AMENDMENT
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Amendment ("Amendment") dated as of July 1, 1996 to the
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Revolving Credit Agreement referred to below between Consolidated Hydro, Inc., a
Delaware corporation (the "Borrower"), Den norske Bank ASA (the "Agent") and the
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banks named therein (the "Bank");
PRELIMINARY STATEMENT
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1. The Borrower, the Agent and the Banks are party to a
Revolving Credit Agreement (as amended or restated from time to time, the
"Credit Agreement") dated as of October 14, 1993.
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2. The Borrower has requested that the Credit Agreement be
amended for the purpose of, among other things, changing the Expiry Date,
reducing the Total Commitment and modifying certain financial covenants.
3. Subject to and on the terms and conditions set forth
herein, the Agent and the Banks are willing to agree to such request.
NOW THEREFORE, the parties hereto agree as follows:
A. Unless otherwise defined herein, terms used herein and
defined in the Credit Agreement shall be used herein as so defined.
B. The Borrower, the Agent and the Banks agree that the Credit
Agreement is hereby amended as follows:
I. Section 2.1(a) shall be amended by adding the following
at the end thereof:
"Notwithstanding the foregoing, no Loan shall be made on or
after June 1, 1996, except for Loans made or deemed made as a
result of the payment of any drawing under any Letter of
Credit."
1. The first sentence of Section 2.1(c) shall be amended to
read in its entirety as follows:
"The Total Commitment shall be reduced on the
following dates to the related amounts:
Total
Date Commitment
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Prior to November 20, 1996 $5,000,000
January 31, 1997 $4,500,000
July 31, 1997 $3,000,000
January 31, 1998 $2,000,000
July 31, 1998 $0
In addition to the foregoing, the Total Commitment (as set forth opposite each
date above) shall be reduced by (i) $500,000, when the aggregate value of the
net proceeds from Northeast Asset Sales is greater than or equal to $5,000,000
and (ii) without duplication, $1,000,000, when (x) such aggregate value is
greater than or equal to $10,000,000 or (y) all or substantially all of the
Northeast Assets have been disposed of. At the time of any reduction of the
Total Commitment, whether pursuant to this Section 2.1(c) or otherwise, the
Commitment of each Bank shall be reduced to the amount equal to such Bank's Pro
Rata Share of the total Commitment as so reduced."
2. Section 2.7 shall be deleted.
3. Section 3.1(c) shall be deleted in its entirety.
4. Section 5.2 shall be amended by adding the following at the
end thereof:
"Notwithstanding the foregoing, on and after the Effective
Date of the 7/1/96 Amendment, the fee described in the first
sentence of this Section 5.2 shall be 2%, instead of 1.5%."
5. Section 6.1 shall be amended to read in its entirety as
follows:
"6.1 Repayment of Loans. (a) Any Loan(s) made or
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deemed made as the result of the payment of any drawing under
any Letter of Credit shall be payable ON DEMAND.
(b) The Borrower agrees that, if and to the extent that, on
any day, the aggregate L/C Available Amount of all Letters of
Credit (other than Subsidiary Letters of Credit) exceeds the
Total Commitment, as reduced pursuant to this Agreement,
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the Borrower will reduce such L/C Available Amount in the
amount of such excess through the cancellation or reduction of
Letters of Credit.
(c) If any reduction or cancellation is required pursuant to
Section 6.1(b), the Issuing Bank will, if so requested in
writing by the Borrower at least 30 days prior to the date of
such reduction, issue a Letter of Credit (each a "Subsidiary
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Letter of Credit") to the beneficiary of the Letter of Credit
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being reduced or cancelled and for the account of the
Subsidiary (each a "Borrowing Subsidiary") for whose project
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or business the Letter of Credit being reduced or cancelled
was originally issued. Each Subsidiary Letter of Credit shall
(i) be in an amount not greater than the amount of the related
reduction of the L/C Available Amount of the Letter of Credit
being cancelled or reduced, as the case may be, (ii) expire no
later than the L/C Expiry Date, (iii) be in form and substance
satisfactory to the Issuing Bank and (iv) be issued pursuant
to a Reimbursement Agreement (each a "Reimbursement
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Agreement") substantially in the form of Exhibit B annexed
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hereto and on the terms and conditions set forth herein and
therein. Such documents and instruments, in any event, shall
provide that the obligations of the Borrowing Subsidiary shall
be secured by cash collateral deposited at the New York or
Cayman Islands office of the Issuing Bank in an amount equal
to the face amount of the related Subsidiary Letter of Credit.
It is understood and agreed that, in connection with the issuance of any
Subsidiary Letter of Credit, the related Letter of Credit previously issued may
have to be amended or re-issued to reflect the reduction of the L/C Available
Amount thereof. Each Borrowing Subsidiary shall be deemed to be a Restricted
Subsidiary and a Significant Subsidiary for purposes of this Agreement until the
related Subsidiary Letter of Credit has expired and all obligations of such
Borrowing Subsidiary thereunder and under the related Reimbursement Agreement
have been paid in full."
6. Section 6.2(a) shall be deleted in its entirety, but the
designation of 6.2(b) shall not be changed.
