Exhibit 10.2
NEW YORK STATE ENERGY RESEARCH
AND DEVELOPMENT AUTHORITY
AND
THE BROOKLYN UNION GAS COMPANY
d/b/a KEYSPAN ENERGY DELIVERY NEW YORK
PARTICIPATION AGREEMENT
Dated as of November 1, 2005
- relating to -
$82,000,000 Gas Facilities Revenue Bonds
(The Brooklyn Union Gas Company d/b/a KeySpan Energy Delivery New York Project),
2005 Series A
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS; EFFECTIVE DATE AND DURATION OF PARTICIPATION AGREEMENT
Section 1.01. Definitions.....................................................................................2
Section 1.02. Effective date of Participation Agreement; duration of Participation Agreement..................2
ARTICLE II
REPRESENTATIONS
Section 2.01. Representations by the Authority................................................................2
Section 2.02. Representations by the Company..................................................................3
ARTICLE III
CONSTRUCTION OF PROJECTS; ISSUANCE OF BONDS
Section 3.01. Company to cause construction of Project........................................................5
Section 3.02. Sale of Bonds and deposit of proceeds; Liability under Bonds....................................5
Section 3.03. Possession of Projects..........................................................................5
Section 3.04. Operation, maintenance and repair...............................................................5
Section 3.05. Investment of moneys in Funds under the Indenture...............................................5
ARTICLE IV
CORPORATION OBLIGATION AND PAYMENTS
Section 4.02. Prepayment to redeem Bonds......................................................................6
Section 4.03. Obligation for payment absolute; deficiencies...................................................7
Section 4.04. Administration Fees; expenses, etc..............................................................7
Section 4.05. Compensation of Trustee and Paying Agents.......................................................8
Section 4.06. Project not security for Bonds..................................................................8
Section 4.07. Payment of taxes and assessments; no liens or charges...........................................8
Section 4.08. Indemnification of Authority and Trustee........................................................9
Section 4.09. Company to pay attorneys' fees and disbursements................................................9
Section 4.10. No abatement of Administration Fees and other charges...........................................9
Section 4.11. Prepayment of Company Obligation...............................................................10
Section 4.12. Company Liable to Owners of Bonds in the Case of Certain Events of Taxability..................10
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TABLE OF CONTENTS
(continued)
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ARTICLE V
SPECIAL COVENANTS
Section 5.01. No warranty as to suitability of Project.......................................................10
Section 5.02. Authority's rights to inspect Project and plans and specifications.............................10
Section 5.03. Company consent to amendment of Indenture......................................................10
Section 5.04. Tax Covenant...................................................................................10
Section 5.05. Company agrees to perform obligations imposed by Indenture.....................................11
Section 5.06. Certificates as to defaults....................................................................11
Section 5.07. Compliance with laws...........................................................................11
Section 5.08. Consolidation, Merger or Sale of Assets........................................................11
Section 5.09. Financial Statements of Company................................................................12
Section 5.10. Recording and Filing...........................................................................12
Section 5.11. Maintenance of Properties......................................................................13
Section 5.12. Insurance......................................................................................13
Section 5.13. Proper Books of Record and Account.............................................................13
Section 5.14. Compliance with Laws...........................................................................13
Section 5.15. Further Assurances.............................................................................13
Section 5.16. Maintenance of Office or Agency................................................................13
Section 5.17. Performance of and Compliance with Other Covenants.............................................14
ARTICLE VI
DEFAULTS BY CORPORATION; REMEDIES
Section 6.01. Section 6.01. Events of Default; Acceleration..................................................14
Section 6.02. Events of Default Relating to Fees or Indemnification..........................................15
Section 6.03. Judicial Proceedings by Trustee................................................................16
Section 6.04. Rights of the Credit Facility Issuer; Other Rights of the Trustee to
Enforce this Participation Agreement...........................................................16
ARTICLE VII
MISCELLANEOUS
Section 7.01. Disposition of amounts after payment of Bonds..................................................16
Section 7.02. Notices........................................................................................16
Section 7.03. Successors and assigns.........................................................................17
Section 7.04. Amendment of Participation Agreement...........................................................17
Section 7.05. Assignment by Authority........................................................................17
Section 7.06. Participation Agreement supersedes any prior agreements........................................17
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TABLE OF CONTENTS
(continued)
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Section 7.07. Counterparts...................................................................................17
Section 7.08. Severability...................................................................................17
Section 7.09. Law and Place of Enforcement of this Participation Agreement...................................17
Section 7.10. Bond Insurer Requirements......................................................................18
Section 7.11. Parties in Interest............................................................................18
Section 7.12. The Policy.....................................................................................18
Section 7.13. Company Request to Transfer Bond Proceeds......................................................18
Section 7.14. Delegation of Duties by Authority..............................................................18
Section 7.15. Survival of Representations, Warranties and Covenants..........................................18
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This PARTICIPATION AGREEMENT, dated as of November 1, 2005, between NEW
YORK STATE ENERGY RESEARCH AND DEVELOPMENT AUTHORITY, a body corporate and
politic, constituting a public benefit corporation, established and existing
under and by virtue of the laws of the State of New York (the "Authority"), and
THE BROOKLYN UNION GAS COMPANY d/b/a KEYSPAN ENERGY DELIVERY NEW YORK, a
corporation duly organized and existing and qualified to do business as a public
utility under the laws of the State of New York (the "Company"),
WITNESSETH:
WHEREAS, pursuant to a special act of the Legislature of the State of New
York (Title 9 of Article 8 of the Public Authorities Law of New York, as from
time to time amended and supplemented, herein called the "Act"), the Authority
has been established, as a body corporate and politic, constituting a public
benefit corporation; and
WHEREAS, pursuant to the Act, the Authority is empowered to contract with
any power company to participate in the incorporation of features in power
plants and the construction of associated facilities to the extent required by
the public interest in development, health, recreation, safety, conservation of
natural resources and aesthetics; and
WHEREAS, the Authority is also authorized under the Act to borrow moneys
and issue its negotiable bonds to provide sufficient moneys for achieving its
corporate purposes, including the refunding of outstanding bonds and notes of
the Authority; and
WHEREAS, the Authority is also authorized under the Act to enter into any
contracts and to execute all instruments necessary or convenient for the
exercise of its corporate powers and the fulfillment of its corporate purposes;
and
WHEREAS, the Company is a public utility corporation doing business in the
