CONFORMED COPY
____________________________________________________________________________
THE ENERGY NETWORK, INC.
$15,000,000
6.90% Senior Secured Notes due 2010
__________________
NOTE PURCHASE AGREEMENT
__________________
Dated as of October 14, 1998
____________________________________________________________________________
[Exhibits B, C, D and E are photocopies of the documents as delivered.]
TABLE OF CONTENTS
Section Page
------- ----
1.AUTHORIZATION OF NOTES. . . . . . . . . . . . . . . . . . 1
0.XXXX AND PURCHASE OF NOTES. . . . . . . . . . . . . . . . 1
3.CLOSING. . . . . . . . . . . . . . . . . . . . . . . . 1
4.CONDITIONS TO CLOSING. . . . . . . . . . . . . . . . . . 2
4.1. Representations and Warranties. . . . . . . . 2
4.2. Performance; No Default. . . . . . . . . . . . 2
4.3. Compliance Certificates. . . . . . . . . . . . 2
4.4. Opinions of Counsel. . . . . . . . . . . . . . 3
4.5. Purchase Permitted By Applicable Law, etc. . . 3
4.6. Payment of Special Counsel Fees. . . . . . . . 3
4.7. Private Placement Number. . . . . . . . . . . 3
4.8. Changes in Corporate Structure. . . . . . . . 3
4.9. Credit Rating. . . . . . . . . . . . . . . . . 4
4.10. Subsidiary Guarantees. . . . . . . . . . . . . 4
4.11. Pledge Agreement; Collateral Agency Agreement. 4
4.12. Consent. . . . . . . . . . . . . . . . . . . . 4
4.13. Forward Equity Purchase Agreement. . . . . . . 4
4.14. Support Agreement. . . . . . . . . . . . . . . 4
4.15. Proceedings and Documents. . . . . . . . . . . 4
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. . . . . 5
5.1. Organization; Power and Authority. . . . . . . 5
5.2. Authorization, etc. . . . . . . . . . . . . . 5
5.3. Disclosure. . . . . . . . . . . . . . . . . . 5
5.4. Organization and Ownership of Shares of Subsidiaries;
Affiliates. . . . . . . . . . . . . . . . . . 6
5.5. Financial Statements. . . . . . . . . . . . . 6
5.6. Compliance with Laws, Other Instruments, etc. 7
5.7. Governmental Authorizations, etc. . . . . . . 7
5.8. Litigation; Observance of Agreements, Statutes and
Orders . . . . . . . . . . . . . . . . . . . . 7
5.9. Taxes. . . . . . . . . . . . . . . . . . . . . 7
5.10. Title to Property; Leases; Pledge Agreement. . 8
5.11. Licenses, Permits, etc. . . . . . . . . . . . 8
5.12. Compliance with ERISA. . . . . . . . . . . . . 9
5.13. Private Offering by the Company. . . . . . . . 9
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5.14. Use of Proceeds; Margin Regulations. . . . . . 10
5.15. Existing Indebtedness; Future Liens. . . . . . 10
5.16. Foreign Assets Control Regulations, etc. . . . 10
5.17. Status under Certain Statutes. . . . . . . . . 11
5.18. Environmental Matters. . . . . . . . . . . . . 11
5.19. Representations in Transaction Documents. . . 11
6. REPRESENTATIONS OF THE PURCHASER. . . . . . . . . . . 12
6.1. Purchase for Investment. . . . . . . . . . . . 12
6.2. Source of Funds. . . . . . . . . . . . . . . . 12
7. INFORMATION AS TO COMPANY. . . . . . . . . . . . . . . 13
7.1. Financial and Business Information. . . . . . 13
7.2. Officer s Certificate . . . . . . . . . . . . 16
7.3. Inspection. . . . . . . . . . . . . . . . . . 16
8. INTEREST ON THE NOTES; PREPAYMENT OF THE NOTES. . . . 17
8.1. Interest on the Notes. . . . . . . . . . . . . 17
8.2. Maturity. . . . . . . . . . . . . . . . . . . 17
8.3. Optional Prepayments with Make-Whole Amount. . 17
8.4. Prepayment in Connection with a Change of Control. 17
8.5. Notices, Etc; Calculation of Make-Whole Amounts. 18
8.6. Allocation of Partial Prepayments. . . . . . . 19
8.7. Maturity; Surrender, etc. . . . . . . . . . . 19
8.8. Purchase of Notes. . . . . . . . . . . . . . . 19
8.9. Make-Whole Amount. . . . . . . . . . . . . . . 19
9. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . 21
9.1. Compliance with Law. . . . . . . . . . . . . . 22
9.2. Insurance. . . . . . . . . . . . . . . . . . . 21
9.3. Maintenance of Properties. . . . . . . . . . . 21
9.4. Payment of Taxes and Claims. . . . . . . . . . 21
9.5. Corporate Existence, etc. . . . . . . . . . . 22
9.6. Subsidiary Guarantees, etc. . . . . . . . . . 22
10. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . 22
10.1. Transactions with Affiliates. . . . . . . . . 22
10.2. Merger, Consolidation, etc. . . . . . . . . . 23
10.3. Consolidated Net Worth. . . . . . . . . . . . 23
10.4. Debt Service Coverage Ratio. . . . . . . . . . 23
10.5. Indebtedness. . . . . . . . . . . . . . . . . 23
10.6. Intercompany Indebtedness. . . . . . . . . . . 24
10.7. Liens. . . . . . . . . . . . . . . . . . . . . 24
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10.8. Sale and Leasebacks. . . . . . . . . . . . . . 25
10.9. Restricted Payments. . . . . . . . . . . . . . 25
10.10. Amendments, etc. to Forward Equity Purchase
Agreement. . . . . . . . . . . . . . . . . . . 26
11. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . 26
12. REMEDIES ON DEFAULT, ETC. . . . . . . . . . . . . . . 29
12.1. Acceleration. . . . . . . . . . . . . . . . . 29
12.2. Other Remedies. . . . . . . . . . . . . . . . 29
12.3. Rescission. . . . . . . . . . . . . . . . . . 30
12.4. No Waivers or Election of Remedies, Expenses, etc. 30
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES. . . . . 30
13.1. Registration of Notes. . . . . . . . . . . . . 30
13.2. Transfer and Exchange of Notes. . . . . . . . 31
13.3. Replacement of Notes. . . . . . . . . . . . . 31
14. PAYMENTS ON NOTES. . . . . . . . . . . . . . . . . . . 32
14.1. Place of Payment. . . . . . . . . . . . . . . 32
14.2. Home Office Payment. . . . . . . . . . . . . . 32
15. EXPENSES, ETC. . . . . . . . . . . . . . . . . . . . . 32
15.1. Transaction Expenses. . . . . . . . . . . . . 32
15.2. Survival. . . . . . . . . . . . . . . . . . . 33
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . 33
17. AMENDMENT AND WAIVER. . . . . . . . . . . . . . . . . 33
17.1. Requirements. . . . . . . . . . . . . . . . . 33
17.2. Solicitation of Holders of Notes. . . . . . . 34
17.3. Binding Effect, etc. . . . . . . . . . . . . . 34
17.4. Notes held by Company, etc. . . . . . . . . . 34
18. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . 34
19. REPRODUCTION OF DOCUMENTS. . . . . . . . . . . . . . . 35
20. CONFIDENTIAL INFORMATION. . . . . . . . . . . . . . . 35
21. SUBSTITUTION OF PURCHASER. . . . . . . . . . . . . . . 36
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22. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . 37
22.1. Successors and Assigns. . . . . . . . . . . . 37
22.2. Payments Due on Non-Business Days. . . . . . . 37
22.3. Severability. . . . . . . . . . . . . . . . . 37
22.4. Construction. . . . . . . . . . . . . . . . . 37
22.5. Counterparts. . . . . . . . . . . . . . . . . 37
22.6. Governing Law. . . . . . . . . . . . . . . . . 37
SCHEDULE A -- INFORMATION RELATING TO PURCHASERS
SCHEDULE B -- DEFINED TERMS
SCHEDULE 5.3 -- Disclosure Materials
SCHEDULE 5.4 -- Subsidiaries of the Company and
Ownership of Subsidiary Stock
SCHEDULE 5.5 -- Financial Statements
SCHEDULE 5.11 -- Patents, etc.
SCHEDULE 5.14 -- Use of Proceeds
SCHEDULE 5.15 -- Existing Indebtedness/Liens
EXHIBIT 1 -- Form of 6.90% Senior Secured Note due 2010
EXHIBIT 4.4(a) -- Form of Opinion of Special Counsel for the
Company
EXHIBIT 4.4(b) -- Form of Opinion of Special Counsel
for the Purchasers
EXHIBIT A -- Form of Subordination Provisions
EXHIBIT B -- Form of Collateral Agency Agreement
EXHIBIT C -- Form of Consent
EXHIBIT D -- Form of Modification of Forward Equity Purchase
Agreement
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EXHIBIT E -- Form of Pledge Agreement
EXHIBIT F -- Form of Subsidiary Guarantee
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THE ENERGY NETWORK, INC.
000 Xxxxxxxx Xxxx.
Hartford, Connecticut 06144
6.90% Senior Secured Notes due 2010
As of October 14, 1998
METROPOLITAN LIFE INSURANCE COMPANY
ONE MADISON AVENUE
NEW YORK, NEW YORK 10010
Ladies and Gentlemen:
THE ENERGY NETWORK, INC., a Connecticut corporation (the
"Company"), agrees with you as follows:
1. AUTHORIZATION OF NOTES.
The Company will authorize the issue and sale of $15,000,000
aggregate principal amount of its 6.90% Senior Secured Notes due 2010 (the
"Notes", such term to include any such notes issued in substitution therefor
pursuant to Section 13 of this Agreement). The Notes shall be substantially
in the form set out in Exhibit 1, with such changes therefrom, if any, as
may be approved by you and the Company. Certain capitalized terms used in
this Agreement are defined in Schedule B; references to a "Schedule" or an
"Exhibit" are, unless otherwise specified, to a Schedule or an Exhibit
attached to this Agreement.
2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the Company
will issue and sell to you and you will purchase from the Company, at the
Closing provided for in Section 3, Notes in the principal amount specified
opposite your name in Schedule A at the purchase price of 100% of the
principal amount thereof.
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3. CLOSING.
The sale and purchase of the Notes to be purchased by you shall
occur at the offices of Milbank, Tweed, Xxxxxx & XxXxxx, Xxx Xxxxx Xxxxxxxxx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., New York City time, at a
closing (the "Closing") on October 14, 1998 or on such other Business Day
thereafter on or prior to October 30, 1998 as may be agreed upon by the
Company and you. At the Closing the Company will deliver to you the Notes
to be purchased by you in the form of a single Note (or such greater number
of Notes in denominations of at least $100,000 as you may request) dated the
date of the Closing and registered in your name (or in the name of your
nominee), against delivery by you to the Company or its order of immediately
available funds in the amount of the purchase price therefor by wire
transfer of immediately available funds for the account of the Company to an
account of the Company designated in a written notice from the Company to
you at least two Business Days in advance of the Closing. If at the Closing
the Company shall fail to tender such Notes to you as provided above in this
Section 3, or any of the conditions specified in Section 4 shall not have
been fulfilled to your satisfaction, you shall, at your election, be re-
lieved of all further obligations under this Agreement, without thereby
waiving any rights you may have by reason of such failure or such nonful-
fillment.
4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be sold to
you at the Closing is subject to the fulfillment to your satisfaction, prior
to or at the Closing, of the following conditions:
4.1. Representations and Warranties.
The representations and warranties of the Company in this Agree-
ment and the other Transaction Documents to which the Company is a party
shall be correct when made and at the time of the Closing.
4.2. Performance; No Default.
The Company shall have performed and complied with all agreements
and conditions contained in this Agreement and in each other Transaction
Document to which the Company is a party required to be performed or
complied with by it prior to or at the Closing and after giving effect to
the issue and sale of the Notes (and the application of the proceeds thereof
as contemplated by Section 5.14) no Default or Event of Default shall have
2
occurred and be continuing.
4.3. Compliance Certificates.
(a) OFFICER'S CERTIFICATE. The Company shall have delivered to
you an Officer s Certificate, dated the date of the Closing, certifying that
the conditions specified in Sections 4.1, 4.2 and 4.8 have been fulfilled.
(b) SECRETARY'S CERTIFICATE. Each of the Company, CTG and each
Subsidiary shall have delivered to you a certificate certifying as to the
resolutions attached thereto and other corporate proceedings relating to the
authorization, execution and delivery of the Transaction Documents to which
it is a party.
4.4. Opinions of Counsel.
You shall have received opinions in form and substance
satisfactory to you, dated the date of the Closing (a) from Murtha, Cullina,
Xxxxxxx and Xxxxxx LLP, counsel for the Company, CTG and each Subsidiary,
covering the matters set forth in Exhibit 4.4(a) and covering such other
matters incident to the transactions contemplated hereby as you or your
counsel may reasonably request (and the Company hereby instructs its counsel
to deliver such opinion to you) and (b) rom Milbank, Xxxxx, Xxxxxx & XxXxxx,
your special counsel in connection with such transactions, covering the
matters set forth in Exhibit 4.4(b) and covering such other matters incident
to such transactions as you may reasonably request.
4.5. Purchase Permitted By Applicable Law, etc.
On the date of the Closing your purchase of Notes shall (i) be
permitted by the laws and regulations of each jurisdiction to which you are
subject, without recourse to provisions (such as Section 1405(a)(8) of the
New York Insurance Law) permitting limited investments by insurance
companies without restriction as to the character of the particular invest-
ment, (ii) not violate any applicable law or regulation (including, without
limitation, Regulation T, U or X of the Board of Governors of the Federal
Reserve System) and (iii) not subject you to any tax, penalty or liability
under or pursuant to any applicable law or regulation, which law or
regulation was not in effect on the date hereof. If requested by you, you
shall have received an Officer s Certificate certifying as to such matters
of fact as you may reasonably specify to enable you to determine whether
such purchase is so permitted.
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4.6. Payment of Special Counsel Fees.
Without limiting the provisions of Section 15.1, the Company shall
have paid on or before the Closing the fees, charges and disbursements of
your special counsel referred to in Section 4.4 to the extent reflected in a
statement of such counsel rendered to the Company at least one Business Day
prior to the Closing.
