SECOND AMENDMENT TO
CREDIT AGREEMENT
By and Among
NEW JERSEY NATURAL GAS COMPANY
as the Borrower
THE FINANCIAL INSTITUTIONS PARTY THERETO
as the Lenders
and
PNC BANK, NATIONAL ASSOCIATION
as the Administrative Agent
and
FLEET NATIONAL BANK
as the Syndication Agent
and
BANK ONE, NA
as the Documentation Agent
Dated as of
October 3, 2001
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (the "Second
Amendment") made as of October 3, 2001, among NEW JERSEY NATURAL GAS COMPANY, a
New Jersey corporation (the "Borrower"), the financial institutions listed on
the signature pages hereto (individually a "Lender" and collectively the
"Lenders"), PNC BANK, NATIONAL ASSOCIATION, a national banking association, as
Administrative Agent for the Lenders (in such capacity the "Administrative
Agent"), FLEET NATIONAL BANK (as successor to SUMMIT BANK), as Syndication Agent
and BANK ONE, NA, a national banking association, as Documentation Agent, amends
that certain Credit Agreement dated as of January 5, 2001 by and among the
Borrower, the financial institutions listed on the signature pages thereto (the
"Existing Lenders") and the Administrative Agent, as amended by a First
Amendment dated as of March 1, 2001 (the Credit Agreement, as amended, together
with the exhibits and schedules thereto and all modifications, amendments,
extensions, renewals, substitutions or replacements prior to the date hereof,
the "Existing Agreement") (the Existing Agreement, as amended by this Second
Amendment and as modified, amended, extended, renewed, substituted or replaced
from time to time hereafter, the "Agreement").
WITNESSETH:
WHEREAS, the Borrower, the Lenders and the Administrative
Agent entered into the Existing Agreement pursuant to which the Lenders made
certain financial accommodations available to the Borrower including Commitments
to make (i) Short Term Revolving Credit Loans in an amount not to exceed
$50,000,000 and (ii) Long Term Revolving Credit Loans in an amount not to exceed
$100,000,000; and
WHEREAS, the Borrower, the Lenders and the Administrative
Agent desire to amend the Existing Agreement as set forth herein.
NOW THEREFORE, in consideration of the mutual promises
contained herein and other good and valuable consideration, the Borrower, the
Administrative Agent and the Lenders with the intent to be legally bound hereby,
agree that the Existing Agreement shall be amended as follows:
ARTICLE I
AMENDMENTS TO EXISTING AGREEMENT
SECTION 1.01. ADDITIONAL DEFINITIONS. Section 1.1 of the
Existing Agreement is hereby amended by adding thereto the following definitions
in the appropriate alphabetical order:
"Gas Cost Underrecovery Adjustment Assets" means that
Underrecovered Gas Cost Balance to be collected from all sales
customers and transportation customers, through surcharge commencing
December 1, 2001 over an amortization period of three years from that
date, with simple interest at 5.5% per annum, until November 30, 2004.
"Permitted Accounts Receivable Securitization" means the
receivables financing program providing for the sale of Receivables
Facility Assets by Borrower and its Subsidiaries to the Receivables
Subsidiary in transactions purporting to be sales (and treated as sales
for GAAP purposes), which Receivables Subsidiary shall finance the
purchase of such Receivables Facility Assets by the sale, transfer,
conveyance, lien or pledge of such Receivables Facility Assets to one
or more limited purpose financing companies, special purpose entities
and/or other financial institutions, in each case, on a limited
recourse basis as to the Borrower and its Subsidiaries; provided that
any such transaction described herein shall be consummated pursuant to
documentation in form and substance reasonably satisfactory to the
Agent.
"Receivables Documents" shall mean all documentation relating
to any Permitted Accounts Receivable Securitization.
"Receivables Facility Assets" shall mean all Gas Cost
Underrecovery Adjustment Assets of Borrower which are transferred to
the Receivables Subsidiary pursuant to a Permitted Accounts Receivable
Securitization, and any assets related thereto, including without
limitation (i) all collateral given by the respective account debtor or
on its behalf (but not by Borrower or any of its Subsidiaries) securing
such Gas Cost Underrecovery Adjustment Assets, (ii) all contracts and
all guarantees (but not by Borrower or any of its Subsidiaries) or
other obligations directly related to such Gas Cost Underrecovery
Adjustment Assets, (iii) other related assets including those set forth
in the Receivables Documents, and (iv) proceeds of all of the
foregoing.