State of New York; and
WHEREAS, the Company has requested that the Authority issue bonds for the
purpose of refunding the Authority's Adjustable Rate Gas Facilities Revenue
Bonds, Series 1989A (The Brooklyn Union Gas Company Project) and Adjustable Rate
Gas Facilities Revenue Bonds, Series 1989B (The Brooklyn Union Gas Company
Project), each issued pursuant to a Trust Indenture dated as of February 1, 1989
(together, the "Prior Basic Indenture"), each of which was supplemented by a
First Supplemental Indenture of Trust, dated as of May 1, 1992 (together with
the Prior Basic Indenture, the "Prior Indenture"), each between the Authority
and JPMorgan Chase Bank, N.A., as successor to Manufacturers Hanover Trust
Company, a banking corporation organized under the laws of the State of New
York, as trustee (in such capacity, the "Prior Bond Trustee") (the bonds issued
under the Prior Indenture being the "Prior Bonds"), which were issued to provide
all or part of the funds for the acquisition, construction, and installation of
certain facilities for the local furnishing of gas within The City of New York
(such facilities as further described in Exhibit A hereto hereinafter referred
to as the "Project") and, as part of such participation, that the Authority
issue bonds pursuant to the Act to provide funds to refund the Prior Bonds; and
WHEREAS, by Resolution No. 1093, adopted September 19, 2005, the Authority
has determined to issue its Gas Facilities Revenue Bonds (The Brooklyn Union Gas
Company d/b/a KeySpan Energy Delivery New York Project), 2005 Series A (the
"Bonds") in an aggregate principal amount not to exceed $82,000,000 for the
purpose of refunding the outstanding principal amount of the Prior Bonds, all
the Bonds to be issued under and secured by an Indenture of Trust dated as of
November 1, 2005 (the "Indenture") between the Authority and Citibank, N.A., as
Trustee (the "Trustee"); and
WHEREAS, simultaneously with the issuance and delivery of such bonds, the
Company will execute and deliver a promissory note dated the date of issuance of
such bonds (the "Company Obligation") as evidence of its obligation to make
payments required by this Participation Agreement;
NOW, THEREFORE, for and in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, it is hereby agreed by and
between the parties as follows:
ARTICLE I
DEFINITIONS; EFFECTIVE DATE AND DURATION OF
PARTICIPATION AGREEMENT
Section 1.01. Definitions. Each of the terms used in this Participation
Agreement which is defined in Section 1.01 of the Indenture shall have the
meaning herein which such term is given in Section 1.01 of the Indenture.
Section 1.02. Effective date of Participation Agreement; duration of
Participation Agreement. This Participation Agreement shall become effective
upon its execution and delivery. Concurrently with the issuance of the Bonds,
(i) the proceeds of the sale of such Bonds will be transferred by the Trustee
for deposit into the Prior Bond Fund as provided in Section 3.02 hereof. This
Participation Agreement shall continue in full force and effect until the
principal of and premium, if any, and interest on the Bonds have been fully paid
(or provision for their payment has been made and all such Bonds are deemed to
be no longer outstanding in accordance with the provisions of the Indenture) and
all sums to which the Authority, the Trustee and the Bond Insurer are entitled
hereunder have been fully paid, including but not limited to amounts payable
pursuant to Sections 4.05, 4.08 and 4.09 hereof.
ARTICLE II
REPRESENTATIONS
Section 2.01. Representations by the Authority. The Authority represents as
follows:
(a) The Authority is a body corporate and politic, constituting a
public benefit corporation, established and existing under the laws of the
State of New York;
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(b) The Authority has full power and authority to execute and deliver
this Participation Agreement, the Tax Regulatory Agreement and the
Indenture and to consummate the transactions contemplated hereby and
thereby and perform its obligations hereunder and thereunder;
(c) The Authority is not in default under any of the provisions of the
laws of the State of New York which would affect its existence or its
powers referred to in the preceding paragraph (b);
(d) The Authority has determined that its participation in the
Project, as contemplated by this Participation Agreement, is in the public
interest;
(e) The Authority has duly authorized the execution and delivery of
this Participation Agreement and the Indenture; and
(f) The execution and delivery of this Participation Agreement and the
Tax Regulatory Agreement, and the consummation of the transactions herein
contemplated will not violate or cause a default under any indenture,
mortgage, loan agreement or other contract or instrument to which the
Authority is a party or by which it is bound, or to the best of the
Authority's knowledge, any judgment, decree, order, statute, rule or
regulation applicable to the Authority.
Section 2.02. Representations by the Company. The Company represents as
follows:
(a) The Company is a corporation duly incorporated and in good
standing under the laws of the State of New York, is duly qualified and
authorized to engage in business as a public utility in the State of New
York, has power to enter into, execute and deliver this Participation
Agreement and the Tax Regulatory Agreement, and to issue and deliver the
Company Obligation and by proper corporate action has duly authorized the
execution and delivery of this Participation Agreement, the Tax Regulatory
Agreement, the Insurance Agreement and the issuance and delivery of the
Company Obligation;
(b) The execution and delivery of this Participation Agreement and the
issuance and delivery of the Company Obligation and the consummation of the
transactions herein contemplated will not conflict with or constitute a
breach of or a default under the Company's Certificate of Incorporation or
By-Laws or any judgment, decree, order, statute, rule or regulation
applicable to the Company or any indenture, mortgage, loan agreement or
other contract or instrument to which the Company is a party or by which it
is bound;
(c) The issuance and delivery of the Company Obligation by the Company
and the execution and delivery of this Participation Agreement by the
Company in the manner and for the purposes herein set forth have been duly
authorized by an order of the Public Service Commission of the State of New
York; and
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(d) The Participation Agreement, the Tax Regulatory Agreement and the
Insurance Agreement have been duly executed and delivered by the Company
and constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their respective terms,
except as enforcement may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization or other laws relating to or affecting the
enforcement of creditors' rights or contractual obligations generally or
principles of equity or judicial discretion; and
(e) All necessary authorizations for or approvals of the execution and
delivery of this Participation Agreement and the issuance and delivery of
the Company Obligation have been obtained by the Company; and
(f) The Company agrees to reimburse the Bond Insurer immediately and
unconditionally upon demand, to the extent permitted by law, for all
reasonable expenses, including attorneys' fees and expenses, incurred by
the Bond Insurer in connection with (i) the enforcement by the Bond Insurer
of the Company's obligations, or the preservation or defense of any rights
of the Bond Insurer, under this Indenture and any other document executed
in connection with the issuance of the Bonds, and (ii) any consent,
amendment, waiver or other action with respect to the Indenture or any
related document, whether or not granted or approved, together with
interest on all such expenses from and including the date incurred to the
date of payment at Citibank's Prime Rate plus 3% or the maximum interest
rate permitted by law, whichever is less. In addition, the Insurer reserves
the right to charge a fee in connection with its review of any such
consent, amendment or waiver, whether or not granted or approved; and
(g) The Company agrees not to use the Bond Insurer's name in any
public document including, without limitation, a press release or
presentation, announcement or forum without the Bond Insurer's prior
consent. In the event that the Company is advised by counsel that it has a
legal obligation to disclose the Bond Insurer's name in any press release,
public announcement or other public document, the Company shall provide the
Bond Insurer with at least three (3) business days' prior written notice of
its intent to use the Bond Insurer's name together with a copy of the
proposed use of the Bond Insurer's name and of any description of a
transaction with the Bond Insurer and shall obtain the Bond Insurer's prior
consent as to the form and substance of the proposed use of the Bond
Insurer's name and any such description.