4.7. Private Placement Number.
A Private Placement number issued by Standard & Poor s CUSIP
Service Bureau (in cooperation with the Securities Valuation Office of the
National Association of Insurance Commissioners) shall have been obtained
for the Notes.
4.8. Changes in Corporate Structure.
Neither CTG nor the Company shall have changed its jurisdiction of
incorporation or been a party to any merger or consolidation and shall not
have succeeded to all or any substantial part of the liabilities of any
other entity, at any time following the date of the most recent financial
statements referred to in Schedule 5.5.
4.9. Credit Rating.
You shall have received evidence, in a form satisfactory to you,
that Standard & Poor s and Xxxxx s have assigned ratings of not less than A-
and A3, respectively, to the senior unsecured long-term debt of CNG.
4.10. Subsidiary Guarantees.
Each Subsidiary of the Company shall have executed and delivered a
Subsidiary Guarantee and each such Subsidiary Guarantee shall be in full
force and effect.
4.11. Pledge Agreement; Collateral Agency Agreement.
The Company and the Collateral Agent shall have executed and
delivered the Pledge Agreement and the Pledge Agreement shall be in full
force and effect. The stock certificates identified in Annex 1 to the
Pledge Agreement, together with undated stock powers executed in blank in
connection therewith, shall have been delivered to the Collateral Agent.
All necessary and appropriate filings shall have been made in all necessary
4
and appropriate public offices and all other necessary and appropriate
actions shall have been taken so that the Liens created by the Pledge
Agreement constitute perfected first priority Liens on all right, title and
interest of the Company in the Collateral.
The Collateral Agency Agreement shall have been executed and
delivered by the parties thereto and shall be in full force and effect.
4.12. Consent.
CTG, the Company and the Collateral Agent shall have executed and
delivered the Consent and the Consent shall be in full force and effect.
4.13. Forward Equity Purchase Agreement.
The Company and CTG shall have executed and delivered the
Modification of Forward Equity Purchase Agreement and the Forward Equity
Purchase Agreement as amended thereby shall be in full force and effect.
4.14. Support Agreement.
CTG shall have executed and delivered the Support Agreement and
the Support Agreement shall be in full force and effect.
4.15. Proceedings and Documents.
All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and the other Transaction
Documents and all documents and instruments incident to such transactions
shall be satisfactory to you and your special counsel, and you and your
special counsel shall have received all such counterpart originals or
certified or other copies of such documents as you or they may reasonably
request.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you that:
5.1. Organization; Power and Authority.
The Company is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation, and is
duly qualified as a foreign corporation and is in good standing in each
5
jurisdiction in which such qualification is required by law, other than
those jurisdictions as to which the failure to be so qualified or in good
standing could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. The Company has the corporate power and
authority to own or hold under lease the properties it purports to own or
hold under lease, to transact the business it transacts and proposes to
transact, to execute and deliver this Agreement, the Notes and the other
Transaction Documents to which the Company is a party and to perform the
provisions hereof and thereof. The Company is a wholly-owned Subsidiary of
CTG.
5.2. Authorization, etc.
This Agreement, the Notes and the other Transaction Documents to
which the Company is a party have been duly authorized by all necessary
corporate action on the part of the Company, and this Agreement constitutes,
and upon execution and delivery thereof each Note and each other Transaction
Document to which the Company is a party will constitute, a legal, valid and
binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
(i) applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors rights generally and
(ii) general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
5.3. Disclosure.
Except as disclosed in Schedule 5.3, this Agreement, the
documents, certificates or other writings delivered to you by or on behalf
of the Company in connection with the transactions contemplated hereby and
the financial statements listed in Schedule 5.5, taken as a whole, do not
contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading in
light of the circumstances under which they were made. Except as expressly
described in Schedule 5.3, or in one of the documents, certificates or other
writings identified therein, or in the financial statements listed in
Schedule 5.5, since September 30, 1997, there has been no change in the
financial condition, operations, business, properties or prospects of the
Company or any Subsidiary except changes that individually or in the aggre-
gate could not reasonably be expected to have a Material Adverse Effect.
There is no fact known to the Company that could reasonably be expected to
have a Material Adverse Effect that has not been set forth herein or in the
other documents, certificates and other writings delivered to you by or on
6
behalf of the Company specifically for use in connection with the
transactions contemplated hereby.
5.4. Organization and Ownership of Shares of Subsidiaries; Affiliates.
(a) Schedule 5.4 contains (except as noted therein) complete and
correct lists (i) of the Company s Subsidiaries, showing, as to each
Subsidiary, the correct name thereof, the jurisdiction of its organization,
and the percentage of shares of each class of its capital stock or similar
equity interests outstanding owned by the Company and each other Subsidiary
and (ii) of the Company s Affiliates, other than Subsidiaries.
(b) All of the outstanding shares of capital stock or similar
equity interests of each Subsidiary shown in Schedule 5.4 as being owned by
the Company and its Subsidiaries have been validly issued, are fully paid
and nonassessable and are owned by the Company or another Subsidiary free
and clear of any Lien other than the Lien of the Pledge Agreement.
(c) Each Subsidiary identified in Schedule 5.4 is a corporation
or other legal entity duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization, and is duly qualified as
a foreign corporation or other legal entity and is in good standing in each
jurisdiction in which such qualification is required by law, other than
those jurisdictions as to which the failure to be so qualified or in good
standing could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. Each such Subsidiary has the corporate
or other power and authority to own or hold under lease the properties it
purports to own or hold under lease and to transact the business it
transacts and proposes to transact.
(d) No Subsidiary is a party to, or otherwise subject to any
legal restriction or any agreement (other than this Agreement, the
agreements listed on Schedule 5.4 and customary limitations imposed by
corporate law statutes) restricting the ability of such Subsidiary to pay
dividends out of profits or make any other similar distributions of profits
to the Company or any of its Subsidiaries that owns outstanding shares of
capital stock or similar equity interests of such Subsidiary.
5.5. Financial Statements.
The Company has delivered to each Purchaser copies of the
financial statements listed on Schedule 5.5. All of said financial
statements (including in each case the related schedules and notes) fairly
7
present in all material respects the consolidated financial position of the
Persons indicated therein as of the respective dates specified in such
Schedule and the consolidated results of their operations and cash flows for
the respective periods so specified and have been prepared in accordance
with GAAP consistently applied throughout the periods involved except as set
forth in the notes thereto (subject, in the case of any interim financial
statements, to normal year-end adjustments).
5.6. Compliance with Laws, Other Instruments, etc.
The execution, delivery and performance by the Company of this
Agreement, the Notes and the other Transaction Documents to which the
Company is a party will not (i) contravene, result in any breach of, or
constitute a default under, or result in the creation of any Lien in respect
of any property of the Company or any Subsidiary under (other than the Lien
of the Pledge Agreement), any indenture, mortgage, deed of trust, loan,
purchase or credit agreement, lease, corporate charter or by-laws, or any
other agreement or instrument to which the Company or any Subsidiary is
bound or by which the Company or any Subsidiary or any of their respective
properties may be bound or affected, (ii) conflict with or result in a
breach of any of the terms, conditions or provisions of any order, judgment,
decree, or ruling of any court, arbitrator or Governmental Authority applic-
able to the Company or any Subsidiary or (iii) violate any provision of any
statute or other rule or regulation of any Governmental Authority applicable
to the Company or any Subsidiary.
5.7. Governmental Authorizations, etc.
No consent, approval or authorization of, or registration, filing
or declaration with, any Governmental Authority is required in connection
with the execution, delivery or performance by the Company of this
Agreement, the Notes or any other Transaction Document to which the Company
is a party, except for filings in respect of the Liens created pursuant to
the Pledge Agreement.
5.8. Litigation; Observance of Agreements, Statutes and Orders.
(a) There are no actions, suits or proceedings pending or, to the
knowledge of the Company, threatened against or affecting the Company or any
Subsidiary or any property of the Company or any Subsidiary in any court or
before any arbitrator of any kind or before or by any Governmental Authority
that, individually or in the aggregate, could reasonably be expected to have
a Material Adverse Effect.
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(b) Neither the Company nor any Subsidiary is in default under
any term of any agreement or instrument to which it is a party or by which
it is bound, or any order, judgment, decree or ruling of any court,
arbitrator or Governmental Authority or is in violation of any applicable
law, ordinance, rule or regulation (including without limitation Environ-
mental Laws) of any Governmental Authority, which default or violation,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
5.9. Taxes.
The Company and its Subsidiaries have filed all tax returns that
are required to have been filed in any jurisdiction, and have paid all taxes
shown to be due and payable on such returns and all other taxes and assess-
ments levied upon them or their properties, assets, income or franchises, to
the extent such taxes and assessments have become due and payable and before
they have become delinquent, except for any taxes and assessments (i) the
amount of which is not individually or in the aggregate Material or (ii) the
amount, applicability or validity of which is currently being contested in
good faith by appropriate proceedings and with respect to which the Company
or a Subsidiary, as the case may be, has established adequate reserves in
accordance with GAAP. The Company knows of no basis for any other tax or
assessment that could reasonably be expected to have a Material Adverse
Effect. The charges, accruals and reserves on the books of the Company and
its Subsidiaries in respect of Federal, state or other taxes for all fiscal
periods are adequate. The Federal income tax liabilities of the Company and
its Subsidiaries have been determined and paid for all fiscal years up to
and including the fiscal year ended September 30, 1997, and have been
audited by the Internal Revenue Service for all fiscal years up to and
including the fiscal year ended September 30, 1988.
5.10. Title to Property; Leases; Pledge Agreement.
The Company and its Subsidiaries have good and sufficient title to
their respective properties that individually or in the aggregate are
Material, including all such properties reflected in the most recent audited
balance sheet referred to in Section 5.5 or purported to have been acquired
by the Company or any Subsidiary after said date (except as sold or
otherwise disposed of in the ordinary course of business), in each case free
and clear of Liens prohibited by this Agreement. All leases that
individually or in the aggregate are Material are valid and subsisting and
are in full force and effect in all material respects.
The provisions of the Pledge Agreement are effective to create, in
9
favor of the Collateral Agent, a legal, valid and enforceable Lien on or in
all of the Collateral which Lien shall be, upon the retaining or taking of
possession by the Collateral Agent of the applicable stock certificates as
contemplated by Section 5 of the Pledge Agreement and the filing of UCC
financing statements with the Secretary of the State of the State of
Connecticut, a perfected first priority Lien.
5.11. Licenses, Permits, etc.
Except as disclosed in Schedule 5.11,
(a) the Company and its Subsidiaries own or possess all licenses,
permits, franchises, authorizations, patents, copyrights, service
marks, trademarks and trade names, or rights thereto, that individually
or in the aggregate are Material, without known conflict with the
rights of others;
(b) to the best knowledge of the Company, no product of the
Company or any of its Subsidiaries infringes in any material respect
any license, permit, franchise, authorization, patent, copyright,
service mark, trademark, trade name or other right owned by any other
Person; and
(c) to the best knowledge of the Company, there is no Material
violation by any Person of any right of the Company or any of its
Subsidiaries with respect to any patent, copyright, service mark,
trademark, trade name or other right owned or used by the Company or
any of its Subsidiaries.
5.12. Compliance with ERISA.
(a) The Company and each ERISA Affiliate have operated and
administered each Plan in compliance with all applicable laws except for
such instances of noncompliance as have not resulted in and could not
reasonably be expected to result in a Material Adverse Effect. Neither the
Company nor any ERISA Affiliate has incurred any liability pursuant to Title
I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans (as defined in section 3 of ERISA), and
no event, transaction or condition has occurred or exists that could
reasonably be expected to result in the incurrence of any such liability by
the Company or any ERISA Affiliate, or in the imposition of any Lien on any
of the rights, properties or assets of the Company or any ERISA Affiliate,
in either case pursuant to Title I or IV of ERISA or to such penalty or
10
excise tax provisions or to section 401(a)(29) or 412 of the Code, other
than such liabilities or Liens as would not be individually or in the aggre-
gate Material.
(b) The present value of the aggregate benefit liabilities under
each of the Plans (other than Multiemployer Plans), determined as of the end
of such Plan s most recently ended plan year on the basis of the actuarial
assumptions specified for funding purposes in such Plan s most recent
actuarial valuation report, did not exceed the aggregate current value of
the assets of such Plan allocable to such benefit liabilities. The term
"BENEFIT LIABILITIES" has the meaning specified in section 4001 of ERISA and
the terms "CURRENT VALUE" and "PRESENT VALUE" have the meaning specified in
section 3 of ERISA.
(c) The Company and its ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer
Plans that individually or in the aggregate are Material.
(d) The expected postretirement benefit obligation (determined as
of the last day of the Company s most recently ended fiscal year in
accordance with Financial Accounting Standards Board Statement No. 106,
without regard to liabilities attributable to continuation coverage mandated
by section 4980B of the Code) of the Company and its Subsidiaries is not
Material.
(e) The execution and delivery of this Agreement and the issuance
and sale of the Notes hereunder will not involve any transaction that is
subject to the prohibitions of section 406 of ERISA or in connection with
which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the
Code. The representation by the Company in the first sentence of this
Section 5.12(e) is made in reliance upon and subject to the accuracy of your
representation in Section 6.2 as to the sources of the funds used to pay the
purchase price of the Notes to be purchased by you.
5.13. Private Offering by the Company.
Neither the Company nor anyone acting on its behalf has offered
the Notes or any similar securities for sale to, or solicited any offer to
buy any of the same from, or otherwise approached or negotiated in respect
thereof with, any person other than you and one other Institutional
Investor, each of which has been offered the Notes at a private sale for
investment. Neither the Company nor anyone acting on its behalf has taken,
11
or will take, any action that would subject the issuance or sale of the
Notes to the registration requirements of Section 5 of the Securities Act.
5.14. Use of Proceeds; Margin Regulations.
The Company will apply the proceeds of the sale of the Notes as
set forth in Schedule 5.14. Taking into account such application of the
proceeds of the sale of the Notes, the purchase of the Notes as contemplated
hereunder will not constitute an extension of credit secured directly or
indirectly by margin stock within the meaning of Regulation U of the Board
of Governors of the Federal Reserve System (12 CFR 221) and you shall not be
obligated to require the Company to execute a Form F.R. G-3 under said
Regulation U. No part of the proceeds from the sale of the Notes hereunder
will be used, directly or indirectly, for the purpose of buying or carrying
or trading in any securities under such circumstances as to involve the
Company in a violation of Regulation X of said Board (12 CFR 224) or to
involve any broker or dealer in a violation of Regulation T of said Board
(12 CFR 220). Margin stock does not constitute more than 5% of the value of
the consolidated assets of the Company and its Subsidiaries and the Company
does not have any present intention that margin stock will constitute more
than 5% of the value of such assets. As used in this Section, the terms
"MARGIN STOCK" and "PURPOSE OF BUYING OR CARRYING" shall have the meanings
assigned to them in said Regulation U.
