EXHIBIT 10.4
June 30, 1996
[ONE VALLEY BANK LOGO]
Beneficiary:
Wilmington Trust Company, as Delaware
Trustee of the Eastern American Natural Gas
Trust (the "Trust") under the Amended and
Restated Agreement effective as of January 1, 1993,
among Eastern American Energy Corporation, Bank
of Montreal Trust Company (the "Trust Agreement").
Re: Irrevocable Letter of Credit No.96-025 Transferable Amount:
USD$12,000,000.00 (USDollarstwelvemillionand00/100)
Gentlemen:
We hereby issue our Irrevocable Standby Letter of Credit Number 96-025
by order and for the account of Eastern Amercian Energy Corporation, a West
Virginia corporation ("EASTERN AMERICAN"), up to an aggregate amount
USD$12,000,000.00 (US Dollars twelve million and 00/100)(the "STATED AMOUNT")
available by your drafts at sight drawn on One Valley Bank, National
Association, One Valley Square, Xxxxxxx and Xxx Xxxxxxx, Xxxxxxxxxx, Xxxx
Xxxxxxxx 00000. This Irrevocable Standby Letter of Credit replaces that certain
Irrevocable Standby Letter of Credit issued by the Bank of Nova Scotia Number
LIHII6562.
Subject to the further provisions of this Letter of Credit, a demand for
payment may be made to you on or proir to the Expiry Date (as defined below) by
persentation to us at our address set forth above (Attention: Stanby Letter of
Credit) of your sight draft, accompanied by your Drawing Certificate in the form
of Annex I, Annex II, Annex III, or Annex IV hereto, approximately completed.
The sight draft drawn under this credit must bear on its face the clause
"Drawn under One Valley Bank, National Association, Letter of Credit No.96-025".
Wilmington Trust Company,
as Delaware Trustee
June 28, 1996
Page 2
The Stated Amount of this Letter of Credit shall be automatically
reduced by the amount of each drawing hereunder and shall further be reduced
automatically on June 30, 1997 and each anniversary thereof until June 30, 1999
to an amount equal to the lesser of (i) the original Stated Amount less the
amount of all drawings made hereunder on or prior to such date and (ii) Nine
Millionand 00/100 Dollars ($9,000,000.00) with respect to June 30, 1997, Six
Millionand 00/100 Dollars ($6,000,000.00) with respect to June 30, 1998 and
Three Millionand 00/100 Dollars ($3,000,000.00) with respect to June 30, 1999.
This Letter of Credit shall expire at our close of business at our
aforesaid address on June 30, 1997 unless extended as provided herein (the
"Expiry Date" as it may from time to time be extended), provided that the Expiry
Date shall not in any event be extended to a date later than June 30, 2000.
Unless we notify you in writing not later than 30 calandar days prior to the
Expiry Date that we do not intend to extend the Expiry Date for one additional
calendar year, then the Expiry Date shall be extended for one additional
calendar year effective on the Expiry Date. If we notify you that we do not
intend to extend the Expiry Date, as aforesaid, you may draw on us for the full
Stated Amount of this Letter of Credit then available by your sight draft,
accompanied by you Drawing Certificate in the form of Annex IV to this Letter of
Credit.
In the event of notification of default under the Terms and Conditions
of the Applications and Agreement for Standby Letter of Credit dated as of June
21, 1996, between Eastern American Energy, Eastern Marketing Corporation and One
Valley Bank, National Association (as ammended, modified or supplemented from
time to time, the "Agreement") tha an Event of Default (as defined in the
Agreement) has occured and is continuing, we shall have the right to terminate
this Letter of Credit upon 30 days' written notice to you, specifying that we
have excercised such right to terminate the Letter of Credit and specifying the
date as to which this Letter of Credit will terminate. Upon receipt of such
notice, you may draw upon us at the full Stated Amount of this Letter of Credit
then available by your sight draft accompanied by your Drawing Certificate in
the form of Annex III to this Letter of Credit.
This Letter of Credit is transferable in its entirety (but not in part)
to any transferee who has succeeded to you as Trustee under the Trust Agreement
and such transferred Letter of Credit may be successively transferred to a
succesor trustee. Transfer of the available drawing(s) under this Letter of
Credit to such transferee shall be effected by the presentation to us of this
Letter of Credit accompanied by the transfer from attached hereto as Annex V.
