Mortgage
New Jersey Natural Gas Company
To
The Bank of New York Mellon Trust Company, N.A.,
successor in interest to BNY Midwest Trust Company
,
As Trustee
___________________________
Thirty-Third Supplemental Indenture
Dated as of August 1, 2011
___________________________
Supplemental to Indenture of Mortgage and
Deed of Trust Dated April 1, 1952
Prepared by: William M. Libit Record and Return to: Richard Reich, Esq.
Chapman and Cutler LLP NJR Service Corporation
111 West Monroe Street 1415 Wyckoff Road
Chicago, Illinois 60603 Wall, New Jersey 07719
3013723 02 10 (4).doc
2154474
MORTGAGE
Thirty-Third Supplemental Indenture
, dated as of August 1, 2011, between
New Jersey Natural Gas Company
, a corporation organized and existing under the laws of the State of New Jersey (hereinafter called the
“Company”
), having its principal office at 1415 Wyckoff Road, Wall, New Jersey, party of the first part, and
The Bank of New York Mellon Trust Company, N.A.,
successor in interest to BNY Midwest Trust Company, a national banking association (hereinafter called the
“Trustee”
), having its principal office at 2 North LaSalle Street, Chicago, Illinois, as Trustee under the Indenture of Mortgage and Deed of Trust hereinafter mentioned, party of the second part.
Whereas
, the Company has heretofore executed and delivered to the Trustee its Indenture of Mortgage and Deed of Trust dated April 1, 1952 (hereinafter sometimes called the
“Original Indenture”
) to secure the payment of the principal of and the interest and premium (if any) on all Bonds at any time issued and outstanding thereunder, and to declare the terms and conditions upon which Bonds are to be issued thereunder; and
Whereas,
the Company thereafter executed and delivered to the Trustee its First Supplemental Indenture dated February 1, 1958, its Second Supplemental Indenture dated December 1, 1960, its Third Supplemental Indenture dated July 1, 1962, its Fourth Supplemental Indenture dated September 1, 1962, its Fifth Supplemental Indenture dated December 1, 1963, its Sixth Supplemental Indenture dated June 1, 1966, its Seventh Supplemental Indenture dated October 1, 1970, its Eighth Supplemental Indenture dated May 1, 1975, its Ninth Supplemental Indenture dated February 1, 1977, its Tenth Supplemental Indenture dated as of September 1, 1980, its Eleventh Supplemental Indenture dated as of September 1, 1983, its Twelfth Supplemental Indenture dated as of August 1, 1984, its Thirteenth Supplemental Indenture dated as of September 1, 1985, its Fourteenth Supplemental Indenture dated as of May 1, 1986, its Fifteenth Supplemental Indenture dated as of March 1, 1987, its Sixteenth Supplemental Indenture dated as of December 1, 1987, its Seventeenth Supplemental Indenture dated as of June 1, 1988, its Eighteenth Supplemental Indenture dated as of June 1, 1989, its Nineteenth Supplemental Indenture dated as of March 1, 1991, its Twentieth Supplemental Indenture dated as of December 1, 1992, its Twenty-First Supplemental Indenture dated as of August 1, 1993, its Twenty-Second Supplemental Indenture dated as of October 1, 1993, its Twenty-Third Supplemental Indenture dated as of August 15, 1994, its Twenty-Fourth Supplemental Indenture dated as of October 1, 1994, its Twenty-Fifth Supplemental Indenture dated as of July 15, 1995, its Twenty-Sixth Supplemental Indenture dated as of October 1, 1995, its Twenty-Seventh Supplemental Indenture dated as of September 1, 1997, its Twenty-Eighth Supplemental Indenture dated as of January 1, 1998, its Twenty-Ninth Supplemental Indenture dated as of April 1, 1998, its Thirtieth Supplemental Indenture dated as of December 1, 2003, its Thirty-First Supplemental Indenture dated as of October 1, 2005 and its Thirty-Second Supplemental Indenture dated as of May 1, 2008, supplementing and amending the Original Indenture; and
Whereas
, Bonds in the aggregate principal amount of Twelve Million Five Hundred Thousand Dollars ($12,500,000) were issued under and in accordance with the terms of the Original Indenture, as an initial series designated “First Mortgage Bonds, 4‑1/4% Series A due 1977,” herein
sometimes called
“1977 Series A Bonds,”
which 1977 Series A Bonds have since been paid and redeemed by the Company; and
Whereas
, thereafter Bonds in the aggregate principal amount of Two Million Two Hundred Fifty Thousand Dollars ($2,250,000) were issued under and in accordance with the terms of the Original Indenture, as supplemented and amended by the First Supplemental Indenture, as a second series designated “First Mortgage Bonds, 5% Series B due 1983”, herein sometimes called
“1983 Series B Bonds”
, which 1983 Series B Bonds have since been paid and redeemed by the Company; and
Whereas
, thereafter Bonds in the aggregate principal amount of Four Million Dollars ($4,000,000) were issued under and in accordance with the terms of the Original Indenture, as supplemented and amended by the First Supplemental Indenture and the Second Supplemental Indenture, as a third series designated “First Mortgage Bonds, 5‑1/8% Series C due 1985,” herein sometimes called
“1985 Series C Bonds,”
which 1985 Series C Bonds have since been paid and redeemed by the Company; and
Whereas
, thereafter Bonds in the aggregate principal amount of Five Million Dollars ($5,000,000) were issued under and in accordance with the terms of the Original Indenture, as supplemented and amended by the First through the Fourth Supplemental Indentures, inclusive, as a fourth series designated “First Mortgage Bonds, 4‑7/8% Series D due 1987,” herein sometimes called
“1987 Series D Bonds,”
which 1987 Series D Bonds have since been paid and redeemed by the Company; and
Whereas,
thereafter Bonds in the aggregate principal amount of Four Million Five Hundred Thousand Dollars ($4,500,000) were issued under and in accordance with the terms of the Original Indenture, as supplemented and amended by the First through the Fifth Supplemental Indentures, inclusive, as a fifth series designated “First Mortgage Bonds, 4‑3/4% Series E due 1988,” herein sometimes called
“1988 Series E Bonds,”
which 1988 Series E Bonds have since been paid and redeemed by the Company; and
Whereas,
thereafter Bonds in the aggregate principal amount of Fifteen Million Dollars ($15,000,000) were issued under and in accordance with the terms of the Original Indenture, as supplemented and amended by the First through the Seventh Supplemental Indentures, inclusive, as a sixth series designated “First Mortgage Bonds, 9‑1/4% Series F due 1995,” herein sometimes called
“1995 Series F Bonds,”
which 1995 Series F Bonds have since been paid and redeemed by the Company; and
Whereas
, thereafter Bonds in the aggregate principal amount of Ten Million Dollars ($10,000,000) were issued under and in accordance with the terms of the Original Indenture, as supplemented and amended by the First through the Eighth Supplemental Indentures, inclusive as a seventh series designated “First Mortgage Bonds, 10% Series G due 1987,” herein sometimes called
“1987 Series G Bonds,”
which 1987 Series G Bonds have since been paid and redeemed by the Company; and
Whereas
, thereafter Bonds in the aggregate principal amount of Ten Million Dollars ($10,000,000) were issued under and in accordance with the terms of the Original Indenture, as supplemented and amended by the First through the Ninth Supplemental Indentures, inclusive, as an eighth series designated “First Mortgage Bonds, 9% Series H due 1992,” herein sometimes called
“1992 Series H Bonds,”
which 1992 Series H Bonds have since been paid and redeemed by the Company; and
Whereas
, thereafter Bonds in the aggregate principal amount of Nine Million Five Hundred Forty-Five Thousand Dollars ($9,545,000) were issued under and in accordance with the terms of the Original Indenture, as supplemented and amended by the First through the Tenth Supplemental Indentures, inclusive, as a ninth series designated “First Mortgage Bonds, 9‑1/8% Series J due 2000,” herein sometimes called
“2000 Series J Bonds,”
which 2000 Series J Bonds have since been paid and redeemed by the Company; and
Whereas,
thereafter Bonds in the aggregate principal amount of Ten Million Three Hundred Thousand Dollars ($10,300,000) were issued under and in accordance with the terms of the Original Indenture, as supplemented and amended by the First through the Eleventh Supplemental Indentures, inclusive, as a tenth series designated “First Mortgage Bonds, 10‑3/8% Series K due 2013,” herein sometimes called
“2013 Series K Bonds,”
which 2013 Series K Bonds have since been paid and redeemed by the Company; and
Whereas,
thereafter Bonds in the aggregate principal amount of Ten Million Five Hundred Thousand Dollars ($10,500,000) were issued under and in accordance with the terms of the Original Indenture, as supplemented and amended by the First through the Twelfth Supplemental Indentures, inclusive, as an eleventh series designated “First Mortgage Bonds, 10‑l/2% Series L due 2014,” herein sometimes called
“2014 Series L Bonds,”
which 2014 Series L Bonds have since been paid and redeemed by the Company; and
Whereas
, thereafter Bonds in the aggregate principal amount of Twelve Million Dollars ($12,000,000) were issued under and in accordance with the terms of the Original Indenture, as supplemented and amended by the First through the Thirteenth Supplemental Indentures, inclusive, as a twelfth series designated “First Mortgage Bonds, 10.85% Series M due 2000,” herein sometimes called
“2000 Series M Bonds,”
which 2000 Series M Bonds have since been paid and redeemed by the Company; and
Whereas
, thereafter Bonds in the aggregate principal amount of Ten Million Dollars ($10,000,000) were issued under and in accordance with the terms of the Original Indenture as supplemented and amended by the First through the Fourteenth Supplemental Indentures, inclusive, as a thirteenth series designated “First Mortgage Bonds, 10% Series N due 2001,” herein sometimes called
“2001 Series N Bonds,”
which 2001 Series N Bonds have since been paid and redeemed by the Company; and
Whereas,
thereafter Bonds in the aggregate principal amount of Fifteen Million Dollars ($15,000,000) were issued under and in accordance with the terms of the Original Indenture, as supplemented and amended by the First through the Fifteenth Supplemental Indentures, inclusive, as a fourteenth series designated “First Mortgage Bonds, 8.50% Series P due 2002,” herein
sometimes called
“2002 Series P Bonds,”
which 2002 Series P Bonds have since been paid and redeemed by the Company; and
Whereas,
thereafter Bonds in the aggregate principal amount of Thirteen Million Five Hundred Thousand Dollars ($13,500,000) were issued under and in accordance with the terms of the Original Indenture, as supplemented and amended by the First through the Sixteenth Supplemental Indentures, inclusive, as a fifteenth series designated “First Mortgage Bonds, 9% Series Q due 2017,” herein sometimes called
“2017 Series Q Bonds,”
which 2017 Series Q Bonds have since been paid and redeemed by the Company; and
Whereas,
thereafter Bonds in the aggregate principal amount of Twenty-Five Million Dollars ($25,000,000) were issued under and in accordance with the terms of the Original Indenture, as supplemented and amended by the First through the Seventeenth Supplemental Indentures, inclusive, as a sixteenth series designated “First Mortgage Bonds, 8.50% Series R due 2018,” herein sometimes called
“2018 Series R Bonds,”
which 2018 Series R Bonds have since been paid and redeemed by the Company; and
Whereas,
thereafter Bonds in the aggregate principal amount of Twenty Million Dollars ($20,000,000) were issued under and in accordance with the terms of the Original Indenture, as supplemented and amended by the First through the Eighteenth Supplemental Indentures, inclusive, as a seventeenth series designated “First Mortgage Bonds, 10.10% Series S due 2009,” herein sometimes called
“2009 Series S Bonds,”
which 2009 Series S Bonds have since been paid and redeemed by the Company; and
Whereas,
thereafter Bonds in the aggregate principal amount of Nine Million Five Hundred Forty-Five Thousand Dollars ($9,545,000) were issued under and in accordance with the terms of the Original Indenture, as supplemented and amended by the First through the Nineteenth Supplemental Indentures, inclusive, as an eighteenth series designated “First Mortgage Bonds, 7.05% Series T due 2016,” herein sometimes called
“2016 Series T Bonds,”
which 2016 Series T Bonds have since been paid and redeemed by the Company; and
Whereas,
thereafter Bonds in the aggregate principal amount of Fifteen Million Dollars ($15,000,000) were authorized, of which Fifteen Million Dollars ($15,000,000) have been issued under and in accordance with the terms of the Original Indenture, as supplemented and amended by the First through the Nineteenth Supplemental Indentures, inclusive, as a nineteenth series designated “First Mortgage Bonds, 7.25% Series U due 2021,” herein sometimes called
“2021 Series U Bonds,”
which 2021 Series U Bonds have since been paid and redeemed by the Company; and
Whereas,
thereafter Bonds in the aggregate principal amount of Twenty-Five Million Dollars ($25,000,000) were issued under and in accordance with the terms of the Original Indenture, as supplemented and amended by the First through the Twentieth Supplemental Indentures, inclusive, as a twentieth series designated “First Mortgage Bonds, 7.50% Series V due 2002,” herein sometimes called
“2002 Series V Bonds,”
which 2002 Series V Bonds have since been paid and redeemed by the Company; and
Whereas,
thereafter Bonds in the aggregate principal amount of Ten Million Three Hundred Thousand Dollars ($10,300,000) were issued under and in accordance with the terms of the Original Indenture, as supplemented and amended by the First through the Twenty-First Supplemental Indentures, inclusive, as a twenty-first series designated “First Mortgage Bonds, 5‑3/8% Series W due 2023,” herein sometimes called
“2023 Series W Bonds,”
which 2023 Series W Bonds have since been paid and redeemed by the Company; and
Whereas,
thereafter Bonds in the aggregate principal amount of Thirty Million Dollars ($30,000,000) were issued under and in accordance with the terms of the Original Indenture, as supplemented and amended by the First through the Twenty-Second Supplemental Indentures, inclusive, as a twenty-second series designated “First Mortgage Bonds, 6.27% Series X due 2008,” herein sometimes called
“2008 Series X Bonds,”
which 2008 Series X Bonds have since been paid and redeemed by the Company; and
Whereas
, thereafter Bonds in the aggregate principal amount of Ten Million Five Hundred Thousand Dollars ($10,500,000) were issued under and in accordance with the terms of the Original Indenture, as supplemented and amended by the First through the Twenty-Third Supplemental Indentures, inclusive, as a twenty-third series designated “First Mortgage Bonds, 6.25% Series Y due 2024,” herein sometimes called
“2024 Series Y Bonds,”
which 2024 Series Y Bonds have since been paid and redeemed by the Company; and
Whereas,
thereafter Bonds in the aggregate principal amount of Twenty-Five Million Dollars ($25,000,000) were issued under and in accordance with the terms of the Original Indenture, as supplemented and amended by the First through the Twenty-Fourth Supplemental Indentures, inclusive, as a twenty-fourth series designated “First Mortgage Bonds, 8.25% Series Z due 2004,” herein sometimes called
“2004 Series Z Bonds,”
which 2004 Series Z Bonds have since been paid and redeemed by the Company; and
Whereas,
thereafter Bonds in the aggregate principal amount of Twenty-Five Million Dollars ($25,000,000) were issued under and in accordance with the terms of the Original Indenture, as supplemented and amended by the First through the Twenty-Fifth Supplemental Indentures, inclusive, as a twenty-fifth series designated “First Mortgage Bonds, Adjustable Rate Series AA due 2030,” herein sometimes called
“2030 Series AA Bonds,”
of which Twenty‑Five Million Dollars ($25,000,000) in principal amount are outstanding at the date hereof; and
Whereas,
thereafter Bonds in the aggregate principal amount of Sixteen Million Dollars ($16,000,000) were issued under and in accordance with the terms of the Original Indenture, as supplemented and amended by the First through the Twenty-Fifth Supplemental Indentures, inclusive, as a twenty-sixth series designated “First Mortgage Bonds, Adjustable Rate Series BB due 2030,” herein sometimes called
“2030 Series BB Bonds,”
of which Sixteen Million Dollars ($16,000,000) in principal amount are outstanding at the date hereof; and
Whereas,
thereafter Bonds in the aggregate principal amount of Twenty Million Dollars ($20,000,000) were issued under and in accordance with the terms of the Original Indenture, as supplemented and amended by the First through the Twenty-Sixth Supplemental Indentures, inclusive, as a twenty-seventh series designated “First Mortgage Bonds, 6-7/8 Series CC due 2010,”
herein sometimes called
“2010 Series CC Bonds,”
which 2010 Series CC Bonds have since been paid and redeemed by the Company; and
Whereas,
thereafter Bonds in the aggregate principal amount of Thirteen Million Five Hundred Thousand Dollars ($13,500,000) were issued under and in accordance with the terms of the Original Indenture, as supplemented and amended by the First through the Twenty-Seventh Supplemental Indentures, inclusive, as a twenty-eighth series designated “First Mortgage Bonds, Adjustable Rate Series DD due 2027,” herein sometimes called
“2027 Series DD Bonds,”
of which Thirteen Million Five Hundred Thousand Dollars ($13,500,000) in principal amount are outstanding at the date hereof; and
Whereas,
thereafter Bonds in the aggregate principal amount of Nine Million Five Hundred Forty-Five Thousand Dollars ($9,545,000) were issued under and in accordance with the terms of the Original Indenture, as supplemented and amended by the First through the Twenty-Eighth Supplemental Indentures, inclusive, as a twenty-ninth series designated “First Mortgage Bonds, Adjustable Rate Series EE due 2028,” herein sometimes called
“2028 Series EE Bonds,”
of which Nine Million Five Hundred Forty-Five Thousand Dollars ($9,545,000) in principal amount are outstanding at the date hereof; and
Whereas,
thereafter Bonds in the aggregate principal amount of Fifteen Million Dollars ($15,000,000) were issued under and in accordance with the terms of the Original Indenture, as supplemented and amended by the First through the Twenty-Eighth Supplemental Indentures, inclusive, as a thirtieth series designated “First Mortgage Bonds, Adjustable Rate Series FF due 2028,” herein sometimes called
“2028 Series FF Bonds,”
of which Fifteen Million Dollars ($15,000,000) in principal amount are outstanding at the date hereof; and
Whereas
, thereafter Bonds in the aggregate principal amount of Eighteen Million Dollars ($18,000,000) were issued under and in accordance with the terms of the Original Indenture, as supplemented and amended by the First through the Twenty-Ninth Supplemental Indentures, inclusive, as a thirty-first series designated “First Mortgage Bonds, Adjustable Rate Series GG due 2033,” herein sometimes called
“2033 Series GG Bonds,”
of which Eighteen Million Dollars ($18,000,000) in principal amount are outstanding at the date hereof; and
Whereas
, thereafter Bonds in the aggregate principal amount of Twelve Million Dollars ($12,000,000) were issued under and in accordance with the terms of the Original Indenture, as supplemented and amended by the First through the Thirtieth Supplemental Indentures, inclusive, as a thirty-second series designated “First Mortgage Bonds, Series HH due 2038,” herein sometimes called
“2038 Series HH Bonds,”
of which Twelve Million Dollars ($12,000,000) in principal amount are outstanding at the date hereof; and
Whereas,
thereafter Bonds in the aggregate principal amount of Ten Million Three Hundred Thousand Dollars ($10,300,000) were issued under and in accordance with the terms of the Original Indenture, as supplemented and amended by the First through the Thirty-First Supplemental Indentures, inclusive, as a thirty-third series designated “First Mortgage Bonds, Series
II
due 2023,” herein sometimes called
“2023 Series II Bonds,”
of which Ten Million Three
Hundred Thousand Dollars ($10,300,000) in principal amount are outstanding at the date hereof; and
Whereas,
thereafter Bonds in the aggregate principal amount of Ten Million Five Hundred Thousand Dollars ($10,500,000) were issued under and in accordance with the terms of the Original Indenture, as supplemented and amended by the First through the Thirty-First Supplemental Indentures, inclusive, as a thirty-fourth series designated “First Mortgage Bonds, Series
JJ
due 2024,” herein sometimes called
“2024 Series JJ Bonds,”
of which Ten Million Five Hundred Thousand Dollars ($10,500,000) in principal amount are outstanding at the date hereof; and
Whereas,
thereafter Bonds in the aggregate principal amount of Fifteen Million Dollars ($15,000,000) were authorized under and in accordance with the terms of the Original Indenture, as supplemented and amended by the First through the Thirty-First Supplemental Indentures, inclusive, as a thirty-fifth series designated “First Mortgage Bonds, Series
KK
due 2040,” herein sometimes called
“2040 Series KK Bonds,”
of which Ten Million Eight Hundred Thousand Dollars ($10,800,000) in principal amount are outstanding at the date hereof; and
Whereas,
thereafter Bonds in the aggregate principal amount of One Hundred Twenty Five Million Dollars ($125,000,000) were authorized under and in accordance with the terms of the Original Indenture, as supplemented and amended by the First through the Thirty-Second Supplemental Indentures, inclusive, as a thirty-sixth series designated “First Mortgage Bonds, Series
LL
due 2018,” herein sometimes called
“2018 Series LL Bonds,”
of which One Hundred Twenty Five Million Dollars ($125,000,000) in principal amount are outstanding at the date hereof; and
Whereas
, that on May 17, 2000 BNY Midwest Trust Company, as transferee of the corporate trust business of Harris Trust and Savings Bank, Trustee under the Original Indenture, became successor Trustee under the Original Indenture; and
Whereas
, the Original Indenture provides that, subject to certain exceptions not presently relevant, such changes in or additions to the provisions of the Indenture (the term
“Indenture”
and other terms used herein having the meanings assigned thereto in the Original Indenture except as herein expressly modified) may be made to add to the covenants and agreements of the Company in the Indenture contained other covenants and agreements thereafter to be observed by the Company; and to provide for the creation of any series of Bonds, designating the series to be created and specifying the form and provisions of the Bonds of such series as in the Indenture provided or permitted; and
Whereas
, the Indenture further provides that the Company and the Trustee may enter into indentures supplemental to the Indenture to convey, transfer and assign unto the Trustee and to subject to the lien of the Indenture additional properties acquired by the Company; and
Whereas
, the Company has entered into a Loan Agreement dated as of August 1, 2011 (the
“Loan Agreement”
) with the New Jersey Economic Development Authority (herein sometimes called the
“EDA”
), a public body corporate and politic of the State of New Jersey, pursuant to which (i) the proceeds of the issuance by the EDA of Nine Million Five Hundred Forty Five Thousand
Dollars ($9,545,000) in aggregate principal amount of its Natural Gas Facilities Refunding Revenue Bonds, Series 2011A (Non‑AMT) (New Jersey Natural Gas Company Project) (the
“2011A EDA Bonds”
) are to be loaned to the Company to provide for the refinancing of certain natural gas and functionally related and subordinate facilities (consisting of the refunding of $9,545,000 in aggregate principal amount of the EDA’s Natural Gas Facilities Refunding Revenue Bonds, Series 1998A (New Jersey Natural Gas Project)); (ii) the proceeds of the issuance by the EDA of Forty-One Million Dollars ($41,000,000) in aggregate principal amount of its Natural Gas Facilities Refunding Revenue Bonds, Series 2011B (AMT) (New Jersey Natural Gas Company Project) (the
“2011B EDA Bonds”
) are to be loaned to the Company to provide for the refinancing of certain natural gas and functionally related and subordinate facilities (consisting of the refunding of (a) $25,000,000 in aggregate principal amount of the EDA’s Natural Gas Facilities Refunding Revenue Bonds, Series 1995A (New Jersey Natural Gas Company Project) and (b) $16,000,000 in aggregate principal amount of the EDA’s Natural Gas Facilities Revenue Bonds, Series 1995B (New Jersey Natural Gas Company Project)); and (iii) the proceeds of the issuance by the EDA of Forty-Six Million Five Hundred Thousand Dollars ($46,500,000) in aggregate principal amount of its Natural Gas Facilities Refunding Revenue Bonds, Series 2011C (AMT) (New Jersey Natural Gas Company Project) (the
“2011C EDA Bonds”
and together with the 2011A EDA Bonds and the 2011B EDA Bonds, the
“2011 Series EDA Bonds”
) are to be loaned to the Company to provide for the refinancing of certain natural gas and functionally related and subordinate facilities (consisting of the refunding of (a) $13,500,000 in aggregate principal amount of the EDA’s Natural Gas Facilities Refunding Revenue Bonds, Series 1997A (New Jersey Natural Gas Company Project); (b) $15,000,000 in aggregate principal amount of the EDA’s Natural Gas Facilities Refunding Revenue Bonds, Series 1998B (New Jersey Natural Gas Company Project); and (c) $18,000,000 in aggregate principal amount of the EDA’s Natural Gas Facilities Revenue Bonds, Series 1998C (New Jersey Natural Gas Company Project)) are being issued pursuant to the EDA Bond Indenture (as defined below); and
Whereas
, the Company has duly determined to create a thirty-seventh series of Bonds, to be known as “First Mortgage Bonds, Series MM due 2027,” herein sometimes called
“2027 Series MM Bonds”
; a thirty-eighth series of Bonds, to be known as “First Mortgage Bonds, Series NN due 2035,” herein sometimes called
“2035 Series NN Bonds,”
and a thirty-ninth series of Bonds, to be known as “First Mortgage Bonds, Series OO due 2041,” herein sometimes called
“2041 Series OO Bonds,”
each to be issued and delivered (in conjunction with the assignment by the EDA of certain of its rights under the Loan Agreement) to U.S. Bank National Association, as trustee (the
“EDA Loan Trustee”
) pursuant to an Indenture dated as of August 1, 2011 (the
“EDA Bond Indenture”
) between the EDA and the EDA Loan Trustee for the benefit and security of the holders of the 2011 Series EDA Bonds, all as herein provided, and to add to the covenants and agreements contained in the Indenture the covenants and agreements hereinafter set forth; and
Whereas
, the Company, in the exercise of the powers and authority conferred upon and reserved to it under the provisions of the Indenture and pursuant to appropriate resolutions of its Board of Directors, has duly resolved and determined to make, execute and deliver to the Trustee a Thirty-Third Supplemental Indenture in the form hereof for the purposes herein provided; and
Whereas
, all conditions and requirements necessary to make this Thirty-Third Supplemental Indenture a valid, binding and legal instrument have been done, performed and fulfilled and the execution and delivery hereof have been in all respects duly authorized.
Now, Therefore, this Indenture Witnesseth
:
That
New Jersey Natural Gas Company
, by way of further assurance and in consideration of the premises and of the acceptance by the Trustee of the trusts hereby created and of One Dollar to it duly paid by the Trustee at or before the ensealing and delivery of these presents, the receipt whereof is hereby acknowledged, and in order to secure the payment of principal of and any premium which may be due and payable on and the interest on all Bonds at any time issued and outstanding under the Indenture according to their tenor and effect, and the performance and observance by the Company of all the covenants and conditions herein and therein contained, has granted, bargained, sold, warranted, aliened, remised, released, conveyed, assigned, transferred, mortgaged, pledged, set over and confirmed, and by these presents does grant, bargain, sell, warrant, alien, remise, release, convey, assign, transfer, mortgage, pledge, set over and confirm, unto the party of the second part, and to its successors in the trust, and to it and its assigns forever, and has granted and does hereby grant thereunto a security interest in, all of the property, real, personal and mixed, now owned by the Company and situated in the Counties of Burlington, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset and Sussex in the State of New Jersey, or wherever situate (except property specifically excepted from the lien of the Indenture by the terms of the Indenture) and also all of the property, real, personal and mixed, hereafter acquired by the Company wherever situate (except property specifically excepted from the lien of the Indenture by the terms of the Indenture), including both as to property now owned and property hereafter acquired, without in any way limiting or impairing the enumeration of the same, the scope and intent of the foregoing or of any general or specific description contained in the Indenture, the following:
I. Franchises
All and singular, the franchises, grants, permits, immunities, privileges and rights of the Company owned and held by it at the date of the execution hereof or hereafter acquired for the construction, maintenance, and operation of the gas plants and systems now or hereafter subject to the lien hereof, as well as all certificates, franchises, grants, permits, immunities, privileges, and rights of the Company used or useful in the operation of the property now or hereafter mortgaged hereunder, including all and singular the franchises, grants, permits, immunities, privileges, and rights of the Company granted by the governing authorities of any municipalities or other political subdivisions and all renewals, extensions and modifications of said certificates, franchises, grants, permits, privileges, and rights or any of them.
II. Gas Distribution Systems and Related Property
All gas generating plants, gas storage plants and gas manufacturing plants of the Company, all the buildings, erections, structures, generating and purifying apparatus, holders, engines, boilers, benches, retorts, tanks, instruments, appliances, apparatus, facilities, machinery, fixtures, and all other property used or provided for use in the generation, manufacturing and purifying of gas, together with the land on which the same are situated, and all other lands and easements, rights-of-
way, permits, privileges, and sites forming a part of such plants or any of them or occupied, enjoyed or used in connection therewith.
All gas distribution or gas transmission systems of the Company, all buildings, erections, structures, generating and purifying apparatus, holders, engines, boilers, benches, retorts, tanks, pipe lines, connections, service pipes, meters, conduits, tools, instruments, appliances, apparatus, facilities, machinery, fixtures, and all other property used or provided for use in the construction, maintenance, repair or operations of such distribution or transmission systems, together with all the certificates, rights, privileges, rights-of-way, franchises, licenses, easements, grants, liberties, immunities, permits of the Company, howsoever conferred or acquired, under, over, or upon any private property or any public streets or highways within as well as without the corporate limits of any municipal corporation. Without limiting the generality of the foregoing, there are expressly included the gas distribution or gas transmission systems located in the Counties of Burlington, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset and Sussex in the State of New Jersey, and in the following municipalities in said State and Counties: Aberdeen Township (formerly Matawan Township), Allenhurst Borough, City of Asbury Park, Atlantic Highlands Borough, Avon Borough, Barnegat Light Borough, Barnegat Township (formerly named Union Township), Bay Head Borough, Beach Haven Borough, Beachwood Borough, Belmar Borough, Berkeley Township, Boonton Town, Boonton Township, Bradley Beach Borough, Brick Township, Brielle Borough, Colts Neck Township, Deal Borough, Denville Township, Dover Town, Dover Township, Eagleswood Township, East Brunswick Township, Eatontown Borough, Englishtown Borough, Fair Haven Borough, Farmingdale Borough, Franklin Township in Somerset County, Freehold Borough, Freehold Township, Hanover Township, Harvey Cedars Borough, Hazlet Township, Highlands Borough, Holmdel Township, Hopatcong Borough, Howell Township, Interlaken Borough, Island Heights Borough, Jackson Township, Jefferson Township, Keansburg Borough, Keyport Borough, Lacey Township, Lakehurst Borough, Lakewood Township, Lavallette Borough, Lincoln Park Borough, Little Egg Harbor Township, Little Silver Borough, Loch Arbour Village, Long Beach Township, Long Branch City, Manalapan Township, Manasquan Borough, Manchester Township, Mantoloking Borough, Marlboro Township, Matawan Borough, Middletown Township, Milltown Borough, Mine Hill Township, Monmouth Beach Borough, Monroe Township, Montville Township, Morris Plains Borough, Mount Arlington Borough, Mount Olive Township, Mountain Lakes Borough, Neptune City Borough, Neptune Township, Netcong Borough, New Brunswick City, North Brunswick Township, Ocean Township in Monmouth County, Ocean Township in Ocean County, Ocean Gate Borough, Oceanport Borough, Old Bridge Township (formerly named Madison Township), Parsippany-Troy Hills Township, Pine Beach Borough, Point Pleasant Borough, Point Pleasant Beach Borough, Randolph Township, Red Bank Borough, Rockaway Borough, Rockaway Township, Roxbury Township, Rumson Borough, Sayreville Borough, Sea Bright Borough, Sea Girt Borough, Seaside Heights Borough, Seaside Park Borough, Ship Bottom Borough, Shrewsbury Borough, Shrewsbury Township, South Belmar Borough, South Brunswick Township, South River Borough, South Toms River Borough, Spring Lake Borough, Spring Lake Heights Borough, Stafford Township, Surf City Borough, Tinton Falls Borough (formerly named New Shrewsbury Borough), Tuckerton Borough, Union Beach Borough, Union Township, Victory Gardens Borough, Wall Township, Washington Township in Burlington County, Washington Township in Morris County, West Long Branch Borough, West Milford Township and Wharton Borough.
III. Contracts
All of the Company’s right, title and interest in and under all contracts, licenses or leases for the purchase of gas, either in effect at the date of execution hereof or hereafter made and any extension or renewal thereof.
Together with all and singular
the tenements, hereditaments and appurtenances belonging or in anywise appertaining to the Trust Estate, or any part thereof, with the reversion or reversions, remainder and remainders, rents, issues, income and profits thereof, and all the right, title, interest and claim whatsoever, at law or in equity, which the Company now has or which it may hereafter acquire in and to the Trust Estate and every part and parcel thereof.
To have and to hold
the Trust Estate and all and singular the lands, properties, estates, rights, franchises, privileges and appurtenances hereby mortgaged, conveyed, pledged or assigned, or intended so to be, together with all the appurtenances thereto appertaining, unto the Trustee and its successors and assigns forever;
Subject, however
, as to property hereby conveyed, to Permitted Encumbrances;
But in trust, nevertheless
, under and subject to the terms and conditions hereafter set forth, for the equal and proportionate use, benefit, security and protection of each and every person and corporation who may be or become the holders of the Bonds and coupons hereby secured, if any, without preference, priority or distinction as to the lien or otherwise of one Bond or coupon over or from the others by reason of priority in the issue or negotiation thereof, or by reason of the date of maturity thereof, or otherwise (except as any sinking, amortization, improvement, renewal or other analogous fund, established in accordance with the provisions of the Indenture, may afford additional security for the Bonds of any particular series and except as provided in § 9.02 of the Indenture), and for securing the observance and performance of all the terms, provisions and conditions of the Indenture.
This Indenture further witnesseth
, that the Company has agreed and covenanted, and hereby does agree and covenant, with the Trustee and its successors and assigns and with the respective holders from time to time of the Bonds and coupons, or any thereof, as follows:
Article
I
Certain Amendments of Indenture
§ 1.1.
The Original Indenture, as heretofore amended, be and it hereby is further amended in the following respects, the section numbers specified below being the sections of the Indenture in which such amendments occur:
§ 1.01.
The following definition be and it hereby is added immediately after the thirty-third sentence of § 1.01B:
“‘
Thirty-Third Supplemental Indenture
’ shall mean the Supplemental Indenture dated as of August 1, 2011, supplemental to the Indenture.”
§ 1.01.
The following definitions be and they hereby are added immediately after the thirty‑seventh sentence of § 1.01F:
“‘
2027 Series MM Bond
’ shall mean one of the First Mortgage Bonds, Series MM due 2027, issued hereunder.
‘
2035 Series NN Bond
’ shall mean one of the First Mortgage Bonds, Series NN due 2035, issued hereunder
‘2041
Series OO Bond
’ shall mean one of the First Mortgage Bonds, Series OO due 2041, issued hereunder.”
§ 2.11.
The following be and it hereby is added at the end of § 2.11:
“No charge except for taxes or governmental charges shall be made against any holder of any 2027 Series MM Bond, 2035 Series NN Bond or 2041 Series OO Bond for the exchange, transfer or registration of transfer thereof.”
§ 8.08.
The period at the end of the first paragraph of § 8.08 be and it hereby is deleted and the following words and figures be and they hereby are added thereto:
“, and the 2027 Series MM Bonds, the 2035 Series NN Bonds and the 2041 Series OO Bonds shall be redeemed at the redemption price specified in § 10.90, § 10.92 and § 10.94, respectively.”
Article
II
2027 Series MM Bonds
§ 2.1.
There shall be a thirty-seventh series of Bonds, known as and entitled “First Mortgage Bonds, Series MM due 2027” or “First Mortgage Bonds, Series MM” (herein and in the Indenture referred to as the
“2027 Series MM Bonds”
), and the form thereof shall contain suitable provisions with respect to the matters hereinafter in this Section specified and shall in other respects be substantially as set forth in the preambles to the Original Indenture.
The aggregate principal amount of 2027 Series MM Bonds which may be authenticated and delivered and outstanding under the Indenture is Nine Million Five Hundred Forty Five Thousand ($9,545,000).
The 2027 Series MM Bonds shall be payable to the EDA Loan Trustee, and shall be nontransferable except to a successor of the EDA Loan Trustee.
The 2027 Series MM Bonds shall bear interest at the minimum rate per annum necessary to yield interest in amounts sufficient, when taken together with other amounts available therefor under the EDA Bond Indenture, to pay the interest from time to time payable on the 2011A EDA Bonds, computed on the same basis as the 2011A EDA Bonds (interest on overdue principal and premium, if any, and, to the extent legally enforceable, interest, being at the rate of six percent (6%) per annum), but in no event shall the interest rate on the 2027 Series MM Bonds exceed twelve percent (12%) per annum; and the 2027 Series MM Bonds shall mature on September 1, 2027, subject to prior redemption as described herein. The amount of “annual interest charges” on the 2027 Series MM Bonds, within the meaning of any provision of the Indenture requiring a determination of said amount as a condition to the issuance of any Bonds thereunder (including, without limitation, the 2027 Series MM Bonds), shall mean the amount calculated by applying to the 2027 Series MM Bonds the interest rate of twelve percent (12%) per annum;
provided, however,
that if the rate of interest on the 2011A EDA Bonds shall have become fixed and determined at a per annum rate lower than twelve percent (12%) for a period not less than the remaining maturity of said 2011A EDA Bonds (whether said 2011A EDA Bonds shall mature at their stated maturity, by earlier redemption or otherwise), then said lower rate shall be used to determine the amount of the “annual interest charges” on the 2027 Series MM Bonds;
provided
further,
that upon the effectiveness of the amendment to the definition of “Interest Changes on Indebtedness” described in § 8.1 herein, the amount of such annual interest charges shall be computed as forth in such amendment.
The 2027 Series MM Bonds shall be in the form of registered Bonds without coupons of denominations of Five Thousand Dollars ($5,000) and any integral multiple thereof which may be authorized by the Company, the issue of a registered Bond without coupons in any such denomination to be conclusive evidence of such authorization. The 2027 Series MM Bonds shall be dated as provided in § 2.05 of the Indenture. All 2027 Series MM Bonds shall bear interest from their respective dates, such interest to be payable, upon the terms of and otherwise in accordance with the 2027 Series MM Bonds, on the first business day preceding each date on which interest shall from time to time be payable on the 2011A EDA Bonds;
provided,
that the obligation of the Company to make payments with respect to the principal of, premium, if any, and interest on the 2027 Series MM Bonds shall be fully or partially, as the case may be, satisfied and discharged to the extent that at the time any such payment shall be due, the then due principal of, premium, if any, and interest on any of the 2011A EDA Bonds shall have been fully or partially paid from payments made by the Company under the Loan Agreement or from other moneys expressly available therefor in the principal and interest account for the 2011A EDA Bonds under the EDA Bond Indenture or, as far as principal is concerned, reduced by the principal amount of any of the 2011A EDA Bonds deemed paid pursuant to Article X of the EDA Bond Indenture. The principal of and the premium, if any, and interest on the 2027 Series MM Bonds shall be payable at the principal office of the Trustee, in the City of Chicago, Illinois, or, at the option of the Company, at the “Corporate Trust Office” (as that term is defined in the EDA Bond Indenture) of the EDA Loan Trustee, in any coin or currency of the United States of America which at the time of payment shall be legal tender for the payment of public and private debts.
Notwithstanding any other provision of the Indenture or of the 2027 Series MM Bonds, payments of the principal of and the premium, if any, and interest on any 2027 Series MM Bond may be made directly to the registered holder thereof without presentation or surrender thereof or the making of any notation thereon if there shall be filed with the Trustee a Certificate of the Company to the effect that such registered holder (or the person for whom such registered holder is a nominee) and the Company have entered into a written agreement that payment shall be so made;
provided, however,
that before such registered holder transfers or otherwise disposes of any 2027 Series MM Bond, such registered holder will, at its election, either endorse thereon (or on a paper annexed thereto) the principal amount thereof redeemed and the last date to which interest has been paid thereon or make such Bond available to the Company at the principal office of the Trustee for the purpose of making such endorsement thereon.
The 2027 Series MM Bonds shall be subject to redemption at the option of the Company or otherwise, in the manner provided in the applicable provisions of Article Ten of the Indenture, as amended by Article V of this Supplemental Indenture.
The 2027 Series MM Bonds shall be excluded from the benefits of, and shall not be subject to redemption through the operation of, a Mandatory Sinking Fund pursuant to § 11.02 of the Indenture and shall also be excluded from the benefits of the covenants of § 9.08 and § 11.01 of the Indenture.
Notwithstanding the provisions of § 10.04 or any other provision of the Indenture, the selection of 2027 Series MM Bonds to be redeemed shall, in case fewer than all of the outstanding 2027 Series MM Bonds are to be redeemed, be made by the Trustee pro rata (to the nearest multiple of Five Thousand Dollars ($5,000)) among the registered holders of the 2027 Series MM Bonds in proportion, as nearly as practicable, to the respective unpaid principal amounts of 2027 Series MM Bonds registered in the names of such holders, with adjustments, to the extent practicable, to compensate for any prior redemption not made exactly in such proportion (or otherwise as may be specified by a written order signed by the registered holders of all outstanding 2027 Series MM Bonds).
The definitive 2027 Series MM Bonds may be issued in the form of engraved Bonds or Bonds printed or lithographed on steel engraved borders or Bonds in typed form on normal bond paper. Subject to the foregoing provisions of this Section and the provisions of § 2.11 of the Indenture, all definitive 2027 Series MM Bonds shall be fully exchangeable for other Bonds of the same series, of like aggregate principal amounts, and, upon surrender to the Trustee at its principal office, shall be exchangeable for other Bonds of the same series of a different authorized denomination or denominations, as requested by the holder surrendering the same. The Company will execute, and the Trustee shall authenticate and deliver, registered Bonds without coupons, whenever the same shall be required for any such exchange.
§ 2.2
. 2027 Series MM Bonds in the aggregate principal amount of Nine Million Five Hundred Forty Five Thousand Dollars ($9,545,000) may forthwith upon the execution and delivery of this Supplemental Indenture, or from time to time thereafter, be executed by the Company and delivered to the Trustee, and shall thereupon be authenticated and delivered by the Trustee upon compliance by the Company with the provisions of Articles Four, Five or Six of the Indenture,
without awaiting the filing or recording of this Supplemental Indenture. No additional 2027 Series MM Bonds shall be issued under Article Four, Five or Six of the Indenture without the consent in writing of the holders of all the outstanding 2027 Series MM Bonds.
§ 2.3
. As provided in Section 5.10 of the EDA Bond Indenture, from and after the Company’s certification of the occurrence of the Release Date (as defined in the EDA Bond Indenture), the obligations of the Company with respect to the 2027 Series MM Bonds shall be deemed to be satisfied and discharged, the 2027 Series MM Bonds shall cease to secure in any manner any 2011A EDA Bonds outstanding under the EDA Bond Indenture, and, pursuant to Section 5.10 of the EDA Bond Indenture, the EDA Loan Trustee shall forthwith deliver the 2027 Series MM Bonds to the Company for cancellation.
Article
III
2035 Series NN Bonds
§ 3.1.
There shall be a thirty-eighth series of Bonds, known as and entitled “First Mortgage Bonds, Series NN due 2035” or “First Mortgage Bonds, Series NN” (herein and in the Indenture referred to as the
“2035 Series NN Bonds”
), and the form thereof shall contain suitable provisions with respect to the matters hereinafter in this Section specified and shall in other respects be substantially as set forth in the preambles to the Original Indenture.
The aggregate principal amount of 2035 Series NN Bonds which may be authenticated and delivered and outstanding under the Indenture is Forty One Million Dollars ($41,000,000).
The 2035 Series NN Bonds shall be payable to the EDA Loan Trustee, and shall be nontransferable except to a successor of the EDA Loan Trustee.
The 2035 Series NN Bonds shall bear interest at the minimum rate per annum necessary to yield interest in amounts sufficient, when taken together with other amounts available therefor under the EDA Bond Indenture, to pay the interest from time to time payable on the 2011B EDA Bonds, computed on the same basis as the 2011B EDA Bonds (interest on overdue principal and premium, if any, and, to the extent legally enforceable, interest, being at the rate of six percent (6%) per annum), but in no event shall the interest rate on the 2035 Series NN Bonds exceed twelve percent (12%) per annum; and the 2035 Series NN Bonds shall mature on August 1, 2035, subject to prior redemption as described herein. The amount of “annual interest charges” on the 2035 Series NN Bonds, within the meaning of any provision of the Indenture requiring a determination of said amount as a condition to the issuance of any Bonds thereunder (including, without limitation, the 2035 Series NN Bonds), shall mean the amount calculated by applying to the 2035 Series NN Bonds the interest rate of twelve percent (12%) per annum;
provided, however,
that if the rate of interest on the 2011B EDA Bonds shall have become fixed and determined at a per annum rate lower than twelve percent (12%) for a period not less than the remaining maturity of said 2011B EDA Bonds (whether said 2011B EDA Bonds shall mature at their stated maturity, by earlier redemption or otherwise), then said lower rate shall be used to determine the amount of the “annual interest charges” on the 2035 Series NN Bonds;
provided
further,
that upon the effectiveness of the amendment to the definition of “Interest Changes on Indebtedness” described in § 8.1 herein, the amount of such
annual interest charges shall be computed as forth in such amendment.
The 2035 Series NN Bonds shall be in the form of registered Bonds without coupons of denominations of Five Thousand Dollars ($5,000) and any integral multiple thereof which may be authorized by the Company, the issue of a registered Bond without coupons in any such denomination to be conclusive evidence of such authorization. The 2035 Series NN Bonds shall be dated as provided in § 2.05 of the Indenture. All 2035 Series NN Bonds shall bear interest from their respective dates, such interest to be payable, upon the terms of and otherwise in accordance with the 2035 Series NN Bonds, on the first business day preceding each date on which interest shall from time to time be payable on the 2011B EDA Bonds;
provided,
that the obligation of the Company to make payments with respect to the principal of, premium, if any, and interest on the 2035 Series NN Bonds shall be fully or partially, as the case may be, satisfied and discharged to the extent that at the time any such payment shall be due, the then due principal of, premium, if any, and interest on any of the 2011B EDA Bonds shall have been fully or partially paid from payments made by the Company under the Loan Agreement or from other moneys expressly available therefor in the principal and interest account for the 2011B EDA Bonds under the EDA Bond Indenture or, as far as principal is concerned, reduced by the principal amount of any of the 2011B EDA Bonds deemed paid pursuant to Article X of the EDA Bond Indenture. The principal of and the premium, if any, and interest on the 2035 Series NN Bonds shall be payable at the principal office of the Trustee, in the City of Chicago, Illinois, or, at the option of the Company, at the “Corporate Trust Office” (as that term is defined in the EDA Bond Indenture) of the EDA Loan Trustee, in any coin or currency of the United States of America which at the time of payment shall be legal tender for the payment of public and private debts.
Notwithstanding any other provision of the Indenture or of the 2035 Series NN Bonds, payments of the principal of and the premium, if any, and interest on any 2035 Series NN Bond may be made directly to the registered holder thereof without presentation or surrender thereof or the making of any notation thereon if there shall be filed with the Trustee a Certificate of the Company to the effect that such registered holder (or the person for whom such registered holder is a nominee) and the Company have entered into a written agreement that payment shall be so made;
provided, however,
that before such registered holder transfers or otherwise disposes of any 2035 Series NN Bond, such registered holder will, at its election, either endorse thereon (or on a paper annexed thereto) the principal amount thereof redeemed and the last date to which interest has been paid thereon or make such Bond available to the Company at the principal office of the Trustee for the purpose of making such endorsement thereon.
The 2035 Series NN Bonds shall be subject to redemption at the option of the Company or otherwise, in the manner provided in the applicable provisions of Article Ten of the Indenture, as amended by Article VI of this Supplemental Indenture.
The 2035 Series NN Bonds shall be excluded from the benefits of, and shall not be subject to redemption through the operation of, a Mandatory Sinking Fund pursuant to § 11.02 of the
Indenture and shall also be excluded from the benefits of the covenants of § 9.08 and § 11.01 of the Indenture.
Notwithstanding the provisions of § 10.04 or any other provision of the Indenture, the selection of 2035 Series NN Bonds to be redeemed shall, in case fewer than all of the outstanding 2035 Series NN Bonds are to be redeemed, be made by the Trustee pro rata (to the nearest multiple of Five Thousand Dollars ($5,000)) among the registered holders of the 2035 Series NN Bonds in proportion, as nearly as practicable, to the respective unpaid principal amounts of 2035 Series NN Bonds registered in the names of such holders, with adjustments, to the extent practicable, to compensate for any prior redemption not made exactly in such proportion (or otherwise as may be specified by a written order signed by the registered holders of all outstanding 2035 Series NN Bonds).
The definitive 2035 Series NN Bonds may be issued in the form of engraved Bonds or Bonds printed or lithographed on steel engraved borders or Bonds in typed form on normal bond paper. Subject to the foregoing provisions of this Section and the provisions of § 2.11 of the Indenture, all definitive 2035 Series NN Bonds shall be fully exchangeable for other Bonds of the same series, of like aggregate principal amounts, and, upon surrender to the Trustee at its principal office, shall be exchangeable for other Bonds of the same series of a different authorized denomination or denominations, as requested by the holder surrendering the same. The Company will execute, and the Trustee shall authenticate and deliver, registered Bonds without coupons, whenever the same shall be required for any such exchange.
§ 3.2
. 2035 Series NN Bonds in the aggregate principal amount of Forty One Million Dollars ($41,000,000) may forthwith upon the execution and delivery of this Supplemental Indenture, or from time to time thereafter, be executed by the Company and delivered to the Trustee, and shall thereupon be authenticated and delivered by the Trustee upon compliance by the Company with the provisions of Articles Four, Five or Six of the Indenture, without awaiting the filing or recording of this Supplemental Indenture. No additional 2035 Series NN Bonds shall be issued under Article Four, Five or Six of the Indenture without the consent in writing of the holders of all the outstanding 2035 Series NN Bonds.
§ 3.3
. As provided in Section 5.10 of the EDA Bond Indenture, from and after the Company’s certification of the occurrence of the Release Date (as defined in the EDA Bond Indenture), the obligations of the Company with respect to the 2035 Series NN Bonds shall be deemed to be satisfied and discharged, the 2035 Series NN Bonds shall cease to secure in any manner any 2011B EDA Bonds outstanding under the EDA Bond Indenture, and, pursuant to Section 5.10 of the EDA Bond Indenture, the EDA Loan Trustee shall forthwith deliver the 2035 Series NN Bonds to the Company for cancellation.
Article
IV
2041 Series OO Bonds
§ 4.1.
There shall be a thirty-ninth series of Bonds, known as and entitled “First Mortgage Bonds, Series OO due 2041” or “First Mortgage Bonds, Series OO” (herein and in the Indenture referred to as the
“2041 Series OO Bonds”
), and the form thereof shall contain suitable provisions with respect to the matters hereinafter in this Section specified and shall in other respects be substantially as set forth in the preambles to the Original Indenture.
The aggregate principal amount of 2041 Series OO Bonds which may be authenticated and delivered and outstanding under the Indenture is Forty Six Million Five Hundred Thousand Dollars ($46,500,000).
The 2041 Series OO Bonds shall be payable to the EDA Loan Trustee, and shall be nontransferable except to a successor of the EDA Loan Trustee.
The 2041 Series OO Bonds shall bear interest at the minimum rate per annum necessary to yield interest in amounts sufficient, when taken together with other amounts available therefor under the EDA Bond Indenture, to pay the interest from time to time payable on the 2011C EDA Bonds, computed on the same basis as the 2011C EDA Bonds (interest on overdue principal and premium, if any, and, to the extent legally enforceable, interest, being at the rate of six percent (6%) per annum), but in no event shall the interest rate on the 2041 Series OO Bonds exceed twelve percent (12%) per annum; and the 2041 Series OO Bonds shall mature on August 1, 2041, subject to prior redemption as described herein. The amount of “annual interest charges” on the 2041 Series OO Bonds, within the meaning of any provision of the Indenture requiring a determination of said amount as a condition to the issuance of any Bonds thereunder (including, without limitation, the 2041 Series OO Bonds), shall mean the amount calculated by applying to the 2041 Series OO Bonds the interest rate of twelve percent (12%) per annum;
provided, however,
that if the rate of interest on the 2011C EDA Bonds shall have become fixed and determined at a per annum rate lower than twelve percent (12%) for a period not less than the remaining maturity of said 2011C EDA Bonds (whether said 2011C EDA Bonds shall mature at their stated maturity, by earlier redemption or otherwise), then said lower rate shall be used to determine the amount of the “annual interest charges” on the 2041 Series OO Bonds;
provided
further,
that upon the effectiveness of the amendment to the definition of “Interest Changes on Indebtedness” described in § 8.1 herein, the amount of such annual interest charges shall be computed as forth in such amendment.
The 2041 Series OO Bonds shall be in the form of registered Bonds without coupons of denominations of Five Thousand Dollars ($5,000) and any integral multiple thereof which may be authorized by the Company, the issue of a registered Bond without coupons in any such denomination to be conclusive evidence of such authorization. The 2041 Series OO Bonds shall be dated as provided in § 2.05 of the Indenture. All 2041 Series OO Bonds shall bear interest from their respective dates, such interest to be payable, upon the terms of and otherwise in accordance with the 2041 Series OO Bonds, on the first business day preceding each date on which interest shall from time to time be payable on the 2011B EDA Bonds;
provided,
that the obligation of the Company to make payments with respect to the principal of, premium, if any, and interest on the 2041 Series
OO Bonds shall be fully or partially, as the case may be, satisfied and discharged to the extent that at the time any such payment shall be due, the then due principal of, premium, if any, and interest on any of the 2011C EDA Bonds shall have been fully or partially paid from payments made by the Company under the Loan Agreement or from other moneys expressly available therefor in the principal and interest account for the 2011C EDA Bonds under the EDA Bond Indenture or, as far as principal is concerned, reduced by the principal amount of any of the 2011C EDA Bonds deemed paid pursuant to Article X of the EDA Bond Indenture. The principal of and the premium, if any, and interest on the 2041 Series OO Bonds shall be payable at the principal office of the Trustee, in the City of Chicago, Illinois, or, at the option of the Company, at the “Corporate Trust Office” (as that term is defined in the EDA Bond Indenture) of the EDA Loan Trustee, in any coin or currency of the United States of America which at the time of payment shall be legal tender for the payment of public and private debts.
Notwithstanding any other provision of the Indenture or of the 2041 Series OO Bonds, payments of the principal of and the premium, if any, and interest on any 2041 Series OO Bond may be made directly to the registered holder thereof without presentation or surrender thereof or the making of any notation thereon if there shall be filed with the Trustee a Certificate of the Company to the effect that such registered holder (or the person for whom such registered holder is a nominee) and the Company have entered into a written agreement that payment shall be so made;
provided, however,
that before such registered holder transfers or otherwise disposes of any 2041 Series OO Bond, such registered holder will, at its election, either endorse thereon (or on a paper annexed thereto) the principal amount thereof redeemed and the last date to which interest has been paid thereon or make such Bond available to the Company at the principal office of the Trustee for the purpose of making such endorsement thereon.
The 2041 Series OO Bonds shall be subject to redemption at the option of the Company or otherwise, in the manner provided in the applicable provisions of Article Ten of the Indenture, as amended by Article VII of this Supplemental Indenture.
The 2041 Series OO Bonds shall be excluded from the benefits of, and shall not be subject to redemption through the operation of, a Mandatory Sinking Fund pursuant to § 11.02 of the Indenture and shall also be excluded from the benefits of the covenants of § 9.08 and § 11.01 of the Indenture.
Notwithstanding the provisions of § 10.04 or any other provision of the Indenture, the selection of 2041 Series OO Bonds to be redeemed shall, in case fewer than all of the outstanding 2041 Series OO Bonds are to be redeemed, be made by the Trustee pro rata (to the nearest multiple of Five Thousand Dollars ($5,000)) among the registered holders of the 2041 Series OO Bonds in proportion, as nearly as practicable, to the respective unpaid principal amounts of 2041 Series OO Bonds registered in the names of such holders, with adjustments, to the extent practicable, to compensate for any prior redemption not made exactly in such proportion (or otherwise as may be specified by a written order signed by the registered holders of all outstanding 2041 Series OO Bonds).
The definitive 2041 Series OO Bonds may be issued in the form of engraved Bonds or Bonds printed or lithographed on steel engraved borders or Bonds in typed form on normal bond paper. Subject to the foregoing provisions of this Section and the provisions of § 2.11 of the Indenture, all definitive 2041 Series OO Bonds shall be fully exchangeable for other Bonds of the same series, of like aggregate principal amounts, and, upon surrender to the Trustee at its principal office, shall be exchangeable for other Bonds of the same series of a different authorized denomination or denominations, as requested by the holder surrendering the same. The Company will execute, and the Trustee shall authenticate and deliver, registered Bonds without coupons, whenever the same shall be required for any such exchange.
§ 4.2
. 2041 Series OO Bonds in the aggregate principal amount of Forty-Six Million Five Hundred Thousand Dollars ($46,500,000) may forthwith upon the execution and delivery of this Supplemental Indenture, or from time to time thereafter, be executed by the Company and delivered to the Trustee, and shall thereupon be authenticated and delivered by the Trustee upon compliance by the Company with the provisions of Articles Four, Five or Six of the Indenture, without awaiting the filing or recording of this Supplemental Indenture. No additional 2041 Series OO Bonds shall be issued under Article Four, Five or Six of the Indenture without the consent in writing of the holders of all the outstanding 2041 Series OO Bonds.
§ 4.3
. As provided in Section 5.10 of the EDA Bond Indenture, from and after the Company’s certification of the occurrence of the Release Date (as defined in the EDA Bond Indenture), the obligations of the Company with respect to the 2041 Series OO Bonds shall be deemed to be satisfied and discharged, the 2041 Series OO Bonds shall cease to secure in any manner any 2011C EDA Bonds outstanding under the EDA Bond Indenture, and, pursuant to Section 5.10 of the EDA Bond Indenture, the EDA Loan Trustee shall forthwith deliver the 2041 Series OO Bonds to the Company for cancellation.
Article
V
Redemption of the 2027 Series MM Bonds
§ 5.1.
The following § 10.89 and § 10.90 be and they hereby are added to Article Ten of the Indenture:
Ҥ 10.89.
The 2027 Series MM Bonds shall be subject to mandatory redemption as follows: payments of principal of and premium on the 2027 Series MM Bonds shall be made to the EDA Loan Trustee to redeem 2027 Series MM Bonds in such amounts as shall be necessary, in accordance with the provisions of the Loan Agreement, to provide funds under the Loan Agreement to (a) make, when due, payment at maturity (including, without limitation, maturity upon acceleration of the 2011A EDA Bonds) and (b) make, when due, any prepayment required by the Loan Agreement in connection with any mandatory, special mandatory, optional or extraordinary optional redemption of 2011A EDA Bonds;
provided, however,
that the obligation of the Company to make any redemption payments under this Section shall be fully or partially, as the case may be, satisfied and discharged to the extent that at any time such payment shall be due, the then due payment at maturity or redemption payment on any of the 2011A EDA Bonds shall have been fully or partially made from payments made by the Company under the Loan Agreement or from other
moneys expressly available therefor in a redemption account or subaccount for the 2011A EDA Bonds under the EDA Bond Indenture or, as far as principal is concerned, reduced by the principal amount of any 2011A EDA Bonds deemed paid pursuant to Article X of the EDA Bond Indenture. Terms used and not defined in this Section shall have the respective meanings given to them in the Thirty-Third Supplemental Indenture dated as of August 1, 2011.”
Ҥ 10.90.
In the case of the redemption of 2027 Series MM Bonds out of moneys deposited with the Trustee pursuant to § 8.08, such 2027 Series MM Bonds shall, upon compliance with provisions of §
10.04, and subject to the provisions of § 2.1 of the Thirty-Third Supplemental Indenture, be redeemable at the principal amounts thereof, together with interest accrued thereon to the date fixed for redemption, without premium.”
Article VI
Redemption of the 2035 Series NN Bonds
§ 6.1.
The following § 10.91 and § 10.92 be and they hereby are added to Article Ten of the Indenture:
Ҥ 10.91.
The 2035 Series NN Bonds shall be subject to mandatory redemption as follows: payments of principal of and premium on the 2035 Series NN Bonds shall be made to the EDA Loan Trustee to redeem 2035 Series NN Bonds in such amounts as shall be necessary, in accordance with the provisions of the Loan Agreement, to provide funds under the Loan Agreement to (a) make, when due, payment at maturity (including, without limitation, maturity upon acceleration of the 2011B EDA Bonds) and (b) make, when due, any prepayment required by the Loan Agreement in connection with any mandatory, special mandatory, optional or extraordinary optional redemption of 2011B EDA Bonds;
provided, however,
that the obligation of the Company to make any redemption payments under this Section shall be fully or partially, as the case may be, satisfied and discharged to the extent that at any time such payment shall be due, the then due payment at maturity or redemption payment on any of the 2011B EDA Bonds shall have been fully or partially made from payments made by the Company under the Loan Agreement or from other moneys expressly available therefor in a redemption account or subaccount for the 2011B EDA Bonds under the EDA Bond Indenture or, as far as principal is concerned, reduced by the principal amount of any 2011B EDA Bonds deemed paid pursuant to Article X of the EDA Bond Indenture. Terms used and not defined in this Section shall have the respective meanings given to them in the Thirty-Third Supplemental Indenture dated as of August 1, 2011.”
Ҥ 10.92.
In the case of the redemption of 2035 Series NN Bonds out of moneys deposited with the Trustee pursuant to § 8.08, such 2035 Series NN Bonds shall, upon compliance with provisions of § 10.04, and subject to the provisions of § 3.1 of the Thirty-Third Supplemental Indenture, be redeemable at the principal amounts thereof, together with interest accrued thereon to the date fixed for redemption, without premium.”
Article VII
Redemption of the 2041 Series OO Bonds
§ 7.1.
The following § 10.93 and § 10.94 be and they hereby are added to Article Ten of the Indenture:
Ҥ 10.93.
The 2041 Series OO Bonds shall be subject to mandatory redemption as follows: payments of principal of and premium on the 2041 Series OO Bonds shall be made to the EDA Loan Trustee to redeem 2041 Series OO Bonds in such amounts as shall be necessary, in accordance with the provisions of the Loan Agreement, to provide funds under the Loan Agreement to (a) make, when due, payment at maturity (including, without limitation, maturity upon acceleration of the 2011C EDA Bonds) and (b) make, when due, any prepayment required by the Loan Agreement in connection with any mandatory, special mandatory, optional or extraordinary optional redemption of 2011C EDA Bonds;
provided, however,
that the obligation of the Company to make any redemption payments under this Section shall be fully or partially, as the case may be, satisfied and discharged to the extent that at any time such payment shall be due, the then due payment at maturity or redemption payment on any of the 2011C EDA Bonds shall have been fully or partially made from payments made by the Company under the Loan Agreement or from other moneys expressly available therefor in a redemption account or subaccount for the 2011C EDA Bonds under the EDA Bond Indenture or, as far as principal is concerned, reduced by the principal amount of any 2011C EDA Bonds deemed paid pursuant to Article X of the EDA Bond Indenture. Terms used and not defined in this Section shall have the respective meanings given to them in the Thirty-Third Supplemental Indenture dated as of August 1, 2011.”
Ҥ 10.94.
In the case of the redemption of 2041 Series OO Bonds out of moneys deposited with the Trustee pursuant to § 8.08, such 2041 Series OO Bonds shall, upon compliance with provisions of § 10.04, and subject to the provisions of § 4.1 of the Thirty‑Third Supplemental Indenture, be redeemable at the principal amounts thereof, together with interest accrued thereon to the date fixed for redemption, without premium.”
Article VIII
Consent to Amendment
§ 8.1.
Each holder of a 2027 Series MM Bond, a 2035 Series NN Bond or a 2041 Series OO Bond, by holding such 2027 Series MM Bond, 2035 Series NN Bond or 2041 Series OO Bond, as applicable, and as a fundamental term of the 2027 Series MM Bonds, the 2035 Series NN Bonds and the 2041 Series OO Bonds and this Supplemental Indenture, consents and shall be deemed to have consented to the substance of the following amendments to the Indenture:
The definition of “Interest Charges on Indebtedness” in the Indenture will be amended by adding the following paragraphs and definitions at the end of the definition:
“In the event any Bonds bear, are being issued which bear, or are to bear, interest at a variable rate during such period, annual Interest Charges on Indebtedness on such variable rate Bonds for any such period shall be computed by assuming that the rate of interest applicable to such period is the highest of (A) the actual rate at the date of calculation, or if the Bonds are not yet Outstanding, the initial rate, (B) if the Bonds have been Outstanding for at least 12 months, the average rate over the 12 months immediately preceding the date of calculation, and (C)(1) if the obligations which are secured by such Bonds are issued as obligations the interest on which is excludable from gross income under the applicable provisions of the Internal Revenue Code of 1986, as amended, the rate of interest shown in the most recently published interest rate in
The Bond Buyer
as the 30 Year Index of 25 Revenue Bonds or a comparable index selected by a Vice President or the Treasurer or (2) if interest on the obligations which are secured by such Bonds is not intended to be so excludable or if such Bonds do not secure a separate obligation of the Company, the interest rate on Government Obligations with comparable maturities, but in each case not in excess of the lesser of (a) the maximum rate authorized by law and (b) the maximum rate permitted in the supplement to the Indenture authorizing the issuance of the related Bonds.
In the event the Company has entered into a Hedging Transaction in connection with any Bonds for such period, the computation of the annual Interest Charges on Indebtedness for such Bonds for such period may, at the option of a Vice President or the Treasurer, include payments made and received by the Company or to be made and received by the Company under the related Hedging Transaction,
provided
that at the time such option is initially exercised the Company delivers a certificate to the effect that (1) the institution other than the Company that is party to such Hedging Transaction (the
“Counterparty”
) is obligated under such Hedging Transaction to make payments thereunder for the period for which the computation of the annual Interest Charges on Indebtedness on such Bonds is being determined, and (2) as of the date the Company and the Counterparty entered into such Hedging Transaction, the long-term debt obligations of the Counterparty or of any guarantor of the Counterparty’s obligations under such Hedging Transaction were rated “A” or better by Moody’s Investors Service, Inc. or Standard & Poor’s Ratings Group.
“Government Obligations”
means securities which are direct obligations of the United States of America (including trust receipts evidencing an interest therein) and securities for which the United
States of America has fully guaranteed the payment of principal and interest.
“Hedging Transaction”
means an agreement, expressly identified in a certificate of a Vice President or Treasurer of the Company as being entered into in order to hedge the interest payable on all or a portion of any Bonds, which agreement may include, without limitation, an interest rate swap, a forward or futures contract or an option (
e.g.,
a call, put, cap, floor or collar) and which agreement does not constitute an obligation to repay money borrowed, credit extended or the equivalent thereof.”
§ 9.17 of the Indenture will be amended to read as follows:
“The Company covenants and agrees to deliver to the Trustee:
A. Within fifty five (55) days after the end of each quarterly period, except the last, of each fiscal year, a copy of its balance sheet and its statement of capitalization as at the end of such quarterly period, its income statement for the three months to the end of such quarterly period, and its statements of cash flows for the three months to the end of such quarterly period together with the figures for the corresponding date or period or fiscal year end prior thereto, as the case may be, in reasonable detail, certified by a financial officer of the Company; and
B. Within one hundred and twenty (120) days after the end of each fiscal year, a copy of its balance sheet as at the end of such year, its income statement for such year, its statement of cash flows for such year, its statement of capitalization for such year and its statement of common stock equity and comprehensive income for such year, in reasonable detail, certified by Independent Accountants of recognized standing selected by the Company.”
The foregoing consent shall be irrevocable, shall be continuing and in effect at all times and shall be deemed to be “concurrent” (within the meaning of § 13.01 of the Indenture) with the writings relating to the foregoing amendment by or on behalf of all other Bondholders. Further, the foregoing consent shall survive any transfer, exchange or substitution of any 2027 Series MM Bond, any 2035 Series NN Bond or any 2041 Series OO Bond, and shall bind all holders thereof and such holders’ transferees, successors, assigns, heirs and legatees. Each holder of a 2027 Series MM Bond, a 2035 Series NN Bond or a 2041 Series OO Bond (and such holder’s transferees, successors, assigns, heirs and legatees), by holding such 2027 Series MM Bond, 2035 Series NN Bond or 2041 Series OO Bond, as applicable, authorizes and shall be deemed to have authorized the Trustee to sign, in the name of all holders of the 2027 Series MM Bonds, the 2035 Series NN Bonds and the 2041
Series OO Bonds, any consent or authorization deemed necessary or desirable in the discretion of the Trustee to evidence the foregoing consent (it being understood and agreed, however, that this § 8.1 shall constitute, for all purposes of the Indenture, the written consent by the holders of the 2027 Series MM Bonds, the 2035 Series NN Bonds and the 2041 Series OO Bonds, as applicable, to the foregoing amendment without further act or instrument).
The foregoing amendments to the Indenture contained in this § 8.1 shall become effective upon the consent of the holders of at least 66‑2/3% in principal amount of the Bonds at the time outstanding.
Article IX
Miscellaneous
§ 9.1.
The Company is lawfully seized and possessed of all the real estate, franchises and other property described or referred to in the Indenture (except properties released from the lien of the Indenture pursuant to the provisions thereof) as presently mortgaged, subject to the exceptions stated therein, such real estate, franchises and other property are free and clear of any lien prior to the lien of the Indenture except as set forth in the Granting Clauses of the Indenture and the Company has good right and lawful authority to mortgage the same as provided in and by the Indenture.
§ 9.2.
The Trustee assumes no duties, responsibilities or liabilities by reason of this Supplemental Indenture other than as set forth in the Indenture, and this Supplemental Indenture is executed and accepted by the Trustee subject to all the terms and conditions of its acceptance of the trust under the Indenture, as fully as if said terms and conditions were herein set forth at length.
§ 9.3.
The terms used in this Supplemental Indenture shall have the meanings assigned thereto in the Indenture. Reference by number in this Supplemental Indenture to Articles or Sections shall be construed as referring to Articles or Sections contained in the Indenture, unless otherwise stated.
§ 9.4.
As amended and modified by this Supplemental Indenture, the Indenture is in all respects ratified and confirmed and the Indenture and this Supplemental Indenture shall be read, taken and construed as one and the same instrument.
§ 9.5.
Neither the approval by the Board of Public Utilities of the State of New Jersey of the execution and delivery of this Supplemental Indenture nor the approval by said Board of the issue of any Bonds under the Indenture shall in any way be construed as the approval by said Board of any other act, matter or thing which requires approval of said Board under the laws of the State of New Jersey; nor shall approval by said Board of the issue of any Bonds under the Indenture bind said Board or any other public body or authority of the State of New Jersey having jurisdiction in
the premises in any future application for the issue of Bonds under the Indenture or otherwise.
§ 9.6.
This Supplemental Indenture may be executed in any number of counterparts and all said counterparts executed and delivered each as an original shall constitute but one and the same instrument.
New Jersey Natural Gas Company hereby declares that it has read this Thirty-Third Supplemental Indenture, has received a completely filled-in true copy of it without charge and has signed
this Thirty-Third Supplemental Indenture on the date contained in its acknowledgment hereof.
In witness whereof, New Jersey Natural Gas Company
, party of the first part, has caused these presents to be signed in its corporate name by its President or a Vice President and its corporate seal to be hereunto affixed and attested by its Secretary or an Assistant Secretary, and
The Bank of New York Mellon Trust Company, N.A.,
successor in interest to BNY Midwest Trust Company, party of the second part, in evidence of its acceptance of the trust hereby created, has caused these presents to be signed in its corporate name by one of its Vice Presidents.
New Jersey Natural Gas Company
By
/s/ Kathleen T. Ellis
Name: Kathleen T. Ellis
Title: Executive Vice President and
Chief Operating Officer
[Corporate Seal]
Attest:
/s/ Rhonda M. Figueroa
Name: Rhonda M. Figueroa
Title: Corporate Secretary
The Bank of New York Mellon Trust Company, N.A.,
successor in interest to BNY Midwest Trust Company
,
as Trustee
By
/s/ J. Christopher Howe
Name: J. Christopher Howe
Title: Agent
State of New Jersey )
) SS:
County of Monmouth )
Be it remembered
that on this 22nd day of August, 2011, before me, the subscriber, an Attorney-at-Law of the State of New Jersey, and I hereby certify that I am such an Attorney-at-Law as witness my hand, personally appeared Rhonda M. Figueroa to me known who, being by me duly sworn according to law, on her/his oath, does depose and make proof to my satisfaction that she is the Corporate Secretary of
New Jersey Natural Gas Company
, the grantor or mortgagor in the foregoing Supplemental Indenture named; that she well knows the seal of said corporation; that the seal affixed to said Supplemental Indenture is the corporate seal of said corporation, and that it was so affixed in pursuance of resolutions of the Board of Directors of said corporation; that Kathleen T. Ellis is Executive Vice President and Chief Operating Officer of said corporation; that she saw said Kathleen T. Ellis, as such Executive Vice President and Chief Operating Officer, affix said seal thereto, sign and deliver said Supplemental Indenture, and heard her declare that she signed, sealed and delivered the same as the voluntary act and deed of said corporation, in pursuance of said resolutions, and that this deponent signed her name thereto, at the same time, as attesting witness.
/s/ Rhonda M. Figueroa
Name: Rhonda M. Figueroa
Title: Corporate Secretary
Subscribed and sworn to before me
an Attorney-at-Law of the State of
New Jersey, at Wall, New Jersey,
the day and year aforesaid.
/s/ Richard Reich
Name: Richard Reich
Attorney-at-Law of the
State of New Jersey
Commonwealth of Pennsylvania
)
) SS:
County of Allegheny
)
Be it remembered that on this 17th day of August, 2011, before me, the subscriber, a Notary Public of the Commonwealth of Pennsylvania, personally appeared J. Christopher Howe to me known or who, being by me duly sworn according to law, on his/her oath, does depose and make proof to my satisfaction that he is an Agent of The Bank of New York Mellon Trust Company, N.A., successor in interest to BNY Midwest Trust Company, the grantee or mortgagee and trustee in the foregoing Supplemental Indenture named and heard said J. Christopher Howe declare that he signed and delivered the same as the voluntary act and deed of said corporation, in pursuance of said resolution, and that this deponent signed his name thereto, at the same time, as attesting witness.
/s/ J. Christopher Howe
Name:
J. Christopher Howe
Title:
Agent
Subscribed and sworn to before me a
Notary Public of the Commonwealth
of Pennsylvania at Pittsburgh, the day
and year aforesaid.
/s/ Robert Wesner
Notary Public of the
Commonwealth of Pennsylvania
[Notary Seal]
EXECUTION VERSION
Published CUSIP Number: 64586RAA6
CREDIT AGREEMENT
by and among
NEW JERSEY NATURAL GAS COMPANY
and
THE LENDERS PARTY HERETO
and
PNC BANK, NATIONAL ASSOCIATION,
as Administrative Agent
and
JPMORGAN CHASE BANK, N.A.,
as Syndication Agent
and
U.S. BANK NATIONAL ASSOCIATION, TD BANK, N.A., and
Wells Fargo Bank, NATIONAL ASSOCIATION,
as Documentation Agents
and
PNC CAPITAL MARKETS LLC,
as Lead Arranger
Dated as of August 24, 2011
TABLE OF CONTENTS
Section
Page
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1
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CERTAIN DEFINITIONS
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1
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1.1
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Certain Definitions.
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1
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1.2
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Construction.
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24
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1.2.1.
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Number; Inclusion.
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24
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1.2.2.
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Determination.
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24
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1.2.3.
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Agent's Discretion and Consent.
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24
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1.2.4.
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Documents Taken as a Whole.
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24
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1.2.5.
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Headings.
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24
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1.2.6.
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Implied References to this Agreement.
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24
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1.2.7.
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Persons.
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24
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1.2.8.
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Modifications to Documents.
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25
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1.2.9.
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From, To and Through.
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25
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1.2.10.
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Shall; Will.
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25
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1.3
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Accounting Principles; Changes in GAAP.
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25
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2
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REVOLVING CREDIT AND SWING LOAN FACILITIES
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26
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2.1
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Commitments.
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26
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2.1.1.
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Revolving Credit Loans.
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26
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2.1.2.
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Swing Loan Commitment.
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26
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2.2
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Nature of Lenders' Obligations with Respect to Revolving Credit Loans.
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26
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2.3
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Commitment Fee.
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27
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2.4
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Revolving Credit Loan Requests.
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27
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2.5
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Swing Loan Requests.
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28
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2.6
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Making Revolving Credit Loans and Swing Loans.
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28
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2.6.1.
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Making Revolving Credit Loans.
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28
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2.6.2.
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Presumptions by the Agent.
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28
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2.6.3.
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Making Swing Loans.
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29
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2.7
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Swing Loan Note.
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29
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2.8
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Use of Proceeds.
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29
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2.9
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Letter of Credit Subfacility.
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30
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2.9.1.
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Issuance of Letters of Credit.
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30
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2.9.2.
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Letter of Credit Fees.
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30
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2.9.3.
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Disbursements, Reimbursement.
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30
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2.9.4.
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Repayment of Participation Advances.
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32
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2.9.5.
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Documentation.
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32
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2.9.6.
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Determinations to Honor Drawing Requests.
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32
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2.9.7.
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Nature of Participation and Reimbursement Obligations.
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33
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2.9.8.
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Indemnity.
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34
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2.9.9.
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Liability for Acts and Omissions.
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35
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2.10
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Borrowings to Repay Swing Loans.
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36
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2.11
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Right to Increase Commitments.
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36
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TABLE OF CONTENTS
Section
Page
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2.12
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Defaulting Lenders.
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37
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2.13
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Release of Cash Collateral.
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39
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3
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INTENTIONALLY OMITTED
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39
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4
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INTEREST RATES
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39
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4.1
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Interest Rate Options.
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39
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4.1.1.
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Revolving Credit Interest Rate Options.
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40
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4.1.2.
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Rate Quotations.
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40
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4.1.3.
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Change in Fees or Interest Rates.
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40
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4.2
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Interest Periods.
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41
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4.2.1.
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Amount of Borrowing Tranche.
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41
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4.2.2.
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Renewals.
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41
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4.3
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Interest After Default.
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41
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4.3.1.
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Letter of Credit Fees, Interest Rate.
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41
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4.3.2.
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Other Obligations.
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41
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4.3.3.
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Acknowledgment.
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42
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4.4
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LIBOR Rate Unascertainable; Illegality; Increased Costs; Deposits Not Available.
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42
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4.4.1.
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Unascertainable.
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42
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4.4.2.
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Illegality; Increased Costs; Deposits Not Available.
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42
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4.4.3.
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The Agent's and Lenders' Rights.
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42
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4.5
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Selection of Interest Rate Options.
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43
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5
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PAYMENTS
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43
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5.1
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Payments.
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43
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5.2
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Pro Rata Treatment of Lenders; Sharing of Payments; Agent's Presumptions.
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44
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5.2.1.
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Pro Rata Treatment of Lenders.
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44
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5.2.2.
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Sharing of Payments by Lenders.
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44
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5.2.3.
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Presumptions by the Agent.
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45
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5.3
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Interest Payment Dates.
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45
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5.4
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Prepayments.
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45
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5.4.1.
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Voluntary Prepayments.
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45
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5.4.2.
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Replacement of a Lender.
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47
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5.4.3.
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Change of Lending Office.
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47
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5.5
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Voluntary Commitment Reductions.
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48
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5.6
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Additional Compensation in Certain Circumstances.
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48
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5.6.1.
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Increased Costs Generally.
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48
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5.6.2.
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Capital Requirements.
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49
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5.6.3.
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Certificates for Reimbursement; Repayment of Outstanding Loans;
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Borrowing of New Loans.
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49
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TABLE OF CONTENTS
Section
Page
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5.6.4.
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Delay in Requests.
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49
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5.6.5.
|
Indemnity.
|
|
49
|
|
|
|
5.7
|
|
Interbank Market Presumption.
|
50
|
|
|
|
5.8
|
|
Taxes.
|
|
|
51
|
|
|
|
|
5.8.1.
|
Payments Free of Taxes.
|
|
51
|
|
|
|
|
5.8.2.
|
Payment of Other Taxes by the Borrower.
|
|
51
|
|
|
|
|
5.8.3.
|
Indemnification by the Borrower.
|
|
51
|
|
|
|
|
5.8.4.
|
Evidence of Payments.
|
|
51
|
|
|
|
|
5.8.5.
|
Status of Lenders.
|
|
51
|
|
|
|
|
5.8.6.
|
Survival.
|
|
53
|
|
|
|
5.9
|
|
Notes.
|
|
|
53
|
|
|
|
5.10
|
|
Settlement Date Procedures.
|
53
|
|
|
|
|
|
|
|
|
|
6
|
|
REPRESENTATIONS AND WARRANTIES
|
53
|
|
|
|
6.1
|
|
Representations and Warranties.
|
53
|
|
|
|
|
6.1.1.
|
Organization and Qualification.
|
|
53
|
|
|
|
|
6.1.2.
|
Subsidiaries.
|
|
54
|
|
|
|
|
6.1.3.
|
Power and Authority.
|
|
54
|
|
|
|
|
6.1.4.
|
Validity and Binding Effect.
|
|
54
|
|
|
|
|
6.1.5.
|
No Conflict.
|
|
55
|
|
|
|
|
6.1.6.
|
Litigation.
|
|
55
|
|
|
|
|
6.1.7.
|
Title to Properties.
|
|
55
|
|
|
|
|
6.1.8.
|
Accuracy of Financial Statements.
|
|
55
|
|
|
|
|
6.1.9.
|
Use of Proceeds; Margin Stock.
|
|
56
|
|
|
|
|
6.1.10.
|
Full Disclosure.
|
|
56
|
|
|
|
|
6.1.11.
|
Taxes.
|
|
56
|
|
|
|
|
6.1.12.
|
Consents and Approvals.
|
|
57
|
|
|
|
|
6.1.13.
|
No Event of Default; Compliance With Instruments.
|
57
|
|
|
|
|
6.1.14.
|
Patents, Trademarks, Copyrights, Licenses, Etc.
|
|
57
|
|
|
|
|
6.1.15.
|
Insurance.
|
|
57
|
|
|
|
|
6.1.16.
|
Compliance With Laws.
|
|
58
|
|
|
|
|
6.1.17.
|
Material Contracts; Burdensome Restrictions.
|
|
58
|
|
|
|
|
6.1.18.
|
Investment Companies.
|
|
58
|
|
|
|
|
6.1.19.
|
Plans and Benefit Arrangements.
|
|
58
|
|
|
|
|
6.1.20.
|
Employment Matters.
|
|
59
|
|
|
|
|
6.1.21.
|
Environmental Matters.
|
|
59
|
|
|
|
|
6.1.22.
|
Senior Debt Status.
|
|
60
|
|
|
|
|
6.1.23.
|
Hedging Contract Policies.
|
|
60
|
|
|
|
|
6.1.24.
|
Permitted Related Business Opportunities.
|
|
60
|
|
|
|
|
6.1.25.
|
Anti-Terrorism Laws; Executive Order No. 13224.
|
60
|
|
|
|
6.2
|
|
Continuation of Representations.
|
61
|
|
|
|
|
|
|
|
|
TABLE OF CONTENTS
Section
Page
|
|
|
|
|
|
|
|
|
|
|
|
|
7
|
|
CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT
|
61
|
|
|
|
7.1
|
|
First Loans and Letters of Credit.
|
61
|
|
|
|
|
7.1.1.
|
Officer's Certificate.
|
|
61
|
|
|
|
|
7.1.2.
|
Secretary's Certificate.
|
|
62
|
|
|
|
|
7.1.3.
|
Opinion of Counsel.
|
|
62
|
|
|
|
|
7.1.4.
|
Legal Details.
|
|
62
|
|
|
|
|
7.1.5.
|
Payment of Fees.
|
|
62
|
|
|
|
|
7.1.6.
|
Consents.
|
|
63
|
|
|
|
|
7.1.7.
|
Officer's Certificate Regarding MACs.
|
|
63
|
|
|
|
|
7.1.8.
|
No Violation of Laws.
|
|
63
|
|
|
|
|
7.1.9.
|
No Actions or Proceedings.
|
|
63
|
|
|
|
|
7.1.10.
|
Hedging Contract Policies.
|
|
63
|
|
|
|
|
7.1.11.
|
Termination of Commitments and Repayment of Outstanding Indebtedness.
|
63
|
|
|
|
7.2
|
|
Each Additional Loan or Letter of Credit.
|
63
|
|
|
|
|
|
|
|
|
|
8
|
|
COVENANTS
|
|
64
|
|
|
|
8.1
|
|
Affirmative Covenants.
|
|
64
|
|
|
|
|
8.1.1.
|
Preservation of Existence, Etc.
|
|
64
|
|
|
|
|
8.1.2.
|
Payment of Liabilities, Including Taxes, Etc.
|
|
64
|
|
|
|
|
8.1.3.
|
Maintenance of Insurance.
|
|
65
|
|
|
|
|
8.1.4.
|
Maintenance of Properties and Leases.
|
|
65
|
|
|
|
|
8.1.5.
|
Maintenance of Patents, Trademarks, Etc.
|
|
65
|
|
|
|
|
8.1.6.
|
Visitation Rights.
|
|
65
|
|
|
|
|
8.1.7.
|
Keeping of Records and Books of Account.
|
|
65
|
|
|
|
|
8.1.8.
|
Plans and Benefit Arrangements.
|
|
66
|
|
|
|
|
8.1.9.
|
Compliance With Laws.
|
|
66
|
|
|
|
|
8.1.10.
|
Use of Proceeds.
|
|
66
|
|
|
|
|
8.1.11.
|
Hedging Contract Policies.
|
|
67
|
|
|
|
8.2
|
|
Negative Covenants.
|
67
|
|
|
|
|
8.2.1.
|
Indebtedness.
|
|
67
|
|
|
|
|
8.2.2.
|
Liens.
|
|
68
|
|
|
|
|
8.2.3.
|
[Intentionally Omitted].
|
|
68
|
|
|
|
|
8.2.4.
|
Loans and Investments.
|
|
68
|
|
|
|
|
8.2.5.
|
Liquidations, Mergers, Consolidations, Acquisitions.
|
68
|
|
|
|
|
8.2.6.
|
Dispositions of Assets or Subsidiaries.
|
|
69
|
|
|
|
|
8.2.7.
|
Affiliate Transactions.
|
|
70
|
|
|
|
|
8.2.8.
|
Subsidiaries as Guarantors.
|
|
70
|
|
|
|
|
8.2.9.
|
Continuation of or Change in Business; Joint Ventures.
|
71
|
|
|
|
|
8.2.10.
|
Plans and Benefit Arrangements.
|
|
71
|
|
|
|
|
8.2.11.
|
Fiscal Year.
|
|
71
|
|
|
|
|
8.2.12.
|
Maximum Leverage Ratio.
|
|
71
|
|
|
|
|
|
|
|
|
TABLE OF CONTENTS
Section
Page
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8.2.13.
|
[Intentionally Omitted].
|
71
|
|
|
|
|
8.2.14.
|
No Limitation on Dividends and Distributions by Borrower or its Subsidiaries.
|
71
|
|
|
|
|
8.2.15.
|
Payment of Dividends; Redemptions.
|
|
71
|
|
|
|
|
8.2.16.
|
No Modification of Hedging Contract Policies.
|
|
72
|
|
|
|
|
8.2.17.
|
Off-Balance Sheet Financing.
|
|
72
|
|
|
|
|
8.2.18.
|
[Intentionally Omitted].
|
|
72
|
|
|
|
|
8.2.19.
|
No Violation of Anti-Terrorism Laws.
|
|
72
|
|
|
|
8.3
|
|
Reporting Requirements.
|
73
|
|
|
|
|
8.3.1.
|
Quarterly Financial Statements.
|
|
73
|
|
|
|
|
8.3.2.
|
Annual Financial Statements.
|
|
73
|
|
|
|
|
8.3.3.
|
Certificate of the Borrower.
|
|
74
|
|
|
|
|
8.3.4.
|
Notice of Default.
|
|
74
|
|
|
|
|
8.3.5.
|
Notice of Litigation.
|
|
74
|
|
|
|
|
8.3.6.
|
Notice of Change in Debt Rating.
|
|
74
|
|
|
|
|
8.3.7.
|
Sale of Assets.
|
|
74
|
|
|
|
|
8.3.8.
|
Budgets, Forecasts, Other Reports and Information.
|
75
|
|
|
|
|
8.3.9.
|
Notices Regarding Plans and Benefit Arrangements.
|
75
|
|
|
|
|
8.3.10.
|
Other Information.
|
|
77
|
|
|
|
|
|
|
|
|
|
9
|
|
DEFAULT
|
77
|
|
|
|
9.1
|
|
Events of Default.
|
77
|
|
|
|
|
9.1.1.
|
Payments Under Loan Documents.
|
|
77
|
|
|
|
|
9.1.2.
|
Breach of Warranty.
|
|
77
|
|
|
|
|
9.1.3.
|
Breach of Negative Covenants or Visitation Rights.
|
77
|
|
|
|
|
9.1.4.
|
Breach of Other Covenants.
|
|
77
|
|
|
|
|
9.1.5.
|
Defaults in Other Agreements or Indebtedness.
|
|
78
|
|
|
|
|
9.1.6.
|
Final Judgments or Orders.
|
|
78
|
|
|
|
|
9.1.7.
|
Loan Document Unenforceable.
|
|
78
|
|
|
|
|
9.1.8.
|
Uninsured Losses; Proceedings Against Assets.
|
|
78
|
|
|
|
|
9.1.9.
|
Notice of Lien or Assessment.
|
|
79
|
|
|
|
|
9.1.10.
|
Insolvency.
|
|
79
|
|
|
|
|
9.1.11.
|
Events Relating to Plans and Benefit Arrangements.
|
79
|
|
|
|
|
9.1.12.
|
Cessation of Business.
|
|
79
|
|
|
|
|
9.1.13.
|
Change of Control.
|
|
80
|
|
|
|
|
9.1.14.
|
Involuntary Proceedings.
|
|
80
|
|
|
|
|
9.1.15.
|
Voluntary Proceedings.
|
|
80
|
|
|
|
9.2
|
|
Consequences of Event of Default.
|
80
|
|
|
|
|
9.2.1.
|
Events of Default Other Than Bankruptcy, Insolvency or Reorganization Proceedings.
|
80
|
|
|
|
|
9.2.2.
|
Bankruptcy, Insolvency or Reorganization Proceedings.
|
81
|
|
|
|
|
9.2.3.
|
Set-off.
|
|
81
|
|
|
|
|
|
|
|
|
TABLE OF CONTENTS
Section
Page
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9.2.4.
|
Suits, Actions, Proceedings.
|
|
82
|
|
|
|
|
9.2.5.
|
Application of Proceeds; Collateral Sharing.
|
|
82
|
|
|
|
|
9.2.6.
|
Other Rights and Remedies.
|
|
83
|
|
|
|
|
|
|
|
|
|
10
|
|
THE AGENT
|
|
83
|
|
|
|
10.1
|
|
Appointment and Authority.
|
83
|
|
|
|
10.2
|
|
Rights as a Lender.
|
83
|
|
|
|
10.3
|
|
Exculpatory Provisions.
|
83
|
|
|
|
10.4
|
|
Reliance by Agent.
|
84
|
|
|
|
10.5
|
|
Delegation of Duties.
|
84
|
|
|
|
10.6
|
|
Resignation of Agent.
|
85
|
|
|
|
10.7
|
|
Non-Reliance on Agent and Other Lenders.
|
86
|
|
|
|
10.8
|
|
No Other Duties, etc.
|
86
|
|
|
|
10.9
|
|
The Agent's Fees.
|
86
|
|
|
|
10.10
|
|
No Reliance on Agent's Customer Identification Program.
|
86
|
|
|
|
10.11
|
|
Calculations.
|
86
|
|
|
|
10.12
|
|
Beneficiaries.
|
87
|
|
|
|
|
|
|
|
|
|
11
|
|
MISCELLANEOUS
|
87
|
|
|
|
11.1
|
|
Modifications, Amendments or Waivers.
|
87
|
|
|
|
|
11.1.1.
|
Increase of Revolving Credit Commitments; Extension of Expiration Date.
|
87
|
|
|
|
|
11.1.2.
|
Release of Collateral or Guarantor.
|
|
88
|
|
|
|
|
11.1.3.
|
Miscellaneous.
|
|
88
|
|
|
|
11.2
|
|
No Implied Waivers; Cumulative Remedies; Writing Required.
|
88
|
|
|
|
11.3
|
|
Expenses; Indemnity; Damage Waiver.
|
89
|
|
|
|
|
11.3.1.
|
Costs and Expenses.
|
|
89
|
|
|
|
|
11.3.2.
|
Indemnification by the Borrower.
|
|
89
|
|
|
|
|
11.3.3.
|
Reimbursement by Lenders.
|
|
90
|
|
|
|
|
11.3.4.
|
Waiver of Consequential Damages, Etc.
|
|
90
|
|
|
|
|
11.3.5.
|
Payments.
|
|
90
|
|
|
|
11.4
|
|
Holidays.
|
90
|
|
|
|
11.5
|
|
Funding by Branch, Subsidiary or Affiliate.
|
91
|
|
|
|
|
11.5.1.
|
Notional Funding.
|
|
91
|
|
|
|
|
11.5.2.
|
Actual Funding.
|
|
91
|
|
|
|
11.6
|
|
Notices; Lending Offices.
|
91
|
|
|
|
11.7
|
|
Severability.
|
92
|
|
|
|
11.8
|
|
Governing Law.
|
92
|
|
|
|
11.9
|
|
Prior Understanding.
|
93
|
|
|
|
11.10
|
|
Duration; Survival.
|
93
|
|
|
|
11.11
|
|
Successors and Assigns; Joinder of a Lender.
|
93
|
|
|
|
11.12
|
|
Confidentiality.
|
95
|
|
|
|
|
|
|
|
|
TABLE OF CONTENTS
Section
Page
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11.12.1.
|
General.
|
|
95
|
|
|
|
|
11.12.2.
|
Sharing Information With Affiliates of the Lenders.
|
95
|
|
|
|
11.13
|
|
Counterparts.
|
95
|
|
|
|
11.14
|
|
The Agent's or the Lenders' Consent.
|
95
|
|
|
|
11.15
|
|
Exceptions.
|
96
|
|
|
|
11.16
|
|
WAIVER OF JURY TRIAL.
|
96
|
|
|
|
11.17
|
|
JURISDICTION AND VENUE.
|
96
|
|
|
|
11.18
|
|
USA Patriot Act Notice.
|
97
|
|
|
|
|
|
|
|
|
LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
|
|
|
|
SCHEDULE 1.1(A)
|
- PRICING GRID
|
|
|
|
|
SCHEDULE 1.1(B)
|
- COMMITMENTS OF LENDERS AND ADDRESSES FOR NOTICES
|
|
|
|
|
SCHEDULE 1.1(P)
|
- PERMITTED LIENS
|
|
|
|
|
SCHEDULE 2.9.1
|
- EXISTING LETTERS OF CREDIT
|
|
|
|
|
SCHEDULE 6.1.2
|
- SUBSIDIARIES
|
|
|
|
|
SCHEDULE 6.1.12
|
- CONSENTS AND APPROVALS
|
|
|
|
|
SCHEDULE 6.1.23
|
- HEDGING CONTRACT POLICIES
|
|
|
|
|
SCHEDULE 6.1.24
|
PERMITTED BUSINESS OPPORTUNITIES
|
|
|
|
|
SCHEDULE 8.2.1
|
- EXISTING INDEBTEDNESS
|
EXHIBITS
|
|
|
|
EXHIBIT 1.1(A)
|
- ASSIGNMENT AND ASSUMPTION AGREEMENT
|
|
|
|
|
EXHIBIT 1.1(B)
|
- LENDER JOINDER
|
|
|
|
|
EXHIBIT 1.1(R)
|
- REVOLVING CREDIT NOTE
|
|
|
|
|
EXHIBIT 1.1(S)
|
- SWING LOAN NOTE
|
|
|
|
|
EXHIBIT 2.4
|
- LOAN REQUEST
|
|
|
|
|
EXHIBIT 2.5
|
- SWING LOAN REQUEST
|
|
|
|
|
EXHIBIT 5.5
|
- COMMITMENT REDUCTION NOTICE
|
|
|
|
|
EXHIBIT 7.1.3(A)
|
- OPINION OF COUNSEL
|
|
|
|
|
EXHIBIT 7.1.3(B)
|
- OPINION OF IN-HOUSE COUNSEL
|
|
|
|
|
EXHIBIT 8.2.5
|
- ACQUISITION COMPLIANCE CERTIFICATE
|
|
|
|
|
EXHIBIT 8.3.3
|
- COMPLIANCE CERTIFICATE
|
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is dated as of August 24, 2011, and is made by and among
NEW JERSEY NATURAL GAS COMPANY
, a New Jersey corporation, the
LENDERS
(as hereinafter defined),
JP MORGAN CHASE BANK, N.A.
, in its capacity as a syndication agent,
U.S.
BANK NATIONAL ASSOCIATION,
TD BANK, N.A.
, and
Wells Fargo Bank, NATIONAL ASSOCIATION,
each in its capacity as a documentation agent, and
PNC BANK, NATIONAL ASSOCIATION
, in its capacity as administrative agent for the Lenders under this Agreement.
BACKGROUND
WHEREAS
, the Borrower, the Agent, and certain other Persons are parties to a $200,000,000.00 Credit Agreement, subject to increase as provided therein, dated as of December 11, 2009 ( the "
Existing Agreement
"), whereby the lenders thereunder have provided the Borrower with a revolving credit facility on the terms and conditions therein contained; and
WHEREAS
, the Borrower has requested that the Lenders provide a new revolving credit facility to the Borrower in an aggregate principal amount not to exceed $200,000,000.00, subject to increase as provided herein; and
WHEREAS
, the new revolving credit facility shall be used for refinancing all indebtedness under the Existing Agreement and general corporate purposes of the Borrower; and
WHEREAS
, the Lenders are willing to provide such new revolving credit facility upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, the parties hereto, in consideration of their mutual covenants and agreements hereinafter set forth and intending to be legally bound hereby, covenant and agree as follows:
1.
CERTAIN DEFINITIONS
1.1
Certain Definitions
.
In addition to words and terms defined elsewhere in this Agreement, the following words and terms shall have the following meanings, respectively, unless the context hereof clearly requires otherwise:
Acquired Person
means a Person or business acquired by the Borrower or any Subsidiary of the Borrower in a transaction which is a Permitted Acquisition.
Acquisition Compliance Certificate
has the meaning assigned to that term in
Section 8.2.5
[Liquidations, Mergers, Consolidations, Acquisitions].
Additional Lender
has the meaning assigned to such term in
Section 11.11(d)
.
Affiliate
as to any Person means any other Person (a) which directly or indirectly controls, is controlled by, or is under common control with such Person, (b) which beneficially owns or holds 10% or more of any class of the voting or other equity interests of such Person, or (c) 10% or more of any class of voting interests or other equity interests of which is beneficially owned or held, directly or indirectly, by such Person. Control, as used in this definition, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise, including the power to elect a majority of the directors or trustees of a corporation or trust, as the case may be.
Agent
means PNC Bank, National Association, in its capacity as administrative agent as described herein, and its successors and assigns.
Agent's Fees
has the meaning assigned to such term in
Section 10.9
[Agent's Fees].
Agent's Letter
has the meaning assigned to such term in
Section 10.9
[Agent's Fees].
Agreement
means this Credit Agreement, as the same may be supplemented or amended from time to time, including all schedules and exhibits.
Anti-Terrorism Laws
means any Laws relating to terrorism or money laundering, including Executive Order No. 13224, the USA Patriot Act, the Laws comprising or implementing the Bank Secrecy Act, and the Laws administered by the United States Treasury Department's Office of Foreign Asset Control (as any of the foregoing Laws may from time to time be amended, renewed, extended, or replaced).
Applicable Commitment Fee Rate
means the percentage rate per annum at the indicated level of Debt Rating in the pricing grid on
Schedule 1.1(A)
below the heading "Commitment Fee." The Applicable Commitment Fee Rate shall be computed in accordance with the parameters set forth on
Schedule 1.1(A)
,
provided
however
that if the Borrower's Debt Rating is determined by Fitch, Inc. or any other nationally recognized statistical agency pursuant to the definition of "Debt Rating" hereunder, the second column (Debt Rating Standard & Poor's and Moody's) of the pricing grid set forth on
Schedule 1.1(A)
shall be modified by the Agent upon written notice to the Borrower to reflect such replacement of Moody's or Standard & Poor's as the applicable rating agencies hereunder and to replace the Debt Rating Levels with the corresponding levels of Fitch or such other nationally recognized statistical agency.
Applicable Letter of Credit Fee Rate
means the percentage rate per annum at the indicated level of Debt Rating in the pricing grid on
Schedule 1.1(A)
below the heading "Letter of Credit Fee." The Applicable Letter of Credit Fee Rate shall be computed in accordance with the parameters set forth on
Schedule 1.1(A)
,
provided
however
that if the Borrower's Debt Rating is determined by Fitch, Inc. or any other nationally recognized statistical agency pursuant to the definition of "Debt Rating" hereunder, the second column (Debt Rating Standard & Poor's and Moody's) of the pricing grid set forth on
Schedule 1.1(A)
shall be modified by the
Agent upon written notice to the Borrower to reflect such replacement of Moody's or Standard & Poor's as theapplicable rating agencies hereunder and to replace the Debt Rating Levels with the corresponding levels of Fitch or such other nationally recognized statistical agency.
Applicable Margin
means, as applicable:
(a) the percentage spread to be added to the Base Rate under the Base Rate Option at the indicated level of Debt Rating in the pricing grid on
Schedule 1.1(A)
below the heading "Base Rate Spread," as the same may be modified in accordance with the terms hereof, or(b) the percentage spread to be added to the LIBOR Rate under the LIBOR Rate Option at the indicated level of Debt Rating in the pricing grid on
Schedule 1.1(A)
below the heading "LIBOR Rate Spread," as the same may be modified in accordance with the terms hereof,
The Applicable Margin shall be computed in accordance with the parameters set forth on
Schedule 1.1(A)
;
provided
,
however
that if the Borrower's Debt Rating is determined by Fitch, Inc. or any other nationally recognized statistical agency, pursuant hereto, the second column (Debt Rating Standard & Poor's and Moody's) of the Applicable Margin pricing grid contained in
Schedule 1.1(A)
shall be modified by the Agent upon written notice to the Borrower to reflect such replacement of Moody's or Standard & Poor's as the applicable rating agencies hereunder and to replace the Debt Rating Levels with the corresponding levels of Fitch or such other nationally recognized statistical agency.
Approved Fund
means any fund that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender, or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
Assignment and Assumption Agreement
means an Assignment and Assumption Agreement by and among a Purchasing Lender, a Transferor Lender and the Agent, as Agent and on behalf of the remaining Lenders, substantially in the form of
Exhibit 1.1(A)
.
Authorized Officer
means those individuals, designated by written notice to the Agent from the Borrower, authorized to execute notices, reports and other documents on behalf of the Borrower required hereunder. The Borrower may amend such list of individuals from time to time by giving written notice of such amendment to the Agent.
Base Rate
means the greatest of (a) the interest rate per annum announced from time to time by the Agent at its Principal Office as its then prime rate, which rate may not be the lowest rate then being charged commercial borrowers by the Agent, (b) the Federal Funds Open Rate plus 1/2% per annum, and (c) the Daily LIBOR Rate plus 1.00%.
Base Rate Option
means the option of the Borrower to have Revolving Credit Loans bear interest at the rate and under the terms and conditions set forth in
Section 4.1.1(a)
[Base Rate Option].
Benefit Arrangement
means an "employee benefit plan," within the meaning of Section 3(3) of ERISA, which is neither a Plan, a Multiple Employer Plan, nor a Multiemployer Plan and which is maintained, sponsored or otherwise contributed to by any member of the ERISA Group.
Blocked Person
has the meaning assigned to such term in
Section 6.1.25
[Anti-Terrorism Laws; Executive Order No. 13224].
Borrower
means New Jersey Natural Gas Company, a corporation organized and existing under the laws of the State of New Jersey.
Borrowing Date
means, with respect to any Loan, the date for the making thereof or the renewal or conversion thereof at or to the same or a different Interest Rate Option, which shall be a Business Day.
Borrowing Tranche
means specified portions of Loans outstanding as follows: (a) any Loans to which a LIBOR Rate Option applies which become subject to the same Interest Rate Option under the same Loan Request by the Borrower and which have the same Interest Period shall constitute one Borrowing Tranche, and (b) all Loans to which a Base Rate Option applies shall constitute one Borrowing Tranche.
Business Day
means any day other than a Saturday or Sunday or a legal holiday on which commercial banks are authorized or required to be closed for business in Pittsburgh, Pennsylvania and if the applicable Business Day relates to any Loan to which the LIBOR Rate Option applies, such day must also be a day on which dealings are carried on in the London interbank market.
Change in Law
means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any Law, (b) any change in any Law or in the administration, interpretation, implementation or application thereof by any Official Body or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of Law) by any Official Body;
provided
that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, regulations, guidelines, interpretations or directives thereunder or issued in connection therewith (whether or not having the force of Law) and (y) all requests, rules, regulations, guidelines, interpretations or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities (whether or not having the force of Law), in each case pursuant to Basel III, shall in each case be deemed to be a Change in Law regardless of the date enacted, adopted, issued, promulgated or implemented.
CIP Regulations
has the meaning given to such term in
Section 10.11
[No Reliance in the Agent's Customer Identification Program].
Closing Date
means the Business Day on which this Agreement is fully executed and becomes effective.
Collateral Agent
has the meaning given to such term in
Section 9.2.5.2
[Collateral Sharing].
Collateral Documents
has the meaning given to such term in
Section 9.2.5.2
[Collateral Sharing].
Commercial Letter of Credit
means any letter of credit which is issued in respect of the purchase of goods or services by the Borrower in the ordinary course of its business.
Commitment
means as to any Lender its Revolving Credit Commitment and, in the case of the Agent, its Swing Loan Commitment, and
Commitments
shall mean the aggregate of the Revolving Credit Commitments and Swing Loan Commitment of all of the Lenders.
Commitment Fee
has the meaning given to such term in
Section 2.3
[Commitment Fee].
Commitment Reduction Notice
has the meaning given to such term in
Section 5.5
[Voluntary Commitment Reductions].
Compliance Certificate
has the meaning assigned to such term in
Section 8.3.3
[Certificate of the Borrower].
Consolidated Shareholders' Equity
means as of any date of determination the sum of the amounts under the headings "Common Shareholders' Equity" and "Preferred Shareholders' Equity" on the balance sheet, prepared in accordance with GAAP, for the Borrower and its Subsidiaries on a consolidated basis as of such date of determination.
Consolidated Total Capitalization
means as of any date of determination the sum of (a) Consolidated Total Indebtedness, plus (b) Consolidated Shareholders' Equity.
Consolidated Total Indebtedness
means as of any date of determination total Indebtedness, without duplication, of the Borrower and its Subsidiaries.
Contamination
means the presence or release or threat of release of Regulated Substances in, on, under or emanating to or from the Property, which pursuant to Environmental Laws requires notification or reporting to an Official Body, or which pursuant to Environmental Laws requires the performance of a Remedial Action or which otherwise constitutes a violation of Environmental Laws.
Daily LIBOR Rate
means for any day, the rate per annum determined by the Agent by dividing (a) the Published Rate by (b) a number equal to 1.00 minus the LIBOR Rate Reserve Percentage on such day.
Debt Rating
means the rating of the Borrower's senior secured long-term debt by each of Standard & Poor's and Moody's;
provided
,
however
, at the option of the Borrower from time to time and
with the consent of the Agent which will not be unreasonably withheld or delayed, either or both Standard & Poor's and Moody's shall be replaced by Fitch, Inc. or any other nationally recognized statistical rating agency that is then rating the Borrower's senior secured Indebtedness.
Defaulting Lender
means any Lender that (a) has failed, within two Business Days of the date required to be funded or paid, to (i) fund any portion of its Loans, (ii) fund any portion of its participations in Letters of Credit or Swing Loans or (iii) pay over to the Agent, the Issuing Lender, PNC Bank (as the Lender of Swing Loans) or any Lender any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Lender notifies the Agent in writing that such failure is the result of such Lender’s good faith determination that a condition precedent to funding (specifically identified and including the particular default, if any) has not been satisfied, (b) has notified the Borrower or the Agent in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender’s good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within two Business Days after request by the Agent, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations) to fund prospective Loans and participations in then outstanding Letters of Credit and Swing Loans under this Agreement, provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon the Agent's receipt of such certification in form and substance satisfactory to the Agent, (d) has become the subject of a Bankruptcy Event or (e) has failed at any time to comply with the provisions of this Agreement with respect to purchasing participation interests in Obligations from the other Lenders, whereby such Lender's share of any payment received, whether by setoff or otherwise, is in excess of its Ratable Share of such payments due and payable to all of the Lenders.
As used in this definition and in
Section 2.12
[Defaulting Lenders], the term "Bankruptcy Event" means, with respect to any Person, such Person or such Person's direct or indirect parent company becomes the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it, or, in the good faith determination of the Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment, provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person or such Person's direct or indirect parent company by a Official Body or instrumentality thereof if, and only if, such ownership interest does not result in or provide such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such Official Body or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.
Dollar, Dollars, U.S. Dollars
and the symbol
$
means lawful money of the United States of America.
Drawing Date
has the meaning assigned to such term in
Section 2.9.3.2
.
Environmental Complaint
means any (a) written notice of non-compliance or violation, citation or order relating in any way to any Environmental Law, Environmental Permit, Contamination or Regulated Substance; (b) civil, criminal, administrative or regulatory investigation instituted by an Official Body relating in any way to any Environmental Law, Environmental Permit, Contamination or Regulated Substance; (c) administrative, regulatory or judicial action, suit, claim or proceeding instituted by any Person or Official Body or any other written notice of liability or potential liability from any Person or Official Body, in either instance, relating to or setting forth allegations or a cause of action for personal injury (including but not limited to death), property damage, natural resource damage, contribution or indemnity for the costs associated with the performance of Remedial Actions, direct recovery for the costs associated with the performance of Remedial Actions, liens or encumbrances attached to or recorded or levied against property for the costs associated with the performance of Remedial Actions, civil or administrative penalties, criminal fines or penalties or declaratory or equitable relief arising under any Environmental Laws; or (d) subpoena, request for information or other written notice or demand of any type issued by an Official Body pursuant to any Environmental Laws.
Environmental Laws
means all federal, state, local and foreign Laws (including, but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §§ 9601 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq., the Hazardous Materials Transportation Act, 49 U.S.C. § 1801 et seq., the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq., the Federal Water Pollution Control Act, 33 U.S.C. §§ 1251 et seq., the Federal Safe Drinking Water Act, 42 U.S.C. §§ 300f-300j, the Federal Air Pollution Control Act, 42 U.S.C. § 7401 et seq., the Oil Pollution Act, 33 U.S.C. § 2701 et seq., the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. §§ 136 to 136y, the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq., each as amended, and any regulations promulgated or any equivalent state or local Law, and any amendments thereto) and any final, non-appealable consent decrees, consent orders, consent agreements, settlement agreements, judgments or orders, or binding directives, policies or programs, issued by or entered into with an Official Body pertaining or relating to: (a) pollution or pollution control; (b) protection of human health from exposure to Regulated Substances; (c) protection of the environment and/or natural resources; (d) protection of employee safety in the workplace and protection of employees from exposure to Regulated Substances in the workplace (but excluding workers compensation and wage and hour Laws); (e) the presence, use, management, generation, manufacture, processing, extraction, treatment, recycling, refining, reclamation, labeling, sale, transport, storage, collection, distribution, disposal or release or threat of release of Regulated Substances; (f) the presence of Contamination; (g) the protection of endangered or threatened species; and (h) the protection of Environmentally Sensitive Areas.
Environmental Permits
means all permits, licenses, bonds or other forms of financial assurances, consents, registrations, identification numbers, approvals or authorizations required under Environmental Laws (a) to own, occupy or maintain the Property; (b) for the operations and business activities of the Borrower and any of its Subsidiaries; or (c) for the performance of a Remedial Action.
Environmentally Sensitive Area
means (a) any wetland as defined by applicable Environmental Laws; (b) any area designated as a coastal zone pursuant to applicable Laws, including Environmental Laws; (c) any area of historic or archeological significance or scenic area as defined or designated by applicable Laws, including Environmental Laws; (d) habitats of endangered species or threatened species as designated by applicable Laws, including Environmental Laws; or (e) a floodplain or other flood hazard area as defined pursuant to any applicable Laws.
ERISA
means the Employee Retirement Income Security Act of 1974, as the same may be amended or supplemented from time to time, and any successor statute of similar import, and the rules and regulations thereunder, as from time to time in effect.
ERISA Group
means the Borrower and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control and all other entities which, together with the Borrower, are treated as a single employer under Section 414 of the Internal Revenue Code.
Event of Default
shall mean any of the events described in
Section 9.1
[Events of Default] and referred to therein as an "Event of Default."
Excluded Taxes
means, with respect to the Agent, any Lender, the Issuing Lender or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) taxes imposed on or measured by its overall net income (however denominated), and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the Laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which the Borrower is located and (c) in the case of a Foreign Lender, any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party hereto (or designates a new lending office) or is attributable to such Foreign Lender's failure or inability (other than as a result of a Change in Law) to comply with
Section 5.8.5
[Status of Lenders], except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to
Section 5.8.1
[Payments Free of Taxes].
Executive Order No. 13224
means the Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.
Existing Agreement
has the meaning given to such term in the Background section hereof.
Existing Letters of Credit
has the meaning assigned to such term in
Section 2.9.1
[Issuance of Letters of Credit].
Expiration Date
means, with respect to the Revolving Credit Commitments, August 24, 2014.
Federal Funds Effective Rate
for any day means the rate per annum (based on a year of 360 days and actual days elapsed and rounded upward to the nearest 1/100 of 1%) announced by the Federal Reserve Bank of New York (or any successor) on such day as being the weighted average of the rates on overnight federal funds transactions arranged by federal funds brokers on the previous trading day, as computed and announced by such Federal Reserve Bank (or any successor) in substantially the same manner as such Federal Reserve Bank computes and announces the weighted average it refers to as the "Federal Funds Effective Rate" as of the date of this Agreement;
provided
, if such Federal Reserve Bank (or its successor) does not announce such rate on any day, the "Federal Funds Effective Rate" for such day shall be the Federal Funds Effective Rate for the last day on which such rate was announced.
Federal Funds Open Rate
for any day means the rate per annum (based on a year of 360 days and actual days elapsed) which is the daily federal funds open rate as quoted by ICAP North America, Inc. (or any successor) as set forth on the Bloomberg Screen BTMM for that day opposite the caption "OPEN" (or on such other substitute Bloomberg Screen that displays such rate), or as set forth on such other recognized electronic source used for the purpose of displaying such rate as selected by the Agent (for purposes of this definition, an "
Alternate Source
") (or if such rate for such day does not appear on the Bloomberg Screen BTMM (or any substitute screen) or on any Alternate Source, or if there shall at any time, for any reason, no longer exist a Bloomberg Screen BTMM (or any substitute screen) or any Alternate Source, a comparable replacement rate determined by the Agent at such time (which determination shall be conclusive absent manifest error); provided however, that if such day is not a Business Day, the Federal Funds Open Rate for such day shall be the "open" rate on the immediately preceding Business Day. If and when the Federal Funds Open Rate changes, the rate of interest with respect to any advance to which the Federal Funds Open Rate applies will change automatically without notice to the Borrower, effective on the date of any such change.
First Mortgage Bonds
means the secured Indebtedness issued by the Borrower pursuant to the First Mortgage Indenture in an aggregate principal amount of $269,845,000 plus interest at such rates and maturing on such dates as are more particularly described in
Schedule 8.2.1
hereto.
First Mortgage Indenture
means that certain Indenture of Mortgage and Deed of Trust dated April 1, 1952 from the Borrower to BNY Midwest Trust Company, as successor to Harris Trust and Savings Bank, Trustee, as heretofore or hereafter amended, modified and supplemented from time to time.
Foreign Lender
means any Lender that is organized under the Laws of a jurisdiction other than that in which the Borrower is resident for tax purposes. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.
GAAP
means generally accepted accounting principles as are in effect in the United States from time to time, subject to the provisions of
Section 1.3
[Accounting Principles; Changes in GAAP], and applied on a consistent basis both as to classification of items and amounts.
Guaranty
of any Person means any obligation of such Person guaranteeing or in effect guaranteeing any liability or obligation of any other Person in any manner, whether directly or indirectly, including any agreement to indemnify or hold harmless any other Person, any performance bond or other suretyship arrangement and any other form of assurance against loss, except endorsement of negotiable or other instruments for deposit or collection in the ordinary course of business.
Hedging Contract Policies
means the written internal policies and procedures of the Borrower with respect to hedging or trading of gas contracts or other commodity, hedging contracts of any kind, or any derivatives or other similar financial instruments, as in effect on the date of this Agreement and as hereafter amended in accordance with
Section 8.2.16
[No Modification of Hedging Contract Policies], a copy of which has been delivered to the Agent and each Lender.
