REIMBURSEMENT AGREEMENT
between
THE ENERGY NETWORK, INC.
and
FLEET NATIONAL BANK
dated as of
August 1, 1998
TABLE OF CONTENTS
SECTION l. Definitions . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. Reimbursement and Other Payments . . . . . . . . . . 6
SECTION 3. Issuance; Conditions Precedent; Extension . . . . . 9
SECTION 4. Reduction of Letter of Credit Amount . . . . . . . . 12
SECTION 5. Obligations Absolute . . . . . . . . . . . . . . . . 12
SECTION 6. Representations and Warranties of the Borrower . . . 13
SECTION 7. Affirmative Covenants Other Than Reporting Requirements16
SECTION 8. Negative Covenants . . . . . . . . . . . . . . . . . 20
SECTION 9. [Intentionally Left Blank] . . . . . . . . . . . . . 23
SECTION 10. Events of Default . . . . . . . . . . . . . . . . . 23
SECTION 11. Right to Cure . . . . . . . . . . . . . . . . . . . 26
SECTION 12. Amendments and Waivers . . . . . . . . . . . . . . . 26
SECTION 13. Notices . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 14. No Waiver; Remedies . . . . . . . . . . . . . . . . 27
SECTION 15. Indemnification . . . . . . . . . . . . . . . . . . 27
SECTION 16. Continuing Obligation; Survival . . . . . . . . . . 27
SECTION 17. Transfer of the Letter of Credit . . . . . . . . . . 28
SECTION 18. Limited Liability of the Bank . . . . . . . . . . . 28
SECTION 19. Costs, Expenses and Taxes . . . . . . . . . . . . . 29
SECTION 20. Severability . . . . . . . . . . . . . . . . . . . . 29
SECTION 21. Governing Law . . . . . . . . . . . . . . . . . . . 30
SECTION 22. Consent to Jurisdiction; JURY TRIAL WAIVER . . . . . 30
SECTION 23. Table of Contents; Headings . . . . . . . . . . . . 31
Exhibit A - Project Description
Exhibit B - Irrevocable Letter of Credit
Exhibit C - Form of Request for Termination Date Extension
Exhibit D - List of Subsidiaries
Exhibit E - Litigation
Exhibit F - Financial Statement Certificate
Exhibit G - Existing Indebtedness and Liens
REIMBURSEMENT AGREEMENT
REIMBURSEMENT AGREEMENT dated as of August 1, 1998 between THE ENERGY
NETWORK, INC., a corporation duly organized and validly existing under the
laws of the State of Connecticut (the Borrower ) and FLEET NATIONAL BANK
(together with any successor thereto, the Bank ).
WHEREAS, the Connecticut Development Authority (the "Issuer"), is
issuing its $10,600,000 aggregate principal amount Industrial Revenue
Variable Rate Demand Bonds (Capitol District Energy Center Project - 1998
Refunding Series) (the Bonds ) pursuant to an Indenture of Trust dated as
of August 1, 1998 (the Indenture ) between the Issuer and State Street Bank
and Trust Company, as trustee, and the Issuer wishes to lend the proceeds of
the Bonds to the Borrower to finance the project described in EXHIBIT A
hereto and to pay certain costs of issuance of the Bonds (collectively, the
Project ); and
WHEREAS, pursuant to a Loan Agreement dated as of August 1, 1998 (the
Loan Agreement ) between the Issuer and the Borrower, the Issuer proposes
to lend to the Borrower the amount of $10,600,000 (the Loan ) in order to
finance the Project; and
WHEREAS, in order to enhance the marketability of the Bonds and thus
achieve savings on interest costs, the Borrower has requested the Bank to
issue, for the account of the Borrower and for the benefit of the Trustee
under the Indenture, an irrevocable letter of credit substantially in the
form of EXHIBIT B hereto (the Letter of Credit ) in the maximum stated
amount of $10,756,822 (as the same may be reduced from time to time as
provided therein, the Letter of Credit Amount ); and
WHEREAS, the Letter of Credit will secure the payment of the principal
amount of the Bonds and up to 45 days' interest thereon;
NOW, THEREFORE, in consideration of the premises and in order to induce
the Bank to issue the Letter of Credit, the Borrower and the Bank hereby act
and agree as follows:
SECTION 1. DEFINITIONS.
(a) DEFINITIONS. The following terms, as used herein, shall have the
following respective meanings:
"AGREEMENT" means this Reimbursement Agreement, as same may be from
time to time amended.
"AVAILABLE AMOUNT", as in effect at any time, means the maximum amount
available to be drawn at such time under the Letter of Credit, the
determination of such maximum amount to assume compliance with all
conditions for drawing and no reduction (i) for any amount drawn by an
Interest Drawing (unless such amount is not to be reinstated under the
Letter of Credit), or (ii) or any amount drawn by a Tender Drawing, or (iii)
for any amount not available to be drawn because Bonds are held by or for
the account of the Borrower.
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"BANK OBLIGATIONS" means all obligations (now existing or hereafter
arising, matured or unmatured, fixed or contingent) of the Borrower to the
Bank arising under this Agreement and/or under any of the Related Documents.
"BONDS" has the meaning assigned to it in the introductory clauses to
this Agreement.
"BUSINESS DAY" means any day (i) that is not a Saturday, Sunday or
legal holiday, (ii) that is a day on which banks are not required or
authorized to close in Hartford, Connecticut or New York, New York, (iii)
that is a day on which banking institutions in all of the cities in which
the principal corporate trust office of the Trustee, the principal office of
the Remarketing Agent and the principal office of the Bank are located are
not required or authorized pursuant to law to remain closed and (iv) that is
a day on which the New York Stock Exchange is not closed.
"CHARTER" means the Articles of Organization or other organizational
documents of a corporation referred to herein, all as amended to date.
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended.
"CODE" shall mean the Internal Revenue Code of 1986, a amended from
time to time.
"COLLATERAL" shall mean any and all assets, rights and interests in or
to property of Borrower or any other Person pledged or mortgaged to Bank, or
in which a security interest is granted to Bank, from time to time, as
security pursuant to the Security Documents, whether now owned or hereafter
acquired.
"COMMONLY CONTROLLED ENTITY" shall have the meaning specified in
Section 6(i) of this Agreement.
"CREDIT FACILITIES means that certain 3-Year Revolving Credit
Agreement dated as of October 1, 1997 between the Borrower and the Bank, as
well as that certain 364 Day Revolving Credit Agreement dated as of October
1, 1997, both as amended from time to time.
"DATE OF ISSUANCE" means the date on which the Letter of Credit is
issued upon request of the Borrower pursuant to Subsection 3(a) hereof.
"EMPLOYEE BENEFIT PLAN" shall have the meaning specified in Section
6(i) of this Agreement.
"ENVIRONMENTAL EVENT" means (i) the unlawful generation, storage,
disposal, removal, transportation or treatment of Hazardous Substances on
any of the properties used or owned by the Borrower or any of its
Subsidiaries or in the vicinity of such properties, if, through soil or
groundwater migration, such Hazardous Substances could have come to be
located at any of such properties); (ii) the receipt by the Borrower of any
notice or claim of any violation of any Environmental Law or of any action
based upon nuisance, negligence or other tort theory alleging liability on
the basis of improper generation, storage, disposal, removal, transportation
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or treatment of Hazardous Substances on any properties used or owned by the
Borrower or any of its Subsidiaries; or (iii) the presence or release of
Hazardous Substances at or upon any of properties used or owned by the
Borrower or any of its Subsidiaries that has resulted in contamination or
deterioration of any portion of such properties resulting in a level of
contamination greater than the levels permitted or established by any
governmental agency having jurisdiction over the Borrower or any of such
properties.
"ENVIRONMENTAL LAWS" means any and all federal, state and local
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, licenses or other governmental restrictions relating to the
environment or the release of any materials into the environment, including,
without limitation, CERCLA and the Resource Conservation and Recovery Act
of 1976, 42 U.S.C. Sections 6901-6987.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EVENT OF DEFAULT" means any of the events specified in Section 10
hereof.
"FEPA ASSIGNMENT AGREEMENT" means that certain Pledge and Assignment
Agreement dated as of October 1, 1997 from the Borrower to State Street Bank
and Trust Company, as Collateral Agent, as amended by that certain Amendment
to Pledge and Assignment Agreement dated the date hereof, and as further
amended from time to time, and relating to the Forward Equity Purchase
Agreement.
"FINAL DRAWING" has the meaning assigned to that term in the Letter of
Credit.
"FORWARD EQUITY PURCHASE AGREEMENT" means that certain Forward Equity
Purchase Agreement dated as of August 1, 1997 between CTG Resources, Inc.
and the Borrower.
"GUARANTOR" shall mean, jointly, severally and collectively, TEN
Transmission Company, The Hartford Steam Company, and ENI Gas Services, Inc.
"GUARANTY" shall mean those certain unconditional and continuing
guaranties of each Guarantor of even date herewith in favor of Bank, as the
same may be supplemented or amended from time to time.
"GOVERNMENTAL AUTHORITIES" means all agencies, authorities, bodies,
boards, commissions, courts, instrumentalities, legislatures and offices of
any nature whatsoever for any government unit or political subdivision,
whether foreign, federal, state, county, district, municipal or otherwise,
and whether now or hereafter in existence.
"HAZARDOUS SUBSTANCES" means hazardous substances as defined in
CERCLA or any similar definitions in any of the Environmental Laws, as well
as asbestos and materials containing asbestos.
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"INDENTURE" has the meaning assigned to it in the introductory clauses
to this Agreement.
"INTEREST DRAWING" has the meaning assigned to that term in the Letter
of Credit.
"LEGAL REQUIREMENTS" means all statutes, ordinances, by-laws, codes,
rules, rulings, regulations, restrictions, orders, judgments, decrees,
writs, judicial or administrative interpretations and injunctions
(including, without limitation, all applicable building, health code,
zoning, subdivision and other land use statutes, ordinances, by-laws, codes,
rules and regulations), whether now or hereafter enacted, promulgated or
issued by any Governmental Authority materially affecting the Borrower, any
of its properties or the ownership, construction, development, maintenance,
management, repair, use, occupancy, possession or operation of any of the
foregoing or the operation of any programs or services by the Borrower,
including, without limitation, any of the foregoing which may (i) require
repairs, modifications or alterations in or to any of its properties, (ii)
in any way materially affect (adversely or otherwise) the use and enjoyment
of any of its properties or (iii) require the assessment, monitoring, clean-
up, containment or removal of any oil or hazardous substances on, under or
from any of its properties.
"LETTER OF CREDIT" has the meaning given to it in the introductory
clauses to this Agreement.
"LETTER OF CREDIT AMOUNT" has the meaning given to it in the
introductory clauses to this Agreement.
"LOAN" has the meaning specified in the introductory clauses to this
Agreement.
"MATERIAL ADVERSE CHANGE shall mean a material adverse change in (i)
the business, prospects, operations, results of operations, assets,
liabilities or condition (financial or otherwise) of Borrower or (ii) the
Collateral, in each case as determined by Bank in its sole discretion.
"MULTIEMPLOYER PLAN" shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"PARTIAL REDEMPTION DRAWING" has the meaning assigned to that term in
the Letter of Credit.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"PERMITS" means all licenses, approvals, qualifications, variances,
permissive uses, certificates of need, franchises, accreditations,
certificates, certifications, consents, permits and other authorizations
(including, without limitation, building permits, subdivision approvals and
subdivision plans) benefiting, relating to or affecting the Borrower or any
of its properties and the ownership, construction, development, maintenance,
management, repair, use, occupancy, possession or operation thereof or the
operation of any programs or services by the Borrower and all renewals,
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replacements and substitutions therefor, now or hereafter issued by or
entered into with any Governmental Authority or maintained or used by the
Borrower or entered into by the Borrower with any other Person.
"PERSON" means an individual, corporation, company, partnership, joint
venture, trust or unincorporated organization or a government or any agency
or political subdivision thereof.
"PLEDGE AGREEMENT" means that certain Pledge Agreement of even date
herewith between the Borrower and the Bank.
"PREVAILING LOCAL TIME" means the prevailing local time in effect in
Hartford, Connecticut.
"PRIME RATE" means a fluctuating rate of interest per annum equal to
that rate per annum announced by Fleet National Bank or any successor
thereto, from time to time, as being its prime rate of interest or base rate
of interest, with a change in the Prime Rate to take effect simultaneously
with each change in such announced rate. It is understood that such
announced prime rate or base rate is merely a reference rate, not
necessarily the lowest, which serves as the basis upon which effective rates
of interest are calculated for obligations making reference thereto.
"PROJECT" has the meaning assigned thereto in the introductory clauses
of this Agreement.
"RELATED DOCUMENTS" means the Letter of Credit, the Indenture, the Loan
Agreement, the Bonds, the Pledge Agreement, the Mortgage, the Security
Documents, and any other agreement or instrument guaranteeing, securing or
otherwise relating to any of the foregoing.
"REMARKETING AGENT" means X.X. Xxxxxxx & Sons, Inc. or any successor
thereto as remarketing agent under the Indenture.
"REMARKETING AGREEMENT" means that certain Remarketing Agreement of
even date herewith between the Remarketing Agent and the Borrower, and any
modification thereof or substitution therefor.
"SECURITY DOCUMENTS" means the FEPA Assignment Agreement and the
Guaranty as the same may be amended from time to time.
"TENDER ADVANCE" has the meaning assigned to that term in Subsection
2(d) of this Agreement.
"TENDER DRAWING" has the meaning assigned to that term in the Letter of
Credit.
"TERMINATION DATE" means the earliest of: (i) August __, 2000 (unless
extended as provided in Subsection 3(e) below), (ii) the date of payment of
a Final Drawing drawn under the Letter of Credit, or (iii) the earlier
termination of the Letter of Credit pursuant to the terms thereof.
"TRUSTEE" means State Street Bank and Trust Company, as trustee under
the Indenture, or any successor as such trustee.
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"UNRESTRICTED INVESTMENTS" means at any time cash and cash-equivalents
and other readily marketable securities of the Borrower as are unrestricted
and are identified as such in financial statements provided by the Borrower
to the Bank from time to time under this Agreement.
(b) ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial
statements required to be delivered hereunder shall be prepared, in
accordance with generally accepted accounting principles as in effect from
time to time and consistently applied.
(c) USE OF DEFINED TERMS. Any defined term used in the plural
preceded by the definite article shall be taken to encompass all members of
the relevant class. Any defined term used in the singular preceded by any
shall be taken to indicate any number of the members of the relevant class.
SECTION 2. REIMBURSEMENT AND OTHER PAYMENTS.