However, the transfer shall not become operative until you have notified us of
the name of the transferee, and the same has been approvedby us not being
contrary to U.S. government regulations, and we have informed you accordingly.
Wilmington Trust Company,
as Delaware Trustee
June 28, 1996
Page 3
This Letter of Credit sets forth in full the terms of our underlying and
shall not in any way be modified, amended or amplified by reference to any
document, instrument or agreement referred to herein (except the Uniform Customs
(hereinafter defined) or in which this Letter of Credit is referred to or to
which this Letter of Credit relatives, and any such reference shall not be
deemed to incorporate herein by reference any documents, instruments of
agreement.
This Letter of Credit is subject to the Uniform Customs and Practice for
Documentary Credits, International Chamber of Commerce, UCP500 (1993)Revision
and, as to matters not governed by said Uniform Customs and Practice, shall be
governed by and construed in accordance with the laws of the State of West
Virginia.
Very Truly Yours,
/s/?????????????
Authorized Signature
One Valley Bank National Association
ANNEX I
DRAWING CERTIFICATE
The undersigned, a duly authorized officer of Wilmington Trust Company
(the "Beneficiary"), hereby certifies to One Valley Bank, National Association
(the "Bank"), with reference to Irrevocable Letter of Credit No. 96-025 (the
"Letter of Credit") issued by the Bank in favor of the Beneficiary (terms
defined in the Letter of Credit having the same meanings when used herein),
that:
(1) The Beneficiary is the Delaware Trustee under the Trust Agreement.
(2) The Beneficiary, as the Delaware Trustee under the Trust Agreement,
is making a drawing under the Letter of Credit with respect to (I) the failure
of Eastern Marketing Corporation, a West Virginia corporation ("Eastern
Marketing"), to make full payment of the amount required to be paid by Eastern
Marketing to the Trust pursuant to Article 9 of the Gas Purchase Contract, dated
January 1, 1993, between Eastern American and Eastern Marketing (the "GAS
PURCHASE CONTRACT") on or prior to the time required for such payment to be made
with respect to Seller's gas (as such term is defined in the Gas Purchase
Contract) for a quarterly period (as such term is defined in the Gas Purchse
Contract) and (ii) the failure of Eastern American to make full payment of the
amount required to be paid by Eastern American to the Trust pursuant to Section
2.1 of the Assignment and Standby Performance Agreement, dated January 1, 1993,
between Eastern American and the Trust (the "STANBY PERFORMANCE AGREEMENT") on
or prior to the time required for such payment to be made with respect to such
quarterly period.
(3) The amount of the sight draft accompanying this Certificate does not
exceed and amount equal to the difference obtained by subtracting (i) the
aggregate amount of all payments received by the Trust from Eastern American
pursuant to Section 2.1 of the Standby Performance Agreements on or prior to the
time required for such payments to be made with respect to the quarterly period
referred to in Paragraph (2) hereof from (ii) the amount required to be paid to
the Trust by Eastern American pursuant to Section 2.1 of the Standby Performance
Agreement with respect to such quarterly period.
(4) The amount of the sight draft accompanying this Certificate does not
exceed the Stated Amount of the Letter of Credit of the date hereof.
IN WITNESS WHEREOF, the Beneficiary has executed and delivered this
Certificate as of the ___________ day of___________ 199_.
WILMINGTON TRUST COMPANY,
AS TRUSTEE
By:______________________
Title:___________________
ANNEX II
DRAWING CERTIFICATE
The undersigned, a duly authorized officer of Wilmington Trust Company
(the "Beneficiary"), hereby certifies to One Valley Bank, National Association
(the "Bank"), with reference to Irrevocable Letter of Credit No. 96-025 (the
"Letter of Credit") issued by the Bank in favor of the Beneficiary (terms
defined in the Letter of Credit having the same meanings when used herein),
that:
(1) The Beneficiary is the Delaware Trustee under the Trust Agreement.
(2) The Beneficiary, as the Delaware Trustee under the Trust Agreement,
is making a drawing under the Letter of Credit with respect to a termination of
Gas Purchase Contract, dated January 1, 1993, between Eastern Marketing
Corporation, a West Virginia corporation, and Eastern American (the "GAS
PURCHASE CONTRACT") without the prior written consent of the Trustee (as such
defined in the Trust Agreement), the Assignee of Eastern American's rights under
the Gas Purchase Contract, in the manner specified in the Trust Agreement.
