REVOLVING CREDIT AGREEMENT
Dated as of November 14, 1995
THIS REVOLVING CREDIT AGREEMENT is made as of November 14,
1995, by and between ESSEX COUNTY GAS COMPANY (the "Company"), a
Massachusetts corporation having its chief executive office at 7
North Hunt Road, Amesbury, Massachusetts 01913-0800 and THE
FIRST NATIONAL BANK OF BOSTON (the "Bank"), a national banking
association having its head office at 100 Federal Street, Boston,
Massachusetts 02110.
SECTION I
DEFINITIONS
1.1. Definitions.
All capitalized terms used in this Agreement or in the Note
or in any certificate, report or other document made or delivered
pursuant to this Agreement (unless otherwise defined therein)
shall have the meanings assigned to them below:
Adjusted Eurodollar Rate. Applicable to any Interest
Period, a rate per annum determined pursuant to the following
formula, rounded upwards, if necessary, to the next higher 1/100
of 1%:
Adjusted Eurodollar Rate = Interbank Offered
Rate
1.00 - Reserve Percentage
Where:
"Interbank Offered Rate" applicable to any
Eurodollar Loan for any Interest Period means the rate
of interest determined by the Bank to be the prevailing
rate per annum at which deposits in U.S. Dollars are
offered to the Bank by first-class banks in the
interbank Eurodollar market in which it regularly
participates on or about 10:00 a.m. (Boston,
Massachusetts time) two Business Days before the first
day of such Interest Period in an amount approximately
equal to the principal amount of the Eurodollar Loan to
which such Interest Period is to apply for a period of
time approximately equal to such Interest Period.
"Reserve Percentage" applicable to any Interest
Period means the rate (expressed as a decimal)
applicable to the Bank during such Interest Period
under regulations issued from time to time by the Board
of Governors of the Federal Reserve System for
determining the maximum reserve requirement (including,
without limitation, any basic, supplemental, emergency
or marginal reserve requirement) of the Bank with
respect to "Eurocurrency liabilities" as that term is
defined under such regulations.
The Adjusted Eurodollar Rate shall be adjusted automatically as
of the effective date of any change in the Reserve Percentage.
Agreement. This Agreement, as the same may be supplemented
or amended from time to time.
Bank. See Preamble.
Base Rate. The greater of (i) the rate of interest
announced from time to time by the Bank at its head office as its
Base Rate, and (ii) the Federal Funds Effective Rate plus 1/2 of
1% per annum (rounded upwards, if necessary, to the next 1/8 of
1%). "Federal Funds Effective Rate" means, for any day, a
fluctuating interest rate per annum equal to the weighted average
of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers,
as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day
that is a Business Day, the average of the quotations for such
day on such transactions received by the Bank from three Federal
funds brokers of recognized standing selected by the Bank.
Base Rate Loan. Any Loan bearing interest determined with
reference to the Base Rate.
Business Day. Any day other than a Saturday, Sunday or
legal holiday on which banks in Boston, Massachusetts or New
York, New York are open for the conduct of a substantial part of
their commercial banking business, and with respect to all
notices and determinations in connection with, and payments of
principal and interest on, Eurodollar Loans, any day that is such
a Business Day and that is also a day for trading between banks
in U.S. Dollar deposits in the interbank Eurodollar market.
Code. The Internal Revenue Code of 1986 and the rules and
regulations thereunder, collectively, as the same may from time
to time be supplemented or amended.
Collateral. As defined in the Security Agreement.
Commitment Amount. $10,000,000 or any lesser amount,
including zero, resulting from a termination or reduction of such
amount in accordance with Section 2.4 or Section 7.2.
Company. See Preamble.
Consolidated Funded Debt. On any date as of which the
amount thereof shall be determined, all Indebtedness of the
Company and its Subsidiaries that is payable on a date more than
one year from such date of determination, including Indebtedness
arising hereunder and Indebtedness from capitalized leases and
any portion of any such Indebtedness that is payable within one
year from such date of determination.
Consolidated Stockholders' Equity. On any date as of which
the amount thereof shall be determined, the consolidated common
stock, paid in capital and retained earnings of the Company and
its Subsidiaries.
Consolidated Total Capitalization. On any date as of which
the amount thereof shall be determined, the sum of Consolidated
Stockholders' Equity, consolidated preferred stock of the Company
and its Subsidiaries and Consolidated Funded Debt.
Controlled Group. All trades or businesses (whether or not
incorporated) under common control that, together with the
Company, are treated as a single employer under Section 414(b) or
414(c) of the Code or Section 4001 of ERISA.
Credit Documents. This Agreement, the Note, the Security
Agreement and any documents, agreements or other writings
executed in connection therewith.
Default. An Event of Default or event or condition that,
but for the requirement that time elapse or notice be given, or
both, would constitute an Event of Default.
Effective Date. The date on which the Order of the
Massachusetts Department of Public Utilities referred to in
Section 3.1(b) approving of this Agreement and the Indebtedness
created hereunder shall have become final and not subject to
further appeal, and all of the other conditions precedent set
forth in Section III shall have been satisfied.
Encumbrances. See Section 6.5.
ERISA. The Employee Retirement Income Security Act of 1974
and the rules and regulations thereunder, collectively, as the
same may from time to time be supplemented or amended.
Environmental Laws. All applicable foreign, federal, state
and local environmental, health or safety statutes, laws,
regulations, rules, ordinances, policies and rules or common law
whether now existing or hereafter enacted or promulgated,
relating to injury to, or the protection of, real or personal
property or human health or the environment.
Eurodollar Loan. Any Loan bearing interest at a rate
determined with reference to the Adjusted Eurodollar Rate.
Event of Default. Any event described in Section 7.1.
Federal Funds Rate. Applicable to any Interest Period, the
rate of interest equal to the rate per annum at which the Bank is
offered seven-day term Federal funds in the term Federal funds
market as of 10:00 a.m. (Boston, Massachusetts time) on the first
Business Day of such Interest Period, for settlement on such day
in an amount approximately equal to the principal amount of the
Fed Funds Rate Loan to which such Interest Period is to apply.
Federal Funds Rate Loans. Any Loan bearing interest at a
Federal Funds Rate.
Guarantees. All guarantees, endorsements or other
contingent or surety obligations with respect to obligations of
others whether or not reflected on the consolidated balance sheet
of the Company and its Subsidiaries, including any obligation to
furnish funds, directly or indirectly (whether by virtue of
partnership arrangements, by agreement to keep-well or
otherwise), through the purchase of goods, supplies or services,
or by way of stock purchase, capital contribution, advance or
loan, or to enter into a contract for any of the foregoing, for
the purpose of payment of obligations of any other person or
entity.
Hazardous Material. Any substance which is or becomes
defined as a "hazardous waste", "hazardous material" or
"hazardous substance" or "controlled industrial waste" or
"pollutant" or "contaminant" under any Environmental Law or which
is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous and
is or becomes regulated by any governmental authority or
instrumentality or which contains gasoline, diesel fuel or other
petroleum products, asbestos or polychlorinated biphenyls
("PCB's").
Indebtedness. All obligations (i) for borrowed money or
other extensions of credit, whether or not secured or unsecured,
absolute or contingent, including, without limitation, unmatured
reimbursement obligations with respect to letters of credit,
bankers' acceptances or guarantees issued for the account of or
on behalf of the Company and its Subsidiaries, (ii) representing
the deferred purchase price of property, other than accounts
payable arising in the ordinary course of business, (iii)
evidenced by bonds, notes, debentures or other similar
instruments, (iv) secured by any mortgage, pledge, security
interest or other lien on property owned or acquired by the
Company or any of its Subsidiaries whether or not the obligations
secured thereby shall have been assumed, (v) arising under
capital leases and required to be capitalized on the consolidated
balance sheet of the Company and its Subsidiaries, (vi) all
Guarantees.
Indenture. The Indenture of First Mortgage dated as of
October 1, 1955 by the Company (formerly known as Haverhill Gas
Company) to State Street Bank and Trust Company (formerly known
as Second Bank-State Street Trust Company), Trustee, as
supplemented and amended from time to time.
Interest Period.