Hedging Transaction
means any transaction entered into by the Borrower or any of its Subsidiaries in accordance with the Hedging Contract Policies.
Historical Statements
has the meaning assigned to such term in
Section 6.1.8(a)
[Historical Statements].
Hybrid Security
means any of the following: (a) beneficial interests issued by a trust which constitutes a Subsidiary of the Borrower, substantially all of the assets of which trust are unsecured Indebtedness of the Borrower or any Subsidiary of the Borrower or proceeds thereof, and all payments of which Indebtedness are required to be, and are, distributed to the holders of beneficial interests in such trust promptly after receipt by such trust, or (b) any shares of capital stock or other equity interest that, other than solely at the option of the issuer thereof, by their terms (or by the terms of any security into which they are convertible or exchangeable) are, or upon the happening of an event or the passage of time would be, required to be redeemed or repurchased, in whole or in part, or have, or upon the happening of an event or the passage of time would have, a redemption or similar payment.
Inactive Subsidiary
means, at any time, any Subsidiary of any Person, which Subsidiary (a) does not conduct any business or have operations, and (b) does not have total assets with a net book value, as of any date of determination, in excess of $100,000.00.
Indebtedness
means, as to any Person at any time, any and all indebtedness, obligations or liabilities (whether matured or unmatured, liquidated or unliquidated, direct or indirect, absolute or contingent, or joint or several) of such Person for or in respect of: (a) borrowed money, (b) amounts raised under or liabilities in respect of any note purchase or acceptance credit facility, (c) reimbursement obligations (contingent or otherwise) under any letter of credit, currency swap agreement, interest rate swap, cap, collar or floor agreement or other interest rate or currency exchange rate management device, (d) any other transaction (including forward sale or purchase agreements, capitalized leases and conditional sales agreements) having the commercial effect of a borrowing of money entered into by such Person to finance its operations or capital requirements (but not including trade payables and accrued expenses incurred in the ordinary course of business which are not represented by a promissory note or other evidence of indebtedness and which are not more than sixty (60) days past due), (e) without duplication, any Hedging Transaction, to
the extent that any indebtedness, obligations or liabilities of such Person in respect thereof constitutes "indebtedness" as determined in accordance with GAAP, (f) any Guaranty of any Hedging Transaction described in the immediately preceding clause (e), (g) any Guaranty of Indebtedness, (h) any Hybrid Security described in clause (a) of the definition of Hybrid Security, or (i) the mandatory repayment obligation of the issuer of any Hybrid Security described in clause (b) of the definition of Hybrid Security.
Indemnified Taxes
shall mean Taxes other than Excluded Taxes.
Insolvency Proceeding
means, with respect to any Person, (a) a case, action or proceeding with respect to such Person (i) before any court or any other Official Body under any bankruptcy, insolvency, reorganization or other similar Law now or hereafter in effect, or (ii) for the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator (or similar official) of such Person or otherwise relating to the liquidation, dissolution, winding-up or relief of such Person, or (b) any general assignment for the benefit of creditors, composition, marshaling of assets for creditors, or other, similar arrangement in respect of such Person's creditors generally or any substantial portion of its creditors; undertaken under any Law.
Interest Period
means the period of time selected by the Borrower in connection with (and to apply to) any election permitted hereunder by the Borrower to have Revolving Credit Loans bear interest under the LIBOR Rate Option. Subject to the last sentence of this definition, such period shall be one, two, three or six Months, and solely with approval of the Agent a shorter period. Such Interest Period shall commence on the effective date of such Interest Rate Option, which shall be (a) the Borrowing Date if the Borrower is requesting new Loans, or (b) the date of renewal of or conversion to the LIBOR Rate Option if the Borrower is renewing or converting to the LIBOR Rate Option applicable to outstanding Loans. Notwithstanding the second sentence hereof: (i) any Interest Period which would otherwise end on a date which is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, and (ii) the Borrower shall not select, convert to or renew an Interest Period for any portion of the Loans that would end after the Expiration Date.
Interest Rate Hedge
means an interest rate exchange, collar, cap, swap, adjustable strike cap, adjustable strike corridor or similar agreements entered into by the Borrower or its Subsidiaries in order to provide protection to, or minimize the impact upon, the Borrower and/or its Subsidiaries of increasing floating rates of interest applicable to Indebtedness.
Interest Rate Option
means any LIBOR Rate Option or Base Rate Option.
Internal Revenue Code
means the Internal Revenue Code of 1986, as the same may be amended or supplemented from time to time, and any successor statute of similar import, and the rules and regulations thereunder, as from time to time in effect.
Investment
has the meaning assigned to such term in
Section 8.2.4
[Loans and Investments].
ISP 98
has the meaning given to such term in
Section 11.8
[Governing Law].
IRH Provider
has the meaning assigned to such term in
Section 9.2.5.2
[Collateral Sharing].
Issuing Lender
has the meaning assigned to such term in
Section 10.6
[Resignation of the Agent].
Labor Contracts
means all collective bargaining agreements among the Borrower or any Subsidiary of the Borrower and unions representing employees of the Borrower or any Subsidiary of the Borrower.
Law
means any law (including common law), constitution, statute, treaty, regulation, rule, ordinance, binding opinion, release, ruling, order, injunction, writ, decree, bond, judgment, authorization or approval, lien or award of or settlement agreement with any Official Body.
Lender Joinder
means a Lender Joinder substantially in the form of
Exhibit 1.1(B)
.
Lender Provided Interest Rate Hedge
means an Interest Rate Hedge which is provided by any Lender or an Affiliate of a Lender and that meets the following requirements: such Interest Rate Hedge (a) is documented in a standard International Swap Dealer Association Agreement, and (b) provides for the method of calculating the reimbursable amount of the provider's credit exposure in a reasonable and customary manner. The liabilities of the Borrower to the provider of any Lender Provided Interest Rate Hedge shall be "Obligations" for the purposes of
Sections 5.2.2
[Sharing of Payments by Lenders],
5.8
[Taxes],
9.1
[Events of Default],
9.2
[Consequences of Event of Default],
11.3
[Expenses; Indemnity; Damage Waiver], and
11.10
[Duration; Survival], and shall have the benefits of the representations and warranties set forth in
Section 6
[Representations and Warranties], the covenants set forth in
Section 8
[Covenants] and any collateral security for the Obligations hereafter granted under the Loan Documents.
Lenders
means the financial institutions named on
Schedule 1.1(B)
, any Person that becomes a Lender pursuant to
Section 2.11
[Right to Increase Commitment], and their respective successors and assigns as permitted hereunder, each of which is referred to herein as a Lender.
Letter of Credit
has the meaning assigned to such term in
Section 2.9.1
[Issuance of Letters of Credit].
Letter of Credit Borrowing
has the meaning assigned to such term in
Section 2.9.3.4
.
Letter of Credit Fee
has the meaning assigned to such term in
Section 2.9.2
[Letter of Credit Fees].
Letter of Credit Obligation
means, as of any date of determination, the aggregate amount available to be drawn under all outstanding Letters of Credit on such date (if any Letter of Credit shall increase in amount automatically in the future, such aggregate amount available to be drawn shall currently give effect to any such future increase)
plus
the aggregate Reimbursement Obligations and Letter of Credit Borrowings on such date.
Letter of Credit Sublimit
means $20,000,000.00.
LIBOR Rate
means, with respect to the Loans comprising any Borrowing Tranche to which the LIBOR Rate Option applies for any Interest Period, the interest rate per annum determined by the Agent by dividing (the resulting quotient rounded upwards, if necessary, to the nearest 1/100th of 1% per annum) (a) the rate which appears on the Bloomberg Page BBAM1 (or on such other substitute Bloomberg page that displays rates at which US dollar deposits are offered by leading banks in the London interbank deposit market), or the rate which is quoted by another source selected by the Agent which has been approved by the British Bankers' Association as an authorized information vendor for the purpose of displaying rates at which US Dollar deposits are offered by leading banks in the London interbank deposit market (for purposes of this definition, an "
Alternate Source
"), at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period as the London interbank offered rate for U.S. Dollars for an amount having a borrowing date and a maturity comparable to such Interest Period (or if there shall at any time, for any reason, no longer exist a Bloomberg Page BBAM1 (or any substitute page) or any Alternate Source, a comparable replacement rate determined by the Agent at such time (which determination shall be conclusive absent manifest error)), by (b) a number equal to 1.00 minus the LIBOR Rate Reserve Percentage. LIBOR Rate may also be expressed by the following formula:
London interbank offered rate quoted by Bloomberg or appropriate successor as shown on
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LIBOR Rate =
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Bloomberg Page BBAM1
1.00 - LIBOR Rate Reserve Percentage
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The LIBOR Rate shall be adjusted with respect to any Loan to which the LIBOR Rate Option applies that is outstanding on the effective date of any change in the LIBOR Rate Reserve Percentage as of such effective date. The Agent shall give prompt notice to the Borrower of the LIBOR Rate as determined or adjusted in accordance herewith, which determination shall be conclusive absent manifest error.
LIBOR Rate Option
means the option of the Borrower to have Revolving Credit Loans bear interest at the rate and under the terms and conditions set forth in
Section 4.1.1(b)
[LIBOR Rate Option].
LIBOR Rate Reserve Percentage
means as of any day the maximum percentage in effect on such day as prescribed by the Board of Governors of the Federal Reserve System (or any successor)
for determining the reserve requirements (including supplemental, marginal and emergency reserve requirements) with respect to eurocurrency funding (currently referred to as "Eurocurrency Liabilities").
Lien
means any mortgage, deed of trust, pledge, lien, security interest, charge or other encumbrance or security arrangement of any nature whatsoever, whether voluntarily or involuntarily given, including any conditional sale or title retention arrangement, and any assignment, deposit arrangement or lease intended as, or having the effect of, security and any filed financing statement or other notice of any of the foregoing (whether or not a lien or other encumbrance is created or exists at the time of the filing).
LLC Interests
has the meaning given to such term in
Section 6.1.2
[Subsidiaries].
Loan Documents
means this Agreement, the Agent's Letter, the Notes, and any other instruments, certificates or documents delivered or contemplated to be delivered hereunder or thereunder or in connection herewith or therewith, as the same may be supplemented or amended from time to time in accordance herewith or therewith, and
Loan Document
shall mean any of the Loan Documents.
Loan Parties
means the Borrower, together with any future guarantors, pledgors or other obligors with respect to the Obligations.
Loan Request
means a request for a Revolving Credit Loan or a request to select, convert to or renew a Base Rate Option or LIBOR Rate Option with respect to an outstanding Revolving Credit Loan in accordance with
Sections 2.4
[Revolving Credit Loan Requests]
,
2.5
[Swing Loan Requests],
4.1
[Interest Rate Options] and
4.2
[Interest Periods].
Loans
means collectively and
Loan
means separately all Revolving Credit Loans and Swing Loans or any Revolving Credit Loan or Swing Loan.
Material Adverse Change
means any set of circumstances or events which (a) has or could reasonably be expected to have any material adverse effect whatsoever upon the validity or enforceability of this Agreement or any other Loan Document, (b) is or could reasonably be expected to be material and adverse to the business, properties, assets, financial condition, results of operations or prospects of the Borrower or the Borrower and its Subsidiaries taken as a whole, (c) impairs materially or could reasonably be expected to impair materially the ability of the Borrower or the Borrower and its Subsidiaries taken as a whole to duly and punctually pay the Indebtedness or otherwise perform the obligations in accordance with the Loan Documents, or (d) impairs materially or could reasonably be expected to impair materially the ability of the Agent or any of the Lenders, to the extent permitted, to enforce their legal remedies pursuant to this Agreement or any other Loan Document.
Month
, with respect to an Interest Period under the LIBOR Rate Option, means the interval between the days in consecutive calendar months numerically corresponding to the first day of such Interest Period. If any LIBOR Rate Interest Period begins on a day of a calendar month for which there is
no numerically corresponding day in the month in which such Interest Period is to end, the final month of such Interest Period shall be deemed to end on the last Business Day of such final month.
Moody's
means Moody's Investors Service, Inc. and its successors.
Multiemployer Plan
means any "employee benefit plan" within the meaning of Section 3(3) of ERISA, which is a "multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA and to which the Borrower or any member of the ERISA Group is then making or accruing an obligation to make contributions or, solely for the purposes of
Section 6.1.19
, within the preceding five Plan years, has made or had an obligation to make such contributions.
Multiple Employer Plan
means a Plan which has two or more contributing sponsors (at least one of which is the Borrower or any member of the ERISA Group) at least two of whom are not under common control, as such a plan is described in Sections 4063 and 4064 of ERISA.
NJNG Note Agreement
means the Note Purchase Agreement, dated May 15, 2004, between the Borrower and the purchasers listed therein, as the same may have been supplemented, amended, or modified prior to the date hereof, and as the same may hereafter be supplemented, amended, or modified from time to time as permitted by
Section 8.2.1(b)
.
NJNG Notes
means the unsecured Indebtedness issued by the Borrower pursuant to the NJNG Note Agreement in an aggregate principal amount of $60,000,000 plus interest at a rate of 4.77% per annum, which Indebtedness matures March 15, 2014.
Non-Consenting Lender
has the meaning assigned to such term in
Section 11.1
[Modifications, Amendments or Waivers].
Notes
means the Revolving Credit Notes and Swing Loan Note.
Notice
has the meaning assigned to such term in
Section 11.6
[Notices, Lending Offices].
Obligations
means any obligation or liability of the Borrower to the Agent or any of the Lenders, howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, now or hereafter existing, or due or to become due, under or in connection with this Agreement, any Notes,
the Letters of Credit, the Agent’s Letter or any other Loan Document. Obligations shall include, to the extent set forth in the definitions of "Lender Provided Interest Rate Hedge" and "Other Lender Provided Financial Service Product," the liabilities to any Lender (or any Affiliate thereof) under any Lender Provided Interest Rate Hedge and any Other Lender Provided Financial Service Product.
Official Body
means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies
such as the European Union or the European Central Bank) and any group or body charged with setting financial accounting or regulatory capital rules or standards (including, without limitation, the Financial Accounting Standards Board, the Bank for International Settlements or the Basel Committee on Banking Supervision or any successor or similar authority to any of the foregoing).
Order
has the meaning given to such term in
Section 2.9.9
[Liability for Acts and Omissions].
Other Lender Provided Financial Service Product
shall mean agreements or other arrangements under which any Lender or Affiliate of a Lender provides any of the following products or services to the Borrower: (a) credit cards, (b) credit card processing services, (c) debit cards, (d) purchase cards, (e) ACH transactions, (f) cash management, including controlled disbursement, accounts or services, or (g) foreign currency exchange. The liabilities of the Borrower to the provider of any Other Lender Provided Financial Service Product shall be "Obligations" for the purposes of
Sections 5.2.2
[Sharing of Payments by Lenders], and any collateral security for the Obligations hereafter granted under the Loan Documents.
Other Taxes
means all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.
Parent
means New Jersey Resources Corporation, a corporation organized and existing under the laws of the State of New Jersey, of which Borrower is a wholly owned Subsidiary.
Participation Advance
means, with respect to any Lender, such Lender's payment in respect of its participation in a Letter of Credit Borrowing according to its Ratable Share pursuant to
Section 2.9.3.4
.
Partnership Interests
has the meaning given to such term in
Section 6.1.2
[Subsidiaries].
PBGC
means the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA or any successor.
Permitted Acquisition
has the meaning assigned to such term in
Section 8.2.5
[Liquidations, Mergers, Consolidations, Acquisitions].
Permitted Investments
means:
(a) direct obligations of the United States of America or any agency or instrumentality thereof or obligations backed by the full faith and credit of the United States of America maturing in twelve (12) months or less from the date of acquisition;
(b) repurchase agreements having a duration of not more than sixty (60) days that are collateralized by full faith and credit obligations of the United States Government or obligations guaranteed by the United States Government and its agencies;
(c) interests in investment companies registered under the Investment Company Act of 1940, as amended (or in a separate portfolio of such an investment company), that invest primarily in full faith and credit obligations of the United States Government or obligations guaranteed by the United States Government and its agencies and repurchase agreements collateralized by such obligations;
(d) time deposits with any office located in the United States of the Lenders or any other bank or trust company which is organized under the laws of the United States and has combined capital, surplus and undivided profits of not less than $500,000,000.00 or with any bank which is organized other than under the laws of the United States (i) the commercial paper of which is rated at least A-1 by Standard & Poor's and P-1 by Moody's (or, if such commercial paper is rated only by Standard & Poor's, at least A-1 by Standard & Poor's, or if such commercial paper is rated only by Moody's, at least P-1 by Moody's) or (ii) the long term senior debt of which is rated at least AA by Standard & Poor's and Aa2 by Moody's (or, if such debt is rated only by Standard & Poor's, at least AA by Standard & Poor's, or if such debt is rated only by Moody's, at least Aa2 by Moody's);
(e) commercial paper having a maturity of not more than one year from the date of such investment and rated at least A-1 by Standard & Poor's and P-1 by Moody's (or, if such commercial paper is rated only by Standard & Poor's, at least A-1 by Standard & Poor's or, if such commercial paper is rated only by Moody's, at least P-1 by Moody's);
(f) instruments held for collection in the ordinary course of business;
(g) any equity or debt securities or other form of debt instrument obtained in settlement of debts previously contracted; and
(h) any Investment arising out of a Permitted Related Business Opportunity.
Permitted Liens
means:
(a) Liens for taxes, assessments, or similar charges, incurred in the ordinary course of business and which are not yet due and payable or are being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP are maintained on such Person's books, and which could not be reasonably expected to result in a Material Adverse Change;
(b) Pledges or deposits made in the ordinary course of business to secure payment of workers' compensation, or to participate in any fund in connection with workers' compensation, unemployment insurance, old-age pensions or other social security programs or retirement benefits legislation;
(c) Liens of mechanics, materialmen, warehousemen, carriers, or other like Liens, securing obligations incurred in the ordinary course of business that are not yet due and payable and Liens of landlords securing obligations to pay lease payments that are not yet due and payable or in default, or in either case are being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP are maintained on such Person's books and which could not be reasonably expected to result in a Material Adverse Change;
(d) Any Lien arising out of judgments or awards but only to the extent that the creation of any such Lien shall not be an event or condition which, with or without notice or lapse of time or both, would cause Borrower to be in violation of
Section 9.1.6
[Final Judgments or Orders];
(e) Security interests in favor of lessors of personal property, which property is the subject of a true lease;
(f) Good-faith pledges or deposits made in the ordinary course of business to secure performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases, not in excess of the aggregate amount due thereunder, or to secure statutory obligations, or surety, appeal, indemnity, performance or other similar bonds required in the ordinary course of business;
(g) Encumbrances consisting of zoning restrictions, easements, rights-of-way or other restrictions on the use of real property and minor defects to title to real property, none of which materially impairs the use of such property or the value thereof;
(h) Liens on property leased by the Borrower or any Subsidiary of the Borrower securing obligations of the Borrower or such Subsidiary to the lessor under such leases, so long as to the extent the payments or other amounts due and owing under any such lease constitute Indebtedness, such Indebtedness is either Indebtedness under the Permitted Sale and Leaseback Program or is otherwise permitted under
Section 8.2.1(d)
[Indebtedness];
(i) Liens on assets of the Borrower described on Part A of
Schedule 1.1(P)
(other than on any "Excepted Property" of the Borrower, as "Excepted Property" is defined in the First Mortgage Indenture on the Closing Date), which Liens secure outstanding Indebtedness under the Mortgage Bonds issued pursuant to the First Mortgage Indenture (including additional Indebtedness which is issued thereunder in accordance with Article Two of the First Mortgage Indenture) to the extent such Indebtedness is permitted under
Section 8.2.1(c)
or
8.2.1(d)
(as applicable);
(j) Purchase Money Security Interests encumbering only the assets so purchased and the proceeds thereof, and securing only Indebtedness incurred to acquire such assets to the extent such Indebtedness is permitted under
Section 8.2.1(d)
;
(k) Liens on any property or asset of an Acquired Person so long as: (i) such Liens secure Indebtedness of the Acquired Person and such Indebtedness and such Liens on property or assets of the Acquired Person existed prior to the consummation of the Permitted Acquisition and were not created in
contemplation of or in connection with such acquisition, (ii) such Liens apply solely to the assets of the Acquired Person and do not apply to any asset of the Borrower or any Subsidiary of the Borrower, and (iii) such Indebtedness is permitted under
Section 8.2.1(d)
;
(l) Liens (other than those described in clause (i) above) described on Part B of
Schedule 1.1(P)
;
(m) Liens consisting of the First Mortgage Bonds issued under the First Mortgage Indenture which secure (i) the loan agreements identified on
Schedule 8.2.1
(with a net principal Indebtedness under the Series AA through KK First Mortgage Bonds and the related loan agreements of $144,845,000) and (ii) the promissory note or promissory notes in the original aggregate principal amount of $125,000,000 issued under a note purchase agreement (with a net principal Indebtedness under both the Series LL First Mortgage Bonds and related promissory note(s) of $125,000,000 as described on
Schedule 8.2.1
)
;
(n) Liens consisting of additional series of First Mortgage Bonds to be issued under the First Mortgage Indenture which secure net Indebtedness in an aggregate principal amount not greater than the aggregate amount of such additional First Mortgage Bonds, so long as such net Indebtedness is permitted under
Section 8.2.1(d)
; and
(o) other Liens (of which there are none as of the Closing Date) to the extent they secure Indebtedness permitted under
Section 8.2.1(d)
, so long as
the aggregate principal amount of Indebtedness secured thereby does not exceed $25,000,000 in the aggregate.
Permitted Related Business Opportunity
means any transaction with another Person (other than any Inactive Subsidiary of Parent) involving business activities or assets reasonably related or complementary to the business of the Borrower and its Subsidiaries as conducted on the Closing Date or as may be conducted pursuant to
Section 8.2.9
[Continuation of or Change in Business], including, without limitation, the management and marketing of storage, capacity and transportation of gas and other forms of energy, the generation, transmission or storage of gas and other forms of energy, or the access to gas and energy transmission lines, and business initiatives for the conservation and efficiency of gas and energy.
Permitted Sale and Leaseback Program
means the sale and leaseback of gas meters by the Borrower, consistent with its existing sale and leaseback program, in an aggregate amount in each fiscal year not to exceed $12,000,000.00.
Permitted Transferee
means, as of any date of determination, any of the following with respect to any then current officer or director of the Parent: (a) such Person's spouse, lineal descendants or lineal descendant's of such Person's spouse, (b) any charitable corporation or trust established by such officer or director or by any Person described in the immediately preceding clause (a), (c) any trust (or in the case of a minor, a custodial account under a Uniform Gifts or Transfers to Minors Act) of which the beneficiary or beneficiaries are one or more Persons described in the immediately preceding clauses (a) or (b), or (d) any executor or administrator upon the death of such officer or director or the death of any Person described in the immediately preceding clauses (a) or (b).
Person
means any individual, corporation, partnership, limited liability company, association, joint-stock company, trust, unincorporated organization, joint venture, government or political subdivision or agency thereof, or any other entity.
Plan
means an "employee pension benefit plan," within the meaning of Section (3)(2) of ERISA (not including a Multiple Employer Plan or a Multiemployer Plan), which is covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Internal Revenue Code and either (a) is maintained by any member of the ERISA Group for employees of any member of the ERISA Group or (b) solely for purposes of
Section 6.1.19
, has at any time within the preceding five years been maintained by any entity which was at such time a member of the ERISA Group for employees of any entity which was at such time a member of the ERISA Group.
PNC Bank
means PNC Bank, National Association, its successors and assigns.
Potential Default
means any event or condition which with notice, passage of time, or both, would constitute an Event of Default.
Principal Office
means the main banking office of the Agent in Pittsburgh, Pennsylvania.
Prohibited Transaction
means any prohibited transaction as defined in Section 4975 of the Internal Revenue Code or Section 406 of ERISA for which neither an individual nor a class exemption has been issued by the United States Department of Labor.
Property
means all real property, both owned and leased, of the Borrower or any Subsidiary of the Borrower.
Published Rate
means the rate of interest published each Business Day in The Wall Street Journal "Money Rates" listing under the caption "London Interbank Offered Rates" for a one month period (or, if no such rate is published therein for any reason, then the Published Rate shall be the rate at which U.S. dollar deposits are offered by leading banks in the London interbank deposit market for a one month period as published in another publication selected by the Agent).
Purchase Money Security Interest
means Liens upon tangible personal property securing loans to the Borrower or any Subsidiary of the Borrower or deferred payments by the Borrower or such Subsidiary for the purchase of such tangible personal property.
Purchasing Lender
means a Lender which becomes a party to this Agreement by executing an Assignment and Assumption Agreement.
Ratable Share
means the proportion that a Lender's Commitment (excluding the Swing Loan Commitment) bears to the Commitments (excluding the Swing Loan Commitment) of all of the Lenders,
provided
that in the case of
Section 2.12
[Defaulting Lenders] when a Defaulting Lender shall exist, "Ratable Share" shall mean the percentage of the aggregate Commitments (disregarding any Defaulting Lender's Commitment) represented by such Lender's Commitment. If the Commitments have terminated or
expired, the Ratable Share shall be determined based upon the Commitments (excluding the Swing Loan Commitment) most recently in effect, giving effect to any assignments.
Regulated Substances
means, without limitation, any substance, material or waste, regardless of its form or nature, defined under Environmental Laws as a "hazardous substance," "pollutant," "pollution," "contaminant," "hazardous or toxic substance," "extremely hazardous substance," "toxic chemical," "toxic substance," "toxic waste," "hazardous waste," "special handling waste," "industrial waste," "residual waste," "solid waste," "municipal waste," "mixed waste," "infectious waste," "chemotherapeutic waste," "medical waste," or "regulated substance", or any other substance, material or waste, regardless of its form or nature, which is regulated, controlled or governed by Environmental Laws due to its radioactive, ignitable, corrosive, reactive, explosive, toxic, carcinogenic or infectious properties or nature or any other material, substance or waste, regardless of its form or nature, which otherwise is regulated, controlled or governed by Environmental Laws, including without limitation, petroleum and petroleum products (including crude oil and any fractions thereof), natural gas, synthetic gas and any mixtures thereof, asbestos, urea formaldehyde, polychlorinated biphenlys, mercury, radon and radioactive materials.
Regulation U
means Regulations U, T, G, or X as promulgated by the Board of Governors of the Federal Reserve System, as amended from time to time.
Reimbursement Obligation
has the meaning assigned to such term in
Section 2.9.3.2
.
Related Parties
has the meaning given to such term in
Section 10.6
[Resignation of the Agent].
Remedial Action
means any investigation, identification, characterization, delineation, cleanup, removal, remediation, containment, control or abatement of or other response actions to Regulated Substances and any closure or post-closure measures associated therewith.
Reportable Event
means a reportable event described in Section 4043 of ERISA and regulations thereunder with respect to a Plan, Multiple Employer Plan which is covered under Title IV of ERISA or subject to the minimum funding standards under Section 412 or 430 of the Internal Revenue Code, or Multiemployer Plan.
Required Lenders
shall mean:
(a) If there exists fewer than three (3) Lenders, all Lenders (other than any Defaulting Lender), and
(b) If there exist three (3) or more Lenders, Lenders (other than any Defaulting Lender) having 51% or more of the aggregate amount of the Revolving Credit Commitments of the Lenders (excluding any Defaulting Lender) or, after the termination of the Revolving Credit Commitments, the outstanding Revolving Credit Loans and Ratable Share of Letter of Credit Obligations of the Lenders (excluding any Defaulting Lender).
Required Share
has the meaning assigned to such term in
Section 5.10
.
Revolving Credit Commitment
means, as to any Lender at any time, the amount initially set forth opposite its name on
Schedule 1.1(B)
in the column labeled "Amount of Commitment for Revolving Credit Loans," and thereafter as determined by the Agent after giving effect to each applicable Lender Joinder and Assignment and Assumption Agreement executed by such Lender and delivered to the Agent, and
Revolving Credit Commitments
means the aggregate Revolving Credit Commitments of all of the Lenders.
Revolving Credit Loans
means collectively and
Revolving Credit Loan
means separately all Revolving Credit Loans or any Revolving Credit Loan made by the Lenders or one of the Lenders to the Borrower pursuant to
Section 2.1.1
[Revolving Credit Loans] or
Section 2.9.3
[Disbursements, Reimbursements].
Revolving Credit Note
means any Revolving Credit Note
of the Borrower in the form of
Exhibit 1.1(R)
issued by the Borrower at the request of a Lender pursuant to
Section 5.9
[Notes] evidencing the Revolving Credit Loans to such Lender, together with all amendments, extensions, renewals, replacements, refinancings or refundings thereof in whole or in part.
Revolving Facility Usage
means at any time the sum of the Revolving Credit Loans outstanding, the Swing Loans outstanding and the Letter of Credit Obligations.
SEC
means the Securities and Exchange Commission or any governmental agencies substituted therefor.
SEC Filing
means the Parent's Form 10‑K, filed with the SEC for the fiscal year ended September 30, 2010.
Settlement Date
has the meaning given to such term in
Section 2.5
[Swing Loan Requests].
Solvent
means, with respect to any Person on a particular date, that on such date (a) such Person is able to realize upon its assets and pay its debts and other liabilities as they mature in the normal course of business, and (b) such Person has not incurred debts or liabilities beyond such Person's ability to pay as such debts and liabilities mature.
Standard & Poor's
means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., and its successors.
Standby Letter of Credit
means a Letter of Credit issued to support obligations of the Borrower, contingent or otherwise, which finances the working capital and business needs of the Borrower incurred in the ordinary course of its business, but excluding any Letter of Credit under which the stated amount of such Letter of Credit increases automatically over time and excluding Commercial Letters of Credit.
Subsidiary
of any Person at any time means (a) any corporation or trust of which 50% or more (by number of shares or number of votes) of the outstanding capital stock or shares of beneficial
interest normally entitled to vote for the election of one or more directors or trustees (regardless of any contingency which does or may suspend or dilute the voting rights) is at such time owned directly or indirectly by such Person or one or more of such Person's Subsidiaries, (b) any partnership of which such Person is a general partner or of which 50% or more of the partnership interests is at the time directly or indirectly owned by such Person or one or more of such Person's Subsidiaries, (c) any limited liability company of which such Person is a member or of which 50% or more of the limited liability company interests is at the time directly or indirectly owned by such Person or one or more of such Person's Subsidiaries or (d) any corporation, trust, partnership, limited liability company or other entity which is controlled or capable of being controlled by such Person or one or more of such Person's Subsidiaries.
Subsidiary Shares
has the meaning assigned to such term in
Section 6.1.2
[Subsidiaries].
Swing Loan Commitment
means PNC Bank's commitment to make Swing Loans to the Borrower pursuant to
Section 2.1.2
[Swing Loan Commitment] hereof in an aggregate principal amount up to $20,000,000.00.
Swing Loan Interest Rate
means as to each Swing Loan the rate of interest quoted by PNC Bank applicable thereto and accepted by the Borrower with respect to such Swing Loan.
Swing Loan Note
means the Swing Loan Note of the Borrower in the form of
Exhibit 1.1(S)
evidencing the Swing Loans, together with all amendments, extensions, renewals, replacements, refinancings or refundings thereof in whole or in part.
Swing Loan Request
means a request for Swing Loans made in accordance with
Section 2.5
[Swing Loan Requests] hereof.
Swing Loans
means collectively and
Swing Loan
means separately all Swing Loans or any Swing Loan made by PNC Bank to the Borrower pursuant to
Section 2.1.2
[Swing Loan Commitment] hereof.
Taxes
means all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Official Body, including any interest, additions to tax or penalties applicable thereto.
Transferor Lender
means the selling Lender pursuant to an Assignment and Assumption Agreement.
USA Patriot Act
means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.
Website Posting
has the meaning given to such term in
Section 11.6
[Notices; Lending Offices].
1.2
Construction
.
Unless the context of this Agreement otherwise clearly requires, the following rules of construction shall apply to this Agreement and each of the other Loan Documents:
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1.2.1.
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Number; Inclusion
.
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References to the plural include the singular, the plural, the part and the whole; "or" has the inclusive meaning represented by the phrase "and/or" and "including" has the meaning represented by the phrase "including without limitation".
References to "determination" of or by the Agent or the Lenders shall be deemed to include good-faith estimates by the Agent or the Lenders (in the case of quantitative determinations) and good-faith beliefs by the Agent or the Lenders (in the case of qualitative determinations) and such determination shall be conclusive absent manifest error.
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1.2.3.
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Agent's Discretion and Consent
.
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Whenever the Agent or the Lenders are granted the right herein to act in its or their sole discretion or to grant or withhold consent such right shall be exercised in good faith.
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1.2.4.
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Documents Taken as a Whole
.
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The words "hereof," "herein," "hereunder," "hereto" and similar terms in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document as a whole and not to any particular provision of this Agreement or such other Loan Document.
The section and other headings contained in this Agreement or such other Loan Document and the Table of Contents (if any), preceding this Agreement or such other Loan Document are for reference purposes only and shall not control or affect the construction of this Agreement or such other Loan Document or the interpretation thereof in any respect.
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1.2.6.
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Implied References to this Agreement
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Article, section, subsection, clause, schedule and exhibit references are to this Agreement or other Loan Document, as the case may be, unless otherwise specified.
Reference to any Person includes such Person's successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement or such other Loan Document,
as the case may be, and reference to a Person in a particular capacity excludes such Person in any other capacity.
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1.2.8.
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Modifications to Documents
.
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Reference to any agreement (including this Agreement and any other Loan Document together with the schedules and exhibits hereto or thereto), document or instrument means such agreement, document or instrument as amended, modified, replaced, substituted for, superseded or restated.
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1.2.9.
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From, To and Through
.
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Relative to the determination of any period of time, "from" means "from and including," "to" means "to but excluding," and "through" means "through and including".
References to "shall" and "will" are intended to have the same meaning.
1.3
Accounting Principles; Changes in GAAP
.
Except as otherwise provided in this Agreement, all computations and determinations as to accounting or financial matters and all financial statements to be delivered pursuant to this Agreement shall be made and prepared in accordance with GAAP (including principles of consolidation where appropriate), and all accounting or financial terms shall have the meanings ascribed to such terms by GAAP;
provided
,
however
, that all accounting terms used in
Section 8.2
[Negative Covenants] (and all defined terms used in the definition of any accounting term used in
Section 8.2
) have the meaning given to such terms (and defined terms) under GAAP as in effect on the date hereof applied on a basis consistent with those used in preparing the Annual Statements referred to in
Section 6.1.8(a)
[Historical Statements]. Notwithstanding the foregoing, if the Borrower notifies the Agent in writing that the Borrower wishes to amend any financial covenant in
Section 8.2
[Negative Covenants] of this Agreement, any related definition and/or the definition of the term Leverage Ratio for purposes of interest, Letter of Credit Fee and Commitment Fee determinations to eliminate the effect of any change in GAAP occurring after the Closing Date on the operation of such financial covenants and/or interest, Letter of Credit Fee or Commitment Fee determinations (or if the Agent notifies the Borrower in writing that the Required Lenders wish to amend any financial covenant in
Section 8.2
[Negative Covenants], any related definition and/or the definition of the term Leverage Ratio for purposes of interest, Letter of Credit Fee and Commitment Fee determinations to eliminate the effect of any such change in GAAP), then the Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratios or requirements to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders);
provided
that, until so amended, the Borrower's compliance with such covenants and/or the definition of the term Leverage Ratio for purposes of interest, Letter of Credit Fee and Commitment Fee determinations shall be determined on the basis of GAAP in effect immediately before the relevant change in GAAP became effective, until either such notice is withdrawn or such covenants or definitions are amended in a manner satisfactory to the Borrower and the Required Lenders, and the Borrower shall provide to the
Agent, when it delivers its financial statements pursuant to
Section 8.3.1
[Quarterly Financial Statements] and
Section 8.3.2
[Annual Financial Statements] of this Agreement, such reconciliation statements as shall be reasonably requested by the Agent.
2.
REVOLVING CREDIT AND SWING LOAN FACILITIES
2.1
Commitments
.
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2.1.1.
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Revolving Credit Loans
.
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Subject to the terms and conditions hereof and relying upon the representations and warranties herein set forth, each Lender severally agrees to make Revolving Credit Loans to the Borrower in Dollars at any time or from time to time on or after the date hereof to, but not including, the Expiration Date,
provided that
, after giving effect to each such Revolving Credit Loan the aggregate amount of Revolving Credit Loans from such Lender shall not exceed such Lender's Revolving Credit Commitment minus such Lender's Ratable Share of the amount of (a) Letter of Credit Obligations and (b) outstanding Swing Loans; and
provided further
that the Revolving Facility Usage at any time shall not exceed the Revolving Credit Commitments of all the Lenders. Within such limits of time and amount and subject to the other provisions of this Agreement, the Borrower may borrow, repay and reborrow pursuant to this
Section 2.1.1
. The outstanding principal amount of all Revolving Credit Loans, together with accrued interest thereon, shall be due and payable on the Expiration Date.
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2.1.2.
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Swing Loan Commitment
.
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Subject to the terms and conditions hereof and relying upon the representations and warranties herein set forth, PNC Bank may at its discretion make Swing Loans to the Borrower in Dollars at the Borrower's request as hereinafter provided, from time to time after the date hereof to, but not including, the Expiration Date, in an aggregate principal amount of up to but not in excess of the Swing Loan Commitment,
provided
that the Revolving Facility Usage at any time (after giving effect to any requested Swing Loan) shall not exceed the Revolving Credit Commitments of all the Lenders. Within such limits of time and amount and subject to the other provisions of this Agreement, the Borrower may borrow, repay and reborrow pursuant to this
Section 2.1.2
. The outstanding principal amount of all Swing Loans, together with accrued interest thereon, shall be due and payable on the earlier of the Settlement Date applicable thereto or the Expiration Date.
2.2
Nature of Lenders' Obligations with Respect to Revolving Credit Loans.
Each Lender shall be obligated to participate in each request for Revolving Credit Loans pursuant to
Section 2.4
[Revolving Credit Loan Requests] in accordance with its Ratable Share. The aggregate amount of each Lender's Revolving Credit Loans outstanding hereunder to the Borrower at any time shall never exceed its Revolving Credit Commitment minus its Ratable Share of the amount of Letter of Credit Obligations and outstanding Swing Loans. The obligations of each Lender hereunder are several. The failure of any Lender to perform its obligations hereunder shall not affect the Obligations of the Borrower to any other party nor shall any other party be liable for the failure of such Lender to perform its obligations hereunder.
The Lenders shall have no obligation to make Revolving Credit Loans hereunder on or after the Expiration Date.
2.3
Commitment Fee.
Accruing from the date hereof until the Expiration Date, the Borrower agrees to pay to the Agent in Dollars for the account of each Lender, as consideration for such Lender's Revolving Credit Commitment hereunder, a nonrefundable commitment fee (the "
Commitment Fee
"), calculated on a per annum (365 or 366 days, as appropriate, and actual days elapsed) basis at the Applicable Commitment Fee Rate from time to time on the average daily difference between the amount of (a) such Lender's Revolving Credit Commitment as the same may be constituted from time to time and (b) the principal amount of such Lender's Ratable Share of Revolving Facility Usage, in each case, as determined for the immediately preceding fiscal quarter (or shorter period commencing with the Closing Date or ending with the Expiration Date);
provided
,
however
, that any Commitment Fee accrued with respect to the Revolving Credit Commitment of a Defaulting Lender during the period prior to the time such Lender became a Defaulting Lender and unpaid at such time shall not be payable by the Borrower so long as such Lender is a Defaulting Lender except to the extent that such Commitment Fee shall otherwise have been due and payable by the Borrower prior to such time; and
provided
further that
no Commitment Fee shall accrue on the Revolving Credit Commitment of a Defaulting Lender so long as such Lender is a Defaulting Lender. All Commitment Fees shall be payable quarterly in arrears on the first day of each January, April, July and October for the immediately preceding quarter, the date of each reduction of the Revolving Credit Commitments, and on the Expiration Date or upon acceleration of the Notes. For purposes of this computation, PNC Bank's outstanding Swing Loans shall be deemed to be borrowed amounts under its Revolving Credit Commitment.
2.4
Revolving Credit Loan Requests
.
Except as otherwise provided herein, the Borrower may from time to time prior to the Expiration Date request the Lenders to make Revolving Credit Loans or renew or convert the Interest Rate Option applicable to existing Revolving Credit Loans pursuant to
Section 4.2
[Interest Periods], by delivering to the Agent, not later than 10:00 a.m., Pittsburgh time, (a) three (3) Business Days prior to the proposed Borrowing Date with respect to the making of Revolving Credit Loans to which the LIBOR Rate Option applies or the date of conversion to or the renewal of the LIBOR Rate Option for any such Loans; and (b) on either the proposed Borrowing Date with respect to the making of a Revolving Credit Loan to which the Base Rate Option applies or the last day of the preceding Interest Period with respect to the conversion to the Base Rate Option for any Loan, of a Loan Request therefor duly completed by an Authorized Officer substantially in the form of
Exhibit 2.4
or a Loan Request by telephone immediately confirmed in writing by letter, facsimile or telex in the form of such Exhibit, it being understood that the Agent may rely on the authority of any individual making such a telephonic request without the necessity of receipt of such written confirmation, provided that such individual purports to be an Authorized Officer. Each Loan Request shall be irrevocable and shall specify (i) the proposed Borrowing Date; (ii) the aggregate amount of the proposed Revolving Credit Loans comprising each Borrowing Tranche, the amount of which shall be in integral multiples of $1,000,000.00 and not less than $3,000,000.00 for each Borrowing Tranche to which the LIBOR Rate Option
applies and not less than the lesser of $1,000,000.00 and in integral multiples of $100,000.00 or the maximum amount available for Borrowing Tranches to which the Base Rate Option applies; (iii) whether the LIBOR Rate Option or Base Rate Option shall apply to the proposed Loans comprising the applicable Borrowing Tranche; and (iv) in the case of a Borrowing Tranche to which the LIBOR Rate Option applies, an appropriate Interest Period for the Loans comprising such Borrowing Tranche.
2.5
Swing Loan Requests
.
Except as otherwise provided herein, the Borrower may from time to time prior to the Expiration Date request PNC Bank to make a Swing Loan by delivery to PNC Bank, not later than 12:00 noon Pittsburgh time, on the proposed Borrowing Date of a request therefor duly completed by an Authorized Officer substantially in the form of
Exhibit 2.5.
hereto or a request by telephone immediately confirmed in writing by letter, facsimile or telex, it being understood that PNC Bank may rely on the authority of any individual making such a telephonic request without the necessity of receipt of such written confirmation, provided that such individual purports to be an Authorized Officer. Each Swing Loan Request shall be irrevocable and shall specify (a) the proposed Borrowing Date, (b) the date such Swing Loan is to be repaid, if applicable (such date, together with any earlier date on which PNC Bank makes demand for repayment thereof, the "
Settlement Date
"), and (c) the principal amount of such Swing Loan, which shall not be less than $250,000.00 and shall be an integral multiple of $100,000.00. Each Swing Loan shall be payable on demand, and, if no demand is made therefor, on the applicable Settlement Date.
2.6
Making Revolving Credit Loans and Swing Loans
.
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2.6.1.
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Making Revolving Credit Loans
.
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Promptly after receipt by the Agent of a Loan Request for or with respect to Revolving Credit Loans pursuant to
Section 2.4
[Revolving Credit Loan Requests], the Agent shall notify the Lenders with Revolving Credit Commitments of its receipt of such Loan Request specifying: (a) the proposed Borrowing Date and the time and method of disbursement of the Revolving Credit Loans requested thereby; (b) the amount and type of each such Revolving Credit Loan and the applicable Interest Period (if any); and (c) the apportionment among the Lenders of such Revolving Credit Loans as determined by the Agent in accordance with
Section 2.2
[Nature of Lenders' Obligations]. Each Lender shall remit the principal amount of each Revolving Credit Loan to the Agent such that the Agent is able to, and the Agent shall, to the extent the Lenders have made funds available to it for such purpose and subject to
Section 7.2
[Each Additional Loan or Letter of Credit], fund such Revolving Credit Loans to the Borrower in U.S. Dollars and immediately available funds at the Principal Office prior to 2:00 p.m., Pittsburgh time, on the applicable Borrowing Date,
provided
that
if any Lender fails to remit such funds to the Agent in a timely manner, the Agent may elect in its sole discretion to fund with its own funds the Revolving Credit Loans of such Lender on such Borrowing Date, and such Lender shall be subject to the repayment obligation in
Section 2.6.2
[Presumptions by the Agent].
2.6.2.
Presumptions by the Agent.
Unless the Agent shall have received notice from a Lender prior to the proposed date of any Loan that such Lender will not make available to the Agent such Lender's share of such Loan, the Agent may assume that such Lender has made such share available on such date in accordance with
Section 2.6.1
[Making Revolving Credit Loans] and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Loan available to the Agent, then the applicable Lender and the Borrower severally agree to pay to the Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Agent, at (i) in the case of a payment to be made by such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Agent in accordance with banking industry rules on interbank compensation and (ii) in the case of a payment to be made by the Borrower, the interest rate applicable to Loans under the Base Rate Option. If such Lender pays its share of the applicable Loan to the Agent, then the amount so paid shall constitute such Lender's Loan. Any prepayment by the Borrower that shall duplicate a payment by such Lender shall be promptly returned to the Borrower in immediately available funds or otherwise as shall be determined by the Borrower and Agent. Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Agent.
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2.6.3.
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Making Swing Loans
.
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So long as PNC Bank elects to make Swing Loans, after receipt by it of a Swing Loan Request pursuant to
Section 2.5
[Swing Loan Requests], PNC Bank shall fund such Swing Loan to the Borrower in U.S. Dollars and immediately available funds at the Principal Office prior to 2:00 p.m. Pittsburgh time on the Borrowing Date. Each Swing Loan shall bear interest at the Swing Loan Interest Rate applicable thereto for the account of PNC Bank only.
2.7
Swing Loan Note
.
The obligation of the Borrower to repay the unpaid principal amount of the Swing Loans made to it by PNC Bank together with interest thereon shall be evidenced by a demand promissory note of the Borrower dated the Closing Date in substantially the form attached hereto as
Exhibit 1.1(S)
payable to the order of PNC Bank in a face amount equal to the Swing Loan Commitment.
2.8
Use of Proceeds
.
The proceeds of the Loans shall be used by the Borrower for general corporate purposes of the Borrower, including without limitation, to support the issuance by the Borrower of short term notes in the commercial paper market, and in accordance with
Section 8.1.10
[Use of Proceeds].
2.9
Letter of Credit Subfacility.
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2.9.1.
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Issuance of Letters of Credit
.
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The Borrower may request the issuance of a letter of credit (each a "
Letter of Credit
") on behalf of itself by delivering to the Agent an application and agreement for letters of credit in such form as the Agent may specify, duly completed by an Authorized Officer from time to time by no later than 10:00 a.m., Pittsburgh time, at least five (5) Business Days, or such shorter period as may be agreed to by the Agent, in advance of the proposed date of issuance. Each Letter of Credit shall be a Standby Letter of Credit (and may not be a Commercial Letter of Credit) and shall be denominated in Dollars. Subject to the terms and conditions hereof and in reliance on the agreements of the other Lenders set forth in this
Section 2.9
, the Agent or any of the Agent's Affiliates will issue a Letter of Credit
provided
that
each Letter of Credit shall (a) have a maximum maturity of twelve (12) months from the date of issuance, and (b) in no event expire later than ten (10) Business Days prior to the Expiration Date;
provided
,
further
,
that
in no event shall the Revolving Facility Usage, after giving effect to such Letter of Credit, exceed, at any one time, the Revolving Credit Commitments; and
provided
,
further
,
that
at no time shall the Letter of Credit Obligations (after giving effect to all Letters of Credit being requested) exceed the Letter of Credit Sublimit.
Schedule 2.9.1
sets forth letters of credit issued by PNC Bank, National Association, as administrative agent, under the Existing Agreement, which are outstanding as of the Closing Date (the "
Existing Letters of Credit
"). It is expressly agreed that the Existing Letters of Credit are Letters of Credit under this Agreement.
The Borrower shall not be entitled to the issuance, amendment or extension of any Letter of Credit if at such time the conditions set forth in
Section 7.2
[Each Additional Loan or Letter of Credit] are not satisfied.
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2.9.2.
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Letter of Credit Fees
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The Borrower shall pay (a) to the Agent for the ratable account of the Lenders a fee (the "
Letter of Credit Fee
") equal to the Applicable Letter of Credit Fee Rate then in effect (computed on the basis of a year of 360 days and actual days elapsed) per annum, and (b) to the Agent for the account of the Issuing Lender a fronting fee equal to 0.10% per annum (computed on the basis of a year of 360 days and actual days elapsed), which fees shall be computed on the daily average amount of the Letter of Credit Obligations and shall be payable quarterly in arrears commencing with the first Business Day of each January, April, July and October following issuance of each Letter of Credit and on the Expiration Date. The Borrower shall also pay to the Agent for the Issuing Lender's sole account customary fees and administrative expenses then in effect payable with respect to the Letters of Credit as the Issuing Lender may generally charge or incur from time to time in connection with the issuance, maintenance, modification (if any), assignment or transfer (if any),
negotiation, and administration of Letters of Credit.
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2.9.3.
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Disbursements, Reimbursement
.
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2.9.3.1
Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Agent a participation in
such Letter of Credit and each drawing thereunder in an amount equal to such Lender's Ratable Share of the maximum amount available to be drawn under such Letter of Credit and the amount of such drawing, respectively.
2.9.3.2
In the event of any request for a drawing under a Letter of Credit by the beneficiary or transferee thereof, the Agent will promptly notify the Borrower. Provided that it shall have received such notice, the Borrower shall reimburse (such obligation to reimburse the Agent shall sometimes be referred to as a "
Reimbursement Obligation
") the Agent prior to 12:00 noon, Pittsburgh time on each date that an amount is paid by the Agent under any Letter of Credit, or if paid after 12:00 noon, Pittsburgh time, on the immediately following Business Day (each such date on which the Borrower is obligated to make such payment, a "
Drawing Date
") in an amount equal to the amount so paid by the Agent plus interest at the Base Rate Option for each day, if any, from the date a draw is made under a Letter of Credit through the Drawing Date. In the event the Borrower fails to reimburse the Agent for the full amount of any drawing under any Letter of Credit by 12:00 noon, Pittsburgh time, on the Drawing Date, the Agent will promptly notify each Lender thereof, and the Borrower shall be deemed to have requested that Revolving Credit Loans be made by the Lenders under the Base Rate Option to be disbursed on the Drawing Date under such Letter of Credit, subject to the amount of the unutilized portion of the Revolving Credit Commitment and subject to the conditions set forth in
Section 7.2
[Each Additional Loan] other than any notice requirements. Any notice given by the Agent pursuant to this
Section 2.9.3.2
may be oral if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.
2.9.3.3
Each Lender shall upon any notice pursuant to
Section 2.9.3.2
make available to the Agent an amount in immediately available funds equal to its Ratable Share of the amount of the drawing, whereupon the participating Lenders shall (subject to
Section 2.9.3.4
) each be deemed to have made a Revolving Credit Loan under the Base Rate Option to the Borrower in that amount. If any Lender so notified fails to make available to the Agent for the account of the Agent the amount of such Lender's Ratable Share of such amount by no later than 2:00 p.m., Pittsburgh time on the Drawing Date, then interest shall accrue on such Lender's obligation to make such payment, from the Drawing Date to the date on which such Lender makes such payment (a) at a rate per annum equal to the Federal Funds Effective Rate during the first three (3) days following the Drawing Date and (b) at a rate per annum equal to the rate applicable to Loans under the Base Rate Option on and after the fourth (4th) day following the Drawing Date. The Agent will promptly give notice of the occurrence of the Drawing Date, but failure of the Agent to give any such notice on the Drawing Date or in sufficient time to enable any Lender to effect such payment on such date shall not relieve such Lender from its obligation under this
Section 2.9.3.3
, provided, however, interest shall not accrue on any Lender's obligation to make a payment under this
Section 2.9.3.3
, until such Lender has received notice of the Drawing Date from the Agent.
2.9.3.4
With respect to any unreimbursed drawing that is not converted into Revolving Credit Loans under the Base Rate Option to the Borrower in whole or in part as contemplated by
Section 2.9.3.2
, because of the Borrower's failure to satisfy the conditions set forth in
Section 7.2
[Each Additional Loan] other than any notice requirements or for any other reason, the Borrower shall be deemed
to have incurred from the Agent a borrowing (each a "
Letter of Credit Borrowing
") in the amount of such drawing. Such Letter of Credit Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the rate per annum applicable to the Revolving Credit Loans under the Base Rate Option. Each Lender's payment to the Agent pursuant to
Section 2.9.3.3
shall be deemed to be a payment in respect of its participation in such Letter of Credit Borrowing (to the extent this Section in applicable) and shall constitute a "
Participation Advance
" from such Lender in satisfaction of its participation obligation under this
Section 2.9.3
.
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2.9.4.
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Repayment of Participation Advances
.
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2.9.4.1
Upon (and only upon) receipt by the Agent for its account of immediately available funds from the Borrower (a) in reimbursement of any payment made by the Agent under the Letter of Credit with respect to which any Lender has made a Participation Advance to the Agent, or (b) in payment of interest on such a payment made by the Agent under such a Letter of Credit, the Agent will pay to each Lender, in the same funds as those received by the Agent, the amount of such Lender's Ratable Share of such funds, except the Agent shall retain the amount of the Ratable Share of such funds of any Lender that did not make a Participation Advance in respect of such payment by Agent.
2.9.4.2
If the Agent is required at any time to return to the Borrower, or to a trustee, receiver, liquidator, custodian, or any official in any Insolvency Proceeding, any portion of the payments made by the Borrower to the Agent pursuant to
Section 2.9.4.1
in reimbursement of a payment made under the Letter of Credit or interest or fee thereon, on demand of the Agent each Lender shall forthwith return to the Agent the amount of its Ratable Share of any amounts so returned by the Agent plus interest thereon from the date such demand is made to the date such amounts are returned by such Lender to the Agent, at a rate per annum equal to the Federal Funds Effective Rate in effect from time to time.
The Borrower agrees to be bound by the terms of the Agent's application and agreement for letters of credit and the Agent's written regulations and customary practices relating to letters of credit, though such interpretation may be different from the Borrower's own. In the event of a conflict between such application or agreement and this Agreement, this Agreement shall govern. It is understood and agreed that, except in the case of gross negligence or willful misconduct, the Agent shall not be liable for any error and/or mistakes, whether of omission or commission, in following the Borrower's written instructions or those contained in the Letters of Credit or any modifications, amendments or supplements thereto, provided that the Borrower agrees that all instructions provided to the Agent by the Borrower with respect to any Letter of Credit shall be provided in writing.
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2.9.6.
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Determinations to Honor Drawing Requests
.
|
In determining whether to honor any request for drawing under any Letter of Credit by the beneficiary thereof, the Agent shall be responsible only to determine that the documents and certificates required to be delivered under such Letter of Credit have been delivered and that they comply on their face with the requirements of such Letter of Credit.
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2.9.7.
|
Nature of Participation and Reimbursement Obligations.
|
Each Lender's obligation in accordance with this Agreement to make the Revolving Credit Loans or Participation Advances, as contemplated by
Section 2.9.3
[Disbursements, Reimbursements], as a result of a drawing under a Letter of Credit, and the Obligations of the Borrower to reimburse the Agent upon a draw under a Letter of Credit, shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this
Section 2.9
under all circumstances, including the following circumstances:
(a) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against the Agent or any of its Affiliates, the Borrower or any other Person for any reason whatsoever;
(b) the failure of the Borrower or any other Person to comply, in connection with a Letter of Credit Borrowing, with the conditions applicable to Revolving Credit Loans set forth in
Sections 2.1.1
[Revolving Credit Loans],
2.4
[Revolving Credit Loan Requests],
2.6.1
[Making Revolving Credit Loans],
2.6.3
[Making Swing Loans] or
7.2
[Each Additional Loan or Letter of Credit] or as otherwise set forth in this Agreement for the making of a Revolving Credit Loan, it being acknowledged that such conditions are not required for the making of a Letter of Credit Borrowing and the obligation of the Lenders to make Participation Advances under
Section 2.9.3
;
(c) any lack of validity or enforceability of any Letter of Credit;
(d) any claim of breach of warranty that might be made by the Borrower or any Lender against any beneficiary of a Letter of Credit, or the existence of any claim, set-off, recoupment, counterclaim, crossclaim, defense or other right which the Borrower or any Lender may have at any time against a beneficiary, successor beneficiary any transferee or assignee of any Letter of Credit or the proceeds thereof (or any Persons for whom any such transferee may be acting), the Agent or its Affiliates or any Lender or any other Person or, whether in connection with this Agreement, the transactions contemplated herein or any unrelated transaction (including any underlying transaction between the Borrower or any Subsidiaries of the Borrower and the beneficiary for which any Letter of Credit was procured);
(e) the lack of power or authority of any signer of (or any defect in or forgery of any signature or endorsement on) or the form of or lack of validity, sufficiency, accuracy, enforceability or genuineness of any draft, demand, instrument, certificate or other document presented under or in connection with any Letter of Credit, or any fraud or alleged fraud in connection with any Letter of Credit, or the transport of any property or provisions of services relating to a Letter of Credit, in each case even if the Agent or any of the Agent's Affiliates has been notified thereof;
(f) payment by the Agent or any of its Affiliates under any Letter of Credit against presentation of a demand, draft or certificate or other document which does not comply with the terms of such Letter of Credit;
(g) the solvency of, or any acts of omissions by, any beneficiary of any Letter of Credit, or any other Person having a role in any transaction or obligation relating to a Letter of Credit, or the existence, nature, quality, quantity, condition, value or other characteristic of any property or services relating to a Letter of Credit;
(h) any failure by the Agent or any of Agent's Affiliates to issue any Letter of Credit in the form requested by the Borrower, unless the Agent has received written notice from the Borrower of such failure within three (3) Business Days after the Agent shall have furnished the Borrower a copy of such Letter of Credit and such error is material and no drawing has been made thereon prior to receipt of such notice;
(i) any adverse change in the business, operations, properties, assets, condition (financial or otherwise) or prospects of the Borrower or any Subsidiaries of the Borrower;
(j) any breach of this Agreement or any other Loan Document by any party thereto;
(k) the occurrence or continuance of an Insolvency Proceeding with respect to the Borrower;
(l) the fact that an Event of Default or a Potential Default shall have occurred and be continuing;
(m) the fact that the Expiration Date shall have passed or this Agreement or the Commitments hereunder shall have been terminated; and
(n) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.
Notwithstanding the foregoing, no Lender shall be required to make a Revolving Credit Advance or a Participation Advance in excess of its Revolving Credit Commitment minus its Ratable Share of any Letter of Credit Obligations.
In addition to amounts payable as provided in
Section 11.3
[Expenses; Indemnity; Damage Waiver],
the Borrower hereby agrees to protect, indemnify, pay and save harmless the Agent and any of Agent's Affiliates that has issued a Letter of Credit from and against any and all claims, demands, liabilities, damages, taxes (other than income and franchise taxes), penalties, interest, judgments, losses, costs, charges and expenses (including reasonable fees, out-of-pocket expenses and disbursements of counsel and allocated costs of internal counsel) which the Agent or any of Agent's Affiliates may incur or be subject to as a consequence of the issuance of any Letter of Credit, other than as a result of (a) the gross negligence or willful misconduct of the Agent as determined by a final judgment of a court of competent jurisdiction or (b) the wrongful dishonor by the Agent or any of Agent's Affiliates of a proper demand for payment made
under any Letter of Credit, except if such dishonor resulted from any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or Official Body.
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2.9.9.
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Liability for Acts and Omissions
.
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As between the Borrower and the Agent, or the Agent's Affiliates, the Borrower assumes all risks of the acts and omissions of, or misuse of the Letters of Credit by, the respective beneficiaries of such Letters of Credit. In furtherance and not in limitation of the foregoing, the Agent shall not be responsible for any of the following including any losses or damages to the Borrower or other Person or property relating therefrom: (a) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for an issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged (even if the Agent or the Agent's Affiliates shall have been notified thereof); (b) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (c) the failure of the beneficiary of any such Letter of Credit, or any other party to which such Letter of Credit may be transferred, to comply fully with any conditions required in order to draw upon such Letter of Credit or any other claim of the Borrower against any beneficiary of such Letter of Credit, or any such transferee, or any dispute between or among the Borrower and any beneficiary of any Letter of Credit or any such transferee; (d) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (e) errors in interpretation of technical terms; (f) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any such Letter of Credit or of the proceeds thereof; (g) the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of Credit; or (h) any consequences arising from causes beyond the control of the Agent or the Agent's Affiliates, as applicable, including any act or omission of any Official Body, and none of the above shall affect or impair, or prevent the vesting of, any of the Agent's or the Agent's Affiliates rights or powers hereunder. Nothing in the preceding sentence shall relieve the Agent from liability for the Agent's gross negligence or willful misconduct in connection with actions or omissions described in such clauses (a) through (h) of such sentence. In no event shall the Agent or the Agent's Affiliates be liable to the Borrower for any indirect, consequential, incidental, punitive, exemplary or special damages or expenses (including without limitation attorneys' fees), or for any damages resulting from any change in the value of any property relating to a Letter of Credit.
Without limiting the generality of the foregoing, the Agent and each of its Affiliates (i) may rely on any oral or other communication believed in good faith by the Agent or such Affiliate to have been authorized or given by or on behalf of the applicant for a Letter of Credit, (ii) may honor any presentation if the documents presented appear on their face substantially to comply with the terms and conditions of the relevant Letter of Credit; (iii) may honor a previously dishonored presentation under a Letter of Credit, whether such dishonor was pursuant to a court order, to settle or compromise any claim of wrongful dishonor, or otherwise, and shall be entitled to reimbursement to the same extent as if such presentation had initially been honored, together with any interest paid by the Agent or its Affiliate; (iv) may honor any drawing that is payable upon presentation of a statement advising negotiation or payment, upon receipt of such statement
(even if such statement indicates that a draft or other document is being delivered separately), and shall not be liable for any failure of any such draft or other document to arrive, or to conform in any way with the relevant Letter of Credit; (v) may pay any paying or negotiating bank claiming that it rightfully honored under the laws or practices of the place where such bank is located; and (vi) may settle or adjust any claim or demand made on the Agent or its Affiliate in any way related to any order issued at the applicant's request to an air carrier, a letter of guarantee or of indemnity issued to a carrier or any similar document (each an "
Order
") and honor any drawing in connection with any Letter of Credit that is the subject to such Order, notwithstanding that any drafts or other documents presented in connection with such Letter of Credit fail to conform in any way with such Letter of Credit.
In furtherance and extension and not in limitation of the specific provisions set forth above, any action taken or omitted by the Agent or the Agent's Affiliates under or in connection with the Letters of Credit issued by it or any documents and certificates delivered thereunder, if taken or omitted in good faith, shall not put the Agent or the Agent's Affiliates under any resulting liability to the Borrower or any Lender.
2.10
Borrowings to Repay Swing Loans
.
PNC Bank may, at its option, exercisable at any time for any reason whatsoever, demand repayment of the Swing Loans, and, unless the Borrower makes such repayment from sources other than a Revolving Credit Loan, each Lender shall make a Revolving Credit Loan in an amount equal to such Lender's Ratable Share of the aggregate principal amount of the outstanding Swing Loans, plus, if PNC Bank so requests, accrued interest thereon,
provided that
no Lender shall be obligated in any event to make Revolving Credit Loans in excess of its Revolving Credit Commitment minus such Lender's Ratable Share of the amount of the Letter of Credit Obligations. Revolving Credit Loans made pursuant to the preceding sentence shall bear interest at the Base Rate Option and shall be deemed to have been properly requested in accordance with
Section 2.4
[Revolving Credit Loan Requests] without regard to any of the requirements of that provision. PNC Bank shall provide notice to the Lenders (which may be telephonic or written notice by letter, facsimile or telex) that such Revolving Credit Loans are to be made under this
Section 2.10
and of the apportionment among the Lenders, and the Lenders shall be unconditionally obligated to fund such Revolving Credit Loans (whether or not the conditions specified in
Section 2.4
[Revolving Credit Loan Requests] or
Section 7.2
[Each Additional Loan or Letter of Credit] are then satisfied) by the time PNC Bank so requests, which shall not be earlier than 3:00 p.m. Pittsburgh time on the Business Day next after the date the Lenders receive such notice from PNC Bank.
2.11
Right to Increase Commitments
.
Provided that there is no Event of Default or Potential Default, if the Borrower wishes to increase the Revolving Credit Commitments, the Borrower shall notify the Agent thereof,
provided
that any such increase shall be in a minimum of $15,000,000.00 and the aggregate of all such increases in the Revolving Credit Commitments shall not exceed $50,000,000.00 from and after the Closing Date. Each Lender shall have the right at any time within fifteen (15) days following such notice to increase its respective Revolving Credit Commitment so as to provide such added commitment pro rata in accordance with such Lender's
Ratable Share, and any portion of such requested increase that is not provided by any Lender shall: (a) first be available to the other Lenders pro rata in accordance with their Ratable Share, (b) next be available to the other Lenders in such a manner as the Borrower, the Agent and those Lenders shall agree, and (c) thereafter, to the extent not provided by the Lenders, to any additional bank proposed by the Borrower, which is approved by the Agent (which approval shall not be unreasonably withheld) and that becomes a party to this Agreement pursuant to
Section 11.11
[Successors and Assigns; Joinder of a Lender]. In the event of any such increase in the aggregate Revolving Credit Commitments effected pursuant to the terms of this
Section 2.11
, which results in a change in the Ratable Share of any Lender, then on the effective date of any increase (i) the Borrower shall repay all Loans then outstanding, subject to the Borrower's indemnity obligations set forth in
Section 5.6.5
[Indemnity],
provided
that
the Borrower may borrow new Loans on such date, with each Lender participating in such new Loans in accordance with their respective Ratable Shares after giving effect to the increase in Revolving Credit Commitments contemplated by this Section, and (ii) each Lender will be deemed to have purchased a participation interest in all Letter of Credit Obligations and in all Swing Loans equal to its Ratable Share after giving effect to the increase in Revolving Credit Commitments contemplated by this Section. In the event of any such increase in Revolving Credit Commitments pursuant to this Section, new Notes shall, to the extent necessary, be executed and delivered by the Borrower in exchange for the surrender of the existing Notes and the Agent shall amend
Schedule 1.1(B)
to reflect such increase in Commitments. No Lender shall have any obligation to increase its Revolving Credit Commitment pursuant to this Section.
2.12
Defaulting Lenders
.
Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:
(i)
fees shall cease to accrue on the unfunded portion of the Commitment of such Defaulting Lender pursuant to
Section 2.3
[Commitment Fee];
(ii)
the Commitment and outstanding Loans of such Defaulting Lender shall not be included in determining whether the Required Lenders have taken or may take any action hereunder (including any consent to any amendment, waiver or other modification pursuant to
Section 11.1
[Modifications, Amendments or Waivers]); provided, that this clause (ii) shall not apply to the vote of a Defaulting Lender in the case of an amendment, waiver or other modification requiring the consent of such Lender or each Lender directly affected thereby;
(iii)
if any Swing Loans are outstanding or any Letter of Credit Obligations exist at the time such Lender becomes a Defaulting Lender, then:
(a) all or any part of the outstanding Swing Loans and Letter of Credit Obligations of such Defaulting Lender shall be reallocated among the non-Defaulting Lenders in accordance with their respective Ratable Shares but only to the extent that (x) the Revolving Facility Usage does not exceed the total of all non-Defaulting Lenders' Revolving Credit Commitments, and (y) no Potential Default or Event of Default has occurred and is continuing at such time;
(b) if the reallocation described in clause (a) above cannot, or can only partially, be effected, the Borrower shall within one Business Day following notice by the Agent (x)
first
, prepay such outstanding Swing Loans, and (y)
second
, cash collateralize for the benefit of the Issuing Lender the Borrower's obligations corresponding to such Defaulting Lender's Letter of Credit Obligations (after giving effect to any partial reallocation pursuant to clause (a) above) in a deposit account held at the Agent for so long as such Letter of Credit Obligations are outstanding;
provided
, however, that if the Borrower elects to replace the applicable Defaulting Lender under
Section 5.4.2
[Replacement of a Lender], the Borrower shall be given a five (5) Business Day grace period before being required to take the steps required in the preceding clauses (x) and (y) (and upon successful replacement of such Defaulting Lender with a non-Defaulting Lender, the Borrower shall not be required to take such steps);
(c) if the Borrower cash collateralizes any portion of such Defaulting Lender's Letter of Credit Obligations pursuant to clause (b) above or replaces such Defaulting Lender pursuant to
Section 5.4.2
[Replacement of a Lender], the Borrower shall not be required to pay any fees to such Defaulting Lender pursuant to
Section 2.9.2
[Letter of Credit Fees] with respect to such Defaulting Lender's Letter of Credit Obligations during the period such Defaulting Lender's Letter of Credit Obligations are cash collateralized;
(d) if the Letter of Credit Obligations of the non-Defaulting Lenders are reallocated pursuant to clause (a) above, then the fees payable to the Lenders pursuant to
Section 2.9.2
[Letter of Credit Fees] shall be adjusted in accordance with such non-Defaulting Lenders' Ratable Share; and
(e) if all or any portion of such Defaulting Lender's Letter of Credit Obligations are neither reallocated nor cash collateralized pursuant to clause (a) or (b) above, and such Defaulting Lender is not replaced pursuant to
Section 5.4.2
[Replacement of a Lender], then, without prejudice to any rights or remedies of the Issuing Lender or any other Lender hereunder, all Letter of Credit Fees payable under
Section 2.9.2
[Letter of Credit Fees] with respect to such Defaulting Lender's Letter of Credit Obligations shall be payable to the Issuing Lender (and not to such Defaulting Lender) until and to the extent that such Letter of Credit Obligations are reallocated and/or cash collateralized; and
(iv)
so long as such Lender is a Defaulting Lender, PNC Bank shall not be required to fund any Swing Loans and the Issuing Lender shall not be required to issue, amend or increase any Letter of Credit, unless such Issuing Lender is satisfied that the related exposure and the Defaulting Lender's then outstanding Letter of Credit Obligations has been 100% covered by the Revolving Credit Commitments of the non-Defaulting Lenders and/or cash collateral provided by the Borrower in accordance with
Section 2.12(iii)
, or the applicable Defaulting Lender has been replaced pursuant to
Section 5.4.2
[Replacement of a Lender], and participating interests in any newly made Swing Loan or any newly issued or increased Letter of Credit can (and shall, if they can) be allocated among non-Defaulting Lenders in a manner consistent with
Section 2.12(iii)(a)
(and such Defaulting Lender shall not participate therein).
If (i) a Bankruptcy Event with respect to a parent company of any Lender shall occur following the date hereof and for so long as such event shall continue, or (ii) PNC Bank or the Issuing Lender has a good faith belief that any Lender has defaulted in fulfilling its obligations under one or more other agreements in which
such Lender commits to extend credit, PNC Bank shall not be required to fund any Swing Loan and the Issuing Lender shall not be required to issue, amend or increase any Letter of Credit, unless PNC Bank or the Issuing Lender, as the case may be, shall have entered into arrangements with the Borrower or such Lender, satisfactory to PNC Bank or the Issuing Lender, as the case may be, to defease any risk to it in respect of such Lender hereunder.
In the event that the Agent, the Borrower, PNC Bank and the Issuing Lender agree in writing that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the Agent will so notify the parties hereto, and the Ratable Share of the Swing Loans and Letter of Credit Obligations of the Lenders shall be readjusted to reflect the inclusion of such Lender's Commitment, and on such date such Lender shall purchase at par such of the Loans of the other Lenders (other than Swing Loans) as the Agent shall determine may be necessary in order for such Lender to hold such Loans in accordance with its Ratable Share.
2.13
Release of Cash Collateral
.
Cash collateral provided by the Borrower pursuant to Section 2.12(b) above shall no longer be required to be held as cash collateral pursuant to this Agreement following (a) the elimination of the fronting exposure of the Issuing Lender giving rise to the requirement that cash collateral be provided pursuant to Section 2.12(b) (i.e., by the termination of Defaulting Lender status of the applicable Lender, replacement of such Lender with a non-Defaulting Lender who has assumed such Defaulting Lender's obligations in respect thereof, or termination of the circumstances preventing a full reallocation of such fronting exposure among the non-Defaulting Lenders as described in Section 2.12(a) above), or (b) the determination by the Agent and Issuing Lender that there exists excess cash collateral;
provided
, however that, subject to Section 2.12 [Defaulting Lenders], the Borrower and Issuing Lender may agree that such cash collateral shall be held to support future anticipated fronting exposure or other obligations.
3.
INTENTIONALLY OMITTED
4.
INTEREST RATES
4.1
I
nterest Rate Options
.
The Borrower shall pay interest in respect of the outstanding unpaid principal amount of the Loans as selected by it from the Base Rate Option or LIBOR Rate Option set forth below applicable to the Loans, it being understood that, subject to the provisions of this Agreement, the Borrower may select different Interest Rate Options and different Interest Periods to apply simultaneously to the Loans comprising different Borrowing Tranches and may convert to or renew one or more Interest Rate Options with respect to all or any portion of the comprising any Borrowing Tranche,
provided
that there shall not be at any one time outstanding more than six (6) Borrowing Tranches in the aggregate among all of the Loans, and
provided
further
that only the Swing Loan Interest Rate shall apply to the Swing Loans. If at any time the designated rate applicable to any Loan made by any Lender exceeds such Lender's highest lawful rate, the rate of interest on such Lender's Loan shall be limited to such Lender's highest lawful rate. Notwithstanding anything to the
contrary set forth herein, if an Event of Default or Potential Default exists and is continuing, the Borrower may not request, convert to, or renew the LIBOR Rate Option for any Loans and the Required Lenders may demand that all existing Borrowing Tranches bearing interest under the LIBOR Rate Option shall be converted immediately to the Base Rate Option, subject to the obligation of the Borrower to pay any indemnity under
Section 5.6.5
[Indemnity] in connection with such conversion.
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4.1.1.
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Revolving Credit Interest Rate Options
.
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The Borrower shall have the right to select from the following Interest Rate Options applicable to the Revolving Credit Loans (subject to the provision above regarding Swing Loans):
(a)
Base Rate Option
: A fluctuating rate per annum (computed on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed) equal to the Base Rate plus the Applicable Margin, such interest rate to change automatically from time to time effective as of the effective date of each change in the Base Rate and/or the Applicable Margin; or
(b)
LIBOR Rate Option
: A rate per annum (computed on the basis of a year of 360 days and actual days elapsed) equal to the LIBOR Rate plus the Applicable Margin, such interest rate to change automatically from time to time as of the effective date of each change in the Applicable Margin.
Notwithstanding the foregoing, if any Event of Default has occurred and is continuing, no Loan may be made, converted to or renewed under any LIBOR Rate Option.
The Borrower may call the Agent on or before the date on which a Loan Request is to be delivered to receive an indication of the interest rates then in effect, but it is acknowledged that such projection shall not be binding on the Agent or the Lenders nor affect the rate of interest which thereafter is actually in effect when the election is made.
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4.1.3.
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Change in Fees or Interest Rates
.
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If the Applicable Margin, Applicable Letter of Credit Fee Rate or Applicable Commitment Fee Rate is increased or reduced with respect to any period for which the Borrower has already paid interest, the Commitment Fee, or the Letter of Credit Fee, the Agent shall recalculate the additional interest, Commitment Fee, or Letter of Credit Fee due from or to the Borrower and shall, within fifteen (15) Business Days after the Borrower notifies the Agent of such increase or decrease, give the Borrower and the Lenders notice of such recalculation.
4.1.3.1
Any additional interest, Commitment Fee, or Letter of Credit Fee due from the Borrower shall be paid to the Agent for the account of the Lenders on the next date on which an interest or fee payment is due; provided, however, that if there are no Loans outstanding or if the Loans are due and
payable, such additional interest, Commitment Fee, or Letter of Credit Fee shall be paid promptly after receipt of written request for payment from the Agent.
4.1.3.2
Any interest, Commitment Fee, or Letter of Credit Fee refund due to the Borrower shall be credited against payments otherwise due from the Borrower on the next interest or fee payment due date or, if the Loans have been repaid and the Lenders are no longer committed to lend under this Agreement, the Lenders shall pay the Agent for the account of the Borrower such interest, Commitment Fee, or Letter of Credit Fee refund not later than five Business Days after written notice from the Agent to the Lenders.
4.2
Interest Periods
.
At any time when the Borrower shall select, convert to or renew a LIBOR Rate Option, the Borrower shall notify the Agent thereof by delivering a Loan Request at least three (3) Business Days prior to the effective date of such Interest Rate Option. The notice shall specify an
Interest Period during which such Interest Rate Option shall apply. Notwithstanding the preceding sentence, the following provisions shall apply to any selection of, renewal of, or conversion to a LIBOR Rate Option:
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4.2.1.
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Amount of Borrowing Tranche
.
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The amount of each Borrowing Tranche of Loans to which a LIBOR Rate Option applies shall be in integral multiples of $1,000,000.00 and not less than $3,000,000.00;
In the case of the renewal of a LIBOR Rate Option at the end of an Interest Period, the first day of the new Interest Period shall be the last day of the preceding Interest Period, without duplication in payment of interest for such day.
4.3
Interest After Default
.
To the extent permitted by Law, upon the occurrence of an Event of Default and until such time such Event of Default shall have been cured or waived, and at the discretion of the Agent or upon written demand by the Required Lenders to the Agent:
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4.3.1.
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Letter of Credit Fees, Interest Rate
.
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The Letter of Credit Fee and the rate of interest for each Loan otherwise applicable pursuant to
Section 2.9.2
[Letter of Credit Fees] or
Section 4.1
[Interest Rate Options], respectively, shall be increased by 2.0% per annum; and
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4.3.2.
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Other Obligations
.
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Each other Obligation hereunder if not paid when due shall bear interest at a rate per annum equal to the sum of the rate of interest applicable under the Base Rate Option plus an additional 2% per annum from the time such Obligation becomes due and payable and until it is paid in full.
The Borrower acknowledges that the increase in rates referred to in this
Section 4.3
reflects, among other things, the fact that such Loans or other amounts have become a substantially greater risk given their default status and that the Lenders are entitled to additional compensation for such risk; and all such interest shall be payable by the Borrower upon demand by the Agent.
4.4
LIBOR Rate Unascertainable; Illegality; Increased Costs; Deposits Not Available
.
If on any date on which a LIBOR Rate would otherwise be determined with respect to Loans, the Agent shall have determined that:
(a) adequate and reasonable means do not exist for ascertaining such LIBOR Rate, or
(b) a contingency has occurred which materially and adversely affects the London interbank eurodollar market relating to the LIBOR Rate, then the Agent shall have the rights specified in
Section 4.4.3
[The Agent's and Lenders' Rights].
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4.4.2.
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Illegality; Increased Costs; Deposits Not Available
.
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If at any time any Lender shall have determined that:
(a) the making, maintenance or funding of any Loan to which a LIBOR Rate Option applies has been made unlawful or materially impracticable by compliance by such Lender in good faith with any Law or any interpretation or application thereof by any Official Body or with any request or directive of any such Official Body (whether or not having the force of Law), or
(b) such LIBOR Rate Option will not adequately and fairly reflect the cost to such Lender of the establishment or maintenance of any such Loan in a material respect, or
(c) after making all reasonable efforts, deposits of the relevant amount in Dollars for the relevant Interest Period for a Loan, or to banks generally, to which a LIBOR Rate Option applies, respectively, are not available to such Lender with respect to such Loan, or to banks generally, in the interbank eurodollar market, then the Agent shall have the rights specified in
Section 4.4.3
[The Agent's and Lenders' Rights].
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4.4.3.
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The Agent's and Lenders' Rights
.
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In the case of any event specified in
Section 4.4.1
[Unascertainable] above, the Agent shall promptly so notify the Lenders and the Borrower thereof, and in the case of an event specified in
Section 4.4.2
[Illegality; Increased Costs; Deposits Not Available] above, such Lender shall promptly so
notify the Agent and endorse a certificate to such notice as to the specific circumstances of such notice, and the Agent shall promptly send copies of such notice and certificate to the other Lenders and the Borrower. Upon such date as shall be specified in such notice (which shall not be earlier than the date such notice is given), the obligation of (a) the Lenders, in the case of such notice given by the Agent, or (b) such Lender, in the case of such notice given by such Lender, to allow the Borrower to select, convert to or renew a LIBOR Rate Option shall be suspended until the Agent shall have later notified the Borrower, or such Lender shall have later notified the Agent, of the Agent's or such Lender's, as the case may be, determination that the circumstances giving rise to such previous determination no longer exist. If at any time the Agent makes a determination under
Section 4.4.1
[Unascertainable] and the Borrower has previously notified the Agent of its selection of, conversion to or renewal of a LIBOR Rate Option and such Interest Rate Option has not yet gone into effect, such notification shall be deemed to provide for the selection of, conversion to or renewal of the Base Rate Option otherwise available with respect to such Loans if the Borrower has requested the LIBOR Rate Option. If any Lender notifies the Agent of a determination under
Section 4.4.2
[Illegality; Increased Costs; Deposits Not Available], the Borrower shall, subject to the Borrower's indemnification Obligations under
Section 5.6.5
[Indemnity], as to any Loan of the Lender to which a LIBOR Rate Option applies, on the date specified in such notice either (i) as applicable, convert such Loan to the Base Rate Option otherwise available with respect to such Loan, or (ii) prepay such Loan in accordance with
Section 5.4.1
[Voluntary Prepayments]. Absent due notice from the Borrower of conversion or prepayment, such Loan shall automatically be converted to the Base Rate Option otherwise available with respect to such Loan upon such specified date.
4.5
Selection of Interest Rate Options
.
If the Borrower fails to select a new Interest Period to apply to any Borrowing Tranche of Loans under the LIBOR Rate Option at the expiration of an existing Interest Period applicable to such Borrowing Tranche in accordance with the provisions of
Section 4.2
[Interest Periods], the Borrower shall be deemed to have converted such Borrowing Tranche to the Base Rate Option, commencing upon the last day of the existing Interest Period.
5.
PAYMENTS
5.1
Payments
.
All payments and prepayments to be made in respect of principal, interest, Commitment Fee, Letter of Credit Fees, Agent's Fees or other fees or amounts due from the Borrower hereunder shall be payable prior to 11:00 a.m., Pittsburgh time, on the date when due without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived by the Borrower, and without set-off, counterclaim or other deduction of any nature, and an action therefor shall immediately accrue. Such payments shall be made to the Agent at the Principal Office for the account of PNC Bank with respect to the Swing Loans, for the account of the Issuing Lender with respect to Letters of Credit (except for the Letter of Credit Fee, which shall be payable to the Agent for the account of the Lenders as provided herein), and for the ratable accounts of the Lenders with respect to the Revolving Credit Loans and the Letter of Credit Fee, and in immediately
available funds, and the Agent shall promptly distribute such amounts to the Lenders in immediately available funds,
provided
that in the event payments are received by 11:00 a.m., Pittsburgh time, by the Agent with respect to the Loans and such payments are not distributed to the Lenders on the same day received by the Agent, the Agent shall pay the Lenders the Federal Funds Effective Rate, with respect to the amount of such payments for each day held by the Agent and not distributed to the Lenders. The Agent's and each Lender's statement of account, ledger or other relevant record shall, in the absence of manifest error, be conclusive as the statement of the amount of principal of and interest on the Loans and other amounts owing under this Agreement and shall be deemed an "account stated."
5.2
Pro Rata Treatment of Lenders; Sharing of Payments; Agent's Presumptions
.
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5.2.1.
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Pro Rata Treatment of Lenders
.
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Each borrowing of Loans shall be allocated to each Lender according to its Ratable Share and each selection of, conversion to or renewal of any Interest Rate Option applicable to the Loans and each payment or prepayment by the Borrower with respect to principal or interest on the Loans or Commitment Fees, Letter of Credit Fees, or other fees (except for the Agent's Fees and fees and interest paid solely for the account of the Issuing Lender or PNC Bank as the Lender of Swing Loans) or amounts due from the Borrower hereunder to the Lenders with respect to the Loans shall (except as otherwise may be provided with respect to a Defaulting Lender and as provided in
Section 4.4.3
[The Agent's and Lenders' Rights] in the case of an event specified in
Sections 4.4
[LIBOR Rate Unascertainable; Etc.],
5.4.2
[Replacement of a Lender] or
5.6
[Additional Compensation in Certain Circumstances]) be made in proportion to the applicable Loans outstanding from each Lender and, if no such Loans are then outstanding, in proportion to the Ratable Share. Notwithstanding any of the foregoing, each borrowing or payment or prepayment by the Borrower of principal, interest, fees or other amounts from the Borrower with respect to Swing Loans shall be made by or to PNC Bank according to
Section 2
.
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5.2.2.
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Sharing of Payments by Lenders
.
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If any Lender shall, by exercising any right of setoff, counterclaim or banker's lien, by receipt of voluntary payment, by realization upon security, or by any other non-pro rata source, obtain payment in respect of any principal of or interest on any of its Loans or other obligations hereunder resulting in such Lender's receiving payment of a proportion of the aggregate amount of its Loans and accrued interest thereon or other such obligations greater than its Ratable Share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the Agent of such fact, and (b) purchase (for cash at face value) participations in the Loans and such other obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and other amounts owing them, provided that:
(i)
if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, together
with interest or other amounts, if any, required by Law (including court order) to be paid by the Lender or the holder making such purchase; and
(ii)
the provisions of this Section shall not be construed to apply to (A) any payment made by the Borrower pursuant to and in accordance with the express terms of the Loan Documents or (B) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or Participation Advances to any assignee or participant, other than to the Borrower or any Subsidiary thereof (as to which the provisions of this Section shall apply).
The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.
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5.2.3.
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Presumptions by the Agent
.
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Unless the Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Agent for the account of the Lenders or the Issuing Lender hereunder that the Borrower will not make such payment, the Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Lender, as the case may be, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the Issuing Lender, as the case may be, severally agrees to repay to the Agent forthwith on demand the amount so distributed to such Lender or the Issuing Lender, with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Agent in accordance with banking industry rules on interbank compensation.
5.3
Interest Payment Dates
.
Interest on Swing Loans and on Loans to which the Base Rate Option applies shall be due and payable quarterly in arrears on the first day of each January, April, July and October after the date hereof and on the Expiration Date, or upon acceleration of the Loans. Interest on Loans to which the LIBOR Rate Option applies shall be due and payable on the last day of each Interest Period for those Loans and, if such Interest Period is longer than three (3) Months, also on the 90th day of such Interest Period.
5.4
Prepayments
.
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5.4.1.
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Voluntary Prepayments
.
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The Borrower shall have the right at its option from time to time to prepay the Loans in whole or part without premium or penalty (except as provided in
Section 5.4.2
[Replacement of a Lender]
below or in
Section 5.6
[Additional Compensation in Certain Circumstances]):
(a) at any time with respect to Swing Loans or with respect to any Loan to which the Base Rate Option applies,
(b) on the last day of the applicable Interest Period with respect to Loans to which a LIBOR Rate Option applies, or
(c) on the date specified in a notice by any Lender pursuant to
Section 4.4
[LIBOR Rate Unascertainable, Etc.] with respect to any Loan to which a LIBOR Rate Option applies.
Whenever the Borrower desires to prepay any part of the Loans, it shall provide a prepayment notice to the Agent by 1:00 p.m., Pittsburgh time, at least one (1) Business Day prior to the date of prepayment of the Revolving Credit Loans or no later than 2:00 p.m., Pittsburgh time, on the date of prepayment of Swing Loans, setting forth the following information:
(i) the date, which shall be a Business Day, on which the proposed prepayment is to be made;
(ii) a statement indicating the application of the prepayment among the Revolving Credit Loans and Swing Loans;
(iii) the total principal amount of such prepayment, which, with respect to Loans to which the Base Rate Option applies shall not be less than $500,000.00 for any Revolving Credit Loan, unless such repayment is of the total amount outstanding with regard to such Revolving Credit Loan, and which, with respect to Swing Loans, shall be the total amount thereof, and
(iv) the total principal amount of such prepayment, which, with respect to Loans to which the LIBOR Rate Option applies, shall not be less than $1,000,000.00 for any Revolving Credit Loan, unless such repayment is of the total amount outstanding with regard to such Revolving Credit Loan.
All prepayment notices shall be irrevocable. The principal amount of the Loans for which a prepayment notice is given, together with interest on such principal amount except with respect to Loans to which the Base Rate Option applies, shall be due and payable on the date specified in such prepayment notice as the date on which the proposed prepayment is to be made. Except as provided in
Section 4.4.3
[Agent's and Lender's Rights], if the Borrower prepays a Loan but fails to specify the applicable Borrowing Tranche which the Borrower is prepaying, the prepayment shall be applied (A) first to Swing Loans and second to Revolving Credit Loans; and (B) after giving effect to the allocations in clause (A) above and in the preceding sentence, first to Loans to which the Swing Loan Interest Rate applies, second to Loans to which the Base Rate Option applies, and then to Loans to which the LIBOR Rate Option applies. Any prepayment hereunder shall be subject to the Borrower's Obligation to indemnify the Lenders under
Section 5.6.5
[Indemnity].
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5.4.2.
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Replacement of a Lender
.
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In the event any Lender (a) gives notice under
Section 4.4
[LIBOR Rate Unascertainable, Etc.], (b) requests compensation under
Section 5.6.1
[Increased Costs Generally] or
Section 5.8
[Taxes], (c) is a Defaulting Lender, (d) becomes subject to the control of an Official Body (other than normal and customary supervision), (e) is a Non-Consenting Lender referred to in
Section 11.1
[Modifications, Amendments or Waivers], or (f) causes the Borrower to pay, withhold or indemnify any Taxes or Other Taxes pursuant to
Section 5.8
[Taxes], then in any such event the Borrower may, at its sole expense, upon notice to such Lender and the Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by,
Section 11.11
[Successors and Assigns]), all of its interests, rights and obligations under this Agreement and the related Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment),
provided
that:
(i)
the Borrower shall have paid to the Agent the assignment fee specified in
Section 11.11
[Successors and Assigns];
(ii)
such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and Participation Advances, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under
Section 5.6.5
[Indemnity]) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts);
(iii)
in the case of any such assignment resulting from a claim for compensation under
Section 5.6.1
[Increased Costs Generally] or payments required to be made pursuant to
Section 5.8
[Taxes], such assignment will result in a reduction in such compensation or payments thereafter; and
(iv)
such assignment does not conflict with applicable Law.
A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply. Notwithstanding the foregoing, the Agent may only be replaced in accordance with
Section 10.6
[Resignation of Agent].
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5.4.3.
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Change of Lending Office.
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Each Lender agrees that prior to giving notice to any claim for increased costs, indemnification or other special payments under
Sections 4.4.2
[Illegality, Etc.],
5.6.1
[Increased Costs Generally] or
Section 5.8
[Taxes] with respect to such Lender, it will have initiated reasonable efforts (subject to overall policy considerations of such Lender) to designate another lending office for any Loans or Letters of Credit affected by such event,
provided
that such designation is made on such terms that such Lender and its lending office suffer no economic, legal or regulatory disadvantage, with the object of avoiding the
consequence of the event giving rise to the operation of such Section. Nothing in this
Section 5.4.3
shall affect or postpone any of the Obligations of the Borrower or the rights of the Agent or any Lender provided in this Agreement.
5.5
Voluntary Commitment Reductions
.
The Borrower shall have the right, upon not less than five (5) Business Days' written irrevocable notice to the Agent, to terminate the Commitments or, from time to time, to reduce the amount of the Commitments, which notice shall specify the date and amount of any such reduction and otherwise be substantially in the form of
Exhibit 5.5
(a "
Commitment Reduction Notice
"). Any such reduction shall be in a minimum amount equal to $5,000,000.00 or an integral multiple thereof, unless the Commitments are reduced to zero and this Agreement terminated;
provided
, that the Revolving Credit Commitments may not be reduced below the aggregate principal amount of the Revolving Facility Usage. Each reduction of Revolving Credit Commitments shall ratably reduce the Revolving Credit Commitments of the Lenders.
5.6
Additional Compensation in Certain Circumstances
.
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5.6.1.
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Increased Costs Generally
.
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If any Change in Law shall:
(i)
impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement reflected in the LIBOR Rate) or the Issuing Lender;
(ii)
subject any Lender or the Issuing Lender to any tax of any kind whatsoever with respect to this Agreement, any Letter of Credit, any participation in a Letter of Credit or any Loan under the LIBOR Rate Option made by it, or change the basis of taxation of payments to such Lender or the Issuing Lender in respect thereof (except for Indemnified Taxes or Other Taxes covered by
Section 5.8
[Taxes] and the imposition of, or any change in the rate of, any Excluded Tax payable by such Lender or the Issuing Lender); or
(iii)
impose on any Lender, the Issuing Lender or the London interbank market any other condition, cost or expense affecting this Agreement or any Loan under the LIBOR Rate Option made by such Lender or any Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to such Lender of making, converting to, continuing or maintaining any Loan under the LIBOR Rate Option (or of maintaining its obligation to make any such Loan), or to increase the cost to such Lender or the Issuing Lender of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender or the Issuing Lender hereunder (whether of principal, interest or any other amount) then, upon request of such Lender or the Issuing Lender, the Borrower will pay to such Lender or the Issuing Lender, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Lender, as the case may be, for such additional costs incurred or reduction suffered.
5.6.2.
Capital Requirements
.
If any Lender or the Issuing Lender determines that any Change in Law affecting such Lender or the Issuing Lender or any lending office of such Lender or such Lender's or the Issuing Lender's holding company, if any, regarding capital requirements has or would have the effect of reducing the rate of return on such Lender's or the Issuing Lender's capital or on the capital of such Lender's or the Issuing Lender's holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of Credit or Swing Loans held by, such Lender, or the Letters of Credit issued by the Issuing Lender, to a level below that which such Lender or the Issuing Lender or such Lender's or the Issuing Lender's holding company could have achieved but for such Change in Law (taking into consideration such Lender's or the Issuing Lender's policies and the policies of such Lender's or the Issuing Lender's holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender or the Issuing Lender, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Lender or such Lender's or the Issuing Lender's holding company for any such reduction suffered.
5.6.3.
Certificates for Reimbursement; Repayment of Outstanding Loans; Borrowing of New Loans
.
A certificate of a Lender or the Issuing Lender setting forth the amount or amounts necessary to compensate such Lender or the Issuing Lender or its holding company, as the case may be, as specified in
Sections 5.6.1
[Increased Costs Generally] or
5.6.2
[Capital Requirements] and delivered to the Borrower shall be conclusive absent manifest error. The Borrower shall pay such Lender or the Issuing Lender, as the case may be, the amount shown as due on any such certificate within ten (10) days after receipt thereof.
5.6.4.
Delay in Requests
.
Failure or delay on the part of any Lender or the Issuing Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender's or the Issuing Lender's right to demand such compensation,
provided
that the Borrower shall not be required to compensate a Lender or the Issuing Lender pursuant to this Section for any increased costs incurred or reductions suffered more than nine months prior to the date that such Lender or the Issuing Lender, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender's or the Issuing Lender's intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine (9) month period referred to above shall be extended to include the period of retroactive effect thereof).
In addition to the compensation or payments required by
Section 5.6.1
[Increased Costs Generally] or
Section 5.8
[Taxes], the Borrower shall indemnify each Lender against all direct liabilities, losses or expenses (including any loss or expense incurred in connection with the liquidation or reemployment of funds obtained by it to maintain such Loan, from fees payable to terminate the deposits from which such
funds were obtained or from the performance of any foreign exchange contract) which such Lender actually sustains or incurs as a consequence of any:
(a) payment, prepayment, conversion or renewal of any Loan to which a LIBOR Rate Option applies on a day other than the last day of the corresponding Interest Period (whether or not such payment or prepayment is mandatory, voluntary or automatic and whether or not such payment or prepayment is then due),
(b) attempt by the Borrower to revoke (expressly, by later inconsistent notices or otherwise) in whole or part any Loan Requests under
Section 2.4
[Revolving Credit Loan Requests],
Section 2.5
[Swing Loan Requests] or
Section 4.2
[Interest Periods] or notice relating to voluntary prepayments under
Section 5.4
[Voluntary Prepayments] or notice relating to voluntary Commitment reductions under
Section 5.5
[Voluntary Commitment Reductions],
(c) default by the Borrower in the performance or observance of any covenant or condition contained in this Agreement or any other Loan Document, including any failure of the Borrower to pay when due (by acceleration or otherwise) any principal of or interest on the Loans, Letter of Credit Fees or Commitment Fees or any other amount due hereunder, or
(d) the assignment of any Loan to which a LIBOR Rate Option applies, as a result of the Borrower's exercise of its rights to replace a Lender under
Section 5.4.2
[Replacement of a Lender].
If any Lender sustains or incurs any such loss or expense, it shall from time to time notify the Borrower of the amount determined in good faith by such Lender (which determination may include such assumptions, allocations of costs and expenses and averaging or attribution methods as such Lender shall deem reasonable) to be necessary to indemnify such Lender for such loss or expense. Such notice shall set forth in reasonable detail the basis for such determination. Such amount shall be due and payable by the Borrower to such Lender thirty (30) days after such notice is given.
5.7
Interbank Market Presumption
.
Except as otherwise expressly provided herein, for all purposes of this Agreement and each Note with respect to any aspects of the LIBOR Rate or any Loan under the LIBOR Rate Option, each Lender and the Agent shall be presumed to have obtained rates, funding, currencies, deposits, and the like in the London interbank market regardless whether it did so or not; and, each Lender's and the Agent's determination of amounts payable under, and actions required or authorized by,
Sections 4.4
[LIBOR Rate Unascertainable; Illegality; Increased Costs; Deposits Not Available] and
5.6
[Additional Compensation in Certain Circumstances] shall be calculated, at each Lender's and Agent's option, as though each Lender and Agent funded its pro rata share of each Borrowing Tranche of Loans under the LIBOR Rate Option through the purchase of deposits of the types and maturities corresponding to the deposits used as a reference in accordance with the terms hereof in determining the LIBOR Rate applicable to such Loans, whether in fact that is the case.
5.8
Taxes
.
5.8.1.
Payments Free of Taxes
.
Any and all payments by or on account of any obligation of the Borrower hereunder or under any other Loan Document shall be made free and clear of and without reduction or withholding for any Indemnified Taxes or Other Taxes; provided that if the Borrower shall be required by applicable Law to deduct any Indemnified Taxes (including any Other Taxes) from such payments, then (a) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Agent, Lender or Issuing Lender, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (b) the Borrower shall make such deductions and (c) the Borrower shall timely pay the full amount deducted to the relevant Official Body in accordance with applicable Law.
5.8.2.
Payment of Other Taxes by the Borrower
.
Without limiting the provisions of
Section 5.8.1
[Payments Free of Taxes] above, the Borrower shall timely pay any Other Taxes to the relevant Official Body in accordance with applicable Law.
5.8.3.
Indemnification by the Borrower
.
The Borrower shall indemnify the Agent, each Lender and the Issuing Lender, within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this
Section 5.8.3
) paid by the Agent, such Lender or the Issuing Lender, as the case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Official Body. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender or the Issuing Lender (with a copy to the Agent), or by the Agent on its own behalf or on behalf of a Lender or the Issuing Lender, shall be conclusive absent manifest error.
5.8.4.
Evidence of Payments
.
Within 30 days after the date of any payment of Indemnified Taxes or Other Taxes by the Borrower to an Official Body, the Borrower shall deliver to the Agent the original or a certified copy of a receipt issued by such Official Body evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Agent. If no Indemnified Taxes or Other Taxes are payable in respect of any payment by the Borrower, the Borrower shall, if so requested by a Lender, provide a certificate of an officer of the Borrower to that effect.
5.8.5.
Status of Lenders
.
Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the Law of the jurisdiction in which the Borrower is resident for tax purposes, or any treaty to which
such jurisdiction is a party, with respect to payments hereunder or under any other Loan Document shall deliver to the Borrower (with a copy to the Agent), at the time or times prescribed by applicable Law or reasonably requested by the Borrower or the Agent, such properly completed and executed documentation prescribed by applicable Law as will permit such payments to be made without withholding or at a reduced rate of withholding. Notwithstanding the submission of such documentation claiming a reduced rate of or exemption from U.S. withholding tax, the Agent shall be entitled to withhold United States federal income taxes at the full 30% withholding rate if in its reasonable judgment it is required to do so under the due diligence requirements imposed upon a withholding agent under § 1.1441-7(b) of the United States Income Tax Regulations. Further, the Agent is indemnified under § 1.1461-1(e) of the United States Income Tax Regulations against any claims and demands of any Lender or assignee or participant of a Lender for the amount of any tax it deducts and withholds in accordance with regulations under § 1441 of the Internal Revenue Code. In addition, any Lender, if requested by the Borrower or the Agent, shall deliver such other documentation prescribed by applicable Law or reasonably requested by the Borrower or the Agent as will enable the Borrower or the Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.
Without limiting the generality of the foregoing, in the event that the Borrower is resident for tax purposes in the United States of America, any Foreign Lender shall deliver to the Borrower and the Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the request of the Borrower or the Agent, but only if such Foreign Lender is legally entitled to do so), whichever of the following is applicable:
(a) two (2) duly completed valid originals of IRS Form W-8BEN claiming eligibility for benefits of an income tax treaty to which the United States of America is a party,
(b) two (2) duly completed valid originals of IRS Form W-8ECI,
(c) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, (x) a certificate to the effect that such Foreign Lender is not (A) a "bank" within the meaning of section 881(c)(3)(A) of the Code, (B) a "10 percent shareholder" of the Borrower within the meaning of section 881(c)(3)(B) of the Code, or (C) a "controlled foreign corporation" described in section 881(c)(3)(C) of the Code and (y) two duly completed valid originals of IRS Form W-8BEN,
(d) any other form prescribed by applicable Law as a basis for claiming exemption from or a reduction in United States Federal withholding tax duly completed together with such supplementary documentation as may be prescribed by applicable Law to permit the Borrower to determine the withholding or deduction required to be made, or
(e) to the extent that any Lender is not a Foreign Lender, such Lender shall submit to the Agent two (2) originals of an IRS Form W-9 or any other form prescribed by applicable Law demonstrating that such Lender is not a Foreign Lender.
Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in
Sections 5.8.1
[Payments Free of Taxes] through and including
5.8.4
[Evidence of Payment] shall survive the payment in full of principal and interest hereunder and under any instrument delivered hereunder.
5.9
Notes
.
Upon the request of any Lender, the Revolving Credit Loans made by such Lender may be evidenced by a Revolving Credit Note in the form of
Exhibit 1.1(R)
.
5.10
Settlement Date Procedures
.
In order to minimize the transfer of funds between the Lenders and the Agent, the Borrower may borrow, repay and reborrow Swing Loans and PNC Bank may make Swing Loans as provided in
Section 2.1.2
[Swing Loan Commitment] hereof during the period between Settlement Dates. Not later than 11:00 a.m., Pittsburgh time, on each Settlement Date, the Agent shall notify each Lender of its Ratable Share of the total of the Revolving Credit Loans and the Swing Loans (each a "
Required Share
"). Prior to 2:00 p.m., Pittsburgh time, on such Settlement Date, each Lender shall pay to the Agent the amount equal to the difference between its Required Share and its Revolving Credit Loans, and the Agent shall pay to each Lender its Ratable Share of all payments made by the Borrower to the Agent with respect to the Revolving Credit Loans. The Agent shall also effect settlement in accordance with the foregoing sentence on the proposed Borrowing Dates for Revolving Credit Loans and may at its option effect settlement on any other Business Day. These settlement procedures are established solely as a matter of administrative convenience, and nothing contained in this
Section 5.10
shall relieve the Lenders of their obligations to fund Revolving Credit Loans on dates other than a Settlement Date pursuant to
Sections 2.1.1
[Revolving Credit Loans] and
2.2
[Nature of Lenders' Obligations with Respect to Revolving Credit Loans]. The Agent may at any time at its option for any reason whatsoever require each Lender to pay immediately to the Agent such Lender's Ratable Share of the outstanding Revolving Credit Loans and each Lender may at any time require the Agent to pay immediately to such Lender its Revolving Credit Ratable Share of all payments made by the Borrower to the Agent with respect to the Revolving Credit Loans.
6.
REPRESENTATIONS AND WARRANTIES
6.1
Representations and Warranties
.
The Borrower represents and warrants to the Agent and each of the Lenders as follows:
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6.1.1.
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Organization and Qualification
.
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The Borrower and each Subsidiary of the Borrower that is not an Inactive Subsidiary is a corporation, partnership or limited liability company duly organized, validly existing and in good standing under the laws of the State of New Jersey in the case of the Borrower, or its respective jurisdiction of
organization in the case of such Subsidiary. The Borrower and each Subsidiary of the Borrower that is not an Inactive Subsidiary has the lawful power to own or lease its properties and to engage in the business it presently conducts or proposes to conduct. The Borrower and each Subsidiary of the Borrower that is not an Inactive Subsidiary is duly licensed or qualified and in good standing in each jurisdiction where the failure to be so licensed or qualified could reasonably be expected to result in a Material Adverse Change.
Schedule 6.1.2
states the name of each of the Borrower's Subsidiaries, its jurisdiction of incorporation, its authorized capital stock, the issued and outstanding shares (referred to herein as the "
Subsidiary Shares
") and the owners thereof if it is a corporation, its outstanding partnership interests (the "
Partnership Interests
") if it is a partnership and its outstanding limited liability company interests, interests assigned to managers thereof and the voting rights associated therewith (the "
LLC Interests
") if it is a limited liability company and also indicates if such Subsidiary is an Inactive Subsidiary. The Borrower and each Subsidiary of the Borrower has good and marketable title to all of the Subsidiary Shares, Partnership Interests and LLC Interests it purports to own, free and clear in each case of any Lien. All Subsidiary Shares, Partnership Interests and LLC Interests have been validly issued, and all Subsidiary Shares are fully paid and nonassessable. All capital contributions and other consideration required to be made or paid in connection with the issuance of the Partnership Interests and LLC Interests have been made or paid, as the case may be. There are no options,
warrants or other rights outstanding to purchase any such Subsidiary Shares, Partnership Interests or LLC Interests except as indicated on
Schedule 6.1.2
.
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6.1.3.
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Power and Authority
.
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The Borrower has full power to enter into, execute, deliver and carry out this Agreement and the other Loan Documents to which it is a party, to incur the Indebtedness contemplated by the Loan Documents and to perform its Obligations under the Loan Documents to which it is a party, and all such actions have been duly authorized by all necessary proceedings on its part.
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6.1.4.
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Validity and Binding Effect
.
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This Agreement has been duly and validly executed and delivered by the Borrower, and each other Loan Document which the Borrower is required to execute and deliver on or after the date hereof will have been duly executed and delivered by the Borrower on the required date of delivery of such Loan Document. This Agreement and each other Loan Document constitutes, or will constitute, legal, valid and binding obligations of the Borrower on and after its date of delivery thereof, enforceable against the Borrower in accordance with its terms, except to the extent that enforceability of any of such Loan Document may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforceability of creditors' rights generally or limiting the right of specific performance.
Neither the execution and delivery of this Agreement or the other Loan Documents by the Borrower nor the consummation of the transactions herein or therein contemplated or compliance with the terms and provisions hereof or thereof by the Borrower will conflict with, constitute a default under or result in any breach of (a) the terms and conditions of the certificate of incorporation, bylaws, certificate of limited partnership, partnership agreement, certificate of formation, limited liability company agreement or other organizational documents of the Borrower or (b) any Law or any material agreement or instrument or order, writ, judgment, injunction or decree to which the Borrower or any of its Subsidiaries is a party or by which it or any of its Subsidiaries is bound or to which it is subject, or result in the creation or enforcement of any Lien, charge or encumbrance whatsoever upon any property (now or hereafter acquired) of the Borrower or any of its Subsidiaries (other than Liens granted under the Loan Documents and other than Permitted Liens).
Except as set forth in the SEC Filing, there are no actions, suits, proceedings or investigations (other than Environmental Complaints which are specifically addressed in
Section 6.1.21
[Environmental Matters]) pending or, to the knowledge of the Borrower, threatened against the Borrower or any Subsidiary of the Borrower at law or equity before any Official Body which individually or in the aggregate could reasonably be expected to result in a Material Adverse Change. None of the Borrower or any Subsidiaries of the Borrower is in violation of any order, writ, injunction or any decree of any Official Body which could reasonably be expected to result in any Material Adverse Change.
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6.1.7.
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Title to Properties
.
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The Borrower and each Subsidiary of the Borrower has good and marketable title to or valid leasehold interest in all properties, assets and other rights which it purports to own or lease or which are reflected as owned or leased on its books and records, free and clear of all Liens (other than Environmental Complaints which are specifically addressed in
Section 6.1.21
[Environmental Matters]) except Permitted Liens, and subject to the terms and conditions of the applicable leases, except where the failure to hold such assets and other rights subject to such terms and conditions could reasonably be expected to result in a Material Adverse Change. All leases of property are in full force and effect without the necessity for any consent which has not previously been obtained upon consummation of the transactions contemplated hereby to the extent that the failure of such leases to be in full force and effect or to have obtained any such consent could reasonably be expected to result in a Material Adverse Change.
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6.1.8.
|
Accuracy of Financial Statements
.
|
The Borrower has delivered to the Agent copies of its audited consolidated year-end financial statements for and as of the end of the fiscal year ended September 30, 2010, and its unaudited consolidated financial statements for and as of the end of the fiscal quarters ended December 31, 2010, March 31, 2011 [and June 30, 2011] (the "
Historical Statements
"). The Historical Statements were compiled from
the books and records maintained by the Borrower's management, are correct and complete and fairly represent the consolidated financial condition of the Borrower and its Subsidiaries as of their dates and the results of operations for the fiscal periods then ended and have been prepared in accordance with GAAP consistently applied (subject, in the case of such quarterly financial statements, to normal year-end adjustments and the absence of footnote disclosures). Since September 30, 2010,
no Material Adverse Change has occurred.
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6.1.9.
|
Use of Proceeds; Margin Stock
.
|
6.1.9.1
General.
The Borrower intends to use the proceeds of the Loans in accordance with
Sections 2.8
[Use of Proceeds] and
8.1.10
[Use of Proceeds].
6.1.9.2
Margin Stock.
Neither the Borrower nor any Subsidiary of the Borrower engages or intends to engage principally, or as one of its important activities, in the business of extending credit for the purpose, immediately, incidentally or ultimately, of purchasing or carrying margin stock (within the meaning of Regulation U). No part of the proceeds of any Loan has been or will be used, immediately, incidentally or ultimately, to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock or to refund Indebtedness originally incurred for such purpose, or for any purpose which entails a violation of or which is inconsistent with the provisions of the regulations of the Board of Governors of the Federal Reserve System. Neither the Borrower nor any Subsidiary of the Borrower holds or intends to hold margin stock in such amounts that more than 25% of the reasonable value of the assets of the Borrower or any Subsidiary of the Borrower is or will be represented by margin stock.
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6.1.10.
|
Full Disclosure
.
|
Neither this Agreement nor any other Loan Document, nor any certificate, statement, agreement or other documents furnished to the Agent or any Lender in connection herewith or therewith, contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein and therein, in light of the circumstances under which they were made, not misleading.
All federal, state, local and other tax returns required to have been filed with respect to the Borrower and each Subsidiary of the Borrower on or prior to the Closing Date have been filed, and payment or adequate provision has been made for the payment of all taxes, fees, assessments and other governmental charges which have or may become due pursuant to said returns or to assessments received, except (a) to the extent that such taxes, fees, assessments and other charges are being contested in good faith by appropriate proceedings diligently conducted and for which such reserves or other appropriate provisions if any, as shall be required by GAAP shall have been made or (b) to the extent that with respect to taxes (other
than any U.S. federal or state income taxes, state taxes on equity or capital or comparable state taxes on income, equity or capital and which are otherwise related to the conduct of business or local real property taxes all of which taxes are subject to the requirements of the immediately preceding clause (a)), fees, assessments or other government charges, the failure to so pay or so contest could not reasonably be expected to result in a Material Adverse Change. As of the Closing Date, there are no agreements or waivers extending the statutory period of limitations applicable to any federal income tax return of the Borrower or any Subsidiary of the Borrower for any period.
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6.1.12.
|
Consents and Approvals
.
|
No consent, approval, exemption, order or authorization of, or a registration or filing with, any Official Body or any other Person is required by any Law or any agreement in connection with the execution, delivery and carrying out of this Agreement and the other Loan Documents by the Borrower, except as listed on
Schedule 6.1.12
, all of which shall have been obtained or made on or prior to the Closing Date except as otherwise indicated on
Schedule 6.1.12
.
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6.1.13.
|
No Event of Default; Compliance With Instruments
.
|
No event has occurred and is continuing and no condition exists or will exist after giving effect to the borrowings or other extensions of credit to be made on the Closing Date under or pursuant to the Loan Documents which constitutes an Event of Default or Potential Default. None of the Borrower nor any Subsidiaries of the Borrower is in violation of (a) any term of its certificate of incorporation, bylaws, certificate of limited partnership, partnership agreement, certificate of formation, limited liability company agreement or other organizational documents or (b) any material agreement or instrument to which it is a party or by which it or any of its properties may be subject or bound where such violation could reasonably be expected to result in a Material Adverse Change.
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6.1.14.
|
Patents, Trademarks, Copyrights, Licenses, Etc
.
|
The Borrower and each Subsidiary of the Borrower owns or has the contractual right to use all the patents, trademarks, service marks, trade names, copyrights, licenses, registrations, franchises, permits and rights reasonably necessary to own and operate its properties and to carry on its business as presently conducted and planned to be conducted by the Borrower or such Subsidiary, without known possible, alleged or actual conflict with the rights of others, except where the failure to do so could not reasonably be expected to have a Material Adverse Change.
As of the Closing Date, the Borrower is in compliance with the requirements of
Section 8.1.3
[Maintenance of Insurance].
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6.1.16.
|
Compliance With Laws
.
|
The Borrower and its Subsidiaries are in compliance in all material respects with all applicable Laws (other than Environmental Laws which are specifically addressed in
Section 6.1.21
[Environmental Matters]) in all jurisdictions in which the Borrower or any Subsidiary of the Borrower is presently or will be doing business except where the failure to do so could not reasonably be expected to result in a Material Adverse Change.
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6.1.17.
|
Material Contracts; Burdensome Restrictions
.
|
All material contracts relating to the business operations of the Borrower and each Subsidiary of the Borrower, including all employee benefit plans and Labor Contracts are valid, binding and enforceable upon the Borrower or such Subsidiary and, to the best of the Borrower's knowledge, each of the other parties thereto in accordance with their respective terms, except to the extent that the failure to be valid, binding and enforceable could reasonably be expected to result in a Material Adverse Change. To the Borrower's knowledge, there is no default with respect to parties other than the Borrower or such Subsidiary under any contract which, when combined with all then existing defaults under all other contracts, could reasonably be expected to result in a Material Adverse Change. None of the Borrower or its Subsidiaries is bound by any contractual obligation, or subject to any restriction in any organization document, or any requirement of Law which could reasonably be expected to result in a Material Adverse Change.
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6.1.18.
|
Investment Companies
.
|
Neither the Borrower nor any Subsidiaries of the Borrower is an "investment company" registered or required to be registered under the Investment Company Act of 1940 or under the "control" of an "investment company" as such terms are defined in the Investment Company Act of 1940 and shall not become such an "investment company" or under such "control." Neither the Borrower nor any Subsidiaries of the Borrower is a "holding company" or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company" within the meaning of the Public Utility Holding Company Act of 1935, as amended. Neither the Borrower nor any Subsidiaries of the Borrower is subject to any other federal or state statute or regulation limiting its ability to incur Indebtedness for borrowed money.
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6.1.19.
|
Plans and Benefit Arrangements
.
|
(a) The Borrower and each other member of the ERISA Group are in compliance with any applicable provisions of ERISA with respect to all Benefit Arrangements, Plans, Multiple Employer Plans and Multiemployer Plans except where any instance of noncompliance could not reasonably be expected to result in a Material Adverse Change. There has been no Prohibited Transaction with respect to any Benefit Arrangement or any Plan or, to the best knowledge of the Borrower, with respect to any Multiemployer Plan or Multiple Employer Plan, which could reasonably be expected to result in a Material Adverse Change. The Borrower and all other members of the ERISA Group have made when due any and all material payments required to be made under any agreement relating to a Multiemployer Plan or a Multiple Employer Plan or any Law pertaining thereto except for any failure that could not reasonably be expected to result in a Material
Adverse Change. With respect to each Plan and Multiple Employer Plan, the Borrower and each other member of the ERISA Group (i) have fulfilled in all material respects their obligations under the minimum funding standards of ERISA, (ii) have not incurred any material liability to the PBGC which has not been paid in the ordinary course, and (iii) have not had asserted against them any penalty for failure to fulfill the minimum funding requirements of ERISA except for any failure that could not reasonably be expected to result in a Material Adverse Change. All Plans, Benefit Arrangements and, to the best knowledge of Borrower, Multiple Employer Plans and Multiemployer Plans have been administered in all material respects in accordance with their terms and applicable Law except for any failure that could not reasonably be expected to result in a Material Adverse Change.