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7. Section 6.2(b) shall be amended by adding the following at
the end thereof:
"If pursuant to this Section 6.2(b) the Borrower is required
to make any prepayment in respect of the Loans, then, instead
of any such prepayment, the Total Commitment (as set forth
opposite each date in Section 2.1(c) of this Agreement) shall
be reduced by the amount otherwise required to be prepaid in
accordance with, and with the effect provided by, Section
2.1(c) of this Agreement."
8. Sections 6.2(d), 6.4, 9.4 and 11.6(a) shall be deleted in
their entirety.
9. Section 10.2(b) shall be amended to read in its entirety as
follows:
"(b) in the case of the annual Financial Statements delivered
pursuant to Section 10.1, (i) a statement by the independent
certified public accountants reporting on such Financial
Statements that, (x) in making the audit in connection with
such Financial Statements, nothing has come to their attention
that caused them to believe that the Borrower was not in
compliance with Sections 4.04, 4.06 and 5.01 of the Indenture
and Sections 11.5 or 11.6 of the Credit Agreement (noting,
however, that their audit was not directed primarily toward
obtaining knowledge of such noncompliance), (y) in conducting
their audit, they acquired no actual knowledge that any Event
of Default or Default has occurred and is continuing under the
Indenture or the Credit Agreement (noting, however, with
respect to such actual knowledge, they relied solely on the
representations made to them by management of the Borrower in
its management representation letter, but they are not aware
of any reason why such reliance is not justified), or, (z) if
any such noncompliance, Event of Default or Default has come
to their attention, such statement shall specify the nature
and period of existence thereof, provided that such
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independent certified public accountants shall not be liable
in respect of such statement by reason of any failure to
obtain knowledge of any such non-compliance, Event of Default
or Default that would not be disclosed in the course of an
audit exam-
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ination conducted in accordance with generally accepted
auditing standards in effect at the date of such examination,
and (ii) a certificate of an Authorized Representative of the
Borrower certifying which Subsidiaries are Significant
Subsidiaries;"
10. Section 11.6(b) shall be amended by changing the ratio
"2.75 to 1.0" set forth therein to "2.0 to 1.0."
11. Section 12.2 is amended to read in its entirety as
follows:
"12.2 Representations and Warranties. Any representation,
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warranty or statement made or deemed made by the Borrower or
any Borrowing Subsidiary herein, in any other Loan Document or
otherwise in connection herewith or therewith, shall be
breached or be untrue in any material respect on or as of the
date made or deemed made; or"
12. Annex I shall be amended by (a) adding the following at
the end of the definition of "Adjusted Consolidated Net Worth":
"plus $77,200,000."
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(b) amending the definition of "L/C Expiry Date"
to read in its entirety as follows:
"`L/C Expiry Date' shall mean July 31, 1998."
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(c) amending the definition of "Asset Sales" to exclude any
Northeast Asset Sales, amending the definition of "Loan Documents" by adding at
the end thereof:
"and shall also include any Borrowing Subsidiary
Loan Documents."
and amending the definition of Net Cash Proceeds to exclude any proceeds from
Northeast Asset Sales.
(d) deleting the definition of "Clean-Up Period" and adding
the following new definitions in alphabetical order:
"Borrowing Subsidiary" - Section 6.1(c).
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"Borrowing Subsidiary Loan Documents" shall mean any documents
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or instruments executed and delivered by a Borrowing
Subsidiary in connection with a Subsidiary Letter of Credit.
"Northeast Assets" shall mean all or any part of the assets
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of, or the capital stock or other equity interests of, the
entities listed on Schedule 1 hereto.
"Northeast Asset Sale" shall mean any Asset Sale
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of the Northeast Assets.
"7/1/96 Amendment" shall mean the Amendment to this Agreement
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dated as of July 1, 1996.
"Subsidiary Letter of Credit" - Section 6.1(c).
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C. The amendments set forth above are limited precisely as
written and shall not be deemed to (a) be a consent to any waiver of any other
term or condition of the Credit Agreement or any other Loan Document, (b)
prejudice any right or rights which the Agent, the Issuing Bank or the Banks may
now or in the future have in connection with the Credit Agreement or any other
Loan Document. It is understood, however, that (i) all Events of Default and
Defaults cured by the amendments set forth herein shall be deemed waived by the
Agent and the Banks and (ii) the Agent and the Banks waive all Defaults and
Events of Default which occurred prior to the Effective Date of this Amendment.
Except as modified hereby, the Credit Agreement and the other Loan Documents
shall continue in full force and effect.
D. The Borrower represents and warrants that as of the
Effective Date (as hereinafter defined), after giving effect to this Amendment,
(i) all representations and warranties contained in the Credit Agreement or
other Loan Documents are true and correct; and (ii) no Default exists.
E. For purposes of the representations and warranties made
pursuant to paragraph E above and for purposes of any documents and papers
delivered in connection with the execution and delivery of the Credit Agreement,
the effectiveness of this Amendment or thereafter, the term "Credit Agreement"
shall mean the Credit Agreement as modified hereby and the term "Loan Documents"
shall include the Loan Documents as modified hereby.
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F. This Amendment may be executed in counterparts, of which
each shall be an original and all shall constitute a single instrument, and
shall become effective on the date (the "Effective Date") when (x) the Borrower,
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the Agent, and each Bank shall have signed a copy hereof (whether the same or
different copies) and the Agent shall have received a copy executed by all such
parties and (y) unless waived by the Agent in writing, the Agent shall have
received each of the following documents:
(i) an amendment fee equal to $29,703, such
fee shall not, in any event, be refundable,
(ii) a copy of the Certificate set forth at the foot
of this Amendment executed and delivered by the Secretary or an
Assistant Secretary of the Borrower, and
(iii) a favorable opinion from counsel for the
Borrower covering the matters set forth in Exhibit A hereto.