"Receivables Facility Attributed Indebtedness" at any time
shall mean the aggregate net outstanding amount theretofore paid to the
Receivables Subsidiary in respect of the Receivables Facilities Assets
sold, transferred, financed or pledged by it in connection with a
Permitted Accounts Receivable Securitization (it being the intent of
the parties that the amount of Receivables Facility Attributed
Indebtedness at any time outstanding approximate as closely as possible
the principal amount of Indebtedness which would be outstanding at such
time under the Permitted Accounts Receivable Securitization if the same
were structured as a secured lending agreement rather than a purchase
agreement).
"Receivables Subsidiary" means a special purpose, bankruptcy
remote wholly-owned Subsidiary of Borrower which may be formed for the
sole and exclusive purpose of engaging in activities in connection with
the purchase, sale and financing of Gas Cost Underrecovery Adjustment
Assets in connection with and pursuant to a Permitted Accounts
Receivable Securitization.
"Second Amendment" shall mean that certain Second Amendment to
Credit Agreement dated as of October 3, 2001.
"Second Amendment Effective Date" shall mean October 3, 2001.
"Underrecovered Gas Cost Balance" means that amount of the
Borrower's Levelized Gas Adjustment Clause not recovered in customer
rates for the period ending October 31, 2001.
SECTION 1.02. AMENDMENTS TO CERTAIN DEFINITIONS. The
definition of the term "Permitted Encumbrance" contained in Section 1.1 of the
Existing Agreement is hereby
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amended by adding to the end thereof the following new clauses (x) and (xi)
which shall read as follows:
"(x) Encumbrances on Receivables Facility Assets
transferred (a) to the Receivables Subsidiary or (b) by the
Receivables Subsidiary to the purchasers of such receivables (and the
filing of financing statements in connection therewith) created by,
and as set forth in, the Receivables Documents pursuant to the
Permitted Accounts Receivable Securitization; and
(xi) Encumbrances on meter assets created in connection
with capitalized lease transactions and securing Indebtedness in favor
of one or more financial institutions incurred in connection with such
transactions in an aggregate principal amount not to exceed
$27,000,000."
SECTION 1.03. Amendment to Section 5.2 of the Existing
Agreement. Section 5.2 of the Existing Agreement is hereby amended and restated
to read as follows:
"5.2 Encumbrances. The Borrower will not create or
suffer to exist, or permit any of its Subsidiaries to create or suffer
to exist, any Encumbrance or any other type of preferential
arrangement, upon or with respect to any of its properties, whether
now owned or hereafter acquired, or assign, or permit any of its
Subsidiaries to assign, any right to receive income, in each case to
secure or provide for the payment of any Indebtedness of any Person,
other than:
(a) purchase money liens or purchase money security
interests upon or in any property acquired or held
by the Borrower or any Subsidiary in the ordinary
course of business to secure the purchase price of
such property or to secure indebtedness incurred
solely for the purpose of financing the
acquisition of such property, so long as such
indebtedness does not exceed 100% of the purchase
price of such property;
(b) Encumbrances existing on such property at the time
of the acquisition of such property or the
acquisition of such Subsidiary (other than any
such Encumbrance created as a result of such
acquisition);
(c) Permitted Encumbrances; or
(d) Extensions or renewals of any Encumbrance
described in clauses (a) through (c) above,
provided, that (i) any such extension or renewal
shall be limited to the property theretofore
subject to such Encumbrance and (ii) the principal
amount of the Indebtedness secured by such
Encumbrance shall not be increased;
provided, that the aggregate principal amount of Indebtedness
secured by Encumbrances referred to in clauses (a) and (b)
above shall not exceed $5,000,000 at any time outstanding (it
being expressly agreed that any
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refinanced Indebtedness shall not by considered new
Indebtedness hereunder).