(a) With respect to each Eurodollar Loan, the period
commencing on the date of the making or continuation of or
conversion to such Eurodollar Loan and ending one, two, three,
six or (if then available) twelve months thereafter, as the
Company may elect in the applicable Notice of Borrowing or
Conversion; and
(b) with respect to each Federal Funds Rate Loan, the
period commencing on the date of the making of such Federal Funds
Rate Loan and ending seven days thereafter, as the Company may
elect in the applicable Notice of Borrowing or Conversion;
provided that:
(i) any Interest Period (other than an Interest Period
determined pursuant to clause (iii) below) that would
otherwise end on a day that is not a Business Day shall be
extended to the next succeeding Business Day unless, in the
case of Eurodollar Loans, such Business Day falls in the
next calendar month, in which case such Interest Period
shall end on the immediately preceding Business Day;
(ii) any Interest Period applicable to a Eurodollar
Loan that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (iii) below, end
on the last Business Day of a calendar month;
(iii) any Interest Period that would otherwise end
after the Termination Date shall end on the Termination
Date; and
(iv) notwithstanding clause (iii) above, no Interest
Period applicable to a Eurodollar Loan shall have a duration
of less than one month; and if any Interest Period
applicable to such Loan would be for a shorter period, such
Interest Period shall not be available hereunder.
Investment. The purchase or acquisition of any share of
capital stock, partnership interest, evidence of indebtedness or
other equity security of any other person or entity, any loan,
advance or extension of credit to, or contribution to the capital
of, any other person or entity, any real estate held for sale or
investment, any commodities futures contracts held other than in
connection with bona fide hedging transactions, any other
investment in any other person or entity, and the making of any
commitment or acquisition of any option to make an Investment.
Loan. A loan made to the Company by the Bank pursuant to
Section II of this Agreement, and "Loans" means all of such
loans, collectively.
Note. A promissory note of the Company, substantially in
the form of Exhibit A hereto, evidencing the obligation of the
Company to the Bank to repay the Loans.
Notice of Borrowing or Conversion. See Section 2.2.
Obligations. All obligations of the Company to the Bank
hereunder of every kind and description, direct or indirect,
absolute or contingent, primary or secondary, due or to become
due, now existing or hereafter arising, regardless of how they
arise or by what agreement or instrument, if any, and including
obligations to perform acts and refrain from taking action as
well as obligations to pay money.
PBGC. The Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
Permitted Encumbrances. See Section 6.5.
Plan. An employee pension or other benefit plan that is
subject to Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code and is either (i)
maintained by the Company or any member of the Controlled Group
for employees of the Company or any member of the Controlled
Group or (ii) if such Plan is established, maintained pursuant to
a collective bargaining agreement or any other arrangement under
which more than one employer makes contributions and to which the
Company or any member of the Controlled Group is then making or
accruing an obligation to make contributions or has within the
preceding five Plan years made contributions.
Qualified Investments. Investments in (i) notes, bonds or
other obligations of the United States of America or any agency
thereof that as to principal and interest constitute direct
obligations of or are guaranteed by the United States of America;
(ii) certificates of deposit or other deposit instruments or
accounts of banks or trust companies organized under the laws of
the United States or any state thereof that have capital and
surplus of at least $100,000,000, (iii) commercial paper of Bank
of Boston Corporation or any other issuer that is rated not less
than prime-one or A-1 or their equivalents by Moody's Investors
Service, Inc. or Standard & Poor's Corporation, respectively, or
their successors, and (iv) any repurchase agreement secured by
any one or more of the foregoing.
Security Agreement. The Security Agreement dated as of
November 14, 1995 executed by the Company in favor of the Bank,
pursuant to which the Company granted to the Bank a security
interest in certain gas properties.
Storage Gas. All gas and other gaseous hydrocarbons of the
Company and all products refined therefrom and all other
minerals, ores and other substances of value of the Company and
the products and proceeds therefrom, in each case that are held
for sale, lease or other disposition, or leased or consigned,
whether in transit or in the possession of the Company or
another, and all such hydrocarbons and other substances of value
billed and held by suppliers, carriers, forwarding agents,
warehousemen, vendors, selling agents or other third parties.
Subsidiary. Any corporation, association, joint stock
company, business trust or other similar organization of which
50% or more of the ordinary voting power for the election of a
majority of the members of the board of directors or other
governing body of such entity is held or controlled by the
Company or a Subsidiary of the Company; or any other such entity
the management of which is directly or indirectly controlled by
the Company or a Subsidiary of the Company through the exercise
of voting power or otherwise; or any joint venture, whether
incorporated or not, in which the Company has an ownership
interest of 50% or more.
Termination Date. December 31, 2000 or such earlier date on
which the commitment to make Loans is terminated or the
Commitment Amount is reduced to zero in accordance with the terms
hereof.
1.2. Accounting Terms. All terms of an accounting character
shall have the meanings assigned thereto by generally accepted
accounting principles applied on a basis consistent with the
financial statements referred to in Section 4.6 of this
Agreement, but as herein specifically modified.
SECTION II
DESCRIPTION OF CREDIT
2.1. The Loans. (a) Subject to the terms and conditions
hereof, the Bank will make Loans to the Company, from time to
time until the close of business on the Termination Date, in such
sums as the Company may request, provided that the aggregate
principal amount of all Loans at any one time outstanding
hereunder may not exceed the Commitment Amount. The Company may
borrow, prepay pursuant to Section 2.10 and reborrow, from the
date of this Agreement until the Termination Date, the Commitment
Amount or any lesser sum that is at least $500,000 and an
integral multiple of $100,000 (in the case of Eurodollar Loans or
Federal Funds Rate Loans) and at least $100,000 and an integral
multiple of $100,000 (in the case of Base Rate Loans). Any Loan
not repaid by the Termination Date shall be due and payable on
the Termination Date.
(b) Provided that no Default shall have occurred and be
continuing, the Company may convert all or any part (in minimum
amounts of $500,000 and integral multiples of $100,000 (in the
case of Loans converted to Eurodollar Loans or Federal Funds Rate
Loans) and at least $100,000 and integral multiples of $100,000
(in the case of Loans converted to Base Rate Loans)) of any
outstanding Loan into a Loan of any other type provided for in
this Agreement in the same principal amount, on any Business Day
(which, in the case of a conversion of a Eurodollar Loan or
Federal Funds Rate Loan, shall be the last day of the applicable
Interest Period). The Company shall give the Bank prior notice
of each such conversion (which notice shall be effective upon
receipt) in accordance with Section 2.2.
2.2. Notice and Manner of Borrowing or Conversion of Loans.
(a) Whenever the Company desires to borrow, continue a Loan or
convert an outstanding Loan into a Loan of another type provided
for in this Agreement, the Company shall notify the Bank (which
notice shall be irrevocable) by telex, telegraph or telephone
received no later than 10:00 a.m. (Boston, Massachusetts time)
(i) one Business Day before the day on which the requested Loan
is to be made, continued as or converted to a Base Rate Loan,
(ii) three Business Days before the day on which the requested
Loan is to be made, continued as or converted to a Eurodollar
Loan and (iii) on the day on which the requested Loan is to be
made, continued as or converted to a Federal Funds Rate Loan.
Such notice shall specify (i) the effective date and amount of
each Loan or portion thereof to be continued or converted,
subject to the limitations set forth in Section 2.1, (ii) the
applicable interest rate option, and (iii) the duration of the
applicable Interest Period, if any (subject to the provisions of
the definition of Interest Period and Section 2.6). Each such
notification (a "Notice of Borrowing or Conversion") shall be
immediately followed by a written confirmation thereof by the
Company in substantially the form of Exhibit B hereto, provided
that if such written confirmation differs in any material respect
from the action taken by the Bank, the records of the Bank shall
control absent manifest error.
(b) Subject to the terms and conditions hereof, the Bank
shall make each Loan on the effective date specified therefor by
crediting the amount of such Loan to the Company's demand deposit
account with the Bank.
2.3. Commitment Fee. The Company shall pay to the Bank a
commitment fee computed at the rate of 1/8 of one percent (1/8%)
per annum on the average daily amount of the unborrowed portion
of the Commitment Amount during each quarter or portion thereof.
Commitment fees shall be payable quarterly in arrears on the last
day of each calendar quarter, beginning December 31, 1995, and on
the Termination Date.
In addition, the Company shall pay to the Bank a facility
fee equal to 1/8 of 1% of the Commitment Amount, payable
quarterly in arrears on the last day of each calendar quarter,
beginning December 31, 1995, and on the Termination Date.
2.4. Reduction of Commitment Amount. The Company may from
time to time by written notice delivered to the Bank at least
five Business Days prior to the date of the requested reduction,
reduce by integral multiples of $1,000,000 any unborrowed portion
of the Commitment Amount. No reduction of the Commitment Amount
shall be subject to reinstatement without the Bank's prior
written consent.