All such documents and information shall be in form and substance satisfactory
to the Bank.
G. This Amendment shall be governed by and construed in
accordance with the law of the State of New York, without giving effect to the
conflict of laws provisions thereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their duly authorized officers as
of the date first above written.
CONSOLIDATED HYDRO, INC.
By /s/ Xxxxxx X Xxxxx
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Xxxxxx X Xxxxx
Title President
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DEN NORSKE BANK ASA,
Individually and as Agent
By /s/ Xxxxxx X. Xxxxxxxxxx
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Xxxxxx X. Xxxxxxxxxx
Title President
By /s/ Xxxxx Xxxx Lippstead
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Bjorn Xxxx Xxxxxxxxx
Title Senior Vice President
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SECRETARY'S CERTIFICATE
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The undersigned, the Secretary or Assistant Secretary of
Consolidated Hydro, Inc., a Delaware corporation (the "Borrower"), hereby
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certifies that the foregoing letter of amendment ("Amendment") dated July 1,
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1996 and the transactions contemplated thereby have been duly authorized and
approved by all necessary corporate and shareholder action and that the officer
of the Borrower who has executed and delivered such Amendment has been duly
authorized to take such action and all such other action as may be necessary or
desirable to effect the intent and purposes of such Amendment and the
transactions contemplated thereby.
IN WITNESS WHEREOF, the udnersigned has hereunto set forth
his/her hand and affixed the corporate seal of the Borrower on the 3rd day of
December , 1996.
/s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
Title: Asst. Sec'y
Consolidated Hydro, Inc.
[Seal]
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Schedule 1
Northeast Assets
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MW
UTILITY PROJECT CAPACITY
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CMP: Upper Xxxxxx 0.95
Lower Xxxxxx 1.50
Browns Mill 0.59
Greenville 0.57
Pittsfield 1.05
Damariscotta 0.46
Eustis 0.25
Xxxxxxxx 1.00
Mechanics Falls 1.30
Norway 0.32
South Berwick 0.53
York 1.25
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9.77
PSNH: EHC 1.00
Kelly's Falls 0.45
Rollinsford 1.49
Salmon Falls 1.20
Somerwsoth 1.29
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5.43
Bangor Hydro: Milo 0.60
Pumpkin Hill 0.95
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1.55
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TOTAL 16.75
======
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Schedule 1
OPINION OF COUNSEL
The terms used herein shall have the meaning provided in the
Credit Agreement referred to in the Reimbursement Agreement to which this
Schedule is attached, unless otherwise defined herein.
1. The Account Party is duly organized, validly existing and
is in good standing under the law of the State of ______________.
2. The Account Party has the power to execute, deliver and
carry out the terms and provisions of the Agreement and has taken all necessary
action to authorize the execution, delivery and performance by it of the
Agreement. The Account Party has duly executed and delivered the Agreement, and
the Agreement constitutes its legal, valid and binding obligation enforceable in
accordance with its terms, except to the extent that enforcement may be limited
by the provisions of applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally or the
application of generally equitable principles (regardless of whether enforcement
is sought in equity or at law).
3. Neither the execution, delivery or performance by the
Account Party of the Agreement nor the consummation by it of the transactions
contemplated thereby will (i) require the approval of its stockholders, (ii)
contravene any provision of any law, statute, rule or regulation applicable to
CHI, the Account Party or any Subsidiary or any judgment, decree, franchise,
order or permit or any decision of any arbitrator applicable to CHI, the Account
Party or any Subsidiary, (iii) conflict or be inconsistent with, or result in
any breach of, any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien upon any of the properties or assets of
CHI, the Account Party or any Subsidiary pursuant to the terms of any indenture,
mortgage, deed of trust, agreement or other instrument known to us, after due
inquiry, to which CHI, the Account Party is a party or by which the Account
Party or any of its property or assets is bound or to which the Account Party or
its
1
assets may be subject, or (iv) violate any provision of any Organizational
Document of CHI, the Account Party.
4. No order, consent, approval, license, authorization or
validation of, filing, recording or registration with, or exemption by, any
governmental or public body or authority, or any connection with (i) the
execution, delivery and performance of the Agreement or any other Loan Document
or (ii) the legality, validity, binding effect or enforceability of the
Agreement, or any other Loan Document.
5. After giving effect to the Agreement, the Revolving Credit
Agreement (the "Credit Agreement") dated as of October 14, 1993 among
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Consolidated Hydro, Inc., Den norske Bank ASA, and the Banks named therein
constitutes the Working Capital Facility (as defined in the Indenture) and the
performance and observance of the terms and provisions of the Agreement will not
affect the status of the Credit Agreement as the Working Capital Facility.
For purposes of this opinion, we have assumed, with your
permission, that the law of the State of New York is the same as the law of the
State of ________________.
Very truly yours,
2
EXHIBIT A
OPINION OF COUNSEL
Terms used herein shall have the meaning provided in the
Credit Agreement referred to in the Amendment to which this Exhibit is attached,
unless otherwise defined herein.