(a) CERTAIN FEES AND CHARGES. The Borrower agrees to pay to the Bank
(i) upon each transfer of the Letter of Credit by the Trustee, a transfer
fee equal to the Bank's then customary charge therefor; (ii) on the same
Business Day as any drawing under the Letter of Credit, a drawing fee in the
amount of $150; (iii) upon notice from the Bank, any and all out-of-pocket
charges and expenses which the Bank may pay or incur relative to drawings
under the Letter of Credit; (iv) interest on any and all amounts unpaid by
the Borrower when due under this Agreement (except as otherwise expressly
provided in Subsection 2(e) below) from the date such amounts become due
until payment in full, payable on demand, at a fluctuating interest rate per
annum (computed on the basis of a year of 360 days for the actual number of
days elapsed) which shall at times be equal to the sum of (x) 4.00% per
annum plus (y) the Prime Rate as in effect from time to time (but such
fluctuating interest rate shall in no event be higher than the maximum rate
permitted by then applicable law); (v) a late fee of 5.00% on any and all
amounts unpaid by the Borrower within ten days after the same are due under
this Agreement, payable on demand; and (vi) any and all costs and expenses
(including, without limitation, reasonable attorneys' fees) reasonably
incurred by the Bank in exercising or enforcing any rights or performing any
obligations under this Agreement.
(b)COMMITMENT AND CLOSING FEES. The Borrower also agrees that it will
pay to the Bank commitment fees with respect to the Letter of Credit
computed (on the basis of a year of 360 days for the actual number of days
elapsed) at the rate of 0.65% per annum. Such fees shall be payable in
advance, on the Date of Issuance and thereafter quarterly in advance on the
first day of each February, May, August and November, and shall be
calculated on the Available Amount outstanding on the date of payment. All
commitment fees paid hereunder shall be non-refundable once paid. The
Borrower acknowledges that it will be solely responsible for any
confirmation or other credit enhancement which may now or hereafter be
needed (or reasonably desired by the Borrower and/or the Remarketing Agent)
with respect to the Bonds. The Bank makes no representation that it has or
6
will maintain any particular rating with respect to the Letter of Credit or
its obligations generally and will not be liable to the Borrower for any
decline in any such rating.
(c) REIMBURSEMENT FOR DRAWINGS. The Borrower hereby agrees to pay to
the Bank immediately after (and on the same Business Day as) any amount is
drawn under the Letter of Credit pursuant to any Interest Drawing, Partial
Redemption Drawing or Final Drawing or pursuant to any Tender Drawing (but
as to a Tender Drawing, except as otherwise provided below, only to the
extent that such drawing represents accrued interest on the Bonds), a sum
equal to the amount so drawn. The Borrower also agrees to pay to the Bank,
with respect to any Tender Drawing as to which the conditions contained in
Subsection 3(d) are not fulfilled, any amount drawn under the Letter of
Credit pursuant to such Tender Drawing, such amount to be paid to the Bank
immediately after and on the same Business Day as such drawing. All amounts
payable under this Subsection 2(c) shall bear interest from the date on
which any such amount became payable until paid in full, at the rate
provided in clause (iv) of Subsection 2(a), payable on demand.
(d) TENDER ADVANCES. If the Bank shall make any payment of that
portion of the purchase price corresponding to principal of the Bonds drawn
under the Letter of Credit pursuant to a Tender Drawing and the conditions
set forth in Subsection 3(d) shall have been fulfilled, each such payment
shall constitute a Tender Advance made by the Bank to the Borrower on the
date and in the amount of such payment. The Borrower shall repay the unpaid
principal amount of each Tender Advance on the earliest of: (i) any demand
for payment following the occurrence of an Event of Default hereunder, (ii)
such date as is provided for in Paragraph 2(f)(ii) hereof, (iii) that date
which is designated as the required payment date in a written notice sent by
the Bank to the Borrower (provided that (a) such required payment date with
respect to any Tender Advance shall be not sooner than 120 days after the
date on which such Tender Advance was made, and (b) the required payment
date shall be not sooner than 30 days after such notice is given) or (iv)
the Termination Date of the Letter of Credit. The Borrower may prepay such
amount on an earlier date as provided in Paragraph 2(f)(i) hereof.
(e) INTEREST ON TENDER ADVANCES. The Borrower shall pay interest on
the unpaid amount of each Tender Advance from the date of such Tender
Advance until such amount is paid in full, such interest to be payable
monthly, in arrears, on the first day of each month during the term of each
Tender Advance and on the date such amount is paid in full, at a fluctuating
interest rate per annum which shall at all times be equal to the sum of (x)
2.00% per annum plus (y) the Prime Rate.
(f) PREPAYMENTS; REINSTATEMENT OF LETTER OF CREDIT AMOUNT.
(i) The Borrower, upon same-day prior notice to the Bank (stating
the amount to be prepaid), may prepay the outstanding amount of any Tender
Advance in whole or in part, together with accrued interest to the date of
such prepayment on the amount prepaid.
(ii) Prior to or simultaneously with the resale of Bonds acquired
with the proceeds of one or more draws under the Letter of Credit by one or
more Tender Drawings, the Borrower shall prepay the then outstanding Tender
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Advances (in the order in which they were made) by paying to the Bank an
amount equal to the sum of (x) the portion of the purchase price
corresponding to the aggregate principal amount of the Bonds being resold or
to be resold, PLUS (y) the portion of the purchase price corresponding to
the aggregate amount of accrued and unpaid interest on such Bonds, PLUS (z)
the aggregate amount of accrued and unpaid interest on such Tender Advances,
less the amount paid pursuant to the immediately preceding clause. Such
payment shall be applied by the Bank in reimbursement of such drawings (and
as prepayment of Tender Advances resulting from such drawings in the manner
described above), and, when such payment with respect to clause (x) and (y)
of the immediately preceding sentence is accompanied by a certificate
completed and signed by the Trustee in the form of Annex F to the Letter of
Credit, the Borrower irrevocably authorizes the Bank to rely on such
certificate and to reinstate the Letter of Credit in accordance therewith.
(iii) Pursuant to the Pledge Agreement, the Borrower has
agreed that Bonds purchased with proceeds of any Tender Drawing shall be
delivered to the Bank or its designee to be held by the Bank or its designee
in pledge as collateral securing the Borrower's payment obligations to the
Bank hereunder. Bonds so delivered to the Bank or its designee shall be
registered in the name of the Bank, or its designee, as pledgee, as provided
for in Section 3 of the Pledge Agreement.
(iv) Outstanding Tender Advances may be prepaid at any time by or
on behalf of the Borrower on notice from the Borrower directing the Bank to
deliver Bonds held by the Bank or its designee pursuant to the Pledge
Agreement for sale pursuant to the Indenture and specifying the principal
amount of Bonds to be so sold, which notice may be given by telephone
(promptly confirmed in writing) but which shall not be effective unless
received by the Bank prior to 10:00 A.M. (New York time) on the day of the
proposed prepayment referred to above; PROVIDED that the Bank shall not
deliver any such Bonds for sale or otherwise until the Letter of Credit has
been reinstated pursuant to the terms of this Agreement and the Letter of
Credit.
(g) INCREASED COSTS. If any law, regulation or change in any law or
regulation or in the interpretation thereof or any ruling, decree, judgment,
guideline, directive or recommendation (whether or not having the force of
law) by any regulatory body, court, central bank or any administrative or
governmental authority having or claiming jurisdiction (including, without
limitation, a request or requirement that affects the manner in which the
Bank or any participant in the Letter of Credit or any confirming bank with
respect to the Letter of Credit allocates capital resources to its
commitments including its obligations hereunder), shall either (i) impose
upon, modify, require, make or deem applicable to the Bank or any
participant in the Letter of Credit or to any confirming bank with respect
to the Letter of Credit any reserve requirement, special deposit requirement
or the like against or affecting the Letter of Credit or such participation
or any confirmation thereof, or (ii) subject the Bank or any such
participant to any tax, charge, fee, deduction or withholding of any kind
whatsoever in connection with the Letter of Credit or any participation or
any confirmation thereof or change the basis of taxation of the Bank or of
any such participant or any such confirming bank (other than a change in the
rate of tax based on the overall net income of the Bank or of any such
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participant or any such confirming bank), or (iii) impose any condition upon
or cause in any manner the addition of any supplement to or increase of any
kind to the Bank s or such participant's or confirming bank's capital or
cost base for issuing the Letter of Credit or participating therein or
confirming thereof, or (iv) impose upon, modify, require, make or deem
applicable to the Bank or any such participant or such confirming bank any
capital requirement, increased capital requirement or similar requirement,
including, without limitation, a request or requirement that affects the
manner in which the Bank or any such participant allocates capital resources
to its commitments including its obligations hereunder and/or under the
Letter of Credit or any such participation or confirmation, and the result
of any of the events referred to in (i), (ii), (iii) or (iv) above shall be
to increase the costs in any way to the Bank or any such participant or any
such confirming bank of issuing or maintaining the Letter of Credit or
participating therein or confirming thereof or to reduce the amounts payable
by the Borrower hereunder or to reduce the rate of return on the Bank s
capital, as a consequence of issuing or maintaining the Letter of Credit or
participating therein or confirming thereof, to a level below that which the
Bank or any such participant or any such confirming bank could have achieved
but for any such events; then and in any such event the Borrower shall,
promptly upon receipt of written notice by the Bank of such increased costs
and/or decreased benefits stating the reason therefor, pay to the Bank all
such additional amounts that, in the Bank's sole good faith calculation, as
allocated to the Letter of Credit or any such participation or confirmation,
shall be sufficient to compensate the Bank or any such participant or any
such confirming bank for all such increased costs and/or decreased benefits,
all as certified by the Bank in said written notice to the Borrower. Such
certification shall be conclusive and binding on the parties hereto, absent
manifest error. In determining such amount, the Bank may use any reasonable
averaging or attribution methods.
(h) PAYMENTS. All payments by the Borrower to the Bank hereunder
shall be made in lawful currency of the United States and in immediately
available funds at the offices of the Bank at Xxx Xxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, or such other place as the Bank may designate.
Whenever any payment hereunder shall be due on a day which is not a Business
Day, the date for payment thereof shall be extended to the next succeeding
Business Day, and any interest payable thereon shall be payable for such
extended time at the specified rate. Any payments received after 12:00 noon
on any day will be deemed received on the next succeeding Business Day.
SECTION 3. ISSUANCE; CONDITIONS PRECEDENT; EXTENSION.
(a) Subject to satisfaction of the conditions precedent set forth in
subsections (b) and (c) of this Section, the Bank shall issue the Letter of
Credit in the Letter of Credit Amount, effective on the Date of Issuance and
expiring on the Termination Date.
(b) As conditions precedent to the issuance of the Letter of Credit,
the Bank shall have received on or before the Date of Issuance the
following, each in form and substance satisfactory to the Bank:
(i) A copy of the Borrower's Charter and all amendments thereto,
certified by the Secretary of State of the State of Connecticut.
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(ii) A long-form Certificate of Legal Existence for the
Borrower, issued by the Secretary of State of the State of Connecticut.
(iii) The by-laws of the Borrower, certified by its Secretary.
(iv) True and correct copies of the resolutions of the board
of directors of the Borrower (and, if needed, the members of the
Borrower) approving this Agreement and each of the Related Documents.
Such resolutions shall be certified as to the accuracy, due adoption
and continuing force and effect thereof by the Secretary of the
Borrower.
(v) A certificate executed by the Secretary of the Borrower
certifying the names and true signatures of the officers of the
Borrower authorized to execute on behalf of the Borrower this Agreement
and the Related Documents and any and all certificates, notices and
reports referred to in this Agreement; each such certificate shall
state that the Bank may conclusively rely on the statements made
therein until the Bank shall receive a further certificate of such
Secretary canceling or amending the prior certificate and submitting
signatures of the officers named in such further certificate.
(vi) The Security Documents.
(vii) Evidence in such form as the Bank may reasonably require that
the Borrower has obtained all types of casualty, liability and other
insurance required hereunder or under any of the Related Documents.
(viii) Certified copies of all approvals, authorizations, or
consents of, or notices to, or registrations with, any governmental
body or agency required for the Borrower to enter into this Agreement
and the Related Documents and to carry out the transactions
contemplated hereby and thereby.
(ix) Executed copies of the Related Documents (or duplicate
originals thereof), and all other such documents relating to the
Related Documents or this Agreement as the Bank shall reasonably
request, each of which shall be in form and substance satisfactory to
the Bank, together with evidence of the execution and delivery thereof
by a person duly authorized to do so and appropriate evidence of such
authorization.
(x) An opinion or opinions of counsel to the Borrower as to legal
existence and authority of the Borrower, corporate capacity of the
Borrower, due authorization of transactions, enforceability of
documents, no conflict with law, no conflict with other agreements, no
litigation, perfection of security interests, and other matters
reasonably requested by the Bank, such opinion or opinions to be
satisfactory in form and substance to the Bank.
(xi) Financial statements of the Borrower as at September 30,
1997, and for the fiscal year then ended, certified by the Borrower s
independent certified public accountants.
10
(xii) Interim financial statements of the Borrower, certified by
its chief financial officer, for the fiscal quarter ended June 30,
1998.
(xiii) Evidence of the Issuer's approval of the Bonds.
(xiv) All such other documents, instruments, approvals and opinions
as the Bank may reasonably request.
(c) The following statements shall be true and correct on the Date of
Issuance and the Bank shall have received a certificate signed by an
authorized officer of the Borrower, dated the Date of Issuance, stating
that:
(i) the representations and warranties contained in Section 6
hereof are correct on and as of the Date of Issuance as though made on
and as of such date; and
(ii) no Event of Default hereunder (or event or circumstance
which, with the passage of time or the giving of notice, or both, could
become an Event of Default) has occurred and is continuing or could
result from the issuance of the Letter of Credit.
(d) Each payment made by the Bank under the Letter of Credit pursuant
to a Tender Drawing shall constitute a Tender Advance hereunder ONLY IF on
the date of such payment the following statements shall be true:
(i) The representations and warranties contained in Section 6 of
this Agreement, Section 5 of the Pledge Agreement and the other Related
Documents are correct on and as of the date of such Tender Advance as
though made on and as of such date; and
(ii) No event has occurred and is continuing, or would result from
such Tender Advance, that constitutes an Event of Default or could,
with the passage of time or the giving of notice or both, constitute an
Event of Default.
On the date of each payment by the Bank of a Tender Drawing, the
Borrower shall give the Bank a certificate, signed by an authorized officer
of the Borrower, stating that on the date of such payment the above
statements are true and correct.
(e) Upon the written request of the Borrower received by the Bank no
later than 225 days prior to the Termination Date then in effect under
subsection (i) of the definition thereof (or such later date to which the
Bank may consent in writing), the Bank shall within 45 days of such request
notify the Borrower, the Issuer, the Trustee and the Remarketing Agent
whether or not it will extend the scheduled Termination Date for a period of
one year (or such other period as the Bank may agree in its sole
discretion); PROVIDED, HOWEVER, that the Borrower shall not make its first
request that Bank so extend the scheduled Termination Date earlier than the
one year anniversary of this Agreement. If the Bank notifies the Borrower,
the Issuer, the Trustee and the Remarketing Agent that the scheduled
Termination Date shall be so extended, the Bank shall within 30 days of such
11
notification, deliver to the Trustee and the Borrower a written
acknowledgment of such extension. If the Bank fails to notify the Borrower
of its decision within such 30-day period, the Bank shall be deemed to have
rejected such request. Any such request by the Borrower for an extension of
the Termination Date shall be substantially in the form of EXHIBIT C hereto
(or in such other form to which the Bank may consent in writing) and, unless
the Bank shall otherwise consent, shall include (i) a statement of the
outstanding principal amount of the Bonds, (ii) a reasonably detailed
description of any and all Events of Default and all conditions, events and
acts which with notice or lapse of time or both would become an Event of
Default and (iii) any other pertinent information requested by the Bank.