5.15. Existing Indebtedness; Future Liens.
(a) Except as described therein, Schedule 5.15 sets forth a
complete and correct list of all outstanding Indebtedness of the Company and
its Subsidiaries as of the date hereof, since which date there has been no
Material change in the amounts, interest rates, sinking funds, installment
payments or maturities of the Indebtedness of the Company or its
Subsidiaries. Neither the Company nor any Subsidiary is in default and no
waiver of default is currently in effect, in the payment of any principal or
interest on any Indebtedness of the Company or such Subsidiary and no event
or condition exists with respect to any Indebtedness of the Company or any
Subsidiary that would permit (or that with notice or the lapse of time, or
both, would permit) one or more Persons to cause such Indebtedness to become
due and payable before its stated maturity or before its regularly scheduled
dates of payment.
(b) Except as disclosed in Schedule 5.15, neither the Company nor
any Subsidiary has agreed or consented to cause or permit in the future
(upon the happening of a contingency or otherwise) any of its property,
12
whether now owned or hereafter acquired, to be subject to a Lien not
permitted by Section 10.7.
5.16. Foreign Assets Control Regulations, etc.
Neither the sale of the Notes by the Company hereunder nor its use
of the proceeds thereof will violate the Trading with the Enemy Act, as
amended, or any of the foreign assets control regulations of the United
States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or
any enabling legislation or executive order relating thereto.
5.17. Status under Certain Statutes.
Neither the Company nor any Subsidiary is subject to regulation
under the Investment Company Act of 1940, as amended, the Public Utility
Holding Company Act of 1935, as amended, the Interstate Commerce Act, as
amended, or the Federal Power Act, as amended.
5.18. Environmental Matters.
Neither the Company nor any Subsidiary has knowledge of any claim
or has received any notice of any claim, and no proceeding has been
instituted raising any claim against the Company or any of its Subsidiaries
or any of their respective real properties now or formerly owned, leased or
operated by any of them or other assets, alleging any damage to the
environment or violation of any Environmental Laws, except, in each case,
such as could not reasonably be expected to result in a Material Adverse
Effect. Except as otherwise disclosed in CTG s most recent Annual Report on
Form 10-K previously furnished to you,
(a) neither the Company nor any Subsidiary has knowledge of
any facts which would give rise to any claim, public or private,
of violation of Environmental Laws or damage to the environment
emanating from, occurring on or in any way related to real
properties now or formerly owned, leased or operated by any of
them or to other assets or their use, except, in each case, such
as could not reasonably be expected to result in a Material
Adverse Effect;
(b) neither the Company nor any of its Subsidiaries has
stored any Hazardous Materials on real properties now or formerly
owned, leased or operated by any of them and has not disposed of
any Hazardous Materials in a manner contrary to any Environmental
13
Laws in each case in any manner that could reasonably be expected
to result in a Material Adverse Effect; and
(c) all buildings on all real properties now owned, leased
or operated by the Company or any of its Subsidiaries are in
compliance with applicable Environmental Laws, except where
failure to comply could not reasonably be expected to result in a
Material Adverse Effect.
5.19. Representations in Transaction Documents.
The representations and warranties of the Company in each other
Transaction Document to which the Company is a party and of each Subsidiary
in its Subsidiary Guarantee are true and correct.
6. REPRESENTATIONS OF THE PURCHASER.
6.1. Purchase for Investment.
You represent that you are purchasing the Notes for your own
account or for one or more separate accounts maintained by you or for the
account of one or more pension or trust funds and not with a view to the
distribution thereof, PROVIDED that the disposition of your or their
property shall at all times be within your or their control. You understand
that the Notes have not been registered under the Securities Act and may be
resold only if registered pursuant to the provisions of the Securities Act
or if an exemption from registration is available, except under
circumstances where neither such registration nor such an exemption is re-
quired by law, and that the Company is not required to register the Notes.
6.2. Source of Funds.
You represent that at least one of the following statements is an
accurate representation as to each source of funds (a "Source") to be used
by you to pay the purchase price of the Notes to be purchased by you
hereunder:
(a) the Source is an "insurance company general account" (as the
term is defined in Prohibited Transaction Exemption ("PTE") 95-60
(issued July 12, 1995)) in respect of which the reserves and
14
liabilities (as defined by the annual statement for life insurance
companies approved by the National Association of Insurance
Commissioners (the "NAIC Annual Statement")) for the general account
contract(s) held by or on behalf of any employee benefit plan together
with the amount of the reserves and liabilities for the general account
contract(s) held by or on behalf of any other employee benefit plans
maintained by the same employer (or affiliate thereof as defined in PTE
95-60) or by the same employee organization in the general account do
not exceed 10% of the total reserves and liabilities of the general
account (exclusive of separate account liabilities) plus surplus as set
forth in the NAIC Annual Statement filed with your state of domicile;
or
(b) the Source is a separate account that is maintained solely in
connection with your fixed contractual obligations under which the
amounts payable, or credited, to any employee benefit plan (or its
related trust) that has any interest in such separate account (or to
any participant or beneficiary of such plan (including any annuitant))
are not affected in any manner by the investment performance of the
separate account; or
(c) the Source is either (i) an insurance company pooled separate
account, within the meaning of PTE 90-1 (issued January 29, 1990), or
(ii) a bank collective investment fund, within the meaning of the PTE
91-38 (issued July 12, 1991) and, except as you have disclosed to the
Company in writing pursuant to this paragraph (b), no employee benefit
plan or group of plans maintained by the same employer or employee
organization beneficially owns more than 10% of all assets allocated to
such pooled separate account or collective investment fund; or
(d) the Source constitutes assets of an "investment fund" (within
the meaning of Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of
the QPAM Exemption), no employee benefit plan s assets that are includ-
ed in such investment fund, when combined with the assets of all other
employee benefit plans established or maintained by the same employer
or by an affiliate (within the meaning of Section V(c)(1) of the QPAM
Exemption) of such employer or by the same employee organization and
managed by such QPAM, exceed 20% of the total client assets managed by
such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption
are satisfied, neither the QPAM nor a person controlling or controlled
by the QPAM (applying the definition of "control" in Section V(e) of
the QPAM Exemption) owns a 5% or more interest in the Company and
15
(i) the identity of such QPAM and (ii) the names of all employee
benefit plans whose assets are included in such investment fund have
been disclosed to the Company in writing pursuant to this paragraph
(d); or
(e) the Source is a governmental plan; or
(f) the Source is one or more employee benefit plans, or a
separate account or trust fund comprised of one or more employee
benefit plans, each of which has been identified to the Company in
writing pursuant to this paragraph (f); or
(g) the Source does not include assets of any employee benefit
plan, other than a plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms "employee benefit plan" and "separate
account" shall have the respective meanings assigned to such terms in
Section 3 of ERISA.
16
7. INFORMATION AS TO COMPANY.
7.1. Financial and Business Information.
The Company shall deliver to each holder of Notes that is an
Institutional Investor:
(a) QUARTERLY STATEMENTS -- within 60 days after the end of each
quarterly fiscal period in each fiscal year of the Company (other than
the last quarterly fiscal period of each such fiscal year), duplicate
copies of,
(i) a consolidated balance sheet of the Company and its
Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income, changes in
stockholder s equity and cash flows of the Company and its
Subsidiaries, for such quarter and (in the case of the second and
third quarters) for the portion of the fiscal year ending with
such quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP applicable to quarterly
financial statements generally, and certified by a Senior Financial
Officer as fairly presenting, in all material respects, the financial
position of the companies being reported on and their results of
operations and cash flows, subject to changes resulting from year-end
adjustments;
(b) ANNUAL STATEMENTS -- within 105 days after the end of each
fiscal year of the Company, duplicate copies of,
(i) a consolidated balance sheet of the Company and its
Subsidiaries, as at the end of such year, and
(ii) consolidated statements of income, changes in
stockholder s equity and cash flows of the Company and its
Subsidiaries, for such year,
setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail, prepared in accordance
with GAAP, and accompanied
17
(A) by an opinion thereon of independent certified public
accountants of recognized national standing, which opinion shall
state that such financial statements present fairly, in all mate-
rial respects, the financial position of the companies being
reported upon and their results of operations and cash flows and
have been prepared in conformity with GAAP, and that the
examination of such accountants in connection with such financial
statements has been made in accordance with generally accepted
auditing standards, and that such audit provides a reasonable
basis for such opinion in the circumstances, and
(B) a certificate of such accountants stating that they have
reviewed this Agreement and stating further whether, in making
their audit, they have become aware of any condition or event that
then constitutes a Default or an Event of Default, and, if they
are aware that any such condition or event then exists, specifying
the nature and period of the existence thereof (it being
understood that such accountants shall not be liable, directly or
indirectly, for any failure to obtain knowledge of any Default or
Event of Default unless such accountants should have obtained
knowledge thereof in making an audit in accordance with generally
accepted auditing standards or did not make such an audit);
(c) SEC AND OTHER REPORTS -- promptly upon their becoming
available, one copy of (i) each financial statement, report, notice or
proxy statement sent by the Company, CTG, any CTG Subsidiary or any
Subsidiary to public securities holders generally, and (ii) each
regular or periodic report (including Annual Reports on Form 10-K and
Quarterly Reports on Form 10-Q), each registration statement (without
exhibits except as expressly requested by such holder), and each
prospectus and all amendments thereto filed by the Company, CTG, any
CTG Subsidiary or any Subsidiary with the Securities and Exchange
Commission and of all press releases and other statements made
available generally by the Company, CTG, any CTG Subsidiary or any
Subsidiary to the public concerning developments that are Material;
(d) NOTICE OF DEFAULT OR EVENT OF DEFAULT -- promptly, and in any
event within five days after a Responsible Officer becoming aware of
the existence of any Default or Event of Default or that any Person has
given any notice or taken any action with respect to a claimed default
hereunder or that any Person has given any notice or taken any action
with respect to a claimed default of the type referred to in Section
11(f), a written notice specifying the nature and period of existence
18
thereof and what action the Company is taking or proposes to take with
respect thereto;
(e) ERISA MATTERS -- promptly, and in any event within five days
after a Responsible Officer becoming aware of any of the following, a
written notice setting forth the nature thereof and the action, if any,
that the Company or an ERISA Affiliate proposes to take with respect
thereto:
(i) with respect to any Plan, any reportable event, as
defined in section 4043(b) of ERISA and the regulations there-
under, for which notice thereof has not been waived pursuant to
such regulations as in effect on the date hereof; or
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under
section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan, or the receipt by the
Company or any ERISA Affiliate of a notice from a Multiemployer
Plan that such action has been taken by the PBGC with respect to
such Multiemployer Plan; or
(iii) any event, transaction or condition that could
result in the incurrence of any liability by the Company or any
ERISA Affiliate pursuant to Title I or IV of ERISA or the penalty
or excise tax provisions of the Code relating to employee benefit
plans, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate
pursuant to Title I or IV of ERISA or such penalty or excise tax
provisions, if such liability or Lien, taken together with any
other such liabilities or Liens then existing, could reasonably be
expected to have a Material Adverse Effect;
(f) NOTICES FROM GOVERNMENTAL AUTHORITY -- promptly, and in any
event within 30 days of receipt thereof, copies of any notice to the
Company or any Subsidiary from any Federal or state Governmental
Authority relating to any order, ruling, statute or other law or
regulation that could reasonably be expected to have a Material Adverse
Effect; and
(g) REQUESTED INFORMATION -- with reasonable promptness, such
other data and information relating to the business, operations,
affairs, financial condition, assets or properties of the Company or
19
any of its Subsidiaries or relating to the ability of the Company to
perform its obligations hereunder and under the Notes as from time to
time may be reasonably requested by any such holder of Notes.
7.2. Officer s Certificate.
Each set of financial statements delivered to a holder of Notes
pursuant to Section 7.1(a) or Section 7.1(b) hereof shall be accompanied by
a certificate of a Senior Financial Officer setting forth:
(a) COVENANT COMPLIANCE -- the information (including detailed
calculations) required in order to establish whether the Company was in
compliance with the requirements of Section 10.3, 10.4, 10.5, 10.7(i),
10.8 and 10.9 during the quarterly or annual period covered by the
statements then being furnished (including with respect to each such
Section, where applicable, the calculations of the maximum or minimum
amount, ratio or percentage, as the case may be, permissible under the
terms of such Sections, and the calculation of the amount, ratio or
percentage then in existence); and
(b) EVENT OF DEFAULT -- a statement that such officer has
reviewed the relevant terms hereof and has made, or caused to be made,
under his or her supervision, a review of the transactions and
conditions of the Company and its Subsidiaries from the beginning of
the quarterly or annual period covered by the statements then being
furnished to the date of the certificate and that such review shall not
have disclosed the existence during such period of any condition or
event that constitutes a Default or an Event of Default or, if any such
condition or event existed or exists (including, without limitation,
any such event or condition resulting from the failure of the Company
or any Subsidiary to comply with any Environmental Law), specifying the
nature and period of existence thereof and what action the Company
shall have taken or proposes to take with respect thereto.
7.3. Inspection.
The Company shall permit the representatives of each holder of
Notes that is an Institutional Investor:
(a) NO DEFAULT -- if no Default or Event of Default then exists,
at the expense of such holder and upon reasonable prior notice to the
Company, to visit the principal executive office of the Company, to
discuss the affairs, finances and accounts of the Company and its
20
Subsidiaries with the Company s officers, and (with the consent of the
Company, which consent will not be unreasonably withheld) its
independent public accountants, and (with the consent of the Company,
which consent will not be unreasonably withheld) to visit the other
offices and properties of the Company and each Subsidiary, all at such
reasonable times and as often as may be reasonably requested in
writing; and
(b) DEFAULT -- if a Default or Event of Default then exists, at
the expense of the Company, to visit and inspect any of the offices or
properties of the Company or any Subsidiary, to examine all their
respective books of account, records, reports and other papers, to make
copies and extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers and independent
public accountants (and by this provision the Company authorizes said
accountants to discuss the affairs, finances and accounts of the
Company and its Subsidiaries), all at such times and as often as may be
requested.
