LETTER OF CREDIT AND
REIMBURSEMENT AGREEMENT
by and between
KEYSPAN GENERATION LLC
and
NATIONAL WESTMINSTER BANK PLC,
NEW YORK BRANCH
entered into in connection with
$24,880,000
New York State Energy Research and Development Authority
Electric Facilities Revenue Bonds
(Long Island Lighting Company Project),
1997 Series A
Dated as of December 1, 2000
Xxxxx, Day, Xxxxxx & Xxxxx
New York
(JP985156)
TABLE OF CONTENTS
ARTICLE I DEFINITIONS.............................................................................................2
Section 1.1 Definitions............................................................................2
Section 1.2 Accounting Terms......................................................................12
ARTICLE II LETTER OF CREDIT......................................................................................13
Section 2.1 Issuance and Reissuance of Letter of Credit...........................................13
Section 2.2 Agreement to Reimburse the Bank for Letter of
Credit Payments; Term Borrowing.......................................................13
Section 2.3 Interest and Loan Options for the Borrowing...........................................14
Section 2.4 Repayments and Prepayments of the Borrowing...........................................15
Section 2.5 Interest Rates and Payment Dates......................................................16
Section 2.6 Fees..................................................................................16
Section 2.7 Computation of Interest and Fees......................................................16
Section 2.8 Inability to Determine Interest Rate..................................................17
Section 2.9 Payments..............................................................................17
Section 2.10 Requirements of Law...................................................................18
Section 2.11 Taxes.................................................................................19
Section 2.12 Funding Indemnity.....................................................................20
Section 2.13 Change of Lending Office..............................................................20
ARTICLE III REPRESENTATIONS AND WARRANTIES.......................................................................21
Section 3.1 Financial Condition...................................................................21
Section 3.2 No Change.............................................................................21
Section 3.3 Corporate Existence; Compliance with Law..............................................21
Section 3.4 Corporate Power; Authorization; Enforceable Obligations...............................22
Section 3.5 No Legal Bar..........................................................................22
Section 3.6 Litigation............................................................................22
Section 3.7 No Default............................................................................22
Section 3.8 Ownership of Property; Liens..........................................................23
Section 3.9 Intellectual Property.................................................................23
Section 3.10 Taxes.................................................................................23
Section 3.11 Federal Regulations...................................................................23
Section 3.12 Labor Matters.........................................................................23
Section 3.13 ERISA.................................................................................24
Section 3.14 Investment Company Act; Other Regulations.............................................24
Section 3.15 Subsidiaries..........................................................................24
Section 3.16 Use of Proceeds.......................................................................24
Section 3.17 Environmental Matters.................................................................24
Section 3.18 Accuracy of Information, etc..........................................................25
Section 3.19 Official Statement....................................................................25
ARTICLE IV AFFIRMATIVE COVENANTS.................................................................................26
Section 4.1 Financial Statements..................................................................26
Section 4.2 Certificates; Other Information.......................................................26
Section 4.3 Payment of Obligations................................................................27
Section 4.4 Maintenance of Existence; Compliance..................................................27
Section 4.5 Maintenance of Property; Insurance....................................................27
Section 4.6 Inspection of Property; Books and Records; Discussions................................27
Section 4.7 Notices...............................................................................28
Section 4.8 Environmental Laws....................................................................28
Section 4.9 Transaction with Affiliates...........................................................28
Section 4.10 Remarketing...........................................................................29
ARTICLE V NEGATIVE COVENANTS.....................................................................................29
Section 5.1 Financial Condition Covenant..........................................................29
Section 5.2 Liens.................................................................................29
Section 5.3 Fundamental Changes...................................................................30
Section 5.4 Disposition of Property...............................................................30
Section 5.5 Negative Pledge Clauses...............................................................30
Section 5.6 Limitation on Restrictions on Distributions from Subsidiaries.........................30
Section 5.7 Company Agreements....................................................................30
ARTICLE VI EVENTS OF DEFAULT.....................................................................................31
Section 6.1 Events of Default.....................................................................31
Section 6.2 Remedies Upon an Event of Default.....................................................33
ARTICLE VII CONDITIONS TO ISSUANCE OF LETTER OF CREDIT...........................................................34
Section 7.1 Documents.............................................................................34
Section 7.2 No Default: Representations and Warranties True and Correct..........................35
Section 7.3 Borrowing Conditions..................................................................35
ARTICLE VIII GENERAL.............................................................................................36
Section 8.1 Amendments............................................................................36
Section 8.2 Notices...............................................................................36
Section 8.3 Costs, Expenses and Taxes.............................................................37
Section 8.4 Liability of the Bank.................................................................37
Section 8.5 Setoff................................................................................38
Section 8.6 Headings and References...............................................................38
Section 8.7 Governing Law: Waiver Of Jury Trial...................................................38
Section 8.8 Successors and Assigns................................................................38
Section 8.9 Severability of Provisions............................................................39
Section 8.10 Execution in Counterparts.............................................................39
SCHEDULES
---------
SCHEDULE 3.15 Subsidiaries
SCHEDULE 5.2(f) Permitted Liens
EXHIBITS
--------
EXHIBIT A Form of Letter of Credit
EXHIBIT B Form of Notice of Conversion, Continuation, Subdivision or
Consolidation
EXHIBIT C Form of Closing Certificate
EXHIBIT D Form of Opinion of Counsel to Company
40
LETTER OF CREDIT AND
REIMBURSEMENT AGREEMENT
THIS LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT, dated as of December
1, 2000, is entered into by and between KEYSPAN GENERATION LLC a New York
limited liability company (the "Company"), and NATIONAL WESTMINSTER BANK PLC,
NEW YORK BRANCH (the "Bank").