1. The Borrower is duly organized, validly existing and is in
good standing under the law of the State of Delaware.
2. The Borrower has the power to execute, deliver and carry
out the terms and provisions of the Amendment and has taken all necessary action
to authorize the execution, delivery and performance by it of the Amendment. The
Borrower has duly executed and delivered the Amendment and the Credit Agreement,
as amended by the Amendment, constitutes its legal, valid and binding obligation
enforceable in accordance with its terms, except to the extent that enforcement
may be limited by the provisions of applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally or the application of general equitable principles (regardless of
whether enforcement is sought in equity or at law).
3. Neither the execution, delivery or performance by the
Borrower of the Amendment nor the consummation by it of the transactions
contemplated thereby will (i) require the approval of its stockholders, (ii)
contravene any provision of any law, statute, rule or regulation applicable to
the Borrower or any Subsidiary or any judgment, decree, franchise, order or
permit or any decision of any arbitrator applicable to the Borrower or any
Subsidiary, (iii) based on the assumption stated in the last sentence of this
paragraph 3, conflict or be inconsistent with, or result in any breach of, any
of the terms, covenants, conditions or provisions of, or constitute a default
under, or result in the creation or imposition of (or the obligation to create
or impose) any Lien upon any of the properties or assets of the Borrower or any
Subsidiary pursuant to the terms of any indenture, mortgage, deed of trust,
agreement or other instrument known to us, after due inquiry to which the
Borrower or any Subsidiary is a party or by which the Borrower or any Subsidiary
or any of its property or assets is bound or to which the Borrower or any
1
Subsidiary or its assets may be subject, or (iv) violate any provision of any
Organizational Document of the Borrower or any Subsidiary. After giving effect
to the Amendment, the Credit Agreement constitutes the Working Capital Facility
(as defined in the Indenture) and the performance and observance of the terms
and provisions of the Amendment will not affect the status of the Credit
Agreement as the Working Capital Facility. Our opinion in clause 3 of this
paragraph is qualified to the extent that certain third party consents may be
required prior to the entering into and performance by a Borrowing Subsidiary of
a Reimbursement Agreement and the transactions contemplated thereby.
4. No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with, or exemption by, any
governmental or public body or authority, or any subdivision thereof, is
required to authorize, or is required in connection with (i) the execution,
delivery and performance of the Amendment or any other Loan Document or (ii) the
legality, validity, binding effect or enforceability of the Credit Agreement, as
amended by the Amendment, or any other Loan Document.
For purposes of this opinion, we have assumed, with your
permission, that the law of the State of New York is the same as the law of the
State of ________________.
Very truly yours,
2
EXHIBIT B to the
THIRD AMENDMENT
REIMBURSEMENT AGREEMENT
(Letter of Credit)
Agreement between the Account Party named below and Den norske
Bank ASA (the "Bank" or the "Issuing Bank") dated as of _______________, 199___.
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1. The following terms and provisions shall apply to this
Agreement; the meaning of any term in this or any other Section of this
Agreement expressed in the singular shall apply, mutatis mutandis, to the same
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term expressed in the plural and vice versa; all definitions of agreements,
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notes or other instruments shall mean such agreements as modified or amended in
accordance with the terms thereof and all definitions of promissory notes shall
include all promissory notes issued in replacement or substitution thereof:
"Account Party": ________________________________, a
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___________________ corporation and a subsidiary of Consolidated Hydro, Inc.,
a Delaware corporation("CHI").
"CHI Credit Agreement": Revolving Credit Agreement dated as of
--------------------
October 14, 1993 among CHI, Den norske Bank ASA, as Agent and the Banks named
therein, as amended from time to time.
Except as otherwise defined in this Agreement, terms used in
this Agreement and defined in the CHI Credit Agreement shall be used herein as
so defined. All references to the "Loan(s)" or the "Borrower" in the provisions
of the CHI Credit Agreement which are incorporated into this Agreement by
reference, shall be deemed to be references to the Loans made under this
Agreement or the Account Party, as the case may be.
2. The Account Party has requested that the Bank issue, for
the account of the Account Party, a letter of credit, together with the Letter
of Credit issued in substitution or replacement thereof (the "Letter of
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Credit").
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3. The Account Party agrees to pay to the Issuing Bank, a fee
with respect to the Letter of Credit, computed at a rate of 0.25% per annum on
the L/C Available Amount of the Letter of Credit and payable in arrears on the
last Business Day of March, June, September and December of each year commencing
on the first such date occurring after
1
the date on which such Letter of Credit is issued. In addition, the Account
Party agrees (x) to pay to the Issuing Bank for its own account the Issuing
Bank's standard charges and expenses, as in effect from time to time, in
connection with the issuing, transmitting, maintaining, administering, amending,
processing or paying the Letter of Credit and (y) to pay any and all costs or
charges of any other Person relating to the advising, confirming, negotiating,
paying or similar acts with respect to the Letter of Credit, provided that, if
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any beneficiary shall require that the Letter of Credit be confirmed, and such
requirement is reasonably acceptable to the Issuing Bank and the cost of such
confirmation shall exceed 1% per annum (based upon the L/C Available Amount)
plus any amounts payable during any relevant period pursuant to Section 4 the
----
CHI Credit Agreement (as incorporated herein by reference), then, Den norske
----
Bank AS shall pay such excess costs of confirmation, provided that, if the
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confirming bank is not selected by Den norske Bank AS, the cost of such
confirmation borne by Den norske Bank AS shall not exceed an amount computed at
a rate equal to 1/2 of 1% per annum (based upon the relevant L/C Available
Amount. Fees charged on a per annum basis shall be computed on the number of
days actually elapsed on the basis of a 360-day year.