SECTION 1.04. AMENDMENT TO SECTION 5.3 OF THE EXISTING
AGREEMENT. Section 5.3 of the Existing Agreement is hereby amended and restated
to read as follows:
"5.3 INDEBTEDNESS. The Borrower shall not and
shall not permit any Subsidiary to create, incur, assume,
cause, permit or suffer to exist or remain outstanding any
Indebtedness except for:
(i) The Bank Indebtedness;
(ii) Existing Indebtedness set
forth on Schedule 5.3 hereof and any extensions, renewals or
refinancings thereof in outstanding principal amounts not
greater than those shown on Schedule 5.3; provided that such
extensions, renewals or refinancings when incurred and when
added to the Borrower's then outstanding Indebtedness would
not cause the Borrower to be in violation of Section 5.2
hereof;
(iii) Additional Indebtedness under
the Mortgage Indenture as permitted pursuant to the terms of
the Mortgage Indenture in the form in effect on the Closing
Date;
(iv) Additional Indebtedness in
favor of one or more financial institutions in connection
with capitalized leases of meter assets in an aggregate
principal amount not to exceed $27,000,000 at any one time
outstanding;
(v) Receivables Facility
Attributed Indebtedness; and
(vi) Additional Indebtedness not
otherwise permitted by the foregoing clauses (i), (ii),
(iii), (iv), or (v) in an aggregate principal amount not to
exceed $25,000,000 at any one time outstanding.
In addition, Indebtedness incurred pursuant to item (vi) may
not contain covenants (other than covenants relating to
collateral, if any, securing such Indebtedness as such
security interests are permitted hereby) more restrictive
than or in addition to those contained herein.
SECTION 1.05. AMENDMENT TO SECTION 5.4 OF THE EXISTING
AGREEMENT. Section 5.4 of the Existing Agreement is hereby amended to add the
following language to the end thereof:
", except for investments in the Receivables Subsidiary
prior to the occurrence and continuance of any Potential Default or
Event of Default."
SECTION 1.06. AMENDMENT TO SECTION 5.5 OF THE EXISTING
AGREEMENT. Section 5.5 of the Existing Agreement is hereby amended to add the
following language to the end thereof:
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", and other than (i) a sale, contribution or other transfer
of Receivables Facility Assets to the Receivables Subsidiary and the
Receivables Subsidiary may sell and make other transfers of Receivables
Facility assets, in each case pursuant to the Receivables Documents in
connection with the Permitted Accounts Receivable Securitization" and
(ii) in connection with the capitalized lease transactions permitted
under Section 5.3(iv)."
SECTION 1.07. NO OTHER AMENDMENTS OR WAIVERS. The amendments
to the Existing Agreement set forth in Sections 1.01 through 1.05 above do not
either implicitly or explicitly alter, waive or amend, except as expressly
provided in this Second Amendment, the provisions of the Existing Agreement. The
amendments set forth in Sections 1.01 through 1.05 hereof do not waive, now or
in the future, compliance with any other covenant, term or condition to be
performed or complied with nor do they impair any rights or remedies of the
Lenders or the and the Administrative Agent under the Existing Agreement with
respect to any such violation. Nothing in this Second Amendment shall be deemed
or construed to be a waiver or release of, or a limitation upon, the Lenders' or
the Administrative Agent's exercise of any of their respective rights and
remedies under the Existing Agreement and the other Loan Documents, whether
arising as a consequence of any Events of Default which may now exist or
otherwise, and all such rights and remedies are hereby expressly reserved.
ARTICLE II
BORROWER'S SUPPLEMENTAL REPRESENTATIONS
SECTION 2.01. INCORPORATION BY REFERENCE. As an inducement to
the Lenders to enter into this Second Amendment, the Borrower hereby repeats
herein, for the benefit of the Lenders, the representations and warranties made
by the Borrower in Article III of the Existing Agreement, as amended hereby,
except that for purposes hereof such representations and warranties shall be
deemed to extend to and cover this Second Amendment.
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.01. CONDITIONS PRECEDENT. Each of the following
shall be a condition precedent to the effectiveness of this Second Amendment:
(i) The Administrative Agent shall have received on
behalf of each Lender, on or before the Second Amendment Effective Date, duly
executed counterpart originals of this Second Amendment (which may be initially
delivered via telecopier).
