LOAN AGREEMENT
between
INDUSTRIAL DEVELOPMENT AUTHORITY OF XXXXXXX COUNTY
and
VIRGINIA GAS COMPANY
Dated as of February 1, 1997
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 XXXXXXX COUNTY, 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
Page
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........................... 6
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......... 9
Section 3.5. Limitation of Authority's Liability...................... 10
Section 3.6. Disclaimer of Warranties................................. 10
Section 3.7. Compliance with Indenture................................ 10
ARTICLE IV
Payments on the Note
Section 4.1. Amounts Payable.......................................... 11
Section 4.2. Payments Assigned........................................ 11
Section 4.3. Default in Payments...................................... 12
Section 4.4. Corporation's Obligations Unconditional.................. 12
Section 4.5. Advances by Authority or Underwriter..................... 13
Section 4.6. Rebate Requirement....................................... 13
i
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.......................................... 17
Section 5.6. Maintenance and Modification of Project.................. 19
Section 5.7. Tax Exemption............................................ 19
Section 5.8. Investment and Use of Trust Funds........................ 22
Section 5.9. Notice of Other Defaults; Compliance with Other Documents 23
Section 5.10. Corporate Status......................................... 23
Section 5.11. Priority of Indebtedness; Additional Indebtedness........ 23
Section 5.12. Limitations on Liens..................................... 24
Section 5.13. Limitations on Payment of Dividends...................... 24
Section 5.14. Ownership of Stocks and Project.......................... 24
Section 5.15. Continuing Disclosure Requirements....................... 24
Section 5.16. Subordination Discontinuance Requirements................ 25
ARTICLE VI
Events of Default and Remedies
Section 6.1. Event of Default Defined................................. 25
Section 6.2. Remedies on Default...................................... 26
Section 6.3. Application of Amounts Realized in Enforcement of Remedies 27
Section 6.4. No Remedy Exclusive...................................... 27
Section 6.5. Attorneys' Fees and other Expenses....................... 27
Section 6.6. No Additional Waiver Implied by One Waiver............... 27
ARTICLE VII
Prepayment of the Note
Section 7.1. Option To Prepay the Note and Terminate Loan Agreement
in Certain Events...................................... 28
Section 7.2. Option To Prepay the Note in Whole....................... 28
Section 7.3. Option To Prepay the Note in Part........................ 29
Section 7.4. Obligation To Prepay the Note............................ 29
Section 7.5. Amount Required for Prepayment........................... 29
ii
ARTICLE VIII
Miscellaneous
Section 8.1. Term of Loan Agreement................................... 29
Section 8.2. Notices.................................................. 30
Section 8.3. Amendments to Loan Agreement and Note.................... 30
Section 8.4. Successors and Assigns................................... 31
Section 8.5. Severability............................................. 31
Section 8.6. Applicable Law; Entire Understanding..................... 31
Section 8.7. Limitation of Liability of Directors of Authority........ 31
Section 8.8. Counterparts............................................. 31
Testimonium............................................................ 32
Signatures............................................................. 32
Receipt................................................................ 33
Exhibit A - Specimen Note
Exhibit B - Specimen Company Note
Exhibit C - Arbitrage Rebate Instructions
iii
THIS LOAN AGREEMENT, dated as of February 1, 1997,
between the INDUSTRIAL DEVELOPMENT AUTHORITY OF XXXXXXX COUNTY, 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 and to refund obligations
previously issued for such purposes;
WHEREAS, at the request of the Corporation, Virginia Gas
Distribution Company, a Virginia corporation (the "Distribution Company"),
and Virginia Gas Storage Company, a Virginia corporation (the "Storage
Company"), the Authority issued its $3,000,000 Natural Gas Facility Revenue
Bonds (Virginia Gas Company Project) Series 1994 A and B on January 6, 1994
