364-DAY REVOLVING CREDIT AGREEMENT
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THIS 364-DAY REVOLVING CREDIT AGREEMENT (this "Agreement") is made as of
the 1st day of October, 1997, by and between FLEET NATIONAL BANK, a national
banking association with an office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ("Lender"), and THE ENERGY NETWORK, INC., a Connecticut corporation with a
mailing address at ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ("Borrower").
W I T N E S S E T H T H A T:
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Borrower has requested that Lender provide Borrower with a secured
revolving credit loan in the aggregate principal amount not to exceed Ten
Million Dollars ($10,000,000) at any time outstanding (the "Loan"), and Lender
has agreed to extend such Loan upon the terms and subject to the conditions
hereinafter set forth.
ARTICLE I
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DEFINITIONS
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As used herein, the following terms shall have the indicated meanings:
"ADVANCE" shall mean an advance of all or some portion of the principal of
the Loan pursuant to Section 2.01 of this Agreement.
"AGREEMENT" shall mean this 364-Day Revolving Credit Agreement, as the same
may be supplemented, amended or restated from time to time.
"BORROWER" shall have the meaning specified in the Preamble to this
Agreement.
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended.
"CODE" shall mean the Internal Revenue Code of 1986, a amended from time to
time.
"COLLATERAL" shall mean any and all assets, rights and interests in or to
property of Borrower or any other Person pledged or mortgaged to Lender, or in
which a security interest is granted to Lender, from time to time, as security
pursuant to the Security Documents, whether now owned or hereafter acquired.
"COMMONLY CONTROLLED ENTITY" shall have the meaning specified in Section
3.09(a) of this Agreement.
"COSTS" shall mean all costs and expenses incurred or to be incurred by
Lender or Borrower in connection with or incidental to the Loan including,
without limitation, filing fees, fees associated with UCC lien search reports,
legal fees, audit fees and all other costs and fees incurred in connection with
the Loan.
"DEFAULT RATE" shall have the meaning specified in Section 7.02 of this
Agreement.
"EMPLOYEE BENEFIT PLAN" shall have the meaning specified in Section 3.09(b)
of this Agreement.
"EMPLOYEE WELFARE PLAN" shall mean an employee welfare benefit plan, as
defined in Section 3(1) of ERISA.
"ENVIRONMENTAL REQUIREMENT(S)" shall mean any present or future law,
statute, ordinance, rule, regulation, order, code, license, permit, decree,
judgment, directive or the equivalent of or by any Governmental Authority and
relating to or addressing the protection of human health or the environment.
"ERISA" shall have the meaning specified in Section 3.09(b) of this
Agreement.
"EVENT OF DEFAULT" shall have the meaning specified in Section 7.01 of this
Agreement.
"FEES" shall mean the balance deficiency fee and the commitment fee payable
pursuant to Section 5.13 and Section 5.14 of this Agreement.
"FINANCIAL STATEMENTS" shall mean the balance sheet, income statement,
statement of cash flows and retained earnings statement of Borrower on a
consolidated and consolidating basis for the year or other period then ended,
together with supporting schedules, prepared in accordance with GAAP.
"GAAP" shall mean generally accepted accounting principles in the United
States of America, as promulgated or adopted by the Financial Accounting
Standards Board and in effect from time to time, consistently applied with past
Financial Statements of Borrower.
"GOVERNMENTAL AUTHORITY" shall mean the United States government, any state
or other political subdivision thereof, any agency, court or body of the United
States government, any state or other political subdivision thereof, or any
quasi-governmental agency or authority exercising executive, legislative,
judicial, regulatory or administrative functions.
"GUARANTOR" shall mean, jointly, severally and collectively, TEN
Transmission Company, The Hartford Steam Company, ENServe, Incorporated and ENI
Gas Services, Inc.
"GUARANTY" shall mean those certain unconditional and continuing guaranties
of each Guarantor of even date herewith in favor of Lender, as the same may be
supplemented or amended from time to time.
"HAZARDOUS MATERIAL" shall mean any material or substance (i) which,
whether by its nature or use, is now or hereafter defined as a hazardous waste,
hazardous substance, pollutant or contaminant under any Environmental
Requirement, (ii) which is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous to human health or
the environment, (iii) which is or contains petroleum or any fraction thereof,
including
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crude oil, heating oil, gasoline or diesel fuel, or (iv) the presence of which
requires investigation or remediation under any Environmental Requirement.
"LENDER" shall have the meaning specified in the Preamble to this
Agreement.
"LOAN" shall have the meaning specified in the Preamble to this Agreement.
"LOAN DOCUMENTS" shall mean this Agreement, the Note, the Security
Documents and all other documents or instruments executed and delivered by or on
behalf of Borrower in connection with the Loan and the transactions contemplated
hereby, as the same may be supplemented or amended from time to time.
"MATERIAL ADVERSE CHANGE" shall mean a material adverse change in (i) the
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of Borrower or (ii) the Collateral, in each
case as determined by Lender in its sole discretion.
"MATURITY DATE" shall mean September 29, 1998.
"MULTIEMPLOYER PLAN" shall mean a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"NOTE" shall mean the $10,000,000 364-Day Revolving Credit Note of even
date herewith in the form attached hereto as EXHIBIT A, made by Borrower in
favor of Lender to evidence the Loan, as the same may be supplemented or amended
from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"PERSON" shall mean any individual, corporation, partnership, joint
venture, trust or unincorporated organization, or a government or any agency or
political subdivision thereof.
"REVOLVING CREDIT COMMITMENT" shall have the meaning specified in Section
2.01 of this Agreement.
"SECURED PARTIES" shall mean the Lender, the holders of the Borrower's
Senior Secured Notes Due 2009 issued as of October 1, 1997 and The Bank of Nova
Scotia, as issuer of that certain Irrevocable Standby Letter of Credit dated
March 20, 1996.
"SECURITY AGREEMENT" shall mean that certain Pledge and Assignment
Agreement made by Borrower in favor of State Street Bank and Trust Company, as
agent for the Secured Parties as the same may be supplemented or amended from
time to time.
"SECURITY DOCUMENTS" shall have the meaning set forth in Section 2.05 of
this Agreement.
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ARTICLE II
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GENERAL TERMS
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SECTION 2.01. REVOLVING CREDIT LOAN. Subject to the terms and conditions
contained in this Agreement and provided neither an Event of Default nor any
event which with notice or lapse of time, or both, would constitute an Event of
Default hereunder, has occurred, Lender agrees to make loans to Borrower from
time to time until the Maturity Date on a revolving credit basis in an aggregate
principal amount not to exceed $10,000,000 (the "Revolving Credit Commitment").
Borrower may request Advances from Lender in accordance with Section 2.03
hereof. Within the Revolving Credit Commitment, Borrower may borrow, repay
(without premium or penalty) and reborrow under the provisions of this Section
and Section 2.03. Each partial payment shall be in the amount of at least Ten
Thousand Dollars ($10,000). If at any time the outstanding principal balance of
the Advances exceeds the Revolving Credit Commitment, Borrower shall immediately
pay to Lender the amount of such excess. The Advances shall be evidenced by the
Note, which Note is hereby incorporated herein by reference and made a part
hereof.
SECTION 2.02. PAYMENTS OF PRINCIPAL AND INTEREST ON THE LOAN.
(a) Subject to Section 7.02 hereof, the outstanding unpaid principal
balance of the Advances shall bear interest at a rate per annum equal to either
(i) a LIBO Rate (as such term is defined in the Note) plus 60 basis points
(.6%), with each change in said rate to be effective on the date of the
commencement of each Interest Period (as defined in the Note) without notice to
Borrower or (ii) a Bank Rate (as such term is defined in the Note), as selected
by Borrower in accordance with the provisions of the Note. Interest will be
computed in arrears and based on a three hundred sixty (360) day year counting
the actual number of days elapsed. Interest on the outstanding principal
balance of the Advances will be paid monthly commencing on November 1, 1997, and
continuing on the same day of each successive month until the outstanding
principal balance of the Advances is paid in full and the Loan evidenced by the
Loan Documents is terminated. A final payment of all remaining principal and
accrued interest on the Loan will be made by Borrower to Lender on the Maturity
Date.
(b) All payments to be made by Borrower of principal of, and interest
on, the Note and all fees and other sums, costs, charges and expenses payable by
Borrower hereunder, may be made by Lender, at its option, debiting any demand
deposit account(s) of Borrower maintained with Lender, or in such other
reasonable manner as may be designated by Lender in writing to Borrower, and in
any event all such payments shall be made to Lender in U.S. dollars in
immediately available funds prior to 12:00 o'clock noon (Hartford time) on or
before the day that such payment is due. Any payments coming due on a Saturday,
Sunday or other day in which banks in the State of Connecticut are required to
be closed will be due on the next business day and such additional time will be
taken into account in computing interest thereon. Borrower hereby irrevocably
authorizes Lender to so debit its demand deposit account(s) maintained with
Lender and Lender shall be entitled to rely on this authorization.
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SECTION 2.03. ADVANCES UNDER THE LOAN. Borrower will open and maintain
with Lender an account. Advances under the Loan will be made by Lender to
Borrower upon telephonic request to credit such Advance to Borrower's account
made by an officer of Borrower who has been duly authorized by its board of
directors and whose name, along with a certified copy of such resolutions, has
been transmitted to Lender. Such request shall be confirmed in writing by
Lender's receipt, on the same day such request is received if such request was
received prior to 10:00 a.m. e.s.t., of a request for Advance in the form of
EXHIBIT B attached hereto, signed by a duly authorized officer of Borrower
indicating the date and amount of the Advance requested and acknowledging the
principal balance outstanding on the Loan, as of the said date after taking into
consideration the amount of the Advance as so requested.
SECTION 2.04. USE OF PROCEEDS. The proceeds of the Advances shall be used
exclusively by Borrower for short term working capital needs, general corporate
purposes and the payment of Costs.
SECTION 2.05. SECURITY. Payment and performance of the obligations,
indebtedness and liabilities of Borrower to Lender, whether under the Note or
otherwise, shall be secured by:
(a) a first priority security interest pursuant to the Security
Agreement shared PARI PASSU with the Secured Parties in (i) all equity
contributions made and to be made to the Borrower under that certain Forward
Equity Purchase Agreement between CTG Resources, Inc. and Borrower dated as of
October 1, 1997 (the "Forward Equity Purchase Agreement") and (ii) all of the
common stock of each Guarantor owned or hereafter acquired by Borrower;
(b) the Guaranty;
(c) the support letter from CTG Resources, Inc. in favor of Borrower
dated October 1, 1997; and
(d) such other security documents as may be required by Lender.
All agreements and instruments described in this Section 2.05, together
with any and all other agreements and instruments now or hereafter securing the
Note, are sometimes hereinafter referred to collectively as the "Security
Documents" and individually as a "Security Document".
ARTICLE III
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REPRESENTATIONS AND WARRANTIES
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To induce Lender to enter into this Agreement and to make the Loan,
Borrower hereby represents and warrants to Lender (which representations and
warranties shall survive the delivery of the Note and the making of the Loan)
that:
SECTION 3.01. FINANCIAL STATEMENTS. Borrower has heretofore furnished to
Lender Borrower's Financial Statements which fairly present the financial
condition of Borrower as of their date, and the results of its operations for
the year or other period then ended in conformity
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with GAAP. To the best of Borrower's knowledge and belief, Borrower does not
have any contingent obligations, liabilities for taxes or unusual forward or
long-term commitments except as specifically mentioned in the Financial
Statements. Since the date of the Financial Statements, there has been no
Material Adverse Change, and since that date, no dividends or other
distributions have been declared or paid or made to the stockholders of
Borrower.
SECTION 3.02. ORGANIZATION, ETC. Borrower (a) is duly organized, validly
existing and in good standing under the laws of its state of incorporation, (b)
is duly qualified to transact business in every jurisdiction where, because of
the nature of its business or property, such qualification is required; (c) has
full power and authority to own its property and assets and to carry on its
business as now being conducted and (d) has full power to execute, deliver and
perform its obligations under the Loan Documents to which it is a party.
