Exhibit 99(b)(4)
EXECUTION COPY
10/1/97
BII/88663_4
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THE ENERGY NETWORK, INC.
$45,000,000
6.99% Senior Secured Notes due 2009
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NOTE PURCHASE AGREEMENT
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Dated as of October 1, 1997
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TABLE OF CONTENTS
Section Page
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1. AUTHORIZATION OF NOTES.................................................. 1
2. SALE AND PURCHASE OF NOTES.............................................. 1
3. CLOSING................................................................. 2
4. CONDITIONS TO CLOSING................................................... 2
4.1. Representations and Warranties................................... 2
4.2. Performance; No Default.......................................... 2
4.3. Compliance Certificates.......................................... 3
4.4. Opinions of Counsel.............................................. 3
4.5. Purchase Permitted By Applicable Law, etc........................ 3
4.6. Sale of Other Notes.............................................. 3
4.7. Payment of Special Counsel Fees.................................. 4
4.8. Private Placement Number......................................... 4
4.9. Changes in Corporate Structure................................... 4
4.10. Credit Rating.................................................... 4
4.11. Subsidiary Guarantees............................................ 4
4.12. Pledge Agreement; Collateral Agency Agreement.................... 4
4.13. Consent.......................................................... 5
4.14. Credit Agreement................................................. 5
4.15. Forward Equity Purchase Agreement................................ 5
4.16. Support Agreement................................................ 5
4.17. Tender Offer..................................................... 5
4.18. Proceedings and Documents........................................ 5
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................... 5
5.1. Organization; Power and Authority................................ 5
5.2. Authorization, etc............................................... 6
5.3. Disclosure....................................................... 6
5.4. Organization and Ownership of Shares of Subsidiaries;
Affiliates....................................................... 7
5.5. Financial Statements............................................. 7
5.6. Compliance with Laws, Other Instruments, etc..................... 8
5.7. Governmental Authorizations, etc................................. 8
5.8. Litigation; Observance of Agreements, Statutes and Orders........ 8
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5.9. Taxes............................................................ 8
5.10. Title to Property; Leases; Pledge Agreement...................... 9
5.11. Licenses, Permits, etc........................................... 9
5.12. Compliance with ERISA............................................ 10
5.13. Private Offering by the Company.................................. 11
5.14. Use of Proceeds; Margin Regulations.............................. 11
5.15. Existing Indebtedness; Future Liens.............................. 11
5.16. Foreign Assets Control Regulations, etc.......................... 12
5.17. Status under Certain Statutes.................................... 12
5.18. Environmental Matters............................................ 12
5.19. Representations in Transaction Documents......................... 13
6. REPRESENTATIONS OF THE PURCHASER........................................ 13
6.1. Purchase for Investment.......................................... 13
6.2. Source of Funds.................................................. 13
7. INFORMATION AS TO COMPANY............................................... 14
7.1. Financial and Business Information............................... 14
7.2. Officer's Certificate............................................ 17
7.3. Inspection....................................................... 18
8. INTEREST ON THE NOTES; PREPAYMENT OF THE NOTES.......................... 18
8.1. Interest on the Notes............................................ 18
8.2. Required Prepayments............................................. 18
8.3. Optional Prepayments with Make-Whole Amount...................... 19
8.4. Prepayment in Connection with a Change of Control................ 19
8.5. Notices, Etc; Calculation of Make-Whole Amounts.................. 20
8.6. Allocation of Partial Prepayments................................ 20
8.7. Maturity; Surrender, etc......................................... 20
8.8. Purchase of Notes................................................ 21
8.9. Make-Whole Amount................................................ 21
9. AFFIRMATIVE COVENANTS................................................... 22
9.1. Compliance with Law.............................................. 22
9.2. Insurance........................................................ 23
9.3. Maintenance of Properties........................................ 23
9.4. Payment of Taxes and Claims...................................... 23
9.5. Corporate Existence, etc......................................... 23
9.6. Subsidiary Guarantees, etc....................................... 24
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10. NEGATIVE COVENANTS...................................................... 24
10.1. Transactions with Affiliates..................................... 24
10.2. Xxxxxx, Consolidation, etc....................................... 24
10.3. Consolidated Net Worth........................................... 25
10.4. Debt Service Coverage Ratio...................................... 25
10.5. Indebtedness..................................................... 25
10.6. Intercompany Indebtedness........................................ 26
10.7. Liens............................................................ 26
10.8. Sale and Leasebacks.............................................. 27
10.9. Restricted Payments.............................................. 27
10.10. Amendments, etc. to Forward Equity Purchase Agreement........... 27
11. EVENTS OF DEFAULT....................................................... 28
12. REMEDIES ON DEFAULT, ETC................................................ 31
12.1. Acceleration..................................................... 31
12.2. Other Remedies................................................... 31
12.3. Rescission....................................................... 32
12.4. No Waivers or Election of Remedies, Expenses, etc................ 32
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES........................... 32
13.1. Registration of Notes............................................ 32
13.2. Transfer and Exchange of Notes................................... 33
13.3. Replacement of Notes............................................. 33
14. PAYMENTS ON NOTES....................................................... 34
14.1. Place of Payment................................................. 34
14.2. Home Office Payment.............................................. 34
15. EXPENSES, ETC........................................................... 34
15.1. Transaction Expenses............................................. 34
15.2. Survival......................................................... 35
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT............ 35
17. AMENDMENT AND WAIVER.................................................... 35
17.1. Requirements..................................................... 35
17.2. Solicitation of Holders of Notes................................. 36
17.3. Binding Effect, etc.............................................. 36
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17.4. Notes held by Company, etc....................................... 36
18. NOTICES................................................................. 37
19. REPRODUCTION OF DOCUMENTS............................................... 37
20. CONFIDENTIAL INFORMATION................................................ 37
21. SUBSTITUTION OF PURCHASER............................................... 38
22. MISCELLANEOUS........................................................... 39
22.1. Successors and Assigns........................................... 39
22.2. Payments Due on Non-Business Days................................ 39
22.3. Severability..................................................... 39
22.4. Construction..................................................... 39
22.5. Counterparts..................................................... 39
22.6. Governing Law.................................................... 40
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 5.15 -- Existing Indebtedness/Liens
EXHIBIT 1 -- Form of 6.99% Senior Secured Note due 2009
EXHIBIT 4.4(a) -- Form of Opinion of Special Counsel for the
Company
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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 Pledge Agreement
EXHIBIT E -- Form of Subsidiary Guarantee
V
THE ENERGY NETWORK, INC.
000 Xxxxxxxx Xxxx.
Hartford, Connecticut 06144
6.99% Senior Secured Notes due 2009
As of October 1, 1997
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A:
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 $45,000,000 aggregate
principal amount of its 6.99% Senior Secured Notes due 2009 (the "NOTES", such
term to include any such notes issued in substitution therefor pursuant to
Section 13 of this Agreement or the Other Agreements (as hereinafter defined)).
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. Contemporaneously with entering into this Agreement, the
Company is entering into separate Note Purchase Agreements (the "OTHER
AGREEMENTS") identical with this Agreement with each of the other purchasers
named in Schedule A (the "OTHER PURCHASERS"), providing for the sale at such
Closing to each of the Other Purchasers of Notes in the principal amount
specified opposite its name in Schedule A. Your obligation hereunder and the
obligations of the Other Purchasers under the Other Agreements are several and
not joint obligations and you shall have no obligation under any Other
Agreement and no liability to any Person for the performance or non-performance
by any Other Purchaser thereunder.
3. CLOSING.
The sale and purchase of the Notes to be purchased by you and the
Other Purchasers 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 30, 1997 or on such other
Business Day thereafter on or prior to November 15, 1997 as may be agreed upon
by the Company and you and the Other Purchasers. 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 relieved of
all further obligations under this Agreement, without thereby waiving any rights
you may have by reason of such failure or such nonfulfillment.
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 Agreement
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 occurred and be continuing.
Neither the Company nor any Subsidiary shall have entered into any transaction
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since the date of the Memorandum that would have been prohibited by Section 10.1
hereof had such Section applied since such date.
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 4.9 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,
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) from Milbank, Tweed, 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 investment, (II) not
violate any applicable law or regulation (including, without limitation,
Regulation G, T 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.
4.6. SALE OF OTHER NOTES.
Contemporaneously with the Closing the Company shall sell to the Other
Purchasers and the Other Purchasers shall purchase the Notes to be purchased by
them at the Closing as specified in Schedule A.
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4.7. 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.
4.8. 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.
4.9. 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.
4.10. CREDIT RATING.
You shall have received evidence, in a form satisfactory to you, that
Standard & Poor's and Xxxxx'x have assigned ratings of not less than A- and A3,
respectively, to the senior unsecured long-term debt of CNG.
4.11. 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.
4.12. 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 thereto, 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 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.
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4.13. 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.
4.14. CREDIT AGREEMENT.
The Company and the Bank shall have executed and delivered the Credit
Agreement and the Credit Agreement shall be in full force and effect.
4.15. FORWARD EQUITY PURCHASE AGREEMENT.
The Company and CTG shall have executed and delivered the Forward
Equity Purchase Agreement and the Forward Equity Purchase Agreement shall be in
full force and effect.
4.16. SUPPORT AGREEMENT.
CTG shall have executed and delivered the Support Agreement and the
Support Agreement shall be in full force and effect.
4.17. TENDER OFFER.
The Company shall have committed to purchase not less than 1,800,000
shares of CTG's common stock pursuant to the Tender Offer or as otherwise
contemplated by the Forward Equity Purchase Agreement.
4.18. 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 jurisdiction
in which such qualification is required
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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.