4. Any amount drawn under the Letter of Credit (whether issued
by the Bank or any other Issuing Bank) shall be paid by the Issuing Bank using
the amounts credited to the Cash Collateral Account (as hereinafter defined).
If, for any reason, such amounts cannot be so applied or the application thereof
is reversed, the amount of such drawing shall constitute a loan (each a "Loan")
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by the Bank to the Account Party made on the date of any such drawing. Each Loan
shall bear interest, from the date of such drawing until such amount is repaid
to the Bank, at the time(s) and at the rate(s) provided for Loans in the CHI
Credit Agreement. Sections 3 and 4 of the CHI Credit Agreement are incorporated
herein by reference, together with the defined terms used in said Sections 3 and
4; provided that, for this purpose;
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(i) the Default Rate shall apply only upon the
earlier of the date on which (x) the Bank is (by operation of law, legal process
or otherwise) prevented from applying the Deposited Funds to the Secured
Obligations or (y) the Bank rescinds any such application in connection with any
bankruptcy or other proceeding for the relief of financially distressed debtors,
and
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(ii) each Loan and interest thereon shall be
payable ON DEMAND.
5. All payments provided for hereunder shall be effectively
made to the Bank, in lawful money of the United States of America (without
setoff or counterclaim in immediately available funds), prior to 12:00 Noon on
the date when due at the office of the Bank located at 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 or such other place and for the account of such office of
the Bank as the Bank may designate. The Bank is authorized to debit any account
of the Account Party with the Bank for all amounts payable under this Agreement
or the other Loan Documents.
6. Each Letter of Credit shall be in form and substance
satisfactory to the Account Party and the Issuing Bank, and, unless otherwise
agreed by the Account Party and the Issuing Bank, shall (i) have an initial
expiry date, which shall be no later than one year after the date of its
issuance or, if earlier, the L/C Expiry Date, subject to automatic renewal
unless notice to the contrary is given by the Issuing Bank in writing a
specified period before the then current expiry date, and (ii) state that,
except as otherwise provided therein, such Letter of Credit shall be governed by
the Uniform Customs and, to the extent not inconsistent therewith, the law of
the State of New York.
The Bank shall not be required to issue the Letter of Credit unless,
within a reasonable time before such issuance, the Bank shall have received from
the Account Party an L/C Request. The documents executed and delivered in
connection with the issuance or performance of the Letter of Credit (including,
without limitation, any standing agreement or application for standby or
commercial letters of credit, any application for steamship guaranty, air
release or similar document, any trust receipt or any other document relating to
the Letter of Credit or the transactions contemplated thereby or in connection
therewith) are herein sometimes referred to as the "L/C Documents". In the case
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of an L/C Request, on the date specified in such L/C Request (or as soon
thereafter as is practicable), the Issuing Bank shall issue the requested Letter
of Credit by sending it to the beneficiary thereof, or as the Account Party may
otherwise direct.
7. The Account Party assumes all risks of the acts, omissions
or misuse of the Letter of Credit by the beneficiary or any other user thereof
and those of any bank
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engaged to issue, advise, pay, negotiate, confirm or otherwise deal with the
Letter of Credit. The Issuing Bank (and, also, the Agent and the Banks) shall
not be responsible: (i) for the form, validity, sufficiency, accuracy,
genuineness or legal effect of any draft or document submitted by any party in
connection with the application for, issuance of, or payment under, the Letter
of Credit, even if any thereof should in fact proved to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged, (ii) for
errors, omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex, telecopy or otherwise, whether or
not they be in cipher, (iii) for any loss or delay in the transmission or
otherwise of any document or draft required in order to make a drawing under the
Letter of Credit or of any proceeds thereof or (iv) for any consequences arising
from causes beyond the control of the Issuing Bank. None of the above shall
affect, impair, or prevent the vesting of any of the Issuing Bank's rights or
powers hereunder or under any of the other documents or instruments executed in
connection herewith. The Account Party shall protect the Issuing Bank, the Agent
and the Banks in connection with the Payment of any draft presented on or before
the expiration of any time limit expressed in the related Letter of Credit
regardless of when drawn and when or whether negotiated. In furtherance and
extension and not in limitation of the specific provisions hereinbefore set
forth, the Account Party agrees that any action taken by the Issuing Bank under
or in connection with the Letter of Credit or the relevant drafts shall be
binding on the Account Party and shall not put the Issuing Bank, the Agent or
any Bank under any resulting liability to the Account Party, and the Account
Party makes like agreement as to any inaction or omission, unless, in the case
of the Issuing Bank, it acted with gross negligence or willful misconduct.