(the "Xxxxxxx Senior 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 "Castlewood
Project") to serve natural gas customers in and near the Town of Castlewood
in Xxxxxxx County, Virginia, (ii) fund certain reserves, and (iii) pay
certain costs of issuance of the Xxxxxxx Senior Bonds. The proceeds of the
Xxxxxxx Senior Bonds were loaned by the Authority to the Corporation and the
Corporation evidenced such loan by issuing to the Authority the Corporation's
$3,000,000 Promissory Note (the "Xxxxxxx Senior Note");
WHEREAS, at the request of the Corporation, the
Distribution Company, the Storage Company and Virginia Gas Exploration
Company, a Virginia corporation (the "Exploration Company"), the Industrial
Development Authority of Xxxxxxxx County, Virginia (the "Xxxxxxxx Authority")
issued its $4,250,000 Natural Gas Facilities Revenue Bonds (Virginia Gas
Company Project) Series 1994 on November 15, 1994 (the "Xxxxxxxx Senior
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 "Grundy Project") to serve natural gas
customers in and near the Town of Grundy in Xxxxxxxx County, Virginia, (ii)
fund certain reserves, and (iii) pay certain costs of issuance of the
Xxxxxxxx Senior Bonds. The proceeds of the Xxxxxxxx Senior Bonds were loaned
by the Xxxxxxxx Authority to the Corporation and the Corporation evidenced
such loan by issuing to the Xxxxxxxx Authority the Corporation's $4,250,000
Promissory Note (the "Xxxxxxxx Senior Note");
WHEREAS, at the request of the Corporation, the
Distribution Company, the Storage Company and the Exploration Company, the
Xxxxxxxx Authority issued its $3,750,000
1
Senior Subordinated Natural Gas Facilities Revenue Bonds (Virginia Gas Company
Project) Series 1995 on December 15, 1995 (the "Xxxxxxxx Senior Subordinated
Bonds") for the purpose of providing funds, together with other available funds
to (i) acquire, improve, construct and equip additional portions of the Grundy
Project, (ii) fund certain reserves, and (iii) pay certain costs of issuance of
the Xxxxxxxx Senior Subordinated Bonds. The proceeds of the Xxxxxxxx Senior
Subordinated Bonds were loaned by the Xxxxxxxx Authority to the Corporation and
the Corporation evidenced such loan by issuing to the Xxxxxxxx Authority the
Corporation's $3,750,000 Promissory Note (the "Xxxxxxxx Senior Subordinated
Note");
WHEREAS, at the request of the Corporation, the
Distribution Company, the Storage Company and the Exploration Company, the
Authority made a $100,000 Borrower Loan to the Corporation, on behalf of
itself and the Distribution Company, the Storage Company and the Exploration
Company, on October 1, 1996 (the "Xxxxxxx Borrower Loan") from the proceeds
of its $100,000 Issuer Loan (the "Xxxxxxx Issuer Loan") 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 "Lebanon Project") to serve natural gas customers in and near the Town
of Lebanon in Xxxxxxx County, Virginia, and (ii) pay certain costs of
issuance of the Xxxxxxx Issuer Loan;
WHEREAS, at the request of the Corporation, the
Distribution Company and Virginia Gas Pipeline Company, a Virginia
corporation (the "Pipeline Company"), the Authority has been asked to issue
its $9,100,000 Subordinated Natural Gas Facilities Revenue Bonds (Virginia
Gas Company Project) Series 1997 (the "Bonds") for the purpose of providing
funds, together with other available funds to (i) acquire, improve, construct
and equip additional portions of the Lebanon Project, (ii) prepay in full the
outstanding principal balance of the Xxxxxxx Issuer Loan, (iii) fund certain
reserves and (iv) pay certain costs of issuance of the Bonds; 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 Lebanon Project. The natural gas
distribution facilities comprising a portion of the Lebanon Project are owned
and operated by the Distribution Company and the natural gas pipeline and
storage facilities comprising a portion of the Lebanon Project are owned and
operated by the Pipeline 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
2
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 Lebanon 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 February 20, 1997 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 each and every Certificate of
Public Convenience and Necessity or other permit or certificate issued to one
or more of the Companies by the Virginia State Corporation Commission or the
Federal Energy Regulatory Commission relating to the operation of the natural
gas facilities comprising a portion of the Lebanon Project.
"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.