SECTION 3.03. AUTHORIZATION, COMPLIANCE, ETC. The execution and delivery
of, and the performance by Borrower of its obligations under, the Loan Documents
(a) are within its corporate powers, (b) have been duly authorized by all
requisite corporate action, (c) do not and will not violate any provision of
law, any order of any court or other agency of government, or the corporate
charter or by-laws of Borrower, and (d) do not and will not violate any
indenture, agreement or other instrument to which it is a party, or by which it
is bound, or be in conflict with, result in a breach of, or constitute (with due
notice or lapse of time or both) a default under, or except as may be provided
by this Agreement, result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon any of the property or assets of
Borrower pursuant to, any such indenture, agreement or instrument. Borrower is
not required to obtain any consent, approval or authorization from, or to file
any declaration or statement with, any governmental instrumentality or other
agency in connection with or as a condition to the execution, delivery or
performance of the Loan Documents.
SECTION 3.04. LITIGATION. There is no action, suit or proceeding at law
or in equity or by or before any Governmental Authority now pending or, to the
knowledge of Borrower, threatened against or affecting Borrower other than as
has been previously disclosed in writing to Lender.
SECTION 3.05. TITLE TO PROPERTIES. Borrower has good title to all of its
properties and assets, free and clear of all mortgages, security interests,
restrictions, liens and encumbrances of any kind, except liens permitted under
Section 6.02 hereof.
SECTION 3.06. BORROWER NOT AN INVESTMENT COMPANY. Borrower is not an
"investment company", or a company "controlled" by an "investment company", as
such terms are defined in the Investment Company Act of 1940, as amended.
SECTION 3.07. MARGIN STOCK. Borrower does not own or have any present
intention of acquiring, any "margin security" within the meaning of Regulation
G, or any "margin stock" within the meaning of Regulation U, of the Board of
Governors of the Federal Reserve System (herein called "margin security" and
"margin stock"), nor does Borrower extend credit to others for the purpose of
purchasing or carrying such margin stock. None of the proceeds of the Loan will
be used, directly or indirectly, by Borrower for the purpose of purchasing or
carrying, or for the purpose of reducing or retiring any indebtedness which was
originally incurred to purchase or carry,
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any margin security or margin stock or for any other purpose which might
constitute the transactions contemplated hereby a "purpose credit" within the
meaning of said Regulation G or Regulation U, or cause this Agreement to violate
any other regulation of the Board of Governors of the Federal Reserve System or
the Securities Exchange Act of 1934, as amended, or any rules or regulations
promulgated under such statutes.
SECTION 3.08. FILING AND PAYMENT OF TAXES. Borrower has filed all
federal, state and local tax returns required to be filed, and has paid, or made
adequate provision for the payment of, all federal, state and local taxes,
charges and assessments.
SECTION 3.09. PENSION PLANS, ETC.
(a) PLANS. Except as set forth in a separate letter to Lender of
even date herewith and acknowledged by Lender in writing, neither Borrower nor
any entity with which Borrower would be aggregated (a "Commonly Controlled
Entity") under Section 414(b), (c), (m), or (o) of the Code, maintains or
contributes to any pension, profit sharing, or similar plan providing for a
program of deferred compensation to any employee or former employee.
(b) FUNDING OF EMPLOYEE BENEFIT PLANS. All contributions and other
payments required to be made by Borrower or any Commonly Controlled Entity to
all employee benefit plans, as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), which either
Borrower or any Commonly Controlled Entity maintains or maintained or to which
any of them contributes or has contributed (the "Employee Benefit Plans") have
been made or reserves adequate for such purposes has been set aside and reflect
on Borrower's financial statements. Except as provided in the following
sentence, no Employee Benefit Plan is a plan subject to Section 412 of the Code
or Section 302 of ERISA, nor is any Employee Benefit Plan a multiemployer plan
as defined in Section 4001(a)(3) of ERISA. The three defined benefit plans
maintained by the Borrower and its Commonly Controlled Entities are subject to
Section 412 of the Code and Section 302 of ERISA. Each other Employee Benefit
Plan which is an employee pension benefit plan, as defined in Section 3(2) of
ERISA, has been determined to be qualified under Section 401(a) or Section
403(a) of the Code and nothing has occurred which would cause the loss of such
qualification or the imposition of any tax liability or penalty under the Code
or ERISA on Borrower.
(c) ADMINISTRATION, ETC. Each Employee Benefit Plan has been and is
administered in accordance with its terms and applicable law. To its knowledge,
Borrower has not breached any fiduciary duty imposed on it under ERISA with
respect to any Employee Benefit Plan, or engaged in any prohibited transaction,
as defined in Title I of ERISA or Section 4975 of the Code, involving any
Employee Benefit Plan for which no exemption is available.
(d) WELFARE PLANS. No Employee Benefit Plan which is an employee
welfare benefit plan, as defined in Section 3(1) of ERISA, if any, provides for
continuing benefits or coverage for any participant (or beneficiary) after the
termination of the participant's employment except as may be required under
Section 4980B of the Code or applicable state statutory law, and except that
medical insurance is provided in certain instances.
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(e) CLAIMS. There are no claims (other than routine claims for
benefits), actions or lawsuits asserted or instituted with respect to, and
Borrower has no knowledge of any threatened claims or litigation with respect
to, any Employee Benefit Plan or any fiduciary thereof.
SECTION 3.10. ENVIRONMENTAL MATTERS. Borrower:
(a) Except as disclosed in the Annual Report on Form 10-K of the
Connecticut Natural Gas Corporation for the calendar year 1996, has not received
any notice, citation, summons, directive, order or other communication, written
or oral, from, and Borrower has no knowledge, after reasonable inquiry, of any
notice, citation, summons, directive, order or other communication by, any
Governmental Authority or any other person concerning the presence, generation,
treatment, storage, transportation, transfer, disposal, release or other
handling of any Hazardous Material within, on, from, related to, or affecting
any real property owned or occupied by Borrower; and
(b) Except as disclosed in the Annual Report on Form 10-K of the
Connecticut Natural Gas Corporation for the calendar year 1996, has no
knowledge, after reasonable inquiry, that any real property owned or occupied by
Borrower has ever been used either by Borrower, any tenant or any predecessor in
interest, to generate, treat, store, transport, transfer, dispose of, release or
otherwise handle any Hazardous Material, except in material compliance with all
Environmental Requirements.
SECTION 3.11. PATENTS, TRADEMARKS, ETC. Borrower owns or possesses all
the patents, trademarks, service marks, trade names, copyrights, consents and
licenses, and all rights with respect to the foregoing, necessary for the
current and currently planned future conduct of its business, without any known
conflict with the rights of others.
SECTION 3.12. FULL DISCLOSURE. Neither the Financial Statements referred
to in Section 3.01, nor any statement of fact made by or on behalf of Borrower
in this Agreement or any of the other Loan Documents or any certificate, written
statement or schedule furnished to Lender pursuant hereto, contains any untrue
statement of a material fact or omits to state any material fact necessary to
make statements contained herein or therein not misleading.
SECTION 3.13. ENFORCEABILITY. This Agreement and all other Loan Documents
executed and delivered in connection herewith are legal, valid and binding
obligations of Borrower, and with respect to those Loan Documents executed and
delivered by Guarantor, of Guarantor, and are enforceable against Borrower and
Guarantor, as the case may be, in accordance with their terms except as such
enforceability may be limited by (i) the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally and (ii) general principles of equity.
SECTION 3.14. SOLVENCY. The fair saleable value of Borrower's assets
exceeds all probable liabilities of Borrower; Borrower does not have
unreasonably small capital in relation to the business in which it is or
proposes to be engaged; and Borrower has not incurred, nor believes that it will
incur after giving effect to the transactions contemplated by this Agreement,
debts beyond its ability to pay such debts as they become due.
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ARTICLE IV
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CONDITIONS OF MAKING THE LOAN
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SECTION 4.01. CONDITIONS PRECEDENT TO INITIAL ADVANCE. The obligation of
Lender to make the initial Advance hereunder is subject to the satisfaction of
the following conditions precedent:
(a) The representations and warranties set forth in Article III
hereof and in all other Loan Documents shall be true and correct.
(b) Borrower shall have executed and delivered to Lender, or caused
to be executed and delivered to Lender, on or prior to the date of execution of
this Agreement, each of the documents, opinions and certificates required by
Lender, each in scope, form and substance satisfactory to Lender in its sole
discretion, and all other documents reasonably necessary to consummate the
lending transactions contemplated hereby.
(c) All legal matters incident to the transactions hereby
contemplated shall be satisfactory to counsel for Lender.
(d) No Event of Default, nor any event which upon notice or lapse of
time, or both, would constitute such an Event of Default, shall have occurred
and be continuing.
SECTION 4.02. CONDITIONS PRECEDENT TO ADDITIONAL ADVANCES. The obligation
of Lender to make each Advance in connection with the Loan is subject to the
conditions precedent that, on the date of each such Advance:
(a) All representations and warranties set forth in Article III
hereof and in all other Loan Documents shall be true and accurate as of the date
each Advance is requested to be made, except with respect to the representations
and warranties in Section 3.01 of this Agreement as it relates to the Financial
Statements of the Borrower;
(b) No event has occurred and is continuing, or would result from the
making of the Advance, which constitutes an Event of Default hereunder or would
constitute such an Event of Default but for the requirement that notice be given
or time elapse, or both; and
(c) Borrower shall represent and warrant to Lender that the financial
condition of Borrower has not materially adversely changed since the submission
of Borrower's most recent financial information to Lender.
Each Request for Advance shall constitute a certificate by Borrower to such
effect.
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ARTICLE V
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AFFIRMATIVE COVENANTS
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Borrower covenants and agrees that, until payment in full of the principal
of, and interest on, the Note and any other indebtedness, obligation and
liability of Borrower to Lender under the Loan Documents, whether now existing
or arising hereafter, and termination of the loan facility evidenced by the Loan
Documents, Borrower will:
SECTION 5.01. PRESERVATION OF ASSETS; COMPLIANCE WITH LAW.
(a) Do or cause to be done all things reasonably necessary to
preserve, renew and keep in full force and effect its corporate existence,
rights, licenses, permits and franchises; at all times maintain, preserve and
protect all franchises and trade names and preserve all the remainder of its
property used or useful in the conduct of its business and keep the same in good
repair, working order and condition, and from time to time, make, or cause to be
made, all needful and proper repairs, renewals, replacements, betterments and
improvements thereto, so that the business carried on in connection therewith
may be properly and advantageously conducted at all times; and
(b) Comply with all applicable laws, rules, regulations and orders,
whether now in effect or hereafter enacted or promulgated by any Governmental
Authority.
SECTION 5.02. TAXES, ETC. Pay and discharge or cause to be paid and
discharged, when due, all taxes, assessments and governmental charges or levies
imposed upon it or upon its respective income and profits or upon any of its
property, real, personal or mixed, or upon any part thereof, as well as all
lawful claims for labor, materials and supplies or otherwise, which, if unpaid,
might become a lien or charge upon such properties or any part thereof,
PROVIDED, HOWEVER, Borrower may contest in good faith any such taxes,
assessments and governmental charges or levies, and withhold payment thereof, if
Borrower properly commences and thereafter diligently pursues the contest.
SECTION 5.03. NOTICE OF PROCEEDINGS. Give prompt written notice to Lender
of any proceedings instituted against it by or in any Federal or state court or
before any commission or other regulatory body, whether Federal, state or local.
SECTION 5.04. FINANCIAL REPORTING. Furnish to Lender:
(a) Within ninety (90) days of the end of each fiscal year,
consolidated and consolidating Financial Statements certified (without
qualification) by independent certified public accountants selected by Borrower
and approved by Lender, showing the financial condition at the close of such
fiscal year, the results of operations during such year and containing a
statement to the effect that its independent public accountants have examined
the provisions of this Agreement and that no Event of Default, nor any event
which with notice or lapse of time, or both, would constitute such an Event of
Default, has occurred;
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(b) Within sixty (60) days after the end of each quarter in each such
fiscal year, consolidated and consolidating Financial Statements for such period
and the fiscal year to that date, subject to changes resulting from routine
year-end audit adjustments, in form satisfactory to Lender, prepared and
certified by the chief financial officer of Borrower to the best of his or her
information and belief;
(c) Simultaneously with the furnishing of each of the Financial
Statements to be delivered pursuant to subsections (a) and (b) above, a
certificate in the form of EXHIBIT C hereto and certified by the President or
chief financial officer of Borrower; and
(d) Promptly, from time to time such other information regarding its
operations, assets, business, affairs and financial condition or the operations,
assets, business, affairs and financial condition of any of its subsidiaries, as
Lender may reasonably request.