8. INTEREST ON THE NOTES; PREPAYMENT OF THE NOTES.
8.1. Interest on the Notes.
(a) Interest will accrue and be payable on the Notes in the
amounts and at the times specified in the first paragraph thereof.
Notwithstanding anything above or in the Notes to the contrary, upon the
occurrence and during the continuance of a Credit Rating Event interest
shall accrue and be payable on the Notes at a rate that is 0.50% per annum
above the rate of interest that would otherwise be applicable to the Notes
pursuant to the first paragraph thereof.
(b) For purposes of subsection (a) above, a "Credit Rating Event"
shall have occurred upon, and shall continue for so long as, (i) the senior
unsecured long-term debt of any CTG Subsidiary shall be rated BBB- or less
by Standard & Poor s or Baa3 or less by Xxxxx s or (ii) the rating of the
senior unsecured long-term debt of all of the CTG Subsidiaries shall have
been withdrawn or otherwise not maintained by Standard & Poor s or Xxxxx s.
8.2. Maturity.
As provided therein, the entire unpaid principal amount of the
Notes shall be due and payable on October 14, 2010.
21
8.3. Optional Prepayments with Make-Whole Amount.
The Company may, at its option, upon notice as in Section 8.5,
prepay at any time all, or from time to time any part of, the Notes, in an
amount not less than $1,000,000 in the case of a partial prepayment, at 100%
of the principal amount so prepaid, plus the Make-Whole Amount determined
for the prepayment date with respect to such principal amount.
8.4. Prepayment in Connection with a Change of Control.
(a) Promptly and in any event within five Business Days after any
Responsible Officer has knowledge of the occurrence of a Change of Control,
the Company shall give written notice thereof to the holders of all
outstanding Notes, which notice shall (i) refer specifically to this Section
8.4 and describe the Change of Control in reasonable detail (including the
Persons party thereto), (ii) specify a date not less than 30 days and not
more than 60 days after the date of such notice (the "Control Prepayment
Date") and (iii) offer to prepay on the Control Prepayment Date all (but not
less than all) the Notes, at 100% of the principal amount thereof, together
with interest accrued thereon to the Control Prepayment Date, plus the
applicable Make-Whole Amount determined for the Control Prepayment Date with
respect to such principal amount. Each holder of a Note shall notify the
Company of such holder s acceptance or rejection of such offer by giving
written notice of such acceptance or rejection to the Company on a date (the
"Control Response Date") at least 10 days prior to the Control Prepayment
Date, and the Company shall prepay on the Control Prepayment Date all of the
Notes held by each holder of Notes that has accepted such offer in
accordance with this Section 8.4(a) at a price in respect of each Note held
by such holder equal to 100% of the principal amount thereof, together with
interest accrued thereon to the Control Prepayment Date, plus the applicable
Make-Whole Amount determined for the Control Prepayment Date with respect to
such principal amount; PROVIDED, however, that the failure by a holder of
any Note to respond to such offer in writing on or before the Control
Response Date shall be deemed to be an acceptance of such offer.
(b) A "Change of Control" will be deemed to have occurred for
purposes of Section 8.4(a) if any Person or Persons acting in concert,
together with Affiliates thereof, shall in the aggregate, directly or
indirectly, control or own (beneficially or otherwise) more than 45% of the
total voting power of all classes of CTG s then outstanding voting
securities.
8.5. Notices, Etc; Calculation of Make-Whole Amounts.
22
(a) The Company will give each holder of Notes written notice of
each optional prepayment under Section 8.3 not less than 30 days and not
more than 60 days prior to the date fixed for such prepayment. Each such
notice shall specify such date, the aggregate principal amount of the Notes
to be prepaid on such date, the principal amount of each Note held by such
holder to be prepaid, and the interest to be paid on the prepayment date
with respect to such principal amount being prepaid.
(b) Each notice of optional prepayment pursuant to Section 8.3
and each notice of prepayment pursuant to Section 8.4(a), shall be
accompanied by a certificate of a Senior Financial Officer as to the
estimated applicable Make-Whole Amount due in connection with such
prepayment (calculated as if the date of such notice were the date of the
prepayment), setting forth the details of such computation, and two Business
Days prior to each such prepayment, the Company shall deliver to each holder
of Notes to be prepaid a certificate of a Senior Financial Officer
specifying the calculation of such Make-Whole Amount as of the specified
prepayment date.
(c) In the event the Company shall incorrectly determine the
Make-Whole Amount payable in connection with any Note to be prepaid pursuant
to Section 8.3 or 8.4(a) or declared to be immediately due and payable
pursuant to Section 12.1 hereof, the holder of such Note shall not be bound
by such incorrect determination but, instead, shall be entitled to receive
an amount equal to the Make-Whole Amount, if any, determined by the Required
Holders, in the case of Section 8.3, and in all other cases, by such holder
in compliance with the terms of this Agreement, which determination shall
be, absent manifest error, conclusive.
8.6. Allocation of Partial Prepayments.
In the case of each partial prepayment of the Notes pursuant to
Section 8.3, the principal amount of the Notes to be prepaid shall be
allocated among all of the Notes at the time outstanding in proportion, as
nearly as practicable, to the respective unpaid principal amounts thereof
not theretofore called for prepayment.
8.7. Maturity; Surrender, etc.
In the case of each prepayment of Notes pursuant to this Section
8, the principal amount of each Note to be prepaid shall mature and become
due and payable on the date fixed for such prepayment, together with
interest on such principal amount accrued to such date and the applicable
23
Make-Whole Amount, if any. From and after such date, unless the Company
shall fail to pay such principal amount when so due and payable, together
with the interest and Make-Whole Amount, if any, as aforesaid, interest on
such principal amount shall cease to accrue. Any Note paid or prepaid in
full shall be surrendered to the Company and cancelled and shall not be
reissued, and no Note shall be issued in lieu of any prepaid principal
amount of any Note.
8.8. Purchase of Notes.
The Company will not and will not permit any Affiliate to
purchase, redeem, prepay or otherwise acquire, directly or indirectly, any
of the outstanding Notes except upon the payment or prepayment of the Notes
in accordance with the terms of this Agreement and the Notes. The Company
will promptly cancel all Notes acquired by it or any Affiliate pursuant to
any payment, prepayment or purchase of Notes pursuant to any provision of
this Agreement and no Notes may be issued in substitution or exchange for
any such Notes.
8.9. Make-Whole Amount.
The term "Make-Whole Amount" means, with respect to any Note, an amount
equal to the excess, if any, of the Discounted Value of the Remaining Sched-
uled Payments with respect to the Called Principal of such Note over the
amount of such Called Principal, PROVIDED that the Make-Whole Amount may in
no event be less than zero. For the purposes of determining the Make-Whole
Amount, the following terms have the following meanings:
"Called Principal" means, with respect to any Note, the principal
of such Note that is to be prepaid pursuant to Section 8.3 or 8.4 or
has become or is declared to be immediately due and payable pursuant to
Section 12.1, as the context requires.
"Discounted Value" means, with respect to the Called Principal of
any Note, the amount obtained by discounting all Remaining Scheduled
Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a
discount factor (applied on the same periodic basis as that on which
interest on the Notes is payable) equal to the Reinvestment Yield with
respect to such Called Principal.
"Reinvestment Yield" means, with respect to the Called Principal
24
of any Note, 0.50% over the yield to maturity implied by (i) the yields
reported, as of 10:00 A.M. (New York City time) on the second Business
Day preceding the Settlement Date with respect to such Called
Principal, on the display designated as Bloomberg Financial Markets
"Page PX7" (or such other display as may replace Bloomberg Financial
Markets Page PX7) for actively traded U.S. Treasury securities having a
maturity equal to the Remaining Average Life of such Called Principal
as of such Settlement Date, or (ii) if such yields are not reported as
of such time or the yields reported as of such time are not
ascertainable, the Treasury Constant Maturity Series Yields reported,
for the latest day for which such yields have been so reported as of
the second Business Day preceding the Settlement Date with respect to
such Called Principal, in Federal Reserve Statistical Release H.15
(519) (or any comparable successor publication) for actively traded
U.S. Treasury securities having a constant maturity equal to the
Remaining Average Life of such Called Principal as of such Settlement
Date. Such implied yield will be determined, if necessary, by (a) con-
verting U.S. Treasury bill quotations to bond-equivalent yields in
accordance with accepted financial practice and (b) interpolating
linearly between (1) the actively traded U.S. Treasury security with
the duration closest to and greater than the Remaining Average Life and
(2) the actively traded U.S. Treasury security with the duration
closest to and less than the Remaining Average Life.
"Remaining Average Life" means, with respect to any Called
Principal, the number of years (calculated to the nearest one-twelfth
year) obtained by dividing (i) such Called Principal into (ii) the sum
of the products obtained by multiplying (a) the principal component of
each Remaining Scheduled Payment with respect to such Called Principal
by (b) the number of years (calculated to the nearest one-twelfth year)
that will elapse between the Settlement Date with respect to such
Called Principal and the scheduled due date of such Remaining Scheduled
Payment.
"Remaining Scheduled Payments" means, with respect to the Called
Principal of any Note, all payments of such Called Principal and
interest thereon that would be due after the Settlement Date with re-
spect to such Called Principal if no payment of such Called Principal
were made prior to its scheduled due date, PROVIDED that if such
Settlement Date is not a date on which interest payments are due to be
made under the terms of the Notes, then the amount of the next suc-
ceeding scheduled interest payment will be reduced by the amount of
interest accrued to such Settlement Date and required to be paid on
25
such Settlement Date pursuant to Section 8.3, 8.4 or 12.1.
"Settlement Date" means, with respect to the Called Principal of
any Note, the date on which such Called Principal is to be prepaid
pursuant to Section 8.3 or 8.4 or has become or is declared to be
immediately due and payable pursuant to Section 12.1, as the context
requires.
9. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
9.1. Compliance with Law.
The Company will and will cause each of its Subsidiaries to comply
with all laws, ordinances or governmental rules or regulations to which each
of them is subject, including, without limitation, Environmental Laws, and
will obtain and maintain in effect all licenses, certificates, permits,
franchises and other governmental authorizations necessary to the ownership
of their respective properties or to the conduct of their respective
businesses, in each case to the extent necessary to ensure that non-compli-
ance with such laws, ordinances or governmental rules or regulations or
failures to obtain or maintain in effect such licenses, certificates,
permits, franchises and other governmental authorizations could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
9.2. Insurance.
The Company will and will cause each of its Subsidiaries to
maintain, with financially sound and reputable insurers, insurance with
respect to their respective properties and businesses against such
casualties and contingencies, of such types, on such terms and in such
amounts (including deductibles, co-insurance and self-insurance, if adequate
26
reserves are maintained with respect thereto) as is customary in the case of
entities of established reputations engaged in the same or a similar
business and similarly situated.
9.3. Maintenance of Properties.
The Company will and will cause each of its Subsidiaries to
maintain and keep, or cause to be maintained and kept, their respective
properties in good repair, working order and condition (other than ordinary
wear and tear), so that the business carried on in connection therewith may
be properly conducted at all times, PROVIDED that this Section shall not
prevent the Company or any Subsidiary from discontinuing the operation and
the maintenance of any of its properties if such discontinuance is desirable
in the conduct of its business and the Company has concluded that such
discontinuance could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
9.4. Payment of Taxes and Claims.
The Company will and will cause each of its Subsidiaries to file
all tax returns required to be filed in any jurisdiction and to pay and
discharge all taxes shown to be due and payable on such returns and all
other taxes, assessments, governmental charges, or levies imposed on them or
any of their properties, assets, income or franchises, to the extent such
taxes and assessments have become due and payable and before they have
become delinquent, and all claims for which sums have become due and payable
that have or might become a Lien on properties or assets of the Company or
any Subsidiary, provided that neither the Company nor any Subsidiary need
pay any such tax or assessment or claims if (i) the amount, applicability or
validity thereof is contested by the Company or such Subsidiary on a timely
basis in good faith and in appropriate proceedings, and the Company or a
Subsidiary has established adequate reserves therefor in accordance with
GAAP on the books of the Company or such Subsidiary or (ii) the nonpayment
of all such taxes, assessments and claims in the aggregate could not
reasonably be expected to have a Material Adverse Effect.
9.5. Corporate Existence, etc.
Subject to Section 10.2, the Company will at all times preserve
and keep in full force and effect its corporate existence. The Company will
at all times preserve and keep in full force and effect the corporate
existence of each of its Subsidiaries (unless merged into the Company or a
Subsidiary) and all rights and franchises of the Company and its
27
Subsidiaries unless, in the good faith judgment of the Company, the
termination of or failure to preserve and keep in full force and effect such
corporate existence, right or franchise could not, individually or in the
aggregate, have a Material Adverse Effect (it being understood that the
Company may sell or otherwise dispose of ENServe Corporation and KBC Energy
Services of New England (either through the sale of the stock thereof or the
sale of all or substantially all of the assets thereof) and may dissolve ENI
Gas Services, Inc., ENServe Corporation and TEN Gas Services, Inc. in
connection therewith).
9.6. Subsidiary Guarantees, etc.
If on any date the Company or any of its Subsidiaries creates a
Subsidiary or acquires a Person which thereupon becomes a Subsidiary, the
Company shall promptly, and in any event within 30 days of such creation or
acquisition, (i) cause such Subsidiary to execute and deliver to each holder
of a Note a Subsidiary Guarantee and (ii) cause all shares of common stock
of such Subsidiary owned by the Company or another Subsidiary to be pledged
to the Collateral Agent pursuant to the Pledge Agreement.
10. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are out-
standing:
10.1. Transactions with Affiliates.
Except for the Forward Equity Purchase Agreement as in effect on
the date of the Closing, the Company will not and will not permit any
Subsidiary to enter into directly or indirectly any transaction or group of
related transactions (including without limitation the purchase, lease, sale
or exchange of properties of any kind or the rendering of any service) with
any Affiliate (other than the Company or another Subsidiary), except in the
ordinary course and pursuant to the reasonable requirements of the Company s
or such Subsidiary s business and upon fair and reasonable terms no less
favorable to the Company or such Subsidiary than would be obtainable in a
comparable arm s-length transaction with a Person not an Affiliate.