"Lebanon 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 Lebanon in Xxxxxxx County, including
certain natural gas pipeline and storage facilities that directly support the
distribution facilities. The pipeline and storage facilities are located
primarily in Xxxxx County, Washington County and Xxxxx County.
"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 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 $9,100,000, 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.
3
"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.
"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 Lebanon
Project or other assets owned by the Corporation, the Distribution Company or
the Pipeline 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
Lebanon Project or other assets owned by the Corporation, the Distribution
Company or the Pipeline 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 or the Pipeline 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 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.
"Rebate Amount" shall have the meaning set forth in
Exhibit C, as it may be amended from time to time.
4
"Rebate Amount Certificate" shall have the meaning set
forth in Exhibit C, as it may be amended from time to time.
"Subsidiaries" shall mean any corporations for which
fifty percent (50%) or 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
Lebanon 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 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
5
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
Lebanon 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 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.
(h) The Authority has by duly adopted resolution found
and determined that the financing of the Lebanon Project, including the
financing of interest on the Bonds attributable to construction and equipping
of the Lebanon 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.
6
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, the Continuing Disclosure 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, the Continuing Disclosure 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 Lebanon Project, the
validity of this Loan Agreement, the Bond Purchase Agreement, the Continuing
Disclosure 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, the Continuing Disclosure
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, any 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.
(e) A Certificate has been issued to the Distribution
Company for the operation of the distribution facilities in and near the Town
of Lebanon comprising a portion of the Lebanon Project. Pursuant to such
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 Lebanon Project will be available for use by a
large segment of the general public in such service area.
7
Certificates have been issued or are expected to be
issued to the Pipeline Company for the operation of a portion of the pipeline
and storage facilities comprising a portion of the Lebanon Project.
The Corporation, the Companies and the other Subsidiaries
have or are expected to receive all Certificates required for the operation
and maintenance of the Lebanon Project.
(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, the Continuing Disclosure 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 Pipeline Company will own
and operate the natural gas pipeline and storage facilities in Xxxxx,
Washington and Xxxxx Counties that will support the distribution facilities.
Only that portion of the pipeline and storage facilities that will support
the distribution facilities will be financed with a portion of the proceeds
of the Bonds. The Corporation will cause the Lebanon 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 or until certain Events of Taxability, as
described in Section 5.7.
(h) The Corporation and the Companies were engaged in
the local furnishing of natural gas, within the meaning of Section 142(a)(8)
of the Code, on January 1, 1997. The Lebanon Project is within the area
served by the Corporation and the Companies, pursuant to the Certificates, on
January 1, 1997.
(i) 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 or the Pipeline 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 Lebanon
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 Lebanon Project and agrees to:
(1) obtain and maintain or cause to be obtained and
maintained all Certificates, licenses, permits and consents required for the
acquisition, improvement,
8
construction, equipping and operation of the Lebanon 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 Lebanon 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 and
the Pipeline Company. Further, upon the issuance of the Bonds, the
Distribution Company and the Pipeline Company shall each execute and deliver
to the Corporation a Company Note in a principal amount equal to its
allocable share of the face amount of the Bonds. Each Company Note, which
shall be substantially in the form set forth in Exhibit B attached hereto,
will obligate the Distribution Company or the Pipeline Company to pay to the
Corporation an amount equal to an allocable portion of the principal of 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 or the Pipeline Company differs from
the principal amount of that entity's Company Note by more than $50,000, each
such entity has agreed to amend its Company 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 Notes to the Trustee as security for the
payments due under the Note.
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,
9
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 Lebanon
Project that would increase the Costs of the Project by more than an
aggregate amount of $900,000 unless it demonstrates to the satisfaction of
the Trustee that funds are available to the Corporation to pay the increased
costs.
The proceeds of the Xxxxxxx Issuer Loan and the Xxxxxxx
Borrower Loan have been used by the Corporation and the Companies to finance
certain portions of the Cost of the Project. On the date that the Bonds are
issued, $100,000 of the proceeds of the Bonds will be applied to the
prepayment in full of the outstanding principal balance of the Xxxxxxx Issuer
Loan. On the date that the Bonds are issued, the Corporation will pay from
its own assets (or cause the Companies to pay from their own assets) to the
holders of the Xxxxxxx Issuer Loan an amount equal to the accrued and unpaid
interest on the Xxxxxxx Issuer Loan to such date and will take all other
actions necessary to cause the Xxxxxxx Issuer Loan to be paid in full as of
such date.