Without limiting the foregoing, the obligation of the Account Party or the Banks
to reimburse the Issuing Bank and the Banks, as the case may be, with respect to
any drawing made under the Letter of Credit shall be irrevocable, absolute and
unconditional and shall not be subject to any qualification or exception
whatsoever, and shall be made in accordance with the terms and conditions of
this Agreement under all circumstances, including, without limitation, any of
the following circumstances:
(i) any lack of validity or enforceability of this
Agreement, the Letter of Credit or any related
document or instrument;
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(ii) the existence of any claim, setoff,
defense or other right which the Account
Party may have at any time against a
beneficiary or transferee of the Letter of
Credit (or any Person for whom any such
beneficiary or transferee may be acting),
the Agent, the Issuing Bank, any Bank or
any other Person, whether in connection
with this agreement, the Letter of Credit,
any other Loan Document, the transactions
contemplated hereby or thereby or any
unrelated transactions (including any
underlying transactions between the
Account Party and the beneficiary named in
the Letter of Credit);
(iii) payment by the Issuing Bank under the Letter of
Credit of any draft which does not comply with
the terms of such Letter of Credit:
(iv) any other circumstance or happening whatsoever
which would give rise to a defense against
payment regardless of whether similar to any of
the foregoing; or
(v) the occurrence of any Default or the
termination or expiration of any
Commitment;
provided that, nothing herein shall prejudice any right of the Account Party to
-------------
bring an independent action against the Issuing Bank with respect to any claim
that the Issuing Bank acted with gross negligence or wilful misconduct. The term
"draft" as used in this Agreement shall mean and include any draft or drawing
-----
certificate or statement and any and all documents and instruments required to
be presented for payment under the Letter of Credit.
8. The Account Party hereby agrees at all times to protect,
indemnify and save harmless the Bank from and against any and all claims,
actions, suits and other legal proceedings, and from and against any and all
loss, claims, demands, liabilities, damages, costs, charges, counsel fees and
other expenses which the Bank may, at any time, sustain or incur by reason of or
in consequence of or arising out of the issuance or performance of the Letters
of Credit (including, without limitation, any action to restrain or
5
enjoin any payment thereunder), it being the intention of the parties that this
Agreement shall be construed and applied to protect and indemnify the Bank
against any and all risks involved in the issuance or performance of the Letters
of Credit, all of which risks are hereby assumed by the Account Party,
including, without limitation, any and all risks of the act or omissions,
whether rightful or wrongful, of any present or future de jure or de facto
------- --------
government or governmental authority (all such acts and omissions, "Government
----------
Acts"). Without in any way limiting the foregoing, the Account Party hereby
----
further agrees (i) at all times to protect, indemnify and save harmless the Bank
from and against any and all claims, actions, suits and other legal proceedings,
and from and against any and all losses, claims, demands, liabilities, damages,
costs, charges, counsel fees and other expenses which the Bank may, at any time,
sustain or incur by reason of or in consequence of or arising out of the Letter
of Credit being issued by an Issuing Bank other than the Bank or as a result of
the Bank executing any application (including any joint application) or other
Letter of Credit Document for the issuance of, or in connection with, such
Letter of Credit (including, without limitation, all claims, demands,
liabilities, damages, costs, charges, counsel fees and other expenses incurred
by the Bank to such Issuing Bank, or payments made by the Bank to such Issuing
Bank, in connection with any such Letter of Credit or the Letter of Credit
Document), (ii) that the Bank shall have no liability to the Account Party, as
an applicant or a joint applicant for any such Letter of Credit, and the Account
Party shall have no right against the Bank (by way of indemnification,
contribution or otherwise) in connection therewith and (iii) the Bank shall be
entitled to the benefits of any indemnification provision provided to any
Issuing Bank under the Letter of Credit Document with the effect that, without
limiting any other provision of this Agreement, the Bank shall be indemnified
for any and all matters with respect to which such Issuing Bank is indemnified.
The Bank shall not, in any way, be liable for any failure by the Bank or anyone
else to pay any draft under the Letter of Credit as a result of any Government
Acts or any other cause beyond the control of the Bank. The provisions of this
Section 8 shall survive the termination of this Agreement.
9. The Account Party hereby authorizes and directs the Bank to
establish a special account named the [Name of Account Party] Cash Collateral
Account (the "Cash Collateral Account") at its office identified below or at
-----------------------
6
any of its other branch offices, such account to be maintained until the Letter
of Credit is terminated or expired and all Secured Obligations are paid in full.
On or before the Letter of Credit is issued, the Account Party shall deposit in
the Cash Collateral Account an amount (the "Cash Collateral Amount") equal to
----------------------
the face amount of the Letter of Credit.
The Bank shall have a lien on, and security interest in, all
amounts (together with all interest, if any, accrued thereon) in the Cash
Collateral Account. All amounts deposited in the Cash Collateral Account (but
not interest accrued thereon) shall bear interest for each day from the date of
such deposit to (but not including) the Charge Date (as hereinafter defined) at
a rate per annum equal to the lesser of
(i) (x) The rate determined by the Issuing Bank
at its principal office in New York City as
the rate which the Issuing Bank is willing to
pay for U.S. dollar deposits in an amount
equal to the cash collateral amount for which
interest is being determined during such day
or, if such day is not a Business Day, during
the next preceding Business Day minus (y)
-----
0.25%, or
(ii) the highest rate permitted by law.
All such interest shall be credited to the Cash Collateral
Account quarterly. As used herein, the term "Charge Date" shall mean, with
-----------
respect to any amount bearing interest in the Cash Collateral Account, the
earlier of:
(a) the date on which a corresponding amount is paid by
the Bank pursuant to the Letter of Credit or charged
by the Bank in respect of any of the Account Party's
obligations hereunder or
(b) the date on an event of the type referred to in
Section 12.7 of the CHI Credit Agreement shall occur
with respect to the Account Party.