(h) The Company shall not enter into any agreement nor shall it
consent to or participate in any arrangement pursuant to which Bonds are
tendered or purchased for any purpose other than the redemption and
cancellation or legal defeasance of such Bonds without the prior written
consent of the Bond Insurer; and
(i) The Company has corporate power to take all actions required or
permitted to be taken by the Company by or under, and to perform and
observe the covenants and agreements on its part contained in, the
Indenture.
2. The representations and warranties of the Company set forth in the Tax
Regulatory Agreement are hereby incorporated by reference as though fully set
forth herein.
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ARTICLE III
CONSTRUCTION OF PROJECTS; ISSUANCE OF BONDS
Section 3.01. Company to cause construction of Project. 1. The Company
represents that it has caused the Project to be completed. The Project belongs
to and is the property of the Company. In order to effectuate the purposes of
this Participation Agreement, the Company, in its own name, will do or cause to
be done all things requisite or proper for the fulfillment of the obligations of
the Company under this Participation Agreement.
Section 3.02. Sale of Bonds and deposit of proceeds; Liability under Bonds.
1. In rder to provide funds for the refunding of the Prior Bonds, the Authority
will issue, sell and deliver the Bonds to the initial purchasers thereof, all
pursuant to and as provided in the Bond Purchase Agreement for the Bonds among
the Authority, the Company and the initial purchasers of the Bonds, and will
deposit the proceeds of such sale of the Bonds in the Prior Bond Fund as
provided in the Indenture.
2. The Bonds shall not be general obligations of the Authority, and shall
not constitute an indebtedness of or a charge against the general credit of the
Authority or give rise to any pecuniary liability of the Authority. The
liability of the Authority under the Bonds shall be enforceable only to the
extent provided in the Indenture, and the Bonds shall be payable solely from the
Company Obligation Payments and any other funds held by the Trustee in any
accounts established under the Indenture and specifically available for such
payment. The Bonds shall not be a debt of the State of New York and the State
shall not be liable thereon.
Section 3.03. Possession of Projects. As owner of the Project, the Company
is entitled to possession of the Projects.
Section 3.04. Operation, maintenance and repair. The Company agrees to
proceed in good faith to maintain the availability of the Project for use as an
authorized project under the Act. Notwithstanding the foregoing, the Authority
and the Company recognize that the Project will constitute integrated portions
of gas distribution, production and storage facilities of the Company and that
it is not feasiblt to administer the Project separately from such facilities.
The Company shall operate the Project (with such changes, improvements or
additions as the Company may deem desireable) as part of such facilities for the
joint useful lives of the Project and such facilitites and shall maintain and
repair the Project in conformity with the Company's normal maintenance and
repair programs for such facilities; provided that the Company shall have no
obligation to operate, maintain or repair any element or item of the Project the
operation, maintenance or repair of which becomes uneconomic to the Company
because of damage or destruction or obsolescence (including phsycial, functional
and economic obsolescence), or change in government standards and regulations,
or the termination by the Company of the operation of the facilities to which
the element or item of the Project is an adjunct.
Section 3.05. Investment of moneys in Funds under the Indenture. Any moneys
held as a part of any Fund created under the Indenture shall, at the specific
written direction of an Authorized Company Representative, be invested or
reinvested by the Trustee as provided in Article VI of the Indenture. In the
absence of any such written direction, amounts held in any fund or account shall
remain uninvested.
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ARTICLE IV
CORPORATION OBLIGATION AND PAYMENTS
Section 4.01 Execution and delivery of Company Obligation to Trustee. In
order to evidence the obligation of the Company to the Authority to repay the
advance of the proceeds of the Bonds, the Authority hereby directs the Company,
and the Company hereby agrees, to deliver or cause to be delivered to the
Trustee, concurrently with the authentication of and delivery by the Authority
of the Bonds, the Company Obligation relating to the Bonds. The Company
Obligation shall be in substantially the form attached hereto as Exhibit B, with
only such changes, omissions and insertions thereto as shall have been approved
by the Authority. The Company shall be entitled to receive a credit against its
obligation to pay the principal of and premium, if any, and interest on, the
Company Obligation in accordance with the Indenture. The Company Obligation
shall:
(a) be in an aggregate principal amount equal to the aggregate
principal amount of the Bonds then being authenticated and delivered (the
"related Bonds");
(b) provide for payments of interest equal to the payments of interest
on the Bonds;
(c) require payments of principal, or principal plus a premium, equal
to the payments required to be made on the Bonds;
(d) contain redemption provisions, including premium, if any, or
provisions with respect to amortization of principal, together with
premium, if any, identical to the redemption or amortization provisions of
the Bonds;
(e) require that all payments of principal, premium, if any, and
interest on the Company Obligation be made to the Trustee in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts, and that each
such payment be made on the due date for the corresponding payment on the
Bonds;
(f) provide that the amount of any such payment shall be reduced by
the amount, if any, available under the Indenture on the due date for such
payment and applied to the corresponding payment on the Bonds; and
(g) provide for payment of amounts due under the Insurance Agreement.
Section 4.02. Prepayment to redeem Bonds. Whenever any Bonds are redeemable
in whole or in part (other than pursuant to Section 9.06 of the Indenture), the
Authority will redeem the same at the written direction of an Authorized Company
Representative, and the Company will pay, as a prepayment of the amount due on
the Company Obligation corresponding to such Bonds, an amount equal to the total
cost of such redemption, less the amount, if any, in the Bond Fund on the date
fixed for such redemption and available for such redemption payment.