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 Lebanon 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
Lebanon 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 DISTRIBUTION
COMPANY OR THE PIPELINE COMPANY WILL HAVE QUIET AND PEACEFUL POSSESSION OF
THE LEBANON PROJECT, except that the Lebanon 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
Lebanon 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 LEBANON PROJECT OR ITS SUITABILITY FOR THE
PURPOSES OF THE CORPORATION, THE DISTRIBUTION COMPANY OR THE PIPELINE 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 OR THE PIPELINE 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
10
FURNISHED BY THE CORPORATION, THE DISTRIBUTION COMPANY OR THE PIPELINE
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 reasonable steps that
may be necessary to effect redemption thereunder, and (b) take any other
action reasonably 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, as Bond Registrar and paying agent on the Bonds, and as the
Dissemination Agent under the Continuing Disclosure Agreement, 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 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
Lebanon 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.
11
(4) All other amounts that the Corporation agrees
to pay under the terms of the Indenture, the Bond Purchase Agreement and this
Loan Agreement, including the amounts described in the definition of
"Determination of Taxability" in the Indenture.
Section 4.2. Payments Assigned. The Corporation
consents to the assignment made by the Indenture to the Trustee of the Note
and the Company 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 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 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 or the Pipeline Company to make any payment when due
under its Company 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 Lebanon Project or commercial frustration of purpose, or any
damage to or destruction or condemnation of all or any part of the Lebanon
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
12
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.
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, UNTIL ALL OF THE
SUBORDINATION DISCONTINUANCE REQUIREMENTS HAVE BEEN MET, SUBORDINATE TO THE
OBLIGATION OF THE CORPORATION TO MAKE PAYMENTS UNDER ITS SENIOR NOTES AND ITS
SENIOR SUBORDINATED NOTES. FURTHER, THE AUTHORITY, THE CORPORATION AND, BY
THEIR PURCHASE OF BONDS, THE BONDHOLDERS, EXPRESSLY ACKNOWLEDGE AND AGREE
THAT THE OBLIGATION OF THE DISTRIBUTION COMPANY TO MAKE PAYMENTS UNDER ITS
COMPANY NOTE IS, UNTIL ALL OF THE SUBORDINATION DISCONTINUANCE REQUIREMENTS
HAVE BEEN MET, SUBORDINATE TO THE OBLIGATION OF THE DISTRIBUTION COMPANY TO
MAKE PAYMENTS UNDER ITS SENIOR COMPANY NOTES AND SENIOR SUBORDINATED COMPANY
NOTE.
BY THEIR PURCHASE OF THE BONDS, THE BONDHOLDERS EXPRESSLY
ACKNOWLEDGE AND AGREE THAT SO LONG AS NO EVENT OF DEFAULT UNDER ANY OF THE
SENIOR LOAN AGREEMENTS, SENIOR COMPANY LOAN AGREEMENTS, SENIOR SUBORDINATED
LOAN AGREEMENTS OR SENIOR SUBORDINATED COMPANY LOAN AGREEMENTS HAS OCCURRED,
THE BONDHOLDERS MAY CONTINUE TO RECEIVE AND RETAIN PAYMENTS ON THE BONDS WHEN
AND AS THE SAME BECOME DUE, BUT THAT ANY AMOUNTS RECEIVED BY SUCH HOLDERS AS
A PAYMENT ON THE BONDS SUBSEQUENT TO ANY EVENT OF DEFAULT UNDER ANY OF THE
SENIOR LOAN AGREEMENTS, SENIOR COMPANY LOAN AGREEMENTS, SENIOR SUBORDINATED
LOAN AGREEMENTS OR SENIOR SUBORDINATED COMPANY LOAN AGREEMENTS WILL BE
RETAINED AND HELD IN TRUST BY SUCH HOLDER FOR THE BENEFIT OF THE TRUSTEE FOR
THE SENIOR BONDS AND THE SENIOR SUBORDINATED BONDS.