Nothing contained in this Agreement or elsewhere shall be deemed an
agreement by the Bank to extend the Termination Date whether on the terms
contained herein or on any other terms.
SECTION 4. REDUCTION OF LETTER OF CREDIT AMOUNT. The Letter of
Credit Amount shall be reduced from time to time as specified in the fourth
grammatical paragraph of the Letter of Credit; provided that voluntary
prepayments of the Loan will be made not more frequently than quarterly.
SECTION 5. OBLIGATIONS ABSOLUTE. The obligations of the Borrower
under this Agreement shall be absolute, unconditional and irrevocable, and
shall be performed strictly in accordance with the terms of this Agreement,
under all circumstances whatsoever, including, without limitation, the
following circumstances:
(a) any lack of validity or enforceability of the Letter of
Credit or any of the other Related Documents;
(b) any amendment or waiver of or any consent to departure from
the terms of all or any of the Related Documents;
(c) any exchange, acceptance, release or non-perfection as to any
collateral or release or addition of any other Persons primarily or
secondarily liable;
(d) the existence of any claim, setoff, defense or other rights
which the Borrower may have at any time against the Bank, the Issuer,
the Trustee or any beneficiary or any transferee of the Letter of
Credit (or any Person for whom any such beneficiary or any such
transferee may be acting), whether in connection with this Agreement,
the transactions contemplated hereby or any unrelated transaction;
(e) any statement or any other document presented under the
Letter of Credit shall prove to be forged, fraudulent, invalid or
insufficient in any material respect or any statement therein is untrue
or inaccurate in any material respect;
(f) payment in good faith by the Bank under the Letter of Credit
against presentation of a statement or draft which does not comply with
the terms of the Letter of Credit; or
(g) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing.
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SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. As an
inducement to the Bank to execute this Agreement and to issue the Letter of
Credit, the Borrower hereby represents and warrants to the Bank that:
(a) The Borrower is a corporation duly organized, legally existing and
in good standing under the laws of the State of Connecticut and has the
legal power and authority to enter into and perform this Agreement and each
of the Related Documents in which it is named as a party, to grant the
security interests and liens described in the Security Agreement and the
related collateral assignments, to fulfill its obligations set forth herein
and therein and to carry out the transactions contemplated hereby and
thereby. The Borrower has all requisite corporate power to own and operate
its properties and to carry on its business as now conducted and as proposed
to be conducted and is duly qualified and in good standing in each
jurisdiction where the failure so to be qualified could have a material
adverse effect on the Borrower and/or its operations. At the date of this
Agreement, the Borrower has only Subsidiaries listed on Exhibit D. The
Borrower is not a member of any partnership or joint venture, other than
Downtown Cogeneration Associates Limited Partnership.
(b) The execution, delivery and performance by the Borrower of this
Agreement, the Security Documents and the other documents required to be
executed by the Borrower pursuant hereto have been duly authorized by all
necessary corporate action, will not require any consent of any third party
not obtained prior to the date hereof, and will not conflict with, violate
the provisions of, or cause a default or constitute an event which, with the
passage of time or the giving of notice or both, could constitute a default
on the part of the Borrower under any mortgage, indenture, judgment, decree,
rule, regulation, law or order, or any material contract or agreement
applicable to the Borrower or under any provision of the Charter or by-laws
of the Borrower, or result in the imposition of any lien or encumbrance on
any property or assets of the Borrower, except for the liens created by the
Security Agreement, the Mortgage and/or the related collateral assignments.
This Agreement, the Security Agreement, the Mortgage and any other documents
delivered to the Bank by the Borrower pursuant hereto are the valid and
binding obligations of the Borrower, enforceable in accordance with their
respective terms.
(c) There are no actions, suits, proceedings or investigations pending
or, to the knowledge of the Borrower, threatened, anticipated or
contemplated (nor, to the knowledge of the Borrower, is there any basis
therefor) against or affecting the Borrower before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic
or foreign, which could prevent or hinder the consummation of the
transactions contemplated hereby or call into question the validity of this
Agreement, any of the Related Documents or any other instrument provided for
or contemplated by this Agreement or any action taken or to be taken in
connection with the transactions contemplated hereby or thereby or which in
any single case or in the aggregate could reasonably be expected to result
in any material adverse change in the business, prospects, condition,
affairs or operations of the Borrower or any material impairment of the
right or ability of the Borrower to carry on its operations as now conducted
or as proposed to be conducted. Without conceding that any of same are
13
material, the Borrower represents that the only judicial or administrative
proceedings to which it is party are those set forth on EXHIBIT E hereto.
(d) The Borrower is not in violation of any term of its Charter or by-
laws as now in effect. The Borrower is not in violation of any material
term of any mortgage, indenture, judgment, decree or order, or any other
material instrument, contract or agreement applicable to it.
(e) The Borrower has filed proper and accurate federal, state and
local tax returns, reports and estimates for all years and periods for which
any such returns, reports or estimates were required to be filed and has
paid all taxes, assessments, impositions, fees and other governmental
charges required to be paid in respect of the periods covered by any such
returns, reports or estimates, except for taxes being contested in good
faith for which adequate provision and reserves for payment have been made
and for which no lien has been filed. The Borrower is not delinquent in the
payment of any tax, assessment or governmental charge, and no deficiencies
for any tax, assessment or governmental charge have been asserted or
assessed, and the Borrower knows of no material liability or basis therefor.
(f) The Borrower is in compliance in all material respects with all
requirements of law, federal, state and local, and all requirements of all
governmental bodies or agencies having jurisdiction over it, the conduct of
its business and the use of its properties and assets, as presently
conducted and used, and all premises occupied by it, all to the extent that
failure to comply with any of which could (singly or in the aggregate) have
a material adverse effect on the business, prospects or financial condition
of the Borrower.
(g) The Borrower is not engaged in the business of extending credit
for the purpose of purchasing or carrying margin stock (within the meaning
of Regulation U of the Board of Governors of the Federal Reserve System),
and no part of the proceeds of the Loan will be used to purchase or carry
any margin stock or to extend credit to others for the purpose of purchasing
or carrying any margin stock or in any other manner which would involve a
violation of any of the regulations of the Board of Governors of the Federal
Reserve System. The Borrower is not an investment company within the
meaning of the Investment Company Act of 1940, as amended.
(h) The reviewed financial statements of the Borrower as at December
31, 1997, March 31, 1998 and June 30, 1998 heretofore delivered to the Bank,
are complete and accurate and fairly present the financial condition of the
Borrower as at the dates thereof and for the periods covered thereby, having
been prepared in accordance with generally accepted accounting principles
consistently applied. The Borrower has no liability, contingent or
otherwise, not disclosed in the aforesaid financial statements or in any
notes thereto that could materially affect the financial condition of the
Borrower. The following representations are true on the Date of Issuance;
since the date of the most recently delivered financial statements: (A)
there has been no material adverse change in the business, assets or
condition, financial or otherwise, of the Borrower; (B) neither the
business, condition, or operations of the Borrower nor any of its properties
or assets has been materially adversely affected as the result of any
legislative or regulatory change, any revocation or change in any franchise,
14
license or right to do business, or any other event or occurrence, whether
or not insured against; (C) the Borrower has not experienced any material
controversy or problem with its employees or with any labor organization;
and (D) the Borrower has not entered into any material transaction other
than in the ordinary course of business and other than the purchase by The
Hartford Steam Company of certain cogeneration facilities as disclosed in
writing to the Bank prior to the date hereof.
(i) PENSION PLANS, Etc.
(i) PLANS. Except as set forth in a separate letter to Bank of
even date herewith and acknowledged by Bank in writing, neither Borrower nor
any entity with which Borrower would be aggregated (a Commonly Controlled
Entity ) under Section 414(b), (c), (m), or (o) of the Code, maintains or
contributes to any pension, profit sharing, or similar plan providing for a
program of deferred compensation to any employee or former employee.
(ii) FUNDING OF EMPLOYEE BENEFIT PLANS. All contributions and
other payments required to be made by Borrower or any Commonly Controlled
Entity to all employee benefit plans, as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ( ERISA ), which
either Borrower or any Commonly Controlled Entity maintains or maintained or
to which any of them contributes or has contributed (the Employee Benefit
Plans ) have been made or reserves adequate for such purposes has been set
aside and reflect on Borrower s financial statements. Except as provided in
the following sentence, no Employee Benefit Plan is a plan subject to
Section 412 of the Code or Section 302 of ERISA, nor is any Employee Benefit
Plan a multiemployer plan as defined in Section 4001(a)(3) of ERISA. The
three defined benefit plans maintained by the Borrower and its Commonly
Controlled Entities are subject to Section 412 of the Code and Section 302
of ERISA. Each other Employee Benefit Plan which is an employee pension
benefit plan, as defined in Section 3(2) of ERISA, has been determined to be
qualified under Section 401(a) or Section 403(a) of the Code and nothing has
occurred which would cause the loss of such qualification or the imposition
of any tax liability or penalty under the Code or ERISA on Borrower.
(iii) ADMINISTRATION, Etc. Each Employee Benefit Plan has been
and is administered in accordance with its terms and applicable law. To its
knowledge, Borrower has not breached any fiduciary duty imposed on it under
ERISA with respect to any Employee Benefit Plan, or engaged in any
prohibited transaction, as defined in Title I of ERISA or Section 4975 of
the Code, involving any Employee Benefit Plan for which no exemption is
available.
(iv) WELFARE PLANS. No Employee Benefit Plan which is an
employee welfare benefit plan, as defined in Section 3(1) of ERISA, if any,
provides for continuing benefits or coverage for any participant (or
beneficiary) after the termination of the participant s employment except as
may be required under Section 4980B of the Code or applicable state
statutory law, and except that medical insurance is provided in certain
instances.
(v) CLAIMS. There are no claims (other than routine claims for
benefits), actions or lawsuits asserted or instituted with respect to, and
15
Borrower has no knowledge of any threatened claims or litigation with
respect to, any Employee Benefit Plan or any fiduciary thereof.
(j) ENVIRONMENTAL MATTERS. Borrower:
(i) Except as disclosed in the Annual Report on Form 10-K of the
Connecticut Natural Gas Corporation for Borrower s 1997 fiscal year, has not
received any notice, citation, summons, directive, order or other
communication, written or oral, from, and Borrower has no knowledge, after
reasonable inquiry, of any notice, citation, summons, directive, order or
other communication by, any Governmental Authority or any other person
concerning the presence, generation, treatment, storage, transportation,
transfer, disposal, release or other handling of any Hazardous Substances
within, on, from, related to, or affecting any real property owned or
occupied by Borrower; and
(ii) Except as disclosed in the Annual Report on Form 10-K of the
Connecticut Natural Gas Corporation for Borrower s 1997 fiscal year, has no
knowledge, after reasonable inquiry, that any real property owned or
occupied by Borrower has ever been used either by Borrower, any tenant or
any predecessor in interest, to generate, treat, store, transport, transfer,
dispose of, release or otherwise handle any Hazardous Material, except in
material compliance with all Environmental Laws.
(k) The principal place of business and chief executive offices of the
Borrower are located at 000 Xxxxxxxx Xxxxxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000.
The Borrower maintains at said location the books and records relating to
the collateral described in the Security Agreement and/or the related
collateral assignments.
(l) There is no condemnation or similar proceeding pending with
respect to or affecting any of the Borrower's properties, and the Borrower
is not aware that any such proceeding is contemplated.
(m) After giving effect to the transactions contemplated hereby, the
Borrower (A) will be able to pay its debts as they become due, (B) will have
funds and capital sufficient to carry on its business as now conducted and
as intended to be conducted, (C) has total assets which exceed total
liabilities, and (D) is not insolvent and will not be rendered insolvent as
determined by applicable law.
(n) Neither this Agreement, nor the financial statements referred to
herein, nor any other agreement, document, certificate or written statement
furnished or to be furnished to the Bank by or on behalf of the Borrower in
connection with the transactions contemplated by this Agreement contains any
untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein or therein not
misleading. There is no fact within the special knowledge of any of the
officers of the Borrower which has not been disclosed herein or in writing
by them to the Bank and which materially adversely affects or in the future
in their opinion may, insofar as they can now reasonably foresee, materially
adversely affect the business, properties, assets or condition, financial or
other, of the Borrower.
(o) The representations and warranties of the Borrower contained in
16
the Related Documents are hereby incorporated herein by reference; such
representations and warranties are true and correct.
SECTION 7. AFFIRMATIVE COVENANTS OTHER THAN REPORTING REQUIREMENTS.
Without limiting any other covenants and provisions hereof or of any of the
Related Documents, the Borrower covenants and agrees that during the term of
this Agreement and for so long as (i) the Letter of Credit is outstanding
and/or (ii) any Indebtedness of the Borrower to the Bank under this
Agreement or any Related Document remains unpaid:
(a) PAYMENT. The Borrower will pay promptly when due any and all
amounts owing under the Bonds or other Related Documents or owing to the
Bank hereunder.
(b) PRESERVATION OF ASSETS; COMPLIANCE WITH LAW.
(i) Do or cause to be done all things reasonably necessary to
preserve, renew and keep in full force and effect its corporate existence,
rights, licenses, permits and franchises; at all times maintain, preserve
and protect all franchises and trade names and preserve all the remainder of
its property used or useful in the conduct of its business and keep the same
in good repair, working order and condition, and from time to time, make, or
cause to be made, all needful and proper repairs, renewals, replacements,
betterments and improvements thereto, so that the business carried on in
connection therewith may be properly and advantageously conducted at all
times; and
(ii) Comply with all applicable laws, rules, regulations and
orders, whether now in effect or hereafter enacted or promulgated by any
Governmental Authority.
(iii) TAXES, Etc. Pay and discharge or cause to be paid and
discharged, when due, all taxes, assessments and governmental charges or
levies imposed upon it or upon its respective income and profits or upon any
of its property, real, personal or mixed, or upon any part thereof, as well
as all lawful claims for labor, materials and supplies or otherwise, which,
if unpaid, might become a lien or charge upon such properties or any part
thereof, PROVIDED, HOWEVER, Borrower may contest in good faith any such
taxes, assessments and governmental charges or levies, and withhold payment
thereof, if Borrower properly commences and thereafter diligently pursues
the contest.
(d) NOTICE OF PROCEEDINGS. Give prompt written notice to the Bank of
any proceedings instituted against it by or in any Federal or state court or
before any commission or other regulatory body, whether Federal, state or
local.