The Company, through its agent, PaineWebber Incorporated, has
delivered to you and each Other Purchaser a copy of a Private Placement
Memorandum, dated September 1997, (the "MEMORANDUM"), relating to the
transactions contemplated hereby. The Memorandum fairly describes, in all
material respects, the general nature of the business and principal properties
of the Company and its Subsidiaries. Except as disclosed in Schedule 5.3, this
Agreement, the Memorandum, 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 disclosed in the Memorandum or 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, 1996, 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 aggregate 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 Memorandum or in the other documents,
certificates and other writings delivered to you by or on behalf of the Company
specifically for use in connection with the transactions contemplated hereby.
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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 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).
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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 applicable 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.
(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 Environmental 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 assessments levied
upon them or their properties, assets, income or franchises, to the extent such
taxes and assessments have become due and payable and before
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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
by the Internal Revenue Service and paid for all fiscal years up to and
including the fiscal year ended September 30, 1996.
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
favor of [the Collateral Agent], a legal, valid and enforceable Lien on or in
all of the Collateral which Lien shall be, upon the taking of possession by the
Collateral Agent of the applicable stocks 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,
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copyright, service mark, trademark, trade name or other right owned or
used by the Company or any of its Subsidiaries.
5.12. COMPLIANCE WITH XXXXX.
(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 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 aggregate 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.
10
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, the Other Purchasers 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, 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 the Memorandum. 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 G of the Board of Governors of the
Federal Reserve System (12 CFR 207) and you shall not be obligated to require
the Company to execute a Form F.R. G-3 under said Regulation G. 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 G.
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
11
contingency or otherwise) any of its property, 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 Connecticut Natural Gas Corporation'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 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
12
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 required 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 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
13
(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 included
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 (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.
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:
14
(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
(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 material
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,
15
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
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 thereunder, 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
16
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 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.
17
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
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'x 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'x.
8.2. REQUIRED PREPAYMENTS.
On May 1, 2001 and on each November 1 and May 1 thereafter to and
including May 1, 2008 the Company will prepay $2,500,000 principal amount (or
such lesser principal amount as shall then be outstanding) of the Notes at par
and without payment of the Make-
18
Whole Amount or any premium, PROVIDED that upon any partial prepayment of the
Notes pursuant to Section 8.3 or 8.4 the principal amount of each required
prepayment of the Notes becoming due under this Section 8.2 on and after the
date of such prepayment or purchase shall be reduced in the same proportion as
the aggregate unpaid principal amount of the Notes is reduced as a result of
such prepayment.
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.
19
8.5. NOTICES, ETC; CALCULATION OF MAKE-WHOLE AMOUNTS.
(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 8.2 or 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 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
20
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
Scheduled 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 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
21
such Called Principal as of such Settlement Date. Such implied yield
will be determined, if necessary, by (A) converting 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 respect 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 succeeding scheduled interest payment
will be reduced by the amount of interest accrued to such Settlement Date
and required to be paid on 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-compliance 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.
22
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 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 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
23
or in the aggregate, have a Material Adverse Effect (it being understood that
the Company may sell or otherwise dispose of ENServe, Incorporated 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. 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
outstanding:
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:
(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
24
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
(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.
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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 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;
26
(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
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) consent to any amendment,
modification, supplement or waiver to or of the Forward Equity Purchase
Agreement without the written approval of the Required Holders.
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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
(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 performance 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
28
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
(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 appointment 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 bankruptcy
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 liabilities" (within the meaning of
section 4001(a)(18) of ERISA) under all Plans, determined in accordance
with Title IV of ERISA, shall exceed $1,000,000, (IV) the Company or any
ERISA
29
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 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.
30
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 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.
31
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.
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.
32
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 surrendered 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
(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 satisfactory), 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.
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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 New
York, New York at the principal office of [Specify Bank] 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 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 Other Purchaser or 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
34
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.
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 certificate 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
35
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 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.
36
18. NOTICES.
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.
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
37
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 Confidential 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 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
38
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.
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
39
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.
* * * * *
40
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______________________________________
Title:
The foregoing is hereby
agreed to as of the
date thereof.
METROPOLITAN LIFE INSURANCE COMPANY
By__________________________
Title:
41
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______________________________________
Title:
The foregoing is hereby
agreed to as of the
date thereof.
TEXAS LIFE INSURANCE COMPANY
By____________________
Title:
41
SCHEDULE A
----------
INFORMATION RELATING TO PURCHASERS
Principal Amount of
Name and Address of Purchaser Notes to Be Purchased
----------------------------- ---------------------
METROPOLITAN LIFE INSURANCE COMPANY $42,000,000
(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
2
Principal Amount of
Name and Address of Purchaser Notes to Be Purchased
----------------------------- ---------------------
TEXAS LIFE INSURANCE COMPANY $3,000,000
(1) All payments by wire transfer of
immediately available funds to:
The Chase Manhattan Bank, N.A.
Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000-1508
Account No.: 900-9-000200
ABA No.: 000000000
With reference to PPN No.:
with sufficient information
to identify the source and
application of such funds.
(2) Address for notices and other
communications:
Texas Life Insurance Company
000 Xxxxxxxxxx Xxxxxx
Xxxx, XX 00000
Attention: Xxxxxxxx Xxxxx
With a copy to:
Metropolitan Life Insurance Company
000 Xxxxxxx Xxxxxx
Xxxxxxx Xxxxxxx, XX 00000-0633
Attention: Vice President
Telecopier: (000) 000-0000
(3) Tax Identification No.: 00-0000000
SCHEDULE B
----------
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]
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 Collateral Agency Agreement
dated as of the date hereof substantially in the form of Exhibit B between the
Collateral Agent, the Bank, The Bank of Nova Scotia, you and the Other
Purchaser.
"COLLATERAL AGENT" means State Street Bank and Trust Company in its
capacity as collateral agent pursuant to the Collateral Agency Agreement.
"COMPANY" means The Energy Network, Inc., a Connecticut corporation.
"CONFIDENTIAL INFORMATION" is defined in Section 20.
"CONSENT" means the Consent of CTG and Agreement dated as of the date
hereof substantially in the form of Exhibit C.
"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
the Company or a Subsidiary has any form of equity interest, except to
the extent such
2
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 the date
hereof, 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.
3
"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 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 8.99% 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 promulgated 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 the date hereof between CTG and the Company.
4
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States of America.
"GOVERNMENTAL AUTHORITY" means
(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.
5
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, 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
6
(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 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
7
(C) the validity or enforceability of this Agreement, the Notes or any other
Transaction Document to which the Company is a party.
"MEMORANDUM" is defined in Section 5.3.
"MOODY'S" means Xxxxx'x 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).
"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.
"OTHER AGREEMENTS" is defined in Section 2.
"OTHER PURCHASERS" is defined in Section 2.
"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 preceding 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 Pledge and Assignment Agreement dated as
of the date hereof between the Company and [the Collateral Agent] substantially
in the form of Exhibit D.
"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.
8
"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 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;
9
(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.
"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 "Subsidiary" is a reference to a Subsidiary of the Company.
10
"SUBSIDIARY GUARANTEE" means a guarantee of the obligations of the
Company under this Agreement and the Notes, substantially in the form of Exhibit
E.
"SUPPORT AGREEMENT" means the Support Agreement dated the date hereof
from CTG in favor of the holders from time to time of the Notes.
"TENDER OFFER" means the Tender Offer as defined and described in the
Memorandum.
"TRANSACTION DOCUMENTS" means this Agreement, the Other Agreements,
the Notes, the Pledge Agreement, each Subsidiary Guarantee, the 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.
11
EXHIBIT 1
[FORM OF NOTE]
THE ENERGY NETWORK, INC.
6.99% SENIOR SECURED NOTE DUE 2009
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 November 1, 2009,
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 6.99% per annum from the date
hereof, payable quarterly, on the first day of February, May, August and
November in each year, commencing with the February 1, May 1, August 1 or
November 1 next succeeding the date hereof, 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 8.99% 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 [Specify bank] in New York, New York 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 separate Note Purchase Agreements, dated as of
October 1, 1997 (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 Purchase
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.
The Company will make required prepayments of principal on the dates
and in the amounts specified in the Note Purchase Agreements. This Note is also
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:
2
EXHIBIT 4.4(b)
MATTERS TO BE COVERED IN THE OPINION
OF SPECIAL COUNSEL TO THE PURCHASERS
1. The Notes not requiring registration under the Securities Act of
1933, as amended; no need to qualify an indenture under the Trust Indenture Act
of 1939, as amended.
2. Form and scope blessing of opinion of counsel for the Company.
10/1/97
EXHIBIT A
FORM OF SUBORDINATION PROVISIONS
Section 1. [add name of Company or Subsidiary, as applicable], a
__________________, corporation (the "BORROWER"), and [add name of Subsidiary
lender] (the "SUBORDINATED LENDER"), covenant and agree, that [DESCRIBE
INDEBTEDNESS] (the "SUBORDINATED INDEBTEDNESS") shall be subordinate and junior
to all Senior Indebtedness (as hereinafter defined), to the extent and in the
manner hereinafter set forth.
ALTERNATIVE NO. 1 (FOR USE WHEN THE COMPANY IS THE BORROWER): [For
purposes hereof, "SENIOR INDEBTEDNESS" shall mean (1) all obligations of the
Borrower under the several Note Purchase Agreements dated as of October 1, 1997
among the Borrower and certain institutional investors named therein (herein, as
the same may be amended or supplemented from time to time, collectively referred
to as the "NOTE PURCHASE AGREEMENT"), including all fees and expenses payable by
the Borrower thereunder, (2) all principal of, and interest and Make-Whole
Amount (if any) on, the 6.99% Senior Secured Notes due 2009 issued in the
original aggregate principal amount of $45,000,000 by the Borrower pursuant to
the Note Purchase Agreement (together with any notes delivered in substitution
or exchange for said notes, the "NOTES") including, without limitation, any
interest accruing thereon after the commencement of any proceeding of the
character described in Section 11(g) or 11(h) of the Note Purchase Agreement and
(3) all extensions, refinancings, refundings or renewals of the liabilities of
the Borrower referred to in clauses (1) through (2) above.]