(b) No event requiring notice to the PBGC under Section 303(k)(4)(A) of ERISA has occurred or is reasonably expected to occur with respect to any Plan except for any failure that could not reasonably be expected to result in a Material Adverse Change.
(c) Neither the Borrower nor any other member of the ERISA Group has incurred or reasonably expects to incur any withdrawal liability under ERISA to any Multiemployer Plan or Multiple Employer Plan which could reasonably be expected to result in a Material Adverse Change. Neither the Borrower nor any other member of the ERISA Group has been notified by any Multiemployer Plan or Multiple Employer Plan that such Multiemployer Plan or Multiple Employer Plan has been terminated within the meaning of Title IV of ERISA and, to the best knowledge of the Borrower, no Multiemployer Plan or Multiple Employer Plan is reasonably expected to be reorganized or terminated, within the meaning of Title IV of ERISA which, in either case, could reasonably be expected to result in a Material Adverse Change.
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6.1.20.
|
Employment Matters
.
|
The Borrower and each Subsidiary of the Borrower is in compliance with the Labor Contracts and all applicable federal, state and local labor and employment Laws including those related to equal employment opportunity and affirmative action, labor relations, minimum wage, overtime, child labor, medical insurance continuation, worker adjustment and relocation notices, immigration controls and worker and unemployment compensation, where the failure to comply could reasonably be expected to result in a Material Adverse Change. There are no outstanding grievances, arbitration awards or appeals therefrom arising out of the Labor Contracts or current or threatened strikes, picketing, handbilling or other work stoppages or slowdowns at facilities of the Borrower or any Subsidiary of the Borrower which in any case could reasonably be expected to result in a Material Adverse Change.
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6.1.21.
|
Environmental Matters
.
|
Except as set forth in the SEC Filing, none of the Borrower or any Subsidiary of the Borrower has received any Environmental Complaint which individually or in the aggregate could reasonably be expected to result in a Material Adverse Change.. There are no pending or, to the Borrower's knowledge, threatened Environmental Complaints relating to the Borrower or any Subsidiary of the Borrower, or any of the Properties or, to the Borrower's knowledge, any prior owner, operator or occupant of any of the Properties pertaining to, or arising out of, any Contamination or violations of Environmental Laws or Environmental
Permits which, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Change. The Borrower and its Subsidiaries are in compliance with all applicable Environmental Laws in all jurisdictions in which the Borrower or any of its Subsidiaries is doing business except where the failure to do so could not reasonably be expected to result in a Material Adverse Change. The Borrower holds and its Subsidiaries hold and are operating in compliance with Environmental Permits, except where the failure to do so could not reasonably be expected to result in a Material Adverse Change.
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6.1.22.
|
Senior Debt Status
.
|
The Obligations of the Borrower under this Agreement and each of the other Loan Documents to which it is a party do rank and will rank at least
pari
passu
in priority of payment with all other Indebtedness of the Borrower, except Indebtedness of the Borrower to the extent secured by Permitted Liens. There is no Lien upon or with respect to any of the properties or income of the Borrower or any Subsidiary of the Borrower which secures Indebtedness or other obligations of any Person except for Permitted Liens.
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6.1.23.
|
Hedging Contract Policies.
|
Schedule 6.1.23
is a true and correct copy of Hedging Contract Policies. The Borrower and each Subsidiary of the Borrower is subject to and is in compliance with the Hedging Contract Policies and the Borrower shall, and shall cause each of its Subsidiaries which engages in any Hedging Transaction to continue to comply with the Hedging Contract Policies, to the extent that the failure to comply, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Change.
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6.1.24.
|
Permitted Related Business Opportunities.
|
The information set forth on
Schedule 6.1.24
is true, complete and correct in all material respects and sets forth a list of all of the Investments in Permitted Related Business Opportunities of the Borrower and its Subsidiaries as of the Closing Date and includes, without limitation, the amount and nature of each such Investment, a description of the activities engaged in by the Borrower and its Subsidiaries in connection with such Investment, and a description of the activities engaged in by the Person in which the Investment has been made.
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6.1.25.
|
Anti-Terrorism Laws; Executive Order No. 13224.
|
Neither the Borrower nor any Subsidiary of the Borrower is any of the following (each a "
Blocked Person
"):
(a) a Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order No. 13224;
(b) a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order No. 13224;
(c) a Person or entity with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law;
(d) a Person or entity that commits, threatens or conspires to commit or supports "terrorism" as defined in the Executive Order No. 13224;
(e) a Person or entity that is named as a "specially designated national" on the most current list published by the United States Treasury Department Office of Foreign Asset Control at its official website or any replacement website or other replacement official publication of such list, or
(f) a Person or entity who is affiliated or associated with a Person or entity listed above.
6.2
Continuation of Representations
.
The Borrower makes the representations and warranties in this
Section 6
on the date hereof, on the Closing Date, and each date thereafter on which a Loan is made or a Letter of Credit is issued as provided in and subject to
Sections 7.1
[First Loans and Letters of Credit] and
7.2
[Each Additional Loan or Letter of Credit].
7.
CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT
The obligation of each Lender to make Loans and of the Issuing Lender to issue Letters of Credit hereunder is subject to the performance by the Borrower of its Obligations to be performed hereunder at or prior to the making of any such Loans or issuance of such Letters of Credit and to the satisfaction of the following further conditions:
7.1
First Loans and Letters of Credit
.
On the Closing Date:
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7.1.1.
|
Officer's Certificate
.
|
The representations and warranties of the Borrower contained in
Section 6
[Representations and Warranties] and in each of the other Loan Documents shall be true and accurate on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of such date (except representations and warranties which relate solely to an earlier date or time, which representations and warranties shall be true and correct on and as of the specific dates or times referred to therein), and the Borrower shall have performed and complied with all covenants and conditions hereof and thereof required to have been performed and complied with on or prior to the Closing Date, no Event of Default or Potential Default shall have occurred and be continuing or shall exist; and there shall be delivered to the Agent for the benefit of each Lender a certificate of the Borrower, dated the Closing Date and signed by the Chief Executive Officer, President, Chief Financial Officer or other Authorized Officer of the Borrower, to each such effect.
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7.1.2.
|
Secretary's Certificate
.
|
There shall be delivered to the Agent for the benefit of each Lender a certificate dated the Closing Date and signed by the Secretary or an Assistant Secretary of the Borrower, certifying as appropriate as to:
(a) all action taken by the Borrower in connection with this Agreement and the other Loan Documents;
(b) the names of the officer or officers authorized to sign this Agreement and the other Loan Documents and the true signatures of such officer or officers and specifying the Authorized Officers permitted to act on behalf of the Borrower for purposes of this Agreement and the true signatures of such officers, on which the Agent and each Lender may conclusively rely; and
(c) copies of its organizational documents, including its certificate of incorporation, bylaws, certificate of limited partnership, partnership agreement, certificate of formation, and limited liability company agreement as in effect on the Closing Date certified by the appropriate state official where such documents are filed in a state office together with certificates from the appropriate state officials as to the continued existence and good standing of the Borrower in each state where organized or qualified to do business.
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7.1.3.
|
Opinion of Counsel.
|
There shall be delivered to the Agent for the benefit of each Lender a written opinion of (a) Troutman Sanders LLP, counsel for the Borrower (who may rely on the opinions of such other counsel and Certificates of the Borrower's in-house counsel as may be reasonably acceptable to the Agent), dated the Closing Date and in substantially the form attached hereto as
Exhibit 7.1.3 (A)
, and (b) Richard Reich, in-house counsel for NJR Service Corporation, dated the Closing Date and in substantially the form attached hereto as
Exhibit 7.1.3 (B)
.
All legal details and proceedings in connection with the transactions contemplated by this Agreement and the other Loan Documents shall be in form and substance satisfactory to the Agent and counsel for the Agent, and the Agent shall have received all such other counterpart originals or certified or other copies of such documents and proceedings in connection with such transactions, in form and substance satisfactory to the Agent and said counsel, as the Agent or said counsel may reasonably request. The Agent shall have received this Agreement executed by the Borrower and each Lender.
The Borrower shall have paid or caused to be paid to the Agent for itself and for the account of the Lenders to the extent not previously paid all fees accrued through the Closing Date and the costs and expenses for which the Agent and the Lenders are entitled to be reimbursed.
The material consents, if any, required to effectuate the transactions contemplated hereby as set forth on
Schedule 6.1.12
shall have been obtained.
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7.1.7.
|
Officer's Certificate Regarding MACs
.
|
Since September 30, 2010, no Material Adverse Change shall have occurred; prior to the Closing Date, there shall have been no material change in the management of the Borrower; and there shall have been delivered to the Agent for the benefit of each Lender a certificate dated the Closing Date and signed by the Chief Executive Officer, President, Chief Financial Officer or other Authorized Officer of the Borrower to each such effect.
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7.1.8.
|
No Violation of Laws
.
|
The making of the Loans and the issuance of the Letters of Credit shall not contravene any Law applicable to the Borrower or any of the Lenders.
|
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|
7.1.9.
|
No Actions or Proceedings
.
|
No action, proceeding, investigation, regulation or legislation shall have been instituted, threatened or proposed before any court, governmental agency or legislative body to enjoin, restrain or prohibit, or to obtain damages in respect of, this Agreement, the other Loan Documents or the consummation of the transactions contemplated hereby or thereby or which, in the Agent's sole discretion, would make it inadvisable to consummate the transactions contemplated by this Agreement or any of the other Loan Documents.
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7.1.10.
|
Hedging Contract Policies
.
|
The Borrower shall have delivered to the Agent and each Lender a true and complete copy of the Hedging Contract Policies, and the Hedging Contract Policies shall be satisfactory in form and substance to each Lender.
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7.1.11.
|
Termination of Commitments and Repayment of Outstanding Indebtedness.
|
The Borrower shall have repaid all obligations, indebtedness, interest fees, expenses and other amounts due and owing under the Existing Agreement, all commitments to lend thereunder shall have been irrevocably terminated and all letters of credit issued thereunder shall have been terminated (except for the Existing Letters of Credit).
7.2
Each Additional Loan or Letter of Credit
.
At the time of making any Loans or issuing any Letters of Credit other than Loans made or Letters of Credit issued on the Closing Date and after giving effect to the proposed extensions of credit: (a) the representations and warranties of the Borrower contained in
Section 6
[Representations and Warranties] (other than the representations and warranties contained in the first sentence of
Section 6.1.6
[Litigation], the last sentence of
Section 6.1.8(b)
[Financial Statements], and
Section 6.1.21
[Environmental Matters]) and in the other Loan Documents shall be true on and as of the date of such additional Loan or Letter of Credit with the same effect as though such representations and warranties had been made on and as of such date (except representations and warranties which expressly relate solely to an earlier date or time, which representations and warranties shall be true and correct on and as of the specific dates or times referred to therein), and the Borrower shall have performed and complied with all covenants and conditions hereof; (b) no Event of Default or Potential Default shall have occurred and be continuing or shall exist; (c) the making of the Loans or issuance of such Letters of Credit shall not contravene any Law applicable to the Borrower or any Subsidiary of the Borrower or any of the Lenders; and (d) the Borrower shall have delivered to the Agent a duly executed and completed Loan Request, Swing Loan Request, or application for a Letter of Credit as the case may be.
8.
COVENANTS
8.1
Affirmative Covenants
.
The Borrower covenants and agrees that until payment in full of the Loans, Reimbursement Obligations and Letter of Credit Borrowings, and interest thereon, expiration or termination of all Letters of Credit, satisfaction of all of the Borrower's other Obligations under the Loan Documents and termination of the Commitments, the Borrower shall comply at all times with the following affirmative covenants:
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8.1.1.
|
Preservation of Existence, Etc
.
|
The Borrower shall, and shall cause each of its Subsidiaries to, maintain its legal existence as a corporation, limited partnership or limited liability company and its license or qualification and good standing in each jurisdiction in which its ownership or lease of property or the nature of its business makes such license or qualification necessary, except (a) where the lack of legal existence of any Subsidiary or the failure to be so licensed or qualified could not reasonably be expected to have a Material Adverse Change, or (b) as otherwise expressly permitted in
Section 8.2.5
[Liquidations, Mergers, Etc.].
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8.1.2.
|
Payment of Liabilities, Including Taxes, Etc
.
|
The Borrower shall, and shall cause each of its Subsidiaries to, (a) file all federal, state, local and other tax returns required to be filed in a timely manner, and (b) duly pay and discharge all liabilities to which it is subject or which are asserted against it, promptly as and when the same shall become due and payable, including all taxes,
assessments and governmental charges upon it or any of its properties, assets, income or profits, prior to the date on which penalties attach thereto, except to the extent that such liabilities, including taxes, assessments or charges, are being contested in good faith and by appropriate and lawful proceedings diligently conducted and for which such reserve or other appropriate provisions, if any, as shall be required by GAAP shall have been made, but only to the extent that failure to file any such returns in a timely manner or discharge any such liabilities would not result in any additional liability which could reasonably be expected to result in a Material Adverse Change.
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8.1.3.
|
Maintenance of Insurance
.
|
The Borrower shall, and shall cause each of its Subsidiaries to, insure its properties and assets with reputable and financially sound insurers, including self-insurance to the extent customary, according to prudent business practice in the industry of the Borrower and such Subsidiaries, in amounts sufficient to insure the assets and risks of the Borrower and each of its Subsidiaries in accordance with prudent business practice in the industry of the Borrower and such Subsidiaries.
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8.1.4.
|
Maintenance of Properties and Leases
.
|
The Borrower shall, and shall cause each of its Subsidiaries to, maintain in good repair, working order and condition (ordinary wear and tear excepted) in accordance with the general practice of other businesses of similar character and size, all of those properties useful or necessary to its business, and from time to time, the Borrower will make or cause to be made all appropriate repairs, renewals or replacements thereof.
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8.1.5.
|
Maintenance of Patents, Trademarks, Etc
.
|
The Borrower shall, and shall cause each of its Subsidiaries to, maintain in full force and effect all patents, trademarks, service marks, trade names, copyrights, licenses, franchises, permits and other authorizations necessary for the ownership and operation of its properties and business if the failure so to maintain the same could constitute a Material Adverse Change.
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8.1.6.
|
Visitation Rights
.
|
The Borrower shall, and shall cause each of its Subsidiaries to, permit any of the officers or authorized employees or representatives of the Agent or any of the Lenders to visit and inspect any of its properties and to examine and make excerpts from its books and records and discuss its business affairs, finances and accounts with its officers, all in such detail and at such times and as often as any of the Lenders may reasonably request,
provided
that each Lender shall provide the Borrower and the Agent with reasonable notice prior to any visit or inspection, and, except after the occurrence and during the continuance of an Event of Default, any such visit or inspection shall occur during regular business hours. In the event any Lender desires to conduct an audit of the Borrower and/or any one or more of its Subsidiaries, such Lender shall make a reasonable effort to conduct such audit contemporaneously with any audit to be performed by the Agent, and except after the occurrence and during the continuance of an Event of Default, any such audit (whether by the Agent or any Lender) shall be at the sole cost and expense of the Agent or such Lender, as the case may be.
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8.1.7.
|
Keeping of Records and Books of Account
.
|
The Borrower shall, and shall cause each Subsidiary of the Borrower to, maintain and keep proper books of record and account which enable the Borrower and its Subsidiaries to issue financial statements in accordance with GAAP and as otherwise required by applicable Laws of any Official Body
having jurisdiction over the Borrower or any Subsidiary of the Borrower, and in which full, true and correct entries shall be made in all material respects of all its dealings and business and financial affairs.
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8.1.8.
|
Plans and Benefit Arrangements
.
|
The Borrower shall, and shall cause each of its Subsidiaries and each other member of the ERISA Group to, comply with ERISA, the Internal Revenue Code and other applicable Laws applicable to Plans and Benefit Arrangements except where such failure, alone or in conjunction with any other failure, would not reasonably be expected to result in a Material Adverse Change. Without limiting the generality of the foregoing, the Borrower shall cause all of its Plans and all Plans maintained by any of its Subsidiaries and any member of the ERISA Group to be funded in accordance with the minimum funding requirements of ERISA and shall make, and cause each member of the ERISA Group to make, in a timely manner, all contributions due to Plans, Benefit Arrangements and Multiemployer Plans, except where any such failure, alone or in conjunction with any other failure, could not reasonably be expected to result in a Material Adverse Change.
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8.1.9.
|
Compliance With Laws
.
|
The Borrower shall, and shall cause each of its Subsidiaries to, comply with all applicable Laws, including all Environmental Laws, in all material respects,
provided
that
it shall not be deemed to be a violation of this
Section 8.1.9
if any failure to comply with any Law would not result in fines, penalties, costs associated with the performance of any Remedial Actions, other similar liabilities or injunctive relief which in the aggregate could not reasonably be expected to result in a Material Adverse Change. Without limiting the generality of the foregoing, the Borrower shall, and shall cause each of its Subsidiaries to, obtain, maintain, renew and comply with all Environmental Permits applicable to their respective operations and activities, provided that it shall not be deemed to be a violation of this
Section 8.1.9
if any failure to do so would not result in cease and desist orders or fines, penalties or other similar liabilities or injunctive relief which in the aggregate could not reasonably be expected to result in a Material Adverse Change.
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8.1.10.
|
Use of Proceeds
.
|
The Borrower will use the Letters of Credit and the proceeds of the Loans only for general corporate purposes of the Borrower and for working capital of the Borrower (including, without limitation (a) the use of Letters of Credit to support obligations arising in the ordinary course of the business of the Borrower, as such business is permitted to be conducted pursuant to
Section 8.2.9
[Continuation of or Change in Business] (b) to support the issuance by the Borrower of short term notes in the commercial paper market and (c) to repay and terminate Indebtedness outstanding under the Existing Agreement). The Borrower shall not use the Letters of Credit or the proceeds of the Loans for any purposes which contravenes any applicable Law or any provision hereof.
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8.1.11.
|
Hedging Contract Policies
.
|
The Borrower and each Subsidiary of the Borrower shall comply with the Hedging Contract Policies if the failures to comply, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Change.
8.2
Negative Covenants
.
The Borrower covenants and agrees that until payment in full of the Loans, Reimbursement Obligations and Letter of Credit Borrowings, and interest thereon, expiration or termination of all Letters of Credit, satisfaction of all of the Borrower's other Obligations hereunder and termination of the Commitments, the Borrower shall comply with the following negative covenants:
The Borrower shall not, and shall not permit any of its Subsidiaries to, at any time create, incur, assume or suffer to exist any Indebtedness, except:
(a) Indebtedness under the Loan Documents;
(b) unsecured Indebtedness of the Borrower under the NJNG Notes as identified on
Schedule 8.2.1
; including any amendments, extensions, renewals or refinancings thereof, so long as before and immediately after the incurrence of such Indebtedness, the Borrower is in compliance with
Sections 8.2.12
[Maximum Leverage Ratio] and no Event of Default would be caused thereby;
(c) secured Indebtedness of the Borrower under the First Mortgage Indenture (including the First Mortgage Bonds identified on
Schedule 8.2.1
issued under the First Mortgage Indenture which secure (i) the loan agreements identified on
Schedule 8.2.1
(with a net principal Indebtedness under the Series AA through KK First Mortgage Bonds and the related Loan Agreements of $144,845,000) and (ii) the promissory note or promissory notes in the original aggregate principal amount of $125,000,000 issued under a note purchase agreement (with a net principal Indebtedness under both the Series LL First Mortgage Bonds and related promissory note(s) of $125,000,000 as described on
Schedule 8.2.1
) as identified on
Schedule 8.2.1
; including any amendments, extensions, renewals or refinancings thereof, so long as before and immediately after the incurrence of such Indebtedness, the Borrower is in compliance with
Sections 8.2.12
[Maximum Leverage Ratio] and no Event of Default would be caused thereby;
(d) other Indebtedness of the Borrower (identified on
Schedule 8.2.1
as of the Closing Date or incurred after the Closing Date) so long as before and immediately after the incurrence of such Indebtedness, the Borrower is in compliance with
Section 8.2.12
[Maximum Leverage Ratio]) and no Event of Default would be caused thereby;
(e) Indebtedness of the Borrower arising under any Hedging Transaction in accordance with Borrower's Hedging Contract Policies covering a notional amount not to exceed the face amount of outstanding Indebtedness;
(f) Guaranties of any Subsidiary of the Borrower of obligations of the Borrower arising under any Hedging Transaction;
(g) Guaranties by the Borrower of various obligations of any of its Subsidiaries in connection with any transaction arising in connection with its ordinary course of business as conducted on the Closing Date or as otherwise permitted to be conducted pursuant to
Section 8.2.9
[Continuation of or Change in Business]; and
(h) Guaranties of the Borrower or any Subsidiary of the Borrower of Indebtedness permitted by clause (d) of this
Section 8.2.1
[Indebtedness].
The Borrower shall not, and shall not permit any of its Subsidiaries to, at any time create, incur, assume or suffer to exist any Lien on any of its property or assets, tangible or intangible, now owned or hereafter acquired, or agree or become liable to do so,
except for Permitted Liens.
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8.2.3.
|
[
Intentionally Omitted
]
.
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8.2.4.
|
Loans and Investments
.
|
The Borrower shall not, and shall not permit any of its Subsidiaries to, at any time make or suffer to remain outstanding any loan or advance to, or purchase, acquire or own any stock, bonds, notes or securities of, or any partnership interest (whether general or limited) or limited liability company interest in, or any other investment or interest in,
or make any capital contribution to, any other Person, or agree, become or remain liable to do any of the foregoing (any of the foregoing being an "
Investment
"), except:
(a) trade credit extended on usual and customary terms in the ordinary course of business;
(b) advances to employees to meet expenses incurred by such employees in the ordinary course of business;
(c) Investments in New Jersey Natural Gas Charity, Inc.;
(d) Permitted Investments; and
(e) any Investment which constitutes a Permitted Acquisition in accordance with
Section 8.2.5
[Liquidations, Mergers, Consolidations, Acquisitions].
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8.2.5.
|
Liquidations, Mergers, Consolidations, Acquisitions
.
|
The Borrower shall not, and shall not permit any of its Subsidiaries to, dissolve, liquidate or wind-up its affairs, or become a party to any merger or consolidation, or acquire by purchase, lease or otherwise all or substantially all of the assets or capital stock of any other Person,
provided
that
:
(a) any such Subsidiary may consolidate or merge into another such Subsidiary which is wholly owned by the Borrower or one or more of such other Subsidiaries,
(b) any Inactive Subsidiary of the Borrower may dissolve, liquidate or wind-up its affairs or any Inactive Subsidiary of the Borrower may consolidate or merge into: (i) any other Inactive Subsidiary of the Borrower, or (ii) any other Subsidiary of the Borrower which is not an Inactive Subsidiary so long as such Inactive Subsidiary has no liabilities, contingent or otherwise, other than Indebtedness permitted by
Section 8.2.1
[Indebtedness], and
(c) the Borrower may acquire, whether by purchase or by merger, (i) all of the ownership interests of another Person or (ii) substantially all of assets of another Person or of a business or division of another Person (each a "
Permitted Acquisition
"),
provided
that each of the following requirements is met:
(A) the board of directors or other equivalent governing body of such Person shall have approved such Permitted Acquisition and, if the Borrower shall use any portion of the Loans to fund such Permitted Acquisition, the Borrower also shall have delivered to the Lenders written evidence of the approval of the board of directors (or equivalent body) of such Person for such Permitted Acquisition;
(B) the business acquired, or the business conducted by the Person whose ownership interests are being acquired, as applicable, shall be substantially the same as one or more line or lines of business conducted by the Borrower or otherwise be compliant with
Section 8.2.8
[Continuation of or Change in Business];
(C) no Potential Default or Event of Default shall exist immediately prior to and after giving effect to such Permitted Acquisition;
(D) the Borrower shall demonstrate that it shall be in compliance with the covenant contained in
Section 8.2.12
[Maximum Leverage Ratio] after giving effect to such Permitted Acquisition (including in such computation Indebtedness or other liabilities assumed or incurred in connection with such Permitted Acquisition but excluding income earned or expenses incurred by the Person, business or assets to be acquired prior to the date of such Permitted Acquisition) by delivering at least five (5) Business Days prior to such Permitted Acquisition a certificate in the form of
Exhibit 8.2.5
(the "
Acquisition Compliance Certificate
") evidencing such compliance; and
(E) the Borrower shall deliver to the Agent, as soon as available prior to, or in any event within five (5) Business Days after, the consummation of such Permitted Acquisition, such copies of any agreements entered into or proposed to be entered into by the Borrower in connection with such Permitted Acquisition, and shall deliver, as soon as available, to the Agent such other information about such Person or its assets as the Agent or any Lender may reasonably require.
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8.2.6.
|
Dispositions of Assets or Subsidiaries
.
|
The Borrower shall not, and shall not permit any of its Subsidiaries to, sell, sell and leaseback, convey, assign, lease, abandon or otherwise transfer or dispose of, voluntarily or involuntarily,
any of its properties or assets, tangible or intangible (including sale, assignment, discount or other disposition of accounts, contract rights, chattel paper, equipment or general intangibles with or without recourse, or of capital stock, shares of beneficial interest, partnership interests or limited liability company interests of a Subsidiary of the Borrower), except:
(a) transactions involving the sale of inventory in the ordinary course of business;
(b) any sale, transfer or lease of assets in the ordinary course of business which are no longer necessary or required in the conduct of the Borrower's or such Subsidiary's business;
(c) any sale, transfer or lease of assets by any Subsidiary of the Borrower to the Borrower;
(d) any sale, transfer or lease of assets in the ordinary course of business which are replaced by substitute assets acquired or leased;
(e) any sale, transfer or lease of assets, other than those specifically excepted pursuant to clauses (a) through (d) above, provided that (i) at the time of any disposition, no Event of Default shall exist or shall result from such disposition, and (ii) the aggregate net book value of all assets so sold by the Borrower and its Subsidiaries shall not exceed in any fiscal year five (5%) of the consolidated total assets of the Borrower and its Subsidiaries as determined on a consolidated basis in accordance with GAAP;
(f) any issuance of shares of the capital stock of the Borrower to the Parent;
(g) any sale, transfer or lease of assets of any Inactive Subsidiary of the Borrower; and
(h) gas meter sale and leaseback transactions under the Permitted Sale and Leaseback Program.
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8.2.7.
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Affiliate Transactions
.
|
Except for any Permitted Related Business Opportunities as previously disclosed to the Agent and each of the Lenders, the Borrower shall not, and shall not permit any of its Subsidiaries to, enter into or carry out any transaction (including purchasing property or services from or selling property or services to any Affiliate of the Borrower or any of its Subsidiaries or other Person) unless such transaction is not otherwise prohibited by this Agreement, is entered into in the ordinary course of business upon fair and reasonable arm's-length terms and conditions and is in accordance with all applicable Law.
8.2.8.
Subsidiaries as Guarantors
.
The Borrower shall not, and shall not permit any of its Subsidiaries to, without the Required Lenders' consent (which shall not be unreasonably withheld) own or create, directly or indirectly, any Subsidiaries.
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8.2.9.
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Continuation of or Change in Business; Joint Ventures
.
|
The Borrower shall not, and shall not permit any of its Subsidiaries to, engage in any business (including without limitation any joint ventures) other than the business of the Borrower or such Subsidiary substantially as conducted and operated by the Borrower or such Subsidiary during the present fiscal year,
and any line of business or business activity related or complementary to the business of the Borrower and its Subsidiaries conducted as of the Closing Date, or constituting a Permitted Related Business Opportunity.
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8.2.10.
|
Plans and Benefit Arrangements
.
|
The Borrower shall not, and shall not permit any of its Subsidiaries to, engage in a Prohibited Transaction with any Plan, Benefit Arrangement, Multiple Employer Plan or Multiemployer Plan which, alone or in conjunction with any other circumstances or set of circumstances, would reasonably be expected to result in a Material Adverse Change.
The Borrower shall not, and shall not permit any Subsidiary of the Borrower to, change its fiscal year from the twelve-month period beginning October 1 and ending September 30, without the prior written consent of the Required Lenders (which consent will not be unreasonably conditioned or withheld).
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8.2.12.
|
Maximum Leverage Ratio
.
|
The Borrower shall not at any time permit the ratio of Consolidated Total Indebtedness of the Borrower and its Subsidiaries to Consolidated Total Capitalization to exceed 0.65 to 1.00.
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8.2.13.
|
[
Intentionally Omitted
]
.
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8.2.14.
|
No Limitation on Dividends and Distributions by Borrower or its Subsidiaries
.
|
The Borrower shall not, and shall not permit any Subsidiary of the Borrower to, enter into or otherwise be bound by any agreement not to pay dividends or make distributions to the Borrower (in the case of any such Subsidiary) or to the Parent (in the case of the Borrower), except for the restrictions that are no more onerous than the restrictions set forth in this Agreement and the restrictions set forth in the First Mortgage Indenture, in each case as such restrictions exist as of the Closing Date.
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8.2.15.
|
Payment of Dividends; Redemptions
.
|
The Borrower shall not, and shall not permit any Subsidiary to, declare or make any dividend payment or other distribution of assets, properties, cash, rights, obligations or securities on account of any shares of any class of capital stock of the Borrower, or purchase, redeem or otherwise acquire for value
(or permit any of its Subsidiaries to do so) any shares of any class of capital stock or other securities of the Borrower or any warrants, rights or options to acquire any such shares or other securities, now or hereafter outstanding, except that the Borrower may (a) declare and make any dividend payment or other distribution payable in common stock of the Borrower, (b) purchase, redeem or otherwise acquire shares of its common stock or warrants, rights or options to acquire any such shares so long as no Event of Default or Potential Default shall have occurred and is continuing or would result therefrom, and (c) declare and make its dividends, so long as, after giving effect thereto, no Event of Default shall have occurred and is continuing.
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8.2.16.
|
No Modification of Hedging Contract Policies
.
|
The Borrower and each Subsidiary of the Borrower shall not amend, modify, supplement, restate or rescind the Hedging Contract Policies in a manner which, compared with past practice of the Borrower and its Subsidiaries, would render Hedging Transactions entered into pursuant to the Hedging Contract Policies (as so modified) materially more speculative, without the prior written consent of the Required Lenders.
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8.2.17.
|
Off-Balance Sheet Financing.
|
The Borrower and each Subsidiary of the Borrower shall not engage in any off-balance sheet transaction (i.e., the liabilities in respect of which do not appear on the liability side of the balance sheet, with such balance sheet prepared in accordance with GAAP) providing the functional equivalent of borrowed money (including asset securitizations, sale/leasebacks or Synthetic Leases (other than any sale/leaseback transaction or Synthetic Lease entered into, in either case, with respect to meter assets and which transaction is otherwise permitted by this Agreement)) if the liabilities thereunder could reasonably be expected to result in a Material Adverse Change. For purposes of this
Section 8.2.17
(a) "Synthetic Lease" means any lease transaction under which the parties intend that (i) the lease will be treated as an "operating lease" by the lessee pursuant to Statement of Financial Accounting Standards No. 13, as amended, or appropriate successor thereto, and (ii) the lessee will be entitled to various tax benefits ordinarily available to owners (as opposed to lessees) of like property, and (b) the amount of any lease which is not a capital lease in accordance with GAAP is the aggregate amount of minimum lease payments due pursuant to such lease for any non-cancelable portion of its term.
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8.2.18.
|
[Intentionally Omitted]
.
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8.2.19.
|
No Violation of Anti-Terrorism Laws.
|
Neither the Borrower nor any Subsidiary of the Borrower shall: (a) violate any of the prohibitions set forth in the Executive Order No. 13224, the USA Patriot Act or any other Anti-Terrorism Law applicable to any of them or the business that they conduct, or (b) require the Agent or the Lenders to take any action that would cause the Agent or the Lenders to be in violation of the prohibitions set forth in the Executive Order No. 13224, the USA Patriot Act or any other Anti-Terrorism Law, it being understood that the Agent or any Lender can refuse to honor any such request or demand otherwise validly made by the Borrower under this Agreement or any other Loan Document.
8.3
Reporting Requirements
.
The Borrower covenants and agrees that until payment in full of the Loans, Reimbursement Obligations and Letter of Credit Borrowings, and interest thereon, expiration or termination of all Letters of Credit, satisfaction of all of the Borrower's other Obligations hereunder and under the other Loan Documents and termination of the Commitments, the Borrower will furnish or cause to be furnished to the Agent and each of the Lenders:
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8.3.1.
|
Quarterly Financial Statements
.
|
As soon as available and in any event within fifty-five (55) calendar days after the end of each of the first three fiscal quarters in each fiscal year (or such earlier or later date, from time to time established by the SEC in accordance with the Securities Exchange Act of 1934, as amended), financial statements of the Borrower, consisting of a consolidated and consolidating balance sheet as of the end of such fiscal quarter and related consolidated and consolidating statements of income, stockholders' equity and cash flows for the fiscal quarter then ended and the fiscal year through that date, all in reasonable detail and certified (subject to normal year-end audit adjustments) by the Chief Executive Officer, President, Chief Financial Officer or Treasurer of the Borrower as having been prepared in accordance with GAAP, consistently applied, and setting forth in comparative form the respective financial statements for the corresponding date and period in the previous fiscal year. The Borrower will be deemed to have complied with the delivery requirements of this
Section 8.3.1
if within fifty-five (55) days after the end of its fiscal quarter (or such earlier or later date, from time to time established by the SEC in accordance with the Securities Exchange Act of 1934, as amended), the Borrower delivers to the Agent and each of the Lenders a copy of its Form 10-Q as filed with the SEC and the financial statements contained therein meets the requirements described in this Section.
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8.3.2.
|
Annual Financial Statements
.
|
As soon as available and in any event within 105 days after the end of each fiscal year of the Borrower (or such earlier or later date, from time to time established by the SEC in accordance with the Securities Exchange Act of 1934, as amended), financial statements of the Borrower consisting of a consolidated balance sheet as of the end of such fiscal year, and related consolidated statements of income, stockholders' equity and cash flows for the fiscal year then ended, all in reasonable detail and setting forth in comparative form the financial statements as of the end of and for the preceding fiscal year, and certified by independent certified public accountants of nationally recognized standing satisfactory to the Agent. The certificate or report of accountants shall be free of qualifications (other than any consistency qualification that may result from a change in the method used to prepare the financial statements as to which such accountants concur) and shall not indicate the occurrence or existence of any event, condition or contingency which would materially impair the prospect of payment or performance of any covenant, agreement or duty of the Borrower under any of the Loan Documents. The Borrower will be deemed to have complied with the delivery requirements of this
Section 8.3.2
if within 105 days after the end of its fiscal year (or such earlier or later date, from time to time established by the SEC in accordance with the Securities Exchange
Act of 1934, as amended), the Borrower delivers to the Agent and each of the Lenders a copy of its Form 10-K as filed with the SEC and the financial statements and certification of public accountants contained therein meets the requirements described in this Section.
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8.3.3.
|
Certificate of the Borrower
.
|
Concurrently with the financial statements of the Borrower furnished to the Agent and to the Lenders pursuant to
Sections 8.3.1
[Quarterly Financial Statements] and
8.3.2
[Annual Financial Statements], a certificate (each a "
Compliance Certificate
") of the Borrower signed by the Chief Executive Officer, President, Chief Financial Officer or Treasurer of the Borrower, in the form of
Exhibit 8.3.3
.
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8.3.4.
|
Notice of Default
.
|
Promptly after any Authorized Officer (or other executive officer) of the Borrower has learned of the occurrence of an Event of Default or Potential Default, a certificate signed by the Chief Executive Officer, President or Chief Financial Officer of the Borrower setting forth the details of such Event of Default or Potential Default and the action which the Borrower proposes to take with respect thereto.
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8.3.5.
|
Notice of Litigation
.
|
Promptly after the commencement thereof, notice of (a) all actions, suits, proceedings or investigations before or by any Official Body or any other Person against the Borrower or Subsidiary of the Borrower, involve a claim or series of claims in excess of $15,000,000.00 or, (b) any Environmental Complaint, individually or in the aggregate exceed $15,000,000.00, and in either case which if adversely determined could reasonably be expected to result in a Material Adverse Change.
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8.3.6.
|
Notice of Change in Debt Rating
.
|
Within five (5) Business Days after Standard & Poor's or Moody's, or such other rating agency as may be applicable pursuant to the terms hereof, announces a change in the Debt Rating of the Borrower, notice of such change. The Borrower will deliver, together with such notice, a copy of any written notification which Borrower received from the applicable rating agency regarding such change of Debt Rating.
At least thirty (30) calendar days prior thereto, notice with respect to any proposed sale or transfer of assets pursuant to
Section 8.2.6(e)
[Dispositions of Assets or Subsidiaries] where the consideration for such sale or transfer of assets is in excess of $15,000,000.00.
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8.3.8.
|
Budgets, Forecasts, Other Reports and Information
.
|
Promptly upon their becoming available to the Borrower:
(a) any reports, notices or proxy statements generally distributed by the Borrower to its stockholders on a date no later than the date supplied to such stockholders,
(b) to the extent not publicly accessible through the SEC's, the Parent's or the Borrower's respective websites, regular or periodic reports, including Forms 10-K, 10-Q and 8-K, registration statements and prospectuses, filed by the Borrower or the Parent with the SEC,
(c) to the extent not previously reported in regular or periodic reports, including Forms 10-K, 10-Q and 8-K, registration statements and prospectuses, filed by the Borrower or the Parent with the SEC, the Borrower shall notify the Lenders promptly of the enactment or adoption of any published Law which could, in the Borrower's opinion, reasonably be expected to result in a Material Adverse Change,
(d) to the extent requested by the Agent or any Lender, the annual budget and any forecasts or projections of the Borrower, and
(e) with respect to the Hedging Transaction activities of the Borrower and its Subsidiaries, to the extent not previously reported in regular or periodic reports, including Forms 10-K, 10-Q and 8-K, registration statements and prospectuses, filed by the Borrower or the Parent with the SEC, such other reports and information as any of the Lenders may from time to time reasonably request.
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8.3.9.
|
Notices Regarding Plans and Benefit Arrangements
.
|
8.3.9.1
Certain Events
.
Promptly upon becoming aware of the occurrence thereof, notice (including the nature of the event and, when known, any action taken or threatened by the Internal Revenue Service or the PBGC with respect thereto) of:
(a) any Reportable Event with respect to the Borrower or any other member of the ERISA Group (unless the obligation to report said Reportable Event to the PBGC has been waived) which could reasonably be expected to result in a Material Adverse Change,
(b) any Prohibited Transaction which could subject the Borrower or any other member of the ERISA Group to a civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the Internal Revenue Code in connection with any Plan, any Benefit Arrangement or any trust created thereunder which penalty or tax could reasonably be expected to result in a Material Adverse Change,
(c) any assertion of withdrawal liability with respect to any Multiemployer Plan, which could reasonably be expected to result in a Material Adverse Change,
(d) any partial or complete withdrawal against the Borrower or any other member of the ERISA Group from a Multiemployer Plan by the Borrower or any other member of the ERISA Group under Title IV of ERISA (or assertion thereof) which could reasonably be expected to result in a Material Adverse Change,
(e) any cessation of operations (by the Borrower or any other member of the ERISA Group) at a facility in the circumstances described in Section 4062(e) of ERISA, which could reasonably be expected to result in a Material Adverse Change,
(f) withdrawal by the Borrower or any other member of the ERISA Group from a Multiple Employer Plan, which could reasonably be expected to result in a Material Adverse Change,
(g) a failure by the Borrower or any other member of the ERISA Group to make a payment to a Plan required to avoid imposition of a Lien under Section 303(k) of ERISA which could reasonably be expected to result in a Material Adverse Change,
(h) the adoption of an amendment to a Plan requiring the provision of security to such Plan pursuant to Section 307 of ERISA, or
(i) any change in the actuarial assumptions or funding methods used for any Plan, where the effect of such change is to materially increase or materially reduce the unfunded benefit liability or obligation to make periodic contributions, except for any such change required under applicable law which could reasonably be expected to result in a Material Adverse Change.
8.3.9.2
Notices of Involuntary Termination and Annual Reports
.
Promptly after receipt thereof, copies of (a) all notices received by the Borrower or any other member of the ERISA Group of the PBGC's intent to terminate any Plan administered or maintained by the Borrower or any member of the ERISA Group, or to have a trustee appointed to administer any such Plan; and (b) at the request of the Agent or any Lender each annual report (IRS Form 5500 series) and all accompanying schedules, the most recent actuarial reports, the most recent financial information concerning the financial status of each Plan administered or maintained by the Borrower or any other member of the ERISA Group, and schedules showing the amounts contributed to each such Plan by or on behalf of the Borrower or any other member of the ERISA Group in which any of their personnel participate or from which such personnel may derive a benefit, and each Schedule B (Actuarial Information) to the annual report filed by the Borrower or any other member of the ERISA Group with the Internal Revenue Service with respect to each such Plan.
8.3.9.3
Notice of Voluntary Termination
.
Promptly upon the filing thereof, copies of any Form 5310, or any successor or equivalent form to Form 5310, filed with the PBGC in connection with the termination of any Plan.
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8.3.10.
|
Other Information.
|
Such additional information as may be reasonably requested in writing by the Agent.
9.
DEFAULT
9.1
Events of Default
.
An Event of Default means the occurrence or existence of any one or more of the following events or conditions (whatever the reason therefor and whether voluntary, involuntary or effected by operation of Law):
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9.1.1.
|
Payments Under Loan Documents
.
|
The Borrower shall fail to pay (a) any principal of any Loan (including scheduled installments, mandatory prepayments or the payment due at maturity), Reimbursement Obligation or Letter of Credit Borrowing when such principal is due hereunder or (b) any interest on any Loan, Commitment Fee, Reimbursement Obligation or Letter of Credit Borrowing or any other amount owing hereunder or under the other Loan Documents within three (3) Business Days after such interest, fee, or other amount becomes due in accordance with the terms hereof or thereof;
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9.1.2.
|
Breach of Warranty
.
|
Any representation or warranty made at any time by the Borrower herein or in any other Loan Document, or in any certificate, other instrument or statement furnished pursuant to the provisions hereof or thereof, shall prove to have been false or misleading in any material respect as of the time it was made or furnished;
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9.1.3.
|
Breach of Negative Covenants or Visitation Rights
.
|
The Borrower shall default in the observance or performance of any covenant contained in
Section 8.1.6
[Visitation Rights] or
Section 8.2
[Negative Covenants];
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9.1.4.
|
Breach of Other Covenants
.
|
The Borrower shall default in the observance or performance of any other covenant, condition or provision hereof or of any other Loan Document and such default shall continue unremedied for a period of thirty (30) calendar days after any Authorized Officer (or other executive officer) of the Borrower becomes aware of the occurrence thereof (such grace period to be applicable only in the event such
default can be remedied by corrective action of the Borrower as determined by the Agent in its reasonable discretion);
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9.1.5.
|
Defaults in Other Agreements or Indebtedness
.
|
(a) A default or event of default shall occur at any time under the terms of any other agreement involving borrowed money or the extension of credit or any other Indebtedness (including without limitation any Other Lender Provided Financial Service Product) under which the Borrower may be obligated as a borrower or guarantor in excess of $15,000,000.00 in the aggregate, and such breach, default or event of default consists of the failure to pay (beyond any period of grace permitted with respect thereto, whether waived or not) any indebtedness when due (whether at stated maturity, by acceleration or otherwise) or if such breach or default permits or causes the acceleration of any indebtedness (whether or not such right shall have been waived) or the termination of any commitment to lend; or
(b) A default or event of default shall occur at any time under the terms of any agreement involving any off balance sheet transaction (including any asset securitization, sale/leaseback transaction, or Synthetic Lease) with obligations in the aggregate thereunder for which the Borrower may be obligated in excess of $15,000,000.00, and such breach, default or event of default consists of the failure to pay (beyond any period of grace permitted with respect thereto, whether waived or not) any obligation when due (whether at stated maturity, by acceleration or otherwise) or if such breach or default permits or causes the acceleration of any obligation (whether or not such right shall have been waived) or the termination of any such agreement;
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9.1.6.
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Final Judgments or Orders
.
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Any final judgments or orders for the payment of money in excess of $15,000,000.00 in the aggregate, to the extent not covered by insurance, shall be entered against the Borrower by a court having jurisdiction in the premises, which judgment is not discharged, vacated, bonded or stayed pending appeal within a period of thirty (30) days from the date of entry;
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9.1.7.
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Loan Document Unenforceable
.
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Any of the Loan Documents shall cease to be legal, valid and binding agreements enforceable against the Borrower or its successors and assigns (as permitted under the Loan Documents) in accordance with the respective terms thereof or shall in any way be terminated (except in accordance with its terms) or become or be declared ineffective or inoperative or shall in any way be challenged or contested by the Borrower or cease to give or provide the respective rights, titles, interests, remedies, powers or privileges intended to be created thereby;
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9.1.8.
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Uninsured Losses; Proceedings Against Assets
.
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The assets of the Borrower or the assets of any Subsidiary of the Borrower are attached, seized, levied upon or subjected to a writ or distress warrant; or such come within the possession of any receiver, trustee, custodian or assignee for the benefit of creditors and the same is not cured within thirty (30)
days thereafter or otherwise fully bonded or covered by insurance (subject to reasonable and customary deductible amounts);
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9.1.9.
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Notice of Lien or Assessment
.
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A notice of Lien or assessment in excess of $15,000,000.00 (which is not a Permitted Lien) or an Environmental Complaint in excess of $15,000,000.00 is filed of record with respect to all or any part of any of the Borrower's or any of its Subsidiaries' assets by the United States, or any department, agency or instrumentality thereof, or by any state, county, municipal or other governmental agency, including the PBGC, or any taxes or debts owing at any time or times hereafter to any one of these becomes payable and the same is not paid within thirty (30) days after the same becomes payable;
The Borrower ceases to be Solvent or admits in writing to a creditor or Official Body its inability to pay its debts as they mature;
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9.1.11.
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Events Relating to Plans and Benefit Arrangements
.
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Any of the following occurs: (a) any Reportable Event; (b) proceedings shall have been instituted or other action taken to terminate any Plan in a distress termination; (c) a trustee shall be appointed by the PBGC to administer or liquidate any Plan; (d) the PBGC shall give notice of its intent to institute proceedings to terminate any Plan or Plans or to appoint a trustee to administer or liquidate any Plan; and, in the case of the occurrence of (a), (b), (c) or (d) above, which could reasonably be expected to result in a Material Adverse Change; (e) the Borrower or any member of the ERISA Group shall fail to make any contributions when due to a Plan or a Multiemployer Plan; (f) the Borrower or any other member of the ERISA Group shall withdraw completely or partially from a Multiemployer Plan; (g) the Borrower or any other member of the ERISA Group shall withdraw (or shall be deemed under Section 4062(e) of ERISA to withdraw) from a Multiple Employer Plan; or (h) any applicable Law is adopted, changed or interpreted by any Official Body with respect to or otherwise affecting one or more Plans, Multiple Employer Plans Multiemployer Plans or Benefit Arrangements and, with respect to any of the events specified in (e), (f), (g) or (h) such occurrence could reasonably be expected to result in a Material Adverse Change;
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9.1.12.
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Cessation of Business
.
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The Borrower or any Subsidiary of the Borrower ceases to conduct its business as contemplated, except as expressly permitted under
Section 8.2.5
[Liquidations, Mergers, Etc.],
Section 8.2.6
[Disposition of Assets or Subsidiaries] or
Section 8.2.9
[Continuation of or Change of Business] or the Borrower or any Subsidiary of the Borrower is enjoined, restrained or in any way prevented by court order from conducting all or any material part of its business and such injunction, restraint or other preventive order is not dismissed within thirty (30) days after the entry thereof;
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9.1.13.
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Change of Control
.
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(a) Any person or group of persons (within the meaning of Sections 13(d) or 14(a) of the Securities Exchange Act of 1934, as amended) shall have acquired beneficial ownership of (within the meaning of Rule 13d-3 promulgated by the SEC under said Act) 25% or more of the voting capital stock of the Parent (provided that, for purposes of calculating the acquisition of beneficial ownership, any transfer of voting stock of the Parent by any Person or group of Persons to a Permitted Transferee shall be deemed not to constitute a conveyance and acquisition of such stock), or (b) within a period of twelve (12) consecutive calendar months, individuals who were directors of the Parent on the first day of such period shall cease to constitute a majority of the board of directors of the Parent unless the individuals who were elected or appointed directors during such twelve (12) month period were elected or appointed by a majority of the individuals who were directors of the Parent on the first day of such period or by their duly appointed or elected successors; or (c) the Parent shall cease to own 100% of the issued and outstanding equity interests of the Borrower;
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9.1.14.
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Involuntary Proceedings
.
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A proceeding shall have been instituted in a court having jurisdiction in the premises seeking a decree or order for relief in respect of the Borrower or any Subsidiary of the Borrower in an involuntary case under any applicable bankruptcy, insolvency, reorganization or other similar law now or hereafter in effect, or for the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator (or similar official) of the Borrower or any Subsidiary of the Borrower for any substantial part of its property, or for the winding-up or liquidation of its affairs, and such proceeding shall remain undismissed or unstayed and in effect for a period of sixty (60) consecutive days or such court shall enter a decree or order granting any of the relief sought in such proceeding; or
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9.1.15.
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Voluntary Proceedings
.
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The Borrower or any Subsidiary of the Borrower shall commence a voluntary case under any applicable bankruptcy, insolvency, reorganization or other similar law now or hereafter in effect, shall consent to the entry of an order for relief in an involuntary case under any such law, or shall consent to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator (or other similar official) of itself or for any substantial part of its property or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any action in furtherance of any of the foregoing.
9.2
Consequences of Event of Default
.
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9.2.1.
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Events of Default Other Than Bankruptcy, Insolvency or Reorganization Proceedings
.
|
If an Event of Default specified under
Sections 9.1.1
through
9.1.13
shall occur and be continuing, the Lenders and the Agent shall be under no further obligation to make Loans or issue Letters of Credit, as the case may be, and the Agent may, and upon the request of the Required Lenders shall, by
written notice to the Borrower, take one or both of the following actions: (a) terminate the Commitments and thereupon the Commitments shall be terminated and of no further force and effect, or (b) declare the unpaid principal amount of the Notes and Loans then outstanding and all interest accrued thereon, any unpaid fees and all other Indebtedness of the Borrower to the Lenders hereunder and thereunder to be forthwith due and payable, and the same shall thereupon become and be immediately due and payable to the Agent for the benefit of each Lender without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, and (c) require the Borrower to, and the Borrower shall thereupon, deposit in a non-interest-bearing account with the Agent, as cash collateral for its Obligations under the Loan Documents, an amount equal to the maximum amount currently or at any time thereafter available to be drawn on all outstanding Letters of Credit, and the Borrower hereby pledges to the Agent and the Lenders, and grants to the Agent and the Lenders a security interest in, all such cash as security for such Obligations. Upon the curing of all existing Events of Default to the satisfaction of the Required Lenders, the Agent shall return such cash collateral to the Borrower; and
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9.2.2.
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Bankruptcy, Insolvency or Reorganization Proceedings
.
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If an Event of Default specified under
Sections 9.1.14
[Involuntary Proceedings] or
9.1.15
[Voluntary Proceedings] shall occur, the Commitments shall automatically terminate and be of no further force and effect, the Agent and the Lenders shall be under no further obligations to make Loans or issue Letters of Credit, as the case may be, and the unpaid principal amount of the Loans then outstanding and all interest accrued thereon, any unpaid fees and all other Indebtedness of the Borrower to the Lenders hereunder and thereunder shall be immediately due and payable, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived; and
If an Event of Default shall occur and be continuing, any Lender to whom any Obligation is owed by the Borrower hereunder or under any other Loan Document or any participant of such Lender which has agreed in writing to be bound by the provisions of
Section 5.2.2
[Sharing of Payments by Lenders] and any branch, Subsidiary or Affiliate of such Lender or participant anywhere in the world shall have the right, in addition to all other rights and remedies available to it, without notice to the Borrower, to set-off against and apply to the then unpaid balance of all the Loans and all other Obligations of the Borrower hereunder or under any other Loan Document any debt owing to, and any other funds held in any manner for the account of, the Borrower by such Lender or participant or by such branch, Subsidiary or Affiliate, including all funds in all deposit accounts (whether time or demand, general or special, provisionally credited or finally credited, or otherwise) now or hereafter maintained by the Borrower for its own account (but not including funds held in custodian or trust accounts) with such Lender or participant or such branch, Subsidiary or Affiliate. Such right shall exist whether or not any Lender or the Agent shall have made any demand under this Agreement or any other Loan Document, whether or not such debt owing to or funds held for the account of the Borrower is or are matured or unmatured and regardless of the existence or adequacy of any Guaranty or any other security, right or remedy available to any Lender or the Agent; and
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9.2.4.
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Suits, Actions, Proceedings
.
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If an Event of Default shall occur and be continuing, and whether or not the Agent shall have accelerated the maturity of Loans pursuant to any of the foregoing provisions of this
Section 9.2
, the Agent or any Lender, if owed any amount with respect to the Loans, may proceed to protect and enforce its rights by suit in equity, action at law and/or other appropriate proceeding, whether for the specific performance of any covenant or agreement contained in this Agreement or the other Loan Documents; and
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9.2.5.
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Application of Proceeds; Collateral Sharing
.
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9.2.5.1
Application of Proceeds
.
From and after the date on which the Agent has taken any action pursuant to this
Section 9.2
and until all Obligations of the Borrower have been paid in full, any and all proceeds received by the Agent from the exercise of any remedy by the Agent, shall be applied as follows:
(a) first, to reimburse the Agent and the Lenders for out-of-pocket costs, expenses and disbursements, including reasonable attorneys' and paralegals' fees and legal expenses, incurred by the Agent or the Lenders in connection with collection of any Obligations of the Borrower under any of the Loan Documents;
(b) second, to the repayment of all Obligations then unpaid of the Borrower to the Lenders incurred under this Agreement or any of the other Loan Documents, or under any Lender Provided Interest Rate Hedge or Other Lender Provided Financial Service Product or otherwise, whether of principal, interest, fees, expenses or otherwise, in such manner as the Agent may determine in its discretion; and
(c) the balance, if any, as required by Law.
9.2.5.2
Collateral Sharing
.
All Liens granted under each Loan Document (the "
Collateral Documents
") shall secure ratably and on a
pari
passu
basis (a) the Obligations in favor of the Agent and the Lenders hereunder, and (b) the Obligations incurred by the Borrower in favor of any Lender and Lender's Affiliates which provides a Lender Provided Interest Rate Hedge or Other Lender Provided Financial Service Product (the "
IRH Provider
"). The Agent under the Collateral Documents shall be deemed to serve as the collateral agent (the "
Collateral Agent
") for the IRH Provider and the Lenders hereunder, provided that the Collateral Agent shall comply with the instructions and directions of the Agent (or the Lenders under this Agreement to the extent that this Agreement or any other Loan Documents empowers the Lenders to direct the Agent), as to all matters relating to the collateral, including the maintenance and disposition thereof. No IRH Provider (except in its capacity as a Lender hereunder) shall be entitled or have the power to direct or instruct the Collateral Agent on any such matters or to control or direct in any manner the maintenance or disposition of the collateral.
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9.2.6.
|
Other Rights and Remedies
.
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In addition to all of the rights and remedies contained in this Agreement or in any of the other Loan Documents, the Agent shall have all of the rights and remedies under applicable Law, all of which rights and remedies shall be cumulative and non-exclusive, to the extent permitted by Law. The Agent may, and upon the request of the Required Lenders shall, exercise all post-default rights granted to the Agent and the Lenders under the Loan Documents or applicable Law.
10.
THE AGENT
10.1
Appointment and Authority.
Each of the Lenders and the Issuing Lender hereby irrevocably appoints PNC Bank to act on its behalf as the Agent hereunder and under the other Loan Documents and authorizes the Agent to take such actions on its behalf and to exercise such powers as are delegated to the Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this
Section 10
are solely for the benefit of the Agent, the Lenders and the Issuing Lender, and neither the Borrower nor any other Loan Party shall have rights as a third party beneficiary of any of such provisions.
10.2
Rights as a Lender.
The Person serving as the Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Agent and the term "Lender" or "Lenders" shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Agent hereunder and without any duty to account therefor to the Lenders.
10.3
Exculpatory Provisions.
The Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, the Agent:
(a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Potential Default or Event of Default has occurred and is continuing;
(b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents);
provided
that the Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Agent to liability or that is contrary to any Loan Document or applicable Law; and
(c) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as the Agent or any of its Affiliates in any capacity.
The Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Agent shall believe in good faith shall be necessary, under the circumstances as provided in
Sections 11.1
[Modifications, Amendments or Waivers] and
9.2
[Consequences of Event of Default]) or (ii) in the absence of its own gross negligence or willful misconduct. The Agent shall be deemed not to have knowledge of any Potential Default or Event of Default unless and until notice describing such Potential Default or Event of Default is given to the Agent by the Borrower, a Lender or the Issuing Lender.
The Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Potential Default or Event of Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in
Section 7
[Conditions of Lending and Issuance of Letters of Credit] or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Agent.
10.4
Reliance by Agent.
The Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the Issuing Lender, the Agent may presume that such condition is satisfactory to such Lender or the Issuing Lender unless the Agent shall have received notice to the contrary from such Lender or the Issuing Lender prior to the making of such Loan or the issuance of such Letter of Credit. The Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.
10.5
Delegation of Duties.
The Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub‑agents appointed by the Agent. The
Agent and any such sub‑agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Section 10.5 shall apply to any such sub‑agent and to the Related Parties of the Agent and any such sub‑agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Agent.
10.6
Resignation of Agent.
The Agent may at any time give notice of its resignation as Agent to the Lenders, the Lender issuing Letters of Credit hereunder (the "
Issuing Lender
"), and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, with approval from the Borrower (so long as no Event of Default has occurred and is continuing), to appoint a successor, such approval not to be unreasonably withheld or delayed. If no such successor shall have been so appointed by the Required Lenders and so approved by the Borrower (as applicable) and shall have accepted such appointment within thirty (30) days after the retiring Agent gives notice of its resignation, then the retiring Agent may on behalf of the Lenders and the Issuing Lender, appoint a successor Agent meeting the qualifications set forth above; provided that if the Agent shall notify the Borrower and the Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (a) the retiring Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Agent on behalf of the Lenders or the Issuing Lender under any of the Loan Documents, the retiring Agent shall continue to hold such collateral security until such time as a successor Agent is appointed) and (b) all payments, communications and determinations provided to be made by, to or through the Agent shall instead be made by or to each Lender and the Issuing Lender directly, until such time as the Required Lenders appoint a successor Agent as provided for above in this Section. Upon the acceptance of a successor's appointment as Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Agent, and the retiring Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section). The fees payable by the Borrower to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring Agent's resignation hereunder and under the other Loan Documents, the provisions of this
Section 10.6
and
Section 11.3
[Expenses; Indemnity; Damage Waiver] shall continue in effect for the benefit of such retiring Agent, its sub‑agents and their respective Affiliates, and their and their Affiliates' respective partners, directors, officers, employees, agents and advisors (for purposes hereof, "
Related Parties
") in respect of any actions taken or omitted to be taken by any of them while the retiring Agent was acting as Agent.
If PNC Bank resigns as Agent under this Section, PNC Bank shall also resign as Issuing Lender. Upon the appointment of a successor Agent hereunder, such successor shall (i) succeed to all of the rights, powers, privileges and duties of PNC Bank as the retiring Issuing Lender and the Agent and PNC Bank shall be discharged from all of its respective duties and obligations as Issuing Lender and Agent under the Loan Documents, and (ii) issue letters of credit in substitution for the Letters of Credit issued by PNC Bank, if any,
outstanding at the time of such succession or make other arrangement satisfactory to PNC Bank to effectively assume the obligations of PNC Bank with respect to such Letters of Credit.
10.7
Non-Reliance on Agent and Other Lenders.
Each Lender and the Issuing Lender acknowledges that it has, independently and without reliance upon the Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and the Issuing Lender also acknowledges that it will, independently and without reliance upon the Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.
10.8
No Other Duties, etc.
Anything herein to the contrary notwithstanding, none of the [Syndication Agent(s) or Documentation Agent(s)] listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Agent, a Lender or the Issuing Lender hereunder.
10.9
The Agent's Fees
.
The Borrower shall pay to the Agent such nonrefundable fees (the "
Agent's Fees
") for the Agent's services hereunder as are provided under the terms of a letter (the "
Agent’s Letter
") between the Borrower and the Agent dated July 5, 2011.
10.10
No Reliance on Agent's Customer Identification Program.
Each Lender acknowledges and agrees that neither such Lender, nor any of its Affiliates, participants or assignees, may rely on the Agent to carry out such Lender's, Affiliate's, participant's or assignee's customer identification program, or other obligations required or imposed under or pursuant to the USA Patriot Act or the regulations thereunder, including the regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the "
CIP Regulations
"), or any other Anti-Terrorism Law, including any programs involving any of the following items relating to or in connection with any of the Loan Parties, their Affiliates or their agents, the Loan Documents or the transactions hereunder or contemplated hereby: (i) any identity verification procedures, (ii) any recordkeeping, (iii) comparisons with government lists, (iv) customer notices or (v) other procedures required under the CIP Regulations or such other Laws.
10.11
Calculations
.
In the absence of gross negligence or willful misconduct as determined in a final, unappealable judgment of a court of competent jurisdiction, the Agent shall not be liable for any error in computing the amount payable to any Lender whether in respect of the Loans, fees or any other amounts due to the Lenders
under this Agreement. In the event an error in computing any amount payable to any Lender is made, the Agent, the Borrower and each affected Lender shall, forthwith upon discovery of such error, make such adjustments as shall be required to correct such error, and any compensation therefor will be calculated at the Federal Funds Effective Rate.
10.12
Beneficiaries
.
Except as otherwise expressly provided herein, the provisions of this
Section 10
are solely for the benefit of the Agent and the Lenders, and the Borrower shall not have any rights to rely on or enforce any of the provisions of this
Section 10
. In performing its functions and duties under this Agreement, the Agent shall act solely as agent of the Lenders and does not assume and shall not be deemed to have assumed any obligation toward or relationship of agency or trust with or for the Borrower.
11.
MISCELLANEOUS
11.1
Modifications, Amendments or Waivers
.
With the written consent of the Required Lenders, the Agent, acting on behalf of all the Lenders, and the Borrower may from time to time enter into written agreements amending or changing any provision of this Agreement or any other Loan Document or the rights of the Lenders or the Borrower hereunder or thereunder, or may grant written waivers or consents to a departure from the due performance of the Obligations of the Borrower hereunder or thereunder. Any such agreement, waiver or consent made with such written consent shall be effective to bind all the Lenders and the Borrower;
provided
, that, no such agreement, waiver or consent may be made which will:
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11.1.1.
|
Increase of Revolving Credit Commitments; Extension of Expiration Date
.
|
Without the written consent of all Lenders:
(a) increase the amount of the Revolving Credit Commitment of any Lender hereunder, (other than any increase in the amount of the Revolving Credit Commitments in accordance with
Section 2.11
[Right to Increase Commitments], which increase shall not require the consent of any Lender, other than each Lender increasing its Revolving Credit Commitment),
(b) extend the Expiration Date,
(c) whether or not any Revolving Credit Loans are outstanding extend the time for payment of principal or interest of any Revolving Credit Loan (excluding the due date of any mandatory prepayment of a Revolving Credit Loan or any mandatory Revolving Credit Commitment reduction in connection with such a mandatory prepayment hereunder except for mandatory reductions of the Revolving
Credit Commitments on the Expiration Date), the Commitment Fee, or any other fee payable to any Lender which has a Revolving Credit Commitment, or
(d) reduce the principal amount of or the rate of interest borne by any Revolving Credit Loan or reduce the Commitment Fee or any other fee payable to any Lender which has a Revolving Credit Commitment, or otherwise affect the terms of payment of the principal of or interest of any Revolving Credit Loan, the Commitment Fee, or any other fee payable to any Lender which has a Revolving Credit Commitment;
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11.1.2.
|
Release of Collateral or Guarantor
.
|
Without the written consent of all Lenders (other than Defaulting Lenders), release any guarantor from its obligations under any guaranty agreement providing for a guaranty of the Obligations or any other security for any of the Borrower's Obligations; or
Without the written consent of all Lenders (other than Defaulting Lenders), amend
Sections 5.2
[Pro Rata Treatment of Lenders],
9.2.5
[Application of Proceeds; Collateral Sharing],
10.3
[Exculpatory Provisions] or
5.2.2
[Sharing of Payments by Lenders] or this
Section 11.1
, alter any provision regarding the pro rata treatment of the Lenders, change the definition of Required Lenders, or change any requirement providing for the Lenders or the Required Lenders to authorize the taking of any action hereunder;
provided
, that no agreement, waiver or consent which would modify the interests, rights or obligations of the Agent in its capacity as Agent or as the Issuing Lender shall be effective without the written consent of the Agent, and no agreement, waiver or consent which would modify the interests, rights or obligations of PNC Bank with respect to its Swing Loan Commitment shall be effective without the written consent of PNC Bank; and
provided
,
further
that, if in connection with any proposed waiver, amendment or modification referred to in
Sections 11.1.1
[Increase of Revolving Credit Commitments; Extension of Expiration Date] through
11.1.3
above, the consent of the Required Lenders is obtained but the consent of one or more of such other Lenders whose consent is required is not obtained (each a "
Non-Consenting Lender
"), then the Borrower shall have the right to replace any such Non-Consenting Lender with one or more replacement Lenders pursuant to
Section 5.4.2
[Replacement of a Lender].
11.2
No Implied Waivers; Cumulative Remedies; Writing Required
.
No course of dealing and no delay or failure of the Agent or any Lender in exercising any right, power, remedy or privilege under this Agreement or any other Loan Document shall affect any other or future exercise thereof or operate as a waiver thereof, nor shall any single or partial exercise thereof or any abandonment or discontinuance of steps to enforce such a right, power, remedy or privilege preclude any further exercise thereof or of any other right, power, remedy or privilege. The rights and remedies of the Agent and the Lenders under this Agreement and any other Loan Documents are cumulative and not exclusive of any rights or remedies which they would otherwise have. Any waiver, permit, consent or approval of any kind or character on the part of any Lender of any breach or default under this Agreement or any such waiver
of any provision or condition of this Agreement must be in writing and shall be effective only to the extent specifically set forth in such writing.
11.3
Expenses; Indemnity; Damage Waiver.
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11.3.1.
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Costs and Expenses.
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The Borrower shall pay (i) all reasonable out‑of‑pocket expenses incurred by the Agent and its Affiliates (including the reasonable fees, charges and disbursements of counsel for the Agent), and shall pay all fees and time charges and disbursements for attorneys who may be employees of the Agent, in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out‑of‑pocket expenses incurred by the Issuing Lender in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder, (iii) all reasonable out‑of‑pocket expenses incurred by the Agent, any Lender or the Issuing Lender (including the fees, charges and disbursements of any counsel for the Agent, any Lender or the Issuing Lender), and shall pay all fees and time charges for attorneys who may be employees of the Agent, any Lender or the Issuing Lender, in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Loans made or Letters of Credit issued hereunder, including all such out‑of‑pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit, and (iv) all reasonable out-of-pocket expenses of the Agent's regular employees and agents engaged periodically to perform audits of the Loan Parties' books, records and business properties.
11.3.2.
Indemnification by the Borrower.
The Borrower shall indemnify the Agent (and any sub-agent thereof), each Lender and the Issuing Lender, and each Related Party of any of the foregoing Persons (each such Person being called an "
Indemnitee
") against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee), and shall indemnify and hold harmless each Indemnitee from all reasonable fees and time charges and disbursements for attorneys (who may be employees of any Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee by any third party or by the Borrower or any other Loan Party arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance or nonperformance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the Issuing Lender to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) breach of representations, warranties or covenants of the Borrower under the Loan Documents, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, including any such items or losses relating to or arising under
Environmental Laws or pertaining to environmental matters, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower or any other Loan Party, and regardless of whether any Indemnitee is a party thereto;
provided
that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by the Borrower or any other Loan Party against an Indemnitee for breach in bad faith of such Indemnitee's obligations hereunder or under any other Loan Document, if the Borrower or such Loan Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction. The Lenders will attempt to minimize the fees and expenses of legal counsel for the Lenders which are subject to reimbursement by the Borrower hereunder by considering the usage of one law firm to represent the Lenders and the Agent if appropriate under the circumstances.
11.3.3.
Reimbursement by Lenders.
To the extent that the Borrower for any reason fails to indefeasibly pay any amount required under
Sections 11.3.1
[Costs and Expenses] or
11.3.2
[Indemnification by the Borrower] to be paid by it to the Agent (or any sub-agent thereof), the Issuing Lender or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Agent (or any such sub-agent), the Issuing Lender or such Related Party, as the case may be, such Lender's Ratable Share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount,
provided
that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Agent (or any such sub-agent) or the Issuing Lender in its capacity as such, or against any Related Party of any of the foregoing acting for the Agent (or any such sub-agent) or Issuing Lender in connection with such capacity.
11.3.4.
Waiver of Consequential Damages, Etc.
To the fullest extent permitted by applicable Law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof. No Indemnitee referred to in
Section 11.3.2
[Indemnification by Borrower] shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.
11.3.5.
Payments.
All amounts due under this Section shall be payable not later than thirty (30) days after demand therefor.
11.4
Holidays
.
Whenever payment of a Loan to be made or taken hereunder shall be due on a day which is not a Business Day such payment shall be due on the next Business Day (except as provided in
Section 4.2
[Interest Periods] with respect to Interest Periods under the LIBOR Rate Option) and such extension of time
shall be included in computing interest and fees, except that the Revolving Credit Loans and Swing Loans shall be due on the Business Day preceding the Expiration Date if the Expiration Date is not a Business Day. Whenever any payment or action to be made or taken hereunder (other than payment of the Loans) shall be stated to be due on a day which is not a Business Day, such payment or action shall be made or taken on the next following Business Day, and such extension of time shall not be included in computing interest or fees, if any, in connection with such payment or action.
11.5
Funding by Branch, Subsidiary or Affiliate
.
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11.5.1.
|
Notional Funding
.
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Each Lender shall have the right from time to time, without notice to the Borrower, to deem any branch, Subsidiary or Affiliate (which for the purposes of this
Section 11.5
shall mean any corporation or association which is directly or indirectly controlled by or is under direct or indirect common control with any corporation or association which directly or indirectly controls such Lender) of such Lender to have made, maintained or funded any Loan to which the LIBOR Rate Option applies at any time,
provided
that immediately following (on the assumption that a payment were then due from the Borrower to such other office), and as a result of such change, the Borrower would not be under any greater financial obligation pursuant to
Section 5.6
[Additional Compensation in Certain Circumstances] or
Section 5.8
[Taxes] than it would have been in the absence of such change. Notional funding offices may be selected by each Lender without regard to such Lender's actual methods of making, maintaining or funding the Loans or any sources of funding actually used by or available to such Lender.
Each Lender shall have the right from time to time to make or maintain any Loan by arranging for a branch, Subsidiary or Affiliate of such Lender to make or maintain such Loan subject to the last sentence of this
Section 11.5.2
. If any Lender causes a branch, Subsidiary or Affiliate to make or maintain any part of the Loans hereunder, all terms and conditions of this Agreement shall, except where the context clearly requires otherwise, be applicable to such part of the Loans to the same extent as if such Loans were made or maintained by such Lender, but in no event shall any Lender's use of such a branch, Subsidiary or Affiliate to make or maintain any part of the Loans hereunder cause such Lender or such branch, Subsidiary or Affiliate to incur any cost or expenses payable by the Borrower hereunder or require the Borrower to pay any other compensation to any Lender (including any expenses incurred or payable pursuant to
Section 5.6
[Additional Compensation in Certain Circumstances]) or
Section 5.8
[Taxes] which would otherwise not be incurred.
11.6
Notices; Lending Offices
.
Any notice, request, demand, direction or other communication (for purposes of this
Section 11.6
only, a “
Notice
”) to be given to or made upon any party hereto under any provision of this Agreement shall be given or made by telephone or in writing (which includes means of electronic transmission (i.e., “e-mail”) or facsimile transmission or by setting forth such Notice on a restricted access site on the World Wide Web (a “
Website Posting
”) if Notice of such Website Posting (including the information necessary to access such site) has previously been delivered to the applicable parties hereto by another means set forth in this
Section 11.6
) in accordance with this
Section 11.6
. Any such Notice must be delivered to the applicable parties hereto at the addresses and numbers set forth under their respective names on
Schedule 1.1(B)
hereof or in accordance with any subsequent unrevoked Notice from any such party that is given in accordance with this
Section 11.6
. Any Notice shall be effective:
(a) In the case of hand-delivery, when delivered;
(b) If given by mail, four days after such Notice is deposited with the United States Postal Service, with first-class postage prepaid, return receipt requested;
(c) In the case of a telephonic Notice, when a party is contacted by telephone, if delivery of such telephonic Notice is confirmed no later than the next Business Day by hand delivery, a facsimile or electronic transmission, a Website Posting or overnight courier delivery of a confirmatory notice (received at or before noon on such next Business Day);
(d) In the case of a facsimile transmission, when sent to the applicable party's facsimile machine's telephone number if the party sending such Notice receives confirmation of the delivery thereof from its own facsimile machine;
(e) In the case of electronic transmission, when actually received;
(f) In the case of a Website Posting, upon delivery of a Notice of such posting (including the information necessary to access such web site) by another means set forth in this
Section 11.6
; and
(g) If given by any other means (including by overnight courier), when actually received.
Any Lender giving a Notice to the Borrower shall concurrently send a copy thereof to the Agent, and the Agent shall promptly notify the other Lenders of its receipt of such Notice.
11.7
Severability
.
The provisions of this Agreement are intended to be severable. If any provision of this Agreement shall be held invalid or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction.
11.8
Governing Law
.
Each Letter of Credit and
Section 2.9
[Letter of Credit Subfacility] shall be subject to the rules of the International Standby Practices (ICC Publication Number 590), and any subsequent official revision thereof, as determined by the Issuing Lender, and to the extent not inconsistent therewith, the internal laws of the State of New Jersey without regard to its conflict of laws principles, and the balance of this Agreement shall be deemed to be a contract under the Laws of the State of New Jersey and for all purposes shall be
governed by and construed and enforced in accordance with the internal laws of the State of New Jersey without regard to its conflict of laws principles.
11.9
Prior Understanding
.
This Agreement and the other Loan Documents supersede all prior understandings and agreements, whether written or oral, between the parties hereto and thereto relating to the transactions provided for herein and therein, including any prior confidentiality agreements and commitments.
11.10
Duration; Survival
.
All representations and warranties of the Borrower contained herein or made in connection herewith shall survive the making of Loans and issuance of Letters of Credit and shall not be waived by the execution and delivery of this Agreement, any investigation by the Agent or the Lenders, the making of Loans, issuance of Letters of Credit, or payment in full of the Loans. All covenants and agreements of the Borrower contained in
Sections 8.1
[Affirmative Covenants],
8.2
[Negative Covenants] and
8.3
[Reporting Requirements] herein shall continue in full force and effect from and after the date hereof so long as the Borrower may borrow or request Letters of Credit hereunder and until termination of the Commitments and payment in full of the Loans and expiration or termination of all Letters of Credit. All covenants and agreements of the Borrower contained herein relating to the payment of principal, interest, premiums, additional compensation or expenses and indemnification, including those set forth in
Section 5
[Payments] and
Sections 11.3.2
[Indemnification by the Borrower] and
11.3.3
[Reimbursement by Lenders] shall survive payment in full of the Loans, expiration or termination of the Letters of Credit and termination of the Commitments.
11.11
Successors and Assigns; Joinder of a Lender
.
(a) This Agreement shall be binding upon and shall inure to the benefit of the Lenders, the Agent, the Borrower and their respective successors and assigns, except that the Borrower may not assign or transfer any of its rights and Obligations hereunder or any interest herein. Each Lender may, at its own cost, make assignments of or sell participations in all or any part of its Commitments and the Loans made by it to one or more banks or other entities, subject to the consent of the Borrower and the Agent with respect to any assignee, such consent not to be unreasonably withheld,
provided
that
(i) no consent of the Borrower shall be required (A) if an Event of Default exists and is continuing, or (B) in the case of an assignment by a Lender to an Affiliate of such Lender or an Approved Fund of such Lender, (ii) any assignment by a Lender to a Person other than an Affiliate of such Lender may not be made in amounts less than the lesser of $5,000,000.00 or the amount of the assigning Lender's Commitment and (iii) no such assignment or participation shall be permitted to the Borrower or to any of the Borrower's Affiliates or Subsidiaries. In the case of an assignment, upon receipt by the Agent of the Assignment and Assumption Agreement, the assignee shall have, to the extent of such assignment (unless otherwise provided therein), the same rights, benefits and obligations as it would have if it had been a signatory Lender hereunder, the Commitments shall be adjusted accordingly, and upon surrender of any Revolving Credit Note or subject to such assignment, the Borrower shall execute and deliver a new Revolving Credit Note to the assignee, if such assignee requests such a Note in an amount equal to the amount of the Revolving Credit Commitment assumed by it and a new Revolving Credit Note to the assigning Lender, if the assigning Lender requests such a Note, in an amount equal to the
Revolving Credit Commitment retained by it hereunder. Any Lender which assigns any or all of its Commitment or Loans to a Person other than an Affiliate of such Lender shall pay to the Agent a service fee in the amount of $3,500.00 for each assignment. In the case of a participation, the participant shall only have the rights specified in
Section 9.2.3
[Set-off] (the participant's rights against such Lender in respect of such participation to be those set forth in the agreement executed by such Lender in favor of the participant relating thereto and not to include any voting rights, all of such Lender's obligations under this Agreement or any other Loan Document shall remain unchanged, and all amounts payable by the Borrower hereunder or thereunder shall be determined as if such Lender had not sold such participation.
(b) Any assignee or participant which is not incorporated under the Laws of the United States of America or a state thereof shall deliver to the Borrower and the Agent the form of certificate described in
Section 5.8.5
[Status of Lenders] relating to federal income tax withholding. Each Lender may furnish any publicly available information concerning the Borrower or its Subsidiaries and any other information concerning the Borrower or its Subsidiaries in the possession of such Lender from time to time to assignees and participants (including prospective assignees or participants),
provided
that
such assignees and participants agree to be bound by the provisions of
Section 11.12
[Confidentiality].
(c) Notwithstanding any other provision in this Agreement, any Lender may at any time pledge or grant a security interest in all or any portion of its rights under this Agreement, its Note (if any) and the other Loan Documents to any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S. Treasury Regulation 31 CFR Section 203.14 without notice to or consent of the Borrower or the Agent. No such pledge or grant of a security interest shall release the transferor Lender of its obligations hereunder or under any other Loan Document.
(d) A bank that is to become a party to this Agreement pursuant to
Section 2.11
[Right to Increase Commitments] hereof or otherwise (each an "
Additional Lender
") shall execute and deliver to Agent a Lender Joinder to this Agreement in substantially the form attached hereto as
Exhibit 1.1(B)
. Upon execution and delivery of a Lender Joinder, such Additional Lender shall be a party hereto and a Lender under each of the Loan Documents for all purposes, except that such Additional Lender shall not participate in any Loans to which the LIBOR Rate Option applies that are outstanding on the effective date of such Lender Joinder. If the Borrower should renew after the effective date of such Lender Joinder the LIBOR Rate Option with respect to Loans existing on such date, the Borrower shall be deemed to repay the applicable Loans on the renewal date and then reborrow a similar amount on such date so that the Additional Lender shall participate in such Loans after such renewal date.
Schedule 1.1(B)
shall be amended and restated on the date of such Lender Joinder to revise the information contained therein as appropriate to reflect the information on the attachment to such Lender Joinder. Simultaneously with the execution and delivery of such Lender Joinder, the Borrower shall execute a Revolving Credit Note, and deliver it to such Additional Lender together with originals of such other documents described in
Section 7.1
[First Loans and Letters of Credit] hereof as such Additional Lender may reasonably require.
11.12
Confidentiality
.
The Agent and the Lenders each agree to keep confidential all information obtained from the Borrower or its Subsidiaries which is nonpublic or otherwise confidential or proprietary in nature (including any information the Borrower specifically designates as confidential), except as provided below, and to use such information only in connection with their respective capacities under this Agreement and for the purposes contemplated hereby. The Agent and the Lenders shall be permitted to disclose such information (a) to outside legal counsel, accountants and other professional advisors who need to know such information in connection with the administration and enforcement of this Agreement, subject to agreement of such Persons to maintain the confidentiality, (b) to assignees and participants as contemplated by
Section 11.11
[Successors and Assignors; Joinder of a Lender], and prospective assignees and participants,
provided
that
prior to such disclosure, such parties agree in writing to be bound by this undertaking of confidentiality set forth in this
Section 11.12
, (c) to the extent requested by any bank regulatory authority or, with notice to the Borrower, as otherwise required by applicable Law or by any subpoena or similar legal process, or in connection with any investigation or proceeding arising out of the transactions contemplated by this Agreement, (d) if it becomes publicly available other than as a result of a breach of this Agreement or becomes available and is not reasonably known to be subject to confidentiality restrictions, or (e) if the Borrower shall have consented to such disclosure.
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11.12.2.
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Sharing Information With Affiliates of the Lenders
.
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The Borrower acknowledges that from time to time financial advisory, investment banking and other services may be offered or provided to the Borrower or one or more of its Affiliates (in connection with this Agreement or otherwise) by any Lender or by one or more Subsidiaries or Affiliates of such Lender and the Borrower hereby authorizes each Lender to share any information delivered to such Lender by the Borrower and its Subsidiaries pursuant to this Agreement, or in connection with the decision of such Lender to enter into this Agreement, to any such Subsidiary or Affiliate of such Lender, it being understood that any such Subsidiary or affiliate of any Lender receiving such information shall be bound by the provisions of
Section 11.12.1
[General] as if it were a Lender hereunder. Such authorization shall survive the repayment of the Loans and other Obligations and the termination of the Commitments.
11.13
Counterparts
.
This Agreement may be executed by different parties hereto on any number of separate counterparts, each of which, when so executed and delivered, shall be an original, and all such counterparts shall together constitute one and the same instrument.
11.14
The Agent's or the Lenders' Consent
.
Whenever the Agent's or any Lender's consent is required to be obtained under this Agreement or any of the other Loan Documents as a condition to any action, inaction, condition or event, the Agent and
each Lender shall be authorized to give or withhold such consent in its sole and absolute discretion and to condition its consent upon the giving of additional collateral, the payment of money or any other matter.
11.15
Exceptions
.
The representations, warranties and covenants contained herein shall be independent of each other, and no exception to any representation, warranty or covenant shall be deemed to be an exception to any other representation, warranty or covenant contained herein unless expressly provided, nor shall any such exceptions be deemed to permit any action or omission that would be in contravention of applicable Law.
11.16
WAIVER OF JURY TRIAL
.
THE BORROWER, THE AGENT AND THE LENDERS HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY COLLATERAL, OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING, WITHOUT LIMITATION, ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF THE AGENT OR THE BANKS RELATING TO THE ADMINISTRATION OF THE LOANS OR ENFORCEMENT OF THIS AGREEMENT OR THE LOAN DOCUMENTS, TO THE FULLEST EXTENT PERMITTED BY LAW. THE BORROWER WILL NOT SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THE BORROWER CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE AGENT OR THE LENDERS, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT AGENT OR THE LENDERS WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR THE AGENT AND THE LENDERS TO ACCEPT THIS AGREEMENT AND THE LOAN DOCUMENTS AND MAKE THE LOANS.
11.17
JURISDICTION AND VENUE
.
THE BORROWER HEREBY IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF COURTS IN THE COUNTY OF MIDDLESEX IN THE STATE OF NEW JERSEY AND THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY, AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY CERTIFIED OR REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO THE BORROWER AT THE ADDRESSES PROVIDED FOR IN
SECTION 11.6
[NOTICES; LENDING OFFICES] AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF THE AGENT TO SERVE LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY LAW. THE BORROWER IRREVOCABLY WAIVES ANY OBJECTION TO
JURISDICTION AND VENUE OF ANY ACTION INSTITUTED AGAINST IT AS PROVIDED HEREIN AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON
FORUM NON CONVENIENS
OR ANY LACK OF JURISDICTION OR VENUE THAT IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT.
11.18
USA Patriot Act Notice.
Each Lender that is subject to the USA Patriot Act and the Agent (for itself and not on behalf of any Lender) hereby notifies Loan Parties that pursuant to the requirements of the USA Patriot Act, it is required to obtain, verify and record information that identifies the Loan Parties, which information includes the name and address of Loan Parties and other information that will allow such Lender or Agent, as applicable, to identify the Loan Parties in accordance with the USA Patriot Act.
[SIGNATURE PAGES FOLLOW]
[SIGNATURE PAGE 1 OF 9 TO THE NEW JERSEY NATURAL
GAS COMPANY CREDIT AGREEMENT]
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly authorized, have executed this Agreement as of the day and year first above written.
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ATTEST:
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NEW JERSEY NATURAL GAS COMPANY
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/s/Richard Reich
By:
/s/William Foley
Name: Richard Reich Name:
William Foley
Title:
Assistant General Counsel
Title: Treasurer
[SIGNATURE PAGE 2 OF 9 TO THE NEW JERSEY NATURAL
GAS COMPANY CREDIT AGREEMENT]
PNC BANK, NATIONAL ASSOCIATION,
individually and as Agent
By:
/s/Edward M. Teesalone
Name: Edward M. Tessalone
Title: Senior Vice President
[SIGNATURE PAGE 3 OF 9 TO THE NEW JERSEY NATURAL
GAS COMPANY CREDIT AGREEMENT]
JPMORGAN CHASE BANK, N.A.
, as a Lender and as Syndication Agent
By:
/s/Nancy R. Barwig
Name:
Nancy R. Barwig
Title: Credit Executive
[SIGNATURE PAGE 4 OF 9 TO THE NEW JERSEY NATURAL
GAS COMPANY CREDIT AGREEMENT]
TD BANK, N.A.
, as a Lender and as a Documentation Agent
By:
/s/Todd Antico
Name: Todd Antico
Title: Senior Vice President
[SIGNATURE PAGE 5 OF 9 TO THE NEW JERSEY NATURAL
GAS COMPANY CREDIT AGREEMENT]
U.S. BANK NATIONAL ASSOCIATION
, as a Lender and as a Documentation Agent
By:
/s/Eric Cosgrove
Name: Eric Cosgrove
Title: Vice President
[SIGNATURE PAGE 6 OF 9 TO THE NEW JERSEY NATURAL
GAS COMPANY CREDIT AGREEMENT]
Wells Fargo Bank, NATIONAL ASSOCIATION
, as a Lender and as a Documentation Agent
By:
/s/James T, King
Name: James T. King
Title: Senior Vice President
[SIGNATURE PAGE 7 OF 9 TO THE NEW JERSEY NATURAL
GAS COMPANY CREDIT AGREEMENT]
SOVEREIGN BANK
, as a Lender
By:
/s/Chris D. Wolfslayer
Name:
Chris D. Wolfslayer
Title: Senior Vice President
[SIGNATURE PAGE 8 OF 9 TO THE NEW JERSEY NATURAL
GAS COMPANY CREDIT AGREEMENT]
THE NORTHERN TRUST COMPANY
,
as a Lender
By:
/s/ Andrew Holtz
Name: Andrew Holtz
Title:
Vice President
[SIGNATURE PAGE 9 OF 9 TO THE NEW JERSEY NATURAL
GAS COMPANY CREDIT AGREEMENT]
THE BANK OF NOVA SCOTIA
,
as a Lender
By:
/s/Jim Trimble
Name:
Jim Trimble
Title: Managing Director
SCHEDULE 1.1(A)
Pricing Grid
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Level
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Debt Rating
Standard & Poor's and Moody's
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Commitment
Fee
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Base Rate
Spread
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LIBOR Rate
Spread
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Letter of
Credit Fee
|
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I
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A or above
or
A2 or above
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0.125%
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0.00%
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1.00%
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1.00%
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II
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A- or above but less than A
or
A3 or above but less than A2
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0.15%
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0.25%
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1.25%
|
1.25%
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III
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BBB+ or above but less than A-
or
Baa1 or above but less than A3
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0.175%
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0.50%
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1.50%
|
1.50%
|
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IV
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BBB or less
or
Baa2 or less
or
unrated
|
0.225%
|
0.75%
|
1.75%
|
1.75%
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For purposes of determining the Applicable Margin, the Applicable Commitment Fee Rate and the Applicable Letter of Credit Fee Rate:
(a) With respect to the Debt Ratings of Moody's and Standard & Poor's or such other rating agency (or agencies) that may from time to time be determining Borrower's Debt Rating pursuant to the terms of the Credit Agreement to which this Schedule is attached (each, an "
Applicable Rating Agency
" and, collectively, the "
Applicable Rating Agencies
"): (i) if one or both of such Applicable Rating Agencies shall fail to have a Debt Rating in effect, then such Applicable Rating Agency which fails to have a Debt Rating in effect shall be deemed to have established a Debt Rating at Level IV; and (ii) if the Debt Rating established by one Applicable Rating Agency and the Debt Rating established by another Applicable Rating Agency differ, the pricing Level above shall be determined based upon the higher of the Debt Ratings established by the Applicable Rating Agencies,
provided
,
however
, if one of the Debt Ratings is two or more Levels lower than the other, the applicable pricing Level shall be determined at the Level next above that of the Level of the lower of the two Debt Ratings.
(b) Any change in the Applicable Margin, the Applicable Commitment Fee Rate, or the Applicable Letter of Credit Fee Rate shall become effective on the date of any public announcement of the change in the Debt Rating requiring such an increase or decrease.
SCHEDULE 1.1(B)
COMMITMENTS OF LENDERS AND ADDRESSES FOR NOTICES
Part 1 - Commitments/Addresses of Lenders
|
|
|
|
|
|
|
|
|
|
LENDER
|
AMOUNT OF COMMITMENT FOR REVOLVING CREDIT LOANS
|
PERCENTAGE
|
|
PNC BANK, NATIONAL ASSOCIATION
Address for Notices:
Two Tower Center Boulevard
East Brunswick, NJ 08816
Attention: Edward M. Tessalone
Telephone No. (732) 448-2886
Telecopier No. (732) 220-3503
E-mail: edward.tessalone@pnc.com
Address of Lending Office:
PNC Firstside Center, 3rd Floor
500 First Ave.
Pittsburgh, PA 15219
Attention: Rini Davis
Telephone No. (412) 762-7638
Telecopier No. (412) 762-8672
E-mail: rini.davis@pnc.com
|
$37,500,000.00
|
18.750000000
|
%
|
|
|
|
|
|
|
|
|
|
|
LENDER
|
AMOUNT OF COMMITMENT FOR REVOLVING CREDIT LOANS
|
PERCENTAGE
|
|
JPMORGAN CHASE BANK, N.A.
Address for Notices:
10 S. Dearborn St., Floor 9
Mail code: IL1-0090
Chicago, Illinois 60603
Attention: John E. Zur
Telephone No. (312) 732-1754
Telecopier No. (312) 732-1762
E-mail: john.e.zur@jpmchase.com
Address of Lending Office:
10 S. Dearborn St., Floor 9
Mail code: IL1-0090
Chicago, Illinois 60603
Attention: Non-Agent Servicing Team
Telephone No. (312) 385-7072
Telecopier No. (312) 256-2608
E-mail: cls.chicago.non.agented.servicing@chase.com
|
$
|
30,000,000.00
|
|
15.000000000
|
%
|
|
TD BANK, N.A.
Address for Notices:
6000 Atrium Way
Mt. Laurel, NJ 08054
Attention: Marcella Brattan
Telephone No.: (856) 533-4885
Telecopier No.: (856) 533-7128
E-mail: Investor.Processing@yesbank.com; Marcella.brattan@td.com
Address of Lending Office:
31 West 52nd Street
19th Floor
New York, New York 10019
Attention: Shannon Batchman
Telephone No.: (646) 645-1738
Telecopier No.:
E-mail: Shannon.Batchman@td.com
|
$
|
30,000,000.00
|
|
15.000000000
|
%
|
|
|
|
|
|
|
|
|
|
|
LENDER
|
AMOUNT OF COMMITMENT FOR REVOLVING CREDIT LOANS
|
PERCENTAGE
|
|
U.S. BANK NATIONAL ASSOCIATION
Address for Notices:
U.S. Bank Tower
425 Walnut Street, 8th Floor
ML CN-W-8
Cincinnati, OH 45202
Attention: Eric J. Cosgrove, VP,
National Corporate Banking
Telephone No. (513) 632-3033
Telecopier No. (513) 632-2068
E-mail: Eric.Cosgrove@USBank.com
Address of Lending Office
425 Walnut Street, 8th Floor
ML CN-OH-W8
Cincinnati, OH 45202
Attention: Eric J. Cosgrove, VP,
National Corporate Banking
Telephone No. (513) 632-3033
Telecopier No. (513) 632-2068
E-mail: Eric.Cosgrove@USBank.com
|
$
|
30,000,000.00
|
|
15.000000000
|
%
|
|
WELLS FARGO BANK, NATIONAL
ASSOCIATION
Address for Notices:
32 E. Front Street, 4th Floor
Trenton, NJ 08608
Attention: James T. King
Telephone No. (609) 826-8538
Telecopier No. (609) 826-8796
E-mail: james.t.king@wachovia.com
Address of Lending Office:
_____________________________
_____________________________
Attention: Wholesale Loan Servicing East
Telephone No. (866) 647-7249, Opt. 4
Telecopier No. (704) 715-0099
E-mail: james.t.king@wellsfargo.com and RKELCLNSVMemberSyndications@wellsrargo.com
|
$
|
30,000,000.00
|
|
15.000000000
|
%
|
|
|
|
|
|
|
|
|
|
|
LENDER
|
AMOUNT OF COMMITMENT FOR REVOLVING CREDIT LOANS
|
PERCENTAGE
|
|
SOVEREIGN BANK
Address for Notices:
830 Morris Turnpike
Short Hills, NJ 07078
Attention: Christopher Wolfslayer
Telephone No. (973) 924-2161
Telecopier No. (973) 379-4360
E-mail: cwolfsla@sovereignbank.com
Address of Lending Office:
_____________________________
_____________________________
Attention: Susan A. Kissinger
Telephone No.: (610) 988-1617
Telecopier No.: (484) 338-2831
E-mail: participations@sovereignbank.com
|
$
|
20,000,000.00
|
|
10.000000000
|
%
|
|
THE NORTHERN TRUST COMPANY
Address for Notices:
50 South LaSalle Street MB-27
Chicago, IL 60603
Attention: Andrew Holtz
Telephone No. (312) 444-4243
Telecopier No. (312) 444-4906
E-mail: adh11@ntrs.com
Address of Lending Office:
50 S. LaSalle Street
MB-27
Chicago, IL 60603
Attention: Sharon Jackson
Telephone No.: (312) 630-1609
Telecopier No.: (312) 630-1566
E-mail: smj@ntrs.com
|
$
|
15,000,000.00
|
|
7.500000000
|
%
|
|
|
|
|
|
|
|
|
|
|
THE BANK OF NOVA SCOTIA
Address for Notices:
1 Liberty Plaza, Fl 23-26
New York, NY 10006
Attention: Benjamin Thomas
Telephone No. (212) 225-5178
Telecopier No. (212) 225-5254
E-mail: Benjamin_Thomas@scotiacapital.com
Address of Lending Office:
Attention: Vesna Vukelich
Telephone No. (212) 225-5705
Telecopier No. (212) 225-5709
E-mail: Vesna_Vukelich@scotiacapital.com
|
$
|
7,500,000.00
|
|
3.750000000
|
%
|
|
Total
|
$200,000,000.00
|
100.000000000
|
%
|
SCHEDULE 1.1(B)
COMMITMENTS OF LENDERS AND ADDRESSES FOR NOTICES
Part 2 - Addresses for Notices to Agent, Borrower:
AGENT:
Name:
PNC BANK, NATIONAL ASSOCIATION
|
|
|
|
Address:
|
Two Tower Center Boulevard
|
East Brunswick, NJ 08816
|
|
|
|
Attention:
|
Edward M. Tessalone
|
Telephone No. (732) 448-2886
Telecopier No. (732) 220-3503
|
|
|
|
E-mail:
|
edward.tessalone@pnc.com
|
With a Copy to:
Name
PNC BANK, NATIONAL ASSOCIATION
Address: PNC Firstside Center, 3rd Floor
500 First Ave.
Pittsburgh, PA 15219
Attention: Rini Davis
Telephone: (412) 762-7638
Telecopy: (412) 762-8672
E-mail: rini.davis@pnc.com
BORROWER:
Name:
NEW JERSEY NATURAL GAS COMPANY
Address: 1415 Wyckoff Road
Wall, NJ 07719
Attention: William Foley, Treasurer
Telephone: (732) 938-1224
Telecopy: (732) 938-3154
E-mail: wfoley@njresources.com
SCHEDULE 1.1(P)
See Attached.
Part A
|
|
|
|
|
|
|
|
|
|
JURISDICTION
|
SEARCH
|
FILING DATE
|
SECURED PARTY
|
FILE NO.
|
COLLATERAL
1
|
|
New Jersey Department of Treasury
|
UCC
|
05/31/2007
|
BNY Midwest Trust Company, as Trustee
|
2418782-4
|
Makes reference to that certain Indenture of Mortgage and Deed of Trust, dated April 1, 1952, relating to all property (real, personal and mixed), including, in part, franchises, grants, permits, immunities, privileges, rights, buildings and equipment, systems, licenses, gas by-products, land, the Trust Estate and proceeds relating to the gas plants.
|
Part B
|
|
|
|
|
|
|
|
|
|
JURISDICTION
|
SEARCH
|
FILING DATE
|
SECURED PARTY
|
FILE NO.
|
COLLATERAL
|
|
New Jersey Department of Treasury
|
UCC
|
11/23/2009
|
Banc of America Leasing & Capital, LLC
|
2544901-3
|
Precautionary Filing - Makes reference to Lease Schedule No. 40739-11500-021 to Master Lease Agreement No. 35352, relating to certain equipment, specifically service trucks, together with all attachments, accessories, accessions, substitutions, and replacements; all accounts, chattel paper, general intangibles, insurance, intellectual property rights, and proceeds thereof; books and records.
|
|
|
|
|
|
|
|
|
New Jersey Department of Treasury
|
UCC
|
12/21/2010
|
CIT Communications Finance Corporation
|
2587437-2
|
True Lease, Lease No. 0001724, relating to certain data equipment, software, support, maintenance and services, and all attachments, accessions, additions, substitutions, products, replacements, rentals, right to use licenses and any credits, refunds or proceeds thereof. Lessee/Lessor.
|
1
Collateral descriptions are summaries only, and are qualified in their entireties by references to the actual filings.
|
|
|
|
|
|
|
|
|
|
JURISDICTION
|
SEARCH
|
FILING DATE
|
SECURED PARTY
|
FILE NO.
|
COLLATERAL
|
|
New Jersey Department of Treasury
|
UCC
|
6/9/2008
|
IBM Credit LLC
|
2477333-1
|
Precautionary Filing - Certain equipment, together with the related software and all additions, attachments, accessories, accessions, upgrades, substitutions, replacements, exchanges and proceeds. Makes reference to UCC 9-505 (Compulsory Disposition of Chattel; Acceptance of the Collateral as Discharge of Obligation) filed 06/09/2008.
|
|
New Jersey Department of Treasury
|
UCC
|
2/7/2011
|
Banc of America Leasing & Capital, LLC
|
2593338-3
|
Precautionary Filing - Makes reference to Lease Schedule No. 40739-11500-036 to Master Lease Agreement No. 35352, relating to certain equipment, specifically, a dump truck, together with all attachments, accessories, accessions, substitutions, and replacements; all accounts, chattel paper, general intangibles, insurance, intellectual property rights, and proceeds thereof; books and records.
|
|
New Jersey Department of Treasury
|
UCC
|
12/24/2009
|
The Fifth Third Leasing Company
|
2548926-2
|
Precautionary Filing - Makes reference to Lease Schedule No. 40739-11500-026 to Master Lease Agreement No. 35352, relating to certain equipment specifically, gas meters, together with all attachments, accessories, accessions, substitutions, and replacements; all accounts, chattel paper, general intangibles, insurance, intellectual property rights, and proceeds thereof; books and records.
|
|
New Jersey Department of Treasury
|
UCC
|
12/17/2007
|
Banc of America Leasing & Capital, LLC
|
2450743-1
|
Precautionary Filing subject to True Lease, Lease No. 40739-11500-007, relating to certain gas meters and related equipment, together with all attachments, accessories, accessions, substitutions, and replacements; all accounts, chattel paper, general intangibles, insurance, intellectual property rights, and proceeds thereof; books and records. Lessee/Lessor.
|
|
|
|
|
|
|
|
|
|
|
New Jersey Department of Treasury
|
UCC
|
1/16/2008
|
Farm Credit Leasing Services Corporation
|
2450743-1
|
Full assignment of collateral for filing number 2450743-1 to Farm Credit Leasing Services Corporation.
|
|
New Jersey Department of Treasury
|
UCC
|
8/19/2009
|
Banc of America Leasing & Capital, LLC
|
2533223-0
|
Precautionary Filing - Makes reference to Lease Schedule No. 40739-11500-019 to Master Lease Agreement No. 35352, relating to certain equipment, specifically, service trucks, together with all attachments, accessories, accessions, substitutions, and replacements; all accounts, chattel paper, general intangibles, insurance, intellectual property rights, and proceeds thereof; books and records.
|
|
New Jersey Department of Treasury
|
UCC
|
12/26/2008
|
Banc of America Leasing & Capital, LLC
|
2508293-7
|
Precautionary Filing - Makes reference to Lease Schedule No. 40739-11500-008 to Master Lease Agreement No. 35352, relating to certain equipment, specifically, gas meters, together with all attachments, accessories, accessions, substitutions, and replacements; all accounts, chattel paper, general intangibles, insurance, intellectual property rights, and proceeds thereof; books and records.
|
|
New Jersey Department of Treasury
|
UCC
|
11/7/2001
|
Fleet Capital Corporation
|
2072634
|
Precautionary Filing - True Lease, Lease No. 35352-00001, relating to certain equipment, specifically, gas meters, together with all attachments, accessories, accessions, substitutions, exchanges, and replacements; all proceeds, including accounts, chattel paper, documents, instruments, general intangibles, investment property, deposit accounts, letter of credit rights and supporting obligations.
|
|
New Jersey Department of Treasury
|
UCC
|
8/21/2006
|
Banc of America Leasing & Capital, LLC
|
2072634
|
Amendment of filing number 2072634 to change the name of the secured party to Banc of America Leasing & Capital, LLC. Collateral unchanged.
|
|
|
|
|
|
|
|
|
|
|
New Jersey Department of Treasury
|
UCC
|
10/20/2006
Continuation filed 06/27/2011
|
Winmark Limited Funding, LLC
|
2072634
|
Full Collateral Assignment of filing number 2072634 to Winmark Limited Funding, LLC.
|
|
New Jersey Department of Treasury
|
UCC
|
10/1/2009
|
Banc of America Leasing & Capital, LLC
|
2538537-3
|
Precautionary Filing - Makes reference to Lease Schedule No. 40739-11500-020 to Master Lease Agreement No. 35352, relating to certain equipment, specifically, service trucks, together with all attachments, accessories, accessions, substitutions, and replacements; all accounts, chattel paper, general intangibles, insurance, intellectual property rights, and proceeds thereof; books and records.
|
|
New Jersey Department of Treasury
|
UCC
|
9/25/2006
|
IBM Credit LLC
|
2380567-5
|
Precautionary Filing - Certain equipment, together with the related software and all additions, attachments, accessories, accessions, upgrades, substitutions, replacements, exchanges and proceeds of the foregoing, including insurance, indemnity, or warranty. Makes reference to UCC 9-505 (Compulsory Disposition of Chattel; Acceptance of the Collateral as Discharge of Obligation).
|
|
New Jersey Department of Treasury
|
UCC
|
1/10/1996
|
State Street Bank and Trust Company of Connecticut, National Association
Fleet National Bank of Connecticut, as Indenture Trustee, as assignee
|
1676447
|
Precautionary Filing - True Lease, dated as of December 21, 1995, relating to a certain Wyckoff Road property and covering the right, title and interest in and to the building, land, fixtures, certain listed personalty and any proceeds thereof.
|
|
New Jersey Department of Treasury
|
UCC
|
1/9/2001
|
State Street Bank and Trust Company, as Indenture Trustee
|
1676447
|
Amendment of filing number 1676447 to change the name of the secured party to State Street Bank and Trust Company, as Indenture Trustee. Collateral unchanged.
|
|
|
|
|
|
|
|
|
|
|
New Jersey Department of Treasury
|
UCC
|
10/24/2005
Continuations filed 11/04/2005 and
07/15/2010
|
U.S. Bank, National Association, as Indenture Trustee
|
1676447
|
Collateral Assignment of filing number 1676447 to U.S. Bank, National Association, as Indenture Trustee. Collateral unchanged.
|
|
New Jersey Department of Treasury
|
UCC
|
2/28/2008
|
Leaf Funding Inc
|
24608596
|
Rental Agreement, filed for notification purposes only, relating to certain equipment, specifically certain listed water coolers.
|
|
New Jersey Department of Treasury
|
UCC
|
12/12/2008
|
Quench USA
|
24608596
|
Assignment of filing number 24608596 to Quench USA. Collateral unchanged.
|
|
New Jersey Department of Treasury
|
UCC
|
11/23/2009
|
Banc of America Leasing & Capital, LLC
|
2544924-2
|
Makes reference to Lease Schedule No. 023 to Master Lease Agreement No. 40739, relating to certain equipment, specifically, compressors, together with all attachments, accessories, accessions, substitutions, and replacements; all accounts, chattel paper, general intangibles, insurance, intellectual property rights, and proceeds thereof; books and records.
|
|
New Jersey Department of Treasury
|
UCC
|
8/20/2009
|
Hannon Armstrong Multi-Asset Infrastructure Trust c/o The Bank of New York Mellon, as agent; and Hannon Armstrong NJ Funding LLC, as Assignor Secured Party
|
2533361-9
|
All right, title and interest in and to all moneys relating to Task Order No. JN09 issued by NAVFAC Mid-Atlantic pursuant to Area Wide Contract No. GS-00P-99-BSD-0115, including payments, interest, and cash and non-cash proceeds of natural gas, gas transportation, and energy management services provided by Debtor.
|
|
|
|
|
|
|
|
|
|
|
New Jersey Department of Treasury
|
UCC
|
1/7/2003
|
Fleet Capital Corporation
|
2138318-2
|
Precautionary Filing - True Lease, Lease No. 35352-00002, relating to certain equipment, specifically, gas meters, together with all attachments, accessories, accessions, substitutions, exchanges, and replacements; all proceeds, including accounts, chattel paper, documents, instruments, general intangibles, investment property, deposit accounts, letter of credit rights and supporting obligations.
|
|
New Jersey Department of Treasury
|
UCC
|
06/09/2003
Continuation filed 10/02/2007
|
Citizens Leasing Corporation
|
2138318-2
|
Collateral Assignment of filing number 2138318-2 to Citizens Leasing Corporation. Collateral unchanged.
|
|
New Jersey Department of Treasury
|
UCC
|
10/12/2007
|
Banc of America Leasing & Capital, L.L.C.
|
2138318-2
|
Amendment of filing number 2138318-2 to change the name of the secured party to Banc of America Leasing & Capital, L.L.C. Collateral unchanged.
|
|
New Jersey Department of Treasury
|
UCC
|
12/8/2008
|
IBM Credit LLC
|
2505243-5
|
Precautionary Filing - Certain equipment, together with the related software and all additions, attachments, accessories, accessions, upgrades, substitutions, replacements, exchanges and proceeds of the foregoing, including insurance, indemnity, or warranty. Makes reference to UCC 9-505 (Compulsory Disposition of Chattel; Acceptance of the Collateral as Discharge of Obligation) filed 12/05/2008.
|
|
New Jersey Department of Treasury
|
UCC
|
01/06/2006
Continuation filed 01/05/2011
|
Banc of America Leasing & Capital, LLC
|
2337501-7
|
True Lease, Lease No. 40739-11500-005, relating to certain equipment, specifically, gas meters and related equipment, together with all attachments, accessories, accessions, substitutions, exchanges, and replacements; all proceeds, including accounts, chattel paper, documents, instruments, general intangibles, investment property, deposit accounts, letter of credit rights and supporting obligations; Lessee/Lessor.
|
|
|
|
|
|
|
|
|
|
|
New Jersey Department of Treasury
|
UCC
|
12/31/2009
|
Banc of America Leasing & Capital, LLC
|
2549640-6
|
Precautionary Filing - Makes reference to Lease Schedule No. 40739-11500-025 to Master Lease Agreement No. 35352, relating to certain equipment, specifically, service trucks, together with all attachments, accessories, accessions, substitutions, and replacements; all accounts, chattel paper, general intangibles, insurance, intellectual property rights, and proceeds thereof; books and records.
|
|
New Jersey Department of Treasury
|
UCC
|
04/03/2001
Continuations filed 01/19/2006 and
01/26/2011
|
Forsythe McArthur Associates, Inc.
|
2034417
|
Master Equipment Lease No. F13395, relating to certain computer, data processing, telecommunications and other equipment, together with all attachments, accessories, replacements, products and proceeds thereof; Related to a previously lapsed filing statement, filed on 05/24/1991.
|
|
New Jersey Department of Treasury
|
UCC
|
5/18/2011
|
Forsythe McArthur Associates, Inc.
|
2034417
|
Amendment of filing number 2034417 to change the address of Forsythe McArthur Associates, Inc. Collateral unchanged.
|
|
New Jersey Department of Treasury
|
UCC
|
2/11/2010
|
Banc of America Leasing & Capital, LLC
|
2554011-6
|
Precautionary Filing - Makes reference to Lease Schedule No. 40739-11500-029 to Master Lease Agreement No. 35352, relating to certain equipment, specifically, service trucks, together with all attachments, accessories, accessions, substitutions, and replacements; all accounts, chattel paper, general intangibles, insurance, intellectual property rights, and proceeds thereof; books and records.
|
|
New Jersey Department of Treasury
|
UCC
|
8/17/2009
|
CIT Communications Finance Corporation
|
2533081-6
|
True Lease, Lease No. S8700, for Media Server, relating to certain equipment including yyyyyyyyyyyyy, software, support, maintenance and services, and all attachments, accessions, additions, substitutions, products, replacements, rentals, a right to use the licensed software, and any proceeds therefrom; Lessee/Lessor.
|
|
|
|
|
|
|
|
|
|
|
New Jersey Department of Treasury
|
UCC
|
12/27/2004
Continuation filed 12/07/2009
|
Fleet Capital Corporation
|
2275156-0
|
Precautionary Filing - True Lease, Lease No. 35352-00004, relating to certain equipment, specifically, gas meters and related equipment, together with all attachments, accessories, accessions, substitutions, exchanges, and replacements; all proceeds, including accounts, chattel paper, documents, instruments, general intangibles, investment property, deposit accounts, letter of credit rights and supporting obligations.
|
|
New Jersey Department of Treasury
|
UCC
|
4/1/2009
|
CIT Communications Finance Corporation
|
2518096-1
|
True Lease, Lease No. xxxxxxxxxx, relating to certain equipment including yyyyyyyyyyyyy, software, support, maintenance and services, and all attachments, accessions, additions, substitutions, products, replacements, rentals, a right to use the licensed software, and any proceeds therefrom; Lessee/Lessor.
|
|
New Jersey Department of Treasury
|
UCC
|
5/11/2011
|
CIT Communications Finance Corporation
|
2518096-1
|
Amendment of Collateral of filing number 2518096-1 to the following: Certain listed equipment or other personal property, together with all attachments, accessories, accessions, substitutions, and replacements; all accounts, chattel paper, general intangibles, insurance, intellectual property rights, and proceeds thereof; books and records.
|
|
New Jersey Department of Treasury
|
UCC
|
12/29/2003
Continuation filed 10/23/2008
|
Fleet Capital Corporation
|
2196757-3
|
Precautionary Filing - True Lease, Lease No. 35352-00003, relating to certain equipment, specifically, gas meters and related equipment, together with all attachments, accessories, accessions, substitutions, exchanges, and replacements; all proceeds, including accounts, chattel paper, documents, instruments, general intangibles, investment property, deposit accounts, letter of credit rights and supporting obligations.
|
|
|
|
|
|
|
|
|
|
|
New Jersey Department of Treasury
|
UCC
|
6/1/2007
|
IBM Credit LLC
|
2418709-1
|
Precautionary Filing - Certain equipment, together with the related software and all additions, attachments, accessories, accessions, upgrades, substitutions, replacements, exchanges and proceeds of the foregoing, including insurance, indemnity, or warranty. Makes reference to UCC 9-505 (Compulsory Disposition of Chattel; Acceptance of the Collateral as Discharge of Obligation) filed 06/01/2007.
|
|
New Jersey Department of Treasury
|
UCC
|
5/29/2009
|
Hannon Armstrong Multi-Asset Infrastructure Trust c/o The Bank of New York Mellon, as agent; and Hannon Armstrong NJ Funding LLC, as Assignor Secured Party
|
2524135-8
|
All right, title and interest in and to all moneys relating to Task Order No. JN08 issued by NAVFAC Mid-Atlantic pursuant to Area Wide Contract No. GS-00P-99-BSD-0115, including payments, interest, and cash and non-cash proceeds of natural gas, gas transportation, and energy management services provided by Debtor.
|
|
New Jersey Department of Treasury
|
UCC
|
1/12/2007
|
Banc of America Leasing & Capital, LLC
|
2399117-0
|
Precautionary Filing; True Lease, Lease No. 40739-11500-006, relating to certain equipment, specifically, gas meters and related equipment, together with all attachments, accessories, accessions, substitutions, and replacements; all accounts, chattel paper, general intangibles, insurance, intellectual property rights, and proceeds thereof; books and records. Lessee/Lessor.
|
|
New Jersey Department of Treasury
|
UCC
|
6/3/2010
|
Banc of America Leasing & Capital, LLC
|
2565672-5
|
Precautionary Filing - Makes reference to Lease Schedule No. 40739-11500-034 to Master Lease Agreement No. 35352, relating to certain equipment, specifically, service trucks and aerial vans, together with all attachments, accessories, accessions, substitutions, and replacements; all accounts, chattel paper, general intangibles, insurance, intellectual property rights, and proceeds thereof; books and records.
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New Jersey Department of Treasury
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UCC
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10/10/2006
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Canon Financial Services
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2385620-2
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Makes reference to Lease No. 001-0024262-031, relating to all equipment leased, sold, or financed by Canon Financial Services, Inc., all general intangibles and accounts receivable relating thereto, and all replacements, additions, substitutions and proceeds of the foregoing. Lessee/Lessor.
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New Jersey Department of Treasury
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UCC
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2/4/2011
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Canon Financial Services
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2385620-2
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Amendment of Collateral of filing number 2385620-2 to the following: All equipment leased from secured party, together with any replacement parts and substitutions for and additions to such equipment.
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County Clerk of Monmouth County, New Jersey
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Fixture Liens
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1/10/1996
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State Street Bank and Trust Company of Connecticut, National Association
Fleet National Bank of Connecticut, as Indenture Trustee, as assignee
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77677
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Precautionary Filing - True Lease, dated as of December 21, 1995, relating to a certain Wyckoff Road property and covering the right, title and interest in and to the building, land, fixtures, certain listed personalty and any proceeds thereof.
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County Clerk of Monmouth County, New Jersey
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Fixture Liens
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12/22/2000
Continuation
12/22/2000
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State Street Bank and Trust Company, as Indenture Trustee
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2000172600
Continuation
2000172601
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Amendment of filing number 77677 to change the name of the secured party to State Street Bank and Trust Company, as Indenture Trustee. Collateral unchanged.
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County Clerk of Monmouth County, New Jersey
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Fixture Liens
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11/16/2005
Continuations
12/22/2005 and
09/16/2010
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U.S. Bank, National Association, as Indenture Trustee
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2005194252
Continuations
2005224411
And
2010085619
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Collateral Assignment of filing number 77677, together with filing number 2000172600, to U.S. Bank, National Association, as Indenture Trustee. Collateral unchanged.
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SCHEDULE 2.9.1
EXISTING LETTERS OF CREDIT
NONE
SCHEDULE 6.1.12
SUBSIDIARIES
NONE.
SCHEDULE 6.1.12
CONSENTS AND APPROVALS
CONSENT OF THE NEW JERSEY BOARD OF PUBLIC UTILITIES, WHICH HAS BEEN RECEIVED BY NJNG.
SCHEDULE 6.1.23
HEDGING CONTRACT POLICIES
SEE ATTACHED
New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
Revised: May 12, 2009 Approved By: NJNG Risk Management Committee
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I.
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Objectives of the Risk Management Committee’s Guidelines and Procedures
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The Board of Directors of New Jersey Resources Corporation (“NJR”) has delegated responsibility for risk management with regard to wholesale gas trading, credit risk, and overall hedging activities of New Jersey Natural Gas (“NJNG” or the “Company”) to the Audit Committee of NJR’s Board of Directors (“Audit Committee”). The Audit Committee has established and authorized the Risk Management Committee (“RMC”) to develop, implement, and enforce risk management procedures for NJNG, consistent with NJNG’s Risk Management Policy.
The following Guidelines and Procedures have been developed in order to fulfill the responsibilities delegated to the RMC by the Audit Committee. The RMC’s Guidelines and Procedures are intended to be a working document and will be updated on an ongoing basis to reflect the changing business environment encountered by NJNG.