(e) FINANCIAL REPORTING. Furnish to Bank:
(i) Within ninety (90) days of the end of each fiscal year,
consolidated and consolidating Financial Statements certified (without
qualification) by independent certified public accountants selected by
Borrower and approved by Bank, showing the financial condition at the close
of such fiscal year, the results of operations during such year and
17
containing a statement to the effect that its independent public accountants
have examined the provisions of this Agreement and that no Event of Default,
nor any event which with notice or lapse of time, or both, would constitute
such an Event of Default, has occurred;
(ii) Within sixty (60) days after the end of each quarter in each
such fiscal year, consolidated and consolidating Financial Statements for
such period and the fiscal year to that date, subject to changes resulting
from routine year-end audit adjustments, in form satisfactory to Bank,
prepared and certified by the chief financial officer of Borrower to the
best of his or her information and belief;
(iii) Simultaneously with the furnishing of each of the
Financial Statements to be delivered pursuant to subsections (a) and (b)
above, a certificate in the form of EXHIBIT F hereto and certified by the
President or chief financial officer of Borrower; and
(iv) Promptly, from time to time such other information regarding
its operations, assets, business, affairs and financial condition or the
operations, assets, business, affairs and financial condition of any of its
subsidiaries, as Bank may reasonably request.
(f) VISITATION AND INSPECTION RIGHTS. Permit agents or representatives
of Bank to inspect and to discuss the affairs, finances and accounts of
Borrower with its officers, at any time and from time to time during normal
business hours upon twenty-four hours notice to Borrower, at Borrower s
reasonable expense after an Event of Default (including, without limitation,
the reasonable fees and expenses of such agents or representatives), (i) the
Collateral, and (ii) Borrower s books and records and to make abstracts or
reproductions thereof and to duplicate, reduce to hard copy or otherwise use
any and all computer or electronically stored information or data.
(g) NOTICE OF EVENT OF DEFAULT. Immediately advise Bank of any
Material Adverse Change, or of the occurrence of any Event of Default, or of
the occurrence of any event which upon notice or lapse of time or both would
constitute such an Event of Default.
(h) ACCOUNTING SYSTEM. Maintain a standard system of accounting in
accordance with GAAP.
(i) FINANCIAL COVENANTS.
(i) For purposes of this Section, the following terms shall have
the following definitions and any undefined terms shall be defined in
accordance with GAAP:
(a) "DEBT SERVICE" shall mean for any relevant accounting
period the aggregate amount of principal and interest payments due from
Borrower with respect to its Total Debt.
(b) "DEBT SERVICE COVERAGE RATIO shall mean for any
relevant accounting period the ratio of (x) earnings before interest,
taxes , depreciation, amortization and dividends (EBITDA) plus amounts
received under the Forward Equity Purchase Agreement to (y) Debt
18
Service.
(c) "INTEREST COVERAGE RATIO" shall mean for any relevant
accounting period the ratio of (x) earnings before interest, taxes and
dividends (EBIT) plus amounts received under the Forward Equity
Purchase Agreement to (y) the aggregate amount of interest payments due
from Borrower with respect to its Total Debt.
(d) "SENIOR DEBT" shall mean the Loan, all debt secured PARI
PASSU with the Loan pursuant to the FEPA Assignment Agreement and any
other indebtedness of Borrower owed to Bank, including all debt related
to the Credit Facilities.
(e) "TANGIBLE NET WORTH" shall mean the excess of Borrower s
total assets over its total liabilities computed in accordance with
generally accepted accounting principles consistently applied, less all
intangible assets and deferred charges, including, without limitation,
goodwill, unamortized debt discount, organization expenses, trademarks
and trade names, patents, deferred product development costs, the
Borrower s interests under the Forward Equity Purchase Agreement, and
similar items.
(f) "TOTAL DEBT" shall mean Senior Debt, as well as any of
Borrower s other loan or lease obligations then outstanding.
(ii) At all times during the period the Letter of Credit is
outstanding, Borrower agrees to fulfill each of the following financial
covenants:
(a) Not permit the ratio of Total Debt to Tangible Net Worth
to exceed 2.25 to 1 on a consolidated basis, to be tested quarterly;
(b) Not permit its Tangible Net Worth to be less than
$30,000,000 on a consolidated basis, to be tested annually;
(c) Not permit its Debt Service Coverage Ratio to be less
than 1.25 to 1, as tested quarterly; and
(d) Not permit its Interest Coverage Ratio to be less than
2.5 to 1, as tested quarterly.
(j) BANK AS PRINCIPAL DEPOSITORY. Use Bank as the principal
depository of its funds.
(k) INSURANCE. Keep all of its insurable properties, now or hereafter
owned, adequately insured at all times against loss or damage by fire or
other casualty to the extent customary with respect to like properties of
companies conducting similar businesses; maintain public liability, business
interruption and worker s compensation insurance insuring Borrower to the
extent customary with respect to companies conducting similar businesses,
all by financially sound and reputable insurers.
(l) ENVIRONMENTAL INDEMNIFICATION. With respect to environmental
matters:
19
(i) comply strictly and in all material respects with all
Environmental Laws, and cause all tenants or other occupants of any real
property which Borrower owns or occupies to comply, in all material respects
with all Environmental Laws, and not generate, treat, store, handle,
process, transfer, transport, dispose of, release or otherwise use, and not
permit any tenant or other occupant of such property to generate, treat,
store, handle, process, transfer, transport, dispose of, release or
otherwise use, Hazardous Substances within, on, under or about such property
in a manner that could lead to the imposition on Borrower, Bank or any such
real property of any liability or lien of any nature whatsoever under any
Environmental Laws;
(ii) notify Bank promptly in the event of any Environmental Event,
promptly forward to Bank copies of any notices received by Borrower relating
to any Environmental Event and promptly pay when due any fine or assessment
against Borrower, Bank or any such real property relating to any
Environmental Event, PROVIDED, HOWEVER, Borrower may contest in good faith
any such fine or assessment, and withhold payment thereof, if Borrower
properly commences and thereafter diligently pursues the contest.; and
(iii) indemnify, defend, and hold Bank harmless from and
against any claim, cost, damage (including, without limitation,
consequential damages), expenses (including, without limitation, attorneys
fees and expenses), loss, liability, or judgment now or hereafter arising as
a result of any Environmental Event. Notwithstanding anything contained
herein to the contrary, the provisions of this subparagraph (C) shall
continue in effect and shall survive (among other events) any termination of
this Agreement, payment and satisfaction of the Note, and release of any
Collateral.
(m) The Borrower will use the proceeds of the Loan for the Project,
all as specified in the description of the Project contained in EXHIBIT A.
(n) So long as the Bonds are outstanding, the Borrower will comply
with all of its obligations and agreements under the Loan Agreement.
SECTION 8. NEGATIVE COVENANTS. Without limiting any other
covenants and provisions hereof or of any of the Related Documents, the
Borrower covenants and agrees that during the term of this Agreement and for
so long as (i) the Letter of Credit is outstanding and/or (ii) any
Indebtedness of the Borrower to the Bank under this Agreement or any Related
Document remains unpaid, then, unless the Bank shall have otherwise
consented in writing (which consent may be given or withheld in the Bank's
discretion):
(a) INDEBTEDNESS. Incur, create, assume, become or be liable in any
manner with respect to, or permit to exist, any indebtedness, obligation or
liability or permit any of its subsidiaries to incur, create, assume, become
or be liable in any manner with respect to, or permit to exist, any
indebtedness, obligation or liability, except for:
(i) indebtedness to Bank, including the debt outstanding under
the Credit Facilities;
20
(ii) indebtedness with respect to trade obligations and other
normal accruals in the ordinary course of business not yet due and payable,
or with respect to which it is contesting in good faith the amount or
validity thereof by appropriate proceedings, and then only to the extent it
has set aside on its books adequate reserves therefor;
(iii) indebtedness for which Borrower has received the prior
written consent of Bank, which consent shall not be unreasonably withheld;
(iv) liens created pursuant to the Security Agreement and the
indebtedness set forth on EXHIBIT G, Existing Indebtedness and Liens
attached hereto and made a part hereof; and
(v) other indebtedness for borrowed money not in excess of
$1,000,000 outstanding at any time; and
(vi) $45,000,000 in 6.99% Senior Secured Notes due 2009.
(b) LIENS. Create, incur, assume or otherwise permit to exist any
mortgage, pledge, lien, charge or other encumbrance of any nature whatsoever
on any of its assets, now or hereafter owned by Borrower, except for:
(i) liens securing the payment of taxes, either not yet due or
the validity of which is being contested in good faith by appropriate
proceedings, and as to which it shall have set aside on its books adequate
reserves;
(ii) deposits under worker s compensation, unemployment insurance
and social security laws, or to secure the performance of bids, tenders,
contracts (other than for the repayment of borrowed money) or leases, or to
secure statutory obligations or surety or appeal bonds, or to secure
indemnity, performance or other similar bonds in the ordinary course of
business;
(iii) liens imposed by law, such as carriers , warehousemen s or
mechanics liens, incurred by it in good faith in the ordinary course of
business, and liens arising out of a judgment or award against it with
respect to which it shall currently be prosecuting an appeal, a stay of
execution pending such appeal having been secured;
(iv) liens in favor of Bank;
(v) the liens set forth on the EXHIBIT G Existing Indebtedness
Liens attached hereto and made a part hereof; and
(vi) liens (including liens securing obligations in respect of
capital leases) to secure indebtedness incurred in connection with the
financing of all or part of the purchase price or cost of improvement of
property acquired or improved by the Company or any of its subsidiaries
after the date hereof, provided that the indebtedness secured by said liens
is permitted by Section 8(a) above.
(c) GUARANTEES. Without the consent of the Bank, which shall not be
unreasonably withheld, guarantee, endorse or otherwise in any way become or
be responsible for obligations of any other person, except endorsements of
21
negotiable instruments for collection in the ordinary course of business.
(d) DISPOSITION OF ASSETS. Sell, lease, transfer or otherwise dispose
of its material properties, assets, rights, licenses and franchises to any
person, except for sales of inventory in the ordinary course of its
business, or turn over the management of, or enter a management contract
with respect to, such material properties, assets, rights, licenses and
franchises.
(e) SALE AND LEASEBACKS. Enter into any arrangement, directly or
indirectly, with any person whereby it shall sell or transfer any property,
real, personal or mixed, used or useful in its business, whether now owned
or hereafter acquired, and thereafter rent or lease such property.
(f) INVESTMENTS. Purchase, invest in or otherwise acquire or hold
securities, including, without limitation, capital stock and evidences of
indebtedness of, or make loans or advances to, but excluding from such
prohibition commercial paper rated A/2 or P-2 or better and Euro-Time
deposits, or enter into any arrangement for the purpose of providing funds
or credit to, any other person, except:
(i) advances to employees for business expenses or for personal
needs not to exceed Five Thousand Dollars ($5,000) in the case of any one
(1) employee and not to exceed Fifty Thousand Dollars ($50,000) in the
aggregate to all such employees outstanding at one time; and
(ii) investments in certificates of deposit issued by Bank or in
short-term obligations of the United States.
(g) FUNDAMENTAL CHANGES. Dissolve, liquidate, merge, consolidate or
otherwise alter or modify Borrower s corporate name, mailing address,
principal place of business, structure, status or existence.
(h) DIVIDENDS. Pay any dividends, or make any distribution of cash or
property, or both, to holders of shares of its capital stock, or directly or
indirectly, redeem, purchase or otherwise acquire for a consideration, any
shares of its capital stock, of any class, unless such would not
significantly alter Borrower s financial capabilities or cause a default
under a covenant contained in this Agreement.
(i) ACCOUNTS RECEIVABLE. Sell, assign, pledge, discount or dispose in
any way of any accounts receivable, promissory notes or trade acceptances
held by Borrower, with or without recourse, except for collection (including
endorsements) in the ordinary course of business.
(j) TRANSACTIONS WITH AFFILIATES. Enter into any transaction,
including, without limitation, the purchase, sale or exchange of property or
assets or the rendering or accepting of any service with or to any
subsidiary or affiliate of Borrower except in the ordinary course of
business and pursuant to the reasonable requirements of Borrower s business
and upon terms not less favorable to Borrower than it could obtain in a
comparable arm s-length transaction with a third party other than such
subsidiary or affiliate.
22
(k) ERISA. (a) Fail, or permit any Commonly Controlled Entity to
fail, to comply with the requirements of ERISA with respect to any Employee
Benefit Plan; (b) permit any funded Employee Pension Plan to lose its
qualified status under Section 401(a) or 403(a) of the Code; (c) fail, or
permit any Commonly Controlled Entity to fail, to meet the minimum funding
standards of Section 302 of ERISA and Section 412 of the Code; (d) fail, or
permit any Commonly Controlled Entity to fail, to discharge any obligations
to the PBGC with respect to the termination of an Employee Pension Plan or
to any Multiemployer Plan on account of its withdrawal or partial withdrawal
therefrom or allow to exist any event or condition which presents a
substantial risk of Borrower incurring liability to the PBGC by reason of
the termination of any Employee Pension Plan; (e) create or adopt, or permit
any Commonly Controlled Entity to create or adopt, any new Employee Pension
Plan which would significantly alter Borrower s financial capabilities or
cause a default under a covenant contained in this Agreement without the
prior written consent of Bank; (f) modify, or permit any Commonly Controlled
Entity to modify, any existing Employee Pension Plan so as to increase its
obligations thereunder which would significantly alter Borrower s financial
capabilities or cause a default under a covenant contained in this
Agreement, except in the ordinary course of business consistent with past
practice or with the prior written consent of Bank; (g) create or adopt any
new Employee Welfare Plan or modify any existing Employee Welfare Plan, or
permit any Commonly Controlled Entity to create or adopt any new Employee
Welfare Plan or modify any existing Employee Welfare Plan, to provide
continuing benefits or coverage for any participant (or beneficiary) after
the termination of the participant s employment except as may be required by
COBRA, regulations thereunder or applicable state statutory law which would
significantly alter Borrower s financial capabilities or cause a default
under a covenant contained in this Agreement or with the prior written
consent of Bank; or (h) engage, or permit any Commonly Controlled Entity to
engage, in any transaction which would reasonably result in the assessment
of a direct or indirect liability to Borrower or any Commonly Controlled
Entity under Section 409 or 502 of ERISA or Section 4975 of the Code.
(l) NEGATIVE PLEDGE. Without Bank s consent, which shall not be
unreasonably withheld, (a) sell, transfer, pledge or assign any shares of
stock or other ownership interests in Borrower or any of its subsidiaries or
(b) execute or agree to any further negative pledges of such shares of stock
or other ownership interests in Borrower or any of its subsidiaries.
SECTION 9. Intentionally left blank.
