent and Lenders and their respective successors, assigns and legal
representatives; provided, however, that (a) Borrower may not, without the prior written consent of
Lenders, assign any rights, powers, duties or obligations thereunder, and (b) no Lender may,



18









 




without the prior written consent of the other Lenders and Borrower, assign any rights, powers,
duties or obligations thereunder.




     Section 9.10. Entirety. The Loan Documents embody the entire agreement between the
parties and supersede all prior or contemporaneous agreements and understandings, if any, relating
to the subject matter hereof and thereof.



     Section 9.11. Headings. Section headings are for convenience of reference only and
shall in no way affect the interpretation of this Agreement.



     Section 9.12. No Third Party Beneficiary. The parties do not intend the benefits of
this Agreement to inure to any third party, nor shall this Agreement be construed to make or render
Agent or Lenders liable to any materialman, supplier, contractor, subcontractor, purchaser or
lessee of any property owned by Borrower, or for debts or claims accruing to any such persons
against Borrower. Notwithstanding anything contained herein or in the Note, or in any other Loan
Document, or any conduct or course of conduct by any or all of the parties hereto, before or after
signing, neither this Agreement nor any other Loan Document shall be construed as creating any
right, claim or cause of action against Agent or Lenders, or any of their officers, directors,
agents or employees, in favor of any materialman, supplier, contractor, subcontractor, purchaser or
lessee of any property owned by Borrower, nor to any other person or entity other than Borrower.



     Section 9.13. Multiple Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same agreement, and any of
the parties hereto may execute this Agreement by signing any such counterpart.



     IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day and year first
above written.



	 	 	 	 	 	 
	BORROWER:	 	ENERGYSOUTH, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ John S. Davis
	 

	 	 	 	 
	 

	 	 	 	JOHN S. DAVIS
	 

	 	 	 	President and Chief Executive Officer
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Charles Huffman
	 

	 	 	 	 
	 

	 	 	 	CHARLES HUFFMAN
	 

	 	 	 	Senior Vice President and Chief Financial
Officer






19









 






	 	 	 	 	 	 
	AGENT:	 	REGIONS BANK, as Agent for Lenders pursuant to the terms hereof
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Douglas E. Rehm
	 

	 	 	 	 
	 

	 	 	 	DOUGLAS E. REHM
	 

	 	 	 	Its Vice President
	 
	 	 	 	 
	LENDERS:	 	REGIONS BANK
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Douglas E. Rehm
	 

	 	 	 	 
	 

	 	 	 	DOUGLAS E. REHM
	 

	 	 	 	Its Vice President
	 
	 	 	 	 
	 	 	AMSOUTH BANK
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Russ Ford
	 

	 	 	 	 
	 

	 	 	 	Its Senior Vice President
	 
	 	 	 	 
	 	 	WACHOVIA BANK, NATIONAL ASSOCIATION, successor by
merger to SouthTrust Bank
	 
	 	 	 	 
	 

	 	By:
	 	/s/ P.Todd Henderson
	 

	 	 	 	 
	 

	 	 	 	P. Todd Henderson
	 

	 	 	 	Its Vice President
	 
	 	 	 	 
	 	 	GULF FEDERAL BANK
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Marvin Boyd
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	Its President and CEO






Attachments:



Exhibit A — Revolving Credit Note

Exhibit B — Request for Advance




20









 








Exhibit “A”




REVOLVING CREDIT NOTE




			
	$20,000,000.00
	 	January 31, 2005

Mobile, Alabama






     FOR VALUE RECEIVED, the undersigned, ENERGYSOUTH, INC. (hereinafter called “Borrower”),
promises to pay to the order of Regions Bank, as Agent for the Lenders (hereinafter called
“Agent”), at its main office in Mobile, Alabama, or such other place as the holder hereof may from
time to time appoint in writing, in lawful money of the United States of America, the principal sum
of TWENTY MILLION AND NO/100 DOLLARS ($20,000,000.00), or so much thereof as may be advanced
hereunder and not repaid, together with interest on the unpaid principal balance from day to day
remaining, computed from the date of advance until maturity at the rate and subject to the terms
set forth below.