(ii) The following statements shall be true and correct
on the Second Amendment Effective Date, and the Administrative Agent shall have
received a certificate signed by an authorized officer of the Borrower dated the
Second Amendment Effective Date stating that:
(A) except to the extent modified in writing
by the Borrower heretofore delivered to the Banks, the representations and
warranties made pursuant to Section 3.01 of this Second Amendment and in the
other Loan Documents are true and correct on and as of the
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Second Amendment Effective Date as though made on and as of such date in all
material respects;
(B) no Event of Default or Potential Default
has occurred and is continuing, or would result from the execution of or
performance under this Second Amendment;
(C) the Borrower has in all material
respects performed all agreements, covenants and conditions required to be
performed on or prior to the date hereof under the Existing Agreement and the
other Loan Documents.
(iii) The Administrative Agent shall have received a
certificate, duly certified as of the date hereof, by the secretary or assistant
secretary of the Borrower, as to (A) the Certificate of Incorporation of the
Borrower in effect as of the date hereof, (B) the By-Laws of the Borrower in
effect as of the date hereof, (C) the resolutions of the Borrower's Board of
Directors authorizing the borrowings hereunder and the execution and delivery of
this Second Amendment, and all documents supplemental hereto and (D) the names
of the officers of the Borrower authorized to sign this Second Amendment and all
supplemental documentation and which contains a true signature of each such
officer.
(iv) The Borrower shall pay to the Administrative Agent
for the account of each Lender who executes this Second Amendment on or before
the Second Amendment Effective Date a fee equal to one (1) basis point (.01%) of
such Lender's aggregate Commitment.
ARTICLE IV
GENERAL PROVISIONS
SECTION 4.01. RATIFICATION OF TERMS. Except as expressly
amended by this Second Amendment, the Existing Agreement and each and every
representation, warranty, covenant, term and condition contained therein is
specifically ratified and confirmed in all material respects.
SECTION 4.02. REFERENCES. All notices, communications,
agreements, certificates, documents or other instruments executed and delivered
after the execution and delivery of this Second Amendment in connection with the
Agreement, any of the other Loan Documents or the transactions contemplated
thereby may refer to the Existing Agreement without making specific reference to
this Second Amendment, but nevertheless all such references shall include this
Second Amendment unless the context requires otherwise. From and after the
Second Amendment Effective Date, all references in the Existing Agreement and
each of the other Loan Documents to the "Agreement" shall be deemed to be
references to the Existing Agreement as amended hereby.
SECTION 4.03. COUNTERPARTS. This Second Amendment may be
executed in different counterparts, each of which when executed by the Borrower,
the Administrative Agent and the Lenders shall be regarded as an original, and
all such counterparts shall constitute one Second Amendment. Delivery of an
executed counterpart by telecopier shall be effective as delivery of a manually
executed counterpart hereof.
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SECTION 4.04. CAPITALIZED TERMS. Except for proper nouns and
as otherwise defined herein, capitalized terms used herein as defined terms
shall have the meanings ascribed to them in the Existing Agreement, as amended
hereby.
SECTION 4.05. GOVERNING LAW. THIS SECOND AMENDMENT AND THE
RIGHTS AND OBLIGATIONS HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW JERSEY WITHOUT REGARD TO THE PROVISIONS
THEREOF REGARDING CONFLICTS OF LAW.
SECTION 4.06. HEADINGS. The headings of the sections in this
Second Amendment are for purposes of reference only and shall not be deemed to
be a part hereof.
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Second Amendment to Credit Agreement to be duly
executed by their duly authorized officers as of the date first written above.
ATTEST: NEW JERSEY NATURAL GAS COMPANY
By: By: (SEAL)
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Name: Name:
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Title: Title:
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PNC BANK, NATIONAL ASSOCIATION, in its
capacity as the Administrative Agent
hereunder
By: (SEAL)
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Name:
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Title:
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PNC BANK, NATIONAL ASSOCIATION, as a Lender
By: (SEAL)
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Name:
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Title:
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FLEET NATIONAL BANK , as a Lender
By: (SEAL)
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Name:
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Title:
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BANK ONE, N.A., as a Lender
By: (SEAL)
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Name:
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Title:
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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
THE BANK OF NEW YORK, as a Lender
By: (SEAL)
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Name:
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Title:
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CITIZENS BANK OF MASSACHUSETTS, as a Lender
By: (SEAL)
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Name:
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Title:
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BANK OF TOKYO-MITSUBISHI TRUST COMPANY, as a
Lender
By: (SEAL)
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Name:
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Title:
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THE CHASE MANHATTAN BANK, as a Lender
By: (SEAL)
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Name:
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Title:
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