10.2. Merger, Consolidation, etc.
The Company shall not consolidate with or merge with any other
corporation or convey, transfer or lease substantially all of its assets in
a single transaction or series of transactions to any Person unless:
28
(a) the successor formed by such consolidation or the survivor of
such merger or the Person that acquires by conveyance, transfer or
lease substantially all of the assets of the Company as an entirety, as
the case may be, shall be a solvent corporation organized and existing
under the laws of the United States or any State thereof (including the
District of Columbia), and, if the Company is not such corporation, (i)
such corporation shall have executed and delivered to each holder of
any Notes its assumption of the due and punctual performance and
observance of each covenant and condition of this Agreement, the Notes
and the other Transaction Documents to which the Company is a party and
(ii) the Company shall have caused to be delivered to each holder of
any Notes an opinion of nationally recognized independent counsel, or
other independent counsel reasonably satisfactory to the Required
Holders, to the effect that all agreements or instruments effecting
such assumption are enforceable in accordance with their terms and
comply with the terms hereof; and
(b) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing and
the Company could incur at least $1.00 of interest bearing Indebtedness
under Section 10.5(d).
No such conveyance, transfer or lease of substantially all of the assets of
the Company shall have the effect of releasing the Company or any successor
corporation that shall theretofore have become such in the manner prescribed
in this Section 10.2 from its liability under this Agreement or the Notes.
10.3. Consolidated Net Worth.
The Company will not, at any time, permit Consolidated Net Worth
to be less than 100% of the amount thereof as of September 30, 1997.
10.4. Debt Service Coverage Ratio.
The Company will not, at any time, permit the Debt Service
Coverage Ratio to be less than 1.25 to 1.0.
10.5. Indebtedness.
The Company will not, and will not permit any Subsidiary to,
incur, create, assume or otherwise become or be liable in respect of any
Indebtedness, except
29
(a) the Notes;
(b) the Indebtedness outstanding under the Credit Agreement in an
aggregate principal amount of not greater than $20,000,000;
(c) Indebtedness outstanding on the date hereof as specified in
Schedule 5.15, but not any extension, renewal or refunding thereof
unless permitted by subsection (d) below; and
(d) additional Indebtedness if on the date such Indebtedness is
incurred and after giving effect thereto and to the concurrent
retirement of any Indebtedness the Pro Forma Interest Coverage Ratio
would not be less than 2.0 to 1.0.
10.6. Intercompany Indebtedness.
The Company will not, and will not permit any Subsidiary to,
incur, create, assume or otherwise become liable in respect of any
Indebtedness owing to any Subsidiary (the "Payee Subsidiary") unless the
Payee Subsidiary is a Wholly-Owned Subsidiary and such Indebtedness is
unsecured and is subordinated in right of payment pursuant to subordination
provisions in the form of Exhibit A to (x) in the case of the Company, the
Company s obligations with respect to the Notes and (y) in the case of any
Subsidiary, such Subsidiary s obligations under its Subsidiary Guarantee.
10.7. Liens.
The Company will not, and will not permit any Subsidiary to,
create, assume, incur or suffer to exist any Lien upon or with respect to
any property or assets, whether now owned or hereafter acquired, of the
Company or any Subsidiary, excluding from the operation of this Section:
(a) Liens created pursuant to the Pledge Agreement;
(b) Liens existing on the date hereof securing Indebtedness of
the Company or any Subsidiary outstanding on the date hereof and
specified in Schedule 5.15;
(c) Liens incurred or deposits made in connection with workers
compensation, unemployment insurance and other types of social security
or retirement benefits and Liens (for sums not yet due) of carriers,
warehousemen, mechanics and other similar Liens, in each case incurred
or made in the ordinary course of business and not in connection with
30
the incurrence of Indebtedness;
(d) Liens for taxes, assessments or governmental charges or
levies either not yet due and payable or to the extent that nonpayment
thereof is permitted by the proviso to Section 9.4;
(e) Liens (including Liens securing obligations in respect of
Capital Leases) to secure Indebtedness incurred in connection with the
financing of all or a part of the purchase price or cost of improvement
of property acquired or improved by the Company or a Subsidiary after
the date hereof, PROVIDED that (i) the aggregate principal amount of
Indebtedness secured by such Lien in respect of any such property or
improvement and all other Indebtedness secured by a Lien on such
property or improvement shall not exceed the lesser of (x) the cost of
such property or improvement and (y) the fair market value of such
property or improvement, (ii) such Lien shall not extend to or cover
any other property of the Company or such Subsidiary and (iii) such
Lien shall be created contemporaneously with, or within 12 months
after, the acquisition or improvement of such property;
(f) Liens created by or resulting from any litigation or legal
proceeding that is effectively stayed while the underlying claims are
being contested in good faith by appropriate proceedings and with
respect to which the Company or such Subsidiary has established
adequate reserves on its books in accordance with GAAP;
(g) any extension, renewal or replacement of any Lien described
in Subsections (a), (b) or (e) above, PROVIDED that the principal
amount of Indebtedness secured thereby immediately before giving effect
to such extension, renewal or replacement is not increased and such
Lien is not extended to any other property; and
(h) Liens incurred by the Company or any Subsidiary in addition
to those described in Subsections (a) through (g) above, PROVIDED that,
upon the incurrence thereof and immediately after giving effect
thereto, (x) the aggregate amount of Priority Indebtedness does not
exceed 20% of Consolidated Net Worth and (y) the Company would be able
to incur at least $1.00 of additional interest bearing Indebtedness
under Section 10.5(d).
10.8. Sale and Leasebacks.
The Company will not, and will not permit any Subsidiary to, enter
31
into any Sale and Leaseback Transaction unless, immediately after giving
effect thereto, (x) the aggregate amount of Priority Indebtedness does not
exceed 20% of Consolidated Net Worth and (y) the Company would be able to
incur at least $1.00 of additional interest bearing Indebtedness under
Section 10.5(d).
10.9. Restricted Payments.
The Company will not, and will not permit any Subsidiary to, at
any time, declare or make, or incur any liability to declare or make, any
Restricted Payment unless immediately after giving effect to such action (x)
no Default or Event of Default shall have occurred and be continuing, (y)
the Company would be able to incur at least $1.00 of additional interest
bearing Indebtedness under Section 10.5(d) and (z) the aggregate amount of
Restricted Payments of the Company and its Subsidiaries for the period
commencing on the Closing Date and ending on the date such Restricted
Payment is declared or made, inclusive, would not exceed Consolidated Net
Income for such period.
10.10. Amendments, etc. to Forward Equity Purchase Agreement.
The Company will not (i) terminate, or accept the termination of,
the Forward Equity Purchase Agreement or (ii) other than the Modification of
Forward Equity Purchase Agreement, consent to any amendment, modification,
supplement or waiver to or of the Forward Equity Purchase Agreement without
the written approval of the Required Holders.
11. EVENTS OF DEFAULT.
An "Event of Default" shall exist if any of the following
conditions or events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or Make-
Whole Amount, if any, on any Note when the same becomes due and
payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise; or
(b) the Company defaults in the payment of any interest on any
Note for more than five Business Days after the same becomes due and
payable; or
(c) the Company defaults in the performance of or compliance with
any term contained in Sections 10.3 to 10.10, inclusive; or
32
(d) the Company defaults in the performance of or compliance
with any term contained herein (other than those referred to in
paragraphs (a), (b) and (c) of this Section 11) or any other
Transaction Document to which the Company is a party and such default
is not remedied within 30 days after the earlier of (i) a Responsible
Officer obtaining actual knowledge of such default and (ii) the Company
receiving written notice of such Default from any holder of a Note (any
such written notice to be identified as a "notice of default" and to
refer specifically to this paragraph (d) of Section 11); or
(e) any representation or warranty made in writing by or on
behalf of the Company, CTG, any CTG Subsidiary or any Subsidiary or by
any officer of the Company, CTG, any CTG Subsidiary or any Subsidiary
in this Agreement or any other Transaction Document or in any writing
furnished in connection with the transactions contemplated hereby or
thereby proves to have been false or incorrect in any material respect
on the date as of which made; or
(f) (i) the Company or any CTG Subsidiary is in default (as
principal or as guarantor or other surety) in the payment of any
principal of or premium or make-whole amount or interest on any
Indebtedness (that, in the case of a CTG Subsidiary only, is
outstanding in an aggregate principal amount of at least $1,000,000),
in any case beyond any period of grace provided with respect thereto,
or (ii) the Company or any CTG Subsidiary is in default in the per-
formance of or compliance with any term of any evidence of any
Indebtedness (that, in the case of a CTG Subsidiary only, is
outstanding in an aggregate principal amount of at least $1,000,000),
or of any mortgage, indenture or other agreement relating thereto or
any other condition exists, and as a consequence of such default or
condition such Indebtedness has become, or has been declared (or one or
more Persons are entitled to declare such Indebtedness to be), due and
payable before its stated maturity or before its regularly scheduled
dates of payment, or (iii) as a consequence of the occurrence or
continuation of any event or condition (other than the passage of time
or the right of the holder of Indebtedness to convert such Indebtedness
into equity interests), (x) the Company or any CTG Subsidiary has
become obligated to purchase or repay any Indebtedness before its
regular maturity or before its regularly scheduled dates of payment
(that, in the case of a CTG Subsidiary only, is outstanding in an
aggregate principal amount of at least $1,000,000), or (y) one or more
Persons have the right to require the Company or any CTG Subsidiary so
to purchase or repay such Indebtedness; or
33
(g) CTG, the Company or any CTG Subsidiary (i) is generally not
paying, or admits in writing its inability to pay, its debts as they
become due, (ii) files, or consents by answer or otherwise to the
filing against it of, a petition for relief or reorganization or
arrangement or any other petition in bankruptcy, for liquidation or to
take advantage of any bankruptcy, insolvency, reorganization,
moratorium or other similar law of any jurisdiction, (iii) makes an
assignment for the benefit of its creditors, (iv) consents to the ap-
pointment of a custodian, receiver, trustee or other officer with
similar powers with respect to it or with respect to any substantial
part of its property, (v) is adjudicated as insolvent or to be
liquidated, or (vi) takes corporate action for the purpose of any of
the foregoing; or
(h) a court or governmental authority of competent jurisdiction
enters an order appointing, without consent by CTG, the Company or any
CTG Subsidiary, a custodian, receiver, trustee or other officer with
similar powers with respect to it or with respect to any substantial
part of its property, or constituting an order for relief or approving
a petition for relief or reorganization or any other petition in bank-
ruptcy or for liquidation or to take advantage of any bankruptcy or
insolvency law of any jurisdiction, or ordering the dissolution,
winding-up or liquidation of CTG, the Company or any CTG Subsidiary, or
any such petition shall be filed against CTG, the Company or any CTG
Subsidiary and such petition shall not be dismissed within 60 days; or
(i) a final judgment or judgments for the payment of money
aggregating in excess of $500,000 are rendered against one or more of
the Company and its Subsidiaries and which judgments are not, within 60
days after entry thereof, bonded, discharged or stayed pending appeal,
or are not discharged within 60 days after the expiration of such stay;
or
(j) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is
sought or granted under section 412 of the Code, (ii) a notice of
intent to terminate any Plan shall have been or is reasonably expected
to be filed with the PBGC or the PBGC shall have instituted proceedings
under ERISA section 4042 to terminate or appoint a trustee to
administer any Plan or the PBGC shall have notified the Company or any
ERISA Affiliate that a Plan may become a subject of any such
proceedings, (iii) the aggregate "amount of unfunded benefit liabil-
ities" (within the meaning of section 4001(a)(18) of ERISA) under all
34
Plans, determined in accordance with Title IV of ERISA, shall exceed
$1,000,000, (iv) the Company or any ERISA Affiliate shall have incurred
or is reasonably expected to incur any liability pursuant to Title I or
IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans, (v) the Company or any ERISA
Affiliate withdraws from any Multiemployer Plan, or (vi) the Company or
any Subsidiary establishes or amends any employee welfare benefit plan
that provides post-employment welfare benefits in a manner that would
increase the liability of the Company or any Subsidiary thereunder; and
any such event or events described in clauses (i) through (vi) above,
either individually or together with any other such event or events,
could reasonably be expected to have a Material Adverse Effect; or
(k) any Subsidiary Guarantee ceases to be in full force and
effect or any Subsidiary or any Person acting on behalf of any
Subsidiary contests in any manner the validity, binding nature or
enforceability of its Subsidiary Guarantee; or
(l) the Forward Equity Purchase Agreement ceases to be in full
force and effect on CTG or any Person acting on behalf of CTG contests
in any manner the validity, binding nature or enforceability of such
Agreement or CTG fails to receive sufficient dividends from its
Subsidiaries or proceeds from the sale of CTG stock in the open market
35
to enable it to make all required payments thereunder or CTG otherwise
defaults in the payment or performance of any of its obligations
thereunder; or
(m) the Liens created pursuant to the Pledge Agreement cease to
constitute a valid and perfected first priority Lien on the collateral
intended to be covered thereby in favor of the Collateral Agent or the
Pledge Agreement otherwise ceases to be in full force or effect or the
Company or any Person acting on behalf of the Company contests in any
manner the validity, binding nature or enforceability of the Pledge
Agreement or such Liens; or
(n) the total tangible assets of CTG and its Subsidiaries
determined on a consolidated basis in accordance with GAAP (as reported
on the balance sheet included in CTG s most recent Annual Report on
Form 10-K filed with the Securities and Exchange Commission) are less
than $400,000,000 or the tangible net worth of CTG and its Subsidiaries
determined on a consolidated basis in accordance with GAAP is less than
$100,000,000; or
(o) CTG ceases to own free and clear of any Lien all of the
outstanding shares of common stock of each of the Company and CNG; or
(p) CTG incurs, creates, assumes, guarantees or otherwise becomes
liable with respect to any Indebtedness.
As used in Section 11(j), the terms "employee benefit plan" and "employee
welfare benefit plan" shall have the respective meanings assigned to such
terms in Section 3 of ERISA.
36
12. REMEDIES ON DEFAULT, ETC.
12.1. Acceleration.
(a) If an Event of Default with respect to the Company described
in paragraph (g) or (h) of Section 11 (other than an Event of Default
described in clause (i) of paragraph (g) or described in clause (vi) of
paragraph (g) by virtue of the fact that such clause encompasses clause (i)
of paragraph (g)) has occurred, all the Notes then outstanding shall
automatically become immediately due and payable.