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Section 4.03. Obligation for payment absolute; deficiencies. The Company
agrees that its obligation to make the Company Obligation Payments at the times
and in the amounts provided in the Company Obligation and to make all other
payments provided for in this Participation Agreement shall be absolute,
irrevocable and unconditional and shall not be subject to any defense (other
than payment) or any rights of setoff, recoupment, abatement, counterclaim or
deduction and without any rights of suspension, deferment, diminution or
reduction it might otherwise have against the Authority or Trustee or the owner
of any Bond. The Company will not suspend or discontinue any such payments or
terminate this Participation Agreement for any cause including, without limiting
the generality of the foregoing, the unenforceability (because of judicial
decision or otherwise) or the impossibility of performance of the Company
Obligation obligations, or any breach by the Authority of any obligation to the
Company, whether under this Participation Agreement or any indebtedness or
liability at any time owing to the Company by the Authority or the destruction
by fire or other casualty of any Project or any portion thereof, or the taking
of title thereto or the use thereof by the exercise of the power of eminent
domain or condemnation or any change in the tax or other laws of the United
States, the State or any political subdivision of either thereof. Except to the
extent provided in the first and second sentences in this Section 4.03, nothing
contained herein shall constitute a waiver or release by the Company of any
right, claim or cause of action which the Company may have against the
Authority, the Trustee or others, including but not limited to, those rights,
causes of action or claims which may arise out of the breach of their respective
obligations or the inaccuracy of their respective warranties, provided, however,
that the Company may pursue any such right, claim or cause of action only by a
separate proceeding or action and not by counterclaim or setoff and the bringing
of such separate proceeding or action shall not affect the Company's absolute,
irrevocable and unconditional obligation to make payments pursuant to this
Section 4.03. No provisions set forth herein shall constitute a waiver or
release by the Authority of any right, claim or cause of action which the
Authority may have against the Company, the Trustee or others, including, but
not limited to, those rights, causes of action or claims which arise out of the
breach of their respective obligations or the inaccuracy of their respective
warranties. No provisions set forth herein shall constitute a waiver or release
by the Trustee of any right, claim or cause of action which the Trustee may have
against the Company, or others, including, but not limited to, those rights,
causes of action or claims which arise out of the breach of their respective
obligations or the inaccuracy of their respective warranties. Notwithstanding
anything herein to the contrary, if for any reason Company Obligation Payments,
together with other moneys held by the Trustee in any account and specifically
available for such purpose, would not be sufficient to make the corresponding
payments of principal of and premium, if any, and interest on the Bonds when
such payments are due, the Company will pay the amounts required from time to
time to make up any such deficiency.
Section 4.04. Administration Fees; expenses, etc. In order to defray a
portion of the expenses incurred by the Authority in conducting and
administering its gas facility financing programs, the Company shall pay to the
Authority an initial Administration Fee in the amount of $205,000 on the date of
authentication and delivery of the Bonds to the initial purchasers and an annual
Administrative Fee on November 1 of each year (commencing November 1, 2006)
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until the Bonds are no longer outstanding in the amount of $10,660. In addition,
the Company shall deliver to the Authority a check payable to the State of New
York with respect to the bond issuance charge applicable to the Bonds pursuant
to Section 2976 of the Public Authorities Law in the amount of $574,000.
In addition to such Administration Fees, the Company will pay or reimburse
the Authority upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Authority (including printing costs and the
reasonable fees, expenses and disbursements of its counsel and bond counsel) in
connection with this Participation Agreement, the Company Obligation, the
Municipal Bond Insurance Policy, the Tax Regulatory Agreement, the Bond Purchase
Agreement, the Indenture or any transaction, instrument or event contemplated by
any such document.
Section 4.05. Compensation of Trustee and Paying Agents. The Company agrees
to pay to the Trustee until the principal of, premium, if any, and interest on
the Bonds shall have been fully paid: (i) an amount equal to the initial or
acceptance fee of the Trustee and the annual fee of the Trustee for its ordinary
services rendered and its ordinary expenses incurred as Trustee under the
Indenture, as and when the same become due; (ii) reasonable fees and charges of
the Trustee, as Registrar and Paying Agent, and any other Registrar and Paying
Agent for the Bonds for acting as Registrar and Paying Agent, as provided in the
Indenture, as and when the same become due; (iii) reasonable fees and
disbursements of counsel to the Trustee, as and when the same become due; and
(iv) the reasonable fees and charges of the Trustee for the necessary
extraordinary services rendered by it and extraordinary expenses incurred by it
under the Indenture, as and when the same become due; provided, that the Company
may, without creating a default hereunder, contest in good faith the necessity
for any such extraordinary services or extraordinary expenses and the
reasonableness of any such fees, charges or expenses. Such fees, charges and
expenses shall be paid directly to the Trustee for its own use or for
disbursement to the Registrar and Paying Agent, as the case may be.
Section 4.06. Project not security for Bonds. It is expressly recognized by
the parties that the Project will not constitute any part of the security for
the Bonds. The principal security for the Bonds shall be the Company Obligation
and the absolute, irrevocable and unconditional obligation of the Company to
make the Company Obligation Payments.
Section 4.07. Payment of taxes and assessments; no liens or charges. The
Company will (a) pay, when the same shall become due, all taxes and assessments,
including income, profits, property or excise taxes, if any, or other municipal
or governmental charges, imposed, levied or assessed by the Federal, state or
any municipal government upon the Authority or the Trustee in respect of any
payments (other than payments made pursuant to Sections 4.04 and 4.05 hereof)
made or to be made pursuant to this Participation Agreement or the Company
Obligation, and (b) pay or cause to be discharged, within sixty (60) days after
the same shall accrue, any lien or charge upon any such payment made or to be
made under this Participation Agreement, provided, that the Company shall not be
required to pay any such tax or assessment so long as (i) the Company at its
expense contests by appropriate legal proceedings conducted in good faith and
with due diligence the amount, validity or application of any such tax,
assessment or charge, (ii) such proceedings shall have the effect of suspending
the collection thereof from the Authority and the Trustee, and (iii) the Company
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shall indemnify and hold the Authority and the Trustee harmless from any losses,
costs, charges, expenses (including attorneys' fees and expenses), judgments and
liabilities arising in respect of such tax, assessment or charge and the
non-payment thereof.
Section 4.08. Indemnification of Authority and Trustee. Any obligation of
the Authority created by or arising out of this Participation Agreement shall be
a limited obligation of the Authority, payable solely from the Company
Obligation Payments and any other funds held by the Trustee under the Indenture
and available for such payment, and shall not constitute an indebtedness of or a
charge against the general credit of the Authority and shall not constitute or
give rise to any pecuniary liability of the Authority; nevertheless, if the
Authority shall incur any such pecuniary liability, then in such event the
Company shall indemnify and hold the Authority harmless by reason thereof. The
Company releases the Authority and the Trustee from, agrees that the Authority
and the Trustee shall not be liable for, and agrees to indemnify and hold the
Authority and the Trustee harmless from, any liability for any loss or damage to
property or any injury to or death of any person that may be occasioned by any
cause whatsoever arising out of the construction or operation of any Project or
the financing thereof. The Company agrees to indemnify and hold the Authority,
its members, officers and employees harmless from any losses, costs, charges,
expenses (including attorneys' fees and disbursements), judgments and
liabilities incurred by it or them, as the case may be, in connection with any
action, suit or proceeding instituted or threatened in connection with the
transactions contemplated by this Participation Agreement so long as it or they,
as the case may be, have acted in good faith to carry out the transactions
contemplated by this Participation Agreement. The Company agrees to indemnify
and hold the Trustee and any director, officer, employee or agent of the Trustee
harmless in connection with any loss, liability, claim or reasonable expense
(including costs and expenses of litigation, and of investigation, counsel fees,
damages, judgments and amounts paid in settlement), action, suit or proceeding
instituted or threatened in connection with or arising under the transactions
contemplated by this Participation Agreement in the manner provided in Article
XIII of the Indenture, except for its own willful misconduct or negligence in
carrying out the transactions contemplated by this Participation Agreement.