THE BONDHOLDERS, BY THEIR PURCHASE OF THE BONDS,
EXPRESSLY ACKNOWLEDGE AND AGREE THAT THE AUTHORITY MAKES NO REPRESENTATIONS
WHATSOEVER AS TO THE VIABILITY OF THE LEBANON PROJECT OR THE CREDITWORTHINESS
OF THE CORPORATION, THE COMPANIES OR THE BONDS OR THE ABILITY OF THE
CORPORATION OR THE COMPANIES TO PAY THE PRINCIPAL OF OR INTEREST ON THE
BONDS.
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
13
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.
(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 Pipeline Company, their operations and their
property, including the Lebanon Project. The insurance required to be
14
maintained pursuant hereto shall be reviewed by independent insurance
consultants knowledgeable 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 or the
Pipeline Company should maintain, which in the opinion of such insurance
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 and the Pipeline
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 Pipeline Company, their operations and their
property, including the Lebanon Project. The Corporation shall cause the
Authority to be a named as an insured under its general liability insurance
policies referred to above, as its interest may appear.
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 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 and the
Underwriter such other financial statements and information concerning its
operations and financial affairs as the Trustee or the Underwriter may from
time to time reasonably request, and (2) provide access to its facilities for
the purpose of inspection by the Trustee or the Underwriter during regular
business hours or at such other times as the Trustee or the Underwriter 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 and the Underwriter a certificate signed by its
chief executive officer and its chief financial officer and a report of the
15
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 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.
(e) As soon as practical, but in any case within
forty-five (45) days after the end of each month, the Corporation shall
furnish to the Underwriter unaudited financial statements for such month,
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 Lebanon Project, (2) a taking of all or any material part of the Lebanon
Project or any right therein under the exercise of the power of eminent
domain, (3) any loss of any material part of the Lebanon 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 material any part of the Lebanon Project
is destroyed or damaged by fire or other casualty, or if title to or the use
of all or any material part of the Lebanon 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 Lebanon 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 Lebanon 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
and Pipeline 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:
16
(1) The acquisition and/or construction by the
Corporation, the Distribution Company or the Pipeline 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 or the Pipeline 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, the Exploration Company or the Pipeline Company
evidencing the obligation to repay any other loan made by the Authority, the
Xxxxxxxx Authority or any other industrial development authority or similar
entity to finance a portion of the Lebanon Project, in whole or in part, for
application to the prorata redemption of the Bonds, the Senior Bonds, the
Senior Subordinated Bonds and any other bonds issued on behalf of the
Corporation, the Distribution Company, the Storage Company, the Exploration
Company or the Pipeline Company to finance a portion of the Lebanon 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 Lebanon Project. Prepayments of the Note shall be used to redeem
Bonds pursuant to Section 301(a) of the Indenture.
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 "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 Pipeline Company, the Lebanon 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 or the Pipeline Company to comply with
the terms of any Company Loan Agreement or Company Note;
17
(B) any action, suit, claim or demand contesting or
affecting the title to the Lebanon 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
Lebanon 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 or the Pipeline
Company, the Lebanon 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 Note, or the performance by the Corporation,
the Distribution Company, the Pipeline Company or any Indemnitee of any of
their respective obligations thereunder; or
(F) any releases or discharges of hazardous wastes,
constituents or pollutants, or other environmental hazards, contamination or
pollution on, in, near or under the Lebanon 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
18
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 Lebanon Project and its other properties or cause the Lebanon 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 Lebanon
Project and its 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 Lebanon 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 or the Pipeline Company and be subject to the terms
of this Loan Agreement as part of the Lebanon Project. Any portion of the
Lebanon Project may be disposed of in any manner permitted by Section 5.14.
The Corporation, the Distribution Company and the
Pipeline 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 Lebanon Project, including each 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
19
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 or the
Pipeline 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 Lebanon Project to be used, leased
to or occupied by the United States or an agency or instrumentality 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 Lebanon 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. Since the Underwriter will deduct two percent (2%) of the proceeds
of the Bonds from the funds being delivered to the Trustee in partial payment
for the Underwriter's discount, the Corporation will not request the payment
of any further Costs of Issuance from the proceeds of the Bonds.