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II.
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Operating Guidelines for the Risk Management Committee
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The RMC is comprised of six senior management representatives as appointed by NJR's Chairman and Chief Executive Officer. The RMC is comprised of:
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•
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Glenn Lockwood - Senior Vice President & CFO of NJR (RMC Chairperson)
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•
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Joseph Shields - Senior Vice President, Energy Services NJNG
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•
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Mark Sperduto - Vice President, Regulatory Affairs of NJNG
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•
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Mariellen Dugan – Senior Vice President & General Counsel of NJR
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•
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William Foley - Treasurer of NJR
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•
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William Scharfenberg – Senior Counsel
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Additionally, NJR's Vice President of Internal Auditing and/or audit staff are invited to attend all meetings of the RMC as a non-voting but participating member.
The RMC will meet at least twice each month. Any member of the RMC may request that a meeting be held. A quorum (consisting of three members of the RMC) must be present to conduct an RMC meeting. All official actions of the RMC will require the affirmative vote of three members of the RMC. Meeting minutes will be prepared by the Manager, Mid-Office Controls, for each meeting. All approved RMC meeting minutes will be forwarded to the Vice President of Internal Auditing, who is responsible for forwarding the approved RMC minutes and related materials to the Audit Committee regularly.
The Manager, Mid-Office Controls will be responsible for reviewing NJNG’s risk management reports on a daily or weekly basis, depending on the report. These reports include mark-to-market of open positions, daily broker statement, pricing data, trader limit exception report, and counterparty deal compare report. In addition to these reports, the Manager, Mid-Office Controls is also responsible for
compiling the RMC reports listed in Section VII, B, 1 - Risk Monitoring & Reporting, of these Guidelines.
NJNG’s Energy Services operating management has the first-line delegated authority to ensure that NJNG’s business risks are properly identified, measured, controlled, and reported, using approved methodologies as specified herein.
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III.
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Affiliate Transactions
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NJNG transacts in the natural gas commodity, transportation and storage capacity markets (physical assets), and establishes a position within those markets to provide sufficient commodity and capacity necessary to meet its customers’ demand levels. An affiliated company, NJR Energy Services (“NJRES”),
New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
also acquires physical assets and transacts in natural gas transportation and storage capacity markets.
On a daily basis, both companies (NJNG and NJRES) buy and sell physical assets within the same market place. In light of that, controls have been developed to oversee activities to ensure that each company’s strategies, techniques and transactions comply with applicable regulations and policies. On a monthly basis, the RMC is provided with an internal control addendum that includes reports designed to monitor potential affiliate transactions. These reports were developed in accordance with the BPU audit report (dated 11/20/07); section I-5 “Affiliate Procurement Relationships”.
The NJR “Code of Conduct” (Exhibit III) also addresses affiliate transactions.
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IV.
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Overview of NJNG’s Business Activities
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NJNG is a wholly owned subsidiary of NJR and is engaged in providing regulated natural gas energy services to customers located in central and northern New Jersey, as well as, providing other energy-related services throughout various geographic regions in which NJNG has gas transportation and/or storage capacity rights. The following summarizes NJNG’s core business activities.
Basic Gas Supply Service (BGSS) -
NJNG provides natural gas service to a specified core customer base in New Jersey. To be able to fulfill its obligation to serve this market, NJNG maintains a portfolio of supply, transportation and storage contracts. The costs associated with holding this portfolio are currently filed for recovery in rates through the BGSS factor that must be approved by the New Jersey Board of Public Utilities (“Board” or the “BPU”). Although the Company’s price risk within this portfolio is currently mitigated by the rates established through the BGSS process, NJNG is proactive in its portfolio management approach and is conscious of hedging its gas costs to attempt to keep prices and volatility as low as possible.
Prior to April 1 of each year, the Company will determine the estimated firm purchase requirements for at least the next two annual BGSS periods. The volume targets will be updated based upon the annual budget forecast issued in May or June each year. Along with this, a determination is made of the average rates necessary to recover the gas costs with a minimal impact on un-recovered gas costs, when compared to the currently approved BGSS rate.
The Company will then devise a strategy to hedge (but not necessarily fix) the gas purchase requirements. The strategy will provide that at least 75% of the current winter volumes and 25% of the following year volumes be hedged by November 1 of the current year. The Company may, at its discretion, hedge additional volumes. The percentage hedged will consist of storage gas, all fixed price contracts (future or physical) as well as all long (purchased) call positions divided by the estimated purchase requirements including fuel.
Off System Sales and Capacity Release Program -
NJNG’s Off-System Sales and Capacity Release programs include optimizing the Company’s storage and pipeline capacity contracts to recover some of the fixed costs within its BGSS portfolio.
Off System Sales involves the bundled sales (i.e. the natural gas supply and transportation capacity) to various end-users and marketers.
The Capacity Release Program involves the posting of transportation capacity or storage capacity on the various electronic bulletin boards in compliance with Federal Energy Regulatory Commission (“FERC”) provider posting requirements for the sale of capacity to various end-users and marketers when the Company is not utilizing it (i.e. seasonal demands).
New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
Both programs have an incentive mechanism, with the reported net revenue generated shared at eighty five percent (85%) to the customers through a credit to the BGSS balance and fifteen percent (15%) to the Company.
Storage Incentive Program
The Storage Incentive provides benefits to customers through added price stability and cost reductions. The program establishes a benchmark cost for storage injections against which actual injection costs are measured. The program yields cost savings by promoting innovative purchasing strategies that take advantage of the optionality inherent in storage operations and marketplace opportunities. The actual costs of storage injections include commodity costs, actual transportation costs and any gains and losses associated with trading of financial hedges within the program. The difference between the Storage Incentive benchmark and actual costs, positive or negative, are currently shared eighty percent (80%) to customers and twenty percent (20%) to NJNG. In addition to cost savings, the program promotes long-term price stability through hedging of storage injection volumes.
Financial Risk Management (FRM) Program
The program is designed to provide price stability and includes an incentive mechanism designed to encourage the use of financial options to hedge NJNG’s gas costs. The current sharing percentages on FRM gains are eighty five percent (85%) to customers and fifteen percent (15%) to NJNG.
IV.
Business Risks
NJNG is subject to a number of ongoing business risks. These risks and the RMC’s approved strategies to mitigate these risks are identified below.
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A.
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Market Risk -
Market risk represents the potential loss that can be caused by unfavorable changes in market variables. These variables include adverse changes in commodity prices and market liquidity and may occur as a result of positions taken by NJNG in the market or as a result of market forces outside the control of NJNG. Market risk is currently mitigated through the BGSS process; in other words, reasonably incurred gas costs are reflected in the company’s rates.
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1.
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General Trading and Exchange Position Guidelines -
The RMC has established the following guidelines, procedures and trading limits to mitigate NJNG’s exposure to risks of adverse changes in commodity and capacity market prices. At its discretion, Management may establish more restrictive limits than those outlined herein. In addition, the RMC may, in its discretion, or at the discretion of the Audit Committee, direct Management to reduce any exposure deemed not in the best interest of NJNG. The following guidelines apply to all commodity and capacity transactions for NJNG’s trading operations.
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a.
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Market Exposure -
Under the Company’s Off System Sales program, NJNG will make commitments to purchase or sell commodity, or sell capacity on a fixed price basis, financial basis or physical basis.
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b.
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Use of Financial Instruments -
The use of approved financial instruments (see Exhibit I) will be used to hedge risks in the physical commodity market. These derivative instruments can be used to hedge BGSS or system requirement supply, as well as, for the incentive programs such as Off-System Sales, Storage Incentive and FRM. The use of financial instruments for speculative purposes is expressly prohibited.
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New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
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c.
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Approved Financial Instruments -
Approved financial instruments and exchanges are listed on Exhibit I. A listing of approved brokerage houses/financial counterparties with whom NJNG had ISDA contracts is available for all traders. Approved brokerage houses/financial counterparties will be required to send confirmations of all financial trades to the Manager, Mid-Office Control or Accounting Manager, NJRES. Also, if specifically requested, a copy of the confirmation must be sent to the Vice President, Internal Audit.
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d.
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Managing Liquidity Risk -
Market liquidity may limit NJNG’s ability to execute transactions rapidly at a reasonable price. The lack of market liquidity may make it difficult for NJNG to unwind or offset a particular position at or near a previous market price if there is inadequate market depth or a disruption in the market. Because of this risk, the liquidity of certain types of instruments may make them unsuitable in achieving NJNG’s business objectives. Therefore, the RMC is to consider this risk when approving the suitability of specific financial instruments for use by NJNG
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2.
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Financial Risk Management (FRM) Program Guidelines -
NJNG was granted approval by the New Jersey Board of Public Utilities for the FRM program, which involves utilizing natural gas options to hedge the commodity price risk within the BGSS supply portfolio. The FRM program also includes an incentive mechanism on certain transactions, whereby margins are split eighty five percent (85%) to the customer through a credit to the BGSS balance and fifteen percent (15%) to the Company. The program is described in greater detail below.
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a.
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Benchmark -
The pricing benchmark for the FRM Program is the Global Insight Natural Gas Monthly Forecast for the Henry Hub. This report is published by the end of every month and is used to update the FRM benchmark on a quarterly (Dec, Mar, Jun & Sep) basis. A copy of the Global Insight Forecast report is provided to the RMC. All executed trades within the FRM program are measured against the quarterly benchmark that is in effect at the time of the trade transaction date.
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b.
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Portfolio Volumes -
The program has volume limitations relating to the total monthly BGSS market-based purchases. A report of the volumes is updated annually on June 1, as part of the annual BGSS filing. The report lists the volumes that may be hedged in relation to pricing against the approved benchmarks.
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New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
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c.
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Approved Financial Instruments –
Permitted FRM transactions are limited to options. Naked options, futures contracts and swaps are not permitted.
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d.
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Program Dollar Limitation -
The cost associated with the program is capped. The current cap which may be changed with approval of the BPU is $6.4 million; the current cap was approved by the BPU in the October 3, 2008 Order approving the Stipulation in the base rate case. The $6.4 million includes the premium costs of the options purchased for the program, NJNG’s 15 percent share, credits from option close, and broker fees/commissions.
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Calculations for the above individual FRM components are as follows:
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•
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Option premium costs – determined based on the premium rate obtained at deal inception multiplied by the number of option contracts purchased, multiplied by 10,000 (1 contract = 10,000 dths).
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•
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NJNG sharing dollars at 15% – calculated as DRI Benchmark minus Strike Price minus the premium paid, multiplied by the number of option contracts purchased times 10,000 dths less fees at purchase, with 15% credited to NJNG; these sharing dollars are determined at the time the option is purchased, since both prices are known at deal inception.
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•
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Credit from option close – calculated as Market price (penultimate) minus DRI Benchmark; these amounts are not determined until option settlement date when the penultimate price becomes available. Additionally, only resulting gains (and not losses) are applied as a credit to the program dollars.
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New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
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•
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Broker fees/commissions – flat individual rate per contract.
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e.
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Authorized Financial Brokerage Accounts -
The RMC has approved two financial brokerage accounts (see Exhibit I).
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f.
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Below the Benchmark Sharing -
The profit on trades executed below the program benchmark is calculated as the benchmark minus the strike price minus the premium and the transaction costs (e.g., broker commissions). Eighty five percent (85%) of the calculated profit is allocated to the customers as a credit to the BGSS balance, while fifteen percent (15%) is allocated to the Company.
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g.
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Above the Benchmark Sharing –
RMC approval is required for entering into options above the benchmark. Sharing on trades above the established benchmark is subject to the market price of the option minus the transaction costs. Eighty five percent (85%) of the calculated profit is allocated to the BGSS balance, while fifteen percent (15%) is allocated to the Company. If the option expires without value in the market, the premium paid for that option is shared eighty five percent (85%) of the cost to the BGSS, fifteen percent (15%) to the Company.
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h.
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Reporting
- Internally, an update of the FRM Program activity is presented at every RMC meeting. External reports are prepared monthly for the BPU on a confidential basis subject to a protective order between NJNG, the Department of the Public Advocate, Division of Rate Counsel and the BPU.
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3.
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Gas Purchasing and Off-System Sales Trading Guidelines -
In addition to purchasing the physical commodity and capacity necessary to meet NJNG’s retail sales commitments, NJNG’s traders purchase and sell natural gas and capacity as part of OSS and capacity release incentive programs.. The following guidelines apply to NJNG’s gas supply operations:
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Prior to making any off system sale or capacity release, the NJNG trader must analyze the availability of any excess deliverability in the portfolio.
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a.
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For daily and within the month transactions: the trader reviews the daily send out estimate report that is distributed by Gas Control twice a day and compares it to the daily deliverability available in the portfolio. If the transaction is greater than the number of days on the daily send out but still less than 1 month, the trader requests a balance of month forecast projection from the Manager, Supply Planning and compares each days’ estimate to the deliverability of the portfolio.
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b.
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For transactions for the prompt month or greater, but not over a peak winter month (January or February): the trader requests a projected gas usage by month from the Manager, Supply Planning which shows by month the current system requirement estimates based on 10-year averages and current long term weather forecast and compares that to the estimated portfolio deliverability, inclusive of projected planned storage injections and/or withdrawals.
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c.
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For transactions that might include a peak winter month, then in addition to the above analysis, the trader must obtain a peak day analysis that shows potential peak day requirements and the required 5% reserve volume.
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After the determination of any excess deliverability is made, the trader can transact within the following approval limits.
New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
Trading Approvals -
Traders are authorized to make capacity and commodity trades using the following volumetric limits:
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Deal Term
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Dths/day
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Daily
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50,000
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Monthly
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30,000
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Seasonal
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20,000
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Seasonal deal term is defined as Apr-Oct (Summer) period or Nov-Mar (Winter) period. The Vice President or Senior Vice President of Energy Services, NJNG, must approve any trades that exceed a seasonal period.
Capacity Release
The following table summarizes the approvals required for capacity release transactions:
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Approval
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Dths/day
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Term *
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Demand $
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Traders
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50,000
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</= Seasonal
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< $0.2 MM
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V.P. NJNG
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> Seasonal
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< $1.0 MM
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SVP ES
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< $5.0 MM
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CFO/ Treasurer/ VP NJRSC/ COO
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> $5.0 MM
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CEO
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> $ 15.0 MM
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Board of Directors
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> $20.0 MM
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*
refers to upcoming season only
Exhibit IV – Contract & Credit Policy for Wholesale Transactions provides additional information regarding the above approvals.
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a.
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General Trading Guidelines -
Authorized NJNG traders are subject to compliance within the established monthly and daily trading strategies (i.e., monthly and daily “set-up” sheets) as approved by
the Vice President or Senior Vice President, NJNG Energy Services. Any seasonal trades executed must be in compliance with the winter seasonal trading strategy approved by the Vice President or Senior Vice President, NJNG Energy Services.
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b.
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Transaction Documentation -
All transactions must be documented by a contract executed by both parties. Physical transactions are commonly documented by a GISB (Gas Industries Standards Board) or NAESB (North American Energy Standards Board) base contract for sale and purchase of natural gas. Financial transactions are commonly documented by an ISDA (International Standards and Derivatives Association) contract. More detail concerning contracts can be found in the Credit and Contract Procedures manual (see Exhibit IV).
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In addition, traders will document all hedges, with note to file, by explaining why the hedge is being established and reference the applicable program (e.g., Storage Incentive).
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d.
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Risk Management -
Documentation for all transactions will be in the GMS (Gas Management System) or Zai*Net systems. The financial trader will coordinate with the physical traders to determine the risk management strategy for each transaction or group of transactions with the intent that all price exposure is to be hedged with a financial instrument at the time of the physical transaction or the optional trigger price is executed.
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New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
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4.
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Storage Incentive Program
|
The Company has established a target range of 20 - 23 bcf of gas available through storage as of October 31 each year. Of that quantity, 20 bcf will be included in the Storage Incentive Program. The Storage Incentive Program purchase guideline is as follows:
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# of Contracts
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Contract Month
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286
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April
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286
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May
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285
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June
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286
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July
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286
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August
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285
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September
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286
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October
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2,000
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Totals
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The 20 Bcf will be evenly distributed within the Apr-Oct month period to equal approximately 285 – 286 contracts per month. The Storage Incentive program does not specify a starting date to begin hedging. NJNG has the ability to increase the volume for any new incremental storage capacity that is added to the portfolio.
NJNG’s policy is to not hedge beyond the years that the Storage Incentive program is approved by the BPU.
Note: the fuel component/hedge is done at the then-applicable rate.
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B.
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Credit Risk -
Credit risk is the risk of loss as a result of nonperformance by NJNG’s counterparties pursuant to the terms of their contractual obligations. The loss is the cost of replacing the contract with a new one with identical or similar terms (replacement value) or the amount of gas delivered but not paid for.
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NJNG’s exchange-traded purchases and sales of natural gas financial contracts do not contribute to credit risk since each transaction is supported by the NYMEX Exchange. Any over-the-counter financial transaction would be subject to the individual counterparty credit risk.
The Senior Manager, Energy Services is responsible for the credit risk management function and will have clear independence and authority separate from the trading function. The Senior Manager’s responsibilities include first-line evaluation of new counterparties, monitoring and reporting credit exposure, reviewing the creditworthiness of counter parties, monitoring the concentrations of credit risk and reviewing and monitoring risk reduction arrangements. All credit limit increases require approval from several RMC members, and at least the Senior Vice President, Energy Services NJNG, and the Vice President & Controller, or Treasurer of NJR. These responsibilities are further defined in NJR’s Credit and Contract Policies and Procedures.
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C.
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Operational Risk -
Operational risk is the exposure to loss due to human error or fraud, or from a system of internal controls that fails to adequately record, monitor and account for transactions or positions. In addition to the daily and monthly reporting obligations described in Section VII, NJNG has implemented the following personnel and system controls to mitigate operational risks.
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1.
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Personnel -
The following procedures have been established to safeguard against personnel risks:
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New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
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a.
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All personnel who are authorized to contract on behalf of NJNG must be approved by the RMC. Approved traders with authorized products to trade are listed in Exhibit II.
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All trades that are conducted via telephone will be made with recording devices to ensure that conversations are captured for evidentiary purposes, in the event of deal discrepancies. Only specific transaction related information will be recorded. Voice data containing this information will be kept consistent with FERC policy.
Trades that are performed via instant messaging, or on telephones located outside the office (including cellular phones), will be confirmed via a recorded telephone line or the instant message will be retained.
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b.
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Personnel involved in risk measurement, validation, and monitoring will have clear independence and autonomy from the trading function.
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c.
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All employees will be required to sign NJR’s Code of Conduct policy annually.
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d.
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All traders and Transportation & Exchange (T&E) personnel are required to sign an annual compliance statement indicating that they have read, understood, and will comply with the RMC’s Guidelines and Procedures.
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e.
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No person will be able to trade for themselves or others using approved financial instruments during their affiliation with NJNG. Financial instruments that are approved for use in NJNG’s risk management operations are listed in Exhibit I.
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2.
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Information System Controls -
To minimize operational risk, information systems controls will be established and implemented with the following design feature requirements:
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a.
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Information systems will be developed and implemented to adequately document, record and measure all of NJNG’s business transactions and forward commitments.
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b.
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Data access will be controlled and security procedures will be implemented to properly control data access and update capabilities.
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c.
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Contingency plans will be established with detailed procedures for backup (timely, adequate, off-site rotation to secure location, etc.) of mission-critical applications.
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D.
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Legal Risk -
Legal risk is the risk of loss when a contract cannot be enforced or a counterparty fails to fulfill its contractual obligations. This includes risks arising from insufficient documentation, insufficient authority of a counterparty, uncertain legality, and unenforceability due to bankruptcy or insolvency.
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To minimize the risks of failure of NJNG’s counterparties to perform their contractual obligations, NJR’s legal counsel must approve all contracts as per the Contract and Credit Guidelines (see Exhibit IV).
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E.
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Tax Risk -
Tax risk is the financial risk arising from possible misinterpretations or changes in the federal or state tax laws. To minimize this risk, NJR’s tax department monitors federal and state tax laws affecting NJNG’s business operations. In addition, Management is required to notify NJR’s tax department prior to conducting business in a new tax jurisdiction (i.e., country, federal, state or city).
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New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
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V.
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Required Notifications
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Changes in Management’s business strategies, changes in the business environment that materially impact NJNG’s risk profile and any violation of the RMC’s guidelines and procedures are required to be immediately reported to the RMC. If a violation involves the failure of the RMC to comply with its oversight responsibilities, the violation must also be immediately reported to the Audit Committee. Required notifications to the RMC and the Audit Committee include, but are not limited to, the following events:
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A.
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Required Notifications by Management to the RMC -
The RMC is to be immediately notified when any of the following occur or are expected to occur:
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1.
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There is any incident of trader misconduct or a trader has exceeded his or her trading limit, without consent from an approving party.
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2.
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NJNG’s FRM Program dollar limitation exceeds the approved limit of $6,400,000.
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3.
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There is a material credit failure or nonperformance by counterparty or clearing broker.
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4.
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There is a change in any risk management methodology or a material change in any measurement process.
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5.
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Significant market changes have occurred or are reasonably expected to occur that would adversely affect NJNG’s risk management strategy.
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6.
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There is a change in Management’s fundamental strategy with respect to any of NJNG’s business activities.
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7.
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Trading occurs on an exchange or of a new product or instrument that is not listed in Exhibit I;
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8.
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A loss has occurred that would materially impact the financial position or results of NJNG or NJR.
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B.
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Required Notification by the RMC to the Audit Committee -
The Audit Committee is to be notified by the RMC when any of the following occur.
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1.
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There is any incident of trader misconduct or a trader has exceeded his or her trading limit, without consent from an approving party.
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2.
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NJNG’s FRM Program dollar limitation exceeds the approved limit of $6,400,000.
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3.
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There is a material credit failure or nonperformance by counterparty or clearing broker.
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4.
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A loss has occurred that would materially impact the financial position or results of NJNG or NJR.
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C.
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Notification Procedures -
Should any of the above matters arise such that notification must be made to the Audit Committee, a written statement of the matter is to be prepared by the employee making the observation. A copy of the written statement is to be provided to:
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New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
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•
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Larry Downes, President & Chief Executive Officer, NJNG
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•
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Glenn Lockwood, Senior Vice President & CFO of NJR (RMC Chairperson)
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•
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Joseph Shields - Senior Vice President, Energy Services NJNG
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•
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Kathy Ellis – Executive Vice President & Chief Operating Officer, NJNG
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•
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Mariellen Dugan – Sr. Vice President & General Counsel
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•
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George Smith - Vice President of Internal Audit
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The Chairperson of the RMC is to notify the RMC and the Audit Committee if required by the above procedures.
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VI.
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Disciplinary Actions for Violations of the RMC’s Risk Management Guidelines
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The available disciplinary actions for violations are established by NJNG’s RMC from time-to-time and are documented herein. Violations not specifically identified below will be handled at the discretion of the RMC on a case-by-case basis. All disciplinary actions, whether specifically identified below or handled at the discretion of the RMC, will be applied on a consistent and non-discriminatory basis.
The following disciplinary actions apply to violations of the RMC’s guidelines and procedures:
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A.
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Trader Limit Violations and Trader Misconduct -
If a trader exceeds his or her authorized trading limits without notice, either as the direct result of a particular trade (“active” excess) or from an adverse market move due to improper hedging (“passive” excess), or if the trader otherwise violates the guidelines contained herein, the trader will be issued a written warning by the Senior Vice President, NJNG Energy Services documenting the violation. Any trader, who subsequently violates a limit, regardless of notice, within twelve months of any previous violation, will be subject to immediate disciplinary action, up to and including dismissal from employment. The RMC must be notified immediately of any trader limit violation consistent with the notification procedures contained herein.
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Irrespective of the guidelines described above, the RMC retains the right to take any disciplinary action it deems appropriate under the circumstances, whether more or less severe than the disciplinary actions specified in this Section.
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VII.
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Risk Monitoring and Reporting Responsibilities
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The following guidelines have been established in order to provide the RMC and Management with timely and meaningful information to assess the risk exposure of NJNG and to ensure that NJNG’s business activities are in compliance with the RMC’s guidelines and procedures.
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A.
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Independent Monitoring -
Management is to ensure that there is adequate segregation of duties between the functions of the front, middle, and back offices. Personnel involved in risk measurement, validation, monitoring and reporting are to have the appropriate competencies in understanding the monitored activity and clear independence and autonomy from the trading function.
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NJR Internal Audit shall perform periodic non-scheduled audits at the discretion of the Vice President of Internal Audit. The results of these audits will be provided to the RMC and the Audit Committee after Management has had the opportunity to review the findings and respond appropriately.
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B.
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Management’s Responsibility to Report to the RMC -
Management will provide periodic reports to the RMC. The RMC designates the Manager, Mid-Office Control with the first-line responsibility
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New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
for monitoring and reporting on NJNG’s adherence to the established procedures and trading limits.
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1.
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Required Reporting from Management to the RMC -
The following reports will be produced for each RMC meeting by assigned personnel and are to be reviewed by the Manager, Mid-Office Control.
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RMC Report
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NJNG BGSS
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NJNG Hedging Summary
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NJNG Storage Incentive Summary
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NJNG Forward Market Equity
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NJNG FRM Program
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NJNG FRM Supplemental
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NJNG/NJREC Coastal Swap
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Credit Information Change Report
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Available Credit Report
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Credit Exposure
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Ratings changes
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The following additional reports addressing internal controls are included as an addendum to the first RMC meeting of each month:
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Affiliate-trade reporting
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Un-used capacity report (annually)
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Option premiums
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Trader limit report
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Top 10 counterparties ($’s and Dth’s)
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Top 10 trades ($’s and Dth’s)
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C.
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RMC’s Responsibility to Report to the Audit Committee -
The Chairperson of the RMC will provide a verbal report at each meeting of the Audit Committee summarizing any of NJNG’s activities that affect its risk management profile or risk exposure. Additionally, minutes of all RMC meetings will be provided to the Audit Committee regularly.
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New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
EXHIBIT I
APPROVED FINANCIAL INSTRUMENTS, BROKERAGE HOUSES, FINANCIAL COUNTERPARTIES AND EXCHANGES
Approved Financial Instruments:
Natural gas futures contracts
Natural gas options contracts
Natural gas basis swaps
Natural gas commodity swaps
Approved Exchanges:
New York Mercantile Exchange
Intercontinental Exchange
Approved Futures Commission Merchants:
Citigroup Global Markets, Inc. (formerly Salomon Smith Barney)
Newedge Financial (formerly Calyon Financial)
Approved Counterparties:
Refer to GMS (Contract Summary)
New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
EXHIBIT II
Risk Management Committee
List of Authorized Traders
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Name
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Title
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Physical Trades **
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Financial Trades
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NJNG
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Annitto, S.
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Director
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X
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Level 1 (a)(b)
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X
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Richman, G.
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VP
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X
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Level 1
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X
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Dugan, S.
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Trader
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X
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Level 1 (a)
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X
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Rose, A.
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Trader
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X
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Level 2
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X
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Ferreira, K.
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Trader
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X
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Not authorized
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X
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**
refer to OSS and BGSS sections for specific limits
Level 1 financial = Futures, Options, Swaps
(a) primary function is executing financial trades
(b) back-up to NJNG trader (S. Dugan)
Level 2 financial = Futures, Options and Swaps other than basis swaps, and for the prompt two months only.
In order to distinguish between these limits, a separate account has been established with our Futures Commission Merchant(s). These accounts have corresponding settings in ICE.
All traders with level 2 financial authority will periodically attend formal in-house training in pricing execution, specifications and settlement of financial products.
New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
Exhibit III
Code of Conduct
of New Jersey Resources Corporation
Governing Wholesale Natural Gas Buying and Selling
and the Reporting of Trade Data for Index Development Purposes
General Policies
The policy of New Jersey Resources Corporation and its subsidiaries (the “Company”) is for all officers, employees, agents and others authorized to act on the Company’s behalf to comply fully with all applicable laws and regulations, and to adhere to the highest professional and ethical standards in the conduct of the Company’s natural gas wholesale purchase and sale business. The Company’s business shall be conducted in accordance with the highest standards of honesty, integrity and fairness, and business decisions shall be made to honor the spirit and letter of all applicable laws and regulations.
The Company believes that the development and publication of fair, accurate and robust natural gas price indices has value to all industry stakeholders. Accordingly, the Company’s policy is to participate, voluntarily and with appropriate protection for competitively sensitive information, in the collection by industry-recognized index developers of transaction data for the purpose of developing and publishing price indices. In all such activities, the Company is committed to full compliance with all applicable laws and regulations, as well as adherence to the general principles set forth by the Federal Energy Regulatory Commission (“FERC”) in its
Policy Statement on Natural Gas and Electric Price Indices.
Any questions regarding the policies set forth herein should be addressed to the Company’s Chief Compliance Officer, Mariellen Dugan, Vice President and General Counsel of New Jersey Resources Corporation. Ms. Dugan's telephone number is (732) 938-1489, e-mail address is
mdugan@njresources.com
and business address is 1415 Wyckoff Road, Wall, New Jersey 07719. In addition, any questions pertaining to the Company’s reporting of price information to index developers may be addressed directly to Dennis F. Veltre, Manager of Credit and Contracts, NJR Energy Services Company. Mr. Veltre’s telephone number is (732) 938-4541, e-mail address is
dveltre@njresources.com
and business address is 1415 Wyckoff Road, Wall, New Jersey 07719.
Any person with knowledge or concerns regarding activities that may be in violation of this Code of Conduct or of any applicable laws or regulations must report them immediately to the Company’s Chief Compliance Officer. There will be no retaliation for reports made in good faith.
The policy guidelines established in this wholesale natural gas transactions Code of Conduct are intended to be in addition to, and not in lieu of, (1) the New Jersey Resources Corporation Code of Conduct, which is applicable to all business activities of the Company, and (2) any other specific policies and procedures that apply to particular business activities and/or personnel of the Company.
This policy applies to all officers and any employees and agents directly or indirectly involved in the submission of offers or bids to buy or sell natural gas or pipeline or storage capacity (“Trading Representatives”).
Failure to adhere to this Code of Conduct will result in disciplinary action, up to and including termination of employment. This Code will be consistently and strictly applied, and will include disciplinary action against any supervisory personnel for negligent failure to detect an offense in his or her area of responsibility.
New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
Policies Governing the Buying and Selling of Natural Gas in Wholesale Markets
•
Accounting & Financial Records
The accuracy of the Company’s accounting, financial and auditing records and reports is crucial to the integrity and success of the Company. At no time should anyone knowingly falsify or misrepresent these records or reports, or require that others do so. Moreover, it shall be the Company’s policy to make full, fair, accurate, timely and understandable disclosure as required by applicable laws and regulations. Any Trading Representative with knowledge or concerns regarding questionable accounting, financial or auditing matters must report them to the Company’s Chief Compliance Officer.
It shall be the policy of the Company to retain, for a period consistent with FERC policy (which is currently five years), all data and information upon which it billed the prices it charged for natural gas sold pursuant to any market based sales certificate issued by the FERC.
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•
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Antitrust Laws, Fair Competitive Practices, and Prohibition of Manipulative Conduct
The Company’s policy is to comply fully with both the letter and spirit of all federal and state antitrust and fair competition laws. The basic premise behind these laws is that all companies should compete individually rather than join together in agreements or actions that restrict their individual competition. Although the antitrust laws and the actions they proscribe are complicated, examples of a few types of activities that may be violations of those laws are: 1) competitors agreeing on prices they will charge for their products or agreeing to serve customers in certain exclusive areas; 2) competitors agreeing on the types of products or the amount of any product the companies will produce or offer for sale; 3) tying the sale of one product or service on the purchaser buying a separate unrelated product or service; and 4) treating similarly situated purchasers/sellers or users of a product or service differently. Any questions about this issue should be directed to the Chief Compliance Officer.
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The Company’s wholesale natural gas buying and selling, reporting of trade data for index development purposes and related communications with others will concern genuine proposed or actual transactions and will be undertaken so as not to violate the antitrust or fair competition laws. The Company will separately maintain Antitrust Compliance Guidelines and periodically review those Guidelines with trading and other appropriate personnel.
All Trading Representatives shall be prohibited from engaging in actions or transactions relating to natural gas commodity, transportation or storage markets that are manipulative or deceptive. In particular, the Company prohibits (1) the use or employment of any device, scheme or artifice to defraud, (2) the making of any untrue statement of a material fact or omission of a material fact that would be necessary to make a statement made not misleading under the circumstances, and (3) acts, practices and courses of business that operate as a fraud or deceit upon any entity. Examples of such prohibited conduct include engaging in pre-arranged offsetting trades of the same product among the same parties that involve no economic risk and no net change in beneficial ownership (so-called “wash trades”), knowingly or recklessly submitting false information in connection with a transaction, and collusion with another party for the purpose of manipulating natural gas market prices, conditions, or rules.
•
Affiliate Sales and Purchases
No Trading Representative acting on behalf of New Jersey Natural Gas Company may enter into any transaction to directly purchase or sell natural gas, transportation, storage or related products or services from or to an affiliate of New Jersey Natural Gas Company without the express prior written consent of the Company’s Chief Executive Officer. Consent to any such transaction shall be at the sole discretion of the Chief Executive Officer; provided, however, such consent shall not be given if he determines that at the time the request for consent is made (i) the sale of the product or service to New Jersey Natural Gas Company would exceed the market price for such product or service; or (ii) the sale of the product or service by New Jersey Natural Gas Company would be at a price less than the higher of its cost or
New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
the market price.
No Trading Representative may enter into any transaction with a third party to purchase or sell natural gas, transportation, storage or related products or services if the Trading Representative knows at the time that the transaction is entered into that the third party has entered into or plans to enter into a corresponding contemporaneous transaction with the Company to resell or repurchase the same or similar product or service. Notwithstanding the foregoing, any transaction executed through the IntercontinentalExchange (“ICE”) or similar trading platform is
per se
not in violation of this prohibition.
For purposes of this prohibition, an “affiliate” of a specified company includes any company that controls, is controlled by, or is under common control with the specified company.
•
Confidential Information
All Trading Representatives must appropriately safeguard the Company’s trade secrets and confidential or proprietary information, and refuse any improper access to trade secrets and confidential information of any other company, including the Company’s competitors. Trading Representatives should always be alert to avoid inadvertent disclosure that could arise in either social conversations or in normal business relations with Company suppliers and customers.
Confidential information is any information, which, at the time it is known, is not generally available to the pubic and which is useful or helpful to the Company and/or which would be useful or helpful to competitors of the Company. Confidential information can include customer, employee, stockholder, supplier, financial or operational information and plans for stock splits, business acquisitions and mergers, or an important pending regulatory action.
Any Company confidential information to which a Trading Representative may have access should be discussed with others in the Company only on a need-to-know basis.
If the Company wishes to disclose its own trade secret or confidential information to anyone outside the Company, it should be done only in conjunction with appropriate trade secret or confidential information disclosure agreements that must be reviewed by the Company’s legal department.
•
Conflicts of Interest
No Trading Representative shall pursue or engage in any outside employment, business or other commercial activity, either during or outside such Trading Representative’s Company working hours, which conflicts or competes directly or indirectly with his or her duties or responsibilities as a Trading Representative, or with any business interests or activities of the Company. Trading Representatives are expected to carefully consider whether any of their actions during or outside Company hours rise to the level of a conflict of interest. Even the appearance of a conflict of interest must be avoided.
Trading Representatives directly involved in the trading of natural gas have an affirmative obligation to disclose to the Chief Compliance Officer any interest, including but not limited to, a financial interest in any outside activities or business that may conflict or compete with those of the Company. This affirmative disclosure obligation extends to the interests of the Trading Representative’s immediate family members(s).
At no time during Company working hours or on Company property shall any Trading Representative engage in or pursue any non-company employment, business or commercial activity, or solicit Company customers or Trading Representatives for any profit-making purpose, nor shall any Trading Representative make use of any Company vehicles, telephones, tools, equipment, information, or other facilities at any time for any such purpose.
New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
Trading Representatives directly involved in the trading of natural gas shall not enter into any natural gas transactions for their personal accounts. Any questions regarding this policy should be addressed with the Chief Compliance Officer. No vendor or consultant shall be retained to perform services for any business unit where a Trading Representative in that business unit is related to, lives with or is in a relationship with the consultant or vendor, without the express permission of the Company’s Chief Executive Officer. Any such existing relationship must be immediately disclosed to the Chief Compliance Officer.
Unless specifically approved by an officer of the Company, vendors or consultants may only be contacted for purposes for which the vendor or consultant was retained.
•
Securities Fraud and Insider Trading
It is both illegal and against Company policy for any individual to profit from undisclosed information relating to the Company or any company with which the Company does business. (See the
Policy Regarding the Purchase and Sale of New Jersey Resources Corporation Securities
) Anyone who is in possession of material non-public information that the Company has not yet disclosed to the public may not purchase or sell any Company securities. Moreover, Trading Representatives who have material non-public information about any of the Company’s suppliers, customers, or any company the Company does business with are prohibited from purchasing or selling the securities of those companies. “Material non-public information” is generally considered to be information, positive or negative, not available to the general public that would be expected to affect the decision of a reasonable investor contemplating whether to purchase, sell or hold Company securities. Information may be material for this purpose even if it would not alone determine the investor’s decision. Whether particular information is “material” at a particular time may involve complex factual and legal analysis, and an individual should consider as material any information that would be important enough to affect a decision to buy or sell Company securities.
It is against Company policy, and possibly illegal as well, to trade the Company’s securities or the securities of any other company in a way which attempts to hide the true identify of the trader or to mislead others as to exactly who is doing the trading. Any Trading Representative trading in the Company’s securities or the securities of other companies, using fictitious names, names of relatives or friends, or brokerage accounts under fictitious names located in foreign jurisdictions shall be subject to immediate disciplinary action. Should the Company discover any such trading, it will disclose it to the appropriate authorities.
Anyone who is uncertain as to whether a proposed transaction in Company securities or the securities of other companies would violate the Company’s insider trading procedures should consult with the Chief Compliance Officer before engaging in it.
Technology Policy
The Company reserves the broadest possible rights to ensure that all electronic communication systems, including electronic mail (“e-mail”), voice mail, internet access and faxes, computers, peripherals and related software (“business tools”) are provided by the Company and used by Trading Representatives to perform their job responsibilities in the most productive and efficient manner. E-mail or Internet access is provided to conduct official Company business. Limited and incidental use not related to Company business must be kept to a reasonable level consistent with what would be appropriate for personal phone calls or personal e-mail usage. Users with Internet access must abide by all software license agreements, copyright laws, trademark laws, patent laws, intellectual property laws, and applicable State and Federal laws. Communications systems are the sole property of the Company and not the individual property of Trading Representatives. As such, Trading Representatives should not consider any information created or disseminated through the use of communication systems to be private. The Company reserves the right
New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
to inspect and monitor all business tools for compliance at any time.
All computer systems are password protected. Each user is responsible for preserving the security of their password, workstation, and company data, which includes periodic password changes. Users are responsible for the activity performed with the User ID, whether or not they executed the task.
No user shall access another user’s communication systems without express permission from the senior officer of the business unit to do so. Such permission is not necessary in the event of an audit, or other Company action referred to above.
Further written policies regarding technology matters are available from the Chief Compliance Officer.
Policies Governing the Reporting of Trade Data to Index Developers
Consistent with its general policy to support the development and publication of natural gas price indices, as well as the general standards embodied herein, it is the Company’s policy to furnish accurate, complete and timely trade data to approved index developers in accordance with the following principles:
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•
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Confidentiality -
Trade data will be submitted only where protected by a confidentiality agreement with the index developer.
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•
|
Separation from Trading Function -
The NJRES Manager of Credit and Contracts is responsible for reporting trade data to index developers, for verifying the accuracy and completeness of such data, and for supervising the Company’s involvement in trade data reporting. No Trading Representatives directly involved in the trading of natural gas shall be involved in the reporting process.
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•
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Data Reported -
Only bilateral, arm’s-length transactions in the physical markets with non-affiliates are reported. Financial hedges, financial transactions, or swaps or exchanges of gas are not reported. For each transaction, the Company endeavors to report all key terms of the transaction separately, including (a) price; (b) volume; (c) buy/sell indicator; (d) delivery/receipt location; (e) transaction date and time; and (f) term (next day or next month), but does not disclose the identity of the counterparty.
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•
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Error Resolution -
The Company strives to report errors promptly as they are identified and to cooperate with the error resolution processes and timelines adopted by the index developers to which the Company reports in order to resolve any identified errors or discrepancies in reported data. The NJRES Manager of Credit and Contracts is responsible for error resolution.
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•
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Data Retention -
The Company retains data relating to reported trades for not less than the period required by applicable FERC rules (currently, five years).
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•
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Audit -
At least once annually, either an external or internal auditor independent from the Company’s trading and reporting departments and personnel will review the Company’s data gathering and submission process. The Company will make the results of these audits available to the index developers to which the Company submits trade data, and allow the index developers to recommend changes to improve the accuracy and timeliness of the Company’s data reporting.
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Policies Prohibiting the Dissemination of Non-Public Transmission Function Information
Consistent with the FERC Standards of Conduct for Transmission Providers as they apply to affiliates of a “transmission provider” performing “marketing functions”, Trading Representatives actively and personally engaged in marketing functions are prohibited from receiving non-public “transmission function information” from any source regarding any transmission provider affiliated with the Company.
All officers, directors and employees of the Company are prohibited from acting as a conduit for the disclosure
New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
of non-public transmission function information to Trading Representatives actively and personally engaged in marketing functions.
As used in this Code of Conduct, “marketing functions” means the sale for resale in interstate commerce, or the submission of offers or bids to buy or sell natural gas or capacity, demand response, virtual gas supply or demand in interstate commerce; “transmission function information” means information relating to the natural gas transportation, storage, exchange, backhaul, or displacement services operations and the planning, directing, organizing or carrying out of such transmission operations, including the granting and denying of transmission service requests; and “transmission provider” means any FERC-regulated interstate natural gas pipeline or storage provider that transports or stores gas for others pursuant to FERC regulations. Transmission providers affiliated with the Company include Steckman Ridge, LP, but do not include any transmission provider of which the Company owns, controls or holds with power to vote less than 10 percent of the outstanding voting securities.
New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
Exhibit IV
Contract and Credit Policy
for Wholesale Transactions
Approved: ____________
Revised: ______________
As required under the New Jersey Resources Corporation (“NJR”) Contract Review Policy and Procedure, Administrative Procedure 90, all “Wholesale Transactions” must be reviewed under this Contract and Credit Policy for Wholesale Transactions (referred to herein as the “Policy”).
A “Wholesale Transaction” includes:
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1.
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contracts for the wholesale purchase and sale of natural gas including, but not limited to, physical and financial transactions typically entered into under industry standard contract forms such as the North American Energy Standards Board, Inc. Base Contract for Sale and Purchase of Natural Gas or the International Swaps and Derivatives Association, Inc. Master Agreement, respectively;
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2.
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tariff-based agreements for the purchase of gas transportation or storage services and related non-tariff based precedent agreements;
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3.
|
credit agreements such as guaranties and letters of credit provided or received in support of agreements entered into under 1 and 2, above;
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4.
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confidentiality agreements related to agreements entered into under 1 and 2, above; and
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5.
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other arrangements related to the unregulated wholesale energy businesses of the “Company” (defined to include NJR and its affiliates).
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NO WORK MAY PROCEED OR SERVICES BE INITIATED OR RENDERED OR PRODUCTS OF ANY KIND TAKEN OR RECEIVED UNDER ANY WHOLESALE TRANSACTION UNTIL IT HAS BEEN REVIEWED AND APPROVED CONSISTENT WITH THIS CONTRACT AND CREDIT POLICY FOR WHOLESALE TRANSACTIONS AND ADMINISTRATIVE PROCEDURE 90.
The purpose of this Policy is to provide a means for the Company to reasonably ensure that all Wholesale Transactions are reviewed by the Legal Department and appropriate Company personnel.
Any changes to this Policy must be approved by the Risk Management Committee. The responsibility for maintenance and distribution of this Policy will reside with the Credit and Contracts Department.
PART 1: CONTRACT REVIEW PROCEDURES
The Company, primarily through its subsidiaries NJNG, NJRES and NJR Energy Holdings Corporation (and its subsidiaries), currently engages in regulated (tariff-based) and unregulated (non tariff-based) Wholesale Transactions involving both physical and financial deals. Physical deals are typically transacted under the
New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
NAESB Contract, but may be transacted under a customized purchase and sale agreement. The NAESB Contract (and its predecessor, the GISB Contract) may be modified by the incorporation of “Special Provisions” to those contracts. Financial deals are typically transacted under the ISDA, which is modified to meet the particular needs of the contracting parties through negotiation and incorporation of special provisions in the “ISDA Schedule” and/or an “ISDA Credit Support Annex”.
Corporate guaranties and other credit support documents provide credit support to both physical and financial deals. These documents are requested in accordance with the Credit Policy discussed in Part 2 below.
Separate payment netting agreements may be used to compensate for the lack of a netting provision in a particular deal; however, most netting is included as part of the standard NAESB Contract and ISDA and separate netting agreements are discouraged.
Individual customized purchase and sale agreements, i.e., contracts other than the NAESB Contract and the ISDA, are discouraged and will only be entered into under special circumstances.
Trading exchange participation agreements are governed by the standard agreements of the individual exchange and are entered into as necessary.
Administration of the review process for Wholesale Transactions under this Policy shall be the primary responsibility of the Contracts Manager.
“CCR” means the Counterparty Change Request Form included as Attachment A.
"Company" means NJR and its affiliates, including, but not limited to New Jersey Natural Gas Company (“NJNG”) and NJR Energy Services Company (“NJRES”)
“ConA” means Confidentiality Agreement
“Contract Analyst” means Linda Bracken in the Energy Services Department
“Contracts Manager” means Adrienne Kalbacher who is the Contracts Manager in the Energy Services Department
“COO NJNG” means Kathy Ellis who is the Chief Operating Officer of New Jersey Natural Gas Company
“Corporate Secretary” means Rhonda Figueroa who is the Corporate Secretary of New Jersey Resources Corporation
“Credit Department” means the Credit and Contracts Department
“"Credit Limit" has the meaning given to it in the Credit Policy
“Credit Policy” means the Credit Policy for Regulated and Unregulated Transactions contained in Part 2
New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
“Credit Support Document” has the meaning given to it in the Credit Policy
“Credit Manager” means Kevin O’Dea who is the Credit Manager in the Energy Services Department
“Deal Approval Form” means the Deal Approval Form included as Attachment B.
“Director of Marketing” means David Johnson who is Director of Marketing in the Energy Services department of NJRES
“Director Energy Trading” means Tim Shea who is Director of Energy Trading in the Energy Services department of NJRES
“EBB” means pipeline or storage provider electronic bulletin board
“EVP & COO/SVP” means Joe Shields who is the Executive Vice President and Chief Operating Officer for NJRES and Senior Vice President-Energy Services for NJNG
“Gas Supply Analyst II” means Doug Rudd who is in the Energy Services department of NJNG
“GISB Contract” means the Base Contract for the Short-Term Sale and Purchase of Natural Gas published by the Gas Industry Standards Board
“GMS” means the Gas Management System
“ISDA” means the Master Agreement published by the International Swaps and Derivatives Association, Inc.
“Manager T&E NJNG” means Kathy Ferreira who is the Manager of Transportation & Exchange for New Jersey Natural Gas Company
“NAESB Contract” means the Base Contract for the Sale and Purchase of Natural Gas published by the North American Energy Standards Board, Inc.
“NJR” is New Jersey Resources Corporation
“President and CEO” means Larry Downes of New Jersey Resources Corporation
“Senior Counsel” means Bill Scharfenberg who is Senior Counsel in the Legal Department with primary responsibility for reviewing Wholesale Transactions
“Sr Manager” means Dennis Veltre who is the Senior Manager–Energy Services
“SVP & CFO” means Glenn Lockwood who is the Senior Vice President and Chief Financial Officer of NJR
“SVP & General Counsel” means Mariellen Dugan who is the Senior Vice President and General Counsel of NJR
“Tax Manager” means Bob Walsh who is Tax Manager of NJR
“T&E” means the Transportation and Exchange analysts.
“Trader(s)” means the NJNG and NJRES employees included on the List of Authorized Traders, which is attached as Exhibit II to the Risk Management Guidelines
New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
“Trading Partner(s)” or “Counterparty” means any vendor(s) and/or customer(s) selling or buying natural gas or related products or services, including financial risk management products or services, to or from the Company in the wholesale market under a GISB or NAESB Contract, ISDA or other agreement
“Treasurer” means Bill Foley who is the Treasurer of NJR
“VP, Energy Services” means Rick Gardner who is the Vice President, Energy Services in NJRES
“VP NJNG” means Ginger Richman who is the Vice President, Gas Supply/Energy Services for NJNG
“VP, Energy Trading” means Steve Westhoven who is the Vice President, Energy Trading in NJRES
“Wholesale Transaction” has the meaning given to it in the introduction, above
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II.
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UNREGULATED (NON-TARIFF BASED) WHOLESALE TRANSACTIONS
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The process of adding a new Trading Partner or a new Wholesale Transaction (for non-tariff based contracts) involves the following steps, which are discussed more fully in Section II, B below:
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Initial Request
- CCR Form.
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Credit Approval
– Determination as to whether the proposed Counterparty is a creditworthy Trading Partner and if contract negotiations should be continued.
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Contract Request
– Contracts Manager makes contact with new Counterparty and requests documents.
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Contract Tracking
– Contracts Manager saves the CCR form to the g:/gassales/contracts/contracts files/ specific counterparty name. All major notes that Contracts Manager needs to keep on negotiations will be stored in GMS.
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Contract Review
– Contracts Manager manages comments back and forth with Counterparty and submits comments, revisions and proposed provisions to Senior Counsel for review, as necessary.
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Contract Execution
– Contracts Manager and/or Contract Analyst, prepares documents for signature with appropriate sign-off per CCR.
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Directory of Completed Agreements
– Contracts Manager and/or Contract Analyst, receives fully executed agreements and enters Agreements into the GMS system(s).
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Filing
– Contract Analyst scans documents onto g:\contracts and files hardcopies.
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However, the process of initiating or revising a ConA is handled differently as addressed in Section III, below.
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B.
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Request Process for all Non Tariff-Based Wholesale Transactions Other Than ConAs
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The process of initiating or revising all non tariff-based Wholesale Transactions (other than ConAs, addressed below in Section III below) with a Trading Partner includes one the following:
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A CCR is completed by a Trader via an excel worksheet (found at g:/gassales/contract/contract masters/Counterparty Change Request Form) and distributed to Sr Manager, Credit Manager, and Contracts Manager; or
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The Company receives a request for contract(s) from the Trading Partner. This needs to be confirmed with Trader(s) and if confirmed, a CCR Form is completed by the Trader and distributed to Sr Manager,
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New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
Credit Manager, and Contracts Manager; or
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The Company receives a request from a Trading Partner for a credit increase from the Company. Credit Manager or Sr Manager will be notified and if approved by all relevant parties as per the Credit policy, Credit Manager or Sr Manager will notify Contracts Manager to initiate an amendment to the relevant credit support document; or
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The need for new or revised credit support document is identified through review of an expiring credit support document; or
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The need for new or revised credit support document is identified through a review of Trading Partner’s credit status.
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The decision as to what types of contracts to enter into includes, but is not limited to, the following factors:
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Types of deals Trader(s) and/or Trading Partner expect to transact (physical vs. financial)
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For physical contracts, only NAESB Contract’s will be negotiated unless otherwise approved by Senior Counsel and EVP & COO/SVP.
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Whether credit support is needed as determined by the Credit Policy discussed in Part 2 below
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The decision as to what type of contract to enter is made jointly by Contracts Manager and the Trader. The Trading Partner and the Company exchange drafts of the contract documents for review, including any credit support documents needed from the Trading Partner as determined by Sr Manager and/or Credit Manager. Business terms are the responsibility of the Trader, Sr Manager and Contracts Manager and are approved by EVP & COO/SVP. Legal terms are the responsibility of the Legal Department. During contract negotiation, Contracts Manager interacts with the Trading Partner (usually through the Counterparty’s non-legal counterpart) to forward all issues identified by Senior Counsel and any business issues identified by the Trader, Contracts Manager and Sr Manager and/or Credit Manager. If Contracts Manager is unable to complete negotiations with the Trading Partner, Senior Counsel may complete negotiations with the attorney representing the Trading Partner with the input from the Trader, Contracts Manager, Sr Manager or EVP & COO/SVP, as necessary. In the event any major issues that could be identified as “deal breakers” emerge during the course of negotiations, Senior Counsel (or SVP & General Counsel, as the case may be) and EVP & COO/SVP shall work to resolve such issues in the best interests of the Company; provided, however, SVP & General Counsel reserves the right to make the final decision with respect to all inherently legal issues. EVP & COO/SVP shall make the final decision with respect to all business issues. If the contract provision agreed to is unusual and could influence a Trader’s transaction, the Counterparty will be placed on a “Restricted List” with an “*” by the Counterparty’s name on the daily Credit Report. A separate “Restricted List” report is available on all Traders’ desktops via icon that explains the unusual provision in the Counterparty’s contract.
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D.
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Tracking Contract Negotiations
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Contracts Manager is responsible for tracking, monitoring and communicating the status of contracts as they are negotiated. Questions on contracts in negotiations should be directed to Contracts Manager. A log of documents submitted to Senior Counsel, and available for Senior Counsel’s review at all times, is located on g:\legal contract log\documents submitted to legal.xls. The log includes the date forwarded, person who forwarded, type of document, expected return date and the actual date returned. Periodically, usually on a weekly basis, Contracts Manager will issue verbal and/or written updates on all active negotiations. Once each quarter (12/31, 3/31, 6/30 and 9/30), Contracts Manager will provide a summary of completed negotiations since the last quarterly report. This report will be distributed to the Traders, Sr Manager, Senior Counsel, EVP & COO/SVP, Contract Analyst and other interested parties upon request.
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E.
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Establishment of Credit
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New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
See Credit Policy in Part 2, below.
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F.
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Issuance of a Corporate Guaranty by NJR on behalf of NJRES or NJNG
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See Credit Policy discussed in Part 2 below. Contracts Manager and/or Contract Analyst, is responsible for ensuring acknowledged guarantees have been received and logged into GMS.
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G.
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Legal Department Review
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All Wholesale Transactions must be forwarded to Senior Counsel for review. The Legal Department will record its review by final sign-off on the CCR prior to signature.
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H.
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Officer Approval and Signatures
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Contracts Manager and/or Contract Analyst, will prepare all documents for final signature.
(A)
Wholesale Transactions Other Than NJR-issued Guaranties
EVP & COO/SVP must review and sign-off on the CCR and execute all Wholesale Transactions (other than NJR-issued guaranties, addressed below); provided, however, in the event that that EVP & COO/SVP is not available to sign-off on the CCR and/or execute the Wholesale Transaction and time is of the essence: (1) for NJNG Wholesale Transactions with a term of one year or less, VP NJNG may sign-off/execute, and (2) for NJRES Wholesale Transactions, (a) VP, Energy Trading may sign-off/execute, or (b) VP, Energy Services may sign-off/execute agreements with a term of one year or less. Before the Counterparty is activated in GMS and made available to the Traders, Treasurer must review and sign-off on the CCR.
(B)
Guaranties
SVP & CFO must review and execute all guaranties issued by NJR on behalf of NJRES or NJNG; provided, however, in the event that that SVP & CFO is not available to execute the guaranty and time is of the essence Treasurer may execute the guaranty.
For ISDA’s, Contracts Manager and/or Contract Analyst, in consultation with Senior Counsel, may request a certificate of incumbency from the Corporate Secretary and any other required documents specified in the ISDA Schedule. After all signatures are obtained, if the Counterparty has not already signed, Contracts Manager and/or Contract Analyst, will manage obtaining signatures from Counterparty. Contracts Manager and/or Contract Analyst, will review the documents to ensure all required documentation is included in the package that is sent to Counterparties. Contracts Manager is responsible for making sure that a fully executed original of all contract documents are obtained, scanned and filed on g:\contracts. All guaranties and amendments issued and signed by NJR, but not yet acknowledged, will be logged into GMS by Contracts Manager and/or Contract Analyst, at the time they are signed by NJR. All other documents will be input into GMS, and marked as “inactive” by Contracts Manager and/or Contract Analyst, upon initiation of the documents. Upon receipt of fully executed contract documents, the documents will be made “active”.
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I.
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System Input of Contract Information
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After all documents are received, Contracts Manager and/or Contract Analyst will arrange to enter the Trading Partner into the appropriate tracking systems. After the Trading Partner is entered, Contracts Manager and/or Contract Analyst can then enter the relevant contract information.
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J.
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System Input of Credit Information
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See Credit Policy discussed in Part 2 below.
New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
Trader(s) must review credit, contract and restricted list reports to determine that the requisite level of credit and contracts are in place and active before transacting with a Trading Partner. Credit, contract and restricted list reports are distributed to Trader(s) daily or as needed.
Each month, Credit Manager will compile a list of Counterparty credit support documents expiring within the next two months. Credit Manager will advise Contracts Manager and Contract Analyst how to handle each Trading Partner. Credit Manager will follow-up on all expiring credit support documents. For NJR credit support documents, Contract Analyst will compile a list of NJR credit support documents expiring two months in advance. Credit Manager will advise Contracts Manager and Contract Analyst if any changes should be made to the expiring credit support document. Contracts Manager, or Contract Analyst will follow-up on replacing or extending expiring credit support documents unless otherwise directed by Credit Manager. See Credit Policy discussed in Part 2 below for more information on reconciliation procedures.
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III.
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REQUEST PROCESS FOR ConAs
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The process of initiating or revising a ConA differs from the above general procedure for non tariff-based Wholesale Transactions, as follows:
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Any Company employee may originate review of a ConA under this Policy. Contracts Manager may, but is not required, to originate review of a ConA.
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Since ConA’s typically require a very quick turnaround, the Company employee may prefer to originate review directly with Legal; however, in this case, Contracts Manager should be copied on all correspondence.
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The Company employee will e-mail the ConA directly to Senior Counsel for review and Senior Counsel will respond directly to the Company employee with any revisions/comments, which the Company employee will then forward to the Counterparty.
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Once negotiation of the ConA is complete, the Company employee will have the Counterparty sign.
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The Company employee will then prepare (or ask Contract Analyst to prepare) the ConA for signature with appropriate sign-off per CCR.
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For a ConA, only the Senior Counsel and an officer of the NJR company that is a party to the ConA are required to sign-off on the CCR.
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Any officer of the NJR company that is a party to the ConA may sign the ConA.
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The fully executed ConA will be given to Contract Analyst.
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Contract Analyst will scan and file executed ConA in Credit and Contracts Department g:\contracts.
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IV.
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REGULATED (TARIFF-BASED) WHOLESALE TRANSACTIONS
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The Company is also a purchaser of tariff-based regulated pipeline/storage products and/or services. The process of adding a new tariff-based Wholesale Transaction differs from the above process for non-tariff-based transactions, as follows:
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A.
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New Service Agreement Under the Same Rate Schedule and On the Same Pipeline/Storage Provider That The Company Has Previously Entered Into A Contract With
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The abbreviated procedure for review and approval of this limited type of tariff-based Wholesale Transaction reflects that fact that the Wholesale Transaction is effectively a new business deal under the same terms
New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
and conditions that previously have been reviewed and approved in accordance with Section IV, B, below.
Trader fills out a Deal Approval Form.
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Execution/Management Approvals
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Trader determines if Wholesale Transaction will be an electronic or hardcopy (paper) tariff transportation contract. Based on the projected cost of the pipeline/storage contract, sign-offs will be required as per the Deal Approval Form. The Trader, with assistance of Contract Analyst, will forward the Deal Approval Form through all necessary departmental sign-offs as specified on Deal Approval Form, including Treasurer, SVP & CFO, COO NJNG, and President and CEO, as needed.
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1.
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Trader will fill out the pipeline’s request for service form and fax to pipeline.
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2.
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Pipeline will return hardcopy contracts for signature which will be attached to the Deal Approval Form
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3.
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Deal Approval Form with hardcopy attached will be circulated by Trader or Contract Analyst for approvals and execution, as required.
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4.
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Execution of hardcopy contracts shall be in accordance with Section II.H(A) above.
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1.
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Deal Approval Form will be circulated by Trader or Contract Analyst for approvals.
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2.
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Only after all approvals signed on Deal Approval Form, T&E enters contract request online in the EBB (or reviews what pipeline creates online)
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3.
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T&E prints a copy to attach to Deal Approval Form
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4.
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T&E electronically signs the contract through electronic execution rights with ID.
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Credit Application
- If the pipeline requires a credit application, the Trader shall forward the credit application to Credit Manager at the same time as the Deal Approval Form is filled out. Credit Manager will fill out the credit specific information and forward the credit application back to the Trader for the Trader to fill in any service specific information and for the Trader to send back to the pipeline/storage provider with the contract package.
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Input New Contract into GMS
– Once all applicable sign-offs are in place on the Deal Approval Form, T&E will enter the new contract into GMS and will initial the Deal Approval Form that the contract has been added to GMS. This is
not
in the credit screen where non-tariff based contracts are set-up. Note: If this is a new pipeline, Contracts (Contracts Manager or Contract Analyst) will have set-up a new counterparty that includes a credit and associated screens as per the procedures below. Until a credit screen is created, T&E will not be able to set-up contracts.
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Capacity Release Deals
– All Capacity Release deals need to be reviewed by (A) with respect to NJNG, Manager T&E NJNG or VP NJNG, and (B) with respect to NJRES, VP, Energy Trading, Director Energy Trading, or Director of Marketing for compliance with FERC posting rules; provided, however, Senior Counsel must be consulted in the event of any uncertainty with respect to compliance with FERC posting rules. This is in addition to the necessary approvals pertaining to the value of the deal prior to posting or bidding on the release. See Section V, below for more details.
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Rate changes
– T&E or Gas Supply Analyst II will process updates of tariff and rates.
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Scanning & filing completed contracts
– Fully approved Deal Approval Forms and attached contracts will be forwarded to Contract Analyst who will scan and file by company to the electronic filing system in g:\contracts. In addition, all Deal Approval Forms only are scanned onto g:\contracts\Board_Deal Approvals.
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New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
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Legal Review of Deals Over $15 Million or Under New Rate Schedules
– In the event that the new service agreement is for service on a pipeline/storage provider that the Company has previously entered into a contract with but under a rate schedule that the Company has not previously contracted under, or the service agreement represents an amount over $15 million, the Trader must obtain approval from Senior Counsel in accordance with Section IV. C, below.
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Many tariff-based Wholesale Transactions contain rollover rights that provide the Company with the right to extend the arrangement. Rollover rights shall be tracked in the following manner:
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T&E monitors the notification period of tariff-based Wholesale Transactions that have rollover provisions and details of the rollover as part of the monthly close process. The Trader will direct T&E, in writing, whether or not to elect the rollover option. If rollover is elected, a Deal Approval Form will be filled out by the Trader and approved subject to the procedure in Section IV. A, above.
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C.
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New Tariff-Based Wholesale Transaction with a Pipeline/Storage Provider that the Company Has Not Previously Entered Into a Contract With (Or a Request to Enter Into a Service Agreement Under a New Rate Schedule)
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If the tariff-based Wholesale Transaction that the Trader desires to enter into is with a pipeline/storage provider that the Company has not previously entered into a contract with (or is a request for service under a new rate schedule), the following steps must be followed in addition to the steps contained in Section IV. A, above:
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Legal Approval with Initial Request
– All new pipeline/storage requests (or requests for service under a new rate schedule) MUST have the relevant tariff provisions reviewed and approved by Senior Counsel as the first step of the approval process. The Trader making the initial request will fill out a Deal Approval Form and e-mail the Deal Approval Form to Senior Counsel along with the tariff (or electronic link to the tariff) and information as to what rate schedules the Trader anticipates using (such as IT, FT, FSS, IW etc.) and specify what Senior Counsel is requested to review. Contracts Manager should be copied on the e-mail to and back from Senior Counsel. Senior Counsel will respond via e-mail as to whether the tariff and rate schedule is acceptable and any issues the Trader should be aware of. If the tariff/rate schedule is acceptable, Senior Counsel will print out the Deal Approval Form, sign for Legal review and return to the Trader.
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Input New Pipeline/Storage Provider, Credit and Associated Screen Input Into GMS
– With respect to all new pipeline/storage requests, when Contracts Manager receives a copy of the e-mail to Senior Counsel to review the tariff, Contracts Manager will set-up the company screen. Optional notes may be input into GMS by Contracts Manager and/or trader. When Contracts Manager receives the reply e-mail from Senior Counsel that the new pipeline is acceptable, Contracts Manager will notify Contract Analyst that the credit and associated screens should be set-up in GMS.
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D.
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Tariff-Based Short-Term Wholesale Transactions
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In some limited circumstances, immediate turnaround is necessary in order to enter into short-term (next day, up to one summer or winter season) Wholesale Transactions for capacity release, transportation or storage capacity. Due to the extremely short time period (at times 1 hour or less) within which to execute these Wholesale Transactions, personnel availability to approve them in accordance with the above contract review procedure has proven to be an obstacle. In an effort to work within these time constraints, the following abbreviated procedures have been developed.
New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
These procedures are to be followed for the execution of short-term contracts for transportation, capacity release and/or storage capacity only. Note that these procedures only apply to Wholesale Transactions under a tariff and rate schedule that previously has been reviewed by Legal. If the tariff or rate schedule has not been reviewed (as indicated by Legal sign-off on the Deal Approval Form) or there are points of concern, approval by the undersigned must wait until Senior Counsel has approved and/or the issues have been resolved. To the extent that Senior Counsel previously has reviewed the tariff and rate schedule, the following procedures are to be followed:
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Up to one month or less, and up to $200,000 in total. – Individual Traders may approve the Wholesale Transaction.
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Seasonal Term (Nov-Mar/April-Oct) and total demand fees up to $1 million – Trader identifies, analyzes and reviews, then forwards for approval to:
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NJRES
: VP, Energy Trading, Director Energy Trading or Director of Marketing
NJNG
: VP NJNG
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Trader, VP, Energy Trading, Director Energy Trading, Director of Marketing or VP NJNG (as required in this procedure) will verify that the Wholesale Transaction does not deviate from the standard tariff and rate schedule that Senior Counsel has approved.
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◦
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If the contract approval is limited to an individual Trader, he/she will notify T&E to execute on the Electronic Bulletin Board (via email or other written means) and/or sign the contract, as applicable. If a hard-copy contract, Trader will give to Contract Analyst for filing.
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◦
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If the contract requires Director/VP approval, the Director/VP will sign-off on the Deal Approval Form, notify T&E to execute on the EBB and/or sign the contract, as applicable. If a hard-copy contract, Approver will give to Contract Analyst for scanning and filing. Contract Analyst will forward to EVP & COO/SVP to notify him that the contract has been executed.
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Any contracts above $1 million and/or beyond a seasonal term require approval of EVP & COO/SVP. Contracts above $5 million require additional approval of Treasurer/SVP & CFO (and COO NJNG for NJNG contracts) and contracts above $15 million require additional approval of President and CEO as required in the Risk Management and/or Credit and Contract Guidelines.
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E.
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Estimated Annual Property Taxes (Storage Contracts Only)
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Some states, e.g., West Virginia, assess inventory,
ad valorem
or similar taxes on the gas in storage held by a shipper under a storage contract. For storage contracts only, the estimated annual property taxes must be included on the Deal Approval Form and sign-off must be obtained from the Tax Manager.
The following procedures apply to all capacity release transactions including releases of capacity, acquisitions of released capacity and related contracting arrangements, as follows:
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Prior to posting a capacity release deal, bidding on posted capacity release or creating a new contract request, amending an existing contract or executing a new contract on a Pipeline EBB, all with respect to capacity release, the following approvals must be obtained, as appropriate:
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A signed Deal Approval Sheet from the appropriate Trader must be obtained in all circumstances;
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New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
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Based on the total dollar commitment and term of the deal, additional approvals may be required as specified on the Deal Approval Sheet; and
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Prior to any posting, (A) with respect to NJNG, Manager T&E NJNG or VP NJNG, and (B) with respect to NJRES, Director Energy Trading, Director of Marketing must review the posting (i) for Counterparty company affiliates, and (ii) to ensure the posting satisfies FERC’s rules with respect to what is non-biddable, as applicable; provided, however, Senior Counsel must be consulted in the event of any uncertainty with respect to compliance with FERC posting rules.
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Only the Scheduling Manager, VP NJNG, Grade 8 schedulers or Grade 7 schedulers, with at least 1 year of experience, who have received appropriate training regarding rules and regulations of capacity release and who have been granted access by their supervisor, may post capacity releases, bid on capacity releases, request new contracts or amendments. If a Trader asks you to do something, but you are not sure you have authority, ASK YOUR SUPERVISOR OR VP ENERGY SERVICES FIRST.
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Verify that the Trader has listed all pertinent data on the deal sheet (pipeline, path and/or contract, if recallable or not, rereleasable, biddable, rate, term, volume, and other relevant details). There must be a reason discussed in the box. Ask the Trader about any information that is missing before proceeding. If there are errors or changes necessary, the Trader must complete a new Deal Approval Form.
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For capacity release, verify if the release has to be posted for bid. Releases are biddable in most circumstances; however, the following releases are not biddable:
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A pre-arranged release to an asset manager where the release contains a condition that the releasing shipper may call upon the replacement shipper to deliver to, or purchase from, the releasing shipper a volume of gas up to 100 percent of the daily contract demand of the released transportation or storage capacity at least five-twelfths of the period of the release, as more fully detailed in Part 284.8(h)(3) of FERC’s regulations;
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◦
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A pre-arranged release to a marketer participating in a state-regulated retail access program, as more fully detailed in Part 284.8(h)(4) of FERC’s regulations;
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◦
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Pre-arranged releases at the maximum pipeline tariff rate for a term greater than one year; and
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◦
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Releases for any period of 31 days or less, but only after verifying:
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•
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That the same transportation or storage capacity segment was not released by the Company to the same Counterparty or any affiliate thereof as a non-biddable release in the previous 28 days. If there was no prior release within the previous 28 days, you can post the capacity as non-biddable.
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•
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If you have
any
doubt as to whether the Counterparty under the proposed release is affiliated with a Counterparty that held the released the capacity in the prior 28 days, you must verify affiliate status. The Credit Manager or Sr Manager can verify affiliate status through a quick credit review. Do not be an unwitting party to other companies trying to “flip” capacity by using affiliates to avoid bidding requirements. If the proposed Counterparty is confirmed to be an affiliate of the prior Counterparty that was released the capacity within the preceding 28 days, NOTIFY YOUR SUPERVISOR AND VP ENERGY SERVICES IMMEDIATELY.
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New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
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•
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For capacity release, post all release or bid requirements in the Pipeline EBB. For releases under an asset management arrangement or under a state-regulated retail access program be sure to include all additional posting requirements per FERC and pipeline EBB requirements. For new contract request or contract amendment either complete the online request form or paper request form for processing. Print out all screens from pipeline EBB and attach to the Deal Approval Sheet.
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Capacity releases that are done on a contract that was released to NJR as recallable must also be recallable. Any terms to NJR must be reviewed to see what must be the same (recallable business day, intraday, etc)
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•
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If you are not sure what any of the fields mean, ASK. Some pipelines allow you to release capacity so the replacement shipper can change your receipt and delivery points. Some have entitlement that can vary along the entire path. Each pipeline EBB is unique. You must be aware of the specific requirements.
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•
|
Before executing a new contract make sure to review all of the terms. Date, points, volumes and any other important details must be reviewed before accepting.
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|
|
•
|
When completed, enter into GMS.
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•
|
New transport contracts must also have the 2
nd
demand screen filled in to account for the demand $$. GMS should have comments listing any relevant details. Storage contracts must list the Demand rates in either the back screen or as a Demand Rate on the front screen.
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|
|
•
|
Once a deal is completed, the Deal Approval forms with all back up EBB print screens should be given to Contract Analyst.
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•
|
Deal Approval forms will be reviewed at least monthly by Manager T&E NJNG or VP NJNG to ensure compliance with policy.
|
New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
PART 2: CREDIT POLICY FOR REGULATED (Tariff-based) AND
UNREGULATED (Non tariff-based) WHOLESALE TRANSACTIONS
The purpose of this Policy is to provide a means for New Jersey Resources Corporation (“NJR”) to reasonably ensure that its subsidiaries, New Jersey Natural Gas Company (“NJNG”) and NJR Energy Services Company (“NJRES”), will be paid by third parties for services or products provided. This Policy details standards for establishing Credit Limits for Trading Partners entering into regulated and unregulated wholesale transactions with NJNG and NJRES. For NJNG or NJRES to extend credit to a Debtor, the Debtor will need to demonstrate creditworthiness and/or post Security pursuant to this Policy.
Any changes to this Policy must be approved by the Risk Management Committee. The responsibility for maintenance and distribution of this Policy will reside with the Credit Department.
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I.
|
DEFINITIONS (in addition to definitions in Part I above)
|
“Affiliate” means in relation to any person, any entity controlled, directly or indirectly, by the person, any entity that controls, directly or indirectly, the person or any entity, directly or indirectly, under common control with the person. For this purpose, “control” of any entity or person means ownership of a majority of the voting power of the entity or person. For this purpose, “person” means all corporations, business trusts, associations, companies, partnerships, joint ventures and any other entities.
"Credit Limit" means the limit of exposure to any individual Debtor, which Company shall have at any time and shall be set in accordance with this Policy.
“Credit Support Annex” means the Credit Support Annex published by the International Swaps and Derivatives Association, Inc.
“Credit Support Document” means a corporate guaranty or any form of Security specified in this Policy given to Company in support of a Debtor's Credit Limit.
“Credit Support Provider” means any third party provider of a Credit Support Document on Debtor’s behalf.
“Debtor(s)” means any Trading Partner making a request for credit or approved for credit by NJR.
“Exposure” means at any point in time, the sum of the dollar amount owed to Company by Debtor for Company services or products under a GISB or NAESB Contract, ISDA and/or other agreement.
“Moody’s” means Moody’s Investor Service, or an equivalent rating by any successor rating agency.
“NJNG Tariff” means the natural gas tariff of NJNG approved and on file with the New Jersey Board of Public Utilities.
"Net Exposure" means at any point in time, the total dollar amount owed to Company by Debtor for Company services or products, less the total dollar amount owed by Company to Debtor for Debtor products or services whether under the same or different agreements.
“S&P” means Standard & Poor’s Ratings Services, or an equivalent rating by any successor rating agency.
"Security" means security given to Company in support of a Debtor's Credit Limit as provided under Section III D of this Policy.
New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
Trader(s) shall recommend a Credit Limit for each Debtor to Sr Manager and/or Credit Manager based on and reasonably related to the volume and price of the pending transaction(s), utilizing the “Request for Counterparty Change Request Form”. NJRES and/or NJNG should engage in wholesale transactions with Trading Partners who are deemed creditworthy, or who have/will post Security, with the exception of the companies referenced in section V of this credit policy. In the event a request is made to enter into contracts with a Trading Partner, and upon credit review it is determined that the Trading Partner does not qualify for credit under this policy, contracts can still be entered into, provided that a) trader justifies the business need for the contract; and b) approval by EVP & COO/SVP. Trading Partner will then be approved for business with a zero credit limit. In instances where the applicable netting agreements are in place and a zero credit limit exists, Energy Services’ net exposure must always remain in a position where Energy Services’ purchases exceed their sales with Trading Partner.
Credit Department staff shall be responsible for obtaining all financial and credit information and documentation required to complete the review process. Trader(s) shall forward all credit inquiries to the Credit Department, including inquiries regarding pending credit requests. The Credit Department will make every effort to render a credit determination within a reasonable time of receipt of all pertinent information, not to exceed two weeks. The Credit Department shall deny the request for credit of Debtors who fail to provide requested information in a timely manner. The Credit Department shall conduct its credit review in a non-discriminatory manner.
Debtor and/or its Credit Support Provider must supply Security in a form and amount acceptable to NJR. Security must be in an amount reasonably related to the pending transaction(s) with NJNG and/or NJRES. The Credit Department may recommend to the appropriate parties not to request Security of any kind from an electric or natural gas local distribution company; any other company that meets the ratings criteria described below; or from other Trading Partners whose creditworthiness is acceptable based on the calculations of various financial ratios prescribed in Table 1, as described below. Factors that may be considered are if the Debtor or Credit Support Provider is not rated, but has a rated utility subsidiary. Conversely, an unrated utility may be acceptable if its parent company is rated (but may be proscribed from guarantying utility obligations).
Credit shall be reviewed, requested and granted based on the following hierarchy:
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A.
|
S&P or Moody’s Ratings
|
The maximum credit extended to a Debtor shall be consistent with their S&P or Moody’s rating and the respective Credit Limit as listed in Table 2. If the Debtor is not directly rated, the ratings of its underlying debt can be used. In the event of a “split” rating, the decision regarding the amount of credit will be recommended by the Credit Department and discussed by the Risk Management Committee and/or approved by use of the protocol set for in Section VI of this Policy.
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B.
|
Corporate Guaranty issued by a Credit Support Provider
|
If the Debtor is not rated, a qualified guaranty on behalf of the Debtor issued by a investment grade-rated Credit Support Provider shall be acceptable, consistent with the Credit Support Provider’s S&P or Moody’s rating and the respective Credit Limit listed in Table 2 below.
A single corporate guaranty may cover wholesale transactions for more than one (1) company. A single corporate guaranty may cover both retail and wholesale transactions with NJNG and/or NJRES. A separate amount shall be stated for retail and wholesale transactions. The corporate
New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
guaranty on its face must clearly state all entities covered.
In the evaluation of a corporate guaranty from an Affiliate, the Credit Department should determine that the Affiliate was organized to guarantee the debt of Debtor. This may be accomplished by reviewing the corporate organizational chart, affiliate’s charter or audited financial reports, which make that representation, or other documents recommended by the Legal Department. In no event shall the Credit Department accept a corporate guaranty from a company unaffiliated with Debtor without the approval of the Legal Department.
A corporate guaranty from another company for wholesale transactions, which requires a signature from either NJNG or NJRES, shall be signed by EVP & COO/SVP
.
If EVP & COO/SVP is unavailable, the corporate guaranty may be signed by any officer of the respective company.
When considering the acceptance of a corporate guaranty from and Credit Limit relating to a Credit Support Provider, the Credit Department must consider the total amount of security given to NJR from the Credit Support Provider for multiple Trading Partners and the aggregate Credit Limits extended to all Trading Partners under the same corporate guaranty. The aggregate amount of security and the aggregate Credit Limit should be evaluated within the context of the guidelines of this Policy.
If the Debtor or its’ Credit Support Provider are not rated, NJR may determine the Debtor’s or Credit Support Provider’s (as applicable) creditworthiness based on the calculation of various financial ratios prescribed in Table 1. The Debtor or Credit Support Provider should achieve the acceptable level of performance for each financial ratio in order to post a corporate guaranty. If not, mitigating supporting documentation must be provided. The foregoing ratios should be a guide to recommending Credit Limits to such counterparties. For those counterparties whose creditworthiness is acceptable based upon financial ratios, contractual and business relationships, the Credit Limit should be no more than 3% - 5% of the equity of the counterparty and such 3% - 5% should equal at least $1,000,000.
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Table 1
Financial Ratio Guidelines for Accepting A Corporate Guaranty
|
|
Ratio
|
Acceptable Level of Performance
|
|
Funds from Operations/Total Debt (%)
|
20% or Greater
|
|
Total Debt/Capitalization (%)
|
55% or Less
|
|
Pretax Interest Coverage (x)
|
3.0x or Greater
|
|
Funds from Operations Interest Coverage (x)
|
3.5x or Greater
|
If the Debtor or its’ Credit Support Provider are not rated, the Credit Department shall accept the following forms of Security for both regulated and unregulated wholesale transactions except as otherwise noted:
|
|
|
|
(a)
|
An advance cash deposit or prepayment.
|
New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
|
|
|
|
(b)
|
A standby irrevocable letter of credit issued by a bank or other financial institution with a minimum S&P bond rating or Moody’s equivalent, consistent with the Credit Limit requested in accordance with the Table 2 below. The credit of the issuing bank will be considered with respect to NJR’s total exposure to that bank, for both other LCs issued by that bank and NJR exposure to the bank resulting from Wholesale Transactions.
|
If the rating of a bank or other financial institution from whom the Debtor has obtained a letter of credit falls below levels specified above, the Debtor shall have thirty (30) calendar days upon written notice to obtain a suitable letter of credit from a replacement bank or other financial institution that meets those standards. Letters of credit and other Credit Support Documents shall be replenished pursuant to the terms and conditions of the letter of credit or other Credit Support Document or agreement.
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(c)
|
Credit Support Annex
. The Collateral Threshold shall be a negotiated amount based on Debtor’s S&P and/or Moody’s rating, or other financial criteria. The Collateral Threshold shall be considered when establishing the total Credit Limit and shall be evaluated in the aggregate with physical transactions.
|
Other forms of Security shall be reviewed and considered on a case-by-case basis.
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IV.
|
CALCULATION OF CREDIT LIMIT AND MINIMUM SECURITY AMOUNTS
|
The Credit Limit shall be reasonably related to the level of business NJRES or NJNG anticipates with Debtor. Trading Partners rated BBB- or above by S&P (or the rated equivalent by Moody’s) shall be eligible for the applicable maximum Credit Limit prescribed in Table 2. If applicable payment netting agreements are in place, the Credit Limit shall apply to the “net” exposure of transactions with the Trading Partner to the extent that Trading Partner’s purchases exceed their sales to NJRES or NJNG, as applicable. In no event shall any Credit Limit be approved for any Trading Partner without the approvals required in Section VI. below.
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Table 2
Maximum Credit Limits
|
|
S&P Rating
|
Moody’s Rating
|
Suggested Maximum Credit Limit
|
|
A- and above
|
A3 and above
|
$100 million
|
|
BBB+
|
Baa1
|
$50 million
|
|
BBB
|
Baa2
|
$25 million
|
|
BBB-
|
Baa3
|
$10 million
|
In cases where the Debtor is a “Division of” another company, and is not a separate incorporated company, that company’s rating or financial statements will be used as the basis for evaluating credit limits for Debtor.
|
|
|
|
V.
|
CREDIT LIMITS FOR COUNTERPARTIES WITH LONG TERM CONTRACTS AND/OR BUSINESS RELATIONSHIPS
|
New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
Long-term contracts are in place with the following Trading Partners, which require the NJR to sell or purchase gas as required for the applicable cogeneration plants covered under each contract.
KIAC Partners
Nissequogue Cogen Partners
Credit Limits for these Trading Partners are set at levels appropriate for the contractually required exposures.
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VI.
|
CREDIT APPROVAL AND DOCUMENTATION/CONTROL PROCEDURES
|
Sr Manager and/or Credit Manager will be responsible for documenting and recommending Credit Limits for Trading Partners and changes to the Credit Limits requested by Trader(s). Before Trading Partners can be extended credit, all contract documents, including Credit Support Documents, or any amendments, if applicable, must be fully executed, or appropriate credit mitigation measures must be undertaken. Credit will be granted using the “Counterparty Change Request Form”.
Credit Limits and any changes thereto will be recommended pursuant to the criteria prescribed by this Policy. Additional information or mitigating factors to the prescribed criteria must be detailed in the recommendation.
The recommended Credit Limits and documentation shall be forwarded to EVP & COO/SVP for approval. If EVP & COO/SVP approves, the request and all supporting documentation shall be forwarded to Treasurer for review and approval. Requests for Credit Limits above $5,000,000 or with mitigating factors if this Policy’s criteria are not fully met, require the additional approval of the SVP & CFO and COO NJNG (if NJNG). Requests for Credit Limits above $15,000,000 require the approval of President and CEO. The aforementioned officers may request additional approval at their discretion.
Approval of Request for Credit
Upon receipt of the signed approval of a Debtor’s request for credit or Credit Limit adjustment, Sr Manager shall so notify Trader(s). The system default Credit Limit is zero. When finally approved, only Treasurer, SVP & CFO or their designee (approved in writing) will enter the limit(s) into the applicable system(s). Appropriate systems security measures will allow only those individuals access to change Credit Limits. If Debtor is an authorized trader on an electronic trading exchange, the appropriate changes will be made by Sr Manager or Credit Manager concurrent with the change in other systems. If a change to an existing Credit Limit is required, Treasurer will make the appropriate change and notify Sr Manager and/or Credit Manager in writing.
The fully completed and signed “Counterparty Change Request Form” form will be forwarded to the Contract Analyst for filing and maintenance. Trader(s) shall not begin trading activities until the Trading Partner’s name has been added to the appropriate credit systems.
Reductions or re-allocations in Credit Limits will be initiated by Sr Manager or Credit Manager via email or other written means to Treasurer and/or his approved designee, who will then enter the change in the appropriate credit systems. Once made, Treasurer and/or their approved designee will notify Sr Manager and Credit Manager via email or other written means.
Denial of Request for Credit
In the event a request for credit by a Trading Partner is denied, Sr Manager shall notify the Trading Partner and Trader(s) of the negative determination and rationale.
See Part 1: Contract Review Procedures for a detailed sequence of document flow and review processes.
New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
NJR shall not extend credit to any Debtor until the Credit Department, EVP & COO/SVP and Treasurer (as applicable) has approved Debtor’s request for credit, except in exceptional circumstances as approved by EVP & COO/SVP and Treasurer or SVP & CFO. Traders may execute a transaction, if a current approved contract exists, without credit support only if the transaction is contingent on credit approval. If the Trading Partner fails to provide credit support within the agreed upon timeframe, the transaction will be voided. Obtaining and maintaining a credit account with NJR and the Credit Limit of such account shall be at the sole reasonable discretion of NJR. The Credit Department shall use the “Counterparty Change Request Form” form attached as Appendix 1 to this Policy to process credit requests by Trading Partners. NJR shall not extend credit until both/either (as applicable) NJNG or NJRES and Debtor have signed the applicable underlying contract.
All credit information received from Debtor or other sources by the Credit Department shall be confidential, except to the extent necessary to respond to an inquiry or order from the New Jersey State Board of Public Utilities or other federal, state or local regulatory or judicial tribunal. All NJR personnel are prohibited from revealing such information to external credit industry personnel without Debtor’s consent, except when the information was previously known or obtained from other sources. NJR, at its sole discretion, may retain external credit industry personnel to assist NJR in its credit determinations.
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IX.
|
PERIODIC CREDIT REVIEWS
|
The Credit Department shall review on-line and other news services on a regular basis to identify potential credit issues with existing counterparties. In addition, the Credit Department should consider Credit Default Swaps, credit service risk metrics or other objective data (if available) when making recommendations about new and on-going credit limits for Trading Partners. In addition, the Credit Department shall conduct credit reviews on a periodic basis but no less frequently than once per quarter. Audited financial statements of private companies or subsidiaries, which do not publish or regularly make available quarterly information, will be reviewed annually. Internal financial statements will be reviewed quarterly if available. Corporate guaranties and other forms of Security will be reviewed quarterly to assess their adequacy with respect to current ratings and exposure.
When the credit information for a Trading Partner is reviewed according to the above schedule, all credit and contract information shall be reconciled to all systems (including electronic trading platforms, internal systems and reports) and hard copy files to ensure accuracy, consistency and completeness.
Reviews may also be performed on a more frequent basis or when a change in the Credit Limit, creditworthiness or payment habits require. Further financial statements shall be requested as necessary in connection with the ongoing review process. Trader(s) and the Credit Department shall advise each other immediately of any concerns regarding Debtor’s creditworthiness even though Debtor’s Net Exposure does not exceed Debtor's Credit Limit. If circumstances warrant, Credit Department may reduce Debtor’s Credit Limit or recommend to Trader(s) in consultation with EVP & COO/SVP or Treasurer that all business with Debtor be curtailed.
Sr Manager shall provide credit reports at each Risk Management Committee meeting for wholesale transactions for both NJNG and NJRES. Trader(s) and EVP & COO/SVP will be provided with credit reports on a daily basis, and credit matters are discussed daily in the morning meeting. Finally, analytic reports will be generated by the Credit Department as needed, to perform reviews listed in Section IX of this Credit
New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
Policy.
|
|
|
|
XI.
|
PROCEDURES WHEN CREDIT LIMITS ARE EXCEEDED
|
In the event a Trading Partner’s Exposure exceeds its Credit Limit due to changes in market conditions or are caused by term transactions’ increase in exposure from originating expectations, the Credit Department shall review with EVP & COO/SVP, whether further business should be curtailed unless and until such Exposure is reduced, additional Security requested or other action as available under existing contracts.
Security shall be accessed, or margin requested, in accordance with the Credit Support Document or any other applicable agreement, as deemed necessary by the Credit Department and/or EVP & COO/SVP. Upon any required notice to Trading Partner (or five (5) day notice if none is specified), the Credit Department may access the Security posted by Trading Partner upon notification to the Credit Department that Trading Partner has failed to pay NJNG or NJRES when due pursuant to the terms and conditions of the applicable agreement and/or tariff. The Credit Department shall forward any and all necessary paperwork to the Legal Department for review and approval or processing.
|
|
|
|
XIII.
|
MAINTENANCE OF CREDITWORTHINESS
|
Upon notice of any material reduction in Trading Partner’s or its Credit Support Provider’s credit rating or financial condition, the Credit Department shall promptly adjust the Trading Partner’s or its Credit Support Provider’s status on electronic trading platforms and recommend adjustment of the existing Credit Limit(s) accordingly. In addition, the Credit Department will request from Debtor evidence of an acceptable credit rating or financial condition if necessary. If the Credit Department determines that Trading Partner or Credit Support Provider’s creditworthiness has materially reduced, the Credit Department may request additional Security commensurate with the change in creditworthiness in accordance with the terms and conditions of this Policy or any applicable agreement. If Debtor fails to comply with such request, the Credit Department shall cancel Trading Partner’s Credit Limit and consult with the Legal Department regarding appropriate action
.
Credit determinations for wholesale transactions with NJNG shall be consistent with the terms and conditions of NJNG’s Tariff. In the event of a conflict between the terms and conditions of this Policy and the terms and conditions of NJNG’s Tariff, the NJNG Tariff shall govern.
|
|
|
|
XV.
|
CONSULTATION WITH LEGAL DEPARTMENT
|
Credit determinations for wholesale transactions shall be consistent with the terms and conditions of all relevant and applicable Credit Support Documents and other agreements. The Legal Department shall review all Credit Support Documents as required in the Contract Review Procedures. In addition, the Credit Department shall consult with the Legal Department as necessary.
New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
The Credit Department shall be responsible for retaining current records of all credit requests and signed originals of any and all Security and Credit Support Documents. The Credit Department shall maintain such records in accordance with the time periods specified in NJR’s Record Retention procedures and FERC policy.
In the event a debtor is late with a payment, the Settlements area will contact the other party and inquire as to the status of the payment. If there is a discrepancy, dispute or administrative oversight, this is usually resolved and the payment is made within 1-2 business days. Should the Settlements area be unable to resolve the issue, the Trader that was responsible for the transaction and/or Director Energy Trading, Director of Marketing or VP, Energy Trading will become involved. Should they be unable to resolve the issue, EVP & COO/SVP will become involved. Should he be unable to resolve the issue, he will then contact SVP & General Counsel to solicit payment. In the event this is unsuccessful, a collection agency will be asked to pursue payment.
New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
Attachement A
New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
Attachment - B
RMC Guidelines & Procedures
Authorized by:
_______________________
New Jersey Natural Gas Company
Risk Management Committee
Guideline and Procedures
_______________________
Title
__________Date
SCHEDULE 6.1.24
Permitted Business Opportunities
NONE.
SCHEDULE 8.2.1.
INDEBTEDNESS
1
|
|
|
|
1.
|
First Mortgage Bonds (Secured)
2
|
|
|
|
|
|
|
|
|
|
|
|
|
Series
|
Rate
|
|
Maturity Date
|
|
Principal Amt.
|
|
Series AA
3
|
Var.
|
|
8/1/2030
|
|
$
|
25,000
|
|
|
Series BB
3
|
Var.
|
|
8/1/2030
|
|
16,000
|
|
|
Series DD
3
|
Var.
|
|
9/1/2027
|
|
13,500
|
|
|
Series EE
3
|
Var.
|
|
1/1/2028
|
|
9,545
|
|
|
Series FF
3
|
Var.
|
|
1/1/2028
|
|
15,000
|
|
|
Series GG
3
|
Var.
|
|
4/1/2033
|
|
18,000
|
|
|
Series HH
3
|
5%
|
|
12/1/2038
|
|
12,000
|
|
|
Series II
3
|
4.5%
|
|
8/1/2023
|
|
10,300
|
|
|
Series JJ
3
|
4.6%
|
|
8/1/2024
|
|
10,500
|
|
|
Series KK
3
|
4.9%
|
|
10/1/2040
|
|
15,000
|
|
|
Series LL
4
|
5.6%
|
|
5/15/2018
|
|
125,000
|
|
|
|
|
|
|
|
|
|
Total First Mortgage Bonds
|
|
|
|
|
$
|
269,845
|
|
2.
Senior Notes
: As of June 30, 2011, the following Indebtedness of the Borrower was outstanding:
1
All amounts are as of June 30, 2011 and are in thousands ($000).
2
These bonds are issued pursuant to the Indenture of Mortgage and Deed of Trust dated April 1, 1952, as amended (the “
Indenture
”), of the Borrower to The Bank of New York Mellon Trust Company, N.A., successor in interest to BNY Midwest Trust Company (as successor trustee to Harris Trust and Savings Bank), as trustee.
3
Each of the AA through the KK First Mortgage Bonds were issued in conjunction with the Borrower entering into a related Loan Agreement with the New Jersey Economic Development Authority (the “
Authority
”). The Borrower is obligated under each Loan Agreement to pay amounts sufficient to pay amounts due on certain tax-exempt bonds issued by the Authority under the Loan Agreements (the “
Authority Bonds
”). The Loan Agreements are described below. These Authority Bonds (and the Borrower's obligations under the Loan Agreements) match the respective principal amounts, interest rates and maturity dates of the related AA through KK First Mortgage Bonds. Each of the AA through KK First Mortgage Bonds were issued to serve as security for the repayment of the Authority Bonds under the terms of the related Loan Agreement and the related supplement to the First Mortgage Indenture.
4
The LL First Mortgage Bonds were issued in conjunction with the issuance of the Senior Secured Notes of the Borrower in the aggregate principal amount of $125,000,000 under that certain Note Purchase Agreement dated as of May 15, 2008 (the “
Secured Note Purchase Agreement
”) by and among the Borrower and the purchasers named therein. These Senior Secured Notes bear interest at 5.60%, and have a maturity date of 5/15/18, which match the rate and maturity date of the LL First Mortgage Bonds. The LL First Mortgage Bonds were issued to serve as security for the repayment of the Senior Secured Notes under the terms of the Secured Note Purchase Agreement and the Thirty-Second Supplemental Indenture dated as of May 1, 2008 to the Indenture.
The following Indebtedness under that certain Note Purchase Agreement dated as of March 15, 2004 by and among the Borrower and the purchasers named therein:
Rate
Maturity Date
Principal Amt
.
Unsecured Senior Notes
4.77%
3/15/14
$60,000
3.
Capitalized Lease Obligations
: As of June 30, 2011, the Borrower had outstanding the following obligations under Capital Leases:
Maturity Date
Principal Amt.
Capital Lease Obligations-Building
6/1/21
$23,976
Capital Lease Obligations-Meters
Various
$36,014
Capital Lease Obligations-Equipment
12/1/13
$589
4.
Loan Agreements
:
a.
Loan Agreement dated as of August 1, 1995 by and between the Authority and the Borrower. (Secured by AA and BB Bonds)
b.
Loan Agreement dated as of September 1, 1997 by and between the Authority and the Borrower. (Secured by DD Bonds)
c.
Loan Agreement dated as of January 1, 1998 by and between the Authority and the Borrower. (Secured by EE and FF Bonds)
d.
Loan Agreement dated as of April 1, 1998 by and between the Authority and the Borrower. (Secured by GG Bonds)
e.
Loan Agreement dated as of December 1, 2003 by and between the Authority and the Borrower. (Secured by HH Bonds)
f.
Loan Agreement dated as of October 1, 2005 by and between the Authority and the Borrower. (Secured by II, JJ and KK Bonds)
EXHIBIT 1.1(A)
FORM OF
ASSIGNMENT AND ASSUMPTION
This Assignment and Assumption Agreement (the "
Assignment and Assumption
") is dated as of the Effective Date set forth below and is entered into by and between [
Insert name of Assignor
] (the "
Assignor
") and [
Insert name of Assignee
] (the "
Assignee
"). Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, the "
Credit Agreement
"), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in
Annex 1
attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.
For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Agent as contemplated below (i) all of the Assignor’s rights and obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and Obligations of the Assignor under the respective facilities identified below (including without limitation any Letters of Credit, guarantees, and Swing Loans included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as, the "
Assigned Interest
"). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.
1.
Assignor: ______________________________
2.
Assignee: ______________________________
[and is an Affiliate of [
identify Lender
1
]
3.
Borrower(s): New Jersey Natural Gas Company
|
|
|
|
4.
|
Agent: PNC Bank, National Association, as the administrative agent under the Credit Agreement
|
____________________________
1
Select if applicable.
|
|
|
|
5.
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Credit Agreement: Credit Agreement dated as of August ____, 2011 among New Jersey Natural Gas Company, the Lenders parties thereto, each syndication agent, each documentation agent and each other titled Lender that may be identified therein, and PNC Bank, National Association, as administrative agent for the Lenders
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6.
Assigned Interest:
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Facility Assigned
2
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Aggregate Amount of Commitment for all Lenders
*
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Amount of Commitment Assigned
*
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Percentage Assigned of Commitment
3
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$
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$
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%
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$
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$
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%
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$
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$
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%
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7.
Trade Date: ______________]
4
Effective Date: _____________ ___, 20___ [TO BE INSERTED BY AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]
5
[SIGNATURE PAGE FOLLOWS]
_________________________________________
2
Fill in the appropriate terminology for the types of facilities under the Credit Agreement that are being assigned under this Assignment (e.g. "Revolving Credit Commitment", etc.)
*
Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.
3
Set forth, to at least 9 decimals, as a percentage of the Commitment of all Lenders thereunder.
4
To be completed if the Assignor and the Assignee intend that the minimum assignment amount is to be determined as of the Trade Date.
5
Assignor shall pay a fee of $3,500 to the Administrative Agent in connection with the Assignment and Assumption.
[SIGNATURE PAGE - ASSIGNMENT AND ASSUMPTION]
The terms set forth in this Assignment and Assumption are hereby agreed to:
ASSIGNOR
[NAME OF ASSIGNOR]
By:
Name:
Title:
ASSIGNEE
[NAME OF ASSIGNEE]
By:
Name:
Title:
Consented to and Accepted:
PNC BANK, NATIONAL ASSOCIATION
,
as Agent
By_____________________________________
Title:
Consented to:
NEW JERSEY NATURAL GAS COMPANY,
as Borrower
By_____________________________________
Title:
ANNEX 1
STANDARD TERMS AND CONDITIONS
FOR ASSIGNMENT AND ASSUMPTION
1.
Representations and Warranties
.
1.1
Assignor
. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.
1.2.
Assignee
. The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all requirements of an Assignee under the Credit Agreement (subject to receipt of such consents as may be required under the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 8.3 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Agent or any other Lender, and (v) if Assignee is not incorporated under the Laws of the United States of America or a state thereof, attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.
2.
Payments
. From and after the Effective Date, the Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.
3.
General Provisions
. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New Jersey.
EXHIBIT 1.1(B)
FORM OF
LENDER JOINDER AND ASSUMPTION AGREEMENT
Reference is made to the Credit Agreement, dated as of August ____, 2011 (as amended, supplemented, restated or modified from time to time, the "Credit Agreement"), by and among New Jersey Natural Gas Company, a New Jersey corporation ("Borrower"), the Lenders now or hereafter party thereto, each syndication agent, each documentation agent and each other titled Lender that may be identified therein, and PNC Bank, National Association, in its capacity as administrative agent for the Lenders (the "Agent").
Agreement
Unless otherwise defined herein, terms defined in the Credit Agreement (defined above) are used herein with the same meanings.
______________________________________________________________ (the "New Lender"), intending to be legally bound hereby, joins and becomes a "Lender" and an "Additional Lender" under the Credit Agreement and each of the other Loan Documents as of this ______ day of ______________, 20____ (the "Effective Date") and, pursuant to Section 11.11(d) of the Credit Agreement, the New Lender hereby agrees as follows:
1. As of the Effective Date and to the extent of the Revolving Credit Commitment
of the New Lender set forth on
Schedule I
hereto: (i) the New Lender hereby agrees that it is and shall be deemed to be, and it hereby assumes the obligations of, a "Lender" and an "Additional Lender" under the Credit Agreement and each of the other Loan Documents; and the New Lender shall be entitled to the benefits, rights, privileges and remedies of a Lender and an Additional Lender under the Credit Agreement and each of the other Loan Documents.
2. The New Lender acknowledges and agrees that the Agent, each other agent under the Credit Agreement and each Lender makes no representation or warranty and assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any of the other Loan Documents or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any of the other Loan Documents or any other instrument or document furnished pursuant thereto or (ii) the financial condition of Borrower or the performance or observance by Borrower of any of its obligations under the Credit Agreement or any of the other Loan Documents or any other instrument or document furnished pursuant thereto.
3. The New Lender (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements (if any) referred to in Sections 8.3.1 and 8.3.2 of the Credit Agreement, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Lender Joinder and Assumption Agreement; (ii) agrees that it
will, independently and without reliance upon the Agent, any other agent or any Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iii) appoints and authorizes the Agent to take such actions on its behalf and to exercise such powers under the Loan Documents as are delegated to the Agent by the terms thereof; (iv) agrees that it will become a party to and be bound by the Credit Agreement on the Effective Date as if it were an original Lender thereunder and will have the rights and obligations of a Lender thereunder and will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender; and (v) specifies as its address for notices the office set forth beneath its name on the signature pages hereof.
4. Following the execution of this Lender Joinder and Assumption Agreement, it will be delivered to the Borrower and the Agent for acceptance and for recording by the Agent.
5. Upon such acceptance and recording, as of the Effective Date, (i) the New Lender shall be a party to the Credit Agreement and, to the extent provided in this Lender Joinder and Assumption Agreement, have the rights and obligations of a Lender thereunder and under the Loan Documents, and (ii) the Revolving Credit Commitment
of the New Lender shall be as set forth in
Schedule I
hereto.
6. Upon such acceptance and recording from and after the Effective Date, the Agent shall make all payments under the Credit Agreement and the Revolving Credit Notes
in respect and to the extent of the interest of the New Lender assumed hereby (including, without limitation, all payments of principal, interest, Facility Fees and other fees, costs and expenses with respect thereto) to the New Lender.
7. To the extent that any Revolving Credit Loans are outstanding as of the Effective Date, the New Lender shall make Revolving Credit Loans to Borrower on the Effective Date (and to the extent that any such Loans are subject to the LIBOR Rate Option, only if Borrower shall timely provide a Loan Request after the Effective Date in accordance with Sections 2.4, 4.1 and 4.2 of the Credit Agreement to renew such Loan(s) in accordance with Section 11.11(d) of the Credit Agreement) in an amount such that its share of all Revolving Credit Loans
outstanding (after giving effect to the Revolving Credit Loans
of the New Lender and assuming that no Lender failed to make Revolving Credit Loans) are in the same proportion as the Revolving Credit Commitment
of the New Lender bears to the Revolving Credit Commitments of all the Lenders (after giving effect to the Revolving Credit Commitment
of the New Lender). The Interest Period for each such initial Revolving Credit Loan made by the New Lender shall equal the remaining Interest Period of each respective Revolving Credit Loan
then outstanding (except and to the extent such no such Loan Request as aforesaid has been provided by Borrower with respect to outstanding Loans subject to the LIBOR Rate Option).
8. This Lender Joinder and Assumption Agreement shall be governed by and construed in accordance with the laws of the State of New Jersey.
9. This Lender Joinder and Assumption Agreement may be signed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and
the same instrument; and delivery of executed signature pages hereof by telecopy transmission from one party to another shall constitute effective and binding execution and delivery of this Lender Joinder and Assumption Agreement by such party.
[SIGNATURE PAGES FOLLOW]
[SIGNATURE PAGE - LENDER JOINDER AND ASSUMPTION
AGREEMENT]
IN WITNESS WHEREOF, and intending to be legally bound hereby, the New Lender has duly executed this Lender Joinder and Assumption Agreement and delivered the same to the Agent and the Borrower as of the Effective Date.
NEW LENDER
__________________________________________
By:
Name:
Title:
Notice Address:
Telephone No.:
Telecopier No.:
Email:
Attention:
CONSENTED TO
:
PNC BANK, NATIONAL ASSOCIATION
, as Agent
By:
Name:
Title:
ACKNOWLEDGMENT AND AGREEMENT OF BORROWER
In consideration of the foregoing Lender Joinder and Assumption Agreement: (A) Borrower hereby agrees to execute and deliver to the New Lender a Revolving Credit Note in respect of the Revolving Credit Commitment
of the New Lender, and (B) Borrower hereby (i) acknowledges and consents to the foregoing Lender Joinder and Assumption Agreement and agrees that the New Lender shall be a Lender and an Additional Lender under the Credit Agreement and the other Loan Documents and shall have the rights, privileges, remedies and obligations of a Lender and an Additional Lender under the Credit Agreement and under the other Loan Documents in respect and to the extent of the Revolving Credit Commitment
of the New Lender set forth on
Schedule I
hereto, which information shall be reflected on an amended and restated Schedule 1.1(B) to the Credit Agreement, and (ii) makes, affirms and ratifies in favor of the New Lender the Credit Agreement and the other Loan Documents.
BORROWER
NEW JERSEY NATURAL GAS COMPANY
By:
(SEAL)
Name:
Title:
EXHIBIT 1.1(R)
FORM OF
REVOLVING CREDIT NOTE
$_____________ Princeton, New Jersey
______________, 2011
FOR VALUE RECEIVED, the undersigned,
NEW JERSEY NATURAL GAS COMPANY
, a New Jersey corporation (herein called the "Borrower"), hereby promises to pay to the order of
___________________________________
(the "Lender"), the lesser of (i) the principal sum of __________________________________ Dollars (U.S. $___________), or (ii) the aggregate unpaid principal balance of all Revolving Credit Loans made by the Lender to the Borrower pursuant to the Credit Agreement, dated as of the date hereof, among the Borrower, the Lenders now or hereafter party thereto, each syndication agent, each documentation agent and each other titled Lender that may be identified therein, and PNC Bank, National Association, as administrative agent (hereinafter referred to in such capacity as the “Agent”) (as amended, restated, modified, or supplemented from time to time, the "Credit Agreement"), payable on such dates as set forth in the Credit Agreement, with the entire outstanding balance due and payable by 11:00 a.m. (Pittsburgh time)
on the Expiration Date, together with interest on the unpaid principal balance hereof from time to time outstanding from the date hereof at the rate or rates per annum specified by the Borrower pursuant to, or as otherwise provided in, the Credit Agreement.
Interest on the unpaid principal balance hereof from time to time outstanding from the date hereof will be payable on the dates and at the times provided for in the Credit Agreement. Upon the occurrence and during the continuation of an Event of Default, the Borrower shall pay interest on the entire principal amount of the then outstanding Revolving Credit Loans evidenced by this Revolving Credit Note and all other obligations due and payable to the Lender pursuant to the Credit Agreement and the other Loan Documents at a rate per annum as set forth in Section 4.3 of the Credit Agreement. Such interest rate will accrue before and after any judgment has been entered.
Subject to the provisions of the Credit Agreement, payments of both principal and interest shall be made without setoff, counterclaim, or other deduction of any nature at the office of the Agent located at One PNC Plaza, 249 Fifth Avenue, Pittsburgh, Pennsylvania 15222-2707, unless otherwise directed in writing by the holder hereof, in lawful money of the United States of America in immediately available funds.
This Note is one of the Revolving Credit Notes referred to in, and is entitled to the benefits of, the Credit Agreement and other Loan Documents, including the representations, warranties, covenants and conditions contained or granted therein. The Credit Agreement among other things contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for
for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayment, in certain circumstances, on account of principal hereof prior to maturity upon the terms and conditions therein specified. The Borrower waives presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Credit Agreement.
This Note shall bind the Borrower and its successors and assigns, and the benefits hereof shall inure to the benefit of the Lender and its successors and assigns. All references herein to the "Borrower" and the "Lender" shall be deemed to apply to the Borrower and the Lender, respectively, and their respective successors and assigns as permitted under the Credit Agreement.
This Note and any other documents delivered in connection herewith and the rights and obligations of the parties hereto and thereto shall for all purposes be governed by and construed and enforced in accordance with the internal laws of the State of New Jersey
without giving effect to its conflicts of law principles.
All capitalized terms used herein shall, unless otherwise defined herein, have the same meanings given to such terms in the Credit Agreement.
[SIGNATURE PAGE FOLLOWS]
[SIGNATURE PAGE 1 OF 1 TO REVOLVING CREDIT NOTE]
IN WITNESS WHEREOF, and intending to be legally bound hereby, the undersigned has executed this Note by its duly authorized officer with the intention that it constitute a sealed instrument.
NEW JERSEY NATURAL GAS COMPANY
, a New Jersey corporation
By:
Name:
Title:
(Seal)
EXHIBIT 1.1(S)
FORM OF
SWING LOAN NOTE
$20,000,000.00 Princeton, New Jersey
_________________, 2011
FOR VALUE RECEIVED, the undersigned,
NEW JERSEY NATURAL GAS COMPANY
, a New Jersey corporation (herein called the "Borrower"), hereby promises to pay to the order of
PNC BANK, NATIONAL ASSOCIATION
(the "Lender"), the lesser of (i) the principal sum of Twenty Million Dollars (U.S. $20,000,000.00), or (ii) the aggregate unpaid principal balance of all Swing Loans made by the Lender to the Borrower pursuant to the Credit Agreement, dated as of the date hereof, among the Borrower, the Lenders now or hereafter party thereto, each syndication agent, each documentation agent, each other titled Lender that may be identified therein, and PNC Bank, National Association, as administrative agent (hereinafter referred to in such capacity as the "Agent") (as amended, restated, modified, or supplemented from time to time, the "Credit Agreement"), payable on such dates as set forth in the Credit Agreement, with the entire outstanding balance due and payable by 11:00 a.m. (Pittsburgh time)
on the Expiration Date, together with interest on the unpaid principal balance hereof from time to time outstanding from the date hereof at the rate or rates per annum specified by the Borrower pursuant to, or as otherwise provided in, the Credit Agreement.
Interest on the unpaid principal balance hereof from time to time outstanding from the date hereof will be payable on the dates and at the times provided for in the Credit Agreement. Upon the occurrence and during the continuation of an Event of Default, the Borrower shall pay interest on the entire principal amount of the then outstanding Swing Loans evidenced by this Swing Loan Note and all other obligations due and payable to the Lender pursuant to the Credit Agreement and the other Loan Documents at a rate per annum as set forth in Section 4.3 of the Credit Agreement. Such interest rate will accrue before and after any judgment has been entered.
Subject to the provisions of the Credit Agreement, payments of both principal and interest shall be made without setoff, counterclaim, or other deduction of any nature at the office of the Lender located at One PNC Plaza, 249 Fifth Avenue, Pittsburgh, Pennsylvania 15222-2707, unless otherwise directed in writing by the holder hereof, in lawful money of the United States of America in immediately available funds.
This Note is the Swing Loan Note referred to in, and is entitled to the benefits of, the Credit Agreement and other Loan Documents, including the representations, warranties, covenants and conditions contained or granted therein. The Credit Agreement among other things contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayment, in certain circumstances, on account of principal hereof prior to maturity upon the terms and
conditions therein specified. The Borrower waives presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Credit Agreement.
This Note shall bind the Borrower and its successors and assigns, and the benefits hereof shall inure to the benefit of the Lender and its successors and assigns. All references herein to the "Borrower" and the "Lender" shall be deemed to apply to the Borrower and the Lender, respectively, and their respective successors and assigns as permitted under the Credit Agreement.
This Note and any other documents delivered in connection herewith and the rights and obligations of the parties hereto and thereto shall for all purposes be governed by and construed and enforced in accordance with the internal laws of the State of New Jersey
without giving effect to its conflicts of law principles.
All capitalized terms used herein shall, unless otherwise defined herein, have the same meanings given to such terms in the Credit Agreement.
[SIGNATURE PAGE FOLLOWS]
[SIGNATURE PAGE 1 OF 1 TO SWING LOAN NOTE]
IN WITNESS WHEREOF, and intending to be legally bound hereby, the undersigned has executed this Note by its duly authorized officer with the intention that it constitute a sealed instrument.
NEW JERSEY NATURAL GAS COMPANY
, a New Jersey corporation
By:
Name:
Title:
(Seal)
EXHIBIT 2.4
FORM OF
LOAN REQUEST
TO:
PNC Bank, National Association, as Agent
One PNC Plaza
249 Fifth Avenue
Pittsburgh, Pennsylvania 15222
Telephone No.: (412) 762-7638
Telecopier No.: (412) 762-8672
Attention: Rini Davis
FROM: New Jersey Natural Gas Company (the "Borrower")
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RE:
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Credit Agreement (as it may be amended, restated, modified or supplemented, the "Agreement") dated as of August ____, 2011 by and among the Borrower, the Lenders party thereto, each syndication agent, each documentation agent and each other titled Lender that may be identified therein, and PNC Bank, National Association, as administrative agent for the Lenders (the "Agent")
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Capitalized terms not otherwise defined herein shall have the respective meanings ascribed to them by the Agreement.
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A.
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Pursuant to Section 2.4 of the Agreement, the undersigned Borrower irrevocably requests
[check
one line under 1(a) below and fill in blank space next to the line as appropriate]:
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1(a) _____ A new Revolving Credit Loan
OR
_____ Renewal of the LIBOR Rate Option applicable to an outstanding Revolving Credit Loan originally made on ____________, ____
OR
_____ Conversion of the Base Rate Option applicable to an outstanding Revolving Credit Loan originally made on _____________, _____ to a Loan to which the LIBOR Rate Option applies,
OR
_____ Conversion of the LIBOR Rate Option applicable to an outstanding Revolving Credit Loan originally made on ____________, ____ to a Loan to which the Base Rate Option applies.
SUCH NEW, RENEWED OR CONVERTED LOAN SHALL BEAR INTEREST:
[Check one line under 1(b) below and fill in blank spaces in line next to line]:
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1(b)(i) _____
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Under the Base Rate Option. Such Loan shall have a Borrowing Date of __________, ___ (which date shall be (i) the proposed Borrowing Date, upon receipt by the Agent by 10:00 a.m. of this Loan Request for making a new Revolving Credit Loan to which the Base Rate Option applies, or (ii) the last day of the preceding Interest Period if a Loan to which the Euro-Rate Option applies is being converted to a Loan to which the Base Rate Option applies).
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OR
(ii) _____ Under the LIBOR Rate Option. Such Loan shall have a Borrowing Date of _____________ (which date shall be (i) three (3) Business Days after the Business Day of receipt by the Agent by 10:00 a.m. of this Loan Request for making a new Revolving Credit Loan to which the LIBOR Rate Option applies, renewing a Loan to which the LIBOR Rate Option applies, or converting a Loan to which the Base Rate Option applies to a Loan to which the LIBOR Rate Option applies.
2. Such Loan is in the principal amount of U.S. $_____________ or the principal amount to be renewed or converted is U.S. $_____________
[for Revolving Credit Loans under Section 2.4 not to be less than $3,000,000 and in increments of $1,000,000 for each Borrowing Tranche to which the LIBOR Rate Option applies and not less than the lesser of $1,000,000 and in integral multiples of $100,000 or the maximum amount available for each Borrowing Tranche to which the Base Rate Option applies
].
3. [Complete blank below if the Borrower is selecting the LIBOR Rate Option]: Such Loan shall have an Interest Period of [one, two, three or six] Months. ________________.
B. As of the date hereof and the date of making of the above-requested Loan (and after giving effect thereto), the Borrower has performed and complied with all covenants and conditions of the Agreement and the other Loan Documents; all of the representations and warranties of the Borrower in the Agreement and in the other Loan Documents are true and correct (except representations and warranties which expressly relate solely to an earlier date or time, which representations and warranties were true and correct on and as of the specific dates or times referred to therein); no Event of Default or Potential Default has occurred and is continuing or shall exist; and the making of such Loan shall not contravene any Law applicable to the Borrower.
C. The undersigned hereby irrevocably requests [check one line under paragraph 1 below and fill in blank space next to the line as appropriate]:
1. ______ Funds to be deposited into PNC bank account per our current standing instructions. Complete amount of deposit if not full loan advance amount: $ _________.
______ Funds to be wired per the following wire instructions:
$____________________ Amount of Wire Transfer
Bank Name:
ABA:
Account Number:
Account Name:
Reference:
______ Funds to be wired per the attached Funds Flow (multiple wire transfers)
[SIGNATURE PAGE FOLLOWS]
[SIGNATURE PAGE 1 OF 1 TO LOAN REQUEST]
The undersigned certifies to the Agent as to the accuracy of the foregoing.