SECTION 5.05. VISITATION AND INSPECTION RIGHTS. Permit agents or
representatives of Lender to inspect and to discuss the affairs, finances and
accounts of Borrower with its officers, at any time and from time to time during
normal business hours upon twenty-four hours notice to Borrower, at Borrower's
reasonable expense after an Event of Default (including, without limitation, the
reasonable fees and expenses of such agents or representatives), (i) the
Collateral, and (ii) Borrower's books and records and to make abstracts or
reproductions thereof and to duplicate, reduce to hard copy or otherwise use any
and all computer or electronically stored information or data.
SECTION 5.06. NOTICE OF EVENT OF DEFAULT. Immediately advise Lender of
any Material Adverse Change, or of the occurrence of any Event of Default, or of
the occurrence of any event which upon notice or lapse of time or both would
constitute such an Event of Default.
SECTION 5.07. ACCOUNTING SYSTEM. Maintain a standard system of accounting
in accordance with GAAP.
SECTION 5.08. FINANCIAL COVENANTS.
(a) For purposes of this Section, the following terms shall have the
following definitions and any undefined terms shall be defined in accordance
with GAAP:
(i) "DEBT SERVICE" shall mean for any relevant accounting period the
aggregate amount of principal and interest payments due from Borrower with
respect to its Total Debt.
(ii) "DEBT SERVICE COVERAGE RATIO" shall mean for any relevant
accounting period the ratio of (x) earnings before interest, taxes ,
depreciation, amortization and dividends (EBITDA) plus amounts received
under the Forward Equity Purchase Agreement to (y) Debt Service.
(iii) "INTEREST COVERAGE RATIO" shall mean for any relevant
accounting period the ratio of (x) earnings before interest, taxes and
dividends (EBIT) plus amounts received
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under the Forward Equity Purchase Agreement to (y) the aggregate amount of
interest payments due from Borrower with respect to its Total Debt.
(iv) "SENIOR DEBT" shall mean the Loan, all debt secured PARI PASSU
with the Loan pursuant to the Collateral Agency Agreement and any other
indebtedness of Borrower owed to Lender.
(v) "TANGIBLE NET WORTH" shall mean the excess of Borrower's total
assets over its total liabilities computed in accordance with generally
accepted accounting principles consistently applied, less all intangible
assets and deferred charges, including, without limitation, goodwill,
unamortized debt discount, organization expenses, trademarks and trade
names, patents, deferred product development costs, the Borrower's
interests under the Forward Equity Purchase Agreement, and similar items.
(vi) "TOTAL DEBT" shall mean Senior Debt, as well as any of
Borrower's other loan or lease obligations then outstanding.
(b) At all times during the period the Loan is outstanding, Borrower
agrees to fulfill each of the following financial covenants:
(i) Not permit the ratio of Total Debt to Tangible Net Worth to
exceed the 2.25 to 1 on a consolidated basis, to be tested quarterly;
(ii) Not permit its Tangible Net Worth to be less than $30,00,000 on
a consolidated basis, to be tested annually;
(iii) Not permit its Debt Service Coverage Ratio to be less than 1.25
to 1, as tested quarterly; and
(iv) Not permit its Interest Coverage Ratio to be less than 2.5 to 1,
as tested quarterly.
SECTION 5.09. LENDER AS PRINCIPAL DEPOSITORY. Use Lender as the principal
depository of its funds.
SECTION 5.10. INSURANCE. Keep all of its insurable properties, now or
hereafter owned, adequately insured at all times against loss or damage by fire
or other casualty to the extent customary with respect to like properties of
companies conducting similar businesses; maintain public liability, business
interruption and worker's compensation insurance insuring Borrower to the extent
customary with respect to companies conducting similar businesses, all by
financially sound and reputable insurers.
SECTION 5.11. ENVIRONMENTAL INDEMNIFICATION. With respect to
environmental matters:
(a) comply strictly and in all material respects with all
Environmental Requirements, and cause all tenants or other occupants of any real
property which Borrower owns or occupies to
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comply, in all material respects with all Environmental Requirements, and not
generate, treat, store, handle, process, transfer, transport, dispose of,
release or otherwise use, and not permit any tenant or other occupant of such
property to generate, treat, store, handle, process, transfer, transport,
dispose of, release or otherwise use, Hazardous Materials within, on, under or
about such property in a manner that could lead to the imposition on Borrower,
Lender or any such real property of any liability or lien of any nature
whatsoever under any Environmental Requirement;
(b) notify Lender promptly in the event of any material spill or
other release of any Hazardous Material within, on, under or about any real
property owned or occupied by Borrower which is required to be reported to a
Governmental Authority under any Environmental Requirement, promptly forward to
Lender copies of any notices received by Borrower relating to alleged violation
of any Environmental Requirement and promptly pay when due any fine or
assessment against Borrower, Lender or any such real property relating to any
Environmental Requirement, PROVIDED, HOWEVER, Borrower may contest in good faith
any such fine or assessment, and withhold payment thereof, if Borrower properly
commences and thereafter diligently pursues the contest.; and
(c) indemnify, defend, and hold Lender harmless from and against any
claim, cost, damage (including, without limitation, consequential damages),
expenses (including, without limitation, attorneys' fees and expenses), loss,
liability, or judgment now or hereafter arising as a result of any claim for
environmental cleanup costs, any resulting damage to the environment and any
other environmental claims against Borrower, Lender, the Premises or any other
real property which Borrower owns or occupies. Notwithstanding anything
contained herein to the contrary, the provisions of this subparagraph (c) shall
continue in effect and shall survive (among other events) any termination of
this Agreement, payment and satisfaction of the Note, and release of any
Collateral.
SECTION 5.12. PRIVATE PLACEMENT. Within one month from the date hereof,
consummate the tender offer set forth in that certain Confidential Private
Placement Memorandum with PaineWebber Incorporated.
SECTION 5.13. COMMITMENT FEE. Pay to Lender (a) on or before the date of
this Agreement, a one-time commitment fee for the Loan and the other financial
accommodations being extended to Borrower on this date in the amount of $5,000
and (b) on or before the date of this Agreement and, in addition, prior to any
renewal of this Agreement, a facility fee in the amount of $37,500 (.375% of the
Revolving Credit Commitment).
ARTICLE VI
----------
NEGATIVE COVENANTS
------------------
Borrower covenants and agrees that, until payment and satisfaction in full
of the principal of, and interest on, the Note and any other indebtedness,
obligation or liability of Borrower to Lender, whether now existing or arising
hereafter, and termination of the loan facility evidenced by the Loan Documents,
Borrower will not, directly or indirectly:
SECTION 6.01. INDEBTEDNESS. Incur, create, assume, become or be liable in
any manner with respect to, or permit to exist, any indebtedness, obligation or
liability or permit any of its subsidiaries to
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incur, create, assume, become or be liable in any manner with respect to, or
permit to exist, any indebtedness, obligation or liability, except for:
(a) indebtedness to Lender;
(b) indebtedness with respect to trade obligations and other normal
accruals in the ordinary course of business not yet due and payable, or with
respect to which it is contesting in good faith the amount or validity thereof
by appropriate proceedings, and then only to the extent it has set aside on its
books adequate reserves therefor;
(c) indebtedness for which Borrower has received the prior written
consent of Lender, which consent shall not be unreasonably withheld;
(d) the indebtedness set forth on the Schedule of Existing
Indebtedness attached hereto and made a part hereof; and
(e) other indebtedness for borrowed money not in excess of $1,000,000
outstanding at any time; and
(f) up to $45,000,000 in 6.99% Senior Secured Notes due 2009 to be
issued prior to October 31, 1997.
SECTION 6.02. LIENS. Create, incur, assume or otherwise permit to exist
any mortgage, pledge, lien, charge or other encumbrance of any nature whatsoever
on any of its assets, now or hereafter owned by Borrower, except for:
(a) liens securing the payment of taxes, either not yet due or the
validity of which is being contested in good faith by appropriate proceedings,
and as to which it shall have set aside on its books adequate reserves;
(b) deposits under worker's compensation, unemployment insurance and
social security laws, or to secure the performance of bids, tenders, contracts
(other than for the repayment of borrowed money) or leases, or to secure
statutory obligations or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds in the ordinary course of business;
(c) liens imposed by law, such as carriers', warehousemen's or
mechanics' liens, incurred by it in good faith in the ordinary course of
business, and liens arising out of a judgment or award against it with respect
to which it shall currently be prosecuting an appeal, a stay of execution
pending such appeal having been secured;
(d) liens in favor of Lender;
(e) the liens set forth on the Schedule of Existing Liens attached
hereto and made a part hereof; and
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(f) liens (including liens securing obligations in respect of capital
leases) to secure indebtedness incurred in connection with the financing of all
or part of the purchase price or cost of improvement of property acquired or
improved by the Company or any of its subsidiaries after the date hereof,
provided that the indebtedness secured by said liens is permitted by Section
6.01 hereof.
SECTION 6.03. GUARANTEES. Without the consent of the Lender, which shall
not be unreasonably withheld, guarantee, endorse or otherwise in any way become
or be responsible for obligations of any other person, except endorsements of
negotiable instruments for collection in the ordinary course of business.
SECTION 6.04. DISPOSITION OF ASSETS. Sell, lease, transfer or otherwise
dispose of its material properties, assets, rights, licenses and franchises to
any person, except for sales of inventory in the ordinary course of its
business, or turn over the management of, or enter a management contract with
respect to, such material properties, assets, rights, licenses and franchises,
PROVIDED, HOWEVER, that the sales of KBC and ENServe, Incorporated shall be
permitted under this Section 6.04.
SECTION 6.05. SALE AND LEASEBACKS. Enter into any arrangement, directly
or indirectly, with any person whereby it shall sell or transfer any property,
real, personal or mixed, used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease such property.
SECTION 6.06. INVESTMENTS. Purchase, invest in or otherwise acquire or
hold securities, including, without limitation, capital stock and evidences of
indebtedness of, or make loans or advances to, but excluding from such
prohibition commercial paper rated A/2 or P-2 or better and Euro-Time deposits,
or enter into any arrangement for the purpose of providing funds or credit to,
any other person, except:
(a) advances to employees for business expenses or for personal needs
not to exceed Five Thousand Dollars ($5,000) in the case of any one (1) employee
and not to exceed Fifty Thousand Dollars ($50,000) in the aggregate to all such
employees outstanding at one time; and
(b) investments in certificates of deposit issued by Lender or in
short-term obligations of the United States.
SECTION 6.07. FUNDAMENTAL CHANGES. Dissolve, liquidate, merge,
consolidate or otherwise alter or modify Borrower's corporate name, mailing
address, principal place of business, structure, status or existence.
SECTION 6.08. DIVIDENDS. Pay any dividends, or make any distribution of
cash or property, or both, to holders of shares of its capital stock, or
directly or indirectly, redeem, purchase or otherwise acquire for a
consideration, any shares of its capital stock, of any class, unless such would
not significantly alter Borrower's financial capabilities or cause a default
under a covenant contained in this Agreement.
SECTION 6.09. ACCOUNTS RECEIVABLE. Sell, assign, pledge, discount or
dispose in any way of any accounts receivable, promissory notes or trade
acceptances held by Borrower, with or without recourse, except for collection
(including endorsements) in the ordinary course of business.
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SECTION 6.10. TRANSACTIONS WITH AFFILIATES. Enter into any transaction,
including, without limitation, the purchase, sale or exchange of property or
assets or the rendering or accepting of any service with or to any subsidiary or
affiliate of Borrower except in the ordinary course of business and pursuant to
the reasonable requirements of Borrower's business and upon terms not less
favorable to Borrower than it could obtain in a comparable arm's-length
transaction with a third party other than such subsidiary or affiliate.