20
(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 July 30, 1995.
(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,
(2) amounts invested in a bona fide debt service
fund, withinthe 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
Lebanon 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 or the Pipeline Company to participate in any other
issue of obligations, the interest on which
21
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 Lebanon for which the Distribution Company has
received a Certificate. As to the pipeline and storage facilities to be
owned and operated by the Pipeline Company, the Corporation shall request a
withdrawal from the Project Fund only for that portion of the Pipeline
Company's pipeline and storage facilities in Xxxxxxx County, Xxxxx County,
Xxxxx County and Washington County that are necessary to support the
distribution facility serving the area in and around the Town of Lebanon for
which the Distribution Company has received a 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.
(l) Notwithstanding anything to the contrary in the
Indenture, this Loan Agreement or the Company Loan Agreements, if a
Determination of Taxability has occurred and if the Corporation has opted to
increase the interest rate on the Bonds and the Note in lieu of the mandatory
redemption of the Bonds (as described in Section 301(d) of the Indenture),
neither the Authority, the Corporation nor the Companies need thereafter
comply with the covenants set forth in such documents regarding Adverse Tax
Actions unless the failure to so comply would cause the interest on any
Senior Bonds or Senior Subordinated Bonds to become includable in the gross
income of the holders thereof for federal income tax purposes.
FURTHER, NOTWITHSTANDING THE FOREGOING, THE CORPORATION MAY
INTENTIONALLY VIOLATE ONE OR MORE OF THE COVENANTS SET FORTH ABOVE AND
PURPOSEFULLY CAUSE AN EVENT OF TAXABILITY TO OCCUR IF IT (1) PROVIDES ADVANCE
NOTICE TO THE
22
BONDHOLDERS THAT AN EVENT OF TAXABILITY IS SCHEDULED TO OCCUR AND (2) ON OR
BEFORE THE DATE THAT THE EVENT OF TAXABILITY IS SCHEDULED TO OCCUR REDEEMS THE
BONDS IN FULL OR INCREASES THE INTEREST RATE ON THE BONDS TO FIFTEEN PERCENT
(15%) PER YEAR.
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 the
Underwriter and, unless the Senior Bonds and the Senior Subordinated Bonds
have been paid or defeased in full, the Senior 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, the Exploration
Company or the Pipeline Company is liable for any indebtedness, including
this Loan Agreement, the Senior Loan Agreements, the Senior Subordinated Loan
Agreements, the Company Loan Agreements, the Senior Company Loan Agreements
and the Senior Subordinated 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 Senior Loan
Agreements, the Senior Notes, the Senior Subordinated Loan Agreement and the
Senior Subordinated Note.
Section 5.10. Corporate Status. Unless the prior
written consent of the Underwriter has been obtained, 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, unless the prior written consent of the Underwriter has
been obtained, the Corporation agrees that throughout the term of this Loan
Agreement it will cause each of the Distribution Company and the Pipeline
Company to maintain its status as a corporation validly existing under the
laws of the Commonwealth of Virginia.
Unless the prior written consent of the Underwriter has
been obtained, 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 and the Pipeline
Company may be merged into or consolidated with the Corporation or one or
more of its Subsidiaries or one another.
Section 5.11. Priority of Indebtedness; Additional
Indebtedness. There are no restrictions on the ability of the Corporation to
issue additional indebtedness secured on a parity with the Note as to the
general revenues of the Corporation.
23
In addition to the Senior Bonds and the Senior
Subordinated Bonds and the documents related thereto, 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 to the
claims securing the Bonds and the documents related thereto, but, as to each
entity, the outstanding principal balance of such additional indebtedness may
not exceed $500,000 at any time, and, as to all entities, the outstanding
principal balance of such additional indebtedness may not exceed $3,000,000
in the aggregate at any time.