(b) If any other Event of Default has occurred and is continuing,
the Required Holders may at any time at its or their option, by notice or
notices to the Company, declare all the Notes then outstanding to be
immediately due and payable.
(c) If any Event of Default described in paragraph (a) or (b) of
Section 11 has occurred and is continuing, any holder or holders of Notes at
the time outstanding affected by such Event of Default may at any time, at
its or their option, by notice or notices to the Company, declare all the
Notes held by it or them to be immediately due and payable.
Upon any Notes becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Notes will forthwith mature
and the entire unpaid principal amount of such Notes, plus (x) all accrued
and unpaid interest thereon and (y) the Make-Whole Amount determined in
respect of such principal amount (to the full extent permitted by applicable
law), shall all be immediately due and payable, in each and every case
without presentment, demand, protest or further notice, all of which are
hereby waived. The Company acknowledges, and the parties hereto agree, that
each holder of a Note has the right to maintain its investment in the Notes
free from repayment by the Company (except as herein specifically provided
for) and that the provision for payment of a Make-Whole Amount by the
Company in the event that the Notes are prepaid or are accelerated as a
result of an Event of Default, is intended to provide compensation for the
deprivation of such right under such circumstances.
12.2. Other Remedies.
If any Default or Event of Default has occurred and is continuing,
and irrespective of whether any Notes have become or have been declared
immediately due and payable under Section 12.1, the holder of any Note at
the time outstanding may proceed to protect and enforce the rights of such
37
holder by an action at law, suit in equity or other appropriate proceeding,
whether for the specific performance of any agreement contained herein or in
any Note, or for an injunction against a violation of any of the terms
hereof or thereof, or in aid of the exercise of any power granted hereby or
thereby or by law or otherwise.
12.3. Rescission.
At any time after any Notes have been declared due and payable
pursuant to paragraph (b) or (c) of Section 12.1, the Required Holders, by
written notice to the Company, may rescind and annul any such declaration
and its consequences if (a) the Company has paid all overdue interest on the
Notes, all principal of and Make-Whole Amount, if any, on any Notes that are
due and payable and are unpaid other than by reason of such declaration, and
all interest on such overdue principal and Make-Whole Amount, if any, and
(to the extent permitted by applicable law) any overdue interest in respect
of the Notes, at the Default Rate, (b) all Events of Default and Defaults,
other than non-payment of amounts that have become due solely by reason of
such declaration, have been cured or have been waived pursuant to
Section 17, and (c) no judgment or decree has been entered for the payment
of any monies due pursuant hereto or to the Notes. No rescission and
annulment under this Section 12.3 will extend to or affect any subsequent
Event of Default or Default or impair any right consequent thereon.
12.4. No Waivers or Election of Remedies, Expenses, etc.
No course of dealing and no delay on the part of any holder of any
Note in exercising any right, power or remedy shall operate as a waiver
thereof or otherwise prejudice such holder s rights, powers or remedies. No
right, power or remedy conferred by this Agreement or by any Note upon any
holder thereof or by any other Transaction Document to which the Company is
a party shall be exclusive of any other right, power or remedy referred to
herein or therein or now or hereafter available at law, in equity, by
statute or otherwise. Without limiting the obligations of the Company under
Section 15, the Company will pay to the holder of each Note on demand such
further amount as shall be sufficient to cover all costs and expenses of
such holder incurred in any enforcement or collection under this Section 12,
including, without limitation, reasonable attorneys fees, expenses and
disbursements.
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
13.1. Registration of Notes.
38
The Company shall keep at its principal executive office a
register for the registration and registration of transfers of Notes. The
name and address of each holder of one or more Notes, each transfer thereof
and the name and address of each transferee of one or more Notes shall be
registered in such register. Prior to due presentment for registration of
transfer, the Person in whose name any Note shall be registered shall be
deemed and treated as the owner and holder thereof for all purposes hereof,
and the Company shall not be affected by any notice or knowledge to the
contrary. The Company shall give to any holder of a Note that is an
Institutional Investor promptly upon request therefor, a complete and
correct copy of the names and addresses of all registered holders of Notes.
13.2. Transfer and Exchange of Notes.
Upon surrender of any Note at the principal executive office of
the Company for registration of transfer or exchange (and in the case of a
surrender for registration of transfer, duly endorsed or accompanied by a
written instrument of transfer duly executed by the registered holder of
such Note or his attorney duly authorized in writing and accompanied by the
address for notices of each transferee of such Note or part thereof), the
Company shall execute and deliver, at the Company s expense (except as
provided below), one or more new Notes (as requested by the holder thereof)
in exchange therefor, in an aggregate principal amount equal to the unpaid
principal amount of the surrendered Note. Each such new Note shall be
payable to such Person as such holder may request and shall be substantially
in the form of Exhibit 1. Each such new Note shall be dated and bear
interest from the date to which interest shall have been paid on the surren-
dered Note or dated the date of the surrendered Note if no interest shall
have been paid thereon. The Company may require payment of a sum sufficient
to cover any stamp tax or governmental charge imposed in respect of any such
transfer of Notes. Notes shall not be transferred in denominations of less
than $100,000, PROVIDED that if necessary to enable the registration of
transfer by a holder of its entire holding of Notes, one Note may be in a
denomination of less than $100,000. Any transferee, by its acceptance of a
Note registered in its name (or the name of its nominee), shall be deemed to
have made the representation set forth in Section 6.2.
13.3. Replacement of Notes.
Upon receipt by the Company of evidence reasonably satisfactory to
it of the ownership of and the loss, theft, destruction or mutilation of any
Note (which evidence shall be, in the case of an Institutional Investor,
notice from such Institutional Investor of such ownership and such loss,
theft, destruction or mutilation), and
39
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (PROVIDED that if the holder of such Note
is, or is a nominee for, an original Purchaser or another holder of a
Note with a minimum net worth of at least $50,000,000, such Person s
own unsecured agreement of indemnity shall be deemed to be satis-
factory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a
new Note, dated and bearing interest from the date to which interest shall
have been paid on such lost, stolen, destroyed or mutilated Note or dated
the date of such lost, stolen, destroyed or mutilated Note if no interest
shall have been paid thereon.
14. PAYMENTS ON NOTES.
14.1. Place of Payment.
Subject to Section 14.2, payments of principal, Make-Whole Amount,
if any, and interest becoming due and payable on the Notes shall be made in
Hartford, Connecticut at the principal office of the Company in such
jurisdiction. The Company may at any time, by notice to each holder of a
Note, change the place of payment of the Notes so long as such place of
payment shall be either the principal office of the Company in such
jurisdiction or the principal office of a bank or trust company in such
jurisdiction.
14.2. Home Office Payment.
So long as you or your nominee shall be the holder of any Note,
and notwithstanding anything contained in Section 14.1 or in such Note to
the contrary, the Company will pay all sums becoming due on such Note for
principal, Make-Whole Amount, if any, and interest by the method and at the
address specified for such purpose below your name in Schedule A, or by such
other method or at such other address as you shall have from time to time
specified to the Company in writing for such purpose, without the
presentation or surrender of such Note or the making of any notation
thereon, except that upon written request of the Company made concurrently
with or reasonably promptly after payment or prepayment in full of any Note,
you shall surrender such Note for cancellation, reasonably promptly after
any such request, to the Company at its principal executive office or at the
40
place of payment most recently designated by the Company pursuant to Section
14.1. Prior to any sale or other disposition of any Note held by you or
your nominee you will, at your election, either endorse thereon the amount
of principal paid thereon and the last date to which interest has been paid
thereon or surrender such Note to the Company in exchange for a new Note or
Notes pursuant to Section 13.2. The Company will afford the benefits of
this Section 14.2 to any Institutional Investor that is the direct or
indirect transferee of any Note purchased by you under this Agreement and
that has made the same agreement relating to such Note as you have made in
this Section 14.2.
15. EXPENSES, ETC.
15.1. Transaction Expenses.
Whether or not the transactions contemplated hereby are
consummated, the Company will pay all costs and expenses (including
reasonable attorneys fees of a special counsel and, if reasonably required,
local or other counsel) incurred by you and each holder of a Note in
connection with such transactions and in connection with any amendments,
waivers or consents under or in respect of this Agreement, the Notes or any
other Transaction Document (whether or not such amendment, waiver or consent
becomes effective), including, without limitation: (a) the costs and
expenses incurred in enforcing or defending (or determining whether or how
to enforce or defend) any rights under this Agreement, the Notes or any
other Transaction Document or in responding to any subpoena or other legal
process or informal investigative demand issued in connection with this
Agreement, the Notes or any other Transaction Document, or by reason of
being a holder of any Note, and (b) the costs and expenses, including
financial advisors fees, incurred in connection with the insolvency or
bankruptcy of the Company or any Subsidiary or in connection with any work-
out or restructuring of the transactions contemplated hereby and by the
Notes. The Company will pay, and will save you and each other holder of a
Note harmless from, all claims in respect of any fees, costs or expenses if
any, of brokers and finders (other than those retained by you).
15.2. Survival.
The obligations of the Company under this Section 15 will survive
the payment or transfer of any Note, the enforcement, amendment or waiver of
any provision of this Agreement or the Notes, and the termination of this
Agreement.
41
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive
the execution and delivery of this Agreement and the Notes, the purchase or
transfer by you of any Note or portion thereof or interest therein and the
payment of any Note, and may be relied upon by any subsequent holder of a
Note, regardless of any investigation made at any time by or on behalf of
you or any other holder of a Note. All statements contained in any certifi-
cate or other instrument delivered by or on behalf of the Company pursuant
to this Agreement or any other Transaction Document to which the Company is
a party shall be deemed representations and warranties of the Company under
this Agreement. Subject to the preceding sentence, this Agreement, the
Notes and the Transaction Documents embody the entire agreement and
understanding between you and the Company and supersede all prior agreements
and understandings relating to the subject matter hereof.
17. AMENDMENT AND WAIVER.
17.1. Requirements.
This Agreement and the Notes may be amended, and the observance of
any term hereof or of the Notes may be waived (either retroactively or
prospectively), with (and only with) the written consent of the Company and
the Required Holders, except that (a) no amendment or waiver of any of the
provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term (as
it is used therein), will be effective as to you unless consented to by you
in writing, and (b) no such amendment or waiver may, without the written
consent of the holder of each Note at the time outstanding affected thereby,
(i) subject to the provisions of Section 12 relating to acceleration or
rescission, change the amount or time of any prepayment or payment of
principal of, or reduce the rate or change the time of payment or method of
computation of interest or of the Make-Whole Amount on, the Notes,
(ii) change the percentage of the principal amount of the Notes the holders
of which are required to consent to any such amendment or waiver, or
(iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or 20.
17.2. Solicitation of Holders of Notes.
(a) SOLICITATION. The Company will provide each holder of the
Notes (irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required,
to enable such holder to make an informed and considered decision with
respect to any proposed amendment, waiver or consent in respect of any of
42
the provisions hereof or of the Notes. The Company will deliver executed or
true and correct copies of each amendment, waiver or consent effected
pursuant to the provisions of this Section 17 to each holder of outstanding
Notes promptly following the date on which it is executed and delivered by,
or receives the consent or approval of, the requisite holders of Notes.
(b) PAYMENT. The Company will not directly or indirectly pay or
cause to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, or grant any security, to any holder
of Notes as consideration for or as an inducement to the entering into by
any holder of Notes of any waiver or amendment of any of the terms and
provisions hereof unless such remuneration is concurrently paid, or security
is concurrently granted, on the same terms, ratably to each holder of Notes
then outstanding even if such holder did not consent to such waiver or
amendment.
17.3. Binding Effect, etc.
Any amendment or waiver consented to as provided in this
Section 17 applies equally to all holders of Notes and is binding upon them
and upon each future holder of any Note and upon the Company without regard
to whether such Note has been marked to indicate such amendment or waiver.
No such amendment or waiver will extend to or affect any obligation,
covenant, agreement, Default or Event of Default not expressly amended or
waived or impair any right consequent thereon. No course of dealing between
the Company and the holder of any Note nor any delay in exercising any
rights hereunder or under any Note shall operate as a waiver of any rights
of any holder of such Note. As used herein, the term "this Agreement" and
references thereto shall mean this Agreement as it may from time to time be
amended or supplemented.
17.4. Notes held by Company, etc.
Solely for the purpose of determining whether the holders of the
requisite percentage of the aggregate principal amount of Notes then
outstanding approved or consented to any amendment, waiver or consent to be
given under this Agreement or the Notes, or have directed the taking of any
action provided herein or in the Notes to be taken upon the direction of the
holders of a specified percentage of the aggregate principal amount of Notes
then outstanding, Notes directly or indirectly owned by the Company or any
of its Affiliates shall be deemed not to be outstanding.
18. NOTICES.
43
All notices and communications provided for hereunder shall be in
writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid) or (b) by a recognized overnight delivery service (with
charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address
specified for such communications in Schedule A, or at such other
address as you or it shall have specified to the Company in writing,
(ii) if to any other holder of any Note, to such holder at such
address as such other holder shall have specified to the Company in
writing, or
(iii) if to the Company, to the Company at its address set
forth at the beginning hereof to the attention of the Chief Financial
Officer, or at such other address as the Company shall have specified
to the holder of each Note in writing.
Notices under this Section 18 will be deemed given only when actually
received.
19. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including,
without limitation, (a) consents, waivers and modifications that may
hereafter be executed, (b) documents received by you at the Closing (except
the Notes themselves), and (c) financial statements, certificates and other
information previously or hereafter furnished to you, may be reproduced by
you by any photographic, photostatic, microfilm, microcard, miniature
photographic or other similar process and you may destroy any original
document so reproduced. The Company agrees and stipulates that, to the
extent permitted by applicable law, any such reproduction shall be
admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original is in existence and
whether or not such reproduction was made by you in the regular course of
business) and any enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence. This Section 19
shall not prohibit the Company or any other holder of Notes from contesting
any such reproduction to the same extent that it could contest the original,
or from introducing evidence to demonstrate the inaccuracy of any such
reproduction.