SECTION 6.11. ERISA. (a) Fail, or permit any Commonly Controlled Entity
to fail, to comply with the requirements of ERISA with respect to any Employee
Benefit Plan; (b) permit any funded Employee Pension Plan to lose its qualified
status under Section 401(a) or 403(a) of the Code; (c) fail, or permit any
Commonly Controlled Entity to fail, to meet the minimum funding standards of
Section 302 of ERISA and Section 412 of the Code; (d) fail, or permit any
Commonly Controlled Entity to fail, to discharge any obligations to the PBGC
with respect to the termination of an Employee Pension Plan or to any
Multiemployer Plan on account of its withdrawal or partial withdrawal therefrom
or allow to exist any event or condition which presents a substantial risk of
Borrower incurring liability to the PBGC by reason of the termination of any
Employee Pension Plan; (e) create or adopt, or permit any Commonly Controlled
Entity to create or adopt, any new Employee Pension Plan which would
significantly alter Borrower's financial capabilities or cause a default under a
covenant contained in this Agreement without the prior written consent of
Lender; (f) modify, or permit any Commonly Controlled Entity to modify, any
existing Employee Pension Plan so as to increase its obligations thereunder
which would significantly alter Borrower's financial capabilities or cause a
default under a covenant contained in this Agreement, except in the ordinary
course of business consistent with past practice or with the prior written
consent of Lender; (g) create or adopt any new Employee Welfare Plan or modify
any existing Employee Welfare Plan, or permit any Commonly Controlled Entity to
create or adopt any new Employee Welfare Plan or modify any existing Employee
Welfare Plan, to provide continuing benefits or coverage for any participant (or
beneficiary) after the termination of the participant's employment except as may
be required by COBRA, regulations thereunder or applicable state statutory law
which would significantly alter Borrower's financial capabilities or cause a
default under a covenant contained in this Agreement or with the prior written
consent of Lender; or (h) engage, or permit any Commonly Controlled Entity to
engage, in any transaction which would reasonably result in the assessment of a
direct or indirect liability to Borrower or any Commonly Controlled Entity under
Section 409 or 502 of ERISA or Section 4975 of the Code.
SECTION 6.12. NEGATIVE PLEDGE. Without Lender's consent, which shall not
be unreasonably withheld, (a) sell, transfer, pledge or assign any shares of
stock or other ownership interests in Borrower or any of its subsidiaries or (b)
execute or agree to any further negative pledges of such shares of stock or
other ownership interests in Borrower or any of its subsidiaries. Lender
acknowledges and agrees that Borrower has pledged the stok of its subsidiaries
to State Street Bank and Trust Company, as collateral agent for Lender, The Bank
of Nova Scotia and the purchasers of the Borrower's 6.99% Senior Notes due 2009.
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ARTICLE VII
-----------
DEFAULTS; RIGHTS AND REMEDIES OF LENDER UPON DEFAULT
----------------------------------------------------
SECTION 7.01. EVENTS OF DEFAULT. In each case of happening of any of the
following events (each of which is herein and in the Note and Security Documents
sometimes called an "Event of Default"):
(a) failure of Borrower to pay, after the expiration of any
applicable grace period, any installment of the principal of, or interest on,
the Note or any other indebtedness, obligation or liability of Borrower to
Lender, whether now existing or hereafter arising, when the same shall become
due and payable, whether at the due date thereof or at a date fixed for
prepayment or by acceleration or otherwise;
(b) failure of Borrower to perform, comply or observe any term,
covenant, condition or agreement applicable to Borrower contained in Articles
IV, V or VI hereof or in the Note;
(c) failure of Borrower to perform, comply with or observe any other
term, covenant, condition or agreement applicable to Borrower pursuant to the
terms hereof (other than as set forth in any other paragraph of this Article
VII), and such default shall continue unremedied for thirty (30) days after the
delivery of written notice thereof by Lender to Borrower;
(d) any representation or warranty made in this Agreement, any other
Loan Document or any other report, certificate, financial statement or other
instrument furnished in connection with this Agreement, or the borrowing
hereunder, shall be untrue or misleading in any material respect as of the date
such representation or warranty was made or is deemed to have been made;
(e) the occurrence of a default or event of default with respect to
any evidence of indebtedness of Borrower (other than to Lender), in excess of
one million dollars ($1,000,000), if the effect of such default is to accelerate
the maturity of such indebtedness or to permit the holder thereof to cause such
indebtedness to become due prior to the stated maturity thereof, or if any such
indebtedness of Borrower is not paid when due and payable, whether at the due
date thereof or by acceleration or otherwise;
(f) the occurrence of an "Event of Default" as defined in any
Security Document;
(g) Borrower shall (i) discontinue or abandon operation of its
business, (ii) apply for or consent to or suffer the appointment of a receiver,
trustee, custodian or liquidator of it or any of its property, (iii) admit in
writing its inability to pay its debts as they mature, (iv) make a general
assignment for the benefit of creditors, (v) file a petition for relief under
Title 11 of the United States Code or (vi) file a petition in bankruptcy, or a
petition or an answer seeking reorganization or an arrangement with creditors or
to take advantage of any bankruptcy, reorganization, insolvency, readjustment of
debt, dissolution or liquidation law or statute, or an answer admitting the
material allegations of a petition filed against it in any proceeding under any
such law, or if corporate action shall be taken for the purpose of effecting any
of the foregoing, (vi) become insolvent, (vii) fail to generally pay its debts
as they mature or (viii) have liabilities which exceed the fair value of its
assets;
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(h) there shall be filed against Borrower an involuntary petition
seeking reorganization of Borrower or the appointment of a receiver, trustee,
custodian or liquidator of Borrower or any material part of its assets, or an
involuntary petition under any bankruptcy, reorganization or insolvency law of
any jurisdiction, whether now or hereafter in effect;
(i) any judgment or court order for the payment of money in excess of
an aggregate of one million dollars ($1,000,000) shall be rendered against
Borrower in any twelve (12) month period, and either the same shall remain
undischarged for a period of thirty (30) consecutive days, or execution shall
have issued in respect thereof;
(j) the occurrence of any attachment of any deposits or other
property of Borrower in the hands or possession of Lender, or the occurrence of
any attachment of any other property of Borrower in the aggregate amount
exceeding one million dollars ($1,000,000) in any twelve (12) month period and
either the same shall remain undischarged for a period of thirty (30)
consecutive days, or execution shall have issued in respect thereof;
(k) the occurrence of any event or condition described in paragraph
(e), (g), (h), (i) or (j) of this Article VII with respect to Guarantor or any
other entity liable, in whole or in part, for payment or performance hereof or
of the Note;
(l) for any reason, any Security Document (including, without
limitation, the Guaranty) at any time shall not be in full force and effect in
all material respects or shall not be enforceable in all material respects in
accordance with its terms, or any material security interest or lien granted
pursuant thereto shall fail to be perfected, or any person (other than Lender)
shall contest the validity, enforceability or perfection of any material lien
granted pursuant thereto, or any party thereto (other than Lender) shall seek to
disaffirm, terminate, limit or reduce its obligations under any Security
Document; or
(m) for any reason, Guarantor shall give notice of Guarantor's
attempt or intent to terminate the Guaranty and/or said entity shall be in
default of its own obligations to Lender; or
(n) Borrower suffers or sustains a Material Adverse Change or Lender
in good faith determines that the prospect of repayment of the Note is
materially impaired; or
(o) for any reason, the ratio of (x) the total debt (the sum of all
short term debt, current maturities of long term indebtedness (CMLTD) and
long-term debt) of CTG Resources, Inc. (the parent of Borrower) to (y) the
capitalization of CTG Resources, Inc., exceeds 70% in any two consecutive fiscal
quarters; or
(p) any operating subsidiary of CTG Resources, Inc. fails to maintain
a Standard and Poor's Corporation debt rating at least equal to "BBB",
THEN, upon the occurrence of any such Event of Default which has not been cured
by Borrower or waived in writing by Lender, Lender may, by notice to Borrower,
terminate this Agreement and declare the Note and any and all other liabilities,
indebtedness and obligations of Borrower to Lender to be immediately due and
payable, both as to principal and interest, without presentment, demand, protest
or
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notice of any kind, all of which are hereby expressly waived, anything contained
herein or in the Note or other evidence of such indebtedness, obligations and
liabilities to the contrary notwithstanding (except with respect to any Event of
Default set forth in Section 7.01(g), in which case this Agreement shall
automatically terminate and the Note and all other indebtedness, obligations and
liabilities of Borrower to Lender shall automatically become immediately due and
payable without the necessity of any notice or demand). In the event of an
acceleration of Borrower's indebtedness hereunder as a result of the filing of
an involuntary petition as specified in paragraph (h) of this Article VII, such
acceleration shall be rescinded, and Borrower's rights hereunder reinstated, if,
within sixty (60) days following the filing of such involuntary petition, such
involuntary petition shall have been dismissed, and there shall then exist no
other Event of Default. Lender may enforce payment of the same and exercise any
or all of the rights, powers and remedies possessed by Lender, under this
Agreement, the Security Documents or under any agreement securing the
obligations of Borrower hereunder, whether afforded by the Uniform Commercial
Code or otherwise afforded by law or in equity. The remedies provided for
herein are cumulative and are not exclusive of any other remedies provided by
law. Borrower agrees to pay Lender's reasonable attorneys' fees and legal
expenses incurred in enforcing Lender's rights, powers and remedies under this
Agreement, the Note, the Security Documents and any other agreement securing the
liabilities, indebtedness or obligations of Borrower to Lender.
SECTION 7.02. DEFAULT RATE; LATE CHARGE. Without regard to whether Lender
has exercised any other rights or remedies hereunder, if Lender has accelerated
amounts owing under the Note following the occurrence an Event of Default, the
applicable interest rate under the Note shall be increased, to the extent
permitted by law, to a rate per annum equal to the Default Rate (as defined in
the Note). In addition, if the entire amount of any required principal and/or
interest payment is not paid in full within ten (10) days after the same is due,
Borrower shall pay to Lender a late fee equal to five percent (5%) of the
required payment.
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ARTICLE VIII
------------
MISCELLANEOUS
-------------
SECTION 8.01. INCREASED COSTS - CAPITAL. If Lender shall have determined
that the adoption of any applicable law, rule, regulation, guideline, directive
or request (whether or not having force of law) regarding capital requirements,
or the interpretation or administration thereof, by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by Lender with any of the foregoing with
respect to this Loan imposes or increases a requirement by Lender to allocate
capital resources to its commitments, including its obligations hereunder, which
has or would have the effect of reducing the return on Lender's capital to a
level below that which Lender could have achieved (taking into consideration
Lender's then existing policies with respect to capital adequacy and assuming
full utilization of Lender's capital) but for such adoption, change or
compliance by any amount deemed by Lender to be material, then, in each such
case: (i) Lender shall promptly after its determination of such occurrence give
notice thereof to Borrower; and (ii) Borrower shall pay to Lender as an
additional fee from time to time on demand such amount as Lender certifies to be
the amount that will compensate it for such reduction. A certificate of Lender
claiming compensation under this Section shall be conclusive in the absence of
manifest error. Such certificate shall set forth the nature of the occurrence
giving rise to such compensation, the additional amount or amounts to be paid to
it hereunder and the method by which such amounts were determined. In
determining such amounts, Lender may use any reasonable averaging and
attribution methods.
SECTION 8.02. SURVIVAL. This Agreement and all covenants, agreements,
representations and warranties herein and in the certificates delivered pursuant
hereto, shall survive the making by Lender of the Loan, the execution and
delivery to Lender of the Note, and shall continue in full force and effect so
long as the Note and any other indebtedness of Borrower to Lender is outstanding
and unpaid; PROVIDED, HOWEVER, that the provisions of Section 5.11(c) hereof
shall survive payment and satisfaction of the Note.
SECTION 8.03. EXPENSES. Borrower will reimburse Lender upon demand for
all out-of-pocket costs, charges and expenses of Lender (including costs of
searches of public records and filing and recording documents with public
offices and fees and disbursements of counsel to Lender, which fees and
disbursements are capped at $20,000) in connection with (a) the preparation,
execution and delivery of this Agreement, the Note, the Security Documents and
any other Loan Documents, (b) the making of the Loan, (c) any amendments,
modifications, consents or waivers in respect thereof and (d) any enforcement
thereof.
SECTION 8.04. GOVERNING LAW. THIS AGREEMENT, THE NOTE AND THE
ADMINISTRATION THEREOF SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF CONNECTICUT APPLICABLE TO CONTRACTS MADE AND PERFORMED IN
SAID STATE.
SECTION 8.05. AMENDMENTS; ETC.. No amendment or waiver of any provision
of this Agreement, or of the Note, or of any of the Security Documents, no
consent to any departure therefrom, shall be effective unless the same shall be
in writing and signed by Lender. A written amendment,
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consent or waiver shall be effective only in the specific instance, and for the
purpose, for which given. No notice to, or demand, on Borrower, in any one
case, shall entitle Borrower to any other or future notice or demand in the
same, similar or other circumstances.