SECTION 10. EVENTS OF DEFAULT. The occurrence of any one or more of
following shall be an Event of Default under this Agreement, unless waived
by the Bank pursuant to Section 12 hereof:
(a) The Borrower shall fail to pay when due any amount payable
hereunder; or
(b) The Borrower shall fail to observe, comply or perform any term,
covenant, condition or agreement contained in any of Sections 3, 7, or 8;
(c) The Borrower shall fail to observe or perform any term, covenant
or agreement contained in this Agreement (other than those referred to in
23
clauses (a) or (b) above) and such failure shall continue for 30 days after
written notice thereof has been given to the Borrower; or
(d) Any representation, warranty or certification made by the Borrower
in this Agreement or in any certificate, financial statement or other
document delivered in connection with or pursuant to this Agreement or any
of the Related Documents shall prove to have been incorrect in any material
respect when made; or
(e) the occurrence of a default or event of default with respect to
any evidence of indebtedness of Borrower (other than to Bank), in excess of
one million dollars ($1,000,000), if the effect of such default is to
accelerate the maturity of such indebtedness or to permit the holder thereof
to cause such indebtedness to become due prior to the stated maturity
thereof, or if any such indebtedness of Borrower is not paid when due and
payable, whether at the due date thereof or by acceleration or otherwise;
(f) the occurrence of an Event of Default as defined in any Security
Document or either of the Credit Facilities;
(g) Borrower shall (i) discontinue or abandon operation of its
business, (ii) apply for or consent to or suffer the appointment of a
receiver, trustee, custodian or liquidator of it or any of its property,
(iii) admit in writing its inability to pay its debts as they mature, (iv)
make a general assignment for the benefit of creditors, (v) file a petition
for relief under Title 11 of the United States Code or (vi) file a petition
in bankruptcy, or a petition or an answer seeking reorganization or an
arrangement with creditors or to take advantage of any bankruptcy,
reorganization, insolvency, readjustment of debt, dissolution or liquidation
law or statute, or an answer admitting the material allegations of a
petition filed against it in any proceeding under any such law, or if
corporate action shall be taken for the purpose of effecting any of the
foregoing, (vi) become insolvent, (vii) fail to generally pay its debts as
they mature or (viii) have liabilities which exceed the fair value of its
assets;
(h) there shall be filed against Borrower an involuntary petition
seeking reorganization of Borrower or the appointment of a receiver,
trustee, custodian or liquidator of Borrower or any material part of its
assets, or an involuntary petition under any bankruptcy, reorganization or
insolvency law of any jurisdiction, whether now or hereafter in effect;
(i) any judgment or court order for the payment of money in excess of
an aggregate of one million dollars ($1,000,000) shall be rendered against
Borrower in any twelve (12) month period, and either the same shall remain
undischarged for a period of thirty (30) consecutive days, or execution
shall have issued in respect thereof;
(j) the occurrence of any attachment of any deposits or other property
of Borrower in the hands or possession of Bank, or the occurrence of any
attachment of any other property of Borrower in the aggregate amount
exceeding one million dollars ($1,000,000) in any twelve (12) month period
and either the same shall remain undischarged for a period of thirty (30)
consecutive days, or execution shall have issued in respect thereof;
24
(k) for any reason, any Security Document at any time shall not be in
full force and effect in all material respects or shall not be enforceable
in all material respects in accordance with its terms, or any material
security interest or lien granted pursuant thereto shall fail to be
perfected, or any person (other than Bank) shall contest the validity,
enforceability or perfection of any material lien granted pursuant thereto,
or any party thereto (other than Bank) shall seek to disaffirm, terminate,
limit or reduce its obligations under any Security Document; or
(l) Borrower suffers or sustains a Material Adverse Change or Bank in
good faith determines that the prospect of repayment of Borrower s
obligations hereunder is materially impaired; or
(m) for any reason, the ratio of (x) the total debt (the sum of all
short term debt, current maturities of long term indebtedness (CMLTD) and
long-term debt) of CTG Resources, Inc. (the parent of Borrower) to (y) the
capitalization of CTG Resources, Inc., exceeds 70% in any two consecutive
fiscal quarters;
(n) any operating subsidiary of CTG Resources, Inc. fails to maintain
a Standard and Poor s Corporation debt rating at least equal to BBB ;
(o) Any default on the part of the Borrower or any of its Subsidiaries
shall exist, and shall remain unwaived or uncured beyond the expiration of
any applicable notice and/or grace period, under any contract, agreement
(including, without limitation, the documentation for the Line of Credit) or
undertaking now existing or hereafter entered into with or for the benefit
of the Bank or any affiliate of the Bank in any capacity or capacities; or
(p) Any Event of Default (as defined in the Indenture) shall have
occurred or any failure or default shall have occurred under any of the
Related Documents and shall have continued beyond the expiration of any
applicable notice and/or grace period.
If an Event of Default occurs, the Bank may exercise any one or more of
the following rights and remedies (all of which shall be cumulative):
(i) Notify the Trustee of such Event of Default and direct the
Trustee in writing to accelerate the Bonds pursuant to the Indenture,
resulting in the Trustee declaring the principal of such Bonds then
outstanding and the interest accrued thereon immediately due and
payable under the Indenture and in the Trustee drawing under the Letter
of Credit by a Final Drawing, whereupon all amounts drawn under the
Letter of Credit, all Tender Advances, all interest thereon and all
other amounts payable hereunder or in respect hereof shall
automatically be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby
expressly waived by the Borrower.
(ii) Enforce its rights and remedies under the Security Documents.
(iii) Enforce the provisions of this Agreement by legal
proceedings for the specific performance of any covenant or agreement
contained herein or for the enforcement of any other appropriate legal
25
or equitable remedy. The Bank may recover damages caused by any breach
by the Borrower of the provisions of this Agreement, including court
costs, reasonable attorneys' fees and other costs and expenses incurred
in the enforcement of the obligations of the Borrower hereunder.
(iv) Exercise all other rights and remedies which the Bank may
have under any agreement or under applicable law.
(v) Whether or not any acceleration occurs under the Indenture or
any other notice is given to the Trustee, the Bank may give the notice
described in the third grammatical paragraph of the Letter of Credit,
whereupon any Interest Component (as defined in the Letter of Credit)
theretofore drawn and not yet reinstated in accordance with the terms
of the Letter of Credit will not be so reinstated.
In addition to any rights now or hereafter granted under applicable law
and not by way of limitation of any such rights, upon the occurrence of any
Event of Default, the Bank is hereby authorized at any time or from time to
time, without presentment, demand, protest or other notice of any kind to
the Borrower or to any other Person, all of which are hereby expressly
waived, to set off and to appropriate and apply any and all deposits and any
other Indebtedness at any time held or owing by the Bank or any affiliate
thereof to or for the credit or the account of any Borrower against and on
account of the obligations and liabilities of the Borrower to the Bank,
under this Agreement or otherwise, if then due and payable. ANY AND ALL
RIGHTS TO REQUIRE THE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT
TO ANY OTHER COLLATERAL WHICH SECURES ANY OF THE BANK OBLIGATIONS PRIOR TO
THE EXERCISE BY THE BANK OF ITS RIGHT OF SET-OFF UNDER THIS SECTION ARE
HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
SECTION 11. RIGHT TO CURE. In the event that the Borrower shall fail
to purchase or maintain insurance required hereunder on any of the
collateral or to pay any tax, assessment, governmental charge or levy on any
of the collateral, except as the same may be otherwise permitted hereunder,
or in the event that any lien, encumbrance or security interest on any of
the collateral prohibited hereby shall not be paid in full or discharged, or
in the event that the Borrower shall fail to pay or comply with any other
liability or agreement hereunder, which liability or agreement relates to
any of the collateral or to the Loan or to any obligation of the Borrower to
the Trustee and/or the Issuer, the Bank may, but shall not be required to,
pay, satisfy, perform, discharge or bond the same for the account of the
Borrower, and all moneys so paid and expenses incurred by the Bank shall be
payable to the Bank by the Borrower on demand and shall bear interest from
the date of demand until paid at the lesser of (i) a fluctuating rate per
annum which shall at all times be equal to 4.00% plus the Prime Rate, or
(ii) the maximum rate permitted by then applicable law.
SECTION 12. AMENDMENTS AND WAIVERS. No amendment or waiver of any
provision of this Agreement or consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be in
writing and signed by the party to be charged. Any such waiver or consent
shall be effective only in the specific instance and for the specific
purpose for which given. The Borrower will not agree or consent to any
amendment to any of the Related Documents without prior written consent of
26
the Bank which shall not be unreasonably withheld. The Borrower will not
initiate or consent to any change in the Mode applicable to the Bonds under
the Indenture to provide for any Mode other than a Weekly Mode (as defined
in the Indenture).
SECTION 13. NOTICES. All notices, requests and other communications
to any party hereunder shall be in writing and shall be given to such party,
addressed to it at its address set forth below or such other address as such
party may hereafter specify for the purpose by notice to the other party.
Each such notice, request or communication shall be deemed delivered on the
earliest of (a) the date received or (b) the date of delivery, refusal or
nondelivery indicated on the return receipt if deposited in a United States
Postal Service Depository, postage prepaid, sent certified or registered
mail, return receipt requested. The parties' initial notice addresses are
as follows:
Party Address
----- -------
Borrower: The Energy Network
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Bank: Fleet National Bank
One Federal Street
Mail Stop: MAOFD07B
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxx,
Vice President, National Utilities
SECTION 14. NO WAIVER: REMEDIES. No failure on the part of the Bank
to exercise, and no delay in exercising, any right hereunder shall operate
as a waiver thereof nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the exercise of
any other right. The provisions of this Agreement are not in limitation of
nor limited by inconsistent or differing provisions contained in the
Security Documents or the indenture or elsewhere, and any rights or remedies
hereunder are cumulative with (and not in exclusion of) all other rights and
remedies hereunder, or arising under any other agreement or provided by law.
The Borrower specifically acknowledges that the Indenture may permit
incurrence of additional Indebtedness and additional liens, permits certain
property dispositions and contemplates other matters which are prohibited by
this Agreement and agrees that, as between the Borrower and the Bank, the
provisions of this Agreement are controlling over the provisions of the
Indenture.
SECTION 15. INDEMNIFICATION. The Borrower hereby agrees to indemnify
and hold harmless the Bank from and against any and all claims, damages,
losses, liabilities, costs or expenses whatsoever which the Bank may incur
(i) by reason of any untrue statement or alleged untrue statement of any
material fact contained or incorporated by reference in any materials
furnished by the Borrower or any other Person (other than the Bank) in
connection with the making of the Loan or the sale of the Bonds, or the
omission or alleged omission to state therein a material fact necessary to
27
make such statements, in light of the circumstances under which they are or
were made, not misleading, or (ii) by reason of or in connection with the
execution and delivery or transfer of, or payment or failure to pay under,
the Letter of Credit, except for any claims, damages, losses, liabilities,
costs or expenses to the extent, but only to the extent, caused by the gross
negligence or willful misconduct of the Bank in determining whether a
statement or draft presented under the Letter of Credit complies with the
terms of the Letter of Credit or in failing to pay under the Letter of
Credit after presentation to it by the Trustee of a draft and certificate
strictly complying with the terms and conditions of the Letter of Credit.
Further, the Borrower hereby agrees to pay, and to protect, indemnify and
save harmless the Bank and its officers, directors, shareholders, employees,
agents and servants from and against, any and all losses, liabilities
(including liabilities for penalties), actions, suits, judgments, demands,
damages, costs or expenses (including, without limitation, attorneys' fees
and expenses) of any nature arising from or relating to the offering,
issuance, sale or delivery of the Bonds (or any interest in any fund into
which the Bonds are placed), except for any such loss, liability, action,
suit, judgment, demand, damage, cost or expense to the extent, and only to
the extent, resulting from the Bank's gross negligence or willful
misconduct. Nothing in this Section 15 is intended to limit the Borrower's
reimbursement obligation set forth in Section 2 of this Agreement.
SECTION 16. CONTINUING OBLIGATION: SURVIVAL. This Agreement is a
continuing obligation and shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective successors,
transferees and assigns; PROVIDED, HOWEVER, that the Borrower may not assign
or delegate all or any part of this Agreement without the prior written
consent of the Bank. All representations and warranties of the Borrower
contained herein or made in connection herewith shall survive the making of
this Agreement or any payment made by the Bank under the Letter of Credit.
The Bank may, in accordance with applicable law, from time to time assign or
grant participations in this Agreement and/or the Letter of Credit issued
hereunder. Without limitation of the foregoing generality:
(i) The Bank may at any time pledge all or any portion of its
rights under this Agreement and the Related Documents to any of the 12
Federal Reserve Banks organized under Section 4 of the Federal Reserve
Act, 12 U.S.C. Section 341. No such pledge or the enforcement thereof
shall release the Bank from its obligations under this Agreement or
Related Documents.
(ii)The Bank shall have the unrestricted right at any time and
from time to time, and without the consent of or notice to the
Borrower, to grant to one or more banks or other financial institutions
(each, a Participant ) participating interests in the Bank s
obligations hereunder and/or under the Letter of Credit. In the event
of any such grant by the Bank of a participating interest to a
Participant, whether or not upon notice to the Borrower, the Bank shall
remain responsible for the performance of its obligations hereunder and
under the Letter of Credit and the Borrower shall continue to deal
solely and directly with the Bank in connection with the Bank s rights
and obligations hereunder. The Bank may furnish any information
concerning the Borrower in its possession from time to time to
28
prospective assignees and Participants; provided that the Bank shall
require any such prospective assignee or Participant to agree in
writing to maintain the confidentiality of such information to the same
extent as the Bank would be required to maintain such confidentiality.
All covenants and agreements of the Borrower contained herein shall
continue in full force and effect from and after the date hereof until
payment in full of all sums due hereunder. The obligations of the Borrower
pursuant to Section 15 and Section 19 shall survive termination of this
Agreement.
SECTION 17. TRANSFER OF THE LETTER OF CREDIT. The Letter of Credit
may be transferred only in accordance with the provisions set forth therein.
SECTION 18. LIMITED LIABILITY OF THE BANK. The Borrower assumes all
risks of the acts or omissions of the Trustee and any transferee of the
Letter of Credit with respect to the use of the Letter of Credit. Neither
the Bank nor any of its officers, directors, employees or attorneys shall be
liable or responsible for: (a) the use which may be made of the Letter of
Credit or for any acts or omissions of the Trustee or any beneficiary or
transferee in connection therewith; (b) the validity, sufficiency or
genuineness of documents, or of any endorsement(s) thereon, even if such
documents should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged; (c) payment by the Bank against
presentation of documents which do not comply with the terms of the Letter
of Credit, including failure of any documents to bear any reference or
adequate reference to the Letter of Credit; or (d) any other circumstances
whatsoever in making or failing to make payment under the Letter of Credit;
PROVIDED that the Borrower shall have a claim against the Bank, and the Bank
shall be liable to the Borrower to the extent, but only to the extent, of
any direct, as opposed to consequential, losses, liabilities or damages
suffered by the Borrower which the Borrower proves were caused by the Bank's
willful misconduct or gross negligence. In furtherance and not in
limitation of the foregoing, the Bank may accept documents that appear on
their face to be in order, without responsibility for further investigation.
Further, and without limitation of the foregoing, the Bank is specifically
authorized to rely upon facsimile copies received by telecopier of any sight
drafts and certificates otherwise complying as to form with the terms and
conditions of the Letter of Credit.