ALTERNATIVE NO. 2 (FOR USE WHEN A SUBSIDIARY IS THE BORROWER): [For
purposes hereof, "SENIOR INDEBTEDNESS" shall mean all obligations of the
Borrower under the Guarantee dated as of ______________ (the "GUARANTEE")
pursuant to which the Borrower has guaranteed the obligations of The Energy
Network, Inc. (the "COMPANY") under the Note Purchase Agreement dated as of
October 1, 1997 among the Company and certain institutional investors named
therein (herein, as the same may be amended or supplemented from time to time,
collectively referred to as the "NOTE PURCHASE AGREEMENT") and the Company's
6.99% Senior Secured Notes due 2009 issued thereunder in the original aggregate
principal amount of $45,000,000 and all extensions, refinancings, refundings or
renewals of the liabilities of the Borrower under the Guarantee.
Section 2. In the event of any liquidation, dissolution or other
winding up of the Borrower or of any receivership, insolvency, bankruptcy,
liquidation, readjustment, reorganization or other similar proceeding relative
to the Borrower or its creditors or its property, all Senior Indebtedness shall
first be paid in full in cash before any payment or distribution of any kind or
character, whether in cash, property or securities shall be made upon or in
respect of the Subordinated Indebtedness, and any such payments or distributions
shall be paid over to the holders of such Senior Indebtedness for application to
the payment
-2-
thereof, unless and until all Senior Indebtedness shall have been paid and
satisfied in full in cash.
Section 3. Until the Senior Indebtedness shall have been paid in full
in cash, no payment of any kind shall be made on the Subordinated Indebtedness,
whether of principal, premium or interest, (b) the Subordinated Lender shall not
take, demand or receive, directly or indirectly, by set-off, redemption,
purchase or in any other manner, any payment for or in respect of the
Subordinated Indebtedness and (c) the Subordinated Lender shall not have any
right to accelerate the payment of Subordinated Indebtedness or exercise any
other remedies to enforce the payment thereof.
Section 4. If the Subordinated Lender shall receive any payment (of
any kind, whether or not in cash) in respect of the Subordinated Indebtedness
which is in violation of the requirements of Section 2 or 3, the Subordinated
Lender hereby agrees to hold such payment in trust for the benefit of the
holders of the Senior Indebtedness and to pay over such payment or any amount
equal thereto to the holders of the Senior Indebtedness on demand.
Section 5. Without notice to or the consent of the Subordinated
Lender, the holders of the Senior Indebtedness may, at any time and from time to
time, without impairing or releasing the subordination herein made, do any one
or more of the following:
(1) change the manner, place or terms of payment, or change or extend
the time of payment of or renew or alter, the Senior Indebtedness, or amend
or supplement in any manner the Note Purchase Agreement or any Subsidiary
Guarantee (as defined therein) or any other instrument securing or relating
to the Senior Indebtedness (including the Pledge Agreement, as defined in
the Note Purchase Agreement);
(2) release any person liable in any manner for the payment or
collection of the Senior Indebtedness;
(3) exercise or refrain from exercising any rights in respect of the
Senior Indebtedness against the Borrower or any other person;
(4) apply any monies or other property paid by any person or released
in any manner, to the Senior Indebtedness; or
(5) accept or release any security for the Senior Indebtedness.
Section 6. The Subordinated Lender hereby irrevocably authorizes and
empowers (without imposing any obligation on) the holders of the Senior
Indebtedness, under the circumstances set forth in Section 2 hereof, to demand,
sue for, collect and receive every
-3-
payment or distribution upon or in respect of the Subordinated Indebtedness and
give acquittance therefor, to file claims and proofs of claims in any statutory
or nonstatutory proceeding, to vote the full amount of the Subordinated
Indebtedness which is owing in the sole discretion of the holders of the Senior
Indebtedness or their representative in connection with any resolution,
arrangement, plan of reorganization, compromise, settlement or extension and to
take all such other action (including, without limitation, the right to
participate in any composition of creditors and the right to vote at creditors'
meetings for the election of trustees, acceptance of plans and otherwise), in
the name of the holders of the Senior Indebtedness or in the name of the
Subordinated Lender or otherwise, as the holders of the Senior Indebtedness or
their representative may deem necessary or advisable for the enforcement of the
subordination provisions of this Subordinated Indebtedness. The Subordinated
Xxxxxx hereby agrees, under the circumstances set forth in Section 2 hereof,
duly and promptly to take such action as may be requested at any time and from
time to time by the holders of the Senior Indebtedness or their representative
to collect and receive any and all payments and distributions hereunder and to
file appropriate proofs of claim in respect thereof and to execute and deliver
such powers of attorney, assignments or other instruments as may be requested by
the holders of the Senior Indebtedness or their representative in order to
enable the holders of the Senior Indebtedness or their representative to enforce
any and all claims upon or in respect of this Subordinated Indebtedness and to
collect and receive any and all payments or distributions which may be payable
or deliverable at any time upon or in respect of this Subordinated Indebtedness.
10/1/97
EXHIBIT C
AGREEMENT AND CONSENT
This AGREEMENT AND CONSENT, dated as of _____ __, 1997 (this
"CONSENT"), among CTG Resources, Inc., a Connecticut corporation (the
"CONSENTING PARTY"), The Energy Network, Inc., a Connecticut corporation (the
"COMPANY"), and State Street Bank and Trust Company, as collateral agent (in
such capacity, together with any successor thereto in such capacity, the
"COLLATERAL AGENT") for the benefit of the Collateral Agent and the Secured
Parties (as defined in the Pledge Agreement referred to below).
The Company and The Bank of Nova Scotia (the "LC PROVIDER") are
parties to a Letter of Credit and Reimbursement Agreement dated as of October
14, 1994 pursuant to which the LC Provider has issued its irrevocable standby
letter of credit in a stated amount of $13,767,123 on behalf of the Company (as
modified and supplemented and in effect from time to time, the "LC FACILITY").
The Company and Fleet National Bank (together with its successors and assigns,
the "BANK") are parties to a 364-Day Revolving Credit Agreement and a 3-Year
Reducing Revolving Credit Agreement, each dated as of October 1, 1997
(collectively, as modified and supplemented and in effect from time to time, the
"CREDIT AGREEMENT"), providing, subject to the terms and conditions thereof, for
loans to be made by the Bank to the Company in an aggregate principal amount not
exceeding $20,000,000. The Company is party to the several Note Purchase
Agreements dated as of the date hereof (collectively, as modified and
supplemented and in effect from time to time, the "NOTE PURCHASE AGREEMENT")
with the institutional investors named therein (the "PURCHASERS") pursuant to
which the Company has issued its 6.99% Senior Secured Notes dues 2009 in the
aggregate principal amount of $45,000,000 (the "NOTES").
The Company and the Collateral Agent are parties to a Pledge and
Assignment Agreement dated as of the date hereof (the "PLEDGE AGREEMENT")
pursuant to which the Company has pledged to the Collateral Agent the Collateral
referred to therein as security for the Secured Obligations referred to therein,
including the Company's right, title and interest in the Forward Equity Purchase
Agreement dated as of the date hereof between the Consenting Party and the
Company (the "ASSIGNED AGREEMENT").
The Collateral Agent, the LC Provider, the Bank and the Purchasers are
party to a Collateral Agency Agreement dated as of the date hereof (the
"COLLATERAL AGENCY AGREEMENT").
It is a condition precedent to the Bank making loans under the Credit
Agreement, the Purchasers purchasing Notes under the Note Purchase Agreement and
the LC
Provider amending the LC Facility that the Consenting Party execute and deliver
this Consent. Accordingly, the parties hereto agree as follows:
ARTICLE I. DEFINITIONS
Section 1.01. INCORPORATED TERMS. Unless otherwise indicated, each
capitalized term used herein and not defined herein shall have the meaning
ascribed to such term in the Pledge Agreement.
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF THE CONSENTING PARTY
The Consenting Party represents and warrants as follows:
Section 2.01. DUE ORGANIZATION. The Consenting Party is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Connecticut.
Section 2.02. CORPORATE POWER. The Consenting Party has full power,
authority and legal right to execute and deliver this Consent and the Assigned
Agreement and to perform its obligations hereunder and thereunder.
Section 2.03. DUE AUTHORIZATION. The Consenting Party has taken all
necessary corporate and shareholder action to authorize the execution, delivery
and performance of this Consent and the Assigned Agreement.
Section 2.04. ENFORCEABILITY. This Consent and the Assigned
Agreement have been duly executed and delivered by the Consenting Party and
constitute the legal, valid and binding obligations of the Consenting Party
enforceable against the Consenting Party in accordance with their respective
terms, except as the enforceability thereof may be limited by (i) bankruptcy,
insolvency, moratorium and other similar laws affecting the enforcement of
creditors' rights generally and (ii) the application of equitable principles
(whether considered in a court of law or a proceeding in equity).
Section 2.05. NO VIOLATION. The execution, delivery and performance
by the Consenting Party of this Consent and the Assigned Agreement do not and
will not (i) violate any applicable provision of any law, rule, regulation or
court order, (ii) result in any breach of any of the terms or provisions of, or
constitute a default under, any agreement or instrument to which the Consenting
Party is a party or by which it or any of its property or assets is bound or to
which it may be subject, or (iii) violate or conflict with any provision of the
charter documents or by-laws of the Consenting Party.
