Execution Copy
SECURITY AGREEMENT
AND ASSIGNMENT OF CONTRACTS
SECURITY AGREEMENT AND ASSIGNMENT OF CONTRACTS (this
"Security Agreement") dated as of September 12, 1997, made by
MASSACHUSETTS FUEL INVENTORY TRUST (the "Trust") by State
Street Bank and Trust Company, not in its individual capacity
but solely as successor trustee (herein, in such capacity,
called the "Trustee") under the Trust Agreement dated as of
June 22, 1990 (said Trust Agreement, as the same may from
time to time be amended, modified or supplemented, being
herein called the "Trust Agreement") between it and Colonial
Gas Company, as trustor and beneficiary (the "Company", and
together with the Trust, the "Borrowers"), to FLEET NATIONAL
BANK as agent (in such capacity, the "Agent"), for the
ratable benefit of itself and the Banks party to the Credit
Agreement (as defined below) (the "Banks") and the
institution and/or person acting as Trustee (hereinafter
referred to collectively as the "Secured Parties"):
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement (as
hereinafter defined), the Banks have agreed to extend credit
to the Trust from time to time in an aggregate principal
amount up to but not exceeding $30,000,000, by making
Advances to the Trust, such Advances to be evidenced by the
Notes (as defined in the Credit Agreement); and
WHEREAS, the Banks are willing to extend credit under
the Credit Agreement in order, among other things, to enable
the Trust to acquire rights in the Collateral (as hereinafter
defined), but only upon the condition, among others, that (a)
the Trust shall have executed and delivered to the Agent, for
the ratable benefit of the Secured Parties, this Security
Agreement and Assignment of Contracts and (b) the Company
shall have executed and delivered to the Agent, for the
ratable benefit of the Secured Parties, the Consent and
Agreement;
NOW, THEREFORE, in consideration of the premises and of
the mutual covenants herein contained and for other good and
valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
Section 1. Defined Terms. Unless the context
otherwise specifies or requires, each term defined in this
Section 1 shall, when used in this Agreement, have the
meaning indicated. To the extent that certain of the terms
defined in this Agreement are defined by cross-reference to
documents which may not be in full force and effect during
the entire term of this Agreement, the definitions contained
in such documents shall be and remain effective for purposes
of implementing this Agreement during the term of this
Agreement.
"Advance" shall have the meaning set forth in Section 1
of the Credit Agreement.
"Agent" shall mean Fleet National Bank, and its
successors and permitted assigns, as agent for the ratable
benefit of the Secured Parties.
"Authorized Officer" shall mean at any time and for any
purpose the following officers: in the case of the Trust,
any Vice President or Assistant Vice President of the
Trustee; or in the case of the Company, President, Vice
President, Treasurer, or any Assistant Treasurer.
"Banks" shall have the meaning specified in the preamble
to the Credit Agreement.
"Bill of Sale" shall have the meaning specified in
Schedule A to the Fuel Purchase Contract.
"Cash Collateral Account" shall have the meaning,
specified in Section 6.1 of this Agreement.
"Code" shall mean the Uniform Commercial Code as the
same may from time to time be in effect in any applicable
jurisdiction.
"Collateral" shall mean all property or rights referred
to in Section 2(a) hereof in which a security interest is
granted under this Security Agreement.
"Commodities" means each of the following types of gases
and fuels: liquified natural gas and natural gas in vapor
form (herein collectively called "Natural Gas") and propane,
each of which is a fungible commodity which is intermingled
or may be intermingled with Commodities owned by other
Persons and all contract rights, general intangibles and
other rights to acquire any of the foregoing types of gases
and fuels; and such other type or types of gases and fuels
as may from time to time be acceptable to the Banks and the
Agent.
"Commitment" shall have the meaning specified in Section
1 of the Credit Agreement.
"Company" means Colonial Gas Company, a Massachusetts
corporation.
"Consent and Agreement" means the Consent and Agreement
between the Company and the Agent in the form attached as
Annex II hereto.
"Contracts" shall mean, collectively, (i) the Fuel
Purchase Contract and (ii) all Bills of Sale.
"Credit Agreement" shall mean the Credit Agreement dated
as of the date hereof between the Trustee, the Agent and the
Banks, as the same may from time to time be amended, modified
or supplemented.
"Default" shall have the meaning specified in Section 1
of the Credit Agreement.
"Event of Default" shall have the meaning specified in
Section 1 of the Credit Agreement.
"Fuel Purchase Contract" means the Purchase Contract
between the Trust and the Company dated June 27, 1990, a copy
of which, as amended and in effect on the date hereof, is
attached as Annex I hereto.
"Majority Banks" shall have the meaning specified in
Section 1 of the Credit Agreement.
"Notes" shall have the meaning specified in Section 1 of
the Credit Agreement.
"Obligations" shall mean all indebtedness, obligations
and liabilities of the Trust to the Agent or any other
Secured Party, whether absolute or contingent, due or to
become due, now existing or hereafter incurred, under,
arising out of or in connection with the Credit Agreement,
the Notes or this Security Agreement.
"Person" shall have the meaning specified in Section 1
of the Credit Agreement.
"Proceeds" shall have the meaning assigned to it under
the Code and, in any event, shall include, but not be limited
to, (i) any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to the Trust from time to time
with respect to any of the Collateral, (ii) any and all
payments (in any form whatsoever) made or due and payable to
the Trust from time to time in connection with any
requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any
governmental body, authority, bureau or agency (or any Person
acting under color of governmental authority), and (iii) any
and all other amounts from time to time paid or payable under
or in connection with any of the Collateral.
"Secured Parties" shall mean the Agent and the Banks and
the Trustee and their respective successors and permitted
assigns.