44
20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "Confidential Information"
means information delivered to you by or on behalf of the Company or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was
clearly marked or labeled or otherwise adequately identified when received
by you as being confidential information of the Company or such Subsidiary,
PROVIDED that such term does not include information that (a) was publicly
known or otherwise known to you prior to the time of such disclosure,
(b) subsequently becomes publicly known through no act or omission by you or
any person acting on your behalf, (c) otherwise becomes known to you other
than through disclosure by the Company or any Subsidiary or (d) constitutes
financial statements delivered to you under Section 7.1 that are otherwise
publicly available. You will maintain the confidentiality of such Confiden-
tial Information in accordance with procedures adopted by you in good faith
to protect confidential information of third parties delivered to you,
PROVIDED that you may deliver or disclose Confidential Information to
(i) your directors, officers, employees, agents, attorneys and affiliates
(to the extent such disclosure reasonably relates to the administration of
the investment represented by your Notes), (ii) your financial advisors and
other professional advisors who agree to hold confidential the Confidential
Information substantially in accordance with the terms of this Section 20,
(iii) any other holder of any Note, (iv) any Institutional Investor to which
you sell or offer to sell such Note or any part thereof or any participation
therein (if such Person has agreed in writing prior to its receipt of such
Confidential Information to be bound by the provisions of this Section 20),
(v) any Person from which you offer to purchase any security of the Company
(if such Person has agreed in writing prior to its receipt of such
Confidential Information to be bound by the provisions of this Section 20),
(vi) any federal or state regulatory authority having jurisdiction over you,
(vii) the National Association of Insurance Commissioners or any similar
organization, or any nationally recognized rating agency that requires
access to information about your investment portfolio or (viii) any other
Person to which such delivery or disclosure may be necessary or appropriate
(w) to effect compliance with any law, rule, regulation or order applicable
to you, (x) in response to any subpoena or other legal process, (y) in
connection with any litigation to which you are a party or (z) if an Event
of Default has occurred and is continuing, to the extent you may reasonably
determine such delivery and disclosure to be necessary or appropriate in the
enforcement or for the protection of the rights and remedies under your
Notes and this Agreement. Each holder of a Note, by its acceptance of a
Note, will be deemed to have agreed to be bound by and to be entitled to the
45
benefits of this Section 20 as though it were a party to this Agreement. On
reasonable request by the Company in connection with the delivery to any
holder of a Note of information required to be delivered to such holder
under this Agreement or requested by such holder (other than a holder that
is a party to this Agreement or its nominee), such holder will enter into an
agreement with the Company embodying the provisions of this Section 20.
21. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your Affiliates
as the purchaser of the Notes that you have agreed to purchase hereunder, by
written notice to the Company, which notice shall be signed by both you and
such Affiliate, shall contain such Affiliate s agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon
receipt of such notice, wherever the word "you" is used in this Agreement
(other than in this Section 21), such word shall be deemed to refer to such
Affiliate in lieu of you. In the event that such Affiliate is so
substituted as a purchaser hereunder and such Affiliate thereafter transfers
to you all of the Notes then held by such Affiliate, upon receipt by the
Company of notice of such transfer, wherever the word "you" is used in this
Agreement (other than in this Section 21), such word shall no longer be
deemed to refer to such Affiliate, but shall refer to you, and you shall
have all the rights of an original holder of the Notes under this Agreement.
22. MISCELLANEOUS.
22.1. Successors and Assigns.
All covenants and other agreements contained in this Agreement by
or on behalf of any of the parties hereto bind and inure to the benefit of
their respective successors and assigns (including, without limitation, any
subsequent holder of a Note) whether so expressed or not.
22.2. Payments Due on Non-Business Days.
Anything in this Agreement or the Notes to the contrary
notwithstanding, any payment of principal of or Make-whole Amount or
interest on any Note that is due on a date other than a Business Day shall
be made on the next succeeding Business Day without including the additional
days elapsed in the computation of the interest payable on such next
succeeding Business Day.
46
22.3. Severability.
Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by
law) not invalidate or render unenforceable such provision in any other
jurisdiction.
22.4. Construction.
Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant
contained herein, so that compliance with any one covenant shall not (absent
such an express contrary provision) be deemed to excuse compliance with any
other covenant. Where any provision herein refers to action to be taken by
any Person, or which such Person is prohibited from taking, such provision
shall be applicable whether such action is taken directly or indirectly by
such Person.
22.5. Counterparts.
This Agreement may be executed in any number of counterparts, each
of which shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
22.6. Governing Law.
This Agreement shall be construed and enforced in accordance with,
and the rights of the parties shall be governed by, the law of the State of
Connecticut excluding choice-of-law principles of the law of such State that
would require the application of the laws of a jurisdiction other than such
State.
* * * * *
47
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to
the Company, whereupon the foregoing shall become a binding agreement
between you and the Company.
Very truly yours,
THE ENERGY NETWORK, INC.
By: Xxxxx X. Xxxxxx
Title:Executive Vice President and
Chief Financial Officer
The foregoing is hereby
agreed to as of the
date thereof.
METROPOLITAN LIFE INSURANCE COMPANY
By: Xxxxxx X. Xxxxxx
Title: Director
48
INFORMATION RELATING TO PURCHASERS
Principal Amount of
Name and Address of Purchaser Notes to be Purchased
----------------------------- ---------------------
METROPOLITAN LIFE INSURANCE COMPANY$15,000,000
(1)All payments on or in respect
of the Notes to be by bank wire
transfer of Federal or other
immediately available funds, for
receipt not later than 12:00 noon
(New York time) on the
date payment is due, to:
The Chase Manhattan Bank
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Account No.: 002-2-410591
ABA No.: 000000000
Each such wire transfer shall set forth the name of The Energy Network,
Inc., the full title (including the coupon rate and final maturity date) of
the Notes, a reference to the PPN, and the due date and application (as
among principal, premium and interest) of the payment being made.
(2)Address for all notices and other communications:
Metropolitan Life Insurance Company
Xxx Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone No. (000) 000-0000
Telecopier No. (000) 000-0000
Attention: Treasurer
SCHEDULE A
----------
With a duplicate copy to:
Metropolitan Life Insurance Company
000 Xxxxxxx Xxxxxx
Xxxxxxx Xxxxxxx, Xxx Xxxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Vice President - Private Placement Unit
(3) Tax Identification No.: 00-0000000
DEFINED TERMS
-------------
As used herein, the following terms have the respective meanings
set forth below or set forth in the Section hereof following such term:
"AFFILIATE" means, at any time, and with respect to any Person,
(a) any other Person that at such time directly or indirectly through one or
more intermediaries Controls, or is Controlled by, or is under common
Control with, such first Person, and (b) any Person beneficially owning or
holding, directly or indirectly, 5% or more of any class of voting or equity
interests of the Company or any Subsidiary or any corporation of which the
Company and its Subsidiaries beneficially own or hold, in the aggregate,
directly or indirectly, 5% or more of any class of voting or equity
interests. As used in this definition, "CONTROL" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise. Unless the context otherwise clearly
requires, any reference to an "Affiliate" is a reference to an Affiliate of
the Company.
"ATTRIBUTABLE DEBT" means, as to any particular lease relating to
a Sale and Leaseback Transaction, the present value of all lease rentals
required to be paid by the Company or any Subsidiary under such lease during
the remaining term thereof (determined in accordance with generally accepted
financial practice using a discount factor equal to the interest rate
implicit in such lease).
"BANK" means Fleet National Bank, a national banking association.
"BUSINESS DAY" means (a) for the purposes of Section 8.9 only, any
day other than a Saturday, a Sunday or a day on which commercial banks in
New York City are required or authorized to be closed, and (b) for the
purposes of any other provision of this Agreement, any day other than a
Saturday, a Sunday or a day on which commercial banks in New York City or
Hartford, Connecticut are required or authorized to be closed.
"CAPITAL LEASE" means, at any time, a lease with respect to which
the lessee is required concurrently to recognize the acquisition of an asset
and the incurrence of a liability in accordance with GAAP.
"CAPITAL LEASE OBLIGATION" means, with respect to any Person and a
Capital Lease, the amount of the obligation of such Person as lessee under
such Capital Lease which would, in accordance with GAAP, appear as a
liability on a balance sheet of such Person.
"CHANGE OF CONTROL" is defined in Section 8.4.
"CLOSING" is defined in Section 3.
"CNG" means Connecticut National Gas Corporation, a Connecticut
SCHEDULE B
----------
corporation.
"CODE" means the Internal Revenue Code of 1986, as amended from
time to time, and the rules and regulations promulgated thereunder from time
to time.
"COLLATERAL" has the meaning assigned to such term in the Pledge
Agreement.
"COLLATERAL AGENCY AGREEMENT" means the Amended and Restated
Collateral Agency Agreement dated as of the date hereof between the
Collateral Agent, the Bank, and the purchasers party thereto, substantially
in the form of Exhibit B, as amended, supplemented or otherwise modified
from time to time.
"COLLATERAL AGENT" means State Street Bank and Trust Company in
its capacity as collateral agent pursuant to the Collateral Agency
Agreement.
"COMAPNY" means The Energy Network, Inc., a Connecticut
corporation.
"CONFIDENTIAL INFORMATION" is defined in Section 20.
"CONSENT" means the Amended and Restated Consent of CTG and
Agreement dated as of the date hereof, substantially in the form of Exhibit
C, as amended, supplemented or otherwise modified from time to time.
"CONSOLIDATED ADJUSTED EBITDA" means, with respect to any period,
the sum of (i) Consolidated Net Income for such period, (ii) all FEPA
Payments received by the Company during such period and (iii) all amounts
deducted in the computation of Consolidated Net Income for such period on
account of (w) Interest Charges, (x) taxes imposed on or measured by income,
(y) depreciation and (z) amortization.
"CONSOLIDATED NET INCOME" means, with respect to an period, the
net earnings (or loss) of the Company and its Subsidiaries for such period,
determined for each in accordance with, and consolidated in accordance with,
GAAP, excluding:
(i) proceeds of life insurance policies;
(ii) gains arising from (a) the sale or disposition of any assets
which are not current assets, (b) any write-up subsequent to the
Closing Date in the book value of any asset owned by the Company or a
Subsidiary and (c) the acquisition of debt securities for a cost less
than principal and accrued interest;
(iii) the net income of any Person other than a Subsidiary in which
SCHEDULE B
----------
the Company or a Subsidiary has any form of equity interest, except to
the extent such Person s net income has been actually distributed and
received by the Company or a Subsidiary in the form of cash or other
property (the latter valued at the fair market value thereof at time of
distribution as determined by the Company s independent public
accountants);
(iv) earnings of any Subsidiary accrued prior to the date it
became a Subsidiary;
(v) any portion of the net earnings of any Subsidiary which for
any reason is unavailable for payment of dividends to the Company or
any other Subsidiary;
(vi) extraordinary gains and losses (including, without
limitation, capital gains or losses in aggregate amounts exceeding
$100,000 in any one fiscal year, and extraordinary charges or credits);
(vii) any amounts paid or payable in any currency that at the time
of determination of Consolidated Net Income is not fully convertible
into United States dollars;
(viii) net earnings of any successor to or transferee corporation of
the Company prior to consummation of the transaction that resulted in
such consolidation, merger or transfer of assets;
(ix) any deferred credit (or amortization of a deferred credit)
arising from the acquisition in any manner of any other Person; and
(x) income from any transactions with any Affiliates of the
Company unless received in cash.
"CONSOLIDATED NET WORTH" means the consolidated stockholder s
equity of the Company and its Subsidiaries determined in accordance with
GAAP.
"CREDIT AGREEMENT" means, collectively, the 364-Day Revolving
Credit Agreement and the 3-Year Revolving Credit Agreement, each dated as of
October 1, 1997 between the Company and the Bank.
"CTG" means CTG Resources, Inc., a Connecticut corporation.
"CTG SUBSIDIARY" means any Subsidiary of CTG other than the
Company.
"DEBT SERVICE" means, with respect to any period, the sum of the
following: (i) Interest Charges for such period and (ii) all payments of
principal in respect of Indebtedness of the Company and its Subsidiaries
(including the principal component of any payments in respect of Capital
SCHEDULE B
----------
Lease Obligations) paid or payable during such period after eliminating all
offsetting debits and credits between the Company and its Subsidiaries and
all other items required to be eliminated in the course of the preparation
of consolidated financial statements of the Company and its Subsidiaries in
accordance with GAAP.
"DEBT SERVICE COVERAGE RATIO" means, at any time, the ratio of (i)
Consolidated Adjusted EBITDA for the period of four consecutive fiscal
quarters ending on, or most recently ended prior to, such time to (ii) Debt
Service for such period.
"DEFAULT" means an event or condition the occurrence or existence
of which would, with the lapse of time or the giving of notice or both,
become an Event of Default.
"DEFAULT RATE" means an interest rate of 8.90% per annum.
"ENVIRONMENTAL LAWS" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including
but not limited to those related to hazardous substances or wastes, air
emissions and discharges to waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the rules and regulations promul-
gated thereunder from time to time in effect.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under section 414 of the Code.
"EVENT OF DEFAULT" is defined in Section 11.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FEPA PAYMENTS" means all payments in cash by CTG to the Company
under the Forward Equity Purchase Agreement.
"FORWARD EQUITY PURCHASE AGREEMENT" means the Forward Equity
Purchase Agreement dated as of October 1, 1997 between CTG and the Company,
as amended, supplemented or otherwise modified from time to time.
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States of America.
"GOVERNMENTAL AUTHORITY" means
SCHEDULE B
----------
(a) the government of
(i) the United States of America or any State or other
political subdivision thereof, or
(ii) any jurisdiction in which the Company or any Subsidiary
conducts all or any part of its business, or which asserts
jurisdiction over any properties of the Company or any Subsidiary,
or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"GUARANTY" means, with respect to any Person, any obligation
(except the endorsement in the ordinary course of business of negotiable
instruments for deposit or collection) of such Person guaranteeing or in
effect guaranteeing any indebtedness, dividend or other obligation of any
other Person in any manner, whether directly or indirectly, including
(without limitation) obligations incurred through an agreement, contingent
or otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment of
such indebtedness or obligation, or (ii) to maintain any working
capital or other balance sheet condition or any income statement
condition of any other Person or otherwise to advance or make available
funds for the purchase or payment of such indebtedness or obligation;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such indebtedness or
obligation of the ability of any other Person to make payment of the
indebtedness or obligation; or
(d) otherwise to assure the owner of such indebtedness or
obligation against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the obligor
under any Guaranty, the indebtedness or other obligations that are the
subject of such Guaranty shall be assumed to be direct obligations of such
obligor.