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) there has occurred a default in the payment of the principal of or
interest on the Senior Bonds or the Senior Subordinated Bonds or if moneys
have been transferred from the reserve fund or supplemental reserve account
for the Senior Bonds or the Senior Subordinated Bonds to the bond funds for
the Senior Bonds or the Senior Subordinated Bonds to make up any deficiency
in the bond funds for the Senior Bonds or the Senior Subordinated Bonds, as
applicable, 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
such payments and made such deposits to the reserve fund or supplemental
reserve account for the Senior Bonds or the Senior Subordinated Bonds or the
Reserve Fund, as applicable, to increase the balances therein to the amounts
required.
Section 5.14. Ownership of Stocks and Project. Unless
the prior written consent of the Underwriter has been obtained, 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
Pipeline Company.
Unless the prior written consent of the Underwriter has
been obtained, the Corporation shall not sell or transfer or permit the
Distribution Company or the Pipeline Company to sell or transfer any portion
of the Lebanon 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. Continuing Disclosure Requirements. The
Corporation hereby covenants and agrees that it will comply with and carry
out all of the provisions of the Continuing Disclosure Agreement.
Notwithstanding any other provision of this Loan Agreement, failure of the
Corporation to comply with the Continuing Disclosure Agreement
24
shall not be considered an Event of Default hereunder. The remedies available
upon a default under the Continuing Disclosure Agreement are described therein.
The Authority and the Corporation have agreed that no
financial or operating data concerning the Authority is material to any
decision to purchase, hold or sell the Bonds and have agreed that the
Authority will not provide any such information. The Corporation has
undertaken all responsibilities for any continuing disclosure to Bondholders
as described in the Continuing Disclosure Agreement, and the Authority shall
have no liability to the Holders of the Bonds or any other person with
respect to such disclosure.
Section 5.16. Subordination Discontinuance Requirements.
If the Corporation has contemporaneously caused all of the Subordination
Discontinuance Requirements to be met, the Bonds will no longer be secured on
a subordinate basis to the Senior Bonds and the Senior Subordinate Bonds, but
will become secured on a parity basis with the Senior Bonds and the Senior
Subordinated Bonds. Further, if the Corporation has contemporaneously caused
all of the Subordination Discontinuance Requirements to be met on or before
February 15, 2002, the interest rate on the Bonds will not increase to the
rate described in Section 202(b) of the Indenture, but rather shall remain at
9.50% per year through Payment of the Bonds, subject to the provisions of
Section 301(d) of the Indenture.
If the Corporation has contemporaneously caused all of
the Subordination Discontinuance Requirements to be met, the Trustee will
send a notice to the Holders of the Bonds, the Senior Underwriter (if any of
the Senior Bonds or Senior Subordinated Bonds are then outstanding) and the
Underwriter informing them (1) that the Bonds are no longer subordinate in
payment to the payment of the Senior Bonds and Senior Subordinated Bonds and
(2) if before February 15, 2002, that the interest rate on the Bonds will not
increase to 12.0% on or after February 15, 2002.
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) Except as provided in Section 5.15, 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
25
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 Lebanon Project or
the facilities financed with the proceeds of the Senior Bonds or the Senior
Subordinated Bonds by the Corporation, the Distribution Company, the Storage
Company, the Exploration Company, the Pipeline Company or any other
subsidiary or affiliate of the Corporation for a period of fifteen (15) days
or more.
(d) (1) If the Corporation, the Distribution Company,
the Storage Company, the Exploration Company or the Pipeline 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 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, the Exploration Company or the
Pipeline 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 or the Pipeline
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 shall take any action at law or in equity directed by the
Underwriter (or by the Holders of twenty-five percent (25%) or more in
aggregate principal amount of the Bonds outstanding if the Holders have
regained the
26
ability to select and direct remedies upon an Event of Default) 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 Notes shall take
any action at law or in equity directed by the Underwriter (or by the Holders of
twenty-five percent (25%) or more in aggregate principal amount of the Bonds
outstanding if the Holders have regained the ability to select and direct
remedies upon an Event of Default) 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 Notes due and payable.
Upon any such declaration of acceleration, the Distribution Company and/or the
Pipeline Company shall immediately pay to the Trustee the entire unpaid
principal of and accrued interest on its Company Note and other moneys due
thereunder. If the Trustee accelerates the payment of the Note, it shall also
accelerate the payment of the Company Notes.