Section 2.06. GOVERNMENTAL APPROVALS. No consent, approval or
authorization of, or registration, filing or declaration with, any governmental
authority is required (i) in connection with the execution, delivery, or
performance of this Consent or the Assigned Agreement or (ii) for the validity
or enforceability of this Consent or the Assigned Agreement.
2
ARTICLE III. CONSENT
Section 3.01. CONSENT TO ASSIGNMENTS, ETC. The Consenting Party
hereby:
(a) acknowledges that the Collateral Agent and the Secured Parties
are relying upon the execution, delivery and performance by the Consenting
Party of the Assigned Agreement and this Consent;
(b) consents to the Pledge Agreement and the assignment by the
Company to the Collateral Agent pursuant thereto of all of its right, title
and interest in the Assigned Agreement as collateral security for the
Secured Obligations;
(c) acknowledges the right of the Collateral Agent in the exercise of
its rights and remedies under the Pledge Agreement and at the times
provided for therein to make all demands, give all notices, take all
actions and exercise all rights and remedies of the Company under the
Assigned Agreement, except as otherwise expressly provided in the Pledge
Agreement, and agrees that in such event, the Consenting Party shall
continue to perform the obligations of the Consenting Party under the
Assigned Agreement;
(d) agrees that neither the Collateral Agent, as collateral assignee
of the Assigned Agreement, nor its designee, shall be subject to any duty
or obligation under the Assigned Agreement; and
(e) agrees that the Consenting Party will not, without the prior
written consent of the Collateral Agent, enter into any waiver, amendment,
supplement, or other modification of the Assigned Agreement.
Section 3.02. PAYMENT OF ASSIGNED SUMS. The Consenting Party shall
pay all monies that are due and payable to the Company under the Assigned
Agreement directly to the Collateral Account (or to such other account or such
other Person as the Collateral Agent shall have notified the Consenting Party in
writing) in immediately available funds on the date such monies are due. The
Consenting Party agrees that the amount of such payment shall not be reduced by
any defense, claim, counterclaim, offset or recoupment that the Consenting Party
may have against the Company. The Company hereby releases and agrees to hold
the Consenting Party harmless from all liability for making payments to the
Collateral Agent in accordance with the requirements of this Section 3.02.
Section 3.03. OBLIGATIONS ABSOLUTE AND UNCONDITIONAL. The Consenting
Party's obligations hereunder are absolute and unconditional, and the Consenting
Party has no right, and shall have no right, to terminate this Consent or to be
released, relieved or discharged from any obligation or liability hereunder
until the termination of this Consent.
Section 3.04. REINSTATEMENT. This Consent shall continue to be
effective or be reinstated, as the case may be, if at any time any amount
received by the Collateral Agent or the other Secured Parties in respect of the
Secured Obligations is rescinded or must otherwise be restored or returned by
the Collateral Agent or the other Secured Parties by
3
reason of the insolvency, bankruptcy or reorganization of the Company or for any
other reason, all as though such payments had not been made.
ARTICLE IV. MISCELLANEOUS
Section 4.01. TERMINATION. Except as otherwise provided for herein,
this Consent shall terminate when the Secured Obligations have been paid in full
and the obligations of the Bank under the Credit Agreement and the LC Provider
under the LC Facility shall have expired or been terminated.
Section 4.02. NOTICES. All notices and other communications
hereunder shall be in writing, shall be sent by first class mail, by personal
delivery, by a nationally recognized courier service, or by telecopy and shall
be directed to the addresses and telephone numbers listed on the signature page
hereto or to such other address or addressee as a party may designate by notice
given pursuant hereto.
Section 4.03. SEPARATE COUNTERPARTS; AMENDMENTS, WAIVER. This
Consent may be executed in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall constitute
one and the same instrument. Neither this Consent nor any of the terms hereof
may be terminated, amended, supplemented, waived or modified except by an
instrument in writing signed by the Collateral Agent and by any other party
against whom any such amendment, supplement, waiver or modification is to be
enforced.
Section 4.04. SEVERABILITY OF PROVISIONS. Any provision of this
Consent which 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 not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 4.05. SUCCESSORS AND ASSIGNS. This Consent shall be binding
upon each of the Consenting Party and the Company, and on the permitted
successors and assigns of each of them, and shall inure to the benefit of the
Collateral Agent, the Secured Parties and their respective successors and
assigns; PROVIDED that the Consenting Party shall not transfer or assign all or
any portion of its obligations under this Consent or the Assigned Agreement
without the prior written consent of the Collateral Agent.
Section 4.06. THE COLLATERAL AGENT. The Consenting Party
acknowledges that the Collateral Agent, as agent for the Secured Parties, is
subject to the terms and conditions of the Collateral Agency Agreement and shall
act in exercising its rights and remedies hereunder (including, without
limitation, the giving of any consent, direction, amendment, modification or
waiver hereunder) with the consent of the Secured Parties in accordance with the
Collateral Agency Agreement.
Section 4.07. GOVERNING LAW. This Consent shall be construed and
enforced in accordance with the law of the State of Connecticut.
4
IN WITNESS WHEREOF, each of the parties hereto has caused this Consent
to be executed by its duly authorized officer as of the date first above
written.
CTG RESOURCES, INC.
By:____________________________
Name:
Title:
Address for Notice:
Attention:
Telephone Number:
Telecopier Number:
STATE STREET BANK AND TRUST
COMPANY,
as Collateral Agent
By:___________________________
Name:
Title:
Address for Notice:
Attention:
Telephone Number:
Telecopier Number:
5
THE ENERGY NETWORK, INC.
By:___________________________
Address for Notice:
Attention:
Telephone Number:
Telecopier Number:
6
10/1/97
EXHIBIT D
PLEDGE AND ASSIGNMENT AGREEMENT
PLEDGE AND ASSIGNMENT AGREEMENT dated as of October 1, 1997 between
The Energy Network, Inc., a Connecticut corporation (the "COMPANY"), and State
Street Bank and Trust Company, as agent for the Secured Parties referred to
below (in such capacity, together with its successors in such capacity, the
"COLLATERAL AGENT").
The Company and The Bank of Nova Scotia (the "LC PROVIDER") are
parties to a Letter of Credit and Reimbursement Agreement dated as of October
14, 1994 pursuant to which the LC Provider has issued its irrevocable standby
letter of credit in a stated amount of $13,767,123 on behalf of the Company (as
modified and supplemented and in effect from time to time, the "LC FACILITY").
The Company and Fleet National Bank (together with its successors and assigns,
the "BANK") are parties to a 364-Day Revolving Credit Agreement and a 3-Year
Reducing Revolving Credit Agreement, each dated as of the date hereof
(collectively, as modified and supplemented and in effect from time to time, the
"CREDIT AGREEMENT"), providing, subject to the terms and conditions thereof, for
loans to be made by the Bank to the Company in an aggregate principal amount not
exceeding $20,000,000. The Company is party to the several Note Purchase
Agreements dated as of the date hereof (collectively, as modified and
supplemented and in effect from time to time, the "NOTE PURCHASE AGREEMENT")
with the institutional investors named therein (the "PURCHASERS") pursuant to
which the Company has issued its 6.99% Senior Secured Notes dues 2009 in the
aggregate principal amount of $45,000,000 (the "NOTES").
To induce the Bank to enter into the Credit Agreement and to extend
credit thereunder, the Purchasers to purchase the Notes and the LC Provider to
amend the LC Facility and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company has agreed to
pledge and grant a security interest in the Collateral (as hereinafter defined)
as security for the Secured Obligations (as so defined). Accordingly, the
parties hereto agree as follows:
Section 1. DEFINITIONS. Unless the context otherwise requires, any
reference in this Agreement to the Assigned Agreement shall mean such Assigned
Agreement and all schedules, exhibits and attachments thereto as amended,
supplemented or modified and in effect from time to time. Unless otherwise
stated, any reference in this Agreement to any Person shall include its
permitted successors and assigns. In addition, as used herein the following
terms shall have the following respective meanings (all terms defined in this
Section 1 and in the other provisions of this Agreement in the singular to have
the same meanings when used in the plural and VICE VERSA):
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"ASSIGNED AGREEMENT" shall have the meaning assigned to such term in
Section 3(e) hereof.
"COLLATERAL" shall have the meaning ascribed thereto in Section 3
hereof.
"COLLATERAL ACCOUNT" shall have the meaning ascribed thereto in
Section 4.01 hereof.
"COLLATERAL AGENCY AGREEMENT" shall mean the Collateral Agency
Agreement dated as of the date hereof among the Collateral Agent, the LC
Provider, the Bank and the Purchasers.
"DEFAULT" shall mean a "Default", or 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" under the Note
Purchase Agreement, the Credit Agreement or the LC Facility.
"EVENT OF DEFAULT shall mean an "Event of Default" under the Note
Purchase Agreement, the Credit Agreement or the LC Facility.
"ISSUERS" shall mean, collectively, the respective corporations
identified on Annex 1 hereto under the caption "ISSUER".
"NOTE HOLDERS" shall mean the holders from time to time of the Notes.
"PLEDGED STOCK" shall have the meaning ascribed thereto in
Section 3(a) hereof.
"PERMITTED INVESTMENTS" shall mean
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed
by the full faith and credit of the United States of America), in each case
maturing within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from the
date of acquisition thereof and having, at such date of acquisition, the
highest credit rating obtainable from a nationally recognized rating
agency;
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(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within 180 days from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts
issued or offered by, any domestic office of any commercial bank organized
under the laws of the United States of America or any State thereof which
has a combined capital and surplus and undivided profits of not less than
$500,000,000;
(d) fully collateralized repurchase agreements with a term of not
more than 30 days for securities described in clause (a) above and entered
into with a financial institution satisfying the criteria described in
clause (c) above; and
(e) investments in a money market fund registered under the
Investment Company Act of 1940 (15 U.S.C. Section 809-1 et seq.), as from
time to time amended, the portfolio of which is limited to United States
government obligations and United States agency obligations.