(3) The amount of the sight draft accompanying this Certificate does not
exceed the production payment reserve value (as such term defined in the Trust
Agreement) on the date herof.
(4) The amount of the sight draft accompanying this Certificate does not
exceed the Stated Amount of the Letter of Credit of the date hereof.
IN WITNESS WHEREOF, the Beneficiary has executed and delivered this
Certificate as of the ___________ day of___________ 199_.
WILMINGTON TRUST COMPANY,
AS TRUSTEE
By:______________________
Title:___________________
ANNEX III
DRAWING CERTIFICATE
The undersigned, a duly authorized officer of Wilmington Trust Company
(the "Beneficiary"), hereby certifies to One Valley Bank, National Association
(the "Bank"), with reference to Irrevocable Letter of Credit No. 96-025 (the
"Letter of Credit") issued by the Bank in favor of the Beneficiary (terms
defined in the Letter of Credit having the same meanings when used herein),
that:
(1) The Beneficiary is the Delaware Trustee under the Trust Agreement.
(2) The Beneficiary, as the Delaware Trustee under the Trust Agreement,
is making a drawing under the Letter of Credit with respect to a notification
from the Bank to the Trustee that there has been an Event of Default (as defined
in te Agreement, dated as of June 28, 1996 among Eastern American, Eastern
Marketing, and the Bank) and that the Letter of Credit will terminate as of a
date specified in such notification.
(3) The amount of the sight draft accompanying this Certificate does not
exceed the production payment reserve value (as such term defined in the Trust
Agreement) on the date herof.
(4) The amount of the sight draft accompanying this Certificate does not
exceed the Stated Amount of the Letter of Credit of the date hereof.
IN WITNESS WHEREOF, the Beneficiary has executed and delivered this
Certificate as of the ___________ day of___________ 199_.
WILMINGTON TRUST COMPANY,
AS TRUSTEE
By:______________________
Title:___________________
ANNEX IV
DRAWING CERTIFICATE
The undersigned, a duly authorized officer of Wilmington Trust Company
(the "Beneficiary"), hereby certifies to One Valley Bank, National Association
(the "Bank"), with reference to Irrevocable Letter of Credit No. 96-025 (the
"Letter of Credit") issued by the Bank in favor of the Beneficiary (terms
defined in the Letter of Credit having the same meanings when used herein),
that:
(1) The Beneficiary is the Delaware Trustee under the Trust Agreement.
(2) The Beneficiary, as the Delaware Trustee under the Trust Agreement,
is making a drawing under the Letter of Credit with respect to a notification
from the Bank to the Trustee that the Bank will not extend the Expiry Date of
the Letter of Credit and that the Letter of Credit will terminate as of the
Expiry Date.
(3) The amount of the sight draft accompanying this Certificate does not
exceed the Stated Amount of the Letter of Credit of the date hereof.
IN WITNESS WHEREOF, the Beneficiary has executed and delivered this
Certificate as of the ___________ day of___________ 199_.
WILMINGTON TRUST COMPANY,
AS TRUSTEE
By:______________________
Title:___________________
ANNEX V
Gentlemen:
For value recieved, the undersigned Beneficiary herby Irrevocably
transfers to:
(NAME OF TRANSFEREE)
(ADDRESS)
all rights of the undersigned Beneficiary to draw under the above Letter of
Credit in its entirety.
By this transfer, all rights of the undersigned Beneficiary in such
Letter of Credit are transferred to the Transferee and the Transferee shall have
the sole rights relating to any amendments, whether increases of extensions or
other amendments and whether now existing or hereafter made. All amendments are
to be advised direct to the Transferee without necessity of consent of or notice
to the undersigned Beneficiary.
The advice of such Letter of Credit is returned herewith, and we ask you
to endorse the transfer on the reverse thereof, and forward to the Transferee
with your customary notice of transfer.
Very Truly Yours,
__________________________
Signature of Beneficiary
__________________________
Signature Authenticated
__________________________
(Bank)
__________________________
(Authorized Signature)