     This Note has been executed and delivered pursuant to the terms of that certain Revolving
Credit Agreement (hereinafter called the “Revolving Credit Agreement”) between Borrower, Agent, and
Regions Bank, AmSouth Bank, Wachovia Bank, National Association, successor by merger to SouthTrust
Bank, and Gulf Federal Bank, as Lenders, dated of even date herewith, and is the “Note” referred to
therein. Each capitalized term used herein shall, unless otherwise indicated, have the meaning
assigned to such term in the Revolving Credit Agreement.



     Principal Payments and Prepayments



     (a) Payment of the Note. The unpaid principal amount of the Note and all accrued but
unpaid interest thereon, shall be due and payable on the earlier of: (i) the Commitment
Termination Date; or (ii) the date on which the Note becomes due and payable under the provisions
of Section 8.2 of the Revolving Credit Agreement.



     (b) Optional Principal Prepayments on the Note. At any time and from time to time,
Borrower may prepay, without premium or penalty, the principal of the Note then outstanding, in
whole or in part.



     Payment of Interest on the Note. Interest upon the Note shall be calculated at the
end of each calendar month and shall be due and payable on the first Business Day of the next
calendar month and at the Commitment Termination Date.



     Manner and Application of Payments. All payments and prepayments of principal of and
interest on the Note shall be made by Borrower to Agent before 2:00 p.m., local time in Mobile,
Alabama, in federal or other immediately available funds at Agent’s principal banking office in
Mobile, Alabama. Any payment or prepayment received by Agent after 2:00 p.m., local time in
Mobile, Alabama, shall be deemed to have been received by Agent on the next succeeding



21









 




Business
Day. Should the principal of or interest on the Note become due and payable on a day
other than a Business Day, the maturity thereof shall be extended to the next succeeding
Business Day.




     The Borrower hereby waives demand, presentment, protest, notice of protest, notice of
dishonor, and all of the requirements necessary to hold it liable for any of the Obligations
(meaning thereby this Note and any and all renewals and extensions thereof and any amounts due
under the Revolving Credit Agreement).



     Neither any failure nor any delay on the part of Agent in exercising any right, power, or
privilege under this Note shall operate as a waiver thereof, nor shall a single or partial exercise
thereof preclude any other or further exercise or the exercise of any other right, power, or
privilege. No modification, amendment, or waiver of any provision of this Note shall be effective
unless in writing and signed by a duly authorized officer of Agent and then the same shall be
effective only in the specific instance and for the purpose for which given.



     This Note shall be governed and construed in accordance with the laws of the State of Alabama.



     IN WITNESS WHEREOF, ENERGYSOUTH, INC. has caused this instrument to be executed by its
officers thereunto duly authorized as of the day and date first above written.



	 	 	 	 	 
	 	ENERGYSOUTH, INC.

 	 
	 	By:  	/s/ John S. Davis
 	 
	 	 	JOHN S. DAVIS 	 
	 	 	President and Chief Executive Officer 	 
	 



	 	 	 	 	 
	 	 	 
	 	By:  	                                                 /s/ Charles Huffman
 	 
	 	 	CHARLES HUFFMAN 	 
	 	 	Senior Vice President and Chief Financial
Officer 	 



22









 






	 	 	 	 	 



Exhibit “B”




REQUEST FOR ADVANCE




REVOLVING CREDIT AGREEMENT

BETWEEN REGIONS BANK, AS AGENT, AND

ENERGYSOUTH, INC.