SECTION 19. COSTS, EXPENSES AND TAXES. The Borrower agrees to pay on
demand all reasonable costs and expenses (including, without limitation,
reasonable legal fees) of the Bank in connection with the preparation,
negotiation, execution, delivery, filing and recording of this Agreement and
any other documents which may be delivered in connection with this
Agreement, and any amendments or modifications of any of the foregoing, or
in connection with the examination, review or administration of any of the
foregoing, or in connection with the confirmation, perfection and/or
protection of the security interests granted or intended to be granted to
the Bank, as well as the costs and expenses (including, without limitation,
the reasonable fees and expenses of legal counsel) incurred by the Bank in
connection with interpreting, administering, preserving, enforcing or
exercising any rights or remedies under this Agreement, the Security
Agreement and all other instruments and documents to be delivered hereunder,
29
all whether or not legal action is instituted. In addition, the Borrower
shall pay any and all stamp and other taxes and fees payable or determined
to be payable in connection with the execution, delivery, filing and
recording of this Agreement, the Security Agreement and such other
documents, and agrees to save the Bank harmless from and against any and all
liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes and fees. The Borrower further agrees to pay,
and to save the Bank harmless from, any and all brokers' fees, investment
bankers' fees and the like which may be asserted in connection with any of
the transactions contemplated by this Agreement. The Bank did not have any
broker or investment banker in connection herewith. Any fees, expenses,
other charges or other payments which the Bank is entitled to receive from
the Borrower hereunder shall bear interest until paid at a fluctuating rate
per annum which shall at all times be equal to the lesser of (i) 4.00% per
annum plus the Prime Rate or (ii) the maximum rate permitted by then
applicable law.
SECTION 20. SEVERABILITY; MISCELLANEOUS. Any provision of this
Agreement which is prohibited, unenforceable or not authorized in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition, unenforceability or non-authorization without invalidating
the remaining provisions hereof or affecting the validity, enforceability or
legality of such provision in any other jurisdiction. Upon receipt of an
affidavit of an officer of the Bank as to the loss, theft, destruction or
mutilation of this Agreement or any Related Document which is not of public
record and, in the case of any such mutilation, upon surrender and
cancellation of such document, the Borrower will issue, in lieu thereof, a
replacement document of like tenor. All agreements between the Borrower and
the Bank are hereby expressly limited so that in no contingency or event
whatsoever, whether by reason of acceleration of maturity of the Bonds or
otherwise, shall the amount paid or agreed to be paid to the Bank for the
use or the forbearance of any Indebtedness exceed the maximum permissible
under applicable law. In this regard, it is expressly agreed that it is the
intent of the Borrower and the Bank, in the execution, delivery and
acceptance of this Agreement, to contract in strict compliance with the laws
of the State of Connecticut. If, under any circumstances whatsoever,
performance or fulfillment of any provision of this Agreement or any of the
Related Documents at the time such provision is to be performed or fulfilled
shall involve exceeding the limit of validity prescribed by applicable law,
then the obligation so to be fulfilled shall be reduced automatically to the
limits of such validity, and if under any circumstances whatsoever the Bank
should ever receive as interest an amount which would exceed the highest
lawful rate, such amount which would be excessive interest shall be applied
to the reduction of the principal balance of the Bank Obligations and not to
the payment of interest. The provisions of this Section shall control every
other provision of this Agreement and of each Related Document.
SECTION 21. GOVERNING LAW. This Agreement shall be governed by, and
construed and interpreted in accordance with, the laws of the State of
Connecticut.
SECTION 22. CONSENT TO JURISDICTION; JURY TRIAL WAIVER. (a) The
Borrower irrevocably submits to the non-exclusive jurisdiction of any
Connecticut court or any federal court sitting within the State of
30
Connecticut over any suit, action or proceeding arising out of or relating
to this Agreement. The Borrower irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the
laying of venue of any such suit, action or proceeding brought in such a
court and any claim that any such suit, action or proceeding has been
brought in an inconvenient forum. The Borrower agrees that final judgment
in any such suit, action or proceeding brought in such a court shall be
enforced in any court of proper jurisdiction by a suit upon such judgment,
provided that service of process in such action, suit or proceeding shall
have been effected upon the Borrower in one of the manners specified in
paragraph (b) of this Section 22 or as otherwise permitted by law.
(b) The Borrower hereby consents to process being served in any suit,
action or proceeding of the nature referred to in paragraph (a) of this
Section 22 either (i) by mailing a copy thereof by registered or certified
mail, postage prepaid, return receipt requested, to it at its address set
forth in Section 13 or (ii) by serving a copy thereof upon it at its address
set forth in Section 13. The Borrower irrevocably waives, to the fullest
extent permitted by law, all claims of error by reason of any service as
contemplated herein and agrees that such service shall be deemed in every
respect effective service upon the Borrower in any such suit, action or
proceeding and, to the fullest extent permitted by law, shall be taken and
held to be valid personal service upon and personal delivery to the
Borrower.
(c) EACH OF THE PARTIES HERETO HEREBY WAIVES TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THEM AGAINST THE
OTHER ON ANY MATTERS WHATSOEVER (INCLUDING, WITHOUT LIMITATION, ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS
AGREEMENT, THE SECURITY AGREEMENT OR ANY OTHER AGREEMENTS EXECUTED IN
CONNECTION HEREWITH OR THE ADMINISTRATION THEREOF OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREIN OR THEREIN). THE PROVISIONS OF THIS SECTION HAVE BEEN
FULLY DISCUSSED BY THE PARTIES HERETO, AND THESE PROVISIONS SHALL BE SUBJECT
TO NO EXCEPTIONS. NO PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY
OTHER PARTY THAT THE PROVISIONS OF THIS SECTION WILL NOT BE FULLY ENFORCED
IN ALL INSTANCES.
SECTION 23. TABLE OF CONTENTS; HEADINGS. The Table of Contents and
Section headings in this Agreement are included herein for convenience of
reference only and shall not constitute a part of this Agreement for any
other purpose.
31
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered, as an instrument under seal, by their
respective officers thereunto duly authorized, as of the date first above
written.
THE ENERGY NETWORK, INC.
By: S/ Xxxxxx X. Xxxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Assistant Vice
President
FLEET NATIONAL BANK
By: S/ Xxxxxx X. Xxxx
--------------------------
Name: Xxxxxx X. Xxxx
Title: Vice President
32
EXHIBIT A
Project Description
-------------------
The Connecticut Development Authority (the Authority ) has previously
issued $11,000,000 principal amount of its Industrial Revenue Variable Rate
Demand Bonds (Capitol District Energy Center Project - 1986 Series) (the
1986 Series Bonds ) and $5,300,000 of its Industrial Revenue Variable Rate
demand Bonds (Capitol District Energy Center Project - 1988 Series) (the
1988 Series Bonds ) and together with the 1986 Series Bonds, the Prior
Obligations ) for the purpose of financing the acquisition, constriction and
installation of approximately 20,000 linear feet of pipeline for a local
district hearing and cooling system (the Project ). The Authority proposes
to make a loan from Bond proceeds to the Borrower to assist in the
refinancing of the Project through the refunding of the Prior Obligations.
EXHIBIT B
Letter of Credit
----------------
(See Attached)
IRREVOCABLE DIRECT PAY LETTER OF
CREDIT NO. CS1101345
DATE OF ISSUE: August 27, 1998
ISSUING BANK: APPLICANT:
Fleet National Bank The Energy Network, Inc.
a Member of Fleet Financial 000 Xxxxxxxx Xxxxxxxxx
Group Xxxxxxxx, Xxxxxxxxxxx 00000
c/o Fleet Pennsylvania Services
Xxx Xxxxx Xxx
Xxxxxxxx, XX 00000
BENEFICIARY:
State Street Bank and Trust
Company,
as Trustee under Indenture of
Trust Agreement dated as of
August 1, 0000
Xxxxxxx Xxxxxx
000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Amount/Currency:
Up to USD $10,756,822.00
Up to Ten Million Seven Hundred
Fifty-Six Thousand Eight
Hundred and Twenty-Two
00/100ths US Dollars
Date and Place of Expiry:
August 27, 2000 at the
Issuing Bank
Dear Sirs:
At the request and for the account of our customer, The
Energy Network, Inc., 000 Xxxxxxxx Xxxxxxxxx, Xxxxxxxx,
Xxxxxxxxxxx 00000 (the Borrower ), we hereby establish in your
favor, as Trustee under the below-defined Indenture pursuant to
which $10,600,000 in aggregate principal amount of Connecticut
Development Authority Industrial Revenue Variable Rate Demand
Bonds (Capital District Energy Center Project- 1998 Refunding
Series) (the Bonds ) are being issued by the Connecticut
Development Authority (the Issuer ), this Irrevocable Direct Pay
Letter of Credit No. CS1101345 in the amount of $10,756,822 (the
Stated Amount ), of which (1) $10,600,000 (as from time to time
reduced or reinstated as provided in this Letter of Credit, the
Principal Component ) shall support the payment of the principal
or portion of the purchase price corresponding to principal of
the Bonds, and (2) $156,822 (as from time to time reduced or
(continued)
reinstated as provided in this Letter of Credit, the Interest
Component ) shall support the payment of up to 45 days' interest
on the Bonds or portion of the purchase price corresponding to
interest at an assumed rate of 12% per annum, effective
immediately and expiring at 5:00 P.M. (Scranton time) on the
below-defined Stated Termination Date or earlier as hereinafter
provided. Any payment pursuant to a drawing under this Letter of
Credit will be made by us with our own funds, and not from any
separate funds of the Issuer or the Borrower. As used herein,
the term Indenture will be deemed to mean that certain
Indenture of Trust dated as of August 1, 1998 among the Issuer
and State Street Bank and Trust Company, as trustee (the
Trustee ). As used herein, the term Stated Termination Date
means August 27, 2000.
We hereby irrevocably authorize you to draw on us, in an
aggregate amount not to exceed the amount of this Letter of
Credit set forth above and in accordance with the terms and
conditions and subject to the reductions in amount as hereinafter
set forth, (1) in one drawing per month (subject to the
provisions contained in the next following paragraph) by your
draft (in the form of Annex A attached hereto), payable at sight
on a Business Day, and accompanied by your written and completed
certificate signed by you in the form of Annex B attached hereto
(such draft accompanied by such certificate being your Interest
Drawing ), an amount not exceeding the Interest Component,
computed at an assumed rate of 12% per annum; (2) in one or more
drawings by one or more of your drafts (in the form of Annex A
attached hereto), payable at sight on a Business Day, and
accompanied by your written and completed certificate signed by
you in the form of Annex C attached hereto (any such draft
accompanied by such certificate being your Tender Drawing ), an
aggregate amount not exceeding the sum of the Principal Component
and the Interest Component; (3) in one or more drawings by one or
more of your drafts (in the form of Annex A attached hereto),
payable at sight on a Business Day, and accompanied by your
written and completed certificate signed by you in the form of
Annex D attached hereto (any such draft accompanied by such
certificate being your Partial Redemption Drawing ), an
aggregate amount not exceeding the sum of the Principal Component
and the Interest Component; and (4) in a single drawing by your
draft (in the form of Annex A attached hereto), payable at sight
on a Business Day, and accompanied by your written and completed
certificate signed by you in the form of Annex E attached hereto
(such draft accompanied by such certificate being your Final
Drawing , and any Interest Drawing, Tender Drawing, Partial
Redemption Drawing or Final Drawing referred to herein being a
Drawing ), an amount not exceeding the sum of the Principal
Component and the Interest Component. Each such Drawing shall
cover principal of and/or accrued and unpaid interest on the
Bonds. Business Day means any day (i) that is not a Saturday,
Sunday or legal holiday, (ii) that is a day on which banks are
not required or authorized to close in Hartford, Connecticut or
(continued)
New York, New York, (iii) that is a day on which banking
institutions in each of the cities in which the principal
corporate trust office of the Trustee, the principal office of
the Remarketing Agent (as defined in the Indenture) and our
principal office are located are not required or authorized to
remain closed and (iv) that is a day on which the New York Stock
Exchange is not closed.
If you shall draw on us by your Interest Drawing under
clause (1) of the first sentence of the immediately preceding
paragraph and you shall not have received from us within ten (10)
calendar days from the date of such drawing a written notice to
the effect that a default exists under our reimbursement
agreement with the Borrower and that the Interest Component of
the Letter of Credit will not be reinstated, your right to draw
on us in a single drawing by your Interest Drawing under said
clause (1) shall be automatically reinstated and, effective the
eleventh (11th) calendar day from the date of such drawing, you
shall again be authorized to draw on us by your Interest Drawing
in accordance with said clause (1); provided, however, that the
Interest Component of this Letter of Credit shall be decreased as
hereinafter provided in connection with amounts drawn pursuant to
Partial Redemption Drawings and any Tender Drawing. The
automatic reinstatement of your right to draw on us by your
Interest Drawing shall be applicable to successive drawings by
your Interest Drawings under clause (1) of the first sentence of
the immediately preceding paragraph so long as this Letter of
Credit shall not have terminated as set forth below.
Upon our honoring any Tender Drawing or Partial Redemption
Drawing presented by you hereunder, (i) the Principal Component
of this Letter of Credit and the amounts available to be drawn
hereunder by you with respect to principal of the Bonds by any
subsequent Drawing shall be automatically decreased by an amount
equal to the Principal Component of such Tender Drawing or
Partial Redemption Drawing, and (ii) the Interest Component of
this Letter of Credit and the amounts available to be drawn
hereunder by you with respect to accrued and unpaid interest on
the Bonds by any subsequent Drawing shall be automatically
decreased by an amount equal to the portion of the Interest
Component relating to Bonds purchased or redeemed with the
proceeds of such Tender Drawing or Partial Redemption Drawing,
but shall automatically reinstate as follows:
(A) with respect to any decrease upon payment of any
Tender Drawing, the amount of the Principal Component of
this Letter of Credit and the portion of the Interest
Component relating thereto shall be increased when and to
the extent, but only when and to the extent, that we are
reimbursed by or on behalf of the Borrower for any amount
drawn hereunder by any Tender Drawing. Any amount received
by us from or on behalf of the Borrower in reimbursement of
amounts drawn hereunder by any Tender Drawing shall, if
(continued)
accompanied by your completed certificate signed by you in
the form of Annex F attached hereto, be applied to the
extent of the amount indicated therein to reimburse us for
amounts drawn hereunder by your Tender Drawings; and
(B) with respect to any decrease upon payment of any
Partial Redemption Drawing or Final Drawing, the amount of
the Principal Component relating thereto shall not be
reinstated.
Funds from us under this Letter of Credit are available to
you against presentation of your Interest Drawing, your Tender
Drawing, your Partial Redemption Drawing and your Final Drawing.