R E C I T A L S:
A. New York State Energy Research and Development Authority (the
"Issuer") has issued pursuant to an Indenture of Trust dated as of December 1,
1997 (as supplemented or amended prior to the date of this Agreement and as
further supplemented or amended from time to time with the written consent of
the Bank, the "Indenture"), by and between the Issuer and The Chase Manhattan
Bank as trustee (such entity, or its successor as trustee, being the "Trustee"),
$24,880,000 aggregate principal amount of Electric Facilities Revenue Bonds
(Long Island Lighting Company Project), 1997 Series A (the "Bonds").
B. The Issuer and Long Island Lighting Company ("LILCO") entered into a
Participation Agreement dated as of December 1, 1997 (as supplemented or amended
prior to the date of this Agreement and as further supplemented or amended from
time to time with the written consent of the Banks, the "Participation
Agreement") pursuant to which LILCO agreed, among other things, to furnish a
letter of credit as hereinafter provided. Subsequent to the date of the
Participation Agreement, (i) all the shares of common stock of LILCO were
purchased by a subsidiary of Long Island Power Authority ("LIPA") and such
subsidiary was merged into LILCO with the result that LILCO became a wholly
owned subsidiary of LIPA, (ii) LILCO transferred all of its fossil fuel electric
generating units and its natural gas system (the "KeySpan Transfer") to the
Company, and (iii) in connection with the KeySpan Transfer, LILCO assigned and
delegated to the Company, and the Company accepted and assumed, all the rights
and obligations of LILCO under or in connection with the Bonds, the
Participation Agreement and the Indenture.
C. The Company and the Bank have agreed to enter into this Agreement
with respect to the Bonds pursuant to which the Bank shall furnish such a letter
of credit in the amount of $27,057,000, of which (i) $24,880,000 shall support
the payment of principal of the Bonds (or the portion of the purchase price of
the Bonds corresponding to principal) and (ii) $2,177,000 shall support the
payment of up to 210 days' interest on the principal amount of the Bonds (or the
portion of the purchase price of the Bonds corresponding to interest), computed
at 15% per annum on the basis of a year of 360 days.
NOW, THEREFORE, in consideration of the premises and to induce the Bank
to issue its direct-pay letter of credit, and intending to be legally bound
hereby, the Company and the Bank hereby agree as follows:
ARTICLE I
DEFINITIONS
-----------
Section 1.1 Definitions. When used herein, the following terms shall have the
following respective meanings, which meanings shall be applicable to both the
singular and plural forms of such terms:
"ABR" shall mean for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate
in effect on such day and (b) the Federal Funds Effective Rate in effect on such
day plus 0.5%. For such purposes: "Prime Rate" shall mean the rate of interest
per annum publicly announced from time to time by the Bank as its prime rate in
effect at its principal office in New York City (the Prime Rate not being
intended to be the lowest rate of interest charged by the Bank in connection
with extensions of credit to debtors). Any change in the ABR due to a change in
the Prime Rate or the Federal Funds Effective Rate shall be effective as of the
opening of business on the effective day of such change in the Prime Rate or the
Federal Funds Effective Rate, respectively.
"ABR Loans" shall mean Loans the rate of interest applicable to which
is based upon the ABR.
"Affiliate" shall mean as to any Person, any other Person that,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person. For purposes of this definition, "control" of a
Person means the power, directly or indirectly, either to (a) vote 10% or more
of the securities having ordinary voting power for the election of directors (or
persons performing similar functions) of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise.
"Agreement" shall mean this Letter of Credit and Reimbursement
Agreement, as the same may be amended, restated, supplemented or otherwise
modified from time to time.
"Applicable Margin" shall mean the rate per annum set forth under the
relevant column heading below which corresponds with the most current rating of
the Company's senior unsecured long-term debt issued by S&P and/or Xxxxx'x
respectively:
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Ratings Applicable Margin
================================== ======================================
A+/A1 0.55%
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A/A2 0.60%
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A-/A3 0.65%
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BBB+/Baa1 0.70%
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BBB/Baa2 0.80%
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