Upon the giving of 3 Business Days prior written request to
the Bank, the Account Party shall be entitled to withdraw from the Cash
Collateral Account all amounts in
7
excess of the sum of (w) all amounts due under this Agreement and the other
Letter of Credit Documents (whether for principal, interest or otherwise), (x)
all amounts which the Bank may be required to pay under the Letter of Credit,
and (y) all unreimbursed amounts paid by the Bank under the Letter of Credit and
(z) all fees which may be payable to the Bank in respect of the Letter of Credit
(whether or not then due).
11. The Account Party represents and warrants
that:
(i) the Account Party is duly organized, validly existing
and in good standing under the jurisdiction of its
incorporation and has the power to enter into and
perform its obligations hereunder and the
transactions contemplated hereby;
(ii) this Agreement constitutes the duly autho-
rized, legal, valid and binding obligation of
the Account Party, enforceable in accordance
with its terms; and all acts, filings, condi-
tions and things required to be done and per-
formed and to have happened (including, with-
out limitation, the obtaining of all neces-
sary corporate or shareholder approvals and
all third party and governmental approvals)
precedent to the entering into of this Agree-
ment have been done, performed and have
happened in due and strict compliance with
all applicable laws;
(iii) the entering into and performance of this
Agreement by the Account Party will not
violate any law, rule, regulation, order,
decree, permit, agreement or instrument to
which CHI the Account Party is a party or is
subject, or result in the imposition of any
lien upon any of CHI's or the Account Party's
assets (except as contemplated hereby);
(iv) no event of the type referred to in Section 12.7 of
the CHI Credit Agreement has occurred with respect to
the Account Party; and
8
12. The Account Party represents and agrees that:
(i) legal proceedings against it with respect
this Agreement and the transactions contem-
plated hereby may be brought in the courts of
its jurisdiction of organization or principal
location or any jurisdiction in which the
Account Party has substantial assets or the
courts of the State of New York or of the
United States of America for the Southern
District of New York, as the Bank may elect,
and that the jurisdiction of such courts is
generally and unconditionally accepted;
(ii) service of process out of any such court may be made
by mailing copies thereof by registered or certified
air mail, postage prepaid, to the Account Party at
its address for notices as specified herein and will
become effective 30 days after such mailing;
(iii) it is not entitled to, and to the extent it
hereafter becomes so entitled, hereby waives
any immunity, sovereign or otherwise, with
respect to itself and its property from
jurisdiction, service, attachment (both
before and after judgment) and execution in
legal proceedings wherever commenced to
enforce or collect upon this Agreement;
(iv) the courts of the State of New York and the
courts of the United States of New York for
the Southern District of New York shall have
exclusive jurisdiction with respect to any
action brought by the Account Party in con-
nection with this Agreement or any other Loan
Document or the transactions contemplated
hereby or thereby; and
(v) the provisions of this Section 12 shall not limit the
right of the Bank to serve process in any other
manner permitted by law or to commence legal
proceedings in any other court of competent
jurisdiction.
9
13. The Bank and the Account Party agree that:
(i) communications may be given to the parties
hereto at their respective addresses set
forth below, or at such other address as may
be specified in writing and shall be effec-
tive when received; the phrases "written
notice" and "in writing" when used herein
shall mean notice given in any form of
writing however transmitted;
(ii) this Agreement may be modified only by an instrument
in writing signed by the party against whom
enforcement of the modification is sought;
(iii) this Agreement shall be binding upon the Account
Party, its successors and assigns and shall inure to
the benefit of and be enforceable by the Bank and its
successors and assigns;
(iv) the Bank's rights, powers, privileges and
remedies under or in connection with this
Agreement are cumulative and not exclusive
and shall not be waived, precluded or limited
by any failure or delay in the exercise
thereof or by the partial exercise thereof or
by any course of dealing between the Account
Party and the Bank;
(v) the Account Party agrees to pay and hold the
Bank harmless from and against any and all
costs and expenses (including legal fees and
disbursements and stamp and other taxes)
incurred in connection with this Agreement or
the Letter of Credit, the enforcement hereof
or thereof and any action or proceeding
relating to a court order, injunction or
other process restraining or seeking to
restrain the Bank from paying any amount
under the Letter of Credit;
(vi) for purposes of all exculpatory and indemnification
provisions of this Agreement and the other Loan
Documents, the terms "Bank" and "Issuing Bank" shall
also include their respective directors, officers,
employees,
10
agents, and any bank acting on behalf of the Bank and
the Issuing Bank in connection with this Agreement or
the Letter of Credit and any participant of or in the
Bank's interests relating to this Agreement or the
other Loan Documents; and
(vii) this Agreement and the rights and obligations
of the parties hereunder shall be construed
in accordance with, and be governed by, the
law of the State of New York; and each Letter
of Credit shall be subject to the Uniform
Customs and Practice for Commercial Docu-
mentary Credits fixed by the International
Chamber of Commerce, as in effect on the date
of issuance of the Letter of Credit, and, to
the extent not inconsistent with said Uniform
Customs and Practice, shall be governed by
the law of the State of New York, including
Article 5 of the New York Uniform Commercial
Code.