"SECURED OBLIGATIONS" shall mean, collectively, (a) the principal of
and interest on the Loans made by the Bank to, and the promissory note(s)
held by the Bank of, the Company and all other amounts from time to time
owing to the Bank by the Company under the Credit Agreement, (b) the
principal of and Make-Whole Amount (as defined in the Note Purchase
Agreement), if any, and interest on the Notes and all other amounts owed
thereunder or under the Note Purchase Agreement to the Note Holders, (c)
the Reimbursement Obligations and all other amounts owed by the Company to
the LC Provider under the LC Facility and (d) all obligations of the
Company to the Bank, the Note Holders, the LC Provider and the Collateral
Agent hereunder.
"SECURED PARTIES" shall mean the Bank, the Note Holders and the LC
Provider so long as there shall be Secured Obligations owed to such person.
"UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial Code as in
effect from time to time in the State of Connecticut.
Section 2. REPRESENTATIONS AND WARRANTIES. The Company represents
and warrants to the Bank, the Purchaser, the LC Provider and the Collateral
Agent that:
(a) The Company is the sole beneficial owner of the Collateral and no
Lien exists or will exist upon the Collateral at any time (and no right or
option to acquire the same exists in favor of any other Person), except for
the pledge and security
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interest in favor of the Collateral Agent for the benefit of the Secured
Parties created or provided for herein, which pledge and security interest
constitute a first priority perfected pledge and security interest in and
to all of the Collateral.
(b) The Pledged Stock represented by the certificates identified in
Annex 1 hereto is, and all other Pledged Stock in which the Company shall
hereafter grant a security interest pursuant to Section 3 hereof will be,
duly authorized, validly existing, fully paid and non-assessable and none
of such Pledged Stock is or will be subject to any contractual restriction,
or any restriction under the charter or by-laws of the respective Issuer of
such Pledged Stock, upon the transfer of such Pledged Stock.
(c) The Pledged Stock represented by the certificates identified
in Annex 1 hereto constitutes all of the issued and outstanding shares
of capital stock of any class of the Issuers legally and beneficially
owned by the Company on the date hereof (whether or not registered in
the name of the Company) and said Annex 1 correctly identifies, as at
the date hereof, the respective Issuers of such Pledged Stock, the
respective class and par value of the shares comprising such Pledged
Stock and the respective number of shares (and registered owners
thereof) represented by each such certificate.
(d) The chief place of business and chief executive office of the
Company and the office where the Company keeps its records concerning the
Collateral and the original copy of the Assigned Agreement is located at
the address specified for the Company on the signature pages hereof. A
certified copy of the Assigned Agreement in effect on the date hereof has
been furnished to the Bank, the Purchaser, the LC Provider and the
Collateral Agent.
Section 3. COLLATERAL. As collateral security for the prompt payment
in full when due (whether at stated maturity, by acceleration or otherwise) of
the Secured Obligations, the Company hereby pledges, assigns and grants to the
Collateral Agent, for the benefit of the Secured Parties as hereinafter
provided, a security interest in all of the Company's right, title and interest
in the following, whether now owned by the Company or hereafter acquired and
whether now existing or hereafter coming into existence (all being collectively
referred to herein as "COLLATERAL"):
(a) the shares of common stock of the Issuers represented by the
certificates identified in Annex 1 hereto and all other shares of capital
stock of whatever class of the Issuers, now or hereafter owned by the
Company, in each case together with the
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certificates evidencing the same (collectively, the "PLEDGED STOCK");
(b) all shares, securities, moneys or property representing a
dividend on any of the Pledged Stock, or representing a distribution or
return of capital upon or in respect of the Pledged Stock, or resulting
from a split-up, revision, reclassification or other like change of the
Pledged Stock or otherwise received in exchange therefor, and any
subscription warrants, rights or options issued to the holders of, or
otherwise in respect of, the Pledged Stock;
(c) without affecting the obligations of the Company under any
provision prohibiting such action hereunder or under the Credit Agreement,
the Note Purchase Agreement or the LC Facility, in the event of any
consolidation or merger in which an Issuer is not the surviving
corporation, all shares of each class of the capital stock of the successor
corporation (unless such successor corporation is the Company itself)
formed by or resulting from such consolidation or merger;
(d) the balance from time to time in the Collateral Account;
(e) the Forward Equity Purchase Agreements dated as of the date
hereof between CTG Resources, Inc., a Connecticut corporation, and the
Company, as such agreement, may be amended, supplemented or modified and in
effect from time to time (said agreement, as so amended, supplemented or
modified and in effect from time to time, the "ASSIGNED AGREEMENT")
including, without limitation: (i) all rights of the Company to receive
moneys due and to become due under or pursuant to the Assigned Agreement,
(ii) all claims of the Company for damages arising out of or for breach of
or default under the Assigned Agreement and (iii) all rights of the Company
to terminate, amend, supplement, modify or waive performance under the
Assigned Agreement, and to compel performance and otherwise to exercise all
remedies thereunder; and
(f) all proceeds of and to any of the property of the Company
described in the preceding clauses of this Section 3 (including, without
limitation, all causes of action, claims and warranties now or hereafter
held by the Company in respect of any of the items listed above).
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Section 4. CASH PROCEEDS OF COLLATERAL.
4.01 COLLATERAL ACCOUNT. There is hereby established with the
Collateral Agent a cash collateral account (the "COLLATERAL ACCOUNT") in the
name and under the control of the Collateral Agent into which there shall be
deposited from time to time the cash proceeds of any of the Collateral required
to be delivered to the Collateral Agent pursuant hereto and into which the
Company may from time to time deposit any additional amounts that it wishes to
pledge to the Collateral Agent for the benefit of the Secured Parties as
additional collateral security hereunder. The balance from time to time in the
Collateral Account shall constitute part of the Collateral hereunder and shall
not constitute payment of the Secured Obligations until applied as hereinafter
provided. Except as expressly provided in the next sentence, the Collateral
Agent shall remit the collected balance outstanding to the credit of the
Collateral Account upon the order of the Company as the Company shall from time
to time instruct; and, unless the Collateral Agent shall have received notice of
an Event of Default from any Secured Party, such balance shall be transmitted to
the Company on the same day as received by wire transfer to an account
designated by the Company. However, at any time following the occurrence and
during the continuance of an Event of Default, the Collateral Agent, if so
instructed by the Secured Parties in accordance with the Collateral Agency
Agreement, shall apply or cause to be applied (subject to collection) the
balance from time to time outstanding to the credit of the Collateral Account to
the payment of the Secured Obligations in the manner specified in Section 4 of
the Collateral Agency Agreement. The balance from time to time in the
Collateral Account shall be subject to withdrawal only as provided herein. In
addition to the foregoing, the Company agrees that if the proceeds of any
Collateral hereunder shall be received by it, the Company shall as promptly as
possible deposit such proceeds into the Collateral Account. Until so deposited,
all such proceeds shall be held in trust by the Company for and as the property
of the Collateral Agent and shall not be commingled with any other funds or
property of the Company.
4.02 INVESTMENT OF BALANCE IN COLLATERAL ACCOUNT. Amounts on deposit
in the Collateral Account shall be invested from time to time in such Permitted
Investments as the Company (or, after the occurrence and during the continuance
of an Event of Default, the Collateral Agent as directed by the Secured Parties)
shall determine, which Permitted Investments shall be held in the name and be
under the control of the Collateral Agent, PROVIDED that (i) at any time after
the occurrence and during the continuance of an Event of Default, the Collateral
Agent, if so instructed by the Secured Parties in accordance with the Collateral
Agency Agreement, shall liquidate any such Permitted Investments and apply or
cause to be applied the proceeds thereof to the payment of the Secured
Obligations in the
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manner specified in Section 4 of the Collateral Agency Agreement.
Section 5. FURTHER ASSURANCES; REMEDIES. In furtherance of the grant
of the pledge and security interest pursuant to Section 3 hereof, the Company
hereby agrees with each Secured Party and the Collateral Agent as follows:
5.01 DELIVERY AND OTHER PERFECTION. The Company shall:
(a) if any of the shares, securities, moneys or property required to
be pledged by the Company under clauses (a), (b) and (c) of Section 3
hereof are received by the Company, forthwith either (x) transfer and
deliver to the Collateral Agent such shares or securities so received by
the Company (together with the certificates for any such shares and
securities duly endorsed in blank or accompanied by undated stock powers
duly executed in blank), all of which thereafter shall be held by the
Collateral Agent, pursuant to the terms of this Agreement, as part of the
Collateral or (y) take such other action as the Collateral Agent shall deem
necessary or appropriate to duly record the lien created hereunder in such
shares, securities, moneys or property in said clauses (a), (b) and (c);
(b) give, execute, deliver, file and/or record any financing
statement, notice, instrument, document, agreement or other papers that may
be necessary or desirable (in the judgment of any Secured Party) to create,
preserve, perfect or validate the security interest granted pursuant hereto
or to enable the Collateral Agent to exercise and enforce its rights
hereunder with respect to such pledge and security interest, including,
without limitation, causing any or all of the Collateral to be transferred
of record into the name of the Collateral Agent or its nominee (and the
Collateral Agent agrees that if any Collateral is transferred into its name
or the name of its nominee, the Collateral Agent will thereafter promptly
give to the Company copies of any notices and communications received by it
with respect to the Collateral);
(c) keep full and accurate books and records relating to the
Collateral, and stamp or otherwise mark such books and records in such
manner as the Collateral Agent may reasonably require in order to reflect
the security interests granted by this Agreement; and
(d) permit representatives of the Collateral Agent, upon reasonable
notice, at any time during normal business hours to inspect and make
abstracts from its books and records pertaining to the Collateral, and
permit representatives of the Collateral Agent to be present at the
Company's place of business to receive copies of all
-8-
communications and remittances relating to the Collateral, and forward
copies of any notices or communications received by the Company with
respect to the Collateral, all in such manner as the Collateral Agent may
require.