2.5. The Note. The Loans shall be evidenced by the Note,
payable to the order of the Bank and having a final maturity of
December 31, 2000. The Note shall be dated on or before the date
of the first Loan and shall have the blanks therein appropriately
completed. The Bank shall, and is hereby irrevocably authorized
by the Company to, enter on the schedule forming a part of the
Note or otherwise in its records appropriate notations evidencing
the date and the amount of each Loan, the applicable interest
rate and the date and amount of each payment of principal made by
the Company with respect thereto; and in the absence of manifest
error, such notations shall constitute conclusive evidence
thereof; provided that no failure on the part of the Bank to make
any such notation shall in any way affect any Loan or the rights
or obligations of the Bank or the Company with respect thereto.
2.6. Duration of Interest Periods. (a) Subject to the
provisions of the definition of Interest Period, the duration of
each Interest Period applicable to a Loan shall be as specified
in the applicable Notice of Borrowing or Conversion. The Company
shall have the option to elect a subsequent Interest Period to be
applicable to any Eurodollar Loan by giving notice of such
election to the Bank received no later than 10:00 a.m. (Boston,
Massachusetts time) (i) on the date one Business Day before the
end of the then applicable Interest Period if such Loan is to be
continued as or converted to a Base Rate Loan, and (ii) three
Business Days before the end of the then applicable Interest
Period if such Loan is to be continued as or converted to a
Eurodollar Loan.
(b) If the Bank does not receive a Notice of Borrowing or
Conversion with respect to any maturing Eurodollar Loan within
the applicable time limits specified in subsection (a) above, or
if a Default exists when such notice must be given, the Company
shall be deemed to have elected to convert such Loan into a Base
Rate Loan on the last day of the then current Interest Period.
(c) Notwithstanding the foregoing, the Company may not
select an Interest Period that would end, but for the provisions
of the definition of Interest Period, after the Termination Date.
2.7. Interest Rates and Payments of Interest. (a) Each
Base Rate Loan shall bear interest on the outstanding principal
amount thereof at a rate per annum equal to the Base Rate, which
rate shall change contemporaneously with any change in the Base
Rate. Such interest shall be payable on the last day of each
calendar quarter, beginning December 31, 1995, and when such Loan
is due (whether at maturity, by reason of acceleration or
otherwise).
(b) Each Eurodollar Loan shall bear interest on the
outstanding principal amount thereof, for each Interest Period,
at a rate per annum equal to the applicable Adjusted Eurodollar
Rate plus 1/2 of one percent (0.50%). Such interest shall be
payable for such Interest Period on the last day thereof and when
such Eurodollar Loan is due (whether at maturity, by reason of
acceleration or otherwise) and, if such Interest Period is longer
than three months, at intervals of three months after the first
day thereof.
(c) Each Federal Funds Rate Loan shall bear interest on the
outstanding principal amount thereof, for each Interest Period,
at a rate per annum equal to the applicable Federal Funds Rate
plus 1/2 of one percent (0.50%). Such interest shall be payable
for such Interest Period on the last day thereof and when such
Federal Funds Rate Loan is due (whether at maturity, by reason of
acceleration or otherwise).
2.8. Changed Circumstances.
(a) In the event that the Bank shall have determined in
good faith (which determination shall be final and conclusive)
that:
(i) adequate and fair means do not exist for
ascertaining the Interbank Offered Rate or a Federal Funds
Rate on any date on which the Adjusted Eurodollar Rate or a
Federal Funds Rate would otherwise be set, or
(ii) the making of a Eurodollar Loan or Federal Funds
Rate Loan or the continuation of or conversion of any Loan
to a Eurodollar Loan or Federal Funds Rate Loan has been
made impracticable (as reasonably determined by the Bank) or
unlawful by (1) the occurrence of a contingency that
materially and adversely affects the interbank Eurodollar
market or Federal funds market, as applicable, or (2)
compliance by the Bank in good faith with any applicable law
or governmental regulation, guideline or order or
interpretation or change thereof by any governmental
authority charged with the interpretation or administration
thereof or with any request or directive of any such
governmental authority (whether or not having the force of
law); or
(iii) the Adjusted Eurodollar Rate no longer
represents the effective cost to the Bank for U.S. dollar
deposits in the interbank market for deposits in which it
regularly participates;
then, and in any such event, the Bank shall forthwith so notify
the Company. Until the Bank notifies the Company that the
circumstances giving rise to such notice no longer apply, the
obligation of the Bank to allow selection by the Company of the
affected Loans shall be suspended. If at the time the Bank so
notifies the Company, the Company has previously given the Bank a
Notice of Borrowing or Conversion with respect to one or more
affected Loans but such Loans have not yet been made, continued
or converted, such notification shall be deemed to be void and
the Company may borrow Loans of another type by giving a
substitute Notice of Borrowing or Conversion pursuant to Section
2.2 hereof.
Upon such date as shall be specified in such notice (which
shall not be earlier than the date such notice is given) the
Company shall forthwith prepay all outstanding affected Loans,
together with interest thereon and any amounts required to be
paid pursuant to Section 2.13, and may borrow a Loan of another
type in accordance with Section 2.1 hereof by giving a Notice of
Borrowing or Conversion pursuant to Section 2.2 hereof.
(b) In case the adoption of or any change in any law,
regulation, treaty or official directive or the interpretation or
application thereof by any court or by any governmental authority
charged with the administration thereof or the compliance with
any guideline or request of any central bank or other
governmental authority (whether or not having the force of law):
(i) subjects the Bank to any tax with respect to
payments of principal or interest or any other amounts
payable hereunder by the Company or otherwise with respect
to the transactions contemplated hereby (except for taxes on
the overall net income of the Bank imposed by the United
States of America or any political subdivision thereof), or
(ii) imposes, modifies or deems applicable any deposit
insurance, reserve, special deposit or similar requirement
against assets held by, or deposits in or for the account
of, or loans by, the Bank (other than such requirements as
are already included in the determination of the Adjusted
Eurodollar Rate), or
(iii) imposes upon the Bank any other condition
with respect to its or the Company's performance under this
Agreement,
and the result of any of the foregoing is to increase the cost to
the Bank, reduce the income receivable by the Bank or impose any
expense upon the Bank with respect to any Loans, the Bank shall
notify the Company thereof. The Company agrees to pay to the
Bank the amount of such increase in cost, reduction in income or
additional expense as and when such cost, reduction or expense is
incurred or determined, upon presentation by the Bank of a
statement in the amount and setting forth the Bank's calculation
thereof, which statement shall be deemed true and correct absent
manifest error.
2.9. Capital Requirements. If after the date hereof the
Bank determines that (i) the adoption of or change in any law,
rule, regulation or guideline regarding capital requirements for
banks or bank holding companies, or any change in the
interpretation or application thereof by any governmental
authority charged with the administration thereof, or (ii)
compliance by the Bank or its parent bank holding company with
any guideline, request or directive of any such entity regarding
capital adequacy (whether or not having the force of law), has
the effect of reducing the return on the Bank's or such holding
company's capital as a consequence of the Bank's commitment to
make Loans hereunder to a level below that which the Bank or such
holding company could have achieved but for such adoption, change
or compliance (taking into consideration the Bank's or such
holding company's then existing policies with respect to capital
adequacy and assuming the full utilization of such entity's
capital) by any amount deemed by the Bank to be material, then
the Bank shall notify the Company thereof. The Company agrees to
pay to the Bank the amount of such reduction in the return on
capital as and when such reduction is determined, upon
presentation by the Bank of a statement in the amount and setting
forth the Bank's calculation thereof, which statement shall be
deemed true and correct absent manifest error. In determining
such amount, the Bank may use any reasonable averaging and
attribution methods.
2.10. Payments and Prepayments of the Loans. Any of the
Loans may be prepaid at any time, in whole in the case of
Eurodollar Loans or Federal Funds Rate Loans and in whole or in
part in the case of Base Rate Loans, without premium or penalty,
but with accrued interest to the date of payment (i) in the case
of Eurodollar Loans, on the last day of any applicable Interest
Period and upon three Business Days' notice, (ii) in the case of
Federal Funds Rate Loans, on the last day of any applicable
Interest Period and upon one Business Day's notice and (iii) in
the case of Base Rate Loans, at any time upon one Business Day's
notice. No prepayment of any Loan shall affect the Commitment
Amount or impair the Company's right to borrow as set forth in
Section 2.1.