14. This Agreement may be executed in counterparts, of which
each shall be an original and all shall constitute a single instrument, and
shall become effective on the date (the "Effective Date") when (x) each of the
parties hereto shall have signed a copy hereof (whether the same or different
copies) and the Bank shall have received a copy executed by the Borrower and (y)
unless waived by the Bank in writing, each of the following conditions shall be
satisfied:
A. The Bank shall have received the Cash
Collateral Amount for deposit into the Cash
Collateral Account;
B. The Bank shall have received a favorable opinion of
counsel to the Account Party and CHI, substantially
in the form of Schedule 1 hereto, dated on or about
the Effective Date; such opinion shall be addressed
to the Bank and shall cover such other matters as the
Bank may reasonably request;
C. The Bank shall have received, in U.S. dollars, all
fees, costs and expenses payable as of such time
pursuant to Sections 3 and 13(v) hereof or otherwise
payable in connec-
11
tion with this Agreement or the other L/C Documents
or in connection with the transactions contemplated
hereby or thereby or relating hereto or thereto;
D. All corporate and legal proceedings and all
instruments and agreements in connection with
the transactions contemplated by this Agree-
ment and the other L/C Documents shall be
satisfactory in form and substance to the
Bank and its counsel, and the Bank shall have
received all information and copies of all
documents and papers, including records of
corporate and governmental proceedings and
the financial information required under this
Agreement which the Bank may reasonably have
requested in connection therewith, such docu-
ments and papers (when appropriate) to be
certified by proper corporate or governmental
authorities and shall, in any event, include:
(A) a long form good standing certificate for
the Account Party, (B) certified copies of
the corporate charter and Organizational
Documents of the Account Party and (C) a
certificate of the Secretary or an Assistant
Secretary of the Account Party certifying (1)
the corporate resolutions of the Account
Party relating to the entering into and per-
formance of the L/C Documents and the trans-
actions contemplated thereby and (2) the
incumbency and specimen signatures of
officers or representatives of the Account
Party authorized to execute the L/C Documents
and other documents and papers, and to take
any other action, in connection herewith and
therewith;
E. The Bank shall have received the annual
Financial Statements of the Account Party as
at and for its fiscal year and fiscal quarter
most recently ended (or for the prior year
and/or quarter, if the Financial Statements
for the most recently ended period are not
available and less than 120 days, in the case
of annual Financial Statements, or 30 days,
in the case of quarterly Financial State-
ments, have expired), together with a certif-
12
icate of the type required by Section
10.2(a)(i) of the CHI Credit Agreement;
F. As at the Effective Date, and after giving effect to
this Agreement and the transactions contemplated
hereby, (i) no default by the Account Party under
this Agreement shall exist and (ii) all
representations and warranties of the Account Party
shall be true and correct.
G. All acts, conditions and things required to
be done and performed and to have happened
precedent to the execution and delivery of
this Agreement and the other L/C Documents in
order that the same constitute the legal,
valid and binding obligations of the Account
Party and the other parties thereto, as the
case may be, enforceable in accordance with
their terms, shall have been done and per-
formed and have happened in strict compliance
with all applicable laws; and
H. No law, regulation, rule, guideline or other action
by any Governmental Authority shall be in effect or
shall have occurred, the effect of which is to
prevent the Bank or the Account Party from fulfilling
their respective obligations hereunder or under the
other L/C Documents.
All of the L/C Documents, opinions of counsel and other
documents and papers referred to in this Section 14 shall be in form and
substance satisfactory to the Bank and shall be delivered to the Bank at its
Payment Office, or at such other place as the Bank may from time to time specify
to the Account Party.
15. WAIVER OF JURY TRIAL. EXCEPT TO THE EXTENT PROHIBITED BY
--------------------
LAW WHICH CANNOT BE WAIVED, EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN
CONNECTION WITH ANY ACTION OR PROCEEDING OF ANY NATURE WHATSOEVER ARISING UNDER,
OUT OF OR IN CONNECTION WITH THIS AGREEMENT, THE CHI CREDIT AGREEMENT, THE
LETTER OF CREDIT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY AND IN CONNECTION WITH ANY CLAIM, COUNTERCLAIM, OFFSET OR
DEFENSE ARISING IN CONNECTION WITH SUCH ACTION OR PROCEEDING, WHETHER ARISING
(X) IN CONNECTION WITH ANY ACTION INSTITUTED BY OR ON
13
BEHALF OF THE ACCOUNT PARTY, THE BANK OR ANY OTHER PERSON OR (Y) UNDER STATUTE
(INCLUDING ANY FEDERAL OR STATE CONSTITUTION) OR UNDER THE LAW OF CONTRACT, TORT
OR OTHERWISE AND VALIDITY, BINDING EFFECT OR ENFORCEABILITY OF THIS SECTION 15,
OR THIS AGREEMENT, THE LETTER OF CREDIT OR ANY OTHER LOAN DOCUMENT.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective duly authorized
officers as of the date first above written.
Addresses __________________ , the Account Party
---------
Telefax No: By _______________________________________
000 Xxxx Xxxxxx DEN NORSKE BANK ASA
New York, N.Y. 10166
Telefax No:
(000) 000-0000 By ______________________________________
Title ___________________________________
By ______________________________________
Title ___________________________________
14
NYFS10...:\84\38684\0003\1924\EXB9267R.080