NEW JERSEY NATURAL GAS COMPANY
, a New Jersey corporation
Date: ______________, 20__ By:
(
SEAL)
Name:
Title:
EXHIBIT 2.5
FORM OF SWING LOAN REQUEST
TO:
PNC Bank, National Association, as Agent
One PNC Plaza
249 Fifth Avenue
Pittsburgh, Pennsylvania 15222
Telephone No.: (412) 762-7638
Telecopier No.: (412) 762-8672
Attention: Rini Davis
FROM: New Jersey Natural Gas Company (the "Borrower")
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RE:
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Credit Agreement (as it may be amended, restated, modified or supplemented, the "Agreement") dated as of August ____, 2011 by and among the Borrower, the Lenders party thereto, each syndication agent, each documentation agent and each other titled Lender that may be identified therein, and PNC Bank, National Association, as administrative agent for the Lenders (the "Agent")
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Capitalized terms not otherwise defined herein shall have the respective meanings ascribed to them by the Agreement.
Pursuant to Section 2.5 of the Agreement, the undersigned hereby makes the following Swing Loan Request:
1.
Aggregate Principal Amount of Swing Loans: [amount shall be in integral multiples of $100,000 and not less than $250,000] U.S. $_________
2.
Proposed Borrowing Date: [this Swing Loan Request must be received by the Swing Lender by 12:00 noon Pittsburgh time on the proposed Borrowing Date] ______________
3.
As of the date hereof and the date of making of the Swing Loan requested hereby: the representations and warranties of the Borrower contained in Section 6 of the Agreement and in the other Loan Documents are and will be true (except representations and warranties that expressly relate solely to an earlier date or time, which representations and warranties were true on and as of the specific dates or times referred to therein); the Borrower has performed and complied with all covenants and conditions of the Agreement; no Event of Default or Potential Default has occurred and is continuing or shall exist; and the making of the Swing Loan requested hereby shall not contravene any Law applicable to the Borrower or any of the Lenders.
4. The undersigned hereby irrevocably requests [check one line under (a) below and fill in blank space next to the line as appropriate]:
(a) ______ Funds to be deposited into PNC bank account per our current standing instructions. Complete amount of deposit if not full loan advance amount: $ _________.
______ Funds to be wired per the following wire instructions:
$____________________ Amount of Wire Transfer
Bank Name:
ABA:
Account Number:
Account Name:
Reference:
______ Funds to be wired per the attached Funds Flow (multiple wire transfers)
[SIGNATURE PAGE FOLLOWS]
[SIGNATURE PAGE 1 OF 1 TO SWING LOAN REQUEST]
The undersigned hereby certifies the accuracy of the foregoing.
NEW JERSEY NATURAL GAS COMPANY
, a New Jersey corporation
Date: ______________, 20___ By:
(
SEAL)
Name:
Title:
EXHIBIT 5.5
FORM OF
COMMITMENT REDUCTION NOTICE
TO: PNC Bank, National Association, Agent
One PNC Plaza
249 Fifth Avenue
Pittsburgh, Pennsylvania 15222-2707
Telephone No.: (412) 762-7638
Telecopier No.: (412) 762-8672
Attention: Rini Davis
FROM: New Jersey Natural Gas Company (the "Borrower")
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RE:
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Credit Agreement (as amended, restated, supplemented or modified from time to time, the "Agreement"), dated as of August ____, 2011 by and among the Borrower, the Lenders party thereto, each syndication agent, each documentation agent and each other titled Lender that may be identified therein, and PNC Bank, National Association, as administrative agent for the Lenders (the "Agent")
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Capitalized terms not otherwise defined herein shall have the respective meanings ascribed to them by the Agreement.
Pursuant to Section 5.5 of the Agreement, the Borrower irrevocably gives notice that:
The Revolving Credit Commitments are reduced as of ____________, 20__ (insert date at least five (5) Business Days after the Business Day on which the Agent receives the Commitment Reduction Notice) by $____________ (insert amount equal to but not less than $5,000,000 or an integral multiple thereof). The aggregate amount of Revolving Credit Commitments outstanding after giving effect to the reduction of the Revolving Credit Commitments is $__________. The aggregate outstanding principal amount of all Revolving Facility Usage as of ______________ (insert date of commitment reduction) shall be $__________ (not to exceed the reduced aggregate amount of the Revolving Credit Commitments).
[SIGNATURE PAGE FOLLOWS]
[SIGNATURE PAGE 1 OF 1 TO COMMITMENT REDUCTION NOTICE]
NEW JERSEY NATURAL GAS COMPANY
, a New Jersey corporation
Date:________________ By:
Name:
Title:
EXHIBIT 7.1.3(A)
Matters to be covered in Opinions of Counsel for
New Jersey Natural Gas Company:
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1.
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Organization and Qualification of Borrower and each Subsidiary of Borrower (Section 6.1.1)
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2.
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Power and Authority (Section 6.1.3)
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3.
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Validity and Binding Effect (Section 6.1.4)
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4.
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No Conflict (Section 6.1.5)
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5.
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Litigation (Section 6.1.6)
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6.
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Consents and Approvals (Section 6.1.12)
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7.
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Investment Companies; Regulated Entities (Section 6.1.18)
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8.
|
Such other matters as Agent or the Banks may reasonably request
|
EXHIBIT 7.1.3(B)
Matters to be covered in Opinions of In-House Counsel for
New Jersey Natural Gas Company:
|
|
|
|
1.
|
No Conflict with applicable law (Section 6.1.5)
|
|
|
|
|
2.
|
Litigation (Section 6.1.6)
|
|
|
|
|
3.
|
Consents and Approvals (Section 6.1.12), all of which are in full force and effect, final and non-appealable and copies attached of each required order authorizing New Jersey Natural Gas to enter the transactions contemplated by the Credit Agreement
|
|
|
|
|
4.
|
Investment Companies; Regulated Entities and PUHCA applicability (Section 6.1.18)
|
|
|
|
|
5.
|
Banks will not as a result of the transaction or exercising any remedies available under the Loan Documents be regulated as a public utility
|
|
|
|
|
6.
|
Such other matters as Agent or the Banks may reasonably request
|
EXHIBIT 8.2.5
FORM OF
ACQUISITION COMPLIANCE CERTIFICATE
____________________, 20___
PNC Bank, National Association, as Agent
One PNC Plaza
249 Fifth Avenue
Pittsburgh, Pennsylvania 15222-2707
and each Lender party to the Credit Agreement (defined below)
Ladies and Gentlemen:
I refer to the Credit Agreement dated as of August ____, 2011 (as amended, supplemented, restated or modified from time to time, the "Credit Agreement") among New Jersey Natural Gas Company (the "Borrower"), the Lenders party thereto, each syndication agent, each documentation agent and each other titled Lender that may be identified therein, and PNC Bank, National Association in its capacity as administrative agent for the Lenders (the "Agent"). Unless otherwise defined herein, terms defined in the Credit Agreement are used herein with the same meanings. References herein to Sections of the Credit Agreement are qualified, in their entirety, by the applicable provision of the Section of the Credit Agreement so referred to and together with all related provisions and definitions referred to in such Section or incorporated therein.
I, ______________________,
[
Chief Executive Officer/President/Chief Financial Officer
]
of the Borrower, do hereby certify on behalf of the Borrower as of the
[
fiscal quarter/fiscal year ended _________________, 20__
]
as follows:
In connection with Section 8.2.5 of the Credit Agreement and with respect to a proposed Permitted Acquisition by the Borrower (the "Acquiring Company") of __________ [assets/stock] [by purchase/by merger and insert description of the transaction] (the "Acquisition") of ____________________________ [insert name of entity whose assets are/stock is being acquired] (the "Target").
The proposed date of the Acquisition is _________________ (the "Acquisition Date") [at least 5 Business Days after the date of this certificate].
The "Report Date" herein shall be the date of the most recent fiscal quarter ended prior to the proposed Acquisition of the Target.
The total Consideration to be paid including (i) cash paid by the Borrower, directly or indirectly, to the Target, (ii) the Indebtedness, fixed or contingent, incurred or assumed the Borrower, whether in favor of Target or otherwise, (iii) any Guaranty given or incurred by the
APPENDIX A
|
|
|
|
|
|
|
|
Credit Agreement
|
Consolidated for Borrower and
its Subsidiaries
|
Target
|
Consolidated
Pro Forma
|
|
Maximum Leverage Ratio
(Section 8.2.12). The ratio of (A) Consolidated Total Indebtedness to
(B) Consolidated Total Capitalization as of the Report Date is:
which is not more than the maximum permitted ratio of 0.65 to 1.0
|
_____ to 1.00
|
_____ to 1.00
|
_____ to 1.00
|
|
(A) Consolidated Total Indebtedness, as of the Report Date, is computed as follows:
(i) borrowed moneys
(ii) other transactions similar to borrowed money transactions
(iii) note purchase or acceptance credit facilities
(iv) reimbursement obligations (contingent or otherwise)
(v) Hedging Transactions
(vi) Guarantees of Hedging Transactions and of borrowed money transactions
(vii) Hybrid Securities described in clause (i) of the definition of "Hybrid Security" in the Credit Agreement
(viii) mandatory repayment obligations with respect to Hybrid Securities described in clause (ii) of the definition of "Hybrid Security" in the Credit Agreement
(ix) sum of items (i) through (viii) equals Consolidated Total Indebtedness
|
$__________
$__________
$__________
$__________
$__________
$__________
$__________
$__________
$__________
|
$__________
$__________
$__________
$__________
$__________
$__________
$__________
$__________
$__________
|
$__________
$__________
$__________
$__________
$__________
$__________
$__________
$__________
$__________
|
|
(B) Consolidated Total Capitalization, as of the Report Date, is computed as follows:
(i) Consolidated Total Indebtedness (see item (1)(A)(ix) above)
(ii) Common Shareholders' Equity
(iii) Preferred Shareholders' Equity
(iv) sum of items (i) through (iii) equals Consolidated Total Capitalization
|
$__________
$__________
$__________
$__________
|
$__________
$__________
$__________
$__________
|
$__________
$__________
$__________
$__________
|
PNC Bank, National Association, as Agent
and each lender party to the Credit Agreement
_________________, 20____
Page 2
Borrower in connection with the Acquisition and (iv) any other consideration given or obligation incurred by the Borrower in connection with the Acquisition is $__________.
The Target is engaged in ____________________ [describe business being acquired].
The Borrower is, and after giving effect to the proposed Permitted Acquisition shall be, in compliance with Section 8.2.12 of the Credit Agreement, as more fully set forth on
Appendix A
attached hereto.
The Borrower, in order to consummate the proposed Permitted Acquisition, has incurred or will incur $__________ of Indebtedness permitted by Section 8.2.1(d) (and, if secured, clause (m) of the definition of Permitted Liens).
Immediately prior to and after giving effect to the proposed Acquisition: (i) the representations and warranties of Borrower contained in Section 6 of the Credit Agreement and in the other Loan Documents are true on and correct with the same effect as though such representations and warranties had been made on and as of such date (except representations and warranties which expressly related solely to an earlier date or time), (ii) the Borrower has performed and complied with all covenants and conditions of the Credit Agreement and the other Loan Documents, and (iii) no event has occurred and is continuing which constitutes an Event of Default or Potential Event of Default.
IN WITNESS WHEREOF, the undersigned has executed this Certificate this _____ day of ____________, 20___.
By:
Name:
Title:
[
Chief Executive Officer/President/Chief Financial Officer
]
APPENDIX A
|
|
|
|
|
|
|
|
Credit Agreement
|
Consolidated for Borrower and
its Subsidiaries
|
Target
|
Consolidated
Pro Forma
1
|
|
Maximum Leverage Ratio
(Section 8.2.12). The ratio of (A) Consolidated Total Indebtedness to
(B) Consolidated Total Capitalization as of the Report Date is:
which is not more than the maximum permitted ratio of 0.65 to 1.0
|
_____ to 1.00
|
_____ to 1.00
|
_____ to 1.00
|
______________________________
1
All calculations are on a pro-forma basis, based upon the financial statements of the Borrower as of the Report Date, after giving effect to the proposed Permitted Acquisition (
i.e.
, if a financial covenant is measured for the immediately preceding four fiscal quarters as of the Report Date, the financial results of the Target as well as the Borrower and its Subsidiaries will be included in that four fiscal quarter period calculation;
provided
,
however
, that income earned or expenses incurred by the Target prior to the date of the proposed Permitted Acquisition shall be excluded) and include in such calculations Indebtedness or other liabilities assumed or incurred in connection with such Permitted Acquisition.
|
|
|
|
|
|
|
|
Credit Agreement
|
Consolidated for Borrower and
its Subsidiaries
|
Target
|
Consolidated
Pro Forma
1
|
|
(A) Consolidated Total Indebtedness, as of the Report Date, is computed as follows:
(i) borrowed moneys
(ii) other transactions similar to borrowed money transactions
(iii) note purchase or acceptance credit facilities
(iv) reimbursement obligations (contingent or otherwise)
(v) Hedging Transactions
(vi) Guarantees of Hedging Transactions and of borrowed money transactions
(vii) Hybrid Securities described in clause (i) of the definition of "Hybrid Security" in the Credit Agreement
(viii) mandatory repayment obligations with respect to Hybrid Securities described in clause (ii) of the definition of "Hybrid Security" in the Credit Agreement
(ix) sum of items (i) through (viii) equals Consolidated Total Indebtedness
|
$__________
$__________
$__________
$__________
$__________
$__________
$__________
$__________
$__________
|
$__________
$__________
$__________
$__________
$__________
$__________
$__________
$__________
$__________
|
$__________
$__________
$__________
$__________
$__________
$__________
$__________
$__________
$__________
|
|
(B) Consolidated Total Capitalization, as of the Report Date, is computed as follows:
(i) Consolidated Total Indebtedness (see item (1)(A)(ix) above)
(ii) Common Shareholders' Equity
(iii) Preferred Shareholders' Equity
(iv) sum of items (i) through (iii) equals Consolidated Total Capitalization
|
$__________
$__________
$__________
$__________
|
$__________
$__________
$__________
$__________
|
$__________
$__________
$__________
$__________
|
EXHIBIT 8.3.3
FORM OF
COMPLIANCE CERTIFICATE
____________________, 20___
PNC Bank, National Association, as Agent
One PNC Plaza
249 Fifth Avenue
Pittsburgh, Pennsylvania 15222-2707
and each Lender party to the Credit Agreement (defined below)
Ladies and Gentlemen:
I refer to the Credit Agreement dated as of August ____, 2011 (as amended, supplemented, restated or modified from time to time, the "Credit Agreement") among New Jersey Natural Gas Company (the "Borrower"), the Lenders party thereto, each syndication agent, each documentation agent and each other titled Lender that may be identified therein, and PNC Bank, National Association in its capacity as administrative agent for the Lenders (the "Agent"). Unless otherwise defined herein, terms defined in the Credit Agreement are used herein with the same meanings. References herein to Sections of the Credit Agreement are qualified, in their entirety, by the applicable provision of the Section of the Credit Agreement so referred to and together with all related provisions and definitions referred to in such Section or incorporated therein.
I, ______________________,
[
Chief Executive Officer/President/Chief Financial Officer
]
of the Borrower, do hereby certify on behalf of the Borrower as of the
[
fiscal quarter/fiscal year ended _________________, 20__
]
(the "Report Date"), as follows:
|
|
|
|
(1)
|
Maximum Leverage Ratio
(Section 8.2.12). The ratio of (A) Consolidated Total Indebtedness to (B) Consolidated Total Capitalization of the Borrower and its Subsidiaries is __________ to 1.00 as of the Report Date, which is not more than the maximum permitted ratio of 0.65 to 1.00.
|
(A) Consolidated Total Indebtedness, as of the Report Date, is computed as follows:
(i) borrowed moneys $
(ii) other transactions similar to borrowed money transactions $
(iii) note purchase or acceptance credit facilities $
(iv) reimbursement obligations (contingent or otherwise) $
PNC Bank, National Association, as Agent
and each Lender party to Credit Agreement
_____________________, 20_________
Page
2
(v) Hedging Transactions $
(vi) Guarantees of Hedging Transactions and of borrowed money transactions $
(vii) Hybrid Securities described in clause (i) of the definition of "Hybrid Security" in the Credit Agreement $
(viii) mandatory repayment obligations with respect to Hybrid Securities described in clause (ii) of the definition of "Hybrid Security" in the Credit Agreement $
(ix) sum of items (i) through (viii) equals Consolidated Total Indebtedness $
(B) Consolidated Total Capitalization, as of the Report Date, is computed as follows:
(i) Consolidated Total Indebtedness (see item (1)(A)(ix) above) $
(ii) Common Shareholders' Equity
(iii) Preferred Shareholders' Equity $
(iv) sum of items (i) through (iii) equals Consolidated Total Capitalization $
|
|
|
|
(2)
|
Indebtedness issued by the Borrower in accordance with Article Two of the Mortgage Indenture during the fiscal
[
quarter/year
]
ended on the Report Date is $____________, as permitted by Section 8.2.1(c) of the Credit Agreement.
|
|
|
|
|
(3)
|
Unsecured Indebtedness incurred pursuant to Section 8.2.1(d) of the Credit Agreement is $__________, as permitted by Section 8.2.1(d) of the Credit Agreement.
|
|
|
|
|
(4)
|
Secured Indebtedness incurred pursuant to Section 8.2.1(d) and by the definition of Permitted Liens of the Credit Agreement other than clause (m) of the definition of Permitted Liens of the Credit Agreement, as of the Report Date is $_________.
|
|
|
|
|
(5)
|
Secured Indebtedness incurred pursuant to Section 8.2.1(d) and by clause (m) of the definition of Permitted Liens of the Credit Agreement and together with such Secured Indebtedness incurred under such provisions to date is $__________, which does not
|
PNC Bank, National Association, as Agent
and each Lender party to Credit Agreement
_____________________, 20_________
Page
3
exceed the permitted amount pursuant to clause (m) of the definition of Permitted Liens of the Credit Agreement of $25,000,000.
|
|
|
|
(6)
|
Of the secured Indebtedness described in (4) above, as of the Report Date $____________ is secured by Purchase Money Security Interests.
|
|
|
|
|
(7)
|
Of the unsecured and secured Indebtedness described in clauses (3) and (4) above, as of the Report Date $____________ is Acquired Indebtedness.
|
|
|
|
|
(8)
|
Indebtedness under Hedging Transactions, as of the Report Date, is $________________.
|
|
|
|
|
(9)
|
The Borrower and its Subsidiaries have disposed of $__________ of assets, as permitted by Section 8.2.6(e), which amount does not exceed the permitted amount of $___________ (such permitted amount equal to 5% of consolidated total assets of the Borrower and its Subsidiaries for the applicable fiscal year of the Borrower).
|
|
|
|
|
(10)
|
During the fiscal
[
quarter/year
]
ended on the Report Date, the Borrower has declared or made dividend payments or other distribution or purchased or redeemed or otherwise acquired shares of stock, warrants, rights or options permitted by Section 8.2.15 as follows: [
Insert description of each action undertaken, including the date thereof, the dollar amount thereof and a description of the transaction
].
|
|
|
|
|
(11)
|
The Borrower and its Subsidiaries have engaged in off-balance sheet transactions that are functionally equivalent to borrowed money, as permitted by Section 8.2.17, with aggregate liabilities, as of the Report Date, of $______________.
|
|
|
|
|
(12)
|
The representations and warranties of the Borrower contained in Section 6 of the Credit Agreement (other than the representations and warranties of the Loan Parties contained in the first sentence of Section 6.1.6 [Litigation], the last sentence of Section 6.1.8(b) [Financial Statements], and Section 6.1.21 [Environmental Matters]) and in the other Loan Documents are true on and as of the Report Date with the same effect as though such representations and warranties had been made on and as of such date (except representations and warranties which expressly related solely to an earlier date or time) and the Borrower has performed and complied with all covenants and conditions of the Credit Agreement and the other Loan Documents. No event has occurred and is continuing which constitutes an Event of Default or Potential Event of Default.
|
IN WITNESS WHEREOF, the undersigned has executed this Certificate this _____ day
of ____________, 20___.
PNC Bank, National Association, as Agent
and each Lender party to Credit Agreement
_____________________, 20_________
Page
4
By:
Name:
Title:
[
Chief Executive Officer/President/Chief Financial Officer
]
Loan Agreement
between
New Jersey Economic Development Authority
and
New Jersey Natural Gas Company
________________________
New Jersey Economic Development Authority
$9,545,000 Natural Gas Facilities Refunding Revenue Bonds, Series 2011A (Non-AMT)
(New Jersey Natural Gas Company Project)
and
$41,000,000 Natural Gas Facilities Refunding Revenue Bonds, Series 2011B (AMT)
(New Jersey Natural Gas Company Project)
and
$46,500,000 Natural Gas Facilities Refunding Revenue Bonds, Series 2011C (AMT)
(New Jersey Natural Gas Company Project)
________________________
Dated as of August 1, 2011
|
|
|
|
|
|
|
|
|
Article I
|
Definitions
|
|
3
|
|
|
|
|
|
|
|
|
Section 1.1.
|
Definition of Terms
|
3
|
|
|
|
Section 1.2.
|
Number and Gender
|
3
|
|
|
|
Section 1.3.
|
Articles, Sections, Etc.
|
3
|
|
|
|
|
|
|
|
Article II
|
Representations and Warranties of
|
|
|
|
the Authority and the Borrower
|
4
|
|
|
|
|
|
|
|
|
Section 2.1.
|
Representations and Warranties of the Authority
|
4
|
|
|
|
Section 2.2.
|
Representations and Warranties of the Borrower
|
4
|
|
|
|
|
|
|
|
Article III
|
Issuance of the Bonds; Application of
|
|
|
|
Proceeds of Bonds and Refunded Bonds
|
9
|
|
|
|
|
|
|
|
|
Section 3.1.
|
Agreement to Issue Bonds; Application of Bond Proceeds; Application
|
|
|
|
|
of Refunded Bond Proceeds
|
9
|
|
|
|
Section 3.2.
|
Application of Bond Proceeds
|
9
|
|
|
|
Section 3.3.
|
[Reserved]
|
9
|
|
|
|
Section 3.4.
|
Investment of Moneys in Funds
|
9
|
|
|
|
Section 3.5.
|
No Liability of Authority or Trustee
|
9
|
|
|
|
Section 3.6.
|
First Mortgage Bonds
|
9
|
|
|
|
Section 3.7.
|
Options to Prepay First Mortgage Bonds
|
10
|
|
|
|
|
|
|
|
Article IV
|
Loan of Proceeds; Repayment Provision
|
11
|
|
|
|
|
|
|
|
|
Section 4.1.
|
Loan of Bond Proceeds; Issuance of Bonds
|
11
|
|
|
|
Section 4.2.
|
Loan Payments and Payment of Other Amounts
|
11
|
|
|
|
Section 4.3.
|
Unconditional Obligation
|
13
|
|
|
|
Section 4.4.
|
Assignment of Authority’s Rights
|
13
|
|
|
|
Section 4.5.
|
Amounts Remaining in Funds
|
14
|
|
|
|
|
|
|
|
Article V
|
Covenants and Agreements
|
14
|
|
|
|
|
|
|
|
|
Section 5.1.
|
Right of Access to the Project
|
14
|
|
|
|
Section 5.2.
|
The Borrower’s Maintenance of Its Existence
|
14
|
|
|
|
Section 5.3.
|
Records and Financial Statements of Borrower
|
15
|
|
|
|
Section 5.4.
|
Insurance Required
|
15
|
|
|
|
Section 5.5.
|
Taxes and Other Charges
|
15
|
|
|
|
Section 5.6.
|
Maintenance of the Projects
|
16
|
|
|
|
Section 5.7.
|
Qualification in New Jersey
|
16
|
|
|
|
Section 5.8.
|
Tax Covenant
|
16
|
|
|
|
Section 5.9.
|
Continuing Disclosure
|
21
|
|
|
|
Section 5.10.
|
Assignment by Borrower
|
21
|
|
|
|
Section 5.11.
|
Cooperation in Filings and Other Matters
|
21
|
|
|
|
|
|
|
|
|
|
|
|
Section 5.12.
|
Further Assurances and Corrective Instruments
|
22
|
|
|
|
Section 5.13.
|
Letter of Credit
|
22
|
|
|
|
Section 5.14.
|
Compliance with Indenture
|
22
|
|
|
|
Section 5.15.
|
Remarketing Agent
|
22
|
|
|
|
|
|
|
|
Article VI
|
Special Covenants and Agreements with the
|
|
|
|
Authority
|
|
23
|
|
|
|
|
|
|
|
|
Section 6.1.
|
Additional Information
|
23
|
|
|
|
Section 6.2.
|
Obligation to Pay Taxes
|
23
|
|
|
|
Section 6.3.
|
Use of Project
|
23
|
|
|
|
Section 6.4.
|
Change in Location
|
23
|
|
|
|
Section 6.5.
|
Additional Reporting Requirements
|
24
|
|
|
|
Section 6.6.
|
Observe Laws
|
24
|
|
|
|
Section 6.7.
|
Maintain Employees
|
24
|
|
|
|
Section 6.8.
|
Approval of Tenants by the Authority
|
24
|
|
|
|
Section 6.9.
|
Brokerage Fee
|
25
|
|
|
|
Section 6.10.
|
Affirmative Action and Prevailing Wage Regulations
|
25
|
|
|
|
|
|
|
|
Article VII
|
Loan Default Events and Remedies
|
25
|
|
|
|
|
|
|
|
|
Section 7.1.
|
Loan Default Events
|
25
|
|
|
|
Section 7.2.
|
Remedies on Default
|
26
|
|
|
|
Section 7.3.
|
Agreement to Pay Attorneys’ Fees and Expenses
|
28
|
|
|
|
Section 7.4.
|
No Remedy Exclusive
|
28
|
|
|
|
Section 7.5.
|
No Additional Waiver Implied by One Waiver
|
29
|
|
|
|
|
|
|
|
Article VIII
|
Prepayment
|
|
29
|
|
|
|
|
|
|
|
|
Section 8.1.
|
Redemption of Bonds with Prepayment Moneys
|
29
|
|
|
|
Section 8.2.
|
Options to Prepay Installments
|
29
|
|
|
|
Section 8.3.
|
Mandatory Prepayment
|
29
|
|
|
|
Section 8.4.
|
Amount of Prepayment
|
29
|
|
|
|
Section 8.5.
|
Notice of Prepayment
|
30
|
|
|
|
|
|
|
|
Article IX
|
Non-Liability of Authority; Expenses;
|
|
|
|
Indemnification
|
|
30
|
|
|
|
|
|
|
|
|
Section 9.1.
|
Non-liability of Authority
|
30
|
|
|
|
Section 9.2.
|
Expenses and Fees
|
31
|
|
|
|
Section 9.3.
|
Indemnification
|
31
|
|
|
|
|
|
|
|
Article X
|
Miscellaneous
|
|
33
|
|
|
|
|
|
|
|
|
Section 10.1.
|
Notices
|
33
|
|
|
|
Section 10.2.
|
Severability
|
34
|
|
|
|
|
|
|
|
|
|
|
|
Section 10.3.
|
Execution of Counterparts
|
34
|
|
|
|
Section 10.4.
|
Amendments, Changes and Modifications
|
34
|
|
|
|
Section 10.5.
|
Governing Law; Venue
|
35
|
|
|
|
Section 10.6.
|
Authorized Representative
|
35
|
|
|
|
Section 10.7.
|
Term of the Loan Agreement
|
35
|
|
|
|
Section 10.8.
|
Assignment of Loan Documents
|
35
|
|
|
|
Section 10.9.
|
Binding Effect
|
35
|
|
|
|
Section 10.10.
|
Further Assurances and Corrective Instruments
|
35
|
|
|
|
Section 10.11.
|
Complete Agreement
|
35
|
|
|
|
Section 10.12.
|
Business Days
|
35
|
|
|
|
Section 10.13.
|
Waiver of Personal Liability
|
35
|
|
|
|
Section 10.14.
|
Waivers
|
35
|
|
|
|
Section 10.15.
|
Incorporation of Terms
|
35
|
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Exhibit A
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Description of the Projects
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Exhibit B
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Form of First Mortgage Bonds
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Loan Agreement
This
Loan Agreement
(the
“Agreement”
or
“Loan Agreement”
), dated as of August 1, 2011, is between the
New Jersey Economic Development Authority
(the
“Authority”
) a public body corporate and politic constituting an instrumentality of the State of New Jersey (the "State"), and
New Jersey Natural Gas Company
, a corporation duly organized, validly existing and in good standing under the laws of the State of New Jersey (the
“Borrower”
);
W i t n e s s e t h:
Whereas
, the New Jersey Economic Development Authority Act, constituting Chapter 80 of the Pamphlet Laws of 1974 of the State, approved on August 7, 1974, as amended and supplemented, (the "Act") declares it to be in the public interest and to be the policy of the State to foster and promote the economy of the State, increase opportunities for gainful employment and improve living conditions, assist in the economic development or redevelopment of political subdivisions within the State, and otherwise contribute to the prosperity, health and general welfare of the State and its inhabitants by inducing manufacturing, industrial, commercial, recreational, retail, service and other employment promoting enterprises to locate, remain or expand within the State by making available financial assistance; and
Whereas
, the Authority, to accomplish the purposes of the Act, is empowered to extend credit to such employment promoting enterprises in the name of the Authority on such terms and conditions and in such manner as it may deem proper for such consideration and upon such terms and conditions as the Authority may determine to be reasonable; and
Whereas,
the Borrower has requested that the Authority issue its Natural Gas Facilities Refunding Revenue Bonds, Series 2011A (Non-AMT) (New Jersey Natural Gas Company Project) in an aggregate principal amount not to exceed $9,545,000 (the
“Series 2011A Bonds”
), the proceeds of which Series 2011A Bonds will be used to refund Natural Gas Facilities Refunding Revenue Bonds, Series 1998A (New Jersey Natural Gas Company Project) which are outstanding in the aggregate principal amount of $9,545,000 (the
“1998A Bonds”
), the proceeds of which 1998A Bonds were issued to pay a portion of the cost of refunding the Authority’s Natural Gas Facilities Revenue Bonds, Series 1991A (New Jersey Natural Gas Company Project) (the
“1991A Bonds”
), the proceeds of which 1991A Bonds were used to refund the Authority’s Natural Gas Facilities Revenue Bonds, Series 1980 (New Jersey Natural Gas Company Project) (the
“1980 Bonds”
), the proceeds of which 1980 Bonds were used to finance the purchase, construction and equipping by the Borrower of certain natural gas distribution mains and functionally related equipment (the
“1980
Project”
) and to pay certain costs of issuance of the 1980 Bonds;
Whereas
, the Borrower has requested that the Authority issue its Natural Gas Facilities Refunding Revenue Bonds, Series 2011B (AMT) (New Jersey Natural Gas Company Project) in an aggregate principal amount not to exceed $41,000,000 (the
“Series 2011B Bonds”
), the proceeds of which Series 2011B Bonds will be used to refund the Authority’s (i) Natural Gas Facilities Refunding Revenue Bonds, Series 1995A (New Jersey Natural Gas Company Project) which are outstanding in the aggregate principal amount of $25,000,000 (the
“1995A Bonds”
), the proceeds of which 1995A Bonds were used
issued to pay a portion of the cost of refunding the Authority’s Natural Gas Facilities Revenue Bonds, Series 1988 (New Jersey Natural Gas Company Project) (the
“1988 Bonds”
), the proceeds of which 1988 Bonds were used to finance the purchase, construction and equipping by the Borrower of certain natural gas distribution mains and functionally related equipment (the
“1988 Project”
) and pay certain costs of issuance of the 1988 Bonds and (ii) Natural Gas Facilities Revenue
Bonds, Series 1995B (New Jersey Natural Gas Company Project) which are outstanding in the aggregate principal amount of $16,000,000 (the
“1995B Bonds”
), the proceeds of which 1995B Bonds were used to finance the purchase, construction and equipping by the Company of certain natural gas distribution mains and functionally related equipment (the
“1995B Project”
) and pay certain costs of issuance of the 1995B Bonds, and
Whereas
the Borrower has requested that the Authority issue its Natural Gas Facilities Refunding Revenue Bonds, Series 2011C (AMT) (New Jersey Natural Gas Company Project) in an aggregate principal amount not to exceed $46,500,000 (the
“Series 2011C Bonds”,
and with the Series 2011A Bonds and Series 2011B Bonds are hereinafter collectively, the
“Bonds”
), the proceeds of which Series 2011C Bonds will be used to refund the Authority’s (i) Natural Gas Facilities Refunding Revenue Bonds, Series 1997A (New Jersey Natural Gas Company Project) which are outstanding in the aggregate principal amount of $13,500,000 (the
“1997A Bonds”
), the proceeds of which 1997A Bonds were used to pay a portion of the cost of refunding the Authority’s Natural Gas Facilities Revenue Bonds, Series 1987 (New Jersey Natural Gas Company Project) (the
“1987 Bonds”
), the proceeds of which 1987 Bonds were used to finance the purchase, construction and equipping by the Borrower of certain natural gas distribution mains and functionally related equipment (the
“1987
Project”
) and pay certain costs of issuance of the 1987 Bonds, (ii) Natural Gas Facilities Refunding Revenue Bonds, Series 1998B (New Jersey Natural Gas Company Project) which are outstanding in the aggregate principal amount of $15,000,000 (the
“1998B Bonds”
), the proceeds of which 1998B Bonds were issued to pay a portion of the cost of refunding the Authority’s Natural Gas Facilities Revenue Bonds, Series 1991B (New Jersey Natural Gas Company Project) (the
“1991B Bonds”
), the proceeds of which 1991B Bonds were used to finance the purchase, construction and equipping by the Company of certain natural gas distribution mains and functionally related equipment (the
“1991B Project”
) and pay certain costs of issuance of the 1991B Bonds; and (iii) Natural Gas Facilities Revenue Bonds, Series 1998C (New Jersey Natural Gas Company Project) which are outstanding in the aggregate principal amount of $18,000,000 (the
“1998C Bonds”
and together with the 1998A Bonds, the 1995A Bonds, the 1995B Bonds, the 1997A Bonds and the 1998B Bonds, the
“Refunded Bonds”
), the proceeds of which 1998C Bonds were used to finance the purchase, construction and equipping by the Company of certain natural gas distribution mains and functionally related equipment (the
“1998C Project”
and together with the 1980 Project, the 1995B Project, the 1988 Project, the 1987 Project and the 1991B Project are referred to collectively as the
“Project”
or
Projects”
) and pay certain costs of issuance of the 1998C Bonds;
Whereas
, after due investigation and deliberation, the Authority has approved the Borrower’s application and authorized the issuance of the Bonds pursuant to an Indenture dated as of the date hereof (the
“Indenture”
) by and between the Authority and U.S. Bank National Association, as trustee (the
“Trustee”
);
Whereas,
the Borrower concurrently herewith has agreed to deliver to the Authority pursuant to the Indenture of Mortgage and Deed of Trust by and between the Borrower and Harris Trust and Savings Bank, as trustee, dated April 1, 1952, as heretofore or hereafter supplemented or amended, under which The Bank of New York Mellon Trust Company, N.A., as successor in interest to BNY Midwest Trust Company, is the current Trustee, (i) $9,545,000 First Mortgage Bonds, Series MM due 2027 (the “
Series MM First Mortgage Bonds
”) , (ii) $41,000,000 First Mortgage Bonds, Series NN due 2035 (the “
Series NN First Mortgage Bonds
”), and (iii) $46,500,000 First Mortgage Bonds, Series OO due 2041 (the “
Series OO First Mortgage Bonds
”; which collectively with the Series MM First Mortgage Bonds and the Series NN First Mortgage Bonds shall be the "
First Mortgage Bonds
") in accordance with the terms of this Loan Agreement; and
Whereas
, the Authority and the Borrower desire to enter into this Loan Agreement to specify the terms and conditions of the loan from the Authority to the Borrower of the proceeds of the Bonds and for certain other purposes specified herein;
Whereas
, pursuant to the Indenture, the Bonds will be issued and the Authority will assign to the Trustee its right to receive payments, and certain other rights, under this Loan Agreement;
Now, Therefore
, for and in consideration of the premises and the material covenants hereinafter contained, the parties hereto hereby formally covenant, agree and bind themselves as follows:
Article I
Definitions
Section 1.1. Definition of Terms
. Unless the context otherwise requires, the terms used in this Loan Agreement shall have the meanings specified in Section 1.1 of the Indenture, as originally executed or as it may from time to time be supplemented or amended as provided therein.
Section 1.2. Number and Gender
. The singular form of any word used herein, including the terms defined in Section 1.1 of the Indenture, shall include the plural, and vice versa. The use herein of a word of any gender shall include all genders.
Section 1.3. Articles, Sections, Etc.
Unless otherwise specified, references to Articles, Sections and other subdivisions of this Loan Agreement are to the designated Articles, Sections and other subdivisions of this Loan Agreement as amended from time to time. The words “hereof,” “herein,” “hereunder” and words of similar import refer to this Loan Agreement as a whole. The headings or titles of the several articles and sections, and the table of contents appended to copies hereof, shall be solely for convenience of reference and shall not affect the meaning, construction or effect of the provisions hereof.
Article II
Representations and Warranties of
the Authority and the Borrower
Section 2.1. Representations and Warranties of the Authority
. The Authority hereby represents and agrees that:
(a) The Authority is a duly constituted public body corporate and politic, duly created and existing as an instrumentality of the State with the power and authority set forth in the Act, including the power and authority to authorize the issuance of the Bonds under the Act.
(b) Under the provisions of the Act, the Authority is duly authorized to enter into, execute and deliver the Loan Documents to which it is a party, to undertake the transactions contemplated by the Loan Documents to which it is a party and to carry out its obligations hereunder and thereunder.
(c) The Authority proposes to issue the Bonds in the total aggregate principal amount of $97,045,000 to refinance all or a portion of the Projects.
(d) By duly adopted resolution, the Authority has duly authorized the execution, delivery and sale of the Loan Documents to which it is a party, including the borrowing under, issuance and sale of the Bonds and (as security for the Bonds) the pledge of the First Mortgage Bonds, to the Trustee subject to the Authority’s Reserved Rights). The Authority also has duly authorized the execution, delivery and performance of the Purchase Contract and has approved the Section entitled "The Authority" in the Official Statement.
(e) The Bonds will be issued under and pursuant to the Indenture and will mature, bear interest and have the other terms and provisions set forth or provided for in the Indenture.
(f) To the best knowledge of the Authority, the execution and delivery of and performance by the Authority of the Loan Documents to which the Authority is a party, including the Purchase Contract, under the circumstances contemplated thereby and hereby, do not and will not conflict with, or constitute a breach of or default under any indenture, deed of trust, mortgage, agreement or other instrument to which the Authority is a party, or conflict with, violate or result in a breach of, any existing law or public administrative rule or regulation, judgment, court order or consent decree presently applicable to the Authority (except for such consents and approvals as have heretofore been obtained).
Section 2.2. Representations and Warranties of the Borrower
. The Borrower represents and warrants to the Authority that, as of the date of execution of this Loan Agreement and as of the date of delivery of the Bonds to the initial purchasers thereof:
(a)
Organization/Authority
. The Borrower is a corporation organized and existing under the laws of the State and has full legal right, power and authority to enter into and has duly authorized, by proper action, the execution and delivery of this Loan Agreement and all other documents contemplated
hereby to be executed by the Borrower and to carry out and consummate in all material respects all transactions contemplated hereby.
(b)
Execution/Delivery
. This Loan Agreement and all other documents contemplated hereby have been duly authorized, executed and delivered by the Borrower.
(c)
Enforceability
. This Loan Agreement, when assigned to the Trustee pursuant to the Indenture, the Purchase Contract, the Remarketing Agreement, the Tax Agreement, the other Loan Documents and all other documents and agreements contemplated hereby to which the Borrower is a party, will constitute the legal, valid and binding agreements of the Borrower, enforceable against the Borrower in accordance with their terms, and any rights of the Authority and obligations of the Borrower not so assigned to the Trustee constitute the legal, valid, and binding agreements of the Borrower enforceable against the Borrower by the Authority in accordance with their terms; except in each case as enforcement may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditors’ rights generally, by the application of equitable principles regardless of whether enforcement is sought in a proceeding at law or in equity and by public policy.
(d)
No Conflicts
. The execution and delivery of this Loan Agreement, the Purchase Contract, the Remarketing Agreement, the Tax Agreement and the other Loan Documents, and the consummation of the transactions herein and therein contemplated and the fulfillment of or compliance with the terms and conditions hereof or thereof, will not conflict with or constitute a violation or breach of or default (with due notice or the passage of time or both) under the Articles of Incorporation or Bylaws of the Borrower, any applicable law or administrative rule or regulation, or any applicable court or administrative decree or order, or any indenture, mortgage, deed of trust, loan agreement, lease, contract or other agreement or instrument to which the Borrower is a party or by which it or its properties are otherwise subject or bound, or result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the Borrower, which conflict, violation, breach, default, lien, charge or encumbrance might have consequences that would materially and adversely affect the consummation of the transactions contemplated by this Loan Agreement, the Indenture, the Purchase Contract, the Remarketing Agreement, the Tax Agreement or the other Loan Documents, or the financial condition, assets, properties or operations of the Borrower.
(e)
No Other Consents
. No consent or approval of any trustee or holder of any indebtedness of the Borrower or any guarantor of indebtedness of or other provider of credit or liquidity to the Borrower, and no consent, permission, authorization, order or license of, or filing or registration with, any governmental authority (except with respect to any state securities or “blue sky” laws) which is material to this transaction is necessary in connection with the execution and delivery of this Loan Agreement, the Purchase Contract, the Remarketing Agreement, the Tax Agreement, the First Mortgage Bonds or the other Loan Documents, or the consummation of any transaction herein or therein contemplated, or the fulfillment of or compliance with the terms and conditions hereof or thereof, except as have been obtained or made and as are in full force and effect.
(f)
No Litigation
. There is no action, suit, proceeding, inquiry or investigation, before or by any court or federal, state, municipal or other governmental authority, pending, or to the knowledge of the Borrower, after reasonable investigation, threatened, against or affecting the Borrower or the assets, properties or operations of the Borrower which, if determined adversely to the Borrower or its interests, would have a material adverse effect upon the consummation of the transactions contemplated by, the validity of, or the Borrower’s ability to perform its obligations under this Loan Agreement, the Purchase Contract, the Remarketing Agreement, the Tax Agreement, the First Mortgage Bonds or the other Loan Documents or upon the financial condition, assets, properties or operations of the Borrower.
(g)
Disclosures Accurate
. No written information, exhibit or report furnished to the Authority by the Borrower in connection with the negotiation of this Loan Agreement, the Purchase Contract, the Remarketing Agreement, the Tax Agreement or the other Loan Documents, and no official statement or other offering document in connection with the issuance of the Bonds, if any, as of its date or as of the date hereof, contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(h)
Financial Condition
. All financial statements and information heretofore delivered to the Authority by the Borrower, including without limitation, information relating to the financial condition of the Borrower and the Projects, fairly and accurately present the financial position thereof and have been prepared (except where specifically noted therein) in accordance with generally accepted accounting principles consistently applied. Since the date of such statements, there has been no material adverse change in the financial condition or results of operations of the Borrower or the other subjects of such statements.
(i)
Title to Property
. The Borrower has title to the Projects sufficient to carry out the purposes of this Loan Agreement.
(j)
No Defaults
. The Borrower is not in default (and no event has occurred and is continuing which with the giving of notice or the passage of time or both could constitute a default) (1) under this Loan Agreement, the Purchase Contract, the Remarketing Agreement, the Mortgage Indenture, the Tax Agreement or the other Loan Documents, or (2) with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or other governmental authority, which default could reasonably be expected to have consequences that would materially and adversely affect the consummation of the transactions contemplated by this Loan Agreement, the Purchase Contract, the Remarketing Agreement, the Tax Agreement, the Indenture or the other Loan Documents, or the financial condition, assets, properties or operations of the Borrower.
(k)
All Necessary Approvals
. All material certificates, approvals, permits and authorizations of applicable local governmental agencies, and agencies of the State and the federal government have been obtained with respect to the acquisition, construction, equipping and operation of the Projects, and the Projects have been and will continue to be operated pursuant to and in accordance with such certificates, approvals, permits and authorizations.
(l)
Compliance with Regulations
. The Borrower will cause the Projects to be operated and maintained in such manner as to conform to all applicable material zoning regulations and all applicable material planning, building, environmental and other applicable governmental regulations and all material permits, variances and orders issued or granted pursuant thereto, which permits, variances and orders have not been withdrawn or otherwise suspended.
(m)
Important Inducement.
The availability of the financial assistance by the Authority as provided herein has been an important inducement to the Borrower to engage in the Projects and to locate the Projects in the State.
(n)
No Intention to Dispose of Projects
. The Borrower presently intends to use or operate or cause to be used or operated the Projects in a manner consistent with the purposes set forth herein and in the Act until the date on which the Bonds have been fully paid and knows of no reason why the Projects will not be so operated. The Borrower does not presently intend to sell or otherwise dispose of the Projects or any portion thereof.
(o)
No Action.
The Borrower has not taken and will not take any action and knows of no action that any other Person has taken or intends to take, which would cause interest income on the Refunded Bonds or the Bonds to be includable in the gross income of the recipients thereof under the Code.
(p)
Use of Proceeds of Refunded Bonds
. At least 95% of the net proceeds (as defined in Section 150 of the Code) of the Refunded Bonds were used or will be used to provide land or property of a character subject to the allowance for depreciation for purposes of Section 167 of the Code. The Borrower has not requested and will not request or authorize any disbursement, which, if paid, would result in less than 95% of such net proceeds being so used. Any costs of issuance of the Refunded Bonds financed with the proceeds of the Refunded Bonds did not exceed 2% of the proceeds of the Refunded Bonds. None of the proceeds of the Refunded Bonds were used to provide working capital. None of the proceeds of the Bonds will be used to provide working capital or to pay costs of issuance.
(q)
Weighted Average Maturity of Bonds; Principal Amount of Bonds Not In Excess of Outstanding Principal Amount of Refunded Bonds
. In accordance with Section 147(b) of the Code, the weighted average maturity of the Refunded Bonds did not, and the weighted average maturity of the Bonds does not, exceed 120% of the weighted average reasonably expected economic life of the facilities being financed or refinanced by the proceeds thereof. In accordance with Section 147(f) of the Code, the weighted average maturity of the Bonds does not exceed the weighted average maturity of the Refunded Bonds. The par amount of the Bonds does not exceed the outstanding principal amount of the Refunded Bonds on the date of issuance of the Bonds.
(r)
No Prohibited Facilities
. None of the proceeds of the Refunded Bonds were used and none of the proceeds of the Bonds will be used to provide any airplane; skybox or other private luxury box; health club facility; any facility primarily used for gambling; or any store the principal business of which is the sale of alcoholic beverages for consumption off premises.
(s)
Limitation on Land Acquisition and Used Property
. Less than 25% of the net proceeds of the Refunded Bonds have been used directly or indirectly to acquire land or any interest therein, and none of such land is being or will be used for farming purposes; no portion of the net proceeds of the Refunded Bonds has been used, and no portion of the Bonds will be used, to acquire existing property or any interest therein unless the first use of such property or interest therein is pursuant to such acquisition.
(t)
Compliance with Section 148 of the Code
. Funds constituting gross proceeds of the Refunded Bonds or the Bonds neither have been nor will be used in a manner that would constitute failure of compliance with Section 148 of the Code.
(u)
No Replacement Proceeds
. As of the date hereof, no “replacement proceeds” have been created with respect to the Refunded Bonds, within the meaning of Section 1.148 1(c) of the Treasury Regulations and, with respect to the Refunded Bonds or the Bonds, it is not anticipated that any such “replacement proceeds” will be created; however, in the event that any such replacement proceeds are deemed to have been created, such amounts will be invested in compliance with Section 148 of the Code.
(v)
No Federal Guarantee
. The Refunded Bonds have not been, and the Bonds are not, “federally guaranteed” within the meaning of Section 149(b) of the Code.
(w)
Use for Local Furnishing of Gas
. The Borrower shall use or cause the Projects to be used as an authorized project for a purpose and use as provided for under the Act and for the use set forth in the Application to the Authority until the Bonds have been paid in full. At least 95% of the proceeds of the Refunded Bonds were to provide “local furnishing of gas” within the meaning of Section 142(a)(8) of the Code.
(x)
Accuracy of Information
. The information furnished by the Borrower and used by the Authority in preparing the certification pursuant to Section 148 of the Code and in preparing the information statement pursuant to Section 149(e) of the Code will be accurate and complete as of the date of issuance of the Bonds.
(y)
Limitation on Offices
. The Projects do not and will not include any office except for offices (i) located on the sites of the Projects and (ii) not more than a de minimis amount of the functions to be performed therein is not directly related to the day to day operations of the Projects.
(z)
No Reliance on Authority for Advice
. The Borrower acknowledges, represents and warrants that it understands the nature and structure of the transactions relating to the financing of the Projects; that it is familiar with the provisions of all of the documents and instruments relating to such financing to which the Borrower is a party or of which it is a beneficiary, including the Indenture; that it understands the risks inherent in such transactions; and that it has not relied on the Authority for any
guidance or expertise in analyzing the financial or other consequences of the transactions contemplated by this Loan Agreement or the Indenture or otherwise relied on the Authority for any advice.
Article III
Issuance of the Bonds; Application of
Proceeds of Bonds and Refunded Bonds
Section 3.1. Agreement to Issue Bonds; Application of Bond Proceeds; Application of Refunded Bond Proceeds
. (a) To provide funds to refinance the Projects by refunding the Refunded Bonds, the Authority agrees that it will issue under the Indenture, sell and cause to be delivered to the purchasers thereof, the Bonds. The Authority will thereupon direct the Trustee to apply the proceeds received from the sale of the Bonds as provided herein and in the Indenture.
(b) The Authority will direct the Trustee pursuant to the Indenture to apply the proceeds of the Bonds, as specified in Section 3.2 thereof, to the payment in full of the outstanding amount of the Refunded Bonds.
Section 3.2. Application of Bond Proceeds.
The Borrower hereby authorizes and approves the application of the Bond proceeds as provided in Section 3.2 of the Indenture.
Section 3.3. [Reserved].
Section 3.4. Investment of Moneys in Funds
. Any moneys in any fund or account held by the Trustee shall, at the specific written request of an Authorized Representative of the Borrower, be invested or reinvested by the Trustee as provided in the Indenture. Such investments shall be held by the Trustee and shall be deemed at all times a part of the fund or account from which such investments were made, and the interest accruing thereon, and any profit or loss realized therefrom, shall be credited or charged to such fund or account. The Borrower acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the Borrower the right to receive brokerage confirmations of security transactions from the Trustee as they occur, the Borrower specifically waives receipt of such confirmations to the extent permitted by law.
Section 3.5. No Liability of Authority or Trustee
. Nothing contained herein or in any documents and agreements contemplated hereby or in any other Loan Document shall impose upon the Trustee or the Authority any obligation to ensure the proper application of the disbursements by the Borrower or any other recipient thereof. The Trustee and the Authority shall be relieved of any liability with respect to making such disbursements in accordance with the foregoing.
Section 3.6. First Mortgage Bonds
. To evidence the loan to the Borrower, the Borrower shall deliver to the Authority the First Mortgage Bonds. In order to secure the repayment of the Bonds, simultaneously with the issuance and delivery of the Bonds, the Authority through the Indenture shall assign its interests in the First Mortgage Bonds to the Trustee, subject to its Reserved Rights. The First
Mortgage Bonds shall be in substantially the form set forth as
Exhibit B
hereto, with such variations in principal amounts, interest rates, interest payment and maturity dates and prepayment or redemption provisions as may be necessary to correspond to such provisions of the Bonds issued by the Authority. The First Mortgage Bonds shall:
(a) be payable to the Trustee, registered in the name of the Trustee and be non transferable except to a successor Trustee;
(b) be issued in the number of series and in the principal amounts equal to the aggregate principal amount of each series of the Bonds;
(c) provide for payments of interest equal to the payments of interest on the Bonds except that the Borrower shall receive a cash credit against its interest obligations equal to (i) accrued interest on the Bonds deposited with the Trustee at the time of issuance of the Bonds, if any, and (ii) such other moneys held at the time of such interest payment date by the Trustee in the Bond Fund created under the Indenture and available for the payment of interest on such Bonds, provided that the interest rate on the First Mortgage Bonds where there has been a default in the payment of principal will be as provided in the Mortgage Indenture;
(d) require payments of principal, or principal plus a premium, equal to the stated maturities on the Bonds and the payment of all other amounts due under this Loan Agreement;
(e) contain redemption provisions, or provisions in respect of the acceleration or prepayment of principal and premium, if any, equivalent to the redemption provisions of the Bonds; and
(f) require all payments on such First Mortgage Bonds to be made at the same time on the due date for the corresponding payment to be made on the Bonds.
Section 3.7. Options to Prepay First Mortgage Bonds
.
The Borrower shall have, and is hereby granted, the option to prepay the Loan by redemption of the First Mortgage Bonds in full or in part but only in accordance with the redemption provisions of the First Mortgage Bonds being redeemed. With respect to each exercise of its option to redeem the First Mortgage Bonds, the Borrower shall deliver a written notice to the Trustee with a copy to the Authority signed by an Authorized Representative of the Borrower setting forth the amount of the redemption payment, the amount of the Bonds requested to be redeemed with such payment, and the date of redemption, which date shall be not less than five (5) days from the date the notice is delivered. In the event that at said time there shall have occurred and be continuing an Event of Default, such option may be exercised only to prepay the First Mortgage Bonds in full. Such payment must be sufficient to provide moneys for the payment of interest to accrue to the redemption date and the principal or redemption price, if applicable, in accordance with the terms of the Bonds Outstanding and to be redeemed with such payment. If such prepayment on the First Mortgage Bonds shall be in full, the Borrower shall also pay or provide for the payment of all reasonable or necessary fees and expenses of the Authority, the Trustee, the Tender Agent, the Registrar and any Paying Agent accrued and to accrue through the final payment of the Bonds being redeemed.
Article IV
Loan of Proceeds; Repayment Provision
Section 4.1. Loan of Bond Proceeds; Issuance of Bonds
. The Authority covenants and agrees, upon the terms and conditions in this Loan Agreement, to make a loan to the Borrower from the proceeds of the Bonds for the purpose of refinancing the Projects by refunding the Refunded Bonds. The Authority further covenants and agrees that it shall take all actions within its authority to keep this Loan Agreement in effect in accordance with its terms. Pursuant to said covenants and agreements, the Authority will issue the Bonds upon the terms and conditions contained in this Loan Agreement and the Indenture and will cause the Bond proceeds to be applied as provided in Article III of the Indenture.
Section 4.2. Loan Payments and Payment of Other Amounts
. (a)(i) Until the Release Date, principal of, premium, if any, and interest on the Bonds shall be paid by the Borrower on the dates and in the amounts provided in the First Mortgage Bonds. Any amounts held by the Trustee in the Bond Fund and available therefor shall be credited against the next succeeding payments due on the First Mortgage Bonds. (ii) After the Release Date, on or before 12:30 p.m. New York City time on each Bond Payment Date (as hereinafter defined), until the principal of, premium, if any, and interest on, the Bonds shall have been fully paid or provision for such payment shall have been made as provided in the Indenture, the Borrower covenants and agrees to pay to the Trustee as a repayment on the loan made to the Borrower from Bond proceeds pursuant to Section 4.1 hereof, a sum equal to the amount payable on such Bond Payment Date as principal of, and premium, if any, and interest on, the Bonds as provided in the Indenture. In the event of any mandatory or optional redemption of the Bonds, the Borrower will pay or cause to be paid in accordance with the terms of the Indenture an amount equal to the applicable redemption price as a prepayment of that portion of the Loan corresponding to the Bonds to be redeemed, together with applicable premium (if any) and interest accrued to the date of redemption. Such Loan Payments shall be made in federal funds or other funds immediately available at the Corporate Trust Office of the Trustee. The term
“Bond Payment Date”
as used in this Section 4.2(a) shall mean any date upon which any such amounts payable with respect to the Bonds shall become due, whether on an Interest Payment Date, upon redemption, acceleration, maturity or otherwise.
Each payment made pursuant to this Section 4.2(a) and the First Mortgage Bonds shall at all times be sufficient to pay the total amount of interest and principal (whether at maturity or upon redemption or acceleration) and premium, if any, becoming due and payable on the Bonds on each Bond Payment Date;
provided
that any amount held by the Trustee in the Bond Fund on any due date for a Loan Payment hereunder shall be credited against the Loan Payment due on such date, to the extent available for such purpose; and provided further that, subject to the provisions of this paragraph, if at any time the amounts held by the Trustee in the Bond Fund (other than the Letter of Credit Account) are sufficient to pay all of the principal of and interest and premium, if any, on the Bonds as such payments become due, the Borrower shall be relieved of any obligation to make any further payments under the provisions of this Section. Notwithstanding the foregoing, if on any date the amount held by the Trustee in the Bond Fund is insufficient to make any required payments of principal of (whether at maturity or upon redemption or acceleration) and interest and premium, if any, on, the Bonds as such payments become due, the Borrower shall forthwith pay such deficiency as a Loan Payment hereunder. If an Event of Default shall have occurred and be continuing that is caused by a default in the due and punctual payment of the Purchase Price of a Bond bearing interest at a Daily Interest Rate or a Weekly Interest Rate, then the
Borrower shall pay interest on all Bonds bearing interest at a Daily Interest Rate or a Weekly Interest Rate at the Maximum Rate from the date of such Event of Default. If an Event of Default shall have occurred and be continuing for any other reason, then the Borrower shall pay interest on all Bonds bearing interest at a Daily Interest Rate or a Weekly Interest Rate at the Alternate Rate from the date of such Event of Default.
The obligation of the Borrower to make any payment required by this Section 4.2(a) and the First Mortgage Bonds shall be deemed to have been satisfied to the extent of any corresponding payment made to the Trustee by a Credit Provider pursuant to a Letter of Credit then in effect with respect to the Bonds.
(b) The Borrower further covenants that it will make any payments required to be made pursuant to Sections 2.4, 4.6, 4.8 and 4.9 of the Indenture at the applicable Purchase Price thereof by, 2:45 p.m. (New York City time) on the Purchase Date in federal or other immediately available funds;
provided, however,
the obligation to make such payments shall have been deemed satisfied to the extent that such Purchase Price shall have been paid from remarketing proceeds or from a draw under a Letter of Credit pursuant to Section 4.7(D) of the Indenture.
(c) In addition to the Loan Payments, the Borrower shall also pay to the Authority or to the Trustee, as the case may be, “Additional Payments,” as follows:
(i) All reasonable fees, charges and expenses of the Trustee for services rendered under the Indenture and all amounts referred to in Section 8.6 of the Indenture, as and when the same become due and payable;
(ii) The reasonable fees and expenses of such accountants, consultants, attorneys and other experts as may be engaged by the Authority or the Trustee to prepare audits, financial statements, reports, opinions or provide such other services required under this Loan Agreement, the Remarketing Agreement, any Reimbursement Agreement or the Indenture; and
(iii) The Authority Issuance Fee and the reasonable fees and expenses of the Authority or any agent or attorney selected by the Authority to act on its behalf in connection with this Loan Agreement, the Remarketing Agreement, any Reimbursement Agreement, the Bonds or the Indenture, including, without limitation, any and all reasonable expenses incurred in connection with the authorization, issuance, sale and delivery of any such Bonds or in connection with any litigation, investigation or other proceeding which may at any time be instituted involving this Loan Agreement, the Remarketing Agreement, any Reimbursement Agreement, the Bonds or the Indenture or any of the other documents contemplated thereby, or in connection with the reasonable supervision or inspection of the Borrower, its properties, assets or operations or otherwise in connection with the administration of this Loan Agreement.
Such Additional Payments shall be billed to the Borrower by the Authority or the Trustee from time to time, together with a statement certifying that the amount billed has been incurred or paid by the Authority or the Trustee for one or more of the above items. After such a demand, amounts so billed shall be paid by the Borrower within 30 days after the date of invoice.
The Authority Issuance Fee shall be paid to the Authority by the Borrower on the Issuance Date. The Borrower’s obligation to pay the Authority Issuance Fee shall in no way limit amounts payable by the Borrower to the Authority under this Loan Agreement, including for the enforcement thereof.
(d) The Borrower also agrees to pay the reasonable fees, charges and expenses of the Remarketing Agent in accordance with the Remarketing Agreement. Such payments shall be made directly to the Remarketing Agent. The Authority shall have no obligation whatsoever with respect to the payment of fees, charges and expenses of the Remarketing Agent.
(e) The Borrower agrees to pay any amounts required to be deposited in the Rebate Fund to comply with the provisions of the Tax Agreement and to pay the fees, charges and expenses of any rebate analyst.
Section 4.3. Unconditional Obligation
. The obligations of the Borrower to make the Loan Payments and the other payments required by Section 4.2 hereof and the First Mortgage Bonds and to perform and observe the other agreements on its part contained herein shall be absolute and unconditional, irrespective of any defense or any rights of set‑off, recoupment or counterclaim it might otherwise have against the Authority, and during the term of this Loan Agreement, the Borrower shall pay all payments required to be made on account of this Loan Agreement as prescribed in Section 4.2, under the First Mortgage Bonds and all other payments required hereunder, free of any deductions and without abatement, diminution or set-off. Until such time as the principal of, premium, if any, and interest on, the Bonds shall have been fully paid, or provision for the payment thereof shall have been made as required by the Indenture, the Borrower (i) will not suspend or discontinue any payments provided for in Section 4.2, or prior to the Release Date, the First Mortgage Bonds; (ii) will perform and observe all of its other covenants contained in this Loan Agreement; and (iii) except as provided in Article VIII hereof, will not terminate this Loan Agreement for any cause, including, without limitation, the occurrence of any act or circumstances that may constitute failure of consideration, destruction of or damage to all or a portion of those facilities or equipment comprising the Projects, commercial frustration of purpose, any change in the tax or other laws of the United States of America or of the State or any political subdivision of either of these, or any failure of the Authority or the Trustee to perform and observe any covenant, whether express or implied, or any duty, liability or obligation arising out of or connected with this Loan Agreement or the Indenture, except to the extent permitted by this Loan Agreement.
Section 4.4. Assignment of Authority’s Rights
. As security for the payment of the Bonds, the Authority will assign to the Trustee the Authority’s rights under this Loan Agreement, including the First Mortgage Bonds and the right to receive Loan Payments hereunder (except the Authority’s Reserved Rights). The Authority hereby directs the Borrower to make the Loan Payments required hereunder directly to the Trustee for deposit as contemplated by the Indenture. The Authority hereby directs the Borrower to make the Purchase Price Payments required hereunder directly to the Trustee or the Tender
Agent as contemplated by the Indenture. The Borrower hereby consents to such assignment and agrees to make payments directly to the Trustee or the Tender Agent, as the case may be, without defense or set‑off by reason of any dispute between the Borrower and the Authority or the Trustee.
Section 4.5. Amounts Remaining in Funds
. It is agreed by the parties hereto that after payment in full of (i) the Bonds, or after provision for such payment shall have been made as provided in the Indenture, (ii) the fees, charges and expenses of the Authority, the Trustee, the Tender Agent and any Paying Agents in accordance with the Indenture, (iii) all other amounts required to be paid under this Loan Agreement and the Indenture, and (iv) if applicable, payment to any Credit Provider of any amounts owed to the Credit Provider under the Reimbursement Agreement with respect to a Letter of Credit, any amounts remaining in any fund held by the Trustee under the Indenture (excepting the Rebate Fund) shall be paid as provided in Section 10.1 of the Indenture. Notwithstanding any other provision of this Loan Agreement or the Indenture, under no circumstances shall proceeds of a draw on a Letter of Credit or remarketing proceeds be paid to the Authority, the Borrower or an affiliate of the Borrower.
Article V
Covenants and Agreements
Section 5.1. Right of Access to the Projects
. The Borrower agrees that during the term of this Loan Agreement the Authority, the Trustee, and the duly authorized agents of either of them shall have the right at all reasonable times during normal business hours to enter upon each site where any part of the Project is located and to examine and inspect the Projects;
provided
that reasonable notice shall be given to the Borrower at least five Business Days prior to such examination or inspection, and such inspection shall not disturb the Borrower’s normal business operations.
Section 5.2. The Borrower’s Maintenance of Its Existence
. The Borrower covenants and agrees that during the term of this Loan Agreement it will maintain its existence as a corporation in good standing in the State, will not dissolve, sell or otherwise dispose of all or substantially all of its assets and will not combine or consolidate with or merge into another entity so that the Borrower is not the resulting or surviving entity (any such sale, disposition, combination or merger shall be referred to hereafter as a
“transaction”
);
provided
that the Borrower may enter into such transaction, if (i) the Borrower causes the proposed surviving, resulting or transferee company to furnish the Authority with a Change of Ownership Information Form then in use by the Authority; (ii) the net worth of the surviving, resulting or transferee company following the merger, consolidation or transfer is equal to or greater than the net worth of the company immediately preceding the merger, consolidation or transfer as verified by the independent auditors of the Borrower; (iii) any litigation or investigations in which the surviving, resulting or transferee company or its principals, officers and directors are involved at the time of such merger, and any court, administrative or other orders to which the surviving resulting or transferee company or its officers and directors are subject, relate to matters arising in the ordinary course of business; (iv) the surviving, resulting or transferee company assumes in writing the obligations of the Borrower under this Loan Agreement, the First Mortgage Bonds and the other Loan Documents; (v) after the merger,
consolidation or transfer, the Projects shall continue to be operated as an authorized project under the Act; (vi) the merger, consolidation or transfer shall not impair the excludability of interest paid on the Bonds from gross income of the Owners thereof for federal income tax purposes or cause a reissuance pursuant to an opinion of Bond Counsel and (vii) the surviving or resulting transferee, person or entity, as the case may be, qualifies to do business in the State. The Borrower agrees, prior to the taking of any of the foregoing proposed actions to deliver to the Authority and the Trustee an Approving Opinion.
If a merger, consolidation, sale or other transfer is effected, as provided in this Section, all provisions of this Section shall continue in full force and effect and no further merger, consolidation, sale or transfer shall be effected except in accordance with the provisions of this Section.
Section 5.3. Records and Financial Statements of Borrower
. The Borrower covenants and agrees at all times to keep, or cause to be kept, proper books of record and account, prepared in accordance with generally accepted accounting principles, in which complete and accurate entries shall be made of all transactions of or in relation to the business, properties and operations of the Borrower relating to the Projects. Such books of record and account shall be available for inspection by the Authority or the Trustee during normal business hours and under reasonable circumstances.
Section 5.4. Insurance Required
. The Borrower agrees to insure the Projects in such amounts an in such manner and against such loss, damage and liability, as provided in the Mortgage Indenture. The Borrower shall, at all times during the term hereof maintain:
(a) general comprehensive liability insurance against claims for bodily injury, death or property damage occurring on, in or about the Borrower’s facilities (such coverage to include provisions waiving subrogation against the Authority and the Trustee) in amounts not less than $1,000,000 with respect to bodily injury to any one person, $3,000,000 with respect to bodily injury to two or more persons in any one accident and $1,000,000, with respect to property damage resulting from any one occurrence naming the Authority and the Trustee as additional insureds; and
(b) liability insurance with respect to the Borrower’s facilities under the workers' compensation laws of the State; provided, however, that the insurance so required may be provided by blanket policies now or hereafter maintained by the Borrower.
(c) all policies shall contain a thirty (30) day notice period of any cancellation.
Notwithstanding the foregoing, the insurance requirements set forth in this Section 5.4 may be satisfied by different coverages meeting the intent of such requirements, reasonably acceptable to the
Authority, including but not limited to excess liability policies placed with industry mutual insurers having appropriate excess and surplus lines and regulatory authorizations and inclusive of policies with large self-insured retentions.
Section 5.5. Taxes and Other Charges
.
The Borrower agrees to pay and discharge or cause to be paid and discharged all taxes, payments in lieu of taxes, assessments and governmental charges or levies imposed upon it or in respect of any of its property and assets as provided in, and except as permitted under, the Mortgage Indenture. Notwithstanding the foregoing, the Borrower may, at its expense, in good faith contest any such taxes, assessments and other charges and, in the event of any such contest, may permit such taxes, assessments and other charges so contested to remain unpaid during the period of such contest and any appeal therefrom;
provided further
that during such period enforcement of such contested item is effectively stayed, unless by nonpayment of any such items the lien of the Indenture as to the amounts payable under this Loan Agreement will be materially endangered, in which event the Borrower agrees to promptly pay and cause to be satisfied and discharged all such unpaid items. The Authority agrees to reasonably cooperate with the Borrower in any such contest.
Section 5.6. Maintenance of the Projects
. The Borrower agrees that at all times during the term of this Loan Agreement, it will, at its own expense, in accordance with this Loan Agreement and the Mortgage Indenture, preserve and protect the Projects in good repair, working order and safe condition, and make or cause to be made all necessary and proper repairs, replacements, renewals, betterments and improvements thereto.
Section 5.7. Qualification in New Jersey
. The Borrower agrees that throughout the term of this Loan Agreement it or any successor or assignee as permitted by Section 5.2, will be qualified to do business in the State.
Section 5.8. Tax Covenant
. (a) The Borrower shall at all times do and perform all acts and things necessary or desirable in order to assure that interest paid on the Bonds shall, for the purposes of Federal income taxation, be excludable from the gross income of the recipients thereof and exempt from such taxation. The Borrower shall direct all investments of the Gross Proceeds of the Bonds. In addition, any and all actions to be undertaken by the Borrower or by any other Person as to which the Authority or the Trustee must, pursuant to the terms hereof, consent or approve in advance, shall be deemed to be the actions of the Borrower or such other Person (and not the actions of the Authority or the Trustee).
(b) The Borrower shall not permit at any time or times any of the Gross Proceeds from the sale of the Bonds or other of its funds to be used, directly or indirectly, to acquire any Investment Property (within the meaning of Section 148(b)(2) of the Code) the acquisition of which would cause the Bonds to be "arbitrage bonds" for the purposes of Section 148 of the Code. The Borrower shall utilize the Bond Proceeds from the sale of the Bonds so as to satisfy the reasonable expectations of the Borrower set forth in the Tax Agreement of the Borrower furnished to Bond Counsel and the Authority.
(c) The Borrower shall use the Net Proceeds of the Bonds to refund the Refunded Bonds in the manner and as specifically set forth in the Tax Agreement furnished to Bond Counsel and the Authority.The Borrower shall continue to maintain the eligibility of the Borrower’s facilities under Section 142(a)(8) of the Code.
(d) The Borrower will provide a written certification to the Authority and the Trustee indicating whether the Borrower complied with the six-month or eighteen month exceptions to the arbitrage rebate requirement set forth in Section 148(f)(4)(B) of the Code as are set forth in paragraph (o) below.
(e) Unless the Borrower has complied with the six-month rebate exception or the eighteen month exception to the rebate requirement in Section 148(f)(4)(B) of the Code with respect to the Bonds, as are set forth in paragraph (o) below, the Borrower will retain (i) Bond Counsel, (ii) any nationally recognized firm of certified public accountants, (iii) any reputable firm which offers to the tax-exempt bond industry rebate calculation services and holds itself out as having expertise in that area, or (iv) a Person or firm approved by Bond Counsel, in order to calculate the amount of rebate, if any, due to the United States pursuant to Section 148(f) of the Code, as set forth in paragraph (f) below (the "Rebate Expert"), on or no later than 30 days before the Initial Rebate Computation Date (as defined below) and on each rebate Computation Date thereafter, (A) to compute the Rebate Amount with respect to the Bonds for the period ending on such rebate Computation Date, (B) to deliver an opinion to the Authority and Trustee concerning its conclusions with respect to the amount (if any) of such Rebate Amount together with a written report providing a summary of the calculations relating thereto and (C) to deliver an opinion to the Authority and Trustee that all of the Gross Proceeds of the Bonds (within the meaning of Section 148(f) of the Code), other than Gross Proceeds of the Bonds on deposit in a Bona Fide Debt Service Fund, have been expended on or prior to the initial rebate Computation Date. The Computation Date shall include (i) the final maturity of the Bonds, (ii) if the Bonds are redeemed prior to maturity, the date on which the Bonds are redeemed, (iii) the first day of the fifth anniversary of the date of issuance of the Bonds (the "Initial Rebate Computation Date") and each fifth anniversary thereafter, and (iv) any other date that may be required by the Code.
(f) The Borrower shall direct the Trustee in writing to rebate the Rebate Amount to the United States on behalf of the Authority. The Rebate Amount as of any Computation Date is the excess of the Future Value of all receipts on Nonpurpose Investments ("Nonpurpose Receipts") over the Future Value of all payments on Nonpurpose Investments ("Nonpurpose Payments"). To the extent amounts received from Nonpurpose Investments are reinvested, these amounts may be netted against each other and not taken into account in the computation of the Rebate Amount. Nonpurpose Receipts and Nonpurpose Payments shall be determined as described below.
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(1)
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Nonpurpose Payments
. Nonpurpose Payments include
actual payments
(amounts of Gross Proceeds actually or constructively paid to acquire a Nonpurpose Investment including Qualified Administrative Costs);
"allocation" payments
(for a Nonpurpose Investment that is allocated to the Bonds after already having been acquired by the Borrower (
e.g.
, sinking fund proceeds), an amount equal to the Value of the Investment on the allocation date);
Computation Date payments
(for a Nonpurpose Investment allocated to the Bonds at the end of the preceding Computation Period, the Value of the Investment at the beginning of the Computation
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Period);
Yield Reduction Payments
, if any; and
the Computation Date credit
equal to $1,000.
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(2)
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Nonpurpose Receipts
. Nonpurpose Receipts include
actual receipts
(amounts actually or constructively received with respect to a Nonpurpose Investment, such as earnings and return of principal, reduced by Qualified Administrative Costs);
"deallocation" receipts
(for a Nonpurpose Investment that ceases to be allocated to the Bonds or subject to rebate, the Value of the Investment on the "deallocation" date);
Computation Date receipts
(the Value of any Nonpurpose Investment held at the end of any Computation Period); and
rebate receipts
(any recovery of an overpayment of rebate).
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Investments of amounts held in a
Bona Fide Debt Service Fund
for the Bonds will be excepted from the rebate requirement but only if the gross earnings on such fund for such Bond Year do not exceed $100,000.
(g) For each investment of Gross Proceeds in a Non‑Purpose Investment, the Borrower shall direct the Trustee to record, without limitation, the following information: purchase date, purchase price, face amount, stated interest rate, any accrued interest due on its purchase date, disposition date, disposition price and any accrued interest due on the disposition date. The Yield to maturity for an investment presently means that discount rate, based on a compounding frequency the same as the Bonds (or such other compounding permitted by the Code), which when used to determine the present worth, on the purchase date of such investment or the date on which the investment becomes a Non‑Purpose Investment, whichever is later, of all payments of principal and interest on such investment gives an amount equal to the fair market value of such investment including accrued interest due on such date.
(h) On each Computation Date, if such Rebate Amount payable exceeds the amount then on deposit in the Rebate Account, the Borrower shall within ten (10) days of the receipt of the report furnished by the Rebate Expert pursuant to paragraph (e) of this Section, pay to the Trustee, the amount necessary to make up such deficiency and direct the Trustee to pay the same to the United States within sixty (60) days of the Computation Date. The Borrower shall, in a timely fashion, give all written notices and directions to the Trustee as are called for under Section 5.6 of the Indenture for the payment of the Rebate Amount. Any sums remaining in the Rebate Account following such payments shall be returned to the Borrower. When due, the Authority shall have the right, but shall not be required, to make such payment to the Trustee on behalf of the Borrower. Any amount advanced by the Authority pursuant to this paragraph (h) shall be added to the moneys owing by the Borrower under this Loan Agreement and shall be payable on demand with interest at the rate of twelve percent (12%) per annum.
(i) The rebate shall be paid in installments which shall be made at least once every fifth Bond Year. The first such installment shall be due to the United States on behalf of the Authority not later than sixty (60) days after the end of the fifth (5th) Rebate Year and shall be in an amount which ensures that the Rebate Amount due under the Code with respect to the Bonds is paid. Each subsequent
payment shall be made not later than five (5) years after the date the preceding payment was due. Within sixty (60) days after the retirement of the Bonds at final maturity or upon earlier redemption, the Borrower shall direct the Trustee to pay to the United States on behalf of the Authority the aggregate Rebate Amount due under the Code with respect to the Bonds not theretofore paid.
(j) Each payment of the Rebate Amount to be paid to the United States shall be filed with the Internal Revenue Service Center, Ogden, Utah 84201, or such other address that may be specified by the Internal Revenue Service. Each payment shall be accompanied by Form 8038-T (or such other form required by the Internal Revenue Service) and a statement identifying the Authority, the date of the issue, the CUSIP number for the Bond with the longest maturity and a copy of the applicable Form 8038.
(k) The Borrower acknowledges that the Authority shall have the right at any time and in the sole and absolute discretion of the Authority to obtain from the Borrower and the Trustee the information necessary to determine the Rebate Amount required to be paid to the United States pursuant to Section 148(f) of the Code. Additionally, the Authority may, with reasonable cause, (i) review or cause to be reviewed any determination of the amount to be paid to the United States made by or on behalf of the Borrower and (ii) make or retain a Rebate Expert to make the determination of the amount to be paid to the United States. The Borrower hereby agrees to be bound by any such review or determination, absent manifest error, to pay the costs of such review, including without limitation the reasonable fees and expenses of counsel or a Rebate Expert retained by the Authority, and to pay to the Trustee any additional amounts for deposit in the Rebate Account required as the result of any such review or determination.
(l) Except as may be permitted pursuant to Section 148(c) of the Code (relating to certain temporary periods for investment), at no time during the term of the Bonds shall the amount invested by the Borrower in Non‑Purpose Investments with a Yield higher than the Yield on the Bonds exceed 10% of the then outstanding principal amount of the Bonds.
(m) Notwithstanding any provision of this Section to the contrary, the Borrower shall be liable, and shall indemnify and hold the Authority and the Trustee harmless against any liability and judgments, for payments due to the United States pursuant to Section 148(f) of the Code. Further, the Borrower specifically agrees that neither the Authority nor the Trustee shall be held liable, or in any way responsible, and the Borrower shall indemnify and hold harmless the Trustee and the Authority against any liability and judgments, for any mistake or error in the filing of the payment or the determination of the Rebate Amount due to the United States or for any consequences resulting from any such mistake or error. The provisions of this paragraph shall survive termination of this Agreement. In the event of a conflict between the provisions of this Agreement and the Code, the provisions of the Code shall control.
(n) The Authority, the Trustee and the Borrower acknowledge that the provisions of this Section 5.8 are intended to comply with Section 148(f) of the Code and the regulations promulgated thereunder and if as a result of a change in such Section of the Code or the promulgated regulations thereunder or in the interpretation thereof, a change in this Section 5.8 shall be permitted or necessary to assure continued compliance with Section 148(f) of the Code and the promulgated regulations thereunder,
then with written notice to the Trustee, the Authority and the Borrower shall be empowered to amend this Section 5.8 and the Authority may require, by written notice to the Borrower and the Trustee, the Borrower to amend this Section 5.8 to the extent necessary or desirable to assure compliance with the provisions of Section 148 of the Code and the regulations promulgated thereunder; provided that either the Authority or the Trustee shall require, prior to any such amendment becoming effective, at the sole cost and expense of the Borrower, an opinion of Bond Counsel satisfactory to the Authority to the effect that either (i) such amendment is required to maintain the exclusion from gross income under Section 103 of the Code of interest paid and payable on the Bonds or (ii) such amendment shall not adversely affect the exclusion from gross income under Section 103 of the Code of the interest paid or payable on the Bonds.
(o) (i) The obligation to pay any Rebate Amount with respect to the Bonds shall be treated as satisfied if the following requirements are met (the "six month exception"):
(A) Gross Proceeds of the Bonds (as modified below) are expended by no later than the date which is six (6) months after the Issue Date; and
(B) the rebate requirement is met for amounts not required to be spent within the six (6) month period (excluding earnings on a Bona Fide Debt Service Fund).
The requirement described above will be treated as satisfied if no more than the lesser of 5% of the Issue Price of the Bonds or $100,000 are unexpended at the end of the six (6) month period after the Issue Date and such amount is expended no later than the date which is one year after the Issue Date.
(ii) For purposes of subsection (i), Gross Proceeds do not include (A) amounts held in a Bona Fide Debt Service Fund, (B) amounts held in a reasonably required reserve or replacement fund, (C) amounts that, as of the Issue Date, are not reasonably expected to be Gross Proceeds but that become Gross Proceeds after the end of the 6 month spending period, (D) sales or investment proceeds derived from payments under any purpose investment of the Issue and (E) amounts representing repayments of grants.
(p) The Borrower shall give immediate telephonic notice, promptly confirmed in writing, to the Authority and the Trustee of any Determination of Taxability (as defined in the Indenture) whether the Borrower is on Notice of such Event of Taxability by its own filing of any statement, tax schedule, return or document with the Internal Revenue Service which discloses that an Event of Taxability shall have occurred, by its receipt of any oral or written advice from the Internal Revenue Service that an Event of Taxability shall have occurred, or otherwise.
(q) To the extent that any property is financed by the Bond Proceeds, the cost recovery deduction allowed for such property shall be determined by using the alternative depreciation system determined in accordance with Section 168(g) of the Code.
Section 5.9. Continuing Disclosure
. Pursuant to the federal Securities and Exchange Commission (the
“S.E.C.”
) Rule 15c2‑12 promulgated under the Securities Exchange Act of 1934, as amended, the Borrower hereby covenants and agrees to comply, or to cause compliance with, when and if applicable, the continuing disclosure requirements promulgated thereunder, as such rule may from time to time hereafter be amended or supplemented. In order to comply with such continuing disclosure requirements, the Borrower hereby covenants and agrees to comply, or to cause compliance with, the Continuing Disclosure Agreement. Notwithstanding any other provision of this Loan Agreement, failure of the Borrower to comply with this Section 5.9 or the Continuing Disclosure Agreement shall not be considered a Loan Default Event.
Section 5.10. Assignment by Borrower
. The rights and obligations of the Borrower under this Loan Agreement may be assigned by the Borrower to any person in whole or in part, subject, however, to each of the following conditions:
(a) No assignment other than pursuant to Section 5.2 hereof shall relieve the Borrower from primary liability for any of its obligations hereunder, and in the event of any assignment not pursuant to Section 5.2 hereof the Borrower shall continue to remain primarily liable for the payments specified in Section 4.2 hereof and by the First Mortgage Bonds, and for performance and observance of the other agreements on its part herein provided to be performed and observed by it.
(b) Any assignment from the Borrower other than pursuant to Section 5.2 hereof shall retain for the Borrower such rights and interests as will permit it to perform its obligations under this Loan Agreement, and any assignee from the Borrower shall assume in writing the obligations of the Borrower hereunder to the extent of the interest assigned.
(c) Within the earlier of (1) 30 days after delivery thereof, (2) the next Bond Payment Date or (3) the next Purchase Date, the Borrower shall furnish or cause to be furnished to the Authority, the Credit Provider, if any, and the Trustee a true and complete copy of each such assignment together with an instrument of assumption.
(d) The Borrower shall furnish to the Authority, the Credit Provider, if any, and the Trustee an Approving Opinion addressed to the Authority and the Trustee prior to the effective date of any assignment pursuant to this Section.
Section 5.11. Cooperation in Filings and Other Matters
. (a) The Borrower covenants that it will, at its expense, take all steps as are reasonably necessary to provide that all financing statements, continuation statements, notices and other instruments required by applicable law shall be recorded or filed or re‑recorded or re‑filed in such manner and in such places required by law in order fully to preserve and protect the rights of the Trustee in the granting by the Authority of certain rights of the Authority, pursuant to the Indenture, under this Loan Agreement and the First Mortgage Bonds.
(b) The Borrower and the Authority shall execute and deliver all instruments and shall furnish all information and evidence deemed necessary by the Borrower or advisable by its counsel and the Borrower shall file and re‑file and record and re‑record or cause to be filed and re‑filed and recorded
and re‑recorded all instruments required to be filed and re‑filed and recorded or re‑recorded pursuant to the opinion of its Counsel or Counsel employed by the Authority or the Trustee to perfect all security interests created pursuant to the terms of this Loan Agreement and the Indenture and shall continue or cause to be continued the liens of such instruments for so long as the Bonds shall be Outstanding, except as otherwise required by this Agreement. The Authority shall have no responsibility for such filings or refilings whatsoever, other than executing and delivering the documents requested by the Borrower.
Section 5.12. Further Assurances and Corrective Instruments
. Subject to the provisions of the Indenture, the Authority and the Borrower each agrees that it will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements and amendments hereto and such further instruments as may reasonably be required for carrying out the intention or facilitating the performance of this Loan Agreement. All such supplements, amendments and further instruments shall require the approval of the Authority.
Section 5.13.
Letter of Credit
. (a) The Borrower may, at its option, provide for the delivery to the Trustee of a Letter of Credit or an Alternate Letter of Credit on (1) any Conversion Date, (2) any Business Day during a Term Interest Rate Period on which the Bonds are otherwise subject to optional redemption, or (3) any Business Day during a Variable Interest Rate Period. A Letter of Credit shall be an irrevocable letter of credit or other irrevocable credit facility (including, if applicable, a confirming letter of credit), issued by a Credit Provider, the terms of which shall be acceptable to the Trustee and shall otherwise comply with the requirements of the Indenture;
provided,
that the expiration date of such Letter of Credit shall be a date not earlier than one year from its date of issuance or, if a Term Interest Rate will be in effect, the first date on which the Bonds are subject to optional redemption, subject to earlier termination upon payment of the Bonds in full or provision for such payment in accordance with Article X of the Indenture. On or prior to the date of the delivery of a Letter of Credit to the Trustee, the Borrower shall cause to be furnished to the Trustee (i) an Approving Opinion addressed to the Trustee with respect to the delivery of such Letter of Credit, and (ii) an opinion of counsel to the Credit Provider issuing such Letter of Credit to the effect that such Letter of Credit is enforceable in accordance with its terms (except to the extent that the enforceability thereof may be limited by bankruptcy, reorganization or similar laws limiting the enforceability of creditors’ rights generally and except that no opinion need be expressed as to the availability of any discretionary equitable remedies).
(b) The Borrower shall provide to the Trustee (with a copy to the Authority and the Remarketing Agent) a notice at least 15 days prior to the effective date of any Letter of Credit or Alternate Letter of Credit (and in no event later than 35 days prior to the expiration of any existing Letter of Credit, if required by the terms of the Indenture) identifying the Letter of Credit or Alternate Letter of Credit, if any, and the rating which will apply to the Bonds after the effective date.
Section 5.14. Compliance with Indenture
. The Borrower recognizes that the Indenture contains provisions that, among other things, relate to matters affecting the administration and investment of certain funds. The Borrower has reviewed the Indenture and hereby assents to all provisions of the Indenture. The Borrower shall take such action as may be reasonably necessary in order to enable the Authority and
the Trustee to comply with all requirements and to fulfill all covenants of the Indenture to the extent that compliance with such requirements and fulfillment of such covenants are dependent upon any observance or performance required of the Borrower by the Indenture or this Loan Agreement.
Section 5.15. Remarketing Agent
. At any time the Bonds are in a Variable Rate Period or a Term Rate Period of less than one year, the Borrower will retain a Remarketing Agent meeting the requirements set forth in the Indenture to perform the duties assigned to the Remarketing Agent therein.
Article VI
Special Covenants and Agreements with the authority
Section 6.1. Additional Information
. Until payment of the Bonds in full shall have occurred the Borrower shall promptly, from time to time, deliver to the Trustee and upon the request of the Authority, to the Authority, such information regarding the operations, business affairs and financial condition of the Borrower as the Trustee (or the Authority) may reasonably request. The Trustee is hereby authorized to deliver a copy of any such financial information delivered hereunder, or otherwise obtained by the Trustee, to any Bondholder or prospective Bondholder, to any regulatory authority having jurisdiction over the Trustee and to any other Person as may be required by law. The Authority and the Trustee are authorized to provide information concerning the outstanding principal amount and payment history of, and other information pertaining to, the Bonds or the First Mortgage Bonds to any agency or regulatory authority of the State requesting such information. Upon the request by a Bondholder of any such financial information delivered hereunder, or otherwise obtained by the Trustee, the Trustee shall send such information to all the Bondholders.
Section 6.2. Obligation to Pay Taxes
. The Borrower will not use the financing under this Agreement or the issuance of the Bonds by the Authority as a basis for contesting any assessment or levy of any tax and, if any administrative body or court of competent jurisdiction shall hold for any reason that the Project facilities are exempt from taxation by reason of the financing under this Agreement or the issuance of the Bonds by the Authority or other Authority action in respect thereto, the Borrower covenants to make payments in lieu of all such taxes in an amount equal to such taxes, and, if applicable, interest and penalties.
Section 6.3. Use of Projects
. The Borrower shall use or cause the Projects to be used as an authorized project for a purpose and use as provided for under the Act and for the uses set forth in the Application to the Authority until the Bonds are deemed paid. The Borrower will operate the Projects
substantially in the form represented in the Application and will not materially alter the operation of the Projects without the prior written consent of the Authority.
Section 6.4. Change in Location
. The Borrower shall not relocate the Projects or any part thereof out of the State. The Borrower shall not relocate the Projects within the State without the prior
written consent of an Authorized Authority Representative and an opinion of Bond Counsel that the relocation will not affect the tax-exempt status of interest on the Bonds.
Section 6.5. Additional Reporting Requirements
. (i) On each anniversary hereof, the Borrower shall furnish to the Authority the following:
(a) a certification indicating whether or not the Borrower is aware of any condition, event or act which constitutes an Event of Default, or which would constitute an Event of Default with the giving of notice or passage of time, or both, under any of the Loan Documents;
(b) a written description of the present use of the Projects and a description of any anticipated material change in the use of the Projects or in the number of employees employed at the Projects,
(c) a report from every entity that leases or occupies space at the Project locations indicating the number of persons the entity employs at the Project locations. and
(d) a certification that the insurance requirements set forth in Section 5.4 are being met and a copy of insurance certificates evidencing that such insurance is in force and effect.
(ii) Upon the request of the Authority, the Borrower shall furnish to the Authority such financial information as the Authority may reasonably request.
Section 6.6. Observe Laws
. The Borrower shall observe all applicable laws, regulations and other valid requirements of any regulatory authority with respect to its operations at the Project facilities or elsewhere and any violation of laws, regulations or other valid requirement shall, in the discretion of the Authority, be deemed an Event of Default.
Section 6.7. Maintain Employees
. The Borrower shall maintain the number of employees employed by the Borrower as set forth in the Application to the Authority.
Section 6.8. Approval of Tenants by the Authority
. Prior to leasing, subleasing or consenting to the subleasing or assigning of any lease of all or any part of the Projects, the Borrower shall cause to be furnished to the Authority, a Project Occupant Information Form then in use by the Authority at such time, completed and executed by the proposed tenant and a copy of the proposed lease. In any event, the Borrower shall not permit any such leasing, subleasing or assigning of leases that would impair the excludability of interest paid on any tax-exempt Bonds from the gross income of the holders thereof for purposes of federal income taxation, or that would impair the ability of the Borrower to operate the Projects or cause the Projects not to be operated as an authorized project under the Act.
Section 6.9. Brokerage Fee
. The Authority shall not be liable to the Borrower for any brokerage fee, finder’s fee, or loan servicing fee and the Borrower shall hold the Authority harmless from any such fees or claims.
Section 6.10. Affirmative Action and Prevailing Wage Regulations
. As determined by the Authority, the Borrower shall comply with the Authority's Affirmative Action and Prevailing Wage Rate Regulations and to that end copies of the Affirmation Action Regulations are available on the Authority's Internet web page at: www.njeda.com/affirmativeaction or contacting: New Jersey Economic Development Authority - Internal Process Management - Gateway One, Suite 900, Newark, New Jersey 07102 Phone (973) 648-4130 or e-mail: affirmativeaction@njeda.com.
Article VII
Loan Default Events and Remedies
Section 7.1. Loan Default Events
. Any one of the following which occurs and continues shall constitute a Loan Default Event:
(a) Failure of the Borrower to make any Loan Payment required by Section 4.2(a) hereof or under the First Mortgage Bonds when due; or
(b) Failure of the Borrower to make any Purchase Price Payment required by Section 4.2(b) hereof when due; or
(c) If any representation or warranty made herein or in any other Loan Document or in any material report, certificate, financial statement or other instrument furnished in connection with this Loan Agreement shall prove to be false or misleading in any material respect when made; or
(d) Failure of the Borrower to observe and perform any covenant, condition or agreement on its part required to be observed or performed by this Loan Agreement (other than (i) agreements contained in Section 5.9 hereof, or (ii) as provided in clause (a) or (b) above), which continues for a period of 30 days after written notice delivered by the Authority or the Trustee to the Borrower and the Credit Provider, if any, which notice shall specify such failure and request that it be remedied, unless the Authority and the Trustee shall agree in writing to an extension of such time;
provided, however,
that if the failure stated in the notice cannot be corrected within such period, the Authority and the Trustee will not unreasonably withhold their consent to an extension of such time if corrective action is instituted within such period and diligently pursued in good faith until the default is corrected; or
(e) The dissolution or liquidation of the Borrower or the filing by the Borrower of a voluntary petition in bankruptcy, or failure by the Borrower promptly to cause to be lifted any execution, garnishment or attachment of such consequence as will impair the Borrower’s ability
to carry on its obligations hereunder, or the entry of any order or decree granting relief in any involuntary case commenced against the Borrower under any present or future federal bankruptcy act or any similar federal or state law, or a petition for such an order or decree shall be filed in any court and such petition shall not be discharged or denied within 90 days after the filing thereof, or if the Borrower shall admit in writing its inability to pay its debts generally as they become due, or a receiver, trustee or liquidator of the Borrower shall be appointed in any proceeding brought against the Borrower and shall not be discharged within 90 days after such appointment or if the Borrower shall consent to or acquiesce in such appointment, or assignment by the Borrower for the benefit of its creditors, or the entry by the Borrower into an agreement of composition with its creditors, or a bankruptcy, insolvency or similar proceeding shall be otherwise initiated by or against the Borrower under any applicable bankruptcy, reorganization or analogous law as now or hereafter in effect and if initiated against the Borrower shall remain undismissed (subject to no further appeal) for a period of 90 days;
provided,
the term “dissolution or liquidation of the Borrower,” as used in this subsection, shall not be construed to include the cessation of the existence of the Borrower resulting either from a merger or consolidation of the Borrower into or with another entity or a dissolution or liquidation of the Borrower following a transfer of all or substantially all of its assets as an entirety or under the conditions permitting such actions contained in Section 5.2 hereof; or
(f) the occurrence of an "event of default" under the Mortgage Indenture other than an event of default resulting from a default in the payment of any installment of the principal or interest on the First Mortgage Bonds on the date when due, and the acceleration of the First Mortgage Bonds as a result of such "event of default"; or
(g) The existence of an “Event of Default” (as defined therein) under the Indenture.
Section 7.2. Remedies on Default
. Subject to Section 7.1 hereof, whenever any Loan Default Event shall have occurred and shall be continuing,
(a) The Trustee, by written notice to the Authority, the Borrower and the Credit Provider, if any, shall declare the unpaid balance of the loan payable under Section 4.2(a) of this Loan Agreement and under the First Mortgage Bonds to be due and payable immediately,
provided
that concurrently with or prior to such notice the unpaid principal amount of the Bonds shall have been declared to be due and payable under the Indenture. Upon any such declaration such amount shall become and shall be immediately due and payable as determined in accordance with Section 7.1 of the Indenture.
(b) The Trustee may have access to and may inspect, examine and make copies of the books and records and any and all accounts, data and federal income tax and other tax returns of the Borrower.
(c) The Authority or the Trustee may take whatever action at law or in equity as may be necessary or desirable to collect the payments and other amounts then due and thereafter to
become due or to enforce performance and observance of any obligation, agreement or covenant of the Borrower under this Loan Agreement.
(d) If applicable, the Trustee shall immediately draw upon any Letter of Credit, if permitted by its terms and required by the terms of the Indenture, and apply the amount so drawn in accordance with the Indenture and may exercise any remedy available to it thereunder.
(e) The First Mortgage Bonds may be redeemed, together with interest then due thereon, by delivery of written notice of the Authority's or the Trustee's exercise of such option to the Trustee and the Borrower, such payments to be immediately due and payable, subject to the terms and conditions of the Mortgage Indenture, or the First Mortgage Bonds may be sold in conformity with the provisions of the New Jersey Uniform Commercial Code (provided the same is in compliance with all securities laws);
In case the Trustee, the Credit Provider, if any, or the Authority shall have proceeded to enforce its rights under this Loan Agreement and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Trustee, the Credit Provider, if any, or the Authority, then, and in every such case, the Borrower, the Trustee, the Credit Provider, if any, and the Authority shall be restored respectively to their several positions and rights hereunder, and all rights, remedies and powers of the Borrower, the Trustee, the Credit Provider, if any, and the Authority shall continue as though no such action had been taken.
The Borrower covenants that, in case a Loan Default Event shall occur with respect to the payment of any Loan Payment payable under Section 4.2(a) hereof and under the First Mortgage Bonds, then, upon demand of the Trustee, the Borrower will pay to the Trustee the whole amount that then shall have become due and payable under said Section 4.2(a) and under the First Mortgage Bonds, with interest on the amount then overdue at the rate then borne by the Bonds on the day prior to the occurrence of such default.
In case the Borrower shall fail forthwith to pay such amounts upon such demand, the Trustee shall be entitled and empowered to institute any action or proceeding at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceeding to judgment or final decree, and may enforce any such judgment or final decree against the Borrower and collect in the manner provided by law the moneys adjudged or decreed to be payable.
In case proceedings shall be pending for the bankruptcy or for the reorganization of the Borrower under the federal bankruptcy laws or any other applicable law, or in case a receiver or trustee shall have been appointed for the property of the Borrower or in the case of any other similar judicial proceedings relative to the Borrower, or the creditors or property of the Borrower, then the Trustee shall be entitled and empowered, by intervention in such proceedings or otherwise, to file and prove a claim or claims for the whole amount owing and unpaid pursuant to this Loan Agreement and, in case of any judicial proceedings, to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee allowed in such judicial proceedings relative to the Borrower,
its creditors or its property, and to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute such amounts as provided in the Indenture after the deduction of its reasonable charges and expenses to the extent permitted by the Indenture. Any receiver, assignee or trustee in bankruptcy or reorganization is hereby authorized to make such payments to the Trustee, and to pay to the Trustee and the Authority any amount due each of them for their respective reasonable compensation and expenses, including reasonable expenses and fees of counsel incurred by each of them up to the date of such distribution.
In the event the Trustee incurs expenses or renders services in any proceedings which result from a Loan Default Event under Section 7.1(e) hereof, or from any default which, with the passage of time, would become such Loan Default Event, the expenses so incurred and compensation for services so rendered are intended to constitute expenses of administration under the United States Bankruptcy Code or equivalent law.
Notwithstanding any other provision in this Loan Agreement, without the necessity of obtaining the consent of the holders of the bonds or the Credit Provider, if any: (a) if the Borrower commits a breach, or threatens to commit a breach of the Authority's Reserved Rights, the Authority shall have the right and remedy, without posting bond or other security, to have the applicable provisions of this Loan Agreement specifically enforced by any court having equity jurisdiction, it being acknowledged and agreed that any such breach or threatened breach will cause immediate and irreparable injury to the Authority and that money damages will not provide an adequate remedy therefor; or (b) if a payment default occurs under Section 7.1(a) hereof, the Authority may cause the Borrower's payment obligations under this Loan Agreement and under the First Mortgage Bonds to be accelerated, together with interest then due thereon, by delivery of written notice of the Authority's exercise of such option to the Trustee and the Borrower, such payments to be immediately due and payable.
Section 7.3. Agreement to Pay Attorneys’ Fees and Expenses
. In the event the Borrower should default under any of the provisions of this Loan Agreement and the Authority or the Trustee should employ attorneys or incur other expenses for the collection of the payments due under this Loan Agreement or the enforcement of performance or observance of any obligation or agreement on the part of the Borrower herein contained, the Borrower agrees to pay promptly to the Authority or the Trustee the reasonable fees and expenses of such attorneys and such other reasonable out-of-pocket expenses so incurred by the Authority or the Trustee, whether incurred at trial, on appeal, in bankruptcy proceedings, or otherwise.
Section 7.4. No Remedy Exclusive
. No remedy herein conferred upon or reserved to the Authority or the Trustee is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Loan Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default hereunder shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Authority or the Trustee to exercise any
remedy reserved to it in this Article, it shall not be necessary to give any notice, other than such notice as may be expressly required herein or by applicable law. Such rights and remedies as are given the Authority hereunder shall also extend to the Trustee as the assignee of the Authority.
Section 7.5. No Additional Waiver Implied by One Waiver
. In the event any agreement or covenant contained in this Loan Agreement should be breached by the Borrower and thereafter waived by the Authority, the Credit Provider, if any, or the Trustee, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach hereunder.
Article VIII
Prepayment
Section 8.1. Redemption of Bonds with Prepayment Moneys
. By virtue of the assignment of the rights of the Authority under this Loan Agreement to the Trustee as is provided in Section 4.4 hereof, the Borrower agrees to and shall pay directly to the Trustee any amount permitted or required to be paid by it under this Article VIII. The Indenture provides that the Trustee shall use the moneys so paid to it by the Borrower to redeem the Bonds on the date set for such redemption pursuant to Section 8.5 hereof or to reimburse any Credit Provider for any draw under the Letter of Credit therefor. The Authority shall call Bonds for redemption as required by Article IV of the Indenture or as requested by the Borrower pursuant to the Indenture or this Loan Agreement.
Section 8.2. Options to Prepay Installments
. The Borrower shall have the option to prepay the Loan Payments payable under Section 4.2(a) hereof by paying to the Trustee, for deposit in the Bond Fund, the amount set forth in Section 8.4 hereof and to cause all or any part of the Bonds to be redeemed at the times and at the prices set forth in Section 4.1(B) of the Indenture if the conditions under said Section 4.1(B) are met and at the times and at the prices set forth in Sections 4.1(C), 4.1(D) or 4.1(E) of the Indenture, as the case may be. Prior to the Release Date, the Borrower shall redeem the First Mortgage Bonds in connection with the exercise of its option to prepay the Loan Payments.
Section 8.3. Mandatory Prepayment
. If a mandatory redemption of the Bonds is required by Section 4.1(A) or Section 4.1(E) of the Indenture, the Borrower shall have and hereby accepts the obligation to prepay the Loan Payments by paying to the Trustee, for deposit in the Bond Fund, the amount set forth in Section 8.4 hereof, to be used to redeem all or a part of the Outstanding Bonds.
Section 8.4. Amount of Prepayment
. In the case of a redemption of the Outstanding Bonds in full, the amount to be paid shall be a sum sufficient, together with other funds and the yield on any securities deposited with the Trustee and available for such purpose, to pay (1) the principal of all Bonds Outstanding on the redemption date specified in the notice of redemption, plus interest accrued and to accrue to the payment or redemption date of the Bonds, plus premium, if any, pursuant to the Indenture, (2) all reasonable and necessary fees and expenses of the Authority (including, without limitation, reasonable legal fees and expenses), the Trustee and any Paying Agent accrued and to accrue through
final payment of the Bonds and (3) all other liabilities of the Borrower accrued and to accrue under this Loan Agreement. In the case of redemption of the Outstanding Bonds in part, the amount payable shall be a sum sufficient, together with other funds deposited with the Trustee and available for such purpose, to pay the principal amount of and premium, if any, and accrued interest on the Bonds to be redeemed, as provided in the Indenture, and to pay expenses of redemption of such Bonds.
Section 8.5. Notice of Prepayment
. To exercise an option granted in or to perform an obligation required by this Article VIII, the Borrower shall give written notice at least 15 days prior to the last day by which the Trustee is permitted to give notice of redemption pursuant to Section 4.3 of the Indenture, to the Authority, the Credit Provider, if any, the Remarketing Agent and the Trustee specifying the amount to be prepaid and the date upon which any prepayment will be made. If the Borrower fails to give such notice of a prepayment in connection with a mandatory redemption under this Loan Agreement, such notice may be given by the Authority, by the Trustee or by any Holder or Holders of 10% or more in aggregate principal amount of the Bonds Outstanding. The Authority and the Trustee, at the written request of the Borrower or any such Holder, shall forthwith take all steps necessary under the applicable provisions of the Indenture (except that the Authority shall not be required to make payment of any money required for such redemption) to effect redemption of all or part of the Bonds then Outstanding, as the case may be, on the earliest practicable date thereafter on which such redemption may be made under applicable provisions of the Indenture. The Authority hereby appoints the Borrower to give all notices and make all requests to the Trustee with respect to the application of funds paid by the Borrower as prepayments, including notices of optional redemption of the Bonds in conformity with Article IV of the Indenture.
Article IX
Non-Liability of Authority; Expenses; Indemnification
Section 9.1. Non-liability of Authority
. The obligations of the Authority with respect to the Bonds and under this Loan Agreement are special and limited obligations of the Authority, payable solely out of the revenues and income derived under this Loan Agreement and as otherwise provided under this Loan Agreement and the Indenture. The obligations of the Authority hereunder shall not be deemed to constitute an indebtedness or an obligation of the Authority, the State or any political subdivision thereof within the purview of any constitutional limitation or statutory provision, or a charge against the faith and credit or general taxing powers, if any, of any of them. The Authority does not have the authority to levy taxes for any purposes whatsoever. Neither the Authority nor any member, officer, employee or agent of the Authority nor any person executing the Bonds shall be liable personally for the Bonds or be subject to any personal liability or accountability by reason of the issuance of the Bonds.
The Borrower hereby acknowledges that the Authority’s sole source of moneys to repay the Bonds will be provided by payments made by the Borrower to the Trustee pursuant to this Loan Agreement, together with investment income on certain funds and accounts held by the Trustee under the Indenture, and hereby agrees that if the payments to be made hereunder shall ever prove insufficient to pay all principal or Purchase Price and interest on the Bonds as the same shall become due (whether by maturity,
redemption, acceleration or otherwise), then upon notice from the Trustee, the Borrower shall pay such amounts as are required from time to time to prevent any deficiency or default in the payment of such principal or Purchase Price or interest, including, but not limited to, any deficiency caused by acts, omissions, nonfeasance or malfeasance on the part of the Trustee, the Borrower, the Authority or any third party, subject to any right of reimbursement from the Trustee, the Authority or any such third party, as the case may be, therefor but solely, in the case of the Authority, from the Revenues, other than with respect to any deficiency caused by the willful misconduct of the Authority.
Section 9.2. Expenses and Fees
. All fees and expenses in connection with the preparation, execution, delivery, recording and filing of this Loan Agreement, the First Mortgage Bonds and the other Loan Documents and in connection with the preparation, issuance and delivery of the Bonds, the Authority's fees, the fees and expenses of Wolff & Samson PC, the fees and expenses of the Trustee, the fees and expenses of Trustee's counsel and the fees and expenses of counsel to the Underwriter shall be paid directly by the Borrower. The Borrower shall also pay throughout the term of the Bonds the Authority's fees and expenses and the Trustee's annual and special fees and expenses under the Indenture, the Loan Agreement, the First Mortgage Bonds and the other Loan Documents, including, but not limited to, reasonable attorney's fees and all costs of issuing, collecting payment on and redeeming the Bonds thereunder, and any costs and expenses of any Bondholder (or beneficial owner) in connection with any approval, consent or waiver under, or modification of, any such document.
Section 9.3. Indemnification
. The Borrower agrees, whether or not the transactions contemplated by this Agreement and the Indenture shall be consummated:
(a) to pay, and save the Authority and the Trustee harmless against liability for the payment of, all out-of-pocket expenses arising in connection with said contemplated transactions, including the reasonable fees and expenses of the Authority's Counsel and the Trustee's Counsel; and
(b) to protect, indemnify and save the Authority, the Trustee, the State, the Paying Agent and the Underwriter, the any person who "controls" the Authority, the Trustee, the State, the Paying Agent and the Underwriter (within the meaning of Section 15 of the Securities Act of 1933, as amended or Section 20 Exchange Act of 1934, as amended) and members, officers, directors, officials, employees, agents and attorneys of the Authority, the State, the Trustee, the Paying Agent and the Underwriter (collectively, the "Indemnified Parties") harmless from and against all liabilities, losses, damages, costs, expenses, (including reasonable attorneys' fees), taxes, causes of action, suits, claims, demands and judgments of any nature or form, (including all costs, expenses and reasonable counsel fees incurred in investigating or defending such claim) by or on behalf of any person, arising in any manner from the transactions of which this Agreement is a part or arising in any manner in connection with the Projects or the refinancing of the Projects including, without limiting the generality of the foregoing, caused by, relating to, arising out of, resulting from, or in any way connected with (1) the condition, use, possession, conduct, management, planning, design, acquisition, construction, installation, financing or sale of the Projects or any part thereof, including the obligation to pay rebate to the Federal government; or (2) any
untrue statement of a material fact contained in information submitted or to be submitted by the Borrower with respect to the transactions contemplated hereby; or (3) any omission of a material fact necessary to be stated therein in order to make such statement not misleading or incomplete; or (4) any breach or default by the Borrower of or in any of its obligations hereunder, under the Indenture or any other Loan Document; or (5) the acceptance, administration or performance of any of the duties of any said Indemnified Party under the Indenture, this Agreement or any related document; or (6) any accident, injury or damage whatsoever to any person occurring in or about the Projects or (7) any and all losses, claims, damages, liabilities or expenses whatsoever caused by the Company’s or the Dissemination Agent’s failure to perform or observe any of its obligations, agreements or covenants under the terms of the Continuing Disclosure Agreement but only if and insofar as such losses, claims, damages, liabilities or expenses are caused by any such failure of the Company or the Dissemination Agent to perform. In case any action shall be brought against one or more of the Indemnified Parties based upon any of the above and in respect to which indemnity may be sought against the Borrower, such Indemnified Parties shall promptly notify the Borrower in writing, and the Borrower shall assume the defense thereof, including the employment of counsel satisfactory to the Indemnified Parties, the payment of all costs and expenses and the right to negotiate and consent to settlement. Any one or more of the Indemnified Parties shall have the right to employ separate counsel at the Borrower's expense in any such action and to participate in the defense thereof if, in the opinion of the Indemnified Party, a conflict of interest could arise out of the representation of the separate parties by one counsel. The Borrower shall not be liable for any settlement of any such action effected without the Borrower's consent, but if settled with the consent of the Borrower, or if there is a final judgment for the claimant on any such action, the Borrower agrees to indemnify and hold harmless the Indemnified Parties from and against any loss or liability by reason of such settlement or judgment.
The Borrower agrees to and does hereby indemnify and hold harmless the Indemnified Parties against any and all losses, claims, damages or liabilities (including all costs, expenses, and reasonable counsel fees incurred in investigating or defending such claim) suffered by any of the Indemnified Parties and caused by relating to, arising out of, resulting from, or in any way connected to an examination, investigation or audit of the Bonds by the Internal Revenue Service (IRS). In the event of such examination, investigation or audit, the Indemnified Parties shall have the right to employ counsel at the Borrower’s expense. In such event, the Borrower shall assume the primary role in responding to and negotiating with the IRS, but shall inform the Indemnified Parties of the status of the investigation. In the event Borrower fails to respond adequately and promptly to the IRS, the Authority shall have the right to assume the primary role in responding to and negotiating with the IRS and, upon prior written notice to the Borrower, shall have the right to enter into a closing agreement, for which the Borrower shall be liable.
(c)
Notwithstanding anything in this Agreement to the contrary which may limit recourse to the Borrower or may otherwise purport to limit the Borrower's liability, the provisions of this Section shall control the Borrower's obligations and shall survive the termination of this Agreement and the repayment of the Bonds.
The provisions of this Section 9.4 shall not apply to any liabilities, losses, damages, costs, expenses, taxes, causes of action, suits, claims, demands or judgments resulting from the Trustee's own
gross negligence, willful misconduct or fraudulent actions or from the Authority's own gross negligence, willful misconduct or fraudulent actions.
Notwithstanding the fact that it is the intention of the parties that the Authority shall not incur pecuniary liability by reason of the terms of this Agreement, or the undertakings required of the Authority hereunder, by reason of the issuance of the Bonds, by reason of the execution of the Indenture, by reason of the performance of any act requested of it by the Borrower, or by reason of the operation of the Projects by the Borrower, including all claims, liabilities or losses arising in connection with the violation of any statutes or regulations pertaining to the foregoing, nevertheless, if the Authority should incur any such pecuniary liability (except liability resulting from the Authority's gross negligence, willful misconduct or fraudulent actions) then in such event the Borrower shall indemnify and hold harmless the Authority against all claims by or on behalf of any person, firm or corporation, arising out of the same, and all costs and expenses incurred in connection with any such claim or in connection with any action or proceeding brought thereon, and upon notice from the Authority, the Borrower shall defend the Authority in any such action or proceeding.
(d) The rights of any persons to indemnity hereunder and rights to payment of fees and reimbursement of expenses pursuant to Section 4.2, Section 9.2 and this Section 9.3 shall survive the final payment or defeasance of the Bonds and in the case of the Trustee any resignation or removal. The provisions of this Section shall survive the termination of this Loan Agreement.
Article X
Miscellaneous
Section 10.1. Notices
. All notices, certificates or other communications shall be deemed sufficiently given if mailed by first-class mail, postage prepaid, addressed to the Authority, the Borrower, the Trustee or the Remarketing Agent as the case may be, as follows:
To the Authority:
New Jersey Economic Development Authority
36 West State Street
Trenton, New Jersey 08625
Attention: Director of Bonds and Incentives
To the Borrower:
New Jersey Natural Gas Company
1415 Wyckoff Road
P.O. Box 1464
Wall, New Jersey 07719
Attention: Treasurer
(with a concurrent copy to the General Counsel)
To the Trustee:
U.S. Bank National Association
21 South Street, 3
rd
Floor
Morristown, New Jersey 07960
Attn: Corporate Trust Department
To the Underwriter:
J.P. Morgan Securities LLC
383 Madison Avenue, 8th Floor
New York, NY 10179
Mail Code: NY1-M077
Attention: Municipal Short Term Desk
with a copy to:
J.P. Morgan Securities LLC
383 Madison Avenue, 8th Floor
New York, NY 10179
Mail Code: NY1-M104
Attention: Corporate Backed Public Finance
A duplicate copy of each notice, certificate or other communication given hereunder by either the Authority or the Borrower to the other shall also be given to the Trustee and any Credit Provider, if applicable. Notices to the Trustee are effective only when actually received by the Trustee. The Authority, the Borrower, the Trustee, the Remarketing Agent and any Credit Provider, if applicable, may, by notice given hereunder, designate any different addresses to which subsequent notices, certificates or other communications shall be sent.
Section 10.2. Severability
. If any provision of this Loan Agreement shall be held or deemed to be, or shall in fact be, illegal, inoperative or unenforceable, the same shall not affect any other provision or provisions herein contained or render the same invalid, inoperative, or unenforceable to any extent whatever.
Section 10.3. Execution of Counterparts
. This Loan Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
Section 10.4. Amendments, Changes and Modifications
. Except as otherwise provided in this Loan Agreement or the Indenture, this Loan Agreement may not be effectively amended, changed, modified, altered or terminated except by the written agreement of the Authority and the Borrower and with the written consent of the Credit Provider, if applicable, and of the Trustee, if required, in accordance with Section 9.5 of the Indenture.
Section 10.5. Governing Law; Venue
. This Loan Agreement shall be governed by and construed in accordance with the laws of the State of New Jersey (without regard to the State's conflicts of laws principles).
Section 10.6. Authorized Representative
. No recourse shall be had for the payment of the principal of, premium, if any, and interest on any of the Bonds or for any claim based thereon or upon any obligation, covenant or agreement contained in the Indenture, this Loan Agreement or the Purchase Contract against any past, present or future member, officer, agent or employee of the Authority, or any incorporator, member, officer, employee, director or trustee of any successor corporation, as such, either directly or through the Authority or any successor corporation, under any rule of law or equity, statute or constitution or by the enforcement of any assessment or penalty or otherwise, and all such liability of any such incorporator,
member, officer, employee, director, agent or trustee as such is hereby expressly waived and released as a condition of and consideration for the execution of the Indenture and this Loan Agreement and the issuance of the Bonds.
Section 10.7. Term of the Loan Agreement
. This Loan Agreement shall be in full force and effect from the date hereof and shall continue in effect as long as any of the Bonds are Outstanding or the Trustee holds any moneys under the Indenture, whichever is later.
Section 10.8. Assignment of Loan Documents
. The Borrower acknowledges that with the exception of the Authority’s Reserved Rights, the Loan Documents including the First Mortgage Bonds, shall be assigned by the Authority to the Trustee as security for the Bonds pursuant to the terms of the Indenture. The Authority retains the right, jointly and severally with the Trustee, to specifically enforce the provisions contained in the Loan Documents.
The Borrower assents to such assignment and hereby agrees that, as to the Trustee, its obligation to make payments under the Loan Documents and the First Mortgage Bonds shall be absolute, and shall not be subject to any defense or any right of set‑off, counterclaim or recoupment arising out of any breach by the Authority of any duty or obligation to the Borrower, whether hereunder or otherwise, or out of indebtedness or liability at any time owing to the Borrower by the Authority.
Section 10.9. Binding Effect
. This Loan Agreement shall inure to the benefit of and shall be binding upon the Authority, the Borrower and their respective successors and assigns; subject, however, to the limitations contained in Sections 5.2 and 5.10 hereof.