"Security Agreement" shall mean this Security Agreement
and Assignment of Contracts and all Annexes thereto, as the
same may from time to time be amended, modified or
supplemented.
"Storage Facility Agreements" shall have the meaning
ascribed to it in the Fuel Purchase Contract.
"Storage Fields" means those certain storage areas,
together with the related fixtures and equipment described in
Schedule D to the Fuel Purchase Contract (as from time to
time amended with the prior written consent of the Majority
Banks) used to store Commodities financed hereunder.
"Termination Date" shall have the meaning specified in
Section 1 of the Credit Agreement.
"Trust" shall mean the trust created by the Trust
Agreement, and in no event shall such term be deemed to
include State Street Bank and Trust Company, the Company (as
the beneficiary and trustor) or any of their respective
assets (but shall include the Trust Estate).
"Trust Estate" shall have the meaning specified in the
Trust Agreement.
"Trust Agreement" shall have the meaning specified in
Section 1 of the Credit Agreement.
Section 2. Grant of Security Interest.
(a) As collateral security for the prompt and complete
payment and performance when due of all the Obligations and
in order to induce the Banks to enter into the Credit
Agreement and extend credit to the Trust in accordance with
the terms thereof, the Trust hereby assigns, conveys,
mortgages, pledges, hypothecates and transfers to the Agent,
for the ratable benefit of the Secured Parties, and hereby
grants to the Agent, for the ratable benefit of the Secured
Parties, a security interest in all the Trust's right, title
and interest in, to and under the following (all of which
being hereinafter collectively called the "Collateral"):
(i) the Contracts;
(ii) all Commodities;
(iii) all accounts, contract rights and general
intangibles arising in respect of sales of or contracts
to sell any Commodities;
(iv) all rights, remedies, powers, privileges and
claims of the Trust, now or hereafter existing, (a) for
all monies due and to become due under any of the
agreements and instruments referred to in clause (i)
above, (b) for indemnities, warranties and guaranties
provided for or arising out of or in connection with any
of the agreements and instruments referred to in clause
(i) above or the Commodities, (c) for any damages
arising out of or for breach or default under or in
connection with any such agreement or instrument, (d) to
all other amounts from time to time paid or payable
under or in connection with any such agreement or
instrument (including refunds thereunder), (e) to accept
delivery of and to receive title to any Commodities or
to obtain any service with respect thereto under any
such agreement or instrument or to perform or to
exercise or enforce any and all covenants, remedies,
powers and privileges thereunder; provided, however,
that the foregoing shall not relate to any insurance,
indemnities, warranties and guaranties to the
institution and/or person acting as Trustee;
(v) the Cash Collateral Account and all monies and
instruments from time to time in the Cash Collateral
Account; and
(vi) to the extent not otherwise included, all
Proceeds and products of any or all of the foregoing.
(b) The security interest granted hereby in all
Commodities and all Contracts is and shall be a purchase
money security interest.
Section 3. Assignment of Rights, Powers and
Privileges. In addition to the assignment and security
interest granted in Section 2 hereof, and without limitation
of any of the rights and remedies provided for in this
Security Agreement, the Trust hereby irrevocably assigns and
transfers to the Agent, for the ratable benefit of the
Secured Parties, absolutely and not merely as collateral
security, the right to exercise any and all of the Trust's
rights, remedies, powers and privileges, (whether mandatory,
discretionary or judgmental) but none of its obligations,
duties or liabilities, under or arising out of the Contracts
including, without limitation, the Trust's right and/or power
to (i) take or refrain from taking any action under any of
the Contracts, (ii) express satisfaction with, grant approval
to or give any waiver or make any other determination with
respect to any payment, document, agreement, opinion,
certificate, representation, insurance, storage arrangement,
the fulfillment of any condition precedent or any action or
inaction relating to any of the Contracts or the transactions
contemplated thereby, and (iii) pursue any right or remedy
with respect to any default under any Contract. The Trust
agrees that, upon written instructions (or telephone
instructions, confirmed promptly by facsimile transmission
from the Agent), it will exercise any or all such rights,
remedies, powers and privileges as may be so instructed by
the Agent; provided that the Trust shall have no duty or
obligation to exercise any of such rights, remedies, powers
or privileges except as so instructed by the Agent. The
Trust also agrees that the Agent, for the ratable benefit of
the Secured Parties, may exercise in its sole discretion, any
or all such rights, remedies, powers or privileges directly,
without prior notice to or consent by the Trust; and in
furtherance thereof, and without limiting the generality of
the power granted in Section 7(a) hereof, the Trust hereby
irrevocably constitutes and appoints the Agent and any
officer or agent thereof, with full power of substitution, as
its true and lawful attorney-in-fact, with full irrevocable
power and authority in the place and stead of the Trust and
in the name of the Trust or in its own name, from time to
time in the Agent's discretion, to exercise any and all such
rights, remedies, powers or privileges. This power of
attorney is a power coupled with an interest and shall be
irrevocable. Notwithstanding the provisions of this Section
3, the institution or person acting as Trustee shall not be
required to exercise any of the foregoing rights, remedies,
powers or privileges, or to follow the instructions of the
Agent with respect to such exercise, if it has been advised
by counsel that in the reasonable opinion of counsel, such
exercise is or may be contrary to the Credit Agreement, or is
otherwise contrary to law or is likely to result in liability
for such institution or person acting as Trustee against
which such institution or person is not effectively
indemnified.
Section 4. Liabilities under Agreements. It is
expressly agreed that, anything contained herein to the
contrary notwithstanding (a) the Trust shall at all times
remain liable to observe and perform all of its duties and
obligations under each Contract to the same extent as if this
Security Agreement had not been executed; (b) the exercise by
the Agent, for the ratable benefit of the Secured Parties, of
any of the rights assigned hereunder shall not release the
Trust from any of its duties or obligations under any of the
Contracts; and (c) the Agent shall not have any obligation or
liability under any of the Contracts, by reason of or arising
out of this Security Agreement or the receipt by the Agent of
any payment or property under any of the Contracts pursuant
hereto, nor shall the Agent be obligated to perform or
fulfill any of the duties or obligations of the Trust under
any of the Contracts, or to make any payment thereunder, or
to make any inquiry as to the nature or sufficiency of any
payment or property received by it thereunder, or the
sufficiency or performance by any party thereunder, or to
present or file any claim, or to take any action to collect
or enforce any performance or the payment of any amounts or
the delivery of any property which may have been assigned to
it or to which it may be entitled at any time or times;
provided, however, that the foregoing shall not be deemed to
alter the Agent's obligations pursuant to Section 10 hereof,
as Agent for the ratable benefit of the Secured Parties,
pursuant to this Security Agreement.
Section 5. Covenants. The Trust covenants and
agrees with the Agent, for the ratable benefit of the Secured
Parties that from and after the date of this Security
Agreement and until the Obligations are fully satisfied:
5.1. Further Documentation; Pledge of Instruments. At
any time and from time to time, upon the written request of
the Agent, and at the sole expense of the Trust, the Trust
will promptly, subject to the following two sentences, duly
execute and deliver any and all documents and take such
further action as the Agent may reasonably deem desirable in
obtaining the full benefits of this Security Agreement and of
the rights and powers herein granted, including, without
limitation, the filing of any financing or continuation
statements under the Code with respect to the liens and
security interests granted hereby or otherwise necessary to
establish or maintain a prior perfected security interest in
the Collateral. The Trust also hereby authorizes the Agent
to file, on behalf of the Secured Parties, any such financing
or continuation statement without the signature of the
Trustee to the extent permitted by applicable law. If any
amount payable under or in connection with any of the
Collateral shall be or become evidenced by any promissory
note or other instrument, the Trust shall, or shall cause,
such note or instrument to be delivered immediately to the
Agent hereunder, duly endorsed in a manner satisfactory to
the Agent.
5.2. Maintenance of Records. The Trust will keep and
maintain at its own cost and expense records satisfactory to
the Agent with respect to the Collateral including, without
limitation, a record of all payments received and all credits
granted with respect to the Collateral and all other dealings
with the Collateral. The Trust will mark its books and
records pertaining to the Collateral to evidence this
Security Agreement and the security interest granted hereby.
For the Secured Parties' further security, the Trust agrees
that the Agent, on behalf of the Secured Parties, shall have
a special property interest in all of the Trust's books and
records pertaining to the Collateral and the Trust shall
deliver and turn over any such books and records to the Agent
or to its representatives at any reasonable time on demand of
the Agent. The Agent and the Trust shall have the right at
all reasonable times to inspect and copy such books and
records which are in the possession of the other.
5.3. Indemnification. In any suit, proceeding or action
brought by the Agent, on behalf of the Secured Parties, under
any Contract for any sum owing thereunder or to enforce any
provisions of such Contract, the Trust will (subject to the
provisions of Section 12 hereof) save, indemnify and keep the
Agent and each other Secured Party harmless from and against
all expense, loss or damage suffered by reason of any
defense, setoff, counterclaim, recoupment or reduction or
liability whatsoever of the obligee thereunder, arising out
of a breach by the Trust of any obligation thereunder or
arising out of any other agreement, indebtedness or liability
at any time owing to or in favor of such obligee or its
successors from the Trust, and all such obligations of the
Trust shall be and remain enforceable against and only
against the Trust and shall not be enforceable against the
Agent or any other Secured Party. The Trust further agrees,
subject to the provision of Section 12 hereof, to pay and to
save the Agent and the Secured Parties harmless from any and
all liabilities with respect to, or resulting from any delay
in paying, any and all excise, sales or other taxes which may
be payable or determined to be payable with respect to any of
the Collateral or in connection with any of the transactions
contemplated by this Security Agreement.
5.4. Limitations on Liens on Collateral. Except for the
security interests created by this Security Agreement and
liens permitted under Section 12.2 of the Credit Agreement,
the Trust will not create, permit or suffer to exist, and
will defend the Collateral against and take such other action
as is necessary to remove, any lien, security interest,
encumbrance, claim or right, in or to the Collateral, and
will defend the right, title and interest of the Secured
Parties in and to any of the Trust's rights in, to and under
the Collateral against the claims and demands of all persons
whomsoever.
5.5. Removals, etc. Without the prior written consent
of the Agent, the Trust shall not: (i) maintain any of its
books or records with respect to its accounts, contract
rights or general intangibles at any office other than an
office located at 40 Market Street, Lowell, MA 01852; or (ii)
permit any of its inventory (except inventory in transit or
covered by documents in the physical possession of the Agent)
or other tangible personal property included in the
Collateral to be held at or removed to any location other
than a location constituting a Storage Field except upon a
sale thereof in the ordinary course of business as presently
conducted. The Trust shall maintain its chief executive
office and principal place of business at Two International
Place, Boston, Massachusetts 02110, or at such other place in
Massachusetts as the Trust shall designate within 30 days of
any change of such office by written notice to the Agent.
Not later than 10 days after the end of each month, the Trust
shall notify the Agent of the locations of any Storage Field
not listed on Schedule A attached hereto where any of the
Commodities are located (except for such Storage Fields of
which the Trust has previously notified the Agent).
Section 6. Cash Collateral Account.
6.1. Establishment and Maintenance. Concurrently with
the execution and delivery of this Agreement, the Trust shall
establish at the office of the Agent at One Federal Street,
Boston, Massachusetts 02211, a cash collateral account,
Account No. _________, entitled the "Massachusetts Fuel
Inventory Trust Cash Collateral Account" (the "Cash
Collateral Account") which Cash Collateral Account shall be
maintained at all times until termination thereof in
accordance with Section 6.7 hereof. All monies and
instruments in the Cash Collateral Account from time to time
shall constitute collateral security for the payment and
performance by the Trust of all the Obligations and, subject
to the terms and provisions of this Agreement, shall at all
times be subject to the sole control of the Agent. The Trust
shall have no right of withdrawal from the Cash Collateral
Account, except as provided in Section 6.7 hereof, and shall
have no rights, title, interests, or powers with respect to
any monies or instruments at any time on deposit in the Cash
Collateral Account until it is terminated in accordance with
the provisions hereof; provided that the Agent shall act with
respect to the Cash Collateral Account and apply the funds
deposited therein in accordance with the provisions of
Sections 6.4, 6.5, 6.6 and 6.7 hereof. The Agent agrees to
give the Trust prompt notice if the Cash Collateral Account
or any funds on deposit in the Cash Collateral Account shall
become subject to any writ, judgment, warrant of attachment,
execution or similar process.
6.2. Security Interest. In furtherance of the intent of
this Section 6, the Trust has pursuant to this Agreement
assigned, pledged, and conveyed to the Agent, for the ratable
benefit of the Secured Parties, and granted to the Agent, for
the ratable benefit of the Secured Parties, a first,
perfected security interest in all monies and instruments
from time to time in the Cash Collateral Account as
collateral security for the prompt and unconditional payment
and performance in full of the Obligations.
6.3. Required Deposits. The Trust agrees that (i) it
will cause the proceeds of any Advance made to it pursuant to
the Credit Agreement to be deposited in the Cash Collateral
Account and (ii) it will cause all amounts payable to the
Trust under the Contracts to be deposited in the Cash
Collateral Account. Subject to and in furtherance of the
foregoing, the Trust agrees to deliver sufficient and
irrevocable instructions to all other parties to the
Contracts that all such proceeds and all payments due or to
become due to the Trust under the Contracts shall be promptly
paid directly into the Cash Collateral Account and that no
alteration, modification or abrogation of the foregoing
instructions shall be accepted by such Persons except upon
the express written authorization of the Agent. If,
notwithstanding the foregoing, the Trust at any time receives
any such proceeds or any payments under or in connection with
any Contract or otherwise assigned to the Agent for the
ratable benefit of the Secured Parties pursuant to this
Agreement, all such amounts shall be held by the Trust as the
agent of and in trust for the Agent, shall be segregated from
other funds of the Trust and shall, forthwith upon receipt by
the Trust, be turned over to the Agent for deposit in the
Cash Collateral Account in the same form as received by the
Trust (and, if received in the form of a check, note or any
other instrument, shall be duly endorsed by the Trust to the
order of the Agent).
6.4. Application of Funds. Until the occurrence and
continuance of an Event of Default, funds on deposit in the
Cash Collateral Account at any time and from time to time
(other than deposits to the Cash Collateral Account from
Advances as contemplated by Section 6.3(i) hereof, that are
to be applied in the fashion described in Section 2(b) or
2(e) of the Fuel Purchase Contract) shall be applied by the
Agent promptly upon receipt in the order of priority stated
below:
(i) ratably to the payment of all amounts then due
and payable to the Banks under the Credit Agreement,
according to the then unpaid amounts thereof, without
preference or priority of any kind among them; and
(ii) ratably, to the payment of amounts, if any,
then due and owing to any Secured Party (including the
Agent) on account of any indemnifications or other
obligations for fees or expenses or otherwise pursuant
to this Security Agreement, and to the payment of
amounts then due and payable to the institution and/or
person acting as Trustee on account of obligations for
fees and expenses or otherwise arising under the Trust
Agreement; according to the then unpaid amounts thereof,
without preference or priority of any kind among them.
Until the occurrence and continuance of an Event of
Default, funds deposited in the Cash Collateral Account at
any time and from time to time and constituting Advances
under Section 6.3(i) hereof, shall be applied to the account
of the Company as contemplated by Section 2(e) of the Fuel
Purchase Contract.
If any funds from time to time on deposit in the Cash
Collateral Account shall remain unused after application of
such funds in accordance with the foregoing, such funds
shall, subject to Sections 6.5 and 6.6 hereof, be accumulated
by the Agent in the Cash Collateral Account, for the ratable
benefit of the Secured Parties, and held as collateral
security for the payment and performance of the Obligations.
6.5. Default. If an Event of Default shall have
occurred and be continuing, the Agent may, subject to the
terms and provisions of Sections 9 and 11 hereof, at its sole
option from time to time apply all or any part of the funds
in the Cash Collateral Account in the manner specified in
Section 11 hereof.
6.6. Investment of Funds. To the extent not applied as
provided in Section 6.4 hereof, funds remaining on deposit in
the Cash Collateral Account shall be invested by the Agent,
at the election and direction of the Trust, in marketable
direct or guaranteed obligations of the United States of
America which mature within one year from the date of
purchase by the Agent, certificates of deposit and bankers'
acceptances of banks organized under the laws of the United
States of America or any state thereof having total assets in
excess of $1,000,000,000 United States Dollars, and
securities commonly known as "commercial paper" issued by a
corporation organized and existing under the laws of the
United States of America or any state thereof (other than the
Trustee) which at the time of purchase have been rated by one
or more nationally recognized rating organizations and the
ratings for which are not less than "A-1" or "P-1"; provided
that all such investments shall be evidenced by instruments.
Upon the investment of monies in the Cash Collateral Account
in instruments in accordance with the foregoing, such
instruments shall be deemed to be delivered to the Agent to
be held by it as Collateral hereunder, for the ratable
benefit of the Secured Parties, and the Agent shall be
authorized to endorse any of such instruments in a manner
satisfactory to it, on behalf of the Trust.
6.7. Termination of Cash Collateral Account. When the
Obligations have been satisfied and paid in full, the Agent
shall distribute the funds then on deposit in the Cash
Collateral Account to the Trust whereupon said Cash
Collateral Account shall terminate.
Section 7. Agent's Appointment as Attorney-in-Fact.
(a) The Trust hereby irrevocably constitutes and
appoints the Agent and any officer or agent thereof, with
full power of substitution, as its true and lawful attorney-
in-fact with full irrevocable power and authority in the
place and stead of the Trust and in the name of the Trust or
in its own name, from time to time in the Agent's discretion
(subject to Section 10(b) hereof), for the purpose of
carrying out the terms of this Security Agreement, to take
any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable
in the judgment of the Agent to accomplish the purposes of
this Security Agreement and, without limiting the generality
of the foregoing, hereby gives the Agent, for the ratable
benefit of the Secured Parties, the power and right, on
behalf of the Trust without notice to or assent by the Trust,
to do the following:
(i) upon the occurrence and continuance of a
Default or an Event of Default, to ask, demand, collect,
receive and give acquittances and receipts for any and
all monies due and to become due, or any performance to
be rendered, under any Contract and, in the name of the
Trust or its own name or otherwise, to take possession
of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of
monies due under any Contract and to file any claim or
to take any other action or proceeding in any court of
law or equity or otherwise deemed appropriate by the
Agent for the purpose of collecting any and all such
monies due or securing any performance to be rendered
under any Contract; and
(ii) to pay or discharge taxes, liens, security
interests or other encumbrances levied or placed on or
threatened against the Collateral, to effect any repairs
or any insurance called for by the terms of any Contract
and to pay all or any part of the premiums therefor and
the costs thereof; and
(iii) upon the occurrence and continuance of
any Default or Event of Default, (A) to direct any party
liable for any payment or performance under any of the
Contracts to make payment of any and all monies due and
to become due thereunder or to render any performance
provided for therein directly to the Agent or as the
Agent shall direct; (B) to receive payment of and
receipt for any and all monies, claims and other amounts
due and to become due at any time in respect of or
arising out of any Collateral; (C) to sign and endorse
any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection
with accounts and other documents relating to the
Collateral; (D) to commence and prosecute any suits,
actions or proceedings at law or in equity in any court
of competent jurisdiction to collect the Collateral or
any portion thereof or Proceeds relating thereto and to
enforce any other right in respect of any Collateral;
(E) to defend any suit, action or proceeding brought
against the Trust with respect to any Collateral; (it
being understood that the Trustee shall have the right
to participate in the defense of any suit, action or
proceeding brought against the Trust which might involve
personal liability on the part of the Trustee); (F) to
settle, compromise or adjust any suit, action or
proceeding described above and, in connection therewith,
to give such discharges or releases as the Agent may
deem appropriate and (G) generally to sell, transfer,
pledge, make any agreement with respect to or otherwise
deal with any of the Collateral as fully and completely
as though the Agent were the absolute owner thereof for
all purposes, and to do, at the Agent's option and the
Trust's expense, at any time, or from time to time, all
acts and things which the Agent deems necessary to
protect, preserve or realize upon the Collateral and the
security interest created therein in favor of the
Secured Parties, in order to effect the intent of this
Security Agreement, all as fully and effectively as the
Trust might do.
The Trust hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. This power
of attorney is a power coupled with an interest and shall be
irrevocable.
(b) The powers conferred on the Agent, for the ratable
benefit of the Secured Parties hereunder are solely to
protect the interests of the Secured Parties in the
Collateral and shall not impose any duty upon the Agent to
exercise any such powers, except as provided in Section 10
hereof.
(c) The Trust also authorizes the Agent, for the
ratable benefit of the Secured Parties, at any time and from
time to time, (i) to communicate in its own name with any
party to any Contract with regard to the assignment of the
Contracts hereunder and other matters relating thereto and
(ii) to execute, in connection with the sale provided for in
Section 9(a) hereof, any endorsements, assignments, bills of
sale or other instruments of conveyance or transfer with
respect to the Collateral.
Section 8. Performance by Agent of Trust's
Obligations. If the Trust fails to perform or comply with
any of its agreements contained in the Credit Agreement or
any Contract, the Agent, for the ratable benefit of the
Secured Parties, as provided for by the terms of this
Security Agreement may itself perform or comply, or otherwise
cause performance or compliance, with such agreement, and the
expenses of the Agent incurred in connection with such
performance or compliance (including, without limitation,
legal fees and expenses), together with interest thereon at
the rate provided for in respect of the overdue Advances made
by the Agent under the Credit Agreement, shall be payable by
the Trust to the Agent on demand and such payment shall
constitute Obligations secured hereby.
Section 9. Remedies, Rights Upon Default.
(a) If an Event of Default shall occur and be
continuing, the Agent, for the ratable benefit of the Secured
Parties, may exercise (in addition to all other rights and
remedies granted to it in this Security Agreement and in any
other instrument or agreement securing, evidencing or
relating to the Obligations) all rights and remedies of a
secured party under the Code and/or any and all of the
Trust's rights and remedies under the Contracts in the name
of and in the place of, or in concert with, the Trust.
Without limiting the generality of the foregoing, the Trust
expressly agrees that in any such event the Agent, for the
ratable benefit of the Secured Parties, without demand of
performance or other demand, advertisement or notice of any
kind (except the notice specified below of time and place of
public or private sale) to or upon the Trust or any other
person (all and each of which demands, advertisements and/or
notices are hereby expressly waived to the extent permitted
by applicable law), may, subject to the provisions of the
Contracts, forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may
forthwith sell, lease, assign, give an option or options to
purchase or otherwise dispose of and deliver said Collateral
(or contract to do so), or any part thereof, in one or more
parcels at public or private sale or sales, at any exchange,
broker's board or at any of the Agent's offices or elsewhere
at such prices as it may deem best, for cash or on credit or
for future delivery without assumption of any credit risk.
The Secured Parties shall have the right upon any such public
sale or sales, and, to the extent permitted by law, upon any
such private sale or sales to purchase the whole or any part
of said Collateral so sold, free of any right or equity of
redemption in the Trust, which right or equity is hereby
expressly released. The Trust further agrees in any such
event, at the Agent's request, subject to the provisions of
the Contracts, to assemble the Collateral, and to make it
available to the Agent at places which the Agent shall
reasonably select, whether at the Trustee's premises or
elsewhere. The Agent, for the ratable benefit of the Secured
Parties, shall apply the proceeds of any such collection,
recovery, receipt, appropriation, realization or sale or
disposition to the payment in whole or in part of the
Obligations in accordance with the provisions of Section 11
of this Security Agreement; and only after so applying such
proceeds and after the payment by the Agent of any other
amount required by any provision of law, need the Agent
account for the surplus, if any, to the Trust. To the extent
permitted by applicable law, the Trust waives all claims,
damages and demands against the Agent arising out of the
repossession, retention or sale or disposition of the
Collateral. The Trust agrees that the Agent need not give
more than 10 days notice (which notification shall be deemed
given when delivered or when mailed, postage prepaid,
addressed to the Trustee at its address set forth in Section
14 hereof) of the time and place of any public sale or of the
time after which a private sale may take place and that such
notice is reasonable notification of such matters. Subject
to the provisions of Section 12 hereof, the Trust shall
remain liable for any deficiency if the proceeds of any sale
or disposition of the Collateral are insufficient to pay all
amounts to which the Agent, on behalf of the Secured Parties,
is entitled.
(b) The Trust also agrees, subject to the provisions of
Section 12 hereof, to pay all costs of the Agent incurred
with respect to the collection of any of the Obligations and
the enforcement of any Secured Parties' rights hereunder,
including all costs and expenses of every kind incurred
therein or incidental to the care, safekeeping or otherwise
of any or all of the Collateral, and attorneys' fees and
expenses. All amounts payable hereunder and under Section 27
of the Credit Agreement shall be payable on demand.
(c) Except as otherwise expressly provided in Section
9(a) above, to the extent permitted by applicable law, the
Trust hereby waives presentment, demand, protest or any
notice of any kind in connection with this Security Agreement
or any Collateral.
(d) The Trust also hereby agrees that the Agent shall
not be required to marshall any present or future security
for (including but not limited to the Collateral) any one or
more of the Obligations or to resort to such security in any
particular order; and all of the Agent's rights hereunder as
agent for the ratable benefit of the Secured Parties and in
respect of such security shall be cumulative and in addition
to all other rights, however existing or arising. To the
extent that it lawfully may, the Trust hereby agrees that it
will not invoke any law relating to marshalling of collateral
which might cause delay in or impede the enforcement of the
Secured Parties' rights under this Agreement, or under any
other instrument evidencing any of the Obligations or under
which any of the Obligations is outstanding or by which any
of the Obligations is secured or guaranteed, and to the
extent that it lawfully may, the Trust hereby irrevocably
waives the benefits of all such laws.
Section 10. Concerning Agent; Appointment of Agent;
Limitation on Agent's Duty in Respect of Collateral.
(a) The institution and/or person acting as Trustee, by
its execution of the requisite documents pursuant to which it
accepted its appointment as successor trustee under the Trust
Agreement, has thereby acknowledged and agreed that its
beneficial interest in the security interest granted to the
Agent under this Security Agreement shall be in lieu of all
other liens on the Trust Estate (which may arise as a matter
of law or otherwise) in favor of such institution and/or
person, and does thereby expressly waive the benefits of any
such lien.
(b) Subject to the provisions of paragraph (c) of this
Section 10, the Agent shall, upon the written instruction of
the Majority Banks, promptly take or refrain from taking any
action, or consent or effect a modification, waiver,
alteration or amendment of this Security Agreement, or
exercise or refrain from exercising any right, granted to the
Agent, for the ratable benefit of the Secured Parties, under
this Security Agreement, provided, however, that no
individual Bank (other than the Agent) or the Trust shall
have any right to enforce directly any of the rights or the
security interests granted by this Security Agreement or to
require the Agent to take or refrain from taking any action
under this Security Agreement.
(c) The Agent shall not be required to do any acts
hereunder or to take any action toward the execution or
enforcement of the agency hereby created or to prosecute or
defend any suit in respect of this Agreement or any
instrument delivered hereunder or otherwise, unless
indemnified to its satisfaction by the Banks (to the extent
not indemnified therefor by the Trust) against loss, cost,
liability and expense. If any indemnity furnished to the
Agent for any purpose, in the reasonable judgment of the
Agent determined in good faith, shall be insufficient or
shall become impaired, the Agent may call for additional
indemnity and shall not be required to commence, or shall be
entitled to cease, to do the acts indemnified against unless
such additional indemnity has been furnished.
(d) The Agent agrees, for the benefit of the Secured
Parties, that it will, subject to paragraph (c) of this
Section 10, enforce the rights and security interests granted
to the Secured Parties hereunder, in accordance with written
instructions given pursuant to paragraph (b) of this Section
10, with the same degree of care which it would exercise in
secured transactions for its own account. The Agent may
exercise its powers and execute its duties by or through
employees or agents and shall be entitled to take, and to
rely on, advice of counsel concerning all matters pertaining
to its rights and duties under this Agreement. Neither the
Agent nor any of its shareholders, directors, officers or
employees shall be liable to the Secured Parties for any
action taken, or omitted to be taken, in good faith by it or
them hereunder or in connection herewith or be responsible
for the consequences of any oversight or error of judgment,
provided that the Agent may be liable for losses due to its
gross negligence or willful misconduct. Notwithstanding any
other provision of this Security Agreement, neither the Agent
nor any of its shareholders, directors, officers or employees
shall be liable to the Secured Parties for any action taken,
or omitted to be taken, in accordance with written
instructions of the Majority Banks pursuant to paragraph (b)
of this Section 10, and in accordance with the standard of
care required by this paragraph (d).
(e) The Agent will not be responsible to the Secured
Parties for any recitals or statements, warranties or
representations in the Credit Agreement or this Security
Agreement or made in any certificate or instrument hereafter
furnished to it by or on behalf of any of the other parties
to the Credit Agreement or this Security Agreement or be
bound to ascertain or inquire as to the performance or
observance of any of the terms, conditions, covenants or
agreements therein. The Agent makes no representations or
warranties, and assumes no responsibility to the Secured
Parties, with respect to the legality, sufficiency,
enforceability or collectibility of the Credit Agreement or
this Security Agreement or any agreement, instrument or other
document referred to in any such documents, or of any
Collateral, or of the financial condition of the Trust or the
Company. The Agent assumes no responsibility for the
security value of the Collateral, or for the performance of
any obligations of the Trust or the Company. Beyond the safe
custody thereof, the Agent shall not have any duty as to any
Collateral in its possession or control or in the possession
or control of any of its agents or nominees or any income
thereon or as to the preservation of rights against prior
parties or any other rights pertaining thereto.
(f) For all purposes of this Security Agreement, in
absence of actual knowledge of a responsible officer of the
Agent, the Agent shall not be deemed to have knowledge of any
Default or Event of Default unless or until so notified in
writing by the Trust or the Company.
Section 11. Application of Proceeds Upon Event of
Default. Any monies or property actually received by the
Agent pursuant to the exercise of any rights or remedies
referred to in Section 9 or 11 hereof or otherwise, upon the
occurrence of an Event of Default, shall be applied in the
following order:
first, to the payment of all amounts due to the
Agent under Sections 8, 9 and 10(b) of this Security
Agreement and applicable law;
second, ratably, to the payment of any amounts then
due and payable to any Secured Party under the Credit
Agreement and the Notes, according to the then unpaid
amounts thereof, without preference or priority of any
kind among them (such payment in each case, to be
applied first to accrued unpaid interest and,
thereafter, to unpaid principal debt);
third, ratably, to the payment of amounts, if any,
then due and owing to any Secured Party (including the
Agent) on account of any indemnifications pursuant to
this Security Agreement, the Trust Agreement or any
Contract, and to the payment of amounts then due and
payable to the institution acting as Trustee on account
of obligations for fees or expenses arising under the
Trust Agreement according to the then unpaid amounts
thereof, without preference or priority of any kind
among them;
fourth, ratably, to the payment of all of the
Obligations (except for Obligations which shall have
been paid pursuant to items first, second or third of
this Section 11), according to the then unpaid amounts
thereof, without preference or priority of any kind
among them; and
fifth, the remainder, if any, to the Trust, its
successors or assigns, or to whomsoever may be lawfully
entitled to receive the same, or as a court of competent
jurisdiction may direct.
Section 12. Concerning Trustee.
(a) State Street Bank and Trust Company in its capacity
as Trustee, is entering into this Security Agreement and
granting the security interest provided for herein solely as
successor trustee under the Trust Agreement and pursuant to
instructions contained therein, and not in its individual
capacity and in no case whatsoever shall State Street Bank
and Trust Company (or any entity acting as a successor
trustee, co-trustee or separate trustee under the Trust
Agreement) be personally liable on, or for any loss in
respect of, any of the statements, representations,
warranties, agreements or obligations of the Trustee
hereunder or for any losses the Trust may suffer, as to all
of which the Agent, on behalf of the Secured Parties, agrees
to look solely to the Trust, except for any loss caused by
the Trustee's willful misconduct or gross negligence
(provided that this exception shall not be deemed to apply to
the extent that the Trustee has followed instructions given
to it, or which it is authorized to accept, pursuant to this
Agreement and the Trust Agreement).
(b) The Agent, on behalf of the Secured Parties, agrees
that if any other successor trustee is appointed in
accordance with the terms of the Trust Agreement, such
successor trustee shall, without further act, succeed to all
the rights, duties, immunities and obligations of the Trustee
hereunder and the predecessor successor trustee shall be
released from all further duties and obligations hereunder,
all without in any way altering the terms of this Security
Agreement or the Trustee's obligations hereunder.
Section 13. Release of Collateral. The Agent, on
behalf of the Secured Parties, agrees that each time the
Trust is required by the terms of the Fuel Purchase Contract
to transfer title to any Commodities to the Company free and
clear of the security interest created by this Security
Agreement, the Agent, on behalf of the Secured Parties, shall
release its security interest so that such transfer may be
made; provided that (i) no Default or Event of Default has
occurred and is continuing, and the Trustee and the Company
shall have delivered a certificate to such effect in the form
of Annex III attached hereto, signed by a duly authorized
officer of the Trustee and the Company (it being understood
that the Trustee shall be entitled to rely on the
representations of the Company in such certificate with
respect to the matters therein except to the extent that the
Trustee has received notice or has actual knowledge of such
matters) upon which the Agent shall be entitled to rely, (ii)
the Company and the Trust have each complied to the
satisfaction of the Agent with all provisions of the Fuel
Purchase Contract relating to such transfer, (iii) any
payment required to be made by the Company in connection with
such transfer shall have been deposited in the Cash
Collateral Account, and (iv) any Collateral being substituted
for such Commodities shall have become subject to the
security interest created by this Security Agreement and such
security interest shall have been perfected.
Section 14. Notices. Any notice to the Agent or the
Trust hereunder shall be deemed to have been duly given when
delivered or when deposited in the mail, first class postage
prepaid, addressed: if to the Agent, at One Federal Street,
Boston, Massachusetts 02211, Attention: Thomas L. Rose, Vice
President, National Utilities Group, and if to the Trust, at
State Street Bank and Trust Company, Two International Place,
Boston, Massachusetts 02110, Attention: Virginia Jones,
Secretary.
Section 15. Severability. Any provision of this
Security Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other
jurisdiction.
Section 16. No Waiver; Cumulative Remedies;
Amendments. The Agent or any other Secured Party shall not
by any act, delay, omission or otherwise be deemed to have
waived any of its rights or remedies hereunder and no waiver
shall be valid unless in writing, signed by the Agent on
behalf of the Secured Parties, and then only to the extent
therein set forth. A waiver by the Agent on behalf of the
Secured Parties of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or
remedy which the Agent or any other Secured Party would
otherwise have had on any future occasion. No failure to
exercise nor any delay in exercising on the part of the Agent
or any other Secured Party, any right, power or privilege
hereunder, shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege
hereunder preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The
rights and remedies hereunder provided are cumulative and may
be exercised singly or concurrently, and are not exclusive of
any rights and remedies provided by law. None of the terms
or provisions of this Security Agreement may be waived,
altered, modified or amended except by an instrument in
writing, duly executed by the party sought to be bound
thereby.
Section 17. Successors and Assigns; Governing Law.
This Security Agreement and all obligations of the Trust
hereunder shall be binding upon the successors and assigns of
the Trust, and shall inure to the benefit of the Agent and
the other Secured Parties and each of their respective
successors and assigns, subject to the limitations on the
right of assignment contained in Section 18 of the Credit
Agreement. This Security Agreement shall be governed by, and
be construed and interpreted in accordance with, the laws of
The Commonwealth of Massachusetts, without regards to
principles of conflicts of law.
Section 18. Financing Statement. A photographic or
other reproduction of this Security Agreement is sufficient
as a financing statement.
Section 19. Resignation or Removal of Agent; Fees and
Expenses.
(a) The Agent may, and shall, at the election of the
Majority Banks resign as agent for the ratable benefit of the
Secured Parties hereunder, such resignation to be effective
upon the earlier to occur of (i) written acceptance of
appointment as agent by a successor designated by the
Majority Banks, which acceptance shall be effective
immediately upon the execution thereof, or (ii) 30 days
following the Agent's delivery of a notice of resignation or
receipt of a notice of removal, as applicable. On the date
such resignation or removal is effective in accordance with
this Section 19(a), without further act, the Agent's
obligation to act as agent for the Secured Parties hereunder
shall terminate and thereupon, such successor, if any, shall
succeed to the rights, powers and duties of the Agent
hereunder with respect to the Collateral with like effect as
if an original signatory to this Agreement.
(b) Upon the resignation or removal of the Agent as
agent for the Secured Parties hereunder pursuant to paragraph
(a) of this Section 19, the Agent shall, upon the written
request of such successor, execute and deliver an instrument
or instruments transferring to such successor any Collateral
held by the Agent hereunder and shall pay over to such
successor all monies and instruments on deposit in such Cash
Collateral Account.
Section 20. Entire Agreement. This Agreement
together with all Annexes hereto, contains the full, final
and exclusive statement of the agreement between the Trust
and the Agent relating to the transactions contemplated
hereby.
[remainder of page intentionally left blank]
IN WITNESS WHEREOF, the Trust and the Agent have each
caused this Security Agreement and Assignment of Contracts to
be executed by its duly authorized officer on the date first
set forth above.
STATE STREET BANK AND TRUST
COMPANY,
not in its individual capacity
but solely as successor trustee
of the Massachusetts Fuel
Inventory Trust under the Trust
Agreement dated as of June 22,
1990, between it and the
Trustor and the Beneficiary
named therein.
By: s/Patrick E. Thebado
Assistant Vice President
FLEET NATIONAL BANK, as Agent
By: s/Thomas L. Rose, Vice President
ANNEX I
FUEL PURCHASE CONTRACT
ANNEX II
CONSENT AND AGREEMENT
ANNEX III
CERTIFICATE OF TRUSTEE
SCHEDULE 1
List of Storage Fields
County State
Lewis West Virginia
Taylor West Virginia
Harrison West Virginia
Gilmer West Virginia
Juniata Pennsylvania
Cameron Pennsylvania
Elk Pennsylvania
McKean Pennsylvania
Forest Pennsylvania
Jefferson Pennsylvania
Venango Pennsylvania
Erie Pennsylvania
Westmoreland Pennsylvania
Potter Pennsylvania
Steuben New York
Allegany New York
Niagara New York
Cattaraugus New York
Chautaugua New York
Wyoming New York
Middlesex Massachusetts
Barnstable Massachusetts
Plymouth Massachusetts