5.02 OTHER FINANCING STATEMENTS AND LIENS. Without the prior written
consent of the Collateral Agent (granted with the authorization of the Secured
Parties in accordance with the Collateral Agency Agreement), the Company shall
not file or suffer to be on file, or authorize or permit to be filed or to be on
file, in any jurisdiction, any financing statement or like instrument with
respect to the Collateral in which the Collateral Agent is not named as the sole
secured party for the benefit of the Secured Parties.
5.03 PRESERVATION OF RIGHTS. The Collateral Agent shall not be
required to take steps necessary to preserve any rights against prior parties to
any of the Collateral.
5.04 COLLATERAL.
(1) The Company will cause the Collateral to include at all times
100% of the total number of shares of each class of capital stock of each Issuer
then outstanding.
(2) So long as no Event of Default shall have occurred and be
continuing, the Company shall have the right to exercise all voting, consensual
and other powers of ownership pertaining to that portion Collateral consisting
of shares of stock for all purposes not inconsistent with the terms of this
Agreement, the Collateral Agency Agreement, the Credit Agreement, the Note
Purchase Agreement or the LC Facility PROVIDED that the Company agrees that it
will not vote the Collateral in any manner that is inconsistent with the terms
of this Agreement, the Collateral Agency Agreement, the Credit Agreement, the
Note Purchase Agreement or the LC Facility; and the Collateral Agent shall
execute and deliver to the Company or cause to be executed and delivered to the
Company all such proxies, powers of attorney, dividend and other orders, and all
such instruments, without recourse, as the Company may reasonably request for
the purpose of enabling the Company to exercise the rights and powers that it is
entitled to exercise pursuant to this Section 5.04(2).
(3) Unless and until an Event of Default has occurred and is
continuing, the Company shall be entitled to receive and retain any dividends on
the Collateral paid in cash out of earned surplus.
(4) If any Event of Default shall have occurred, then so long as such
Event of Default shall continue, and whether or not the Collateral Agent acting
in accordance with the Collateral Agency Agreement or any Secured Party
exercises any available right to declare
-9-
any Secured Obligation due and payable or seeks or pursues any other relief or
remedy available to it under applicable law or under this Agreement, the Credit
Agreement, the Note Purchase Agreement, the Notes, the LC Facility or any other
agreement relating to such Secured Obligation, all dividends and other
distributions and payments on the Collateral shall be paid directly to the
Collateral Agent and retained by it in the Collateral Account as part of the
Collateral, subject to the terms of this Agreement, and, if the Collateral Agent
shall so request in writing, the Company agrees to execute and deliver to the
Collateral Agent appropriate additional dividend, distribution and other orders
and documents to that end, PROVIDED that if the Collateral Agent shall have been
advised by the Secured Parties that such Event of Default has been cured, any
such dividend, distribution or payment theretofore paid to the Collateral Agent
shall, upon request of the Company (except to the extent theretofore applied to
the Secured Obligations), be returned by the Collateral Agent to the Company.
5.05 SPECIAL PROVISIONS RELATING TO THE ASSIGNED AGREEMENT.
(a) Anything herein to the contrary notwithstanding, the Company
shall remain liable to perform all of its duties and obligations under the
Assigned Agreement to the same extent as if this Agreement had not been
executed. The exercise by the Collateral Agent or any other Secured Party of
any of the rights and remedies hereunder shall not release the Company from any
of its duties or obligations under the Assigned Agreement or in respect of the
Collateral. Neither the Collateral Agent nor any of the other Secured Parties
shall have any obligation or liability under the Assigned Agreement or otherwise
in respect of the Collateral by reason of this Agreement or be obligated to
perform any of the obligations or duties of the Company under the Assigned
Agreement or otherwise in respect of the Collateral or to take any action to
collect or enforce any claim for payment or any other right assigned hereunder.
(b) If the Company fails to perform any agreement contained herein or
in the Assigned Agreement, the Collateral Agent may itself, but shall have no
obligation to, perform, or cause the performance of, such agreement, and the
reasonable expenses of the Collateral Agent incurred in connection therewith
shall be payable by the Company and shall be Secured Obligations to the
Collateral Agent secured under Section 3 hereof.
5.06 EVENTS OF DEFAULT, ETC. During the period during which an Event
of Default shall have occurred and be continuing:
(a) the Collateral Agent shall have all of the rights and remedies
with respect to the Collateral of a secured party under the Uniform
Commercial Code (whether or not said Code is in effect in the jurisdiction
where the rights and remedies are
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asserted) and such additional rights and remedies to which a secured party
is entitled under the laws in effect in any jurisdiction where any rights
and remedies hereunder may be asserted, including, without limitation, the
right, to the maximum extent permitted by law, to exercise all voting,
consensual and other powers of ownership pertaining to the Collateral as if
the Collateral Agent were the sole and absolute owner thereof (and the
Company agrees to take all such action as may be appropriate to give effect
to such right);
(b) the Collateral Agent in its discretion may, in its name or in the
name of the Company or otherwise, demand, sue for, collect or receive any
money or property at any time payable or receivable on account of or in
exchange for any of the Collateral, but shall be under no obligation to do
so; and
(c) the Collateral Agent may, upon ten business days' prior written
notice to the Company of the time and place, with respect to the Collateral
or any part thereof that shall then be or shall thereafter come into the
possession, custody or control of the Collateral Agent, the Bank, the Note
Holders, the LC Provider or any of their respective agents, sell, lease,
assign or otherwise dispose of all or any part of such Collateral, at such
place or places as the Collateral Agent deems best, and for cash or for
credit or for future delivery (without thereby assuming any credit risk),
at public or private sale, without demand of performance or notice of
intention to effect any such disposition or of the time or place thereof
(except such notice as is required above or by applicable statute and
cannot be waived), and the Collateral Agent, the Bank, any Note Holder or
the LC Provider or anyone else may be the purchaser, lessee, assignee or
recipient of any or all of the Collateral so disposed of at any public sale
(or, to the extent permitted by law, at any private sale) and thereafter
hold the same absolutely, free from any claim or right of whatsoever kind,
including any right or equity of redemption (statutory or otherwise), of
the Company, any such demand, notice and right or equity being hereby
expressly waived and released. The Collateral Agent may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
the sale, and such sale may be made at any time or place to which the sale
may be so adjourned.
The proceeds of each collection, sale or other disposition under this
Section 5.06 shall be applied in accordance with Section 4 of the Collateral
Agency Agreement.
The Company recognizes that, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended, and applicable state
securities laws, the Collateral
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Agent may be compelled, with respect to any sale of all or any part of the
Collateral, to limit purchasers to those who will agree, among other things, to
acquire the Collateral for their own account, for investment and not with a view
to the distribution or resale thereof. The Company acknowledges that any such
private sales may be at prices and on terms less favorable to the Collateral
Agent than those obtainable through a public sale without such restrictions,
and, notwithstanding such circumstances, agrees that any such private sale shall
be deemed to have been made in a commercially reasonable manner and that the
Collateral Agent shall have no obligation to engage in public sales and no
obligation to delay the sale of any Collateral for the period of time necessary
to permit the respective Issuer or issuer thereof to register it for public
sale.
5.07 DEFICIENCY. If the proceeds of sale, collection or other
realization of or upon the Collateral pursuant to Section 5.06 hereof are
insufficient to cover the costs and expenses of such realization and the payment
in full of the Secured Obligations, the Company shall remain liable for any
deficiency.
5.08 REMOVALS, ETC. Without at least 30 days' prior written notice
to the Collateral Agent, the Company shall not (i) maintain any of its books and
records with respect to the Collateral at any office or maintain its principal
place of business at any place other than at the address indicated beneath the
signature of the Company on the signature pages hereto or (ii) change its name,
or the name under which it does business, from the name shown on the signature
pages hereto.
5.09 PRIVATE SALE. The Collateral Agent, the Note Holders, the Bank
and the LC Provider shall incur no liability as a result of the sale of the
Collateral, or any part thereof, at any private sale pursuant to Section 5.06
hereof conducted in a commercially reasonable manner. The Company hereby waives
any claims against the Collateral Agent, the Bank, any Note Holder or the LC
Provider arising by reason of the fact that the price at which the Collateral
may have been sold at such a private sale was less than the price that might
have been obtained at a public sale or was less than the aggregate amount of the
Secured Obligations, even if the Collateral Agent accepts the first offer
received and does not offer the Collateral to more than one offeree.
5.10 ATTORNEY-IN-FACT. Without limiting any rights or powers granted
by this Agreement to the Collateral Agent while no Event of Default has occurred
and is continuing, upon the occurrence and during the continuance of any Event
of Default the Collateral Agent is hereby appointed the attorney-in-fact of the
Company for the purpose of carrying out the provisions of this Section 5 and
taking any action and executing any instruments that the Collateral Agent may
deem necessary or advisable to accomplish the purposes hereof, which
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appointment as attorney-in-fact is irrevocable and coupled with an interest.
Without limiting the generality of the foregoing, so long as the Collateral
Agent shall be entitled under this Section 5 to make collections in respect of
the Collateral, the Collateral Agent shall have the right and power to receive,
endorse and collect all checks made payable to the order of the Company
representing any dividend, payment or other distribution in respect of the
Collateral or any part thereof and to give full discharge for the same.