Section 10.10. Further Assurances and Corrective Instruments
. The Authority and the Borrower agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for correcting any inadequate or incorrect description of the Projects or for carrying out the intention of or facilitating the performance of this Loan Agreement in the manner provided in Article IX of the Indenture.
Section 10.11. Complete Agreement
. The parties agree that the terms and conditions of this Loan Agreement supersede those of all previous agreements between the parties, and that this Loan Agreement, together with the documents referred to in this Loan Agreement, contains the entire agreement between
the parties hereto. The Trustee and the Remarketing Agent shall be deemed to be third party beneficiaries of this Loan Agreement.
Section 10.12. Business Days
. If any payment is to be made hereunder or any action is to be taken hereunder on any date that is not a Business Day, such payment or action otherwise required to be made or taken on such date shall be made or taken on the immediately succeeding Business Day with the same force and effect as if made or taken on such scheduled date.
Section 10.13. Waiver of Personal Liability
. No director, member, officer, agent or employee of the Authority or any director, officer, agent or employee of the Borrower shall be individually or personally liable for the payment of any principal or Purchase Price of or interest on the Bonds or any other sum hereunder or be subject to any personal liability or accountability by reason of the execution and delivery of this Loan Agreement, but nothing herein contained shall relieve any such member, director, officer, agent or employee from the performance of any official duty provided by law or by this Loan Agreement.
Section 10.14. Waivers
. Each of the Borrower and the Authority hereby (i) irrevocably and unconditionally waive, to the fullest extent permitted by law, trial by jury in any legal action or proceeding relating to this Loan Agreement or the Projects and for any counterclaim therein and (ii) irrevocably waive, to the maximum extent not prohibited by law, any right it may have to claim or recover in any such litigation any special, exemplary, punitive or consequential damages, or damages other than, or in addition to, actual damages.
Section 10.15. Incorporation of Terms
. The other Loan Documents shall be made subject to all the terms and conditions contained in this Loan Agreement to the same extent and effect as if this Loan Agreement were fully set forth in and made a part of the other Loan Documents. This Loan Agreement is made subject to all the conditions, stipulations, agreements and covenants contained in the other Loan Documents to the same extent and effect as if the other Loan Documents were fully set forth herein and made a part hereof. Notwithstanding any of the foregoing, if any provisions in the other Loan Documents are inconsistent with the public purpose covenants contained within this Loan Agreement, to that extent this Loan Agreement shall control.
[The remainder of this page intentionally left blank. Signatures follow.]
In Witness Whereof
, the
New Jersey Economic Development Authority
has caused this Loan Agreement to be executed in its name and attested by its duly authorized officials, and
New Jersey Natural Gas Company
has caused this Loan Agreement to be executed in its name and attested by its duly authorized officers, all as of the date first above written.
NEW JERSEY ECONOMIC DEVELOPMENT
AUTHORITY
By:
/s/ Teri Dunlop
Teri Dunlop
Director of Closing Services
ATTEST:
/s/ John J. Rosenfeld
______________
John J. Rosenfeld
Assistant Secretary
[AUTHORITY SIGNATURE PAGE TO LOAN AGREEMENT[
2716988.7
ATTEST: NEW JERSEY NATURAL GAS COMPANY
/s/ Rhonda M. Figueroa
By:
/s/ Kathleen T. Ellis
Rhonda M. Figueroa Kathleen T. Ellis
Corporate Secretary Executive Vice President and
Chief Operating Officer
[BORROWER SIGNATURE PAGE TO LOAN AGREEMENT]
Exhibit A
Description of the Projects
Those certain natural gas distribution mains and functionally related equipment used in the Company's Morris County service area, which were financed through the issuance of the Authority’s Natural Gas Facilities Revenue Bonds, Series 1980 (New Jersey Natural Gas Company Project), Natural Gas Facilities Refunding Revenue Bonds, Series 1987 (New Jersey Natural Gas Company Project), Natural Gas Facilities Revenue Bonds, Series 1988 (New Jersey Natural Gas Company Project), Natural Gas Facilities Revenue Bonds, Series 1991B (New Jersey Natural Gas Company Project), Natural Gas Facilities Revenue Bonds, Natural Gas Facilities Revenue Bonds, Series 1995B (New Jersey Natural Gas Company Project), Series 1998C (New Jersey Natural Gas Company Project), including without limitation, distribution mains, measuring and regulating equipment, transmission mains, and tools and equipment.
Exhibit B
Form of First Mortgage Bond
No. __-1 $_______
New
Jersey
Natural
Gas
Company
First Mortgage Bond, Series __
Due 20__
New
Jersey
Natural
Gas
Company
(hereinafter called the
“Company”
), a corporation organized and existing under the laws of the State of New Jersey, for value received, hereby promises to pay to U.S. Bank National Association, as EDA Loan Trustee (as defined below), or (subject to the transfer restrictions specified below) registered assigns, on the first day of __________, 20__, or upon earlier redemption, ________Dollars ($_______), in any coin or currency of the United States of America which at the time of payment shall be legal tender for the payment of public and private debts, and to pay interest thereon from the date hereof until the principal hereof shall have been paid, at the minimum rate per annum necessary to yield interest in amounts sufficient, when taken together with other amounts available therefor under the EDA Bond Indenture (as defined below), to pay the interest from time to time payable on the Natural Gas Facilities Refunding Revenue Bonds, Series 2011_ (__) (New Jersey Natural Gas Company Project) (the
“2011_ EDA Bonds”
) of the New Jersey Economic Development Authority (the
“Authority”
), and thereafter (if default be made in the payment of such principal or interest, or premium, if any, on redemption) at the rate of six percent (6%) per annum on such principal or (to the extent legally enforceable) on such interest, until the same shall be paid, in like coin or currency, computed on the same basis as the 2011_ EDA Bonds, but in no event shall the interest rate on this Bond exceed twelve percent (12%) per annum. Interest on this Bond shall be payable at the time set forth in the Loan Agreement (as defined below) on each date on which interest shall from time to time be payable on the 2011_ EDA Bonds. This Bond is issued and delivered to the EDA Loan Trustee (in conjunction with the assignment by the Authority of certain of its rights under a loan agreement dated as of August 1, 2011 by and between the Authority and the Company (the
“Loan Agreement”
) to the EDA Loan Trustee), for the benefit and security of the holders of the 2011_ EDA Bonds. The obligation of the Company to make payments with respect to the principal of, premium, if any, and interest on this Bond shall be fully or partially, as the case may be, satisfied and discharged to the extent that at the time any such payment shall be due, the then due principal of, premium, if any, and interest on any of the 2011_ EDA Bonds shall have been fully or partially paid from payments made by the Company under the Loan Agreement or from other moneys expressly available therefor in the principal and interest account for the 2011_ EDA Bonds, or as far as principal is concerned, reduced by the principal amount of any of the 2011_ EDA Bonds deemed paid pursuant to Article X of the EDA Bond Indenture. Payments of principal, premium, if any, and interest are to be made at the principal office of the Trustee referred to hereinafter in the City of Pittsburgh, Pennsylvania or, at the option of the Company, at the “Principal Office” of the trustee under an Indenture (the
“EDA Bond Indenture”
) dated as of August 1, 2011 by and between the Authority and U.S. Bank National Association, as trustee (the
“EDA Loan Trustee”
), as such term,
“Principal Office,”
is
defined in the EDA Bond Indenture. The term
“business day”
shall mean
“Business Day,”
as defined in the EDA Bond Indenture
This Bond is one of an authorized issue of Bonds of the Company known as its “First Mortgage Bonds” (the
“Bonds”
) of an unlimited permitted aggregate principal amount, except as provided in the Indenture hereinafter mentioned, and issued and to be issued in one or more series under, and all equally and ratably secured (except as any sinking, amortization, improvement, renewal or other analogous fund, established in accordance with the provisions of the Indenture hereinafter mentioned, may afford additional security for the Bonds of any particular series) by, an Indenture of Mortgage and Deed of Trust dated April 1, 1952, as amended and supplemented (hereinafter called the
“Indenture”
), executed by the Company to The Bank of New York Mellon Trust Company, N.A., successor in interest to BNY Midwest Trust Company, as successor to Harris Trust and Savings Bank, as Trustee (herein called the
“Trustee”
), to which Indenture, including all indentures supplemental thereto, reference is hereby made for a description of the properties mortgaged and pledged, the nature and extent of the security, the rights of the holders of said Bonds, the Trustee and the Company in respect of such security, and the terms and conditions upon which said Bonds are and are to be issued and secured.
As provided in said Indenture, said Bonds are issuable in series which may vary as in said Indenture provided or permitted. This Bond is one of a series of Bonds entitled “First Mortgage Bonds, Series __ due 20__” (sometimes herein called
“20__ Series __ Bonds”
).
The Company has entered into the Loan Agreement with the Authority, a public instrumentality of the State of New Jersey and a public body corporate and politic organized and existing under the New Jersey Economic Development Authority Act, providing for (i) the issuance by the Authority of its 2011_ EDA Bonds to finance part of the cost of refunding the Series ___ Bonds (as defined in the EDA Bond Indenture); (ii) the loan by the Authority of the proceeds of the 2011_ EDA Bonds pursuant to the Loan Agreement; and (iii) the payment of the 2011_ EDA Bonds from loan payments and certain other amounts payable by the Company under the Loan Agreement as secured by the First Mortgage Bonds, Series __ due 20__ in the amount of $______ to be issued pursuant to the Thirty-Third Supplemental Indenture dated as of August 1, 2011 supplementing the Indenture.
The 2011_ EDA Bonds are payable from payments made, or caused to be made, by the Company of principal of, premium, if any, and interest on the Loan (defined in the EDA Bond Indenture) and secured by the First Mortgage Bonds, Series __ due 20__. Under certain terms and conditions, moneys held under and pursuant to the Loan Agreement and credits arising by reason of the purchase or redemption of the 2011_ EDA Bonds shall be applied in like manner against payment obligations on the First Mortgage Bonds, Series __ due 20__ and to the extent so applied shall satisfy a like amount otherwise due thereunder.
To the extent permitted by the Indenture and as provided therein, with the consent of the Company and upon the written consent of the holders of at least sixty-six and two-thirds percent (66‑2/3%) in principal amount of the Bonds then outstanding and entitled to consent, and of not less than sixty-six and two-thirds (66-2/3%) percent in principal amount of the Bonds then
outstanding and entitled to consent of each series affected thereby in case one or more but less than all of the series of Bonds issued under the Indenture are so affected, the rights and obligations of the Company and of the holders of Bonds and the terms and provisions of the Indenture, including any instrument supplemental thereto, may be modified from time to time,
provided
that no such modification or alteration shall be made without the consent of the holders of all of the Bonds which would (i) postpone the date fixed herein or in the Indenture for the payment of the principal of, or any installment of interest on, the Bonds, or (ii) reduce the principal of, premium, if any, on, or the rate of interest payable on, the Bonds, or (iii) reduce the percentage of the principal amount of Bonds the consent of which is required for the authorization of any such modification or alteration, or which would modify, without the written consent of the Trustee, the rights, duties or immunities of the Trustee.
The First Mortgage Bonds, Series __ due 20__, are not subject to prepayment or redemption, in whole or in part, pursuant to Article Ten of the Indenture, except as hereinafter in this Bond expressly provided, including with reference to Section 8.08 of the Indenture.
This Bond shall be subject to mandatory redemption as follows: payments of principal of and premium on the 20__ Series __ Bonds shall be made to the EDA Loan Trustee to redeem 20__ Series __ Bonds in such amounts as shall be necessary, in accordance with the provisions of the Loan Agreement, to provide funds under the Loan Agreement to (a) make, when due, payment at maturity (including, without limitation, maturity upon acceleration of the 2011_ EDA Bonds) and (b) make, when due, any prepayment required by the Loan Agreement in connection with any mandatory, special mandatory, optional or extraordinary optional redemption of 2011_ EDA Bonds;
provided, however,
that the obligation of the Company to make any redemption payments under this paragraph shall be fully or partially, as the case may be, satisfied and discharged to the extent that at any time such payment shall be due, the then due payment at maturity or redemption payment on any of the 2011_ EDA Bonds shall have been fully or partially made from payments made by the Company under the Loan Agreement or from other moneys expressly available therefor in a redemption account or subaccount for the 2011_ EDA Bonds or, as far as principal is concerned, reduced by the principal amount of any 2011_ EDA Bonds deemed paid pursuant to Article X of the EDA Bond Indenture.
In the case of the redemption of the First Mortgage Bonds, Series __ due 20__, out of monies deposited with the Trustee pursuant to Section 8.08, such First Mortgage Bonds, Series __ due 20__, shall, upon compliance with provisions of Section 10.04 of the Indenture, and subject to the provisions of Section __ of the Thirty-Third Supplemental Indenture thereto, be redeemable at the principal amounts thereof, together with the interest accrued to the date fixed for redemption without premium.
If this Bond, or any portion hereof, is called for redemption in accordance with the foregoing provisions and payment thereof is duly provided for as specified in the Indenture, interest shall cease to accrue hereon or on such portion, as the case may be, from and after the date fixed for redemption.
If an event of default, as defined in said Indenture, shall occur, the principal of this Bond may become or be declared due and payable, in the manner and with the effect provided in said Indenture.
This Bond is transferable only to a successor EDA Loan Trustee under the EDA Bond Indenture by the registered owner hereof in person or by attorney authorized in writing, on the books of the Trustee in the City of Pittsburgh, Pennsylvania, and on the books of the Company at its principal office in the State of New Jersey, upon surrender for cancellation of this Bond and on payment of charges, and upon any such transfer a new registered Bond or Bonds, of the same series, for the same aggregate principal amount, will be issued to the transferee in exchange therefor.
The Company and the Trustee and any paying agent may deem and treat the person in whose name this Bond is registered as the absolute owner hereof, for the purpose of receiving payment of or on account of the principal and premium, if any, hereof and interest due hereon, and for all other purposes, and neither the Company nor the Trustee nor any paying agent shall be affected by any notice to the contrary.
No recourse under or upon any obligation, covenant or agreement contained in the Indenture, including any indenture supplemental thereto, or in any Bond, or because of any indebtedness thereby secured, shall be had against any incorporator, or against any past, present or future stockholder, officer or director, as such, of the Company or of any successor corporation, either directly or through the Company or any successor corporation under any rule of law, statute or constitution or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise; it being expressly agreed and understood that the Indenture, any indenture supplemental thereto and the obligations thereby secured, are solely corporate obligations, and that no personal liability whatever shall attach to, or be incurred by, such incorporators, stockholders, officers or directors, as such, of the Company or of any successor corporation, or any of them, because of the incurring of the indebtedness thereby authorized, or under or by reason of any of the obligations, covenants or agreements contained in the Indenture, including any indenture supplemental thereto, or in any of the Bonds, or implied therefrom.
As provided in Section 5.10 of the EDA Bond Indenture, from and after the Company’s certification of the Release Date (as defined in the EDA Bond Indenture), the obligations of the Company with respect to this Bond shall be deemed to be satisfied and discharged, this Bond shall cease to secure in any manner the Company’s obligations under the Loan Agreement with respect to the payment of any 2011_ EDA Bonds outstanding under the EDA Bond Indenture, and, pursuant to Section 5.10 of the EDA Bond Indenture, the EDA Loan Trustee shall forthwith deliver this Bond to the Company for cancellation.
This Bond shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been signed by the Trustee, or its successor as Trustee under said Indenture.
In
Witness
Whereof
, the Company has caused this Bond to be signed in its name by its President or one of its Vice Presidents, and its corporate seal to be impressed or imprinted hereon and attested by its Secretary or one of its Assistant Secretaries.
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Dated: August __, 2011
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New Jersey Natural Gas Company
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Attest
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_________________________________
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By:
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Rhonda M. Figueroa
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Kathleen T. Ellis
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Corporate Secretary
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Executive Vice President and Chief Operating Officer
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[
Seal
]
Trustee’s Certificate of Authentication
This is one of the Bonds described in the within-mentioned Indenture.
The Bank of New York Mellon Trust Company, N.A.,
as Trustee
By:
Authorized Officer
EXECUTION COPY
J.P. Morgan
CREDIT AGREEMENT
by and among
NEW JERSEY NATURAL GAS COMPANY
and
THE LENDERS PARTY HERETO
and
JPMorgan Chase Bank, N.A.,
as Administrative Agent
_______
J.P. MORGAN SECURITIES LLC
as Lead Arranger
Dated as of August 29, 2011
TABLE OF CONTENTS
Section
Page
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1.
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CERTAIN DEFINITIONS
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1
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1.1
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Certain Definitions
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1
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1.2
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Construction
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19
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1.2.1.
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Number; Inclusion.
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20
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1.2.2.
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Determination.
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20
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1.2.3.
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Agent’s Discretion and Consent.
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20
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1.2.4.
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Documents Taken as a Whole.
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20
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1.2.5.
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Headings.
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20
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1.2.6.
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Implied References to this Agreement.
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20
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1.2.7.
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Persons.
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20
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1.2.8.
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Modifications to Documents.
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20
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1.2.9.
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From, To and Through.
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21
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1.2.10.
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Shall; Will.
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21
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1.3
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Accounting Principles
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21
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2.
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REVOLVING CREDIT FACILITY
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22
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2.1
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Commitments
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22
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2.1.1.
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Revolving Credit Loans.
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22
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2.1.2.
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Intentionally omitted.
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22
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2.2
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Nature of Lenders’ Obligations with Respect to Revolving Credit Loans
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22
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2.3
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Commitment Fee
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22
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2.4
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Revolving Credit Loan Requests
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23
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2.5
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Intentionally omitted
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23
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2.6
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Making Revolving Credit Loans
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23
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2.6.1.
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Making Revolving Credit Loans.
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23
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2.6.2.
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Intentionally omitted.
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24
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2.7
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Intentionally omitted
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24
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2.8
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Use of Proceeds
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24
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2.9
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Intentionally omitted
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24
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2.10
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Intentionally omitted
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24
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2.11
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Intentionally omitted
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24
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3.
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INTENTIONALLY OMITTED
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24
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4.
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INTEREST RATES
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24
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4.1
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Interest Rate Options
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24
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4.1.1.
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Revolving Credit Interest Rate Options.
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25
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4.1.2.
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Rate Quotations.
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25
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4.1.3.
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Change in Fees or Interest Rates.
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25
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4.2
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Interest Periods
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26
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4.2.1.
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Amount of Borrowing Tranche.
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26
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4.2.2.
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Renewals.
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26
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4.3
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Interest After Default
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26
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TABLE OF CONTENTS
Section
Page
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4.3.1.
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Interest Rate.
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26
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4.3.2.
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Other Obligations.
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26
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4.3.3.
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Acknowledgment.
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26
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4.4
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Euro-Rate Unascertainable; Illegality; Increased Costs; Deposits Not Available
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27
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4.4.1.
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Unascertainable.
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27
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4.4.2.
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Illegality; Increased Costs; Deposits Not Available.
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27
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4.4.3.
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The Agent’s and Lenders’ Rights.
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27
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4.5
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Selection of Interest Rate Options
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28
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5.
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PAYMENTS
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28
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5.1
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Payments
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28
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5.2
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Pro Rata Treatment of Lenders; Sharing of Payments; Agent’s Presumptions
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29
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5.2.1.
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Pro Rata Treatment of Lenders.
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29
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5.2.2.
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Sharing of Payments by Lenders.
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29
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5.2.3.
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Presumptions by the Agent.
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30
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5.3
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Interest Payment Dates
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30
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5.4
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Prepayments
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31
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5.4.1.
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Voluntary Prepayments.
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31
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5.4.2.
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Replacement of a Lender.
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32
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5.4.3.
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Change of Lending Office.
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32
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5.5
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Voluntary Commitment Reductions
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33
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5.6
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Additional Compensation in Certain Circumstances
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33
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5.6.1.
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Increased Costs or Reduced Return Resulting From Taxes, Reserves,
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Capital Adequacy Requirements, Expenses, Etc.
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33
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5.6.2.
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Indemnity.
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34
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5.7
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Interbank Market Presumption
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35
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5.8
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Taxes
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35
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5.8.1.
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No Deductions.
|
35
|
|
|
|
|
5.8.2.
|
Stamp Taxes.
|
35
|
|
|
|
|
5.8.3.
|
Indemnification for Taxes Paid by a Lender.
|
36
|
|
|
|
|
5.8.4.
|
Certificate.
|
36
|
|
|
|
|
5.8.5.
|
Lender Indemnity
|
36
|
|
|
|
|
5.8.6.
|
Survival.
|
36
|
|
|
|
5.9
|
Notes
|
|
36
|
|
|
|
5.10
|
Intentionally omitted
|
37
|
|
|
|
|
|
|
6.
|
REPRESENTATIONS AND WARRANTIES
|
37
|
|
|
|
6.1
|
Representations and Warranties
|
37
|
|
|
|
|
6.1.1.
|
Organization and Qualification.
|
37
|
|
|
|
|
6.1.2.
|
Subsidiaries.
|
37
|
|
|
|
|
6.1.3.
|
Power and Authority.
|
37
|
|
|
|
|
6.1.4.
|
Validity and Binding Effect.
|
38
|
|
|
|
|
6.1.5.
|
No Conflict.
|
38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE OF CONTENTS
Section
Page
|
|
|
|
|
|
|
|
|
|
|
|
6.1.6.
|
Litigation.
|
38
|
|
|
|
|
6.1.7.
|
Title to Properties.
|
38
|
|
|
|
|
6.1.8.
|
Financial Statements.
|
39
|
|
|
|
|
6.1.9.
|
Use of Proceeds; Margin Stock...
|
39
|
|
|
|
|
6.1.10.
|
Full Disclosure.
|
39
|
|
|
|
|
6.1.11.
|
Taxes.
|
40
|
|
|
|
|
6.1.12.
|
Consents and Approvals.
|
40
|
|
|
|
|
6.1.13.
|
No Event of Default; Compliance With Instruments.
|
40
|
|
|
|
|
6.1.14.
|
Patents, Trademarks, Copyrights, Licenses, Etc.
|
41
|
|
|
|
|
6.1.15.
|
Insurance.
|
41
|
|
|
|
|
6.1.16.
|
Compliance With Laws.
|
41
|
|
|
|
|
6.1.17.
|
Material Contracts; Burdensome Restrictions.
|
41
|
|
|
|
|
6.1.18.
|
Investment Companies; Regulated Entities.
|
41
|
|
|
|
|
6.1.19.
|
Plans and Benefit Arrangements.
|
42
|
|
|
|
|
6.1.20.
|
Employment Matters.
|
42
|
|
|
|
|
6.1.21.
|
Environmental Matters.
|
43
|
|
|
|
|
6.1.22.
|
Senior Debt Status.
|
43
|
|
|
|
|
6.1.23.
|
Hedging Contract Policies.
|
43
|
|
|
|
|
6.1.24.
|
Permitted Related Business Opportunities.
|
43
|
|
|
|
|
6.1.25.
|
Anti-Terrorism Laws; Executive Order No. 13224.
|
44
|
|
|
|
6.2
|
Continuation of Representations
|
44
|
|
|
|
|
|
|
7.
|
CONDITIONS OF LENDING
|
44
|
|
|
|
7.1
|
Conditions to Closing
|
44
|
|
|
|
|
7.1.1.
|
Officer’s Certificate.
|
45
|
|
|
|
|
7.1.2.
|
Secretary’s Certificate.
|
45
|
|
|
|
|
7.1.3.
|
Opinion of Counsel.
|
45
|
|
|
|
|
7.1.4.
|
Legal Details.
|
46
|
|
|
|
|
7.1.5.
|
Payment of Fees.
|
46
|
|
|
|
|
7.1.6.
|
Consents.
|
46
|
|
|
|
|
7.1.7.
|
Officer’s Certificate Regarding MACs.
|
46
|
|
|
|
|
7.1.8.
|
No Violation of Laws.
|
46
|
|
|
|
|
7.1.9.
|
No Actions or Proceedings.
|
46
|
|
|
|
|
7.1.10.
|
Hedging Contract Policies.
|
47
|
|
|
|
7.2
|
Each Additional Loan
|
47
|
|
|
|
|
|
|
8.
|
COVENANTS
|
47
|
|
|
|
8.1
|
Affirmative Covenants
|
47
|
|
|
|
|
8.1.1.
|
Preservation of Existence, Etc.
|
47
|
|
|
|
|
8.1.2.
|
Payment of Liabilities, Including Taxes, Etc.
|
48
|
|
|
|
|
8.1.3.
|
Maintenance of Insurance.
|
48
|
|
|
|
|
8.1.4.
|
Maintenance of Properties and Leases.
|
48
|
|
|
|
|
8.1.5.
|
Maintenance of Patents, Trademarks, Etc.
|
48
|
|
|
|
|
8.1.6.
|
Visitation Rights.
|
48
|
|
|
|
|
8.1.7.
|
Keeping of Records and Books of Account.
|
49
|
|
TABLE OF CONTENTS
Section
Page
|
|
|
|
|
|
|
|
|
|
|
|
8.1.8.
|
Plans and Benefit Arrangements.
|
49
|
|
|
|
|
8.1.9.
|
Compliance With Laws.
|
49
|
|
|
|
|
8.1.10.
|
Use of Proceeds.
|
50
|
|
|
|
|
8.1.11.
|
Hedging Contract Policies.
|
50
|
|
|
|
8.2
|
Negative Covenants
|
50
|
|
|
|
|
8.2.1.
|
Indebtedness.
|
50
|
|
|
|
|
8.2.2.
|
Liens.
|
51
|
|
|
|
|
8.2.3.
|
[Intentionally omitted].
|
51
|
|
|
|
|
8.2.4.
|
Loans and Investments.
|
51
|
|
|
|
|
8.2.5.
|
Liquidations, Mergers, Consolidations, Acquisitions.
|
52
|
|
|
|
|
8.2.6.
|
Dispositions of Assets or Subsidiaries.
|
53
|
|
|
|
|
8.2.7.
|
Affiliate Transactions.
|
54
|
|
|
|
|
8.2.8.
|
Subsidiaries as Guarantors.
|
54
|
|
|
|
|
8.2.9.
|
Continuation of or Change in Business.
|
54
|
|
|
|
|
8.2.10.
|
Plans and Benefit Arrangements.
|
54
|
|
|
|
|
8.2.11.
|
Fiscal Year.
|
54
|
|
|
|
|
8.2.12.
|
Maximum Leverage Ratio.
|
54
|
|
|
|
|
8.2.13.
|
[Intentionally omitted].
|
55
|
|
|
|
|
8.2.14.
|
No Limitation on Dividends and Distributions by
|
|
|
|
|
|
Borrower or its Subsidiaries.
|
55
|
|
|
|
|
8.2.15.
|
Payment of Dividends; Redemptions.
|
55
|
|
|
|
|
8.2.16.
|
No Modification of Hedging Contract Policies.
|
55
|
|
|
|
|
8.2.17.
|
Off-Balance Sheet Financing.
|
55
|
|
|
|
|
8.2.18.
|
[Intentionally omitted].
|
55
|
|
|
|
|
8.2.19.
|
No Violation of Anti-Terrorism Laws.
|
56
|
|
|
|
8.3
|
Reporting Requirements
|
56
|
|
|
|
|
8.3.1.
|
Quarterly Financial Statements.
|
56
|
|
|
|
|
8.3.2.
|
Annual Financial Statements.
|
57
|
|
|
|
|
8.3.3.
|
Certificate of the Borrower.
|
57
|
|
|
|
|
8.3.4.
|
Notice of Default.
|
57
|
|
|
|
|
8.3.5.
|
Notice of Litigation.
|
57
|
|
|
|
|
8.3.6.
|
Notice of Change in Debt Rating.
|
58
|
|
|
|
|
8.3.7.
|
Sale of Assets.
|
58
|
|
|
|
|
8.3.8.
|
Budgets, Forecasts, Other Reports and Information.
|
58
|
|
|
|
|
8.3.9.
|
Notices Regarding Plans and Benefit Arrangements.
|
58
|
|
|
|
|
8.3.10.
|
Other Information.
|
60
|
|
|
|
|
|
|
|
|
9.
|
DEFAULT
|
60
|
|
|
|
9.1
|
Events of Default
|
60
|
|
|
|
|
9.1.1.
|
Payments Under Loan Documents.
|
60
|
|
|
|
|
9.1.2.
|
Breach of Warranty.
|
60
|
|
|
|
|
9.1.3.
|
Breach of Negative Covenants or Visitation Rights.
|
60
|
|
|
|
|
9.1.4.
|
Breach of Other Covenants.
|
61
|
|
|
|
|
9.1.5.
|
Defaults in Other Agreements or Indebtedness.
|
61
|
|
|
|
|
9.1.6.
|
Final Judgments or Orders.
|
61
|
|
|
|
|
|
|
|
TABLE OF CONTENTS
Section
Page
|
|
|
|
|
|
|
|
|
|
|
|
9.1.7.
|
Loan Document Unenforceable.
|
61
|
|
|
|
|
9.1.8.
|
Uninsured Losses; Proceedings Against Assets.
|
62
|
|
|
|
|
9.1.9.
|
Notice of Lien or Assessment.
|
62
|
|
|
|
|
9.1.10.
|
Insolvency.
|
62
|
|
|
|
|
9.1.11.
|
Events Relating to Plans and Benefit Arrangements.
|
62
|
|
|
|
|
9.1.12.
|
Cessation of Business.
|
62
|
|
|
|
|
9.1.13.
|
Change of Control.
|
63
|
|
|
|
|
9.1.14.
|
Involuntary Proceedings.
|
63
|
|
|
|
|
9.1.15.
|
Voluntary Proceedings.
|
63
|
|
|
|
9.2
|
Consequences of Event of Default
|
64
|
|
|
|
|
9.2.1.
|
Events of Default Other Than Bankruptcy, Insolvency or Reorganization Proceedings.
|
64
|
|
|
|
|
9.2.2.
|
Bankruptcy, Insolvency or Reorganization Proceedings.
|
64
|
|
|
|
|
9.2.3.
|
Set-off.
|
64
|
|
|
|
|
9.2.4.
|
Suits, Actions, Proceedings.
|
65
|
|
|
|
|
9.2.5.
|
Application of Proceeds; Collateral Sharing.
|
65
|
|
|
|
|
9.2.6.
|
Other Rights and Remedies.
|
66
|
|
|
|
|
|
|
|
|
10.
|
THE AGENT
|
66
|
|
|
|
10.1
|
Appointment
|
66
|
|
|
|
10.2
|
Delegation of Duties
|
66
|
|
|
|
10.3
|
Nature of Duties; Independent Credit Investigation
|
66
|
|
|
|
10.4
|
Actions in Discretion of Agent; Instructions From the Lenders
|
67
|
|
|
|
10.5
|
Reimbursement and Indemnification of Agent by the Borrower
|
67
|
|
|
|
10.6
|
Exculpatory Provisions; Limitation of Liability
|
68
|
|
|
|
10.7
|
Reimbursement and Indemnification of Agent by Lenders
|
68
|
|
|
|
10.8
|
Reliance by Agent
|
69
|
|
|
|
10.9
|
Notice of Default
|
69
|
|
|
|
10.10
|
Notices
|
69
|
|
|
|
10.11
|
Lenders in Their Individual Capacities; Agents in Its Individual Capacity
|
70
|
|
|
|
10.12
|
Holders of Notes
|
70
|
|
|
|
10.13
|
Equalization of the Lenders
|
70
|
|
|
|
10.14
|
Resignation of the Agent
|
71
|
|
|
|
10.15
|
The Agent’s Fee
|
71
|
|
|
|
10.16
|
Availability of Funds
|
71
|
|
|
|
10.17
|
Calculations
|
72
|
|
|
|
10.18
|
Beneficiaries
|
72
|
|
|
|
10.19
|
No Reliance on the Agent’s Customer Identification Program
|
72
|
|
|
|
|
|
|
11.
|
MISCELLANEOUS
|
73
|
|
|
|
11.1
|
Modifications, Amendments or Waivers
|
73
|
|
|
|
|
11.1.1.
|
Increase of Revolving Credit Commitments; Extension of Expiration Date.
|
73
|
|
|
|
|
11.1.2.
|
Release of Collateral or Guarantor.
|
73
|
|
|
|
|
11.1.3.
|
Miscellaneous.
|
73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE OF CONTENTS
Section
Page
|
|
|
|
|
|
|
|
|
|
|
11.2
|
No Implied Waivers; Cumulative Remedies; Writing Required
|
74
|
|
|
|
11.3
|
Reimbursement and Indemnification of Lenders by the Borrower;
|
|
|
|
|
Limitation on Damages;Taxes
|
74
|
|
|
|
11.4
|
Holidays
|
|
75
|
|
|
|
11.5
|
Funding by Branch, Subsidiary or Affiliate
|
76
|
|
|
|
|
11.5.1.
|
Notional Funding.
|
76
|
|
|
|
|
11.5.2.
|
Actual Funding.
|
76
|
|
|
|
11.6
|
Notices
|
|
76
|
|
|
|
|
11.6.1.
|
Notices Generally.
|
76
|
|
|
|
|
11.6.2.
|
Electronic Communications
|
78
|
|
|
|
11.7
|
Severability
|
78
|
|
|
|
11.8
|
Governing Law
|
78
|
|
|
|
11.9
|
Prior Understanding
|
78
|
|
|
|
11.10
|
Duration; Survival
|
78
|
|
|
|
11.11
|
Successors and Assigns
|
79
|
|
|
|
11.12
|
Confidentiality
|
80
|
|
|
|
|
11.12.1.
|
General.
|
80
|
|
|
|
|
11.12.2.
|
Sharing Information With Affiliates of the Lenders.
|
81
|
|
|
|
11.13
|
Counterparts
|
81
|
|
|
|
11.14
|
The Agent’s or the Lenders’ Consent
|
81
|
|
|
|
11.15
|
Exceptions
|
81
|
|
|
|
11.16
|
WAIVER OF JURY TRIAL
|
81
|
|
|
|
11.17
|
JURISDICTION AND VENUE
|
82
|
|
|
|
11.18
|
Certifications From Lenders and Participants
|
82
|
|
|
|
|
11.18.1.
|
Tax Withholding.
|
82
|
|
|
|
|
11.18.2.
|
FATCA Certification.
|
83
|
|
|
|
|
11.18.3.
|
USA Patriot Act.
|
84
|
|
LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
SCHEDULE 1.1(A) - PRICING GRID
|
|
|
|
SCHEDULE 1.1(B)
|
- COMMITMENTS OF LENDERS AND ADDRESSES FOR NOTICES
|
SCHEDULE 1.1(P) - PERMITTED LIENS
SCHEDULE 6.1.2 - SUBSIDIARIES
SCHEDULE 6.1.12 - CONSENTS AND APPROVALS
SCHEDULE 6.1.23 - HEDGING CONTRACT POLICIES
SCHEDULE 6.1.24 PERMITTED BUSINESS OPPORTUNITIES
SCHEDULE 8.2.1 - EXISTING INDEBTEDNESS
EXHIBITS
EXHIBIT 1.1(A) - ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT 1.1(B) - LENDER JOINDER
EXHIBIT 1.1(R) - REVOLVING CREDIT NOTE
EXHIBIT 2.4 - LOAN REQUEST
EXHIBIT 5.5 - COMMITMENT REDUCTION NOTICE
EXHIBIT 7.1.3(A) - OPINION OF COUNSEL
EXHIBIT 7.1.3(B) - OPINION OF IN-HOUSE COUNSEL
EXHIBIT 8.2.5 - ACQUISITION COMPLIANCE CERTIFICATE
EXHIBIT 8.3.3 - COMPLIANCE CERTIFICATE
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is dated as of August 29, 2011, and is made by and among
NEW JERSEY NATURAL GAS COMPANY
, a New Jersey corporation (the “
Borrower
”), the
LENDERS
(as hereinafter defined) and
JPMORGAN CHASE BANK, N.A.
, its successors and assigns (the “
Agent
”) in its capacity as administrative agent for the Lenders under this Agreement.
BACKGROUND
WHEREAS
, the Borrower has requested that the Lenders provide a revolving credit facility to the Borrower in an aggregate principal amount not to exceed $100,000,000; and
WHEREAS
, the revolving credit facility shall be used solely to make payments of principal and interest on certain Bonds (as defined in the Indenture described herein) issued pursuant to the Indenture, dated as of August 1, 2011, between the New Jersey Economic Development Authority (the “
Issuer
”) and U.S. Bank National Association, as trustee (the “
Trustee
”) (the “
Indenture
”); and
WHEREAS
, the Lenders are willing to provide such revolving credit facility upon the terms and conditions hereinafter set forth;
NOW
,
THEREFORE
, the parties hereto, in consideration of their mutual covenants and agreements hereinafter set forth and intending to be legally bound hereby, covenant and agree as follows:
1.
CERTAIN DEFINITIONS
In addition to words and terms defined elsewhere in this Agreement, the following words and terms shall have the following meanings, respectively, unless the context hereof clearly requires otherwise:
Acquired Person
means a Person or business acquired by the Borrower or any Subsidiary of the Borrower in a transaction which is a Permitted Acquisition.
Acquisition Compliance Certificate
has the meaning assigned to that term in
Section 8.2.5
.
Additional Lender
has the meaning assigned to such term in
Section 11.11(d)
.
Adjusted Euro-Rate
means, with respect to any Euro-Rate Loans for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the Euro-Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.
Affiliate
as to any Person means any other Person (a) which directly or indirectly controls, is controlled by, or is under common control with such Person, (b) which beneficially
owns or holds 10% or more of any class of the voting or other equity interests of such Person, or (c) 10% or more of any class of voting interests or other equity interests of which is beneficially owned or held, directly or indirectly, by such Person. Control, as used in this definition, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise, including the power to elect a majority of the directors or trustees of a corporation or trust, as the case may be.
Agent
has the meaning assigned to such term in the preamble to this Agreement.
Agent’s Fee
has the meaning assigned to such term in
Section 10.15
.
Agent’s Letter
has the meaning assigned to such term in
Section 10.15
.
Agreement
means this Credit Agreement, as the same may be supplemented or amended from time to time, including all schedules and exhibits.
Anti-Terrorism Laws
means any Laws relating to terrorism or money laundering, including Executive Order No. 13224, the USA Patriot Act, the Laws comprising or implementing the Bank Secrecy Act, and the Laws administered by the United States Treasury Department’s Office of Foreign Asset Control (as any of the foregoing Laws may from time to time be amended, renewed, extended, or replaced).
Applicable Commitment Fee Rate
means the percentage rate per annum at the indicated level of Debt Rating in the pricing grid on
Schedule 1.1(A)
below the heading “Commitment Fee.” The Applicable Commitment Fee Rate shall be computed in accordance with the parameters set forth on
Schedule 1.1(A)
,
provided
however
that if the Borrower’s Debt Rating is determined by Fitch, Inc. or any other nationally recognized statistical agency pursuant to the definition of “Debt Rating” hereunder, the second column (Debt Rating Standard & Poor’s and Moody’s) of the pricing grid set forth on
Schedule 1.1(A)
shall be modified by the Agent upon written notice to the Borrower to reflect such replacement of Moody’s or Standard & Poor’s as the applicable rating agencies hereunder and to replace the Debt Rating Levels with the corresponding levels of Fitch or such other nationally recognized statistical agency.
Applicable Margin
means, as applicable:
(a) the percentage spread to be added to the Base Rate under the Base Rate Option at the indicated level of Debt Rating in the pricing grid on
Schedule 1.1(A)
below the heading “Base Rate Spread,” as the same may be modified in accordance with the terms hereof, or
(b) the percentage spread to be added to the Euro-Rate under the Euro-Rate Option at the indicated level of Debt Rating in the pricing grid on
Schedule 1.1(A)
below the heading “Euro-Rate Spread,” as the same may be modified in accordance with the terms hereof,The Applicable Margin shall be computed in accordance with the parameters set forth on
Schedule 1.1(A)
;
provided
that if the Borrower’s Debt Rating is determined by
Fitch, Inc. or any other nationally recognized statistical agency, pursuant hereto, the second column (Debt Rating Standard & Poor’s and Moody’s) of the Applicable Margin pricing grid contained in
Schedule 1.1(A)
shall be modified by the Agent upon written notice to the Borrower to reflect such replacement of Moody’s or Standard & Poor’s as the applicable rating agencies hereunder and to replace the Debt Rating Levels with the corresponding levels of Fitch or such other nationally recognized statistical agency.
Approved Fund
means any fund that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
Assignment and Assumption Agreement
means an Assignment and Assumption Agreement by and among a Purchasing Lender, a Transferor Lender and the Agent, substantially in the form of
Exhibit 1.1(A)
.
Authorized Officer
means any of those individuals, designated by written notice to the Agent from the Borrower, authorized to execute notices, reports and other documents on behalf of the Borrower required hereunder. The Borrower may amend such list of individuals from time to time by giving written notice of such amendment to the Agent.
Bankruptcy Event
means, with respect to any Person, such Person becomes the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it, or, in the good faith determination of the Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment, provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person by an Official Body or instrumentality thereof, provided, further, that such ownership interest does not result in or provide such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such Official Body or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.
Base Rate
means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus ½ of 1% and (c) the Adjusted Euro-Rate for a one month Interest Period on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1%,
provided
that, for the avoidance of doubt, the Adjusted Euro-Rate for any day shall be based on the rate appearing on Reuters Screen LIBOR01 Page (or on any successor or substitute page of such page) at approximately 11:00 a.m. London time on such day. Any change in the Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted Euro-Rate shall be effective from and including the effective date of such change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted Euro-Rate, respectively.
Base Rate Option
means the option of the Borrower to have Revolving Credit Loans bear interest at the rate and under the terms and conditions set forth in
Section 4.1.1(a)
.
Benefit Arrangement
means an “employee benefit plan,” within the meaning of Section 3(3) of ERISA, which is neither a Plan, a Multiple Employer Plan, nor a Multiemployer Plan and which is maintained, sponsored or otherwise contributed to by any member of the ERISA Group.
Blocked Person
has the meaning assigned to such term in
Section 6.1.25
.
Bonds
has the meaning assigned to such term in the recitals to this Agreement.
Borrower
has the meaning assigned to such term in the preamble to this Agreement.
Borrowing Date
means, with respect to any Loan, the date for the making thereof or the renewal or conversion thereof at or to the same or a different Interest Rate Option, which shall be a Business Day.
Borrowing Tranche
means specified portions of Loans outstanding as follows: (a) any Loans to which a Euro-Rate Option applies which become subject to the same Interest Rate Option under the same Loan Request by the Borrower and which have the same Interest Period shall constitute one Borrowing Tranche, and (b) all Loans to which a Base Rate Option applies shall constitute one Borrowing Tranche.
Business Day
means any day other than a Saturday or Sunday or a legal holiday on which commercial banks are authorized or required to be closed for business in Chicago, Illinois and, if the applicable Business Day relates to any Loan to which the Euro-Rate Option applies, such day must also be a day on which dealings are carried on in the London interbank market.
CIP Regulations
has the meaning given to such term in
Section 10.19
Closing Date
means the Business Day on which this Agreement is fully executed and becomes effective.
Collateral Agent
has the meaning given to such term in
Section 9.2.5.2
.
Collateral Documents
has the meaning given to such term in
Section 9.2.5.2
.
Commitment
means, as to any Lender its Revolving Credit Commitment, and
Commitments
shall mean the aggregate of the Revolving Credit Commitments of all of the Lenders.
Commitment Fee
has the meaning given to such term in
Section 2.3
.
Commitment Reduction Notice
has the meaning given to such term in
Section 5.5
.
Compliance Certificate
has the meaning assigned to such term in
Section 8.3.3.
Consolidated Shareholders’ Equity
means as of any date of determination the sum of the amounts under the headings “Common Shareholders’ Equity” and “Preferred Shareholders’ Equity” on the balance sheet, prepared in accordance with GAAP, for the Borrower and its Subsidiaries on a consolidated basis as of such date of determination.
Consolidated Total Capitalization
means as of any date of determination the sum of (a) Consolidated Total Indebtedness plus (b) Consolidated Shareholders’ Equity.
Consolidated Total Indebtedness
means, as of any date of determination, total Indebtedness, without duplication, of the Borrower and its Subsidiaries.
Contamination
means the presence or release or threat of release of Regulated Substances in, on, under or emanating to or from the Property, which pursuant to Environmental Laws requires notification or reporting to an Official Body, or which pursuant to Environmental Laws requires the performance of a Remedial Action or which otherwise constitutes a violation of Environmental Laws.
Debt Rating
means the rating of the Borrower’s senior secured long-term debt by each of Standard & Poor’s and Moody’s;
provided
,
however
, at the option of the Borrower from time to time and with the consent of the Agent which will not be unreasonably withheld or delayed, either or both Standard & Poor’s and Moody’s shall be replaced by Fitch, Inc. or any other nationally recognized statistical rating agency that is then rating the Borrower’s senior secured Indebtedness.
Defaulting Lender
means any Lender that (a) has failed, within two (2) Business Days of the date required to be funded or paid, to (i) fund any portion of its Loans or (ii) pay over to the Agent or any Lender any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Lender notifies the Agent in writing that such failure is the result of such Lender’s good faith determination that a condition precedent to funding (specifically identified and including the particular default, if any) has not been satisfied, (b) has notified the Borrower, the Agent or any Lender in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender’s good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within three (3) Business Days after request by the Agent or any Lender acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations) to fund prospective Loans under this Agreement, provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon the Agent’s or such Lender’s receipt of such certification in form and substance satisfactory to it and the Agent or such Lender, as applicable, or (d) has become the subject of a Bankruptcy Event.
Delinquent Lender
has the meaning assigned to such term in
Section 5.2
.
Dollar, Dollars, U.S. Dollars
and the symbol “$” means lawful money of the United States of America.
Environmental Complaint
means any (a) written notice of non-compliance or violation, citation or order relating in any way to any Environmental Law, Environmental Permit, Contamination or Regulated Substance; (b) civil, criminal, administrative or regulatory investigation instituted by an Official Body relating in any way to any Environmental Law, Environmental Permit, Contamination or Regulated Substance; (c) administrative, regulatory or judicial action, suit, claim or proceeding instituted by any Person or Official Body or any other written notice of liability or potential liability from any Person or Official Body, in either instance, relating to or setting forth allegations or a cause of action for personal injury (including but not limited to death), property damage, natural resource damage, contribution or indemnity for the costs associated with the performance of Remedial Actions, direct recovery for the costs associated with the performance of Remedial Actions, liens or encumbrances attached to or recorded or levied against property for the costs associated with the performance of Remedial Actions, civil or administrative penalties, criminal fines or penalties or declaratory or equitable relief arising under any Environmental Laws; or (d) subpoena, request for information or other written notice or demand of any type issued by an Official Body pursuant to any Environmental Laws.
Environmental Laws
means all federal, state, local and foreign Laws (including, but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §§ 9601 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq., the Hazardous Materials Transportation Act, 49 U.S.C. § 1801 et seq., the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq., the Federal Water Pollution Control Act, 33 U.S.C. §§ 1251 et seq., the Federal Safe Drinking Water Act, 42 U.S.C. §§ 300f-300j, the Federal Air Pollution Control Act, 42 U.S.C. § 7401 et seq., the Oil Pollution Act, 33 U.S.C. § 2701 et seq., the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. §§ 136 to 136y, the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq., each as amended, and any regulations promulgated or any equivalent state or local Law, and any amendments thereto) and any final, non-appealable consent decrees, consent orders, consent agreements, settlement agreements, judgments or orders, or binding directives, policies or programs, issued by or entered into with an Official Body pertaining or relating to: (a) pollution or pollution control; (b) protection of human health from exposure to Regulated Substances; (c) protection of the environment and/or natural resources; (d) protection of employee safety in the workplace and protection of employees from exposure to Regulated Substances in the workplace (but excluding workers compensation and wage and hour Laws); (e) the presence, use, management, generation, manufacture, processing, extraction, treatment, recycling, refining, reclamation, labeling, sale, transport, storage, collection, distribution, disposal or release or threat of release of Regulated Substances; (f) the presence of Contamination; (g) the protection of endangered or threatened species;
and (h) the protection of Environmentally Sensitive Areas.
Environmental Permits
means all permits, licenses, bonds or other forms of financial assurances, consents, registrations, identification numbers, approvals or authorizations required under Environmental Laws (a) to own, occupy or maintain the Property; (b) for the operations and business activities of the Borrower and any of its Subsidiaries; or (c) for the performance of a Remedial Action.
Environmentally Sensitive Area
means (a) any wetland as defined by applicable Environmental Laws; (b) any area designated as a coastal zone pursuant to applicable Laws, including Environmental Laws; (c) any area of historic or archeological significance or scenic area as defined or designated by applicable Laws, including Environmental Laws; (d) habitats of endangered species or threatened species as designated by applicable Laws, including Environmental Laws; or (e) a floodplain or other flood hazard area as defined pursuant to any applicable Laws.
ERISA
means the Employee Retirement Income Security Act of 1974, as the same may be amended or supplemented from time to time, and any successor statute of similar import, and the rules and regulations thereunder, as from time to time in effect.
ERISA Group
means the Borrower and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control and all other entities which, together with the Borrower, are treated as a single employer under Section 414 of the Internal Revenue Code.
Euro-Rate
means, with respect to any Euro-Rate Loans for any Interest Period, the rate appearing on Reuters Screen LIBOR01 Page (or on any successor or substitute page of such service, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such page of such service, as determined by the Agent from time to time for purposes of providing quotations of interest rates applicable to deposits in Dollars in the London interbank market) at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period, as the rate for deposits in Dollars with a maturity comparable to such Interest Period. In the event that such rate is not available at such time for any reason, then the “
Euro-Rate
” with respect to such Euro-Rate Loans for such Interest Period shall be the rate at which deposits in Dollars in an amount equal to $5,000,000 and for a maturity comparable to such Interest Period are offered by the principal London office of the Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period.
Euro-Rate Option
means the option of the Borrower to have Revolving Credit Loans bear interest at the rate and under the terms and conditions set forth in
Section 4.1.1(b)
.
Euro-Rate Loans
means any Loans comprising any Borrowing Tranche to which the Euro-Rate Option applies.
Euro-Rate Reserve Percentage
means as of any day the maximum percentage in effect on such day as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirements (including supplemental, marginal
and emergency reserve requirements) with respect to eurocurrency funding (currently referred to as “Eurocurrency Liabilities”).
Event of Default
shall mean any of the events described in
Section 9.1
and referred to therein as an “Event of Default.”
Executive Order No. 13224
means the Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.
Expiration Date
means, with respect to the Revolving Credit Commitments, August 31, 2015.
FATCA
means Sections 1471 through 1474 of the Internal Revenue Code, as of the date of this Agreement, and any regulations or interpretations thereof.
Federal Funds Effective Rate
means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Agent from three Federal funds brokers of recognized standing selected by it.
First Mortgage Bonds
means the secured Indebtedness issued by the Borrower pursuant to the First Mortgage Indenture in an aggregate principal amount of $269,845,000 plus interest at such rates and maturing on such dates as are more particularly described in
Schedule 8.2.18
hereto.
First Mortgage Indenture
means that certain Indenture of Mortgage and Deed of Trust dated April 1, 1952 from the Borrower to the Bank of New York Mellon Trust Company, N.A., successor in interest to BNY Midwest Trust Company, as successor to Harris Trust and Savings Bank, Trustee, as heretofore or hereafter amended, modified and supplemented from time to time.
GAAP
means generally accepted accounting principles as are in effect in the United States from time to time, subject to the provisions of
Section 1.3
, and applied on a consistent basis both as to classification of items and amounts.
Guaranty
of any Person means any obligation of such Person guaranteeing or in effect guaranteeing any liability or obligation of any other Person in any manner, whether directly or indirectly, including any agreement to indemnify or hold harmless any other Person, any performance bond or other suretyship arrangement and any other form of assurance against loss, except endorsement of negotiable or other instruments for deposit or collection in the ordinary course of business.
Hedging Contract Policies
means the written internal policies and procedures of the Borrower with respect to hedging or trading of gas contracts or other
commodity, hedging contracts of any kind, or any derivatives or other similar financial instruments, as in effect on the date of this Agreement and as hereafter amended in accordance with
Section 8.2.16
, a copy of which has been delivered to the Agent and each Lender.
Hedging Transaction
means any transaction entered into by the Borrower or any of its Subsidiaries in accordance with the Hedging Contract Policies.
Historical Statements
has the meaning assigned to such term in
Section 6.1.8
.
Hybrid Security
means any of the following: (a) beneficial interests issued by a trust which constitutes a Subsidiary of the Borrower, substantially all of the assets of which trust are unsecured Indebtedness of the Borrower or any Subsidiary of the Borrower or proceeds thereof, and all payments of which Indebtedness are required to be, and are, distributed to the holders of beneficial interests in such trust promptly after receipt by such trust or (b) any shares of capital stock or other equity interest that, other than solely at the option of the issuer thereof, by their terms (or by the terms of any security into which they are convertible or exchangeable) are, or upon the happening of an event or the passage of time would be, required to be redeemed or repurchased, in whole or in part, or have, or upon the happening of an event or the passage of time would have, a redemption or similar payment.
Inactive Subsidiary
means, at any time, any Subsidiary of any Person, which Subsidiary (a) does not conduct any business or have operations, and (b) does not have total assets with a net book value, as of any date of determination, in excess of $100,000.
Indebtedness
means, as to any Person at any time, any and all indebtedness, obligations or liabilities (whether matured or unmatured, liquidated or unliquidated, direct or indirect, absolute or contingent, or joint or several) of such Person for or in respect of: (a) borrowed money, (b) amounts raised under or liabilities in respect of any note purchase or acceptance credit facility, (c) reimbursement obligations (contingent or otherwise) under any letter of credit, currency swap agreement, interest rate swap, cap, collar or floor agreement or other interest rate or currency exchange rate management device, (d) any other transaction (including forward sale or purchase agreements, capitalized leases and conditional sales agreements) having the commercial effect of a borrowing of money entered into by such Person to finance its operations or capital requirements (but not including trade payables and accrued expenses incurred in the ordinary course of business which are not represented by a promissory note or other evidence of indebtedness and which are not more than sixty (60) days past due), (e) without duplication, any Hedging Transaction, to the extent that any indebtedness, obligations or liabilities of such Person in respect thereof constitutes “indebtedness” as determined in accordance with GAAP, (f) any Guaranty of any Hedging Transaction described in the immediately preceding clause (e), (g) any Guaranty of Indebtedness,
(h) any Hybrid Security described in clause (a) of the definition of Hybrid Security, or (i) the mandatory repayment obligation of the issuer of any Hybrid Security described in clause (b) of the definition of Hybrid Security.
Indenture
has the meaning assigned to such term in the recitals to this Agreement.
Interest Period
means the period of time selected by the Borrower in connection with (and to apply to) any election permitted hereunder by the Borrower to have Revolving Credit Loans bear interest under the Euro-Rate Option. Subject to the last sentence of this definition, such period shall be one, two, three or six Months and, solely with approval of the Agent, a shorter period. Such Interest Period shall commence on the effective date of such Interest Rate Option, which shall be (a) the Borrowing Date if the Borrower is requesting new Loans or (b) the date of renewal of or conversion to the Euro-Rate Option if the Borrower is renewing or converting to the Euro-Rate Option applicable to outstanding Loans. Notwithstanding the second sentence hereof: (i) any Interest Period which would otherwise end on a date which is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (ii) the Borrower shall not select, convert to or renew an Interest Period for any portion of the Loans that would end after the Expiration Date.
Interest Rate Hedge
means an interest rate exchange, collar, cap, swap, adjustable strike cap, adjustable strike corridor or similar agreements entered into by the Borrower or its Subsidiaries in order to provide protection to, or minimize the impact upon, the Borrower and/or its Subsidiaries of increasing floating rates of interest applicable to Indebtedness.
Interest Rate Option
means any Euro-Rate Option or Base Rate Option.
Internal Revenue Code
means the Internal Revenue Code of 1986, as the same may be amended or supplemented from time to time, and any successor statute of similar import, and the rules and regulations thereunder, as from time to time in effect.
Investment
has the meaning assigned to such term in
Section 8.2.4
.
IRH Provider
has the meaning assigned to such term in
Section 9.2.5.2
.
Issuer
has the meaning assigned to such term in the recitals to this Agreement.
Labor Contracts
means all collective bargaining agreements among the Borrower or any Subsidiary of the Borrower and unions representing employees of the Borrower or any Subsidiary of the Borrower.
Law
means any law (including common law), constitution, statute, treaty, regulation, rule, ordinance, binding opinion, release, ruling, order, injunction, writ, decree, bond, judgment, authorization or approval, lien or award of or settlement agreement with any Official Body.
Lender Joinder
means a Lender Joinder substantially in the form of
Exhibit 1.1(B)
.
Lender Provided Interest Rate Hedge
means an Interest Rate Hedge which is provided by any Lender or an Affiliate of a Lender and that meets the following requirements:
such Interest Rate Hedge (a) is documented in a standard International Swap Dealer Association Agreement, (b) provides for the method of calculating the reimbursable amount of the provider’s credit exposure in a reasonable and customary manner, and (c) is entered into for hedging (rather than speculative) purposes. The liabilities of the Borrower to the provider of any Lender-Provided Interest Rate Hedge shall be “Obligations” hereunder and otherwise treated as Obligations for the purposes of each of the other Loan Documents.
Lenders
means the financial institutions named on
Schedule 1.1(B)
and their respective successors and assigns as permitted hereunder, each of which is referred to herein as a Lender.
Lien
means any mortgage, deed of trust, pledge, lien, security interest, charge or other encumbrance or security arrangement of any nature whatsoever, whether voluntarily or involuntarily given, including any conditional sale or title retention arrangement and any assignment, deposit arrangement or lease intended as, or having the effect of, security and any filed financing statement or other notice of any of the foregoing (whether or not a lien or other encumbrance is created or exists at the time of the filing).
LLC Interests
has the meaning given to such term in
Section 6.1.2
.
Loan Documents
means this Agreement, the Agent’s Letter, the Notes, and any other instruments, certificates or documents delivered or contemplated to be delivered hereunder or thereunder or in connection herewith or therewith, as the same may be supplemented or amended from time to time in accordance herewith or therewith, and
Loan Document
shall mean any of the Loan Documents.
Loan Request
means a request for a Revolving Credit Loan or a request to select, convert to or renew a Base Rate Option or Euro-Rate Option with respect to an outstanding Revolving Credit Loan in accordance with
Sections
2.4
,
4.1
, and
4.2
.
Loans
means collectively and
Loan
means separately all Revolving Credit Loans or any Revolving Credit Loan.
Material Adverse Change
means any set of circumstances or events which (a) has or could reasonably be expected to have any material adverse effect whatsoever upon the validity or enforceability of this Agreement or any other Loan Document, (b) is or could reasonably be expected to be material and adverse to the business, properties, assets, financial condition, results of operations or prospects of the Borrower or the Borrower and its Subsidiaries taken as a whole, (c) impairs materially or could reasonably be expected to impair materially the ability of the Borrower or the Borrower and its Subsidiaries taken as a whole to duly and punctually pay the Indebtedness or otherwise perform the obligations in accordance with the Loan Documents or (d) impairs materially or could reasonably be expected to impair materially the ability of the Agent or any of the Lenders, to the extent permitted, to enforce their legal remedies pursuant to this Agreement or any other Loan Document.
Month
, with respect to an Interest Period under the Euro-Rate Option,
means the interval between the days in consecutive calendar months numerically corresponding to the first day of such Interest Period. If any Euro-Rate Interest Period begins on a day of a calendar month for which there is no numerically corresponding day in the month in which such Interest Period is to end, the final month of such Interest Period shall be deemed to end on the last Business Day of such final month.
Moody’s
means Moody’s Investors Service, Inc. and its successors.
Multiemployer Plan
means any “employee benefit plan” within the meaning of Section 3(3) of ERISA, which is a “multiemployer plan” within the meaning of Section 4001(a)(3) of ERISA and to which the Borrower or any member of the ERISA Group is then making or accruing an obligation to make contributions or, solely for the purposes of
Section 6.1.19
, within the preceding five Plan years, has made or had an obligation to make such contributions.
Multiple Employer Plan
means a Plan which has two or more contributing sponsors (at least one of which is the Borrower or any member of the ERISA Group) at least two of whom are not under common control, as such a plan is described in Sections 4063 and 4064 of ERISA.
NJNG Note Agreement
means the Note Purchase Agreement, dated May 15, 2004, between the Borrower and the purchasers listed therein, as the same may have been supplemented, amended, or modified prior to the date hereof, and as the same may hereafter be supplemented, amended, or modified from time to time.
NJNG Notes
means the unsecured Indebtedness issued by the Borrower pursuant to the NJNG Note Agreement in an aggregate principal amount of $60,000,000 plus interest at a rate of 4.77% per annum, which Indebtedness matures March 15, 2014.
Non-Consenting Lender
has the meaning assigned to such term in
Section 11.1
.
Notes
means the Revolving Credit Notes.
Notice
has the meaning assigned to such term in
Section 11.6.
Obligations
means any obligation or liability of the Borrower to the Agent or any of the Lenders, howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, now or hereafter existing, or due or to become due, under or in connection with this Agreement, any Notes,
the Agent’s Letter or any other Loan Document. Obligations shall include the liabilities to any Lender (or any Affiliate thereof) under any Lender-Provided Interest Rate Hedge but shall not include the liabilities to other Persons under any other Interest Rate Hedge.
Official Body
means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).
Other Taxes
has the meaning given to such term in
Section 5.8.2
.
Parent
means New Jersey Resources Corporation, a corporation organized and existing under the laws of the State of New Jersey, of which Borrower is a wholly owned Subsidiary.
Partnership Interests
has the meaning given to such term in
Section 6.1.2
.
PBGC
means the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA or any successor.
Permitted Acquisitions
has the meaning assigned to such term in
Section 8.2.5
.
Permitted Investments
means:
(a) direct obligations of the United States of America or any agency or instrumentality thereof or obligations backed by the full faith and credit of the United States of America maturing in twelve (12) months or less from the date of acquisition;
(b) repurchase agreements having a duration of not more than sixty (60) days that are collateralized by full faith and credit obligations of the United States Government or obligations guaranteed by the United States Government and its agencies;
(c) interests in investment companies registered under the Investment Company Act of 1940, as amended (or in a separate portfolio of such an investment company), that invest primarily in full faith and credit obligations of the United States Government or obligations guaranteed by the United States Government and its agencies and repurchase agreements collateralized by such obligations;
(d) time deposits with any office located in the United States of the Lenders or any other bank or trust company which is organized under the laws of the United States and has combined capital, surplus and undivided profits of not less than $500,000,000.00 or with any bank which is organized other than under the laws of the United States (i) the commercial paper of which is rated at least A-1 by Standard & Poor’s and P-1 by Moody’s (or, if such commercial paper is rated only by Standard & Poor’s, at least A-1 by Standard & Poor’s, or if such commercial paper is rated only by Moody’s, at least P-1 by Moody’s) or (ii) the long term senior debt of which is rated at least AA by Standard & Poor’s and Aa2 by Moody’s (or, if such debt is rated only by Standard & Poor’s, at least AA by Standard & Poor’s, or if such debt is rated only by Moody’s, at least Aa2 by Moody’s);
(e) commercial paper having a maturity of not more than one year from the date of such investment and rated at least A-1 by Standard & Poor’s and P-1 by Moody’s
(or, if such commercial paper is rated only by Standard & Poor’s, at least A-1 by Standard &
Poor’s or, if such commercial paper is rated only by Moody’s, at least P-1 by Moody’s);
(f) instruments held for collection in the ordinary course of business;
(g) any equity or debt securities or other form of debt instrument obtained in settlement of debts previously contracted; and
(h) any Investment arising out of a Permitted Related Business Opportunity.
Permitted Liens
means:
(a) Liens for taxes, assessments, or similar charges, incurred in the ordinary course of business and which are not yet due and payable or are being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP are maintained on such Person's books, and which could not be reasonably expected to result in a Material Adverse Change;
(b) Pledges or deposits made in the ordinary course of business to secure payment of workers' compensation, or to participate in any fund in connection with workers' compensation, unemployment insurance, old-age pensions or other social security programs or retirement benefits legislation;
(c) Liens of mechanics, materialmen, warehousemen, carriers, or other like Liens, securing obligations incurred in the ordinary course of business that are not yet due and payable and Liens of landlords securing obligations to pay lease payments that are not yet due and payable or in default, or in either case are being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP are maintained on such Person's books and which could not be reasonably expected to result in a Material Adverse Change;
(d) Any Lien arising out of judgments or awards but only to the extent that the creation of any such Lien shall not be an event or condition which, with or without notice or lapse of time or both, would cause Borrower to be in violation of
Section 9.1.6
;
(e) Security interests in favor of lessors of personal property, which property is the subject of a true lease;
(f) Good-faith pledges or deposits made in the ordinary course of business to secure performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases, not in excess of the aggregate amount due thereunder, or to secure statutory obligations, or surety, appeal, indemnity, performance or other similar bonds required in the ordinary course of business;
(g) Encumbrances consisting of zoning restrictions, easements, rights-of-way or other restrictions on the use of real property and minor defects to title to real property, none of which materially impairs the use of such property or the value thereof;
(h) Liens on property leased by the Borrower or any Subsidiary of the Borrower securing obligations of the Borrower or such Subsidiary to the lessor under such leases, so long as to the extent the payments or other amounts due and owing under any such lease constitute Indebtedness, such Indebtedness is either Indebtedness under the Permitted Sale and Leaseback Program or is otherwise permitted under
Section 8.2.1(d)
;
(i) Liens on assets of the Borrower described on Part A of
Schedule 1.1(P)
(other than on any "Excepted Property" of the Borrower, as "Excepted Property" is defined in the First Mortgage Indenture on the Closing Date), which Liens secure outstanding Indebtedness under the First Mortgage Bonds issued pursuant to the First Mortgage Indenture (including additional Indebtedness which is issued thereunder in accordance with Article Two of the First Mortgage Indenture) to the extent such Indebtedness is permitted under
Section
8.2.1(c)
or
8.2.1(d)
(as applicable)
(j) Purchase Money Security Interests encumbering only the assets so purchased and the proceeds thereof, and securing only Indebtedness incurred to acquire such assets to the extent such Indebtedness is permitted under
Section 8.2.1(d)
;
(k) Liens on any property or asset of an Acquired Person so long as: (i) such Liens secure Indebtedness of the Acquired Person and such Indebtedness and such Liens on property or assets of the Acquired Person existed prior to the consummation of the Permitted Acquisition and were not created in contemplation of or in connection with such acquisition, (ii) such Liens apply solely to the assets of the Acquired Person and do not apply to any asset of the Borrower or any Subsidiary of the Borrower, and (iii) such Indebtedness is permitted under
Section 8.2.1(d)
;
(l) Liens (other than those described in clause (i) above) described on Part B of
Schedule 1.1(P)
;
(m) Liens consisting of the First Mortgage Bonds issued under the First Mortgage Indenture which secure (i) the loan agreements identified on
Schedule 8.2.1
(with a net principal Indebtedness under the Series AA through KK First Mortgage Bonds and the related loan agreements of $144,845,000) and (ii) the promissory note or promissory notes in the original aggregate principal amount of $125,000,000 issued under a note purchase agreement (with a net principal Indebtedness under both the Series LL First Mortgage Bonds and related promissory note(s) of $125,000,000 as described on
Schedule 8.2.1
);
(n) Liens consisting of additional series of First Mortgage Bonds to be issued under the First Mortgage Indenture which secure net Indebtedness in an aggregate principal amount not greater than the aggregate amount of such additional First Mortgage Bonds, so long as such net Indebtedness is permitted under
Section 8.2.1(d)
; and
(o) other Liens (of which there are none as of the Closing Date) to the extent they secure Indebtedness permitted under
Section 8.2.1(d)
, so long as
the aggregate principal amount of Indebtedness secured thereby does not exceed $25,000,000 in the aggregate.
Permitted Related Business Opportunity
means any transaction with another Person (other than any Inactive Subsidiary of Parent) involving business activities or assets reasonably related or complementary to the business of the Borrower and its Subsidiaries as conducted on the Closing Date or as may be conducted pursuant to
Section 8.2.9
, including, without limitation, the management and marketing of storage, capacity and transportation of gas and other forms of energy, the generation, transmission or storage of gas and other forms of energy, or the access to gas and energy transmission lines, and business initiatives for the conservation and efficiency of gas and energy.
Permitted Sale and Leaseback Program
means the sale and leaseback of gas meters by the Borrower, consistent with its existing sale and leaseback program, in an aggregate amount in each fiscal year not to exceed $12,000,000.00.
Permitted Transferee
means, as of any date of determination, any of the following with respect to any then current officer or director of the Parent: (a) such Person’s spouse, lineal descendants or lineal descendant’s of such Person’s spouse, (b) any charitable corporation or trust established by such officer or director or by any Person described in the immediately preceding clause (a), (c) any trust (or in the case of a minor, a custodial account under a Uniform Gifts or Transfers to Minors Act) of which the beneficiary or beneficiaries are one or more Persons described in the immediately preceding clauses (a) or (b), or (d) any executor or administrator upon the death of such officer or director or the death of any Person described in the immediately preceding clauses (a) or (b).
Person
means any individual, corporation, partnership, limited liability company, association, joint-stock company, trust, unincorporated organization, joint venture, government or political subdivision or agency thereof, or any other entity.
Plan
means an “employee pension benefit plan,” within the meaning of Section (3)(2) of ERISA (not including a Multiple Employer Plan or a Multiemployer Plan), which is covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Internal Revenue Code and either (a) is maintained by any member of the ERISA Group for employees of any member of the ERISA Group or (b) solely for purposes of
Section 6.1.19
, has at any time within the preceding five years been maintained by any entity which was at such time a member of the ERISA Group for employees of any entity which was at such time a member of the ERISA Group.
Potential Default
means any event or condition which with notice, passage of time, or both, would constitute an Event of Default.
Prime Rate
means the rate of interest per annum publicly announced from time to time by JPMorgan Chase Bank, N.A. as its prime rate in effect at its Principal Office; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective.
Principal Office
means the main banking office of the Agent in New York, New York.
Prohibited Transaction
means any prohibited transaction as defined in
Section 4975 of the Internal Revenue Code or Section 406 of ERISA for which neither an individual nor a class exemption has been issued by the United States Department of Labor.
Property
means all real property, both owned and leased, of the Borrower or any Subsidiary of the Borrower.
Purchase Money Security Interest
means Liens upon tangible personal property securing loans to the Borrower or any Subsidiary of the Borrower or deferred payments by the Borrower or such Subsidiary for the purchase of such tangible personal property.
Purchasing Lender
means a Lender which becomes a party to this Agreement by executing an Assignment and Assumption Agreement.
Ratable Share
means, with respect to a Lender’s obligation to make Loans and receive payments, interest, and fees related thereto, the proportion that such Lender’s Commitment bears to the Commitments of all of the Lenders,
provided
that if the Commitments have terminated or expired, the Ratable Shares for purposes of this clause shall be determined based upon the Commitments most recently in effect, giving effect to any assignments.
Regulated Entity
means any Person which is subject under Law to any of the laws, rules or regulations respecting the financial, organizational or rate regulation of electric companies, public utilities, or public utility holding companies.
Regulated Substances
means, without limitation, any substance, material or waste, regardless of its form or nature, defined under Environmental Laws as a “hazardous substance,” “pollutant,” “pollution,” “contaminant,” “hazardous or toxic substance,” “extremely hazardous substance,” “toxic chemical,” “toxic substance,” “toxic waste,” “hazardous waste,” “special handling waste,” “industrial waste,” “residual waste,” “solid waste,” “municipal waste,” “mixed waste,” “infectious waste,” “chemotherapeutic waste,” “medical waste,” or “regulated substance”, or any other substance, material or waste, regardless of its form or nature, which is regulated, controlled or governed by Environmental Laws due to its radioactive, ignitable, corrosive, reactive, explosive, toxic, carcinogenic or infectious properties or nature or any other material, substance or waste, regardless of its form or nature, which otherwise is regulated, controlled or governed by Environmental Laws, including without limitation, petroleum and petroleum products (including crude oil and any fractions thereof), natural gas, synthetic gas and any mixtures thereof, asbestos, urea formaldehyde, polychlorinated biphenlys, mercury, radon and radioactive materials.
Regulations
has the meaning given to such term in
Section 11.18.1
.
Regulation U
means Regulations U, T, G, or X as promulgated by the Board of Governors of the Federal Reserve System, as amended from time to time.
Related Parties
has the meaning given to such term in
Section 10.14
Remedial Action
means any investigation, identification, characterization, delineation, cleanup, removal, remediation, containment, control or abatement of or other response actions to Regulated Substances and any closure or post-closure measures associated therewith.
Reportable Event
means a reportable event described in Section 4043 of ERISA and regulations thereunder with respect to a Plan, Multiple Employer Plan which is covered under Title IV of ERISA or subject to the minimum funding standards under Section 412 or 430 of the Internal Revenue Code, or Multiemployer Plan.
Required Lenders
means, at any time, Lenders whose Ratable Shares equal or exceed 51%
as determined pursuant to the definition of “Ratable Share.”
Revolving Credit Commitment
means, as to any Lender at any time, the amount initially set forth opposite its name on
Schedule 1.1(B)
in the column labeled “Amount of Commitment for Revolving Credit Loans,” and thereafter as determined by the Agent after giving effect to each applicable Assignment and Assumption Agreement executed by such Lender and delivered to the Agent, and
Revolving Credit Commitments
means the aggregate Revolving Credit Commitments of all of the Lenders.
Revolving Credit Loans
means collectively and
Revolving Credit Loan
means separately all Revolving Credit Loans or any Revolving Credit Loan made by the Lenders or one of the Lenders to the Borrower pursuant to
Section 2.1.1
.
Revolving Credit Note
means any Revolving Credit Note of the Borrower in the form of
Exhibit 1.1(R)
issued by the Borrower at the request of a Lender pursuant to
Section 5.9
evidencing the Revolving Credit Loans to such Lender, together with all amendments, extensions, renewals, replacements, refinancings or refundings thereof in whole or in part.
Revolving Facility Usage
means at any time the Revolving Credit Loans outstanding.
SEC
means the Securities and Exchange Commission or any governmental agencies substituted therefor.
SEC Filing
means the Parent’s Form 10‑K, filed with the SEC for the fiscal year ended September 30, 2010.
Solvent
means, with respect to any Person on a particular date, that on such date (a) such Person is able to realize upon its assets and pay its debts and other liabilities as they mature in the normal course of business, and (b) such Person has not incurred debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature.
Standard & Poor’s
means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. and its successors.
Statutory Reserve Rate
means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to which the Agent is subject for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board). Such reserve percentages shall include those imposed pursuant to such Regulation D of the Board. Euro-Rate Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D of the Board or any comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.
Subsidiary
of any Person at any time means (a) any corporation or trust of which 50% or more (by number of shares or number of votes) of the outstanding capital stock or shares of beneficial interest normally entitled to vote for the election of one or more directors or trustees (regardless of any contingency which does or may suspend or dilute the voting rights) is at such time owned directly or indirectly by such Person or one or more of such Person’s Subsidiaries, (b) any partnership of which such Person is a general partner or of which 50% or more of the partnership interests is at the time directly or indirectly owned by such Person or one or more of such Person’s Subsidiaries, (c) any limited liability company of which such Person is a member or of which 50% or more of the limited liability company interests is at the time directly or indirectly owned by such Person or one or more of such Person’s Subsidiaries or (d) any corporation, trust, partnership, limited liability company or other entity which is controlled or capable of being controlled by such Person or one or more of such Person’s Subsidiaries.
Subsidiary Shares
has the meaning assigned to such term in
Section 6.1.2
.
Taxes
has the meaning given to such term in
Section 5.8.1
.
Transferor Lender
means the selling Lender pursuant to an Assignment and Assumption Agreement.
Trustee
has the meaning assigned to such term in the recitals to this Agreement.
USA Patriot Act
means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.
Unless the context of this Agreement otherwise clearly requires, the following rules of construction shall apply to this Agreement and each of the other Loan Documents:
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1.2.1.
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Number; Inclusion
.
|
References to the plural include the singular, the plural, the part and the whole; “or” has the inclusive meaning represented by the phrase “and/or” and “including” has the meaning represented by the phrase “including without limitation”.
References to “determination” of or by the Agent or the Lenders shall be deemed to include good-faith estimates by the Agent or the Lenders (in the case of quantitative determinations) and good-faith beliefs by the Agent or the Lenders (in the case of qualitative determinations) and such determination shall be conclusive absent manifest error.
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1.2.3.
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Agent’s Discretion and Consent
.
|
Whenever the Agent or the Lenders are granted the right herein to act in its or their sole discretion or to grant or withhold consent such right shall be exercised in good faith.
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1.2.4.
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Documents Taken as a Whole
.
|
The words “hereof,” “herein,” “hereunder,” “hereto” and similar terms in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document as a whole and not to any particular provision of this Agreement or such other Loan Document.
The section and other headings contained in this Agreement or such other Loan Document and the Table of Contents (if any), preceding this Agreement or such other Loan Document are for reference purposes only and shall not control or affect the construction of this Agreement or such other Loan Document or the interpretation thereof in any respect.
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1.2.6.
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Implied References to this Agreement
.
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Article, section, subsection, clause, schedule and exhibit references are to this Agreement or other Loan Document, as the case may be, unless otherwise specified herein.
Reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement or such other Loan Document, as the case may be, and reference to a Person in a particular capacity excludes such Person in any other capacity.
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1.2.8.
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Modifications to Documents
.
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Reference to any agreement (including this Agreement and any other Loan Document together with the schedules and exhibits hereto or thereto), document or instrument means such agreement, document or instrument as amended, modified, replaced, substituted for, superseded or restated.
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1.2.9.
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From, To and Through
.
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Relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding,” and “through” means “through and including”.
References to “shall” and “will” are intended to have the same meaning.
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1.3
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Accounting Principles
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Except as otherwise provided in this Agreement, all computations and determinations as to accounting or financial matters and all financial statements to be delivered pursuant to this Agreement shall be made and prepared in accordance with GAAP (including principles of consolidation where appropriate), and all accounting or financial terms shall have the meanings ascribed to such terms by GAAP;
provided
that all accounting terms used in
Section 8.2
(and all defined terms used in the definition of any accounting term used in
Section 8.2
) have the meaning given to such terms (and defined terms) under GAAP as in effect on the date hereof applied on a basis consistent with those used in preparing the Annual Statements referred to in
Section 6.1.8
. In the event of any change after the date hereof in GAAP, and if such change would affect the computation of any of the financial covenants set forth in
Section 8.2
based upon the Borrower’s regularly prepared financial statements by reason of the preceding sentence, then the parties hereto agree to endeavor, in good faith, to agree upon an amendment to this Agreement that would adjust such financial covenants in a manner that would not affect the substance thereof, but would allow compliance therewith to be determined in accordance with the Borrower’s financial statements at that time,
provided
that, until so amended, such financial covenants shall continue to be computed in accordance with GAAP prior to such change therein. Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made (i) without giving effect to any election under Accounting Standards Codification 825-10-25 (previously referred to as Statement of Financial Accounting Standards 159) (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of the Borrower or any Subsidiary at “fair value”, as defined therein and (ii) without giving effect to any treatment of Indebtedness in respect of convertible debt instruments under Accounting Standards Codification 470-20 to value any such Indebtedness in a reduced or bifurcated manner as described therein, and such Indebtedness shall at all times be valued at the full stated principal amount thereof.
2.
REVOLVING CREDIT FACILITY
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2.1.1.
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Revolving Credit Loans
.
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Subject to the terms and conditions hereof and relying upon the representations and warranties herein set forth, each Lender severally agrees to make Revolving Credit Loans to the Borrower in Dollars at any time or from time to time on or after the date hereof to, but not including, the Expiration Date,
provided
that after giving effect to each such Revolving Credit Loan the aggregate amount of Revolving Credit Loans from such Lender shall not exceed such Lender’s Revolving Credit Commitment; and
provided
further
that the Revolving Facility Usage at any time shall not exceed the Revolving Credit Commitments of all the Lenders. Within such limits of time and amount and subject to the other provisions of this Agreement, the Borrower may borrow, repay and reborrow pursuant to this
Section 2.1.1
. The outstanding principal amount of all Revolving Credit Loans, together with accrued interest thereon, shall be due and payable on the Expiration Date.
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2.1.2.
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Intentionally omitted
.
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2.2
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Nature of Lenders’ Obligations with Respect to Revolving Credit Loans
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Each Lender shall be obligated to participate in each request for Revolving Credit Loans pursuant to
Section 2.4
in accordance with its Ratable Share. The aggregate amount of each Lender’s Revolving Credit Loans outstanding hereunder to the Borrower at any time shall never exceed its Revolving Credit Commitment. The obligations of each Lender hereunder are several. The failure of any Lender to perform its obligations hereunder shall not affect the Obligations of the Borrower to any other party nor shall any other party be liable for the failure of such Lender to perform its obligations hereunder. The Lenders shall have no obligation to make Revolving Credit Loans hereunder on or after the Expiration Date.
Accruing from the date hereof until the Expiration Date, the Borrower agrees to pay to the Agent in Dollars for the account of each Lender, as consideration for such Lender’s Revolving Credit Commitment hereunder, a nonrefundable commitment fee (the “
Commitment Fee
”), calculated on a per annum (365 or 366 days, as appropriate, and actual days elapsed) basis at the Applicable Commitment Fee Rate from time to time on the average daily difference between the amount of (a) such Lender’s Revolving Credit Commitment as the same may be constituted from time to time and (b) the principal amount of such Lender’s Ratable Share of Revolving Facility Usage, in each case, as determined for the immediately preceding fiscal quarter (or shorter period commencing with the Closing Date or ending with the Expiration Date);
provided
,
however
, that any Commitment Fee accrued with respect to the Revolving Credit Commitment of a Defaulting Lender during the period prior to the time such Lender became a Defaulting Lender and unpaid at such time shall not be payable by the Borrower so long as such Lender is a Defaulting Lender except to the extent that such Commitment Fee shall
otherwise have been due and payable by the Borrower prior to such time; and
provided
further
that no Commitment Fee shall accrue on the Revolving Credit Commitment of a Defaulting Lender so long as such Lender is a Defaulting Lender. All Commitment Fees shall be payable quarterly in arrears on the first day of each January, April, July and October for the immediately preceding quarter, the date of each reduction of the Revolving Credit Commitments, and on the Expiration Date or upon acceleration of the Notes.
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2.4
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Revolving Credit Loan Requests
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Except as otherwise provided herein, the Borrower may from time to time prior to the Expiration Date request the Lenders to make Revolving Credit Loans or renew or convert the Interest Rate Option applicable to existing Revolving Credit Loans pursuant to
Section 4.2
, by delivering to the Agent, not later than 11:30 a.m., Chicago time, (a) three (3) Business Days prior to the proposed Borrowing Date with respect to the making of Revolving Credit Loans to which the Euro-Rate Option applies or the date of conversion to or the renewal of the Euro-Rate Option for any such Loans; and (b) on either the proposed Borrowing Date with respect to the making of a Revolving Credit Loan to which the Base Rate Option applies or the last day of the preceding Interest Period with respect to the conversion to the Base Rate Option for any Loan, of a Loan Request therefor duly completed by an Authorized Officer substantially in the form of
Exhibit 2.4
or a Loan Request by telephone immediately confirmed in writing by letter, facsimile or telex in the form of such Exhibit, it being understood that the Agent may rely on the authority of any individual making such a telephonic request without the necessity of receipt of such written confirmation, provided that such individual purports to be an Authorized Officer. Each Loan Request shall be irrevocable and shall specify (i) the proposed Borrowing Date; (ii) the aggregate amount of the proposed Revolving Credit Loans comprising each Borrowing Tranche, the amount of which shall be in integral multiples of $1,000,000.00 and not less than $3,000,000.00 for each Borrowing Tranche to which the Euro-Rate Option applies and not less than the lesser of $1,000,000.00 and in integral multiples of $100,000.00 or the maximum amount available for Borrowing Tranches to which the Base Rate Option applies; (iii) whether the Euro-Rate Option or Base Rate Option shall apply to the proposed Loans comprising the applicable Borrowing Tranche; and (iv) in the case of a Borrowing Tranche to which the Euro-Rate Option applies, an appropriate Interest Period for the Loans comprising such Borrowing Tranche.
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2.5
|
Intentionally omitted
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2.6
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Making Revolving Credit Loans
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2.6.1.
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Making Revolving Credit Loans
.
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Promptly after receipt by the Agent of a Loan Request for or with respect to Revolving Credit Loans pursuant to
Section 2.4
, the Agent shall notify the Lenders with Revolving Credit Commitments of its receipt of such Loan Request specifying: (a) the proposed Borrowing Date and the time and method of disbursement of the Revolving Credit Loans requested thereby; (b) the amount and type of each such Revolving Credit Loan and the applicable Interest Period (if any); and (c) the apportionment among the Lenders of such Revolving Credit Loans as determined by the Agent in accordance with
Section 2.2
. Each Lender shall remit the principal amount of each Revolving Credit Loan to the Agent such that the Agent is able to, and
the Agent shall, to the extent the Lenders have made funds available to it for such purpose and subject to
Section 7.2
, fund such Revolving Credit Loans to the Borrower or to the Trustee, at the direction of the Borrower, as set forth in the applicable Loan Request, in U.S. Dollars and immediately available funds at the Principal Office prior to 1:00 p.m., Chicago time, on the applicable Borrowing Date,
provided
that if any Lender fails to remit such funds to the Agent in a timely manner, the Agent may elect in its sole discretion to fund with its own funds the Revolving Credit Loans of such Lender on such Borrowing Date, and such Lender shall be subject to the repayment obligation in
Section 10.16
.
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2.6.2.
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Intentionally omitted
.
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2.7
|
Intentionally omitted
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The proceeds of the Loans shall be used by the Borrower for payment of the principal, purchase price upon tender thereof and interest on the Bonds, each in accordance with the terms of the Indenture and
Section 8.1.10
.
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2.9
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Intentionally omitted
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2.10
|
Intentionally omitted
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2.11
|
Intentionally omitted
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3.
INTENTIONALLY OMITTED
4.
INTEREST RATES
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4.1
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Interest Rate Options
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T
he Borrower shall pay interest in respect of the outstanding unpaid principal amount of the Loans as selected by it from the Base Rate Option or Euro-Rate Option set forth below applicable to the Loans, it being understood that, subject to the provisions of this Agreement, the Borrower may select different Interest Rate Options and different Interest Periods to apply simultaneously to the Loans comprising different Borrowing Tranches and may convert to or renew one or more Interest Rate Options with respect to all or any portion of the comprising any Borrowing Tranche,
provided
that there shall not be at any one time outstanding more than eight (8) Borrowing Tranches in the aggregate among all of the Loans. If at any time the designated rate applicable to any Loan made by any Lender exceeds such Lender’s highest lawful rate, the rate of interest on such Lender’s Loan shall be limited to such Lender’s highest lawful rate. Notwithstanding anything to the contrary set forth herein, if an Event of Default or Potential Default exists and is continuing, the Borrower may not request, convert to, or renew the Euro-Rate Option for any Loans and the Required Lenders may demand that all existing Borrowing Tranches bearing interest under the Euro-Rate Option shall be
converted immediately to the Base Rate Option, subject to the obligation of the Borrower to pay any indemnity under
Section 5.6.2
in connection with such conversion.
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4.1.1.
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Revolving Credit Interest Rate Options
.
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The Borrower shall have the right to select from the following Interest Rate Options applicable to the Revolving Credit Loans:
(a)
Base Rate Option
: A fluctuating rate per annum (computed on the basis of a year of 360 days and actual days elapsed) equal to the Base Rate plus the Applicable Margin, such interest rate to change automatically from time to time effective as of the effective date of each change in the Base Rate and/or the Applicable Margin; or
(b)
Euro-Rate Option
: A rate per annum (computed on the basis of a year of 360 days and actual days elapsed) equal to the Euro-Rate plus the Applicable Margin, such interest rate to change automatically from time to time as of the effective date of each change in the Applicable Margin.
Notwithstanding the foregoing, if any Event of Default has occurred and is continuing, no Loan may be made, converted to or renewed under any Euro-Rate Option.
The Borrower may call the Agent on or before the date on which a Loan Request is to be delivered to receive an indication of the interest rates then in effect, but it is acknowledged that such projection shall not be binding on the Agent or the Lenders nor affect the rate of interest which thereafter is actually in effect when the election is made.
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4.1.3.
|
Change in Fees or Interest Rates
.
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If the Applicable Margin or Applicable Commitment Fee Rate is increased or reduced with respect to any period for which the Borrower has already paid interest or the Commitment Fee, the Agent shall recalculate the additional interest or Commitment Fee due from or to the Borrower and shall, within fifteen (15) Business Days after the Borrower notifies the Agent of such increase or decrease, give the Borrower and the Lenders notice of such recalculation.
4.1.3.1
Any additional interest or Commitment Fee due from the Borrower shall be paid to the Agent for the account of the Lenders on the next date on which an interest or fee payment is due;
provided
that if there are no Loans outstanding or if the Loans are due and payable, such additional interest or Commitment Fee shall be paid promptly after receipt of written request for payment from the Agent.
4.1.3.2
Any interest or Commitment Fee refund due to the Borrower shall be credited against payments otherwise due from the Borrower on the next interest or fee payment due date or, if the Loans have been repaid and the Lenders are no longer committed to lend under this Agreement, the Lenders shall pay
the Agent for the account of the Borrower such interest or Commitment Fee refund not later than five (5) Business Days after written notice from the Agent to the Lenders.
At any time when the Borrower shall select, convert to or renew a Euro-Rate Option, the Borrower shall notify the Agent thereof by delivering a Loan Request at least three (3) Business Days prior to the effective date of such Interest Rate Option. The notice shall specify an
Interest Period during which such Interest Rate Option shall apply. Notwithstanding the preceding sentence, the following provisions shall apply to any selection of, renewal of or conversion to a Euro-Rate Option:
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4.2.1.
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Amount of Borrowing Tranche
.
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The amount of each Borrowing Tranche of Loans to which a Euro-Rate Option applies shall be in integral multiples of $1,000,000.00 and not less than $3,000,000.00.
In the case of the renewal of a Euro-Rate Option at the end of an Interest Period, the first day of the new Interest Period shall be the last day of the preceding Interest Period, without duplication, in payment of interest for such day.
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4.3
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Interest After Default
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To the extent permitted by Law, upon the occurrence of an Event of Default and until such time such Event of Default shall have been cured or waived:
The rate of interest for each Loan otherwise applicable pursuant to
Section 4.1
, respectively, shall be increased by 2.0% per annum; and
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4.3.2.
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Other Obligations
.
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Each other Obligation hereunder if not paid when due shall bear interest at a rate per annum equal to the sum of the rate of interest applicable under the Base Rate Option plus an additional 2% per annum from the time such Obligation becomes due and payable and until it is paid in full.
The Borrower acknowledges that the increase in rates referred to in this
Section 4.3
reflects, among other things, the fact that such Loans or other amounts have become a substantially greater risk given their default status and that the Lenders are entitled to additional compensation for such risk; and all such interest shall be payable by the Borrower upon demand by the Agent.
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4.4
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Euro-Rate Unascertainable; Illegality; Increased Costs; Deposits Not Available
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If on any date on which a Euro-Rate would otherwise be determined with respect to Loans, the Agent shall have determined that:
(a) adequate and reasonable means do not exist for ascertaining such Euro-Rate, or
(b) a contingency has occurred which materially and adversely affects the London interbank eurodollar market relating to the Euro-Rate, then the Agent shall have the rights specified in
Section 4.4.3
.
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4.4.2.
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Illegality; Increased Costs; Deposits Not Available
.
|
If at any time any Lender shall have determined that:
(a) the making, maintenance or funding of any Loan to which a Euro-Rate Option applies has been made unlawful or materially impracticable by compliance by such Lender in good faith with any Law or any interpretation or application thereof by any Official Body or with any request or directive of any such Official Body (whether or not having the force of Law), or
(b) such Euro-Rate Option will not adequately and fairly reflect the cost to such Lender of the establishment or maintenance of any such Loan in a material respect, or
(c) after making all reasonable efforts, deposits of the relevant amount in Dollars for the relevant Interest Period for a Loan, or to banks generally, to which a Euro-Rate Option applies, are not available to such Lender with respect to such Loan, or to banks generally, respectively, in the interbank eurodollar market, then the Agent shall have the rights specified in
Section 4.4.3
.
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4.4.3.
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The Agent’s and Lenders’ Rights
.
|
In the case of any event specified in
Section 4.4.1
above, the Agent shall promptly so notify the Lenders and the Borrower thereof, and in the case of an event specified in
Section 4.4.2
above, such Lender shall promptly so notify the Agent and endorse a certificate to such notice as to the specific circumstances of such notice, and the Agent shall promptly send copies of such notice and certificate to the other Lenders and the Borrower. Upon such date as shall be specified in such notice (which shall not be earlier than the date such notice is given), the obligation of (a) the Lenders, in the case of such notice given by the Agent or (b) such Lender, in the case of such notice given by such Lender, to allow the Borrower to select, convert to or renew a Euro-Rate Option shall be suspended until the Agent shall have later notified the Borrower, or such Lender shall have later notified the Agent, of the Agent’s or such Lender’s, as the case may be, determination that the circumstances giving rise to such previous
determination no longer exist. If at any time the Agent makes a determination under
Section 4.4.1
and the Borrower has previously notified the Agent of its selection of, conversion to or renewal of a Euro-Rate Option and such Interest Rate Option has not yet gone into effect,
such notification shall be deemed to provide for the selection of, conversion to or renewal of the Base Rate Option otherwise available with respect to such Loans if the Borrower has requested the Euro-Rate Option. If any Lender notifies the Agent of a determination under
Section 4.4.2
, the Borrower shall, subject to the Borrower’s indemnification Obligations under
Section 5.6.2
as to any Loan of the Lender to which a Euro-Rate Option applies, on the date specified in such notice either (i) convert such Loan to the Base Rate Option otherwise available with respect to such Loan, or (ii) prepay such Loan in accordance with
Section 5.4.1
. Absent due notice from the Borrower of conversion or prepayment, such Loan shall automatically be converted to the Base Rate Option otherwise available with respect to such Loan upon such specified date.
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4.5
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Selection of Interest Rate Options
|
If the Borrower fails to select a new Interest Period to apply to any Borrowing Tranche of Loans under the Euro-Rate Option at the expiration of an existing Interest Period applicable to such Borrowing Tranche in accordance with the provisions of
Section 4.2
, the Borrower shall be deemed to have converted such Borrowing Tranche to the Base Rate Option, commencing upon the last day of the existing Interest Period.
5.
PAYMENTS
All payments and prepayments to be made in respect of principal, interest, Commitment Fee, Agent’s Fee or other fees or amounts due from the Borrower hereunder shall be payable prior to 10:00 a.m., Chicago time, on the date when due, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived by the Borrower, and without set-off, counterclaim or other deduction of any nature, and an action therefor shall immediately accrue. Such payments shall be made to the Agent at the Principal Office for the ratable accounts of the Lenders and in immediately available funds, and the Agent shall promptly distribute such amounts to the Lenders in immediately available funds,
provided
that in the event payments are received by 10:00 a.m., Chicago time, by the Agent with respect to the Loans and such payments are not distributed to the Lenders on the same day received by the Agent, the Agent shall pay the Lenders the Federal Funds Effective Rate, with respect to the amount of such payments for each day held by the Agent and not distributed to the Lenders. The Agent’s and each Lender’s statement of account, ledger or other relevant record shall, in the absence of manifest error, be conclusive as the statement of the amount of principal of and interest on the Loans and other amounts owing under this Agreement and shall be deemed an “account stated.”
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5.2
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Pro Rata Treatment of Lenders; Sharing of Payments; Agent’s Presumption
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5.2.1.
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Pro Rata Treatment of Lenders
.
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Each borrowing of Loans shall be allocated to each Lender according to its Ratable Share and each selection of, conversion to or renewal of any Interest Rate Option applicable to the Loans and each payment or prepayment by the Borrower with respect to principal or interest on the Loans or Commitment Fees or other fees (except for the Agent’s Fee) or amounts due from the Borrower hereunder to the Lenders with respect to the Loans shall (except as otherwise may be provided with respect to a Defaulting Lender or a Delinquent Lender and as provided in
Section 4.4.3
in the case of an event specified in
Sections 4.4
,
5.4.2
or
5.6
) be made in proportion to the applicable Loans outstanding from each Lender and, if no such Loans are then outstanding, in proportion to the Ratable Share.
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5.2.2.
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Sharing of Payments by Lenders
.
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If any Lender shall, by exercising any right of setoff, counterclaim or banker’s lien, by receipt of voluntary payment, by realization upon security, or by any other non-pro rata source, obtain payment in respect of any principal of or interest on any of its Loans or other obligations hereunder resulting in such Lender’s receiving payment of a proportion of the aggregate amount of its Loans and accrued interest thereon or other such obligations greater than its Ratable Share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the Agent of such fact and (b) purchase (for cash at face value) participations in the Loans and such other obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and other amounts owing them, provided that:
(i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, together with interest or other amounts, if any, required by Law (including court order) to be paid by the Lender or the holder making such purchase; and
(ii) the provisions of this Section shall not be construed to apply to (A) any payment made by the Borrower pursuant to and in accordance with the express terms of the Loan Documents or (B) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant, other than to the Borrower or any Subsidiary thereof (as to which the provisions of this Section shall apply).
The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of setoff and counterclaim with respect
to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.
Notwithstanding anything to the contrary contained in this Agreement or any of the other Loan Documents, any Lender that fails at any time to comply with the provisions of this
Section with respect to purchasing participations from the other Lenders whereby such Lender’s share of any payment received, whether by setoff or otherwise, is in excess of its Ratable Share of such payments due and payable to all of the Lenders, when and to the full extent required by the provisions of this Agreement, shall be deemed delinquent (a “
Delinquent Lender
”) and shall be deemed a Delinquent Lender until such time as each such delinquency and all of its obligations hereunder are satisfied. A Delinquent Lender shall be deemed to have assigned any and all payments due to it from the Borrower, whether on account of or relating to outstanding Loans, interest, fees or otherwise, to the remaining nondelinquent Lenders for application to, and reduction of, their respective Ratable Share of all outstanding Loans and other unpaid Obligations of the Borrower. The Delinquent Lender hereby authorizes the Agent to distribute such payments to the nondelinquent Lenders in proportion to their respective Ratable Share of all outstanding Loans and other unpaid Obligations of Borrower. A Delinquent Lender shall be deemed to have satisfied in full a delinquency when and if, as a result of application of the assigned payments to all outstanding Loans and other unpaid Obligations of the Borrower to the nondelinquent Lenders, the Lenders’ respective Ratable Share of all outstanding Loans and unpaid Obligations have returned to those in effect immediately prior to such delinquency and without giving effect to the nonpayment causing such delinquency.
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5.2.3.
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Presumptions by the Agent
.
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Unless the Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Agent for the account of the Lenders hereunder that the Borrower will not make such payment, the Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to the Agent forthwith on demand the amount so distributed to such Lender, with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Agent in accordance with banking industry rules on interbank compensation.
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5.3
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Interest Payment Dates
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Interest on Loans to which the Base Rate Option applies shall be due and payable quarterly in arrears on the first day of each January, April, July and October after the date hereof and on the Expiration Date, or upon acceleration of the Loans. Interest on Loans to which the Euro-Rate Option applies shall be due and payable on the last day of each Interest Period for those Loans and, if such Interest Period is longer than three (3) Months, also on the 90th day of such Interest Period.
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5.4.1.
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Voluntary Prepayments
.
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The Borrower shall have the right at its option from time to time to prepay the Loans in whole or part without premium or penalty (except as provided in
Section 5.4.2
below or in
Section 5.6
):
(a) at any time with respect to any Loan to which the Base Rate Option applies,
(b) on the last day of the applicable Interest Period with respect to Loans to which a Euro-Rate Option applies, or
(c) on the date specified in a notice by any Lender pursuant to
Section 4.4
with respect to any Loan to which a Euro-Rate Option applies.
Whenever the Borrower desires to prepay any part of the Loans, it shall provide a prepayment notice to the Agent by 12:00 noon, Chicago time, at least one (1) Business Day prior to the date of prepayment of the Revolving Credit Loans, setting forth the following information:
(a) the date, which shall be a Business Day, on which the proposed prepayment is to be made;
(b) the total principal amount of such prepayment, which, with respect to Loans to which the Base Rate Option applies shall not be less than $500,000.00 for any Revolving Credit Loan, unless such repayment is of the total amount outstanding with regard to such Revolving Credit Loan; and
(c) the total principal amount of such prepayment, which, with respect to Loans to which the Euro-Rate Option applies, shall not be less than $1,000,000.00 for any Revolving Credit Loan, unless such repayment is of the total amount outstanding with regard to such Revolving Credit Loan.
All prepayment notices shall be irrevocable. The principal amount of the Loans for which a prepayment notice is given, together with interest on such principal amount except with respect to Loans to which the Base Rate Option applies, shall be due and payable on the date specified in such prepayment notice as the date on which the proposed prepayment is to be made. Except as provided in
Section 4.4.3
, if the Borrower prepays a Loan but fails to specify the applicable Borrowing Tranche which the Borrower is prepaying, the prepayment shall be applied (A) first to Revolving Credit Loans; and (B) after giving effect to the allocations in clause (A) above and in the preceding sentence, first Loans to which the Base Rate Option applies, and then to Loans to which the Euro-Rate Option applies. Any prepayment hereunder shall be subject to the Borrower’s Obligation to indemnify the Lenders under
Section 5.6.2
.
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5.4.2.
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Replacement of a Lender
.
|
In the event any Lender (a) gives notice under
Section 4.4
, (b) requests compensation under
Section 5.6.1
or
Section 5.8
, (c) is a Defaulting Lender, (d) becomes subject to the control of an Official Body (other than normal and customary supervision), (e) is a Non-Consenting Lender referred to in
Section 11.1
or (f) causes the Borrower to pay, withhold or indemnify any Taxes or Other Taxes pursuant to
Section 5.8
, then in any such event the Borrower may, at its sole expense, upon notice to such Lender and the Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by,
Section 11.11
), all of its interests, rights and obligations under this Agreement and the related Loan Documents to an assignee that shall assume such obligations
(which assignee may be another Lender, if a Lender accepts such assignment),
provided
that:
(i) the Borrower shall have paid to the Agent the assignment fee specified in
Section 11.11
;
(ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under
Section 5.6.2
) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts);
(iii) in the case of any such assignment resulting from a claim for compensation under
Section 5.6.1
or payments required to be made pursuant to
Section 5.8
, such assignment will result in a reduction in such compensation or payments thereafter; and
(iv) such assignment does not conflict with applicable Law.
A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply. Notwithstanding the foregoing, the Agent may only be replaced in accordance with
Section 10.14
.
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5.4.3.
|
Change of Lending Office.
|
If Lender requests compensation under
Section
4.4.2
, or if the Borrower is required to pay any additional amount to any Lender or any Official Body for the account of any Lender or pursuant to
Section 5.6.1
or
5.8
, then such Lender shall, if requested by the Borrower, use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to
Section
4.4.2
,
5.6.1
or
5.8
, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise
be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.
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5.5
|
Voluntary Commitment Reductions
|
The Borrower shall have the right, upon not less than five (5) Business Days’ written irrevocable notice to the Agent, to terminate the Commitments or, from time to time, to reduce the amount of the Commitments, which notice shall specify the date and amount of any such reduction and otherwise be substantially in the form of
Exhibit 5.5
(a “
Commitment Reduction Notice
”). Any such reduction shall be in a minimum amount equal to $5,000,000.00 or an integral multiple thereof, unless the Commitments are reduced to zero and this Agreement terminated;
provided
that the Revolving Credit Commitments may not be reduced below the aggregate principal amount of the Revolving Facility Usage. Each reduction of Revolving Credit Commitments shall ratably reduce the Revolving Credit Commitments of the Lenders.
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5.6
|
Additional Compensation in Certain Circumstances
|
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|
5.6.1.
|
Increased Costs or Reduced Return Resulting From Taxes, Reserves, Capital Adequacy Requirements, Expenses, Etc
.
|
If any Law, guideline or interpretation or any change in any Law, guideline or interpretation or application thereof by any Official Body charged with the interpretation or administration thereof or compliance with any request or directive (whether or not having the force of Law) of any central bank or other Official Body:
(a) subjects any Person to any taxes, levies, imposts, deductions, charges, assessments, fees, duties or withholdings, and any and all liabilities with respect thereto, on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto (except for Taxes, Other Taxes and taxes on the overall net income of such Person).
(b) imposes, modifies or deems applicable any reserve, special deposit or similar requirement against credits or commitments to extend credit extended by, or assets (funded or contingent) of, deposits with or for the account of, or other acquisitions of funds by, any Lender or any lending office of any Lender, or
(c) imposes, modifies or deems applicable any capital adequacy or similar requirement (i) against assets (funded or contingent) of, or letters of credit, other credits or commitments to extend credit extended by, any Lender (or its holding company), or (ii) otherwise applicable to the obligations of any Lender or any lending office of any Lender (or its holding company) under this Agreement, and the result of any of the foregoing is to increase the cost to, reduce the income receivable by, or impose any expense (including loss of margin) upon any Person (or its holding company) or its lending office with respect to this Agreement or the making, maintenance or funding of any part of the Loans (or, in the case of any capital adequacy or similar
requirement, to have the effect of reducing the rate of return on any Lender’s capital, taking into consideration such Lender’s (or its holding company’s) customary policies with respect to capital adequacy) by an amount which such Person in its reasonable discretion deems to be material, such Person shall from time to time notify the Borrower and the Agent of the amount determined in good faith (using any averaging and attribution methods employed in good faith) by such Person to be necessary to compensate such Lender for such increase in cost, reduction of income, additional expense or reduced rate of return. Such notice shall set forth in reasonable detail the basis for such determination. Such amount shall be due and payable by the Borrower to such Person thirty (30) days after such notice is given.
(d) For the purposes of this
Section 5.6.1
, and notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, requirements, guidelines and directives thereunder or issued in connection therewith or in implementation thereof and (ii) all requests, rules, guidelines, requirements and directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case shall be deemed to have been enacted, adopted and issued after the date hereof, regardless of the date enacted, adopted, issued or implemented.
In addition to the compensation required by
Section 5.6.1
, the Borrower shall indemnify each Lender against all direct liabilities, losses or expenses (including loss of margin, any loss or expense incurred in liquidating or employing deposits from third parties and any loss or expense incurred in connection with funds acquired by a Lender to fund or maintain Loans subject to a Euro-Rate Option) which such Lender actually sustains or incurs as a consequence of any
(a) payment, prepayment, conversion or renewal of any Loan to which a Euro-Rate Option applies on a day other than the last day of the corresponding Interest Period (whether or not such payment or prepayment is mandatory, voluntary or automatic and whether or not such payment or prepayment is then due),
(b) attempt by the Borrower to revoke (expressly, by later inconsistent notices or otherwise) in whole or part any Loan Requests under
Section 2.4
, or
Section 4.2
or notice relating to voluntary prepayments under
Section 5.4.1
or notice relating to voluntary Commitment reductions under
Section 5.5
,
(c) default by the Borrower in the performance or observance of any covenant or condition contained in this Agreement or any other Loan Document, including any failure of the Borrower to pay when due (by acceleration or otherwise) any principal of or interest on the Loans, Commitment Fees or any other amount due hereunder; or
(d) the assignment of any Loan to which a Euro-Rate Option applies, as a result of the Borrower’s exercise of its rights to replace a Lender under
Section 5.4.2
.
If any Lender sustains or incurs any such loss or expense, it shall from time to time notify the Borrower of the amount determined in good faith by such Lender (which determination may include such assumptions, allocations of costs and expenses and averaging or attribution methods as such Lender shall deem reasonable) to be necessary to indemnify such Lender for such loss or expense. Such notice shall set forth in reasonable detail the basis for such determination. Such amount shall be due and payable by the Borrower to such Lender thirty (30) days after such notice is given.
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5.7
|
Interbank Market Presumption
|
Except as otherwise expressly provided herein, for all purposes of this Agreement and each Note with respect to any aspects of the Euro-Rate or any Loan under the Euro-Rate Option, each Lender and the Agent shall be presumed to have obtained rates, funding, currencies, deposits, and the like in the London interbank market regardless whether it did so or not; and, each Lender’s and the Agent’s determination of amounts payable under, and actions required or authorized by
Sections 4.4
and
5.6
, at each Lender’s and Agent’s option, as though each Lender and Agent funded its pro rata share of each Borrowing Tranche of Loans under the Euro-Rate Option through the purchase of deposits of the types and maturities corresponding to the deposits used as a reference in accordance with the terms hereof in determining the Euro-Rate applicable to such Loans, whether in fact that is the case.
All payments made by the Borrower hereunder and under each Note shall be made free and clear of and without deduction for any present or future taxes, levies, imposts, deductions, charges, assessments, fees, duties or withholdings, and all liabilities with respect thereto, excluding taxes imposed on the net income of any Lender and franchise taxes imposed in lieu thereof, and (ii) any U.S. federal withholding taxes imposed by FATCA (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings, assessments, fees, duties and liabilities being hereinafter referred to as “
Taxes
”). If the Borrower shall be required by Law to deduct any Taxes from or in respect of any sum payable hereunder or under any Note (a) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this
Section 5.8.1
) each Lender receives an amount equal to the sum it would have received had no such deductions been made, (b) the Borrower shall make such deductions and (c) the Borrower shall timely pay the full amount deducted to the relevant tax authority or other authority in accordance with applicable Law.
In addition, the Borrower agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges, or similar levies which arise from any payment made hereunder or from the execution, delivery, or registration
of, or otherwise with respect to, this Agreement or any Note (hereinafter referred to as “
Other Taxes
”).
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5.8.3.
|
Indemnification for Taxes Paid by a Lender
.
|
The Borrower shall indemnify the Agent and each Lender for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
Section 5.8.3
) paid by the Agent or such Lender and any liability (including penalties, interest, and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. This indemnification shall be made within thirty (30) days from the date a Lender makes written demand therefor.
Within thirty (30) days after the date of any payment of any Taxes by the Borrower, the Borrower shall furnish to each Lender, at its address referred to herein, the original or a certified copy of a receipt evidencing payment thereof. If no Taxes are payable in respect of any payment by the Borrower, the Borrower shall, if so requested by a Lender, provide a certificate of an officer of the Borrower to that effect.
Each Lender shall severally indemnify the Agent for any taxes, levies, imposts, deductions, charges, assessments, fees, duties or withholdings, and any and all liabilities with respect thereto, or Other Taxes (but, in the case of any Taxes or Other Taxes, only to the extent that the Borrower has not already indemnified the Agent for such amounts and without limiting the obligation of the Borrower to do so) attributable to such Lender that are paid or payable by the Agent in connection with any Loan Documents and any reasonable expenses arising therefrom or with respect thereto, whether or not such amounts were correctly or legally imposed or asserted by the relevant Official Body. The indemnity under this
Section 5.8.5
shall be paid within 10 days after the Agent delivers to the applicable Lender a certificate stating the amount so paid or payable by the Agent. Such certificate shall be conclusive of the amount so paid or payable absent manifest error.
Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in
Sections 5.8.1
through and including
5.8.5
shall survive the payment in full of principal and interest hereunder and under any instrument delivered hereunder.
Upon the request of any Lender, the Revolving Credit Loans made by such Lender may be evidenced by a Revolving Credit Note in the form of
Exhibit 1.1(R)
.
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5.10
|
Intentionally omitted
|
6.
REPRESENTATIONS AND WARRANTIES
|
|
|
|
6.1
|
Representations and Warranties
|
The Borrower represents and warrants to the Agent and each of the Lenders as follows:
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6.1.1.
|
Organization and Qualification
.
|
The Borrower and each Subsidiary of the Borrower that is not an Inactive Subsidiary is a corporation, partnership or limited liability company duly organized, validly existing and in good standing under the laws of the State of New Jersey in the case of the Borrower, or its respective jurisdiction of organization in the case of such Subsidiary. The Borrower and each Subsidiary of the Borrower that is not an Inactive Subsidiary has the lawful power to own or lease its properties and to engage in the business it presently conducts or proposes to conduct. The Borrower and each Subsidiary of the Borrower that is not an Inactive Subsidiary is duly licensed or qualified and in good standing in each jurisdiction where the failure to be so licensed or qualified could reasonably be expected to result in a Material Adverse Change.
Schedule 6.1.2
states the name of each of the Borrower’s Subsidiaries, its jurisdiction of incorporation, its authorized capital stock, the issued and outstanding shares (referred to herein as the “
Subsidiary Shares
”) and the owners thereof if it is a corporation, its outstanding partnership interests (the “
Partnership Interests
”) if it is a partnership and its outstanding limited liability company interests, interests assigned to managers thereof and the voting rights associated therewith (the “
LLC Interests
”) if it is a limited liability company and also indicates if such Subsidiary is an Inactive Subsidiary. The Borrower and each Subsidiary of the Borrower has good and marketable title to all of the Subsidiary Shares, Partnership Interests and LLC Interests it purports to own, free and clear in each case of any Lien. All Subsidiary Shares, Partnership Interests and LLC Interests have been validly issued, and all Subsidiary Shares are fully paid and nonassessable. All capital contributions and other consideration required to be made or paid in connection with the issuance of the Partnership Interests and LLC Interests have been made or paid, as the case may be. There are no options,
warrants or other rights outstanding to purchase any such Subsidiary Shares, Partnership Interests or LLC Interests except as indicated on
Schedule 6.1.2
.
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6.1.3.
|
Power and Authority
.
|
The Borrower has full power to enter into, execute, deliver and carry out this Agreement and the other Loan Documents to which it is a party, to incur the Indebtedness contemplated by the Loan Documents and to perform its Obligations under the Loan Documents to which it is a party, and all such actions have been duly authorized by all necessary proceedings on its part.
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6.1.4.
|
Validity and Binding Effect
.
|
This Agreement has been duly and validly executed and delivered by the Borrower, and each other Loan Document which the Borrower is required to execute and deliver on or after the date hereof will have been duly executed and delivered by the Borrower on the required date of delivery of such Loan Document. This Agreement and each other Loan Document constitutes, or will constitute, legal, valid and binding obligations of the Borrower on and after its date of delivery thereof, enforceable against the Borrower in accordance with its terms, except to the extent that enforceability of any of such Loan Document may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforceability of creditors’ rights generally or limiting the right of specific performance.
Neither the execution and delivery of this Agreement or the other Loan Documents by the Borrower nor the consummation of the transactions herein or therein contemplated or compliance with the terms and provisions hereof or thereof by the Borrower will conflict with, constitute a default under or result in any breach of (a) the terms and conditions of the certificate of incorporation, bylaws, certificate of limited partnership, partnership agreement, certificate of formation, limited liability company agreement or other organizational documents of the Borrower or (b) any Law or any material agreement or instrument or order, writ, judgment, injunction or decree to which the Borrower or any of its Subsidiaries is a party or by which it or any of its Subsidiaries is bound or to which it is subject, or result in the creation or enforcement of any Lien, charge or encumbrance whatsoever upon any property (now or hereafter acquired) of the Borrower or any of its Subsidiaries (other than Liens granted under the Loan Documents and other than Permitted Liens).
Except as set forth in the SEC Filing, there are no actions, suits, proceedings or investigations (other than Environmental Complaints which are specifically addressed in
Section 0
)
pending or, to the knowledge of the Borrower, threatened against the Borrower or any Subsidiary of the Borrower at law or equity before any Official Body which individually or in the aggregate could reasonably be expected to result in a Material Adverse Change. None of the Borrower or any Subsidiaries of the Borrower is in violation of any order, writ, injunction or any decree of any Official Body which could reasonably be expected to result in any Material Adverse Change.
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6.1.7.
|
Title to Properties
.
|
The Borrower and each Subsidiary of the Borrower has good and marketable title to or valid leasehold interest in all properties, assets and other rights which it purports to own or lease or which are reflected as owned or leased on its books and records, free and clear of all Liens (other than Environmental Complaints which are specifically addressed in
Section 0
)
except Permitted Liens, and subject to the terms and
conditions of the applicable leases, except where the failure to hold such assets and other rights subject to such terms and conditions could reasonably be expected to result in a Material Adverse Change. All leases of property are in full force and effect without the necessity for any consent which has not previously been obtained upon consummation of the transactions contemplated hereby to the extent that the failure of such leases to be in full force and effect or to have obtained any such consent could reasonably be expected to result in a Material Adverse Change.
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6.1.8.
|
Financial Statements
.
|
The Borrower has delivered to the Agent copies of its audited consolidated year-end financial statements for and as of the end of the fiscal year ended September 30, 2010, and its unaudited consolidated financial statements for and as of the end of the fiscal quarters ended December 31, 2010, March 31, 2011 and June 30, 2011 (the “
Historical Statements
”). The Historical Statements were compiled from the books and records maintained by the Borrower’s management, are correct and complete and fairly represent the consolidated financial condition of the Borrower and its Subsidiaries as of their dates and the results of operations for the fiscal periods then ended and have been prepared in accordance with GAAP consistently applied (subject, in the case of such quarterly financial statements, to normal year-end adjustments and the absence of footnote disclosures). Since September 30, 2010,
no Material Adverse Change has occurred.
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6.1.9.
|
Use of Proceeds; Margin Stock
.
|
6.1.9.1
General
.