"HAZARDOUS MATERIAL" means any and all pollutants, toxic or
hazardous wastes or any other substances that might pose a hazard to health
or safety, the removal of which may be required or the generation,
manufacture, refining, production, processing, treatment, storage, handling,
transportation, transfer, use, disposal, release, discharge, spillage,
SCHEDULE B
----------
seepage, or filtration of which is or shall be restricted, prohibited or
penalized by any applicable law (including, without limitation, asbestos,
urea formaldehyde foam insulation and polychlorinated biphenyls).
"HOLDER" means, with respect to any Note, the Person in whose name
such Note is registered in the register maintained by the Company pursuant
to Section 13.1.
"INDEBTEDNESS" with respect to any Person means, on any date, all
indebtedness, obligations and liabilities for borrowed money which in
accordance with GAAP would be included as a liability on a balance sheet of
such Person as of such date, and in any event shall include, without
duplication,
(a) its liabilities for borrowed money and its redemption
obligations in respect of mandatorily redeemable Preferred Stock;
(b) its liabilities for the deferred purchase price of property
acquired by such Person (excluding accounts payable arising in the
ordinary course of business but including all liabilities created or
arising under any conditional sale or other title retention agreement
with respect to any such property);
(c) all Capital Leases Obligations of such Person;
(d) all liabilities secured by any Lien with respect to any
property owned by such Person (whether or not it has assumed or
otherwise become liable for such liabilities);
(e) all its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its
account by banks and other financial institutions (whether or not
representing obligations for borrowed money);
(f) all liabilities with respect to any agreement to pay the
purchase price of any product or service where such agreement to pay is
not dependent upon whether such product or service is furnished; and
(g) any Guaranty of such Person with respect to liabilities of a
type described in any of clauses (a) through (f) hereof.
Indebtedness of any Person shall include all obligations of such Person of
the character described in clauses (a) through (g) to the extent such Person
remains legally liable in respect thereof notwithstanding that any such
obligation is deemed to be extinguished under GAAP.
"INSTITUTIONAL INVESTOR" means (a) any original purchaser of a
Note, (b) any holder of a Note holding more than 5% of the aggregate
principal amount of the Notes then outstanding, and (c) any bank, trust
SCHEDULE B
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company, savings and loan association or other financial institution, any
pension plan, any investment company, any insurance company, any broker or
dealer, or any other similar financial institution or entity, regardless of
legal form.
"INTEREST CHARGES" means, with respect to any period, the sum
(without duplication) of the following (in each case, eliminating all
offsetting debits and credits between the Company and its Subsidiaries and
all other items required to be eliminated in the course of the preparation
of consolidated financial statements of the Company and its Subsidiaries in
accordance with GAAP): (i) all interest in respect of Indebtedness of the
Company and its Subsidiaries (including imputed interest on Capital Lease
Obligations and Attributable Debt) deducted in determining Consolidated Net
Income for such period, together with all interest capitalized or deferred
during such period and not deducted in determining Consolidated Net Income
for such period, and (ii) all debt discount and expense amortized or
required to be amortized in the determination of Consolidated Net Income for
such period.
"LIEN" means, with respect to any Person, any mortgage, lien,
pledge, charge, security interest or other encumbrance, or any interest or
title of any vendor, lessor, lender or other secured party to or of such
Person under any conditional sale or other title retention agreement or
Capital Lease, upon or with respect to any property or asset of such Person
(including in the case of stock, stockholder agreements, voting trust
agreements and all similar arrangements).
"MAKE-WHOLE AMOUNT" is defined in Section 8.9.
"MATERIAL" means material in relation to the business, operations,
affairs, financial condition, assets, properties, or prospects of the
Company and its Subsidiaries taken as a whole.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a)
the business, operations, affairs, financial condition, assets or properties
of the Company and its Subsidiaries taken as a whole, or (b) the ability of
the Company to perform its obligations under this Agreement, the Notes or
any other Transaction Document to which the Company is a party, or (c) the
validity or enforceability of this Agreement, the Notes or any other
Transaction Document to which the Company is a party.
"MODIFICATION OF FORWARD EQUITY PURCHASE AGREEMENT" means the
First Amendment to the Forward Equity Purchase Agreement, substantially in
the form of Exhibit D.
"MOODY'S" means Xxxxx s Investors Service, Inc.
"MULTIEMPLOYER PLAN" means any Plan that is a multiemployer plan
(as such term is defined in section 4001(a)(3) of ERISA).
SCHEDULE B
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"NOTES" is defined in Section 1.
"OFFICER'S CERTIFICATE" means a certificate of a Senior Financial
Officer or of any other officer of the Company whose responsibilities extend
to the subject matter of such certificate.
"PBGC" means the Pension Benefit Guaranty Corporation referred to
and defined in ERISA or any successor thereto.
"PERSON" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"PLAN" means an "employee benefit plan" (as defined in section
3(3) of ERISA) that is or, within the preceding five years, has been
established or maintained, or to which contributions are or, within the pre-
ceding five years, have been made or required to be made, by the Company or
any ERISA Affiliate or with respect to which the Company or any ERISA
Affiliate may have any liability.
"PLEDGE AGREEMENT" means the Amended and Restated Pledge and
Assignment Agreement dated as of the date hereof between the Company and the
Collateral Agent, substantially in the form of Exhibit E, as amended,
supplemented or otherwise modified from time to time.
"PREFERRED STOCK" means any class of capital stock of a
corporation that is preferred over any other class of capital stock of such
corporation as to the payment of dividends or the payment of any amount upon
liquidation or dissolution of such corporation.
"PRIORITY INDEBTEDNESS" means, without duplication, the sum of (i)
all Indebtedness of the Company secured by Liens pursuant to Section
10.7(i), (ii) all Attributable Debt of the Company and its Subsidiaries and
(iii) all Indebtedness of Subsidiaries other than Indebtedness owing to the
Company or permitted pursuant to Section 10.6.
"PRO FORMA INTEREST CHARGES" means, at any time, the net amount of
(i) Interest Charges for the period of four consecutive fiscal quarters
ending on, or most recently ended prior to, such time MINUS (ii) all such
Interest Charges in respect of Indebtedness of the Company or any Subsidiary
being retired out of the proceeds of any Indebtedness being created,
incurred or assumed at such time PLUS (iii) scheduled Interest Charges for
the period of 12 full calendar months next succeeding such time in respect
of the Indebtedness being created, incurred or assumed at such time. For
the purposes of the foregoing clause (iii), Indebtedness that bears interest
at a variable rate will be deemed to bear interest during the period in
question at a rate equal to the rate in effect at such time.
"PRO FORMA INTEREST COVERAGE RATIO" means, at any time, the ratio
SCHEDULE B
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of (i) Consolidated Adjusted EBITDA for the period of four consecutive
fiscal quarters ending on, or most recently ended prior to, such time to
(ii) Pro Forma Interest Charges.
"PROPERTY" or "PROPERTIES" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible,
xxxxxx or inchoate.
"QPAM EXEMPTION" means Prohibited Transaction Class Exemption 84-
14 issued by the United States Department of Labor.
"REQUIRED HOLDERS" means, at any time, the holders of a majority
in principal amount of the Notes at the time outstanding (exclusive of Notes
then owned by the Company or any of its Affiliates).
"RESPONSIBLE OFFICER" means any Senior Financial Officer and any
other officer of the Company with responsibility for the administration of
the relevant portion of this agreement.
"RESTRICTED PAYMENT" means
(i) any dividend or other distribution, direct or indirect, on or
on account of any shares of capital stock of any class of the Company,
except a dividend payable solely in such shares;
(ii) any redemption, retirement, purchase or other acquisition,
direct or indirect, of any shares of capital stock of any class of the
Company or of any warrants, rights or options to purchase or otherwise
acquire any such shares, in any manner other than (x) solely in
exchange for other such shares or (y) unless such redemptions,
retirement, purchase or other acquisition shall be made
contemporaneously from the net proceeds of a sale of such stock,
warrants, rights or options; and
(iii) any prepayment, payment, purchase or other retirement or
acquisition, direct or indirect, by the Company or any Subsidiary of
all or part of the principal amount of any subordinated debt (except
out of the proceeds of a substantially concurrent issuance of other
subordinated debt) prior to the regularly scheduled maturity date
thereof (as in effect on the date such subordinated debt was incurred).
"SALE AND LEASEBACK TRANSACTION" means a transaction or series of
transactions pursuant to which the Company or any Subsidiary shall sell or
transfer to any Person (other than the Company or a Subsidiary) any
property, whether now owned or hereafter acquired, and, as part of the same
transaction or series of transactions, the Company or any Subsidiary shall
rent or lease as lessee or similarly acquire the right to possession or use
of, such property or one or more properties which it intends to use for the
same purpose or purposes as such property.
SCHEDULE B
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"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time.
"SENIOR FINANCIAL OFFICER" means the chief financial officer,
principal accounting officer, treasurer or comptroller of the Company.
"STANDARD & POOR'S" means Standard & Poor s Rating Group, a
division of XxXxxx-Xxxx, Inc.
"SUBSIDIARY" means, as to any Person, any corporation, association
or other business entity in which such Person or one or more of its
Subsidiaries or such Person and one or more of its Subsidiaries owns
sufficient equity or voting interests to enable it or them (as a group)
ordinarily, in the absence of contingencies, to elect a majority of the
directors (or Persons performing similar functions) of such entity, and any
partnership or joint venture if more than a 50% interest in the profits or
capital thereof is owned by such Person or one or more of its Subsidiaries
or such Person and one or more of its Subsidiaries (unless such partnership
or joint venture can and does ordinarily take major business actions without
the prior approval of such Person or one or more of its Subsidiaries).
Unless the context otherwise clearly requires, any reference to a "Sub-
sidiary" is a reference to a Subsidiary of the Company.
"SUBSIDIARY GUARANTEE" means a guarantee of the obligations of the
Company under this Agreement and the Notes, substantially in the form of
Exhibit F.
"SUPPORT AGREEMENT" means the Support Agreement dated as of the
date hereof from CTG in favor of the holders from time to time of the Notes.
"TRANSACTION DOCUMENTS" means this Agreement, the Notes, the
Pledge Agreement, each Subsidiary Guarantee, the Forward Equity Purchase
Agreement, the Modification of Forward Equity Purchase Agreement, the
Consent, the Collateral Agency Agreement and the Support Agreement.
"WHOLLY-OWNED SUBSIDIARY" means, at any time, any Subsidiary one
hundred percent (100%) of all of the equity interests (except directors
qualifying shares) and voting interests of which are owned by any one or
more of the Company and the Company s other Wholly-Owned Subsidiaries at
such time.
EXHIBIT 1
---------
[FORM OF NOTE]
THE ENERGY NETWORK, INC.
6.90% SENIOR SECURED NOTE DUE 2010
No. [_____] [Date]
$[_______] PPN[______________]
FOR VALUE RECEIVED, the undersigned, THE ENERGY NETWORK, INC.
(herein called the "Company"), a corporation organized and existing under
the laws of the State of Connecticut, hereby promises to pay to
[_______________________], or registered assigns, the principal sum of
[________________________________________] DOLLARS (or so much thereof as
shall not have been prepaid) on October 14, 2010, with interest (computed on
the basis of a 360-day year of twelve 30-day months) (a) on the unpaid
balance thereof at the rate of 6.90% per annum from the date hereof, payable
quarterly, on the 14th day of January, April, July and October in each year,
commencing on January 14, 1998, until the principal hereof shall have become
due and payable, and (b) to the extent permitted by law, on any overdue
payment (including any overdue prepayment) of principal, any overdue payment
of interest and any overdue payment of any Make-Whole Amount (as defined in
the Note Purchase Agreements referred to below), payable quarterly as
aforesaid (or, at the option of the registered holder hereof, on demand), at
the rate of 8.90% per annum. Notwithstanding anything to the contrary
above, the interest rate applicable to this Note may be increased by 0.50%
as provided in Section 10.1 of the Note Purchase Agreements referred to
below.
Payments of principal of, interest on and any Make-Whole Amount
with respect to this Note are to be made in lawful money of the United
States of America at the principal office of the Company in Hartford,
Connecticut or at such other place as the Company shall have designated by
written notice to the holder of this Note as provided in the Note Purchase
Agreements referred to below.
This Note is one of a series of Senior Secured Notes (herein
called the "Notes") issued pursuant to the Note Purchase Agreement, dated as
of October 14, 1998 (as from time to time amended, the "Note Purchase
Agreements"), between the Company and the respective Purchasers named
therein and is entitled to the benefits thereof. Each holder of this Note
will be deemed, by its acceptance hereof, (i) to have agreed to the
confidentiality provisions set forth in Section 20 of the Note Purchase
Agreements and (ii) to have made the representation set forth in Section 6.2
of the Note Purchase Agreements.
This Note is secured by, and entitled to the benefits of, the
Pledge Agreement referred to in the Note Purchase Agreements. Payment of
the principal of, and Make-Whole Amount, if any, and interest on this Note
has been guaranteed by the Subsidiaries of the Company in accordance with
the Subsidiary Guarantees referred to in the Note Purchase Agreements.
This Note is a registered Note and, as provided in the Note Purch-
ase Agreements, upon surrender of this Note for registration of transfer,
duly endorsed, or accompanied by a written instrument of transfer duly
executed, by the registered holder hereof or such holder s attorney duly
authorized in writing, a new Note for a like principal amount will be issued
to, and registered in the name of, the transferee. Prior to due presentment
for registration of transfer, the Company may treat the person in whose name
this Note is registered as the owner hereof for the purpose of receiving
payment and for all other purposes, and the Company will not be affected by
any notice to the contrary.
This Note is subject to prepayment, in whole or from time to time
in part, at the times and on the terms specified in the Note Purchase
Agreements, but not otherwise.
If an Event of Default, as defined in the Note Purchase
Agreements, occurs and is continuing, the principal of this Note may be
declared or otherwise become due and payable in the manner, at the price
(including any applicable Make-Whole Amount) and with the effect provided in
the Note Purchase Agreements.
This Note shall be construed and enforced in accordance with the
laws of the State of Connecticut.
THE ENERGY NETWORK, INC.
By_________________________
Title:
