LOAN AGREEMENT
between
INDUSTRIAL DEVELOPMENT AUTHORITY OF XXXXXXXX COUNTY, VIRGINIA
and
VIRGINIA GAS COMPANY
Dated as of November 1, 1994
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NOTE: THIS LOAN AGREEMENT AND AN EXECUTED NOTE IN THE FORM DESCRIBED
HEREIN HAVE BEEN ASSIGNED TO, AND ARE SUBJECT TO A SECURITY
INTEREST IN FAVOR OF, CRESTAR BANK, AS TRUSTEE UNDER AN
INDENTURE OF TRUST DATED AS OF THE DATE HEREOF, WITH THE
INDUSTRIAL DEVELOPMENT AUTHORITY OF XXXXXXXX COUNTY, VIRGINIA,
AS AMENDED OR SUPPLEMENTED FROM TIME TO TIME. INFORMATION
CONCERNING SUCH SECURITY INTEREST MAY BE OBTAINED FROM THE
TRUSTEE AT ITS PRINCIPAL CORPORATE TRUST OFFICE IN RICHMOND,
VIRGINIA.
TABLE OF CONTENTS
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ARTICLE I
Definitions and Rules of Construction
Section 1.1. Definitions............................................ 2
Section 1.2. Rules of Construction.................................. 5
ARTICLE II
Representations
Section 2.1. Representations by Authority........................... 5
Section 2.2. Representations by Corporation......................... 7
ARTICLE III
Construction of Project; Loan of Bond Proceeds
Section 3.1. Agreement To Construct Project......................... 8
Section 3.2. Financing of Project................................... 9
Section 3.3. Repayment to Authority; Repayment to
Corporation.......................................... 9
Section 3.4. Corporation To Provide Funds To Complete
Project.............................................. 10
Section 3.5. Limitation of Authority's Liability.................... 10
Section 3.6. Disclaimer of Warranties............................... 11
Section 3.7. Compliance with Indenture.............................. 11
ARTICLE IV
Payments on the Note
Section 4.1. Amounts Payable........................................ 11
Section 4.2. Payments Assigned...................................... 12
Section 4.3. Default in Payments.................................... 12
Section 4.4. Corporation's Obligations Unconditional................ 13
Section 4.5. Advances by Authority or Underwriter................... 13
Section 4.6. Rebate Requirement..................................... 13
ARTICLE V
Special Covenants
Section 5.1. Insurance Requirements................................. 14
Section 5.2. Examination of Books and Records....................... 15
Section 5.3. Financial Statements and Other Information............. 15
Section 5.4. Damage, Destruction, Condemnation and Loss
of Title............................................. 16
Section 5.5. Indemnification........................................ 18
(i)
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Section 5.6. Maintenance and Modification of Project................ 19
Section 5.7. Tax Exemption.......................................... 20
Section 5.8. Investment and Use of Trust Funds...................... 23
Section 5.9. Notice of Other Defaults; Compliance with
Other Documents...................................... 23
Section 5.10. Corporate Status....................................... 24
Section 5.11. Priority of Indebtedness; Additional
Indebtedness......................................... 24
Section 5.12. Limitations on Liens................................... 26
Section 5.13. Limitations on Payment of Dividends.................... 26
Section 5.14. Ownership of Stocks and Project........................ 26
Section 5.15. Prepayment of Xxxxxxx Xxxxx............................ 26
Section 5.16. Deposit to Supplemental Reserve Account................ 27
ARTICLE VI
Events of Default and Remedies
Section 6.1. Event of Default Defined............................... 27
Section 6.2. Remedies on Default.................................... 28
Section 6.3. Application of Amounts Realized in
Enforcement of Remedies.............................. 29
Section 6.4. No Remedy Exclusive.................................... 29
Section 6.5. Attorneys' Fees and other Expenses..................... 29
Section 6.6. No Additional Waiver Implied by One Waiver............. 29
ARTICLE VII
Prepayment of the Note
Section 7.1. Option To Prepay the Note and Terminate
Loan Agreement in Certain Events..................... 29
Section 7.2. Option To Prepay the Note in Whole..................... 30
Section 7.3. Option To Prepay the Note in Part...................... 31
Section 7.4. Obligation To Prepay the Note.......................... 31
Section 7.5. Amount Required for Prepayment......................... 31
ARTICLE VIII
Miscellaneous
Section 8.1. Term of Loan Agreement................................. 31
Section 8.2. Notices................................................ 32
Section 8.3. Amendments to Loan Agreement and Note.................. 33
Section 8.4. Successors and Assigns................................. 33
Section 8.5. Severability........................................... 33
Section 8.6. Applicable Law; Entire Understanding................... 33
Section 8.7. Limitation of Liability of Directors of
Authority............................................ 33
Section 8.8. Counterparts........................................... 33
(ii)
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Testimonium ....................................................... 34
Signatures ....................................................... 34
Receipt ....................................................... 35
Exhibit A - Specimen Note
Exhibit B - Specimen Company Promissory Note
Exhibit C - Arbitrage Rebate Instructions
(iii)
THIS LOAN AGREEMENT, dated as of November 1, 1994, between the
INDUSTRIAL DEVELOPMENT AUTHORITY OF XXXXXXXX COUNTY, VIRGINIA, a political
subdivision of the Commonwealth of Virginia (the "Authority"), and VIRGINIA
GAS COMPANY, a Delaware corporation (the "Corporation"),
W I T N E S S E T H:
WHEREAS, the Authority is a political subdivision of the Commonwealth of
Virginia created pursuant to the Industrial Development and Revenue Bond Act,
Chapter 33, Title 15.1 of the Code of Virginia of 1950, as amended (the
"Act"), and is empowered by the Act, among other things, to issue its bonds
and to loan the proceeds from the sale and issuance of such bonds to be
applied to pay the costs of acquiring, improving, constructing and equipping
industrial and commercial facilities;
WHEREAS, at the request of the Corporation, the Distribution Company,
the Storage Company and the Exploration Company, as hereinafter defined, the
Authority has determined to issue its Natural Gas Facilities Revenue Bonds
(Virginia Gas Company Project) Series 1994, in the aggregate principal amount
of $4,250,000 (the "Bonds") for the purpose of providing funds, together with
other available funds to (i) acquire, improve, construct and equip a natural
gas distribution facility and supporting assets (the "Project") to serve
natural gas customers in and near the Town of Grundy in Xxxxxxxx County,
Virginia, and (ii) pay certain costs of issuance of the Bonds; all upon the
terms and conditions set forth hereinafter and in the Indenture of Trust
dated as of the date hereof (the "Indenture") between the Authority and
Crestar Bank, as Trustee (the "Trustee"); and
WHEREAS, although the Corporation will be primarily liable to make the
payments due on the Note, as hereinafter described, the Corporation will not
own any portion of the Project. The natural gas distribution facilities
comprising a portion of the Project will be owned and operated by Virginia
Gas Distribution Company, a Virginia corporation (the "Distribution
Company"), the natural gas gathering and storage facilities comprising a
portion of the Project will be owned and operated by Virginia Gas Storage
Company, a Virginia corporation (the "Storage Company"), and the natural gas
production facilities comprising a portion of the Project will be owned and
operated by Virginia Gas Exploration Company, a Virginia corporation (the
"Exploration Company");
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter contained, the parties hereto covenant and agree as
follows:
ARTICLE I
Definitions and Rules of Construction
Section 1.1. Definitions. Except as set forth below or unless the
context otherwise requires, all undefined capitalized terms shall have the
meanings assigned them in the Indenture. Words and terms defined in the
preamble hereto shall have the meaning set forth therein. The following
words and terms shall have the following meanings unless the context
otherwise requires:
"Adverse Tax Action" shall mean any action or omission to take action
reasonably within the control of the actor, the result of which is to subject
interest on the Bonds to inclusion in gross income for federal income tax
purposes; provided, that no Adverse Tax Action shall be deemed to have
occurred if the interest on any Bond becomes taxable to the Holder thereof
who is a "substantial user" of the Project or a "related person" within the
meaning of Section 147(a) of the Code.
"Bond Purchase Agreement" shall mean the Bond Purchase Agreement dated
November 7, 1994 among the Authority, the Corporation and the Underwriter,
pursuant to which the Bonds are sold to the Underwriter, including all
amendments or supplements thereto.
"Certificate" shall mean the Certificate of Public Convenience and
Necessity issued to the Distribution Company by the Virginia State
Corporation Commission relating to the operation of the natural gas
distribution facilities comprising a portion of the Project.
"Company" or "Companies," depending on the context in which such
words are used, shall mean each of or all of the Distribution Company,
the Storage Company and the Exploration Company.
"Company Promissory Note" shall mean each Promissory Note issued by the
Distribution Company, the Storage Company or the Exploration Company to the
Corporation evidencing its obligation to repay the Corporation for property
and assets acquired or refinanced for that entity from the proceeds of the
Bonds.
"Event of Default" shall mean with respect to this Loan
Agreement each of those events set forth in Section 6.1 of this Loan
Agreement.
"Loan Agreement" shall mean this Loan Agreement, including all
amendments and supplements hereto.
"Net Proceeds" shall mean the gross proceeds from any insurance recovery
or condemnation award remaining after payment
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of attorneys' fees, fees and expenses of the Trustee and all other expenses
incurred in the collection of such gross proceeds.
"Note" shall mean the Corporation's Promissory Note in the original
principal amount of $4,250,000, dated the date of the Bonds, in the form of
Exhibit A attached hereto, issued hereunder and delivered to the Authority to
evidence certain of the obligations of the Corporation hereunder, and all
amendments, supplements or substitutions thereto or therefor.
"Payment of the Bonds" shall mean payment in full of the principal of,
premium, if any, and interest on all Bonds and all fees necessary to provide
for the discharge of the Indenture or provision for such payment to discharge
the Indenture as provided therein.
"Parity Debt" shall have the meaning set forth in Section 5.11.
"Permitted Liens" shall mean as of any particular time, (a) liens for ad
valorem taxes and special assessments not then delinquent; (b) utility,
access and other easements and rights-of-way, mineral rights, restrictions
and exceptions, which, in the opinion of an architect, engineer or surveyor
will not interfere with or impair the operation of the Project or other
assets owned by the Corporation, the Distribution Company, the Storage
Company or the Exploration Company; (c) such minor defects, irregularities,
encumbrances, easements, right-of-way and licenses as normally exist with
respect to the subject property and as do not interfere with or impair the
operation of the Project or other assets owned by the Corporation, the
Distribution Company, the Storage Company or the Exploration Company for its
intended use; (d) liens arising by reason of good faith deposits in
connection with leases of real estate, bids or contracts (other than
contracts for the payment of money), deposits to secure public or statutory
obligations, liens to secure, or in lieu of, surety, stay or appeal bonds,
and deposits as security for the payment of taxes or assessments or other
similar charges; (e) any judgment lien against the Corporation, the
Distribution Company, the Storage Company or the Exploration Company so long
as such judgment is being contested in good faith and execution thereon is
stayed, or provision for payment of the judgment has been made in accordance
with applicable law or by the deposit with the applicable court, the Trustee
or with a commercial bank or trust company of cash, security or other
property acceptable to the Trustee; (f) any liens of mechanics, materialmen,
laborers, suppliers or vendors for work or services performed or materials
furnished in connection with any property that are not due and payable or
that are not delinquent, the amount or validity of which are being contested
in good faith and execution thereon is stayed or that have been due for less
than ninety (90) days; (g) any lien existing on the date of
authentication and delivery of the Bonds; provided, that no such lien may be
increased, extended, renewed or modified to apply to any property not subject
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to such lien on such date or to secure indebtedness not outstanding on such
date, unless such lien as increased, extended, renewed or modified otherwise
qualifies as a Permitted Lien hereunder; (h) purchase money liens on
property securing indebtedness that was assumed in connection with the
acquisition of such property; provided, that no such lien may be increased,
extended, renewed or modified with respect to such indebtedness unless such
lien as increased, extended, renewed or modified otherwise qualifies as a
Permitted Lien hereunder; and (i) any lien on the property of the Corporation
granted in favor of or securing indebtedness to any of its wholly-owned
subsidiaries, and vice versa.
"Prime Rate" shall mean the rate per year announced from time to time by
Crestar Bank as its prime rate, with any change in the Prime Rate being
effective as of the date such announced prime rate is changed. The Prime
Rate is not necessarily the best or lowest rate of interest offered by such
bank.
"Project" shall mean the acquisition, improvement, construction and
equipping of a natural gas distribution facility to serve the general public
in and near the Town of Grundy in Xxxxxxxx County, including certain natural
gas gathering and production facilities and storage facilities that directly
support the distribution facilities. The gathering and production facilities
are located primarily in Xxxxxxxx County and Xxxxxxxxx County and the storage
facilities are located primarily in Xxxxxxxx County, Xxxxx County and
Washington County.
"Rebate Amount" shall have the meaning set forth in Exhibit C, as it may
be amended from time to time.
"Rebate Amount Certificate" shall have the meaning set forth in Exhibit
C, as it may be amended from time to time.
"Xxxxxxx Company Loan Agreements" shall mean the two Company Loan
Agreements dated as of January 1, 1994, one between the Corporation and the
Distribution Company and the other between the Corporation and the Storage
Company, as amended or supplemented.
"Xxxxxxx Company Promissory Notes" shall have the meaning set forth in
Section 3.3.
"Xxxxxxx XXX" shall have the meaning set forth in Section 3.3.
"Xxxxxxx Indenture" shall mean the Indenture of Trust dated as of
January 1, 1994 between the Xxxxxxx XXX and the Xxxxxxx Trustee pursuant to
which the Xxxxxxx Xxxxx were issued, as amended or supplemented.
"Xxxxxxx Loan Agreement" shall have the meaning set forth in Section
3.3.
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"Xxxxxxx Note" shall have the meaning set forth in Section 3.3.
"Subsidiaries" shall mean any corporations for which fifty percent (50%)
of more of the capital stock is owned by the Corporation.
Section 1.2. Rules of Construction. The following rules shall apply to
the construction of this Loan Agreement unless the context otherwise requires:
(a) Singular words shall connote the plural number as well as the
singular and vice versa. Any references herein to the masculine gender
include the feminine and neuter genders, and vice versa.
(b) Words importing the redemption or calling for redemption of Bonds
shall not be deemed to refer to or connote the payment of Bonds at their
stated maturity.
(c) All references herein to particular articles or sections are
references to articles or sections of this Loan Agreement unless otherwise
indicated. The words "hereof," "herein," "hereto," "hereby," and "hereunder"
refer to the entire Loan Agreement.
(d) The headings and table of contents herein are solely for convenience
of reference and shall not constitute a part of this Loan Agreement nor shall
they affect its meaning, construction or effect.
ARTICLE II
Representations
Section 2.1. Representations by Authority. The Authority makes the
following representations:
(a) The Authority is an industrial development authority duly
established under the Act, and is a political subdivision of the Commonwealth
of Virginia having those corporate powers enumerated under the Act, has the
power to enter into this Loan Agreement, the Bond Purchase Agreement and the
Indenture and the transactions contemplated hereby and thereby and to perform
its obligations hereunder and thereunder. The Project constitutes and will
constitute an "authority facility" within the meaning of the Act.
(b) By proper corporate action the Authority has duly authorized the
execution and delivery of this Loan Agreement, the Bond Purchase Agreement,
the Indenture and the Bonds, the
5
performance of its obligations hereunder and thereunder and the issuance of
the Bonds and, simultaneously with the execution and delivery of this Loan
Agreement, has duly executed and delivered the Bond Purchase Agreement and
the Indenture and issued and sold the Bonds.
(c) The execution and delivery of, and the performance of the
obligations and agreements of the Authority set forth in, this Loan
Agreement, the Bond Purchase Agreement, the Indenture and the Bonds are
within the power and authority of the Authority and have been duly authorized
by the Authority and will not contravene any provision of any judgment, order
or decree to which the Authority is subject or contravene or constitute a
default under any contract, agreement or other instrument to which the
Authority is a party.
(d) The Authority is not in violation of the Act or, to its knowledge,
any existing law, rule or regulation applicable to it which would affect its
existence or the matters referred to in the preceding subsections (b) and (c).
(e) All actions of the Authority with respect to the issuance of the
Bonds occurred at meetings held after notice given in accordance with the
Authority's procedures and applicable law, which were open to the public and
at which quorums were present and acting throughout, and said actions appear
of public record in the minute books of the Authority.
(f) Notwithstanding anything herein to the contrary, any obligation the
Authority may incur hereunder in connection with the acquisition,
improvement, construction, equipping and financing of the Project shall not
be deemed to constitute a general obligation of the Authority but shall be a
limited obligation of the Authority payable solely from the payments received
under this Loan Agreement and the Note and the security specifically pledged
and assigned therefor, including payments received under the Company Loan
Agreements and the Company Promissory Notes.
(g) To the best of its knowledge, no litigation, inquiry or
investigation of any kind in or by any judicial or administrative court or
agency is pending or threatened against the Authority with respect to (1) the
organization and existence of the Authority, (2) its authority to execute or
deliver this Loan Agreement, the Bond Purchase Agreement, the Indenture or
the Bonds or to perform its obligations hereunder and thereunder or to assign
the Note, (3) the validity or enforceability of any of such instruments or
the transactions contemplated hereby or thereby, (4) the title of any officer
of the Authority who executed such instruments, or (5) any authority or
proceedings related to the execution and delivery of such instruments on
behalf of the Authority. No such authority or proceedings have been
repealed, revoked, rescinded or amended and all are in full force and effect.
6
(h) The Authority has by duly adopted resolution found and determined
that the financing of the Project, including the financing of interest on the
Bonds attributable to construction and equipping of the Project for up to one
year after its completion, and the loan of the proceeds of the Bonds to the
Corporation are in furtherance of the purposes for which the Authority was
organized and will serve the purposes of the Act.
Section 2.2. Representations by Corporation. The Corporation makes the
following representations:
(a) The Corporation is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. The Corporation
has the power to enter into this Loan Agreement, the Bond Purchase Agreement
and the Note and the transactions contemplated hereunder and thereunder and
by proper corporate action has duly authorized the execution and delivery of
this Loan Agreement, the Bond Purchase Agreement and the Note and the
performance of its obligations hereunder and thereunder.
(b) The Corporation is not in default in the payment of the principal of
or interest on any of its indebtedness for borrowed money or in default under
any instrument under and subject to which any indebtedness has been incurred,
and no event has occurred and is continuing under the provisions of any such
instrument that with the lapse of time or the giving of notice, or both,
would constitute an event of default thereunder.
(c) There is no litigation at law or in equity or any proceeding before
any governmental agency involving the Corporation pending or, to its
knowledge, threatened in which any liability of any of the Corporation is not
adequately covered by insurance or for which adequate reserves are not
provided or for which any judgment or order would have a material adverse
effect upon the business or assets of the Corporation or affect its existence
or authority to do business, the acquisition, improvement, construction,
equipping or operation of the Project, the validity of this Loan Agreement,
the Bond Purchase Agreement or the Note or the performance of its obligations
hereunder or thereunder.
(d) The execution and delivery by the Corporation of this Loan
Agreement, the Bond Purchase Agreement and the Note, the performance of its
obligations hereunder and thereunder and the consummation of the transactions
herein and therein contemplated do not and will not conflict with, or
constitute a breach or result in a violation of, the articles of
incorporation or bylaws of the Corporation, the Certificate, any agreement or
other instrument to which it is a party or by which it is bound or any
constitutional or statutory provision or order, rule, regulation, decree or
ordinance of any court, government or governmental authority having
jurisdiction over the Corporation or any of its property.
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(e) The Certificate has been issued to the Distribution Company.
Pursuant to the Certificate, the Distribution Company is obligated to furnish
natural gas to all persons who desire such service and who are within the
service area of the Distribution Company. The Project will be available for
use by a large segment of the general public in such service area.
(f) The Corporation has obtained all consents, approvals, authorizations
and orders of any governmental or regulatory authority that are required to
be obtained by it as a condition precedent to the issuance of the Bonds, the
execution and delivery of this Loan Agreement, the Bond Purchase Agreement
and the Note and the performance of its obligations hereunder and thereunder.
(g) The Distribution Company will own and operate the natural gas
distribution facilities that provide gas service to customers in the service
area granted in the Certificate. The Storage Company will own and operate
the natural gas gathering and storage facilities in Scott, Washington,
Xxxxxxxx and Xxxxxxxxx Counties that will support the distribution
facilities. The Exploration Company will own and operate the natural gas
production facilities in Xxxxxxxx and Xxxxxxxxx Counties that will support
the distribution facilities. Only that portion of the gathering, storage and
production facilities that will support the distribution facilities will be
financed with a portion of the proceeds of the Bonds. The Corporation will
cause the Project to be operated as a facility for the local furnishing of
gas within the meaning of Section 142(a)(8) of the Code and as an "authority
facility" within the meaning of the Act until Payment of the Bonds.
(h) The assets acquired or to be acquired with the proceeds of the
Bonds together with the other assets acquired or to be acquired by the
Corporation, the Distribution Company, the Storage Company or the Exploration
Company for which the Corporation has paid or for which it has available
funds on hand include all of those assets which are required to operate the
Project.
ARTICLE III
Construction of Project; Loan of Bond Proceeds
Section 3.1. Agreement To Construct Project. The Corporation, pursuant
to the agreement set forth herein and not as an agent, agrees to cause the
acquisition, improvement, construction and equipping of the Project and
agrees to:
(1) obtain and maintain or cause to be obtained and maintained all
licenses, permits and consents required for the acquisition, improvement,
construction, equipping and operation of
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the Project, and the Authority shall have no responsibility therefor; and
(2) bring or cause to be brought any action or proceeding against
any person which the Authority might bring with respect to the Project as the
Corporation shall deem proper.
The Corporation may enter into contracts on behalf of the Authority,
provided that (A) no such contract shall obligate the Authority to pay money
other than from the proceeds of the Bonds and (B) if the Authority is a party
to any such contract, the Corporation shall obtain the consent of the
Authority and provide for any bond required by law.
Section 3.2. Financing of Project. The Authority hereby agrees to loan
the proceeds of the Bonds to the Corporation to be passed through the
Corporation to be used ultimately for the payment of the Costs of the Project.
Section 3.3. Repayment to Authority; Repayment to Corporation. The
Corporation shall deliver the Note to the Authority as evidence of the
Corporation's obligation to repay the loan made by the Authority and such
Note shall be assigned to the Trustee as security for the Bonds.
Upon the issuance of the Bonds, the Corporation shall provide the
Trustee with a listing of the actual or anticipated expenditures of the
proceeds of the Bonds, broken down into categories for the assets to be
acquired or refinanced for and then owned by the Distribution Company, the
Storage Company and the Exploration Company. Further, upon the issuance of
the Bonds, the Distribution Company, the Storage Company and the Exploration
Company shall each execute and deliver to the Corporation a Company
Promissory Note in a principal amount equal to its allocable share of the
face amount of the Bonds. Each Company Promissory Note, which shall be
substantially in the form set forth in Exhibit B attached hereto, will
obligate the Distribution Company, the Storage Company or the Exploration
Company to pay to the Corporation an amount equal to an allocable portion of
the principal of, premium, if any, and interest on the Bonds. If, upon the
last withdrawal from the Project Fund, it is found that the assets from the
original proceeds of the Bonds actually allocated to the Distribution
Company, the Storage Company or the Exploration Company differs from the
principal amount of that entity's Company Promissory Note by more than
$50,000, each such entity has agreed to amend its Company Promissory Note to
reflect more accurately the amount of the assets acquired or refinanced on
its behalf.
The Corporation shall assign its interests in the Company Loan
Agreements and the Company Promissory Notes to the Trustee as security for
the payments due under the Note.
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THE AUTHORITY, THE CORPORATION AND, BY THEIR PURCHASE OF BONDS, THE
BONDHOLDERS, EXPRESSLY ACKNOWLEDGE AND AGREE THAT THE OBLIGATION OF THE
CORPORATION TO MAKE PAYMENTS UNDER THE NOTE IS ON A PARITY WITH THE
OBLIGATION OF THE CORPORATION TO MAKE PAYMENTS UNDER ITS $3,000,000
PROMISSORY NOTE DATED JANUARY 6, 1994 (THE "XXXXXXX NOTE") AND ISSUED TO THE
INDUSTRIAL DEVELOPMENT AUTHORITY OF XXXXXXX COUNTY (THE "XXXXXXX XXX").
FURTHER, THE AUTHORITY, THE CORPORATION AND, BY THEIR PURCHASE OF BONDS, THE
BONDHOLDERS, EXPRESSLY ACKNOWLEDGE AND AGREE THAT THE OBLIGATIONS OF THE
DISTRIBUTION COMPANY AND THE STORAGE COMPANY TO MAKE PAYMENTS UNDER THEIR
COMPANY PROMISSORY NOTES ARE ON A PARITY WITH THE OBLIGATIONS OF THE
DISTRIBUTION COMPANY AND THE STORAGE COMPANY TO MAKE PAYMENTS, RESPECTIVELY,
UNDER THE $1,300,000 COMPANY PROMISSORY NOTE DATED JANUARY 6, 1994 AND ISSUED
TO THE CORPORATION AND THE $1,330,000 COMPANY PROMISSORY NOTE DATED JANUARY
6, 1994 AND ISSUED TO THE CORPORATION (TOGETHER, THE "XXXXXXX COMPANY
PROMISSORY NOTES").
Section 3.4. Corporation To Provide Funds To Complete Project. If the
proceeds derived from the sale of the Bonds are not sufficient to pay in full
the Costs of the Project, the Corporation shall pay or cause to be paid such
moneys as are necessary to provide for payment in full of such Costs. The
Corporation shall not be entitled to any reimbursement therefor from the
Authority or the Trustee nor shall the Corporation be entitled to any
abatement, diminution or postponement of its payments hereunder or under the
Note. In no event shall the Authority be responsible or liable for the
payment of any such excess costs.
The Corporation shall not permit any changes to the plans and
specifications governing the improvement and construction of the Project that
would increase the Costs of the Project by more than an aggregate amount of
$300,000 unless it demonstrates to the satisfaction of the Trustee that funds
are available to the Corporation to pay the increased costs.
Section 3.5. Limitation of Authority's Liability. Notwithstanding
anything herein to the contrary, any obligation the Authority may incur
hereunder in connection with the undertaking of the Project or the payment of
money shall not be deemed to constitute a general obligation of the Authority
but shall be a limited obligation payable solely from the revenues and
receipts derived by it from or in connection with the Project or otherwise
under this Loan Agreement, including payments received on the Note, but
specifically excluding the Authority's Unassigned Rights.
Section 3.6. Disclaimer of Warranties. THE AUTHORITY MAKES NO
REPRESENTATION OR WARRANTY THAT THE CORPORATION, THE
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DISTRIBUTION COMPANY, THE STORAGE COMPANY OR THE EXPLORATION COMPANY WILL
HAVE QUIET AND PEACEFUL POSSESSION OF THE PROJECT, except that the Project is
free from encumbrances done, made or knowingly suffered by the Authority or
anyone claiming by, through or under it. The Corporation recognizes that
since the Project is being undertaken at its request and by contractors and
suppliers approved by it in accordance with plans and specifications prepared
by engineers approved by it, THE AUTHORITY MAKES NO REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE MERCHANTABILITY, CONDITION
OR WORKMANSHIP OF ANY PART OF THE PROJECT OR ITS SUITABILITY FOR THE PURPOSES
OF THE CORPORATION, THE DISTRIBUTION COMPANY, THE STORAGE COMPANY OR THE
EXPLORATION COMPANY OR THE EXTENT TO WHICH PROCEEDS DERIVED FROM THE SALE OF
THE BONDS WILL PAY THE COST TO BE INCURRED IN CONNECTION THEREWITH. THE
AUTHORITY MAKES NO REPRESENTATION AS TO THE FINANCIAL POSITION OR BUSINESS
CONDITION OF THE CORPORATION, THE DISTRIBUTION COMPANY, THE STORAGE COMPANY
OR THE EXPLORATION COMPANY AND DOES NOT REPRESENT OR WARRANT AS TO ANY OF THE
STATEMENTS, MATERIALS (FINANCIAL OR OTHERWISE), REPRESENTATIONS OR
CERTIFICATIONS FURNISHED OR TO BE MADE AND FURNISHED BY THE CORPORATION, THE
DISTRIBUTION COMPANY, THE STORAGE COMPANY OR THE EXPLORATION COMPANY IN
CONNECTION WITH THE SALE OF THE BONDS, OR AS TO THE CORRECTNESS, COMPLETENESS
OR ACCURACY OF SUCH STATEMENTS.
Section 3.7. Compliance with Indenture. At the request of the
Corporation, the Authority shall (a) at any time moneys held pursuant to the
Indenture are sufficient to effect redemption of the Bonds and if the same
are then redeemable under the Indenture, take all steps that may be necessary
to effect redemption thereunder, and (b) take any other action required by
the Indenture.
ARTICLE IV
Payments on the Note
Section 4.1. Amounts Payable. (a) The Corporation shall make all
payments required by the Note as and when they become due and shall promptly
pay all other amounts necessary to enable the Trustee to make the deposits to
the Bond Fund and the Reserve Fund required by Article VI of the Indenture.
(b) The Corporation shall also pay, as and when the same become due:
(1) To the Trustee, its reasonable fees for services rendered and
for expenses reasonably incurred by it as Trustee under the Indenture and as
Bond Registrar and paying agent on the Bonds, including the reasonable fees
and disbursements of its counsel and the reasonable fees and expenses of any
other paying agents, all as provided in the Indenture, and all other
11
amounts that the Corporation herein assumes or agrees to pay, including any
cost or expense necessary to cancel and discharge the Indenture upon Payment
of the Bonds.
(2) To or on behalf of the Authority, (i) all reasonable and
necessary costs and expenses of the Authority related to the Project or the
Bonds and (ii) all other amounts which the Corporation agrees to pay under
the terms of this Agreement; provided, that the aggregate of all such amounts
paid to the Authority shall not equal or exceed an amount which would cause
the "yield" on the Note, this Loan Agreement or any other "acquired purpose
obligation" to be "materially higher" than the "yield" on the Bonds, as such
terms are used in the Code. Such fees and expenses shall be paid directly to
the Authority for its own account as and when such fees and expenses become
due and payable. When the Authority incurs expenses or renders services after
the occurrence of an Event of Default specified in Sections 6.1(d) or 6.1(e),
the expenses and the compensation for the services are intended to constitute
expenses of administration under any federal or state bankruptcy, insolvency,
arrangement, moratorium, reorganization or other debtor relief law.
(3) Amounts described in Section 4.6.
(4) All other amounts that the Corporation agrees to pay under the
terms of this Loan Agreement.
Section 4.2. Payments Assigned. The Corporation consents to the
assignment made by the Indenture to the Trustee of the Note and the Company
Promissory Notes and of certain of the rights of the Authority under this
Loan Agreement and of the Corporation under the Company Loan Agreements. The
Corporation agrees to pay to the Trustee all amounts payable by the
Corporation pursuant to the Note and this Loan Agreement, except for payments
made to the Authority pursuant to Sections 4.1(b)(2), 4.5, 5.5 and 6.5. The
Corporation hereby assigns to the Trustee its rights under Company Promissory
Notes and its rights under the Company Loan Agreements, except for payments
made to the Corporation pursuant to Sections 5.2 and 6.5 thereof.
Section 4.3. Default in Payments. If the Corporation should fail to
make any payments required by the Note or this Loan Agreement on account of
principal of or interest on any Bonds when due, the Corporation shall pay to
the Trustee interest thereon until paid at the rate equal to the rate on such
Bonds, to the extent permitted by law. If the Corporation should fail to make
any other payments required by this Loan Agreement when due, the Corporation
shall pay to the Authority or the Trustee, as applicable, interest at the
rate equal to the Prime Rate plus one percent (1%) per year.
Section 4.4. Corporation's Obligations Unconditional. The obligation
of the Corporation to make the payments on the Note
12
and to observe and perform all other covenants, conditions and agreements
hereunder shall be absolute and unconditional, irrespective of any rights of
setoff, recoupment or counterclaim the Corporation might otherwise have
against the Authority or the Trustee and irrespective of the failure or the
delay of the Distribution Company, the Storage Company or the Exploration
Company to make any payment when due under its Company Promissory Note.
Subject to the prepayment of the Note as provided therein, the Corporation
shall not suspend or discontinue any payment on the Note or hereunder or fail
to observe and perform any of its other covenants, conditions or agreements
hereunder for any cause, including without limitation, any acts or
circumstances that may constitute an eviction or constructive eviction,
failure of consideration, failure of title to any part or all of the Project
or commercial frustration of purpose, or any damage to or destruction or
condemnation of all or any part of the Project, or any change in the tax or
other laws of the United States of America, Commonwealth of Virginia or any
political subdivision of either, or any failure of the Authority or the
Trustee to observe and perform any covenant, condition or agreement, whether
express or implied, or any duty, liability or obligation arising out of or in
connection with the Indenture or this Loan Agreement. The Corporation may,
after giving to the Authority and the Trustee ten (10) days' notice of its
intention to do so, at its own expense and in its own name, or in the name of
the Authority if procedurally required, prosecute or defend any action or
proceeding or take any other action involving third persons that the
Corporation reasonably deems necessary to secure or protect any of its rights
hereunder. In the event the Corporation takes any such action, the Authority
shall cooperate fully with the Corporation and shall take all necessary
action to substitute the Corporation for the Authority in such action or
proceeding, if so requested.
Section 4.5. Advances by Authority or Underwriter. If the Corporation
shall fail to make any payment or perform any act required of it hereunder,
the Authority or the Underwriter without prior notice or demand on the
Corporation and without waiving or releasing any obligation or default, may
(but shall be under no obligation to) make such payment or perform such act.
All amounts so paid by the Authority or the Underwriter and all costs, fees
and expenses so incurred shall be payable by the Corporation on demand as an
additional obligation under the Note, together with interest thereon at the
Prime Rate plus one percent (1%) per year until paid.
Section 4.6. Rebate Requirement. (a) At its sole expense on behalf of
the Authority, the Corporation shall determine and pay to the United States
the Rebate Amount as and when due in accordance with the "rebate requirement"
described in Section 148(f) of the Code. The Corporation shall retain
records of all such determinations until six (6) years after Payment of the
Bonds.
13
(b) Reference is made to Exhibit C hereto for additional details of the
rebate requirement. Exhibit C may be amended or substituted without
compliance with Article XII of the Indenture or Section 8.3 hereof and
without any action of the Authority upon the Corporation's delivery to the
Trustee of the proposed amendment or substitution together with an Opinion of
Bond Counsel that compliance with this Section 4.6 and Exhibit C, as amended,
will not be an Adverse Tax Action.
(c) Notwithstanding anything contained herein to the contrary, no such
payment need be made if the Corporation receives and delivers to the Trustee
an Opinion of Bond Counsel that such payment is not required under the Code
to prevent any Bonds from becoming "arbitrage bonds" within the meaning of
Section 148 of the Code.
(d) The Authority shall not be liable to the Corporation by way of
contribution, indemnification, counterclaim, set-off or otherwise for any
payment made or expense incurred by or on behalf of the Corporation pursuant
to this Section 4.6.
(e) The Authority covenants that, if so requested by the Corporation,
it shall execute any form required to be signed by an issuer of tax-exempt
bonds in connection with the payment of any rebatable arbitrage (including
Internal Revenue Service Form 8038-T). The Corporation shall supply all
information required to be stated on such form and shall prepare such form.
Except for the execution and delivery of such form upon timely presentation
by the Corporation, the Authority shall have no responsibility for such form
or the information stated thereon.
ARTICLE V
Special Covenants
Section 5.1. Insurance Requirements. The Corporation shall maintain or
cause to be maintained insurance covering such risks and in such amounts as,
in its reasonable judgment, are adequate to protect it, the Distribution
Company, the Storage Company, the Exploration Company, their operations and
their property, including the Project. The insurance required to be
maintained pursuant hereto shall be reviewed by independent insurance
consultants knowledgable about the natural gas business at least biennially
and the Corporation agrees that it will follow or cause to be followed any
reasonable recommendations of the insurance consultants. In order to
establish compliance with this Section 5.1, the Corporation agrees that it
will deliver or cause to be delivered to the Trustee biennially, at the same
time the certificates described in Section 5.3(c) are required to be
delivered, (1) the report of an insurance consultant stating the types of
insurance policies which the Corporation, the Distribution Company, the
Storage Company or the Exploration Company should maintain, which in the
opinion of such insurance
14
consultant would comply with the requirements of this Section 5.1 and
adequately provide the protection described above, and (2) reports of one or
more insurance consultants stating the insurance maintained, or caused to be
maintained, by the Corporation, the Distribution Company, the Storage Company
and the Exploration Company pursuant to this Section 5.1 and then in effect
and stating whether, in the opinion of such insurance consultants, the amount
and manner of providing such insurance and any reductions or eliminations of
the amount of any insurance during the period covered by such report comply
with the requirements of this Section 5.1 and adequately protect the
Corporation, the Distribution Company, the Storage Company, the Exploration
Company, their operations and their property, including the Project.
Section 5.2. Examination of Books and Records. The Trustee and the
Underwriter shall be permitted, during normal business hours and upon
reasonable notice, to examine the books and records of the Corporation with
respect to the Corporation's financial standing or its compliance with its
obligations hereunder.
Section 5.3. Financial Statements and Other Information. (a) As soon
as practical, but in any case within 120 days after the end of any fiscal
year, the Corporation shall file with the Trustee a copy of the audited
consolidated financial statements of the Corporation and its subsidiaries as
of the end of such fiscal year, accompanied by the report of independent
certified public accountants thereon. Such audited financial statements
shall be prepared in accordance with generally accepted accounting principles
and shall include such statements as necessary for a fair presentation of
unrestricted fund financial position, results of operations and changes in
unrestricted fund balance and cash flows for, or as of the end of, such
fiscal year.
(b) If an Event of Default shall have occurred and be continuing, the
Corporation shall (1) file with the Trustee such other financial statements
and information concerning its operations and financial affairs as the
Trustee may from time to time reasonably request, and (2) provide access to
its facilities for the purpose of inspection by the Trustee during regular
business hours or at such other times as the Trustee may reasonably request;
provided, that such obligation to file or allow inspection shall exclude
personnel records.
(c) As soon as practical, but in any case within thirty (30) days after
receipt of the audit report mentioned above, the Corporation shall file with
the Trustee a certificate signed by its chief executive officer and its chief
financial officer and a report of the independent certified public accountant
stating that nothing has come to their attention that would lead them to
believe that the Corporation is in default in the performance of any covenant
contained in this Loan Agreement (including, without
15
limitation, the covenants contained in Sections 5.7, 5.11, 5.12 and 5.14) or,
if they are aware of any such default, specifying each such default and what
actions the Corporation has taken, is taking or proposes to take to cure such
default.
(d) The Corporation shall furnish to any Holder of $100,000 or more in
aggregate principal amount of the Bonds who requests the same in writing,
and, for informational purposes, the Underwriter, the financial statements,
certificate of no default and other information which the Corporation has
covenanted to furnish the Trustee pursuant to subsections (a) and (c) above.
Such information shall be furnished to such persons at the times and in the
manner for such information to be furnished to the Trustee.
THE AUTHORITY AND THE CORPORATION AGREE TO COMPLY WITH ANY APPLICABLE
RULES AND REGULATIONS OF THE MUNICIPAL SECURITIES RULEMAKING BOARD AND THE
SECURITIES AND EXCHANGE COMMISSION REGARDING THE DISSEMINATION OF INFORMATION
AFTER THE ISSUANCE OF THE BONDS. THE CORPORATION WILL CAUSE TO BE DELIVERED
TO THE APPROPRIATE ENTITY ANY INFORMATION REQUIRED TO BE DISSEMINATED. IF
SUCH INFORMATION MUST BE DISSEMINATED THROUGH THE TRUSTEE, THE CORPORATION
WILL DELIVER SUCH INFORMATION TO THE TRUSTEE AND PAY TO THE TRUSTEE ITS
REASONABLE FEES AND EXPENSES OF COLLECTING AND DISSEMINATING SUCH
INFORMATION. NEITHER THE AUTHORITY NOR THE TRUSTEE WILL HAVE ANY
RESPONSIBILITY FOR COLLECTING OR FOR VERIFYING THE ACCURACY OF SUCH
INFORMATION.
(e) As soon as practical, but in any case within forty-five (45) days
after the end of each fiscal quarter, the Corporation shall furnish to the
Underwriter unaudited consolidated financial statements for such fiscal
quarter, including an income statement and balance sheet. Further, the
Corporation shall furnish to the Underwriter any other unaudited financial
statements or information requested by the Underwriter within thirty (30)
days of any such request.
Section 5.4. Damage, Destruction, Condemnation and Loss of Title. (a)
The Corporation shall give prompt notice to the Trustee and the Underwriter
of (1) any material damage to or destruction of any part of the Project, (2)
a taking of all or any part of the Project or any right therein under the
exercise of the power of eminent domain, (3) any loss of any part of the
Project because of failure of title thereto, or (4) the commencement of any
proceedings or negotiations that might result in such a taking or loss. Each
such notice shall describe generally the nature and extent of such damage,
destruction, taking, loss, proceedings or negotiations.
(b) Unless the Corporation prepays the Note in full pursuant to Article
VII, if all or any part of the Project is
16
destroyed or damaged by fire or other casualty, or if title to or the use of
all or any part of the Project is taken under the exercise of the power of
eminent domain or lost because of failure of title, the Corporation shall
promptly replace, repair, rebuild or restore the property damaged, destroyed
or lost so that the Project shall be substantially the same as before such
damage, destruction or loss, with such alterations and additions as the
Corporation may determine and as will not impair the capacity or character of
the Project for the purpose for which it is then being used or is intended to
be used. The Corporation shall apply or cause to be applied the Net Proceeds
of insurance and any condemnation award received by it on account of such
damage, destruction or loss and so much of the funds of the Corporation, the
Distribution Company, the Storage Company and Exploration Company as may be
necessary to payment of the cost of such replacement, repair, rebuilding or
restoration; provided, that in lieu of the requirements of the first sentence
of this Section 5.4(b) the Corporation may apply all of such Net Proceeds to:
(1) The acquisition and/or construction by the Corporation, the
Distribution Company, the Storage Company or the Exploration Company of real
and/or personal property, that (i) is suitable for its operations, (ii) is
free and clear of all liens and encumbrances of any kind except Permitted
Liens, and (iii) is available for use and occupancy by the Corporation, the
Distribution Company, the Storage Company or the Exploration Company without
the requirement of any payment other than as provided in the Note or this
Loan Agreement; or
(2) The prorata prepayment of the Note and any other similar
obligation issued by the Corporation, the Distribution Company, the Storage
Company or the Exploration Company evidencing the obligation to repay any
other loan made by the Authority or any other industrial development
authority or similar entity to finance a portion of the Project, in whole or
in part, for application to the prorata redemption of the Bonds and any other
bonds issued on behalf of the Corporation, the Distribution Company, the
Storage Company or the Exploration Company to finance a portion of the
Project.
The Corporation shall not by reason of the payment of the cost of
replacement, repair, rebuilding or restoration be entitled to any
reimbursement from the Authority or the Trustee or to any abatement or
diminution of the amounts payable under the Note or this Loan Agreement. All
real and personal property acquired pursuant to this Section 5.4 shall become
part of the Project. Prepayments of the Note shall be used to redeem Bonds
pursuant to Section 301(a) of the Indenture. As described in that Section
301(a), the Corporation may select the maturities of the Bonds to be
redeemed.
Section 5.5. Indemnification. (a) The Corporation shall at all times
protect, indemnify and save harmless the Authority, the Trustee and the
Underwriter (collectively, the
17
"Indemnitees") from and against all liabilities, obligations, claims,
damages, penalties, causes of action, costs and expenses (hereinafter
referred to as "Damages"), including without limitation (1) all amounts paid
in settlement of any litigation commenced or threatened against the
Indemnitees, if such settlement is effected with the written consent of the
Corporation, (2) all expenses reasonably incurred in the investigation of,
preparation for or defense of any litigation, proceeding or investigation of
any nature whatsoever, commenced or threatened against the Corporation, the
Distribution Company, the Storage Company, the Exploration Company, the
Project, or the Indemnitees, (3) any judgments, penalties, fines, damages,
assessments, indemnities or contributions, and (4) the reasonable fees of
attorneys, auditors, and consultants; provided, that the Damages arise out of:
(A) failure by the Corporation or any of its officers, employees or
agents, to comply with the terms of this Loan Agreement, the Bond Purchase
Agreement and the Note and any agreements, covenants, obligations, or
prohibitions set forth herein or therein or failure by the Distribution
Company, the Storage Company or the Exploration Company to comply with the
terms of any Company Loan Agreement or Company Promissory Note;
(B) any action, suit, claim or demand contesting or affecting the
title to the Project;
(C) any breach of any representation or warranty set forth
in this Loan Agreement or the Bond Purchase Agreement or any
certificate delivered pursuant hereto or thereto, and any claim that
any representation or warranty of the Corporation contains or contained
any untrue or misleading statement of a material fact or omits or
omitted to state any material fact necessary to make the statements
made herein or therein not misleading in light of the circumstances
under which they were made;
(D) any action, suit, claim, proceeding or investigation of
a judicial, legislative, administrative or regulatory nature arising
from or in connection with the acquisition, improvement, construction,
equipping, ownership, operation, occupation or use of the Project;
(E) any suit, action, administrative proceeding, enforcement
action, or governmental or private action of any kind whatsoever
commenced against the Corporation, the Distribution Company, the
Storage Company or the Exploration Company, the Project or the
Indemnitees that might adversely affect the validity, enforceability or
tax-exempt status of the Bonds, this Loan Agreement, the Bond Purchase
Agreement, the Indenture, the Note, any Company Loan Agreement or any
Company Promissory Note, or the performance by the Corporation, the
Distribution Company, the Storage Company, the Exploration Company or
any Indemnitee of any of their respective obligations thereunder; or
18
(F) any releases or discharges of hazardous wastes,
constituents or pollutants, or other environmental hazards,
contamination or pollution on, in, near or under the Project,
including, without limitation, remedial investigation and feasibility
study costs, clean up costs and other response costs under the
Comprehensive Environmental Response Compensation and Liability Act, as
modified by the Superfund Amendments and Reauthorization Act of 1986 or
any other environmental legislation or regulation, whether federal,
state or local, currently in existence or which may be enacted in the
future,
provided that such indemnity shall be effective only to the extent of
any loss that may be sustained by the Indemnitees in excess of the
proceeds, net of any expenses of collection, received by them or from
any insurance carried with respect to such loss and provided further
that the benefits of this Section 5.5 shall not inure to any person or
entity other than the Indemnitees.
(b) If any action, suit or proceeding is brought against the
Indemnitees for any loss or damage for which the Corporation is
required to provide indemnification under this Section 5.5, the
Corporation, upon request, shall at its expense resist and defend such
action, suit or proceeding, or cause the same to be resisted and
defended by counsel designated by the Corporation and approved by the
Indemnitees, which approval shall not be unreasonably withheld or
delayed, provided that such approval shall not be required in the case
of defense by counsel designated by any insurance company undertaking
such defense pursuant to any applicable policy of insurance. The
obligations of the Corporation under this Section 5.5 shall survive any
termination of this Loan Agreement, including prepayment in full of the
Note.
(c) Nothing contained herein shall require the Corporation
to indemnify the Authority or the Underwriter for any claim or
liability resulting from its gross negligence or its willful, wrongful
acts or the Trustee for any claim or liability resulting from its
negligence or its willful, wrongful acts (under the standard of care
set forth in Article X of the Indenture).
(d) All references in this Section 5.5 to the Authority, the
Trustee and the Underwriter, including references to Indemnitees, shall
include their directors, commissioners, officers, employees and agents.
Section 5.6. Maintenance and Modification of Project. The
Corporation agrees that at all times it will maintain, preserve and
keep the Project and its other properties or cause the Project and its
other properties to be maintained, preserved and kept in good repair,
working order and condition and that the Corporation will from time to
time make or cause to be made all repairs, replacements and renewals
deemed proper and necessary by it. In addition, the Corporation may
upgrade the Project and its
19
other properties or cause them to be upgraded. Further, the Corporation may
make or cause to be made substitutions, additions, modifications and
improvements to the Project from time to time as the Corporation, in its
discretion, deems to be desirable for its use, and as shall be permitted by
the Act. The costs of such upgrades, substitutions, additions, modifications
and improvements shall be paid by the Corporation, the Distribution Company,
the Storage Company or the Exploration Company and be subject to the terms of
this Loan Agreement as part of the Project. Any portion of the Project may
be disposed of in any manner permitted by Section 5.14.
The Corporation and the Distribution Company have obtained or
will obtain and will maintain or cause to be maintained all consents,
approvals, permits, authorizations and orders of any governmental or
regulatory authority that are required to be obtained as a condition
precedent to the acquisition, improvement, construction, equipping and
operation of the Project, including the Certificate. The Corporation
knows of no reason why any such consents, approvals, permits,
authorizations or orders not yet received cannot be obtained on a
timely basis.
Section 5.7. Tax Exemption. (a) Unless the Corporation shall
deliver to the Trustee an Opinion of Bond Counsel to the effect that
such use, occupation or ownership will not be an Adverse Tax Action,
the Corporation shall not:
(1) take or allow to be taken any action that will cause
less than ninety-five percent (95%) of the net proceeds (with the
meaning of Section 150(a)(3) of the Code) of the Bonds to be used to
acquire property which qualifies as facility for the local furnishing
of gas within the meaning of Section 142(a)(8) of the Code or
facilities functionally related and subordinate thereto or will cause
less than ninety-five percent (95%) of such net proceeds to be used for
costs that are properly chargeable to the capital account of the
Corporation, the Distribution Company, the Storage Company or the
Exploration Company or would be so chargeable either with an election
or but for a proper election to deduct such amounts;
(2) take any action or approve or direct the Trustee's
taking any action or making any investment or use of the proceeds of
the Bonds (including failure to spend the same with due diligence) that
would cause the Bonds to be "arbitrage bonds" within the meaning of
Section 148 of the Code;
(3) barring unforeseen circumstances, approve the use of the
proceeds of the Bonds or any other funds other than in accordance with the
"non-arbitrage" certificate with respect to such use given immediately prior
to the delivery of the Bonds;
(4) permit the Project to be used, leased to or occupied by
the United States or an agency or instrumentality
20
thereof in any manner for compensation, including any entity with statutory
authority to borrow from the United States (in any case within the meaning of
Section 149(b) of the Code), or in any way cause the Bonds to be "federally
guaranteed" within the meaning of Section 149(b) of the Code;
(5) permit twenty-five percent (25%) or more of the net
proceeds of the Bonds to be used to acquire (directly or indirectly)
any land (or an interest therein) or permit the proceeds of the Bonds
to be used, directly or indirectly for the acquisition of land (or an
interest therein) to be used for farming purposes, or to provide any
airplane, skybox or other private luxury box, any facility primarily
used for gambling, or any store the principal business of which is the
sale of alcoholic beverages for consumption off premises;
(6) use or allow the use any of the proceeds of the Bonds
for the acquisition of residential rental property for family units; or
(7) take or allow to be taken any other action that would
cause an Adverse Tax Action.
(b) The Corporation shall not make or allow to be made any
change in the Project that would, at the time made, cause the "average
maturity" of the Bonds to exceed 120% of the "average reasonably
expected economic life" of the facilities being financed with the
proceeds of the Bonds, within the meaning of Section 147(b) of the
Code.
(c) The Corporation shall not take or omit to take any
action the taking or omission of which will result in more than two
percent (2%) of the proceeds of the Bonds being used to finance the
Costs of Issuance.
(d) The Corporation shall not take or allow to be taken any
action that will result in the allocation of any proceeds of the Bonds
to the reimbursement of any expenditure made prior to June 7, 1993.
(e) The Corporation will not allow any portion of the
proceeds of the Bonds, directly or indirectly, to be used to acquire
investment property or to replace funds which were used, directly or
indirectly, to acquire investment property (as defined in Section
148(b)(2) of the Code) which produces a materially higher yield over
the term of the Bonds, other than investment property acquired with --
(1) proceeds of the Bonds invested for a reasonable
temporary period of three years or less, or until such proceeds
are needed for the purpose for which the Bonds are issued,
21
(2) amounts invested in a bona fide debt service fund,
within the meaning of Section 1.148-1(b) of the Treasury
Regulations promulgated under the Code, and
(3) amounts deposited in any reasonably required reserve or
replacement fund to the extent such amounts do not exceed the
Reserve Fund Requirement and to the extent that at no time
during any Bond Year will the aggregate amount so invested
exceed 150 percent of debt service on the Bonds for such year.
(f) The Corporation shall not use or allow the use of any
portion of the proceeds of the Bonds (including any investment income
thereon) to acquire any property or an interest therein (other than
land or an interest in land) unless the first use of such property is
pursuant to such acquisition.
(g) The Corporation shall use its best efforts to proceed
with due diligence to acquire, improve, construct and equip the Project
and to expend at least eighty-five percent (85%) of the proceeds of the
Bonds (including any investment income thereon) on Costs of the Project
within three (3) years from the date the Bonds are issued and to ensure
that less than fifty percent (50%) of the proceeds of the Bonds will be
invested in nonpurpose investments, as described in Section 148 of the
Code, having a substantially guaranteed yield for four (4) years or
more.
(h) The Corporation will cause the information contained in
the information report (Form 8038) to be filed by the Authority with
the Internal Revenue Service upon the issuance of the Bonds to be true
and correct as of the date the Bonds are issued.
(i) The Corporation will not participate or permit the
Distribution Company, the Storage Company or the Exploration Company to
participate in any other issue of obligations, the interest on which
may be excludable from gross income for federal income tax purposes,
within fifteen (15) days of the date the Bonds are issued.
(j) The Corporation will not permit the Distribution Company or
any "related person" (as defined in the Code) to the Distribution
Company to provide gas distribution services to customers in any area
beyond the boundaries of Xxxxxxxx County and Xxxxxxx County. As to the
gas distribution assets to be owned and operated by the Distribution
Company, the Corporation shall request a withdrawal from the Project
Fund only for those assets that are related to the gas distribution
facility serving the area in and around the Town of Grundy for which
the Distribution Company has received the Certificate. As to the
gathering and storage facilities to be owned and operated by the
Storage Company, the Corporation shall request a withdrawal from the
Project Fund only for that portion of the Storage Company's
22
gathering and storage facilities in Xxxxxxxx County, Xxxxx County, Washington
County and Xxxxxxxxx County that are necessary to support the distribution
facility serving the area for which the Distribution Company has received the
Certificate. Further, as to the production facilities to be owned and
operated by the Exploration Company, the Corporation shall request a
withdrawal from the Project Fund only for that portion of the Exploration
Company's production facilities in Xxxxxxxx County and Xxxxxxxxx County that
are necessary to support the distribution facility serving the area for which
the Distribution Company has received the Certificate.
(k) The Corporation will not take or omit any action that would
cause it to be a "related person" with the Distribution Company, as
described in Section 147(a)(2) of the Code.
It is the understanding of the Authority and the Corporation that the
covenants contained herein are intended to assure compliance with the
Code, including the applicable Treasury Regulations. In the event that
Treasury Regulations or rulings are hereafter promulgated which modify
or expand provisions of the Code, as applicable to the Bonds, the
Corporation will not be required to comply with any covenant contained
herein except to the extent that such modification or expansion, in the
Opinion of Bond Counsel, will cause an Adverse Tax Action. In the
event that Treasury Regulations or rulings are hereafter promulgated
which impose additional requirements which are applicable to the Bonds,
the Corporation agrees to comply with the additional requirements to
the extent necessary, in the Opinion of Bond Counsel, to preserve the
exclusion from gross income for federal income tax purposes of interest
on the Bonds under Section 103 of the Code.
Section 5.8. Investment and Use of Trust Funds. The
Corporation's Authorized Representative shall provide to the Trustee
written instructions or oral instructions confirmed in writing for the
investment, in accordance with Article VII of the Indenture, of all
funds held by the Trustee under the Indenture.
Section 5.9. Notice of Other Defaults; Compliance with Other
Documents. The Corporation shall promptly inform the Trustee and,
unless the Xxxxxxx Xxxxx have been paid or defeased in full, the
Xxxxxxx Underwriter if it has become aware of or has received any
notice of any default under any agreement under which it, the
Distribution Company, the Storage Company or the Exploration Company is
liable for any indebtedness, including this Loan Agreement, the Xxxxxxx
Loan Agreement, the Company Loan Agreements and the Xxxxxxx Company
Loan Agreements.
The Corporation shall comply with the terms and provisions of,
and make all payments required under, any agreement under which it is
liable for any indebtedness, including the Xxxxxxx Loan Agreement and
the Xxxxxxx Note.
23
Section 5.10. Corporate Status. The Corporation agrees that
throughout the term of this Loan Agreement it will be maintain its
status as a corporation validly existing under the laws of the State of
Delaware which is authorized to transact business in the Commonwealth
of Virginia. Further, the Corporation agrees that throughout the term
of this Loan Agreement it will cause each of the Distribution Company,
the Storage Company and the Exploration Company to maintain its status
as a corporation validly existing under the laws of the Commonwealth of
Virginia.
The Corporation shall not merge or consolidate with, or sell or
transfer all or substantially all of its property or assets to any
person, firm or corporation, except that the Distribution Company, the
Storage Company and the Exploration Company may be merged into or
consolidated with the Corporation or one another.
Section 5.11. Priority of Indebtedness; Additional
Indebtedness. Language similar to the language contained in this
Section 5.11 shall appear in each Company Loan Agreement.
The Corporation, each Company and each other subsidiary or
affiliate of the Corporation may issue additional long-term
indebtedness having a superior or parity claim on the general revenues
and funds of the Corporation or any of the Companies, but, as to each
entity, the outstanding principal balance of such indebtedness may not
exceed $500,000 at any time.
The Corporation, any of the Companies and any other subsidiaries
or affiliates of the Corporation may issue obligations that are secured
on a parity with the Note and the Company Promissory Notes as to the
general revenues and funds of the Corporation and any of the Companies
("Parity Debt"), respectively, only if the following conditions have
been met:
(1) The combined long-term debt of the Corporation, the
Companies and any other subsidiaries or affiliates of the Corporation
has a debt service coverage (taking into account the issuance of the
Parity Debt) equal to at least 3.0 times the combined debt service for
both (A) the latest prior fiscal year for which the Corporation has
audited financial statements and (B) the next two fiscal years, as
forecasted by a feasibility consultant such as Xxxxx & Xxxxxxx, Inc. or
its successor; provided, that this provision does not apply to
obligations issued to refund the Xxxxxxx Xxxxx;
(2) No additional long-term Parity Debt may be incurred by the
Corporation, the Companies or any other subsidiary or affiliate of the
Corporation unless the shareholder's equity of the Corporation and its
subsidiaries and affiliates is equal to at least 33.33 percent of the
total outstanding long-term indebtedness of the Corporation and its
subsidiaries and
24
affiliates (taking into account the issuance of the Parity Debt); provided,
that this provision does not apply to obligations issued to refund the
Xxxxxxx Xxxxx;
(3) No payments due under this Loan Agreement, the Note, the
Company Loan Agreements, the Company Promissory Notes or any amendments
or supplements thereto are then delinquent;
(4) There are at such time no Events of Default, as defined
in this Loan Agreement and in the Company Loan Agreements, then
existing which have not been cured or waived under the terms of this
Loan Agreement, the Company Loan Agreements, the Indenture or any
amendments or supplements thereto; and
(5) The issuance of such Parity Debt will not cause any
Outstanding Bonds or the Xxxxxxx Xxxxx to lose their tax-exempt status
under the Code.
There are no restrictions on the ability of the Corporation, any
of the Companies or any other subsidiary or affiliate of the
Corporation to issue indebtedness that is secured by a pledge of some
or all of the general revenues and funds of the Corporation and any of
the Companies that is secondary and subordinate to the pledge securing
the Note and the Company Promissory Notes. The Corporation, any of the
Companies and any other subsidiary or affiliate of the Corporation
shall provide to the Trustee evidence that the holder of any future
subordinated debt has acknowledged and agreed that its debt is
subordinate to the obligations of the Corporation and the Companies
under this Loan Agreement and the Note, the Company Loan Agreements and
the Company Promissory Notes, if applicable, the Xxxxxxx Loan Agreement
and the Xxxxxxx Note, and, if applicable, the Xxxxxxx Company Loan
Agreements and the Xxxxxxx Company Promissory Notes. In the documents
for all such future subordinated debt in a principal amount of more
than $250,000, the Corporation, any of the Companies and any other
subsidiary or affiliate of the Corporation shall ensure that the
documents provide that so long as no Event of Default under the Loan
Agreement or the Company Loan Agreements has occurred, the holder of
such debt may continue to receive and retain payments on the
subordinated debt when and as the same become due but that any amounts
received by such holder as a payment on the subordinated debt
subsequent to any Event of Default under this Loan Agreement or the
Company Loan Agreements will be retained and held in trust by such
holder for the benefit of the Trustee.
There are no restrictions on the ability of the Corporation, any
of the Companies or any other subsidiary or affiliate of the
Corporation to issue short-term indebtedness or trade payables or
liabilities that are secured by a pledge of some or all of the general
revenues and funds of the Corporation and any of the Companies on a
parity with the general revenues and funds serving the Note and the
Company Promissory Notes.
25
The Corporation shall not assume, guarantee, endorse or
otherwise become liable for the obligations of any person, firm or
corporation (except the Companies and any other subsidiaries or
affiliates of the Corporation) except by endorsement for purposes of
discount or collection of notes or other instruments received from
customers in the ordinary course of business.
Section 5.12. Limitations on Liens. The Corporation shall not
create or suffer to be created, or permit the existence of, any lien
upon any of its property or assets now owned or hereafter acquired by
it, other than Permitted Liens.
Section 5.13. Limitations on Payment of Dividends. If (1)
moneys have been transferred from the reserve fund or supplemental
reserve account for the Xxxxxxx Xxxxx to the bond fund for the Xxxxxxx
Xxxxx to make up any deficiency in such bond fund or (2) moneys have
been transferred by the Trustee from the Reserve Fund to the Bond Fund
to make up any deficiency in the Bond Fund, the Corporation shall not
make a dividend distribution (including distributions of cash or
property) to any of its shareholders unless and until it has made
deposits to the reserve fund or supplemental reserve account for the
Xxxxxxx Xxxxx or the Reserve Fund, as applicable, to increase the
balance therein to the amounts required.
Section 5.14. Ownership of Stocks and Project. For so long
as the Note is outstanding, the Corporation shall continue to own fifty
percent (50%) of the outstanding capital stock of the Distribution
Company and at least fifty percent (50%) of the outstanding capital
stock of the Storage Company and the Exploration Company.
The Corporation shall not permit the Distribution Company, the
Storage Company or the Exploration Company to sell or transfer any
portion of the Project, except (1) sales or transfers of assets in the
ordinary course of business, (2) sales or transfers of assets having an
aggregate value of less than $100,000 and (3) sales or transfers of
assets to the Corporation or one or more of its subsidiaries.
Section 5.15. Prepayment of Xxxxxxx Xxxxx. The Corporation
hereby covenants and agrees that on January 15, 2000 it will either:
(1) prepay or redeem the Xxxxxxx Xxxxx in full; or
(2) deposit $15,000 with the Xxxxxxx Trustee on that date and
on the fifteenth day of each month thereafter until the Xxxxxxx Xxxxx
are prepaid in full. The Corporation shall direct the Xxxxxxx Trustee
to apply such amounts to the prorata prepayment of each series of the
Xxxxxxx Xxxxx in inverse order of maturity.
26
Section 5.16. Deposit to Supplemental Reserve Account. The
Corporation hereby covenants and agrees that within ten (10) days of
the issuance of the Bonds that it will deposit $425,000 with the
Xxxxxxx Trustee. The Corporation will direct the Xxxxxxx Trustee to
hold such amount in a supplemental reserve account for the Xxxxxxx
Xxxxx. If the Bonds are Outstanding on the date that the Xxxxxxx Xxxxx
are paid, redeemed or defeased in full, the Corporation shall direct
the Xxxxxxx Trustee to deliver certain amounts in such supplemental
reserve account to the Trustee for deposit into the Reserve Fund, all
as described in Section 603(a) of the Indenture.
ARTICLE VI
Events of Default and Remedies
Section 6.1. Event of Default Defined. Each of the following
events shall be an Event of Default under this Loan Agreement:
(a) Failure of the Corporation to make any payment on the
Note when the same becomes due and payable, whether at maturity, upon
redemption, prepayment or acceleration or otherwise pursuant to the
terms thereof or this Loan Agreement.
(b) Failure of the Corporation to observe or perform any of
its other covenants, conditions or agreements hereunder for a period of
thirty (30) days after notice in writing (unless the Corporation and
the Trustee shall agree in writing to an extension of such time prior
to its expiration), specifying such failure and requesting that it be
remedied, given by the Authority or the Trustee to the Corporation, or
in the case of any default which can be cured but which cannot with due
diligence be cured within such 30-day period, failure by the
Corporation to proceed promptly to prosecute the curing of the same
with due diligence.
(c) Abandonment of any portion of the Project by the
Corporation, the Distribution Company, the Storage Company or the
Exploration Company for a period of fifteen (15) days or more.
(d) (1) If the Corporation, the Distribution Company, the
Storage Company or the Exploration Company files a petition or answer
seeking reorganization or arrangement of such entity under the federal
bankruptcy laws or any other applicable law or statute, or (2) if,
pursuant to a petition in bankruptcy filed against it, any such entity
is adjudicated a bankrupt or if a court of competent jurisdiction shall
enter an order or decree appointing, without the consent of such
entity, a receiver or trustee of such entity or of the whole or
substantially all of its property, or approving a petition filed
against it seeking reorganization or arrangement of such entity under
the federal bankruptcy laws or any other applicable law or statute, and
such
27
adjudication, order or decree shall not be vacated or set aside or stayed
within ninety (90) days from the date of the entry thereof.
(e) If there is instituted by the Corporation, the
Distribution Company, the Storage Company or the Exploration Company
any proceedings for an order for relief, or if such entity consents to
an order for relief against it, or if such entity files a petition or
answer or consent seeking reorganization, arrangement, adjustment,
composition or relief, under the federal bankruptcy laws or any other
similar applicable federal or state law, or if such entity consents to
the filing of any such petition or to the appointment of a receiver,
liquidator, custodian, assignee, trustee or sequestrator (or other
similar official) of such entity or of any substantial part of its
property, or if such entity makes an assignment for the benefit of
creditors or admits in writing its inability to pay its debts generally
as they become due.
(f) If any warranty, representation or other statement by or on
behalf of the Corporation, the Distribution Company, the Storage
Company or the Exploration Company contained in this Loan Agreement or
in any other document or instrument furnished in connection with the
issuance or sale of the Bonds, including the Company Loan Agreements,
shall prove to have been false or misleading in any material respect at
the time it was made or delivered.
(g) If an Event of Default under the Indenture or any of the
Company Loan Agreements shall occur.
Section 6.2. Remedies on Default. Whenever an Event of Default
shall have happened and be continuing, the Trustee as the assignee of
the Authority may take any action at law or in equity necessary or
desirable to collect the amounts then due and thereafter to become due
or to enforce observance or performance of any covenant, condition or
agreement of the Corporation under the Note and this Loan Agreement,
including declaring the entire unpaid principal of and interest on the
Note due and payable. Upon any such declaration of acceleration, the
Corporation shall immediately pay to the Trustee the entire unpaid
principal of and accrued interest on the Note and other moneys due
thereunder. Further, the Trustee, as assignee of the Company
Promissory Notes may take any action at law or in equity necessary or
desirable to collect the amounts then due and thereafter to become due
thereunder, including declaring the entire unpaid principal of and
interest on any one or more Company Promissory Notes due and payable.
Upon any such declaration of acceleration, the Distribution Company,
the Storage Company and/or the Exploration Company shall immediately
pay to the Trustee the entire unpaid principal of and accrued interest
on its Company Promissory Note and other moneys due thereunder. If the
Trustee accelerates the payment of the Note, it shall also accelerate
the payment of the Company Promissory Notes.
28
If the Trustee, as the assignee of the Authority, exercises any
of its rights or remedies under this Section 6.2, it shall give notice
of such exercise to the Corporation (1) in writing in the manner
provided in Section 8.2 and (2) by telephone or telegram; provided,
that failure to give such notice by telephone or telegram shall not
affect the validity of the exercise of any right or remedy under this
Section 6.2.
Except for any remedy directed by the Holders of the Bonds,
prior to exercising any remedies provided hereunder, unless the Xxxxxxx
Xxxxx have been paid or defeased in full, the Trustee shall notify the
Xxxxxxx Underwriter and offer the Xxxxxxx Underwriter an opportunity
(which may be restricted to a short period of time) to suggest
appropriate remedies.
Section 6.3. Application of Amounts Realized in Enforcement of
Remedies. Any amounts collected pursuant to action taken under Section
6.2 shall be applied in accordance with the provisions of the
Indenture, or, if Payment of the Bonds shall have been made, shall be
applied according to the provisions of Section 608 of the Indenture.
Section 6.4. No Remedy Exclusive. No remedy herein conferred
on or reserved to the Authority or the Trustee or the holder of the
Note is intended to be exclusive of any other remedy, and every remedy
shall be cumulative and in addition to every other remedy herein or now
or hereafter existing at law, in equity or by statute. No delay or
failure to exercise any right or power accruing upon an Event of
Default shall impair any such right or power or shall be construed to
be a waiver thereof, and any such right or power may be exercised from
time to time and as often as may be deemed expedient.
Section 6.5. Attorneys' Fees and other Expenses. Upon an Event
of Default, the Corporation shall on demand pay to or on behalf of the
Authority and the Trustee the reasonable fees and expenses of attorneys
and other reasonable expenses incurred by either of them in the
collection of payments due on the Note or this Loan Agreement or the
enforcement of performance of any other obligations of the Corporation.
Section 6.6. No Additional Waiver Implied by One Waiver. If
any party or its assignee waives a default by any other party under any
covenant, condition or agreement herein, such waiver shall be limited
to the particular breach so waived and shall not be deemed to waive any
other default hereunder.
ARTICLE VII
Prepayment of the Note
29
Section 7.1. Option To Prepay the Note and Terminate Loan
Agreement in Certain Events. The Corporation shall have the option to
prepay the Note in full and terminate this Loan Agreement at any time
if one of the following has occurred:
(1) Damage or destruction of the Project by fire or other
casualty to such extent that, in the opinion of both the Corporation's
board of directors (expressed in a resolution) and an independent
architect or engineer reasonably acceptable to the Trustee, both filed
with the Trustee (A) the Project cannot be reasonably repaired, rebuilt
or restored within a period of one year to its condition immediately
preceding such damage or destruction, or (B) the Corporation, the
Distribution Company, the Storage Company or the Exploration Company is
prevented from carrying on its normal operations in connection with the
Project for a period of one year, or (C) the cost of repairs,
rebuilding or restoration would exceed 125% of the Net Proceeds of
insurance carried thereon.
(2) Loss of title to or use of substantially all of the
Project as a result of the exercise of the power of eminent domain or
failure of title which, in the opinion of both the Corporation's board
of directors (expressed in a resolution) and an independent architect
or engineer reasonably acceptable to the Trustee, both filed with the
Trustee, prevents or is likely to prevent the Corporation, the
Distribution Company, the Storage Company or the Exploration Company
from carrying on its normal operations in connection with the Project
for a period of one year.
(3) A change in the Constitution of Virginia or of the
United States of America or a legislative or administrative action
(whether local, state or federal) or a final decree, judgment or order
of any court or administrative body (whether local, state or federal)
contested by the Corporation in good faith that causes this Loan
Agreement or the Note to become void or unenforceable or impossible of
performance in accordance with the intent and purpose of the parties as
expressed therein or that causes unreasonable burdens or excessive
liabilities to be imposed on the Corporation, the Distribution Company,
the Storage Company or the Exploration Company in connection with the
Project.
To exercise such option the Corporation shall within ninety (90) days
after the event permitting its exercise file the required resolutions
and opinions with the Authority and the Trustee and specify a date not
more than sixty (60) days thereafter for making such prepayment. In
such case, the Authority shall cause the Trustee to redeem the Bonds as
provided in Section 301(a) of the Indenture.
Section 7.2. Option To Prepay the Note in Whole. The
Corporation shall have the option to prepay the Note in whole, with any
applicable premium, and terminate this Loan Agreement before Payment of
the Bonds. In such case, the Authority shall
30
(i) cause the Trustee to redeem the Bonds as provided in Sections 301(b)
and/or (c) of the Indenture if Bonds are then redeemable as provided in
Sections 301(b) and/or (c) of the Indenture, or (ii) if the Bonds are not
then so redeemable, cause the amount so prepaid to be transferred to and held
in the Bond Fund to be applied to the redemption of the Bonds on the next
date or dates that the Bonds are so redeemable. The Corporation shall direct
the Trustee to invest such moneys in the Bond Fund only at a "yield" not in
excess of the "yield" on the Bonds, as described in Section 148 of the Code,
unless there shall be delivered to the Trustee an Opinion of Bond Counsel
that other investments will not cause an Adverse Tax Action.
Section 7.3. Option To Prepay the Note in Part. The
Corporation shall have the option to prepay the Note in part, with any
applicable premium. The amount so prepaid shall, so long as all
payments then due under the Note have been made (a) if Bonds are then
redeemable as provided in Sections 301(b) and/or (c) of the Indenture,
be used to redeem Bonds to the extent possible under such sections, or
(b) if Bonds are not then so redeemable, be transferred to and held in
the Bond Fund to be applied to the redemption of the Bonds on the next
date or dates that the Bonds are so redeemable. The Corporation shall
direct the Trustee to invest such moneys in the Bond Fund only at a
"yield" not in excess of the "yield" on the Bonds, as described in
Section 148 of the Code, unless there shall be delivered to the Trustee
an Opinion of Bond Counsel that other investments will not cause an
Adverse Tax Action.
Section 7.4. Obligation to Prepay the Note. The Corporation
shall have the obligation to prepay the Note in whole upon the
occurrence of a Determination of Taxability. In such case, the
Authority shall cause the Trustee to redeem the Bonds as provided in
Section 301(d) of the Indenture within 120 days after the Determination
of Taxability.
Section 7.5. Amount Required for Prepayment. To prepay the
Note in whole or in part under Sections 5.4, 7.1, 7.2, 7.3 or 7.4, the
Corporation shall pay to the Trustee, for deposit in the Bond Fund, an
amount of cash and Defeasance Obligations that will be sufficient (1)
in the case of prepayment in whole, to discharge the lien of the
Indenture pursuant to Section 801 thereof, and (2) in the case of
prepayment in part, to cause any Bonds that will be paid with the
prepayment to no longer be Outstanding because of a discharge of such
Bonds as described in Section 801 of the Indenture. If the Corporation
has prepaid the Note, as provided above, the Corporation shall not
direct the expenditure of any funds from such prepayment in the Bond
Fund for any purpose other than the payment of principal of, premium,
if any, or interest on the Bonds to be redeemed. The Corporation shall
instruct the Trustee to give the notice of redemption required by
Section 303 of the Indenture if any of the Bonds are to be paid or
redeemed other than at maturity.
31
ARTICLE VIII
Miscellaneous
Section 8.1. Term of Loan Agreement. This Loan Agreement
shall be effective upon its execution and delivery and, subject to
earlier termination upon prepayment in full of the Note and other
amounts described in Article VII, shall expire on the date of the last
maturity of any Bonds, or if payment of the Note has not been made on
such date, when payment of the Note shall have been made; provided,
that (a) the covenants in Sections 5.6 and 5.7 shall continue until the
final maturity date of all Bonds or the earlier redemption date on
which provision for payment for all Bonds has been made, (b) the
covenant made in Section 5.5 shall survive Payment of the Bonds and
payment of the Note and (c) the covenant in Section 4.6 shall continue
for six years after Payment of the Bonds.
Section 8.2. Notices. Unless otherwise provided herein all
demands, notices, approvals, consents, requests, opinions and other
communications hereunder shall be in writing and shall be deemed to
have been given when delivered in person or mailed by first class
registered or certified mail, postage prepaid, addressed:
if to the Corporation:
000 Xxxxx Xxxxx Xxxxxx
Post Office Box 2407
Xxxxxxxx, Xxxxxxxx 00000
(Attention: President)
Telephone (000) 000-0000; Telecopy (000) 000-0000
if to the Authority:
c/o County Administrator's Office
Xxxxxxxx County Courthouse
Xxxx Xxxxxx Xxxxxx 000
Xxxxxx, Xxxxxxxx 00000
(Attention: Chairman)
Telephone (000) 000-0000; Telecopy (000) 000-0000
if to the Trustee:
000 Xxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
(Attention: Corporate Trust Administration)
Telephone (000) 000-0000; Telecopy (000) 000-0000
if to the Underwriter or the Xxxxxxx Underwriter:
Xxxxxxxx & Strudwick Incorporated
0000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
(Attention: X. XxXxxxxx Xxxxx, III)
Telephone (000) 000-0000; Telecopy (000) 000-0000
32
A duplicate copy of each demand, notice, approval, consent, request,
opinion or other communication given hereunder by either the Authority
or the Corporation to the other shall also be given to the Trustee and,
for information purposes only, the Underwriter and, until the Xxxxxxx
Xxxxx are paid or defeased in full, the Xxxxxxx Underwriter. The
Corporation, the Trustee, the Authority, the Underwriter or the
Xxxxxxx Underwriter may, by notice given hereunder, designate any
further or different addresses to which subsequent demands, notices,
approvals, consents, requests, opinions or other communications shall
be sent or persons to whose attention they shall be directed.
Section 8.3. Amendments to Loan Agreement and Note. Except as
provided in Section 4.6(b), neither this Loan Agreement nor the Note
shall be amended, modified or supplemented, and no substitution shall
be made for the Note before Payment of the Bonds without the consent of
the Trustee and the Authority, given in accordance with and subject to
Article XII of the Indenture.
Section 8.4. Successors and Assigns. This Loan Agreement shall
be binding on, inure to the benefit of and be enforceable by the
parties and their respective successors and assigns.
Section 8.5. Severability. If any term or provision of this
Loan Agreement or the Note or the application thereof for any reason or
circumstances shall to any extent be held invalid or unenforceable, the
remaining provisions or the application of such term or provision to
persons and situations other than those as to which it is held invalid
or unenforceable, shall not be affected thereby, and each term and
provision hereof and thereof shall be valid and enforced to the fullest
extent permitted by law.
Section 8.6. Applicable Law; Entire Understanding. This Loan
Agreement and the Note shall be governed by the applicable laws of the
Commonwealth of Virginia. This Loan Agreement and the Note express the
entire understanding and all agreements between the parties hereto.
Section 8.7. Limitation of Liability of Directors of Authority.
No covenant, agreement or obligation contained herein shall be deemed
to be a covenant, agreement or obligation of any present or future
director, officer, employee or agent of the Authority in his individual
capacity so long as he acts in good faith, and no such director,
officer, employee or agent shall be subject to any liability under this
Loan Agreement or the Note or with respect to any other action taken by
him provided that he does not act in bad faith.
Section 8.8. Counterparts. This Loan Agreement may be executed
in several counterparts, each of which shall be an original and all of
which together shall constitute but one and
33
the same instrument, except that to the extent, if any, that this Loan
Agreement shall constitute personal property under the Uniform Commercial
Code of Virginia, no security interest in this Loan Agreement may be created
or perfected through the transfer or possession of any counterpart of this
Loan Agreement other than the original counterpart, which shall be the
counterpart containing the receipt therefor executed by the Trustee following
the signatures to this Loan Agreement.
34
IN WITNESS WHEREOF, the Authority and the Corporation have
caused this Loan Agreement to be signed in their names and on their
behalf by their duly authorized officers all as of the date first above
written.
INDUSTRIAL DEVELOPMENT AUTHORITY OF
XXXXXXXX COUNTY, VIRGINIA
By _________________________________
Name: Xxx Xxxx Xxxxxx
Title: Chairman
VIRGINIA GAS COMPANY
By _________________________________
Name: Xxxx X. Xxxx
Title: Vice President
SEEN AND ACKNOWLEDGED:
VIRGINIA GAS DISTRIBUTION COMPANY
By ______________________________
Name: Xxxx X. Xxxx
Title: Vice President
VIRGINIA GAS STORAGE COMPANY
By ______________________________
Name: Xxxx X. Xxxx
Title: Vice President
VIRGINIA GAS EXPLORATION COMPANY
By ______________________________
Name: Xxxx X. Xxxx
Title: Vice President
Exhibit A -- Specimen Note
Exhibit B -- Specimen Company Promissory Note
35
Exhibit C -- Arbitrage Rebate Instructions
36
RECEIPT
Receipt of the foregoing original counterpart of the Loan
Agreement, dated as of November 1, 1994, between the Industrial
Development Authority of Xxxxxxxx County, Virginia and Virginia Gas
Company and the $4,250,000 Promissory Note from Virginia Gas Company to
the Industrial Development Authority of Xxxxxxxx County, Virginia is
hereby acknowledged.
CRESTAR BANK, as Trustee
By _______________________________
Name: ________________________
Title: ________________________
37
Exhibit A
SPECIMEN NOTE
1
Exhibit B
SPECIMEN COMPANY PROMISSORY NOTE
1
Exhibit C
REBATE INSTRUCTIONS
A. Within forty-five (45) days after (i) the initial installment
computation date (the last day of the fifth Bond Year, which is
November 15, 1999), and (ii) each fifth anniversary thereof, and (iii)
retirement of the last obligation of the Bonds, the Corporation will
cause to be computed the amount of the "rebatable arbitrage" as of each
such computation date calculated pursuant to Section 148(f) of the Code
and regulations thereunder (the "Rebate Amount") and will deliver a
copy of such computation setting forth the Rebate Amount (the "Rebate
Amount Certificate"), together with an opinion or report prepared by
the expert referred to in the following sentence, to the Trustee. The
Rebate Amount Certificate setting forth such Rebate Amount shall be
prepared or approved by (i) a person with experience in matters of
accounting for federal income tax purposes, (ii) an arbitrage rebate
calculating and reporting service, or (iii) Bond Counsel. The
Corporation shall retain the records of computation of each Rebate
Amount until the date six years after the retirement of the last
obligation of the Bonds. The Trustee will be under no obligation to
verify the accuracy of or to retain copies of the Rebate Amount
Certificates.
B. Not later than fifty-five (55) days after the initial
installment computation date, the Corporation shall pay or cause to be
paid to the United States ninety percent (90%) of the Rebate Amount as
set forth in the Rebate Amount Certificate prepared with respect to
such installment computation date. At least once, on or before
fifty-five (55) days after the installment computation date that is the
fifth anniversary of the initial installment computation date and on or
before fifty-five (55) days after every fifth anniversary date
thereafter, until retirement of the last obligation of the Bonds, the
Corporation shall pay or cause to be paid to the United States the
amount, if any, by which ninety percent (90%) of the Rebate Amount set
forth in the most recent Rebate Amount Certificate exceeds the
aggregate of all such payments theretofore made to the United States
pursuant to these rebate instructions. On or before fifty-five (55)
days after retirement of the last obligation of the Bonds, the
Corporation shall pay or cause to be paid to the United States the
amount, if any, by which 100% of the Rebate Amount set forth in the
Rebate Amount Certificate with respect to the date of the retirement of
the last obligation of the Bonds exceeds the aggregate of all payments
theretofore made pursuant to these rebate instructions. All such
payments shall be made by the Corporation from any available source.
C. The provisions hereof shall continue notwithstanding the
establishment of an escrow pursuant to Section
1
801 of the Indenture to discharge the Bonds prior to such final payment.
D. Notwithstanding anything contained herein to the contrary, no
such payment will be due with respect to any installment computation
date if the Corporation receives and delivers to the Trustee an Opinion
of Bond Counsel that such payment is not required under the Code to
prevent any Bonds from becoming "arbitrage bonds" within the meaning of
Section 148 of the Code.
E. Neither the Authority nor the Trustee nor the Underwriter
shall be liable to the Corporation by way of contribution,
indemnification, counterclaim, set-off or otherwise for any payment
made or expense incurred by the Corporation pursuant to these rebate
instructions.
2