Section 4.09. Company to pay attorneys' fees and disbursements. If the
Company shall default under any of the provisions of this Participation
Agreement and the Authority or the Trustee shall employ attorneys or incur other
expenses for the collection of payments due under this Participation Agreement
or for the enforcement of performance or observance of any obligation or
agreement on the part of the Company contained in this Participation Agreement,
the Company will on demand therefor reimburse the reasonable fees of such
attorneys and such other reasonable disbursements so incurred.
Section 4.10. No abatement of Administration Fees and other charges. It is
understood and agreed that so long as any Bonds are outstanding under the
Indenture, Administration Fees and other charges payable to the Authority
pursuant to this Participation Agreement shall continue to be payable at the
times and in the amounts herein specified, whether or not any Project, or any
portion thereof, shall have been destroyed by fire or other casualty, or title
thereto or the use thereof shall have been taken by the exercise of the power of
eminent domain, and that there shall be no abatement of any such Administration
Fees and other charges by reason thereof.
9
Section 4.11. Prepayment of Company Obligation. The Company shall not
prepay any Company Obligation or any portion thereof except as necessary in
connection with the redemption prior to maturity of all or a portion of the
Bonds, or upon acceleration of maturity of the Bonds or pursuant to Article XVI
of the Indenture.
Section 4.12. Company Liable to Owners of Bonds in the Case of Certain
Events of Taxability. The Company confirms and agrees that if as a result of
action by the Company, the owner of the Project as of the date hereof, or any
successor owner of the Project, the interest on the Bonds is determined to be
included for federal income tax purposes in the gross income of any owner of a
Bond (other than a "substantial user" of the Project or a "related person"
within the meaning of section 147(a)(1) of the Code), as evidenced by a
published or private ruling of the Internal Revenue Service or a final,
nonappealable judicial decision by a court of competent jurisdiction, then the
Company, in addition to its obligation to redeem the Bonds pursuant to Section
2.05(c) of the Indenture, shall be liable to the affected owners of the Bonds
for any taxes, penalties and interest assessed against such owners by the
Internal Revenue Service and attributable to the Bonds.
The Authority and the Trustee agree not to object to the intervention in or
participation by the Company at its own expense in any proceedings by or before
the Internal Revenue Service or any court relating to whether interest on the
Bonds is includable for federal income tax purposes in the gross income of any
owner of a Bond (other than a "substantial user" of the Project or a "related
person" within the meaning of Section 147(a)(1) of the Code).
ARTICLE V
SPECIAL COVENANTS
Section 5.01. No warranty as to suitability of Project. The Authority makes
no warranty, either express or implied, as to the actual or designed capacity of
any Project, as to the suitability of any Project for the purposes specified in
this Participation Agreement, as to the condition of any Project, or that any
Project will be suitable for the Company's purposes or needs.
Section 5.02. Authority's rights to inspect Project and plans and
specifications. The Authority shall have the right at all reasonable times to
examine and inspect any and all records of the Company relating to the Project
and, to the extent reasonably available to the Company, the plans and
specifications therefor.
Section 5.03. Company consent to amendment of Indenture. The Authority
shall not adopt any indenture supplemental to or amendatory of the Indenture
which affects the rights or obligations of the Company without the prior consent
of the Company as evidenced by a certificate in writing signed by an Authorized
Company Representative.
Section 5.04. Tax Covenant. Notwithstanding any other provision hereof, the
Company covenants and agrees that it will not take or authorize or permit any
action to be taken with respect to any Project, or the proceeds of Bonds,
including any amounts treated as proceeds of Bonds for any purpose of Section
103 or any related provisions of the Code, which will result in the loss of the
10
exclusion of interest on the Bonds from gross income for Federal income tax
purposes under Section 103 of the Code (except for any Bond during any period
while any such Bond is held by a person referred to in Section 147(a) of the
Code). This provision shall control in case of conflict or ambiguity with any
other provision of this Participation Agreement. In furtherance of such covenant
and agreement, the Authority and the Company will enter into the Tax Regulatory
Agreement and the Company hereby agrees to comply with the provisions thereof.
Section 5.05. Company agrees to perform obligations imposed by Indenture.
The Company agrees to perform such obligations as may be required of it by the
provisions of the Indenture.
Section 5.06. Certificates as to defaults. The Company shall file with the
Trustee, on or before the first day of the month in which the Bonds are
delivered and on the anniversary of such date as long as the Bonds are
outstanding, a certificate signed by an Authorized Company Representative
stating that, to the best of his or her knowledge and belief, the Company has
kept, observed, performed and fulfilled each and every one of its covenants and
obligations contained herein and there does not exist at the date of such
certificate any default hereunder or, if any such default shall so exist,
specifying the same and the nature and status thereof. The Company shall deliver
to the Trustee, as soon as possible and in any event within five days after the
Company becomes aware of the occurrence of any default hereunder or under this
Indenture, a certificate signed by an Authorized Company Representative setting
forth the details of such default and the action which the Company proposes to
take with respect thereto.
Section 5.07. Compliance with laws. The Company will do or cause to be done
all things necessary on its part to preserve and keep in full force and effect
its corporate existence and rights and such corporate and public utility
franchises, rights, licenses and permits as are necessary for the conduct of its
business; provided that the Company may terminate or abandon, or permit the
termination or abandonment of, any such right, franchise, license or permit if
in the opinion of the Company's Board of Directors, the termination or
abandonment thereof is either necessary or in the best interests of the Company
and, in any such case, will not have a material adverse effect on the Company's
ability to pay amounts with respect to the Company Obligation in accordance with
their terms or otherwise to comply with the terms of this Participation
Agreement. The Company will use its best efforts to comply in all material
respects with all applicable laws, rules and regulations and orders of any
governmental authority, non-compliance with which would have a material adverse
effect on its business, financial condition or results of operations (to the
extent the Company deems it can reasonably comply while maintaining its public
utility operations) or would materially adversely affect the Company's ability
to perform its obligations hereunder or under the Company Obligation, except
laws, rules, regulations or orders being contested in good faith.