2.11. Method of Payment. All payments and prepayments
of principal and all payments of interest, fees and other amounts
payable hereunder shall be made by the Company to the Bank at its
head office in immediately available funds, on or before 11:00
a.m. (Boston, Massachusetts time) on the due date thereof, free
and clear of, and without any deduction or withholding for, any
taxes or other payments. The Bank may, and the Company hereby
authorizes the Bank to, debit the amount of any payment not made
by such time to the demand deposit account of the Company with
the Bank.
2.12. Overdue Payments. Overdue principal (whether at
maturity, by reason of acceleration or otherwise) and, to the
extent permitted by applicable law, overdue interest and fees or
any other amounts payable hereunder or under the Note shall bear
interest from and including the due date until paid, compounded
daily and payable on demand, at a rate per annum equal to (i) if
such due date occurs prior to the end of an Interest Period, 2%
above the interest rate applicable to such Loan for such Interest
Period until the expiration of such Interest Period, and
thereafter, 2% above the Base Rate; and (ii) in all other cases,
2% above the rate then applicable to Base Rate Loans.
2.13. Payments Not at End of Interest Period. If the
Company for any reason makes any payment of principal of any
Eurodollar Loan or Federal Funds Rate Loan on any day other than
the last day of an Interest Period applicable to such Eurodollar
Loan or Federal Funds Rate Loan, or fails to borrow, continue or
convert to a Eurodollar Loan or Federal Funds Rate Loan after
giving a Notice of Borrowing or Conversion pursuant to Section
2.2, the Company shall pay to the Bank an amount equal to the
losses, costs and expenses incurred by the Bank in connection
with any redeployment of funds as a result of such payment of
principal or failure to borrow or continue or convert.
The Company shall pay such amount upon presentation by the Bank
of a statement setting forth the amount and the Bank's
calculation thereof, which statement shall be deemed true and
correct absent manifest error.
2.14. Computation of Interest and Fees. Interest and
all fees payable hereunder shall be computed daily on the basis
of a year of 360 days and paid for the actual number of days for
which due. If the due date for any payment of principal is
extended by operation of law, interest shall be payable for such
extended time. If any payment required by this Agreement becomes
due on a day that is not a Business Day such payment may be made
on the next succeeding Business Day (unless, in the case of
Eurodollar Loans, such next succeeding Business Day falls in the
next calendar month, in which case payment shall be due on the
preceding Business Day), and such extension shall be included in
computing interest in connection with such payment.
2.15. Collateral Security. The payment of the Loans and
the performance of the Company's obligations hereunder shall at
all times be subject to a security interest in all Storage Gas
now owned or hereafter acquired by the Company, pursuant to the
Security Agreement.
SECTION III
CONDITIONS OF LOANS
3.1. Conditions Precedent to Initial Loan. The occurrence
of the Effective Date, and the obligation of the Bank to make its
initial Loan is subject to the condition precedent that the Bank
shall have received, in form and substance satisfactory to the
Bank and its counsel, the following:
(a) this Agreement and the Note, duly executed by the
Company;
(b) a copy of Order No. ________ of the Massachusetts
Department of Public Utilities dated ________________, approving
this Agreement and the Indebtedness created hereunder;
(c) a certificate of the Clerk or an Assistant Clerk of the
Company with respect to votes of the Board of Directors of the
Company authorizing the execution and delivery of this Agreement
and the Note and identifying the officer(s) authorized to
execute, deliver and take all other actions required under the
Credit Documents, and providing specimen signatures of such
officers;
(d) all amendments and supplements to the articles of
organization of the Company filed in the office of the Secretary
of State of Massachusetts since the date of this Agreement, each
certified by said Secretary of State as being a true and correct
copy thereof;
(e) all amendments and supplements to the Bylaws of the
Company since the date of this Agreement, certified by the Clerk
or an Assistant Secretary Clerk as being a true and correct copy
thereof as currently in effect;
(f) a certificate of the Secretary of State of
Massachusetts, as to legal existence and good standing in such
state and listing all documents on file in the office of said
Secretary of State;
(g) a certificate of the Department of Revenue of The
Commonwealth of Massachusetts as to the tax good standing of the
Company;
(h) an opinion addressed to it from Keohane & Keegan,
counsel to the Company, substantially in the form of Exhibit G
hereto; and
(i) such other documents, and completion of such other
matters, as counsel for the Bank may deem necessary or
appropriate.
3.2. Conditions Precedent to all Loans. The obligation of
the Bank to make each Loan, including the initial Loan, or
continue or convert Loans to Loans of another type, is further
subject to the following conditions:
(a) timely receipt by the Bank of the Notice of Borrowing
or Conversion as provided in Section 2.2;
(b) the representations and warranties contained in Section
IV of this Agreement and in Section 3 of the Security Agreement
shall be true and accurate in all material respects on and as of
the date of such Notice of Borrowing or Conversion and on the
effective date of the making, continuation or conversion of each
Loan as though made at and as of each such date (except to the
extent that such representations and warranties expressly relate
to an earlier date), and no Default shall have occurred and be
continuing, or would result from such Loan;
(c) the resolutions referred to in Section 3.1(c) shall
remain in full force and effect; and
(d) no change shall have occurred in any law or regulation
or interpretation thereof that, in the opinion of counsel for the
Bank, would make it illegal or against the policy of any
governmental agency or authority for the Bank to make Loans
hereunder.
The making of each Loan shall be deemed to be a
representation and warranty by the Company on the date of the
making, continuation or conversion of such Loan as to the
accuracy of the facts referred to in subsection (b) of this
Section 3.2.
SECTION IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to enter into this Agreement and
to make Loans hereunder, the Company represents and warrants to
the Bank that:
4.1. Organization and Qualification. Each of the Company
and its Subsidiaries (a) is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction
of incorporation, (b) has all requisite corporate power to own
its property and conduct its business as now conducted and as
presently contemplated and (c) is duly qualified and in good
standing as a foreign corporation and is duly authorized to do
business in each jurisdiction except where the failure to be so
qualified would not have a material adverse effect on the
business, financial condition, assets or properties of the
Company or any such Subsidiary.
4.2. Corporate Authority. The execution, delivery and
performance of each of the Credit Documents and the transactions
contemplated thereby are within the corporate power and authority
of the Company and have been authorized by all necessary
corporate proceedings, and do not and will not (a) require any
consent or approval of the stockholders of the Company, (b)
contravene any provision of the charter documents or by-laws of
the Company or any material law, rule or regulation applicable to
the Company, (c) contravene any provision of, or constitute an
event of default or event that, but for the requirement that time
elapse or notice be given, or both, would constitute an event of
default under, any other material agreement, instrument, order or
undertaking binding on the Company, or (d) result in or require
the imposition of any Encumbrance on any of the material
properties, assets or rights of the Company, other than the
Encumbrances on the Collateral created by the Security Agreement.
4.3. Valid Obligations. Each of the Credit Documents and
all of their respective terms and provisions are the legal, valid
and binding obligations of the Company, enforceable in accordance
with their respective terms except as limited by bankruptcy,
insolvency, reorganization, moratorium or other laws affecting
the enforcement of creditors' rights generally, and except as the
remedy of specific performance or of injunctive relief is subject
to the discretion of the court before which any proceeding
therefor may be brought.
4.4. Consents or Approvals. The execution, delivery and
performance of the Credit Documents and the transactions
contemplated therein do not require any approval or consent of,
or filing or registration with, any governmental or other agency
or authority, or any other party, other than other than the
periodic filing of UCC-1 financing statements and the issuance of
Order No. __________ of the Massachusetts Department of Public
Utilities, which Order has been duly issued, is in full force and
effect and is not subject to further appeal.
4.5. Title to Properties; Absence of Encumbrances. Each of
the Company and its Subsidiaries has good and marketable title to
all of the properties, assets and rights of every kind and nature
now purported to be owned by it, including, without limitation,
such properties, assets and rights as are reflected in the
financial statements referred to in Section 4.6 (except such
properties, assets or rights as have been disposed of in the
ordinary course of business since the date thereof), free from
all Encumbrances except Permitted Encumbrances or those
Encumbrances disclosed in Exhibit C hereto, and, except as so
disclosed, free from all defects of title that might materially
adversely affect such properties, assets or rights, taken as a
whole.
4.6. Financial Statements. The Company has furnished the
Bank its consolidated balance sheet as of August 31, 1995 and its
consolidated statements of income, changes in stockholders'
equity and cash flow for the fiscal year then ended, and related
footnotes, audited and certified by Arthur Andersen LLP All
such financial statements were prepared in accordance with
generally accepted accounting principles applied on a consistent
basis throughout the periods specified and present fairly the
financial position of the Company and its Subsidiaries as of such
date and the results of the operations of the Company and its
Subsidiaries for such periods. There are no liabilities,
contingent or otherwise, not disclosed in such financial
statements that involve a material amount.
4.7. Changes. Since the date of the most recent financial
statements referred to in Section 4.6, there have been no changes
in the assets, liabilities, financial condition, business or
prospects of the Company or any of its Subsidiaries other than
changes in the ordinary course of business, the effect of which
has not, in the aggregate, been materially adverse.
4.8. Defaults. As of the date of this Agreement, no Default
exists.
4.9. Taxes. The Company and each Subsidiary have filed all
federal, state and other tax returns required to be filed, and
all taxes, assessments and other governmental charges due from
the Company and each Subsidiary have been fully paid, other than
those taxes, assessments and charges as to which the failure to
pay would not have a material adverse effect on the business,
financial condition, assets or properties of the Company or such
Subsidiary. The Company and each Subsidiary have established on
their books reserves adequate for the payment of all federal,
state and other tax liabilities.
4.10. Litigation. Except as set forth on Exhibit D
hereto, there is no litigation, arbitration, proceeding or
investigation pending, or, to the knowledge of the Company's or
any Subsidiary's officers, threatened, against the Company or any
Subsidiary that, if adversely determined, could result in a
material judgment not fully covered by insurance, could result in
a forfeiture of all or any substantial part of the property of
the Company or its Subsidiaries, or could otherwise have a
material adverse effect on the assets, business or prospects of
the Company or any Subsidiary.
4.11. Use of Proceeds. The proceeds of the Loans shall
be used exclusively for the acquisition of Storage Gas. No
portion of any Loan is to be used for the "purpose of purchasing
or carrying" any "margin stock" as such terms are used in
Regulations U and X of the Board of Governors of the Federal
Reserve System, 12 C.F.R. 221 and 224, as amended; and following
the application of the proceeds of each Loan, the value of all
"margin stock" of the Company will not exceed 25% of the value of
the total assets of the Company that are subject to the
restrictions set forth in Sections 6.5 and 6.6.
4.12. Subsidiaries. As of the date of this Agreement,
all the Subsidiaries of the Company are listed on Exhibit E
hereto. The Company or a Subsidiary of the Company is the owner,
free and clear of all liens and encumbrances, of all of the
issued and outstanding stock of each Subsidiary. All shares of
such stock have been validly issued and are fully paid and
nonassessable, and no rights to subscribe to any additional
shares have been granted, and no options, warrants or similar
rights are outstanding.
4.13. Investment Company Act, etc. Neither the Company
nor any of its Subsidiaries is subject to regulation under the
Investment Company Act of 1940, as amended, the Public Utility
Holding Company Act of 1935, as amended, or any other statute or
regulation that limits its ability to incur Indebtedness.
4.14. Compliance with ERISA. The Company and each
member of the Controlled Group have fulfilled their obligations
under the minimum funding standards of ERISA and the Code with
respect to each Plan and are in compliance in all material
respects with the applicable provisions of ERISA and the Code,
and have not incurred any liability to the PBGC or a Plan under
Title IV of ERISA; and no "prohibited transaction" or "reportable
event" (as such terms are defined in ERISA) has occurred with
respect to any Plan.
4.15. Environmental Matters. In all material respects
relative to the ability of the company to meet its financial and
operational obligations, the Company and each of its Subsidiaries
are in compliance with all Environmental Laws. No demand, claim,
notice, suit, suit in equity, action, administrative action,
investigation or inquiry arising under, relating to or in
connection with any Environmental Laws is pending or threatened
against the Company or any of its Subsidiaries, any real property
in which the Company or any such Subsidiary holds or, to the
Company's knowledge, has held, an interest, or any past or
present operation of the Company or any such Subsidiary, that
would prevent the Company from meeting its financial and
operational obligations. Neither the Company nor any of its
Subsidiaries (i) is the subject of any federal or state
investigation evaluating whether any remedial action is needed to
respond to a release of any Hazardous Materials or other wastes
into the environment, (ii) has received any notice of any
Hazardous Materials or other wastes in or upon any of its
properties in violation of any Environmental Laws, or (iii) knows
of any basis for any such investigation, notice or violation,
except as disclosed to the Bank on Exhibit D, and as to such
matters disclosed on such Exhibit, none will have a material
adverse effect on the financial condition, business, operations
or prospects of the Company or the Company and its Subsidiaries
on a consolidated basis such that the Company will be unable to
meet its financial and operational obligations.
4.16. Security. The Security Agreement, together with
the filing of Uniform Commercial Code financing statements in
such offices as the Company has deemed appropriate, acting in
good faith and with due inquiry, for the locations of the
Collateral referred to therein, and the delivery of notices to
all gas storage providers pursuant to Section 9-305 of the
Uniform Commercial Code of the Bank's security interest in the
Storage Gas held in storage by them, create a valid and
continuing first lien on and perfected security interest in the
Collateral, prior to all other Encumbrances, and is enforceable
as such against creditors of the Company, any owner of the real
property where any of the Collateral is located, any purchaser of
such real property and any present or future creditor obtaining a
lien on such real property.
SECTION V
AFFIRMATIVE COVENANTS
So long as the Bank has any commitment to lend hereunder or
any Loan or other Obligation hereunder remains outstanding, the
Company covenants as follows:
5.1. Financial Statements and other Reporting Requirements.
The Company shall furnish to the Bank:
(a) as soon as available to the Company, but in any event
within 90 days after the end of each of its fiscal years, a
consolidated and consolidating balance sheet as of the end of
such year, and the related consolidated and consolidating
statements of income, changes in stockholders' equity and cash
flow for such year, audited and certified by Arthur Andersen LLP
(or other independent certified public accountants acceptable to
the Bank) in the case of such consolidated statements, and
certified by the chief financial officer in the case of such
consolidating statements, it being understood that the Company
may submit its Report on Form 10-K as filed with the Securities
and Exchange Commission to satisfy this covenant; and,
concurrently with such financial statements, a written statement
by such accountants that, in the making of the audit necessary
for their report and opinion upon such financial statements they
have obtained no knowledge of any Default or, if in the opinion
of such accountants any such Default exists, they shall disclose
in such written statement the nature and status thereof;
(b) as soon as available to the Company, but in any event
within 45 days after the end of each of its fiscal quarters, the
consolidated and consolidating balance sheet as of the end of
such quarter, and a related consolidated and consolidating
statements of income and cash flow for the period then ended,
certified by the chief financial officer of the Company but
subject, however, to normal, recurring year-end adjustments that
shall not in the aggregate be material in amount, it being
understood that the Company may submit its Report on Form 10-Q as
filed with the Securities and Exchange Commission to satisfy this
covenant;
(c) concurrently with the delivery of each financial
statement pursuant to subsections (a) and (b) of this Section
5.1, a report in substantially the form of Exhibit F hereto
signed on behalf of the Company by its chief financial officer;
(d) promptly upon the filing thereof, copies of all proxy
statements, financial statements and reports as the Company shall
send to its stockholders or as the Company may file with the
Securities and Exchange Commission, the Massachusetts Department
of Public Utilities or any other governmental authority at any
time having jurisdiction over the Company or its Subsidiaries;
(e) if and when the Company gives or is required to give
notice to the PBGC of any "Reportable Event" (as defined in
Section 4043 of ERISA) with respect to any Plan that might
constitute grounds for a termination of such Plan under Title IV
of ERISA, or knows that any member of the Controlled Group or the
plan administrator of any Plan has given or is required to give
notice of any such Reportable Event, a copy of the notice of such
Reportable Event given or required to be given to the PBGC;
(f) immediately upon becoming aware of the existence of any
condition or event that constitutes a Default, written notice
thereof specifying the nature and duration thereof and the action
being or proposed to be taken with respect thereto;
(g) promptly upon becoming aware of any litigation or of
any investigative proceedings by a governmental agency or
authority commenced or threatened against the Company or any of
its Subsidiaries, the outcome of which would or might have a
materially adverse effect on the assets, business or prospects of
the Company or the Company and its Subsidiaries on a consolidated
basis, written notice thereof and the action being or proposed to
be taken with respect thereto;
(h) promptly upon becoming aware of any investigative
proceedings by a governmental agency or authority commenced or
threatened against the Company or any of its Subsidiaries
regarding any potential violation of Environmental Laws or any
spill, release, discharge or disposal of any Hazardous Material,
the outcome of which would or might have a materially adverse
effect on the assets, business or prospects of the Company or the
Company and its Subsidiaries on a consolidated basis, written
notice thereof and the action being or proposed to be taken with
respect thereto; and
(i) from time to time, such other financial data and
information about the Company or its Subsidiaries as the Bank may
reasonably request.
5.2. Conduct of Business. Each of the Company and its
Subsidiaries shall:
(a) duly observe and comply in all material respects with
all applicable laws and valid requirements of any governmental
authorities relative to its corporate existence, rights and
franchises, to the conduct of its business and to its property
and assets (including without limitation all Environmental Laws
and ERISA), and shall maintain and keep in full force and effect
all licenses and permits necessary in any material respect to the
proper conduct of its business;
(b) maintain its corporate existence; and
(c) remain engaged substantially in the sale and
distribution of Storage Gas.
5.3. Maintenance and Insurance. Each of the Company and its
Subsidiaries shall maintain its properties in good repair,
working order and condition as required for the normal conduct of
its business, and shall at all times maintain liability and
casualty insurance with financially sound and reputable insurers
in such amounts as the officers of the Company in the exercise of
their reasonable judgment deem to be adequate but in any event as
required by the Security Agreement. The Company shall furnish to
the Bank certificates or other evidence satisfactory to the Bank
of compliance with the foregoing insurance provisions.
5.4. Taxes. The Company shall pay or cause to be paid all
taxes, assessments or governmental charges on or against it or
any of its Subsidiaries or its or their properties on or prior to
the time when they become due; provided that this covenant shall
not apply to any tax, assessment or charge that is being
contested in good faith by appropriate proceedings and with
respect to which adequate reserves have been established and are
being maintained in accordance with generally accepted accounting
principles if no lien shall have been filed to secure such tax,
assessment or charge.
5.5. Inspection by the Bank. The Company shall permit the
Bank or its designees, at any reasonable time and upon reasonable
notice (or if a Default shall have occurred and is continuing, at
any time and without prior notice), to (i) visit and inspect the
properties of the Company and its Subsidiaries, (ii) examine and
make copies of and take abstracts from the books and records of
the Company and its Subsidiaries, and (iii) discuss the affairs,
finances and accounts of the Company and its Subsidiaries with
their appropriate officers, employees and accountants.
5.6. Maintenance of Books and Records. Each of the Company
and its Subsidiaries shall keep adequate books and records of
account, in which true and complete entries will be made
reflecting all of its business and financial transactions, and
such entries will be made in accordance with generally accepted
accounting principles consistently applied and applicable law.
5.7. Further Assurances. At any time and from time to time
the Company shall, and shall cause each of its Subsidiaries to,
execute and deliver such further instruments and take such
further action as may reasonably be requested by the Bank to
effect the purposes of this Agreement and the Note.
SECTION VI
NEGATIVE COVENANTS
So long as the Bank has any commitment to lend hereunder or
any Loan or other Obligation hereunder remains outstanding, the
Company covenants as follows:
6.1. Indebtedness. Neither the Company nor any of its
Subsidiaries shall create, incur, assume or be or remain liable
with respect to any Indebtedness other than the following:
(a) Indebtedness to the Bank or any of its affiliates;
(b) Indebtedness incurred under the Indenture and other
Indebtedness existing as of the date of this Agreement and
disclosed on Exhibit C hereto or in the financial statements
referred to in Section 4.6;
(c) Indebtedness of the Company incurred in connection with
the purchase of tangible property used in its business and
secured by Permitted Encumbrances, in amounts not exceeding in
the aggregate at any time $200,000;
(d) capitalized lease obligations of the Company in amounts
not exceeding in the aggregate at any time $2,000,000;
(e) Indebtedness arising under unsecured short term lines
of credit extended by banks in principal amounts not to exceed in
the aggregate principal amount $20,000,000; and
(f) other unsecured Indebtedness or additional Indebtedness
secured by Encumbrances on non-current assets of the Company
(assets not classified as "current assets" on the Company's
consolidated balance sheet prepared in accordance with generally
accepted accounting principles) that does not exceed in aggregate
principal amount $20,000,000, provided that except with respect
to Restricted Payments, such other Indebtedness shall be on terms
no more restrictive than the Indebtedness hereunder and shall not
be repayable in whole or in part until the date occurring one
year after the Termination Date.
6.2. Contingent Liabilities. Neither the Company nor any of
its Subsidiaries shall create, incur, assume or remain liable
with respect to any Guarantees other than the following:
(a) Guarantees in favor of the Bank or any of its
affiliates;
(b) Guarantees existing on the date of this Agreement and
disclosed on Exhibit C hereto or in the financial statements
referred to in Section 4.6;
(c) Guarantees resulting from the endorsement of negotiable
instruments for collection in the ordinary course of business;
(d) Guarantees with respect to surety, appeal, performance
and return-of-money and other similar obligations incurred in the
ordinary course of business (exclusive of obligations for the
payment of borrowed money) not exceeding in the aggregate at any
time $2,000,000; and
(e) Guarantees of normal trade debt incurred in connection
with the acquisition of goods and supplies.
6.3. Leases. Neither the Company nor any of its
Subsidiaries shall during any fiscal year enter into any leases
of real or personal property as lessee, except for capital leases
or leases providing for payments in any one fiscal year (whether
or not such payments are termed rent) in the aggregate of less
than $500,000.
6.4. Sale and Leaseback. Neither the Company nor any of its
Subsidiaries shall enter into any arrangement, directly or
indirectly, whereby it shall sell or transfer any property owned
by it in order to lease such property or lease other property
that the Company or any such Subsidiary intends to use for
substantially the same purpose as the property being sold or
transferred.
6.5. Encumbrances. Neither the Company nor any of its
Subsidiaries shall create, incur, assume or suffer to exist any
mortgage, pledge, security interest, lien or other charge or
encumbrance, including the lien or retained security title of a
conditional vendor upon or with respect to any of its property or
assets ("Encumbrances"), or assign or otherwise convey any right
to receive income, including the sale or discount of accounts
receivable with or without recourse, except the following
("Permitted Encumbrances"):
(a) Encumbrances in favor of the Bank or any of its
affiliates;
(b) Encumbrances created by the Indenture and other
Encumbrances existing as of the date of this Agreement and
disclosed in Exhibit C hereto;
(c) liens for taxes, fees, assessments and other
governmental charges to the extent that payment of the same may
be postponed or is not required in accordance with the provisions
of Section 5.4;
(d) landlords' and lessors' liens in respect of rent not in
default or liens in respect of pledges or deposits under
workmen's compensation, unemployment insurance, social security
laws, or similar legislation (other than ERISA) or in connection
with appeal and similar bonds incidental to litigation;
mechanics', laborers' and materialmen's and similar liens, if the
obligations secured by such liens are not then delinquent; liens
securing the performance of bids, tenders, contracts (other than
for the payment of money); and statutory obligations incidental
to the conduct of its business and that do not in the aggregate
materially detract from the value of its property or materially
impair the use thereof in the operation of its business;
(e) judgment liens that shall not have been in existence
for a period longer than 30 days after the creation thereof or,
if a stay of execution shall have been obtained, for a period
longer than 30 days after the expiration of such stay;
(f) rights of lessors under capitalized leases permitted by
Section 6.1(f);
(g) Encumbrances securing Indebtedness permitted by Section
6.1(d), provided that any such Encumbrances shall not extend to
assets of the Company or any such Subsidiary not financed by such
Indebtedness;
(h) Encumbrances securing Indebtedness permitted by Section
6.1(e);
(i) easements, rights of way, restrictions and other
similar charges or Encumbrances relating to real property and not
interfering in a material way with the ordinary conduct of its
business; and
(j) Encumbrances on its assets created in connection with
the refinancing of Indebtedness secured by Permitted Encumbrances
on such assets, provided that the amount of Indebtedness secured
by any such Encumbrance shall not be increased as a result of
such refinancing and no such Encumbrance shall extend to property
and assets of the Company or any such Subsidiary not encumbered
prior to any such refinancing.
6.6. Merger; Consolidation; Sale or Lease of Assets.
Neither the Company nor any of its Subsidiaries shall sell, lease
or otherwise dispose of all or any substantial portion of its
assets; or liquidate, merge or consolidate into or with any other
person or entity, provided that any Subsidiary of the Company may
merge or consolidate into or with (i) the Company if no Default
has occurred and is continuing or would result from such merger
and if the Company is the surviving company, or (ii) any other
wholly-owned Subsidiary of the Company.
6.7. Additional Stock Issuance. The Company shall not
permit any of its Subsidiaries to issue any additional shares of
its capital stock or other equity securities, any options
therefor or any securities convertible thereto other than to the
Company. Neither the Company nor any of its Subsidiaries shall
sell, transfer or otherwise dispose of any of the capital stock
or other equity securities of a Subsidiary, except (i) to the
Company or any of its wholly-owned Subsidiaries, or (ii) in
connection with a transaction permitted by Section 6.6.
6.8. Capital Expenditures. Neither the Company nor any of
its Subsidiaries shall purchase or agree to purchase, or incur
any Indebtedness (including that portion of the Indebtedness
arising under capital leases that is required to be capitalized
on the consolidated balance sheet of the Company and its
Subsidiaries) for, any equipment or other property constituting
fixed assets in any fiscal year in excess of $10,000,000.
6.9. Investments. Neither the Company nor any of its
Subsidiaries shall make or maintain any Investments other than
(i) Qualified Investments, (ii) existing Investments in
Subsidiaries and new Investments in such Subsidiaries in the
ordinary course of its business, (iii) acquisitions of new
Subsidiaries, provided that such Subsidiaries engage in the same
or related lines of business as the Company and its Subsidiaries,
and (iv) loans to customers of the Company to enable the
installation of systems for the storage and distribution of gas
products sold to such customers on open account.
6.10. ERISA. Neither the Company nor any member of the
Controlled Group shall permit any Plan maintained by it to (i)
engage in any "prohibited transaction" (as defined in Section
4975 of the Code, (ii) incur any "accumulated funding deficiency"
(as defined in Section 302 of ERISA) whether or not waived, or
(iii) terminate any Plan in a manner that could result in the
imposition of a lien or encumbrance on the assets of the Company
or any of its Subsidiaries pursuant to Section 4068 of ERISA.
6.11. Interest Charge Coverage. The Company shall not
permit its Interest Charge Coverage Ratio to be less than 2.0 to
1.0. As used in this Section 6.11, "Interest Charge Coverage
Ratio" shall mean, as of the end of each period of four
consecutive fiscal quarters, the ratio of (i) consolidated net
income, excluding any nonrecurring or extraordinary items, plus
(ii) income tax expense for such period, plus (iii) consolidated
interest expense (including interest on the Loans notwithstanding
any contrary classification of such expense required by any
regulatory authority, and including interest on fuel inventory
and imputed interest on capitalized lease obligations, but
excluding any charges for accumulated funds used during
construction) and amortized debt discount for such period
(collectively, "Interest Expense"); to Interest Expense for such
period.
6.12. Equity to Total Capitalization. The Company shall
not permit the percentage of (i) Consolidated Stockholders'
Equity to (ii) Consolidated Total Capitalization to be less than
30%.
6.13. Restricted Payments. The Company shall not
directly or indirectly (a) declare or pay any dividend (other
than dividends payable in common stock of the Company) or declare
or make any other distribution on any shares of common stock, or
(b) make any expenditures for the purchase, redemption or other
retirement for a consideration of any shares of capital stock of
the Company (other than in exchange for, or from the net cash
proceeds of, other and new shares of capital stock of the Company
and other than any shares of any class of stock required to be
purchased, redeemed or otherwise retired for any sinking fund or
purchase fund for such class of stock), if the aggregate amount
of all such dividends, distributions and expenditures made since
August 31, 1990 would exceed the aggregate amount of the net
income of the Company (as such term is defined in Section 1.04 of
the Twelfth Supplemental Indenture dated as of December 1, 1990
to the Indenture) accumulated after August 31, 1990 plus
$2,000,000.
SECTION VII
EVENTS OF DEFAULTS
7.1. Events of Default. There shall be an Event of Default
hereunder if any of the following events occurs:
(a) the Company shall fail to pay when due (i) any amount
of principal of any Loans, or (ii) any amount of interest thereon
or any fees or expenses payable hereunder or under the Note
within five days of the due date therefor; or
(b) The Company shall fail to perform any term, covenant or
agreement contained in Sections 5.1(f), 5.5, 5.7 or Section VI of
this Agreement or any term, covenant or agreement contained in
the Security Agreement; or
(c) the Company shall fail to perform any covenant
contained in Sections 5.1(e), 5.1(g), 5.1(h) or 5.2, and such
failure shall continue for 30 days; or
(d) the Company shall fail to perform any term, covenant or
agreement (other than in respect of subsections 7.1(a) through
(c) hereof) contained in this Agreement and such default shall
continue for 30 days after notice thereof has been sent to the
Company by the Bank; or
(e) any representation or warranty of the Company made in
this Agreement or in any of the other Credit Documents or any
other documents or agreements executed in connection with the
transactions contemplated thereunder or in any certificate
delivered thereunder shall prove to have been false in any
material respect upon the date when made or deemed to have been
made; or
(f) there shall occur any material adverse change in the
assets, liabilities, financial condition, business or prospects
of the Company or the Company and its Subsidiaries, taken as a
whole, as determined by the Bank acting in good faith; or
(g) the Company or any of its Subsidiaries shall fail to
pay at maturity, or within any applicable period of grace, any
Indebtedness under the Indenture or any other Indebtedness in
excess of $1,000,000 in the aggregate for borrowed money, or for
the use of real or personal property, or fail to observe or
perform any term, covenant or agreement evidencing or securing
such Indebtedness, or relating to such use of real or personal
property, the result of which failure is to permit the holder or
holders of such obligations to cause such Indebtedness to become
due prior to its stated maturity upon delivery of required
notice, if any; or
(h) the Company or any of its Subsidiaries shall (i) apply
for or consent to the appointment of, or the taking of possession
by, a receiver, custodian, trustee, liquidator or similar
official of itself or of all or a substantial part of its
property, (ii) be generally not paying its debts as such debts
become due, (iii) make a general assignment for the benefit of
its creditors, (iv) commence a voluntary case under the Federal
Bankruptcy Code (as now or hereafter in effect), (v) take any
action or commence any case or proceeding under any law relating
to bankruptcy, insolvency, reorganization, winding-up or
composition or adjustment of debts, or any other law providing
for the relief of debtors, (vi) fail to contest in a timely or
appropriate manner, or acquiesce in writing to, any petition
filed against it in an involuntary case under the Federal
Bankruptcy Code or other law, (vii) take any action under the
laws of its jurisdiction of incorporation or organization similar
to any of the foregoing, or (viii) take any corporate action for
the purpose of effecting any of the foregoing; or
(i) a proceeding or case shall be commenced, without the
application or consent of the Company or any of its Subsidiaries
in any court of competent jurisdiction, seeking (i) the
liquidation, reorganization, dissolution, winding-up, or
composition or readjustment of its debts, (ii) the appointment of
a trustee, receiver, custodian, liquidator or the like of it or
of all or any substantial part of its assets, or (iii) similar
relief in respect of it, under any law relating to bankruptcy,
insolvency, reorganization, winding-up or composition or
adjustment of debts or any other law providing for the relief of
debtors, and such proceeding or case shall continue undismissed,
or unstayed and in effect, for a period of 45 days; or an order
for relief shall be entered in an involuntary case under the
Federal Bankruptcy Code, against the Company or such Subsidiary;
or action under the laws of the jurisdiction of incorporation or
organization of the Company or any of its Subsidiaries similar to
any of the foregoing shall be taken with respect to the Company
or such Subsidiary and shall continue unstayed and in effect for
any period of 45 days; or
(j) a judgment or order for the payment of money shall be
entered against the Company or any of its Subsidiaries by any
court, or a warrant of attachment or execution or similar process
shall be issued or levied against property of the Company or such
Subsidiary, that in the aggregate exceeds $1,000,000 in value and
such judgment, order, warrant or process shall continue
undischarged or unstayed for 45 days; or
(k) the Company or any member of the Controlled Group shall
fail to pay when due any amount that it shall have become liable
to pay to the PBGC or to a Plan under Title IV of ERISA; or
notice of intent to terminate a Plan or Plans shall be filed
under Title IV of ERISA by the Company, any member of the
Controlled Group, any plan administrator or any combination of
the foregoing; or the PBGC shall institute proceedings under
Title IV of ERISA to terminate or to cause a trustee to be
appointed to administer any such Plan or Plans or a proceeding
shall be instituted by a fiduciary of any such Plan or Plans
against the Company and such proceedings shall not have been
dismissed within 45 days thereafter; or a condition shall exist
by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any such Plan or Plans must be terminated.
7.2. Remedies. Upon the occurrence of an Event of Default
described in subsections 7.1(h) and (i), immediately and
automatically, and upon the occurrence of any other Event of
Default, at any time thereafter while such Event of Default is
continuing, at the Bank's option and upon the Bank's declaration:
(a) the Bank's commitment to make any further Loans
hereunder shall terminate;
(b) the unpaid principal amount of the Loans together with
accrued interest and all other Obligations hereunder shall become
immediately due and payable without presentment, demand, protest
or further notice of any kind, all of which are hereby expressly
waived (provided that the Bank shall endeavor to advise the
Company if any payment required to be made hereunder is not
timely received); and
(c) the Bank may exercise any and all rights it has under
the Credit Documents or at law or in equity, and proceed to
protect and enforce the Bank's rights by any action at law, in
equity or other appropriate proceeding.
SECTION VIII
MISCELLANEOUS
8.1. Notices. Unless otherwise specified herein, all
notices hereunder and under the other Credit Documents to any
party hereto shall be in writing and shall be deemed to have been
given when (i) delivered by hand, (ii) properly deposited in the
mails postage prepaid, (iii) sent by telex, answerback received,
or electronic facsimile transmission, or (iv) delivered to the
telegraph company or overnight courier, in each case addressed to
such party at its address indicated below:
If to the Company, at
Essex County Gas Company
7 North Hunt Road
Amesbury, Massachusetts 01913-0800
Attention: James H. Hastings, Vice President and
Treasurer
Telephone: (508) 388-4000
Facsimile: (508) 388-7998
If to the Bank, at
THE FIRST NATIONAL BANK OF BOSTON
100 Federal Street
Boston, Massachusetts 02110
Attention: Sarah P.Z. Dwyer, Assistant Vice
President
Telephone: (617) 434-5934
Facsimile: (617) 434-3652
or at any other address specified by such party in writing.
8.2. Expenses; Indemnification. (a) The Company will pay
on demand all expenses of the Bank in connection with the
preparation, waiver or amendment of this Agreement and the other
Credit Documents, or the administration, default or collection of
the Loans or other Obligations or in connection with the Bank's
exercise, preservation or enforcement of any of its rights,
remedies or options thereunder, including, without limitation,
fees and expenses of outside legal counsel or the allocated costs
of in-house legal counsel, accounting, consulting, brokerage or
other similar professional fees or expenses, and any fees or
expenses associated with any travel or other costs relating to
any appraisals or examinations conducted in connection with the
Obligations or any collateral therefor, and the amount of all
such expenses shall, until paid, bear interest at the rate
applicable to principal hereunder (including any default rate).
(b) The Company agrees to indemnify and hold harmless the
Bank from and against any and all claims, actions and suits
whether groundless or otherwise, and from and against any and all
liabilities, losses, damages and expenses of every nature and
character arising out of this Agreement and the other Credit
Documents or the transactions evidenced thereby; provided that
the Bank shall have no right to be indemnified hereunder with
respect to any such claims, actions, suits, liabilities, losses,
damages and expenses to the extent arising as a result of its own
gross negligence or willful misconduct; and provided, further
that the Company shall not be liable for any settlement,
compromise or consent to the entry of any order adjudicating or
otherwise disposing of any claim, action, suit, liability, loss,
damage or expense effected without the consent of the Company.
Should any claim be made by a person not a party to this
Agreement with respect to any matter to which the foregoing
indemnity relates, the Bank shall promptly notify the Company of
any such claim, and the Company shall have the right to direct
and control the defense of such claim or any litigation based
thereon at its own expense through counsel of its own choosing.
8.3. Set-Off. Regardless of the adequacy of any collateral
or other means of obtaining repayment of the Obligations, any
deposits, balances or other sums credited by or due from the head
office of the Bank or any of its branch offices to the Company
may, at any time and from time to time after the occurrence of an
Event of Default hereunder, without notice to the Company or
compliance with any other condition precedent now or hereafter
imposed by statute, rule of law, or otherwise (all of which are
hereby expressly waived) be set off, appropriated, and applied by
the Bank against any and all obligations of the Company to the
Bank or any of its affiliates in such manner as the head office
of the Bank or any of its branch offices in their sole discretion
may determine, and the Company hereby grants the Bank a
continuing security interest in such deposits, balances or other
sums for the payment and performance of all such Obligations.
8.4. Term of Agreement. This Agreement shall continue in
full force and effect so long as the Bank has any commitment to
make Loans hereunder or any Loan or any Obligation hereunder
shall be outstanding.
8.5. No Waivers. No failure or delay by the Bank in
exercising any right, power or privilege hereunder or under the
other Credit Documents shall operate as a waiver thereof; nor
shall any single or partial exercise thereof preclude any other
or further exercise thereof or the exercise of any other right,
power or privilege. The rights and remedies provided herein and
in the Note and such other documents and agreements are
cumulative and not exclusive of any rights or remedies otherwise
provided by agreement or law.
8.6. Governing Law. This Agreement and the other Credit
Documents shall each be deemed to be a contract made under seal
and shall be construed in accordance with and governed by the
laws of The Commonwealth of Massachusetts (without giving effect
to any conflicts of laws provisions contained therein).
8.7. Amendments. Neither this Agreement nor the other
Credit Documents nor any provision thereof may be amended,
waived, discharged or terminated except by a written instrument
signed by the Bank and, in the case of amendments, by the
Company.
8.8. Binding Effect of Agreement. This Agreement shall be
binding upon and inure to the benefit of the Company and the Bank
and their respective successors and assigns; provided that the
Company may not assign or transfer its rights or obligations
hereunder. The Bank may sell or transfer its interests hereunder
and under the Note, or grant participations therein, without the
prior written consent of the Company. In the case of any such
participation, the Company agrees that any such participant shall
be entitled to the benefits of Sections 2.8, 2.9, 2.13, 5.5 and
8.3 to the same extent as if such transferee or participant were
the Bank hereunder; provided the Company may, for all purposes of
this Agreement, treat the Bank as the person entitled to exercise
all rights hereunder and under the Note and to receive all
payments with respect thereto.
8.9. Counterparts. This Agreement may be signed in any
number of counterparts with the same effect as if the signatures
hereto and thereto were upon the same instrument.
8.10. Partial Invalidity. The invalidity or
unenforceability of any one or more phrases, clauses or sections
of this Agreement shall not affect the validity or enforceability
of the remaining portions of it.
8.11. Captions. The captions and headings of the
various sections and subsections of this Agreement are provided
for convenience only and shall not be construed to modify the
meaning of such sections or subsections.
8.12. WAIVER OF JURY TRIAL. THE BANK AND THE COMPANY
AGREE THAT NEITHER OF THEM NOR ANY ASSIGNEE OR SUCCESSOR SHALL
(A) SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR
ANY OTHER ACTION BASED UPON, OR ARISING OUT OF, THIS AGREEMENT,
THE OTHER CREDIT DOCUMENTS, ANY COLLATERAL OR THE DEALINGS OR THE
RELATIONSHIP BETWEEN OR AMONG ANY OF THEM, OR (B) SEEK TO
CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY
TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THE PROVISIONS OF THIS
PARAGRAPH HAVE BEEN FULLY DISCUSSED BY THE BANK AND THE COMPANY,
AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NEITHER
THE BANK NOR THE COMPANY HAS AGREED WITH OR REPRESENTED TO THE
OTHER THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY
ENFORCED IN ALL INSTANCES.
8.13. Entire Agreement. This Agreement and the other
Credit Documents constitute the final agreement of the parties
hereto and supersede any prior agreement or understanding,
written or oral, with respect to the matters contained herein and
therein.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed by their duly authorized officers as of the day
and year first above written.
ESSEX COUNTY GAS COMPANY
By
_____________________________________
Title:
THE FIRST NATIONAL BANK OF BOSTON
By
_____________________________________
Frank T. Smith
Director