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 Senior
Bonds and the Senior Subordinated Bonds have been paid or defeased in full,
the Trustee shall notify the Senior Underwriter and offer the Senior
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, the Underwriter and the
27
Trustee the reasonable fees and expenses of attorneys and other reasonable
expenses incurred by any 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
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 Lebanon 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 Lebanon 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 or the Pipeline Company is prevented from carrying on
its normal operations in connection with the Lebanon 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 Lebanon 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 or the Pipeline Company from carrying on its normal operations in
connection with the Lebanon 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 or the Pipeline Company in connection
with the Lebanon Project.
28
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 no
penalty or premium, and terminate this Loan Agreement. In such case, the
Authority shall cause the Trustee to redeem the Bonds as provided in Sections
301(b) and/or (c) of the Indenture.
Section 7.3. Option To Prepay the Note in Part. The
Corporation shall have the option to prepay the Note in part (in $5,000
increments), with no penalty or premium. The amount so prepaid shall, so
long as all payments then due under the Note have been made, 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.
Section 7.4. Option to Prepay the Note. The Corporation
shall have the option to prepay the Note in whole upon the occurrence of a
Determination of Taxability, unless the interest rate on the Bonds is
increased, as provided in Section 301(d) of the Indenture. If the
Corporation opts to redeem the Bonds, the Authority shall cause the Trustee
to redeem the Bonds as provided in Section 301(d) of the Indenture as quickly
as possible, but in any case within 30 to 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. Further, upon any such prepayment, the Corporation will pay all
fees and charges that may be due under the Indenture, the Bond Purchase
Agreement or this Loan Agreement. 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.
ARTICLE VIII
Miscellaneous
29
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 Xxxx Xxxx Xxxxxx
Post Office Box 2407
Xxxxxxxx, Xxxxxxxx 00000
(Attention: President)
Telephone (000) 000-0000; Telecopy (000) 000-0000
if to the Authority:
x/x Xxxxxx Xxxxxxxxxxxxx'x Xxxxxx
Xxxxxxx Xxxxxx Courthouse
000 Xxxx Xxxx Xxxxxx
Xxxxxxx, 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 Senior Underwriter:
Xxxxxxxx & Xxxxxxxxx Incorporated
0000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
(Attention: X. XxXxxxxx Downs, III)
Telephone (000) 000-0000; Telecopy (000) 000-0000
30
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 Senior Bonds and the Senior Subordinated
Bonds are paid or defeased in full, the Senior Underwriter. The Corporation,
the Trustee, the Authority, the Underwriter or the Senior 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, 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.
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 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
31
counterpart containing the receipt therefor executed by the Trustee following
the signatures to this Loan Agreement.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
32
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 XXXXXXX COUNTY
By _________________________________
Name: ___________________________
Title: (Vice) Chairman
VIRGINIA GAS COMPANY
By _________________________________
Name: Xxxxxxx X. Xxxxxxx
Title: President
SEEN AND ACKNOWLEDGED:
VIRGINIA GAS DISTRIBUTION COMPANY
By ______________________________
Name: Xxxxxxx X. Xxxxxxx
Title: President
VIRGINIA GAS PIPELINE COMPANY
By ______________________________
Name: Xxxxxxx X. Xxxxxxx
Title: President
Exhibit A -- Specimen Note
Exhibit B -- Specimen Company Note
Exhibit C -- Arbitrage Rebate Instructions
33
RECEIPT
Receipt of the foregoing original counterpart of the Loan
Agreement, dated as of February 1, 1997, between the Industrial Development
Authority of Xxxxxxx County and Virginia Gas Company and the $9,100,000
Promissory Note from Virginia Gas Company to the Industrial Development
Authority of Xxxxxxx County is hereby acknowledged.
CRESTAR BANK, as Trustee
By _______________________________
Name: X. X. Xxxxx
Title: Assistant Vice President
34
Exhibit A
SPECIMEN NOTE
A-1
Exhibit B
SPECIMEN COMPANY NOTE
B-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
February 15, 2002), 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 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
C-1
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.
C-2