Section 5.08. Consolidation, Merger or Sale of Assets. The Company will not
consolidate with or permit itself to be merged into any other corporation or
corporations, or sell, lease, transfer or otherwise dispose of all or
substantially all of its properties and assets, except in the manner and upon
the terms and conditions set forth in this Section 5.08.
11
Nothing contained in this Participation Agreement shall prevent (and this
Participation Agreement shall be construed as permitting and authorizing) any
lawful consolidation or merger of the Company with or into any other corporation
or corporations lawfully authorized to acquire and operate the properties of the
Company, or a series of consolidations or mergers, or successive consolidations
or mergers, in which the Company or its successor or successors shall be a
party, or any sale of all or substantially all the properties of the Company as
an entirety to a corporation lawfully authorized to acquire and operate the
same; provided that, upon any consolidation, merger or sale, the corporation
formed by such consolidation, or into which such merger may be made, or making
such purchase shall execute and deliver to the Trustee an instrument, in form
reasonably satisfactory to the Trustee, whereby such corporation shall
effectually assume the due and punctual payment of the principal of, and
premium, if any, and interest on, the Company Obligation according to its tenor
and the due and punctual performance and observance of all covenants and
agreements to be performed by the Company pursuant to this Participation
Agreement, the Tax Regulatory Agreement and the Company Obligation.
Every such successor corporation shall possess, and may exercise, from time
to time, each and every right and power hereunder of the Company, in its name or
otherwise; and any act, proceeding, resolution or certificate by any of the
terms of this Participation Agreement and the Company Obligation required or
provided to be done, taken and performed or made, executed or verified by any
board or officer of the Company shall and may be done, taken and performed or
made, executed or verified with like force and effect by the corresponding board
or officer of any such successor corporation.
If consolidation, merger or sale or other transfer is made as permitted by
this Section, the provision of this Section shall continue in full force and
effect and no further consolidation, merger or sale or other transfer shall be
made except in compliance with the provisions of this Section.
Section 5.09. Financial Statements of Company. The Company agrees to
furnish the Trustee with a copy of its annual report to stockholders for each
year, beginning with the year 2005, on or before [May 15] of the subsequent year
or as soon thereafter as it is reasonably available. The Company further agrees
to furnish to the Trustee and to any owner of the Bonds if requested in writing
by such owner all financial statements which it sends to its shareholders, and,
to the extent it shall no longer be a publicly owned company, the Company shall
provide a copy of its audited annual financial statements.
Section 5.10. Recording and Filing. The Company hereby covenants that it
will cause all financing statements related to the Indenture and all supplements
thereto and this Participation Agreement and all supplements thereto, as well as
such other security agreements, financing statements and all supplements thereto
and other instruments as may be required from time to time to be kept, to be
recorded and filed in such manner and in such places as may from time to time be
required by law in order to preserve and protect fully the security of Holders
and the rights of the Trustee hereunder, and to take or cause to be taken any
and all other action necessary to perfect the security interest created by the
Indenture.
12
Section 5.11. Maintenance of Properties. So long as the Company Obligation
remains outstanding and unpaid, the Company will at all times make or cause to
be made such expenditures for repairs, maintenance and renewals, or otherwise,
as shall be necessary to maintain its properties in good repair, working order
and condition as an operating system or systems to the extent necessary to meet
the Company's obligations under the Public Service Law of the State of New York
and the Participation Agreement.
Section 5.12. Insurance. So long as the Company Obligation remains
outstanding and unpaid, the Company will keep or cause to be kept its properties
that are of an insurable nature, insured against loss or damage by fire or other
risks, the risk of which in the opinion of an Authorized Company Representative
(who shall be an officer or employee of the Company responsible for the
management of such risks) is customarily insured against by companies similarly
situated and operating like properties, to the extent that property of similar
character is, in such Authorized Company Representative's opinion, customarily
insured against by such companies, either (a) by reputable insurers or (b) in
whole or in part in the form of reserves or of one or more insurance funds
created by the Company, whether alone or with other Companys.
Section 5.13. Proper Books of Record and Account. So long as the Company
Obligation remains outstanding and unpaid, the Company will at all times keep or
cause to be kept proper books of record and account, in which full, true and
correct entry will be made of all dealings, business and affairs of the Company,
including proper and complete entries to capital or property accounts covering
property worn out, obsolete, abandoned or sold, all in accordance with the
requirements of any system of accounting or keeping accounts or the rules,
regulations or orders prescribed by a regulatory commission with jurisdiction
over the rates of the Company giving rise to at least fifty-one percent (51%) of
the Company's gross revenues, or if there are no such requirements or rules,
regulations or orders, then in compliance with generally accepted accounting
principles.
Section 5.14. Compliance with Laws. So long as the Company Obligation
remains outstanding and unpaid, the Company agrees to use commercially
reasonable efforts to comply in all material respects with all applicable laws,
rules and regulations and orders of any governmental authority, non-compliance
with which would have a material adverse effect on its business, financial
condition or results of operations (to the extent the Company deems it can
reasonably comply while maintaining its public utility operations) or would
materially adversely affect the Company's ability to perform its obligations
hereunder, except laws, rules, regulations or orders being contested in good
faith.
Section 5.15. Further Assurances. The Company will make, execute,
acknowledge and deliver, or cause to be made, executed, acknowledged and
delivered, to the Trustee any and all such further acts, instruments or
assurances as may be reasonably required for effectuating the intention of this
Participation Agreement and the Company Obligation.
Section 5.16. Maintenance of Office or Agency. The Company shall at all
times keep, in New York, New York, or another location in the State of New York,
an office or agency where notices and demands with respect to the Company
Obligation and this Participation Agreement may be served, and shall, from time
to time, give written notice to the Trustee of the location of such office or
agency.
13
Section 5.17. Performance of and Compliance with Other Covenants. The
Company will perform and comply with each of the covenants set forth in the
Indenture dated as of November 1, 2005 between the Authority and the Trustee,
together with the definitions of all of the terms defined in such Indenture and
used in or otherwise applicable therein, being hereby incorporated in this
Participation Agreement by reference as if such provisions and definitions were
set forth in full herein.