DATED JANUARY 31, 2005





     The undersigned, pursuant to that certain Revolving Credit Agreement, dated January 31, 2005,
as may be further amended from time to time (the “Credit Agreement”), by and between ENERGYSOUTH,
INC. (“Borrower”) and REGIONS BANK, as Agent, hereby requests an advance of the Loan, pursuant to
that certain Note in the maximum aggregate principal amount of $20,000,000.00, as further defined
in the Credit Agreement. The amount of this request for an advance is the sum of
$______



     The undersigned hereby certifies, represents, and warrants to Regions Bank, as Agent, that as
of the date hereof:




	 	1.	 	There is no default on the part of Borrower under the Credit Agreement or any
other agreement between Borrower and Lenders and no event has occurred and is
continuing which constitutes an Event of Default or which, with notice of the passage
of time, or both, could constitute a Default or Event of Default under the provisions
of the Credit Agreement.
	 
	 	2.	 	All representations and warranties set forth in the Credit Agreement are true
and correct as of this date.
	 
	 	3.	 	Borrower is in compliance with all of the covenants set forth in the Credit
Agreement, including, without limitation, the financial covenants set forth in Article
6 of the Credit Agreement.





     Unless otherwise defined herein, each capitalized term shall have the meaning ascribed to it
in the Credit Agreement.



	 	 	 	 	 	 	 	 
	Date:                                        	 	EnergySouth, Inc.
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 	 	 	 	Its
	 

	 	 	 	 	 	 





23









 






AGENT AGREEMENT




     THIS AGENT AGREEMENT (this “Agreement”) is entered into as of the 31st day of January,
2005, by and between ENERGYSOUTH, INC. (“Borrower”) and REGIONS BANK (“Bank”).



W I T N E S S E T H:




     WHEREAS, on even date herewith, Borrower, Bank, AmSouth Bank, Wachovia Bank, National
Association, successor by merger to SouthTrust Bank, and Gulf Federal Bank have entered into that
certain Revolving Credit Agreement; and



     WHEREAS, Borrower has requested that Bank act as agent under the Revolving Credit Agreement;
and



     WHEREAS, in the Revolving Credit Agreement, Bank has agreed to act as agent for the three
lenders; and



     NOW, THEREFORE, in consideration of the mutual promises herein contained and for other
valuable consideration, the parties hereto agree as follows:



     1. Agent Fee. As compensation for its service as agent under the Revolving Credit
Agreement, Borrower shall pay to Bank at the end of each calendar quarter an Agent Fee equal to
..025% of the outstanding Total Commitment under the Revolving Credit Agreement during such quarter.
The payments shall be due on the 10th day of each July, October, January and April so long as the
Revolving Credit Agreement is in effect. In the event that Borrower reduces the Commitment during
any quarter, the Agent Fee shall be reduced accordingly, which will be reflected beginning with
next quarterly payment.



     2. Waiver. During the term of the Revolving Credit Agreement, Borrower shall maintain
with Bank the operating and disbursement accounts of Borrower and its subsidiaries which Borrower
currently maintains with Bank. In consideration of that agreement, Bank agrees that if the
accounts are so maintained with Bank, then the above-referenced Agent Fee will be waived. However,
it is further agreed that the waiver will become void if, at any point in the future, all such
accounts are no longer maintained with Bank, at which time the Agent Fee will be reinstated and
Borrower shall promptly pay the same when due.



     IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day and year first
above written.



	 	 	 	 	 
	BORROWER: 	ENERGYSOUTH, INC.

 	 
	 	By:  	/s/ John S. Davis
 	 
	 	 	JOHN S. DAVIS 	 
	 	 	President and Chief Executive Officer 	 



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	 	By:  	                                                 /s/ Charles Huffman
 	 
	 	 	CHARLES HUFFMAN 	 
	 	 	Senior Vice President and Chief Financial
Officer 	 
	 



	 	 	 	 	 
	BANK: 	REGIONS BANK

 	 
	 	By:  	/s/ Douglas E. Rehm
 	 
	 	 	DOUGLAS E. REHM 	 
	 	 	Its Vice President 	 



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