The Borrower intends to use the proceeds of the Loans in accordance with
Sections 2.8
and
8.1.10
.
6.1.9.2
Margin Stock
.
Neither the Borrower nor any Subsidiary of the Borrower engages or intends to engage principally, or as one of its important activities, in the business of extending credit for the purpose, immediately, incidentally or ultimately, of purchasing or carrying margin stock (within the meaning of Regulation U). No part of the proceeds of any Loan has been or will be used, immediately, incidentally or ultimately, to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock or to refund Indebtedness originally incurred for such purpose, or for any purpose which entails a violation of or which is inconsistent with the provisions of the regulations of the Board of Governors of the Federal Reserve System. Neither the Borrower nor any Subsidiary of the Borrower holds or intends to hold margin stock in such amounts that more than 25% of the reasonable value of the assets of the Borrower or any Subsidiary of the Borrower is or will be represented by margin stock.
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6.1.10.
|
Full Disclosure
.
|
Neither this Agreement nor any other Loan Document, nor any certificate, statement, agreement or other documents furnished to the Agent or any Lender in connection herewith or therewith, contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein and therein, in light of the circumstances under which they were made, not misleading.
All federal, state, local and other tax returns required to have been filed with respect to the Borrower and each Subsidiary of the Borrower on or prior to the Closing Date have been filed, and payment or adequate provision has been made for the payment of all taxes, fees, assessments, levies, imposts, deductions, duties, withholdings and other governmental charges which have or may become due pursuant to said returns or to assessments received, except (a) to the extent that such taxes, fees, assessments, levies, imposts, deductions, duties, withholdings and other charges are being contested in good faith by appropriate proceedings diligently conducted and for which such reserves or other appropriate provisions if any, as shall be required by GAAP shall have been made or (b) to the extent that with respect to taxes (other than any U.S. federal or state income taxes, state taxes on equity or capital or comparable state taxes on income, equity or capital and which are otherwise related to the conduct of business or local real property taxes all of which taxes are subject to the requirements of the immediately preceding clause (a)), fees, assessments, levies, imposts, deductions, duties, withholdings or other government charges, the failure to so pay or so contest could not reasonably be expected to result in a Material Adverse Change. As of the Closing Date, there are no agreements or waivers extending the statutory period of limitations applicable to any federal income tax return of the Borrower or any Subsidiary of the Borrower for any period.
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6.1.12.
|
Consents and Approvals
.
|
No consent, approval, exemption, order or authorization of, or a registration or filing with, any Official Body or any other Person is required by any Law or any agreement in connection with the execution, delivery and carrying out of this Agreement and the other Loan Documents by the Borrower, except as listed on
Schedule 6.1.12
, all of which shall have been obtained or made on or prior to the Closing Date except as otherwise indicated on
Schedule 6.1.12
.
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6.1.13.
|
No Event of Default; Compliance With Instruments
.
|
No event has occurred and is continuing and no condition exists or will exist after giving effect to the borrowings or other extensions of credit to be made on the Closing Date under or pursuant to the Loan Documents which constitutes an Event of Default or Potential Default. None of the Borrower nor any Subsidiaries of the Borrower is in violation of (a) any term of its certificate of incorporation, bylaws, certificate of limited partnership, partnership agreement, certificate of formation, limited liability company agreement or other organizational documents or (b) any material agreement or instrument to which it is a party or by which it or any of its properties may be subject or bound where such violation could reasonably be expected to result in a Material Adverse Change.
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6.1.14.
|
Patents, Trademarks, Copyrights, Licenses, Etc
.
|
The Borrower and each Subsidiary of the Borrower owns or has the contractual right to use all the patents, trademarks, service marks, trade names, copyrights, licenses, registrations, franchises, permits and rights reasonably necessary to own and operate its properties and to carry on its business as presently conducted and planned to be conducted by the Borrower or such Subsidiary, without known possible, alleged or actual conflict with the rights of others, except where the failure to do so could not reasonably be expected to have a Material Adverse Change.
As of the Closing Date, the Borrower is in compliance with the requirements of
Section 8.1.3
.
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6.1.16.
|
Compliance With Laws
.
|
The Borrower and its Subsidiaries are in compliance in all material respects with all applicable Laws (other than Environmental Laws which are specifically addressed in
Section 0
) in all jurisdictions in which the Borrower or any Subsidiary of the Borrower is presently or will be doing business except where the failure to do so could not reasonably be expected to result in a Material Adverse Change.
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6.1.17.
|
Material Contracts; Burdensome Restrictions
.
|
All material contracts relating to the business operations of the Borrower and each Subsidiary of the Borrower, including all employee benefit plans and Labor Contracts are valid, binding and enforceable upon the Borrower or such Subsidiary and, to the best of the Borrower’s knowledge, each of the other parties thereto in accordance with their respective terms, except to the extent that the failure to be valid, binding and enforceable could reasonably be expected to result in a Material Adverse Change. To the Borrower’s knowledge, there is no default with respect to parties other than the Borrower or such Subsidiary under any contract which, when combined with all then existing defaults under all other contracts, could reasonably be expected to result in a Material Adverse Change. None of the Borrower or its Subsidiaries is bound by any contractual obligation, or subject to any restriction in any organization document, or any requirement of Law which could reasonably be expected to result in a Material Adverse Change.
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6.1.18.
|
Investment Companies; Regulated Entities
.
|
Neither the Borrower nor any Subsidiaries of the Borrower is an “investment company” registered or required to be registered under the Investment Company Act of 1940 or under the “control” of an “investment company” as such terms are defined in the Investment Company Act of 1940 and shall not become such an “investment company” or under such “control.” Neither the Borrower nor any Subsidiaries of the Borrower is a “holding company” or an “affiliate” of a “holding company” or of a “subsidiary company” of a “holding company” within the meaning of the Public Utility Holding Company Act of 1935, as amended. Neither
the Borrower nor any Subsidiaries of the Borrower is subject to any other federal or state statute or regulation limiting its ability to incur Indebtedness for borrowed money.
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6.1.19.
|
Plans and Benefit Arrangements
.
|
(a) The Borrower and each other member of the ERISA Group are in compliance with any applicable provisions of ERISA with respect to all Benefit Arrangements, Plans, Multiple Employer Plans and Multiemployer Plans except where any instance of noncompliance could not reasonably be expected to result in a Material Adverse Change. There has been no Prohibited Transaction with respect to any Benefit Arrangement or any Plan or, to the best knowledge of the Borrower, with respect to any Multiemployer Plan or Multiple Employer Plan, which could reasonably be expected to result in a Material Adverse Change. The Borrower and all other members of the ERISA Group have made when due any and all material payments required to be made under any agreement relating to a Multiemployer Plan or a Multiple Employer Plan or any Law pertaining thereto except for any failure that could not reasonably be expected to result in a Material Adverse Change. With respect to each Plan and Multiple Employer Plan, the Borrower and each other member of the ERISA Group (i) have fulfilled in all material respects their obligations under the minimum funding standards of ERISA, (ii) have not incurred any material liability to the PBGC which has not been paid in the ordinary course, and (iii) have not had asserted against them any penalty for failure to fulfill the minimum funding requirements of ERISA except for any failure that could not reasonably be expected to result in a Material Adverse Change. All Plans, Benefit Arrangements and, to the best knowledge of Borrower, Multiple Employer Plans and Multiemployer Plans have been administered in all material respects in accordance with their terms and applicable Law except for any failure that could not reasonably be expected to result in a Material Adverse Change.
(b) No event requiring notice to the PBGC under Section 303(k)(4)(A) of ERISA has occurred or is reasonably expected to occur with respect to any Plan except for any failure that could not reasonably be expected to result in a Material Adverse Change.
(c) Neither the Borrower nor any other member of the ERISA Group has incurred or reasonably expects to incur any withdrawal liability under ERISA to any Multiemployer Plan or Multiple Employer Plan which could reasonably be expected to result in a Material Adverse Change. Neither the Borrower nor any other member of the ERISA Group has been notified by any Multiemployer Plan or Multiple Employer Plan that such Multiemployer Plan or Multiple Employer Plan has been terminated within the meaning of Title IV of ERISA and, to the best knowledge of the Borrower, no Multiemployer Plan or Multiple Employer Plan is reasonably expected to be reorganized or terminated, within the meaning of Title IV of ERISA which, in either case, could reasonably be expected to result in a Material Adverse Change.
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6.1.20.
|
Employment Matters
.
|
The Borrower and each Subsidiary of the Borrower is in compliance with the Labor Contracts and all applicable federal, state and local labor and employment Laws including those related to equal employment opportunity and affirmative action, labor relations, minimum wage, overtime, child labor, medical insurance continuation, worker adjustment and relocation
notices, immigration controls and worker and unemployment compensation, where the failure to comply could reasonably be expected to result in a Material Adverse Change. There are no outstanding grievances, arbitration awards or appeals therefrom arising out of the Labor Contracts or current or threatened strikes, picketing, handbilling or other work stoppages or slowdowns at facilities of the Borrower or any Subsidiary of the Borrower which in any case could reasonably be expected to result in a Material Adverse Change.
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6.1.21.
|
Environmental Matters
.
|
Except as set forth in the SEC Filing, none of the Borrower or any Subsidiary of the Borrower has received any Environmental Complaint, which, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Change. There are no pending or, to the Borrower’s knowledge, threatened Environmental Complaints relating to the Borrower or any Subsidiary of the Borrower, or any of the Properties or, to the Borrower’s knowledge, any prior owner, operator or occupant of any of the Properties pertaining to, or arising out of, any Contamination or violations of Environmental Laws or Environmental Permits which, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Change. The Borrower and its Subsidiaries are in compliance with all applicable Environmental Laws in all jurisdictions in which the Borrower or any of its Subsidiaries is doing business except where the failure to do so could not reasonably be expected to result in a Material Adverse Change. The Borrower holds and its Subsidiaries hold and are operating in compliance with Environmental Permits, except where the failure to do so could not reasonably be expected to result in a Material Adverse Change.
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6.1.22.
|
Senior Debt Status
.
|
The Obligations of the Borrower under this Agreement and each of the other Loan Documents to which it is a party do rank and will rank at least
pari
passu
in priority of payment with all other Indebtedness of the Borrower, except Indebtedness of the Borrower to the extent secured by Permitted Liens. There is no Lien upon or with respect to any of the properties or income of the Borrower or any Subsidiary of the Borrower which secures Indebtedness or other obligations of any Person except for Permitted Liens.
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6.1.23.
|
Hedging Contract Policies.
|
Schedule 6.1.23
is a true and correct copy of Hedging Contract Policies. The Borrower and each Subsidiary of the Borrower is subject to and is in compliance with the Hedging Contract Policies and the Borrower shall, and shall cause each of its Subsidiaries which engages in any Hedging Transaction to continue to comply with the Hedging Contract Policies, to the extent that the failure to comply, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Change.
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6.1.24.
|
Permitted Related Business Opportunities.
|
The information set forth on
Schedule 6.1.24
is true, complete and correct in all material respects and sets forth a list of all of the Investments in Permitted Related
Business Opportunities of the Borrower and its Subsidiaries as of the Closing Date and includes, without limitation, the amount and nature of each such Investment, a description of the activities engaged in by the Borrower and its Subsidiaries in connection with such Investment, and a description of the activities engaged in by the Person in which the Investment has been made.
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6.1.25.
|
Anti-Terrorism Laws; Executive Order No. 13224
.
|
Neither the Borrower nor any Subsidiary of the Borrower is any of the following (each a "
Blocked Person
"):
(a) a Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order No. 13224;
(b) a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order No. 13224;
(c) a Person or entity with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law;
(d) a Person or entity that commits, threatens or conspires to commit or supports "terrorism" as defined in the Executive Order No. 13224;
(e) a Person or entity that is named as a "specially designated national" on the most current list published by the United States Treasury Department Office of Foreign Asset Control at its official website or any replacement website or other replacement official publication of such list, or
(f) a Person or entity who is affiliated or associated with a Person or entity listed above.
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6.2
|
Continuation of Representations
|
The Borrower makes the representations and warranties in this
Section 6
on the date hereof, on the Closing Date, and each date thereafter on which a Loan is made as provided in and subject to
Sections
Error! Reference source not found.
and
7.2
.
7.
CONDITIONS OF LENDING
The obligation of each Lender to make Loans hereunder is subject to the performance by the Borrower of its Obligations to be performed hereunder at or prior to the making of any such Loans and to the satisfaction of the following further conditions:
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7.1
|
Conditions to Closing
|
On the Closing Date:
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7.1.1.
|
Officer’s Certificate
.
|
The representations and warranties of the Borrower contained in
Section 6
and in each of the other Loan Documents shall be true and accurate on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of such date (except representations and warranties which relate solely to an earlier date or time, which representations and warranties shall be true and correct on and as of the specific dates or times referred to therein), and the Borrower shall have performed and complied with all covenants and conditions hereof and thereof required to have been performed and complied with on or prior to the Closing Date, no Event of Default or Potential Default shall have occurred and be continuing or shall exist; and there shall be delivered to the Agent for the benefit of each Lender a certificate of the Borrower, dated the Closing Date and signed by the Chief Executive Officer, President, Chief Financial Officer or other Authorized Officer of the Borrower, to each such effect.
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7.1.2.
|
Secretary’s Certificate
.
|
There shall be delivered to the Agent for the benefit of each Lender a certificate dated the Closing Date and signed by the Secretary or an Assistant Secretary of the Borrower, certifying as appropriate as to:
(a) all action taken by the Borrower in connection with this Agreement and the other Loan Documents;
(b) the names of the officer or officers authorized to sign this Agreement and the other Loan Documents and the true signatures of such officer or officers and specifying the Authorized Officers permitted to act on behalf of the Borrower for purposes of this Agreement and the true signatures of such officers, on which the Agent and each Lender may conclusively rely; and
(c) copies of its organizational documents, including its certificate of incorporation, bylaws, certificate of limited partnership, partnership agreement, certificate of formation, and limited liability company agreement as in effect on the Closing Date certified by the appropriate state official where such documents are filed in a state office together with certificates from the appropriate state officials as to the continued existence and good standing of the Borrower in each state where organized or qualified to do business and a bring-down certificate by facsimile dated the Closing Date.
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7.1.3.
|
Opinion of Counsel.
|
There shall be delivered to the Agent for the benefit of each Lender a written opinion of (a) Chapman and Cutler LLP, counsel for the Borrower (who may rely on the opinions of such other counsel and Certificates of the Borrower’s in-house counsel as may be reasonably acceptable to the Agent), dated the Closing Date and in substantially the form attached hereto as
Exhibit 7.1.3 (A)
, and (b) Richard Reich, in-house counsel for NJR Service Corporation, dated the Closing Date and in substantially the form attached hereto as
Exhibit 7.1.3 (B)
.
All legal details and proceedings in connection with the transactions contemplated by this Agreement and the other Loan Documents shall be in form and substance satisfactory to the Agent and counsel for the Agent, and the Agent shall have received all such other counterpart originals or certified or other copies of such documents and proceedings in connection with such transactions, in form and substance satisfactory to the Agent and said counsel, as the Agent or said counsel may reasonably request. The Agent shall have received this Agreement executed by the Borrower and each Lender.
The Borrower shall have paid or caused to be paid to the Agent for itself and for the account of the Lenders to the extent not previously paid all fees accrued through the Closing Date and the costs and expenses for which the Agent and the Lenders are entitled to be reimbursed.
The material consents, if any, required to effectuate the transactions contemplated hereby as set forth on
Schedule 6.1.12
shall have been obtained.
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7.1.7.
|
Officer’s Certificate Regarding MACs
.
|
Since September 30, 2010, no Material Adverse Change shall have occurred; prior to the Closing Date, there shall have been no material change in the management of the Borrower; and there shall have been delivered to the Agent for the benefit of each Lender a certificate dated the Closing Date and signed by the Chief Executive Officer, President, Chief Financial Officer or other Authorized Officer of the Borrower to each such effect.
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7.1.8.
|
No Violation of Laws
.
|
The making of the Loans shall not contravene any Law applicable to the Borrower or any of the Lenders.
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7.1.9.
|
No Actions or Proceedings
.
|
No action, proceeding, investigation, regulation or legislation shall have been instituted, threatened or proposed before any court, governmental agency or legislative body to enjoin, restrain or prohibit, or to obtain damages in respect of, this Agreement, the other Loan Documents or the consummation of the transactions contemplated hereby or thereby or which, in the Agent’s sole discretion, would make it inadvisable to consummate the transactions contemplated by this Agreement or any of the other Loan Documents.
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7.1.10.
|
Hedging Contract Policies
.
|
The Borrower shall have delivered to the Agent and each Lender a true and complete copy of the Hedging Contract Policies, and the Hedging Contract Policies shall be satisfactory in form and substance to each Lender.
7.1.11
[Intentionally omitted]
.
At the time of making any Loans and after giving effect to the proposed extensions of credit: (a) the representations and warranties of the Borrower contained in
Section 6
(other than the representations and warranties contained in the first sentence of
Section 6.1.6
, the last sentence of
Section 6.1.8
, and
Section 6.1.21
and in the other Loan Documents shall be true on and as of the date of such Loan with the same effect as though such representations and warranties had been made on and as of such date (except representations and warranties which expressly relate solely to an earlier date or time, which representations and warranties shall be true and correct on and as of the specific dates or times referred to therein), and the Borrower shall have performed and complied with all covenants and conditions hereof; (b) no Event of Default shall have occurred and be continuing or shall exist; (c) the making of the Loans shall not contravene any Law applicable to the Borrower or any Subsidiary of the Borrower or any of the Lenders; (d) the Borrower shall have delivered to the Agent a duly executed and completed Loan Request and (e) the Borrower shall have delivered to the Agent for the benefit of each Lender (x) evidence that the Issuer shall have duly executed, issued and delivered the Bonds to the Trustee and that the Trustee shall have duly authenticated the Bonds and delivered the Bonds against payment, and (y) a copy of the Official Statement used in connection with the offering of the Bonds.
8.
COVENANTS
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8.1
|
Affirmative Covenants
|
The Borrower covenants and agrees that until payment in full of the Loans and interest thereon, satisfaction of all of the Borrower’s other Obligations under the Loan Documents and termination of the Commitments, the Borrower shall comply at all times with the following affirmative covenants:
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8.1.1.
|
Preservation of Existence, Etc
.
|
The Borrower shall, and shall cause each of its Subsidiaries to, maintain its legal existence as a corporation, limited partnership or limited liability company and its license or qualification and good standing in each jurisdiction in which its ownership or lease of property or the nature of its business makes such license or qualification necessary, except (a) where the lack of legal existence of any Subsidiary or the failure
to be so licensed or qualified could not reasonably be expected to have a Material Adverse Change, or (b) as otherwise expressly permitted in
Section 8.2.5
.
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|
8.1.2.
|
Payment of Liabilities, Including Taxes, Etc
.
|
The Borrower shall, and shall cause each of its Subsidiaries to, (a) file all federal, state, local and other tax returns required to be filed in a timely manner, and (b) duly pay and discharge all liabilities to which it is subject or which are asserted against it, promptly as and when the same shall become due and payable, including all taxes,
assessments, levies, imposts, deductions, duties, fees, withholdings and governmental charges upon it or any of its properties, assets, income or profits, prior to the date on which penalties attach thereto, except to the extent that such liabilities, including taxes, assessments, levies, imposts, deductions, duties, fees, withholdings or charges, are being contested in good faith and by appropriate and lawful proceedings diligently conducted and for which such reserve or other appropriate provisions, if any, as shall be required by GAAP shall have been made, but only to the extent that failure to discharge any such liabilities would not result in any additional liability which could reasonably be expected to result in a Material Adverse Change.
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8.1.3.
|
Maintenance of Insurance
.
|
The Borrower shall, and shall cause each of its Subsidiaries to, insure its properties and assets with reputable and financially sound insurers, including self-insurance to the extent customary according to prudent business practice in the industry of the Borrower and such Subsidiaries, in amounts sufficient to insure the assets and risks of the Borrower and each of its Subsidiaries in accordance with prudent business practice in the industry of the Borrower and such Subsidiaries.
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8.1.4.
|
Maintenance of Properties and Leases
.
|
The Borrower shall, and shall cause each of its Subsidiaries to, maintain in good repair, working order and condition (ordinary wear and tear excepted) in accordance with the general practice of other businesses of similar character and size, all of those properties useful or necessary to its business, and from time to time, the Borrower will make or cause to be made all appropriate repairs, renewals or replacements thereof.
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8.1.5.
|
Maintenance of Patents, Trademarks, Etc
.
|
The Borrower shall, and shall cause each of its Subsidiaries to, maintain in full force and effect all patents, trademarks, service marks, trade names, copyrights, licenses, franchises, permits and other authorizations necessary for the ownership and operation of its properties and business if the failure so to maintain the same could constitute a Material Adverse Change.
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8.1.6.
|
Visitation Rights
.
|
The Borrower shall, and shall cause each of its Subsidiaries to, permit any of the officers or authorized employees or representatives of the Agent or any of the Lenders to
visit and inspect any of its properties and to examine and make excerpts from its books and records and discuss its business affairs, finances and accounts with its officers, all in such detail and at such times and as often as any of the Lenders may reasonably request,
provided
that each Lender shall provide the Borrower and the Agent with reasonable notice prior to any visit or inspection, and, except after the occurrence and during the continuance of an Event of Default, any such visit or inspection shall occur during regular business hours. In the event any Lender desires to conduct an audit of the Borrower and/or any one or more of its Subsidiaries, such Lender shall make a reasonable effort to conduct such audit contemporaneously with any audit to be performed by the Agent, and except after the occurrence and during the continuance of an Event of Default, any such audit (whether by the Agent or any Lender) shall be at the sole cost and expense of the Agent or such Lender, as the case may be.
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8.1.7.
|
Keeping of Records and Books of Account
.
|
The Borrower shall, and shall cause each Subsidiary of the Borrower to, maintain and keep proper books of record and account which enable the Borrower and its Subsidiaries to issue financial statements in accordance with GAAP and as otherwise required by applicable Laws of any Official Body having jurisdiction over the Borrower or any Subsidiary of the Borrower, and in which full, true and correct entries shall be made in all material respects of all its dealings and business and financial affairs.
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8.1.8.
|
Plans and Benefit Arrangements
.
|
The Borrower shall, and shall cause each of its Subsidiaries and each other member of the ERISA Group to, comply with ERISA, the Internal Revenue Code and other applicable Laws applicable to Plans and Benefit Arrangements except where such failure, alone or in conjunction with any other failure, would not reasonably be expected to result in a Material Adverse Change. Without limiting the generality of the foregoing, the Borrower shall cause all of its Plans and all Plans maintained by any of its Subsidiaries and any member of the ERISA Group to be funded in accordance with the minimum funding requirements of ERISA and shall make, and cause each member of the ERISA Group to make, in a timely manner, all contributions due to Plans, Benefit Arrangements and Multiemployer Plans, except where any such failure, alone or in conjunction with any other failure, could not reasonably be expected to result in a Material Adverse Change.
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8.1.9.
|
Compliance With Laws
.
|
The Borrower shall, and shall cause each of its Subsidiaries to, comply with all applicable Laws, including all Environmental Laws, in all material respects,
provided
that
it shall not be deemed to be a violation of this
Section 8.1.9
if any failure
to comply with any Law would not result in fines, penalties, costs associated with the performance of any Remedial Actions, other similar liabilities or injunctive relief which in the aggregate could not reasonably be expected to result in a Material Adverse Change. Without limiting the generality of the foregoing, the Borrower shall, and shall cause each of its Subsidiaries to, obtain, maintain, renew and comply with all Environmental Permits applicable to their respective operations and activities, provided that it shall not be deemed to be a violation of this
Section 8.1.9
if any failure to do so would not result in cease and desist orders or fines, penalties or other similar liabilities or injunctive relief which in the aggregate could not reasonably be expected to result in a Material Adverse Change.
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8.1.10.
|
Use of Proceeds
.
|
The Borrower will use the proceeds of the Loans solely to support the payment of principal, purchase price upon tender thereof and interest by the Borrower of Bonds, each in accordance with the terms of the Indenture. The Borrower shall not use the proceeds of the Loans for any purposes which contravenes any applicable Law or any provision hereof.
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8.1.11.
|
Hedging Contract Policies
.
|
The Borrower and each Subsidiary of the Borrower shall comply with the Hedging Contract Policies if the failures to comply, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Change.
The Borrower covenants and agrees that until payment in full of the Loans and interest thereon, satisfaction of all of the Borrower’s other Obligations hereunder and termination of the Commitments, the Borrower shall comply with the following negative covenants:
The Borrower shall not, and shall not permit any of its Subsidiaries to, at any time create, incur, assume or suffer to exist any Indebtedness, except:
(a) Indebtedness under the Loan Documents;
(b) unsecured Indebtedness of the Borrower under the NJNG Notes as identified on
Schedule 8.2.1
; including any amendments, extensions, renewals or refinancings thereof, so long as before and immediately after the incurrence of such Indebtedness, the Borrower is in compliance with
Sections 8.2.12
and no Event of Default would be caused thereby;
(c) secured Indebtedness of the Borrower under the First Mortgage Indenture (including the First Mortgage Bonds identified on
Schedule 8.2.1
under the First Mortgage Indenture which secure (i) the loan agreements identified on
Schedule 8.2.1
(with a net principal Indebtedness under the Series AA through KK First Mortgage Bonds and the related Loan Agreements of $144,845,000) and (ii) the promissory note or promissory notes in the original aggregate principal amount of $125,000,000 issued under a note purchase agreement (with a net principal Indebtedness under both the Series LL First Mortgage Bonds and related promissory note(s) of $125,000,000 as described on
Schedule 8.2.1
) as identified on
Schedule 8.2.1
; including any amendments, extensions, renewals or refinancings thereof, so long as before and immediately after the incurrence of such Indebtedness, the Borrower is in compliance with
Sections 8.2.12
and no Event of Default would be caused thereby;
(d) other Indebtedness of the Borrower (identified on
Schedule 8.2.1
as of the Closing Date on or incurred after the Closing Date) so long as before and immediately after the incurrence of such Indebtedness, the Borrower is in compliance with
Section 8.2.12
) and no Event of Default would be caused thereby;
(e) Indebtedness of the Borrower arising under any Hedging Transaction in accordance with Borrower's Hedging Contract Policies covering a notional
amount not to exceed the face amount of outstanding Indebtedness;
(f) Guaranties of any Subsidiary of the Borrower of obligations of the Borrower arising under any Hedging Transaction;
(g) Guaranties by the Borrower of various obligations of any of its Subsidiaries in connection with any transaction arising in connection with its ordinary course of business as conducted on the Closing Date or as otherwise permitted to be conducted pursuant to
Section 8.2.9
; and
(h) Guaranties of the Borrower or any Subsidiary of the Borrower of Indebtedness permitted by clause (d) of this
Section 8.2.1
.
The Borrower shall not, and shall not permit any of its Subsidiaries to, at any time create, incur, assume or suffer to exist any Lien on any of its property or assets, tangible or intangible, now owned or hereafter acquired, or agree or become liable to do so,
except for Permitted Liens.
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8.2.3.
|
[Intentionally omitted]
.
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|
8.2.4.
|
Loans and Investments
.
|
The Borrower shall not, and shall not permit any of its Subsidiaries to, at any time make or suffer to remain outstanding any loan or advance to, or purchase, acquire or own any stock, bonds, notes or securities of, or any partnership interest (whether general or limited) or limited liability company interest in, or any other investment or interest in,
or make any capital contribution to, any other Person, or agree, become or remain liable to do any of the foregoing (any of the foregoing being an “
Investment
”), except:
(a) trade credit extended on usual and customary terms in the ordinary course of business;
(b) advances to employees to meet expenses incurred by such employees in the ordinary course of business;
(c) Investments in New Jersey Natural Gas Charity, Inc.;
(d) Permitted Investments; and
(e) any Investment which constitutes a Permitted Acquisition in accordance with
Section 8.2.5
.
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8.2.5.
|
Liquidations, Mergers, Consolidations, Acquisitions
.
|
The Borrower shall not, and shall not permit any of its Subsidiaries to, dissolve, liquidate or wind-up its affairs, or become a party to any merger or consolidation, or acquire by purchase, lease or otherwise all or substantially all of the assets or capital stock of any other Person,
provided
that:
(a) any such Subsidiary may consolidate or merge into another such Subsidiary which is wholly owned by the Borrower or one or more of such other Subsidiaries,
(b) any Inactive Subsidiary of the Borrower may dissolve, liquidate or wind-up its affairs or any Inactive Subsidiary of the Borrower may consolidate or merge into: (i) any other Inactive Subsidiary of the Borrower, or (ii) any other Subsidiary of the Borrower which is not an Inactive Subsidiary so long as such Inactive Subsidiary has no liabilities, contingent or otherwise, other than Indebtedness permitted by
Section 8.2.1
, and
(c) the Borrower may acquire, whether by purchase or by merger, (i) all of the ownership interests of another Person or (ii) substantially all of assets of another Person or of a business or division of another Person (each a “
Permitted Acquisition
”),
provided
that each of the following requirements is met:
(A) the board of directors or other equivalent governing body of such Person shall have approved such Permitted Acquisition and, if the Borrower shall use any portion of the Loans to fund such Permitted Acquisition, the Borrower also shall have delivered to the Lenders written evidence of the approval of the board of directors (or equivalent body) of such Person for such Permitted Acquisition;
(B) the business acquired, or the business conducted by the Person whose ownership interests are being acquired, as applicable, shall be substantially the same as one or more line or lines of business conducted by the Borrower or otherwise be compliant with
Section 8.2.8
;
(C) no Potential Default or Event of Default shall exist immediately prior to and after giving effect to such Permitted Acquisition;
(D) the Borrower shall demonstrate that it shall be in compliance with the covenant contained in
Sections 8.2.12
after giving effect to such Permitted Acquisition (including in such computation Indebtedness or other liabilities assumed or incurred in connection with such Permitted Acquisition but excluding income earned or expenses incurred by the Person, business or assets to be acquired prior to the date of such Permitted Acquisition) by delivering at least five (5) Business Days prior to such Permitted Acquisition a certificate in the form of
Exhibit 8.2.5
(the “
Acquisition Compliance Certificate
”) evidencing such compliance; and
(E) the Borrower shall deliver to the Agent as soon as available prior to, or in any event within five (5) Business Days after, the consummation of such Permitted Acquisition, such copies of any agreements entered into or proposed to be entered into by the Borrower in connection with such Permitted Acquisition and shall deliver, as soon as available, to the Agent such other information about such Person or its assets as the Agent or any Lender
may reasonably require.
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8.2.6.
|
Dispositions of Assets or Subsidiaries
.
|
The Borrower shall not, and shall not permit any of its Subsidiaries to, sell, sell and leaseback, convey, assign, lease, abandon or otherwise transfer or dispose of, voluntarily or involuntarily, any of its properties or assets, tangible or intangible (including sale, assignment, discount or other disposition of accounts, contract rights, chattel paper, equipment or general intangibles with or without recourse or of capital stock, shares of beneficial interest, partnership interests or limited liability company interests of a Subsidiary of the Borrower), except:
(a) transactions involving the sale of inventory in the ordinary course of business;
(b) any sale, transfer or lease of assets in the ordinary course of business which are no longer necessary or required in the conduct of the Borrower’s or such Subsidiary’s business;
(c) any sale, transfer or lease of assets by any Subsidiary of the Borrower to the Borrower;
(d) any sale, transfer or lease of assets in the ordinary course of business which are replaced by substitute assets acquired or leased;
(e) any sale, transfer or lease of assets, other than those specifically excepted pursuant to clauses (a) through (d) above, provided that (i) at the time of any disposition, no Event of Default shall exist or shall result from such disposition, and (ii) the aggregate net book value of all assets so sold by the Borrower and its Subsidiaries shall not exceed in any fiscal year five (5%) of the consolidated total assets of the Borrower and its Subsidiaries as determined on a consolidated basis in accordance with GAAP;
(f) any issuance of shares of the capital stock of the Borrower to the Parent;
(g) any sale, transfer or lease of assets of any Inactive Subsidiary of the Borrower; and
(h) gas meter sale and leaseback transactions under the Permitted Sale and Leaseback Program.
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8.2.7.
|
Affiliate Transactions
.
|
Except for any Permitted Related Business Opportunities as previously disclosed to the Agent and each of the Lenders either in the SEC Filing or otherwise, the Borrower shall not, and shall not permit any of its Subsidiaries to, enter into or carry out any transaction (including purchasing property or services from or selling property or services to any Affiliate of the Borrower or any of its Subsidiaries or other Person) unless such transaction is not otherwise prohibited by this Agreement, is entered into in the ordinary course of business upon fair and reasonable arm’s-length terms and conditions and is in accordance with all applicable Law.
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8.2.8.
|
Subsidiaries as Guarantors
.
|
The Borrower shall not, and shall not permit any of its Subsidiaries to, without the Required Lenders' consent (which shall not be unreasonably withheld) own or create, directly or indirectly, any Subsidiaries.
|
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8.2.9.
|
Continuation of or Change in Business
.
|
The Borrower shall not, and shall not permit any of its Subsidiaries to, engage in any business (including, without limitation, any joint ventures) other than the business of the Borrower or such Subsidiary substantially as conducted and operated by the Borrower or such Subsidiary during the present fiscal year,
and any line of business or business activity related or complementary to the business of the Borrower and its Subsidiaries conducted as of the Closing Date, or constituting a Permitted Related Business Opportunity.
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8.2.10.
|
Plans and Benefit Arrangements
.
|
The Borrower shall not, and shall not permit any of its Subsidiaries to, engage in a Prohibited Transaction with any Plan, Benefit Arrangement, Multiple Employer Plan or Multiemployer Plan which, alone or in conjunction with any other circumstances or set of circumstances, would reasonably be expected to result in a Material Adverse Change.
The Borrower shall not, and shall not permit any Subsidiary of the Borrower to, change its fiscal year from the twelve-month period beginning October 1 and ending September 30, without the prior written consent of the Required Lenders (which consent will not be unreasonably conditioned or withheld).
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8.2.12.
|
Maximum Leverage Ratio
.
|
The Borrower shall not at any time permit the ratio of Consolidated Total Indebtedness of the Borrower and its Subsidiaries to Consolidated Total Capitalization to exceed 0.65 to 1.00.
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8.2.13.
|
[Intentionally omitted]
.
|
|
|
|
|
8.2.14.
|
No Limitation on Dividends and Distributions by Borrower or its Subsidiaries
.
|
The Borrower shall not, and shall not permit any Subsidiary of the Borrower to, enter into or otherwise be bound by any agreement not to pay dividends or make distributions to the Borrower (in the case of any such Subsidiary) or to the Parent (in the case of the Borrower), except for the restrictions that are no more onerous than the restrictions set forth in this Agreement and the restrictions set forth in the First Mortgage Indenture, in each case as such restrictions exist as of the Closing Date.
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8.2.15.
|
Payment of Dividends; Redemptions
.
|
The Borrower shall not, and shall not permit any Subsidiary to, declare or make any dividend payment or other distribution of assets, properties, cash, rights, obligations or securities on account of any shares of any class of capital stock of the Borrower, or purchase, redeem or otherwise acquire for value (or permit any of its Subsidiaries to do so) any shares of any class of capital stock or other securities of the Borrower or any warrants, rights or options to acquire any such shares or other securities, now or hereafter outstanding, except that the Borrower may (a) declare and make any dividend payment or other distribution payable in common stock of the Borrower, (b) purchase, redeem or otherwise acquire shares of its common stock or warrants, rights or options to acquire any such shares so long as no Event of Default or Potential Default shall have occurred and is continuing or would result therefrom, and (c) declare and make its dividends, so long as, after giving effect thereto, no Event of Default shall have occurred and is continuing.
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8.2.16.
|
No Modification of Hedging Contract Policies
.
|
The Borrower and each Subsidiary of the Borrower shall not amend, modify, supplement, restate or rescind the Hedging Contract Policies in a manner which, compared with past practice of the Borrower and its Subsidiaries, would render Hedging Transactions entered into pursuant to the Hedging Contract Policies (as so modified) materially more speculative, without the prior written consent of the Required Lenders.
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8.2.17.
|
Off-Balance Sheet Financing.
|
The Borrower and each Subsidiary of the Borrower shall not engage in any off-balance sheet transaction (i.e., the liabilities in respect of which do not appear on the liability side of the balance sheet, with such balance sheet prepared in accordance with GAAP) providing the functional equivalent of borrowed money (including asset securitizations, sale/leasebacks or Synthetic Leases (other than any sale/leaseback transaction or Synthetic Lease entered into, in either case, with respect to meter assets and which transaction is otherwise permitted by this Agreement)) if the liabilities thereunder could reasonably be expected to result in a Material Adverse Change. For purposes of this
Section 8.2.17
(a) "Synthetic Lease" means any lease transaction under which the parties intend that (i) the lease will be treated as an "operating lease"
by the lessee pursuant to Statement of Financial Accounting Standards No. 13, as amended, or appropriate successor thereto, and (ii) the lessee will be entitled to various tax benefits ordinarily available to owners (as opposed to lessees) of like property, and (b) the amount of any lease which is not a capital lease in accordance with GAAP is the aggregate amount of minimum lease payments due pursuant to such lease for any non-cancelable portion of its term.
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8.2.18.
|
[Intentionally omitted]
.
|
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8.2.19.
|
No Violation of Anti-Terrorism Laws
.
|
Neither the Borrower nor any Subsidiary of the Borrower shall: (a) violate any of the prohibitions set forth in the Executive Order No. 13224, the USA Patriot Act or any other Anti-Terrorism Law applicable to any of them or the business that they conduct, or (b) require the Agent or the Lenders to take any action that would cause the Agent or the Lenders to be in violation of the prohibitions set forth in the Executive Order No. 13224, the USA Patriot Act or any other Anti-Terrorism Law, it being understood that the Agent or any Lender can refuse to honor any such request or demand otherwise validly made by the Borrower under this Agreement or any other Loan Document.
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8.3
|
Reporting Requirements
|
The Borrower covenants and agrees that until payment in full of the Loans and interest thereon, satisfaction of all of the Borrower’s other Obligations hereunder and under the other Loan Documents and termination of the Commitments, the Borrower will furnish or cause to be furnished to the Agent and each of the Lenders:
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8.3.1.
|
Quarterly Financial Statements
.
|
As soon as available and in any event within fifty-five (55) calendar days after the end of each of the first three fiscal quarters in each fiscal year (or such earlier or later date, from time to time established by the SEC in accordance with the Securities Exchange Act of 1934, as amended), financial statements of the Borrower, consisting of a consolidated and consolidating balance sheet as of the end of such fiscal quarter and related consolidated and consolidating statements of income, stockholders’ equity and cash flows for the fiscal quarter then ended and the fiscal year through that date, all in reasonable detail and certified (subject to normal year-end audit adjustments) by the Chief Executive Officer, President, Chief Financial Officer or Treasurer of the Borrower as having been prepared in accordance with GAAP, consistently applied, and setting forth in comparative form the respective financial statements for the corresponding date and period in the previous fiscal year. The Borrower will be deemed to have complied with the delivery requirements of this
Section 8.3.1
if within fifty-five (55)
calendar days after the end of its fiscal quarter (or such earlier or later date, from time to time established by the SEC in accordance with the Securities Exchange Act of 1934, as amended), the Borrower delivers to the Agent and each of the Lenders a copy of its Form 10-Q as filed with the SEC and the financial statements contained therein meets the requirements described in this Section.
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8.3.2.
|
Annual Financial Statements
.
|
As soon as available and in any event within 105 days after the end of each fiscal year of the Borrower (or such earlier or later date, from time to time established by the SEC in accordance with the Securities Exchange Act of 1934, as amended), financial statements of the Borrower consisting of a consolidated balance sheet as of the end of such fiscal year, and related consolidated statements of income, stockholders’ equity and cash flows for the fiscal year then ended, all in reasonable detail and setting forth in comparative form the financial statements as of the end of and for the preceding fiscal year, and certified by independent certified public accountants of nationally recognized standing satisfactory to the Agent. The certificate or report of accountants shall be free of qualifications (other than any consistency qualification that may result from a change in the method used to prepare the financial statements as to which such accountants concur) and shall not indicate the occurrence or existence of any event, condition or contingency which would materially impair the prospect of payment or performance of any covenant, agreement or duty of the Borrower under any of the Loan Documents. The Borrower will be deemed to have complied with the delivery requirements of this
Section 8.3.2
if within 105 days after the end of its fiscal year (or such earlier or later date, from time to time established by the SEC in accordance with the Securities Exchange Act of 1934, as amended), the Borrower delivers to the Agent and each of the Lenders a copy of its Form 10-K as filed with the SEC and the financial statements and certification of public accountants contained therein meets the requirements described in this Section.
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8.3.3.
|
Certificate of the Borrower
.
|
Concurrently with the financial statements of the Borrower furnished to the Agent and to the Lenders pursuant to
Sections 8.3.1
and
8.3.2
, a certificate (each a “
Compliance Certificate
”) of the Borrower signed by the Chief Executive Officer, President, Chief Financial Officer or Treasurer of the Borrower, in the form of
Exhibit 8.3.3
.
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8.3.4.
|
Notice of Default
.
|
Promptly after any Authorized Officer (or other executive officer) of the Borrower has learned of the occurrence of an Event of Default or Potential Default, a certificate signed by the Chief Executive Officer, President or Chief Financial Officer of the Borrower setting forth the details of such Event of Default or Potential Default and the action which the Borrower proposes to take with respect thereto.
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8.3.5.
|
Notice of Litigation
.
|
Promptly after the commencement thereof, notice of (a) all actions, suits, proceedings or investigations before or by any Official Body or any other Person against the Borrower or Subsidiary of the Borrower, involve a claim or series of claims in excess of $15,000,000.00 or, (b) any Environmental Complaint, individually or in the aggregate exceed $15,000,000.00, and in either case which if adversely determined could reasonably be expected to result in a Material Adverse Change.
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8.3.6.
|
Notice of Change in Debt Rating
.
|
Within five (5) Business Days after Standard & Poor’s or Moody’s, or such other rating agency as may be applicable pursuant to the terms hereof, announces a change in the Debt Rating of the Borrower, notice of such change. The Borrower will deliver, together with such notice, a copy of any written notification which Borrower received from the applicable rating agency regarding such change of Debt Rating.
At least thirty (30) calendar days prior thereto, notice with respect to any proposed sale or transfer of assets pursuant to
Section 8.2.6(e)
where the consideration for such sale or transfer of assets is in excess of $15,000,000.00.
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8.3.8.
|
Budgets, Forecasts, Other Reports and Information
.
|
Promptly upon their becoming available to the Borrower:
(a) any reports, notices or proxy statements generally distributed by the Borrower to its stockholders on a date no later than the date supplied to such stockholders,
(b) to the extent not publicly accessible through the SEC’s, the Parent’s or the Borrower’s respective websites, regular or periodic reports, including Forms 10-K, 10-Q and 8‑K, registration statements and prospectuses, filed by the Borrower or the Parent with the SEC,
(c) to the extent not previously reported in regular or periodic reports, including Forms 10-K, 10-Q and 8-K, registration statements and prospectuses, filed by the Borrower or the Parent with the SEC, the Borrower shall notify the Lenders promptly of the enactment or adoption of any Law which may result in a Material Adverse Change,
(d) to the extent requested by the Agent or any Lender, the annual budget and any forecasts or projections of the Borrower, and
(e) with respect to the Hedging Transaction activities of the Borrower and its Subsidiaries, to the extent not previously reported in regular or periodic reports, including Forms 10-K, 10-Q and 8-K, registration statements and prospectuses, filed by the Borrower or the Parent with the SEC, such other reports and information as any of the Lenders may from time to time reasonably request.
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8.3.9.
|
Notices Regarding Plans and Benefit Arrangements
.
|
8.3.9.1
Certain Events
.
Promptly upon becoming aware of the occurrence thereof, notice (including the nature of the event and, when known, any action taken or threatened by the Internal Revenue Service or the PBGC with respect thereto) of:
(a) any Reportable Event with respect to the Borrower or any other member of the ERISA Group (unless the obligation to report said Reportable Event to the PBGC has been waived), which could reasonably be expected to result in a Material Adverse Change,
(b) any Prohibited Transaction which could subject the Borrower or any other member of the ERISA Group to a civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the Internal Revenue Code in connection with any Plan, any Benefit Arrangement or any trust created thereunder, which penalty or tax could reasonably be expected to result in a Material Adverse Change,
(c) any assertion of withdrawal liability with respect to any Multiemployer Plan, which could reasonably be expected to result in a Material Adverse Change,
(d) any partial or complete withdrawal against the Borrower or any other member of the ERISA Group from a Multiemployer Plan by the Borrower or any other member of the ERISA Group under Title IV of ERISA (or assertion thereof), which could reasonably be expected to result in a Material Adverse Change,
(e) any cessation of operations (by the Borrower or any other member of the ERISA Group) at a facility in the circumstances described in Section 4062(e) of ERISA, which could reasonably be expected to result in a Material Adverse Change,
(f) withdrawal by the Borrower or any other member of the ERISA Group from a Multiple Employer Plan, which could reasonably be expected to result in a Material Adverse Change,
(g) a failure by the Borrower or any other member of the ERISA Group to make a payment to a Plan required to avoid imposition of a Lien under Section 303(k) of ERISA, which could reasonably be expected to result in a Material Adverse Change,
(h) the adoption of an amendment to a Plan requiring the provision of security to such Plan pursuant to Section 307 of ERISA, or
(i) any change in the actuarial assumptions or funding methods used for any Plan, where the effect of such change is to materially increase or materially reduce the unfunded benefit liability or obligation to make periodic contributions, except for any such change required under applicable law, which could reasonably be expected to result in a Material Adverse Change.
8.3.9.2
Notices of Involuntary Termination and Annual Reports
.
Promptly after receipt thereof, copies of (a) all notices received by the Borrower or any other member of the ERISA Group of the PBGC’s intent to terminate any Plan administered or maintained by the Borrower or any member of the ERISA Group, or to have a trustee appointed to administer any such Plan; and (b) at the request of the Agent or any Lender each annual report (IRS Form 5500 series) and all accompanying schedules, the most recent actuarial reports, the
most recent financial information concerning the financial status of each Plan administered or maintained by the Borrower or any other member of the ERISA Group, and schedules showing the amounts contributed to each such Plan by or on behalf of the Borrower or any other member of the ERISA Group in which any of their personnel participate or from which such personnel
may derive a benefit, and each Schedule B (Actuarial Information) to the annual report filed by the Borrower or any other member of the ERISA Group with the Internal Revenue Service with respect to each such Plan.
8.3.9.3
Notice of Voluntary Termination
.
Promptly upon the filing thereof, copies of any Form 5310, or any successor or equivalent form to Form 5310, filed with the PBGC in connection with the termination of any
Plan.
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8.3.10.
|
Other Information.
|
Such additional information as may be reasonably requested in writing by the Agent.
9.
DEFAULT
An Event of Default means the occurrence or existence of any one or more of the following events or conditions (whatever the reason therefor and whether voluntary, involuntary or effected by operation of Law):
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9.1.1.
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Payments Under Loan Documents
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The Borrower shall fail to pay (a) any principal of any Loan (including scheduled installments, mandatory prepayments or the payment due at maturity) when such principal is due hereunder or (b) any interest on any Loan, Commitment Fee or any other amount owing hereunder or under the other Loan Documents within three (3) Business Days after such interest, fee, or other amount becomes due in accordance with the terms hereof or thereof;
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9.1.2.
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Breach of Warranty
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Any representation or warranty made at any time by the Borrower herein or in any other Loan Document, or in any certificate, other instrument or statement furnished pursuant to the provisions hereof or thereof, shall prove to have been false or misleading in any material respect as of the time it was made or furnished;
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9.1.3.
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Breach of Negative Covenants or Visitation Rights
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The Borrower shall default in the observance or performance of any covenant contained in
Section 8.1.6
or
Section 8.2
;
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9.1.4.
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Breach of Other Covenants
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The Borrower shall default in the observance or performance of any other covenant, condition or provision hereof or of any other Loan Document and such default shall continue unremedied for a period of thirty (30) calendar days after any Authorized Officer (or other executive officer) of the Borrower becomes aware of the occurrence thereof (such grace period to be applicable only in the event such default can be remedied by corrective action of the Borrower as determined by the Agent in its reasonable discretion);
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9.1.5.
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Defaults in Other Agreements or Indebtedness
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(a) A default or event of default shall occur at any time under the terms of any other agreement involving borrowed money or the extension of credit or any other Indebtedness under which the Borrower may be obligated as a borrower or guarantor in excess of $15,000,000.00 in the aggregate, and such breach, default or event of default consists of the failure to pay (beyond any period of grace permitted with respect thereto, whether waived or not) any indebtedness when due (whether at stated maturity, by acceleration or otherwise) or if such breach or default permits or causes the acceleration of any indebtedness (whether or not such right shall have been waived) or the termination of any commitment to lend; or
(b) A default or event of default shall occur at any time under the terms of any agreement involving any off balance sheet transaction (including any asset securitization, sale/leaseback transaction, or Synthetic Lease) with obligations in the aggregate thereunder for which the Borrower may be obligated in excess of $15,000,000.00
,
and such breach, default or event of default consists of the failure to pay (beyond any period of grace permitted with respect thereto, whether waived or not) any obligation when due (whether at stated maturity, by acceleration or otherwise) or if such breach or default permits or causes the acceleration of any obligation (whether or not such right shall have been waived) or the termination of any such agreement;
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9.1.6.
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Final Judgments or Orders
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Any final judgments or orders for the payment of money in excess of $15,000,000.00 in the aggregate, to the extent not covered by insurance, shall be entered against the Borrower by a court having jurisdiction in the premises, which judgment is not discharged, vacated, bonded or stayed pending appeal within a period of thirty (30) days from the date of entry;
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9.1.7.
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Loan Document Unenforceable
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Any of the Loan Documents shall cease to be legal, valid and binding agreements enforceable against the Borrower or its successors and assigns (as permitted under the Loan Documents) in accordance with the respective terms thereof or shall in any way be terminated (except in accordance with its terms) or become or be declared ineffective or inoperative or shall in any way be challenged or contested by the Borrower or cease to give or provide the respective rights, titles, interests, remedies, powers or privileges intended to be created thereby;
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9.1.8.
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Uninsured Losses; Proceedings Against Assets
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The assets of the Borrower or the assets of any Subsidiary of the Borrower are attached, seized, levied upon or subjected to a writ or distress warrant; or such come within the possession of any receiver, trustee, custodian or assignee for the benefit of creditors and the same is not cured within thirty (30) days thereafter or otherwise fully bonded or covered by insurance (subject to reasonable and customary deductible amounts);
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9.1.9.
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Notice of Lien or Assessment
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A notice of Lien or assessment in excess of $15,000,000.00 (which is not a Permitted Lien) or an Environmental Complaint in excess of $15,000,000.00 is filed of record with respect to all or any part of any of the Borrower’s or any of its Subsidiaries’ assets by the United States, or any department, agency or instrumentality thereof, or by any state, county, municipal or other governmental agency, including the PBGC, or any taxes or debts owing at any time or times hereafter to any one of these becomes payable and the same is not paid within thirty (30) days after the same becomes payable;
The Borrower ceases to be Solvent or admits in writing to a creditor or Official Body its inability to pay its debts as they mature;
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9.1.11.
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Events Relating to Plans and Benefit Arrangements
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Any of the following occurs: (a) any Reportable Event; (b) proceedings shall have been instituted or other action taken to terminate any Plan in a distress termination; (c) a trustee shall be appointed by the PBGC to administer or liquidate any Plan; (d) the PBGC shall give notice of its intent to institute proceedings to terminate any Plan or Plans or to appoint a trustee to administer or liquidate any Plan; and, in the case of the occurrence of (a), (b), (c) or (d) above, which could reasonably be expected to result in a Material Adverse Change; (e) the Borrower or any member of the ERISA Group shall fail to make any contributions when due to a Plan or a Multiemployer Plan; (f) the Borrower or any other member of the ERISA Group shall withdraw completely or partially from a Multiemployer Plan; (g) the Borrower or any other member of the ERISA Group shall withdraw (or shall be deemed under Section 4062(e) of ERISA to withdraw) from a Multiple Employer Plan; or (h) any applicable Law is adopted, changed or interpreted by any Official Body with respect to or otherwise affecting one or more Plans, Multiple Employer Plans Multiemployer Plans or Benefit Arrangements and, with respect to any of the events specified in (e), (f), (g) or (h) such occurrence could reasonably be expected to result in a Material Adverse Change;
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9.1.12.
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Cessation of Business
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The Borrower or any Subsidiary of the Borrower ceases to conduct its business as contemplated, except as expressly permitted under
Section 8.2.5
,
Section 0
or
Section 8.2.9
or the Borrower or any Subsidiary of the Borrower is enjoined, restrained or in any way prevented
by court order from conducting all or any material part of its business and such injunction, restraint or other preventive order is not dismissed within thirty (30) days after the entry thereof;
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9.1.13.
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Change of Control
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(a) Any person or group of persons (within the meaning of Sections 13(d) or 14(a) of the Securities Exchange Act of 1934, as amended) shall have acquired beneficial ownership of (within the meaning of Rule 13d-3 promulgated by the SEC under said Act) 25% or more of the voting capital stock of the Parent (provided that, for purposes of calculating the acquisition of beneficial ownership, any transfer of voting stock of the Parent by any Person or group of Persons to a Permitted Transferee shall be deemed not to constitute a conveyance and acquisition of such stock), or (b) within a period of twelve (12) consecutive calendar months, individuals who were directors of the Parent on the first day of such period shall cease to constitute a majority of the board of directors of the Parent unless the individuals who were elected or appointed directors during such twelve (12) month period were elected or appointed by a majority of the individuals who were directors of the Parent on the first day of such period or by their duly appointed or elected successors; or (c) the Parent shall cease to own 100% of the issued and outstanding equity interests of the Borrower;
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9.1.14.
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Involuntary Proceedings
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A proceeding shall have been instituted in a court having jurisdiction in the premises seeking a decree or order for relief in respect of the Borrower or any Subsidiary of the Borrower in an involuntary case under any applicable bankruptcy, insolvency, reorganization or other similar law now or hereafter in effect, or for the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator (or similar official) of the Borrower or any Subsidiary of the Borrower for any substantial part of its property, or for the winding-up or liquidation of its affairs, and such proceeding shall remain undismissed or unstayed and in effect for a period of sixty (60) consecutive days or such court shall enter a decree or order granting any of the relief sought in such proceeding; or
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9.1.15.
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Voluntary Proceedings
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The Borrower or any Subsidiary of the Borrower shall commence a voluntary case under any applicable bankruptcy, insolvency, reorganization or other similar law now or hereafter in effect, shall consent to the entry of an order for relief in an involuntary case under any such law, or shall consent to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator (or other similar official) of itself or for any substantial part of its property or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any action in furtherance of any of the foregoing.
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9.2
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Consequences of Event of Default
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9.2.1.
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Events of Default Other Than Bankruptcy, Insolvency or Reorganization Proceedings
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If an Event of Default specified under
Sections 9.1.1
through
9.1.13
shall occur and be continuing, the Lenders and the Agent shall be under no further obligation to make Loans and the Agent may, and upon the request of the Required Lenders shall, by written notice to the Borrower, take one or both of the following actions: (a) terminate the Commitments and thereupon the Commitments shall be terminated and of no further force and effect or (b) declare the unpaid principal amount of the Notes and Loans then outstanding and all interest accrued thereon, any unpaid fees and all other Indebtedness of the Borrower to the Lenders hereunder and thereunder to be forthwith due and payable, and the same shall thereupon become and be immediately due and payable to the Agent for the benefit of each Lender without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived.
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9.2.2.
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Bankruptcy, Insolvency or Reorganization Proceedings
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If an Event of Default specified under
Sections
9.1.14
or
9.1.15
shall occur, the Commitments shall automatically terminate and be of no further force and effect, the Agent and the Lenders shall be under no further obligations to make Loans and the unpaid principal amount of the Loans then outstanding and all interest accrued thereon, any unpaid fees and all other Indebtedness of the Borrower to the Lenders hereunder and thereunder shall be immediately due and payable, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived; and
If an Event of Default shall occur and be continuing, any Lender to whom any Obligation is owed by the Borrower hereunder or under any other Loan Document or any participant of such Lender which has agreed in writing to be bound by the provisions of
Section 10.13
and any branch, Subsidiary or Affiliate of such Lender or participant anywhere in the world shall have the right, in addition to all other rights and remedies available to it, without notice to the Borrower, to set-off against and apply to the then unpaid balance of all the Loans and all other Obligations of the Borrower hereunder or under any other Loan Document any debt owing to, and any other funds held in any manner for the account of, the Borrower by such Lender or participant or by such branch, Subsidiary or Affiliate, including all funds in all deposit accounts (whether time or demand, general or special, provisionally credited or finally credited, or otherwise) now or hereafter maintained by the Borrower for its own account (but not including funds held in custodian or trust accounts) with such Lender or participant or such branch, Subsidiary or Affiliate. Such right shall exist whether or not any Lender or the Agent shall have made any demand under this Agreement or any other Loan Document, whether or not such debt owing to or funds held for the account of the Borrower is or are matured or unmatured and regardless of the existence or adequacy of any Guaranty or any other security, right or remedy available to any Lender or the Agent; and
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9.2.4.
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Suits, Actions, Proceedings
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If an Event of Default shall occur and be continuing, and whether or not the Agent shall have accelerated the maturity of Loans pursuant to any of the foregoing provisions of this
Section 9.2
, the Agent or any Lender, if owed any amount with respect to the Loans, may proceed to protect and enforce its rights by suit in equity, action at law and/or other appropriate proceeding, whether for the specific performance of any covenant or agreement contained in this Agreement or the other Loan Documents; and
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9.2.5.
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Application of Proceeds; Collateral Sharing
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9.2.5.1
Application of Proceeds
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From and after the date on which the Agent has taken any action pursuant to this
Section 9.2
and until all Obligations of the Borrower have been paid in full, any and all proceeds received by the Agent from the exercise of any remedy by the Agent, shall be applied as follows:
(a) first, to reimburse the Agent and the Lenders for out-of-pocket costs, expenses and disbursements, including reasonable attorneys’ and paralegals’ fees and legal expenses, incurred by the Agent or the Lenders in connection with collection of any Obligations of the Borrower under any of the Loan Documents;
(b) second, to the repayment of all Indebtedness then unpaid of the Borrower to the Lenders incurred under this Agreement or any of the other Loan Documents, whether of principal, interest, fees, expenses or otherwise, in such manner as the Agent may determine in its discretion; and
(c) the balance, if any, as required by Law.
9.2.5.2
Collateral Sharing
.
All Liens granted under each Loan Document (the “
Collateral Documents
”) shall secure ratably and on a
pari
passu
basis (a) the Obligations in favor of the Agent and the Lenders hereunder, and (b) the Obligations incurred by the Borrower in favor of any Lender and Lender’s Affiliates which provides a Lender Provided Interest Rate Hedge (the “
IRH Provider
”). The Agent under the Collateral Documents shall be deemed to serve as the collateral agent (the “
Collateral Agent
”) for the IRH Provider and the Lenders hereunder, provided that the Collateral Agent shall comply with the instructions and directions of the Agent (or the Lenders under this Agreement to the extent that this Agreement or any other Loan Documents empowers the Lenders to direct the Agent), as to all matters relating to the collateral, including the maintenance and disposition thereof. No IRH Provider (except in its capacity as a Lender hereunder) shall be entitled or have the power to direct or instruct the Collateral Agent on any such matters or to control or direct in any manner the maintenance or disposition of the collateral.
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9.2.6.
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Other Rights and Remedies
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In addition to all of the rights and remedies contained in this Agreement or in any of the other Loan Documents, the Agent shall have all of the rights and remedies under applicable Law, all of which rights and remedies shall be cumulative and non-exclusive, to the extent permitted by Law. The Agent may, and upon the request of the Required Lenders shall, exercise all post-default rights granted to the Agent and the Lenders under the Loan Documents or applicable Law.
10.
THE AGENT
Each Lender hereby irrevocably appoints JPMorgan Chase, N.A. to act on its behalf as the Agent hereunder and under the other Loan Documents and authorizes the Agent to take such actions on its behalf and to exercise such powers as are delegated to the Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Section are solely for the benefit of the Agent and the Lenders hereunder, and neither the Borrower nor any other party to the Loan Documents shall have rights as a third party beneficiary of any of such provisions.
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10.2
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Delegation of Duties
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The Agent may perform any of its duties hereunder by or through agents or employees (
provided
such delegation does not constitute a relinquishment of its duties as the Agent) and, subject to
Sections 10.5
and
10.6
, shall be entitled to engage and pay for the advice or services of any attorneys, accountants or other experts concerning all matters pertaining to its duties hereunder and to rely upon any advice so obtained.
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10.3
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Nature of Duties; Independent Credit Investigation
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The Agent shall have no duties or responsibilities except those expressly set forth in this Agreement and no implied covenants, functions, responsibilities, duties, obligations, or liabilities shall be read into this Agreement or otherwise exist. The duties of the Agent shall be mechanical and administrative in nature; the Agent shall not have by reason of this Agreement a fiduciary or trust relationship in respect of any Lender; and nothing in this Agreement, expressed or implied, is intended to or shall be so construed as to impose upon the Agent any obligations in respect of this Agreement except as expressly set forth herein. Without limiting the generality of the foregoing, the use of the term “agent” in this Agreement with reference to the Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties. Each Lender expressly acknowledges (a) that the Agent has not made any representations or warranties to it and that no act by the Agent hereafter taken, including any review of the affairs of the Borrower shall be deemed to constitute any representation or warranty by the Agent to any Lender; (b) that it has made and will continue to make, without reliance upon the Agent, its own independent investigation of the financial
condition and affairs and its own appraisal of the creditworthiness of the Borrower in connection with this Agreement and the making and continuance of the Loans hereunder; and (c) except as expressly provided herein, that the Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before the making of any Loan or at any time or times thereafter.
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10.4
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Actions in Discretion of Agent; Instructions From the Lenders
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The Agent agrees, upon the written request of the Required Lenders, to take or refrain from taking any action of the type specified as being within the Agent’s rights, powers or discretion herein,
provided
that the Agent shall not be required to take any action which exposes the Agent to personal liability or which is contrary to this Agreement or any other Loan Document or applicable Law. In the absence of a request by the Required Lenders, the Agent shall have authority, in its sole discretion, to take or not to take any such action, unless this Agreement specifically requires the consent of the Required Lenders or all of the Lenders. Any action taken or failure to act pursuant to such instructions or discretion shall be binding on the Lenders, subject to
Section 10.6
. Subject to the provisions of
Section 10.6
, no Lender shall have any right of action whatsoever against the Agent as a result of the Agent acting or refraining from acting hereunder in accordance with the instructions of the Required Lenders, or in the absence of such instructions, in the absolute discretion of the Agent.
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10.5
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Reimbursement and Indemnification of Agent by the Borrower
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The Borrower agrees to pay or reimburse the Agent and hold the Agent harmless against (a) liability for the payment of all reasonable out-of-pocket costs, expenses and disbursements, including fees and expenses of counsel (excluding, so long as no Event of Default or Potential Default is occurring, the allocated costs of staff counsel), appraisers and environmental consultants, incurred by the Agent (i) in connection with the negotiation, preparation, printing, execution, administration, syndication, interpretation and performance of this Agreement and the other Loan Documents, (ii) relating to any amendments, waivers or consents pursuant to the provisions hereof, requested by the Borrower or required by applicable law, (iii) in connection with the enforcement of this Agreement or any other Loan Document or collection of amounts due hereunder or thereunder or the proof and allowability of any claim arising under this Agreement or any other Loan Document, whether in bankruptcy or receivership proceedings or otherwise, (iv) in any workout or restructuring or in connection with the protection, preservation, exercise or enforcement of any of the terms hereof or of any rights hereunder or under any other Loan Document or in connection with any foreclosure, collection or bankruptcy proceedings, and (v) in connection with any Environmental Complaint threatened or asserted against the Agent or the Lenders in any way relating to or arising out of this Agreement or any other Loan Documents (including, without limitation, the protection, preservation, exercise or enforcement of any of the terms hereof or of any rights hereunder or under any other Loan Document or in connection with any foreclosure, collection or bankruptcy proceedings or in any
workout or restructuring) and (b) all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against the Agent, in its capacity as such, in any way relating to or arising out of (i) this Agreement or any other Loan Documents or any action taken or omitted by the Agent hereunder or thereunder, and (ii) any Environmental Complaint in any way relating to or arising out of this Agreement or any other Loan Documents or any action taken or omitted by the Agent hereunder or thereunder,
provided
that the Borrower
shall not be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements if the same results solely from the Agent’s gross negligence or willful misconduct as determined in a final, unappealable judgment of a court of competent jurisdiction, or if the Borrower was not given notice of the subject claim and the opportunity to participate in the defense thereof, at its expense (except that the Borrower shall remain liable to the extent such failure to give notice does not result in a loss to the Borrower), or if the same results from a compromise or settlement agreement entered into without the consent of the Borrower, which shall not be unreasonably withheld. In addition, the Borrower agrees to reimburse and pay all reasonable out-of-pocket expenses of the Agent’s regular employees and agents engaged periodically to perform audits of the Borrower’s books, records and business properties, subject in all cases to the limitation set forth in
Section 8.1.6
.
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10.6
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Exculpatory Provisions; Limitation of Liability
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Neither the Agent nor any of its directors, officers, employees, agents, attorneys or Affiliates shall (a) be liable to any Lender for any action taken or omitted to be taken by it or them hereunder, or in connection herewith including pursuant to any Loan Document, unless caused by its or their own gross negligence or willful misconduct as determined in a final, unappealable judgment of a court of competent jurisdiction, (b) be responsible in any manner to any of the Lenders for the effectiveness, enforceability, genuineness, validity or the due execution of this Agreement or any other Loan Documents or for any recital, representation, warranty, document, certificate, report or statement herein or made or furnished under or in connection with this Agreement or any other Loan Documents, or (c) be under any obligation to any of the Lenders to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions hereof or thereof on the part of the Borrower, or the financial condition of the Borrower or the existence or possible existence of any Event of Default or Potential Default. Each Lender agrees that, except for notices, reports and other documents expressly required to be furnished to the Lenders by the Agent hereunder or given to the Agent for the account of or with copies for the Lenders, the Agent and each of its directors, officers, employees, agents, attorneys or Affiliates shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of the Borrower which may come into the possession of the Agent or any of its directors, officers, employees, agents, attorneys or Affiliates.
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10.7
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Reimbursement and Indemnification of Agent by Lenders
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Each Lender agrees to reimburse and indemnify, defend and save the Agent (to the extent not reimbursed by the Borrower and without limiting the Obligation of the Borrower to do so) in proportion to its Ratable Share harmless from and against all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements, including
attorneys’ fees and disbursements (including the allocated costs of staff counsel), and costs of appraisers and environmental consultants, of any kind or nature whatsoever which may be imposed on, incurred by or asserted against the Agent, in its capacity as such, in any way relating
to or arising out of this Agreement or any other Loan Documents or any action taken or omitted by the Agent hereunder or thereunder,
provided
that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements (a) if the same results from the Agent’s gross negligence or willful misconduct as determined in a final, unappealable judgment of a court of competent jurisdiction, or (b) if such Lender was not given notice of the subject claim and the opportunity to participate in the defense thereof, at its expense (subject to reimbursement by the Borrower pursuant to
Section 11.3
and except that such Lender shall remain liable to the extent such failure to give notice does not result in a loss to the Lender), or (c) if the same results from a compromise and settlement agreement entered into without the consent of such Lender, which shall not be unreasonably withheld. In addition, each Lender agrees promptly upon demand to reimburse the Agent (to the extent not reimbursed by the Borrower and without limiting the Obligation of the Borrower to do so) in proportion to its Ratable Share for all amounts due and payable by the Borrower to the Agent in connection with the Agent’s periodic audit of the Borrower’s books, records and business properties.
Except as otherwise expressly provided herein, the Agent shall be entitled to rely upon any writing, telex or teletype message, resolution, notice, consent, certificate, letter, statement, order or other document or conversation by telephone or otherwise believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon the advice and opinions of counsel and other professional advisers selected by the Agent. The Agent shall be fully justified in failing or refusing to take any action hereunder unless it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action.
The Agent shall not be deemed to have knowledge or notice of the occurrence of any Potential Default or Event of Default unless the Agent has received written notice from a Lender or the Borrower referring to this Agreement, describing such Potential Default or Event of Default and stating that such notice is a “notice of default.”
The Agent shall promptly send to each Lender a copy of all notices received from the Borrower pursuant to the provisions of this Agreement or the other Loan Documents promptly upon receipt thereof. The Agent shall promptly notify the Borrower and the other Lenders of each change in the Base Rate and the effective date thereof.
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10.11
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Lenders in Their Individual Capacities; Agents in Its Individual Capacity
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With respect to its Commitment and the Loans made by it and any other rights and powers given to it as a Lender hereunder or under any of the other Loan Documents, the Agent shall have the same rights and powers hereunder as any other Lender and may exercise the same as though it were not the Agent, and the term “Lender” and “Lenders” shall, unless the context otherwise indicates, include the Agent in its individual capacity. Agent and its Affiliates and each of the Lenders and its respective Affiliates may, without liability to account, except as prohibited herein, make loans to, issue letters of credit for the account of, acquire equity interests in, accept deposits from, discount drafts for, act as trustee under indentures of, and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with, the Borrower and its Affiliates, in the case of the Agent, as though it were not acting as Agent hereunder and in the case of each Lender, as though such Lender were not a Lender hereunder, in each case without notice to or consent of the other Lenders. The Lenders acknowledge that, pursuant to such activities, the Agent or its Affiliates may (a) receive information regarding the Borrower or any of its Subsidiaries or Affiliates (including information that may be subject to confidentiality obligations in favor of the Borrower or such Subsidiary or Affiliate) and acknowledge that the Agent shall be under no obligation to provide such information to them, and (b) accept fees and other consideration from the Borrower for services in connection with this Agreement and otherwise without having to account for the same to the Lenders.
The Agent may deem and treat any payee of any Note as the owner thereof for all purposes hereof unless and until written notice of the assignment or transfer thereof shall have been filed with the Agent. Any request, authority or consent of any Person who at the time of making such request or giving such authority or consent is the holder of any Note shall be conclusive and binding on any subsequent holder, transferee or assignee of such Note or of any Note or Notes issued in exchange therefor.
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10.13
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Equalization of the Lenders
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The Lenders and the holders of any participations in any Commitments or Loans or other rights or obligations of a Lender hereunder agree among themselves that,
with respect to all amounts received by any Lender or any such holder for application on any Obligation hereunder or under any such participation, whether received by voluntary payment, by realization upon security, by the exercise of the right of set-off or banker’s lien, by counterclaim or by any other non-pro rata source, equitable adjustment will be made in the manner stated in the following sentence so that, in effect, all such excess amounts will be shared ratably among the Lenders and such holders in proportion to their interests in payments on the Loans, except as otherwise provided in
Sections 4.4.3
,
5.4.2
or
5.6
. The Lenders or any such holder receiving any such amount shall purchase for cash from each of the other Lenders an interest in such Lender’s Loans in such amount as shall result in a ratable participation by the Lenders and each such holder in the aggregate unpaid amount of the Loans,
provided
that if all or any portion of such excess amount is thereafter recovered from the Lender or the holder making such
purchase, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, together with interest or other amounts, if any, required by law (including court order) to be paid by the Lender or the holder making such purchase.
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10.14
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Resignation of the Agent
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The Agent may at any time give notice of its resignation as Agent to the Lenders and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, with approval from the Borrower (so long as no Event of Default has occurred and is continuing), to appoint a successor, such approval not to be unreasonably withheld or delayed. If no such successor shall have been so appointed and by the Required Lenders and so approved by the Borrower (as applicable) within thirty (30) days after the retiring Agent gives notice of its resignation, then the retiring Agent may on behalf of the Lenders, appoint a successor Agent meeting the qualifications set forth above;
provided
that if the Agent shall notify the Borrower and the Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (a) the retiring Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Agent on behalf of the under any of the Loan Documents, the retiring Agent shall continue to hold such collateral security until such time as a successor Agent is appointed) and (b) all payments, communications and determinations provided to be made by, to or through the Agent shall instead be made by or to each Lender directly, until such time as the Required Lenders appoint a successor Agent as provided for above in this Section. Upon the acceptance of a successor’s appointment as Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Agent, and the retiring Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section). The fees payable by the Borrower to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring Agent’s resignation hereunder and under the other Loan Documents, the provisions of this
Section 10.14
and
Section 11.3
shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective Affiliates, and their and their Affiliates’ respective partners, directors, officers, employees, agents and advisors (for purposes hereof, “
Related Parties
”) in respect of any actions taken or omitted to be taken by any of them while the retiring Agent was acting as Agent.
The Borrower shall pay to the Agent the fee (the “
Agent’s Fee
”) for the Agent’s services hereunder pursuant the terms of a letter (the “
Agent’s Letter
”) between the Borrower and the Agent dated as of the date hereof.
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10.16
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Availability of Funds
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The Agent may assume that each Lender has made or will make the proceeds of a Loan available to the Agent unless the Agent shall have been notified by such Lender on or before the later of (a) the close of Business on the Business Day preceding the Borrowing Date with respect to such Loan or (b) two (2) hours before the time on which the Agent actually funds
the proceeds of such Loan to the Borrower (whether using its own funds pursuant to this
Section 10.16
or using proceeds deposited with the Agent by the Lenders and whether such funding occurs before or after the time on which Lenders are required to deposit the proceeds of such Loan with the Agent). The Agent may, in reliance upon such assumption (but shall not be required to), make available to the Borrower a corresponding amount. If such corresponding amount is not in fact made available to the Agent by such Lender, the Agent shall be entitled to recover such amount on demand from such Lender (or, if such Lender fails to pay such amount forthwith upon such demand from the Borrower) together with interest thereon, in respect of each day during the period commencing on the date such amount was made available to the Borrower and ending on the date the Agent recovers such amount, at a rate per annum equal to (i) the Federal Funds Effective Rate during the first three (3) days after such interest shall begin to accrue and (ii) the applicable interest rate in respect of such Loan after the end of such three-day period.
In the absence of gross negligence or willful misconduct as determined in a final, unappealable judgment of a court of competent jurisdiction, the Agent shall not be liable for any error in computing the amount payable to any Lender whether in respect of the Loans, fees or any other amounts due to the Lenders under this Agreement. In the event an error in computing any amount payable to any Lender is made, the Agent, the Borrower and each affected Lender shall, forthwith upon discovery of such error, make such adjustments as shall be required to correct such error, and any compensation therefor will be calculated at the Federal Funds Effective Rate.
Except for
Sections
10.5
and
10.15
and as otherwise expressly provided herein, the provisions of this
Section 10
are solely for the benefit of the Agent and the Lenders, and the Borrower shall not have any rights to rely on or enforce any of the provisions of this
Section 10
. In performing its functions and duties under this Agreement, the Agent shall act solely as agent of the Lenders and does not assume and shall not be deemed to have assumed any obligation toward or relationship of agency or trust with or for the Borrower.
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10.19
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No Reliance on the Agent’s Customer Identification Program
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Each Lender acknowledges and agrees that neither such Lender, nor any of its Affiliates, participants or assignees, may rely on the Agent to carry out such Lender's, Affiliate's, participant's or assignee's customer identification program, or other obligations required or imposed under or pursuant to the USA Patriot Act or the regulations thereunder, including the regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the "
CIP Regulations
"), or any other Anti-Terrorism Law, including any programs involving any of the following items relating to or in connection with the Borrower, any Subsidiary of the Borrower, the Affiliates or the agents of the Borrower or any Subsidiary of the Borrower, the Loan Documents or the transactions hereunder or contemplated hereby: (a) any identity verification procedures, (b) any record keeping, (c) comparisons with government lists, (d) customer notices or (e) other procedures required under the CIP Regulations or such other Laws.
11.
MISCELLANEOUS
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11.1
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Modifications, Amendments or Waivers
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With the written consent of the Required Lenders, the Agent, acting on behalf of all the Lenders, and the Borrower may from time to time enter into written agreements amending or changing any provision of this Agreement or any other Loan Document or the rights of the Lenders or the Borrower hereunder or thereunder, or may grant written waivers or consents to a departure from the due performance of the Obligations of the Borrower hereunder or thereunder. Any such agreement, waiver or consent made with such written consent shall be effective to bind all the Lenders and the Borrower;
provided
, that, no such agreement, waiver or consent may be made which will:
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11.1.1.
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Increase of Revolving Credit Commitments; Extension of Expiration Date
.
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Without the written consent of all Lenders:
(a) increase the amount of the Revolving Credit Commitment of any Lender hereunder,
(b) extend the Expiration Date,
(c) whether or not any Revolving Credit Loans are outstanding extend the time for payment of principal or interest of any Revolving Credit Loan (excluding the due date of any mandatory prepayment of a Revolving Credit Loan or any mandatory Revolving Credit Commitment reduction in connection with such a mandatory prepayment hereunder except for mandatory reductions of the Revolving Credit Commitments on the Expiration Date), the Commitment Fee, or any other fee payable to any Lender which has a Revolving Credit Commitment, or
(d) reduce the principal amount of or the rate of interest borne by any Revolving Credit Loan or reduce the Commitment Fee or any other fee payable to any Lender which has a Revolving Credit Commitment, or otherwise affect the terms of payment of the principal of or interest of any Revolving Credit Loan, the Commitment Fee, or any other fee payable to any Lender which has a Revolving Credit Commitment;
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11.1.2.
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Release of Collateral or Guarantor
.
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Without the written consent of all Lenders (other than Defaulting Lenders), release any guarantor from its obligations under any guaranty agreement providing for a guaranty of the Obligations or any other security for any of the Borrower’s Obligations; or
Without the written consent of all Lenders (other than Defaulting Lenders), amend
Sections
5.2
,
9.2.5
,
10.6
or
10.13
or this
Section 11.1
, alter any provision regarding the
pro rata treatment of the Lenders, change the definition of Required Lenders, or change any requirement providing for the Lenders or the Required Lenders to authorize the taking of any action hereunder;
provided
, that no agreement, waiver or consent which would modify the interests, rights or obligations of the Agent in its capacity as Agent shall be effective without the written consent of the Agent; and
provided
,
further
, that if in connection with any proposed waiver, amendment or modification referred to in
Sections 11.1.1
through
11.1.3
above, the consent of the Required Lenders is obtained but the consent of one or more of such other Lenders whose consent is required is not obtained (each a “
Non-Consenting Lender
”), then the Borrower shall have the right to replace any such Non-Consenting Lender with one or more replacement Lenders pursuant to
Section 5.4.2
.
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11.2
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No Implied Waivers; Cumulative Remedies; Writing Required
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No course of dealing and no delay or failure of the Agent or any Lender in exercising any right, power, remedy or privilege under this Agreement or any other Loan Document shall affect any other or future exercise thereof or operate as a waiver thereof, nor shall any single or partial exercise thereof or any abandonment or discontinuance of steps to enforce such a right, power, remedy or privilege preclude any further exercise thereof or of any other right, power, remedy or privilege. The rights and remedies of the Agent and the Lenders under this Agreement and any other Loan Documents are cumulative and not exclusive of any rights or remedies which they would otherwise have. Any waiver, permit, consent or approval of any kind or character on the part of any Lender of any breach or default under this Agreement or any such waiver of any provision or condition of this Agreement must be in writing and shall be effective only to the extent specifically set forth in such writing.
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11.3
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Reimbursement and Indemnification of Lenders by the Borrower; Limitation on Damages; Taxes
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The Borrower agrees upon demand to pay or reimburse to each Lender (other than the Agent, as to which the Borrower’s Obligations are set forth in
Section 10.5
) and to save such Lender harmless against (a) liability for the payment of all reasonable out-of-pocket costs, expenses and disbursements (including fees and expenses of counsel (including allocated costs of staff counsel) for each Lender except with respect to (A) and (B) below), incurred by such Lender (i) in connection with the administration and interpretation of this Agreement, and other instruments and documents to be delivered hereunder, (ii) relating to any amendments, waivers or consents pursuant to the provisions hereof requested by the Borrower or required by applicable law, (iii) in connection with the enforcement of this Agreement or any other Loan Document, or collection of amounts due hereunder or thereunder or the proof and allowability of any claim arising under this Agreement or any other Loan Document, whether in bankruptcy or receivership proceedings or otherwise, (iv) in any workout or restructuring or in connection with the protection, preservation, exercise or enforcement of any of the terms hereof or of any rights
hereunder or under any other Loan Document or in connection with any foreclosure, collection or bankruptcy proceedings, and (v) in connection with any Environmental Complaint threatened or asserted against such Lender in any way relating to or arising out of this Agreement or any other Loan Documents (including, without limitation, the protection, preservation, exercise or enforcement of any of the terms hereof or of any rights hereunder or under any other Loan Document or in connection with any foreclosure, collection or bankruptcy proceedings or in any workout or restructuring), or (b) all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against such Lender, in its capacity as such, in any way relating to or arising out of (i) this Agreement or any other Loan Documents or any action taken or omitted by such Lender hereunder or thereunder, and (ii) any Environmental Complaint in any way relating to or arising out of this Agreement or any other Loan Documents or any action taken or omitted by such Lender hereunder or thereunder,
provided
that the Borrower shall not be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements (A) if the same results from such Lender’s gross negligence or willful misconduct as determined in a final, unappealable judgment of a court of competent jurisdiction, or (B) if the Borrower was not given notice of the subject claim and the opportunity to participate in the defense thereof, at its expense (except that the Borrower shall remain liable to the extent such failure to give notice does not result in a loss to the Borrower), or (C) if the same results from a compromise or settlement agreement entered into without the consent of the Borrower, which shall not be unreasonably withheld. The Lenders will attempt to minimize the fees and expenses of legal counsel for the Lenders which are subject to reimbursement by the Borrower hereunder by considering the usage of one law firm to represent the Lenders and the Agent if appropriate under the circumstances. No claim may be made by the Borrower, any Lender, the Agent or any of their respective Subsidiaries against the Agent, any Lender or any of their respective directors, officers, employees, agents, attorneys or Affiliates, or any of them, for any special, indirect or consequential damages or, to the fullest extent permitted by Law, for any punitive damages in respect of any claim or cause of action (whether based on contract, tort, statutory liability, or any other ground) based on, arising out of or related to any Loan Document or the transactions contemplated hereby or any act, omission or event occurring in connection therewith, including the negotiation, documentation, administration or collection of the Loans, and the Borrower (for itself and on behalf of each of its Subsidiaries), the Agent and each Lender hereby waives, releases and agrees never to sue upon any claim for any such damages, whether such claim now exists or hereafter arises and whether or not it is now known or suspected to exist in its favor. The Borrower agrees unconditionally to pay all stamp, document, transfer, recording or filing taxes or fees and similar impositions now or hereafter determined by the Agent or any Lender to be payable in connection with this Agreement or any other Loan Document, and the Borrower agrees unconditionally to save the Agent and the Lenders harmless from and against any and all present or future claims, liabilities or losses with respect to or resulting from any omission to pay or delay in paying any such taxes, fees or impositions.
Whenever payment of a Loan to be made or taken hereunder shall be due on a day which is not a Business Day such payment shall be due on the next Business Day (except as provided in
Section 4.2
with respect to Interest Periods under the Euro-Rate Option) and such extension of time shall be included in computing interest and fees, except that the Revolving Credit Loans shall be due on the Business Day preceding the Expiration Date if the Expiration
Date is not a Business Day. Whenever any payment or action to be made or taken hereunder (other than payment of the Loans) shall be stated to be due on a day which is not a Business Day, such payment or action shall be made or taken on the next following Business Day, and such extension of time shall not be included in computing interest or fees, if any, in connection with such payment or action.
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11.5
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Funding by Branch, Subsidiary or Affiliate
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11.5.1.
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Notional Funding
.
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Each Lender shall have the right from time to time, without notice to the Borrower, to deem any branch, Subsidiary or Affiliate (which for the purposes of this
Section
Error! Reference source not found.
shall mean any corporation or association which is directly or indirectly controlled by or is under direct or indirect common control with any corporation or association which directly or indirectly controls such Lender) of such Lender to have made, maintained or funded any Loan to which the Euro-Rate Option applies at any time,
provided
that immediately following (on the assumption that a payment were then due from the Borrower to such other office), and as a result of such change, the Borrower would not be under any greater financial obligation pursuant to
Section 5.6
or
Section 5.8
than it would have been in the absence of such change. Notional funding offices may be selected by each Lender without regard to such Lender's actual methods of making, maintaining or funding the Loans or any sources of funding actually used by or available to such Lender.
Each Lender shall have the right from time to time to make or maintain any Loan by arranging for a branch, Subsidiary or Affiliate of such Lender to make or maintain such Loan subject to the last sentence of this
Section
Error! Reference source not found.
. If any Lender causes a branch, Subsidiary or Affiliate to make or maintain any part of the Loans hereunder, all terms and conditions of this Agreement shall, except where the context clearly requires otherwise, be applicable to such part of the Loans to the same extent as if such Loans were made or maintained by such Lender, but in no event shall any Lender's use of such a branch, Subsidiary or Affiliate to make or maintain any part of the Loans hereunder cause such Lender or such branch, Subsidiary or Affiliate to incur any cost or expenses payable by the Borrower hereunder or require the Borrower to pay any other compensation to any Lender (including any expenses incurred or payable pursuant to
Section 5.6
or
Section 5.8
which would otherwise not be incurred.
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11.6.1.
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Notices Generally
.
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All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by facsimile transmission) and, unless otherwise expressly provided herein, if mailed and properly addressed with postage prepaid or if properly addressed and sent by pre-paid courier service, shall deemed to be given when received and, if transmitted by facsimile, shall be deemed given when the confirmation of transmission thereof is
received
by the transmitter, in each case addressed as follows in the case of the Borrower, the
Agent and as set forth on
Schedule 1.1(B)
in the case of each Lender (or as set forth in the Assumption and Assignment Agreement of any Lender which is Assignee).
(i) The Borrower:
New Jersey Natural Gas Company
1415 Wyckoff Road
Wall, NJ 07719
Facsimile No.: 732-938-3154
Telephone No.: 732-938-1224
Attention: William Foley, Treasurer
E-mail:
wfoley@njresources.com
(ii) The Agent:
If for Requests for Borrowing, including loan rollovers:
JPMorgan Chase Bank, N.A.
10 S Dearborn St.
Mail code IL1-0010
Chicago, IL 60603
Facsimile No.: 888-292-9533
Telephone No.: 312-385-7025
Attention: Joyce King
Email:
joyce.p.king
@jpmchase.com
If for covenant compliance and other credit-related issues:
JPMorgan Chase Bank, N.A.
10 S Dearborn St.
Mail Code IL1-0090
Chicago, IL 60603
Facsimile No.: (312) 732-1762
Telephone No.: (312) 732-1754
Attention: John Zur
E-mail:
john.e.zur@jpmchase.com
With a copy to:
JPMorgan Chase Bank, N.A.
10 S Dearborn St.
Mail Code IL1-0874
Chicago, IL 60603
Telephone No.: (312) 325-3155
Facsimile No.: (312) 325-3238
Attention: Roman Walczak
E-mail:
roman.walczak@jpmchase.com
Provided that any notice, request or demand to or upon the Agent or the Lenders pursuant to
Sections
2.4
,
4.4
,
5.4.1
and
5.5
shall not be effective until received.
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11.6.2.
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Electronic Communications
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Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the Agent; provided that the foregoing shall not apply to notices pursuant to
Section 2
unless otherwise agreed by the Agent and the applicable Lender. The Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it;
provided
that approval of such procedures may be limited to particular notices or communications.
The provisions of this Agreement are intended to be severable. If any provision of this Agreement shall be held invalid or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction.
This Agreement shall be deemed to be a contract under the Laws of the State of New York and for all purposes shall be governed by and construed and enforced in accordance with the internal laws of the State of New York (including Sections 5-1401 and 5-1402 the General Obligations Law of the State of New York but otherwise without regard to Conflict of Law principles).
This Agreement and the other Loan Documents supersede all prior understandings and agreements, whether written or oral, between the parties hereto and thereto relating to the transactions provided for herein and therein, including any prior confidentiality agreements and commitments.
All representations and warranties of the Borrower contained herein or made in connection herewith shall survive the making of Loans and shall not be waived by the execution and delivery of this Agreement, any investigation by the Agent or the Lenders, the making of Loans or payment in full of the Loans. All covenants and agreements of the Borrower contained in
Sections
8.1
,
8.2
and
8.3
herein shall continue in full force and effect from and after the date hereof so long as the Borrower may borrow hereunder and until termination of the Commitments and payment in full of the Loans. All covenants and agreements of the Borrower contained herein relating to the payment of principal, interest, premiums, additional compensation or expenses and
indemnification, including those set forth in
Sections 5
,
10.5
,
10.7
, and
11.3
, shall survive payment in full of the Loans and termination of the Commitments.
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11.11
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Successors and Assigns
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(a) This Agreement shall be binding upon and shall inure to the benefit of the Lenders, the Agent, the Borrower and their respective successors and assigns, except that the Borrower may not assign or transfer any of its rights and Obligations hereunder or any interest herein. Each Lender may, at its own cost, make assignments of or sell participations in all or any part of its Commitments and the Loans made by it to one or more banks or other entities, subject to the consent of the Borrower (provided that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Agent within ten (10) days after having received notice thereof) and the Agent with respect to any assignee, such consent not to be unreasonably withheld,
provided
that (i) no consent of the Borrower shall be required (A) if an Event of Default exists and is continuing, or (B) in the case of an assignment by a Lender to an Affiliate of such Lender or an Approved Fund of such Lender, (ii) any assignment by a Lender to a Person other than an Affiliate of such Lender may not be made in amounts less than the lesser of $5,000,000.00 or the amount of the assigning Lender’s Commitment and (iii) no such assignment or participation shall be permitted to the Borrower or to any of the Borrower’s Affiliates or Subsidiaries. In the case of an assignment, upon receipt by the Agent of the Assignment and Assumption Agreement, the assignee shall have, to the extent of such assignment (unless otherwise provided therein), the same rights, benefits and obligations as it would have if it had been a signatory Lender hereunder, the Commitments shall be adjusted accordingly, and upon surrender of any Revolving Credit Note or subject to such assignment, the Borrower shall execute and deliver a new Revolving Credit Note to the assignee, if such assignee requests such a Note in an amount equal to the amount of the Revolving Credit Commitment assumed by it and a new Revolving Credit Note to the assigning Lender, if the assigning Lender requests such a Note, in an amount equal to the Revolving Credit Commitment retained by it hereunder. Any Lender which assigns any or all of its Commitment or Loans to a Person other than an Affiliate of such Lender shall pay to the Agent a service fee in the amount of $3,500.00 for each assignment. In the case of a participation, the participant shall only have the rights specified in
Section 9.2.3
(the participant’s rights against such Lender in respect of such participation to be those set forth in the agreement executed by such Lender in favor of the participant relating thereto and not to include any voting rights, all of such Lender’s obligations under this Agreement or any other Loan Document shall remain unchanged, and all amounts payable by the Borrower hereunder or thereunder shall be determined as if such Lender had not sold such participation.
(b) Any assignee or participant which is not incorporated under the Laws of the United States of America or a state thereof shall deliver to the Borrower and the Agent the form of certificate described in
Section 11.18.1
relating to federal income tax withholding. Each Lender may furnish any publicly available information concerning the Borrower or its Subsidiaries and any other information concerning the Borrower or its Subsidiaries in the possession of such Lender from time to time to assignees and participants (including prospective
assignees or participants),
provided
that such assignees and participants agree to be bound by
the provisions of
Section 11.12
.
(c) Notwithstanding any other provision in this Agreement, any Lender may at any time pledge or grant a security interest in all or any portion of its rights under this Agreement, its Note (if any) and the other Loan Documents to any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S. Treasury Regulation 31 CFR Section 203.14 without notice to or consent of the Borrower or the Agent. No such pledge or grant of a security
interest shall release the transferor Lender of its obligations hereunder or under any other Loan Document.
(d) A bank that is to become a party to this Agreement (each an "
Additional Lender
") shall execute and deliver to Agent a Lender Joinder to this Agreement in substantially the form attached hereto as
Exhibit 1.1(B)
. Upon execution and delivery of a Lender Joinder, such Additional Lender shall be a party hereto and a Lender under each of the Loan Documents for all purposes, except that such Additional Lender shall not participate in any Loans to which the Euro Rate Option applies that are outstanding on the effective date of such Lender Joinder. If the Borrower should renew after the effective date of such Lender Joinder the Euro Rate Option with respect to Loans existing on such date, the Borrower shall be deemed to repay the applicable Loans on the renewal date and then reborrow a similar amount on such date so that the Additional Lender shall participate in such Loans after such renewal date.
Schedule 1.1(B)
shall be amended and restated on the date of such Lender Joinder to revise the information contained therein as appropriate to reflect the information on the attachment to such Lender Joinder. Simultaneously with the execution and delivery of such Lender Joinder, the Borrower shall execute a Revolving Credit Note, and deliver it to such Additional Lender together with originals of such other documents described in
Section 7.1
hereof as such Additional Lender may reasonably require.
The Agent and the Lenders each agree to keep confidential all information obtained from the Borrower or its Subsidiaries which is nonpublic or otherwise confidential or proprietary in nature (including any information the Borrower specifically designates as confidential), except as provided below, and to use such information only in connection with their respective capacities under this Agreement and for the purposes contemplated hereby. The Agent and the Lenders shall be permitted to disclose such information (a) to outside legal counsel, accountants and other professional advisors who need to know such information in connection with the administration and enforcement of this Agreement, subject to agreement of such Persons to maintain the confidentiality, (b) to assignees and participants as contemplated by
Section 11.11
, and prospective assignees and participants,
provided
that
prior to such disclosure, such parties agree in writing to be bound by this undertaking of confidentiality set forth in this
Section 11.12
, (c) to the extent requested by any bank regulatory authority or, with notice to the
Borrower, as otherwise required by applicable Law or by any subpoena or similar legal process, or in connection with any investigation or proceeding arising out of the
transactions contemplated by this Agreement, (d) if it becomes publicly available other than as
a result of a breach of this Agreement or becomes available and is not reasonably known to be subject to confidentiality restrictions, or (e) if the Borrower shall have consented to such disclosure.
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11.12.2.
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Sharing Information With Affiliates of the Lenders
.
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The Borrower acknowledges that from time to time financial advisory, investment banking and other services may be offered or provided to the Borrower or one or more of its Affiliates (in connection with this Agreement or otherwise) by any Lender or by one or more Subsidiaries or Affiliates of such Lender and the Borrower hereby authorizes each Lender to share any information delivered to such Lender by the Borrower and its Subsidiaries pursuant to this Agreement, or in connection with the decision of such Lender to enter into this Agreement, to any such Subsidiary or Affiliate of such Lender, it being understood that any such Subsidiary or affiliate of any Lender receiving such information shall be bound by the provisions of
Section 11.12.1
as if it were a Lender hereunder. Such authorization shall survive the repayment of the Loans and other Obligations and the termination of the Commitments.
This Agreement may be executed by different parties hereto on any number of separate counterparts, each of which, when so executed and delivered, shall be an original, and all such counterparts shall together constitute one and the same instrument.
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11.14
|
The Agent’s or the Lenders’ Consent
|
Whenever the Agent’s or any Lender’s consent is required to be obtained under this Agreement or any of the other Loan Documents as a condition to any action, inaction, condition or event, the Agent and each Lender shall be authorized to give or withhold such consent in its sole and absolute discretion and to condition its consent upon the giving of additional collateral, the payment of money or any other matter.
The representations, warranties and covenants contained herein shall be independent of each other, and no exception to any representation, warranty or covenant shall be deemed to be an exception to any other representation, warranty or covenant contained herein unless expressly provided, nor shall any such exceptions be deemed to permit any action or omission that would be in contravention of applicable Law.
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11.16
|
WAIVER OF JURY TRIAL
|
THE BORROWER, THE AGENT AND THE LENDERS HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY COLLATERAL, OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING, WITHOUT LIMITATION, ANY COURSE OF CONDUCT, COURSE OF
DEALINGS, STATEMENTS OR ACTIONS OF THE AGENT OR THE BANKS RELATING TO THE ADMINISTRATION OF THE LOANS OR ENFORCEMENT OF THIS AGREEMENT OR THE LOAN DOCUMENTS, TO THE FULLEST EXTENT PERMITTED BY LAW. THE BORROWER WILL NOT SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THE BORROWER CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE AGENT OR THE LENDERS, HAS REPRESENT
ED, EXPRESSLY OR OTHERWISE, THAT AGENT OR THE LENDERS WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR THE AGENT AND THE LENDERS TO ACCEPT THIS AGREEMENT AND THE LOAN DOCUMENTS AND MAKE THE LOANS.
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11.17
|
JURISDICTION AND VENUE
|
THE BORROWER HEREBY IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF COURTS IN THE COUNTY OF MIDDLESEX IN THE STATE OF NEW JERSEY AND THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY, AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY CERTIFIED OR REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO THE BORROWER AT THE ADDRESSES PROVIDED FOR IN
SECTION 11.6
AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF THE AGENT TO SERVE LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY LAW. THE BORROWER IRREVOCABLY WAIVES ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED AGAINST IT AS PROVIDED HEREIN AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON
FORUM NON CONVENIENS
OR ANY LACK OF JURISDICTION OR VENUE THAT IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT.
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11.18
|
Certifications From Lenders and Participants
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11.18.1.
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Tax Withholding.
|
Each Lender or assignee or participant of a Lender that is not incorporated under the laws of the United States of America or a state thereof (and, upon the written request of the Agent, each other Lender or assignee or participant or a Lender) agrees that it will deliver to each of the Borrower and the Agent two (2) duly completed, appropriate, valid Withholding Certificates (as defined under §1.1441-1(c)(16) of the Income Tax Regulations (the “
Regulations
”)) certifying its status (
i.e.,
United States or foreign person) and, if appropriate, making a claim of reduced, or exemption from, United States withholding tax on the
basis of
an income tax treaty or an exemption provided by the Internal Revenue Code. Such delivery
may be made by electronic transmission as described in §1.1441-1(e)(4)(iv) of the Regulations if the Agent establishes an electronic delivery system. The term “Withholding Certificate” means a Form W-9; a Form W-8BEN; a Form W-8ECI; a Form W-81MY and the related statements and certifications as required under §1.1441-1(e)(3) of the Regulations; a statement described in §1.871-14(c)(2)(v) of the Regulations; or any other certificates under the Internal Revenue Code or Regulations that certify or establish the status of a payee or beneficial owner as a United States or foreign person. Each Lender, assignee or participant required to deliver to the Borrower and the Agent a valid Withholding Certificate pursuant to the preceding sentence shall deliver such valid Withholding Certificate as follows: (a) each Lender which is a party hereto on the Closing Date shall deliver such valid Withholding Certificate at least five (5) Business Days prior to the first date on which any interest or Fees are payable by the Borrower hereunder for the account of such Lender; (b) each assignee or participant shall deliver such valid Withholding Certificate at least five (5) Business Days before the effective date of such assignment or participation (unless the Agent in its sole discretion shall permit such assignee or participant to deliver such Withholding Certificate less than five (5) Business Days before such date in which case it shall be due on the date specified by the Agent). Each Lender, assignee or participant which so delivers a valid Withholding Certificate further undertakes to deliver to each of the Borrower and the Agent two (2) additional copies of such Withholding Certificate (or a successor form) on or before the date that such Withholding Certificate expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent Withholding Certificate so delivered by it, and such amendments thereto or extensions or renewals thereof as may be reasonably requested by the Borrower or the Agent. Notwithstanding the submission of a Withholding Certificate claiming a reduced rate of, or exemption from, United States withholding taxes, the Agent shall be entitled to withhold United States federal income taxes at the full 30% withholding rate if in its reasonable judgment it is required to do so under the due diligence requirements imposed upon a withholding agent under §1.1441-7(b) of the Regulations. Further, the Agent is indemnified under §1.1461-1(e) of the Regulations against any claims and demands of any Lender or assignee or participant of a Lender for the amount of any tax it deducts and withholds in accordance with regulations under §1441 of the Internal Revenue Code.
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11.18.2.
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FATCA Certification
.
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If a payment made to a Lender hereunder or under each Note would be subject to U.S. federal withholding tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Internal Revenue Code, as applicable), such Lender shall deliver to each of the Borrower and the Agent, at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Agent, such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Internal Revenue Code) and such additional documentation reasonably requested by the Borrower or the Agent as may be necessary for the Borrower and the Agent to comply with its obligations under FATCA, to determine that such Lender has or has not complied with such Lender’s obligations under FATCA and, as necessary, to determine the amount to deduct and withhold from such payment. Solely for purposes of this
Section 11.18.2
, “FATCA” shall include any amendments made to FATCA after the date of this Agreement.
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11.18.3.
|
USA Patriot Act
.
|
Each Lender or assignee or participant of a Lender that is not incorporated under the laws of the United States of America or a state thereof (and is not excepted from the certification requirement contained in Section 313 of the USA Patriot Act and the applicable regulations because it is both (a) an affiliate of a depository institution or foreign bank that maintains a physical presence in the United States or foreign county, and (b) subject to supervision by a banking authority regulating such affiliated depository institution or foreign bank) shall deliver to the Agent the certification, or, if applicable, recertification, certifying that such Lender is not a “shell” and certifying to other matters as required by Section 313 of the USA Patriot Act and the applicable regulations: (i) within 10 days after the Closing Date, and (ii) as such other times as are required under the USA Patriot Act.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly authorized, have executed this Agreement as of the day and year first above written.
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ATTEST:
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NEW JERSEY NATURAL GAS COMPANY
|
/s/ Richard Reich
By:
/s/William Foley
Name: Richard Reich Name: William Foley
Title: Assistant General Counsel Title: Treasurer
Signature Page to Credit Agreement
JPMORGAN CHASE BANK, N.A.
By:
/s/John Zur
Name: John Zur
Title: Underwriter
Signature Page to Credit Agreement
SCHEDULE 1.1(A)
Pricing Grid
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Level
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Debt Rating
Standard & Poor's and Moody's
|
Commitment
Fee
|
Base Rate
Spread
|
Euro-Rate
Spread
|
|
I
|
Aa2 or above
or
AA or above
|
0.075%
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—%
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1.00%
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II
|
Aa3 or above but less than Aa2
or
AA- or above but less than AA
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0.10%
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0.25%
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1.25%
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III
|
A1 or above but less than Aa3
or
A+ or above but less than AA-
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0.15%
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0.50%
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1.50%
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IV
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A2 or less
or
A or less
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0.20%
|
0.75%
|
1.75%
|
For purposes of determining the Applicable Margin and the Applicable Commitment Fee Rate:
(a) With respect to the Debt Ratings of Moody's and Standard & Poor's or such other rating agency (or agencies) that may from time to time be determining Borrower's Debt Rating pursuant to the terms of the Credit Agreement to which this Schedule is attached (each, an "
Applicable Rating Agency
" and, collectively, the "
Applicable Rating Agencies
"): (i) if one or both of such Applicable Rating Agencies shall fail to have a Debt Rating in effect, then such Applicable Rating Agency which fails to have a Debt Rating in effect shall be deemed to have established a Debt Rating at Level IV; and (ii) if the Debt Rating established by one Applicable Rating Agency and the Debt Rating established by another Applicable Rating Agency differ, the pricing Level above shall be determined based upon the higher of the Debt Ratings established by the Applicable Rating Agencies,
provided
,
however
, if one of the Debt Ratings is two or more Levels lower than the other, the applicable pricing Level shall be determined at the Level next above that of the Level of the lower of the two Debt Ratings.
(b) Any change in the Applicable Margin or the Applicable Commitment Fee Rate shall become effective on the date of any public announcement of the change in the Debt Rating requiring such an increase or decrease.
SCHEDULE 1.1(B)
Commitments of Lenders; Addresses for Notices
JPMorgan Chase Bank, N.A. $100,000,000
If for Requests for Borrowing, including loan rollovers:
JPMorgan Chase Bank, N.A.
10 S Dearborn St.
Mail Code IL1-0010
Chicago, IL 60603
Facsimile No.: 888-292-9533
Telephone No.: 312-385-7025
Attention: Joyce King
Email:
joyce.p.king@jpmchase.com
If for covenant compliance and other credit-related issues:
JPMorgan Chase Bank, N.A.
10 S Dearborn St.
Mail Code IL1-0090
Chicago, IL 60603
Facsimile No.: (312) 732-1762
Telephone No.: (312) 732-1754
Attention: John Zur
E-mail:
john.e.zur@jpmchase.com
With a copy to:
JPMorgan Chase Bank, N.A.
10 S Dearborn St.
Mail Code IL1-0874
Chicago, IL 60603
Telephone No.: (312) 325-3155
Facsimile No.: (312) 325-3238
Attention: Roman Walczak
E-mail:
roman.walczak@jpmorgan.com
SCHEDULE 1.1(P)
Permitted Liens
See Attached.
SCHEDULE 6.1.2
Subsidiaries
None
.
SCHEDULE 6.1.12
Consents and Approvals
Consent of the New Jersey Board of Public Utilities, which has been received by NJNG.
SCHEDULE 6.1.23
Hedging Contract Policies
See Attached
New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
Revised: May 12, 2009 Approved By: NJNG Risk Management Committee
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I.
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Objectives of the Risk Management Committee’s Guidelines and Procedures
|
The Board of Directors of New Jersey Resources Corporation (“NJR”) has delegated responsibility for risk management with regard to wholesale gas trading, credit risk, and overall hedging activities of New Jersey Natural Gas (“NJNG” or the “Company”) to the Audit Committee of NJR’s Board of Directors (“Audit Committee”). The Audit Committee has established and authorized the Risk Management Committee (“RMC”) to develop, implement, and enforce risk management procedures for NJNG, consistent with NJNG’s Risk Management Policy.
The following Guidelines and Procedures have been developed in order to fulfill the responsibilities delegated to the RMC by the Audit Committee. The RMC’s Guidelines and Procedures are intended to be a working document and will be updated on an ongoing basis to reflect the changing business environment encountered by NJNG.
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II.
|
Operating Guidelines for the Risk Management Committee
|
The RMC is comprised of six senior management representatives as appointed by NJR's Chairman and Chief Executive Officer. The RMC is comprised of:
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•
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Glenn Lockwood - Senior Vice President & CFO of NJR (RMC Chairperson)
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•
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Joseph Shields - Senior Vice President, Energy Services NJNG
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•
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Mark Sperduto - Vice President, Regulatory Affairs of NJNG
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•
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Mariellen Dugan – Senior Vice President & General Counsel of NJR
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•
|
William Foley - Treasurer of NJR
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•
|
William Scharfenberg – Senior Counsel
|
Additionally, NJR's Vice President of Internal Auditing and/or audit staff are invited to attend all meetings of the RMC as a non-voting but participating member.
The RMC will meet at least twice each month. Any member of the RMC may request that a meeting be held. A quorum (consisting of three members of the RMC) must be present to conduct an RMC meeting. All official actions of the RMC will require the affirmative vote of three members of the RMC. Meeting minutes will be prepared by the Manager, Mid-Office Controls, for each meeting. All approved RMC meeting minutes will be forwarded to the Vice President of Internal Auditing, who is responsible for forwarding the approved RMC minutes and related materials to the Audit Committee regularly.
The Manager, Mid-Office Controls will be responsible for reviewing NJNG’s risk management reports on a daily or weekly basis, depending on the report. These reports include mark-to-market of open positions, daily broker statement, pricing data, trader limit exception report, and counterparty deal compare report. In addition to these reports, the Manager, Mid-Office Controls is also responsible for
compiling the RMC reports listed in Section VII, B, 1 - Risk Monitoring & Reporting, of these Guidelines.
NJNG’s Energy Services operating management has the first-line delegated authority to ensure that NJNG’s business risks are properly identified, measured, controlled, and reported, using approved methodologies as specified herein.
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III.
|
Affiliate Transactions
|
NJNG transacts in the natural gas commodity, transportation and storage capacity markets (physical assets), and establishes a position within those markets to provide sufficient commodity and capacity
New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
necessary to meet its customers’ demand levels. An affiliated company, NJR Energy Services (“NJRES”), also acquires physical assets and transacts in natural gas transportation and storage capacity markets.
On a daily basis, both companies (NJNG and NJRES) buy and sell physical assets within the same market place. In light of that, controls have been developed to oversee activities to ensure that each company’s strategies, techniques and transactions comply with applicable regulations and policies. On a monthly basis, the RMC is provided with an internal control addendum that includes reports designed to monitor potential affiliate transactions. These reports were developed in accordance with the BPU audit report (dated 11/20/07); section I-5 “Affiliate Procurement Relationships”.
The NJR “Code of Conduct” (Exhibit III) also addresses affiliate transactions.
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IV.
|
Overview of NJNG’s Business Activities
|
NJNG is a wholly owned subsidiary of NJR and is engaged in providing regulated natural gas energy services to customers located in central and northern New Jersey, as well as, providing other energy-related services throughout various geographic regions in which NJNG has gas transportation and/or storage capacity rights. The following summarizes NJNG’s core business activities.
Basic Gas Supply Service (BGSS) -
NJNG provides natural gas service to a specified core customer base in New Jersey. To be able to fulfill its obligation to serve this market, NJNG maintains a portfolio of supply, transportation and storage contracts. The costs associated with holding this portfolio are currently filed for recovery in rates through the BGSS factor that must be approved by the New Jersey Board of Public Utilities (“Board” or the “BPU”). Although the Company’s price risk within this portfolio is currently mitigated by the rates established through the BGSS process, NJNG is proactive in its portfolio management approach and is conscious of hedging its gas costs to attempt to keep prices and volatility as low as possible.
Prior to April 1 of each year, the Company will determine the estimated firm purchase requirements for at least the next two annual BGSS periods. The volume targets will be updated based upon the annual budget forecast issued in May or June each year. Along with this, a determination is made of the average rates necessary to recover the gas costs with a minimal impact on un-recovered gas costs, when compared to the currently approved BGSS rate.
The Company will then devise a strategy to hedge (but not necessarily fix) the gas purchase requirements. The strategy will provide that at least 75% of the current winter volumes and 25% of the following year volumes be hedged by November 1 of the current year. The Company may, at its discretion, hedge additional volumes. The percentage hedged will consist of storage gas, all fixed price contracts (future or physical) as well as all long (purchased) call positions divided by the estimated purchase requirements including fuel.
Off System Sales and Capacity Release Program -
NJNG’s Off-System Sales and Capacity Release programs include optimizing the Company’s storage and pipeline capacity contracts to recover some of the fixed costs within its BGSS portfolio.
Off System Sales involves the bundled sales (i.e. the natural gas supply and transportation capacity) to various end-users and marketers.
The Capacity Release Program involves the posting of transportation capacity or storage capacity on the various electronic bulletin boards in compliance with Federal Energy Regulatory Commission (“FERC”) provider posting requirements for the sale of capacity to various end-users and marketers
New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
when the Company is not utilizing it (i.e. seasonal demands).
Both programs have an incentive mechanism, with the reported net revenue generated shared at eighty five percent (85%) to the customers through a credit to the BGSS balance and fifteen percent (15%) to the Company.
Storage Incentive Program
The Storage Incentive provides benefits to customers through added price stability and cost reductions. The program establishes a benchmark cost for storage injections against which actual injection costs are measured. The program yields cost savings by promoting innovative purchasing strategies that take advantage of the optionality inherent in storage operations and marketplace opportunities. The actual costs of storage injections include commodity costs, actual transportation costs and any gains and losses associated with trading of financial hedges within the program. The difference between the Storage Incentive benchmark and actual costs, positive or negative, are currently shared eighty percent (80%) to customers and twenty percent (20%) to NJNG. In addition to cost savings, the program promotes long-term price stability through hedging of storage injection volumes.
Financial Risk Management (FRM) Program
The program is designed to provide price stability and includes an incentive mechanism designed to encourage the use of financial options to hedge NJNG’s gas costs. The current sharing percentages on FRM gains are eighty five percent (85%) to customers and fifteen percent (15%) to NJNG.
IV.
Business Risks
NJNG is subject to a number of ongoing business risks. These risks and the RMC’s approved strategies to mitigate these risks are identified below.
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A.
|
Market Risk -
Market risk represents the potential loss that can be caused by unfavorable changes in market variables. These variables include adverse changes in commodity prices and market liquidity and may occur as a result of positions taken by NJNG in the market or as a result of market forces outside the control of NJNG. Market risk is currently mitigated through the BGSS process; in other words, reasonably incurred gas costs are reflected in the company’s rates.
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1.
|
General Trading and Exchange Position Guidelines -
The RMC has established the following guidelines, procedures and trading limits to mitigate NJNG’s exposure to risks of adverse changes in commodity and capacity market prices. At its discretion, Management may establish more restrictive limits than those outlined herein. In addition, the RMC may, in its discretion, or at the discretion of the Audit Committee, direct Management to reduce any exposure deemed not in the best interest of NJNG. The following guidelines apply to all commodity and capacity transactions for NJNG’s trading operations.
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a.
|
Market Exposure -
Under the Company’s Off System Sales program, NJNG will make commitments to purchase or sell commodity, or sell capacity on a fixed price basis, financial basis or physical basis.
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b.
|
Use of Financial Instruments -
The use of approved financial instruments (see Exhibit I) will be used to hedge risks in the physical commodity market. These derivative instruments can be used to hedge BGSS or system requirement supply, as well as, for the incentive programs such as Off-System Sales, Storage Incentive and FRM. The use of financial
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New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
instruments for speculative purposes is expressly prohibited.
|
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c.
|
Approved Financial Instruments -
Approved financial instruments and exchanges are listed on Exhibit I. A listing of approved brokerage houses/financial counterparties with whom NJNG had ISDA contracts is available for all traders. Approved brokerage houses/financial counterparties will be required to send confirmations of all financial trades to the Manager, Mid-Office Control or Accounting Manager, NJRES. Also, if specifically requested, a copy of the confirmation must be sent to the Vice President, Internal Audit.
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d.
|
Managing Liquidity Risk -
Market liquidity may limit NJNG’s ability to execute transactions rapidly at a reasonable price. The lack of market liquidity may make it difficult for NJNG to unwind or offset a particular position at or near a previous market price if there is inadequate market depth or a disruption in the market. Because of this risk, the liquidity of certain types of instruments may make them unsuitable in achieving NJNG’s business objectives. Therefore, the RMC is to consider this risk when approving the suitability of specific financial instruments for use by NJNG
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2.
|
Financial Risk Management (FRM) Program Guidelines -
NJNG was granted approval by the New Jersey Board of Public Utilities for the FRM program, which involves utilizing natural gas options to hedge the commodity price risk within the BGSS supply portfolio. The FRM program also includes an incentive mechanism on certain transactions, whereby margins are split eighty five percent (85%) to the customer through a credit to the BGSS balance and fifteen percent (15%) to the Company. The program is described in greater detail below.
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a.
|
Benchmark -
The pricing benchmark for the FRM Program is the Global Insight Natural Gas Monthly Forecast for the Henry Hub. This report is published by the end of every month and is used to update the FRM benchmark on a quarterly (Dec, Mar, Jun & Sep) basis. A copy of the Global Insight Forecast report is provided to the RMC. All executed trades within the FRM program are measured against the quarterly benchmark that is in effect at the time of the trade transaction date.
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b.
|
Portfolio Volumes -
The program has volume limitations relating to the total monthly BGSS market-based purchases. A report of the volumes is updated annually on June 1, as part of the annual BGSS filing. The report lists the volumes that may be hedged in relation to pricing against the approved benchmarks.
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New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
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c.
|
Approved Financial Instruments –
Permitted FRM transactions are limited to options. Naked options, futures contracts and swaps are not permitted.
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d.
|
Program Dollar Limitation -
The cost associated with the program is capped. The current cap which may be changed with approval of the BPU is $6.4 million; the current cap was approved by the BPU in the October 3, 2008 Order approving the Stipulation in the base rate case. The $6.4 million includes the premium costs of the options purchased for the program, NJNG’s 15 percent share, credits from option close, and broker fees/commissions.
|
Calculations for the above individual FRM components are as follows:
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•
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Option premium costs – determined based on the premium rate obtained at deal inception multiplied by the number of option contracts purchased, multiplied by 10,000 (1 contract = 10,000 dths).
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•
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NJNG sharing dollars at 15% – calculated as DRI Benchmark minus Strike Price minus the premium paid, multiplied by the number of option contracts purchased times 10,000 dths less fees at purchase, with 15% credited to NJNG; these sharing dollars are determined at the time the option is purchased, since both prices are known at deal inception.
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•
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Credit from option close – calculated as Market price (penultimate) minus DRI Benchmark; these amounts are not determined until option settlement date when the penultimate price becomes available. Additionally, only resulting gains (and not losses) are applied as a credit to the program dollars.
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•
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Broker fees/commissions – flat individual rate per contract.
|
New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
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e.
|
Authorized Financial Brokerage Accounts -
The RMC has approved two financial brokerage accounts (see Exhibit I).
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f.
|
Below the Benchmark Sharing -
The profit on trades executed below the program benchmark is calculated as the benchmark minus the strike price minus the premium and the transaction costs (e.g., broker commissions). Eighty five percent (85%) of the calculated profit is allocated to the customers as a credit to the BGSS balance, while fifteen percent (15%) is allocated to the Company.
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g.
|
Above the Benchmark Sharing –
RMC approval is required for entering into options above the benchmark. Sharing on trades above the established benchmark is subject to the market price of the option minus the transaction costs. Eighty five percent (85%) of the calculated profit is allocated to the BGSS balance, while fifteen percent (15%) is allocated to the Company. If the option expires without value in the market, the premium paid for that option is shared eighty five percent (85%) of the cost to the BGSS, fifteen percent (15%) to the Company.
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h.
|
Reporting
- Internally, an update of the FRM Program activity is presented at every RMC meeting. External reports are prepared monthly for the BPU on a confidential basis subject to a protective order between NJNG, the Department of the Public Advocate, Division of Rate Counsel and the BPU.
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3.
|
Gas Purchasing and Off-System Sales Trading Guidelines -
In addition to purchasing the physical commodity and capacity necessary to meet NJNG’s retail sales commitments, NJNG’s traders purchase and sell natural gas and capacity as part of OSS and capacity release incentive programs.. The following guidelines apply to NJNG’s gas supply operations:
|
Prior to making any off system sale or capacity release, the NJNG trader must analyze the availability of any excess deliverability in the portfolio.
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a.
|
For daily and within the month transactions: the trader reviews the daily send out estimate report that is distributed by Gas Control twice a day and compares it to the daily deliverability available in the portfolio. If the transaction is greater than the number of days on the daily send out but still less than 1 month, the trader requests a balance of month forecast projection from the Manager, Supply Planning and compares each days’ estimate to the deliverability of the portfolio.
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b.
|
For transactions for the prompt month or greater, but not over a peak winter month (January or February): the trader requests a projected gas usage by month from the Manager, Supply Planning which shows by month the current system requirement estimates based on 10-year averages and current long term weather forecast and compares that to the estimated portfolio deliverability, inclusive of projected planned storage injections and/or withdrawals.
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c.
|
For transactions that might include a peak winter month, then in addition to the above analysis, the trader must obtain a peak day analysis that shows potential peak day requirements and the required 5% reserve volume.
|
After the determination of any excess deliverability is made, the trader can transact within the following approval limits.
Trading Approvals -
Traders are authorized to make capacity and commodity trades using
New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
the following volumetric limits:
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Deal Term
|
Dths/day
|
|
Daily
|
50,000
|
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Monthly
|
30,000
|
|
Seasonal
|
20,000
|
Seasonal deal term is defined as Apr-Oct (Summer) period or Nov-Mar (Winter) period. The Vice President or Senior Vice President of Energy Services, NJNG, must approve any trades that exceed a seasonal period.
Capacity Release
The following table summarizes the approvals required for capacity release transactions:
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Approval
|
Dths/day
|
Term *
|
Demand $
|
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Traders
|
50,000
|
</= Seasonal
|
< $0.2 MM
|
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V.P. NJNG
|
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> Seasonal
|
< $1.0 MM
|
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SVP ES
|
|
|
< $5.0 MM
|
|
CFO/ Treasurer/ VP NJRSC/ COO
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|
> $5.0 MM
|
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CEO
|
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> $ 15.0 MM
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Board of Directors
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> $20.0 MM
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*
refers to upcoming season only
Exhibit IV – Contract & Credit Policy for Wholesale Transactions provides additional information regarding the above approvals.
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a.
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General Trading Guidelines -
Authorized NJNG traders are subject to compliance within the established monthly and daily trading strategies (i.e., monthly and daily “set-up” sheets) as approved by
the Vice President or Senior Vice President, NJNG Energy Services. Any seasonal trades executed must be in compliance with the winter seasonal trading strategy approved by the Vice President or Senior Vice President, NJNG Energy Services.
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b.
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Transaction Documentation -
All transactions must be documented by a contract executed by both parties. Physical transactions are commonly documented by a GISB (Gas Industries Standards Board) or NAESB (North American Energy Standards Board) base contract for sale and purchase of natural gas. Financial transactions are commonly documented by an ISDA (International Standards and Derivatives Association) contract. More detail concerning contracts can be found in the Credit and Contract Procedures manual (see Exhibit IV).
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In addition, traders will document all hedges, with note to file, by explaining why the hedge is being established and reference the applicable program (e.g., Storage Incentive).
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d.
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Risk Management -
Documentation for all transactions will be in the GMS (Gas Management System) or Zai*Net systems. The financial trader will coordinate with the physical traders to determine the risk management strategy for each transaction or group of transactions with the intent that all price exposure is to be hedged with a financial instrument at the time of the physical transaction or the optional trigger price is executed.
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4.
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Storage Incentive Program
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New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
The Company has established a target range of 20 - 23 bcf of gas available through storage as of October 31 each year. Of that quantity, 20 bcf will be included in the Storage Incentive Program. The Storage Incentive Program purchase guideline is as follows:
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# of Contracts
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Contract Month
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286
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April
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286
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May
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285
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June
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286
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July
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286
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August
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285
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September
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286
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October
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2,000
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Totals
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The 20 Bcf will be evenly distributed within the Apr-Oct month period to equal approximately 285 – 286 contracts per month. The Storage Incentive program does not specify a starting date to begin hedging. NJNG has the ability to increase the volume for any new incremental storage capacity that is added to the portfolio.
NJNG’s policy is to not hedge beyond the years that the Storage Incentive program is approved by the BPU.
Note: the fuel component/hedge is done at the then-applicable rate.
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B.
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Credit Risk -
Credit risk is the risk of loss as a result of nonperformance by NJNG’s counterparties pursuant to the terms of their contractual obligations. The loss is the cost of replacing the contract with a new one with identical or similar terms (replacement value) or the amount of gas delivered but not paid for.
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NJNG’s exchange-traded purchases and sales of natural gas financial contracts do not contribute to credit risk since each transaction is supported by the NYMEX Exchange. Any over-the-counter financial transaction would be subject to the individual counterparty credit risk.
The Senior Manager, Energy Services is responsible for the credit risk management function and will have clear independence and authority separate from the trading function. The Senior Manager’s responsibilities include first-line evaluation of new counterparties, monitoring and reporting credit exposure, reviewing the creditworthiness of counter parties, monitoring the concentrations of credit risk and reviewing and monitoring risk reduction arrangements. All credit limit increases require approval from several RMC members, and at least the Senior Vice President, Energy Services NJNG, and the Vice President & Controller, or Treasurer of NJR. These responsibilities are further defined in NJR’s Credit and Contract Policies and Procedures.
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C.
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Operational Risk -
Operational risk is the exposure to loss due to human error or fraud, or from a system of internal controls that fails to adequately record, monitor and account for transactions or positions. In addition to the daily and monthly reporting obligations described in Section VII, NJNG has implemented the following personnel and system controls to mitigate operational risks.
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1.
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Personnel -
The following procedures have been established to safeguard against personnel risks:
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a.
|
All personnel who are authorized to contract on behalf of NJNG must be approved by the
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New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
RMC. Approved traders with authorized products to trade are listed in Exhibit II.
All trades that are conducted via telephone will be made with recording devices to ensure that conversations are captured for evidentiary purposes, in the event of deal discrepancies. Only specific transaction related information will be recorded. Voice data containing this information will be kept consistent with FERC policy.
Trades that are performed via instant messaging, or on telephones located outside the office (including cellular phones), will be confirmed via a recorded telephone line or the instant message will be retained.
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b.
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Personnel involved in risk measurement, validation, and monitoring will have clear independence and autonomy from the trading function.
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c.
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All employees will be required to sign NJR’s Code of Conduct policy annually.
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d.
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All traders and Transportation & Exchange (T&E) personnel are required to sign an annual compliance statement indicating that they have read, understood, and will comply with the RMC’s Guidelines and Procedures.
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e.
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No person will be able to trade for themselves or others using approved financial instruments during their affiliation with NJNG. Financial instruments that are approved for use in NJNG’s risk management operations are listed in Exhibit I.
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2.
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Information System Controls -
To minimize operational risk, information systems controls will be established and implemented with the following design feature requirements:
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a.
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Information systems will be developed and implemented to adequately document, record and measure all of NJNG’s business transactions and forward commitments.
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b.
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Data access will be controlled and security procedures will be implemented to properly control data access and update capabilities.
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c.
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Contingency plans will be established with detailed procedures for backup (timely, adequate, off-site rotation to secure location, etc.) of mission-critical applications.
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D.
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Legal Risk -
Legal risk is the risk of loss when a contract cannot be enforced or a counterparty fails to fulfill its contractual obligations. This includes risks arising from insufficient documentation, insufficient authority of a counterparty, uncertain legality, and unenforceability due to bankruptcy or insolvency.
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To minimize the risks of failure of NJNG’s counterparties to perform their contractual obligations, NJR’s legal counsel must approve all contracts as per the Contract and Credit Guidelines (see Exhibit IV).
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E.
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Tax Risk -
Tax risk is the financial risk arising from possible misinterpretations or changes in the federal or state tax laws. To minimize this risk, NJR’s tax department monitors federal and state tax laws affecting NJNG’s business operations. In addition, Management is required to notify NJR’s tax department prior to conducting business in a new tax jurisdiction (i.e., country, federal, state or city).
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V.
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Required Notifications
|
New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
Changes in Management’s business strategies, changes in the business environment that materially impact NJNG’s risk profile and any violation of the RMC’s guidelines and procedures are required to be immediately reported to the RMC. If a violation involves the failure of the RMC to comply with its oversight responsibilities, the violation must also be immediately reported to the Audit Committee. Required notifications to the RMC and the Audit Committee include, but are not limited to, the following events:
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A.
|
Required Notifications by Management to the RMC -
The RMC is to be immediately notified when any of the following occur or are expected to occur:
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1.
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There is any incident of trader misconduct or a trader has exceeded his or her trading limit, without consent from an approving party.
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2.
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NJNG’s FRM Program dollar limitation exceeds the approved limit of $6,400,000.
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3.
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There is a material credit failure or nonperformance by counterparty or clearing broker.
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4.
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There is a change in any risk management methodology or a material change in any measurement process.
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5.
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Significant market changes have occurred or are reasonably expected to occur that would adversely affect NJNG’s risk management strategy.
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6.
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There is a change in Management’s fundamental strategy with respect to any of NJNG’s business activities.
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7.
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Trading occurs on an exchange or of a new product or instrument that is not listed in Exhibit I;
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8.
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A loss has occurred that would materially impact the financial position or results of NJNG or NJR.
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B.
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Required Notification by the RMC to the Audit Committee -
The Audit Committee is to be notified by the RMC when any of the following occur.
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1.
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There is any incident of trader misconduct or a trader has exceeded his or her trading limit, without consent from an approving party.
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2.
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NJNG’s FRM Program dollar limitation exceeds the approved limit of $6,400,000.
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3.
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There is a material credit failure or nonperformance by counterparty or clearing broker.
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4.
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A loss has occurred that would materially impact the financial position or results of NJNG or NJR.
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C.
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Notification Procedures -
Should any of the above matters arise such that notification must be made to the Audit Committee, a written statement of the matter is to be prepared by the employee making the observation. A copy of the written statement is to be provided to:
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|
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•
|
Larry Downes, President & Chief Executive Officer, NJNG
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•
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Glenn Lockwood, Senior Vice President & CFO of NJR (RMC Chairperson)
|
New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
|
|
|
|
•
|
Joseph Shields - Senior Vice President, Energy Services NJNG
|
|
|
|
|
•
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Kathy Ellis – Executive Vice President & Chief Operating Officer, NJNG
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|
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|
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•
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Mariellen Dugan – Sr. Vice President & General Counsel
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•
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George Smith - Vice President of Internal Audit
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The Chairperson of the RMC is to notify the RMC and the Audit Committee if required by the above procedures.
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|
|
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VI.
|
Disciplinary Actions for Violations of the RMC’s Risk Management Guidelines
|
The available disciplinary actions for violations are established by NJNG’s RMC from time-to-time and are documented herein. Violations not specifically identified below will be handled at the discretion of the RMC on a case-by-case basis. All disciplinary actions, whether specifically identified below or handled at the discretion of the RMC, will be applied on a consistent and non-discriminatory basis.
The following disciplinary actions apply to violations of the RMC’s guidelines and procedures:
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A.
|
Trader Limit Violations and Trader Misconduct -
If a trader exceeds his or her authorized trading limits without notice, either as the direct result of a particular trade (“active” excess) or from an adverse market move due to improper hedging (“passive” excess), or if the trader otherwise violates the guidelines contained herein, the trader will be issued a written warning by the Senior Vice President, NJNG Energy Services documenting the violation. Any trader, who subsequently violates a limit, regardless of notice, within twelve months of any previous violation, will be subject to immediate disciplinary action, up to and including dismissal from employment. The RMC must be notified immediately of any trader limit violation consistent with the notification procedures contained herein.
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Irrespective of the guidelines described above, the RMC retains the right to take any disciplinary action it deems appropriate under the circumstances, whether more or less severe than the disciplinary actions specified in this Section.
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|
|
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VII.
|
Risk Monitoring and Reporting Responsibilities
|
The following guidelines have been established in order to provide the RMC and Management with timely and meaningful information to assess the risk exposure of NJNG and to ensure that NJNG’s business activities are in compliance with the RMC’s guidelines and procedures.
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|
|
|
A.
|
Independent Monitoring -
Management is to ensure that there is adequate segregation of duties between the functions of the front, middle, and back offices. Personnel involved in risk measurement, validation, monitoring and reporting are to have the appropriate competencies in understanding the monitored activity and clear independence and autonomy from the trading function.
|
NJR Internal Audit shall perform periodic non-scheduled audits at the discretion of the Vice President of Internal Audit. The results of these audits will be provided to the RMC and the Audit Committee after Management has had the opportunity to review the findings and respond appropriately.
|
|
|
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B.
|
Management’s Responsibility to Report to the RMC -
Management will provide periodic reports to the RMC. The RMC designates the Manager, Mid-Office Control with the first-line responsibility for monitoring and reporting on NJNG’s adherence to the established procedures and trading limits.
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1.
|
Required Reporting from Management to the RMC -
The following reports will be produced
|
New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
for each RMC meeting by assigned personnel and are to be reviewed by the Manager, Mid-Office Control.
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|
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|
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RMC Report
|
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NJNG BGSS
|
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NJNG Hedging Summary
|
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NJNG Storage Incentive Summary
|
|
NJNG Forward Market Equity
|
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NJNG FRM Program
|
|
NJNG FRM Supplemental
|
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NJNG/NJREC Coastal Swap
|
|
Credit Information Change Report
|
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Available Credit Report
|
|
Credit Exposure
|
|
Ratings changes
|
The following additional reports addressing internal controls are included as an addendum to the first RMC meeting of each month:
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|
|
|
|
Affiliate-trade reporting
|
|
Un-used capacity report (annually)
|
|
Option premiums
|
|
Trader limit report
|
|
Top 10 counterparties ($’s and Dth’s)
|
|
Top 10 trades ($’s and Dth’s)
|
|
|
|
|
C.
|
RMC’s Responsibility to Report to the Audit Committee -
The Chairperson of the RMC will provide a verbal report at each meeting of the Audit Committee summarizing any of NJNG’s activities that affect its risk management profile or risk exposure. Additionally, minutes of all RMC meetings will be provided to the Audit Committee regularly.
|
New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
EXHIBIT I
APPROVED FINANCIAL INSTRUMENTS, BROKERAGE HOUSES, FINANCIAL COUNTERPARTIES AND EXCHANGES
Approved Financial Instruments:
Natural gas futures contracts
Natural gas options contracts
Natural gas basis swaps
Natural gas commodity swaps
Approved Exchanges:
New York Mercantile Exchange
Intercontinental Exchange
Approved Futures Commission Merchants:
Citigroup Global Markets, Inc. (formerly Salomon Smith Barney)
Newedge Financial (formerly Calyon Financial)
Approved Counterparties:
Refer to GMS (Contract Summary)
New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
EXHIBIT II
Risk Management Committee
List of Authorized Traders
|
|
|
|
|
|
|
|
|
Name
|
Title
|
Physical Trades **
|
Financial Trades
|
NJNG
|
|
Annitto, S.
|
Director
|
X
|
Level 1 (a)(b)
|
X
|
|
Richman, G.
|
VP
|
X
|
Level 1
|
X
|
|
Dugan, S.
|
Trader
|
X
|
Level 1 (a)
|
X
|
|
Rose, A.
|
Trader
|
X
|
Level 2
|
X
|
|
Ferreira, K.
|
Trader
|
X
|
Not authorized
|
X
|
**
refer to OSS and BGSS sections for specific limits
Level 1 financial = Futures, Options, Swaps
(a) primary function is executing financial trades
(b) back-up to NJNG trader (S. Dugan)
Level 2 financial = Futures, Options and Swaps other than basis swaps, and for the prompt two months only.
In order to distinguish between these limits, a separate account has been established with our Futures Commission Merchant(s). These accounts have corresponding settings in ICE.
All traders with level 2 financial authority will periodically attend formal in-house training in pricing execution, specifications and settlement of financial products.
New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
Exhibit III
Code of Conduct
of New Jersey Resources Corporation
Governing Wholesale Natural Gas Buying and Selling
and the Reporting of Trade Data for Index Development Purposes
General Policies
The policy of New Jersey Resources Corporation and its subsidiaries (the “Company”) is for all officers, employees, agents and others authorized to act on the Company’s behalf to comply fully with all applicable laws and regulations, and to adhere to the highest professional and ethical standards in the conduct of the Company’s natural gas wholesale purchase and sale business. The Company’s business shall be conducted in accordance with the highest standards of honesty, integrity and fairness, and business decisions shall be made to honor the spirit and letter of all applicable laws and regulations.
The Company believes that the development and publication of fair, accurate and robust natural gas price indices has value to all industry stakeholders. Accordingly, the Company’s policy is to participate, voluntarily and with appropriate protection for competitively sensitive information, in the collection by industry-recognized index developers of transaction data for the purpose of developing and publishing price indices. In all such activities, the Company is committed to full compliance with all applicable laws and regulations, as well as adherence to the general principles set forth by the Federal Energy Regulatory Commission (“FERC”) in its
Policy Statement on Natural Gas and Electric Price Indices.
Any questions regarding the policies set forth herein should be addressed to the Company’s Chief Compliance Officer, Mariellen Dugan, Vice President and General Counsel of New Jersey Resources Corporation. Ms. Dugan's telephone number is (732) 938-1489, e-mail address is
mdugan@njresources.com
and business address is 1415 Wyckoff Road, Wall, New Jersey 07719. In addition, any questions pertaining to the Company’s reporting of price information to index developers may be addressed directly to Dennis F. Veltre, Manager of Credit and Contracts, NJR Energy Services Company. Mr. Veltre’s telephone number is (732) 938-4541, e-mail address is
dveltre@njresources.com
and business address is 1415 Wyckoff Road, Wall, New Jersey 07719.
Any person with knowledge or concerns regarding activities that may be in violation of this Code of Conduct or of any applicable laws or regulations must report them immediately to the Company’s Chief Compliance Officer. There will be no retaliation for reports made in good faith.
The policy guidelines established in this wholesale natural gas transactions Code of Conduct are intended to be in addition to, and not in lieu of, (1) the New Jersey Resources Corporation Code of Conduct, which is applicable to all business activities of the Company, and (2) any other specific policies and procedures that apply to particular business activities and/or personnel of the Company.
This policy applies to all officers and any employees and agents directly or indirectly involved in the submission of offers or bids to buy or sell natural gas or pipeline or storage capacity (“Trading Representatives”).
Failure to adhere to this Code of Conduct will result in disciplinary action, up to and including termination of employment. This Code will be consistently and strictly applied, and will include disciplinary action against any supervisory personnel for negligent failure to detect an offense in his or her area of responsibility.
Policies Governing the Buying and Selling of Natural Gas in Wholesale Markets
New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
•
Accounting & Financial Records
The accuracy of the Company’s accounting, financial and auditing records and reports is crucial to the integrity and success of the Company. At no time should anyone knowingly falsify or misrepresent these records or reports, or require that others do so. Moreover, it shall be the Company’s policy to make full, fair, accurate, timely and understandable disclosure as required by applicable laws and regulations. Any Trading Representative with knowledge or concerns regarding questionable accounting, financial or auditing matters must report them to the Company’s Chief Compliance Officer.
It shall be the policy of the Company to retain, for a period consistent with FERC policy (which is currently five years), all data and information upon which it billed the prices it charged for natural gas sold pursuant to any market based sales certificate issued by the FERC.
|
|
|
|
•
|
Antitrust Laws, Fair Competitive Practices, and Prohibition of Manipulative Conduct
The Company’s policy is to comply fully with both the letter and spirit of all federal and state antitrust and fair competition laws. The basic premise behind these laws is that all companies should compete individually rather than join together in agreements or actions that restrict their individual competition. Although the antitrust laws and the actions they proscribe are complicated, examples of a few types of activities that may be violations of those laws are: 1) competitors agreeing on prices they will charge for their products or agreeing to serve customers in certain exclusive areas; 2) competitors agreeing on the types of products or the amount of any product the companies will produce or offer for sale; 3) tying the sale of one product or service on the purchaser buying a separate unrelated product or service; and 4) treating similarly situated purchasers/sellers or users of a product or service differently. Any questions about this issue should be directed to the Chief Compliance Officer.
|
The Company’s wholesale natural gas buying and selling, reporting of trade data for index development purposes and related communications with others will concern genuine proposed or actual transactions and will be undertaken so as not to violate the antitrust or fair competition laws. The Company will separately maintain Antitrust Compliance Guidelines and periodically review those Guidelines with trading and other appropriate personnel.
All Trading Representatives shall be prohibited from engaging in actions or transactions relating to natural gas commodity, transportation or storage markets that are manipulative or deceptive. In particular, the Company prohibits (1) the use or employment of any device, scheme or artifice to defraud, (2) the making of any untrue statement of a material fact or omission of a material fact that would be necessary to make a statement made not misleading under the circumstances, and (3) acts, practices and courses of business that operate as a fraud or deceit upon any entity. Examples of such prohibited conduct include engaging in pre-arranged offsetting trades of the same product among the same parties that involve no economic risk and no net change in beneficial ownership (so-called “wash trades”), knowingly or recklessly submitting false information in connection with a transaction, and collusion with another party for the purpose of manipulating natural gas market prices, conditions, or rules.
•
Affiliate Sales and Purchases
No Trading Representative acting on behalf of New Jersey Natural Gas Company may enter into any transaction to directly purchase or sell natural gas, transportation, storage or related products or services from or to an affiliate of New Jersey Natural Gas Company without the express prior written consent of the Company’s Chief Executive Officer. Consent to any such transaction shall be at the sole discretion of the Chief Executive Officer; provided, however, such consent shall not be given if he determines that at the time the request for consent is made (i) the sale of the product or service to New Jersey Natural Gas Company would exceed the market price for such product or service; or (ii) the sale of the product or service by New Jersey Natural Gas Company would be at a price less than the higher of its cost or the market price.
No Trading Representative may enter into any transaction with a third party to purchase or sell natural
New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
gas, transportation, storage or related products or services if the Trading Representative knows at the time that the transaction is entered into that the third party has entered into or plans to enter into a corresponding contemporaneous transaction with the Company to resell or repurchase the same or similar product or service. Notwithstanding the foregoing, any transaction executed through the IntercontinentalExchange (“ICE”) or similar trading platform is
per se
not in violation of this prohibition.
For purposes of this prohibition, an “affiliate” of a specified company includes any company that controls, is controlled by, or is under common control with the specified company.
•
Confidential Information
All Trading Representatives must appropriately safeguard the Company’s trade secrets and confidential or proprietary information, and refuse any improper access to trade secrets and confidential information of any other company, including the Company’s competitors. Trading Representatives should always be alert to avoid inadvertent disclosure that could arise in either social conversations or in normal business relations with Company suppliers and customers.
Confidential information is any information, which, at the time it is known, is not generally available to the pubic and which is useful or helpful to the Company and/or which would be useful or helpful to competitors of the Company. Confidential information can include customer, employee, stockholder, supplier, financial or operational information and plans for stock splits, business acquisitions and mergers, or an important pending regulatory action.
Any Company confidential information to which a Trading Representative may have access should be discussed with others in the Company only on a need-to-know basis.
If the Company wishes to disclose its own trade secret or confidential information to anyone outside the Company, it should be done only in conjunction with appropriate trade secret or confidential information disclosure agreements that must be reviewed by the Company’s legal department.
•
Conflicts of Interest
No Trading Representative shall pursue or engage in any outside employment, business or other commercial activity, either during or outside such Trading Representative’s Company working hours, which conflicts or competes directly or indirectly with his or her duties or responsibilities as a Trading Representative, or with any business interests or activities of the Company. Trading Representatives are expected to carefully consider whether any of their actions during or outside Company hours rise to the level of a conflict of interest. Even the appearance of a conflict of interest must be avoided.
Trading Representatives directly involved in the trading of natural gas have an affirmative obligation to disclose to the Chief Compliance Officer any interest, including but not limited to, a financial interest in any outside activities or business that may conflict or compete with those of the Company. This affirmative disclosure obligation extends to the interests of the Trading Representative’s immediate family members(s).
At no time during Company working hours or on Company property shall any Trading Representative engage in or pursue any non-company employment, business or commercial activity, or solicit Company customers or Trading Representatives for any profit-making purpose, nor shall any Trading Representative make use of any Company vehicles, telephones, tools, equipment, information, or other facilities at any time for any such purpose.
Trading Representatives directly involved in the trading of natural gas shall not enter into any natural gas transactions for their personal accounts. Any questions regarding this policy should be addressed with the Chief Compliance Officer. No vendor or consultant shall be retained to perform services for any
New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
business unit where a Trading Representative in that business unit is related to, lives with or is in a relationship with the consultant or vendor, without the express permission of the Company’s Chief Executive Officer. Any such existing relationship must be immediately disclosed to the Chief Compliance Officer.
Unless specifically approved by an officer of the Company, vendors or consultants may only be contacted for purposes for which the vendor or consultant was retained.
•
Securities Fraud and Insider Trading
It is both illegal and against Company policy for any individual to profit from undisclosed information relating to the Company or any company with which the Company does business. (See the
Policy Regarding the Purchase and Sale of New Jersey Resources Corporation Securities
) Anyone who is in possession of material non-public information that the Company has not yet disclosed to the public may not purchase or sell any Company securities. Moreover, Trading Representatives who have material non-public information about any of the Company’s suppliers, customers, or any company the Company does business with are prohibited from purchasing or selling the securities of those companies. “Material non-public information” is generally considered to be information, positive or negative, not available to the general public that would be expected to affect the decision of a reasonable investor contemplating whether to purchase, sell or hold Company securities. Information may be material for this purpose even if it would not alone determine the investor’s decision. Whether particular information is “material” at a particular time may involve complex factual and legal analysis, and an individual should consider as material any information that would be important enough to affect a decision to buy or sell Company securities.
It is against Company policy, and possibly illegal as well, to trade the Company’s securities or the securities of any other company in a way which attempts to hide the true identify of the trader or to mislead others as to exactly who is doing the trading. Any Trading Representative trading in the Company’s securities or the securities of other companies, using fictitious names, names of relatives or friends, or brokerage accounts under fictitious names located in foreign jurisdictions shall be subject to immediate disciplinary action. Should the Company discover any such trading, it will disclose it to the appropriate authorities.
Anyone who is uncertain as to whether a proposed transaction in Company securities or the securities of other companies would violate the Company’s insider trading procedures should consult with the Chief Compliance Officer before engaging in it.
Technology Policy
The Company reserves the broadest possible rights to ensure that all electronic communication systems, including electronic mail (“e-mail”), voice mail, internet access and faxes, computers, peripherals and related software (“business tools”) are provided by the Company and used by Trading Representatives to perform their job responsibilities in the most productive and efficient manner. E-mail or Internet access is provided to conduct official Company business. Limited and incidental use not related to Company business must be kept to a reasonable level consistent with what would be appropriate for personal phone calls or personal e-mail usage. Users with Internet access must abide by all software license agreements, copyright laws, trademark laws, patent laws, intellectual property laws, and applicable State and Federal laws. Communications systems are the sole property of the Company and not the individual property of Trading Representatives. As such, Trading Representatives should not consider any information created or disseminated through the use of communication systems to be private. The Company reserves the right to inspect and monitor all business tools for compliance at any time.
All computer systems are password protected. Each user is responsible for preserving the security of
New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
their password, workstation, and company data, which includes periodic password changes. Users are responsible for the activity performed with the User ID, whether or not they executed the task.
No user shall access another user’s communication systems without express permission from the senior officer of the business unit to do so. Such permission is not necessary in the event of an audit, or other Company action referred to above.
Further written policies regarding technology matters are available from the Chief Compliance Officer.
Policies Governing the Reporting of Trade Data to Index Developers
Consistent with its general policy to support the development and publication of natural gas price indices, as well as the general standards embodied herein, it is the Company’s policy to furnish accurate, complete and timely trade data to approved index developers in accordance with the following principles:
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Confidentiality -
Trade data will be submitted only where protected by a confidentiality agreement with the index developer.
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Separation from Trading Function -
The NJRES Manager of Credit and Contracts is responsible for reporting trade data to index developers, for verifying the accuracy and completeness of such data, and for supervising the Company’s involvement in trade data reporting. No Trading Representatives directly involved in the trading of natural gas shall be involved in the reporting process.
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Data Reported -
Only bilateral, arm’s-length transactions in the physical markets with non-affiliates are reported. Financial hedges, financial transactions, or swaps or exchanges of gas are not reported. For each transaction, the Company endeavors to report all key terms of the transaction separately, including (a) price; (b) volume; (c) buy/sell indicator; (d) delivery/receipt location; (e) transaction date and time; and (f) term (next day or next month), but does not disclose the identity of the counterparty.
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Error Resolution -
The Company strives to report errors promptly as they are identified and to cooperate with the error resolution processes and timelines adopted by the index developers to which the Company reports in order to resolve any identified errors or discrepancies in reported data. The NJRES Manager of Credit and Contracts is responsible for error resolution.
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Data Retention -
The Company retains data relating to reported trades for not less than the period required by applicable FERC rules (currently, five years).
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Audit -
At least once annually, either an external or internal auditor independent from the Company’s trading and reporting departments and personnel will review the Company’s data gathering and submission process. The Company will make the results of these audits available to the index developers to which the Company submits trade data, and allow the index developers to recommend changes to improve the accuracy and timeliness of the Company’s data reporting.
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Policies Prohibiting the Dissemination of Non-Public Transmission Function Information
Consistent with the FERC Standards of Conduct for Transmission Providers as they apply to affiliates of a “transmission provider” performing “marketing functions”, Trading Representatives actively and personally engaged in marketing functions are prohibited from receiving non-public “transmission function information” from any source regarding any transmission provider affiliated with the Company.
All officers, directors and employees of the Company are prohibited from acting as a conduit for the disclosure of non-public transmission function information to Trading Representatives actively and personally engaged in marketing functions.
New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
As used in this Code of Conduct, “marketing functions” means the sale for resale in interstate commerce, or the submission of offers or bids to buy or sell natural gas or capacity, demand response, virtual gas supply or demand in interstate commerce; “transmission function information” means information relating to the natural gas transportation, storage, exchange, backhaul, or displacement services operations and the planning, directing, organizing or carrying out of such transmission operations, including the granting and denying of transmission service requests; and “transmission provider” means any FERC-regulated interstate natural gas pipeline or storage provider that transports or stores gas for others pursuant to FERC regulations. Transmission providers affiliated with the Company include Steckman Ridge, LP, but do not include any transmission provider of which the Company owns, controls or holds with power to vote less than 10 percent of the outstanding voting securities.
New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
Exhibit IV
Contract and Credit Policy
for Wholesale Transactions
Approved: ____________
Revised: ______________
As required under the New Jersey Resources Corporation (“NJR”) Contract Review Policy and Procedure, Administrative Procedure 90, all “Wholesale Transactions” must be reviewed under this Contract and Credit Policy for Wholesale Transactions (referred to herein as the “Policy”).
A “Wholesale Transaction” includes:
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1.
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contracts for the wholesale purchase and sale of natural gas including, but not limited to, physical and financial transactions typically entered into under industry standard contract forms such as the North American Energy Standards Board, Inc. Base Contract for Sale and Purchase of Natural Gas or the International Swaps and Derivatives Association, Inc. Master Agreement, respectively;
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2.
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tariff-based agreements for the purchase of gas transportation or storage services and related non-tariff based precedent agreements;
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3.
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credit agreements such as guaranties and letters of credit provided or received in support of agreements entered into under 1 and 2, above;
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4.
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confidentiality agreements related to agreements entered into under 1 and 2, above; and
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5.
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other arrangements related to the unregulated wholesale energy businesses of the “Company” (defined to include NJR and its affiliates).
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NO WORK MAY PROCEED OR SERVICES BE INITIATED OR RENDERED OR PRODUCTS OF ANY KIND TAKEN OR RECEIVED UNDER ANY WHOLESALE TRANSACTION UNTIL IT HAS BEEN REVIEWED AND APPROVED CONSISTENT WITH THIS CONTRACT AND CREDIT POLICY FOR WHOLESALE TRANSACTIONS AND ADMINISTRATIVE PROCEDURE 90.
The purpose of this Policy is to provide a means for the Company to reasonably ensure that all Wholesale Transactions are reviewed by the Legal Department and appropriate Company personnel.
Any changes to this Policy must be approved by the Risk Management Committee. The responsibility for maintenance and distribution of this Policy will reside with the Credit and Contracts Department.
PART 1: CONTRACT REVIEW PROCEDURES
The Company, primarily through its subsidiaries NJNG, NJRES and NJR Energy Holdings Corporation (and its subsidiaries), currently engages in regulated (tariff-based) and unregulated (non tariff-based) Wholesale Transactions involving both physical and financial deals. Physical deals are typically transacted under the
New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
NAESB Contract, but may be transacted under a customized purchase and sale agreement. The NAESB Contract (and its predecessor, the GISB Contract) may be modified by the incorporation of “Special Provisions” to those contracts. Financial deals are typically transacted under the ISDA, which is modified to meet the particular needs of the contracting parties through negotiation and incorporation of special provisions in the “ISDA Schedule” and/or an “ISDA Credit Support Annex”.
Corporate guaranties and other credit support documents provide credit support to both physical and financial deals. These documents are requested in accordance with the Credit Policy discussed in Part 2 below.
Separate payment netting agreements may be used to compensate for the lack of a netting provision in a particular deal; however, most netting is included as part of the standard NAESB Contract and ISDA and separate netting agreements are discouraged.
Individual customized purchase and sale agreements, i.e., contracts other than the NAESB Contract and the ISDA, are discouraged and will only be entered into under special circumstances.
Trading exchange participation agreements are governed by the standard agreements of the individual exchange and are entered into as necessary.
Administration of the review process for Wholesale Transactions under this Policy shall be the primary responsibility of the Contracts Manager.
“CCR” means the Counterparty Change Request Form included as Attachment A.
"Company" means NJR and its affiliates, including, but not limited to New Jersey Natural Gas Company (“NJNG”) and NJR Energy Services Company (“NJRES”)
“ConA” means Confidentiality Agreement
“Contract Analyst” means Linda Bracken in the Energy Services Department
“Contracts Manager” means Adrienne Kalbacher who is the Contracts Manager in the Energy Services Department
“COO NJNG” means Kathy Ellis who is the Chief Operating Officer of New Jersey Natural Gas Company
“Corporate Secretary” means Rhonda Figueroa who is the Corporate Secretary of New Jersey Resources Corporation
“Credit Department” means the Credit and Contracts Department
“"Credit Limit" has the meaning given to it in the Credit Policy
“Credit Policy” means the Credit Policy for Regulated and Unregulated Transactions contained in Part 2
“Credit Support Document” has the meaning given to it in the Credit Policy
New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
“Credit Manager” means Kevin O’Dea who is the Credit Manager in the Energy Services Department
“Deal Approval Form” means the Deal Approval Form included as Attachment B.
“Director of Marketing” means David Johnson who is Director of Marketing in the Energy Services department of NJRES
“Director Energy Trading” means Tim Shea who is Director of Energy Trading in the Energy Services department of NJRES
“EBB” means pipeline or storage provider electronic bulletin board
“EVP & COO/SVP” means Joe Shields who is the Executive Vice President and Chief Operating Officer for NJRES and Senior Vice President-Energy Services for NJNG
“Gas Supply Analyst II” means Doug Rudd who is in the Energy Services department of NJNG
“GISB Contract” means the Base Contract for the Short-Term Sale and Purchase of Natural Gas published by the Gas Industry Standards Board
“GMS” means the Gas Management System
“ISDA” means the Master Agreement published by the International Swaps and Derivatives Association, Inc.
“Manager T&E NJNG” means Kathy Ferreira who is the Manager of Transportation & Exchange for New Jersey Natural Gas Company
“NAESB Contract” means the Base Contract for the Sale and Purchase of Natural Gas published by the North American Energy Standards Board, Inc.
“NJR” is New Jersey Resources Corporation
“President and CEO” means Larry Downes of New Jersey Resources Corporation
“Senior Counsel” means Bill Scharfenberg who is Senior Counsel in the Legal Department with primary responsibility for reviewing Wholesale Transactions
“Sr Manager” means Dennis Veltre who is the Senior Manager–Energy Services
“SVP & CFO” means Glenn Lockwood who is the Senior Vice President and Chief Financial Officer of NJR
“SVP & General Counsel” means Mariellen Dugan who is the Senior Vice President and General Counsel of NJR
“Tax Manager” means Bob Walsh who is Tax Manager of NJR
“T&E” means the Transportation and Exchange analysts.
“Trader(s)” means the NJNG and NJRES employees included on the List of Authorized Traders, which is attached as Exhibit II to the Risk Management Guidelines
“Trading Partner(s)” or “Counterparty” means any vendor(s) and/or customer(s) selling or buying natural
New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
gas or related products or services, including financial risk management products or services, to or from the Company in the wholesale market under a GISB or NAESB Contract, ISDA or other agreement
“Treasurer” means Bill Foley who is the Treasurer of NJR
“VP, Energy Services” means Rick Gardner who is the Vice President, Energy Services in NJRES
“VP NJNG” means Ginger Richman who is the Vice President, Gas Supply/Energy Services for NJNG
“VP, Energy Trading” means Steve Westhoven who is the Vice President, Energy Trading in NJRES
“Wholesale Transaction” has the meaning given to it in the introduction, above
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II.
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UNREGULATED (NON-TARIFF BASED) WHOLESALE TRANSACTIONS
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The process of adding a new Trading Partner or a new Wholesale Transaction (for non-tariff based contracts) involves the following steps, which are discussed more fully in Section II, B below:
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Initial Request
- CCR Form.
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Credit Approval
– Determination as to whether the proposed Counterparty is a creditworthy Trading Partner and if contract negotiations should be continued.
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Contract Request
– Contracts Manager makes contact with new Counterparty and requests documents.
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Contract Tracking
– Contracts Manager saves the CCR form to the g:/gassales/contracts/contracts files/ specific counterparty name. All major notes that Contracts Manager needs to keep on negotiations will be stored in GMS.
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Contract Review
– Contracts Manager manages comments back and forth with Counterparty and submits comments, revisions and proposed provisions to Senior Counsel for review, as necessary.
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Contract Execution
– Contracts Manager and/or Contract Analyst, prepares documents for signature with appropriate sign-off per CCR.
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Directory of Completed Agreements
– Contracts Manager and/or Contract Analyst, receives fully executed agreements and enters Agreements into the GMS system(s).
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Filing
– Contract Analyst scans documents onto g:\contracts and files hardcopies.
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However, the process of initiating or revising a ConA is handled differently as addressed in Section III, below.
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B.
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Request Process for all Non Tariff-Based Wholesale Transactions Other Than ConAs
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The process of initiating or revising all non tariff-based Wholesale Transactions (other than ConAs, addressed below in Section III below) with a Trading Partner includes one the following:
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A CCR is completed by a Trader via an excel worksheet (found at g:/gassales/contract/contract masters/Counterparty Change Request Form) and distributed to Sr Manager, Credit Manager, and Contracts Manager; or
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The Company receives a request for contract(s) from the Trading Partner. This needs to be confirmed with Trader(s) and if confirmed, a CCR Form is completed by the Trader and distributed to Sr Manager, Credit Manager, and Contracts Manager; or
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The Company receives a request from a Trading Partner for a credit increase from the Company.
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New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
Credit Manager or Sr Manager will be notified and if approved by all relevant parties as per the Credit policy, Credit Manager or Sr Manager will notify Contracts Manager to initiate an amendment to the relevant credit support document; or
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The need for new or revised credit support document is identified through review of an expiring credit support document; or
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The need for new or revised credit support document is identified through a review of Trading Partner’s credit status.
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The decision as to what types of contracts to enter into includes, but is not limited to, the following factors:
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Types of deals Trader(s) and/or Trading Partner expect to transact (physical vs. financial)
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For physical contracts, only NAESB Contract’s will be negotiated unless otherwise approved by Senior Counsel and EVP & COO/SVP.
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Whether credit support is needed as determined by the Credit Policy discussed in Part 2 below
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The decision as to what type of contract to enter is made jointly by Contracts Manager and the Trader. The Trading Partner and the Company exchange drafts of the contract documents for review, including any credit support documents needed from the Trading Partner as determined by Sr Manager and/or Credit Manager. Business terms are the responsibility of the Trader, Sr Manager and Contracts Manager and are approved by EVP & COO/SVP. Legal terms are the responsibility of the Legal Department. During contract negotiation, Contracts Manager interacts with the Trading Partner (usually through the Counterparty’s non-legal counterpart) to forward all issues identified by Senior Counsel and any business issues identified by the Trader, Contracts Manager and Sr Manager and/or Credit Manager. If Contracts Manager is unable to complete negotiations with the Trading Partner, Senior Counsel may complete negotiations with the attorney representing the Trading Partner with the input from the Trader, Contracts Manager, Sr Manager or EVP & COO/SVP, as necessary. In the event any major issues that could be identified as “deal breakers” emerge during the course of negotiations, Senior Counsel (or SVP & General Counsel, as the case may be) and EVP & COO/SVP shall work to resolve such issues in the best interests of the Company; provided, however, SVP & General Counsel reserves the right to make the final decision with respect to all inherently legal issues. EVP & COO/SVP shall make the final decision with respect to all business issues. If the contract provision agreed to is unusual and could influence a Trader’s transaction, the Counterparty will be placed on a “Restricted List” with an “*” by the Counterparty’s name on the daily Credit Report. A separate “Restricted List” report is available on all Traders’ desktops via icon that explains the unusual provision in the Counterparty’s contract.
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D.
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Tracking Contract Negotiations
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Contracts Manager is responsible for tracking, monitoring and communicating the status of contracts as they are negotiated. Questions on contracts in negotiations should be directed to Contracts Manager. A log of documents submitted to Senior Counsel, and available for Senior Counsel’s review at all times, is located on g:\legal contract log\documents submitted to legal.xls. The log includes the date forwarded, person who forwarded, type of document, expected return date and the actual date returned. Periodically, usually on a weekly basis, Contracts Manager will issue verbal and/or written updates on all active negotiations. Once each quarter (12/31, 3/31, 6/30 and 9/30), Contracts Manager will provide a summary of completed negotiations since the last quarterly report. This report will be distributed to the Traders, Sr Manager, Senior Counsel, EVP & COO/SVP, Contract Analyst and other interested parties upon request.
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E.
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Establishment of Credit
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See Credit Policy in Part 2, below.
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F.
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Issuance of a Corporate Guaranty by NJR on behalf of NJRES or NJNG
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New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
See Credit Policy discussed in Part 2 below. Contracts Manager and/or Contract Analyst, is responsible for ensuring acknowledged guarantees have been received and logged into GMS.
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G.
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Legal Department Review
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All Wholesale Transactions must be forwarded to Senior Counsel for review. The Legal Department will record its review by final sign-off on the CCR prior to signature.
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H.
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Officer Approval and Signatures
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Contracts Manager and/or Contract Analyst, will prepare all documents for final signature.
(A)
Wholesale Transactions Other Than NJR-issued Guaranties
EVP & COO/SVP must review and sign-off on the CCR and execute all Wholesale Transactions (other than NJR-issued guaranties, addressed below); provided, however, in the event that that EVP & COO/SVP is not available to sign-off on the CCR and/or execute the Wholesale Transaction and time is of the essence: (1) for NJNG Wholesale Transactions with a term of one year or less, VP NJNG may sign-off/execute, and (2) for NJRES Wholesale Transactions, (a) VP, Energy Trading may sign-off/execute, or (b) VP, Energy Services may sign-off/execute agreements with a term of one year or less. Before the Counterparty is activated in GMS and made available to the Traders, Treasurer must review and sign-off on the CCR.
(B)
Guaranties
SVP & CFO must review and execute all guaranties issued by NJR on behalf of NJRES or NJNG; provided, however, in the event that that SVP & CFO is not available to execute the guaranty and time is of the essence Treasurer may execute the guaranty.
For ISDA’s, Contracts Manager and/or Contract Analyst, in consultation with Senior Counsel, may request a certificate of incumbency from the Corporate Secretary and any other required documents specified in the ISDA Schedule. After all signatures are obtained, if the Counterparty has not already signed, Contracts Manager and/or Contract Analyst, will manage obtaining signatures from Counterparty. Contracts Manager and/or Contract Analyst, will review the documents to ensure all required documentation is included in the package that is sent to Counterparties. Contracts Manager is responsible for making sure that a fully executed original of all contract documents are obtained, scanned and filed on g:\contracts. All guaranties and amendments issued and signed by NJR, but not yet acknowledged, will be logged into GMS by Contracts Manager and/or Contract Analyst, at the time they are signed by NJR. All other documents will be input into GMS, and marked as “inactive” by Contracts Manager and/or Contract Analyst, upon initiation of the documents. Upon receipt of fully executed contract documents, the documents will be made “active”.
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I.
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System Input of Contract Information
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After all documents are received, Contracts Manager and/or Contract Analyst will arrange to enter the Trading Partner into the appropriate tracking systems. After the Trading Partner is entered, Contracts Manager and/or Contract Analyst can then enter the relevant contract information.
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J.
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System Input of Credit Information
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See Credit Policy discussed in Part 2 below.
Trader(s) must review credit, contract and restricted list reports to determine that the requisite level of credit and contracts are in place and active before transacting with a Trading Partner. Credit, contract and restricted list reports are distributed to Trader(s) daily or as needed.
New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
Each month, Credit Manager will compile a list of Counterparty credit support documents expiring within the next two months. Credit Manager will advise Contracts Manager and Contract Analyst how to handle each Trading Partner. Credit Manager will follow-up on all expiring credit support documents. For NJR credit support documents, Contract Analyst will compile a list of NJR credit support documents expiring two months in advance. Credit Manager will advise Contracts Manager and Contract Analyst if any changes should be made to the expiring credit support document. Contracts Manager, or Contract Analyst will follow-up on replacing or extending expiring credit support documents unless otherwise directed by Credit Manager. See Credit Policy discussed in Part 2 below for more information on reconciliation procedures.
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III.
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REQUEST PROCESS FOR ConAs
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The process of initiating or revising a ConA differs from the above general procedure for non tariff-based Wholesale Transactions, as follows:
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Any Company employee may originate review of a ConA under this Policy. Contracts Manager may, but is not required, to originate review of a ConA.
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Since ConA’s typically require a very quick turnaround, the Company employee may prefer to originate review directly with Legal; however, in this case, Contracts Manager should be copied on all correspondence.
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The Company employee will e-mail the ConA directly to Senior Counsel for review and Senior Counsel will respond directly to the Company employee with any revisions/comments, which the Company employee will then forward to the Counterparty.
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Once negotiation of the ConA is complete, the Company employee will have the Counterparty sign.
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The Company employee will then prepare (or ask Contract Analyst to prepare) the ConA for signature with appropriate sign-off per CCR.
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For a ConA, only the Senior Counsel and an officer of the NJR company that is a party to the ConA are required to sign-off on the CCR.
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Any officer of the NJR company that is a party to the ConA may sign the ConA.
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The fully executed ConA will be given to Contract Analyst.
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Contract Analyst will scan and file executed ConA in Credit and Contracts Department g:\contracts.
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IV.
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REGULATED (TARIFF-BASED) WHOLESALE TRANSACTIONS
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The Company is also a purchaser of tariff-based regulated pipeline/storage products and/or services. The process of adding a new tariff-based Wholesale Transaction differs from the above process for non-tariff-based transactions, as follows:
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A.
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New Service Agreement Under the Same Rate Schedule and On the Same Pipeline/Storage Provider That The Company Has Previously Entered Into A Contract With
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The abbreviated procedure for review and approval of this limited type of tariff-based Wholesale Transaction reflects that fact that the Wholesale Transaction is effectively a new business deal under the same terms and conditions that previously have been reviewed and approved in accordance with Section IV, B, below.
Trader fills out a Deal Approval Form.
New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
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Execution/Management Approvals
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Trader determines if Wholesale Transaction will be an electronic or hardcopy (paper) tariff transportation contract. Based on the projected cost of the pipeline/storage contract, sign-offs will be required as per the Deal Approval Form. The Trader, with assistance of Contract Analyst, will forward the Deal Approval Form through all necessary departmental sign-offs as specified on Deal Approval Form, including Treasurer, SVP & CFO, COO NJNG, and President and CEO, as needed.
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Trader will fill out the pipeline’s request for service form and fax to pipeline.
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2.
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Pipeline will return hardcopy contracts for signature which will be attached to the Deal Approval Form
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3.
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Deal Approval Form with hardcopy attached will be circulated by Trader or Contract Analyst for approvals and execution, as required.
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4.
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Execution of hardcopy contracts shall be in accordance with Section II.H(A) above.
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1.
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Deal Approval Form will be circulated by Trader or Contract Analyst for approvals.
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2.
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Only after all approvals signed on Deal Approval Form, T&E enters contract request online in the EBB (or reviews what pipeline creates online)
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3.
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T&E prints a copy to attach to Deal Approval Form
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4.
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T&E electronically signs the contract through electronic execution rights with ID.
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Credit Application
- If the pipeline requires a credit application, the Trader shall forward the credit application to Credit Manager at the same time as the Deal Approval Form is filled out. Credit Manager will fill out the credit specific information and forward the credit application back to the Trader for the Trader to fill in any service specific information and for the Trader to send back to the pipeline/storage provider with the contract package.
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Input New Contract into GMS
– Once all applicable sign-offs are in place on the Deal Approval Form, T&E will enter the new contract into GMS and will initial the Deal Approval Form that the contract has been added to GMS. This is
not
in the credit screen where non-tariff based contracts are set-up. Note: If this is a new pipeline, Contracts (Contracts Manager or Contract Analyst) will have set-up a new counterparty that includes a credit and associated screens as per the procedures below. Until a credit screen is created, T&E will not be able to set-up contracts.
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Capacity Release Deals
– All Capacity Release deals need to be reviewed by (A) with respect to NJNG, Manager T&E NJNG or VP NJNG, and (B) with respect to NJRES, VP, Energy Trading, Director Energy Trading, or Director of Marketing for compliance with FERC posting rules; provided, however, Senior Counsel must be consulted in the event of any uncertainty with respect to compliance with FERC posting rules. This is in addition to the necessary approvals pertaining to the value of the deal prior to posting or bidding on the release. See Section V, below for more details.
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Rate changes
– T&E or Gas Supply Analyst II will process updates of tariff and rates.
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Scanning & filing completed contracts
– Fully approved Deal Approval Forms and attached contracts will be forwarded to Contract Analyst who will scan and file by company to the electronic filing system in g:\contracts. In addition, all Deal Approval Forms only are scanned onto g:\contracts\Board_Deal Approvals.
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Legal Review of Deals Over $15 Million or Under New Rate Schedules
– In the event that the new service agreement is for service on a pipeline/storage provider that the Company has previously entered into a contract with but under a rate schedule that the Company has not previously contracted under, or the service agreement represents an amount over $15 million, the Trader must obtain approval from Senior Counsel in accordance with Section IV. C, below.
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New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
Many tariff-based Wholesale Transactions contain rollover rights that provide the Company with the right to extend the arrangement. Rollover rights shall be tracked in the following manner:
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T&E monitors the notification period of tariff-based Wholesale Transactions that have rollover provisions and details of the rollover as part of the monthly close process. The Trader will direct T&E, in writing, whether or not to elect the rollover option. If rollover is elected, a Deal Approval Form will be filled out by the Trader and approved subject to the procedure in Section IV. A, above.
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C.
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New Tariff-Based Wholesale Transaction with a Pipeline/Storage Provider that the Company Has Not Previously Entered Into a Contract With (Or a Request to Enter Into a Service Agreement Under a New Rate Schedule)
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If the tariff-based Wholesale Transaction that the Trader desires to enter into is with a pipeline/storage provider that the Company has not previously entered into a contract with (or is a request for service under a new rate schedule), the following steps must be followed in addition to the steps contained in Section IV. A, above:
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Legal Approval with Initial Request
– All new pipeline/storage requests (or requests for service under a new rate schedule) MUST have the relevant tariff provisions reviewed and approved by Senior Counsel as the first step of the approval process. The Trader making the initial request will fill out a Deal Approval Form and e-mail the Deal Approval Form to Senior Counsel along with the tariff (or electronic link to the tariff) and information as to what rate schedules the Trader anticipates using (such as IT, FT, FSS, IW etc.) and specify what Senior Counsel is requested to review. Contracts Manager should be copied on the e-mail to and back from Senior Counsel. Senior Counsel will respond via e-mail as to whether the tariff and rate schedule is acceptable and any issues the Trader should be aware of. If the tariff/rate schedule is acceptable, Senior Counsel will print out the Deal Approval Form, sign for Legal review and return to the Trader.
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•
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Input New Pipeline/Storage Provider, Credit and Associated Screen Input Into GMS
– With respect to all new pipeline/storage requests, when Contracts Manager receives a copy of the e-mail to Senior Counsel to review the tariff, Contracts Manager will set-up the company screen. Optional notes may be input into GMS by Contracts Manager and/or trader. When Contracts Manager receives the reply e-mail from Senior Counsel that the new pipeline is acceptable, Contracts Manager will notify Contract Analyst that the credit and associated screens should be set-up in GMS.
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D.
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Tariff-Based Short-Term Wholesale Transactions
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In some limited circumstances, immediate turnaround is necessary in order to enter into short-term (next day, up to one summer or winter season) Wholesale Transactions for capacity release, transportation or storage capacity. Due to the extremely short time period (at times 1 hour or less) within which to execute these Wholesale Transactions, personnel availability to approve them in accordance with the above contract review procedure has proven to be an obstacle. In an effort to work within these time constraints, the following abbreviated procedures have been developed.
These procedures are to be followed for the execution of short-term contracts for transportation, capacity release and/or storage capacity only. Note that these procedures only apply to Wholesale Transactions under a tariff and rate schedule that previously has been reviewed by Legal. If the tariff or rate schedule has not been reviewed (as indicated by Legal sign-off on the Deal Approval Form) or there are points of concern, approval by the undersigned must wait until Senior Counsel has approved and/or the issues
New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
have been resolved. To the extent that Senior Counsel previously has reviewed the tariff and rate schedule, the following procedures are to be followed:
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•
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Up to one month or less, and up to $200,000 in total. – Individual Traders may approve the Wholesale Transaction.
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•
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Seasonal Term (Nov-Mar/April-Oct) and total demand fees up to $1 million – Trader identifies, analyzes and reviews, then forwards for approval to:
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NJRES
: VP, Energy Trading, Director Energy Trading or Director of Marketing
NJNG
: VP NJNG
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•
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Trader, VP, Energy Trading, Director Energy Trading, Director of Marketing or VP NJNG (as required in this procedure) will verify that the Wholesale Transaction does not deviate from the standard tariff and rate schedule that Senior Counsel has approved.
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◦
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If the contract approval is limited to an individual Trader, he/she will notify T&E to execute on the Electronic Bulletin Board (via email or other written means) and/or sign the contract, as applicable. If a hard-copy contract, Trader will give to Contract Analyst for filing.
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◦
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If the contract requires Director/VP approval, the Director/VP will sign-off on the Deal Approval Form, notify T&E to execute on the EBB and/or sign the contract, as applicable. If a hard-copy contract, Approver will give to Contract Analyst for scanning and filing. Contract Analyst will forward to EVP & COO/SVP to notify him that the contract has been executed.
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•
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Any contracts above $1 million and/or beyond a seasonal term require approval of EVP & COO/SVP. Contracts above $5 million require additional approval of Treasurer/SVP & CFO (and COO NJNG for NJNG contracts) and contracts above $15 million require additional approval of President and CEO as required in the Risk Management and/or Credit and Contract Guidelines.
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E.
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Estimated Annual Property Taxes (Storage Contracts Only)
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Some states, e.g., West Virginia, assess inventory,
ad valorem
or similar taxes on the gas in storage held by a shipper under a storage contract. For storage contracts only, the estimated annual property taxes must be included on the Deal Approval Form and sign-off must be obtained from the Tax Manager.
The following procedures apply to all capacity release transactions including releases of capacity, acquisitions of released capacity and related contracting arrangements, as follows:
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•
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Prior to posting a capacity release deal, bidding on posted capacity release or creating a new contract request, amending an existing contract or executing a new contract on a Pipeline EBB, all with respect to capacity release, the following approvals must be obtained, as appropriate:
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•
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A signed Deal Approval Sheet from the appropriate Trader must be obtained in all circumstances;
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•
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Based on the total dollar commitment and term of the deal, additional approvals may be required as specified on the Deal Approval Sheet; and
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•
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Prior to any posting, (A) with respect to NJNG, Manager T&E NJNG or VP NJNG, and (B) with respect to NJRES, Director Energy Trading, Director of Marketing must review the posting (i) for Counterparty company affiliates, and (ii) to ensure the posting satisfies
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New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
FERC’s rules with respect to what is non-biddable, as applicable; provided, however, Senior Counsel must be consulted in the event of any uncertainty with respect to compliance with FERC posting rules.
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•
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Only the Scheduling Manager, VP NJNG, Grade 8 schedulers or Grade 7 schedulers, with at least 1 year of experience, who have received appropriate training regarding rules and regulations of capacity release and who have been granted access by their supervisor, may post capacity releases, bid on capacity releases, request new contracts or amendments. If a Trader asks you to do something, but you are not sure you have authority, ASK YOUR SUPERVISOR OR VP ENERGY SERVICES FIRST.
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•
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Verify that the Trader has listed all pertinent data on the deal sheet (pipeline, path and/or contract, if recallable or not, rereleasable, biddable, rate, term, volume, and other relevant details). There must be a reason discussed in the box. Ask the Trader about any information that is missing before proceeding. If there are errors or changes necessary, the Trader must complete a new Deal Approval Form.
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•
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For capacity release, verify if the release has to be posted for bid. Releases are biddable in most circumstances; however, the following releases are not biddable:
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◦
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A pre-arranged release to an asset manager where the release contains a condition that the releasing shipper may call upon the replacement shipper to deliver to, or purchase from, the releasing shipper a volume of gas up to 100 percent of the daily contract demand of the released transportation or storage capacity at least five-twelfths of the period of the release, as more fully detailed in Part 284.8(h)(3) of FERC’s regulations;
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◦
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A pre-arranged release to a marketer participating in a state-regulated retail access program, as more fully detailed in Part 284.8(h)(4) of FERC’s regulations;
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◦
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Pre-arranged releases at the maximum pipeline tariff rate for a term greater than one year; and
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◦
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Releases for any period of 31 days or less, but only after verifying:
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•
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That the same transportation or storage capacity segment was not released by the Company to the same Counterparty or any affiliate thereof as a non-biddable release in the previous 28 days. If there was no prior release within the previous 28 days, you can post the capacity as non-biddable.
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•
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If you have
any
doubt as to whether the Counterparty under the proposed release is affiliated with a Counterparty that held the released the capacity in the prior 28 days, you must verify affiliate status. The Credit Manager or Sr Manager can verify affiliate status through a quick credit review. Do not be an unwitting party to other companies trying to “flip” capacity by using affiliates to avoid bidding requirements. If the proposed Counterparty is confirmed to be an affiliate of the prior Counterparty that was released the capacity within the preceding 28 days, NOTIFY YOUR SUPERVISOR AND VP ENERGY SERVICES IMMEDIATELY.
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•
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For capacity release, post all release or bid requirements in the Pipeline EBB. For releases under an asset management arrangement or under a state-regulated retail access program be sure to include all additional posting requirements per FERC and pipeline EBB requirements. For new contract request or contract amendment either complete the online request form or paper request form for processing. Print out all screens from pipeline EBB and attach to the Deal Approval Sheet.
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New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
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•
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Capacity releases that are done on a contract that was released to NJR as recallable must also be recallable. Any terms to NJR must be reviewed to see what must be the same (recallable business day, intraday, etc)
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•
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If you are not sure what any of the fields mean, ASK. Some pipelines allow you to release capacity so the replacement shipper can change your receipt and delivery points. Some have entitlement that can vary along the entire path. Each pipeline EBB is unique. You must be aware of the specific requirements.
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•
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Before executing a new contract make sure to review all of the terms. Date, points, volumes and any other important details must be reviewed before accepting.
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•
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When completed, enter into GMS.
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•
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New transport contracts must also have the 2
nd
demand screen filled in to account for the demand $$. GMS should have comments listing any relevant details. Storage contracts must list the Demand rates in either the back screen or as a Demand Rate on the front screen.
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•
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Once a deal is completed, the Deal Approval forms with all back up EBB print screens should be given to Contract Analyst.
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•
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Deal Approval forms will be reviewed at least monthly by Manager T&E NJNG or VP NJNG to ensure compliance with policy.
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New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
PART 2: CREDIT POLICY FOR REGULATED (Tariff-based) AND
UNREGULATED (Non tariff-based) WHOLESALE TRANSACTIONS
The purpose of this Policy is to provide a means for New Jersey Resources Corporation (“NJR”) to reasonably ensure that its subsidiaries, New Jersey Natural Gas Company (“NJNG”) and NJR Energy Services Company (“NJRES”), will be paid by third parties for services or products provided. This Policy details standards for establishing Credit Limits for Trading Partners entering into regulated and unregulated wholesale transactions with NJNG and NJRES. For NJNG or NJRES to extend credit to a Debtor, the Debtor will need to demonstrate creditworthiness and/or post Security pursuant to this Policy.
Any changes to this Policy must be approved by the Risk Management Committee. The responsibility for maintenance and distribution of this Policy will reside with the Credit Department.
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I.
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DEFINITIONS (in addition to definitions in Part I above)
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“Affiliate” means in relation to any person, any entity controlled, directly or indirectly, by the person, any entity that controls, directly or indirectly, the person or any entity, directly or indirectly, under common control with the person. For this purpose, “control” of any entity or person means ownership of a majority of the voting power of the entity or person. For this purpose, “person” means all corporations, business trusts, associations, companies, partnerships, joint ventures and any other entities.
"Credit Limit" means the limit of exposure to any individual Debtor, which Company shall have at any time and shall be set in accordance with this Policy.
“Credit Support Annex” means the Credit Support Annex published by the International Swaps and Derivatives Association, Inc.
“Credit Support Document” means a corporate guaranty or any form of Security specified in this Policy given to Company in support of a Debtor's Credit Limit.
“Credit Support Provider” means any third party provider of a Credit Support Document on Debtor’s behalf.
“Debtor(s)” means any Trading Partner making a request for credit or approved for credit by NJR.
“Exposure” means at any point in time, the sum of the dollar amount owed to Company by Debtor for Company services or products under a GISB or NAESB Contract, ISDA and/or other agreement.
“Moody’s” means Moody’s Investor Service, or an equivalent rating by any successor rating agency.
“NJNG Tariff” means the natural gas tariff of NJNG approved and on file with the New Jersey Board of Public Utilities.
"Net Exposure" means at any point in time, the total dollar amount owed to Company by Debtor for Company services or products, less the total dollar amount owed by Company to Debtor for Debtor products or services whether under the same or different agreements.
“S&P” means Standard & Poor’s Ratings Services, or an equivalent rating by any successor rating agency.
"Security" means security given to Company in support of a Debtor's Credit Limit as provided under Section III D of this Policy.
New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
Trader(s) shall recommend a Credit Limit for each Debtor to Sr Manager and/or Credit Manager based on and reasonably related to the volume and price of the pending transaction(s), utilizing the “Request for Counterparty Change Request Form”. NJRES and/or NJNG should engage in wholesale transactions with Trading Partners who are deemed creditworthy, or who have/will post Security, with the exception of the companies referenced in section V of this credit policy. In the event a request is made to enter into contracts with a Trading Partner, and upon credit review it is determined that the Trading Partner does not qualify for credit under this policy, contracts can still be entered into, provided that a) trader justifies the business need for the contract; and b) approval by EVP & COO/SVP. Trading Partner will then be approved for business with a zero credit limit. In instances where the applicable netting agreements are in place and a zero credit limit exists, Energy Services’ net exposure must always remain in a position where Energy Services’ purchases exceed their sales with Trading Partner.
Credit Department staff shall be responsible for obtaining all financial and credit information and documentation required to complete the review process. Trader(s) shall forward all credit inquiries to the Credit Department, including inquiries regarding pending credit requests. The Credit Department will make every effort to render a credit determination within a reasonable time of receipt of all pertinent information, not to exceed two weeks. The Credit Department shall deny the request for credit of Debtors who fail to provide requested information in a timely manner. The Credit Department shall conduct its credit review in a non-discriminatory manner.
Debtor and/or its Credit Support Provider must supply Security in a form and amount acceptable to NJR. Security must be in an amount reasonably related to the pending transaction(s) with NJNG and/or NJRES. The Credit Department may recommend to the appropriate parties not to request Security of any kind from an electric or natural gas local distribution company; any other company that meets the ratings criteria described below; or from other Trading Partners whose creditworthiness is acceptable based on the calculations of various financial ratios prescribed in Table 1, as described below. Factors that may be considered are if the Debtor or Credit Support Provider is not rated, but has a rated utility subsidiary. Conversely, an unrated utility may be acceptable if its parent company is rated (but may be proscribed from guarantying utility obligations).
Credit shall be reviewed, requested and granted based on the following hierarchy:
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A.
|
S&P or Moody’s Ratings
|
The maximum credit extended to a Debtor shall be consistent with their S&P or Moody’s rating and the respective Credit Limit as listed in Table 2. If the Debtor is not directly rated, the ratings of its underlying debt can be used. In the event of a “split” rating, the decision regarding the amount of credit will be recommended by the Credit Department and discussed by the Risk Management Committee and/or approved by use of the protocol set for in Section VI of this Policy.
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B.
|
Corporate Guaranty issued by a Credit Support Provider
|
If the Debtor is not rated, a qualified guaranty on behalf of the Debtor issued by a investment grade-rated Credit Support Provider shall be acceptable, consistent with the Credit Support Provider’s S&P or Moody’s rating and the respective Credit Limit listed in Table 2 below.
A single corporate guaranty may cover wholesale transactions for more than one (1) company. A single corporate guaranty may cover both retail and wholesale transactions with NJNG and/or NJRES. A separate amount shall be stated for retail and wholesale transactions. The corporate
New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
guaranty on its face must clearly state all entities covered.
In the evaluation of a corporate guaranty from an Affiliate, the Credit Department should determine that the Affiliate was organized to guarantee the debt of Debtor. This may be accomplished by reviewing the corporate organizational chart, affiliate’s charter or audited financial reports, which make that representation, or other documents recommended by the Legal Department. In no event shall the Credit Department accept a corporate guaranty from a company unaffiliated with Debtor without the approval of the Legal Department.
A corporate guaranty from another company for wholesale transactions, which requires a signature from either NJNG or NJRES, shall be signed by EVP & COO/SVP
.
If EVP & COO/SVP is unavailable, the corporate guaranty may be signed by any officer of the respective company.
When considering the acceptance of a corporate guaranty from and Credit Limit relating to a Credit Support Provider, the Credit Department must consider the total amount of security given to NJR from the Credit Support Provider for multiple Trading Partners and the aggregate Credit Limits extended to all Trading Partners under the same corporate guaranty. The aggregate amount of security and the aggregate Credit Limit should be evaluated within the context of the guidelines of this Policy.
If the Debtor or its’ Credit Support Provider are not rated, NJR may determine the Debtor’s or Credit Support Provider’s (as applicable) creditworthiness based on the calculation of various financial ratios prescribed in Table 1. The Debtor or Credit Support Provider should achieve the acceptable level of performance for each financial ratio in order to post a corporate guaranty. If not, mitigating supporting documentation must be provided. The foregoing ratios should be a guide to recommending Credit Limits to such counterparties. For those counterparties whose creditworthiness is acceptable based upon financial ratios, contractual and business relationships, the Credit Limit should be no more than 3% - 5% of the equity of the counterparty and such 3% - 5% should equal at least $1,000,000.
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Table 1
Financial Ratio Guidelines for Accepting A Corporate Guaranty
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Ratio
|
Acceptable Level of Performance
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Funds from Operations/Total Debt (%)
|
20% or Greater
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Total Debt/Capitalization (%)
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55% or Less
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Pretax Interest Coverage (x)
|
3.0x or Greater
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Funds from Operations Interest Coverage (x)
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3.5x or Greater
|
If the Debtor or its’ Credit Support Provider are not rated, the Credit Department shall accept the following forms of Security for both regulated and unregulated wholesale transactions except as otherwise noted:
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|
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(a)
|
An advance cash deposit or prepayment.
|
New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
|
|
|
|
(b)
|
A standby irrevocable letter of credit issued by a bank or other financial institution with a minimum S&P bond rating or Moody’s equivalent, consistent with the Credit Limit requested in accordance with the Table 2 below. The credit of the issuing bank will be considered with respect to NJR’s total exposure to that bank, for both other LCs issued by that bank and NJR exposure to the bank resulting from Wholesale Transactions.
|
If the rating of a bank or other financial institution from whom the Debtor has obtained a letter of credit falls below levels specified above, the Debtor shall have thirty (30) calendar days upon written notice to obtain a suitable letter of credit from a replacement bank or other financial institution that meets those standards. Letters of credit and other Credit Support Documents shall be replenished pursuant to the terms and conditions of the letter of credit or other Credit Support Document or agreement.
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(c)
|
Credit Support Annex
. The Collateral Threshold shall be a negotiated amount based on Debtor’s S&P and/or Moody’s rating, or other financial criteria. The Collateral Threshold shall be considered when establishing the total Credit Limit and shall be evaluated in the aggregate with physical transactions.
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Other forms of Security shall be reviewed and considered on a case-by-case basis.
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IV.
|
CALCULATION OF CREDIT LIMIT AND MINIMUM SECURITY AMOUNTS
|
The Credit Limit shall be reasonably related to the level of business NJRES or NJNG anticipates with Debtor. Trading Partners rated BBB- or above by S&P (or the rated equivalent by Moody’s) shall be eligible for the applicable maximum Credit Limit prescribed in Table 2. If applicable payment netting agreements are in place, the Credit Limit shall apply to the “net” exposure of transactions with the Trading Partner to the extent that Trading Partner’s purchases exceed their sales to NJRES or NJNG, as applicable. In no event shall any Credit Limit be approved for any Trading Partner without the approvals required in Section VI. below.
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Table 2
Maximum Credit Limits
|
|
S&P Rating
|
Moody’s Rating
|
Suggested Maximum Credit Limit
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A- and above
|
A3 and above
|
$100 million
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BBB+
|
Baa1
|
$50 million
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BBB
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Baa2
|
$25 million
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BBB-
|
Baa3
|
$10 million
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In cases where the Debtor is a “Division of” another company, and is not a separate incorporated company, that company’s rating or financial statements will be used as the basis for evaluating credit limits for Debtor.
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|
|
V.
|
CREDIT LIMITS FOR COUNTERPARTIES WITH LONG TERM CONTRACTS AND/OR BUSINESS RELATIONSHIPS
|
New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
Long-term contracts are in place with the following Trading Partners, which require the NJR to sell or purchase gas as required for the applicable cogeneration plants covered under each contract.
KIAC Partners
Nissequogue Cogen Partners
Credit Limits for these Trading Partners are set at levels appropriate for the contractually required exposures.
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VI.
|
CREDIT APPROVAL AND DOCUMENTATION/CONTROL PROCEDURES
|
Sr Manager and/or Credit Manager will be responsible for documenting and recommending Credit Limits for Trading Partners and changes to the Credit Limits requested by Trader(s). Before Trading Partners can be extended credit, all contract documents, including Credit Support Documents, or any amendments, if applicable, must be fully executed, or appropriate credit mitigation measures must be undertaken. Credit will be granted using the “Counterparty Change Request Form”.
Credit Limits and any changes thereto will be recommended pursuant to the criteria prescribed by this Policy. Additional information or mitigating factors to the prescribed criteria must be detailed in the recommendation.
The recommended Credit Limits and documentation shall be forwarded to EVP & COO/SVP for approval. If EVP & COO/SVP approves, the request and all supporting documentation shall be forwarded to Treasurer for review and approval. Requests for Credit Limits above $5,000,000 or with mitigating factors if this Policy’s criteria are not fully met, require the additional approval of the SVP & CFO and COO NJNG (if NJNG). Requests for Credit Limits above $15,000,000 require the approval of President and CEO. The aforementioned officers may request additional approval at their discretion.
Approval of Request for Credit
Upon receipt of the signed approval of a Debtor’s request for credit or Credit Limit adjustment, Sr Manager shall so notify Trader(s). The system default Credit Limit is zero. When finally approved, only Treasurer, SVP & CFO or their designee (approved in writing) will enter the limit(s) into the applicable system(s). Appropriate systems security measures will allow only those individuals access to change Credit Limits. If Debtor is an authorized trader on an electronic trading exchange, the appropriate changes will be made by Sr Manager or Credit Manager concurrent with the change in other systems. If a change to an existing Credit Limit is required, Treasurer will make the appropriate change and notify Sr Manager and/or Credit Manager in writing.
The fully completed and signed “Counterparty Change Request Form” form will be forwarded to the Contract Analyst for filing and maintenance. Trader(s) shall not begin trading activities until the Trading Partner’s name has been added to the appropriate credit systems.
Reductions or re-allocations in Credit Limits will be initiated by Sr Manager or Credit Manager via email or other written means to Treasurer and/or his approved designee, who will then enter the change in the appropriate credit systems. Once made, Treasurer and/or their approved designee will notify Sr Manager and Credit Manager via email or other written means.
Denial of Request for Credit
In the event a request for credit by a Trading Partner is denied, Sr Manager shall notify the Trading Partner and Trader(s) of the negative determination and rationale.
See Part 1: Contract Review Procedures for a detailed sequence of document flow and review processes.
New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
NJR shall not extend credit to any Debtor until the Credit Department, EVP & COO/SVP and Treasurer (as applicable) has approved Debtor’s request for credit, except in exceptional circumstances as approved by EVP & COO/SVP and Treasurer or SVP & CFO. Traders may execute a transaction, if a current approved contract exists, without credit support only if the transaction is contingent on credit approval. If the Trading Partner fails to provide credit support within the agreed upon timeframe, the transaction will be voided. Obtaining and maintaining a credit account with NJR and the Credit Limit of such account shall be at the sole reasonable discretion of NJR. The Credit Department shall use the “Counterparty Change Request Form” form attached as Appendix 1 to this Policy to process credit requests by Trading Partners. NJR shall not extend credit until both/either (as applicable) NJNG or NJRES and Debtor have signed the applicable underlying contract.
All credit information received from Debtor or other sources by the Credit Department shall be confidential, except to the extent necessary to respond to an inquiry or order from the New Jersey State Board of Public Utilities or other federal, state or local regulatory or judicial tribunal. All NJR personnel are prohibited from revealing such information to external credit industry personnel without Debtor’s consent, except when the information was previously known or obtained from other sources. NJR, at its sole discretion, may retain external credit industry personnel to assist NJR in its credit determinations.
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IX.
|
PERIODIC CREDIT REVIEWS
|
The Credit Department shall review on-line and other news services on a regular basis to identify potential credit issues with existing counterparties. In addition, the Credit Department should consider Credit Default Swaps, credit service risk metrics or other objective data (if available) when making recommendations about new and on-going credit limits for Trading Partners. In addition, the Credit Department shall conduct credit reviews on a periodic basis but no less frequently than once per quarter. Audited financial statements of private companies or subsidiaries, which do not publish or regularly make available quarterly information, will be reviewed annually. Internal financial statements will be reviewed quarterly if available. Corporate guaranties and other forms of Security will be reviewed quarterly to assess their adequacy with respect to current ratings and exposure.
When the credit information for a Trading Partner is reviewed according to the above schedule, all credit and contract information shall be reconciled to all systems (including electronic trading platforms, internal systems and reports) and hard copy files to ensure accuracy, consistency and completeness.
Reviews may also be performed on a more frequent basis or when a change in the Credit Limit, creditworthiness or payment habits require. Further financial statements shall be requested as necessary in connection with the ongoing review process. Trader(s) and the Credit Department shall advise each other immediately of any concerns regarding Debtor’s creditworthiness even though Debtor’s Net Exposure does not exceed Debtor's Credit Limit. If circumstances warrant, Credit Department may reduce Debtor’s Credit Limit or recommend to Trader(s) in consultation with EVP & COO/SVP or Treasurer that all business with Debtor be curtailed.
Sr Manager shall provide credit reports at each Risk Management Committee meeting for wholesale transactions for both NJNG and NJRES. Trader(s) and EVP & COO/SVP will be provided with credit reports on a daily basis, and credit matters are discussed daily in the morning meeting. Finally, analytic reports will be generated by the Credit Department as needed, to perform reviews listed in Section IX of this Credit
New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
Policy.
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|
XI.
|
PROCEDURES WHEN CREDIT LIMITS ARE EXCEEDED
|
In the event a Trading Partner’s Exposure exceeds its Credit Limit due to changes in market conditions or are caused by term transactions’ increase in exposure from originating expectations, the Credit Department shall review with EVP & COO/SVP, whether further business should be curtailed unless and until such Exposure is reduced, additional Security requested or other action as available under existing contracts.
Security shall be accessed, or margin requested, in accordance with the Credit Support Document or any other applicable agreement, as deemed necessary by the Credit Department and/or EVP & COO/SVP. Upon any required notice to Trading Partner (or five (5) day notice if none is specified), the Credit Department may access the Security posted by Trading Partner upon notification to the Credit Department that Trading Partner has failed to pay NJNG or NJRES when due pursuant to the terms and conditions of the applicable agreement and/or tariff. The Credit Department shall forward any and all necessary paperwork to the Legal Department for review and approval or processing.
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|
XIII.
|
MAINTENANCE OF CREDITWORTHINESS
|
Upon notice of any material reduction in Trading Partner’s or its Credit Support Provider’s credit rating or financial condition, the Credit Department shall promptly adjust the Trading Partner’s or its Credit Support Provider’s status on electronic trading platforms and recommend adjustment of the existing Credit Limit(s) accordingly. In addition, the Credit Department will request from Debtor evidence of an acceptable credit rating or financial condition if necessary. If the Credit Department determines that Trading Partner or Credit Support Provider’s creditworthiness has materially reduced, the Credit Department may request additional Security commensurate with the change in creditworthiness in accordance with the terms and conditions of this Policy or any applicable agreement. If Debtor fails to comply with such request, the Credit Department shall cancel Trading Partner’s Credit Limit and consult with the Legal Department regarding appropriate action
.
Credit determinations for wholesale transactions with NJNG shall be consistent with the terms and conditions of NJNG’s Tariff. In the event of a conflict between the terms and conditions of this Policy and the terms and conditions of NJNG’s Tariff, the NJNG Tariff shall govern.
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|
XV.
|
CONSULTATION WITH LEGAL DEPARTMENT
|
Credit determinations for wholesale transactions shall be consistent with the terms and conditions of all relevant and applicable Credit Support Documents and other agreements. The Legal Department shall review all Credit Support Documents as required in the Contract Review Procedures. In addition, the Credit Department shall consult with the Legal Department as necessary.
The Credit Department shall be responsible for retaining current records of all credit requests and signed
New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
originals of any and all Security and Credit Support Documents. The Credit Department shall maintain such records in accordance with the time periods specified in NJR’s Record Retention procedures and FERC policy.
In the event a debtor is late with a payment, the Settlements area will contact the other party and inquire as to the status of the payment. If there is a discrepancy, dispute or administrative oversight, this is usually resolved and the payment is made within 1-2 business days. Should the Settlements area be unable to resolve the issue, the Trader that was responsible for the transaction and/or Director Energy Trading, Director of Marketing or VP, Energy Trading will become involved. Should they be unable to resolve the issue, EVP & COO/SVP will become involved. Should he be unable to resolve the issue, he will then contact SVP & General Counsel to solicit payment. In the event this is unsuccessful, a collection agency will be asked to pursue payment.
New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
Attachement A
New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
Attachment - B
RMC Guidelines & Procedures
Authorized by:
_______________________
New Jersey Natural Gas Company
Risk Management Committee
Guidelines and Procedures
_______________________
Title
__________Date
SCHEDULE 6.1.24
Permitted Business Opportunities
None.
SCHEDULE 8.2.1
Existing Indebtedness
1
|
|
|
|
1.
|
First Mortgage Bonds (Secured)
2
|
|
|
|
|
|
|
|
|
|
|
|
Series
|
Rate
|
|
Maturity Date
|
|
Principal Amt.
|
|
Series AA
3
|
Var.
|
|
08/01/30
|
|
$25,000
|
|
Series BB
3
|
Var.
|
|
08/01/30
|
|
16,000
|
|
|
Series DD
3
|
Var.
|
|
09/01/27
|
|
13,500
|
|
|
Series EE
3
|
Var.
|
|
01/01/28
|
|
9,545
|
|
|
Series FF
3
|
Var.
|
|
01/01/28
|
|
15,000
|
|
|
Series GG
3
|
Var.
|
|
04/01/33
|
|
18,000
|
|
|
Series HH
3
|
5.00%
|
|
12/01/38
|
|
12,000
|
|
|
Series II
3
|
4.50%
|
|
08/01/23
|
|
10,300
|
|
|
Series JJ
3
|
4.60%
|
|
08/01/24
|
|
10,500
|
|
|
Series KK
3
|
4.90%
|
|
10/01/40
|
|
15,000
|
|
|
Series LL
4
|
5.60%
|
|
05/15/18
|
|
125,000
|
|
|
|
|
|
|
|
|
|
Total First Mortgage Bonds
|
|
|
|
|
$269,845
|
2.
Senior Notes
: As of June 30, 2011, the following Indebtedness of the Borrower was outstanding:
______________________
1
All amounts are as of June 30, 2011 and are in thousands ($000).
2
These bonds are issued pursuant to the Indenture of Mortgage and Deed of Trust dated April 1, 1952, as amended (the “
Indenture
”), of the Borrower to The Bank of New York Mellon Trust Company, N.A., successor in interest to BNY Midwest Trust Company (as successor trustee to Harris Trust and Savings Bank), as trustee.
3
Each of the AA through the KK First Mortgage Bonds were issued in conjunction with the Borrower entering into a related Loan Agreement with the New Jersey Economic Development Authority (the “
Authority
”). The Borrower is obligated under each Loan Agreement to pay amounts sufficient to pay amounts due on certain tax-exempt bonds issued by the Authority under the Loan Agreements (the “
Authority Bonds
”). The Loan Agreements are described below. These Authority Bonds (and the Borrower's obligations under the Loan Agreements) match the respective principal amounts, interest rates and maturity dates of the related AA through KK First Mortgage Bonds. Each of the AA through KK First Mortgage Bonds were issued to serve as security for the repayment of the Authority Bonds under the terms of the related Loan Agreement and the related supplement to the First Mortgage Indenture.
4
The LL First Mortgage Bonds were issued in conjunction with the issuance of the Senior Secured Notes of the Borrower in the aggregate principal amount of $125,000,000 under that certain Note Purchase Agreement dated as of May 15, 2008 (the “
Secured Note Purchase Agreement
”) by and among the Borrower and the purchasers named therein. These Senior Secured Notes bear interest at 5.60%, and have a maturity date of 5/15/18, which match the rate and maturity date of the LL First Mortgage Bonds. The LL First Mortgage Bonds were issued to serve as security for the repayment of the Senior Secured Notes under the terms of the Secured Note Purchase Agreement and the Thirty-Second Supplemental Indenture dated as of May 1, 2008 to the Indenture.
The following Indebtedness under that certain Note Purchase Agreement dated as of March 15, 2004 by and among the Borrower and the purchasers named therein:
Rate
Maturity Date
Principal Amt
.
Unsecured Senior Notes 4.77% 3/15/14 $60,000
3.
Capitalized Lease Obligations
: As of June 30, 2011, the Borrower had outstanding the following obligations under Capital Leases:
Maturity Date
Principal Amt.
Capital Lease Obligations—Building 6/1/21 $23,976
Capital Lease Obligations—Meters Various $36,014
Capital Lease Obligations—Equipment 12/1/13 $589
4.
Loan Agreements
:
a. Loan Agreement dated as of August 1, 1995 by and between the Authority and the Borrower. (Secured by AA and BB Bonds)
b. Loan Agreement dated as of September 1, 1997 by and between the Authority and the Borrower. (Secured by DD Bonds)
c. Loan Agreement dated as of January 1, 1998 by and between the Authority and the Borrower. (Secured by EE and FF Bonds)
d. Loan Agreement dated as of April 1, 1998 by and between the Authority and the Borrower. (Secured by GG Bonds)
e. Loan Agreement dated as of December 1, 2003 by and between the Authority and the Borrower. (Secured by HH Bonds)
f. Loan Agreement dated as of October 1, 2005 by and between the Authority and the Borrower. (Secured by II, JJ and KK Bonds)
EXHIBIT 1.1(A)
FORM OF
ASSIGNMENT AND ASSUMPTION
This Assignment and Assumption Agreement (the "
Assignment and Assumption
") is dated as of the Effective Date set forth below and is entered into by and between [
Insert name of Assignor
] (the "
Assignor
") and [
Insert name of Assignee
] (the "
Assignee
"). Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, the "
Credit Agreement
"), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in
Annex 1
attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.
For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Agent as contemplated below (i) all of the Assignor’s rights and obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and Obligations of the Assignor under the respective facilities identified below (including without limitation any guarantees included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as, the "
Assigned Interest
"). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.
1. Assignor: ______________________________
2. Assignee: ______________________________
[and is an Affiliate of [
identify Lender
5
]
3. Borrower(s): New Jersey Natural Gas Company
__________________
5
Select if applicable.
4. Agent: JPMorgan Chase Bank, N.A., as the administrative agent under the Credit Agreement
5. Credit Agreement: Credit Agreement dated as of August 29, 2011 among New Jersey Natural Gas Company, the Lenders parties thereto and JPMorgan Chase Bank, N.A., as administrative agent for the Lenders
6. Assigned Interest:
|
|
|
|
|
|
|
|
Facility Assigned
6
|
Aggregate Amount of Commitment for all Lenders
*
|
Amount of Commitment Assigned
*
|
Percentage Assigned of Commitment
7
|
|
|
$
|
$
|
%
|
|
|
$
|
$
|
%
|
|
|
$
|
$
|
%
|
7. Trade Date: ______________]
8
Effective Date: _____________ ___, 20___ [TO BE INSERTED BY AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]
9
[SIGNATURE PAGE FOLLOWS]
___________________
6
Fill in the appropriate terminology for the types of facilities under the Credit Agreement that are being assigned under this Assignment (e.g. "Revolving Credit Commitment", etc.)
*
Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.
7
Set forth, to at least 9 decimals, as a percentage of the Commitment of all Lenders thereunder.
8
To be completed if the Assignor and the Assignee intend that the minimum assignment amount is to be determined as of the Trade Date.
9
Assignor shall pay a fee of $3,500 to the Administrative Agent in connection with the Assignment and Assumption.
[SIGNATURE PAGE - ASSIGNMENT AND ASSUMPTION]
The terms set forth in this Assignment and Assumption are hereby agreed to:
ASSIGNOR
[NAME OF ASSIGNOR]
By:
Name:
Title:
ASSIGNEE
[NAME OF ASSIGNEE]
By:
Name:
Title:
Consented to and Accepted:
JPMORGAN CHASE BANK, N.A.
,
as Agent
By_____________________________________
Title:
Consented to:
NEW JERSEY NATURAL GAS COMPANY,
as Borrower
By_____________________________________
Title:
ANNEX 1
STANDARD TERMS AND CONDITIONS
FOR ASSIGNMENT AND ASSUMPTION
1.
Representations and Warranties
.
1.1
Assignor
. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.
1.2.
Assignee
. The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all requirements of an Assignee under the Credit Agreement (subject to receipt of such consents as may be required under the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 8.3 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Agent or any other Lender, and (v) if Assignee is not incorporated under the Laws of the United States of America or a state thereof, attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.
2.
Payments
. From and after the Effective Date, the Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor
for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.
3.
General Provisions
. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New Jersey.
EXHIBIT 1.1(B)
FORM OF
LENDER JOINDER
Reference is made to the Credit Agreement, dated as of August 29, 2011 (as amended, supplemented, restated or modified from time to time, the "Credit Agreement"), by and among New Jersey Natural Gas Company, a New Jersey corporation ("Borrower"), the Lenders now or hereafter party thereto, each syndication agent, each documentation agent and each other titled Lender that may be identified therein, and JPMorgan Chase Bank, N.A., in its capacity as administrative agent for the Lenders (the "Agent").
Agreement
Unless otherwise defined herein, terms defined in the Credit Agreement (defined above) are used herein with the same meanings.
______________________________________________________________ (the "New Lender"), intending to be legally bound hereby, joins and becomes a "Lender" and an "Additional Lender" under the Credit Agreement and each of the other Loan Documents as of this ______ day of ______________, 20____ (the "Effective Date") and, pursuant to Section 11.11(d) of the Credit Agreement, the New Lender hereby agrees as follows:
1. As of the Effective Date and to the extent of the Revolving Credit Commitment
of the New Lender set forth on
Schedule I
hereto: (i) the New Lender hereby agrees that it is and shall be deemed to be, and it hereby assumes the obligations of, a "Lender" and an "Additional Lender" under the Credit Agreement and each of the other Loan Documents; and the New Lender shall be entitled to the benefits, rights, privileges and remedies of a Lender and an Additional Lender under the Credit Agreement and each of the other Loan Documents.
2. The New Lender acknowledges and agrees that the Agent, each other agent under the Credit Agreement and each Lender makes no representation or warranty and assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any of the other Loan Documents or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any of the other Loan Documents or any other instrument or document furnished pursuant thereto or (ii) the financial condition of Borrower or the performance or observance by Borrower of any of its obligations under the Credit Agreement or any of the other Loan Documents or any other instrument or document furnished pursuant thereto.
3. The New Lender (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements (if any) referred to in Sections 8.3.1 and 8.3.2 of the Credit Agreement, and such other documents and information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Lender Joinder and Assumption Agreement; (ii) agrees that it will, independently and without reliance upon the Agent, any other agent or any Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iii) appoints and authorizes the Agent to take such actions on its behalf and to exercise such powers under the Loan Documents as are delegated to the Agent by the terms thereof; (iv) agrees that it will become a party to and be bound by the Credit Agreement on the Effective Date as if it were an original Lender thereunder and will have the rights and obligations of a Lender thereunder and will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender; and (v) specifies as its address for notices the office set forth beneath its name on the signature pages hereof.
4. Following the execution of this Lender Joinder and Assumption Agreement, it will be delivered to the Borrower and the Agent for acceptance and for recording by the Agent.
5. Upon such acceptance and recording, as of the Effective Date, (i) the New Lender shall be a party to the Credit Agreement and, to the extent provided in this Lender Joinder and Assumption Agreement, have the rights and obligations of a Lender thereunder and under the Loan Documents, and (ii) the Revolving Credit Commitment
of the New Lender shall be as set forth in
Schedule I
hereto.
6. Upon such acceptance and recording from and after the Effective Date, the Agent shall make all payments under the Credit Agreement and the Revolving Credit Notes
in respect and to the extent of the interest of the New Lender assumed hereby (including, without limitation, all payments of principal, interest, Facility Fees and other fees, costs and expenses with respect thereto) to the New Lender.
7. To the extent that any Revolving Credit Loans are outstanding as of the Effective Date, the New Lender shall make Revolving Credit Loans to Borrower on the Effective Date (and to the extent that any such Loans are subject to the Euro-Rate Option, only if Borrower shall timely provide a Loan Request after the Effective Date in accordance with Sections 2.4, 4.1 and 4.2 of the Credit Agreement to renew such Loan(s) in accordance with Section 11.11(d) of the Credit Agreement) in an amount such that its share of all Revolving Credit Loans
outstanding (after giving effect to the Revolving Credit Loans
of the New Lender and assuming that no Lender failed to make Revolving Credit Loans) are in the same proportion as the Revolving Credit Commitment
of the New Lender bears to the Revolving Credit Commitments of all the Lenders (after giving effect to the Revolving Credit Commitment
of the New Lender). The Interest Period for each such initial Revolving Credit Loan made by the New Lender shall equal the remaining Interest Period of each respective Revolving Credit Loan
then outstanding (except and to the extent such no such Loan Request as aforesaid has been provided by Borrower with respect to outstanding Loans subject to the Euro-Rate Option).
8. This Lender Joinder and Assumption Agreement shall be governed by and construed in accordance with the laws of the State of New Jersey.
9.
This Lender Joinder and Assumption Agreement may be signed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument; and delivery of executed signature pages hereof by telecopy transmission from one party to another shall constitute effective and binding execution and delivery of this Lender Joinder and Assumption Agreement by such party.
[SIGNATURE PAGES FOLLOW]
[SIGNATURE PAGE - LENDER JOINDER AND ASSUMPTION
AGREEMENT]
IN WITNESS WHEREOF, and intending to be legally bound hereby, the New Lender has duly executed this Lender Joinder and Assumption Agreement and delivered the same to the Agent and the Borrower as of the Effective Date.
NEW LENDER
__________________________________________
By:
Name:
Title:
Notice Address:
Telephone No.:
Telecopier No.:
Email:
Attention:
CONSENTED TO
:
JPMORGAN CHASE BANK, N.A.
, as Agent
By:
Name:
Title:
ACKNOWLEDGMENT AND AGREEMENT OF BORROWER
In consideration of the foregoing Lender Joinder and Assumption Agreement: (A) Borrower hereby agrees to execute and deliver to the New Lender a Revolving Credit Note in respect of the Revolving Credit Commitment
of the New Lender, and (B) Borrower hereby (i) acknowledges and consents to the foregoing Lender Joinder and Assumption Agreement and agrees that the New Lender shall be a Lender and an Additional Lender under the Credit Agreement and the other Loan Documents and shall have the rights, privileges, remedies and obligations of a Lender and an Additional Lender under the Credit Agreement and under the other Loan Documents in respect and to the extent of the Revolving Credit Commitment
of the New Lender set forth on
Schedule I
hereto, which information shall be reflected on an amended and restated Schedule 1.1(B) to the Credit Agreement, and (ii) makes, affirms and ratifies in favor of the New Lender the Credit Agreement and the other Loan Documents.
BORROWER
NEW JERSEY NATURAL GAS COMPANY
By:
(SEAL)
Name:
Title:
SCHEDULE I
TO LENDER JOINDER AND ASSUMPTION AGREEMENT
|
|
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|
Amount of Revolving Credit Commitment of New Lender
|
Amount of Revolving
Credit Loans of New Lender
|
New Lender's Revolving Credit Ratable Share of Revolving Credit Commitments
|
|
$_________
|
$_________
|
__________%
|
EXHIBIT 1.1(R)
FORM OF
REVOLVING CREDIT NOTE
$_____________ Princeton, New Jersey
______________, 2011
FOR VALUE RECEIVED, the undersigned,
NEW JERSEY NATURAL GAS COMPANY
, a New Jersey corporation (herein called the "Borrower"), hereby promises to pay to the order of
___________________________________
(the "Lender"), the lesser of (i) the principal sum of __________________________________ Dollars (U.S. $___________), or (ii) the aggregate unpaid principal balance of all Revolving Credit Loans made by the Lender to the Borrower pursuant to the Credit Agreement, dated as of the date hereof, among the Borrower, the Lenders now or hereafter party thereto and JPMorgan Chase Bank, N.A., as administrative agent (hereinafter referred to in such capacity as the “Agent”) (as amended, restated, modified, or supplemented from time to time, the "Credit Agreement"), payable on such dates as set forth in the Credit Agreement, with the entire outstanding balance due and payable by 10:00 a.m. (Chicago time)
on the Expiration Date, together with interest on the unpaid principal balance hereof from time to time outstanding from the date hereof at the rate or rates per annum specified by the Borrower pursuant to, or as otherwise provided in, the Credit Agreement.
Interest on the unpaid principal balance hereof from time to time outstanding from the date hereof will be payable on the dates and at the times provided for in the Credit Agreement. Upon the occurrence and during the continuation of an Event of Default, the Borrower shall pay interest on the entire principal amount of the then outstanding Revolving Credit Loans evidenced by this Revolving Credit Note and all other obligations due and payable to the Lender pursuant to the Credit Agreement and the other Loan Documents at a rate per annum as set forth in Section 4.3 of the Credit Agreement. Such interest rate will accrue before and after any judgment has been entered.
Subject to the provisions of the Credit Agreement, payments of both principal and interest shall be made without setoff, counterclaim, or other deduction of any nature at the office of the Agent located at JPMorgan Chase Bank, N.A., 10 S Dearborn St., Mail code IL1-0090, Chicago, IL 60603, unless otherwise directed in writing by the holder hereof, in lawful money of the United States of America in immediately available funds.
This Note is one of the Revolving Credit Notes referred to in, and is entitled to the benefits of, the Credit Agreement and other Loan Documents, including the representations, warranties, covenants and conditions contained or granted therein. The Credit Agreement among other things contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayment, in certain circumstances, on account of principal hereof prior to maturity upon the terms and conditions therein specified. The Borrower waives presentment,
demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Credit Agreement.
This Note shall bind the Borrower and its successors and assigns, and the benefits hereof shall inure to the benefit of the Lender and its successors and assigns. All references herein to the "Borrower" and the "Lender" shall be deemed to apply to the Borrower and the Lender, respectively, and their respective successors and assigns as permitted under the Credit Agreement.
This Note and any other documents delivered in connection herewith and the rights and obligations of the parties hereto and thereto shall for all purposes be governed by and construed and enforced in accordance with the internal laws of the State of New Jersey
without giving effect to its conflicts of law principles.
All capitalized terms used herein shall, unless otherwise defined herein, have the same meanings given to such terms in the Credit Agreement.
[SIGNATURE PAGE FOLLOWS]
[SIGNATURE PAGE 1 OF 1 TO REVOLVING CREDIT NOTE]
IN WITNESS WHEREOF, and intending to be legally bound hereby, the undersigned has executed this Note by its duly authorized officer with the intention that it constitute a sealed instrument.
NEW JERSEY NATURAL GAS COMPANY
, a New Jersey corporation
By:
Name:
Title:
(Seal)
EXHIBIT 2.4
FORM OF
LOAN REQUEST
TO:
JPMorgan Chase Bank, N.A., as Agent
10 S Dearborn St.
Mail code IL1-0010
Chicago, IL 60603
Facsimile No.: 888-292-9533
Telephone No.: 312-385-7025
Attention: Joyce King
Email:
joyce.p.king@jpmchase.com
FROM: New Jersey Natural Gas Company (the "Borrower")
|
|
|
|
RE:
|
Credit Agreement (as it may be amended, restated, modified or supplemented, the "Agreement") dated as of August 29, 2011 by and among the Borrower, the Lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent for the Lenders (the "Agent")
|
Capitalized terms not otherwise defined herein shall have the respective meanings ascribed to them by the Agreement.
|
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A.
|
Pursuant to Section 2.4 of the Agreement, the undersigned Borrower irrevocably requests
[check
one line under 1(a) below and fill in blank space next to the line as appropriate]:
|
1(a) _____ A new Revolving Credit Loan
OR
_____ Renewal of the Euro-Rate Option applicable to an outstanding Revolving Credit Loan originally made on ____________, ____
OR
_____ Conversion of the Base Rate Option applicable to an outstanding Revolving Credit Loan originally made on _____________, _____ to a Loan to which the Euro-Rate Option applies,
OR
_____ Conversion of the Euro-Rate Option applicable to an outstanding Revolving Credit Loan originally made on ____________, ____ to a Loan to which the Base Rate Option applies.
SUCH NEW, RENEWED OR CONVERTED LOAN SHALL BEAR INTEREST:
[Check one line under 1(b) below and fill in blank spaces in line next to line]:
1(b)(i) _____ Under the Base Rate Option. Such Loan shall have a Borrowing Date of __________, ___ (which date shall be (i) the proposed Borrowing Date, upon receipt by the Agent by 10:00 a.m. of this Loan Request for making a new Revolving Credit Loan to which the Base Rate Option applies, or (ii) the last day of the preceding Interest Period if a Loan to which the Euro-Rate Option applies is being converted to a Loan to which the Base Rate Option applies).
OR
(ii) _____ Under the Euro-Rate Option. Such Loan shall have a Borrowing Date of _____________ (which date shall be (i) three (3) Business Days after the Business Day of receipt by the Agent by 10:00 a.m. of this Loan Request for making a new Revolving Credit Loan to which the Euro-Rate Option applies, renewing a Loan to which the Euro-Rate Option applies, or converting a Loan to which the Base Rate Option applies to a Loan to which the Euro-Rate Option applies.
2. Such Loan is in the principal amount of U.S. $_____________ or the principal amount to be renewed or converted is U.S. $_____________
[for Revolving Credit Loans under Section 2.4 not to be less than $3,000,000 and in increments of $1,000,000 for each Borrowing Tranche to which the Euro-Rate Option applies and not less than the lesser of $1,000,000 and in integral multiples of $100,000 or the maximum amount available for each Borrowing Tranche to which the Base Rate Option applies
].
3. [Complete blank below if the Borrower is selecting the Euro-Rate Option]: Such Loan shall have an Interest Period of [one, two, three or six] Months. ________________.
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B.
|
As of the date hereof and the date of making of the above-requested Loan (and after giving effect thereto), the Borrower has performed and complied with all covenants and conditions of the Agreement and the other Loan Documents; all of the representations and warranties of the Borrower in the Agreement and in the other Loan Documents are true and correct (except representations and warranties which expressly relate solely to an earlier date or time, which representations and warranties were true and correct on and as of the specific dates or times referred to therein); no Event of Default or Potential Default has occurred and is continuing or shall exist; and the making of such Loan shall not contravene any Law applicable to the Borrower.
|
C. The undersigned hereby irrevocably requests [check one line under paragraph 1 below and fill in blank space next to the line as appropriate]:
1. ______ Funds to be deposited into [TRUSTEE ACCOUNT]
10
account per our current standing instructions. Complete amount of deposit if not full loan advance amount: $ _________.
______ Funds to be wired per the following wire instructions:
$____________________ Amount of Wire Transfer
Bank Name:
ABA:
Account Number:
Account Name:
Reference:
______ Funds to be wired per the attached Funds Flow (multiple wire transfers)
[SIGNATURE PAGE FOLLOWS]
______________
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Company to provide
[SIGNATURE PAGE 1 OF 1 TO LOAN REQUEST]
The undersigned certifies to the Agent as to the accuracy of the foregoing.
NEW JERSEY NATURAL GAS COMPANY
, a New Jersey corporation
Date: ______________, 20__ By:______________________________________(SEAL)
Name:
Title:
EXHIBIT 5.5
FORM OF
COMMITMENT REDUCTION NOTICE
TO: JPMorgan Chase Bank, N.A., Agent
10 S Dearborn St.
Mail code IL1-0010
Chicago, IL 60603
Facsimile No.: 888-292-9533
Telephone No.: 312-385-7025
Attention: Joyce King
Email:
joyce.p.king@jpmchase.com
FROM: New Jersey Natural Gas Company (the "Borrower")
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RE:
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Credit Agreement (as amended, restated, supplemented or modified from time to time, the "Agreement"), dated as of August 29, 2011 by and among the Borrower, the Lenders party thereto and JPMorgan Chase, N.A., as administrative agent for the Lenders (the "Agent")
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Capitalized terms not otherwise defined herein shall have the respective meanings ascribed to them by the Agreement.
Pursuant to Section 5.5 of the Agreement, the Borrower irrevocably gives notice that:
The Revolving Credit Commitments are reduced as of ____________, 20__ (insert date at least five (5) Business Days after the Business Day on which the Agent receives the Commitment Reduction Notice) by $____________ (insert amount equal to but not less than $5,000,000 or an integral multiple thereof). The aggregate amount of Revolving Credit Commitments outstanding after giving effect to the reduction of the Revolving Credit Commitments is $__________. The aggregate outstanding principal amount of all Revolving Facility Usage as of ______________ (insert date of commitment reduction) shall be $__________ (not to exceed the reduced aggregate amount of the Revolving Credit Commitments).
[SIGNATURE PAGE FOLLOWS]
[SIGNATURE PAGE 1 OF 1 TO COMMITMENT REDUCTION NOTICE]
NEW JERSEY NATURAL GAS COMPANY
, a New Jersey corporation
Date:________________ By:
Name:
Title:
EXHIBIT 7.1.3(A)
OPINION OF COUNSEL
Matters to be covered in Opinions of Counsel for
New Jersey Natural Gas Company:
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1.
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Organization and Qualification of Borrower and each Subsidiary of Borrower (Section 6.1.1)
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2.
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Power and Authority (Section 6.1.3)
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3.
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Validity and Binding Effect (Section 6.1.4)
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4.
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No Conflict (Section 6.1.5)
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5.
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Litigation (Section 6.1.6)
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6.
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Consents and Approvals (Section 6.1.12)
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7.
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Investment Companies; Regulated Entities (Section 6.1.18)
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8.
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Such other matters as Agent or the Banks may reasonably request
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EXHIBIT 7.1.3(B)
OPINION OF IN-HOUSE COUNSEL
Matters to be covered in Opinions of In-House Counsel for
New Jersey Natural Gas Company:
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9.
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No Conflict with applicable law (Section 6.1.5)
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10.
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Litigation (Section 6.1.6)
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11.
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Consents and Approvals (Section 6.1.12), all of which are in full force and effect, final and non-appealable and copies attached of each required order authorizing New Jersey Natural Gas to enter the transactions contemplated by the Credit Agreement
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12.
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Investment Companies; Regulated Entities and PUHCA applicability (Section 6.1.18)
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13.
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Banks will not as a result of the transaction or exercising any remedies available under the Loan Documents be regulated as a public utility
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14.
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Such other matters as Agent or the Banks may reasonably request
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EXHIBIT 8.2.5
FORM OF
ACQUISITION COMPLIANCE CERTIFICATE
____________________, 20___
JPMorgan Chase Bank, N.A., as Agent
10 South Dearborn
Chicago, Illinois 60603
and each Lender party to the Credit Agreement (defined below)
Ladies and Gentlemen:
I refer to the Credit Agreement dated as of August 29, 2011 (as amended, supplemented, restated or modified from time to time, the "Credit Agreement") among New Jersey Natural Gas Company (the "Borrower"), the Lenders party thereto and JPMorgan Chase Bank, N.A., in its capacity as administrative agent for the Lenders (the "Agent"). Unless otherwise defined herein, terms defined in the Credit Agreement are used herein with the same meanings. References herein to Sections of the Credit Agreement are qualified, in their entirety, by the applicable provision of the Section of the Credit Agreement so referred to and together with all related provisions and definitions referred to in such Section or incorporated therein.
I, ______________________,
[
Chief Executive Officer/President/Chief Financial Officer
]
of the Borrower, do hereby certify on behalf of the Borrower as of the
[
fiscal quarter/fiscal year ended _________________, 20__
]
as follows:
In connection with Section 8.2.5 of the Credit Agreement and with respect to a proposed Permitted Acquisition by the Borrower (the "Acquiring Company") of __________ [assets/stock] [by purchase/by merger and insert description of the transaction] (the "Acquisition") of ____________________________ [insert name of entity whose assets are/stock is being acquired] (the "Target").
The proposed date of the Acquisition is _________________ (the "Acquisition Date") [at least 5 Business Days after the date of this certificate].
The "Report Date" herein shall be the date of the most recent fiscal quarter ended prior to the proposed Acquisition of the Target.
The total Consideration to be paid including (i) cash paid by the Borrower, directly or indirectly, to the Target, (ii) the Indebtedness, fixed or contingent, incurred or assumed the Borrower, whether in favor of Target or otherwise, (iii) any Guaranty given or incurred by the Borrower in connection with the Acquisition and (iv) any other consideration given or obligation incurred by the Borrower in connection with the Acquisition is $__________.
The Target is engaged in ____________________ [describe business being acquired].
The Borrower is, and after giving effect to the proposed Permitted Acquisition shall be, in compliance with Sections 8.2.12 of the Credit Agreement, as more fully set forth on
Appendix A
attached hereto.
The Borrower, in order to consummate the proposed Permitted Acquisition, has incurred or will incur $__________ of Indebtedness permitted by Section 8.2.1(__).
Immediately prior to and after giving effect to the proposed Acquisition: (i) the representations and warranties of Borrower contained in Section 6 of the Credit Agreement and in the other Loan Documents are true on and correct with the same effect as though such representations and warranties had been made on and as of such date (except representations and warranties which expressly related solely to an earlier date or time), (ii) the Borrower has performed and complied with all covenants and conditions of the Credit Agreement and the other Loan Documents, and (iii) no event has occurred and is continuing which constitutes an Event of Default or Potential Event of Default.
IN WITNESS WHEREOF, the undersigned has executed this Certificate this _____ day of ____________, 20___.
By:
Name:
Title:
[
Chief Executive Officer/President/Chief Financial Officer
]
APPENDIX A
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Credit Agreement
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Consolidated for Borrower and
its Subsidiaries
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Target
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Consolidated
Pro Forma
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(1) Maximum Leverage Ratio (Section 8.2.12). The ratio of (A) Consolidated Total Indebtedness to (B) Consolidated Total Capitalization as of the Report Date is:
which is not more than the maximum permitted ratio of 0.65 to 1.0
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_____ to 1.00
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_____ to 1.00
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_____ to 1.00
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(A) Consolidated Total Indebtedness, as of the Report Date, is computed as follows:
(i) borrowed moneys
(ii) other transactions similar to borrowed money transactions
(iii) note purchase or acceptance credit facilities
(iv) reimbursement obligations (contingent or otherwise)
(v) Hedging Transactions
(vi) Guarantees of Hedging Transactions and of borrowed money transactions
(vii) Hybrid Securities described in clause (i) of the definition of "Hybrid Security" in the Credit Agreement
(viii) mandatory repayment obligations with respect to Hybrid Securities described in clause (ii) of the definition of "Hybrid Security" in the Credit Agreement
(ix) sum of items (i) through (viii) equals Consolidated Total Indebtedness
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$__________
$__________
$__________
$__________
$__________
$__________
$__________
$__________
$__________
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$__________
$__________
$__________
$__________
$__________
$__________
$__________
$__________
$__________
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$__________
$__________
$__________
$__________
$__________
$__________
$__________
$__________
$__________
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Credit Agreement
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Consolidated for Borrower and
its Subsidiaries
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Target
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Consolidated
Pro Forma
11
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(B) Consolidated Total Capitalization, as of the Report Date, is computed as follows:
(i) Consolidated Total Indebtedness (see item (1)(A)(ix) above)
(ii) Common Shareholders' Equity
(iii) Preferred Shareholders' Equity
(iv) sum of items (i) through (iii) equals Consolidated Total Capitalization
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$__________
$__________
$__________
$__________
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$__________
$__________
$__________
$__________
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$__________
$__________
$__________
$__________
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_____________________
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All calculations are on a pro-forma basis, based upon the financial statements of the Borrower as of the Report Date, after giving effect to the proposed Permitted Acquisition (
i.e.
, if a financial covenant is measured for the immediately preceding four fiscal quarters as of the Report Date, the financial results of the Target as well as the Borrower and its Subsidiaries will be included in that four fiscal quarter period calculation;
provided
,
however
, that income earned or expenses incurred by the Target prior to the date of the proposed Permitted Acquisition shall be excluded) and include in such calculations Indebtedness or other liabilities assumed or incurred in connection with such Permitted Acquisition.
EXHIBIT 8.3.3
FORM OF
COMPLIANCE CERTIFICATE
____________________, 20___
JPMorgan Chase Bank, N.A., as Agent
10 South Dearborn
Chicago, Illinois 60603
and each Lender party to the Credit Agreement (defined below)
Ladies and Gentlemen:
I refer to the Credit Agreement dated as of August 29, 2011 (as amended, supplemented, restated or modified from time to time, the "Credit Agreement") among New Jersey Natural Gas Company (the "Borrower"), the Lenders party thereto and JPMorgan Chase Bank, N.A. in its capacity as administrative agent for the Lenders (the "Agent"). Unless otherwise defined herein, terms defined in the Credit Agreement are used herein with the same meanings. References herein to Sections of the Credit Agreement are qualified, in their entirety, by the applicable provision of the Section of the Credit Agreement so referred to and together with all related provisions and definitions referred to in such Section or incorporated therein.
I, ______________________,
[
Chief Executive Officer/President/Chief Financial Officer
]
of the Borrower, do hereby certify on behalf of the Borrower as of the
[
fiscal quarter/fiscal year ended _________________, 20__
]
(the "Report Date"), as follows:
(1) Maximum Leverage Ratio (Section 8.2.12). The ratio of (A) Consolidated Total Indebtedness to (B) Consolidated Total Capitalization of the Borrower and its Subsidiaries is __________ to 1.00 as of the Report Date, which is not more than the maximum permitted ratio of 0.65 to 1.00.
(A) Consolidated Total Indebtedness, as of the Report Date, is computed as follows:
(i) borrowed moneys $________
(ii) other transactions similar to borrowed money transactions $________
(iii) note purchase or acceptance credit facilities $________
(iv) reimbursement obligations (contingent or otherwise) $________
(v) Hedging Transactions $________
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(vi)
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Guarantees of Hedging Transactions and of borrowed money transactions $________
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(vii)
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Hybrid Securities described in clause (i) of the definition of "Hybrid Security" in the Credit Agreement $________
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(viii)
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mandatory repayment obligations with respect to Hybrid Securities described in clause (ii) of the definition of "Hybrid Security" in the Credit Agreement $________
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(ix)
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sum of items (i) through (viii) equals Consolidated Total Indebtedness $________
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(B) Consolidated Total Capitalization, as of the Report Date, is computed as follows:
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(i)
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Consolidated Total Indebtedness (see item (1)(A)(ix) above) $________
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(ii)
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Common Shareholders' Equity $________
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(iii)
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Preferred Shareholders' Equity $________
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(iv)
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sum of items (i) through (iii) equals Consolidated Total Capitalization $________
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(2) Indebtedness issued by the Borrower in accordance with Article Two of the Mortgage Indenture during the fiscal [quarter/year] ended on the Report Date is $____________, as permitted by Section 8.2.1(c) of the Credit Agreement.
(3) Unsecured Indebtedness incurred pursuant to Section 8.2.1(d) of the Credit Agreement is $__________, as permitted by Section 8.2.1(d) of the Credit Agreement..
(4) Secured Indebtedness incurred pursuant to Section 8.2.1(d) and by the definition of Permitted Liens in the Credit Agreement other than clause (m) of the definition of Permitted Liens of the Credit Agreement, as of the Report Date is $_________.
(5) Secured Indebtedness incurred pursuant to Section 8.2.1(d) and by clause (m) of the definition of Permitted Liens of the Credit Agreement and together with such Secured Indebtedness under such provisions to date is $________, which does not exceed the permitted amount pursuant to clause (m) of the definition of Permitted Liens of the Credit Agreement of $25,000,000.
(6) Of the secured Indebtedness described in (4) above, as of the Report Date $_________ is secured by Purchase Money Security Interests.
(7) Of the unsecured and secured Indebtedness described in clauses (3) and (4) above, as of the Report Date $__________ is Acquired Indebtedness.
(8) Indebtedness under Hedging Transactions, as of the Report Date, is $__________.
(9) The Borrower and its Subsidiaries have disposed of $_______ of assets, as permitted by Section 8.2.6(e), which amount does not exceed the permitted amount of $_________ (such permitted amount equal to 5% of consolidated total assets of the Borrower and its Subsidiaries for the applicable fiscal year of the Borrower).
(10) During the fiscal [quarter/year] ended on the Report Date, the Borrower has declared or made dividend payments or other distribution or purchased or redeemed or otherwise acquired shares of stock, warrants, rights or options permitted by Section 8.2.15 as follows: [Insert description of each action undertaken, including the date thereof, the dollar amount thereof and a description of the transaction].
(13) The Borrower and its Subsidiaries have engaged in off-balance sheet transactions that are functionally equivalent to borrowed money, as permitted by Section 8.2.17, with aggregate liabilities, as of the Report Date, of $________.
(14) The representations and warranties of the Borrower contained in Section 6 of the Credit Agreement (other than the representations and warranties of the Loan Parties contained in the first sentence of Section 6.1.6 [Litigation], the last sentence of Section 6.1.8(b) [Financial Statements], and Section 6.1.21 [Environmental Matters]) and in the other Loan Documents are true on and as of the Report Date with the same effect as though such representations and warranties had been made on and as of such date (except representations and warranties which expressly related solely to an earlier date or time) and the Borrower has performed and complied with all covenants and conditions of the Credit Agreement and the other Loan Documents. No event has occurred and is continuing which constitutes an Event of Default or Potential Event of Default.
IN WITNESS WHEREOF, the undersigned has executed this Certificate this _____ day of ____________, 20___.
By:
Name:
Title:
[
Chief Executive Officer/President/Chief Financial Officer
]