ARTICLE VI
DEFAULTS BY CORPORATION; REMEDIES
Section 6.01. Section 6.01. Events of Default; Acceleration. In case one or
more of the following events of default shall have occurred and be continuing;
(a) failure by the Company to pay when due any amount required to be
paid under this Participation Agreement or the Company Obligation, which
failure causes a default in the payment when due of the principal of, or
premium, if any, or interest on, any of the Bonds; or
(b) failure by the Company to pay when due any amount required to be
paid under Section 4.11 of this Participation Agreement, which failure
causes an Event of Default to occur pursuant to paragraph (a) of Section
12.01 of the Indenture; or
(c) failure on the part of the Company duly to observe or perform any
other of the covenants or agreements on the part of the Company contained
in the Participation Agreement (other than failure to pay amounts required
to be paid under Sections 4.04, 4.05 and 4.08), the Tax Regulatory
Agreement or in the Company Obligation for a period of ninety (90) days
after the date on which written notice of such failure, requiring the
Company to remedy the same, shall have been given to the Company by the
Authority or the Trustee; or
(d) the occurrence of an Event of Bankruptcy of the Company;
then, and in any such event, the Trustee (as assignee of the Authority) may,
with the consent of the Bond Insurer (provided that the Bond Insurer is not in
default under the Policy), and/or the direction of the Bond Insurer (provided
that the Bond Insurer is not in default under the Policy), or, upon the written
request or direction of the owners of not less than twenty-five percent (25%) in
aggregate principal amount of the Bonds then outstanding with the consent of the
Bond Insurer shall, proceed to protect and enforce all rights of the owners of
Bonds and the Trustee and as permitted by the Indenture and the laws of the
State of New York, by such means or appropriate judicial proceedings as shall be
suitable or deemed by it most effective, including suits or special proceedings
at law or in equity, or otherwise, for specific enforcement of any covenant or
agreement contained in the Participation Agreement, or to require the Company to
perform its duty under the Participation Agreement. Any amounts collected by the
14
Trustee pursuant to action taken here shall be applied in accordance with the
Indenture. In addition, if at any time the principal of the Bonds shall have
been declared to be due and payable by acceleration pursuant to the terms of the
Indenture, the Company Obligation shall thereupon become and be immediately due
and payable, subject to such declaration with respect to the Bonds being
annulled pursuant to Section 12.03 of the Indenture. Furthermore, in the event
of a Company default under the Insurance Agreement, the Company Obligation shall
thereupon become and be immediately due and payable.
The right or obligation of the Trustee to make any such declaration as
aforesaid, however, is subject to the condition that if, at any time after
declaration, but before all the Bonds shall have matured by their terms, the
principal of, premium, if any, and interest on, the Company Obligation which
shall have become due and payable otherwise than by such declaration, and all
other sums payable under this Participation Agreement, except the principal of,
and interest on, the Company Obligation which shall have become due and payable
by such declaration, shall have been paid or provision satisfactory to the
Trustee shall have been made for such payment, and the reasonable expenses of
the Trustee and of the owners of the Bonds shall have been paid, including
reasonable attorneys' fees paid or incurred, and all defaults hereunder and
under the Bonds or under the Indenture, except as to the payment of principal
and interest due and payable solely by reason of such declaration, shall be made
good or be secured to the satisfaction of the Trustee or provision deemed by the
Trustee to be adequate shall be made therefore, then and in every such case, the
Bond Insurer (unless the Bond Insurer is then in default under the Policy), or
the owners of a majority in aggregate principal amount of the Bonds then
outstanding, with the consent of the Bond Insurer, by written notice to the
Authority and to the Trustee, may rescind such declaration and annul such
default in its entirety, or, if the Trustee shall have acted in the absence of a
written request of the owners of at least twenty-five percent (25%) in aggregate
principal amount of the outstanding Bonds, and if there shall not have been
theretofore delivered to the Trustee written direction to the contrary by the
owners of a majority in aggregate principal amount of the outstanding Bonds,
then any such declaration shall ipso facto be deemed to be rescinded and any
such default and its consequences shall ipso facto be deemed to be annulled, but
no such rescission and annulment shall extend to or affect any subsequent
default or impair or exhaust any right or power consequent thereon.
In case the Trustee shall have proceeded to enforce any right under this
Participation Agreement or the Company Obligation and such proceedings shall
have been discontinued or abandoned for any reason or shall have been determined
adversely to the Trustee, then and in every such case the Company, the
Authority, the Bond Insurer and the Trustee shall be restored respectively to
their former positions and rights hereunder, and all rights, remedies and powers
of the Company, the Authority, the Bond Insurer and the Trustee shall continue
as though no such proceedings had been taken.
Section 6.02. Events of Default Relating to Fees or Indemnification. In
case the Company shall have failed to pay amounts required to be paid under
Sections 4.04, 4.05 and 4.08, which event shall have continued for a period of
ninety (90) days after the date on which written notice of such failure,
requiring the Company to remedy the same, shall have been given to the Company
by the Authority or the Trustee, the Authority or the Trustee may take whatever
action at law or in equity as may appear necessary or desirable to enforce
performance or observance of any obligations or agreements of the Company under
said Sections 4.04, 4.05 and 4.08.
15
Section 6.03. Judicial Proceedings by Trustee. Upon the occurrence and
continuance of an event of default under this Article, the Trustee may, and upon
the written request of the owners of at least twenty-five percent (25%) in
aggregate principal amount of the Bonds then outstanding shall, institute any
actions or proceedings at law or in equity for the collection of any amounts
then due and unpaid on the Company Obligation, and may prosecute any such action
or proceeding to judgment or final decree, and may collect in the manner
provided by law the moneys adjudged or decreed to be payable.
Section 6.04. Rights of the Credit Facility Issuer; Other Rights of the
Trustee to Enforce this Participation Agreement. Notwithstanding anything herein
to the contrary, any judicial proceedings of the Trustee under Section 6.03 may
be instituted only with the written consent of the Credit Facility Issuer or
Bond Insurer and shall be instituted by the Trustee at the written direction of
the Credit Facility Issuer or Bond Insurer.
Nothing in this Participation Agreement shall limit any other rights of the
Trustee to enforce this Participation Agreement.
ARTICLE VII
MISCELLANEOUS
Section 7.01. Disposition of amounts after payment of Bonds. Any amounts
remaining in the funds created under the Indenture after payment in full of
principal of, and premium, if any, and interest on all the Bonds, or provision
for payment thereof having been made in accordance with the provisions of the
Indenture, and payment of all the fees, charges and expenses of the Trustee and
Registrar and Paying Agents in accordance with this Participation Agreement,
shall belong to and be paid to the Company by the Trustee in accordance with the
provisions of the Indenture.