SECTION 8.06. WAIVER. Neither any failure nor any delay on the part of
Lender in exercising any right, power or privilege hereunder, or under the Note,
or any Security Document shall operate as a waiver thereof, nor shall a single
or partial exercise thereof preclude any other or future exercise, or the
exercise of any other right, power or privilege.
SECTION 8.07. NOTICES. All notices and correspondence hereunder shall be
in writing and sent by certified or registered mail, return receipt requested,
or by overnight delivery service, with all charges prepaid, to the applicable
party at its respective address set forth below, or by facsimile transmission
(including, without limitation, computer generated facsimile), promptly
confirmed in writing sent by first class mail, to the FAX numbers and the
addresses set forth below:
if to Lender:
Fleet National Bank
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Senior Vice President
FAX No.:(▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
FAX No.: (▇▇▇) ▇▇▇-▇▇▇▇
if to Borrower:
The Energy Network, Inc.
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Mr. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Treasurer and CAO
FAX No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
-▇▇-
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇
City Place I
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Esquire
FAX No.: (▇▇▇) ▇▇▇-▇▇▇▇
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other party complying as to delivery with the terms
of this Section. All such notices and correspondence shall be deemed given upon
the earlier to occur of (i) actual receipt, (ii) if sent by certified or
registered mail, three (3) business days after being post-marked, (iii) if sent
by overnight delivery service, when received at the above stated addresses or
when delivery is refused or (iv) if sent by facsimile transmission, when receipt
of such transmission is acknowledged.
SECTION 8.08. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of Borrower and Lender and their respective
successors and assigns, except that Borrower shall not have the right to assign
this Agreement or any interest herein without the prior written consent of
Lender. Lender may, without the consent of Borrower, assign or participate to
one or more banks or financial institutions all or a portion of Lender's rights
and obligations under this Agreement, the Note and the Security Documents.
SECTION 8.09. CONSENT TO JURISDICTION. Borrower hereby submits to the
jurisdiction of the courts of the State of Connecticut and the United States
District Court for the District of Connecticut, as well as to the jurisdiction
of all courts from which an appeal may be taken or other review sought from the
aforesaid courts, for the purpose of any suit, action or other proceeding
arising out of any of Borrower's obligations under or with respect to this
Agreement, the Note, the Security Documents or any of the transactions
contemplated hereby, and expressly waives any and all objections it may have as
to venue in any of such courts.
SECTION 8.10. WAIVER OF JURY TRIAL. BORROWER AND LENDER EACH HEREBY
WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER
OF THEM AGAINST THE OTHER ON ANY MATTERS WHATSOEVER (INCLUDING, WITHOUT
LIMITATION, ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THIS AGREEMENT, THE NOTE, THE SECURITY DOCUMENTS OR ANY OTHER
AGREEMENTS EXECUTED IN CONNECTION HEREWITH OR THE ADMINISTRATION THEREOF OR ANY
OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN). No party to this
Agreement, including BUT NOT LIMITED TO any assignee of or successor to Borrower
or Lender, shall seek a jury trial in any lawsuit, proceeding, counterclaim, or
any other litigation procedure based upon, or arising out of, this Agreement,
the Note, the Security Documents or any related instruments or the relationship
between the parties. No party will seek to consolidate any such action, in
which a jury trial has been waived, with any other action in which a jury trial
cannot be or has not been waived. THE PROVISIONS OF THIS SECTION HAVE BEEN
FULLY DISCUSSED BY THE PARTIES HERETO, AND THESE PROVISIONS SHALL BE SUBJECT TO
NO EXCEPTIONS. NO PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED
-22-
TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS SECTION WILL NOT BE FULLY
ENFORCED IN ALL INSTANCES.
SECTION 8.11. SET-OFFS, ETC. Borrower agrees that, in addition to (and
without limitation of) any right of set-off, bankers' lien or counterclaim
Lender may otherwise have, Lender shall be entitled at its option and whether or
not fully secured, to offset balances held by it for the account of Borrower at
any of its offices, against any indebtedness or other fees or charges owed to
Lender hereunder if the same are not paid when due (regardless of whether such
balances are then due to Borrower) or if Borrower becomes insolvent, howsoever
evidenced, or if any Event of Default occurs, and that such offset balances may
be applied toward the payment of any indebtedness of Borrower to Lender, whether
or not such indebtedness or any part thereof shall then be due and whether or
not such indebtedness is otherwise fully secured, in which case Lender shall
promptly notify Borrower thereof; PROVIDED, HOWEVER, that Lender's failure to
give such notice shall not affect the validity of such set-off and application.
SECTION 8.12. SEVERABILITY. In case any provision of or obligation under
this Agreement or the Note or the other Loan Documents shall be invalid, illegal
or unenforceable in any jurisdiction, the validity, legality and enforceability
of the remaining provisions or obligations, or of such provision or obligation
in any other jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 8.13. SECTION HEADINGS. The Article and Section headings in this
Agreement are inserted for convenience of reference only and shall not in any
way affect the meaning or construction of any provision of this Agreement.
SECTION 8.14. INTEGRATION. This Agreement supersedes Borrower's
application for credit, any commitment letter and proposal letters in respect
hereof, and all other prior dealings between the parties hereto and their
respective agents, employees or officers with respect to the credit facilities
extended hereby, and this Agreement, together with the other Loan Documents,
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof.
SECTION 8.15. WAIVER OF PREJUDGMENT REMEDIES. BORROWER AND EACH GUA-
RANTOR ACKNOWLEDGE THAT THE LOAN EVIDENCED BY THE NOTE AND SECURED BY THE
SECURITY DOCUMENTS IS A COMMERCIAL TRANSACTION AND THEY AND EACH OF THEM, HEREBY
VOLUNTARILY AND KNOWINGLY WAIVE ANY RIGHTS TO NOTICE AND HEARING UNDER CHAPTER
903a OF THE CONNECTICUT GENERAL STATUTES OR OTHER STATUTES AFFECTING PREJUDGMENT
REMEDIES AND AUTHORIZE LENDER'S ATTORNEY TO ISSUE A WRIT FOR A PREJUDGMENT
REMEDY WITHOUT COURT ORDER, PROVIDED THE COMPLAINT SHALL SET FORTH A COPY OF
THIS WAIVER.
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IN WITNESS WHEREOF, Lender and Borrower have caused this Agreement to be
duly executed by their respective duly authorized officers, all as of the day
and year first above written.
LENDER:
FLEET NATIONAL BANK
By:
----------------------------------- -------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Senior Vice President
BORROWER:
THE ENERGY NETWORK, INC.
By:
----------------------------------- -------------------------------------
Name:
Title:
-24-
SCHEDULE OF EXHIBITS
--------------------
Exhibit A - Form of Secured Revolving Credit Note
Exhibit B - Request for Advance
Exhibit C - Officer's Compliance Certificate
EXHIBIT A
---------
[FORM OF SECURED REVOLVING CREDIT NOTE]
-------------------------------------
EXHIBIT B
---------
REQUEST FOR ADVANCE
-------------------
[ ], 19[ ]
Fleet National Bank
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Senior Vice President
Ladies and Gentlemen:
Pursuant to the provisions of that certain 364-Day Revolving Credit
Agreement dated October 1, 1997, by and between The Energy Network, Inc.
("Borrower") and Fleet National Bank (the "Agreement"), the undersigned, as
borrower, hereby requests an Advance of $[ ] to be made on [ ], 19[ ], which
Advance shall be evidenced by the undersigned's Secured Revolving Credit Note
dated [ ]. The principal balance outstanding under said 364-Day Revolving
Credit Note, after taking into consideration the amount of the Advance requested
hereby, is $[ ].
The undersigned hereby represents and warrants that (i) no event has
occurred and is continuing, or would result from the proposed Advance, which
constitutes an "Event of Default", as that term is defined in the Agreement, or
would constitute such an "Event of Default" but for the requirement that notice
be given or time elapse, or both, and (ii) the representations and warranties in
Article III of the Agreement remain true and correct as of the date hereof,
except those set forth in Section 3.01. The undersigned further represents and
warrants that the financial condition of the undersigned has not materially
adversely changed since the submission of the undersigned's most recent
financial information to Fleet National Bank.
Very truly yours,
THE ENERGY NETWORK, INC.
By:
-------------------------------------
Title:
----------------------------------
EXHIBIT C
---------
[FORM OF COMPLIANCE CERTIFICATE]
------------------------------
Fleet National Bank
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Senior Vice President
Ladies and Gentlemen:
As required by Section 5.04 of that certain 364-Day Revolving Credit
Agreement dated October 1, 1997, by and between The Energy Network, Inc.
("Borrower") and Fleet National Bank, a review of the activities of Borrower for
the fiscal quarter/fiscal year ended [__________] has been made under my
supervision with a view to determining whether Borrower has kept, observed,
performed and fulfilled all of its obligations under the Revolving Credit
Agreement and all other agreements or undertakings contemplated thereby.
The undersigned hereby certifies that the amounts set forth below, with
abbreviated descriptions, to the best of my information and belief, accurately
present amounts required to be calculated by various covenants of the Revolving
Credit Agreement as of the last day of the fiscal quarter/fiscal year noted
above and all terms used herein have the identical meaning as in the Revolving
Credit Agreement.
1. 5.08(B)(I) - TOTAL DEBT TO TANGIBLE NET WORTH
Total Debt _______________
Tangible Net Worth _______________
Ratio of Total Debt to Tangible Net Worth _______________
Maximum Permitted 2.25 to 1
2. 5.08(B)(II) - MINIMUM TANGIBLE NET WORTH
Tangible Net Worth _______________
Minimum Required 30,000,000
3. 5.08(B)(III) DEBT SERVICE COVERAGE RATIO
EBITDA plus equity purchase funds _______________
Debt Service _______________
Debt Service Coverage Ratio _______________
Minimum Required 1.25 to 1
4. 5.08(B)(IV) INTEREST COVERAGE RATIO
EBIT _______________
Interest expense _______________
Interest Coverage Ratio _______________
Minimum Required 2.5 to 1
5. 7.01(O) CTG'S DEBT TO CAPITALIZATION
CTG total debt ________________
CTG capitalization ________________
CTG ratio of debt to capitalization ________________
Maximum Permitted 70%
6. 7.01(O) S&P RATING OF CTG OPERATING SUBSIDIARIES
Lowest Standard & Poor's debt rating of each
operating subsidiary of CTG ________________
Minimum Required BBB
The undersigned hereby further certifies that he/she has reviewed the terms
of the Revolving Credit Agreement and that, to the best of his/her knowledge, no
event has occurred which constitutes, or which with the passage of time or
service of notice, or both, would constitute, an Event of Default as defined in
the Revolving Credit Agreement.
Sincerely,
THE ENERGY NETWORK, INC.
By:
-------------------------------------
Title:
----------------------------------
-2-
364-DAY REVOLVING CREDIT NOTE
-----------------------------
$10,000,000.00 October 1, ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
FOR VALUE RECEIVED, THE ENERGY NETWORK, INC., a Connecticut corporation with a
mailing address at ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ("Borrower"),
hereby promises to pay to FLEET NATIONAL BANK, a national banking association
("Lender"), or to its order, at its office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, the principal sum of up to Ten Million Dollars
($10,000,000.00), or so much thereof as has been advanced and not repaid, in
accordance with the provisions of a 364-Day Revolving Credit Agreement of even
date herewith between the Borrower and Lender (the "Loan Agreement") and which
is then outstanding under this Note, together with interest in arrears on the
unpaid principal balance from time to time outstanding from the date hereof
until the entire principal amount due hereunder is paid in full at the rates
hereinafter provided. Interest shall be calculated on the basis of the actual
number of days elapsed over a year of 360 days. Interest shall be payable
monthly, in arrears, on the first day of each month, or the next business day
thereafter if such day is not a business day, commencing November 1, 1997 and
continuing monthly thereafter until this Note is paid in full.
Advances hereunder shall be made on a revolving basis and as principal is
repaid to Lender, such sums may be re-advanced to the Borrower in accordance
with the provisions of the Loan Agreement, provided no Event of Default has
occurred under the Loan Agreement or hereunder. All capitalized terms used
herein and not otherwise defined shall have the meanings set forth in the Loan
Agreement.
This Note is secured, INTER ALIA, by certain "Security Documents" referred
to in the Loan Agreement, and is entitled to the benefits thereof.
INTEREST RATES
BORROWER'S OPTIONS. Subject to the provisions herein with regard to the
Default Rate, interest hereunder shall accrue at the following rates, at
Borrower's selection, subject to the conditions and limitations provided for in
this Note: (i) a rate per annum equal to 60 basis points (.60%) greater than
the LIBO Rate (as hereinafter defined) provided, however, that in the event a
LIBO Rate is unavailable for any reason, interest shall accrue on the Loan at
the Variable Rate (as hereinafter defined) or (ii) a Bank Rate (as hereinafter
defined). Borrower's right to select an interest rate hereunder shall cease
during the continuance of an Event of Default, and, upon the expiration of the
Interest Period(s) for any Advance(s) then in existence, the outstanding
principal balance under this Note shall bear interest at the Variable Rate until
the Event of Default has been cured and Borrower makes an effective interest
rate selection.
SELECTION TO BE MADE. Borrower shall select, and thereafter may change the
selection of, the applicable interest rate, from the alternatives otherwise
provided for
in this Note, by giving Lender a Notice of Rate Selection: prior to each Loan
Advance, and by the times stated below in the next paragraph.
NOTICE. A "Notice of Rate Selection" shall be a written notice, given by
cable, tested telex, telecopier (with authorized signature), or by telephone if
immediately confirmed by such a written notice, from an Authorized
Representative of Borrower which: (i) is irrevocable; (ii) is received by
Lender not later than 10:00 o'clock A.M. Eastern Time on or before a Business
Day for which the selection of Interest Period is to apply.
IF NO NOTICE. If Borrower fails to select an interest rate option in
accordance with the foregoing prior to a Loan Advance, or prior to the last day
of the applicable Interest Period of an outstanding Advance, any new Loan
Advance made or any Advance for which the Interest Period is expiring and an new
interest rate is not selected by Borrower, shall be deemed to be accruing
interest at the rate based on the LIBO Rate, effective on the date such new Loan
Advance is made or upon the expiration of the existing Interest Period.
MATURITY DATE
So long as no Event of Default (as hereinafter defined) occurs as a result
of which Lender declares this Note immediately due and payable, the unpaid
principal amount due hereunder and any interest then owing shall be payable in
full on September 29, 1998 (the "Maturity Date").
PREPAYMENT
The Loan or any portion thereof may be prepaid in full or in part without
premium or penalty at any time if interest is accruing at the Variable Rate or
on the last day of any Interest Period upon five (5) days' prior written notice
to the holder of this Note. Prepayments at any other time shall be subject to
the payment of a Prepayment Premium. Any partial prepayment of principal shall
first be applied to any installment of principal then due and then be applied to
the principal due in the reverse order of maturity, and no such partial
prepayment shall relieve Borrower of the obligation to pay each subsequent
installment of principal when due.
Borrower shall pay to Lender all reasonable costs and expenses incurred by
Lender in connection with such prepayment and such charges will be paid by
Borrower whether payment is made voluntarily at Borrower's option or
involuntarily after Lender has made demand for payment after an Event of
Default.
In the event that interest is accruing hereunder at the LIBO Rate or a Bank
Rate and Borrower prepays the Loan at any time other than at the end of an
Interest Period, Borrower shall be required to pay a Prepayment Premium (the
"Prepayment Premium") to Lender in an amount computed as follows: the current
Treasury Rate with a maturity date closest to the last day of applicable
Interest Period to which the prepayment is made shall be subtracted from the
cost of funds component of the LIBO Rate in effect at the time of prepayment.
If the result is zero or a
-2-
negative number, there shall be no Prepayment Premium. If the result is a
positive number, then the resulting percentage shall be multiplied by the amount
of the principal balance being prepaid. The resulting amount shall be divided
by 360 and multiplied by the number of days remaining in the Interest Period as
to which the prepayment is made. Said amount shall be reduced to present value
calculated by using the number of days remaining in the Interest Period and
using the Treasury Rate. The resulting amount shall be the Prepayment Premium
due to Lender upon prepayment of the Loan. If by reason of an event of default
Lender elects to declare this note to be immediately due and payable, then any
Prepayment Premium with respect to this note shall become due and payable in the
same manner as though Borrower had exercised such right of prepayment.
CERTAIN DEFINITIONS AND PROVISIONS RELATING TO INTEREST RATE.
(a) BANKING DAY. The term "Banking Day" means a day on which banks are
not required or authorized by law to close in the city in which Lender's
principal office is situated.
(b) BANK RATE. The term "Bank Rate" means a rate of interest based on, but
not equal to, the Lender's cost of funds as such Bank Rate may be quoted by
Lender to Borrower upon Borrower's request therefor.
(c) BUSINESS DAY; SAME CALENDAR MONTH. The term "Business Day" means any
Banking Day and, if the applicable Business Day relates to the selection or
determination of any LIBO Rate, any London Banking Day. If any day on which a
payment is due is not a Business Day, then the payment shall be due on the next
day following which is a Business Day, unless, with respect to a LIBO Rate, the
effect would be to make the payment due in the next calendar month, in which
event such payment shall be due on the next preceding day which is a Business
Day. Further, if there is no corresponding day for a payment in the given
calendar month (i.e., there is no "February 30th"), the payment shall be due on
the last Business Day of the calendar month.
(d) DOLLARS. The term "Dollars" or "$" means lawful money of the United
States.
(e) INTEREST PERIOD.
(i) The term "Interest Period" means with respect to the LIBO Rate:
a period of three (3) months, subject to availability. Each such Interest
Period shall commence on a Business Day and shall end on the numerically
corresponding day in the third month thereafter. PROVIDED, HOWEVER: (i) if
there is no such numerically corresponding day (I.E., there is no February
30th), such Interest Period shall end on the last Business Day of the
applicable month, (ii) if the last day of such an Interest Period would
otherwise occur on a day which is not a Business Day, such Interest Period
shall be extended to the next succeeding Business Day; but (iii) if such
extension would otherwise cause such last day to occur in a new calendar
month, then such last day shall occur on the next preceding Business Day.
(ii) The term "Interest Period" shall mean with respect to the
Variable Rate consecutive periods of one (1) day each.
-3-
(iii) The term "Interest Period" shall mean with respect to a Bank
Rate the maturity of the cost of funds liability on which such Bank Rate is
based.
(iv) No Interest Period may end beyond the Maturity Date. If the
last day of an Interest Period would otherwise occur on a day which is not
a Business Day, such last day shall be extended to the next succeeding
Business Day, except as provided above in clause (i) relative to a LIBO
Rate.
(f) LIBO RATE. The term "LIBO Rate" means, with respect to each LIBO Rate
Interest Period, the rate per annum (rounded upward, if necessary, to the
nearest 1/32 of one percent) as determined on the basis of the offered rates for
deposits in U.S. dollars, for a period of time comparable to such Interest
Period which appears on the Telerate page 3750 as of 11:00 a.m. London time on
the day that is two London Banking Days preceding the first day of such advance;
provided, however, if the rate described above does not appear on the Telerate
System on any applicable interest determination date, the LIBO Rate shall be the
rate (rounded upwards as described above, if necessary) for deposits in dollars
for a period substantially equal to the interest period on the Reuters Page
"LIBO" (or such other page as may replace the LIBO Page on that service for the
purpose of displaying such rates), as of 11:00 a.m. (London Time), on the day
that is two (2) London Banking Days prior to the beginning of such interest
period. "Banking Day" shall mean, in respect of any city, any date on which
commercial banks are open for business in that city.
If both the Telerate and Reuters system are unavailable, then the rate for
that date will be determined on the basis of the offered rates for deposits in
U.S. dollars for a period of time comparable to the Interest Period for such
advance which are offered by four major banks in the London interbank market at
approximately 11:00 a.m. London time, on the day that is two (2) London Banking
Days preceding the first day of the Interest Period for such advance as selected
by the Calculation Agent. The principal London office of each of the four major
London banks will be requested to provide a quotation for its U.S. dollar
deposit offered rate. If at least two such quotations are provided, the rate
for that date will be the arithmetic mean of the quotations. If fewer than two
quotations are provided as requested, the rate for that date will be determined
on the basis of the rates quoted for loans in U.S. dollars to leading European
banks for a period of time comparable to the Interest Period for such advance
offered by major banks in New York City at approximately 11:00 a.m. New York
City time, on the day that its two London Banking Days preceding the first day
of the Interest Period for such advance. In the event that Lender is unable to
obtain any such quotation as provided above, it will be deemed that the LIBO
Rate cannot be determined.
In the event that the Board of Governors of the Federal Reserve System
shall impose a Reserve Percentage with respect to LIBOR deposits of Lender then
for any period during which such Reserve Percentage shall apply, the LIBO Rate
shall be equal to the amount determined above divided by an amount equal to 1
minus the Reserve Percentage.
(g) MATURITY. The term "Maturity" means the Maturity Date, or in any
instance, upon acceleration of the Loan, if the Loan has been accelerated by
Lender upon an Event of Default.
-4-
(h) PRESENT VALUE. The term "Present Value" means the value at the
applicable maturity discounted to the date of prepayment using the Treasury
Rate.
(i) PRIME RATE. The term "Prime Rate" means the per annum rate of
interest so designated from time to time by Lender as its prime rate. The Prime
Rate is a reference rate and does not necessarily represent the lowest or best
rate being charged to any customer.
(j) TREASURY RATE. The term "Treasury Rate" means, as of the date of any
calculation or determination, the latest published rate for United States
Treasury Notes or Bills (but the rate on Bills issued on a discounted basis
shall be converted to a bond equivalent) as published weekly in the Federal
Reserve Statistical Release H.15(519) of Selected Interest Rates in an amount
which approximates (as determined by Lender) the amount (i) approximately
comparable to the portion of the Loan to which the Treasury Rate applies for the
Interest Period, or (ii) in the case of a prepayment, the amount prepaid and
with a maturity closest to the original maturity of the installment which is
prepaid in whole or in part.
(k) VARIABLE RATE. The term "Variable Rate" means a per annum rate equal
at all times to the Prime Rate, with changes therein to be effective
simultaneously with any change in the Prime Rate.
ADDITIONAL PROVISIONS RELATED TO INTEREST RATE SELECTION.
(a) INCREASED COSTS. If, due to any one or more of: (i) the introduction
of any applicable law or regulation or any change (other than any change by way
of imposition or increase of reserve requirements already referred to in the
definition of LIBO Rate) in the interpretation or application by any authority
charged with the interpretation or application thereof of any law or regulation;
or (ii) the compliance with any guideline or request from any governmental
central bank or other governmental authority (whether or not having the force of
law), there shall be an increase in the cost to Lender of agreeing to make or
making, funding or maintaining LIBO Rate Loans, including without limitation
changes which affect or would affect the amount of capital or reserves required
or expected to be maintained by Lender, with respect to all or any portion of
the Loan, or any corporation controlling Lender, on account thereof, then
Borrower from time to time shall, upon written demand by Lender, pay Lender
additional amounts sufficient to indemnify Lender against any increased cost
actually incurred. A certificate as to the amount of the increased cost and the
reason therefor submitted to Borrower by Lender, in the absence of manifest
error, shall be conclusive and binding for all purposes.
(b) ILLEGALITY. Notwithstanding any other provision of this Note, if the
introduction of or change in or in the interpretation of any law, treaty,
statute, regulation or interpretation thereof shall make it unlawful, or any
central bank or government authority shall assert by directive, guideline or
otherwise, that it is unlawful, for Lender to make or maintain a LIBO Rate or
to continue to fund or maintain a LIBO Rate then, on written notice thereof and
demand by Lender to Borrower, (a) the obligation of Lender to make a LIBO Rate
available and to convert or continue any Loan advances at a LIBO Rate shall
terminate and (b) Borrower shall convert the interest rate to a Variable Rate.
-5-
(c) ADDITIONAL LIBO RATE CONDITIONS. The selection by Borrower of a LIBO
Rate and the maintenance of advances at such rate shall be subject to the
following additional terms and conditions:
(i) AVAILABILITY. If, before or after Borrower has selected to
take or maintain a LIBO Rate, Lender notifies Borrower that:
(A) dollar deposits in the amount and for the maturity
requested are not available to Lender in the London interbank market
at the rate specified in the definition of LIBO Rate set forth above,
or
(B) reasonable means do not exist for Lender to determine
the LIBO Rate for the amounts and maturity requested,
then the principal which would have been advanced at a LIBO Rate shall be
advanced at a Variable Rate.
(ii) PAYMENTS NET OF TAXES. All payments and prepayments of
principal and interest under this Note shall be made net of any taxes and
costs resulting from having principal outstanding at or computed with
reference to a LIBO Rate. Without limiting the generality of the preceding
obligation, illustrations of such taxes and costs are taxes, or the
withholding of amounts for taxes, of any nature whatsoever including
income, excise, interest equalization taxes (other than United States or
state income taxes) as well as all levies, imposts, duties or fees whether
now in existence or as the result of a change in or promulgation of any
treaty, statute, regulation, or interpretation thereof or any directive
guideline or otherwise by a central bank or fiscal authority (whether or
not having the force of law) or a change in the basis of, or the time of
payment of, such taxes and other amounts resulting therefrom.
DEFAULT
Upon the occurrence of any of the following (each of which events shall be
an Event of Default hereunder):
(i) the failure of Borrower to make any payment of principal or
interest hereunder within ten (10) days after the same is due, or
(ii) an Event of Default as described and defined in any of the Loan
Agreement, the Security Instruments or any instrument evidencing any
indebtedness of Borrower to Lender and the expiration of any period
provided in such instrument to cure such default,
then Lender may declare the entire unpaid principal balance hereunder
immediately due and payable without notice, demand or presentment and may
exercise any of its rights under the Security Instruments. In the event that
Lender or any subsequent holder of this Note shall
-6-
exercise or endeavor to exercise any of its remedies hereunder or under the
Security Instruments, Borrower shall pay on demand all reasonable costs and
expenses incurred in connection therewith, including, without limitation,
reasonable attorney's fees and Lender may take judgment for all such amounts in
addition to all other sums due hereunder.
LATE PAYMENT FEE
Irrespective of the exercise or nonexercise of any of the aforesaid rights,
if any monthly payment of principal or interest hereunder is not paid in full
within ten (10) days after the same is due, Borrower shall pay to Lender a
processing fee on such unpaid amount equal to five percent (5%) of such late
payment.
DEFAULT RATE OF INTEREST
Irrespective of the exercise or nonexercise of any of the aforesaid rights,
if any Event of occurs Lender has accelerated amounts owing under the Note
following the occurrence of Event of Default hereunder, from and after the date
of such acceleration interest charges hereunder shall be increased to the lesser
of (i) the then applicable interest rate charges plus four percent (4%) or (ii)
the maximum rate then permitted by law, until Lender is satisfied that the Event
of Default has been cured.
MISCELLANEOUS
In the event that the holder of this Note shall exercise or endeavor to
exercise any of its remedies hereunder or under said Loan Agreement or any
agreements securing this Note, Borrower shall pay all reasonable costs and
expenses incurred in connection therewith, including without limitation,
reasonable attorneys' fees, and the holder hereof may take judgment for all such
amounts in addition to all other sums due hereunder.
Borrower hereby waives presentment, dishonor, protest and demand,
diligence, notice of protest, demand and of dishonor, and any other notice
otherwise required to be given under the law in connection with the delivery,
acceptance, performance, default, enforcement or collection of this Note, and
expressly agrees that this Note or any payment hereunder may be extended or
subordinated, by forbearance or otherwise, from time to time, without in any way
affecting the liability of Borrower. No consent or waiver by the holder hereof
with respect to any action or failure to act which, without such consent or
waiver, would constitute a breach of any provision of this Note, shall be valid
and binding unless in writing and signed by both Borrower and the holder hereof.
All agreements between Borrower and Lender are hereby expressly limited so
that in no contingency or event whatsoever whether by reason of acceleration of
maturity of the indebtedness evidenced hereby or otherwise shall the amount paid
or agreed to be paid to Lender for the use, forbearance or detention of the
indebtedness evidenced hereby exceed the maximum permissible under applicable
law. As used herein, the term "applicable law" shall mean the law in effect as
of the date hereof, provided, however, that in the event there is a
-7-
change in the law which results in a higher permissible rate of interest, then
this Note shall be governed by such new law as of its effective date. If, from
any circumstance whatsoever, fulfillment of any provision hereof or of the Loan
Agreement or of any agreements securing this Note at the time performance of
such provision shall be due, shall involve transcending the limit of validity
prescribed by law, then, IPSO FACTO, the obligation to be fulfilled shall be
reduced to the limit of such validity, and if from any circumstance Lender
should ever receive as interest an amount which would exceed the highest lawful
rate, such amount which would be excessive interest shall be applied to the
reduction of the principal balance evidenced hereby and not to the payment of
interest. This provision shall control every other provision of all agreements
between Borrower and Lender.
Borrower expressly agrees that this Note, or any payment hereunder, may be
extended from time to time, without in any way affecting the liability of
Borrower. No unilateral consent or waiver by Lender with respect to any action
or failure to act which, without consent, would constitute a breach of any
provision of this Note shall be valid and binding unless in writing and signed
by Lender.
This Note shall be construed in accordance with and governed by the laws of
the State of Connecticut, except to the extent that such laws are superseded by
Federal enactments.
WAIVER OF PREJUDGMENT RIGHTS AND JURY TRIAL
BORROWER ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS NOTE IS A PART IS
A COMMERCIAL TRANSACTION, AND HEREBY VOLUNTARILY AND KNOWINGLY WAIVES ITS RIGHT
TO NOTICE AND HEARING UNDER CHAPTER 903A OF THE CONNECTICUT GENERAL STATUTES AS
THE SAME ARE OR IN THE FUTURE MAY BE AMENDED OR AS OTHERWISE ALLOWED BY ANY
STATE OR FEDERAL LAW OR THE CONSTITUTION OF CONNECTICUT OR THE UNITED STATES
WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH LENDER MAY DESIRE TO USE.
BORROWER HEREBY WAIVES ITS RIGHT TO TRIAL BY JURY IN ANY ACTION BROUGHT ON
OR WITH RESPECT TO THIS NOTE, THE LOAN AGREEMENT, THE SECURITY INSTRUMENTS OR
ANY OTHER AGREEMENTS EXECUTED IN CONNECTION HEREWITH OR THEREWITH. NEITHER
BORROWER NOR ANY ASSIGNEE OF OR SUCCESSOR TO THE BORROWER, SHALL SEEK A JURY
TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM, OR ANY OTHER LITIGATION OR
PROCEEDING BASED UPON, OR ARISING OUT OF, THIS NOTE, THE LOAN AGREEMENT, THE
SECURITY INSTRUMENTS OR ANY OF THE OTHER DOCUMENTS, INSTRUMENTS AND AGREEMENTS
ENTERED INTO IN CONNECTION HEREWITH OR THEREWITH OR THE DEALINGS OR THE
RELATIONSHIP BETWEEN THE PARTIES HERETO, OR ANY OF THEM. NO PARTY WILL SEEK TO
CONSOLIDATE ANY SUCH ACTION, IN WHICH A JURY TRIAL HAS BEEN WAIVED, WITH ANY
OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THE
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PROVISIONS OF THIS WAIVER OF RIGHT TO JURY TRIAL HAVE BEEN DISCUSSED BY THE
PARTIES HERETO, AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NO
PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE
PROVISIONS OF THIS WAIVER OF RIGHT TO JURY TRIAL WILL NOT BE FULLY ENFORCED IN
ALL INSTANCES.
IN WITNESS WHEREOF, Borrower has caused this Note to be executed by its
duly authorized officer as of the day and year first above written.
WITNESS: THE ENERGY NETWORK, INC.
By:
----------------------------------- -------------------------------------
Name:
Title:
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GUARANTY
This unconditional guaranty ("Guaranty") is given pursuant to the terms and
conditions of the (a) a certain 364-Day Credit Agreement and (b) a certain
3-Year Revolving Credit Agreement, each between THE ENERGY NETWORK, INC., a
Connecticut corporation with a mailing address at ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (the "Borrower") and FLEET NATIONAL BANK, a national
banking association with an office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ (the "Lender") of even date herewith (collectively, the "Loan Agreement")
executed in connection with (i) a certain 364-Day Revolving Credit Note and (ii)
a certain 3-Year Revolving Credit Note, each given by the Borrower to the order
of Lender of even date herewith and each in the original principal amounts of
$10,000,000 (collectively, the "Note"). Capitalized terms used herein which are
not otherwise specifically defined shall have the same meaning herein as in the
Loan Agreement.
FOR VALUE RECEIVED, and to induce Lender to extend credit to Borrower as
provided for in the Loan Agreement and the other Loan Documents. TEN
TRANSMISSION COMPANY, a Connecticut corporation, THE HARTFORD STEAM COMPANY, a
Connecticut corporation, ENSERVE, INCORPORATED, a Connecticut corporation and
ENI GAS SERVICES, INC., a Connecticut corporation, each having a mailing address
at ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, hereinafter called jointly,
severally and collectively "Guarantor", hereby unconditionally agree as follows:
1. GUARANTY. Guarantor, as a primary party and not merely as a surety,
unconditionally and irrevocably guarantees the following "Guaranteed
Obligations":
A. ALL OBLIGATIONS. The prompt and full payment (and not merely the
collectibility) performance and observance of all of the obligations, terms and
conditions to be paid, performed or observed by Borrower under the Loan
Agreement and each other Loan Document, each as the same may be hereafter
amended, modified, extended, renewed or recast, including, but not limited to
the payment of $20,000,000 together with interest and other charges thereon as
provided for in the Note and the Loan Agreement.
B. PAYMENT. The prompt and full payment, and not merely the
collectibility, of all principal, interest, fees and other charges when due
under the Note, the Loan Agreement, and each other Loan Document.
Upon any Event of Default under the Loan Agreement, or any of the
other Loan Documents, or if Lender has accelerated the Loan pursuant to a right
to do so under the Loan Agreement, Lender may at its option proceed directly and
at once, without further notice, against Guarantor hereunder, without proceeding
against Borrower, or any other person or other Collateral for the obligations
secured by this Guaranty. Any sums payable by Guarantor hereunder shall bear
interest at the Default Rate from the date of demand until the date paid.
If Borrower, or Guarantor if so required, shall fail or refuse to
perform or continue performance of all of the Obligations of the Loan Agreement
on the part of Borrower to be kept and performed, then, if an Event of Default
exists on account thereof under the Loan Agreement or this Guaranty, in addition
to any other rights and remedies which Lender may have hereunder or elsewhere,
and not in limitation thereof, Lender, at Lender's option, may exercise any or
all of
its rights and remedies under the Loan Agreement and each other Loan Document.
The amounts of any and all expenditures so made by Lender for completion of the
Improvements shall be immediately due and payable to Lender by Guarantor
together with interest thereon at the Default Rate from the date of demand until
the date paid.
This Guaranty shall survive and continue in full force and effect
beyond and after the payment and satisfaction of the Guaranteed Obligations and
the Obligations of Borrower in the event Lender is required to disgorge or
return any payment or property received as a result of any laws pertaining to
preferences, fraudulent transfers or fraudulent conveyances.
2. WAIVERS. Guarantor hereby waives and relinquishes to the fullest
extent now or hereafter not prohibited by applicable law:
(i) all suretyship defenses and defenses in the nature thereof;
(ii) any right or claim of right to cause a marshalling of the
assets of Borrower or of any Collateral, or to cause Lender to proceed
against any of the other security for the Guaranteed Obligations or the
Obligations of Borrower before proceeding under this Agreement against
Guarantor, or, if there shall be more than one Guarantor, to require Lender
to proceed against any other Guarantor or any of Guarantors in any
particular order;
(iii) until the full and Non-Contestable Payment (as defined in
Section 16.1 below) and satisfaction of all Obligations all rights and
remedies, including, but not limited to, any rights of subrogation,
contribution, reimbursement, exoneration or indemnification pursuant to any
agreement, express or implied, or now or hereafter accorded by applicable
law to indemnitors, guarantors, sureties or accommodation parties.
PROVIDED, HOWEVER, unless Lender otherwise expressly agrees in writing,
such waiver by any particular Guarantor shall not be effective to the
extent that by virtue thereof such Guarantor's liability under this
Guaranty or under any other Loan Document is rendered invalid, voidable, or
unenforceable under any applicable state or federal law dealing with the
recovery or avoidance of so-called preferences or fraudulent transfers or
conveyances or otherwise;
(iv) notice of the acceptance hereof, presentment, demand for
payment, protest, notice of protest, or any and all notice of nonpayment,
nonperformance, nonobservance or default, or other proof or notice of
demand whereby to charge Guarantor therefor;
(v) the pleading of any Statute of Limitations as a defense to
Guarantor's obligations hereunder; and
(vi) the right to a trial by jury in any matter related to this
Guaranty.
3. CUMULATIVE RIGHTS. Lender's rights under this Agreement shall be in
addition to and not in limitation of all of the rights and remedies of Lender
under the Loan Documents. All
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rights and remedies of Lender shall be cumulative and may be exercised in such
manner and combination as Lender may determine.
4. NO IMPAIRMENT. The liability of Guarantor hereunder shall in no way
be limited or impaired by, and Guarantor hereby assents to and agrees to be
bound by, any amendment or modification of the provisions of the Loan Documents
to or with Lender by Borrower or any other Guarantor. In addition, the
liability of Guarantor under this Guaranty and the other Loan Documents shall in
no way be limited or impaired by:
(i) any extensions of time for performance required by any of the
Loan Documents;
(ii) any amendment to or modification of any of the Loan Documents;
(iii) the accuracy or inaccuracy of any of the representations or
warranties made by or on behalf of Borrower or Guarantor, under any Loan
Document or otherwise;
(iv) the release of Borrower or any other person or entity, from
performance or observance of any of the agreements, covenants, terms or
conditions contained in any of the Loan Documents by operation of law,
Lender's voluntary act, or otherwise;
(v) the filing of any bankruptcy or reorganization proceeding by or
against Borrower;
(vi) the release or substitution in whole or part of any collateral
or security for the Obligations or the Guaranteed Obligations;
(vii) the release of any other party now or hereafter liable upon or
in respect of this Guaranty or any of the other Loan Documents; or
(viii) the invalidity or unenforceability of all or any portion of any
of the Loan Documents as to Borrower or any other person or entity.
Any of the foregoing may be accomplished with or without notice to Borrower or
any Guarantor and with or without consideration.
5. DELAY NOT WAIVER. No delay on Lender's part in exercising any right,
power or privilege hereunder or under any of the Loan Documents shall operate as
a waiver of any such privilege, power or right. No waiver by Lender in any
instance shall constitute a waiver in any other instance.
6. WARRANTIES AND REPRESENTATIONS. Guarantor warrants and represents to
Lender for the express purpose of inducing Lender to enter into the Loan
Agreement, to make each Loan Advance, to accept this Guaranty, and to otherwise
complete the transactions contemplated by the Loan Agreement that as of the date
of this Guaranty, upon the date of each Loan Advance and at all times thereafter
until the Loan is repaid and all Guaranteed Obligations to Lender have been
satisfied in full, as follows:
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(i) NO VIOLATION. The payment and performance by Guarantor of
Guarantor's obligations under the this Guaranty do not and shall not
constitute a violation of any law, order, regulation, contract or agreement
to which Guarantor is a party or by which Guarantor or Guarantor's property
may be bound;
(ii) NO LITIGATION. There is no material litigation now pending or,
to the best of Guarantor's knowledge threatened in writing, against
Guarantor which, if adversely decided would materially impair the ability
of Guarantor to pay and perform Guarantor's obligations under this
Guaranty. There is no litigation (whether or not material) pending, or
threatened in writing, against Guarantor in which the amount in controversy
exceeds One Million Dollars ($1,000,000) which is not either: (i) covered
by adequate insurance, or (ii) previously disclosed in writing to Lender
together with a written explanation of why such litigation is not material.
(iii) ENTITY MATTERS. Each Guarantor is a duly organized, validly
existing corporation organized and in good standing under the laws of
_______________, and duly qualified to do business and in good standing
under the laws of the State of Connecticut, has all requisite power and
authority to conduct its business and to own its property as now conducted
or owned, and is qualified to do business in all jurisdictions where the
nature and extent of its business is such that such qualification is
required by law.
(iv) VALID AND BINDING. Each of the Loan Documents to which
Guarantor is a party, constitutes such Guarantor's legal, valid and binding
obligation in accordance with the respective terms thereof, subject to
bankruptcy, insolvency and similar laws of general application affecting
the rights and remedies of creditors and with respect to the availability
of remedies of specific enforcement subject to the discretion of the court
before which proceedings therefor may be brought.
(v) SOLVENCY. Guarantor is solvent and is not rendered insolvent
by the obligations undertaken in this Guaranty. No Guarantor is
contemplating either the filing of a petition or proceeding under any state
or federal bankruptcy or insolvency or reorganization laws or the
liquidating of all or a major portion of such Guarantor's property except
as has been previously disclosed to Lender, and no Guarantor has any
knowledge of any such petition or proceeding being filed against such
Guarantor.
(vi) MATERIAL ECONOMIC BENEFIT. The granting of the Loan to
Borrower will constitute a material economic benefit to each Guarantor
inasmuch as Borrower is the corporate parent of each Guarantor.
7. NOTICES. All notices shall be given in the manner provided for, and
shall be effective in accordance with the provisions of, Section 8.07 of the
Loan Agreement.
8. NO ORAL CHANGE. No provision of this Agreement may be changed,
waived, discharged, or terminated orally (in person or by telephone) or by any
other means except by an instrument in
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writing signed by the party against whom enforcement of the change, waiver or
discharge or termination is sought.
9. PARTIES BOUND; BENEFIT. This Agreement shall be binding upon
Guarantor and Guarantor's respective successors, assigns, heirs and personal
representatives and shall be for the benefit of Lender, and of any subsequent
holder of Lender's interest in the Loan and of any owner of a participation
interest therein. In the event the interest of Lender under the Loan Documents
is sold or transferred, then the liability of the Guarantor to Lender shall then
be in favor of both Lender originally named herein and each subsequent holder of
Lender's interest therein, to the extent of their respective interests.
10. JOINT AND SEVERAL. If there is more than one (1) Guarantor, the
obligations of each Guarantor and such Guarantor's respective successors,
assigns, heirs and personal representatives shall be and remain joint and
several. Each reference to Guarantor shall include each Guarantor separately as
well as all Guarantors collectively.
11. PARTIAL INVALIDITY. Each of the provisions hereof shall be
enforceable against Guarantor to the fullest extent now or hereafter not
prohibited by applicable law. The invalidity or unenforceability of any
provision hereof shall not limit the validity or enforceability of each other
provision hereof.
12. GOVERNING LAW. This Agreement and the rights and obligations of the
parties hereunder shall in all respects be governed by and construed and
enforced in accordance with the internal laws of the State of Connecticut,
without giving effect to principles of conflicts of law.
13. CONSENT TO JURISDICTION. Guarantor hereby irrevocably submits to the
nonexclusive personal jurisdiction of any Connecticut State Court or any Federal
Court sitting in Connecticut over any suit, action or proceeding arising out of
or relating to this Guaranty. Guarantor hereby agrees and consents that in
addition to any methods of service of process provided for under applicable law,
all service of process in any such suit, action or proceeding in any Connecticut
State or Federal Court sitting in Connecticut may be made by certified or
registered mail, return receipt requested, directed to Guarantor at the address
indicated in Section 7 above and service so made shall be deemed completed five
(5) days after the same shall have been so mailed.
14. Intentionally omitted.
15. ADDITIONAL COVENANTS OF THE GUARANTORS.
15.1. GENERAL. Guarantor shall pay, perform, observe and comply with
all of the obligations, terms, covenants and conditions set forth in this
Guaranty and the other Loan Documents to which Guarantor is a party and by any
provisions of the Loan Agreement specifically applicable to Guarantor,
including, but not limited to the provisions requiring the Borrower to deliver
financial statements on a consolidated and consolidating basis.
15.2. PROHIBITED TRANSFERS. Without Lender's prior written consent
after full disclosure, Guarantor shall not transfer any material portion of
Guarantor's property, real or
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personal, or release any contract right or claim which constitutes a material
portion of Guarantor's net worth, either voluntarily or involuntarily,
absolutely or collaterally, without receiving full fair market value therefor.
Guarantor agrees that any transfer or release in violation of the foregoing
provision shall be deemed to have occurred with an intent to defraud creditors.
For purposes of the foregoing, the term "material" shall be defined as any
transfer or release involving more than ten percent (10%) of Guarantor's net
worth in any calendar year.
16. SUBORDINATION.
16.1. Any indebtedness of Borrower to Guarantor, or to any affiliated
entity, now or hereafter existing together with any interest thereon shall be,
and such indebtedness is, hereby deferred, postponed and subordinated to the
prior, full and Non-Contestable Payment and satisfaction of all Obligations of
Borrower to the Lender. Payment and satisfaction of Obligations shall be deemed
"Non-Contestable Payment" only upon such payment and satisfaction and the
expiration of all periods of time within which a claim for the recovery of a
preferential payment, or fraudulent conveyance, or fraudulent transfer, in
respect of payments received by Lender as to the Obligations could be filed or
asserted with: (A) no such claim having been filed or asserted, or (B) if so
filed or asserted, the final, non-appealable decision of a court of competent
jurisdiction denying the claim or assertion.
16.2. At all times until the full and Non-Contestable Payment and
satisfaction of the Obligations of Borrower to Lender with respect to the Loan
(and including interest accruing on the Note after the commencement of a case by
or against Borrower under the Bankruptcy Code now or hereafter in effect, which
interest the parties agree shall remain a claim that is prior and superior to
any claim of Guarantor or any affiliated entity notwithstanding any contrary
practice, custom or ruling in cases under the Bankruptcy Code, as now or
hereafter in effect, generally), Guarantor, and each affiliated entity, agrees
not to accept any payment or satisfaction for any kind of indebtedness of
Borrower to Guarantor, or any affiliated entity, and hereby assigns such
indebtedness to Lender including, but not limited to, the right to file proofs
of claim and to vote thereon in connection with any such case under the
Bankruptcy Code, as now or hereafter in effect, and the right to vote on any
plan of reorganization.
16.3. In addition to the foregoing, and not in limitation thereof,
any claims of Guarantor, or any affiliated entity, of subrogation, contribution,
reimbursement, exoneration, indemnification, or reimbursement arising out of any
payment made on this Guaranty, whether such claim is based upon an express or
implied contract, or operation of law, are hereby waived until the full and
Non-Contestable Payment and satisfaction of all Obligations of Borrower to
Lender.
17. LEGAL FEES, COSTS AND EXPENSES. Each Guarantor further agrees to pay
upon demand all costs and expenses reasonably incurred by Lender or its
successors or assigns in connection with enforcing any of the rights or remedies
of Lender, or such successors or assigns, under or with respect to this Guaranty
including, but not limited to, attorneys' fees and the out-of-pocket expenses
and disbursements of such attorneys. Any such amounts which are not paid within
ten
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(10) days of demand therefor shall bear interest at the Default Rate from the
date of demand until paid.
18. SET-OFF. Guarantor hereby grants to Lender, a lien, security interest
and right of set-off as security for all liabilities and obligations to Lender,
whether now existing or hereafter arising, upon and against all deposits,
credits, collateral and property, now or hereafter in the possession, custody,
safekeeping or control of Lender or any entity under the control of Fleet
Financial Group, Inc., or in transit to any of them. At any time, without
demand or notice, Lender may set-off the same or any part thereof and apply the
same to any liability or obligation of Borrower and Guarantor even though
unmatured and regardless of the adequacy of any other collateral securing the
Loan. ANY AND ALL RIGHTS TO REQUIRE LENDER TO EXERCISE ITS RIGHTS OR REMEDIES
WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE LOAN, PRIOR TO EXERCISING
ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF
THE BORROWER OR GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY
WAIVED.
19. JURY TRIAL WAIVER. GUARANTOR AND LENDER MUTUALLY HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF
ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
GUARANTY OR ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION
HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS WAIVER CONSTITUTES A MATERIAL
INDUCEMENT FOR LENDER TO ACCEPT THIS GUARANTY AND MAKE THE LOAN.
NEXT PAGE IS SIGNATURE PAGE
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Witness the execution and delivery hereof as an instrument under seal as of
the 1st day of October, 1997.
GUARANTORS:
ENSERVE, INCORPORATED
By:
----------------------------------- -------------------------------------
Witness Name:
--------------------------------
Title:
-------------------------------
ENI GAS SERVICES, INC.,
By:
----------------------------------- -------------------------------------
Witness Name:
--------------------------------
Title:
-------------------------------
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