Each sight draft drawn under this Letter of Credit must bear on
its face the clause Drawn under Fleet National Bank Irrevocable
Direct Pay Letter of Credit No. CS1101345. Each Drawing shall
be presented to us at the following address: Fleet National
Bank, c/o Fleet Pennsylvania Services, Trade Services Operations,
Xxx Xxxxx Xxx, Xxxxxxxx, XX 00000, attention: Standby Letter of
Credit Unit, Mail Code PASCNO4E. A Drawing shall be deemed to
have been presented on the date actually received by us.
Presentation will also be deemed made upon our receipt of your
telecopier transmission to us (at Fax No. (000) 000-0000) of a
facsimile of the appropriate sight draft and drawing certificate
properly completed and signed, together with your undertaking to
send to us by regular U.S. Mail, for receipt on the next
following Business Day, the signed originals of such documents.
Presentation may not be made in any manner other than as provided
in this paragraph. If we receive any of your Drawings (other
than a Tender Drawing) at our aforesaid office, all in strict
conformity with the terms and conditions of this Letter of
Credit, not later than 12:00 noon (New York City time) on a
Business Day (provided that this Letter of Credit has not then
terminated), we will cause payment of same by 1:00 P.M. (New York
City time) on the next following Business Day in accordance with
your payment instructions. If we receive any of your Drawings
(other than a Tender Drawing) at such office, all in strict
conformity with the terms and conditions of this Letter of
Credit, after 12:00 A.M. (New York City time) on a Business Day
(provided that this Letter of Credit has not then terminated), we
will cause payment of same by 12:00 noon (New York City time) on
the second succeeding Business Day in accordance with your
payment instructions. If we receive any Tender Drawing at our
aforesaid office, all in strict conformity with the terms and
conditions of this Letter of Credit, not later than 10:00 A.M.
(New York City time) on any Business Day (provided that this
Letter of Credit has not then terminated), we will cause payment
of same by 2:30 P.M. (New York City time) on the same Business
Day in accordance with your payment instructions. If we receive
any Tender Drawing at such office, all in strict conformity with
the terms and conditions of this Letter of Credit, after 10:00
A.M. (New York City time) on any Business Day (provided that this
Letter of Credit has not then terminated), we will cause payment
(continued)
of same by 12:00 noon (New York City time) on the next following
Business Day in accordance with your payment instructions. If
requested by you, payment under this Letter of Credit may be made
by wire transfer of Federal Reserve Bank of Boston funds to your
account in a bank on the Federal Reserve wire system or by
deposit of same day funds into a designated account that you
maintain with us. As used in this Letter of Credit cause
payment shall mean (i) the deposit of same day funds into a
designated account with us, if such deposit is requested; or (ii)
if wire transfer is requested, the entry of an appropriate wire
transfer in the Federal Reserve wire system and the obtaining of
a Federal Reserve reference number.
Upon the earliest of (i) our honoring your Final Drawing
presented hereunder accompanied by this Letter of Credit, (ii)
5:00 p.m. (New York City time) on the date on which we receive a
certificate signed by you accompanied by this Letter of Credit
stating that the Borrower has provided and you have accepted a
substitute or replacement Credit Facility (as defined in the
Indenture) in accordance with the terms of the Indenture that is
effective the date of such certificate, or (iii) the Stated
Termination Date, this Letter of Credit shall terminate.
This Letter of Credit is transferable in its entirety (but
not in part) to any transferee whom you certify to us has
succeeded you as Trustee under the Indenture, and may be
successively transferred. Transfer of the available balance
under this Letter of Credit to such transferee shall be effected
by the presentation to us of this Letter of Credit accompanied by
a certificate in the form of Annex G attached hereto. Upon such
presentation, we shall forthwith transfer the same to your
transferee. A transfer fee is payable to us as set forth in our
reimbursement agreement with the Borrower.
This Letter of Credit sets forth in full our undertaking,
and such undertaking shall not in any way be modified, amended,
amplified or limited by reference to any document, instrument or
agreement referred to herein (including, without limitation, the
Bonds), except only the Drawings referred to herein, which are
hereby incorporated by reference; and any such reference shall
not be deemed to incorporate herein by reference any document,
instrument or agreement except for such Drawings.
Only you (or a transferee permitted by the terms of this
Letter of Credit) may make drawings under this Letter of Credit.
Upon the payment to you or to your account of the amount
specified in a sight draft drawn hereunder, we shall be fully
discharged on our obligation under this Letter of Credit with
respect to such draft, and we shall not thereafter be obligated
to make any further payments under this Letter of Credit in
respect of such draft to you or to any other person who may have
made to you or who makes to you a demand for payment of principal
of, or interest on, any Bond.
(continued)
To the extent consistent with the express provisions hereof,
this Letter of Credit shall be governed by the laws of The
Commonwealth of Massachusetts, except to the extent such laws are
inconsistent with the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500, in which event such Uniform Customs
shall govern except as modified hereby (including, without
limitation, the provisions on transferability).
Communications with respect to this Letter of Credit shall
be in writing and shall be addressed to us at Fleet National
Bank, c/o Fleet Pennsylvania Services, Trade Services Operations,
Xxx Xxxxx Xxx, Xxxxxxxx, XX 00000, attention: Standby Letter of
Credit Unit, Mail Code PASCNO4E, and shall specifically refer to
the number of this Letter of Credit.
Very truly yours,
FLEET NATIONAL BANK
By:____________________________________
Authorized Signature
Annex A
-------
[Form of Sight Draft]
DRAWN UNDER FLEET NATIONAL BANK
IRREVOCABLE DIRECT PAY
LETTER OF CREDIT NO. CS1101345
Date:____________
AMOUNT: _______________________
Pay at sight
Pay to the order of ________________________, as trustee 1
(U.S. $_________________)
Charge to account of Fleet National Bank
Irrevocable Direct Pay Letter of Credit No. CS1101345 dated
August 27, 1998
TO: Fleet National Bank
c/o Fleet Pennsylvania Services
Trade Services Operations
Xxx Xxxxx Xxx
Xxxxxxxx, XX 00000
Attention: Standby Letter of Credit Unit
___________________, as Trustee
By:_________________________
Authorized Officer
The signature below constitutes an endorsement of this sight
draft.
___________________, as Trustee
By:_________________________
Authorized Officer
--------------------
1 By wire transfer in immediately available funds for the account
of ______, as trustee (Account No._________).
Annex B
-------
[Form of Certificate for Interest Drawing]
CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT
OF UP TO 45 DAYS INTEREST
Irrevocable Direct Pay Letter of Credit No. CS1101345
-----------------------------------------------------
The undersigned, a duly authorized officer of the
undersigned Trustee (the 'Trustee'), hereby certifies to Fleet
National Bank (the 'Bank'), with reference to Irrevocable Direct
Pay Letter of Credit No. CS1101345 (the 'Letter of Credit', the
terms defined therein and not otherwise defined herein being used
herein as therein defined) issued by the Bank in favor of the
Trustee, as follows:
(1) The Trustee is the Trustee under the Indenture.
(2) The Trustee is making a drawing under the Letter of
Credit with respect to a payment of interest on Bonds on an
interest payment date, which payment is due and payable. As
of the record date for such interest payment, none of such
Bonds to which this drawing relates were Borrower Bonds or
Pledged Bonds, as those terms are defined in the Indenture.
(3) [The Interest Drawing of which this Certificate is a
part is the first Interest Drawing presented by the Trustee
under the Letter of Credit, and covers interest on the Bonds
accruing on and after [ ], 1998.]* [The Interest Drawing
last presented by the Trustee under the Letter of Credit was
honored and paid by the Bank on ______, 19 _, and the
Trustee has not received a notice within ten days of
presentation of such Interest Drawing from the Bank that a
default exists under the reimbursement agreement between the
Borrower and the Bank.]**
(4) The amount of the Interest Drawing of which this
Certificate is a part is $_____________. It was computed in
compliance with the terms and conditions of the Bonds and
the Indenture and does not exceed the amount available to be
drawn by the Trustee as the Interest Component under the
Letter of Credit.
________________________
* To be used in the Certificate relating to the first Interest
Drawing only.
** To be used in each Certificate relating to each Interest
Drawing other than the first Interest Drawing.
(continued)
(5) Upon receipt by the undersigned of the amount demanded
hereby, (a) the undersigned will apply the same directly to
the payment when due of the interest amount owing on account
of the Bonds on an interest payment date, (b) no portion of
said amount shall be applied by the undersigned for any
other purpose, and (c) no portion of said amount shall be
commingled with other funds held by the undersigned.
IN WITNESS WHEREOF, the Trustee has executed and delivered
this Certificate as of the ___ day of _______________, ____.
[ ], as Trustee
By:_______________________________
Name:
Title:
Annex C
-------
[Form of Certificate for Tender Drawing]
CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT OF
THE PURCHASE PRICE OF BONDS TENDERED AT THE OPTION OF
THE HOLDERS THEREOF OR PURSUANT TO MANDATORY TENDER
Irrevocable Direct Pay Letter of Credit No. CS1101345
-----------------------------------------------------
The undersigned, a duly authorized officer of the undersigned
Trustee (the 'Trustee'), hereby certifies to Fleet National Bank (the
'Bank'), with reference to Irrevocable Direct Pay Letter of Credit No.
CS1101345 (the 'Letter of Credit', the terms defined therein and not
otherwise defined herein being used herein as therein defined) issued
by the Bank in favor of the Trustee, as follows:
(1) The Trustee is the Trustee under the Indenture.
(2) The Trustee is making a drawing under the Letter of Credit
with respect to a payment, upon a tender of all or less than all of
the Bonds that are Outstanding (as defined in the Indenture), of the
unpaid principal amount of, and up to 45 days' accrued and unpaid
interest on, the Bonds to be purchased as a result of [optional tender
pursuant to the terms of Section 2.3(G)(1)c) of the Indenture]
[mandatory tender pursuant to the terms of Section 2.3(G)(1)(d) of the
Indenture]* (other than Borrower Bonds or Pledged Bonds, as those
terms are defined in the Indenture), which payment is due on the date
on which this Certificate and the Tender Drawing of which it is a part
are being presented to the Bank.
(3) The amount of the Tender Drawing of which this Certificate
is a part is equal to the sum of (i) $____________ being drawn in
respect of the payment of unpaid principal of Bonds (other than
Borrower Bonds or Pledged Bonds, as those terms are defined in the
Indenture) to be purchased as a result of a tender, plus (ii)
$___________ being drawn in respect of the payment of accrued and
unpaid interest on such Bonds.
(4) The Trustee shall register or cause to be registered in the
name of the Bank, or its designee, as pledgee of the Borrower, and
shall deliver or cause to be delivered (unless in book-entry form
only) to the Bank or its designee a principal amount of Bonds equal to
the principal amount of the Tender Drawing of which this Certificate
is a part as promptly as practicable, and in any event within three
(3) Business Days after presentation of said Tender Drawing.
_______________________
* Select one
(continued)
(5) Upon receipt by the undersigned of the amount demanded
hereby, (a) the undersigned will apply the same directly to the
payment when due of the purchase price of, and accrued and unpaid
interest on, Bonds tendered pursuant to the Indenture, (b) no portion
of said amount shall be applied by the undersigned for any other
purpose, and (c) no portion of said amount shall be commingled with
other funds held by the undersigned.
(6) The amount of the Tender Drawing of which this Certificate
is a part was computed in compliance with the terms and conditions of
the Bonds and the Indenture and does not exceed the amount available
to be drawn by the Trustee under the Letter of Credit; the amount
being drawn hereby in respect of interest does not exceed the Interest
Component and the amount being drawn hereby in respect of principal
does not exceed the Principal Component.
The Trustee acknowledges that, pursuant to the terms of the
Letter of Credit, upon the Bank's honoring of the Tender Drawing of
which this Certificate is a part, the amount of the Letter of Credit
and the amounts available to be drawn by the Trustee thereunder by any
subsequent Drawing are automatically decreased, subject to
reinstatement as set forth in the Letter of Credit.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the _____ day of _________________, ____.
[ ], as Trustee
By:_____________________________
Name:
Title:
Annex D
-------
[Form of Certificate for Partial Redemption Drawing]
CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT
OF PRINCIPAL AND UP TO 45 DAYS' INTEREST UPON PARTIAL
REDEMPTION
Irrevocable Direct Pay Letter of Credit No. CS1101345
-----------------------------------------------------
The undersigned, a duly authorized officer of the undersigned
Trustee (the 'Trustee'), hereby certifies to Fleet National Bank (the
'Bank'), with reference to Irrevocable Direct Pay Letter of Credit No.
CS1101345 (the 'Letter of Credit', the terms defined therein and not
otherwise defined herein being used herein as therein defined) issued
by the Bank in favor of the Trustee, as follows:
(1) The Trustee is the Trustee under the Indenture.
(2) The Trustee is making a drawing under the Letter of Credit
with respect to a payment, upon redemption of less than all of the
Bonds that are Outstanding (as defined in the Indenture), of the
unpaid principal amount of, and up to 45 days' accrued and unpaid
interest on, the Bonds to be redeemed pursuant to Section 2.4 of the
Indenture (other than Borrower Bonds or Pledged Bonds, as those terms
are defined in the Indenture).
(3) The amount of the Partial Redemption Drawing of which this
Certificate is a part is equal to the sum of (i) $____________ being
drawn in respect of the payment of unpaid principal of Bonds (other
than Borrower Bonds or Pledged Bonds, as those terms are defined in
the Indenture) to be redeemed, plus (ii) $_________ being drawn in
respect of the payment of accrued and unpaid interest on such Bonds.
(4) The amount of the Partial Redemption Drawing of which this
Certificate is a part was computed in accordance with the terms and
conditions of the Bonds and the Indenture and does not exceed the
amount available to be drawn by the Trustee under the Letter of
Credit; the amount being drawn hereby in respect of interest does not
exceed the Interest Component and the amount being drawn hereby in
respect of principal does not exceed the Principal Component.
(5) This Certificate and the Partial Redemption Drawing of which
it is a part are dated, and are being presented to the Bank for
payment on, the date on which the unpaid principal amount of and
interest on Bonds to be redeemed are due and payable under the
Indenture upon redemption of less than all of the Bonds that are
Outstanding (as defined in the Indenture).
(continued)
(6) Upon receipt by the undersigned of the amount demanded
hereby, (a) the undersigned will apply the same directly to the
payment when due of the principal amount of, and accrued and unpaid
interest on, Bonds to be redeemed pursuant to the Indenture, (b) no
portion of said amount shall be applied by the undersigned for any
other purpose, and (c) no portion of said amount shall be commingled
with other funds held by the undersigned.
The Trustee acknowledges that, pursuant to the terms of the
Letter of Credit, upon the Bank's honoring the Partial Redemption
Drawing of which this Certificate is a part, the amount of the Letter
of Credit and the amounts available to be drawn by the Trustee
thereunder by any subsequent Drawing are automatically and permanently
decreased by the amounts set forth in the Letter of Credit. The
Trustee acknowledges that pursuant to the immediately preceding
sentence, the Principal Component of the Letter of Credit is being
permanently reduced by $_____________ (the amount set forth in clause
(i) of Paragraph 3 above) and the maximum amount to which the Interest
Component can be reinstated under the Letter of Credit is being
permanently reduced by $___________ (the product of (x) the amount set
forth in clause (i) of Paragraph 3 above, times (y) 0.12, times (z)
45/365).