Section 7.02. Notices. All notices, certificates, requests or other
communications between the Authority, the Company and the Trustee required to be
given under this Participation Agreement or under the Indenture shall be
sufficiently given and shall be deemed given when delivered or mailed by first
class mail, postage prepaid, addressed as follows: if to the Authority,
Authority, at 00 Xxxxxxxx Xxxxxx, Xxxxxx, XX 00000; Attention: Treasurer; if to
the Company, at Xxx XxxxxXxxx Xxxxxx, Xxxxxxxx, XX 00000-0000; Attention:
Treasurer; if to the Bond Insurer with respect to the Bonds, at 000 Xxxx Xxxxxx,
0xx Xxxxx, Xxx Xxxx, XX 00000, Attention: Manager, Global Utilities; if to the
Registered Owners of the Bonds, to the address last appearing on the Bond
Register for such Registered Owner; and if to the Trustee, at 000 Xxxxxxxxx
Xxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000, Attention: Agency & Trust, KeySpan Bonds.
A duplicate copy of each notice, certificate, request or other communication
given hereunder to the Authority, the Company or the Trustee shall also be given
to the others. The Company, the Authority and the Trustee may, by notice given
hereunder, designate any further or different addresses to which subsequent
notices, certificates, requests or other communications shall be sent.
16
Section 7.03. Successors and assigns. This Participation Agreement shall
inure to the benefit of and shall be binding upon the Authority, the Company and
their respective successors and assigns.
Section 7.04. Amendment of Participation Agreement. This Participation
Agreement may not be amended except by an instrument in writing signed by the
parties hereto and, if such amendment occurs after the issuance of the Bonds,
upon compliance with the provisions of Article XV of the Indenture.
Section 7.05. Assignment by Authority. The Authority shall assign its
rights under and interest in this Participation Agreement (except the rights and
interest of the Authority under Article III hereof and Sections 4.04, 4.07,
4.08, 4.09, and 4.10 hereof) to the Trustee pursuant to the Indenture, as
security for payment of the principal of and premium, if any, and interest on
the Bonds but such assignment shall be subject to the provisions of this
Participation Agreement. In addition, the Trustee shall have the same power as
the Authority to enforce from time to time the rights of the Authority set forth
in Article III hereof, subject to the provisions of this Participation Agreement
relating to the amendment hereof. Except as provided in this Section 7.05, the
Authority will not sell, assign, transfer, convey or otherwise dispose of its
interest in this Participation Agreement during the term of this Participation
Agreement.
Section 7.06. Participation Agreement supersedes any prior agreements.
Subject to Section 1.02 hereof, this Participation Agreement supersedes any
other prior agreements or understandings, written or oral, between the parties
with respect to the transactions contemplated hereby, except the Bond Purchase
Agreement, dated October 25, 2005 by and among the Authority, the Company,
Xxxxxx Xxxxxxx & Co. Incorporated, BNY Capital Markets, Inc. Sovereign
Securities Corporation, LLC and The Xxxxxxxx Capital Group, L.P.
Section 7.07. Counterparts. This Participation Agreement may be
simultaneously executed in counterparts. Each such counterpart so executed shall
be deemed to be an original, and all together shall constitute but one and the
same instrument.
Section 7.08. Severability. If any clause, provision or section of this
Participation Agreement be held illegal, invalid or unenforceable by any court
or administrative body, such determination shall be construed and enforced as if
such illegal or invalid or unenforceable clause, provision or section had not
been contained in this Participation Agreement. In case any agreement or
obligation contained in this Participation Agreement be held to be in violation
of law, then such agreement or obligation shall be deemed to be the agreement or
obligation of the Authority or the Company, as the case may be, to the full
extent permitted by law.
Section 7.09. Law and Place of Enforcement of this Participation Agreement.
This Participation Agreement shall be construed and interpreted in accordance
with the laws of the State of New York and all suits and actions arising out of
this Participation Agreement shall be instituted in a court of competent
jurisdiction in the State of New York.
17
Section 7.10. Bond Insurer Requirements. The Company shall, as soon as
practicable after the filing or availability thereof, provide to the Bond
Insurer the Company's quarterly and annual financial statements and the
Company's annual report.
The Company further agrees that it will permit the Bond Insurer (i) to
discuss financial affairs or any information the Bond Insurer may reasonably
request regarding the security for the Bonds which are insured by such Bond
Insurer with representatives of the Company and (ii) to permit the Bond Insurer
to have access to the Project and have access to and to make copies of all books
and records relating to the Bonds which are insured by such Bond Insurer at any
reasonable time.
Section 7.11. Parties in Interest. Except as herein otherwise specifically
provided, nothing in this Agreement expressed or implied is intended or shall be
construed to confer upon any Person other than the Company, the Authority, the
Trustee, each Bond Insurer, any right, remedy or claim under or by reason of
this Agreement, this Agreement being intended to be for the sole and exclusive
benefit of the Company, the Authority, the Trustee, the Bond Insurer and the
owners of the Bonds.
Section 7.12. The Policy. The Company acknowledges that it will cause the
Bond Insurer to deliver the Policy insuring payment of the regularly scheduled
principal of and interest on the Bonds.
Section 7.13. Company Request to Transfer Bond Proceeds. The Company hereby
requests the Authority to direct the Trustee to transfer the proceeds of the
Bonds, pursuant to Section 9.01 of the Indenture, for deposit in the Prior Bond
Fund created pursuant to Article IX of the Prior Indenture.
Section 7.14. Delegation of Duties by Authority. It is agreed that under
the terms of this Participation Agreement and also under the terms of the
Indenture the Authority has delegated certain of its duties hereunder to the
Company. The fact of such delegation shall be deemed a sufficient compliance by
the Authority to satisfy the duties so delegated and the Authority shall not be
liable in any way by reason of acts done or omitted by the Company or any
Authorized Company Representative. The Authority shall have the right at all
times to act in reliance upon the authorization, representation or certification
of an Authorized Company Representative unless such reliance is in bad faith.
Section 7.15. Survival of Representations, Warranties and Covenants. The
respective agreements, representations, warranties and covenants set forth
herein will remain in full force and will survive the execution and delivery of
this Participation Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this
Participation Agreement to be duly executed as of the day and year first written
above.
NEW YORK STATE ENERGY RESEARCH
AND DEVELOPMENT AUTHORITY
By
----------------------
President
(SEAL)
ATTEST:
--------------------------------
Assistant Secretary
THE BROOKLYN UNION GAS COMPANY d/b/a
KEYSPAN ENERGY DELIVERY NEW YORK
By
----------------------
Name:
Title:
(SEAL)
ATTEST:
--------------------------------
Secretary
19
EXHIBIT A
(To Participation Agreement dated as of November 1, 2005, between
New York State Energy Research and Development Authority and
The Brooklyn Union Gas Company d/b/a KeySpan Energy Delivery New York)
DESCRIPTION OF THE PROJECT
A-1
EXHIBIT B
(To Participation Agreement dated as of November 1, 2005, between
New York State Energy Research and Development Authority and
The Brooklyn Union Gas Company d/b/a KeySpan Energy Delivery New York)
FORM OF CORPORATION OBLIGATION
B-1