5.11 PERFECTION. Prior to or concurrently with the execution and
delivery of this Agreement, the Company shall deliver to the Collateral Agent
all certificates identified in Annex 1 hereto, accompanied by undated stock
powers duly executed in blank.
5.12 TERMINATION. When all Secured Obligations shall have been paid
in full and the obligations of the Bank under the Credit Agreement and of the LC
Provider under the LC Facility shall have expired or been terminated, this
Agreement shall terminate, and the Collateral Agent, upon being so directed by
the Secured Parties, shall forthwith cause to be assigned, transferred and
delivered, against receipt but without any recourse, warranty or representation
whatsoever, any remaining Collateral and money received in respect thereof, to
or on the order of the Company.
5.13 FURTHER ASSURANCES. The Company agrees that, from time to time
upon the written request of the Collateral Agent, the Company will execute and
deliver such further documents and do such other acts and things as the
Collateral Agent may reasonably request in order fully to effect the purposes of
this Agreement.
Section 6. MISCELLANEOUS.
6.01 NO WAIVER. No failure on the part of the Collateral Agent, the
Bank, any Note Holder or the LC Provider to exercise, and no course of dealing
with respect to, and no delay in exercising, any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise by the Collateral Agent, the Bank, any Note Holder or the LC Provider
of any right, power or remedy hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. The remedies
herein are cumulative and are not exclusive of any remedies provided by law.
6.02 NOTICES. All notices, requests, consents and demands hereunder
shall be in writing and telecopied or delivered to the intended recipient at its
specified address pursuant to Section 8.07 of the Credit Agreement (in the case
of the Bank), Section 18 of the Note Purchase Agreement (in the case of Note
Holder), Section 8.5 of the LC Facility (in the case of the LC Provider),
Section 8.1 of the Collateral Agency Agreement (in the case of the
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Collateral Agent) and the signature pages hereof (in the case of the Company).
6.03 EXPENSES. The Company agrees to reimburse each of the Secured
Parties for all reasonable costs and expenses of the Secured Parties (including,
without limitation, the reasonable fees and expenses of legal counsel) in
connection with (i) any Default or Event of Default and any enforcement or
collection proceeding resulting therefrom, including, without limitation, all
manner of participation in or other involvement with (w) performance by the
Collateral Agent of any obligations of the Company in respect of the Collateral
that the Company has failed or refused to perform, (x) bankruptcy, insolvency,
receivership, foreclosure, winding up or liquidation proceedings, or any actual
or attempted sale, or any exchange, enforcement, collection, compromise or
settlement in respect of any of the Collateral, and for the care of the
Collateral and defending or asserting rights and claims of the Collateral Agent
in respect thereof, by litigation or otherwise, (y) judicial or regulatory
proceedings and (z) workout, restructuring or other negotiations or proceedings
(whether or not the workout, restructuring or transaction contemplated thereby
is consummated) and (ii) the enforcement of this Section 6.03, and all such
costs and expenses shall be Secured Obligations entitled to the benefits of the
collateral security provided pursuant to Section 3 hereof.
6.04 AMENDMENTS, ETC. The terms of this Agreement may be waived,
altered or amended only by an instrument in writing duly executed by the Company
and the Collateral Agent (acting on the authorization of the Secured Parties in
accordance with the Collateral Agency Agreement). Any such amendment or waiver
shall be binding upon the Collateral Agent and the Bank, each Note Holder, the
LC Provider, each holder of any of the Secured Obligations and the Company.
6.05 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the respective successors and assigns of the
Company, the Collateral Agent, the Bank, the Note Holders, the LC Provider and
each holder of any of the Secured Obligations (PROVIDED, however, that the
Company shall not assign or transfer its rights hereunder without the prior
written consent of the Collateral Agent).
6.06 CAPTIONS. The captions and section headings appearing herein
are included solely for convenience of reference and are not intended to affect
the interpretation of any provision of this Agreement.
6.07 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and either of the parties hereto may execute this Agreement by
signing any such counterpart.
-14-
6.08 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the law of the State of Connecticut.
6.09 SEVERABILITY. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Collateral Agent,
the Bank, the Note Holders and the LC Provider in order to carry out the
intentions of the parties hereto as nearly as may be possible and (ii) the
invalidity or unenforceability of any provision hereof in any jurisdiction shall
not affect the validity or enforceability of such provision in any other
jurisdiction.
-15-
IN WITNESS WHEREOF, the parties hereto have caused this Pledge and
Assignment Agreement to be duly executed and delivered as of the day and year
first above written.
THE ENERGY NETWORK, INC.
By _________________________
Title:
Address:
000 Xxxxxxxx Xxxx.
Hartford, Connecticut 06144
Attention:
Telecopy No.:
STATE STREET BANK AND TRUST
COMPANY
as Collateral Agent
By _________________________
Title:
ANNEX 1
PLEDGED STOCK
[See Section 2(b) and (c)]
Certificate Registered
Issuer Nos. Owner Number of Shares
------ ----------- ---------- ----------------
[Issuer #1] _______ ________ _____ shares of
[common/preferred]
stock, [no] par
value [$________]
[Issuer #2] _______ ________ _____ shares of
[common/preferred]
stock, [no] par
value [$________]
[Issuer #3] _______ ________ _____ shares of
[common/preferred]
stock, [no] par
value [$________]
[To be prepared by the Company]
10/1/97
EXHIBIT E
BII/88700_3
[FORM OF SUBSIDIARY GUARANTEE]
================================================================================
[NAME OF SUBSIDIARY GUARANTOR]
_______________
GUARANTEE
Dated ________________
_______________
================================================================================
GUARANTEE
GUARANTEE dated as of [_____________] by [NAME OF SUBSIDIARY
GUARANTOR] (the "SUBSIDIARY GUARANTOR"), a corporation organized under the laws
of [___________], in favor of each person who is from time to time a holder
(each, a "HOLDER" and, collectively, the "HOLDERS") of one or more of the 6.99%
Senior Secured Notes due 2009 issued in an original aggregate principal amount
of $45,000,000 (together with all notes delivered in substitution or exchange
for any of said notes pursuant to the Note Agreement referred to below, the
"NOTES") issued by The Energy Network, Inc., a Connecticut Corporation (the
"COMPANY"), pursuant to the several Note Purchase Agreements dated as of October
1, 1997 (collectively, as amended, modified or supplemented from time to time,
the "NOTE AGREEMENT") among the Company and the Holders whose names appear in
Schedule A thereto. All capitalized terms used herein and not otherwise defined
herein shall have the meaning ascribed thereto in the Note Agreement.
Section 1. GUARANTEE, ETC.
Section 1.1. GUARANTEE. For valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Subsidiary Guarantor hereby
unconditionally, absolutely and irrevocably guarantees the full and punctual
payment to the Holders, as and when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise, of all of the
principal of and Make-Whole Amount (if any) and interest on the Notes
(including, without limitation, interest on any overdue principal, Make-Whole
Amount and, to the extent permitted by applicable law, on any overdue interest)
and all other amounts from time to time owing by the Company under the Note
Agreement and under the Notes (including, without limitation, costs, expenses
and taxes) (collectively, the "GUARANTEED OBLIGATIONS"), in the same currency as
the currency of the Guaranteed Obligations and strictly in accordance with the
terms of the Notes and the Note Agreement.
Section 1.2. NATURE OF GUARANTEE. The guarantee provided for under
this Section 1 shall in all respects be a continuing, absolute, unconditional
and irrevocable guarantee of payment when due and not of collection, and shall
remain in full force and effect until all applicable Guaranteed Obligations have
expired and been fully and indefeasibly paid and all obligations of the
Subsidiary Guarantor hereunder have been fully and indefeasibly paid. The
Subsidiary Guarantor guarantees that the Guaranteed Obligations will be paid
strictly in accordance with the terms thereof, regardless of any law, regulation
or order now or hereafter in effect in any jurisdiction affecting any of such
terms or the rights of any Holder with respect thereto. The Subsidiary
Guarantor renounces all benefits of discussion and division. The liability of
the Subsidiary Guarantor hereunder shall be absolute, unconditional and
irrevocable irrespective of, and without being lessened or limited by:
(a) the occurrence of any Event of Default under, or any lack of validity,
legality or enforceability of any provision of the Note Agreement, the
Notes or any other agreement;
-2-
(b) the failure of any Holder,
(i) to assert any claim or demand or to enforce any right or remedy
against the Company or any other Person (including any other
guarantor of the Guaranteed Obligations) under the provisions of
this Guarantee, or otherwise, or
(ii) to exercise any right or remedy against any other guarantor of,
or collateral securing, any of the Guaranteed Obligations;
(c) any change in the time, manner or place of payment of, or in any term
of, all or any of the Guaranteed Obligations, or any other extension,
compromise, indulgence or renewal of any Guaranteed Obligation;
(d) any reduction, limitation, variation, impairment, discontinuance or
termination of the Guaranteed Obligations for any reason (other than
by reason of any payment which is not required to be rescinded),
including any claim of waiver, release, discharge, surrender,
alteration or compromise, and shall not be subject to (and the
Subsidiary Guarantor hereby waives any right to or claim of) any
defense or setoff, counterclaim, recoupment or termination whatsoever
by reason of the invalidity, illegality, nongenuineness, irregularity,
compromise, unenforceability of, or any other event or occurrence
affecting, the Guaranteed Obligations or otherwise (other than the
reason of any payment which is not required to be rescinded);
(e) any amendment to, rescission, waiver or other modification of, or any
consent to any departure from, any of the terms of the Guaranteed
Obligations or any guarantees or security;
(f) any addition, exchange, release, discharge, realization or
non-perfection of any collateral security in respect of the Guaranteed
Obligations;
(g) any amendment to, rescission, waiver or other modification of, or
release or addition of, or consent to any departure from, any other
guarantee held by the Holders as security for any of the Guaranteed
Obligations;
(h) the loss of or in respect of or the unenforceability of any other
guarantee or other security which the Holders may now or hereafter
hold in respect of the Guaranteed Obligations, whether occasioned by
the fault of the Holders or otherwise;
(i) any change in the name of the Company or in the constating documents,
-3-
capital structure, capacity or constitution of Company, the bankruptcy
or insolvency of the Company, the sale of any or all of the Company's
business or assets or the Company being consolidated, merged or
amalgamated with any other Person;
(j) any failure on the part of the Company or any other Person to perform
or comply with any term of the Note Agreement, the Notes any of the
Guaranteed Obligations or any other agreement;
(k) any suit or other action brought by any beneficiaries or creditors of,
or by, the Company or any other Person for any reason whatsoever,
including without limitation any suit or action in any way attacking
or involving any issue, matter or thing in respect of the Note
Agreement, the Notes, any of the Guaranteed Obligations or any other
agreement;
(l) any lack or limitation of status or of power, incapacity or disability
of the Company or any trustee or agent thereof; or
(m) any other circumstance (other than final and indefeasible payment in
full) which might otherwise constitute a defense available to, or a
legal or equitable discharge of, the Company, any surety or any other
guarantor.