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the _______ day of _________, ____.
[ ], as Trustee
By:__________________________
Name:
Title:
Annex E
-------
[Form of Certificate for Final Drawing]
CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT OF PRINCIPAL
AND UP TO 45 DAYS' INTEREST, UPON STATED OR ACCELERATED MATURITY OR
OPTIONAL OR MANDATORY REDEMPTION AS A WHOLE
Irrevocable Direct Pay Letter of Credit No. CS1101345
-----------------------------------------------------
The undersigned, a duly authorized officer of the undersigned
Trustee (the 'Trustee'), hereby certifies to Fleet National Bank (the
'Bank'), with reference to Irrevocable Direct Pay Letter of Credit No.
CS1101345 (the 'Letter of Credit', the terms defined therein and not
otherwise defined herein being used herein as therein defined) issued
by the Bank in favor of the Trustee, as follows:
(l) The Trustee is the Trustee under the Indenture.
(2) The Trustee is making a drawing under the Letter of Credit
with respect to a payment*
[ ] upon stated maturity,
[ ] upon acceleration, pursuant to Section 8.1 of the
Indenture,
[ ] upon optional redemption in whole, pursuant to Section
2.4 of the Indenture,
[ ] upon mandatory redemption in whole, pursuant to Section
2.4 of the Indenture,
of the unpaid principal amount of and up to 45 days' accrued and
unpaid interest on, all of the Bonds that are Outstanding within the
meaning of the Indenture (other than Borrower Bonds or Pledged Bonds,
as those terms are defined in the Indenture).
(3) The amount of the Final Drawing of which this Certificate is
a part is equal to the sum of (i) $_____________ being drawn in
respect of the payment of unpaid principal of Bonds
___________________________
*Check Applicable Section.
(continued)
(other than Borrower Bonds or Pledged Bonds, as those terms are
defined in the Indenture), plus (ii) $_________ being drawn in respect
of the payment of accrued and unpaid interest on such Bonds.
(4) The amount of the Final Drawing of which this Certificate is
a part was computed in compliance with the terms and conditions of the
Bonds and the Indenture and does not exceed the amount available to be
drawn by the Trustee under the Letter of Credit; the amount being
drawn hereby in respect of interest does not exceed the Interest
Component and the amount being drawn hereby in respect of principal
does not exceed the Principal Component.
(5) Upon receipt by the undersigned of the amount demanded
hereby, (a) the undersigned will apply the same directly to the
payment when due of the principal amount of, and accrued and unpaid
interest on, the Bonds pursuant to the Indenture, (b) no portion of
said amount shall be applied by the undersigned for any other purpose,
and (c) no portion of said amount shall be commingled with other funds
held by the undersigned.
The Trustee acknowledges that, pursuant to the terms of the
Letter of Credit, upon the Bank's honoring the Final Drawing of which
this Certificate is a part, the Letter of Credit is automatically
terminated and no further amounts are available to be drawn by the
Trustee thereunder.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the _____________ day of ____________, ____.
[ ], as Trustee
By:_________________________
Name:
Title:
Annex F
-------
[Form of Reinstatement Certificate for Tender Drawing]
-----------------------------------------------------
CERTIFICATE FOR THE REINSTATEMENT OF AMOUNTS AVAILABLE UNDER
IRREVOCABLE DIRECT PAY LETTER OF CREDIT NO. CS1101345
The undersigned, a duly authorized officer of the undersigned
Trustee (the 'Trustee'), hereby certifies to Fleet National Bank (the
'Bank'), with reference to Irrevocable Direct Pay Letter of Credit No.
CS1101345 (the 'Letter of Credit', the terms defined therein and not
otherwise defined herein being used herein as therein defined) issued
by the Bank in favor of the Trustee, as follows:
(1) The Trustee is the Trustee under the Indenture.
(2) The amount of $__________ paid to you today by or on behalf
of the Borrower is a payment made to reimburse you, pursuant to
Section 2(f) of the Reimbursement Agreement dated as of August 1, 1998
(the Reimbursement Agreement ) among the Borrower and the Bank, for
amounts drawn under the Letter of Credit by Tender Drawings. Of such
amount, $___________ represents the aggregate principal amount of
Bonds resold or to be resold on behalf of the Borrower. The Trustee
hereby requests that you reinstate the Principal Component of the
Letter of Credit upon receipt of such payment in an amount equal to
such principal amount and that you reinstate the portion of the
Interest Component of the Letter of Credit relating to such Bonds.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the __________ day of ___________, ____.
[ ], as Trustee
By:_______________________
Name:
Title:
(continued)
Annex G
-------
[Form of Transfer Certificate]
-----------------------------
INSTRUCTION TO TRANSFER
[Date]
Fleet National Bank
c/o Fleet Pennsylvania Services
Trade Services Operations
Xxx Xxxxx Xxx
Xxxxxxxx, XX 00000
Attention: Standby Letter of
Credit Unit
Mail Code: PASCNO4E
Re: Fleet National Bank Irrevocable Direct Pay Letter of Credit
No. CS1101345
Ladies and Gentlemen:
For value received, the undersigned beneficiary hereby
irrevocably transfers to the following (the Transferee):
________________________________
[Name of Transferee]
__________________________________
[Address]
all rights of the undersigned beneficiary to draw under the above-
captioned Letter of Credit (the 'Letter of Credit') in its entirety.
The Transferee has succeeded the undersigned as Trustee under the
Indenture (as defined in the Letter of Credit).
By this transfer, all rights of the undersigned beneficiary in
the Letter of Credit are transferred to the Transferee and the
Transferee shall have the sole rights as beneficiary thereof,
including sole rights relating to any amendments of the Letter of
Credit, whether increases in the amount to be drawn thereunder,
extensions of the expiration date thereof, or other amendments, and
whether such amendments now exist or are made after the date hereof.
All amendments of the Letter of Credit are to be delivered directly to
the Transferee without necessity of any consent of or notice to the
undersigned beneficiary. The undersigned hereby certifies that the
(continued)
Transferee has become successor Trustee under the Indenture, and has
accepted such appointment in writing.
The original of the Letter of Credit is returned herewith, and in
accordance therewith we ask you to endorse the within transfer on the
reverse thereof, and forward it directly to the Transferee with your
customary notice of transfer.
Very truly yours,
[ ], as predecessor Trustee
By:________________________________
Authorized Officer
We certify that we have succeeded [predecessor Trustee] as
trustee under the Indenture.
[Name of Transferee]
By:_______________________________
Authorized Officer
EXHIBIT C
FORM REQUEST FOR EXTENSION OF TERMINATION DATE
OF LETTER OF CREDIT
-------------------
[date]
Fleet National Bank
Xxx Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Re: Request for Extension of Termination Date of Letter of
------------------------------------------------------
Credit
------
Ladies/Gentlemen:
Reference is hereby made to that certain Reimbursement Agreement, dated
as of August 1, 1998 (the "Agreement"), between The Energy Network, Inc.
(the "Borrower") and Fleet National Bank (the "Bank") and the Letter of
Credit referred to therein. All capitalized terms contained herein which
are not specifically defined shall be deemed to have the definition set
forth in the Agreement. The Institution hereby requests, pursuant to
Section 3(e) of the Agreement, that the Termination Date for the Letter of
Credit be extended by one year. This request is being given not earlier
than the year anniversary of the Letter of Credit and not later than 225
days prior to the scheduled Termination Date. Pursuant to Section 3(e) of
the Agreement, we have enclosed along with this request the following
information:
1. The outstanding principal amount of the Bonds;
2. The nature of any and all Events of Default and all conditions,
events and acts which with notice or lapse of time or both would become an
Event of Default; and
3. Any other pertinent information previously requested by the Bank.
The Bank is required to notify the Borrower, the Issuer, the Trustee
and the Remarketing Agent of its decision with respect to this request for
extension within 30 days of the date of this request. If the Bank fails to
notify the Borrower of its decision within such 30-day period, the Bank
shall be deemed to have rejected such request.
Very truly yours,
The Energy Network, Inc.
By:___________________________
Name:__________________
Title: ___________________
(continued)
EXHIBIT D
List of Subsidiaries
--------------------
EXHIBIT E
Litigation
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EXHIBIT F
Financial Statement Certificate
-------------------------------
Fleet National Bank
Xxx Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxx, Senior Vice President
Ladies and Gentlemen:
As required by Section 5.04 of that certain 3-Year Revolving Credit
Agreement dated October 1, 1997, by and between The Energy Network, Inc.
( Borrower ) and Fleet National Bank, a review of the activities of Borrower
for the fiscal quarter/fiscal year ended [__________] has been made under my
supervision with a view to determining whether Borrower has kept, observed,
performed and fulfilled all of its obligations under the Revolving Credit
Agreement and all other agreements or undertakings contemplated thereby.
The undersigned hereby certifies that the amounts set forth below, with
abbreviated descriptions, to the best of my information and belief,
accurately present amounts required to be calculated by various covenants of
the Revolving Credit Agreement as of the last day of the fiscal
quarter/fiscal year noted above and all terms used herein have the identical
meaning as in the Revolving Credit Agreement.
1. 7(i)(B)(i) - Total Debt to Tangible Net Worth
---------------------------------------------
Total Debt _______________
Tangible Net Worth _______________
Ratio of Total Debt to Tangible Net Worth _______________
Maximum Permitted 2.25 to 1
2. 7(i)(B)(ii) - Minimum Tangible Net Worth
----------------------------------------
Tangible Net Worth _______________
Minimum Required 30,000,000
3. 7(i)(B)(iii) Debt Service Coverage Ratio
----------------------------------------
EBITDA plus equity purchase funds _______________
Debt Service _______________
Debt Service Coverage Ratio _______________
Minimum Required 1.25 to 1
4. 7(I)(B)(iv) Interest Coverage Ratio
-----------------------------------
EBIT _______________
Interest expense _______________
Interest Coverage Ratio _______________
Minimum Required 2.5 to 1
5. 10(m) CTG s Debt to Capitalization
-----------------------------------
CTG total debt ________________
CTG capitalization ________________
CTG ratio of debt to capitalization ________________
Maximum Permitted 70%
6. 10(n) S&P Rating of CTG Operating Subsidiaries
-----------------------------------------------
Lowest Standard & Poor s debt rating of each
operating subsidiary of CTG ________________
Minimum Required BBB
The undersigned hereby further certifies that he/she has reviewed the
terms of the Revolving Credit Agreement and that, to the best of his/her
knowledge, no event has occurred which constitutes, or which with the
passage of time or service of notice, or both, would constitute, an Event of
Default as defined in the Revolving Credit Agreement.
Sincerely,
THE ENERGY NETWORK, INC.
By:
Title:
EXHIBIT G
Existing Other Indebtedness and Liens
-------------------------------------
APPENDIX C
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SUMMARY OF THE REIMBURSEMENT AGREEMENT
THE REIMBURSEMENT AGREEMENT
---------------------------
The Home has entered into a Reimbursement Agreement with the Bank
pursuant to which the Borrower has agreed to reimburse the Bank for sums
drawn on the Letter of Credit and to exercise its right to optionally redeem
the Bonds as described below so long as the Reimbursement Agreement is in
effect. The Reimbursement Agreement also provides for drawing fees,
transfer fees and other fees and charges. The Borrower s obligations under
the Reimbursement Agreement are secured by a pledge and assignment of a
Forward Equity Purchase Agreement with CTG Resources, Inc. (the Security
Documents)
The Reimbursement Agreement sets forth conditions to the issuance of
the Letter of Credit and certain representations and warranties which are to
be true at the closing date. Such representations and warranties include
representations as to: corporate organization; due execution and delivery;
no litigation; compliance with applicable agreements; payment of taxes;
compliance with laws; lack of encumbrances; accuracy of financial
information; no violation of Regulation U; no ERISA violation; no burdensome
contracts; environmental matters; and accuracy of information furnished.
The Reimbursement Agreement also contains affirmative and negative
covenants and reporting requirements. Affirmative covenants of the Home
include: payment of amounts due to the Bank; payment of taxes, charges and
other obligations; maintenance of insurance; maintenance of existence and
qualification; compliance with laws; rights of access; maintenance of proper
books and records; maintenance of property; continued conduct of business
and a prohibition against unrelated new lines of business; maintaining
principal operating accounts at the Bank; providing further assurances;
maintenance of a debt service coverage ratio of not less than 1.25 to 1.00;
maintenance of the ratio of debt to tangible net worth of not less than
2.25:1.00; and use of loan proceeds. Negative covenants include:
limitation on further indebtedness, subject to exceptions and baskets
described therein; limitation on further liens, subject to exceptions
described therein; limitation on guaranties, subject to exceptions described
therein; prohibition against dissolution or merger and limitations on asset
dispositions as described therein; prohibitions against further pledges;
limitations on loans to other persons and investments in other persons,
subject to exceptions described therein; prohibition against sale-leaseback
transactions; limitations on transactions with affiliates; and requirements
relating to environmental hazards. Reporting requirements include
requirements to furnish: annual audited financial statements of the
Borrower; quarterly unaudited financial statements of the Borrower;
compliance certificates; notice of defaults; notice of material litigation;
management letters; notice of ERISA violations; notice of environmental
violations; notice of change in accountants; notice of loss of material
permits; notice of material loss or casualty damage; notice of material
labor problems; notice of other adverse developments; and such other
information as the Bank may request.
The Reimbursement Agreement also sets out certain Events of Default.
These include: (i) failure to pay; (ii) failure to observe affirmative
covenants (including covenants relating to taxes, insurance, corporate
existence and qualification, compliance with laws and observance of
financial ratios), as well as failure to comply with any of the negative
covenants or reporting requirements; (iii) default under any other covenant
for 30 days after notice; (iv) failure of any representation or warranty to
have been true in any material respect; (v) cross-default to other
agreements with the Bank; (vi) cross-default to any subordinated debt or
other indebtedness of the Borrower in excess of $100,000; (vii) dissolution,
bankruptcy, reorganization or similar proceedings involving the Borrower,
any of its subsidiaries or any guarantor, other than involuntary proceedings
dismissed within 60 days; (viii) any attachment, execution or similar
process in excess of $100,000; (ix) material ERISA violations; (x) material
loss, theft, damage or destruction; (xi) material uninsured judgments; (xii)
cross-default to Indenture and Loan Agreement; (xiv) any material
environmental problem; and (xv) any event of default under other agreements
relating to other indebtedness owed to the Bank.
Upon the occurrence of an Event of Default, the Bank may, among other
things: (i) direct the Trustee to accelerate the Bonds; (ii) enforce its
rights under the Security Documents; (iii) enforce its rights against the
Borrower through legal action; and/or (iv) give notice of non-reinstatement
of the interest component of the Letter of Credit.
The Reimbursement Agreement also contains provisions as to the Bank s
right (but not obligation) to cure certain Borrower defaults;
indemnification of the Bank by the Borrower; amendment and waivers; notices
and other miscellaneous provisions.