Any Guaranteed Obligation which may not be recoverable from the Subsidiary
Guarantor as guarantor shall be recoverable from the Subsidiary Guarantor as
principal debtor in respect thereof.
Section 1.3. HOLDERS NOT BOUND TO EXHAUST RECOURSE. No Holder shall
be bound to exhaust its recourse against the Company or others or any security
or other guarantees it may at any time hold before being entitled to payment
hereunder from the Subsidiary Guarantor.
Section 1.4. DEMAND. The liability of the Subsidiary Guarantor to
make payment under this Guarantee to the Holders shall arise forthwith after
demand for payment has been made in writing to the Subsidiary Guarantor by any
Holder (to the address for the Subsidiary Guarantor set forth on the signature
pages hereof).
Section 1.5. GUARANTEE IN ADDITION TO OTHER SECURITY. The guarantee
provided for in this Guarantee shall be in addition to and not in substitution
for any other guarantee or other security that the Holders may now or hereafter
hold in respect of the Guaranteed Obligations, and the Holders or any of them
shall be under no obligation to marshal in favor of the Subsidiary Guarantor any
other guarantee or other security or any moneys or other assets that any of them
may be entitled to receive or may have a claim
-4-
upon.
Section 1.6. REINSTATEMENT. The guarantee provided for in this
Guarantee and all other terms of this Guarantee shall continue to be effective
or shall be reinstated, as the case may be, if at any time any payment by the
Company or the Subsidiary Guarantor of any of the Guaranteed Obligations is
rescinded or must otherwise be returned by the recipients thereof by reason of
the insolvency, bankruptcy or reorganization of the Company or the Subsidiary
Guarantor or for any other reason, all as though such payment had not been made.
Section 1.7. WAIVER OF NOTICE, ETC. Subject to and except for demand
pursuant to Section 1.4, the Subsidiary Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Guaranteed Obligations and this Guarantee.
Section 1.8. SUBROGATION RIGHTS. Until satisfaction in full of all
of the Guaranteed Obligations, all dividends, compositions, proceeds of security
or payments received by any Holder in respect of the Guaranteed Obligations
shall be regarded for all purposes as payments in gross without any right on the
part of the Subsidiary Guarantor to claim the benefit thereof in reduction of
the liability under this Guarantee. The Subsidiary Guarantor shall not exercise
any rights which it may acquire by way of subrogation under this Guarantee, by
any payment made hereunder or otherwise, until the prior satisfaction in full of
all of the Guaranteed Obligations. Any amount paid to the Subsidiary Guarantor
on account of any such subrogation rights prior to the satisfaction in full of
all Guaranteed Obligations shall be held in trust for the benefit of the Holders
and shall immediately be paid to the Holders, and credited and applied against
the applicable Guaranteed Obligations, whether matured or unmatured, in
accordance with the terms hereof; PROVIDED, however, that upon the full and
indefeasible payment of all of the Guaranteed Obligations, the Subsidiary
Guarantor shall be subrogated to the rights of the Holders against the Company
with respect to all Guaranteed Obligations. In furtherance of the foregoing,
upon notice to the Subsidiary Guarantor from any Holder of the occurrence of an
Event of Default and until such time as the earliest of,
(a) such Event of Default being remedied or cured as provided in the Note
Agreement;
(b) such Event of Default being waived in accordance with the terms of the
Note Agreement; and
(c) all Guaranteed Obligations being indefeasibly paid in full;
the Subsidiary Guarantor shall postpone any and all claims it may have against
the Company
-5-
to the claims of the Holders against the Company and shall refrain from taking
any action or commencing any proceeding against the Company (or its successors
or assigns, whether in connection with a bankruptcy proceeding or otherwise) to
recover any amounts in respect of payments made hereunder to the Holders or any
of them. In the event any payments are made by the Company to the Subsidiary
Guarantor in contravention of the preceding sentence, the Subsidiary Guarantor
shall hold such payments in trust for the Holders and shall forthwith pay such
payments to the Holders.
Section 1.9. CREDIT INFORMATION. The Holders have no duty or
responsibility to provide the Subsidiary Guarantor with any credit or other
information concerning the Company's affairs, financial condition or business
which may come into the possession of any Holder.
Section 2. REPRESENTATIONS. The Subsidiary Guarantor represents and
warrants as follows:
Section 2.1. ORGANIZATION; POWER AND AUTHORITY. The Subsidiary
Guarantor is a corporation duly organized, validly existing and, if applicable,
in good standing under the laws of its jurisdiction of incorporation, and is
duly qualified as a foreign corporation and, if applicable, 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 would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. The Subsidiary Guarantor has the corporate
power and authority to execute and deliver this Guarantee and to perform the
provisions hereof.
Section 2.2. AUTHORIZATION, ETC. This Guarantee has been duly
authorized by all necessary corporate action on the part of the Subsidiary
Guarantor, and this Guarantee constitutes a legal, valid and binding obligation
of the Subsidiary Guarantor enforceable against the Subsidiary Guarantor in
accordance with its terms, except as the enforceability thereof may be limited
by (I) applicable bankruptcy, insolvency, fraudulent conveyance, 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).
Section 2.3. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS OF THE
SUBSIDIARY GUARANTOR, ETC. The execution, delivery and performance by the
Subsidiary Guarantor of this Guarantee will not (I) contravene, result in any
breach of, constitute a default under, or result in the creation of any Lien in
respect of any property of the Subsidiary Guarantor under, 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 Subsidiary
Guarantor is bound or by which the Subsidiary Guarantor or any of its properties
may be bound or affected, (II) conflict with or result in a breach of any of the
terms, conditions or
-6-
provisions of any order, judgment, decree, or ruling of any court, arbitrator or
Governmental Authority applicable to the Subsidiary Guarantor or (III) violate
any provision of any statute or other rule or regulation of any Governmental
Authority applicable to the Subsidiary Guarantor.
Section 2.4. 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 Subsidiary Guarantor of this Guarantee.
Section 2.5. RANKING. All obligations and liabilities of the
Subsidiary Guarantor under this Guarantee constitute direct, unsecured,
unconditional and general obligations of the Subsidiary Guarantor and rank in
right of payment either PARI PASSU or senior to all other Indebtedness of the
Subsidiary Guarantor (it being understood that Indebtedness that is secured may
be effectively senior to the extent of such security).
Section 3. MISCELLANEOUS.
Section 3.1. SUCCESSORS AND ASSIGNS. All agreements contained in
this Guarantee bind the Subsidiary Guarantor and inure to the benefit of the
Holders and in each case to their respective successors and assigns (including,
without limitation, any subsequent Holder of a Note) whether so expressed or
not.
Section 3.2. SEVERABILITY. Any provision of this Guarantee 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.
Section 3.3. CONSTRUCTION. Each agreement contained herein shall be
construed (absent express provision to the contrary) as being independent of
each other agreement contained herein, so that compliance with any one agreement
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other agreement. 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.
-7-
Section 3.4. GOVERNING LAW. This Guarantee 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.
Section 3.5. EXPENSES. The Subsidiary Guarantor shall indemnify each
Holder on demand in respect of all costs and expenses (including reasonable
legal fees) incurred by it in connection with the enforcement of this Guarantee
or the preservation of the rights of such Holder as a result of any breach by
the Subsidiary Guarantor of its obligations hereunder.
Section 3.6. NOTICES. All notices and communications provided for
hereunder shall be in writing and sent as provided in Section 18 of the Note
Agreement (i) if to any Holder, to the address specified for such Holder in the
Note Agreement and (ii) if to the Subsidiary Guarantor, to the address for the
Subsidiary Guarantor set forth on the signature pages hereof.
Section 3.7. AMENDMENTS. This Guarantee may be amended, and
observance of any term hereof waived (either retroactively or prospectively),
with (and only with) the written consent of the Subsidiary Guarantor and the
Required Holders.
Section 3.8. RELEASE. If at any time the Subsidiary Guarantor shall
cease to be a CTG Subsidiary (as a result of a transaction contemplated by
Section 9.5 of the Note Purchase Agreement or otherwise) and shall cease to
guarantee any other Indebtedness of the Company, CTG or any other CTG
Subsidiary, upon written notice thereof to the Holders, the Subsidiary Guarantor
shall be released from all of its obligations hereunder arising after such time.
-8-
EXECUTED by the Subsidiary Guarantor as of the day and year first
above written.
[SUBSIDIARY GUARANTOR]
By______________________
Title:
Address of Subsidiary Guarantor:
