<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K
------------------------
(MARK ONE)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 2-23416
<TABLE>
BOSTON GAS COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<S> <C>
MASSACHUSETTS 04-1103580
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
ONE BEACON STREET
BOSTON, MASSACHUSETTS 02108 (617) 742-8400
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (REGISTRANT'S TELEPHONE NUMBER)
</TABLE>
<TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<CAPTION>
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ------------------------
<S> <C>
None None
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
None
Indicate by Check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this form 10-K or any amendment to this
form 10-K. Yes X No
Indicate the number of shares outstanding of the registrant's class of
common stock as of March 14, 1994.
ALL COMMON STOCK, 514,184 SHARES, ARE HELD BY EASTERN ENTERPRISES.
The registrant meets the conditions set forth in General Instruction
(J)(1)(a) and (b) of Form 10-K and is therefore filing this form with the
reduced disclosure format.
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<PAGE> 2
BOSTON GAS COMPANY
FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 1993
PART I
ITEM 1. BUSINESS.
GENERAL DEVELOPMENT OF BUSINESS
Boston Gas Company (the "Company") is engaged in the transportation,
distribution and sale of natural gas to residential, commercial, and industrial
customers which includes the City of Boston, Massachusetts, and 73 other
Massachusetts communities. The Company has one subsidiary, Massachusetts LNG
Incorporated ("Mass LNG"), which holds a long-term lease on two liquefied
natural gas facilities. The Company has been in business for 171 years and is
the second oldest gas company in the United States. Since 1929, all of the
common stock of the Company has been owned by Eastern Enterprises ("Eastern"),
which is headquartered in Weston, Massachusetts.
GAS SALES
<TABLE>
The following table provides statistical information with respect to the
Company's sales during the three years 1991-1993.
SALES STATISTICS
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1993 1992 1991
---- ---- -----
<S> <C> <C> <C>
Gas sales by classification (millions of cubic feet @
1,000 B.T.U.)
Residential
Heating(A)........................................... 38,126 37,923 32,731
Non-heating.......................................... 3,793 3,906 3,847
Commercial(B)........................................... 26,011 25,796 23,614
Industrial -- firm...................................... 4,955 4,914 4,150
Seasonal firm contracts................................. 10,022 6,379 --
------- ------- -------
Total -- firm...................................... 82,907 78,918 64,342
Interruptible........................................... 8,106 14,456 20,206
Special sales for resale................................ 2,083 4,246 --
------- ------- -------
Total gas sales........................................... 93,096 97,620 84,548
Interruptible transportation............................ 39,304 27,270 31,424
Firm transportation..................................... 12,351 7,369 --
------- ------- -------
Total throughput.......................................... 144,751 132,259 115,972
======= ======= =======
Percent of normal billing degree days..................... 99% 104% 87%
- ---------------
<FN>
(A) The heating classification includes all gas sold to customers having central
or space heating.
(B) The commercial classification includes central-metered apartment houses and
condominiums with five or more units.
</TABLE>
Firm gas sales are made under rate schedules or contracts with customers
who do not contemplate service interruption. Firm sales of natural gas sold for
purposes of space heating are directly related to weather conditions.
Consequently, variations in weather patterns can have a significant impact upon
the Company's revenues and earnings. The Company also provides seasonal firm
sales and transportation services to customers for terms of less than 365 days.
Non-firm sales include interruptible sales made pursuant to contracts with
customers who typically can use oil and gas interchangeably and special sales
for resale to other gas companies for distribution to their
1
<PAGE> 3
customers. Non-firm sales are dependent upon gas supply availability, weather
conditions and the price of gas in relation to the price of alternate fuels. The
price the Company charges is generally tied to the price of the customer's
alternate fuel. Availability of gas supply and price competition from residual
oil are important factors in retaining non-firm sales. Beginning November 1,
1993, gross margins from non-firm sales and transportation services ($8,434,000
in 1993 and $10,248,000 in 1992) are passed back to firm customers through the
cost of gas adjustment clause up to a threshold based upon the prior season's
experience. Non-firm margins realized in excess of the threshold are shared
between shareholders and core customers 25% and 75%, respectively.
One customer accounted for 4.0% of the Company's operating revenues in
1993, 2.3% in 1992 and 3.5% in 1991.
GAS SUPPLY
The Company purchases approximately 70% of its pipeline gas supplies
directly from producers and marketers pursuant to long-term contracts which are
subject to review and approval by the Massachusetts Department of Public
Utilities ("Department"). Seven of the Company's direct purchase agreements have
been approved by the Department including two long-term Canadian agreements.
Five other long-term agreements are pending before the Department, with orders
expected by April, 1994. The Company purchases its remaining pipeline supplies
pursuant to short-term, firm winter service agreements and on a spot basis.
Pipeline supplies are transported on interstate pipeline systems to the
Company's service territory pursuant to transportation agreements approved by
the Federal Energy Regulatory Commission ("FERC"). The Company has also
contracted with pipeline companies and others for the storage of natural gas and
related transportation from underground storage fields located in New York and
Pennsylvania. Supplemental supplies of liquefied natural gas ("LNG") and propane
are purchased and produced from foreign and domestic sources.
All interstate pipelines serving the Company have implemented service
restructuring plans on terms and conditions approved by FERC pursuant to Order
No. 636. Order No. 636, issued April 8, 1992, required interstate pipeline
companies to unbundle existing gas service contracts into separate gas sales,
transportation and storage services. Accordingly, the Company's firm bundled
service with Algonquin Gas Transmission Company ("Algonquin"), a wholly-owned
subsidiary of Algonquin Energy, Inc., a wholly-owned subsidiary of Texas Eastern
Transmission Corporation ("Texas Eastern"), itself a wholly-owned subsidiary of
Panhandle Eastern Corporation, was converted to an annual firm transportation
entitlement of 65,600 MMCF. Similarly, the Company's firm bundled sales service
with Texas Eastern has been converted to an annual firm transportation
entitlement of 100,100 MMCF; and its firm bundled sales service with Tennessee
Gas Pipeline Company, a division of Tenneco, Inc. ("Tennessee"), has been
converted to an annual firm transportation entitlement of 77,800 MMCF. In
addition, as a result of industry restructuring, the Company has firm
entitlements on interstate pipelines upstream of Tennessee, Texas Eastern, and
Algonquin, with direct access to supply areas. Together, these transportation
entitlements are used to transport natural gas purchased by the Company from
producing regions and underground storage facilities to our service territory.
After restructuring, the Company now holds direct entitlements to 16,500 MMCF of
storage capacity with Tennessee, Texas Eastern and others. These new
transportation and storage agreements with Algonquin, Texas Eastern, and
Tennessee have terms generally expiring no earlier than November 1996, April
2012, and April 2000, respectively. The Company is provided rights of first
refusal under Order No. 636 to extend the terms of such service. The Company
considers the service reliability of its natural gas portfolio after industry
restructuring to be comparable to that existing prior to Order No. 636.
In addition to its domestic supply arrangements, the Company has three
contracts for the purchase of Canadian gas supplies. The Company's contract with
Boundary, Inc. provides for the purchase of 3,845 MMCF of gas annually and
expires on January, 2003. The Company also has contracts with Alberta Northeast
Gas, Ltd. ("ANE") to purchase up to 6,242 MMCF of gas annually, and with
Imperial Oil of Canada, Ltd. ("Imperial"), formerly Esso Resources Canada, Ltd.,
for the purchase of 12,775 MMCF of gas annually. These contracts expire on
November, 2003 and April, 2007, respectively. The Company has contracted with
Iroquois Gas Transmission System ("IGTS"), Tennessee and Algonquin to transport
these
2
<PAGE> 4
gas supplies from the Canadian border to delivery points in the Company's
service territory. All necessary Canadian government approvals for the purchase,
import, and transportation of these volumes have been issued.
The Company has contracts, expiring in 1998, with Distrigas of
Massachusetts Corporation ("DOMAC") for the purchase of an annual quantity of up
to 2,000 MMCF of LNG and for 1,000 MMCF of LNG storage capacity and related
vaporization services. The Company also purchases LNG from DOMAC on a spot basis
when prices are competitive with alternative supplies. DOMAC's affiliate,
Distrigas Corporation, imports the LNG from Algeria pursuant to agreements with
Sonatrach, the Algerian National Energy Company, through its wholly-owned
subsidiary Sonatrading Amsterdam B.V. The United States Department of Energy
("DOE") and FERC have granted the necessary approvals for the import, sale and
storage of LNG.
The Company relies on supplemental supplies to meet firm sendout
requirements which are greater than its firm pipeline capacity entitlements. The
number of days that peak sendout can be maintained is limited by the capacity of
the Company's storage facilities for supplemental gas supplies and the rate at
which these supplies can be sent out, and subsequently replenished. Increased
deliveries of pipeline supplies have reduced the Company's dependence on more
costly supplemental supplies. The Company considers its peak day sendout
capability, based on its total supply resources, adequate to meet the
requirements of its customers.
The Company owns or leases facilities which enable it to store the
equivalent of 4,000 MMCF of natural gas in liquid form as LNG and vaporize it
for use during periods of high demand. The inventory for these facilities is
provided by liquefaction of pipeline gas and from LNG purchased. The maximum
storage capacity of these facilities may be limited by various factors,
including maintenance and other operating considerations.
In addition to LNG, the Company has the ability to use propane to meet its
demand requirements during periods of extreme cold weather. Propane can be mixed
with air and introduced, along with natural gas, into the gas distribution
system at a number of propane-air facilities owned by the Company.
<TABLE>
The following table provides statistical information with respect to the
Company's sources of supply during 1991-1993:
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Gas supply (millions of cubic feet @ 1,000 B.T.U.)
Natural gas purchased.......................................... 86,276 94,086 77,283
Propane and manufactured gas................................... 18 50 77
LNG purchased.................................................. 13,375 12,344 11,412
------ ------- ------
Total manufactured and purchased............................ 99,669 106,480 88,772
Deduct:
Net increase in storage gas................................. 4,021 5,195 1,034
Company use, unbilled and other............................. 2,552 3,665 3,190
------ ------- ------
Total gas billed................................................. 93,096 97,620 84,548
====== ======= ======
</TABLE>
REGULATION AND RATES
The Company's operations are subject to Massachusetts statutes applicable
to gas utilities. Rates, the territorial limit of the Company's service area,
issuance of securities, affiliated party transactions, purchase of gas and
pipeline safety regulations are regulated by the Department.
The rates for gas service rendered by the Company are subject to approval
by, and are on file with, the Department. Gas operating revenues are recognized
when billed. No revenue is recorded for the amount of gas distributed to
customers which is unbilled at the end of a period. The Company has a cost of
gas adjustment clause which allows for the adjustment of billing rates for firm
gas sales to recover the cost of gas delivered to firm customers. For financial
reporting purposes, the Company defers the cost of any firm gas that has been
distributed, but is unbilled at the end of a period, to a period in which the
gas is billed to customers.
3
<PAGE> 5
On October 30, 1993, the Department allowed the Company an annual revenue
increase of $37,700,000, effective November 1, 1993, and also approved several
rate design changes that reduce the volatility of the Company's margins
attributable to weather. This was accomplished by increasing customer charges
and moving the recovery of certain local production and storage costs from base
rates to the cost of gas adjustment clause.
Facility expansion is regulated by the Department. Municipal, state and
federal authorities have jurisdiction over the use of public ways, land and
waters for gas mains and other distribution facilities.
LICENSES AND FRANCHISES
The Company and Eastern were granted an intrastate exemption from the
provisions of the Public Utility Holding Company Act of 1935 ("the Act") under
Section 3(a)(1) thereof, pursuant to an order of the Securities and Exchange
Commission (the "SEC") dated February 28, 1955, as amended by orders dated
November 3, 1967 and August 28, 1975. On February 7, 1989, the SEC issued a
proposed rule under the Act which would provide limits for non-utility related
diversification by intrastate public utility holding companies, such as Eastern,
that are exempt under the Act. Since its proposal in 1989, the SEC has taken no
action with respect to this proposed rule. Eastern and the Company cannot
predict whether this proposed rule will be adopted or whether it will affect
their exemption under the Act.
Except as set forth above, there are no patents, trademarks, licenses or
concessions that are important to the business of the Company.
COMPETITION AND MARKETING
The Company competes with fuel oil and electricity and other supplies of
gas for residential, commercial and industrial uses. The Company's marketing
efforts continue to benefit from growing customer awareness of natural gas as a
safe, reliable, economical and environmentally sound fuel. Customer recognition
that the use of gas improves overall air quality, reduces pollutants and
eliminates on-site fuel storage problems has become increasingly significant.
The Company added annual firm sales of approximately 2,443 MMCF in 1993. In
the commercial and industrial markets, where the Company has a 22% market share
in its service territory, a degree of penetration which is approximately half
that of the United States commercial and industrial market share, considerable
growth opportunities exist. In 1993, the Company added new firm annual load of
1,812 MMCF in these markets. Increasing environmental regulation of emissions
should provide additional opportunities in the commercial and industrial
markets. The Company has identified several industrial facilities that must file
compliance plans under these regulations by April 1, 1994.
Approximately 4,391 residential customers converted to gas for central
heating last year. Despite lower oil prices, the Company expects continued
strong activity in the residential conversion market. Approximately 46% of the
Company's existing customers do not use gas for central heating. The Company
plans on targeting this group as well as electrically-heated residential
complexes with special programs to encourage the conversion to natural gas.
FERC Order No. 636 and other regulatory changes have increased the
potential for competition among existing and new suppliers of natural gas in the
Company's service area, particularly in large commercial and industrial markets
(see "Gas Supply"). The Company believes it is well positioned to respond to
such sales competition. The Company received approval from the Department to
file contracts designed to compete with non-captive commercial and industrial
customers with alternative energy options. This provides for an expedited
approval process and enhances the Company's ability to negotiate sales
agreements that reflect competitive market conditions. In June 1992, FERC
granted the Company authority to make sales for resale in interstate commerce
under the terms of a blanket marketing certificate. This additional sales
authority allows the Company to maximize the use of its supply entitlements,
thereby minimizing the cost of gas to firm customers and making its sales rates
more competitive. The Company is also well positioned to provide transportation
service to customers who may engage in direct purchases of natural gas from
other suppliers under firm and interruptible transportation tariffs approved by
the Department. The rate design changes
4
<PAGE> 6
approved by the Department in the October 30, 1993 rate order provide for margin
neutrality regardless of the customer's decision to purchase gas directly from
the Company or purchase third-party gas for transportation on the Company's
distribution system.
The Company continues to pursue market opportunities in natural gas-powered
vehicles. The recent passage of The National Energy Policy Act, as well as the
Clean Air Act Amendments of 1990, both of which mandate the use of alternative
fuel vehicles by the mid-1990's by certain commercial fleets, have enhanced
opportunities in this market. The Company has initiated a number of programs
demonstrating the environmental and operating advantages of natural gas
vehicles. The Company's marketing activities include the installation of two
Company-owned fueling stations, conversion of 92 Company vehicles, and
establishment of pilot programs with a number of large fleet operators to
demonstrate the advantages of choosing natural gas to meet alternative fuel
vehicle requirements.
Other new markets, such as air conditioning, cogeneration and desiccant
dehumidification continue to develop as new technologies emerge.
ENVIRONMENTAL REGULATION
The Company is subject to local, state and federal environmental regulation
of its operations and properties. The Company is working with the Massachusetts
Department of Environmental Protection ("DEP") to determine the environmental
impact, if any, of by-products associated with 13 former manufactured gas plant
("MGP") properties which the Company currently owns and for which the Company
may be potentially responsible. The Company is currently assessing seven of
these properties pursuant to applicable DEP procedures. The Company expects to
spend approximately $1 million in assessing these properties in 1994 and expects
similar expenditures for site assessment for the next several years as other
properties are investigated. Since the DEP has not yet approved a remediation
plan for any Company site, the Company cannot reliably predict the potential
liability associated with final remediation of any of these properties. Company
experience to date indicates that assessment and remediation costs of at least
$18 million could be incurred over the next several years at these thirteen
properties, subject to possible contribution or the assumption of responsibility
by New England Electric System ("NEES") or one of its subsidiaries as discussed
below.
Massachusetts Electric Company, a wholly-owned subsidiary of NEES, has
assumed responsibility for remediating a fourteenth property currently owned by
the Company (part of the site of gas manufacturing operations in Lynn,
Massachusetts) pursuant to the decision of the Court of Appeals for the First
Circuit in The John S. Boyd, Inc., et al. v. Boston Gas Company, et al, Civil
Action No. 89-575-T (May 26, 1993). The First Circuit found that NEES and its
subsidiaries, as the prior owners and operators of the Lynn MGP site, were
responsible for remediating the site and that the Company did not assume any
liability for environmental remediation when it acquired the property from NEES
in 1973. Of the thirteen other sites currently owned by the Company, ten were
acquired from NEES. Given substantial similarities between these acquisitions
and that involved in Boyd, it is not probable that the Company will have any
material exposure for environmental remediation at these ten sites.
There are 23 other former MGP sites within the Company's service territory
which the Company does not currently own. The DEP has not issued a Notice of
Responsibility to the Company for any of these 23 sites. At this time, there is
substantial uncertainty as to whether the Company is responsible for remediating
any of these sites either because the Company never owned the site, the Company
does not have successor liability for contamination of the site by earlier
operators, or site conditions do not require remediation by the Company.
By an order issued on May 25, 1990, the Department approved a settlement
agreement which provides for the recovery through the cost of gas adjustment
clause of all environmental response costs associated with former MGP sites over
separate, seven-year amortization periods without a return on the unamortized
balance. The settlement agreement also provides for no further investigation of
the prudency of any Massachusetts gas utility's past MGP operations.
5
<PAGE> 7
EMPLOYEE RELATIONS
As of December 31, 1993, the Company had 1,720 employees, 71% of whom were
organized in six local unions with which the Company has collective bargaining
agreements. In 1993, after a seventeen-week work stoppage, the Company entered
into a new six-year labor contract with the bargaining units which, among other
things, provides for annual general wage increases of approximately 4%, updates
work rules and changes health care coverage to a managed care program with cost
sharing.
ITEM 2. PROPERTIES.
The Company and Mass LNG own or lease facilities which enable them to
liquefy natural gas in periods of low demand, store the resulting LNG and
vaporize it for use in periods of high demand. The Company owns and operates
such a facility in Dorchester, Massachusetts, and Mass LNG leases and operates
one such facility in Lynn, Massachusetts, and a storage facility in Salem,
Massachusetts. In addition, the Company owns propane-air facilities at several
locations throughout its service territory.
In addition to the properties described above, the Company owns or leases
several small buildings and miscellaneous parcels of land located throughout its
service area which are used for such purposes as storage, subsidiary operations
centers, district business offices and natural gas receiving stations.
The Company's gas distribution system on December 31, 1993 included
approximately 5,700 miles of gas mains, 396,000 services and 519,000 active
customer meters.
The Company's gas mains and services, as well as related equipment, are, in
general not on land owned in fee, being in part, in, under or over public ways,
land or water and, in part, upon or under private ways or other property not
owned by the Company, such occupation of public and private property being, in
general, pursuant to easements, licenses, permits or grants of location. Except
as stated above, the principal items of property of the Company are owned in
fee. A portion of the utility properties and franchises of the Company are
pledged as security for the Company's First Mortgage Bonds.
In 1993, the Company's expenditures on capital expansion and improvement
were $47.1 million. Capital expenditures were principally made for improvements
to the distribution system, for system expansion to meet customer demand and for
productivity enhancement.
ITEM 3. LEGAL PROCEEDINGS.
With the resolution of the John Boyd case discussed in Item 1 above, and
other than normal routine litigation incidental to the Company's business, there
are no material pending legal proceedings involving the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted to a vote of Security Holders in the fourth quarter
of 1993.
6
<PAGE> 8
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Eastern was the holder of record of all of the outstanding common equity
securities of the Company throughout the year ended December 31, 1993. Dividends
on such common equity amounted to $8,998,219 and $7,712,760 for 1993 and 1992,
respectively. At December 31, 1993, under the most restrictive provision
limiting dividend payments in the Company's financing indentures, there were no
restrictions on retained earnings.
ITEM 6. SELECTED FINANCIAL DATA.
Not required.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
1993 COMPARED TO 1992
Earnings available to common shareholders in 1993 of $18.0 million were
$9.3 million lower than the prior year. Earnings in 1992 reflect a one-time
increase of $7.2 million, as a result of a modification to the Company's gas
cost recovery mechanism approved by the Department in May 1992. The modification
shifted the recovery of a portion of pipeline gas costs from the non-heating
season to the heating season to more closely match revenues with costs incurred.
Excluding such modification, earnings year to year decreased $2.1 million. This
decline in earnings was primarily due to the seventeen week labor dispute and
increased depreciation and amortization expense. In addition, weather was 1.3%
warmer than normal and 4.5% warmer than 1992.
Partially offsetting the above was a $5.0 million increase in net earnings
related to the rate increase granted the Company by the Department effective
November 1, 1993. The Department awarded the Company an annual revenue increase
of $37.7 million, or 6.3%. During 1993, the Company added annual firm sales of
approximately 2.4 BCF from the conversion of approximately 4,391 existing
non-heating residences to natural gas and the addition of new customers.
Operating earnings of $49.0 million , excluding the 1992 operating earnings
impact of the change in the gas cost recovery mechanism of $11.6 million, were
$2.4 million lower than 1992. The increase in operating expenses was mainly due
to the work stoppage and its resultant impact on expenditure capitalization.
Depreciation and amortization expense increases in 1993 are principally the
result of continued investments in system replacement and expansion and
productivity programs. Year to year increases in property taxes also contributed
to the decline in operating earnings.
1992 COMPARED TO 1991
Earnings available to common shareholders in 1992 of $27.3 million were 76%
higher than 1991 earnings of $15.5 million primarily due to more seasonable
weather and the modification to the Company's gas cost recovery mechanism
approved by the Department effective May 1, 1992. Since the change took effect
May 1, 1992, the Company recognized a one-time increase in earnings of $7.2
million; however, the modification has no impact on earnings over a 12 month
period. Excluding the modification to the gas cost recovery mechanism, earnings
year to year increased $4.6 million.
More seasonal weather, following unusually warm weather conditions in 1990
and 1991, produced the most favorable impact on 1992 earnings, representing a
$9.1 million increase over 1991 results. 1992, which was 19% colder as compared
to 1991, resulted in an increase in firm gas sales of 7.3 BCF. Growth in the
firm customer base also contributed to the increase in earnings. During 1992,
the Company added annual firm sales of approximately 3.1 BCF from the conversion
of 4,690 existing non-heating residences to natural gas and the additional new
customers.
Operating earnings, excluding the pre-tax impact of the change in the gas
cost recovery mechanism of $11.6 million, were $12.2 million higher than 1991
operating earnings of $39.3 million. Operating expense
7
<PAGE> 9
increases were primarily the result of higher labor and system maintenance
costs. Depreciation and amortization expense increased in 1992 due to continued
investments related primarily to customer growth, system replacement and
productivity improvements. Interest expense increased in 1992 as compared to
1991 due to higher levels of average debt outstanding and reduced capitalized
interest.
LIQUIDITY AND CAPITAL RESOURCES
The Company maintains four committed lines of credit totaling $40.0
million. The Company also maintains various uncommitted lines of credit and
markets its own commercial paper. In addition, the Company may borrow up to
$45.0 million under Eastern's credit facilities.
In accordance with the rate order issued by the Department effective
October 1, 1988, the Company funds all of its gas inventory through external
financing. The costs of such financing are recovered from customers through the
Company's cost of gas adjustment clause. Effective December 31, 1993, the
Company increased its credit capacity for fuel financing through the negotiation
of a credit agreement with a group of banks which provides for borrowing of up
to $90.0 million for the purpose of financing its inventory of gas supplies. The
Company's' capacity under the prior agreement was $60.0 million. (See Note 4 of
the Notes to Consolidated Financial Statements.)
On May 12, 1993, the Company received from its shareholder, Eastern
Enterprises, a $20.0 million equity contribution, which was used to redeem $20.0
million of the Company's outstanding 9% Debentures, due 2001.
On July 13, 1993, the Registrant selected a Final Term which is a Mandatory
Redemption Term with respect to its Variable Term Cumulative Preferred Stock,
Series A. The dividend rate during the Final Term is 6.421% per annum and
dividends are paid quarterly. The Final Term calls for 5% annual sinking fund
payments beginning on September 1, 1999, is non-callable for 10 years, and shall
end on September 1, 2018.
The Company expects capital expenditures for 1994 to be approximately $53.0
million. Capital expenditures will be largely for improvements to the
distribution system, for system expansion to meet customer demand and for
productivity enhancement. The Company also expects to incur assessment and
remediation costs of approximately $1.0 million in 1994 associated with MGP
sites. Such costs are recoverable in rates as discussed more fully in Note 12 of
Notes to Consolidated Financial Statements.
On October 30, 1993, the Department granted the Company an annual revenue
increase of $37.7 million effective November 1, 1993.
In January 1994, the Company issued $36.0 million of Medium-term Notes
Series B, with a weighted average maturity of 24 years and coupon of 6.94%
pursuant to a $50.0 million shelf registration statement dated October 28, 1992
on file with the SEC.
The Company believes that projected cash flow from operations, in
combination with currently available resources, is sufficient to meet 1994
capital expenditures and working capital requirements, normal debt repayments
and dividends to shareholders.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Information with respect to this item appears commencing on Page F-1 of
this Report. Such information is incorporated herein by reference.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
8
<PAGE> 10
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.
Not required.
ITEM 11. EXECUTIVE COMPENSATION.
Not required.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Not required.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Not required.
9
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES.
Information with respect to these items appears on Page F-1 of this Report.
Such information is incorporated herein by reference.
<TABLE>
(3) LIST OF EXHIBITS.
<S> <C>
3.1 -- Restated Articles of Organization, as amended (Filed as Exhibit 3.1 to the
registration statement of the Company on Form S-3 (File No. 33-48525)).*
3.2 -- By-Laws of the Company as amended (Filed as Exhibit 1 to the Annual Report of
the Company on Form 10-K for the year ended December 31, 1976 (File No.
2-23416)).*
4.1. -- Indenture dated as of September 1, 1972 between the Company and State Street
Bank and Trust Company, Trustee, including form of Debenture on pages 1-7 thereof
(Filed as Exhibit 4.6 to the registration statement of the Company on Form S-1
(File No. 2-45350)).*
4.1.1 -- First Supplemental Indenture to Exhibit 4.1 dated as of April 1, 1974 between
the Company and State Street Bank and Trust Company, Trustee (Filed as Exhibit
2.3.2 to the registration statement of the Company on Form S-7 (File No.
2-52522)).*
4.1.2 -- Third Supplemental Indenture to Exhibit 4.1 dated as of May 29, 1981 between
the Company and State Street Bank and Trust Company, Trustee (Filed as Exhibit
4.1 to the Quarterly Report of the Company on Form 10-Q for the quarter ended
June 30, 1981).*
4.1.3 -- Fifth Supplemental Indenture to Exhibit 4.1 dated as of May 1, 1986 between
the Company and State Street Bank and Trust Company, Trustee (Filed as Exhibit
4.1 to the Quarterly Report of the Company on Form 10-Q for the quarter ended
June 30, 1986).*
4.1.4 -- Sixth Supplemental Indenture to Exhibit 4.1 dated as of December 15, 1986
between the Company and State Street Bank and Trust Company, Trustee (Filed as
Exhibit 4.1.4 to the Annual Report of the Company on Form 10-K for the year
ended December 31,1986).*
4.2 -- Indenture of First Mortgage dated as of May 1, 1965 from the Company to The
National Shawmut Bank of Boston, Trustee (Filed as Exhibit 4.1 to the
registration statement of the Company on Form S-1 (File No. 2-36752)).*
4.2.1 -- First Supplemental Indenture to Exhibit 4.2 dated as of May 1, 1969 (Filed as
Exhibit 4.2 to the registration statement of the Company on Form S-1 (File No.
2-36752)).*
4.2.2 -- Second Supplemental Indenture to Exhibit 4.2 dated as of April 1, 1970 (Filed
as an exhibit to the current report of the Company on Form 8-K for the month of
April 1970 (File No.
2-23416)).*
4.2.3 -- Third Supplemental Indenture to Exhibit 4.2 dated as of September 1, 1971
(Filed as an exhibit to the current report of the Company on Form 8-K for the
month of September 1971 (File No. 2-23416)).*
4.2.4 -- Fourth Supplemental Indenture to Exhibit 4.2 dated as of April 1, 1972 (Filed
as an exhibit to the current report of the Company on Form 8-K for the month of
April 1972 (File No.
2-23416)).*
4.2.5 -- Fifth Supplemental Indenture to Exhibit 4.2 dated as of April 1, 1973 (Filed
as an exhibit to the current report of the Company on Form 8-K for the month of
April 1973 (File No.
2-23416)).*
4.2.6 -- Sixth Supplemental Indenture to Exhibit 4.2 dated as of March 1, 1974 (Filed
as an exhibit to the current report of the Company on Form 8-K for the month of
March 1974 (File No.
2-23416)).*
4.3 -- Indenture dated as of December 1, 1989 between the Company and The Bank of New
York, Trustee (Filed as Exhibit 4.2 to the registration statement of the Company
on Form S-3 (File No. 33-31869)).*
</TABLE>
10
<PAGE> 12
<TABLE>
<S> <C>
4.3.1 -- Agreement of Registration, Appointment and Acceptance by and among the
Company, The Bank of New York as Resigning Trustee, and The First National Bank
of Boston as Successor Trustee under Indenture dated as of November 2, 1992
(Filed as an exhibit to registration statement of the Company on Form S-3
(File No. 33-53858)).*
10.1 -- Gas Transportation Contract between Boston Gas Company and Tennessee Gas
Pipeline Company dated as of September 1, 1993 providing for transportation of
approximately 94,000 dekatherms of natural gas per day (Filed herewith).
10.2 -- Gas Transportation Contract between Boston Gas Company and Texas Eastern
Transmission Corporation dated December 30, 1993 providing for transportation of
approximately 83,000 dekatherms of natural gas per day (Filed herewith).
10.3 -- Gas Transportation Contract between Boston Gas Company and Texas Eastern
Transmission Corporation dated December 30, 1993 providing for transportation of
approximately 30,000 dekatherms of natural gas per day (Filed herewith).
10.4 -- Gas Transportation Contract between Boston Gas Company and Algonquin Gas
Transmission Company dated December 30, 1993 providing for transportation of
approximately 48,000 dekatherms of natural gas per day (Filed herewith).
10.5 -- Gas Transportation Contract between Boston Gas Company and Algonquin Gas
Transmission Company dated December 30, 1993 providing for transportation of
approximately 97,000 dekatherms of natural gas per day (Filed herewith).
10.6 -- Gas Storage Agreement between the Company and Consolidated Gas Supply
Corporation dated February 18, 1980 (Filed as Exhibit 20.3 to the Quarterly
Report of the Company on Form 10-Q for the quarter ended March 31, 1982).*
10.7 -- Gas Storage Agreement between the Company and Honeoye Storage Corporation
dated October 11, 1985 (Filed as Exhibit 10.17 to the Annual Report of the
Company on Form
10-K for the year ended December 31, 1985).*
10.8 -- Gas Storage Agreement between the Company and PennYork Energy Corporation
dated as of December 21, 1984 (Filed as Exhibit 10.18 to the Annual Report of the
Company on Form
10-K for the year ended December 31, 1985).*
10.9 -- Gas Sales Contract between the Company and Esso Resources Canada, Limited,
(now Imperial Oil of Canada, Ltd.) dated as of May 1, 1989 (Filed as Exhibit
10.12 to the Annual Report of the Company on Form 10-K for the year ended
December 31, 1989).*
10.9.1 -- Amendment to Exhibit 10.12 dated as of September 28, 1989 (Filed as Exhibit
10.12.1 to the Annual Report of the Company on Form 10-K for the year ended
December 31, 1989).*
10.10 -- Storage Service Agreement between the Company and Distrigas of Massachusetts
Corporation dated as of December 17, 1988 (Filed as Exhibit 10.13 to the Annual
Report of the Company on Form 10-K for the year ended December 31, 1989).*
10.11 -- Liquid Purchase Agreement between the Company and Distrigas of Massachusetts
Corporation dated as of April 14, 1989 (Filed as Exhibit 10.14 to the Annual
Report of the Company on Form 10-K for the year ended December 31, 1989).*
10.12 -- Gas Sales Agreement between the Company and Alberta Northeast Gas, Ltd. dated
as of February 7, 1991 (Filed as Exhibit 10.16 to the Annual Report of the
Company on Form
10-K for the year ended December 31, 1990).*
10.13 -- Firm Gas Transportation Agreement between the Company and Iroquois Gas
Transmission System, L.P. dated as of February 7, 1991 (Filed as Exhibit 10.17 to
the Annual Report of the Company on Form 10-K for the year ended December 31,
1990).*
10.14 -- Firm Gas Transportation Agreement between the Company and Tennessee Gas
Pipeline Company dated as of February 7, 1991 (Filed as Exhibit 10.18 to the
Annual Report of the Company on Form 10-K for the year ended December 31,
1990).*
10.15 -- Lease Agreement between Industrial National Leasing Corporation, Lessor, and
Massachusetts LNG Incorporated, Lessee, dated as of June 1, 1972 (Filed as an
exhibit to Certificate of Notification by Massachusetts LNG Incorporated (and
others) dated June 9, 1972 (File No. 70-5170)).*
</TABLE>
11
<PAGE> 13
<TABLE>
<S> <C>
10.16 -- Lease Supplement to Exhibit 10.12 between National Leasing Corporation and
Massachusetts LNG Incorporated dated October 19, 1972 (Filed as Exhibit 5.23.1 to
the registration statement of the Company on Form S-7 (File No. 2-52522)).*
10.17 -- Credit Agreement dated as of December 22, 1993 by and among the Company,
Morgan Guaranty Trust Company of New York, National Westminster Bank PLC, Shawmut
Bank, N.A. and The First National Bank of Boston (Filed herewith).
10.18 -- Sublease between the Company and Eastern Enterprises dated November 5, 1987
(Filed as Exhibit 10.20 to the Annual Report of the Company on Form 10-K for the
year ended December 31, 1987).*
22 -- Subsidiaries of the Company (Filed as Exhibit 22 to the Annual Report of the
Company on Form 10-K for the year ended December 31, 1985).*
24 -- Consent of Independent Public Accountants.
There were no reports on Form 8-K filed in the Fourth Quarter of 1993.
- ---------------
<FN>
* Not filed herewith. In accordance with Rule 12(b)(32) of the General Rules and
Regulations under the Securities Exchange Act of 1934, reference is made to
the document previously filed with the Commission.
</TABLE>
12
<PAGE> 14
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES AND
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
BOSTON GAS COMPANY
Registrant
By: J. F. BODANZA
_________________________________
J. F.BODANZA
SENIOR VICE PRESIDENT AND TREASURER
(PRINCIPAL FINANCIAL AND ACCOUNTING
OFFICER)
Dated:
<TABLE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES INDICATED ON THE 16TH DAY OF MARCH 1994.
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
C. R. MESSER Director and President
- --------------------------------------------
C. R. Messer
A. J. DIGIOVANNI Director and Senior Vice President
- --------------------------------------------
A. J. DiGiovanni
J. F. BODANZA Director and Senior Vice President
- -------------------------------------------- and Treasurer (Principal Financial
J. F. Bodanza and Accounting Officer)
J. A. IVES Director
- --------------------------------------------
J. A. Ives
R. R. CLAYTON Director
- --------------------------------------------
R. R. Clayton
W. J. FLAHERTY Director
- --------------------------------------------
W. J. Flaherty
</TABLE>
13
<PAGE> 15
<TABLE>
BOSTON GAS COMPANY AND SUBSIDIARY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
(INFORMATION REQUIRED BY ITEMS 8 AND 14 (A) OF FORM 10-K)
<CAPTION>
PAGE
---------------
<S> <C>
Report of Independent Public Accountants.................................... F-17
Consolidated Balance Sheets as of December 31, 1993 and 1992.............. F-2 and F-3
Consolidated Statements of Earnings for the Three Years Ended December 31,
1993................................................................... F-4
Consolidated Statements of Retained Earnings for the Three Years Ended
December 31, 1993...................................................... F-5
Consolidated Statements of Cash Flows for the Three Years Ended December
31, 1993............................................................... F-6
Notes to Consolidated Financial Statements................................ F-7 to F-16
Interim Financial Information for the Two Years Ended December 31, 1993
(Unaudited)............................................................ F-18
Schedules for the Three Years Ended December 31, 1993:
V-- Property, Plant and Equipment.................................. F-19 to F-21
VI-- Accumulated Depreciation and Amortization of Property, Plant
and Equipment.................................................. F-19 to F-21
VIII-- Valuation and Qualifying Accounts.............................. F-22 to F-24
IX-- Short-term Borrowings.......................................... F-25
X-- Supplementary Earnings Statement Information................... F-26
</TABLE>
Schedules other than those listed above have been omitted as the
information has been included in the consolidated financial statements and
related notes or is not applicable nor required.
Separate financial statements of the Company are omitted because the
Company is primarily an operating company and its subsidiary is wholly-owned and
is not indebted to any person in an amount that is in excess of 5% of total
consolidated assets.
F-1
<PAGE> 16
<TABLE>
BOSTON GAS COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
ASSETS
<CAPTION>
DECEMBER 31,
------------------
1993 1992
---- ----
(IN THOUSANDS)
<S> <C> <C>
Gas Plant, at cost................................................ $649,580 $623,725
Construction work-in-progress..................................... 8,131 186
Less-Accumulated depreciation................................... 195,284 182,550
-------- --------
Net Plant....................................................... 462,427 441,361
Current Assets:
Cash and cash equivalents....................................... 1,160 5,300
Accounts receivable, less reserves of $13,518 at December 31,
1993 and $11,408 at December 31, 1992........................ 89,096 73,256
Deferred gas costs.............................................. 65,802 40,868
Natural gas and other inventories, at average cost.............. 53,152 42,140
Materials and supplies, at average cost......................... 5,019 5,650
Prepaid expenses................................................ 3,708 2,035
Income taxes.................................................... 6,046 5,047
-------- --------
Total Current Assets......................................... 223,983 174,296
Other Assets:
Deferred post-retirement benefits cost.......................... 101,182 99,126
Deferred charges and other assets............................... 46,848 23,872
-------- --------
Total Other Assets........................................... 148,030 122,998
-------- --------
Total Assets................................................. $834,440 $738,655
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-2
<PAGE> 17
<TABLE>
BOSTON GAS COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDER'S INVESTMENT
<CAPTION>
DECEMBER 31,
------------------
1993 1992
---- ----
(IN THOUSANDS)
<S> <C> <C>
Capitalization:
Stockholder's investment --
Common stock, $100 par value --
Authorized and outstanding -- 514,184 shares at December
31, 1993 and 1992......................................... $ 51,418 $ 51,418
Amounts in excess of par value............................. 43,233 23,233
Retained earnings.......................................... 95,680 86,653
-------- --------
Total Common Stockholder's Investment................... 190,331 161,304
Variable term cumulative preferred stock, $1 par value,
(liquidation preference, $25 per share) 1,200,000 shares
authorized and
outstanding................................................ 29,197 29,436
Long-term obligations, less current portion..................... 171,345 193,510
-------- --------
Total Capitalization.................................... 390,873 384,250
Gas inventory financing......................................... 59,297 48,631
-------- --------
Total Capitalization and Gas Inventory Financing........ 450,170 432,881
Current Liabilities:
Current portion of long-term obligations..................... 2,165 1,712
Notes payable................................................ 106,300 53,332
Accounts payable............................................. 52,773 52,971
Accrued taxes................................................ 161 297
Accrued interest............................................. 3,004 3,321
Customer deposits............................................ 2,597 2,959
Refunds due customers........................................ 8,029 13,061
Pipeline transition costs.................................... 24,174 --
-------- --------
Total Current Liabilities............................... 199,203 127,653
Commitments and Contingencies:
Reserves and Deferred Credits:
Deferred income taxes........................................ 61,561 52,724
Unamortized investment tax credits........................... 9,427 10,116
Post-retirement benefits obligation.......................... 91,955 89,587
Other........................................................ 22,124 25,694
-------- --------
Total Reserves and Deferred Credits..................... 185,067 178,121
-------- --------
Total Liabilities and Stockholder's Investment.......... $834,440 $738,655
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE> 18
<TABLE>
BOSTON GAS COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1993 1992 1991
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Operating Revenues................................... $614,294 $594,330 $527,928
Cost of Gas Sold................................ 375,103 357,697 326,352
-------- -------- --------
Operating Margin................................ 239,191 236,633 201,576
Operating Expenses:
Other operating expenses........................ 133,187 129,795 124,557
Maintenance..................................... 29,376 21,225 19,044
Depreciation and amortization................... 27,566 22,493 18,685
Income taxes.................................... 12,105 17,995 8,770
-------- -------- --------
202,234 191,508 171,056
-------- -------- --------
Operating Earnings................................... 36,957 45,125 30,520
Other Earnings, Net.................................. 278 47 18
-------- -------- --------
Earnings before Interest Expense..................... 37,235 45,172 30,538
Interest Expense:
Long-term debt.................................. 15,447 15,710 14,228
Other, including amortization of debt expense... 2,957 2,577 3,360
Less-Interest during construction............... (583) (823) (2,537)
-------- -------- --------
17,821 17,464 15,051
-------- -------- --------
Net Earnings......................................... 19,414 27,708 15,487
Preferred Stock Dividends............................ 1,389 405 --
-------- -------- --------
Earnings Applicable to Common Stock.................. $ 18,025 $ 27,303 $ 15,487
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE> 19
<TABLE>
BOSTON GAS COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1993 1992 1991
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Balance at Beginning of Year......................... $ 86,653 $ 67,063 $ 59,726
Net earnings.................................... 19,414 27,708 15,487
Preferred stock dividends ($1.16 per share in
1993 and $.34 per share in 1992............... (1,389) (405) --
Cash dividends on common stock ($17.50 per share
in 1993, $15.00 per share in 1992 and $15.85
per share in 1991)............................ (8,998) (7,713) (8,150)
-------- -------- --------
Balance at End of Year............................... $ 95,680 $ 86,653 $ 67,063
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE> 20
<TABLE>
BOSTON GAS COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1993 1992 1991
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings.................................... $ 19,414 $ 27,708 $ 15,487
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization.............. 27,566 22,493 18,685
Deferred taxes............................. 8,837 (2,997) 4,104
Other changes in assets and liabilities:
Accounts receivable................... (15,840) (11,962) 2,135
Inventory............................. (10,381) (15,430) 1,127
Deferred gas costs.................... (24,933) (26,994) 2,792
Deferred post-retirement benefits..... 312 (5,000) (5,400)
Accounts payable...................... (198) 4,334 2,105
Accrued interest...................... (317) 271 615
Federal and state income taxes........ (998) 9,083 234
Refunds due customers................. (5,032) 1,263 (2,107)
Other................................. (3,844) 3,867 (2,095)
-------- -------- --------
Cash (used for) provided by operating activities..... (5,414) 6,636 37,682
-------- -------- --------
Cash flows used for investing activities:
Capital expenditures.................. (47,057) (51,136) (57,400)
Net cost of removal................... (4,328) (8,096) (3,530)
-------- -------- --------
Cash used for investing activities................... (51,385) (59,232) (60,930)
-------- -------- --------
Cash flows from financing activities:
Capital contribution from parent...... 20,000 -- --
Changes in notes payable, net......... 52,968 (307) 13,104
Changes in inventory financing........ 10,666 17,461 (4,021)
Proceeds from issuance of long-term
debt................................ -- 28,000 25,000
Repayment of long-term debt........... (20,480) (10,030) (1,466)
Proceeds from issuance of preferred
stock............................... (240) 29,436 --
Cash dividends paid on common and
preferred stock..................... (10,255) (8,089) (8,150)
-------- -------- --------
Cash provided by financing activities................ 52,659 56,471 24,467
-------- -------- --------
Increase (decrease) in cash and cash
equivalents(1)..................................... (4,140) 3,875 1,219
Cash and cash equivalents at beginning of year....... 5,300 1,425 206
-------- -------- --------
Cash and cash equivalents at end of year............. $ 1,160 $ 5,300 $ 1,425
======== ======== ========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest, net of amounts
capitalized......................... $ 18,559 $ 17,461 $ 14,661
Income taxes.......................... $ 7,813 $ 6,372 $ 4,246
- ---------------
<FN>
(1) For the purposes of this statement of cash flows, the Company considers
highly liquid investment instruments purchased with a maturity of three
months or less to be cash equivalents.
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE> 21
BOSTON GAS COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) ACCOUNTING POLICIES
The significant accounting policies followed by the Company and its
subsidiary are described below and in the following footnotes:
Note 2--Cost of Gas Adjustment Clause and Deferred Gas Costs
Note 3--Income Taxes
Note 6--Pension Benefits
Note 7--Post-Retirement Benefits Other Than Pensions
Note 8--Leases
Principles of Consolidation
The Company is a wholly-owned subsidiary of Eastern Enterprises
("Eastern"). The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiary, Massachusetts LNG Incorporated ("Mass
LNG"). All material intercompany balances and transactions between the Company
and its subsidiary have been eliminated in consolidation.
Depreciation
Depreciation is provided at rates designed to amortize the cost of
depreciable property, plant and equipment over their estimated remaining useful
lives. The composite depreciation rate, expressed as a percentage of the average
depreciable property in service, was 3.98% in 1993, 3.80% in 1992 and 3.79% in
1991.
Accumulated depreciation is charged with the original cost and cost of
removal, less salvage value, of units retired. Expenditures for repairs, upkeep
of units of property and renewal of minor items of property replaced
independently of the unit of which they are a part are charged to maintenance
expense as incurred.
Gas Operating Revenues
Gas operating revenues are recorded when billed. Revenue is not recorded
for the amount of gas distributed to customers which is unbilled at the end of
the period; however, the cost of this gas is deferred as discussed in Note 2.
(2) COST OF GAS ADJUSTMENT CLAUSE AND DEFERRED GAS COSTS
The cost of gas adjustment clause requires the Company to adjust its rates
semiannually for firm gas sales in order to track changes in the cost of gas
distributed with an annual adjustment of subsequent rates for any collection
over or under actual costs incurred. As a result, the Company defers the cost of
any firm gas that has been distributed, but is unbilled at the end of a period,
to a period in which the gas is billed to customers. The cost of gas adjustment
clause also recovers the amortization of all environmental response costs
associated with former manufactured gas plant ("MGP") sites and costs related to
the Company's various conservation and load management programs.
In May of 1992, the Company modified the cost of gas adjustment clause
shifting a portion of pipeline gas costs from the non-heating to the heating
season in order to more closely match revenues with the related costs.
(3) INCOME TAXES
The Company is a member of an affiliated group of companies which files a
consolidated federal income tax return. The Company follows the policy,
established for the group, of providing for income taxes which would be payable
on a separate company basis. The Company's effective income tax rate was 38.4%
in 1993,
F-7
<PAGE> 22
BOSTON GAS COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(3) INCOME TAXES (CONTINUED)
39.4% in 1992 and 36.2% in 1991. State taxes represent the majority, or 4.3%,
4.6% and 4.8% of the difference between the effective rate and the Federal
income tax rate for 1993, 1992 and 1991, respectively.
<TABLE>
A summary of the provision for income taxes for the three years ended
December 31 is as follows:
<CAPTION>
1993 1992 1991
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Current--
Federal..................... $ 4,063 $ 12,128 $4,471
State....................... 771 2,410 1,127
4,834 14,538 5,598
-------- -------- ------
Deferred--
Federal..................... 5,951 2,711 2,526
State....................... 1,320 746 646
-------- -------- ------
7,271 3,457 3,172
-------- -------- ------
$ 12,105 $ 17,995 $8,770
======== ======== ======
</TABLE>
Effective January 1, 1992, the Company adopted Statement of Financial
Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes." SFAS
109 requires adjustment of deferred tax assets and liabilities to reflect the
future tax consequences, at currently enacted rates, of items already reflected
in the financial statements. A regulatory asset of $1,880,000 was established
for the recovery of prepaid taxes established at the higher federal tax rates in
effect prior to 1988. In its most recent rate request proceeding, the Company
received permission to recover this amount over three years. A regulatory
liability of $6,144,000 was established for the tax benefit of unamortized
investment tax credits, which SFAS 109 requires to be treated as a temporary
difference. This benefit will be passed on to customers over the lives of
property giving rise to the investment credits, consistent with the 1986 Tax
Reform Act. About 38% of each of these items reflect a "gross-up" for taxes as
SFAS 109 eliminated net-of tax accounting for regulatory assets and liabilities.
The regulatory liability for excess deferred taxes being returned to customers
over a 30 year period pursuant to a 1988 rate order was similarly increased by
$4,445,000 upon the adoption of SFAS 109.
The Revenue Reconciliation Act of 1993, enacted on August 10, 1993,
increased the statutory Federal income tax rate from 34% to 35%, retroactive to
January 1, 1993. The provision for income taxes in 1993 includes approximately
$300,000 for the impact of the rate change on current earnings. The effect of
the rate change on deferred tax requirements at January 1, 1993 is reflected in
the regulatory asset and liability established at the adoption of SFAS 109.
<TABLE>
For income tax purposes, the Company uses accelerated depreciation and
shorter depreciation lives permitted by the Internal Revenue Service. Deferred
federal and state taxes are provided for the tax effects of all temporary
differences between financial reporting and taxable income. Significant items
making up deferred tax liabilities and deferred tax assets at December 31, 1993
and 1992, are as follows:
<CAPTION>
1993 1992
---- ----
(IN THOUSANDS)
<S> <C> <C>
ASSETS:
Unbilled revenues........................... $ 30,924 $ 21,878
Regulatory liabilities...................... 5,494 6,797
Reserve for uncollectible receivables....... 5,302 4,368
Other....................................... 6,765 6,697
-------- --------
Total deferred tax assets................... $ 48,485 $ 39,740
-------- --------
</TABLE>
F-8
<PAGE> 23
<TABLE>
BOSTON GAS COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<CAPTION>
1993 1992
---- ----
(IN THOUSANDS)
(3) INCOME TAXES (CONTINUED)
LIABILITIES:
<S> <C> <C>
Accelerated depreciation.................... $ 69,558 $ 61,546
Deferred gas costs.......................... 23,861 15,526
Other....................................... 13,967 11,059
--------- ---------
Total deferred tax liabilities.............. $ 107,386 $ 88,131
--------- ---------
Total net deferred taxes.................... $ 58,901 $ 48,391
========= =========
</TABLE>
During 1991, deferred income taxes were provided for significant timing
differences in the recognition of revenue and expenses for tax and financial
statement purposes. The principal component of the 1991 deferred provision was
$2,308,000 for accelerated depreciation, partially offset by a credit of
$1,021,000 for deferred gas costs.
Investment tax credits are deferred and credited to income over the lives
of the property giving rise to such credits. The credit to income was
approximately $689,000 in 1993, $673,000 in 1992 and $692,000 in 1991.
(4) COMMITMENTS
Long-term Obligations
<TABLE>
The following table provides information on long-term obligations, less the
current portion, as of December 31, 1993 and 1992, respectively.
<CAPTION>
DECEMBER 31,
-----------------
1993 1992
---- ----
(IN THOUSANDS)
<S> <C> <C>
First Mortgage Bonds--
8.375% Series, due 1996.......................... $ 2,880 $ 3,360
Debentures--
7.95% Series, due 1997........................... 2,775 3,142
8.75% Series, due 2001........................... 30,000 30,000
9.00% Series, due 2001........................... 30,000 50,000
Medium-Term Notes--
8.87% Series due 2005............................ 15,000 15,000
9.68% Series due 2010............................ 10,000 10,000
8.95% Series due 2011............................ 10,000 10,000
8.97% Series due 2019............................ 7,000 7,000
9.75% Series due 2020............................ 5,000 5,000
9.00% Series due 2011............................ 10,000 10,000
9.05% Series due 2021............................ 15,000 15,000
8.33% Series due 2017............................ 8,000 8,000
8.33% Series due 2018............................ 10,000 10,000
8.33% Series due 2022............................ 10,000 10,000
Capital Lease Obligations (Note 8)................. 5,690 7,008
-------- --------
$171,345 $193,510
======== ========
</TABLE>
The First Mortgage Bonds are secured by a first mortgage lien on a portion
of the Company's utility properties and franchises. The annual sinking fund
requirement for the 8.375% First Mortgage Bonds is $480,000.
F-9
<PAGE> 24
BOSTON GAS COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(4) COMMITMENTS (CONTINUED)
The 7.95% Sinking Fund Debentures have an annual sinking fund requirement
of $425,000. The 9.0% and 8.75% Sinking Fund Debentures require annual sinking
fund payments of $5,000,000 and $3,000,000, respectively, beginning in 1997.
On October 28, 1992, the Company filed a Shelf registration covering the
issuance of up to $50,000,000 of additional Medium-Term Notes through December
31, 1994 for the financing of capital expenditures and the payment of related
obligations. In January 1994 the Company issued $36,000,000 of Medium-Term Notes
with maturities of 20 - 30 years and an average weighted interest rate of 6.94%.
<TABLE>
The aggregate consolidated annual sinking fund requirements, less amounts
acquired in advance, and current maturities of long-term debt (excluding capital
leases) for the next five years are as follows:
<CAPTION>
YEAR AMOUNT
---- ------
(IN THOUSANDS)
<S> <C>
1994.............. 847
1995.............. 905
1996.............. 2,825
1997.............. 9,925
1998.............. 8,000
</TABLE>
The terms of the various indentures referred to above, as supplemented,
provide that dividends may not be paid on common stock of the Company under
certain conditions. At December 31, 1993 there were no restrictions on retained
earnings available for payment of dividends.
Gas Inventory Financing
Under the terms of the general rate order issued by the Department of
Public Utilities (the Department) effective October 1, 1988, the Company funds
all of its inventory of gas supplies through external sources. All costs related
to this funding are recoverable from its customers. The Company maintains a
credit agreement with a group of banks which provides for the borrowing of up to
$90,000,000 for the exclusive purpose of funding its inventory of gas supplies
or for backing commercial paper issued for the same purpose. The Company had
$59,297,000 and $48,631,000 of commercial paper outstanding at December 31, 1993
and 1992, respectively, for this purpose. Since the commercial paper is
supported by the credit agreement, these borrowings have been classified as
non-current in the accompanying consolidated balance sheets. The credit
agreement includes a 364 day revolving credit which may be converted to a
two-year term loan at the Company's option if the 364 day revolving credit is
not renewed by the banks. The Company may select interest rate alternatives
based on prime or Eurodollar rates. No borrowings were outstanding under this
agreement at December 31, 1993 and no borrowings were outstanding under the
prior $60,000,000 credit agreement at December 31, 1992.
Notes Payable
The Company maintains four committed lines of credit totaling $40,000,000
which provide for interest at either prime rate or money market rates. The
Company pays facility fees related to these lines of credit. In addition, the
Company has various uncommitted lines of credit which provide for interest at
the federal funds, money market or prime rates. These lines of credit are used
for short-term borrowings. The Company had outstanding borrowings of
$106,300,000 and $53,332,000 in commercial paper and bank loans not related to
gas inventory financing at December 31, 1993 and 1992, respectively.
F-10
<PAGE> 25
BOSTON GAS COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(4) COMMITMENTS (CONTINUED)
Eastern Borrowing Arrangement
Eastern has a credit agreement with a group of banks which provides for the
borrowing by Eastern and its subsidiaries of up to $60,000,000 (of which the
Company may borrow up to $35,000,000) at any time through December 31, 1994,
with borrowings thereunder maturing not later than December 31, 1995. The
interest rate for such borrowings is the agent bank's prime rate, or at
Eastern's option, 1/4 of 1% over the agent bank's Eurodollar rate or 3/8 of 1%
over the agent bank's certificate of deposit rate. Eastern has the option until
December 31, 1994 to convert up to $25,000,000 of the total commitment to a
five-year term loan arrangement with the same interest rate provisions through
1994 and thereafter with interest of 1/8 of 1% over the agent bank's prime rate
or 5/8 of 1% over the agent bank's Eurodollar rate or 7/8 of 1% over the agent
bank's certificate of deposit rate. The credit agreement provides, among other
things, for a commitment fee of 1/4 of 1% on the first $50,000,000 unused
portion of the commitment and 3/16 of 1% on the unborrowed portion of the
commitment greater than $50,000,000.
Eastern also has a $10,000,000 line of credit under which the Company is
entitled to borrow which provides for interest at the prime rate, or at
Eastern's option, rates tied to Eurodollar, certificate of deposit or money
market quotes.
(5) VARIABLE TERM CUMULATIVE PREFERRED STOCK
On July 13, 1993, the Company selected a Final Term which is a Mandatory
Redemption Term with respect to its Variable Term Cumulative Preferred Stock,
Series A. The dividend rate during the Final Term is 6.421% per annum and
dividends are paid quarterly. The Final Term calls for 5% annual sinking fund
payments beginning on September 1, 1999, is non-callable for 10 years, and shall
end on September 1, 2018.
(6) PENSION BENEFITS
The Company, through retirement plans under collective bargaining
agreements and participation in Eastern's pension plans, provides retirement
benefits for substantially all of its employees. The benefits under these plans
are based on stated amounts for years of service or employee's average
compensation during the five years prior to retirement. The Company follows a
policy of funding retirement and employee benefit plans in accordance with the
requirements of the plans and agreements in sufficient amounts to satisfy the
"Minimum Funding Standards" of the Employee Retirement Income Security Act of
1974 ("ERISA").
<TABLE>
Net pension cost included the following components:
<CAPTION>
1993 1992 1991
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost-benefits earned during the year........ $ 2,331 $2,072 $ 2,043
Interest cost on projected benefit obligation....... 7,304 6,735 6,427
Actual return on plan assets........................ (15,984) (9,491) (20,122)
Net amortization and deferral....................... 7,105 1,666 13,665
------- ------ -------
Net pension cost.................................... $ 756 $ 982 $ 2,013
======= ====== =======
</TABLE>
The expected long-term rate of return on assets was 8.5% in 1993 and 1992
and 7.5% in 1991. The discount rate used in determining the actuarial present
value of the projected benefit obligation was 7.5% for 1993 as well as for prior
years. The rate of increase in future compensation levels was 5.0%.
F-11
<PAGE> 26
BOSTON GAS COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(6) PENSION BENEFITS (CONTINUED)
<TABLE>
The following table sets forth the funded status of pension plans and
amounts recognized in the Company's consolidated balance sheets based on a
measurement date as of October 1, 1993 and 1992.
<CAPTION>
1993 1992
---- ----
(IN THOUSANDS)
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested
benefits of $83,759 in 1993 and $78,381 in 1992...... $ 92,226 $ 85,735
========= ========
Projected benefit obligation for service rendered to
date................................................. $(103,154) $(96,355)
Plan assets at fair value, primarily listed stocks,
corporate bonds and U.S. bonds....................... 114,711 110,085
--------- --------
Plan assets in excess of projected benefit
obligation........................................... 11,557 13,730
Unrecognized net obligation at January 1, 1986 being
recognized over 15 years............................. 1,522 1,738
Unrecognized net gain.................................. (18,164) (12,215)
Unrecognized prior service cost........................ 15,096 7,014
--------- --------
Net pension asset...................................... $ 10,011 $ 10,267
========= ========
</TABLE>
(7) POST-RETIREMENT BENEFITS OTHER THAN PENSIONS
In addition to providing pension benefits, the Company, through
participation in Eastern administered plans and welfare plans under collective
bargaining agreements, provides certain health care and life insurance benefits
for retired employees.
Effective January 1, 1991, the Company adopted Statement of Financial
Accounting Standards No. 106 ("SFAS 106"), "Employers' Accounting for
Post-Retirement Benefits Other Than Pensions," by immediately recognizing the
cumulative effect of the accounting change. SFAS 106 requires that the expected
cost of post-retirement benefits other than pensions be charged to expense
during the period that the employee renders service. As of the date of adoption,
the cumulative effect of the accounting change ("transition obligation") was,
$89,120,000. With approval by the Department, the Company has deferred the cost
of the transition obligation and the amount by which expense under SFAS 106
exceeds amounts currently included in rates. The 1993 rate order allows the
Company to phase in incremental costs associated with SFAS 106 over a four-year
period. Each year during the phase-in, the Company will file for an increase in
rates to reflect an additional increment of SFAS 106 costs. The difference
between the incremental annual amount allowed in rates during the phase-in
period and the SFAS 106 costs will be deferred as a regulatory asset with
carrying costs.
<TABLE>
Net post-retirement benefit cost included the following components:
<CAPTION>
1993 1992 1991
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost-benefits earned during the year......... $ 1,301 $ 1,096 $ 1,043
Interest cost on accumulated benefit obligation...... 7,021 7,824 7,518
Net amortization and deferral of actuarial gains and
losses............................................. (1,235) 239 --
Actual return on plan assets......................... (282) (173) --
------- ------- -------
Post-retirement benefit cost......................... 6,805 8,986 8,561
Amount charged to regulatory asset................... (2,368) (4,876) (5,130)
------- ------- -------
Net post-retirement benefit cost..................... $ 4,437 $ 4,110 $ 3,431
======= ======= =======
</TABLE>
F-12
<PAGE> 27
BOSTON GAS COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(7) POST-RETIREMENT BENEFITS OTHER THAN PENSIONS (CONTINUED)
Prior to the 1993 rate order, the Company recognized as expense and
recovered through rates billed to customers the cost of post-retirement benefits
on a claims paid basis. Such costs totalled $4,437,000 in 1993, $4,110,000 in
1992 and $3,431,000 in 1991.
<TABLE>
The following table sets forth the funded status of the plans and amounts
recognized in the Company's consolidated balance sheets based on a measurement
date as of October 1, 1993 and October 1, 1992.
<CAPTION>
1993 1992
---- ----
(IN THOUSANDS)
<S> <C> <C>
Retirees..................................................... $(50,561) $(61,418)
Other fully eligible participants............................ (7,943) (11,981)
Other active participants.................................... (13,523) (26,373)
-------- --------
(72,027) (99,772)
Plan assets at fair value.................................... 10,856 5,573
-------- --------
Accumulated post-retirement benefits obligation in excess of
plan assets................................................ (61,171) (94,199)
Unrecognized actuarial loss (gain)........................... (15,997) 4,677
Unrecognized prior service costs............................. (14,787) (5,065)
Amounts contributed to plans in the fourth quarter of 1992... -- 5,000
-------- --------
Accrued post-retirement benefits............................. $(91,955) $(89,587)
======== ========
</TABLE>
The Company established a 501(c)(9) Voluntary Employee Beneficiary
Association ("VEBA") Trust in 1991 to begin funding its post-retirement benefit
obligation for collectively bargained employees. The Company contributed
$5,000,000 in 1992 to the VEBA.
The weighted average discount rate used in determining the accumulated
post-retirement benefit obligation was 7.5% in 1993 and 1992. A 12% and 15%
annual increase in the cost of covered health care benefits was assumed for 1993
and 1992, respectively. This rate of increase is assumed to drop gradually to 5%
after 7 years. A 1% increase in the assumed health care cost trend would have
increased the post-retirement benefit cost by $489,000 and $1,056,000 and the
accumulated post-retirement benefit obligation by $5,691,000 in 1993 and
$9,164,000 in 1992.
In November 1992, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 112 ("SFAS 112"), "Employer's Accounting
for Postemployment Benefits", which establishes standards of financial
accounting and reporting for certain postemployment benefit obligations. The
adoption of SFAS 112 is not expected to have a material effect on the Company's
financial condition or results of operations. SFAS 112 is effective for fiscal
years beginning after December 15, 1993.
(8) LEASES
The Company and its subsidiary lease certain facilities and equipment under
long-term leases which expire on various dates through the year 2000. Total
rentals charged to income under all lease agreements were approximately
$7,663,000 in 1993, $6,939,000 in 1992 and $6,417,000 in 1991.
F-13
<PAGE> 28
BOSTON GAS COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(8) LEASES (CONTINUED)
<TABLE>
The Company capitalizes its financing leases which include liquefied
natural gas facilities and an operations center. A summary of property held
under capital leases as of December 31, 1993 and 1992 is as follows:
<CAPTION>
1993 1992
---- ----
(IN THOUSANDS)
<S> <C> <C>
LNG facilities..................................... $15,600 $15,600
Buildings.......................................... 6,000 6,000
------- -------
21,600 21,600
Less--Accumulated depreciation..................... 14,592 13,361
------- -------
$ 7,008 $ 8,239
======= =======
</TABLE>
Under the terms of SFAS 71, the timing of expense recognition on
capitalized leases should conform with regulatory rate treatment. The Company
has included the rental payments on its financing leases in its cost of service
for rate purposes. Therefore, the total depreciation and interest expense that
was recorded on the leases was equal to the rental payments included in other
operating and maintenance expense in the accompanying consolidated statements of
income.
<TABLE>
The Company also has various operating lease agreements for office
facilities and other equipment. The remaining minimum rental commitment for
these and all other noncancellable leases, including the financing leases, at
December 31, 1993 is as follows:
<CAPTION>
CAPITAL OPERATING
YEAR LEASES LEASES
---- ------- -------
(IN THOUSANDS)
<S> <C> <C>
1994............................................... $1,852 $ 4,320
1995............................................... 1,853 4,126
1996............................................... 1,854 3,350
1997............................................... 1,269 1,622
1998............................................... 684 324
Later Years........................................ 1,430 --
------ -------
Total minimum lease payments....................... $8,942 $13,742
=======
Less--Amount representing interest and executory
costs............................................ 1,934
------
Present value of minimum lease payments on capital
leases........................................... $7,008
======
</TABLE>
(9) FAIR VALUES OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value
disclosures for financial instruments:
Cash and Short-term Investments
The carrying amounts approximate fair value because of the short maturity
of those instruments.
Short-term Debt
The carrying amounts of the Company's short-term debt, including notes
payable and gas inventory financing, approximate their fair value.
Long-term Debt
The fair value of long-term debt is estimated based on currently quoted
market prices for similar types of borrowing arrangements.
F-14
<PAGE> 29
BOSTON GAS COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(9) FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)
Preferred Stock
The fair value of the preferred stock for 1993 is based on currently quoted
market prices. For 1992 the carrying amount approximates fair value because of
the frequency with which dividend rates were reset.
<TABLE>
The carrying amounts and estimated fair values of the Company's financial
instruments at December 31, 1993 are as follows:
<CAPTION>
1993 1992
-------------------- --------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Cash and short-term investments.......... $ 1,160 $ 1,160 $ 5,300 $ 5,300
Short-term debt.......................... $165,597 $165,597 $101,963 $101,963
Long-term debt........................... $173,510 $197,114 $195,222 $208,436
Preferred stock.......................... $ 29,197 $ 30,600 $ 29,436 $ 29,436
</TABLE>
(10) SUPPLEMENTARY INFORMATION
The Company paid Eastern $3,096,000 in 1993, $2,707,000 in 1992 and
$2,520,000 in 1991 for various legal, tax and corporate services rendered.
(11) SIGNIFICANT CUSTOMER
Firm and non-firm sales to a single customer produced revenues totaling
$24,800,000 in 1993, $13,900,000 in 1992 and $18,500,000 in 1991, or 4.0%, 2.3%
and 3.5% of total revenues in 1993, 1992 and 1991, respectively.
(12) ENVIRONMENTAL ISSUES
The Company is subject to local, state and federal environmental regulation
of its operations and properties. The Company is working with the Massachusetts
Department of Environmental Protection ("DEP") to determine the environmental
impact, if any, of by-products associated with 13 former manufactured gas plant
("MGP") properties which the Company currently owns and for which the Company
may be potentially responsible. The Company is currently assessing seven of
these properties pursuant to applicable DEP procedures. The Company expects to
spend approximately $1 million in assessing these properties in 1994 and expects
similar expenditures for site assessment for the next several years as other
properties are investigated. Since the DEP has not yet approved a remediation
plan for any Company site, the Company cannot reliably predict the potential
liability associated with final remediation of any of these properties. Company
experience to date indicates that assessment and remediation costs of at least
$18 million could be incurred over the next several years at these thirteen
properties, subject to possible contribution or the assumption of responsibility
by New England Electric System ("NEES") or one of its subsidiaries as discussed
below.
Massachusetts Electric Company, a wholly-owned subsidiary of NEES, has
assumed responsibility for remediating a fourteenth property currently owned by
the Company (part of the site of gas manufacturing operations in Lynn,
Massachusetts) pursuant to the decision of the Court of Appeals for the First
Circuit in The John S. Boyd, Inc., et al. v. Boston Gas Company, et al, Civil
Action No. 89-575-T (May 26, 1993). The First Circuit found that NEES and its
subsidiaries, as the prior owners and operators of the Lynn MGP site, were
responsible for remediating the site and that the Company did not assume any
liability for environmental remediation when it acquired the property from NEES
in 1973. Of the 13 other sites currently owned by the Company, 10 were acquired
from NEES. Given substantial similarities between these acquisitions and that
involved in Boyd, it is not probable that the Company will have any material
exposure for environmental remediation at these 10 sites.
F-15
<PAGE> 30
BOSTON GAS COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(12) ENVIRONMENTAL ISSUES (CONTINUED)
There are 23 other former MGP sites within the Company's service territory
which the Company does not currently own. The DEP has not issued a Notice of
Responsibility to the Company for any of these 23 sites. At this time, there is
substantial uncertainty as to whether the Company is responsible for remediating
any of these sites either because the Company never owned the site, the Company
does not have successor liability for contamination of the site by earlier
operators, or site conditions do not require remediation by the Company.
By an order issued on May 25, 1990, the Department approved a settlement
agreement which provides for the recovery through the cost of gas adjustment
clause of all environmental response costs associated with former MGP sites over
separate, seven-year amortization periods without a return on the unamoritized
balance. The settlement agreement also provides for no further investigation of
the prudency of any Massachusetts gas utility's past MGP operations.
(13) PIPELINE TRANSITION COSTS
Pursuant to Federal Energy Regulatory Commission ("FERC") Order No. 636,
pipelines will be allowed to recover prudently incurred transition costs,
including (1) gas supply realignment costs or the costs of renegotiating
existing gas supply contracts with producers; (2) unrecovered purchased gas
adjustment costs or unrecovered gas costs at the time the pipelines ceased the
merchant function; (3) stranded costs or the unrecovered costs of assets that
cannot be assigned to customers of unbundled services; and (4) new facilities
costs or the costs of new facilities required to physically implement the order.
The Company's obligation for transition costs is $30.6 million and it has
recorded this amount less actual billings at December 31, 1993 of $6.3 million
as a liability in the accompanying consolidated balance sheet. As pipelines
continue to incur and file for recovery of transition costs, the Company's
obligation may increase.
The Company's obligation to Tennessee for transition costs is $12.0
million, based on filings by Tennessee at FERC. Payments to Tennessee for such
costs commenced in October 1993. The Company's obligations to Texas Eastern and
Algonquin for transition costs is $18.6 million, based on filings by Texas
Eastern and Algonquin at FERC. Payments to Texas Eastern and Algonquin began in
July 1993.
The Department has allowed recovery of the Company's transition costs
liability over a five-year period commencing in May 1994. Accordingly, the
Company has recorded a regulatory asset equivalent to the liability established
at December 31, 1993.
F-16
<PAGE> 31
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Boston Gas Company:
We have audited the accompanying consolidated balance sheets of Boston Gas
Company (a Massachusetts Corporation and wholly-owned subsidiary of Eastern
Enterprises) and subsidiary as of December 31, 1993 and 1992, and the related
consolidated statements of earnings, retained earnings and cash flows for each
of the three years in the period ended December 31, 1993. These financial
statements and the schedules referred to below are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Boston Gas Company and
subsidiary as of December 31, 1993 and 1992 and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1993, in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in the index to
consolidated financial statements and schedules are presented for purposes of
complying with the Securities and Exchange Commission's rules and are not a part
of the basic financial statements. These schedules have been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, fairly state, in all material respects, the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
ARTHUR ANDERSEN & CO.
Boston, Massachusetts
February 4, 1994
F-17
<PAGE> 32
BOSTON GAS COMPANY AND SUBSIDIARY
INTERIM FINANCIAL INFORMATION
FOR THE TWO YEARS ENDED DECEMBER 31, 1993 (UNAUDITED)
The following table summarizes the Company's reported quarterly information
for the years ended December 31, 1993 and 1992:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------------------------
SEPT.
MARCH 31 JUNE 30 30 DEC. 31
-------- -------- ------- --------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
1993
Operating revenues............................. $258,226 $128,567 $66,606 $160,895
Operating margin............................... 95,282 49,209 29,047 65,653
Operating earnings (loss)...................... 27,357 4,446 (5,521) 10,675
Net earnings (loss) applicable to common
stock........................................ 22,372 (182) (9,891) 5,726
1992
Operating revenues............................. $250,701 $122,093 $70,707 $150,829
Operating margin............................... 101,119 49,210 29,295 57,009
Operating earnings (loss)...................... 32,900 7,568 (3,775) 8,432
Net earnings (loss) applicable to common
stock........................................ 28,254 3,247 (8,203) 4,005
</TABLE>
The above amounts vary significantly due to the seasonality of the Company's
business.
F-18
<PAGE> 33
SCHEDULE V
BOSTON GAS COMPANY AND SUBSIDIARY
PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1993
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
TO TRANSFERS
BALANCE, UTILITY AND OTHER BALANCE,
DECEMBER 31, PLANT, SALES AND DEBITS DECEMBER 31,
CLASSIFICATION 1992 AT COST RETIREMENTS (CREDITS) 1993
- --------------------------------------- ------------ --------- ----------- --------- ------------
<S> <C> <C> <C> <C> <C>
GAS UTILITY:
Land and rights-of-way............... $ 4,223 $ (161) $ -- $ -- $ 4,062
Structures........................... 29,284 2,462 516 -- 31,230
Street mains......................... 253,110 13,104 565 -- 265,649
Transportation equipment............. 4,761 126 152 -- 4,735
Other equipment...................... 293,835 21,499 10,952 -- 304,382
Construction work-in-progress........ 186 7,945 -- -- 8,131
Intangible plant..................... 38,341 2,082 1,072 -- 39,351
Miscellaneous property (not used in
operations)....................... 171 -- -- -- 171
-------- ------- ------- -------- --------
Total utility property.......... $623,911 $47,057 $13,257 $ -- $657,711
-------- ------- ------- -------- --------
-------- ------- ------- -------- --------
</TABLE>
SCHEDULE VI
ACCUMULATED DEPRECIATION AND AMORTIZATION OF
PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1993
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
--------------------- DEDUCTIONS
BALANCE, CHARGED FROM RESERVES BALANCE,
DECEMBER 31, CHARGED TO OTHER --------------------- DECEMBER 31,
CLASSIFICATION 1992 TO INCOME ACCOUNTS RETIREMENTS OTHER 1993
- -------------------------------- ------------ --------- -------- ----------- ------ ------------
<S> <C> <C> <C> <C> <C> <C>
TOTAL GAS UTILITY
PROPERTY...................... $182,550 $28,255 $1,232 $12,426 $4,327 $195,284
-------- ------- ------ ------- ------ --------
-------- ------- ------ ------- ------ --------
</TABLE>
F-19
<PAGE> 34
SCHEDULE V
BOSTON GAS COMPANY AND SUBSIDIARY
PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1992
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS TRANSFERS
BALANCE, TO UTILITY AND OTHER BALANCE,
DECEMBER 31, PLANT, SALES AND DEBITS DECEMBER 31,
CLASSIFICATION 1991 AT COST RETIREMENTS (CREDITS) 1992
- ------------------------------- ------------ ---------- ----------- --------- ------------
<S> <C> <C> <C> <C> <C>
GAS UTILITY:
Land and rights-of-way....... $ 3,920 $ 303 $ -- $ -- $ 4,223
Structures................... 23,412 6,065 193 -- 29,284
Street mains................. 228,599 25,620 1,109 -- 253,110
Transportation equipment..... 6,127 47 1,413 -- 4,761
Other equipment.............. 271,081 27,639 4,885 -- 293,835
Construction
work-in-progress.......... 35,839 (35,653) -- -- 186
Intangible plant............. 11,191 27,150 -- -- 38,341
Miscellaneous property (not
used in operations)....... 206 (35) -- -- 171
------------ ---------- ----------- --------- ------------
Total utility
property............. $580,375 $ 51,136 $ 7,600 $ -- $623,911
------------ ---------- ----------- --------- ------------
------------ ---------- ----------- --------- ------------
</TABLE>
SCHEDULE VI
ACCUMULATED DEPRECIATION AND AMORTIZATION OF
PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1992
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
-------------------- DEDUCTIONS
BALANCE, CHARGED FROM RESERVES BALANCE,
DECEMBER 31, CHARGED TO OTHER -------------------- DECEMBER 31,
CLASSIFICATION 1991 TO INCOME ACCOUNTS RETIREMENTS OTHER 1992
---------------------- ------------ --------- -------- ----------- ------ ------------
<S> <C> <C> <C> <C> <C> <C>
TOTAL GAS UTILITY
PROPERTY............ $173,927 $23,166 $1,345 $ 7,600 $8,288 $182,550
------------ --------- -------- ----------- ------ ------------
------------ --------- -------- ----------- ------ ------------
</TABLE>
F-20
<PAGE> 35
SCHEDULE V
BOSTON GAS COMPANY AND SUBSIDIARY
PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1991
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
TO TRANSFERS
BALANCE, UTILITY AND OTHER BALANCE,
DECEMBER 31, PLANT, SALES AND DEBITS DECEMBER 31,
CLASSIFICATION 1990 AT COST RETIREMENTS (CREDITS) 1991
- --------------------------------------- ------------ --------- ----------- --------- ------------
<S> <C> <C> <C> <C> <C>
GAS UTILITY:
Land and rights-of-way............... $ 3,920 $ -- $-- $ -- $ 3,920
Structures........................... 21,829 1,624 41 -- 23,412
Street mains......................... 210,689 18,890 980 -- 228,599
Transportation equipment............. 8,286 155 2,314 -- 6,127
Other equipment...................... 251,344 26,436 6,699 -- 271,081
Construction work-in-progress........ 25,993 9,846 -- -- 35,839
Intangible plant..................... 10,771 449 29 -- 11,191
Miscellaneous property (not used in
operations)....................... 206 -- -- -- 206
------------ --------- ----------- --------- ------------
Total utility property.......... $533,038 $57,400 $10,063 $ -- $580,375
------------ --------- ----------- --------- ------------
------------ --------- ----------- --------- ------------
</TABLE>
SCHEDULE VI
ACCUMULATED DEPRECIATION AND AMORTIZATION OF
PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1991
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
--------------------- DEDUCTIONS
BALANCE, CHARGED FROM RESERVES BALANCE,
DECEMBER 31, CHARGED TO OTHER --------------------- DECEMBER 31,
CLASSIFICATION 1990 TO INCOME ACCOUNTS RETIREMENTS OTHER 1991
- -------------------------------- ------------ --------- -------- ----------- ------ ------------
<S> <C> <C> <C> <C> <C> <C>
TOTAL GAS UTILITY
PROPERTY...................... $167,012 $19,378 $1,173 $10,063 $3,573 $173,927
------------ --------- -------- ----------- ------ ------------
------------ --------- -------- ----------- ------ ------------
</TABLE>
F-21
<PAGE> 36
SCHEDULE VIII
BOSTON GAS COMPANY AND SUBSIDIARY
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 1993
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
--------------------- NET
BALANCE, CHARGED DEDUCTIONS BALANCE,
DECEMBER 31, CHARGED TO OTHER FROM DECEMBER 31,
DESCRIPTION 1992 TO INCOME ACCOUNTS RESERVES 1993
- ---------------------------------------- ------------ --------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
RESERVES DEDUCTED FROM ASSETS:
Reserves for doubtful accounts........ $ 11,408 $13,127 $ -- $ 11,017 $ 13,518
------------ --------- -------- ---------- ------------
------------ --------- -------- ---------- ------------
RESERVES NOT DEDUCTED FROM ASSETS:
Accumulated deferred income taxes..... $ 52,724 $ 7,532 $ 3,057 $ 1,752 $ 61,561
------------ --------- -------- ---------- ------------
Deferred investment tax credits....... $ 10,116 $ -- $ -- $ 689 $ 9,427
------------ --------- -------- ---------- ------------
Post-retirement benefit cost.......... $ 89,587 $ -- $ 6,805 $ 4,437 $ 91,955
------------ --------- -------- ---------- ------------
Other reserves and deferred credit--
Reserve for self-insurance....... 2,354 1,124 -- 1,208 2,270
FAS 109 Regulatory Liability..... 6,144 (440) -- 192 5,512
Deferred net normalization
surplus....................... 11,340 (422) -- 2,424 8,494
Other............................ 5,856 4,530 4,443 8,981 5,848
------------ --------- -------- ---------- ------------
Total other reserves and
deferred credits............ 25,694 4,792 4,443 12,805 22,124
------------ --------- -------- ---------- ------------
Total reserves not deducted
from assets................. $178,121 $12,324 $ 14,305 $ 19,683 $185,067
------------ --------- -------- ---------- ------------
------------ --------- -------- ---------- ------------
</TABLE>
F-22
<PAGE> 37
SCHEDULE VIII
BOSTON GAS COMPANY AND SUBSIDIARY
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 1992
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
--------------------- NET
BALANCE, CHARGED DEDUCTIONS BALANCE,
DECEMBER 31, CHARGED TO OTHER FROM DECEMBER 31,
DESCRIPTION 1991 TO INCOME ACCOUNTS RESERVES 1992
- ---------------------------------------- ------------ --------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
RESERVES DEDUCTED FROM ASSETS:
Reserves for doubtful accounts........ $ 10,020 $12,444 $ -- $ 11,056 $ 11,408
------------ --------- -------- ---------- ------------
------------ --------- -------- ---------- ------------
RESERVES NOT DEDUCTED FROM ASSETS:
Accumulated deferred income taxes..... $ 55,721 $(2,997) $ -- $ -- $ 52,724
------------ --------- -------- ---------- ------------
Deferred investment tax credits....... $ 10,789 $ -- $ -- $ 673 $ 10,116
------------ --------- -------- ---------- ------------
Post-retirement benefit cost.......... $ 89,711 $ -- $ 8,986 $ 9,110 $ 89,587
------------ --------- -------- ---------- ------------
Other reserves and deferred credits--
Reserve for self-insurance....... 3,199 1,732 -- 2,577 2,354
FAS 109 Regulatory Liability..... -- -- 6,144 -- 6,144
Deferred net normalization
surplus....................... 7,164 -- 4,445 269 11,340
Other............................ 5,581 9,355 -- 9,080 5,856
------------ --------- -------- ---------- ------------
Total other reserves and
deferred credits............ 15,944 11,087 10,589 11,926 25,694
------------ --------- -------- ---------- ------------
Total reserves not deducted
from assets................. $172,165 $ 8,090 $ 19,575 $ 21,709 $178,121
------------ --------- -------- ---------- ------------
------------ --------- -------- ---------- ------------
</TABLE>
F-23
<PAGE> 38
SCHEDULE VIII
BOSTON GAS COMPANY AND SUBSIDIARY
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 1991
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
--------------------- NET
BALANCE, CHARGED DEDUCTIONS BALANCE,
DECEMBER 31, CHARGED TO OTHER FROM DECEMBER 31,
DESCRIPTION 1990 TO INCOME ACCOUNTS RESERVES 1991
- ---------------------------------------- ------------ --------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
RESERVES DEDUCTED FROM ASSETS:
Reserves for doubtful accounts........ $ 6,263 $14,072 $ -- $ 10,315 $ 10,020
------------ --------- -------- ---------- ------------
------------ --------- -------- ---------- ------------
RESERVES NOT DEDUCTED FROM ASSETS:
Accumulated deferred income taxes..... $ 51,348 $ 4,373 $ -- $ -- $ 55,721
------------ --------- -------- ---------- ------------
Deferred investment tax credits....... $ 11,481 $ -- $ -- $ 692 $ 10,789
------------ --------- -------- ---------- ------------
Post-retirement benefit cost.......... $ 1,031(1) $ (156) $ 94,250 $ 5,414 $ 89,711
------------ --------- -------- ---------- ------------
Other reserves and deferred credits--
Reserve for self-insurance....... 3,815(1) 1,037 -- $ 1,653 $ 3,199
FAS 87 minimum liability......... 9,423 -- (9,423) -- --
Deferred net normalization
surplus....................... 7,433 -- -- 269 7,164
Other............................ 7,875 5,623 4,522 12,439 5,581
------------ --------- -------- ---------- ------------
Total other reserves and
deferred credits............ 28,546 6,660 (4,901) 14,361 15,944
------------ --------- -------- ---------- ------------
Total reserves not deducted
from assets................. $ 92,406 $10,877 $ 89,349 $ 20,467 $172,165
------------ --------- -------- ---------- ------------
------------ --------- -------- ---------- ------------
</TABLE>
- ---------------
(1) Reclassified from other accounts
F-24
<PAGE> 39
SCHEDULE IX
BOSTON GAS COMPANY AND SUBSIDIARY
SHORT-TERM BORROWINGS
FOR THE YEARS ENDED DECEMBER 31, 1991, 1992 AND 1993
(IN THOUSANDS)
<TABLE>
<CAPTION>
WEIGHTED MAXIMUM AVERAGE WEIGHTED
AVERAGE AMOUNT AMOUNT AVERAGE
BALANCE, INTEREST OUTSTANDING OUTSTANDING INTEREST RATE
YEAR CATEGORY END OF YEAR RATE DURING YEAR DURING YEAR(A) DURING YEAR(B)
- ------------ -------------- ----------- -------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
1991........ Notes Payable $ 53,639 5.3% $ 55,050 $ 25,291 6.6%
1992........ Notes Payable $ 53,332 4.0% $ 70,750 $ 32,983 4.3%
1993........ Notes Payable $ 106,300 3.5% $108,100 $ 55,022 3.4%
</TABLE>
- ---------------
(A) Average daily balances.
(B) Actual interest incurred divided by average amount outstanding during the
year.
F-25
<PAGE> 40
SCHEDULE X
BOSTON GAS COMPANY AND SUBSIDIARY
SUPPLEMENTARY EARNINGS STATEMENT INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(IN THOUSANDS)
<TABLE>
<CAPTION>
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Maintenance and repairs....................................... $27,091 $19,538 $17,612
Taxes, other than payroll and income:
Local property........................................... 8,837 4,865 4,309
Other.................................................... 186 236 162
</TABLE>
F-26
<PAGE> 1
EXHIBIT 10.1
SERVICE PACKAGE NO. 2062
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
THIS AGREEMENT is made and entered into as of the 1st day of
September, 1993, by and between TENNESSEE GAS PIPELINE COMPANY,
a Delaware Corporation, hereinafter referred to as "Transporter, and
BOSTON GAS CO, a MASSACHUSETTS Corporation, hereinafter referred to as
"Shipper." Transporter and Shipper shall collectively be referred to
herein as the "Parties."
ARTICLE I
DEFINITIONS
1.1 TRANSPORTATION QUANTITY - shall mean the maximum daily quantity
of gas which Transporter agrees to receive and transport on a
firm basis, subject to Article II herein, for the account of
Shipper hereunder on each day during each year during the term
hereof which shall be 94,312 dekatherms. Any limitations of the
quantities to be received from each Point of Receipt and/or
delivered to each Point of Delivery shall be as specified on
Exhibit A attached hereto.
1.2 EQUIVALENT QUANTITY - shall be as defined in Article I of the
General Terms and Conditions of Transporter's FERC Gas Tariff.
ARTICLE II
TRANSPORTATION
TRANSPORTATION SERVICE - Transporter agrees to accept and receive
daily on a firm basis, at the Point(s) of Receipt from Shipper or for
Shipper's account such quantity of gas as Shipper makes available up
to the Transportation Quantity, and to deliver to or for the account
of Shipper to the Point(s) of Delivery an Equivalent Quantity of gas.
ARTICLE III
POINT(S) OF RECEIPT AND DELIVERY
The Primary Point(s) of Receipt and Delivery shall be those points
specified on Exhibit A attached hereto.
ARTICLE IV
All facilities are in place to render the service provided for in this
Agreement.
1
<PAGE> 2
SERVICE PACKAGE NO. 2062
AMENDMENT NO. O
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
ARTICLE V
QUALITY SPECIFICATIONS AND STANDARDS FOR MEASUREMENT
For all gas received, transported and delivered hereunder the
parties agree to the Quality Specifications and Standards for
Measurement as specified in the General Terms and Conditions of
Transporter's FERC Gas Tariff Volume No. 1. To the extent that no
new measurement facilities are installed to provide service
hereunder, measurement operations will continue in the manner in
which they have previously been handled. In the event that such
facilities are not operated by Transporter then responsibility for
operations shall be deemed to be Shipper's.
ARTICLE VI
RATES AND CHARGES FOR GAS TRANSPORTATION
6.1 TRANSPORTATION RATES - Commencing upon the date
of execution, the rates, charges, and surcharges to be paid
by Shipper to Transporter for the transportation
service provided herein shall be in accordance with
Transporter's Rate Schedule FT-A and the General Terms and
Conditions of Transporter's FERC Gas Tariff.
6.2 INCIDENTAL CHARGES - Shipper agrees to reimburse Transporter
for any filing or similar fees, which have not been
previously paid for by Shipper, which Transporter incurs in
rendering service hereunder.
6.3 CHANGES IN RATES AND CHARGES - Shipper agrees
that Transporter shall have the unilateral right to file
with the appropriate regulatory authority and make effective
changes in (a) the rates and charges applicable to service
pursuant to Transporter's Rate Schedule FT-A,
(b) the rate schedule(s) pursuant to which service
hereunder is rendered, or (c) any provision of the General
Terms and Conditions applicable to those rate schedules.
Transporter agrees that Shipper may protest or contest the
aforementioned filings, or may seek authorization from duly
constituted regulatory authorities for such adjustment of
Transporter's existing FERC Gas Tariff as may be found
necessary to assure Transporter's just and reasonable
rates.
ARTICLE VII
BILLINGS AND PAYMENTS
Transporter shall bill and Shipper shall pay all rates and charges
in accordance with Articles V and VI, respectively, of the General
Terms and Conditions of Transporter's FERC Gas Tariff.
2
<PAGE> 3
SERVICE PACKAGE NO. 2062
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
ARTICLE VIII
GENERAL TERMS AND CONDITIONS
This Agreement shall be subject to the effective provisions
of Transporter's Rate Schedule FT-A and to the General Terms
and Conditions incorporated therein, as the same may be
changed or superseded from time to time in accordance with the
rules and regulations of the FERC.
ARTICLE IX
REGULATION
9.1 This Agreement shall be subject to all applicable and lawful
governmental statutes, orders, rules and regulations and is
contingent upon the receipt and continuation of all
necessary regulatory approvals or authorizations upon terms
acceptable to Transporter. This Agreement shall be void and
of no force and effect if any necessary regulatory approval
is not so obtained or continued. All parties hereto shall
cooperate to obtain or continue all necessary approvals or
authorizations, but no party shall be liable to any other
party for failure to obtain or continue such approvals or
authorizations.
9.2 The transportation service described herein shall be
be provided subject to Part 284, Subpart G of the FERC
Regulations.
ARTICLE X
RESPONSIBILITY DURING TRANSPORTATION
Except as herein specified the responsibility for gas during
transportation shall be as stated in the General Terms and
Conditions of Transporter's FERC Gas Tariff Volume No. 1.
ARTICLE XI
WARRANTIES
11.1 In addition to the warranties set forth in Article IX of the
General Terms and Conditions of Transporter's FERC
Gas Tariff, Shipper warrants the following:
(a) Shipper warrants that all upstream and downstream
transportation arrangements are in place, or will be in
place as of the requested effective date of service, and
that it has advised the upstream and downstream
transporters of the receipt and delivery points under
this Agreement and any quantity limitations for each
point as specified on Exhibit A attached hereto.
Shipper agrees to indemnify and hold Transporter
harmless for refusal to transport gas hereunder in the
3
<PAGE> 4
SERVICE PACKAGE NO. 2062
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
event any upstream or downstream transporter fails to
receive or deliver gas as contemplated by this
Agreement.
(b) Shipper agrees to indemnify and hold Transporter
harmless from all suits, actions, debts, accounts,
damages, costs, losses and expenses (including
reasonable attorneys fees) arising from or out of breach
of any warranty, express or implied, by Shipper herein.
11.2 Transporter shall not be obligated to provide or continue
service hereunder in the event of any breach of warranty.
ARTICLE XII
TERM
12.1 This contract shall be effective as of the 1st day
of September, 1993, and shall remain in force and effect
until the 1st day of November, 2000, ("Primary Term,) and
on a month to month basis thereafter unless terminated by
either Party upon at least thirty (30) days prior written
notice to the other Party; provided, however, that if the
Primary Term is one year or more, then unless Shipper
elects upon one year's prior written notice to
Transporter to request a lesser extension term, the
Agreement shall automatically extend upon the expiration
of the primary term for a term of five years; and shall
automatically extend for successive five year terms
therafter unless shipper provides notice described above
in advance of the expiration of a succeeding term;
provided further, if the FERC or other governmental body
having jurisdiction over the service rendered pursuant to
this Agreement authorizes abandonment of such service, this
Agreement shall terminate on the abandonment date
permitted by the FERC or such other governmental body.
12.2 Any portions of this Agreement necessary to resolve or
cash-out imbalances under this Agreement as required
by the General Terms and Conditions of Transporter's
FERC Gas Tariff Volume No. 1, shall survive the other
parts of this Agreement until such time as such
balancing has been accomplished.
12.3 This Agreement will terminate upon notice from Transporter
in the event Shipper fails to pay all of the amount of any
bill for service rendered by Transporter hereunder in accord
with the terms and conditions of Article VI of the General
Terms and Conditions of Transporter's FERC Tariff.
ARTICLE XIII
NOTICE
Except as otherwise provided in the General Terms and Conditions
applicable to this Agreement, any notice under this Agreement shall
4
<PAGE> 5
SERVICE PACKAGE NO. 2062
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
be in writing and mailed to the post office address of the party
intended to receive the same, as follows:
TRANSPORTER: Tennessee Gas Pipeline Company
P.O. Box 2511
Houston, Texas 77252-2511
Attention: Transportation Marketing
SHIPPER:
NOTICES: BOSTON GAS CO
ONE BEACON STREET
34TH FLOOR
BOSTON, MA 02108
Attention: BILL YARDLEY
BILLING: BOSTON GAS CO
ONE BEACON STREET
34TH FLOOR
BOSTON, MA 02108
Attention: DON TULCHINSKY
or to such other address as either Party shall designate by formal
written notice to the other.
ARTICLE XIV
ASSIGNMENTS
14.1 Either Party may assign or pledge this Agreement and all
rights and obligations hereunder under the provisions of
any mortgage, deed of trust, indenture, or other
instrument which it has executed or may execute hereafter
as security for indebtedness. Either Party may,
without relieving itself of its obligation under this
Agreement, assign any of its rights hereunder to a
company with which it is affiliated, otherwise,
Shipper shall not assign this Agreement or any of its
rights hereunder, except in accord with Article III,
Section 11 of the General Terms and Conditions of
Transporter's FERC Gas Tariff.
14.2 Any person which shall succeed by purchase, merger,
or consolidation to the properties, substantially as
an entirety, of either Party hereto shall be entitled to
the rights and shall be subject to the obligations
of its predecessor in interest under this Agreement.
ARTICLE XV
MISCELLANEOUS
15.1 The interpretation and performance of this contract shall be
in accordance with and controlled by the laws of the State
5
<PAGE> 6
SERVICE PACKAGE NO. 2062
AMENDMENT NO. O
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
of Texas, without regard to the doctrines governing choice
of law.
15.2 If any provisions of this Agreement is declared null and
void, or voidable, by a court of competent jurisdiction,
then that provision will be considered severable at either
party's option; and if the severability option is exercised,
the remaining provisions of the Agreement shall remain in
full force and effect.
15.3 Unless otherwise expressly provided in this Agreement or
Transporter's Gas Tariff, no modification of or supplement
to the terms and provisions stated in this agreement shall
be or become effective, except by the execution of by both
Parties of a written amendment.
15.4 Exhibit A attached hereto is incorporated herein by
reference and made a part hereof for all purposes.
IN WITNESS WHEREOF, the Parties hereto have caused this
Agreement to be duly executed in several counterparts as of the
date first hereinabove written.
TENNESSEE GAS PIPELINE COMPANY
BY:________________________________
Byron S. Wright
Agent and Attorney-in-Fact
BOSTON GAS CO
BY:________________________________
TITLE:_____________________________
DATE:______________________________
6
<PAGE> 7
<TABLE>
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
EXHIBIT "A"
TO GAS TRANSPORTATION AGREEMENT
DATED September 1st, 1993
BETWEEN
TENNESSEE GAS PIPELINE COMPANY
AND
BOSTON GAS COMPANY
SERVICE PAKAGE: 2062
SERVICE PACKAGE TQ: 94,312
AMENDMENT EFFECTVVE DATE: September 1st, 1993
<CAPTION> MINIMUM
METER AMD METER NAME INTERCONNECT PARTY NAME COUNTY ST ZONE R/D LEG METER-TQ PRESSURE
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C> <C> <C> <C> <C> <C> <C>
10173 0 VALERO-SUN PLANT DEHYD STARR TX 00 R 100 8,225
10729 0 ZAPATA-ZIM DEHYD ENERCORP RESOURCES INC STARR TX 00 R 100 3,809
11102 0 EUGENE ISLAND BLK 342 A TEXACO OFFSHORE-FEDERA LA 01 R 500 10,878
11119 0 CHEVRON-S HARSH IS BLK 61 C CHEVRON USA INC OFFSHORE-FEDERA OL 01 R 500 20,817
11353 0 AHOCO-EUGENE IS BLK 322 A TEXAS GAS TRANSMISSION CORP OFFSHORE-FEDERA OL 01 R 500 822
11362 0 INTRASTATE-SULLIVAN CITY DEHYD HIDALGO TX 00 R 100 4,167
11464 0 AMOCO-SHIP SHOAL BLK 177 A CONOCO INC OFFSHORE-FEDERA OL 01 R 500 1,500
11971 0 CHEVRON-SOUTH MARSH ISLAND 7 CHEVRON USA INC OFFSHORE-FEDERA OL 01 R 500 2,821
12034 0 ARCO-E. CAM. BLK. 60 ARCO NATURAL GAS MARKETING INC OFFSHORE-FEDERA OL 01 R 800 4,166
12087 0 ARCO-MIAMI CORP DEHYD ARCO NATURAL GAS MARKETING INC CAMERON LA 01 R 800 15,640
12100 0 ENSEARCH-KATY EXCHANGE LONE STAR GAS COMPANY WALLER TX O1 R 100 6,450
12112 0 CHEVRON-EUGENE ISLAND 238-E SABINE PRODUCTION CO OFFSHORE-FEDERA OL 01 R 500 4,659
12141 0 VALERO-CARTHAGE GAS UNIT #13 VALERO TRANSMISSION LP PANOLA TX 00 R 100 10,000
20741 0 STA 47 POOLING POINT OUACHITA LA 01 R 100 358
20108 0 BOSTON-SOUTHBRIDGE MASS BOSTON GAS CO WORCESTER MA 06 D 200 7,750
20110 0 BOSTON-CLINTON MASS BOSTON GAS CO WORCESTER MA 06 D 200 3,450 100 LBS
20111 0 BOSTON-LEOMINSTER MASS BOSTON GAS CO WORCESTER MA 06 D 200 7,100 100 LBS
20115 0 BOSTON-ARLINGTON MASS BOSTON GAS CO MIDDLESEX MA 06 D 200 39,767 100 LBS
20116 0 BOSTON-REVERE MASS BOSTON GAS CO MIDDLESEX MA 06 D 200 6,065 100 LBS
20117 0 BOSTON-LYNN MASS BOSTON GAS CO ESSEX MA 06 D 200 14,321 100 LBS
20118 0 BOSTON-BEVERLY-SALEM MASS BOSTON GAS CO ESSEX MA 06 D 200 25,500 100 LBS
20119 0 BOSTON-GLOUCESTER MASS BOSTON GAS CO ESSEX MA 06 D 200 6,895 100 LBS
20136 0 BOSTON-READING MASS BOSTON GAS CO MIDDLESEX MA 06 D 200 16,500 100 LBS
20191 0 BOSTON-SPENCER MASS BOSTON GAS CO WORCESTER HA 06 D 200 4,300 100 LBS
20192 0 BOSTON-LEXINGTON MASS BOSTON GAS CO MIDDLESEX MA 06 D 200 5,200 100 LBS
20341 0 BOSTON-BURLINGTON MASS BOSTON GAS CO MIDDLESEX MA 06 D 200 16,200 100 LBS
20343 0 BOSTON-LYNNFIELD MASS BOSTON GAS CO ESSEX MA 06 D 200 4,300 100 LBS
20389 0 BOSTON-W/PEABODY MASS BOSTON GAS CO ESSEX MA 06 D 200 3,050 100 LBS
20526 0 HONEOYE-STORAGE INC HONEOYE STORAGE CORPORATION ONTARIO NY 05 D 200 6,000
</TABLE>
7
<PAGE> 8
SERVICE PACKAGE NO. 2062
AMENDMENT NO. 0
<TABLE>
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
<CAPTION>
METER AMD METER NAME INTERCONNECT PARTY NAME COUNTY ST ZONE R/D LEG METER-TQ
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C> <C> <C> <C> <C> <C>
20578 0 PENN-NFG-ANDREWS SETTLEMENT SA PENN YORK ENERGY CORPORATION POTTER PA 04 D 300 5,800
60018 0 TGP - NORTHERN STORAGE INJECTI POTTER PA 04 D 300 36,952
NUMBER OF RECEIPT POINTS: 14
NUMBER OF DELIVERY POINTS: 17
THE SUM OF TRAMSPORTER'S DELIVERIES TO SHIPPER FOR ALL TRANSPORTATION CONTRACTS CONVERTED FROM FIRM SALES CANNOT ON ANY DAY EXCEED
THE FOLLOWING QUANTITIES:
20108 0 BOSTON-SOUTHBRIDGE MASS W0RCESTER MA 06 D 200 7,750
20110 0 BOSTON-CLINTON MASS BOSTON GAS CO WORCESTER MA 06 D 200 3,450
20111 0 BOSTON-LEOMINSTER MASS BOSTON GAS CO WORCESTER HA 06 D 200 7,100
20115 0 BOSTON-ARLINGTON MASS BOSTON GAS CO MIDDLESEX MA 06 D 200 39,767
20116 0 BOSTON-REVERE MASS BOSTON GAS CO MIDDLESEX MA 06 D 200 6,065
20117 0 BOSTON-LYNN MASS BOSTON GAS CO ESSEX MA 06 D 200 14,321
20118 0 BOSTON-BEVERLY-SALEM MASS BOSTON GAS CO ESSEX MA 06 D 200 2,550
20119 0 BOSTON-GLOUCESTER MASS BOSTON GAS CO ESSEX MA 06 D 200 6,895
20136 0 BOSTON-READING MASS BOSTON GAS CO MIDDLESEX HA 06 D 200 16,500
20191 0 BOSTON-SPENCER MASS BOSTON GAS CO WORORCESTER MA 96 D 200 4,300
20192 0 BOSTON-LEXINGTON MASS BOSTON GAS CO MIDDLESEX MA 06 D 200 5,200
20341 0 BOSTON-BURLINGTON MASS BOSTON GAS CO MIDDLESEX MA 06 D 200 16,200
20343 0 BOSTON-LYNNFIELD MASS BOSTON GAS CO ESSEX MA 06 D 200 4,300
20389 0 BOSTON-W PEABODY MASS BOSTON GAS CO ESSEX MA 06 D 200 3,050
20526 0 HONEOYE-STORAGE INC HONEOYE STORAGE CORPORATION ONTARIO NY 05 D 200 6,000
20578 0 PENN-NFG-ANDREWS SETTLEMENT SA PENN YORK ENERGY CORPORATION POTTER PA 04 D 300 5,800
20018 0 TGP-NORTHERN STORAGE INJECTI POTTER PA 04 D 300 36,952
THE SUM OF TRAMSPORTER'S DELIVERIES TO SHIPPER FOR ALL TRANSPORTATION CONTRACTS CONVERTED FROM FIRM SALES CANNOT EXCEED
57,483 DTH/DAY FOR THE FOLLOWING METERS:
20136 0 BOSTON-READING MASS BOSTON GAS CO MIDDLESEX MA 06 D 200
20117 0 BOSTON-LYNN MASS BOSTON GAS CO ESSEX MA 06 D 200
20118 0 BOSTON-BEVERLY-SALEM MASS BOSTON GAS CO ESSEX MA 06 D 200
20119 0 BOSTON-GLOUCESTER MASS BOSTON GAS CO ESSEX MA 06 D 200
20343 0 BOSTON-LYNNFIELD MASS BOSTON GAS CO ESSEX MA 06 D 200
23389 0 BOSTON-W PEABODY MASS BOSTON GAS CO ESSEX HA 06 D 200
20116 0 BOSTON-REVERE MASS BOSTON GAS CO MIDDLESEX MA 06 D 200
</TABLE>
METERS 060018 AND 070018 ARE FOR NOMINATION PURPOSES ONLY AND DO NOT DENOTE
CAPACITY AT THESE SPECIFIC POINTS.
8
<PAGE> 1
EXHIBIT 10.2
Contract #: 800285
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
This Service_Agreement, made and entered into this 30th day of
December 1993, by and between TEXAS EASTERN TRANSMISSION
CORPORATION, a Delaware Corporation (herein called "Pipeline")
and BOSTON GAS COMPANY (herein called "Customer", whether one or
more),
WITNESSETH:
WHEREAS, the Federal Energy Regulatory Commission required
Pipeline to restructure Pipeline's services to reflect compliance
with Order Nos. 636, 636-A, and 636-B (collectively hereinafter
referred to as "Order No. 636"); and
WHEREAS, by order issued January 13, 1993 (62 FERC P61,015) and
order issued April 22, 1993 (63 FERC P61,100), the Federal Energy
Regulatory Commission accepted Pipeline's revised tariff sheets
filed in compliance with Order No. 636 to become effective June
1, 1993, subject to certain conditions set forth in the April 22,
1993 order; and
WHEREAS, Algonquin Gas Transmission Company ("Algonquin") made
its final Order No. 636 service elections on May 3, 1993 pursuant
to the April 22, 1993 order and Pipeline filed revised tariff
sheets to become effective June 1, 1993 in compliance with the
April 22, 1993 order; and
WHEREAS, Customer is also a customer of Algonquin; and
WHEREAS, Algonquin, in compliance with Order No. 636 and
Federal Energy Regulatory Commission orders issued in Docket No.
RS92-28, is assigning its firm service rights on Pipeline
directly to its customers; and
WHEREAS, Customer's service rights hereunder are part of
Algonquin's service rights being assigned to its customers; and
WHEREAS, Pipeline and Customer now desire to enter into this
Service Agreement to reflect the assignment of Algonquin's
service rights to Customer;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the parties do
covenant and agree as follows:
ARTICLE I
SCOPE OF AGREEMENT
Subject to the terms, conditions and limitations hereof, of
Pipeline's Rate Schedule FT-1, and of the General Terms and
Conditions, transportation service hereunder will be firm.
Subject to the terms, conditions and limitations hereof and of
Pipeline's Rate Schedule FT-1, Pipeline agrees to deliver for
<PAGE> 2
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
(Continued)
Customer's account quantities of natural gas up to the following
quantity:
Maximum Daily Quantity (MDQ) 83,133 dth
Pipeline shall receive for Customer's account, at those points
on Pipeline's system as specified in Article IV herein or
available to Customer pursuant to Section 14 of the General Terms
and Conditions (hereinafter referred to as Point(s) of Receipt)
for transportation hereunder daily quantities of gas up to
Customer's MDQ, plus Applicable Shrinkage. Pipeline shall
transport and deliver for Customer's account, at those points on
Pipeline's system as specified in Article IV herein or available
to Customer pursuant to Section 14 of the General Terms and
Conditions (hereinafter referred to as Point(s) of Delivery),
such daily quantities tendered up to such Customer's MDQ.
Pipeline shall not be obligated to, but may at its discretion,
receive at any Point of Receipt on any day a quantity of gas in
excess of the applicable Maximum Daily Receipt Obligation (MDRO),
plus Applicable Shrinkage, but shall not receive in the aggregate
at all Points of Receipt on any day a quantity of gas in excess
of the applicable MDQ, plus Applicable Shrinkage. Pipeline shall
not be obligated to, but may at its discretion, deliver at any
Point of Delivery on any day a quantity of gas in excess of the
applicable Maximum Daily Delivery Obligation (MDDO), but shall
not deliver in the aggregate at all Points of Delivery on any day
a quantity of gas in excess of the applicable MDQ.
In addition to the MDQ and subject to the terms, conditions and
limitations hereof, Rate Schedule FT-1 and the General Terms and
Conditions, Pipeline shall deliver within the Access Area under
this and all other service agreements under Rate Schedules CDS,
FT-1, and/or SCT, quantities up to Customer's Operational Segment
Capacity Entitlements, excluding those Operational Segment
Capacity Entitlements scheduled to meet Customer's MDQ, for
Customer's account, as requested on any day.
ARTICLE II
TERM OF AGREEMENT
The term of this Service Agreement shall commence on June 1,
1993 and shall continue in force and effect until 04/30/2012 and
year to year thereafter unless this Service Agreement is
terminated as hereinafter provided. This Service Agreement may
be terminated by either Pipeline or Customer upon five (5) years
prior written notice to the other specifying a termination date
of any year occurring on or after the expiration of the primary
term. In addition to Pipeline rights under Section 22 of
Pipeline's General Terms and Conditions and without prejudice to
such rights, this Service Agreement may be terminated at any time
by Pipeline in the event Customer fails to pay part or all of the
2
<PAGE> 3
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
(Continued)
amount of any bill for service hereunder and such failure
continues for thirty (30) days after payment is due; provided,
Pipeline gives thirty (30) days prior written notice to Customer
of such termination and provided further such termination shall
not be effective if, prior to the date of termination, Customer
either pays such outstanding bill or furnishes a good and
sufficient surety bond guaranteeing payment to Pipeline of such
outstanding bill.
THE TERMINATION OF THIS SERVICE AGREEMENT WITH A FIXED CONTRACT
TERM OR THE PROVISION OF A TERMINATION NOTICE BY CUSTOMER
TRIGGERS PREGRANTED ABANDONMENT UNDER SECTION 7 OF THE NATURAL
GAS ACT AS OF THE EFFECTIVE DATE OF THE TERMINATION. PROVISION
OF A TERMINATION NOTICE BY PIPELINE ALSO TRIGGERS CUSTOMER'S
RIGHT OF FIRST REFUSAL UNDER SECTION 3.13 OF THE GENERAL TERMS
AND CONDITIONS ON THE EFFECTIVE DATE OF THE TERMINATION.
Any portions of this Service Agreement necessary to correct or
cash-out imbalances under this Service Agreement as required by the
General Terms and Conditions of Pipeline's FERC Gas Tariff, Volume
No. 1, shall survive the other parts of this Service Agreement until
such time as such balancing has been accomplished.
ARTICLE III
RATE SCHEDULE
This Service Agreement in all respects shall be and remain
subject to the applicable provisions of Rate Schedule FT-1 and of
the General Terms and Conditions of Pipeline's FERC Gas Tariff on
file with the Federal Energy, Regulatory Commission, all of which
are by this reference made a part hereof.
Customer shall pay Pipeline, for all services rendered
hereunder and for the availability of such service in the period
stated, the applicable prices established under Pipeline's Rate
Schedule FT-1 as filed with the Federal Energy Regulatory
Commission, and as same may hereafter be legally amended or
superseded.
Customer agrees that Pipeline shall have the unilateral right
to file with the appropriate regulatory authority and make
changes effective in (a) the rates and charges applicable to
service pursuant to Pipeline's Rate Schedule FT-1, (b) Pipeline's
Rate Schedule FT-1 pursuant to which service hereunder is
rendered or (c) any provision of the General Terms and Conditions
applicable to Rate Schedule FT-1. Notwithstanding the foregoing,
Customer does not agree that Pipeline shall have, the unilateral
right without the consent of Customer subsequent to the execution
of this Service Agreement and Pipeline shall not have the right
during the effectiveness of this Service Agreement to make any
filings pursuant to Section 4 of the Natural Gas Act to change
3
<PAGE> 4
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
(Continued)
the MDQ specified in Article I, to change the term of the
agreement as specified in Article II, to change Point(s) of
Receipt specified in Article IV, to change the Point(s) of
Delivery specified in Article IV, or to change the firm character
of the service hereunder. Pipeline agrees that Customer may
protest or contest the aforementioned filings, and Customer does
not waive any rights it may have with respect to such filings.
ARTICLE IV
POINT(S) OF RECEIPT AND POINT(S) OF DELIVERY
The Point(s) of Receipt and Point(s) of Delivery at which
Pipeline shall receive and deliver gas, respectively, shall be
specified in Exhibit(s) A and B of the executed service
agreement. Customer's Zone Boundary Entry Quantity and Zone
Boundary Exit Quantity for each of Pipeline's zones shall be
specified in Exhibit C of the executed service agreement.
Exhibit(s) A, B and C are hereby incorporated as part of this
Service Agreement for all intents and purposes as if fully copied
and set forth herein at length.
ARTICLE V
QUALITY
All natural gas tendered to Pipeline for Customer's account
shall conform to the quality specifications set forth in
Section 5 of Pipeline's General Terms and Conditions. Customer
agrees that in the event Customer tenders for service hereunder
and Pipeline agrees to accept natural gas which does not comply
with Pipeline's quality specifications, as expressly provided for
in Section 5 of Pipeline's General Terms and Conditions, Customer
shall pay all costs associated with processing of such gas as
necessary to comply with such quality specifications. Customer
shall execute or cause its supplier to execute, if such supplier
has retained processing rights to the gas delivered to Customer,
the appropriate agreements prior to the commencement of service
for the transportation and processing of any liquefiable
hydrocarbons and any PVR quantities associated with the
processing of gas received by Pipeline at the Point(s) of Receipt
under such Customer's service agreement. In addition, subject to
the execution of appropriate agreements, Pipeline is willing to
transport liquids associated with the gas produced and tendered
for transportation hereunder.
4
<PAGE> 5
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
(Continued)
ARTICLE VI
ADDRESSES
Except as herein otherwise provided or as provided in the
General Terms and Conditions of Pipeline's FERC Gas Tariff, any
notice, request, demand, statement, bill or payment provided for
in this Service Agreement, or any notice which any party may
desire to give to the other, shall be in writing and shall be
considered as duly delivered when mailed by registered, certi-
fied, or regular mail to the post office address of the parties
hereto, as the case may be, as follows:
(a) Pipeline: TEXAS EASTERN TRANSMISSION CORPORATION
5400 Westheimer Court
Houston, TX 77056-5310
(b) Customer: BOSTON GAS COMPANY
ONE BEACON STREET
BOSTON, MA 02108
or such other address as either party shall designate by formal
written notice.
ARTICLE VII
ASSIGNMENTS
Any Company which shall succeed by purchase, merger, or
consolidation to the properties, substantially as an entirety, of
Customer, or of Pipeline, as the case may be, shall be entitled
to the rights and shall be subject to the obligations of its
predecessor in title under this Service Agreement; and either
Customer or Pipeline may assign or pledge this Service Agreement
under the provisions of any mortgage, deed of trust, indenture,
bank credit agreement, assignment, receivable sale, or similar
instrument which it has executed or may execute hereafter;
otherwise, neither Customer nor Pipeline shall assign this
Service Agreement or any of its rights hereunder unless it first
shall have obtained the consent thereto in writing of the other;
provided further, however, that neither Customer nor Pipeline
shall be released from its obligations hereunder without the
consent of the other. In addition, Customer may assign its
rights to capacity pursuant to Section 3.14 of the General Terms
and Conditions. To the extent Customer so desires, when it
releases capacity pursuant to Section 3.14 of the General Terms
and Conditions, Customer may require privity between Customer and
the Replacement Customer, as further provided in the applicable
Capacity Release Umbrella Agreement.
5
<PAGE> 6
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
(Continued)
ARTICLE VIII
INTERPRETATION
The interpretation and performance of this Service Agreement
shall be in accordance with the laws of the State of Texas
without recourse to the law governing conflict of laws.
This Service Agreement and the obligations of the parties are
subject to all present and future valid laws with respect to the
subject matter, State and Federal, and to all valid present and
future orders, rules, and regulations of duly constituted
authorities having jurisdiction.
ARTICLE IX
CANCELLATION OF PRIOR CONTRACT(S)
This Service Agreement supersedes and cancels, as of the
effective date of this Service Agreement, the contract(s) between
the parties hereto as described below:
NONE
6
<PAGE> 7
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
(Continued)
IN WITNESS WHEREOF, the parties hereto have caused this Service
Agreement to be signed by their respective Presidents, Vice
Presidents or other duly authorized agents and their respective
corporate seals to be hereto affixed and attested by their
respective Secretaries or Assistant Secretaries, the day and year
first above written.
TEXAS EASTERN TRANSMISSION CORPORATION
By /s/ Diane T. Tom
------------------------------------
Vice President
ATTEST
/s/ Robert W. Reed
-----------------
BOSTON GAS COMPANY
By /s/ William R. Luthern
------------------------------------
ATTEST:
-----------------
7
<PAGE> 8
Contract #800285
<TABLE>
EXHIBIT A, TRANSPORTATION PATHS
FOR BILLING PURPOSES, DATED _____________,
TO THE SERVICE AGREEMENT UNDER RATE SCHEDULE FT-1
BETWEEN TEXAS EASTERN TRANSMISSION CORPORATION ("Pipeline")
AND BOSTON GAS COMPANY ("Customer"),
DATED _____________:
(1) Customer's firm Point(s) of Receipt:
<CAPTION>
Maximum Daily
Point Receipt Obligation
of (plus Applicable Measurement
Receipt Description Shrinkaqe) Responsibilities Owner Operator
------- ----------- ------------------ ---------------- ----- --------
<S> <C>
None
</TABLE>
(2) Customer shall have Pipeline's Master Receipt Point List
("MRPL"). Customer hereby agrees that Pipeline's MRPL as revised
and published by Pipeline from time to time is incorporated herein by
reference.
Customer hereby agrees to comply with the Receipt Pressure
Obligation as set forth in Section 6 of Pipeline's General Terms and
Conditions at such Point(s) of Receipt.
<TABLE>
<CAPTION>
Transportation
Transportation Path Path Quantity (Dth/D)
------------------- ---------------------
<S> <C>
M1 to M3 83,133
</TABLE>
SIGNED FOR IDENTIFICATION
PIPELINE: /S/ DIANE T. TOM
-----------------------------
CUSTOMER: /S/ WILLIAM R. LUTHEEN
-----------------------------
SUPERSEDES EXHIBIT A DATED:
------------
A-1
<PAGE> 9
Contract #:800285
<TABLE>
EXHIBIT B, POINT(S) OF DELIVERY, DATED _____________,
TO THE SERVICE AGREEMENT UNDER RATE SCHEDULE FT-1
BETWEEN TEXAS EASTERN TRANSMISSION CORPORATION ("Pipeline"), AND
BOSTON GAS COMPANY ( "Customer" ),
DATED ________________:
<CAPTION>
Maximum
Daily
Delivery Delivery Measurement
Point of Obliqation Pressure Responsi-
Delivery Description (dth) Obliqation bilities Owner Operator
-------- ----------- ---------- ---------- ----------- ----- --------
<S> <C> <C> <C> <C> <C> <C>
1. 70087 ALGONQUIN - LAMBERTVILLE, 83,133 AS REQUESTED TX EAST TX EAST ALGONQUIN
NJ HUNTERDON CO., NJ BY CUSTOMER, TRAN TRAN
NOT TO
EXCEED 750
PSIG
2. 71078 ALGONQUIN - HANOVER, NJ 72,571 AS REQUESTED TX EAST TX EAST ALGONQUIN
MORRIS CO., NJ BY CUSTOMER, TRAN TRAN
NOT TO
EXCEED 750
PSIG
3. 79513 SS-1 STORAGE POINT 24,125 N/A N/A N/A N/A
04/01-10/31
24,125
11/01-03/31
4. 79818 AGT-BOSTON GAS - FOR 0 N/A N/A N/A N/A
NOMINATION PURPOSES
</TABLE>
provided, however, that until changed by a subsequent Agreement
between Pipeline and Customer, Pipeline's aggregate maximum daily delivery
obligations at each of the Points of Delivery described above, including
Pipeline's maximum daily delivery obligation under this and all other firm
Service Agreements existing between Pipeline and Customer, shall in no event
exceed the following:
B-1
<PAGE> 10
Contract #: 800285
<TABLE>
EXHIBIT B, POINT(S) OF DELIVERY (Continued)
BOSTON GAS COMPANY
<CAPTION>
AGGREGATE MAXIMUM DAILY
POINT OF DELIVERY DELIVERY OBLIGATION. (DTH)
----------------- --------------------------
<S> <C>
No. 1 157,064
No. 2 72,571
No. 3 24,125
</TABLE>
SIGNED FOR IDENTIFICATION
PIPELINE: /s/ Diane T. Tom
-------------------------
CUSTOMER: /s/ William R. Luthern
-------------------------
SUPERSEDES EXHIBIT B DATED
---------
B-2
<PAGE> 11
Contract #:800285
<TABLE>
EXHIBIT C, ZONE BOUNDARY ENTRY QUANTITY AND ZONE BOUNDARY EXIT QUANTITY,
DATED _____________________, TO THE SERVICE AGREEMENT UNDER RATE SCHEDULE FT-1
BETWEEN TEXAS EASTERN TRANSMISSION CORPORATION ("PIPELINE") AND
BOSTON GAS COMPANY ("CUSTOMER"), DATED ___________________:
ZONE BOUNDARY ENTRY QUANTITY
Dth/D
To
--
<CAPTION>
FROM STX ETX WLA ELA M1-24 M1-30 M1-TXG M1-TGC M2-24 M2-30 M2-TXG M2-TGC M2 M3
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STX 2358
ETX 10020 3567
WLA 1085 2358
ELA 65096
M1-24 10020
M1-30 65096
M1-TXG 4652
M1-TGC 4715
M2-24
M2-3O
M2-TXG
M2-TGC
M2 83133
M3
</TABLE>
C-1
<PAGE> 12
Contract #:800285
<TABLE>
EXHIBIT C (Continued)
BOSTON GAS COMPANY
ZONE BOUNDARY EXIT QUANTITY
Dth/D
To
--
<CAPTION>
FROM STX ETX WLA ELA M1-24 M1-30 M1-TXG M1-TGC M2-24 M2-30 M2-TXG M2-TGC M2 M3
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STX
ETX
WLA
ELA
M1-24 10020
M1-30 65096
M1-TXG 4652
M1-TGC 4715
M2-24
M2-3O
M2-TXG
M2-TGC
M2 83133
M3
</TABLE>
SIGNED FOR IDENTIFICATION
PIPELINE: /s/ Diane T. Tom
--------------------------
CUSTOMER: /s/ William R. Lutheen
--------------------------
SUPERCEDES EXHIBIT C DATED
---------
C-2
<PAGE> 1
Contract #: 800286
------
Exhibit 10.3
SERVICE AGREEMENT
FOR RATE SCHEDULE CDS
This Service Agreement, made and entered into this 30th day
of December, 1993, by and between TEXAS EASTERN TRANSMISSION
CORPORATION, a Delaware Corporation (herein called "Pipeline")
and BOSTON GAS COMPANY (herein called "Customer", whether one or
more),
WITNESSETH:
WHEREAS, the Federal Energy Regulatory Commission required
Pipeline to restructure Pipeline's services to reflect compliance
with Order Nos. 636, 636-A, and 636-B (collectively hereinafter
referred to as "Order No. 636"); and
WHEREAS, by order issued January 13, 1993 (62 FERC P61,015)
and order issued April 22, 1993 (63 FERC P61,1OO), the Federal
Energy Regulatory Commission accepted Pipeline's revised tariff
sheets filed in compliance with Order No. 636 to become effective
June 1, 1993, subject to certain conditions set forth in the
April 22, 1993 order; and
WHEREAS, Algonquin Gas Transmission Company ("Algonquin")
made its final Order No. 636 service elections on May 3, 1993
pursuant to the April 22, 1993 order and Pipeline filed revised
tariff sheets to become effective June 1, 1993 in compliance with
the April 22, 1993 order; and
WHEREAS, Customer is also a customer of Algonquin; and
WHEREAS, Algonquin, in compliance with Order No. 636 and
Federal Energy Regulatory Commission orders issued in Docket No.
RS92-28, is assigning its firm service rights on Pipeline
directly to its customers; and
WHEREAS, Customer's service rights hereunder are part of
Algonquin's service rights being assigned to its customers; and
WHEREAS, Pipeline and Customer now desire to enter into this
Service Agreement to reflect the assignment of Algonquin's
service rights to Customer;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and'agreements herein contained, the parties do
covenant and agree as follows:
ARTICLE I
SCOPE OF AGREEMENT
Subject to the terms, conditions and limitations hereof, of
Pipeline's Rate Schedule CDS, and of the General Terms and
Conditions, transportation service hereunder will be firm.
Subject to the terms, conditions and limitations hereof and of
Sections 2.3 and 2.4 of Pipeline's Rate Schedule CDS, Pipeline
<PAGE> 2
SERVICE AGREEMENT
FOR RATE SCHEDULE CDS
(Continued)
shall deliver to those points on Pipeline's system as specified
in Article IV herein or available to Customer pursuant to Section
14 of the General Terms and Conditions (hereinafter referred to
as Point(s) of Delivery), for Customer's account, as requested
for any day, natural gas quantities up to Customer's MDQ.
Customer's MDQ is as follows:
Maximum Daily Quantity (MDQ) 30,371 dth
Subject to variances as may be permitted by Sections 2.4 of
Rate Schedule CDS or the General Terms and Conditions, Customer
shall deliver to Pipeline and Pipeline shall receive, for
Customer's account, at those points on Pipeline's system as
specified in Article IV herein or available to Customer pursuant
to Section 14 of the General Terms and Conditions (hereinafter
referred to as Point(s) of Receipt) daily quantities of gas equal
to the daily quantities delivered to Customer pursuant to this
Service Agreement up to Customer's MDQ, plus Applicable Shrinkage
as specified in the General Terms and Conditions.
Pipeline shall not be obligated to, but may at its
discretion, receive at any Point of Receipt on any day a quantity
of gas in excess of the applicable Maximum Daily Receipt
Obligation (MDRO), plus Applicable Shrinkage, but shall not
receive in the aggregate at all Points of Receipt on any day a
quantity of gas in excess of the applicable MDQ, plus Applicable
Shrinkage. Pipeline shall not be obligated to, but may at its
discretion, deliver at any Point of Delivery on any day a
quantity of gas in excess of the applicable Maximum Daily
Delivery Obligation (MDDO), but shall not deliver in the
aggregate at all Points of Delivery on any day a quantity of gas
in excess of the MDQ.
In addition to the MDQ and subject to the terms, conditions
and limitations hereof, Rate Schedule CDS and the General Terms
and Conditions, Pipeline shall deliver within the Access Area
under this and all other service agreements under Rate Schedules
CDS, FT-1, and/or SCT, quantities up to Customer's Operational
Segment Capacity Entitlements, excluding those Operational
Segment Capacity Entitlements scheduled to meet Customer's MDQ,
for Customer's account, as requested on any day.
ARTICLE II
TERM OF AGREEMENT
The term of this Service Agreement shall commence on June 1,
1993 and shall continue in force and effect until 04/30/2012 and
year to year thereafter unless this Service Agreement is
terminated as hereinafter provided. This Service Agreement may
be terminated by either Pipeline or Customer upon five (5) years
prior written notice to the other specifying a termination date
2
<PAGE> 3
SERVICE AGREEMENT
FOR RATE SCHEDULE CDS
(Continued)
of any year occurring on or after the expiration of the primary
term. In addition to Pipeline rights under Section 22 of
Pipeline's General Terms and Conditions and without prejudice to
such rights, this Service Agreement may be terminated at any time
by Pipeline in the event Customer fails to pay part or all of the
amount of any bill for service hereunder and such failure
continues for thirty (30) days after payment is due; provided,
Pipeline gives thirty (30) days prior written notice to Customer
of such termination and provided further such termination shall
not be effective if, prior to the date of termination, Customer
either pays such outstanding bill or furnishes a good and
sufficient surety bond guaranteeing payment to Pipeline of such
outstanding bill.
THE TERMINATION OF THIS SERVICE AGREEMENT WITH A FIXED
CONTRACT TERM OR THE PROVISION OF A TERMINATION NOTICE BY
CUSTOMER TRIGGERS PREGRANTED ABANDONMENT UNDER SECTION 7 OF THE
NATURAL GAS ACT AS OF THE EFFECTIVE DATE OF THE TERMINATION.
PROVISION OF A TERMINATION NOTICE BY PIPELINE ALSO TRIGGERS
CUSTOMER' S RIGHT OF FIRST REFUSAL UNDER SECTION 3.13 OF THE
GENERAL TERMS AND CONDITIONS ON THE EFFECTIVE DATE OF THE
TERMINATION.
Any portions of this Service Agreement necessary to correct
or cash-out imbalances under this Service Agreement as required
by the General Terms and Conditions of Pipeline's FERC Gas
Tariff, Volume No. 1, shall survive the other parts of this
Service Agreement until such time as such balancing has been
accomplished.
ARTICLE III
RATE SCHEDULE
This Service Agreement in all respects shall be and remain
subject to the applicable provisions of Rate Schedule CDS and of
the General Terms and Conditions of Pipeline's FERC Gas Tariff on
file with the Federal Energy Regulatory Commission, all of which
are by this reference made a part hereof.
Customer shall pay Pipeline, for all services rendered
hereunder and for the availability of such service in the period
stated, the applicable prices established under Pipeline's Rate
Schedule CDS as filed with the Federal Energy Regulatory
Commission, and as same may hereafter be legally amended or
superseded.
Customer agrees that Pipeline shall have the unilateral
right to file with the appropriate regulatory authority and make
changes effective in (a) the rates and charges applicable to
service pursuant to Pipeline's Rate Schedule CDS, (b) Pipeline's
Rate Schedule CDS pursuant to which service hereunder is rendered
3
<PAGE> 4
SERVICE AGREEMENT
FOR RATE SCHEDULE CDS
(Continued)
or (c) any provision of the General Terms and Conditions
applicable to Rate Schedule CDS. Notwithstanding the foregoing,
Customer does not agree that Pipeline shall have the unilateral
right without the consent of Customer subsequent to the execution
of this Service Agreement and Pipeline shall not have the right
during the effectiveness of this Service Agreement to make any
filings pursuant to Section 4 of the Natural Gas Act to change
the MDQ specified in Article I, to change the term of the
agreement as specified in Article II, to change Point(s) of
Receipt specified in Article IV, to change the Point(s) of
Delivery specified in Article IV, or to change the firm character
of the service hereunder. Pipeline agrees that Customer may
protest or contest the aforementioned filings, and Customer does
not waive any rights it may have with respect to such filings.
ARTICLE IV
POINT(S) OF RECEIPT AND POINT(S) OF DELIVERY
The Point(s) of Receipt and Point(s) of Delivery at which
Pipeline shall receive and deliver gas, respectively, shall be
specified in Exhibit(s) A and B of the executed service
agreement. Customer's Zone Boundary Entry Quantity and Zone
Boundary Exit Quantity for each of Pipeline's zones shall be
specified in Exhibit C of the executed service agreement.
Exhibit(s) A, B and C are hereby incorporated as part of
this Service Agreement for all intents and purposes as if fully
copied and set forth herein at length.
ARTICLE V
QUALITY
All natural gas tendered to Pipeline for Customer's account
shall conform to the quality specifications set forth in
Section 5 of Pipeline's General Terms and Conditions. Customer
agrees that in the event Customer tenders for service hereunder
and Pipeline agrees to accept natural gas which does not comply
with Pipeline's quality specifications, as expressly provided for
in Section 5 of Pipeline's General Terms and Conditions, Customer
shall pay all costs associated with processing of such gas as
necessary to comply with such quality specifications. Customer
shall execute or cause its supplier to execute, if such supplier
has retained processing rights to the gas delivered to Customer,
the appropriate agreements prior to the commencement of service
for the transportation and processing of any liquefiable
hydrocarbons and any PVR quantities associated with the
processing of gas received by Pipeline at the Point(s) of Receipt
under such Customer's service agreement. In addition, subject to
the execution of appropriate agreements, Pipeline is willing to
4
<PAGE> 5
SERVICE AGREEMENT
FOR RATE SCHEDULE CDS
(Continued)
transport liquids associated with the gas produced and tendered
for transportation hereunder.
ARTICLE VI
ADDRESSES
Except as herein otherwise provided or as provided in the
General Terms and Conditions of Pipeline's FERC Gas Tariff, any
notice, request, demand, statement, bill or payment provided for
in this Service Agreement, or any notice which any party may
desire to give to the other, shall be in writing and shall be
considered as duly delivered when mailed by registered, certi-
fied, or regular mail to the post office address of the parties
hereto, as the case may be, as follows:
(a) Pipeline: TEXAS EASTERN TRANSMISSION CORPORATION
5400 Westheimer Court
Houston, TX 77056-5310
(b) Customer: BOSTON GAS COMPANY
One Beacon Street
Boston, MA 02108
or such other address as either party shall designate by formal
written notice.
ARTICLE VII
ASSIGNMENTS
Any Company which shall succeed by purchase, merger, or
consolidation to the properties, substantially as an entirety, of
Customer, or of Pipeline, as the case may be, shall be entitled
to the rights and shall be subject to the obligations of its
predecessor in title under this Service Agreement; and either
Customer or Pipeline may assign or pledge this Service Agreement
under the provisions of any mortgage, deed of trust, indenture,
bank credit agreement, assignment, receivable sale, or similar
instrument which it has executed or may execute hereafter;
otherwise, neither Customer nor Pipeline shall assign this
Service Agreement or any of its rights hereunder unless it first
shall have obtained the consent thereto in writing of the other;
provided further, however, that neither Customer nor Pipeline
shall be released from its obligations hereunder without the
consent of the other. In addition, Customer may assign its
rights to capacity pursuant to Section 3.14 of the General Terms
and Conditions. To the extent Customer so desires, when it
releases capacity pursuant to Section 3.14 of the General Terms
and Conditions, Customer may require privity between Customer and
5
<PAGE> 6
SERVICE AGREEMENT
FOR RATE SCHEDULE CDS
(Continued)
the Replacement Customer, as further provided in the applicable
Capacity Release Umbrella Agreement.
ARTICLE VIII
INTERPRETATION
The interpretation and performance of this Service Agreement
shall be in accordance with the laws of the State of Texas
without recourse to the law governing conflict of laws.
This Service Agreement and the obligations of the parties
are subject to all present and future valid laws with respect to
the subject matter, State and Federal, and to all valid present
and future orders, rules, and regulations of duly constituted
authorities having jurisdiction.
ARTICLE IX
CANCELLATION OF PRIOR CONTRACT(S)
This Service Agreement supersedes and cancels, as of the
effective date of this Service Agreement, the contract(s) between
the parties hereto as described below:
NONE
6
<PAGE> 7
SERVICE AGREEMENT
FOR RATE SCHEDULE CDS
(Continued)
IN WITNESS WHEREOF, the parties hereto have caused this
Service Agreement to be signed by their respective Presidents,
Vice Presidents or other duly authorized agents and their respec-
tive corporate seals to be hereto affixed and attested by their
respective Secretaries or Assistant Secretaries, the day and year
first above written.
TEXAS EASTERN TRANSMISSION CORPORATION
By /s/ Diane T. Tom
----------------------------------
Vice President
ATTEST:
/s/ Robert W. Reed
------------------
BOSTON GAS COMPANY
By /s/ William R. Luthern
----------------------------------
ATTEST:
------------------
7
<PAGE> 8
Contract #800286
EXHIBIT A, TRANSPORTATION PATHS
FOR BILLING PURPOSES, DATED _____________,
TO THE SERVICE AGREEMENT UNDER RATE SCHEDULE CDS
BETWEEN TEXAS EASTERN TRANSMISSION CORPORATION ("Pipeline")
AND BOSTON GAS COMPANY ("Customer"),
DATED ____________:
<TABLE>
(1) Customer's firm Point(s) of Receipt:
<CAPTION>
Maximum Daily
Point Receipt Obligation
of (plus Applicable Measurement
Receipt Description Shrinkage) Responsibilities Owner Operator
------- ----------- ------------------ ---------------- ----- --------
<S> <C> <C> <C> <C> <C>
None
</TABLE>
(2) Customer shall have Pipeline's Master Receipt Point List
("MRPL"). Customer hereby agrees that Pipeline's MRPL as-'
revised and published by Pipeline from time to time is incorporated
herein by reference.
Customer hereby agrees to comply with the Receipt Pressure
Obligation as set forth in Section 6 of Pipeline's General Terms
and Conditions at such Point(s) of Receipt.
<TABLE>
<CAPTION>
Transportation
Transportation Path Path Quantity (Dth/D)
------------------- ---------------------
<S> <C>
MI to M3 30,371
</TABLE>
SIGNED FOR IDENTIFICATION
PIPELINE: /s/ Diane T. Tom
-----------------------------
CUSTOMER: /s/ William B. Luthern
-----------------------------
SUPERSEDES EXHIBIT A DATED: -------------
A-1
<PAGE> 9
Contract #:800286
<TABLE>
EXHIBIT B, POINT(S) OF DELIVERY, DATED ______________,
TO THE SERVICE AGREEMENT UNDER RATE SCHEDULE CDS
BETWEEN TEXAS EASTERN TRANSMISSION CORPORATION ("Pipeline"), AND
BOSTON GAS COMPANY ("Customer"),
DATED _____________:
<CAPTION>
Maximum
Daily Delivery Measurement
Point of Delivery Pressure Responsi-
Delivery Description Obligation Obligation bilities Owner Operator
-------- ----------- ---------- ---------- --------- ----- --------
(dth)
<S> <C> <C> <C> <C> <C>
1. 70087 ALGONQUIN - LAMBERTVILLE, 30,371 AS REQUESTED TX EAST TX EAST ALGONQUIN
NJ HUNTERDON CO., NJ BY CUSTOMER, TRAN TRAN
NOT TO
EXCEED 750
PSIG
2. 71078 ALGONQUIN - HANOVER, NJ 30,371 AS REQUESTED TX EAST TX EAST ALGONQUIN
MORRIS CO., NJ BY CUSTOMER, TRAN TRAN
NOT TO
EXCEED 750
PSIG
3. 79513 SS-1 STORAGE POINT 24,125 N/A N/A N/A N/A
04/01-10/31
24,125
11/01-03/31
4. 79818 AGT-BOSTON GAS - FOR 0 N/A N/A N/A N/A
NOMINATION PURPOSES
</TABLE>
provided, however, that until changed by a subsequent Agreement
between Pipeline and Customer, Pipeline's aggregate maximum daily
delivery obligations at each of the Points of Delivery described above,
including Pipeline's maximum daily delivery obligation under this and all
other firm Service Agreements existing between Pipeline and Customer, shall
in no event exceed the following:
B-1
<PAGE> 10
Contract #: 800286
<TABLE>
EXHIBIT B, POINT(S) OF DELIVERY (Continued)
BOSTON GAS COMPANY
<CAPTION>
AGGREGATE MAXIMUM DAILY
POINT OF DELIVERY DELIVERY OBLIGATION (DTH)
----------------- -------------------------
<S> <C>
No. 1 157,064
No. 2 72,571
No. 3 24,125
</TABLE>
SIGNED FOR IDENTIFICATION
PIPELINE: /s/ Diane T. Tom
---------------------------
CUSTOMER: /s/ William B. Luthern
---------------------------
SUPERSEDES EXHIBIT B DATED ----------
B-2
<PAGE> 11
Contract #:800286
<TABLE>
EXHIBIT C, ZONE BOUNDARY ENTRY QUANTITY AND ZONE BOUNDARY EXIT QUANTITY,
DATED _____________________, TO THE SERVICE AGREEMENT UNDER RATE SCHEDULE CDS
BETWEEN TEXAS EASTERN TRANSMISSION CORPORATION ("PIPELINE") AND
BOSTON GAS COMPANY ("CUSTOMER"), DATED __________________:
ZONE BOUNDARY ENTRY QUANTITY
Dth/D
To
--
<CAPTION>
FROM STX ETX WLA ELA M1-24 M1-30 M1-TXG M1-TGC M2-24 M2-30 M2-TXG M2-TGC M2 M3
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STX 861
ETX 3661 1303
WLA 397 861
ELA 23781
M1-24 3661
M1-30 23781
M1-TXG 1700
M1-TGC 1723
M2-24
M2-3O
M2-TXG
M2-TGC
M2 30371
M3
</TABLE>
C-1
<PAGE> 12
Contract #:800286
<TABLE>
EXHIBIT C (Continued)
BOSTON GAS COMPANY
ZONE BOUNDARY EXIT QUANTITY
Dth/D
To
--
<CAPTION>
FROM STX ETX WLA ELA M1-24 M1-30 M1-TXG M1-TGC M2-24 M2-30 M2-TXG M2-TGC M2 M3
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STX
ETX
WLA
ELA
M1-24 3661
M1-30 23781
M1-TXG 1700
M1-TGC 1723
M2-24
M2-3O
M2-TXG
M2-TGC
M2 30371
M3
</TABLE>
SIGNED FOR IDENTIFICATION:
PIPELINE: /s/ Diane T. Tom
---------------------------
CUSTOMER: /s/ William B. Luthern
---------------------------
SUPERCEDES EXHIBIT C DATED
----------
C-2
<PAGE> 1
9WOO1
Exhibit 10.4
SERVICE AGREEMENT
(APPLICABLE TO RATE SCHEDULE AFT-1)
-----------------------------------
This Agreement ("Agreement") is made and entered into this 1st day of
June, 1993, by and between Algonquin Gas Transmission Company, a
Delaware Corporation (herein called "Algonquin"), and Boston Gas Company
(herein called "Customer" whether one or more persons).
In consideration of the premises and of the mutual covenants herein
contained, the parties do agree as follows:
ARTICLE I
SCOPE OF AGREEMENT
1.1 Subject to the terms, conditions and limitations hereof and
of Algonquin's Rate Schedule AFT-1, Algonquin agrees to receive
from or for the account of Customer for transportation on a
firm basis quantities of natural gas tendered by Customer on any day
at the Point(s) of Receipt; provided, however, Customer shall not
tender without the prior consent of Algonquin, at any Point of
Receipt on any day a quantity of natural gas in excess of the
applicable Maximum Daily Receipt Obligation for such Point of
Receipt plus the applicable Fuel Reimbursement Quantity; and
provided further that Customer shall not tender at all Point(s) of
Receipt on any day or in any year a cumulative quantity of natural
gas, without the prior consent of Algonquin, in excess of the
following quantities natural gas plus the applicable Fuel
Reimbursement Quantities:
<TABLE>
<S> <C>
Maximum Daily Transportation Quantity 48,234 MMBtu
Maximum Annual Transportation Quantity 2,894,040 MMBtu
</TABLE>
1.2 Algonquin agrees to transport and deliver to or for the account of
Customer at the Point(s) of Delivery and Customer agrees to accept
or cause acceptance of delivery of the quantity received by
Algonquin on any day, less the Fuel Reimbursement Quantities;
provided, however, Algonquin shall not be obligated to deliver at
any Point of Delivery on any day a quantity of natural gas in excess
of the applicable Maximum Daily Delivery Obligation.
<PAGE> 2
9WOO1
SERVICE AGREEMENT
(APPLICABLE TO RATE SCHEDULE AFT-1)
-----------------------------------
ARTICLE II
TERM OF AGREEMENT
2.1 This Agreement shall become effective as of the date set
forth hereinabove and shall continue in effect for a term ending on
and including October 31, 1996, (Primary Term") and shall remain
in force from year to year thereafter unless terminated by either
party by written notice one year or more prior to the end of the
Primary Term or any successive term thereafter. Algonquin's right
to cancel this Agreement upon the expiration of the Primary Term
hereof or any succeeding term shall be subject to Customer's rights
pursuant to Sections 8 and 9 of the General Terms and Conditions.
2.2 This Agreement may be terminated at any time by Algonquin in the
event Customer fails to pay part or all of the amount of any bill
for service hereunder and such failure continues for thirty days
after payment is due; provided Algonquin gives ten days
prior written notice to Customer of such termination and provided
further such termination shall not be effective if, prior to the
date of termination, Customer either pays such outstanding bill or
furnishes a good and sufficient surety bond guaranteeing payment to
Algonquin of such outstanding bill; provided that Algonquin
shall not be entitled to terminate service pending the resolution of
a disputed bill if Customer complies with the billing dispute
procedure currently on file in Algonquin's tariff.
ARTICLE III
RATE SCHEDULE
3.1 Customer shall pay Algonquin for all services rendered hereunder and
for the availability of such service under Algonquin's Rate Schedule
AFT-1 as filed with the Federal Energy Regulatory Commission and as
the same may be hereafter revised or changed. The rate to
be charged Customer for transportation hereunder shall not be more
than the maximum rate under Rate Schedule AFT-1, nor less
than' the minimum rate under Rate Schedule AFT-1.
3.2 This Agreement and all terms and provisions contained
or incorporated herein are subject to the provisions of Algonquin's
applicable rate schedules and of Algonquin's General Terms
and Conditions on file with the Federal Energy Regulatory Commission,
or other duly constituted authorities having jurisdiction, and as
the same may be legally amended or superseded, which rate schedules
and General Terms and Conditions are by this reference made
a part hereof.
<PAGE> 3
9WOOl
SERVICE AGREEMENT
(APPLICABLE TO RATE SCHEDULE AFT-1)
-----------------------------------
3.3 Customer agrees that Algonquin shall have the unilateral right to
file with the appropriate regulatory authority and make changes
effective in (a) the rates and charges applicable to service
pursuant to Algonquin's Rate Schedule AFT-1, (b) Algonquin's Rate
Schedule AFT-1, pursuant to which service hereunder is rendered or
(c) any provision of the General Terms and Conditions applicable to
Rate Schedule AFT-1. Algonquin agrees that Customer may protest or
contest the aforementioned filings, or may seek authorization from
duly constituted regulatory authorities for such adjustment of
Algonquin's existing FERC Gas Tariff as may be found necessary to
assure that the provisions in (a), (b), or (c) above are just and
reasonable.
ARTICLE IV
POINT(S) OF RECEIPT
Natural gas to be received by Algonquin for the account of Customer
hereunder shall be received at the outlet side of the measuring station(s)
at or near the Primary Point(s) of Receipt set forth in Exhibit A of the
service agreement, with the Maximum Daily Receipt Obligation and the
receipt pressure obligation indicated for each such Primary Point of
Receipt. Natural gas to be received by Algonquin for the account of
Customer hereunder may also be received at the outlet side of any other
measuring station on the Algonquin system, subject to reduction pursuant
to Section 6.2 of Rate Schedule AFT-1.
ARTICLE V
POINT(S) OF DELIVERY
Natural gas to be delivered by Algonquin for the account of
Customer hereunder shall be delivered on the outlet side of the
measuring station(s) at or near the Primary Point(s) of Delivery
set forth in Exhibit B of the service agreement, with the
Maximum Daily Delivery Obligation and the delivery pressure obligation
indicated for each such Primary Point of Delivery. Natural gas to be
delivered by Algonquin for the account of Customer hereunder may also be
delivered at the outlet side of any other measuring station on the
Algonquin system, subject to reduction pursuant to Section 6.4 of Rate
Schedule AFT-1.
<PAGE> 4
9WOO1
SERVICE AGREEMENT
(APPLICABLE TO RATE SCHEDULE AFT-1)
-----------------------------------
ARTICLE VI
ADDRESSES
Except as herein otherwise provided or as provided in the General Terms
and Conditions of Algonquin's FERC Gas Tariff, any notice,
request, demand, statement, bill or payment provided for in this
Agreement, or any notice which any party may desire to give to the
other, shall be in writing and shall be considered as duly
delivered when mailed by registered, certified, or first class mail to
the post office address of the parties hereto, as the case may be, as
follows:
(a) Algonquin: Algonquin Gas Transmission Company
1284 Soldiers Field Road
Boston, MA 02135
Attn: John J. Mullaney
Vice President, Marketing
(b) Customer: Boston Gas Company
One Beacon Street
Boston, MA 02108
Attn: William R. Luthern
Vice President, Gas Supply and Production
or such other address as either party shall designate by formal written
notice.
ARTICLE VII
INTERPRETATION
The interpretation and performance of the Agreement shall be in accordance
with the laws of the Commonwealth of Massachusetts, excluding conflicts of
law principles that would require the application of the laws of
a different jurisdiction.
<PAGE> 5
9W001
SERVICE AGREEMENT
(APPLICABLE TO RATE SCHEDULE AFT-1)
-----------------------------------
ARTICLE VIII
AGREEMENTS BEING SUPERSEDED
When this Agreement becomes effective, it shall supersede the following
agreements between the parties hereto, except that in the case of
conversions from former Rate Schedules F-2 and F-3, the parties'
obligations under Article II of the service agreements pertaining to such
rate schedules shall continue in effect.
Service Agreement executed by Customer and Algonquin under Rate Schedule
WS-1 dated April 4, 1972.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective agents thereunto duly authorized, the day and
year first above written.
ALGONQUIN GAS TRANSMISSION COMPANY
By: /s/ JOHN J. MULLANEY
-----------------------------------
Title: Vice President, Marketing
--------------------------------
BOSTON GAS COMPANY
By: /s/ WILLIAM R. LUTHERN
-----------------------------------
Title: Vice President
--------------------------------
<PAGE> 6
9WOO1
SERVICE AGREEMENT
(APPLICABLE TO RATE SCHEDULE AFT-1)
-----------------------------------
<TABLE>
Exhibit A
Point(s) of Receipt
-------------------
Dated:
To the service agreement under Rate Schedule AFT-1, between
Algonquin Gas Transmission Company (Algonquin) and Boston
Gas Company (Customer) concerning Point(s) of Receipt
<CAPTION>
Primary Maximum Daily Maximum
Point of Receipt Obligation Receipt Pressure
Receipt (MMBtu) (Psig)
- -------- ------------------ -----------------
<S> <C> <C>
Hanover, NJ (TETGO) 29,894 At any pressure
requested by
Algonquin not in
excess of 750 psig
Lambertville, NJ 18,340 At any pressure
requested by
Algonquin not in
excess of 750 psig
</TABLE>
Signed for Identification
Algonquin: /s/ JOHN J. MULLANEY
------------------------
Customer: /s/ WILLIAM R. LUTHERN
------------------------
<PAGE> 7
9WOO1
SERVICE AGREEMENT
(APPLICABLE TO RATE SCHEDULE AFT-1)
-----------------------------------
<TABLE>
Exhibit B
Point(s) of Delivery
--------------------
Dated:
To the service agreement under Rate Schedule AFT-1 between
Algonquin Gas Transmission Company (Algonquin) and
Boston Gas Company (Customer) concerning Point(s) of Delivery
<CAPTION>
Primary Maximum Daily Maximum
Point of Delivery Obligation Delivery Pressure
Delivery (MMBtu) (Psig)
- -------- ------------------ -----------------
<S> <C> <C>
At Customer's reduction
valves located at Everett, MA 16,487 75
At the property line
on the outlet side of a meter
station located at:
Waltham, MA 4,783 100
East Braintree, MA 6,310 100
Weston, MA 1,425 100
Wellesley, MA 16,792 60
Ponkapoag, MA 0 --
Norwood, MA 2,437 75
Mansfield St., Somerville MA
(Alternate Delivery Point) 0 --
</TABLE>
Signed for Identification
Algonquin: /s/ JOHN J. MULLANEY
------------------------
Customer: /s/ WILLIAM R. LUTHERN
------------------------
<PAGE> 1
EXHIBIT 10.5
93002
SERVICE AGREEMENT
(APPLICABLE TO RATE SCHEDULE AFT-1)
-----------------------------------
This Agreement ("Agreement") is made and entered into this 1st day of
June, 1993, by and between Algonquin Gas Transmission Company,
a Delaware Corporation (herein called "Algonquin"), and Boston Gas
Company (herein called "Customer" whether one or more persons).
In consideration of the premises and of the mutual covenants herein
contained, the parties do agree as follows:
ARTICLE I
SCOPE OF AGREEMENT
1.1 Subject to the terms, conditions and limitations hereof and of
Algonquin's Rate Schedule AFT-1, Algonquin agrees to receive
from or for the account of Customer for transportation on a firm
basis quantities of natural gas tendered by Customer on any day
at the Point(s) of Receipt; provided, however, Customer shall
not tender without the prior consent of Algonquin, at any Point
of Receipt on any day a quantity of natural gas in excess of the
applicable Maximum Daily Receipt Obligation for such Point of
Receipt plus the applicable Fuel Reimbursement Quantity; and
provided further that Customer shall not tender at all Point(s)
of Receipt on any day or in any year a cumulative quantity of
natural gas, without the prior consent of Algonquin, in excess
of the following quantities of natural gas plus the applicable
Fuel Reimbursement Quantities:
<TABLE>
<S> <C>
Maximum Daily Transportation Quantity 97,059 MMBtu
Maximum Annual Transportation Quantity 26,205,930 MMBtu
</TABLE>
1.2 Algonquin agrees to transport and deliver to or for the account
of Customer at the Point(s) of Delivery and Customer agrees to
accept or cause acceptance of delivery of the quantity received
by Algonquin on any day, less the Fuel Reimbursement Quantities;
provided, however, Algonquin shall not be obligated to deliver
at any Point of Delivery on any day a quantity of natural gas in
excess of the applicable Maximum Daily Delivery Obligation.
<PAGE> 2
93002
SERVICE AGREEMENT
(APPLICABLE TO RATE SCHEDULE AFT-1)
-----------------------------------
ARTICLE II
TERM OF AGREEMENT
2.1 This Agreement shall become effective as of the date set forth
hereinabove and shall continue in effect for a term ending on and
including October 31, 1996 ("Primary Term") and shall remain in
force from year to year thereafter unless terminated by either
party by written notice one year or more prior to the end of the
Primary Term or any successive term thereafter. Algonquin's
right to cancel this Agreement upon the expiration of the
Primary Term hereof or any succeeding term shall be subject to
Customer's rights pursuant to Sections 8 and 9 of the General
Terms and Conditions.
2.2 This Agreement may be terminated at any time by Algonquin in the
event Customer fails to pay part or all of the amount of any bill
for service hereunder and such failure continues for thirty days
after payment is due; provided Algonquin gives ten days prior
written notice to Customer of such termination and provided
further such termination shall not be effective if, prior to the
date of termination, Customer either pays such outstanding bill
or furnishes a good and sufficient surety bond guaranteeing
payment to Algonquin of such outstanding bill; provided that
Algonquin shall not be entitled to terminate service pending the
resolution of a disputed bill if Customer complies with the
billing dispute procedure currently on file in Algonquin's
tariff.
ARTICLE III
RATE SCHEDULE
3.1 Customer shall pay Algonquin for all services rendered hereunder
and for the availability of such service under Algonquin's Rate
Schedule AFT-1 as filed with the Federal Energy Regulatory
Commission and as the same may be hereafter revised or changed.
The rate to be charged Customer for transportation hereunder
shall not be more than the maximum rate under Rate Schedule
AFT-1, nor less than the minimum rate under Rate Schedule AFT-1.
<PAGE> 3
93002
SERVICE AGREEMENT
(APPLICABLE TO RATE SCHEDULE AFT-1)
-----------------------------------
3.2 This Agreement and all terms and provisions contained or
incorporated herein are subject to the provisions of
Algonquin's applicable rate schedules and of Algonquin's
General Terms and Conditions on file with the Federal Energy
Regulatory Commission, or other duly constituted authorities
having jurisdiction, and as the same may be legally amended or
superseded, which rate schedules and General Terms and
Conditions are by this reference made a part hereof.
3.3 Customer agrees that Algonquin shall have the unilateral right
to file with the appropriate regulatory authority and make
changes effective in (a) the rates and charges applicable to
service pursuant to Algonquin's Rate Schedule AFT-1, (b)
Algonquin's Rate Schedule AFT-1, pursuant to which service
hereunder is rendered or (c) any provision of the General Terms
and Conditions applicable to Rate Schedule AFT-1. Algonquin
agrees that Customer may protest or contest the aforementioned
flings, or may seek authorization from duly constituted
regulatory authorities for such adjustment of Algonquin's
existing FERC Gas Tariff as may be found necessary to assure
that the provisions in (a), (b), or (c) above are just and
reasonable.
ARTICLE IV
POINT(S) OF RECEIPT
Natural gas to be received by Algonquin for the account of Customer
hereunder shall be received at the outlet side of the measuring
station(s) at or near the Primary Point(s) of Receipt set forth in
Exhibit A of the service agreement, with the Maximum Daily Receipt
Obligation and the receipt pressure obligation indicated for each
such Primary Point of Receipt. Natural gas to be received by
Algonquin for the account of Customer hereunder may also be received
at the outlet side of any other measuring station on the Algonquin
system, subject to reduction pursuant to Section 6.2 of Rate
Schedule AFT-1.
ARTICLE V
POINT(S) OF DELIVERY
Natural gas to be delivered by Algonquin for the account of Customer
hereunder shall be delivered on the outlet side of the measuring
station(s) at or near the Primary Point(s) of Delivery set forth in
Exhibit B of the service agreement, with the Maximum Daily Delivery
Obligation and the delivery pressure obligation indicated for each
such Primary Point of Delivery.
<PAGE> 4
93002
SERVICE AGREEMENT
(APPLICABLE TO RATE SCHEDULE AFT-1)
-----------------------------------
Natural gas to be delivered by Algonquin for the account of Customer hereunder
may also be delivered at the outlet side of any other measuring station on the
Algonquin system, subject to reduction pursuant to Section 6.4 of Rate Schedule
AFT-1.
ARTICLE VI
ADDRESSES
Except as herein otherwise provided or as provided in the General Terms and
Conditions of Algonquin's FERC Gas Tariff, any notice, request, demand,
statement, bill or payment provided for in this Agreement, or any notice which
any party may desire to give to the other, shall be in writing and shall be
considered as duly delivered when mailed by registered, certified, or first
class mail to the post office address of the parties hereto, as the case may
be, as follows:
(a) Algonquin: Algonquin Gas Transmission Company
1284 Soldiers Field Road
Boston, MA 02135
Attn: John J. Mullaney
Vice President, Marketing
(b) Customer: Boston Gas Company
One Beacon Street
Boston, MA 02108
Attn: William R. Luthern
Vice President, Gas Supply and Production
or such other address as either party shall designate by formal written notice.
<PAGE> 5
93002
SERVICE AGREEMENT
(APPLICABLE TO RATE SCHEDULE AFT-1)
-----------------------------------
ARTICLE VII
INTERPRETATION
The interpretation and performance of the Agreement shall be in accordance
with the laws of the Commonwealth of Massachusetts, excluding conflicts of
law principles that would require the application of the laws of a different
jurisdiction.
ARTICLE VIII
AGREEMENTS BEING SUPERSEDED
When this Agreement becomes effective, it shall supersede the following
agreements between the parties hereto, except that in the case of conversions
from former Rate Schedules F-2 and F-3, the parties' obligations under Article
II of the service agreements pertaining to such rate schedules shall continue
in effect.
Service Agreement executed by Customer and Algonquin under Rate Schedule F-1
dated April 4, 1972 to the extent it provides for 97,059 MMBtu Maximum Daily
Quantity and related Maximum Annual Quantity.
<PAGE> 6
93002
SERVICE AGREEMENT
(APPLICABLE TO RATE SCHEDULE AFT-1)
-----------------------------------
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed by their respective agents thereunto duly authorized, the
day and year first above written.
ALGONQUIN GAS TRANSMISSION COMPANY
By: /s/ John J. Mullaney
----------------------------------
Title: Vice President, Marketing
-------------------------------
BOSTON GAS COMPANY
By: /s/ William R. Luthern
----------------------------------
Title: Vice President,
-------------------------------
<PAGE> 7
93002
SERVICE AGREEMENT
(APPLICABLE TO RATE SCHEDULE AFT-1)
-----------------------------------
<TABLE>
EXHIBIT A
Point(s) of Receipt
-------------------
Dated:
To the service agreement under Rate Schedule AFT-1 between
Algonquin Gas Transmission Company (Algonquin) and Boston Gas
Company (Customer) concerning Point(s) of Receipt
<CAPTION>
Primary Maximum Daily Maximum
Point of Receipt Obligation Receipt Pressure
Receipt (MMBtu) (Psig)
- -------- ------------------ -----------------
<S> <C> <C>
Hanover, NJ (TETCO) 37,010 At any pressure requested by
Algonquin but not in excess
of 750 Psig.
Lambertville, NJ 60,049 At any pressure requested by
Algonquin but not in excess
of 750 Psig.
</TABLE>
Signed for Identification
Algonquin: /s/ John J. Mullaney
----------------------------------
Customer: /s/ William R. Luthern
----------------------------------
<PAGE> 8
93002
SERVICE AGREEMENT
(APPLICABLE TO RATE SCHEDULE AFT-1)
-----------------------------------
<TABLE>
EXHIBIT B
Point(s) of Delivery
--------------------
Dated:
To the service agreement under Rate Schedule AFT-1 between
Algonquin Gas Transmission Company (Algonquin) and Boston Gas
Company (Customer) concerning Point(s) of Delivery
<CAPTION>
Primary Maximum Daily Minimum
Point of Delivery Obligation Delivery Pressure
Delivery (MMBtu) (Psig)
-------- ------------------ -----------------
<S> <C> <C>
At Customer's reduction
valves located at Everett, MA 37,316 75
At the Property line on
the outlet side of a meter
station located at:
Waltham, MA 17,103 100
East Braintree, MA 16 948 100
Weston, MA 1,555 100
Wellesley, MA 20,213 60
Ponkapoag, MA 49,133 200
Norwood, MA 2,399 75
Mansfield Street, Somerville,
MA (Alternate Delivery Point) 0 -
</TABLE>
Signed for Identification
Algonquin: /s/ John J. Mullaney
----------------------------------
Customer: /s/ William R. Luthern
----------------------------------
<PAGE> 1
EXHIBIT 10-17
CREDIT AGREEMENT
by and among
BOSTON GAS COMPANY,
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK,
NATIONAL WESTMINSTER BANK PLC,
SHAWMUT BANK, N.A.,
THE FIRST NATIONAL BANK OF BOSTON,
and
THE FIRST NATIONAL BANK OF BOSTON,
AS AGENT
--------------
$90,000,000
--------------
Dated as of December 22, 1993
<PAGE> 2
-ii-
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Paragraph Heading Page
- --------- -------
<S> <C> <C> <C>
1. DEFINITIONS.................................. 1
1.1 Defined Terms................................ 1
1.2 Other Definitional provisions................ 7
PRELIMINARY MATTERS.......................... 7
2. AMOUNT AND TERMS OF LOANS......................... 8
2.1 Loans........................................ 8
2.2 Procedure for Borrowings..................... 8
2.3 Notes........................................ 9
2.4 Voluntary Reductions of the Aggregate
Commitments; Termination..................... 10
(a) Voluntary Reductions.................... 10
(b) General................................. 10
2.5 Prepayments and Payment of Loans............. 10
(a) Voluntary Prepayments................... 10
(b) Mandatory Repayments.................... 11
2.6 Conversion Options........................... 11
(a) Conversion.............................. 11
(b) Continuation............................ 11
2.7 Interest Rate and Payment Dates for Loans.... 12
(a) Interest Rates for All Loans Prior to
Maturity 12
(b) Interest Rates for All Loans After
Maturity 12
(c) General................................. 12
2.8 Substituted Interest Rate.................... 13
2.9 Illegality................................... 13
2.10 Increased Costs.............................. 14
2.11 Indemnity.................................... 14
2.12 Use of Proceeds.............................. 15
2.13 Capital Adequacy............................. 15
2.14 Extension of Revolving Credit Termination
Date ...................................... 16
2.15 Extension to Termination Date................ 17
2.16 Notice of Costs; Substitution of Banks....... 17
3. FEES; PAYMENTS.................................... 17
</TABLE>
<PAGE> 3
-iii-
<TABLE>
<S> <C> <C>
3.1 Commitment and Facility Fees................. 17
3.2 Fees of the Agent............................ 18
3.3 Computation of Interest and Fees............. 18
3.4 Pro Rata Treatment and Application of
Principal Payments 18
4. REPRESENTATIONS AND WARRANTIES.................... 19
4.1 Subsidiary................................... 19
4.2 Corporate Existence and Power................ 19
4.3 Corporate Authority.......................... 19
4.4 Binding Agreement............................ 19
4.5 Litigation................................... 19
4.6 No Conflicting Agreements.................... 20
4.7 Taxes........................................ 20
4.8 Financial Statements......................... 20
4.9 Compliance with Applicable Laws.............. 21
4.10 Governmental Regulations..................... 21
4.11 Property..................................... 21
4.12 Federal Reserve Regulations.................. 21
4.13 No Misrepresentation......................... 22
4.14 Pension Plans................................ 22
4.15 Public Utility Holding Company Act........... 22
4.16 Approvals.................................... 22
4.17 Net Plant Surplus............................ 23
5. CONDITIONS OF BORROWING - FIRST BORROWING......... 23
5.1 Evidence of Corporate Action................. 23
5.2 Notes........................................ 23
5.3 Approval of Special Counsel.................. 23
5.4 Opinion of Counsel to the Company............ 23
5.5 Fees ........................................ 23
5.6 DPU Approval................................. 23
6. CONDITIONS OF BORROWING - ALL BORROWINGS.......... 24
6.1 Compliance................................... 24
6.2 Loan Closings................................ 24
6.3 Approval of Counsel.......................... 24
6.4 Borrowing Request............................ 24
6.5 Other Documents.............................. 24
7. AFFIRMATIVE COVENANTS............................. 24
7.1 Corporate Existence.......................... 24
</TABLE>
<PAGE> 4
-iv-
<TABLE>
<S> <C> <C>
7.2 Taxes........................................ 25
7.3 Insurance.................................... 25
7.4 Payment of Indebtedness and Performance
of Obligations 25
7.5 Observance of Legal Requirements; ERISA...... 25
7.6 Financial Statements and Other Information... 26
7.7 Inspection................................... 27
8. NEGATIVE COVENANTS................................ 27
8.1 Funded Debt.................................. 27
8.2 Liens ....................................... 27
8.3 Mergers and Consolidations................... 28
8.4 Sale of Property............................. 28
8.5 Dividends; Distributions..................... 28
9. EVENTS OF DEFAULT................................. 28
10. THE AGENT ........................................ 31
10.1 Appointment.................................. 31
10.2 Delegation of Duties, Etc.................... 31
10.3 Indemnification.............................. 31
10.4 Exculpatory Provisions....................... 32
10.5 Agent in its Individual Capacity............. 32
10.6 Knowledge of Default......................... 33
10.7 Resignation of Agent......................... 33
10.8 Requests to the Agent........................ 33
11. NOTICES ........................................ 33
11.1 Manner of Delivery........................... 34
11.2 Distribution of Copies....................... 35
11.3 Notices by the Agent or a Bank............... 35
12. RIGHT OF SET-OFF.................................. 35
13. AMENDMENTS. WAIVERS, AND CONSENTS................. 36
14. OTHER PROVISIONS.................................. 37
14.1 No Waiver of Rights by the Banks............. 37
14.2 Headings, Plurals............................ 37
14.3 Counterparts................................. 37
14.4 Severability................................. 37
14.5 Integration.................................. 38
</TABLE>
<PAGE> 5
-v-
<TABLE>
<S> <C> <C>
14.6 Sales and Participations in Loans and Notes;
Successors and Assigns;
Survival of Representations and
Warranties............................ 38
14.7 Applicable Law.......................... 39
14.8 Interest................................ 39
14.9 Accounting Terms and Principles......... 40
14.10 WAIVER OF TRIAL BY JURY................. 40
14.11 CONSENT TO JURISDICTION................. 40
14.12 SERVICE OF PROCESS...................... 40
14.13 NO LIMITATION ON SERVICE OR SUIT........ 41
14.14 Incorporated Provisions................. 41
15. OTHER OBLIGATIONS OF THE COMPANY.................. 41
15.1 Taxes and Fees............................... 41
15.2 Expenses..................................... 41
16. EFFECTIVE DATE.................................... 41
</TABLE>
<TABLE>
EXHIBITS
<S> <C>
EXHIBIT A Commitments
EXHIBIT B Applicable Margins/Percentages for Facility Fee
EXHIBIT C Form of Borrowing Request
EXHIBIT D Form of Revolving Credit Note
EXHIBIT E Form of Term Note
EXHIBIT F Form of Commitment Extension Request
EXHIBIT G List of Subsidiaries
EXHIBIT H Form of Opinion of Special Counsel
EXHIBIT I Form of Opinion of Counsel to the Company
</TABLE>
<PAGE> 6
CREDIT AGREEMENT, dated as of December 22, 1993, among
BOSTON GAS COMPANY, a Massachusetts corporation (the "Company"),
the Signatory Banks hereto (each, a "Bank" and, collectively, the
"Banks"), and THE FIRST NATIONAL BANK OF BOSTON as agent
hereunder (in such capacity, the "Agent").
1. DEFINITIONS.
1.1 DEFINED TERMS.
As used in this Agreement, terms defined in the paragraph above
have the meanings therein indicated, and the following terms have
the following meanings:
"ACCOUNTANTS": Arthur Andersen & Co., or such other firm of
certified public accountants of recognized national standing
selected by the Company.
"AFFECTED LOAN": as defined in paragraph 2.8.
"AFFECTED PRINCIPAL AMOUNT": (i) in the event that the
Company shall fail for any reason to borrow a Loan constituting a
Eurodollar Rate Loan after it shall have delivered a Borrowing
Request to the Agent, an amount equal to the principal amount of
such Eurodollar Rate Loan; (ii) in the event that the right of
the Company to have a Eurodollar Rate Loan outstanding hereunder
shall be suspended or shall terminate for any reason prior to the
last day of the Interest Period applicable thereto, an amount
equal to the principal amount of such Eurodollar Rate Loan; and
(iii) in the event that the Company shall prepay or repay all or
any part of the principal amount of a Eurodollar Rate Loan prior
to the last day of the Interest Period applicable thereto, an
amount equal to the principal amount so prepaid or repaid.
"AFFILIATE": a Person that directly or indirectly, or
through one or more intermediaries, controls or is controlled by
or is under common control with another Person. The term
"control" means possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies
of a Person, whether through the ownership of voting securities,
by contract or otherwise.
"AGENT'S FEES": as defined in paragraph 3.2.
"AGGREGATE COMMITMENTS": the sum of the Commitments set
forth in Exhibit A as the same may be reduced pursuant to
paragraph 2.4.
"AGREEMENT": this Credit Agreement, as same may be amended,
supplemented or otherwise modified from time to time.
"ALTERNATE BASE RATE": the higher of (a) the annual rate of
interest publicly announced from time to time by the Agent at the
Agent's head office as its "base rate" and (b) one-half of
<PAGE> 7
-2-
one percent (1/2%) above the overnight federal funds effective rate,
as published by the Board of Governors of the Federal Reserve
System, as in effect at the relevant time of reference thereto.
"ALTERNATE BASE RATE LOANS": Loans (or any portion thereof)
at such time as they (or such portions) are made or are being
maintained at a rate of interest based upon Alternate Base Rate.
"APPLICABLE LENDING OFFICE": as to any Bank, such Bank's
Domestic Lending Office or Eurodollar Lending Office, as the case
may be.
"APPLICABLE MARGIN": the additional rate per annum to be
added to the interest rate at which each Loan is made determined
by reference to Exhibit B hereto based upon the Debt Rating of
the Company.
"AUTHORIZED SIGNATORY": the president, any vice president,
the treasurer, the secretary, or any other duly authorized
officer of the Company acceptable to the Agent.
"BORROWING": a Borrowing of additional principal amounts
pursuant to paragraph 2.2 consisting of simultaneous Loans of the
same Type made by each Bank.
"BORROWING REQUEST": as defined in paragraph 2.2.
"BORROWING DATE": any date specified in Borrowing Request
delivered pursuant to paragraph 2.2 as a date on which the
Company requests the Banks to make Loans hereunder.
"BUSINESS DAY": for all purposes other than as set forth in
clause (ii) below, (i) any day other than a Saturday, Sunday or
other day on which commercial banks located in New York City or
Boston are authorized or required by law or other governmental
actions to close and (ii) with respect to all notices and
determinations in connection with, and payments of principal and
interest on Eurodollar Loans, any day which is a Business Day
described in clause (i) above and which is also a day on which
dealings in foreign currency and exchange and Eurodollar funding
between banks may be carried on in London, New York City and
Boston.
"CODE": the Internal Revenue Code of 1986, as the same may
be amended from time to time, or any successor thereto, and the
rules and regulations issued hereunder, as from time to time in
effect.
"COMMITMENT": in respect of any Bank, such Bank's
undertaking to make Loans to the Company, subject to the terms
and conditions hereof, in an aggregate outstanding principal
amount equal to but not exceeding the amount set forth next to
the name of such Bank on Exhibit A under the heading "Commitment",
as the same may be reduced pursuant to paragraph 2.5.
"COMMITMENT EXTENSION REQUEST": a request duly executed by
an Authorized Signatory substantially in the form of Exhibit F.
<PAGE> 8
-3-
"COMMITMENT PERCENTAGE": as to any Bank, the percentage set
forth opposite the name of such Bank on Exhibit A under the
heading "Commitment Percentage".
"COMMONLY CONTROLLED ENTITY": an entity, whether or not
incorporated, which is under common control with the Company
within the meaning of Section 414(b) or 414(c) of the Code.
"CONSOLIDATED": the Company and its Subsidiaries taken as a
whole.
"CONVERSION DATE": the date on which a Loan of one Type is
converted to a Loan of another Type or continued as a Loan of the
same Type.
"DPU": the Massachusetts Department of Public Utilities.
"DEBT RATING": the public debt rating of the Company
according to Standard & Poor's Corporation or, in the event that
there is no such public debt rating, the equivalent public debt
rating of the Company according to Moody's Investor Service; in
the event that neither Standard & Poor's Corporation or Moody's
Investor Service have a public debt rating for the Company, the
Company shall be deemed to have no Debt Rating.
"DESIGNATED DOCUMENTS": the Company's 1992 Form 10-K and the
Company's quarterly reports on Form 10-Q for the fiscal quarters
ended March 31, 1993, June 30, 1993 and September 30, 1993.
"DOLLARS" and "$": dollars in lawful currency of the United
States of America.
"DOMESTIC LENDING OFFICE": as to any Bank, initially the
office of such Bank designated as such on the signature page
hereof, and thereafter such other office as reported by such Bank
to the Agent, that shall be making or maintaining Alternate Base
Rate Loans.
"EFFECTIVE DATE": as defined in paragraph 16.
"ENVIRONMENTAL LAW": Any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules,
judgments, orders, decrees, permits, concessions, grants,
franchises, licenses, agreements or other governmental
restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment, including, without
limitation, ambient air, surface water, ground water or land, or
otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or wastes.
"ERISA": the Employee Retirement Income Security Act of
1974, as amended from time to time, and the rules and regulations
issued hereunder, as from time to time in effect.
<PAGE> 9
-4-
"EURODOLLAR LENDING OFFICE": as to any Bank, initially the
office of such Bank designated as such on the signature page
hereof, and thereafter such other office as reported by such Bank
to the Agent, that shall be making or maintaining Eurodollar Rate
Loans.
"EURODOLLAR RATE": with respect to any Interest Period
applicable to any Eurodollar Rate Loan, the rate per annum
determined by dividing (i) the rate per annum (rounded to the
next highest 1/100 of 1%) at which Dollar deposits are offered by
major banks to major banks in immediately available funds in the
London interbank eurodollar market as determined by the Agent at
or about 10:00 A.M. (Boston time) for delivery on the day that is
two Business Days prior to the first day of such Interest Period,
in an amount comparable to the amount of the Eurodollar Rate Loan
of FNBB to which such Interest Period shall apply and for a
period equal to such Interest Period, by (ii) one minus the
aggregate of the maximum rates (expressed as a decimal) of
reserves (including, without limitation, basic, supplemental,
marginal and emergency reserves) for "Eurocurrency liabilities"
of member banks of the Federal Reserve System as prescribed under
Regulation D of the Board of Governors of the Federal Reserve
System. The Eurodollar Rate shall be adjusted automatically on
and as of the effective date of any change in such reserve rate
for Eurocurrency liabilities. Each determination by the Agent of
the Eurodollar Rate shall be presumed to be correct in the
absence of manifest error. All interest based on the Eurodollar
Rate shall be calculated on the basis of a 360-day year for the
actual number of days elapsed.
"EURODOLLAR RATE LOANS": Loans (or any portions thereof) at
such time as they (or such portions) are made or being maintained
at a rate of interest based upon the Eurodollar Rate.
"EVENT OF DEFAULT": any of the events specified in paragraph
9, provided that any requirement for the giving of notice, the
lapse of time, or both, has been satisfied.
"FNBB": The First National Bank of Boston, a national
banking association.
"FACILITY FEE": as defined in paragraph 3.1.
"FINANCIAL STATEMENTS": as defined in paragraph 4.8.
"FUNDED DEBT": shall have the same meaning as the definition
of said term contained in the Indenture, and shall include the
definitions of capitalized terms used in said definition.
"GAAP": generally accepted accounting principles from time
to time followed by companies engaged in a business similar to
that of the Company, except as otherwise required by any
applicable rules, regulations or orders of the DPU, or other
public regulatory authority having jurisdiction over the accounts
of the Company; provided that the Company may at any time contest
or controvert in good faith the validity or applicability to the
Company of any such rule, regulation or order; and provided,
further, that the federal income tax liability of the Company may
be computed as if the Company were filing separate returns
notwithstanding the fact that it may file consolidated returns as
part of an affiliated group.
<PAGE> 10
-5-
"GOVERNMENTAL BODY": any nation or government, any state or
other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative
functions, of, or pertaining to, government, and any court or
arbitrator.
"INDENTURE": the Indenture, dated as of September 1, 1972,
between the Company and State Street Bank and Trust Company, as
Trustee, as the same has been amended, modified or supplemented
to the date hereof.
"INTEREST PAYMENT DATE": (a) as to any Alternate Base Rate
Loan, the last day of each March, June, September and December
commencing on the first such day to occur after such Loan is made
or any Eurodollar Rate Loan is converted to an Alternate Base
Rate Loan, and the date each Alternate Base Rate Loan is paid in
full, (b) as to any Eurodollar Rate Loan in respect of which the
Company has selected an Interest Period of one, two or three
months, the last day of such Interest Period, and (c) as to any
Eurodollar Rate Loan having an Interest Period of six months, the
last day and, in addition, the numerically corresponding day (or,
if there is no numerically corresponding day, the last day) in
the calendar month that is three months after the first day, of
such Interest Period.
"INTEREST PERIOD": with respect to any Eurodollar Rate Loan
comprising the same Borrowing:
(a) initially, the period commencing on, as the case may
be, the Borrowing Date or a Conversion Date with respect to such
Eurodollar Rate Loan, and ending one, two, three or six months
thereafter, as selected by the Company in its irrevocable
Borrowing Request as provided in paragraph 2.2 or its irrevocable
notice of conversion as provided in paragraph 2.6; and
(b) thereafter, each period commencing on the last day of
the next preceding Interest Period applicable to such Eurodollar
Rate Loan and ending one, two, three or six months thereafter, as
selected by the Company in its irrevocable notice of conversion
as provided in paragraph 2.6;
provided, however, that all of the foregoing provisions relating
to Interest Periods are subject to the following:
(a) if any Interest Period pertaining to a Eurodollar Rate
Loan comprising the same Borrowing would otherwise end on a day
which is not a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless the result of
such extension would be to carry such Interest Period into
another calendar month, in which event such Interest Period shall
end on the immediately preceding Business Day;
(b) if, with respect to the conversion of any Loan, the
Company shall fail to give due notice as provided in paragraph
2.6 for such Loan, such Loan shall be automatically converted to
an Alternate Base Rate Loan upon the expiration of the Interest
Period with respect thereto;
<PAGE> 11
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(c) any Interest Period pertaining to a Eurodollar Rate
Loan that begins on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in
the calendar month at the end of such Interest Period) shall end
on the last Business Day of a calendar month;
(d) the Company shall select Interest Periods relating to
Eurodollar Rate Loans so as not to have more than twelve
different Interest Periods relating to Eurodollar Rate Loans
outstanding at any one time; and
(e) the Company shall select Interest Periods pertaining to
Eurodollar Rate Loans such that, on the date the mandatory
repayment is required to be made under paragraph 2.5(b), the
outstanding principal amount of all Alternate Base Rate Loans and
Eurodollar Rate Loans with Interest Periods ending on the date of
such payment shall equal the aggregate principal amount of the
Loans required to be repaid on such date.
"LIEN": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), or
preference, priority or other security agreement or security
interest of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of any
financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction).
"LOAN DOCUMENTS": collectively, this Agreement and the Notes.
"LOAN": a Loan made pursuant to paragraph 2.1.
"MAJORITY BANKS": at any time when no Loans are outstanding,
Banks having at least 66 2/3% of the Aggregate Commitments, at
any time when Loans are outstanding, Banks holding at least 66
2/3% of the outstanding Loans.
"MULTIEMPLOYER PLAN": a Plan which is a multiemployer plan
as defined in Section 4001(a)(3) of ERISA.
"NON-CONSENTING BANK": as defined in paragraph 2.14.
"NOTES": the Revolving Credit Notes and/or the Term Notes,
as applicable.
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA, or any Governmental
Body succeeding to the functions thereof.
"PERSON": an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Body or any other entity of whatever
nature.
<PAGE> 12
-7-
"PLAN": any pension plan which is covered by Title IV of
ERISA and in respect of which the Company or a Commonly
Controlled Entity is an "employer" as defined in Section 3(5) of
ERISA.
"PROPERTY": all types of real, personal, tangible,
intangible or mixed property.
"REGULATION D": Regulation D of the Board of Governors of
the Federal Reserve System, as amended from time to time.
"REPLACEMENT BANK": as defined in paragraph 2.14.
"REPORTABLE EVENT": any event described in Section 4043(b)
of ERISA, other than an event with respect to which the 30-day
notice requirement has been waived.
"REVOLVING CREDIT NOTES": as defined in paragraph 2.3.
"REVOLVING CREDIT TERMINATION DATE": the date which is three
hundred sixty-four (364) days after the Effective Date or any
date subsequent thereto resulting from an extension of the
Revolving Credit Termination Date pursuant to paragraph 2.14.
"SPECIAL COUNSEL": Bingham, Dana & Gould, or such other firm
selected by the Agent.
"SUBSIDIARY": any corporation a majority of the voting
shares of which are at the time owned by the Company or by other
subsidiaries of the Company or by the Company and other
subsidiaries of the Company.
"TAXES": any present or future income, stamp or other taxes,
levies, imposts, duties, fees, assessments, deductions,
withholdings, or other like charges, now or hereafter imposed,
levied, collected, withheld, or assessed by any Governmental
Body.
"TERM NOTES": as defined in paragraph 2.15 hereof.
"TERMINATION DATE": in the event the Company elects to
extend the scheduled maturity of the Loans in accordance with the
terms of paragraph 2.15 hereof, the date which is two (2) years
after the then scheduled Revolving Credit Termination Date.
"TYPE": Loans made hereunder as Alternate Base Rate Loans or
Eurodollar Rate Loans, as the case may be.
1.2 OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Agreement shall have the
meanings given such terms herein when used in any certificate,
opinion or other document made or delivered pursuant hereto or
thereto, unless otherwise defined therein.
<PAGE> 13
-8-
(b) As used herein and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms
relating to the Company not defined in paragraph 1.1, and
accounting terms partly defined in paragraph 1.1, to the extent
not defined, shall have the respective meanings given to them
under GAAP.
(c) The words "hereof", "herein", "hereto" and "hereunder"
and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular
provision of this Agreement, and paragraph, schedule and exhibit
references contained herein shall refer to paragraphs hereof or
schedules or exhibits hereto unless otherwise expressly provided
herein. The word "or" shall not be exclusive.
PRELIMINARY MATTERS
-------------------
The Company desires to request that Loans be made during the
three hundred sixty-four (364) day period commencing on the
Effective Date and ending on the Revolving Credit Termination
Date in an aggregate amount not to exceed the Aggregate
Commitments. Loans which are outstanding on the Revolving Credit
Termination Date are to begin amortizing as required under
paragraph 2.5(b). The Revolving Credit Termination Date is
subject to being extended for successive one-year periods
pursuant to paragraph 2.14. For the purpose of computing interest
on the Loans, Loans may be requested by the Company as Alternate
Base Rate Loans or Eurodollar Rate Loans (each, a Type of Loan)
and shall bear interest at the Alternate Base Rate or Eurodollar
Rate plus the Applicable Margin with respect to each thereof as
provided in paragraph 2.7. During the period from the Revolving
Credit Termination Date to and including the Termination Date the
Company may not effect borrowings which would increase the
outstanding principal balance of Loans hereunder, but may convert
and continue Loans as provided in paragraph 2.6.
2. AMOUNT AND TERMS OF LOANS.
-------------------------
2.1 LOANS. Subject to the terms and conditions of this Agreement,
each Bank severally agrees to make Loans to the Company from time to time
on and after the Effective Date to, but excluding, the Revolving
Credit Termination Date, provided that the aggregate unpaid
principal amount of all Loans due to each Bank at any one time
shall not exceed an amount equal to such Bank's Commitment, and
provided further that the aggregate unpaid principal amount of
the Loans at any one time outstanding shall not exceed the lesser
of (i) the Aggregate Commitments and (ii) the aggregate
outstanding principal balance of all Loans permitted to be
outstanding hereunder after giving effect to the mandatory
prepayments required to be made under paragraph 2.5(b). During
the period from the Effective Date to the Revolving Credit
Termination Date, the Company may borrow, repay and reborrow
hereunder, and may convert all or any part of the Loans from one
Type to another Type or continue all or any part of the Loans as
the same Type in accordance with and subject to the terms and
provisions hereof. In the event the Company elects to extend the
scheduled maturity of the Loans in accordance with paragraph
<PAGE> 14
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2.15 hereof, during the period from and after the Revolving
Credit Termination Date to the Termination Date, the Company may
prepay the Loans and may convert all or any part of the Loans
from one Type to Loans of another Type or continue all or any
part of the Loans as the same Type, all in accordance with and
subject to the terms and provisions hereof.
2.2 PROCEDURE FOR BORROWINGS. The Company may effect a Borrowing
on any Business Day occurring on or after the Effective Date by giving
the Agent an irrevocable telephonic (to be promptly confirmed in writing)
or written notice of borrowing (each, a "Borrowing Request" in the form of
Exhibit B) (which Borrowing Request must be received by the Agent
(a) prior to 10:00 A.M., Boston time, two Business Days prior to
the requested Borrowing Date, if the Company is requesting that
Eurodollar Rate Loans be made as part of such Borrowing, and (b)
prior to 10:00 A.M., Boston time, one Business Day prior to the
requested Borrowing Date, if the Company is requesting that
Alternate Base Rate Loans be made as part of such Borrowing),
specifying (i) the amount to be borrowed, (ii) the requested
Borrowing Date, (iii) whether such Borrowing is to consist of,
Eurodollar Rate Loans, Alternate Base Rate Loans, or a
combination thereof, and (iv) if the Loans are to be Eurodollar
Rate Loans, the length of the initial Interest Period for each
thereof. Each Borrowing shall be in an aggregate principal amount
equal to or greater than $1,000,000 or, if less, the undrawn
balance of the Aggregate Commitments. The principal amount of
each Bank's Loan made on a Borrowing Date shall be in an amount
equal to such Bank's Commitment Percentage of the Loans made on
such Borrowing Date. Subject to the provisions of paragraphs 2.7
and 2.8, Loans may be Alternate Base Rate Loans or Eurodollar
Rate Loans, or any combination thereof. Upon receipt of each
Borrowing Request from the Company, the Agent shall promptly
notify each Bank thereof (such notice to be promptly confirmed in
writing). Each Bank will make the amount of its Commitment
Percentage of each Borrowing available to the Agent for the
account of the Company at the office of the Agent set forth in
paragraph 11.1, in the case of Eurodollar Rate Loans, not later
than 12:00 noon, Boston time, and in the case of Alternate Base
Rate Loans, not later than 11:00 A.M., Boston time, on the
Borrowing Date requested by the Company, in funds immediately
available to the Agent at such office. Amounts so made available
to the Agent on a Borrowing Date will, subject to the
satisfaction of the terms and conditions of this Agreement as
determined by the Agent, be made available on such date to the
Company by the Agent at the office of the Agent specified in
paragraph 11.1 by crediting the account of the Company on the
books of such office with the aggregate of said amounts, in like
funds as received by the Agent. Unless the Agent shall have
received prior notice from a Bank (by telephone or otherwise,
such notice to be promptly confirmed by telex, telecopy or other
writing) that such Bank will not make available to the Agent such
Bank's pro rata share of the Loans requested by the Company, the
Agent may assume that such Bank has made such share available to
the Agent on such Borrowing Date in accordance with this
paragraph, provided that such Bank received notice of the
proposed borrowing from the Agent, and the Agent may, in reliance
upon such assumption, make available to the Company on such
Borrowing Date a corresponding amount. If and to the extent such
Bank shall not have so made such pro rata share available to the
Agent on such Borrowing Date, such Bank shall pay to the Agent on
demand an amount equal to the product of (i) the average computed
for the period referred to in clause (iii) below, of the weighted
average interest rate paid by the Agent for federal funds
acquired by the Agent during each day included
<PAGE> 15
in such period, TIMES (ii) the amount of such Bank's Commitment Percentage of
such Loans, TIMES (iii) a fraction, the numerator of which is the number of
days that elapse from and including such Borrowing Date to the date on which
the amount of such Bank's Commitment Percentage of such Loans shall become
immediately available to the Agent, and the denominator of which is 365. If
such Bank shall pay to the Agent such amount, such amount so paid shall
constitute such Bank's Loan as part of such Loans for purposes of this
Agreement, which Loan shall be deemed to have been made by such Bank on the
date such amount is so paid, but without prejudice to the Company's rights
against such Bank. If and to the extent such Bank shall not have so made such
pro rata share available to the Agent within three days following such
Borrowing Date, the Company shall pay to the Agent forthwith on demand (but
without duplication) an amount equal to such Bank's Commitment Percentage of
such Loans, together with interest thereon for each day from the date such
amount is made available to the Company until the date such amount is paid to
the Agent, at the applicable interest rate for such Loans as set forth in
paragraph 2.7. Such payment by the Company, however, shall be without prejudice
to its rights against such Bank.
2.3 REVOLVING CREDIT NOTES. Loans made by each Bank shall be evidenced
by a promissory note of the Company, substantially in the form of Exhibit D,
with appropriate insertions therein (as endorsed and as amended or otherwise
modified from time to time, a "Revolving Credit Note" and, collectively, the
"Revolving Credit Notes"), payable to the order of such Bank and representing
the obligation of the Company to pay the aggregate unpaid principal amount of
all Loans made by such Bank, with interest thereon as prescribed or determined
herein. Each Bank is hereby authorized to record the date and amount of each
Loan made by such Bank and the other information applicable thereto, and each
payment or prepayment of principal of, such Loan, on the applicable grid (and
any continuations thereof) annexed to and constituting a part of its Revolving
Credit Note. No failure to so record or any error in so recording shall affect
the obligation of the Company to repay such Loans, with interest thereon, as
herein provided. Each Revolving Credit Note shall (a) be dated the date the
initial Loans are made, (b) be stated to mature on the Revolving Credit
Termination Date, and (c) bear interest for the period from and including the
date thereof on the unpaid principal amount thereof from time to time
outstanding at the applicable interest rate per annum determined as provided
herein.
2.4 VOLUNTARY REDUCTIONS OF THE AGGREGATE COMMITMENTS; TERMINATION.
(A) VOLUNTARY REDUCTIONS. During the period from the Effective Date to
the Revolving Credit Termination Date, the Company shall have the right, upon
at least two Business Days' prior written notice to the Agent, to reduce
permanently the Aggregate Commitments in whole at any time, or in part from
time to time, without premium or penalty, provided that (i) each partial
reduction of the Aggregate Commitments shall be in an amount equal to at least
$1,000,000, or such amount plus a whole multiple of $500,000, and (ii) the
Aggregate Commitments shall not be reduced to an amount less than the aggregate
principal balance of Loans outstanding on the date of such reduction (after
giving effect to reductions in such balance made on such date). Upon the
Aggregate Commitments being permanently reduced to zero prior to the Revolving
Credit Termination Date and upon payment in full of the Loans
<PAGE> 16
-11-
and all other sums due hereunder and under the Revolving Credit
Notes, or upon payment in full of all sums due hereunder and
under the Term Notes after the Revolving Credit Termination Date,
this Agreement shall be deemed terminated, except to the extent
that any provisions hereof expressly survive such payment.
(B) GENERAL. Reductions of the Aggregate Commitments under
clause (a) above shall reduce each Bank's Commitment pro rata
according to the Commitment Percentage of such Bank. The Agent
shall promptly notify each Bank of each reduction in the
Aggregate Commitments under clause (a) above upon its receipt of
notice thereof, and remit to each Bank its pro rata share of any
accompanying prepayments of the Loans according to the
outstanding principal balance of the Loans. Simultaneously with
each reduction of the Aggregate Commitments under this paragraph
2.4, the Company shall prepay the Loans in the amount, if any, by
which the aggregate unpaid principal balance of the Loans exceeds
the amount of the Aggregate Commitments as so reduced.
If any prepayment is made under this paragraph 2.4 with
respect to any Eurodollar Rate Loans, in whole or in part, prior
to the last day of the applicable Interest Period with respect
thereto, the Company agrees that it shall indemnify the Banks in
accordance with paragraph 2.11. After giving effect to any
prepayment with respect to Eurodollar Rate Loans, no Eurodollar
Rate Loans made (whether as a result of Borrowing or a
conversion) on the same date and having the same Interest Period
shall be outstanding in an aggregate principal amount of less
than $1,000,000.
2.5 PREPAYMENTS AND PAYMENT OF LOANS.
(A) VOLUNTARY PREPAYMENTS. The Company may, at its option,
prepay Loans in whole or in part, without premium or penalty,
subject to its obligation to indemnify provided in paragraph 2.11
(in the case of Eurodollar Rate Loans), at any time and from time
to time upon at least one Business Day's prior irrevocable
written notice to the Agent, specifying the amount to be prepaid,
and the date and amount of prepayment. Upon receipt of such
notice, the Agent shall promptly notify each Bank thereof. Any
such notice shall be irrevocable and the amount specified in such
notice shall be due and payable on the date specified therein,
together with accrued interest to the date of such payment on the
amount being prepaid. Prepayments shall be in an aggregate
principal amount of at least $1,000,000 or, if less, the
outstanding principal balance of the Notes, provided, however,
that after giving effect to any such prepayment, no Eurodollar
Rate Loans made (whether as the result of Borrowing or a
conversion) on the same date and having the same Interest Period
shall be outstanding in an aggregate principal amount of less
than $1,000,000.
(B) MANDATORY REPAYMENT. On the Revolving Credit
Termination Date or, in the event that the Company elects to
extend the scheduled maturity in accordance with the terms of
paragraph 2.15 hereof, the Termination Date, the Company shall
repay in full the aggregate principal balance of all Loans
<PAGE> 17
-12-
outstanding on such date, together with accrued interest on such
amount to such date and any Facility Fees, Agent's Fees or other
amounts owing hereunder or under the Term Notes.
2.6 CONVERSION OPTIONS.
(A) CONVERSION. The Company may elect from time to time to
convert Eurodollar Rate Loans to Alternate Base Rate Loans by
giving the Agent at least one Business Day's prior notice of such
election, specifying the amount to be so converted, provided,
that any such conversion of Eurodollar Rate Loans shall only be
made on the last day of the Interest Period applicable thereto.
In addition, in the absence of an Event of Default, the Company
may elect from time to time to convert Alternate Base Rate Loans
to Eurodollar Rate Loans, by giving the Agent at least two
Business Day's prior irrevocable notice of such election,
specifying the amount to be so converted and the Interest Period
selected, provided that any such conversion of Alternate Base
Rate Loans to Eurodollar Rate Loans shall only be made on a
Business Day. The Agent shall promptly provide the Banks with
notice of any such election. Loans may be converted pursuant to
this paragraph 2.6, in whole or in part, provided that
conversions of Alternate Base Rate Loans to Eurodollar Rate Loans
or Eurodollar Rate Loans to Alternate Base Rate Loans shall be in
an aggregate principal amount of at least $1,000,000. After
giving effect to any such conversion, no Eurodollar Rate Loans
made (whether as the result of a borrowing or a conversion) on
the same date and having the same Interest Period shall be
outstanding in an aggregate principal amount of less than
$1,000,000. A conversion of a Loan in accordance with this
paragraph 2.6 shall not require the Company to comply with the
conditions to Borrowing set forth in paragraph 6.
(B) CONTINUATION. Any Eurodollar Rate Loans may be
continued as such upon the expiration of any Interest Period with
respect thereto by the Company's giving irrevocable written
notice to the Agent of its intention to do so two Business Days
prior to the last day of such Interest Period, specifying the new
Interest Period therefor, provided that (i) if the Company shall
fail to give notice as provided above, the relevant Eurodollar
Rate Loan shall convert to an Alternate Base Rate Loan
immediately upon the expiration of the then current Interest
Period with respect thereto, (ii) any Eurodollar Rate Loans that
are being continued as such shall be in an aggregate principal
amount of at least $1,000,000 and (iii) no Eurodollar Rate Loans
may be continued as such when any Event of Default has occurred
and is continuing, but shall be automatically converted to an
Alternate Base Rate Loan on the last day of the Interest Period
with respect thereto during which the Agent obtained knowledge of
such Event of Default. The Agent shall notify the Banks promptly
upon obtaining knowledge that an automatic conversion will occur
pursuant to clause (iii) hereof.
2.7 INTEREST RATE AND PAYMENT DATES FOR LOANS.
(A) INTEREST RATES FOR LOANS PRIOR TO MATURITY. During each
period set forth on Exhibit B hereto, (i) Loans made as Alternate
Base Rate Loans shall bear interest for the period from and
including the date thereof, or, in the case of a Loan that has
been converted from a Eurodollar Rate Loan, from the Conversion
Date thereof, until maturity or until converted into Eurodollar
Rate Loans, on the unpaid principal amount thereof at the
Alternate Base Rate plus the Applicable Margin for such period
based on the Debt Rating of the Company, and (ii) Loans
<PAGE> 18
-13-
made as Eurodollar Rate Loans shall bear interest for each
Interest Period with respect thereto on the unpaid principal
amount thereof at the applicable rate of interest per annum based
on the Eurodollar Rate for each such Interest Period plus the
Applicable Margin for such period based on the Debt Rating of the
Company, provided that if the Company has no Debt Rating, the
Applicable Margin shall be the highest rate per annum applicable
to such Loans during the relevant period. Any change in the
Applicable Margin with respect to any Loans resulting from a
change in the Debt Rating of the Company shall be effective as of
the opening of business on the day of the change in the Debt
Rating of the Company.
(B) OVERDUE AMOUNTS. If any amounts payable hereunder shall
not be paid when due (whether at the stated maturity thereof, by
acceleration, notice of intention to prepay or otherwise), such
overdue amounts shall bear interest payable on demand at a rate
per annum equal to 2% above the sum of the Alternate Base Rate
plus the Applicable Margin, if any, for Alternate Base Rate Loans
at such time from the date of such nonpayment until paid in full,
and whether before or after the entry of any judgment thereon,
provided that (i) each such Loan outstanding as a Eurodollar Rate
Loan shall bear interest payable on demand at a rate per annum
equal to 2% above the sum of the Eurodollar Rate plus the
Applicable Margin for such Eurodollar Rate Loan at such time,
from the date of such nonpayment until the end of the Interest
Period with respect thereto, and whether before or after the
entry of any judgment thereon.
(C) GENERAL. Interest on the Loans shall be payable in
arrears on each Interest Payment Date and upon payment (including
prepayment) in full thereof; provided, however, that after an
Event of Default has occurred and is continuing, interest on all
Loans shall be payable on demand made from time to time. At no
time shall the interest rate payable on the Loans, together with
the Agent's Fees, the Facility Fee and all other fees and amounts
payable hereunder and under the Notes, to the extent that any of
the same are construed to constitute interest, exceed the maximum
rate of interest permitted by law. The Company acknowledges that
to the extent interest payable on the Loans is based upon the
Alternate Base Rate, such Rate is only one of the bases for
computing interest on loans made by the Banks, and by basing
interest payable upon the Loans upon the Alternate Base Rate, the
Banks have not committed to charge, and the Company has not in
any way bargained for, interest based on a lower or the lowest
rate at which the Banks may now or in the future make loans to
other borrowers.
2.8 SUBSTITUTED INTEREST RATE. In the event that the Agent
shall have reasonably determined in good faith (which determination
shall be conclusive and binding upon the Company) that by reason of
circumstances affecting the London interbank eurodollar market, (i)
either adequate and reasonable means do not exist for ascertaining a
Eurodollar Rate applicable pursuant to paragraph 2.7(a), or (ii)
any Bank shall have notified the Agent that it has reasonably
determined in good faith (which determination shall be conclusive
and binding on the Company) that the Eurodollar Rate will not
adequately and fairly reflect the cost to such Bank of making or
maintaining its funding of a Eurodollar Rate Loan with respect to
(a) a proposed Loan that the Company has requested be made as a
Eurodollar Rate Loan, or (b) a Eurodollar Rate Loan that will
result from the requested conversion of any Loan into a
Eurodollar Rate Loan (any such Loan being herein called an
"AFFECTED LOAN"), the Agent shall promptly notify the Company
and
<PAGE> 19
-14-
the Banks (by telephone or otherwise) of such determination no
later than 10:00 A.M. (Boston time) one Business Day prior to the
requested Borrowing Date for such Affected Loan, or the requested
Conversion Date of such Loan, as the case may be. If the Agent
shall give such notice, the Company may by no later than 11:00
A.M. (Boston time) on the same Business Day, (i) cancel the
Borrowing Request with respect to such Affected Loan or request
that such Affected Loan be made as an Alternate Base Rate Loan or
(ii) cancel its request to convert to an Affected Loan or request
that any Loan that was to have been converted to an Affected Loan
be converted to an Alternate Base Rate Loan. Until such notice
has been withdrawn by the Agent (by notice to the Company
promptly upon the Agent having been notified by such Bank that
circumstances would no longer render any Loan an Affected Loan)
no further Affected Loans shall be made and Company shall not
have the right to convert any Loan to an Affected Loan.
2.9 ILLEGALITY. Notwithstanding any provision hereof to the
contrary, if any change in any law, regulation, treaty or directive,
or in the interpretation or application thereof, shall make it
unlawful for any Bank to make or maintain Eurodollar Rate Loans as
contemplated by this Agreement, (a) the commitment of such Bank
hereunder to make Eurodollar Rate Loans or to convert Alternate
Base Rate Loans to Eurodollar Rate Loans or to continue
Eurodollar Rate Loans as such shall forthwith be suspended and
(b) such Bank's Loans then outstanding as Eurodollar Rate Loans
shall be converted to Alternate Base Rate Loans on the last day
of the then current Interest Period applicable thereto, or within
such earlier period as required by law. If the commitment of any
Bank with respect to Eurodollar Rate Loans is suspended pursuant
to this paragraph 2.9 and it shall once again become legal for
such Bank to make or maintain its funding of Eurodollar Rate
Loans, such Bank's commitment to make or maintain such Eurodollar
Rate Loans shall be reinstated. Each Bank agrees to promptly
notify the Company and the Agent upon learning of any change
referred to above, as well as of any reinstatement of its ability
to make and maintain Eurodollar Rate Loans as contemplated by
this Agreement.
2.10 INCREASED COSTS. In the event that any change in
any law, regulation, treaty or directive or in the interpretation
or application thereof by any Governmental Body charged with the
administration thereof or compliance by any Bank with any request
or directive from any central bank or other Governmental Body:
(i) subjects any Bank to any tax of any kind whatsoever
with respect to any Eurodollar Rate Loan or its obligations
under this Agreement to make Eurodollar Rate Loans, or
changes the basis of taxation of payments to such Bank of
principal, interest or any other amount payable hereunder in
respect of its Eurodollar Rate Loans (except for imposition
of, or change in the rate of, tax on the overall net income
of such Bank);
(ii) imposes, modifies or makes applicable any reserve,
special deposit, compulsory loan, assessment or similar
requirement against assets held by, or deposits of, or
advances or loans by, or other credit committed or extended
by, or any other acquisition of funds by, any office of such
Bank in respect of its Eurodollar Rate Loans which is not
otherwise included in the determination of a Eurodollar
Rate; or
<PAGE> 20
-15-
(iii) imposes on such Bank any other condition with
respect to Loans hereunder or the Commitments;
and the result of any of the foregoing is to increase the cost to
such Bank of making, renewing, converting or maintaining its
Eurodollar Rate Loans, or to reduce any amount receivable in
respect of its Eurodollar Rate Loans, then, in any such case, the
Company shall promptly pay to such Bank, upon its demand, any
additional amounts necessary to compensate such Bank for such
additional cost or reduction in such amount receivable. A
statement setting forth the calculations of any additional
amounts payable pursuant to the foregoing sentence submitted by a
Bank to the Company shall be presumed to be correct absent
manifest error.
2.11 INDEMNITY. Notwithstanding anything contained herein to
the contrary, if the Company shall fail to borrow on a Borrowing Date
after it shall have given a Borrowing Request, to the extent only that
such Borrowing Request includes Eurodollar Rate Loans, or if the
right of the Company to have Eurodollar Rate Loans outstanding
hereunder shall be suspended or terminated in accordance with the
provisions of this Agreement prior to the last day of the
Interest Period applicable thereto, or if, while a Eurodollar
Rate Loan is outstanding, any repayment or prepayment of the
principal amount of such Eurodollar Rate Loan is made for any
reason (including, without limitation, as a result of
acceleration or illegality) on a date which is prior to the last
day of the Interest Period applicable thereto, the Company agrees
to indemnify each Bank against, and to pay on demand directly to
such Bank, an amount, if greater than zero, equal to (i):
A x (B - C) x D
---
365
where:
"A" equals the Affected Principal Amount;
"B" equals the Eurodollar Rate (expressed as
a decimal), as the case may be, applicable to
such Eurodollar Rate Loan;
"C" equals the applicable Eurodollar Rate
(expressed as a decimal), as the case may be,
in effect on the date of such failure to
borrow, termination, prepayment or repayment,
based on the applicable rates offered or bid,
as the case may be, on such date (or, if no
such rate is determinable on such date, the
rate or rates offered or bid, as the case may
be, determinable on the date closest
thereto), for deposits in an amount equal
approximately to the Affected Principal
Amount with an Interest Period equal
approximately to the period commencing on the
first day of such Remaining Interest Period
and ending on the last day of such Remaining
Interest Period or ending on the last day of
the
<PAGE> 21
-16-
applicable Interest Payment Period, as the
case may be, as determined by the Bank;
"D" equals the number of days from and
including the first day of the Remaining
Interest Period to but excluding the last day
of such Remaining Interest Payment Period;
and (ii) any other out-of-pocket loss or expense (including any
internal processing charge customarily charged by such Bank)
suffered by such Bank in liquidating deposits prior to maturity
in amounts which correspond to the proposed borrowing, prepayment
or repayment. The determination by each Bank of the amount of any
such loss or expense shall be presumed to be correct absent
manifest error.
2.12 USE OF PROCEEDS. The proceeds of the Loans shall be used
exclusively to finance the costs of the Company's gas inventory including
supporting commercial paper associated with gas inventory financing.
2.13 CAPITAL ADEQUACY. If either (i) the introduction of, or
any change or phasing in of any law or regulation or in the
interpretation thereof by any Governmental Body charged with the
administration thereof or (ii) compliance with any directive,
guideline or request from any central bank or Governmental Body
(whether or not having the force of law) promulgated or made after
the date hereof (but including, in any event, any law, rule, regulation,
interpretation, directive, guideline or request contemplated by
the report dated July 1988 entitled "International Convergence of
Capital Measurement and Capital Standards" issued by the Basle
Committee on Banking Regulations and Supervisory Practices)
affects or would affect the amount of capital required or
expected to be maintained by a Bank (or any lending office of
such Bank) or any corporation directly or indirectly owning or
controlling such Bank (or any lending office of such Bank) and
such Bank shall have determined that such introduction, change or
compliance has or would have the effect of reducing the rate of
return on such Bank's capital or the asset value to such Bank of
any Loan made by such Bank as a consequence, directly or
indirectly, of its obligations to make and maintain the funding
of Loans hereunder to a level below that which such Bank could
have achieved but for such introduction, change or compliance
(after taking into account such Bank's policies regarding capital
adequacy) by an amount deemed by such Bank to be material, then,
upon demand by such Bank, the Company shall promptly pay to such
Bank such additional amount or amounts as shall be sufficient to
compensate such Bank for such reduction on the rate of return.
Each Bank shall calculate such amount or amounts payable to it
under this paragraph 2.13 in a manner consistent with the manner
in which it shall calculate similar amounts payable to it by
other borrowers having provisions in their credit agreements
comparable to this paragraph 2.13. Each Bank agrees to provide
the Company with a certificate setting forth a description of any
such amount in respect of which it seeks payment under this
paragraph 2.13. Each Bank's determination of such amount or
amounts that will compensate such Bank for such reductions shall
be presumed correct absent manifest error.
<PAGE> 22
-17-
2.14 EXTENSION OF REVOLVING CREDIT TERMINATION DATE. The Company may,
pursuant to a Commitment Extension Request delivered to the Agent and each Bank
not less than 60 days prior to the then scheduled Revolving Credit Termination
Date, request each Bank to extend its Commitment for an additional
three-hundred sixty-four (364) day period expiring on the 364th day of such
period (or, if such date is not a Business Day, on the immediately preceding
Business Day). Each of the Banks shall, within 30 days of receipt of a
Commitment Extension Request from the Company, provide the Company with a
non-binding preliminary indication regarding whether such Bank is likely to
consent to the extension of its Commitment. If all Banks consent to the
extension of their respective Commitments, which consents shall be given no
less than 30 days prior to the then scheduled Revolving Credit Termination
Date, the Revolving Credit Termination Date shall be so extended. In the event
that less than all of the Banks consent to an extension of their respective
Commitments, the Revolving Credit Termination Date shall not be extended,
unless the Company designates another bank reasonably satisfactory to the Banks
willing so to extend the Revolving Credit Termination Date, or one or more of
the signatory Banks elect to increase its or their Commitments to the amount of
the Commitment of the nonconsenting Bank (any such other bank, including any
signatory Bank, to the extent of, and with respect to such an increase in its
Commitment, being herein called a "Replacement Bank"), to assume the Commitment
and obligations of such nonconsenting Bank or Banks (each, a "Nonconsenting
Bank") with respect to its Loans, and to purchase the outstanding Note of such
nonconsenting Bank and such Nonconsenting Bank's rights with respect to its
Loans, without recourse or warranty, for a purchase price equal to the
outstanding principal balance of the Note of such Nonconsenting Bank, plus all
interest accrued thereon and all other amounts owing to such Nonconsenting Bank
hereunder. Upon such assumption and purchase by a Replacement Bank, and
provided that the Banks (excluding the Nonconsenting Banks and each Replacement
Bank) have consented to the Commitment Extension Request prior to the then
scheduled Revolving Credit Termination Date, (i) the Revolving Credit
Termination Date shall be so extended, (ii) each such Replacement Bank shall be
deemed to be a "Bank" for purposes of this Agreement, and (iii) each
Nonconsenting Bank shall cease to be a "Bank" for all purposes of this
Agreement (except with respect to its rights hereunder to be reimbursed for
costs and expenses, and to indemnification with respect to, matters
attributable to events, acts or conditions occurring prior to such assumption
and purchase) and shall no longer have any obligations hereunder.
Each Bank will use its best efforts to respond promptly to any
Commitment Extension Request, provided that no Bank's failure to so respond
shall create any claim against it or have the effect of extending the Revolving
Credit Termination Date.
2.15 EXTENSION TO TERMINATION DATE. Subject to the terms and
conditions hereof, the Company may, upon notice delivered to the Agent and each
Bank not less than 10 days prior to the then scheduled Revolving Credit
Termination Date, elect to extend the scheduled maturity of the Loans
outstanding on the Revolving Credit Termination Date from such date to the
Termination Date so long as no Event of Default has occurred and is continuing
on the Revolving Credit Termination Date. On the Revolving Credit Termination
Date, the Company shall execute and deliver to each Bank a new promissory note
in substantially the form of Exhibit E, with appropriate insertions (as
endorsed and as amended or otherwise modified from time to
<PAGE> 23
-18-
time, a "Term Note" and, collectively, the "Term Notes"), payable
to the order of each Bank and representing the obligation of the
Company to pay the aggregate unpaid principal amount of all Loans
made by such Bank, with interest thereon as prescribed or
determined herein. Each Bank is authorized to record each
payment or prepayment of principal of the Loans on the applicable
grid (and any continuations thereof) connected to and
constituting a part of its Term Note. No failure to so record or
any error in so recording shall affect the obligation of the
Company to repay the Loans, with interest thereon, as herein
provided. Each Term Note shall (a) be dated the date of the
Revolving Credit Termination Date, (b) be stated to mature on the
Termination Date, and (c) bear interest for the period from and
including the date thereof on the unpaid principal amount thereof
from time to time outstanding at the applicable interest rate per
annum determined as provided herein. Upon receipt by each Bank
from the Company of its Term Note in accordance with the terms of
this #2.15, each Bank will promptly return to the Company the
Revolving Credit Note held by such Bank.
2.16 NOTICE OF COSTS; SUBSTITUTION OF BANKS. Each Bank will
notify the Company of any event that will entitle such Bank to
compensation under paragraphs 2.10 and 2.13 as promptly as practicable,
but in any event within 45 days after an officer of the Bank
responsible for matters concerning this Agreement has knowledge of
such event. If such Bank fails to give such notice, such Bank shall
only be entitled to such compensation for the period commencing on the
date of the giving of such notice. Each Bank shall use its best efforts
to avoid the need to give a notice under paragraph 2.10 or 2.13 by
designating a different Applicable Lending Office outside of the United
States if such designation would avoid the need to give such
notice and will not, in the sole opinion of such Bank, be
disadvantageous to such Bank. In the event the Company receives
such notice or is otherwise required under the provisions of
paragraphs 2.10 or 2.13 to make payments in a material amount to
any Bank, the Company may, so long as no Event of Default shall
have occurred and be continuing, elect to substitute such Bank as
a party to this Agreement; provided that, concurrently with such
substitution, (i) the Company shall pay that Bank all principal,
interest and fees and other amounts (including without
limitation, amounts, if any, owed under paragraph 2.10, 2.11 or
2.13) owed to such Bank through such date of termination, (ii)
another commercial bank satisfactory to the Company and the Agent
(or if the Agent is also the Bank to be substituted, the
successor Agent) shall agree, as of such date, to become a Bank
(whether by assignment or amendment) for all purposes under this
Agreement and to assume all obligations of the Bank to be
substituted as of such date, and (iii) all documents, supporting
materials and fees necessary, in the judgment of the Agent (or if
the Agent is also the Bank to be substituted, the successor
Agent) to evidence the substitution of such Bank shall have been
received and approved by the Agent as of such date.
3. FEES; PAYMENTS.
3.1 FACILITY FEE. The Company agrees to pay to the Agent
for the account of the Banks a fee (the "Facility Fee") equal to
the rate per annum determined by reference to Exhibit B hereto
based upon the Debt Rating of the Company multiplied by the
Aggregate Commitment, which Facility Fee shall be payable in
arrears on the last day of each March, June, September and
<PAGE> 24
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December of each year, commencing on the first such date
following the Effective Date and continuing until the later of
the Termination Date or the date all sums due hereunder and under
the Notes are paid in full; provided that if the Company has no
Debt Rating, the Facility Fee shall be determined at the highest
rate per annum for the relevant period set forth on Exhibit B.
3.2 FEES OF THE AGENT. The Company agrees to pay to the Agent
for its own account, such fees (the "Agent's Fees") for its services
hereunder in such amounts and at such times as previously agreed upon
by the Company and the Agent.
3.3 COMPUTATION OF INTEREST AND FEES.
(a) Interest in respect of Alternate Base Rate Loans, the
Facility Fee and all other fees payable by the Company hereunder
shall be calculated on the basis of a 365/366-day year for the
actual number of days elapsed. Interest in respect of Eurodollar
Rate Loans shall be calculated on the basis of a 360-day year for
the actual number of days elapsed. Any change in the interest
rate on a Loan resulting from a change in the Alternate Base Rate
or Eurodollar Rate shall become effective as of the opening of
business on the day on which such change shall become effective.
The Agent shall, as soon as practicable, notify the Company and
the Banks of the effective date and the amount of each such
change but failure of the Agent to do so shall not in any manner
affect the obligation of the Company to pay interest on the Loans
in the amounts and on the dates required.
(b) Each determination of the Alternate Base Rate or the
Eurodollar Rate by the Agent pursuant to any provision of this
Agreement shall be presumed to be correct absent manifest error.
3.4 PRO RATA TREATMENT AND APPLICATION OF PRINCIPAL
PAYMENTS. Each Borrowing by the Company from the Banks, any
conversion of Loans from one Type to the same or another Type,
and any reduction of the Aggregate Commitments of the Banks,
shall be made pro rata according to the Commitment Percentage of
each Bank. All payments (including prepayments) to be made by the
Company on account of principal and interest on Loans comprising
the same Borrowing shall be made pro rata according to the
outstanding principal amount of each Bank's Loans. All payments
by the Company on all Loans shall be made without set-off or
counterclaim and shall be made prior to 12:00 noon, Boston time,
on the date such payment is due, to the Agent for the account of
the Banks at the Agent's office specified in paragraph 11.1, in
each case in lawful money of the United States of America and in
immediately available funds, and, as between the Company and the
Banks, any payment by the Company to the Agent for the account of
the Banks shall be deemed to be payment by the Company to the
Banks; provided, however, that any payment received by the Agent
on any Business Day after 12:00 noon shall be deemed to have been
received on the immediately succeeding Business Day. The Agent
shall distribute such payments to the Banks promptly upon receipt
in like funds as received. If any payment hereunder or on any
Note becomes due and payable on a day other than a Business Day,
the maturity thereof shall be extended to the next succeeding
Business Day (unless, in the case of Eurodollar Loans, the result
of such extension would be to extend such
<PAGE> 25
-20-
payment into another calendar month, in which event such payment shall
be made on the immediately preceding Business Day) and, with respect to
payments of principal, interest thereon shall be payable at the then applicable
rate during such extension.
4 REPRESENTATIONS AND WARRANTIES. In order to induce the Agent and
the Banks to enter into this Agreement, the Company hereby represents and
warrants to the Agent and to each Bank that:
4.1 SUBSIDIARY. The Company has the Subsidiaries set forth in
Exhibit G. The shares of each corporate Subsidiary owned by the Company are
duly authorized, validly issued, fully paid and non-assessable and are owned
free and clear of any Liens, except Liens permitted by paragraph 8.2.
4.2 CORPORATE EXISTENCE AND POWER. Each of the Company and each
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth of Massachusetts and has all
requisite corporate power and authority to own its Property and to carry on
its business as now conducted. Each of the Company and each Subsidiary is in
good standing and duly qualified to do business in each jurisdiction in which
the failure to so qualify would have a material adverse effect on the
financial condition, Property, prospects or operations of the Company and its
Subsidiaries on a Consolidated basis.
4.3 CORPORATE AUTHORITY. The Company has full corporate power and
authority to enter into, execute, deliver and carry out the terms of this
Agreement and to make the borrowings contemplated hereby, to execute, deliver
and carry out the terms of the Notes and to incur the obligations provided for
herein and therein, all of which have been duly authorized by all necessary
corporate action on its part and are in full compliance with its Charter and
By-Laws. No consent or approval of, or exemption by, shareholders or any
Governmental Body is required to authorize, or is required in connection with
the execution, delivery and performance of, this Agreement and the Notes, or is
required as a condition to the validity or enforceability of this Agreement and
the Notes, except for the approval of the DPU referred to in paragraph 5.6
which has been duly obtained and which remains in full force and effect and is
final and is not subject to appeal.
4.4 BINDING AGREEMENT. This Agreement constitutes and the Notes, when
issued and delivered pursuant hereto for value received, will constitute, the
valid and legally binding obligations of the Company enforceable against the
Company in accordance with their respective terms, except as such
enforceability may be limited by equitable principles and by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the rights of creditors generally.
4.5 LITIGATION. Except for the matters set forth in the Designated
Documents, there are no actions, suits or arbitration proceedings (whether or
not purportedly on behalf of the
<PAGE> 26
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Company or any Subsidiary) pending or to the knowledge of the management of the
Company threatened against the Company or any Subsidiary, or maintained by the
Company or any Subsidiary, in law or in equity before any Governmental Body
which, if decided adversely to the Company or such Subsidiary, would result in
a material adverse change in the financial condition, Property or operations
of the Company and its Subsidiaries on a Consolidated basis, after giving
effect to reserves reflected in the Financial Statements or the footnotes
thereto. There are no proceedings pending or threatened against the Company or
any Subsidiary which call into question the validity and enforceability of this
Agreement or the Notes.
4.6 NO CONFLICTING AGREEMENTS. Except for the matters set forth in
Designated Documents, neither the Company nor any Subsidiary is in default
under any agreement to which it is a party or by which it or any of its
Property is bound the effect of which would have a material adverse effect on
the financial condition, Property, prospects or operations of the Company and
its Subsidiaries on a Consolidated basis. No provision of the Charter or
By-Laws of the Company, and no provision of any existing mortgage, indenture
(including the Indenture), contract, agreement, statute (including, without
limitation, any applicable usury or similar law), rule, regulation, judgment,
decree or order binding on the Company or any Subsidiary would in any way
prevent the execution, delivery or carrying out of the terms of this Agreement
and the Notes, and the taking of any such action will not constitute a default
under, or result in the creation or imposition of, or obligation to create, any
Lien not permitted by paragraph 8.2 upon the Property of the Company or any
Subsidiary pursuant to the terms of any such mortgage, indenture, contract or
agreement.
4.7 TAXES. Each of the Company and its Subsidiaries has filed or
caused to be filed all tax returns material to the Company and its Subsidiaries
required by law to be filed, and has paid, or has made adequate provision for
the payment of, all taxes shown to be due and payable on said returns or in any
assessments made against it. No tax liens have been filed and no claims are
being asserted with respect to such taxes which are required by GAAP to be
reflected in the Financial Statements and are not so reflected therein. The
Internal Revenue Service has audited and settled upon, or the applicable
statutes of limitation have run upon, all Federal income tax returns of the
Company and its Subsidiaries through the tax year ended December 31, 1987, and,
to the extent required by GAAP, the results of all such audits are reflected in
the Financial Statements. The charges, accruals and reserves on the books of
the Company and its Subsidiaries with respect to all taxes are considered by
the management of the Company to be adequate, and the Company knows of no
unpaid assessment which is due and payable against the Company or any of the
Subsidiaries which would have a material adverse effect on the financial
condition, Property, prospects or operations of the Company and its
Subsidiaries on a Consolidated basis, except such thereof as are being
contested in good faith and by appropriate proceedings diligently conducted and
for which adequate reserves have been set aside in accordance with GAAP.
4.8 FINANCIAL STATEMENTS. The Company heretofore delivered to each
Bank (i) copies of the Consolidated Balance Sheets at December 31, 1991 and
1992, and the related
<PAGE> 27
-22-
Consolidated Statements of Income, Retained Earnings and Changes in Financial
Position for the years then ended and (ii) copies of the Consolidated quarterly
reports of the Company and its Subsidiaries as of March 31, 1993, June 30, 1993
and September 30, 1993, each containing a Consolidated balance sheet and
Consolidated statements of income and cash flows of the Company and its
Subsidiaries (the statements in (i) and (ii) above being sometimes referred to
herein as the "Financial Statements"). The financial statements set forth in
(i) above were audited and reported on by the Accountants on February 25, 1993,
and the financial statements set forth in (ii) above were prepared by the
Company. The Financial Statements fairly present the Consolidated financial
condition and the Consolidated results of operations of the Company and its
Subsidiaries as of the dates and for the periods indicated therein, and have
been prepared in conformity with GAAP. Except (a) as reflected in the financial
statements specified in (i) above or in the footnotes thereto, or (b) as
otherwise disclosed to the Banks in a writing specifically referring to this
paragraph 4.8, neither the Company nor any Subsidiary has any obligation or
liability of any kind (whether fixed, accrued, contingent, unmatured or
otherwise) which is material to the Company and its Subsidiaries on a
Consolidated basis and which, in accordance with GAAP, should have been shown
on such financial statements and were not, other than those incurred in the
ordinary course of their respective businesses since December 31, 1992. Since
December 31, 1992, each of the Company and each Subsidiary has conducted its
business only in the ordinary course, and as of the Effective Date there
has been no adverse change in the financial condition, Property, operations or
prospects of the Company and its Subsidiaries which is material to the Company
and its Subsidiaries on a Consolidated basis.
4.9 COMPLIANCE WITH APPLICABLE LAWS. Except as set forth in the
Designated Documents, neither the Company nor any Subsidiary is in default with
respect to any judgment, order, writ, injunction, decree or decision of any
Governmental Body applicable to the Company or such Subsidiary which default
would have a material adverse effect on the financial condition, Property,
prospects or operations of the Company and its Subsidiaries on a Consolidated
basis. Except as set forth in the Designated Documents, each of the Company and
each Subsidiary is complying in all material respects with all applicable
material statutes and regulations of all Governmental Bodies, including ERISA
and all Environmental Laws, a violation of which would have a material adverse
effect on the financial condition, Property, prospects or operations of the
Company and each Subsidiary on a Consolidated basis.
4.10 GOVERNMENTAL REGULATIONS. The Company is not an "Investment
Company" as such term is defined in the Investment Company Act of 1940, as
amended.
4.11 PROPERTY. Each of the Company and each Subsidiary has good and
marketable title to all of its Property, title to which is material to the
Company and its Subsidiaries on a Consolidated basis, subject to no Lien,
except as permitted by paragraph 8.2.
4.12 FEDERAL RESERVE REGULATIONS. The Company is not engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any margin stock
within the meaning of Regulation U of the Board of Governors of the
<PAGE> 28
-23-
Federal Reserve System, as amended. No part of the proceeds of the Loans will
be used (i) to purchase or carry any such margin stock, (ii) to extend credit
to others for the purpose of purchasing or carrying any margin stock, (iii) for
a purpose which violates the provisions of Regulations G, U and X of the Board
of Governors of the Federal Reserve System, as amended, or (iv) for a purpose
which violates any other applicable law, rule or regulation of any
Governmental Body. Not more than 25% of the value of the aggregate of the
assets of the Company subject to the provisions of this Agreement is
represented by margin stock within the meaning of said Regulation U.
4.13 NO MISREPRESENTATION. No representation or warranty contained
herein and no certificate or report furnished or to be furnished by the Company
in connection with the transactions contemplated hereby, contains or will
contain a misstatement of material fact, or omits or will omit to state a
material fact required to be stated in order to make the statements herein or
therein contained not misleading in the light of the circumstances under which
made.
4.14 PENSION PLANS. Each Plan, and to the best of the Company's
knowledge each Multiemployer Plan, established or maintained by the Company and
its Subsidiaries, is in material compliance with the applicable provisions of
ERISA and the Code, and the Company and its Subsidiaries have filed all
material reports required to be filed with respect to each such Plan by ERISA
and the Code. The Company and its Subsidiaries have met all requirements with
respect to funding the Plans imposed by ERISA or the Code. Since the effective
date of ERISA, there have not been, nor are there now existing, any events or
conditions which would permit any Plan and to the best of the Company's
knowledge any Multiemployer Plan to be terminated under circumstances which
would cause the lien provided under Section 4068 of ERISA to attach to the
Property of the Company or any of its Subsidiaries. Since the effective date of
ERISA, no reportable event as defined in Title IV of ERISA, which constitutes
grounds for the termination of any Plan and to the best of the Company's
knowledge any Multiemployer Plan, has occurred and no Plan or any related trust
has been terminated in whole or in part which would have a material adverse
effect on the financial condition, Property or operations of the Company and
its Subsidiaries on a Consolidated basis.
4.15 PUBLIC UTILITY HOLDING COMPANY ACT. The Company and its
Subsidiaries are "subsidiaries" of a "holding company" which is exempt under
the Public Utility Holding Company Act of 1935, pursuant to orders of the
Securities Exchange Commission, which orders remain in full force and effect.
4.16 APPROVALS. The Company has obtained all authorizations, approvals
or consents of and made all filings or registrations with all Governmental
Bodies as are necessary to be obtained or made by the Company for the
execution, delivery or performance by the Company of this Agreement or the
Notes and all such authorizations, approvals and consents are in full force and
effect.
<PAGE> 29
-24-
4.17 NET PLANT SURPLUS. On each Borrowing Date on which the outstanding
principal balance of Loans hereunder would increase, the Company will have
sufficient net plant surplus within the meaning of DPU Order 93-192 to effect
the borrowing on such date.
5. CONDITIONS OF BORROWING - FIRST BORROWING. In addition to the
requirements set forth in paragraph 6, the obligations of the Banks to make the
first Loans on the initial Borrowing Date are subject to the fulfillment of the
following conditions precedent:
5.1 EVIDENCE OF CORPORATE ACTION. The Agent shall have received a
certificate, dated the first Borrowing Date, of the Secretary or an Assistant
Secretary of the Company (i) attaching a true and complete copy of the
resolutions of its Board of Directors and of all documents evidencing other
necessary corporate action (in form and substance satisfactory to the Agent and
to Special Counsel) taken by the Company to authorize this Agreement, the Notes
and the borrowings hereunder, (ii) attaching a true and complete copy of the
Charter and the By-Laws of the Company, and (iii) setting forth the incumbency
of the officer or officers of the Company who sign this Agreement and the
Notes, including therein a signature specimen of such officer or officers,
together with a certificate of the Secretary of State of the Commonwealth of
Massachusetts as to the good standing of, and the payment of franchise taxes
therein by, the Company, together with such other documents as the Agent or
Special Counsel shall reasonably require.
5.2 REVOLVING CREDIT NOTES. The Agent shall have received and be in
possession of the Revolving Credit Notes executed by the duly authorized
officer or officers of the Company.
5.3 APPROVAL OF SPECIAL COUNSEL. All legal matters incident to the
making of the first Loans on the initial Borrowing Date shall be satisfactory
to Special Counsel, and the Agent shall have received from Special Counsel an
opinion addressed to the Banks and to the Agent, dated the first Borrowing
Date, substantially in the form of Exhibit H.
5.4 OPINION OF COUNSEL TO THE COMPANY. The Agent shall have received
the opinion of Jennifer L. Miller, General Counsel to the Company, or her
successor, if any, addressed to the Banks and to the Agent, dated the first
Borrowing Date, substantially in the form of Exhibit I.
5.5 FEES. The fees of Special Counsel shall have been paid.
5.6 DPU APPROVAL. The Agent shall have received true copies for each
Bank of the order or orders of the DPU approving this Agreement in the form
executed and delivered to the Agent by the Company and each Bank with no
material changes to this Agreement. Such approval shall be final and shall no
longer be subject to appeal, shall be in full force and effect, shall be in
form and substance satisfactory to the Agent and Special Counsel. In addition,
the
<PAGE> 30
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Agent shall have received a certificate of the Secretary of the Company to the
effect that no other consents, approvals or licenses are necessary in
connection with the borrowings hereunder.
6. CONDITIONS OF BORROWING - ALL BORROWINGS. The obligations of the
Banks to make all Loans hereunder on each Borrowing Date are subject to the
fulfillment of the following conditions precedent:
6.1 COMPLIANCE. On each Borrowing Date, and after giving effect to the
Loans to be made on such date (a) the Company and each Subsidiary shall be in
compliance with all of the terms, covenants and conditions of this Agreement,
(b) there shall exist no Event of Default, and (c) the representations and
warranties contained in this Agreement, or otherwise in writing made by the
Company in connection herewith shall be true and correct in all material
respects with the same effect as though such representations and warranties had
been made on such Borrowing Date (except such thereof as specifically refer to
an earlier date) and the Agent shall have received a certificate, dated the
Borrowing Date, and signed on behalf of the Company by a duly authorized
officer of the Company, to the same effect as all of the foregoing matters.
6.2 LOAN CLOSINGS. All documents required by paragraphs 5 and 6 of
this Agreement to be executed and/or delivered to the Agent on or before the
applicable Borrowing Date shall have been executed and delivered at the office
of the Agent set forth in paragraph 11 on or before such Borrowing Date.
6.3 APPROVAL OF COUNSEL. All legal matters in connection with the
making of each Loan on Borrowing Date shall be reasonably satisfactory to such
counsel with whom the Agent may deem it necessary to consult.
6.4 BORROWING REQUEST. The Agent shall have received a Borrowing
Request.
6.5 OTHER DOCUMENTS. The Agent shall have received such other
documents as the Agent shall reasonably require.
7. AFFIRMATIVE COVENANTS.
The Company covenants and agrees that on and after the Effective Date
until the later of the termination of the Commitments or the payment in full of
the Notes and the performance by the Company of all other obligations of the
Company hereunder, unless the Agent shall otherwise consent in writing as
provided in paragraph 13, the Company will:
7.1 CORPORATE EXISTENCE. Maintain, and cause its Subsidiaries to
maintain its corporate existence, in good standing in the jurisdiction of its
incorporation or organization and
<PAGE> 31
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in each other jurisdiction in which the character of the Property owned or
leased by it therein or the transaction of its business makes such
qualification necessary, except in the case of any Subsidiary where the failure
so to maintain or qualify would not have a material adverse effect on the
financial condition, Property or operations of the Company and its Subsidiaries
on a Consolidated basis, and except as otherwise expressly permitted hereunder.
7.2 TAXES. Pay and discharge when due, and cause each Subsidiary so
to do, all taxes, assessments and governmental charges and levies upon the
Company and each Subsidiary, and upon the income, profits and Property of the
Company and each Subsidiary, which if unpaid would have a material adverse
effect on the financial condition, Property or operations of the company and
its Subsidiaries on a Consolidated basis or become a Lien not permitted under
paragraph 8.2, unless and to the extent only that such taxes, assessments,
charges and levies, (a) shall be contested in good faith and by appropriate
proceedings diligently conducted by the Company or such Subsidiary, provided
that such reserve or other appropriate provision, if any, as shall be required
in accordance with GAAP shall have been made therefor, or (b) are not in the
aggregate material to the financial condition, Property or operations of the
Company and its Subsidiaries on a Consolidated basis.
7.3 INSURANCE. Maintain, and cause each Subsidiary to maintain,
insurance with financially sound insurance carriers on such of its Property in
such amounts, subject to such deductibles and self-insured amounts and against
such risks as is customarily maintained by similar businesses, including,
without limitation, public liability, workers' compensation and employee
fidelity insurance.
7.4 PAYMENT OF INDEBTEDNESS AND PERFORMANCE OF OBLIGATIONS. Pay and
discharge promptly, and cause its Subsidiaries to so pay and discharge, all
lawful indebtedness, obligations and claims for labor, materials and supplies
or otherwise which, if unpaid, would (a) have a material adverse effect on the
financial condition, Property or operations of the Company and its subsidiaries
on a Consolidated basis, or (b) become a Lien not permitted by paragraph 8.2,
provided that neither the Company nor any Subsidiary shall be required to pay
and discharge or cause to be paid and discharged any such indebtedness,
obligation or claim so long as the validity thereof shall be contested in good
faith and by appropriate proceedings diligently conducted by the Company or
such Subsidiary, and further provided that such reserve or other appropriate
provision as shall be required in accordance with GAAP shall have been made
therefor.
7.5 OBSERVANCE OF LEGAL REQUIREMENTS; ERISA. Observe and comply, and
cause each Subsidiary to observe and comply, in all material respects with all
laws (including ERISA and all Environmental Laws), ordinances, orders,
judgments, rules, regulations, certifications, franchises, permits, licenses,
directions and requirements of all Governmental Bodies, which now or at any
time hereafter may be applicable to the Company or such Subsidiary, a violation
of which would have a material adverse effect on the financial condition,
Property or operations of the Company and its Subsidiaries on a Consolidated
basis, except such thereof as shall be contested in good faith and by
appropriate proceedings diligently conducted by the Company or
<PAGE> 32
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such Subsidiary, provided that such reserve or other appropriate provision as
shall be required in accordance with GAAP shall have been made therefor.
7.6 FINANCIAL STATEMENTS AND OTHER INFORMATION. Furnish to the Agent
and the Banks:
(a) as soon as available, but in no event more than 120 days after the
close of each fiscal year of the Company, copies of its audited Consolidated
Balance Sheet and the related audited Consolidated Statements of Income and
Retained Earnings and Cash Flows for such fiscal year setting forth in each
case in comparative form the corresponding figures for the preceding fiscal
year all reported by the Accountants which report shall state that said
financial statements fairly present the financial position and results of
operations of the Company as at the end of and for such fiscal year except as
specifically stated therein, as of and through the end of such fiscal year,
prepared in accordance with GAAP and accompanied by a report with respect
thereto of the Accountants, together with a certificate signed on behalf of the
Company by the principal financial officer thereof to the effect that having
read this Agreement, and based upon an examination which in the opinion of such
officer was sufficient to enable such officer to make an informed statement,
(x) such statements fairly present the financial position and results of the
operations of the Company and its Subsidiaries on a Consolidated basis to the
best of such officer's knowledge, and (y) nothing came to such officer's
attention which caused such officer to believe that an Event of Default has
occurred, or if an Event of Default has occurred, stating the facts with
respect thereto and whether the same has been cured prior to the date of such
certificate, and, if not, what action is proposed to be taken with respect
thereto;
(b) as soon as available, but in no event more than 60 days after the
close of each quarter (except the last quarter) of each fiscal year of the
Company a Consolidated Balance Sheet and Consolidated Statements of Income and
Cash Flows of the Company and its Subsidiaries as of and through the end of
such quarter, together with a certificate signed on behalf of the Company by
the principal financial officer thereof to the effect that having read this
Agreement, and based upon an examination which in the opinion of such officer
was sufficient to enable such officer to make an informed statement, (x) such
statements fairly present the financial position and results of the operations
of the Company and its Subsidiaries on a Consolidated basis to the best of such
officer's knowledge, and (y) nothing came to such officer's attention which
caused such officer to believe that an Event of Default has occurred, or if an
Event of Default has occurred, stating the facts with respect thereto and
whether the same has been cured prior to the date of such certificate, and, if
not, what action is proposed to be taken with respect thereto;
(c) prompt notice if: (x) any obligation of the Company (other than
its obligations under this Agreement or the Notes) or any Subsidiary for the
payment of any Funded Debt in excess of $1,000,000 is not paid when due or
within any grace period for the payment thereof or is declared or shall become
due and payable prior to its stated maturity, or (y) to the knowledge of any
Authorized Signatory of the Company there shall occur and be continuing an
event which constitutes, or which with the giving of notice or the lapse of
time, or both, would constitute an
<PAGE> 33
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event of default under any agreement with respect to Funded Debt
of the Company or any Subsidiary (including this Agreement);
(d) prompt written notice in the event that (i) the Company
or any Subsidiary shall fail to make any payments when due and
payable under any Plan or Multiemployer Plan, or (ii) the Company
or any Subsidiary shall receive notice from the Internal Revenue
Service or the Department of Labor that the Company or such
Subsidiary shall have failed to meet the minimum funding
requirements of any Plan or Multiemployer Plan, including
therewith a copy of such notice; and
(e) promptly upon becoming available, copies of all
regular, periodic or special reports or other material which may
be filed with or delivered by the Company to the Securities and
Exchange Commission, or any other Governmental Body succeeding to
the functions thereof;
(f) prompt written notice in the event the Debt Rating of
the Company shall change or the Company shall have no Debt
Rating; and
(g) such other information and reports relating to the
affairs of the Company and its Subsidiaries, as the Agent or any
Bank at any time or from time to time may reasonably request.
7.7 INSPECTION. Permit representatives of the Agent or any
Bank to visit the offices of the Company and any Subsidiary, to
examine the books and records thereof and to make copies or extracts
therefrom, and to discuss the affairs of the Company and such
Subsidiary with the officers, including the financial officers,
thereof, at reasonable times, at reasonable intervals and with
reasonable prior notice.
8. NEGATIVE COVENANTS. The Company covenants and agrees that from
the Effective Date until the later of the termination of the
Commitments or the payment in full of the Notes and the performance
by the Company of all other obligations of the Company hereunder,
unless the Agent shall otherwise consent in writing as provided in
paragraph 13, the Company will not:
8.1 FUNDED DEBT. Create, incur, assume, guarantee or suffer to
exist any Funded Debt, or permit any Subsidiary so to do, unless the
same is permitted or allowed under the provisions of the Indenture
specifically relating to restrictions on Funded Debt, which provisions
are incorporated by reference herein as if fully set forth herein.
8.2 LIENS. Create, incur, assume or suffer to exist any Lien
upon any of its Property, whether now owned or hereafter acquired,
to secure any indebtedness or other obligation, or permit any
Subsidiary so to do, unless the same is permitted or allowed under
the Indenture, the provisions of which specifically relating to
restrictions on Liens are incorporated by reference
<PAGE> 34
-29-
herein as if fully set forth herein substituting, however, the
words "all obligations of the Company
hereunder" for the words "200l-B Debentures" (or any comparable
reference to indebtedness secured under the Indenture).
8.3 MERGERS AND CONSOLIDATIONS. Except with the prior
written consent of the Majority Banks, consolidate with or merge
into any other Person, or permit any Subsidiary so to do, except
that (i) a Subsidiary may consolidate with or merge into another
Subsidiary and (ii) a Subsidiary may consolidate with or merge
into the Company provided that the Company is the survivor
thereof.
8.4 SALE OF PROPERTY. Except with the prior written
consent of the Majority Banks, sell, lease or otherwise dispose
of any significant part of its Property (including, without
limitation, the right to receive income), or permit any
Subsidiary so to do, except (i) in the ordinary course of
business, (ii) obsolete or worn out Property which is no longer
used or useful to the Company or such Subsidiary, and (iii) a
Subsidiary may sell, lease or otherwise dispose of Property to
the Company or to another Subsidiary.
8.5 DIVIDENDS; DISTRIBUTIONS. Declare or pay any
dividends (other than dividends payable in shares of common stock
of the Company) on, or make any other distribution in respect of,
any shares of any class of capital stock of the Company, or apply
any of its property or assets to, or set aside any sum for, the
payment, purchase, redemption or other acquisition or retirement
of, or permit any Subsidiary to purchase, any shares of any class
of capital stock of the Company, unless the same is permitted or
allowed under the provisions of the Indenture specifically
relating to the same, which provisions are incorporated by
reference herein as if fully set forth herein.
9. EVENTS OF DEFAULT. The following shall each constitute an
Event of Default hereunder:
(a) the failure of the Company to pay the principal of any
Loan when due; or
(b) the failure of the Company to make payment of interest
on any of the Notes when due and payable and such failure shall
continue unremedied for a period of five Business Days after the
same shall become due; or
(c) the failure of the Company to make payment of the
Facility Fee, the Agent's Fees or, except as otherwise
specifically provided herein, any other amount payable hereunder
within ten Business Days after receipt by the Company of written
notice from the Agent that such payment is due and payable; or
(d) the failure of the Company to observe or perform any
covenant or agreement contained in paragraph 8; or
<PAGE> 35
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(e) the failure of the Company to observe or perform any
other term, covenant, or agreement contained in this Agreement
and such failure shall have continued unremedied for a
period of 30 days after written notice, specifying such failure
and requiring it to be remedied, shall have been given to the
Company by the Agent; or
(f) any material representation or warranty made herein or
in any certificate, report, or notice delivered or to be
delivered by the Company pursuant hereto, shall prove to have
been incorrect in any material respect when made; or
(g) any obligation of the Company (other than its
obligations under this Agreement and the Notes), or of any
Subsidiary, whether as principal, guarantor, surety or other
obligor, for the payment of any Funded Debt in excess of
$3,000,000, (i) shall become or shall be declared to be due and
payable prior to its stated maturity, or (ii) shall not be paid
when due or within any grace period for the payment thereof; or
(h) the Company or any Subsidiary shall (i) make an
assignment for the benefit of creditors, (ii) admit in writing
its inability to pay its debts as they become due or generally
fail to pay its debts as they become due, (iii) file a voluntary
petition in bankruptcy, (iv) become insolvent (however such
insolvency shall be evidenced), (v) file any petition or answer
seeking for itself any reorganization, arrangement, composition,
readjustment of debt, liquidation or dissolution or similar
relief under any present or future statute, law or regulation of
any jurisdiction, (vi) petition or apply to any tribunal for any
trustee, receiver, custodian, liquidate or fiscal agent for any
substantial part of its Property, (vii) be the subject of any
proceeding referred to in clause (vi) above or an involuntary
bankruptcy petition filed against it which remains undismissed
for a period of 90 days, (viii) file any answer admitting or not
contesting the material allegations of any such petition filed
against it, or of any order, judgment or decree approving such
petition in any such proceeding, (ix) seek, approve, consent to,
or acquiesce in any such proceeding, or in the appointment of any
trustee, receiver, custodian, liquidate, or fiscal agent for it,
or any substantial part of its Property, or an order is entered
appointing any such trustee, receiver, custodian, liquidator or
fiscal agent and such order remains in effect for 90 days, (x)
take any formal action for the purpose of effecting any of the
foregoing or looking to the liquidation or dissolution of the
Company or any Subsidiary, or (xi) suspend or discontinue its
business (except as otherwise expressly permitted herein); or
(i) an order for relief is entered under the United States
bankruptcy laws or any other decree or order is entered by a
court having jurisdiction (i) adjudging the Company or any
Subsidiary a bankrupt or insolvent, or (ii) approving as properly
filed a petition seeking reorganization, liquidation,
arrangement, adjustment or composition of or in respect of the
Company or any Subsidiary under the United States bankruptcy laws
or any other applicable Federal or state law, or (iii) appointing
a trustee, receiver, custodian, liquidator, or fiscal agent (or
other similar official) of the Company or any Subsidiary or of
any substantial part of the Property of any thereof, or (iv)
ordering the winding up or liquidation of the affairs of the
Company or any Subsidiary; or
<PAGE> 36
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(j) judgments or decrees against the Company or any
Subsidiary for an aggregate amount in excess of $5,000,000 shall
remain unpaid, unstayed on appeal, undischarged, unbonded or
undismissed for a period of 60 days; or
(k) any fact or circumstance, including any Reportable
Event as defined in Title IV of ERISA, at a time when there
exists an underfunding of the Plan in an amount in excess of
$500,000, which constitutes grounds for the termination of any
Plan by the PBGC or for the appointment of a trustee to
administer any Plan, shall have occurred and be continuing for a
period of 30 days.
Upon the occurrence and during the continuance of an Event
of Default under this paragraph 9, the Agent, upon the request of
the Majority Banks, shall notify the Company that the Commitments
have been terminated and that the Notes, all accrued interest
thereon and all other amounts owing under this Agreement are
immediately due and payable, provided that upon the occurrence of
an event specified in paragraphs 9(h) or 9(i), the Commitments
shall automatically terminate and the Notes (with accrued
interest thereon) and all other amounts owing under this
Agreement shall become immediately due and payable without notice
to the Company. Except for any notice expressly provided for in
this paragraph 9, the Company hereby expressly waives any
presentment, demand, protest, notice of protest or other notice
of any kind. The Company hereby further expressly waives and
covenants not to assert any appeasement, valuation, stay,
extension, redemption or similar laws, now or at any time
hereafter in force which might delay, prevent or otherwise impede
the performance or enforcement of this Agreement or the Notes.
In the event that the unpaid principal balance of the Notes,
all accrued interest thereon and all other amounts owing under
this Agreement shall have been declared due and payable pursuant
to the provisions of this paragraph 9, the Agent may, and, upon
(i) the request of the Majority Banks and (ii) the providing by
all of the Banks to the Agent of an indemnity in form and
substance satisfactory to the Agent in accordance with paragraph
10.3 against all expenses and liabilities shall, proceed to
enforce the rights of the holders of the Notes by suit in equity,
action at law and/or other appropriate proceedings, whether for
payment or the specific performance of any covenant or agreement
contained in this Agreement or the Notes. The Agent shall be
justified in failing or refusing to take any action hereunder and
under the Notes unless it shall be indemnified to its
satisfaction by the Banks pro rata according to the aggregate
outstanding principal balance of the Notes against any and all
liabilities and expenses which may be incurred by it by reason of
taking or continuing to take any such action. In the event that
the Agent, having been so indemnified, or not being indemnified
to its satisfaction, shall fail or refuse so to proceed, any Bank
shall be entitled to take such action as it shall deem
appropriate to enforce its rights hereunder and under its Notes,
with the consent of the Banks, it being understood and intended
that no one or more of the holders of the Notes shall have any
right to enforce payment thereof except as provided in this
paragraph 9 and in paragraph 12.
If an Event of Default shall have occurred and shall be
continuing, the Agent may, and at the request of the Majority
Banks shall, notify the Company (by telephone or otherwise) that
all or such lesser amount as the Majority Banks shall designate
of the outstanding Eurodollar Rate
<PAGE> 37
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Loans automatically shall be converted to Alternate Base Rate Loans, in which
event such Eurodollar Rate Loans automatically shall be converted to Alternate
Base Rate Loans on the date such notice is given. If such notice is given,
notwithstanding anything in paragraph 2.6 to the contrary, no Alternate Base
Rate Loan may be converted to a Eurodollar Rate Loan if an Event of Default has
occurred and is continuing at the time the Company shall notify the Agent of
its election to so convert.
10. THE AGENT. The Banks and the Agent agree by and among themselves that:
10.1 APPOINTMENT. FNBB is hereby irrevocably designated the Agent by
each of the other Banks to perform such duties on behalf of the other Banks and
itself, and to have such powers, as are set forth herein and as are reasonably
incidental thereto.
10.2 DELEGATION OF DUTIES; ETC. The Agent may execute any duties and
perform any powers hereunder by or through agents or employees, and shall be
entitled to consult with legal counsel and any accountant or other
professional selected by it. Any action taken or omitted to be taken or
suffered in good faith by the Agent in accordance with the opinion of such
counsel or accountant or other professional shall be full justification and
protection to the Agent.
10.3 INDEMNIFICATION. The Banks agree to indemnify the Agent in its
capacity as such, to the extent not reimbursed by the Company, pro rata
according to their respective Commitments as of the Effective Date, from and
against any and all claims, 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 any way relating to or arising out of this Agreement or
the Notes or any action taken or omitted to be taken or suffered in good faith
by the Agent hereunder or thereunder, provided that no Bank shall be liable for
any portion of any of the foregoing items resulting from the gross negligence
or willful misconduct of the Agent. Without limitation of the foregoing, each
Bank agrees to reimburse the Agent promptly for its pro-rata share of any
reasonable out-of-pocket expenses (including counsel fees) incurred by the
Agent in connection with the preparation, execution, administration or
enforcement of, or legal advice in respect of rights or responsibilities under,
this Agreement and the Notes, to the extent that the Agent, having sought
reimbursement for such expenses from the Company, is not promptly reimbursed by
the Company. Any reference herein and in any document executed in connection
herewith, to the Banks providing an indemnity in form and substance
satisfactory to the Agent prior to the Agent taking any action hereunder shall
be satisfied by the Banks executing an agreement confirming their agreement to
promptly indemnify the Agent in accordance with this paragraph 10.3.
10.4 EXCULPATORY PROVISIONS. Neither Agent, nor any of its officers,
directors, employees or agents, shall be liable for any action taken or omitted
to be taken or suffered by it or them hereunder or under the Notes, or in
connection herewith or therewith, except that the
<PAGE> 38
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Agent shall be liable for its own gross negligence or willful misconduct. The
Agent shall not be liable in any manner for the effectiveness, enforceability,
collectibility, genuineness, validity or the due execution of this Agreement or
the Notes, or for the due authorization, authenticity or accuracy of the
representations and warranties contained herein or in any other certificate,
report, notice, consent, opinion, statement, or other document furnished or to
be furnished hereunder, and the Agent shall be entitled to rely upon any of the
foregoing believed by it to be genuine and correct and to have been signed and
sent or made by the proper Person. The Agent shall not be under any duty or
responsibility to any Bank to ascertain or to inquire into the performance or
observance by the Company or any Subsidiary of any of the provisions hereof or
of the Notes or of any document executed and delivered in connection herewith
or therewith. Each other Bank expressly acknowledges that the Agent has not
made any representations or warranties to it and that no act taken by the Agent
shall be deemed to constitute any representation or warranty by the Agent to
any other Bank. Each Bank acknowledges that it has taken and will continue to
take such action and has made and will continue to make such investigation as
it deems necessary to inform itself of the affairs of the Company and each
Subsidiary, and each Bank acknowledges that it has made and will continue to
make its own independent investigation of the creditworthiness and the business
and operations of the Company and its Subsidiaries, and that, in entering into
this Agreement, and in agreeing to make its Loans, it has not relied and will
not rely upon any information or representations furnished or given by the
Agent or any other Bank.
10.5 AGENT IN ITS INDIVIDUAL CAPACITY. With respect to its Loans and
any renewals, extensions or deferrals of the payment thereof and any Note
issued to or held by it, the Agent shall have the same rights and powers
hereunder as any Bank, and may exercise the same as though it were not the
Agent, and the term "Bank" or "Banks" shall, unless the context otherwise
requires, include the Agent in its individual capacity. FNBB and its affiliates
may accept deposits from, lend money to, act as trustee or other fiduciary in
connection with transactions involving, and otherwise engage in any business
with the Company and its affiliates and any Person who may do business with or
own securities of the Company or any affiliate of the Company, all as if FNBB
were not the Agent hereunder and without any obligation to account or report
therefor to any Bank.
10.6 KNOWLEDGE OF DEFAULT. It is expressly understood and agreed that
the Agent shall be entitled to assume that no Event of Default has occurred and
is continuing, unless the officers of the Agent who are responsible for matters
concerning this Agreement shall have actual knowledge of such occurrence or
shall have been notified in writing by a Bank that such Bank considers that an
Event of Default has occurred and is continuing and specifying the nature
thereof.
In the event the Agent shall have acquired actual knowledge of any
Event of Default, it shall promptly give notice thereof to the Banks.
10.7 RESIGNATION OF AGENT. If at any time the Agent deems it advisable,
in its sole discretion, it may submit to each of the Banks a written
notification of its resignation as Agent
<PAGE> 39
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under this Agreement, such resignation to be effective on the thirtieth day
after the date of such notice. If the Agent resigns hereunder, the Company
shall have the right to appoint, with the prior written approval of the Banks,
which approval shall not be unreasonably withheld, a successor Agent hereunder,
provided, however that upon the occurrence and during the continuance of an
Event of Default, the Banks shall have the right to appoint such successor
Agent hereunder. The successor Agent shall be a commercial bank organized under
the laws of the United States of America or of any State thereof and having a
combined capital and surplus of at least $100,000,000. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the Agent hereunder, and the retiring Agent shall
be discharged from any further duties and obligations under this Agreement. The
Company and the Banks agree to execute such documents as shall be necessary to
effect such appointment. After the retiring Agent's resignation or removal
hereunder, the provisions of this paragraph 10 shall inure to its benefit as to
any actions taken or omitted to be taken by it while the Agent under this
Agreement. If at any time hereunder there shall not be a duly appointed and
acting Agent, the Company agrees to make each payment due hereunder and under
the Notes directly to the Banks entitled thereto.
10.8 REQUESTS TO THE AGENT. Whenever the Agent is authorized and
empowered hereunder on behalf of the Banks to give any approval or consent, or
to make any request, or to take any other action on behalf of the Banks, the
Agent shall be required to give such approval or consent, or to make such
request or to take such other action only when so requested in writing by the
Majority Banks subject, however, to the provisions of paragraph 13.
11. NOTICES.
11.1 MANNER OF DELIVERY. Except as otherwise specifically provided
herein, all notices and demands shall be in writing and shall be mailed by
certified mail return receipt requested or sent by telegram, telecopy or telex
or delivered in person, and all statements, reports, documents, consents,
waivers, certificates and other papers required to be delivered hereunder shall
be mailed by first-class mail or delivered in person, in each case to the
respective parties to this Agreement as follows:
the Company:
Boston Gas Company
One Beacon Street
Boston, Massachusetts 02108
Attention: Joseph F. Bodanza,
Senior Vice President and Treasurer
Telephone: (617) 742-8400 (Ext. 2302)
Telecopy: (617) 742-0041
<PAGE> 40
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the Agent:
The First National Bank of Boston
100 Federal Street, 01-08-02
Boston, Massachusetts 02110
Attention: George W. Passela, Managing Director
Telephone: (617) 434-7160
Telecopy: (617) 434-3652
the Banks:
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, New York 10260
Attention: Mr. Mathias Blumschein
Telephone: (212) 648-8008
Telecopy: (212) 648-5018
National Westminster Bank Plc
175 Water Street
New York, New York 10038-4924
Attention: Mr. David E. Apps
Telephone: (212) 602-4221
Telecopy: (212) 602-4500
Shawmut Bank, N.A.
One Federal Street
Boston, Massachusetts 02211
Attention: Robert D. Lanigan, Vice President
Telephone: (617) 292-3715
Telecopy: (617) 292-2619
The First National Bank of Boston
100 Federal Street, 01-08-02
Boston, Massachusetts 02110
Attention: George W. Passela, Managing Director
Telephone: (617) 434-7160
Telecopy: (617) 434-3652
or to such other Person or address as a party hereto shall
designate to the other parties hereto from time to time in
writing forwarded in like manner. Any notice or demand given in
accordance with the provisions of this paragraph 11.1 shall be
effective when received and any consent, waiver or other
communication given in accordance with the provisions of this
<PAGE> 41
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paragraph 11.1 shall be conclusively deemed to have been received by a party
hereto and to be effective on the day on which delivered to such party at its
address specified above or, if sent by first class mail, on the third Business
Day after the day when deposited in the mail, postage prepaid, and
addressed to such party at such address, provided that a notice of change of
address shall be deemed to be effective when actually received.
11.2 DISTRIBUTION OF COPIES. Whenever the Company is required to
deliver any statement, report, document, certificate or other paper (other than
Borrowing Request or a notice to convert under paragraph 2.6) to the Agent, the
Company shall simultaneously deliver a copy thereof to each Bank.
11.3 NOTICES BY THE AGENT OR A BANK. In the event that the Agent or any
Bank takes any action or gives any consent or notice provided for by this
Agreement, notice of such action, consent or notice shall be given forthwith to
all the Banks by the Agent or the Bank taking such action or giving such
consent or notice, provided that the failure to give any such notice shall not
invalidate any such action, consent or notice in respect of the Company.
12. RIGHT OF SET-OFF. Regardless of the adequacy of any collateral,
upon the occurrence and during the continuance of any Event of Default, each
Bank is hereby expressly and irrevocably authorized by the Company at any time
and from time to time, without notice to the Company, to set-off, appropriate,
and apply all moneys, securities and other Property and the proceeds thereof
now or hereafter held or received by or in transit to such Bank from or for the
account of the Company, whether for safekeeping, pledge, transmission,
collection or otherwise, and also upon any and all deposits (general and
special), account balances and credits of the Company with such Bank at any
time existing against any and all obligations of the Company to the Banks and
to each of them arising under this Agreement and the Notes, and the Company
shall continue to be liable to each Bank for any deficiency with interest at
the rate or rates set forth in subparagraph 2.7(b). Each of the Banks agrees
with each other Bank that (a) if an amount to be set off is to be applied to
any obligations of the Company to such Bank, other than obligations evidenced
by the Notes held by such Bank, such amount shall be applied ratably to such
other obligations and to the obligations evidenced by all such Notes held by
such Bank and (b) if such Bank shall receive from the Company, whether by
voluntary payment, exercise of the right of setoff, counterclaim, cross action,
enforcement of the claim evidenced by the Notes held by such Bank by
proceedings against the Company at law or in equity or by proof thereof in
bankruptcy, reorganization, liquidation, receivership or similar proceedings,
or otherwise, and shall retain and apply to the payment of the Note or Notes
held by such Bank any amount in excess of its ratable portion of the payments
received by all of the Banks with respect to the Notes held by all of the
Banks, such Bank will make such disposition and arrangements with the other
Banks with respect to such excess, either by way of distribution, PRO TANTO
assignment of claims, subrogation or otherwise as shall result in each Bank
receiving in respect of the Notes held by each Bank, its proportionate payment
as contemplated by this Agreement; PROVIDED that if all or any part of such
excess payment is thereafter recovered from such Bank, such disposition and
arrangements shall be rescinded and the amount restored to the extent of such
recovery, but without interest.
<PAGE> 42
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13. AMENDMENTS, WAIVERS AND CONSENTS. Except as otherwise expressly set forth
herein, with the written consent of the Majority Banks, the Agent shall,
subject to the provisions of this paragraph 13, from time to time enter into
agreements amendatory or supplemental hereto with the Company for the purpose
of changing any provisions of this Agreement or the Notes, or changing in any
manner the rights of the Banks, the Agent or the Company hereunder and
thereunder, or waiving compliance with any provision of this Agreement or
consenting to the non-compliance thereof. Notwithstanding the foregoing, the
consent of all of the Banks shall be required with respect to any amendment,
waiver or consent (i) changing the Aggregate Commitments or the Commitment of
any Bank or (ii) changing the maturity of any Loan, or the rate of interest of,
time or manner of payment of interest on or principal of, or the principal
amount of any Loan, or the amount, time or manner of payment of any fees
hereunder, or modifying this paragraph 13. Any such amendatory or supplemental
agreement, waiver or consent shall apply equally to each of the Banks and shall
be binding on the Company and all of the Banks and the Agent. Any waiver or
consent shall be for such period and subject to such conditions or limitations
as shall be specified therein, but no waiver or consent shall extend to any
subsequent or other Event of Default, or impair any right or remedy consequent
thereupon. In the case of any waiver or consent, the rights of the Company,
the Banks and the Agent under this Agreement and the Notes shall be otherwise
unaffected. Nothing contained herein shall be deemed to require the Agent to
obtain the consent of any Bank with respect to any change in the amount or
terms of payment of the Agent's Fees. The Company shall be entitled to rely
upon the provisions of any such amendatory or supplemental agreement, waiver or
consent if it shall have obtained any of the same in writing from the Agent who
therein shall have represented that such agreement, waiver or consent has been
authorized in accordance with the provisions of this paragraph 13.
14. OTHER PROVISIONS.
14.1 NO WAIVER OF RIGHTS BY THE BANKS. No failure on the part of the
Agent or of any Bank to exercise, and no delay in exercising, any right or
remedy hereunder or under the Notes shall operate as a waiver thereof, except
as provided in paragraph 13, nor shall any single or partial exercise by the
Agent or any Bank of any right, remedy or power hereunder or under the Notes
preclude any other or future exercise thereof, or the exercise of any other
right, remedy or power. The rights, remedies and powers provided herein and in
the Notes are cumulative and not exclusive of any other rights, remedies or
powers which the Agent or the Banks or any holder of a Note would otherwise
have. Notice to or demand on the Company in any circumstance in which the terms
of this Agreement or the Notes do not require notice or demand to be given
shall not entitle the Company to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of the
Agent or any Bank or the holder of any Note to take any other or further action
in any circumstances without notice or demand.
14.2 HEADINGS; PLURALS. Paragraph and subparagraph headings have been
inserted herein for convenience only and shall not be construed to be a part of
this Agreement. Unless the
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context otherwise requires, words in the singular number include the plural,
and words in the plural include the singular.
14.3 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original and all of which shall
constitute one agreement. It shall not be necessary in making proof of this
Agreement or of any document required to be executed and delivered in
connection herewith or therewith to produce or account for more than one
counterpart.
14.4 SEVERABILITY. Every provision of this Agreement and the Notes is
intended to be severable, and if any term or provision hereof or thereof shall
be invalid, illegal or unenforceable for any reason, the validity, legality and
enforceability of the remaining provisions hereof or thereof shall not be
affected or impaired thereby, and any invalidity, illegality or
unenforceability in any jurisdiction shall not affect the validity, legality or
enforceability of any such term or provision in any other jurisdiction.
14.5 INTEGRATION. All exhibits to this Agreement shall be deemed to be
a part of this Agreement. This Agreement, the exhibits hereto and the Notes
embody the entire agreement and understanding between the Company, the Agent
and the Banks with respect to the subject matter hereof and thereof and
supersede all prior agreements and understandings between the Company, the
Agent and the Banks with respect to the subject matter hereof and thereof.
14.6 SALES AND PARTICIPATIONS IN LOANS AND NOTES; SUCCESSORS AND
ASSIGNS; SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
(a) Each Bank shall have the right with the prior written consent of
the Company (which consent may be withheld for any reason or no reason), upon
written notice to the Agent and the Company to sell, assign, transfer or
negotiate all or any part of the Loans and the Notes and its Commitment to one
or more Banks. In addition, each Bank shall have the right with the prior
written consent of the Company (which consent may be withheld for any reason or
for no reason) upon written notice to the Agent and the Company to sell,
assign, transfer or negotiate all or any part (but not less than $5,000,000) of
the Loans and the Notes and its Commitment to one or more commercial banks or
other financial institutions. In the case of any sale, assignment, transfer or
negotiation of all or any such part of the Loans and the Notes authorized under
this paragraph 14.6 (a), the assignee or transferee shall have, to the extent
of such sale, assignment, transfer or negotiation, the same rights, benefits
and obligations as it would if it were a Bank hereunder and a holder of such
Note, including, without limitation, (x) the right to approve or disapprove of
actions which in accordance with the terms hereof, require the approval of the
Majority Banks and (y) the obligation to fund Loans directly to the Agent
pursuant to paragraph 2.2.
(b) Notwithstanding paragraph 14.6 (a), each Bank may grant
participations in all or any part (but not less than $5,000,000) of its Loans
and its Notes to one or more commercial
<PAGE> 44
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banks, insurance companies or other financial institutions,
pension funds or mutual funds; provided that (i) any such
disposition shall not, without the prior written consent of the
Company, require the Company to file a registration statement
with the Securities and Exchange Commission or apply to qualify
the Loans and the Notes under the blue sky laws of any state and
(ii) the holder of any such participation, other than an
Affiliate of such Bank, shall not have any rights or obligations
hereunder and shall not be entitled to require such Bank to take
or omit to take any action hereunder except action directly
affecting the extension of the maturity of any portion of the
principal amount of, or interest on, the Loan allocated to such
participation, or a reduction of the principal amount of, or the
rate of interest payable on, such Loans.
Notwithstanding the foregoing provisions of this paragraph
14.6, each Bank may at any time with the prior written consent of
the Company (which consent shall not be unreasonably withheld)
sell, assign, transfer, or negotiate all or any part of the
Loans to any Affiliate of such Bank; provided that an Affiliate
to whom such disposition has been made shall not be considered a
"Bank", and the assigning Bank shall be considered not to have
disposed of any Loans so assigned, for purposes of determining
the Majority Banks under any provision hereof, but such Affiliate
shall otherwise be considered a "Bank", and the assigning Bank
shall otherwise be considered to have disposed of any Loans so
assigned, for purposes hereof, including, without limitation,
paragraphs 3.1 and 12 hereof, and provided further, that the
Company shall not incur any additional expenses solely as a
result of such sale, assignment, transfer or negotiation.
In addition, notwithstanding anything to the contrary
contained in this paragraph 14.6, any Bank may at any time or
from time to time assign all or any portion of its rights under
this Agreement with respect to its Loans, its Commitments and its
Notes to a Federal Reserve Bank. No such assignment shall
release the assignor Bank from its obligations hereunder.
No Bank shall, as between the Company and such Bank, be
relieved of any of its obligations hereunder as a result of
granting participations in all or any part of the Loans and the
Notes of such Bank or other obligations owed to such Bank.
This Agreement shall be binding upon and inure to the
benefit of the Banks, the Agent and the Company and their
respective successors and assigns. All covenants, agreements,
warranties and representations made herein, and in all
certificates or other documents delivered in connection with this
Agreement by or on behalf of the Company shall survive the
execution and delivery hereof and thereof, and all such
covenants, agreements, representations and warranties shall inure
to the respective successors and assigns of the Banks and the
Agent whether or not so expressed.
The Agent shall maintain a copy of each assignment delivered
to it and a register or similar list for the recordation of the
names and addresses of the Banks and the Commitment Percentages
of the Banks and the principal amount of the Loans and the Notes
assigned from time to time. The entries in such register shall be
conclusive, in the absence of manifest error and provided that
any required consent of the Company has been obtained, and the
Company, the Agent and the Banks may treat each Person whose name
is recorded in such register as a Bank hereunder for all purposes
of this Agreement. Upon each such recordation, the assigning
Bank
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agrees to pay to the Agent a registration fee in the sum of One Thousand Five
Hundred Dollars ($1,500).
14.7 APPLICABLE LAW. This Agreement and the Notes are being delivered
in and are intended to be performed in the Commonwealth of Massachusetts and
shall be construed and enforceable in accordance with, and be governed by, the
internal laws of the Commonwealth of Massachusetts without regard to principles
of conflict of laws.
14.8 INTEREST. At no time shall the interest rate payable on the Notes,
together with the Facility Fee and the Agent's Fees, to the extent same are
construed to constitute interest, exceed the maximum rate of interest permitted
by law. The Company acknowledges that to the extent interest payable on the
Notes is based on FNBB's Prime Rate, such Rate is only one of the bases for
computing interest on loans made by the Banks, and by basing interest payable
on the Notes on FNBB's Prime Rate, the Banks have not committed to charge, and
the Company has not in any way bargained for, interest based on a lower or the
lowest rate at which the Banks may now or in the future make loans to other
borrowers.
14.9 ACCOUNTING TERMS AND PRINCIPLES. All accounting terms not herein
defined by being capitalized shall be interpreted in accordance with GAAP,
unless the context otherwise expressly requires.
14.10 WAIVER OF TRIAL BY JURY. THE COMPANY HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES (TO THE FULLEST EXTENT PERMITTED OR NOT
PROHIBITED BY APPLICABLE LAW) ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH THE LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREIN. FURTHER, THE COMPANY HEREBY
ACKNOWLEDGES THAT NO REPRESENTATIVE OF THE AGENT OR THE BANKS OR COUNSEL TO THE
AGENT OR THE BANKS HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE AGENT OR
THE BANKS WOULD NOT, IN THE EVENT OF SUCH LITIGATION, SEEK TO ENFORCE SUCH
WAIVER. THE COMPANY ACKNOWLEDGES THAT THE AGENT AND THE BANKS HAVE BEEN INDUCED
TO ENTER INTO THE LOAN DOCUMENTS BY, INTER ALIA, THE PROVISIONS OF THIS
PARAGRAPH.
14.11 CONSENT TO JURISDICTION. THE COMPANY HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY COURT OF THE COMMONWEALTH OF MASSACHUSETTS
OR ANY FEDERAL COURT SITTING IN THE COMMONWEALTH OF MASSACHUSETTS OVER ANY
SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THE LOAN DOCUMENTS.
THE COMPANY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED OR NOT
PROHIBITED BY APPLICABLE LAW, ANY OBJECTION
<PAGE> 46
-41-
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH A COURT HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM. THE COMPANY HEREBY AGREES THAT A FINAL JUDGMENT IN ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH A COURT, AFTER ALL
APPROPRIATE APPEALS, SHALL BE CONCLUSIVE AND BINDING UPON IT.
14.12 SERVICE OF PROCESS. PROCESS MAY BE SERVED IN ANY SUIT,
ACTION, COUNTERCLAIM OR PROCEEDING OF THE NATURE REFERRED TO IN PARAGRAPH 14.11
BY MAILING COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID,
RETURN RECEIPT REQUESTED, TO THE ADDRESS OF THE COMPANY SET FORTH IN PARAGRAPH
11.1 OR TO ANY OTHER ADDRESS OF WHICH THE COMPANY SHALL HAVE GIVEN WRITTEN
NOTICE TO THE AGENT. THE COMPANY HEREBY AGREES THAT SUCH SERVICE (I) SHALL BE
DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON IT IN ANY SUCH SUIT,
ACTION, COUNTERCLAIM OR PROCEEDING, AND (II) SHALL TO THE FULLEST EXTENT
PERMITTED OR NOT PROHIBITED BY APPLICABLE LAW, BE TAKEN AND HELD TO BE VALID
PERSONAL SERVICE UPON AND PERSONAL DELIVERY TO IT.
14.13 NO LIMITATION ON SERVICE OR SUIT. NOTHING IN THE LOAN
DOCUMENTS, OR ANY MODIFICATION, WAIVER, OR AMENDMENT THERETO, SHALL AFFECT THE
RIGHT OF THE AGENT OR ANY BANK TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW OR LIMIT THE RIGHT OF THE AGENT OR ANY BANK TO BRING PROCEEDINGS AGAINST
THE COMPANY IN THE COURTS OF ANY OTHER JURISDICTION OR JURISDICTIONS.
14.14 INCORPORATED PROVISIONS. Certain provisions of the Indenture
are incorporated into paragraphs 8.1, 8.2 and 8.5 as if fully set forth
therein. Notwithstanding such incorporation, this Agreement may only be
amended, and waivers and consents hereunder may be obtained or granted, only as
provided herein. Accordingly, except as altered in accordance herewith, such
incorporated provisions shall survive and shall not be altered by any
amendment, modification or supplement of or to the Indenture, as well as the
termination thereof, and any payment or defeasance of the obligations of the
Company thereunder.
15. OTHER OBLIGATIONS OF THE COMPANY.
15.1 TAXES AND FEES. Should any tax (other than a tax based upon the
net income of any Bank), recording or filing fee become payable in respect of
this Agreement or the Notes or any amendment, modification or supplement hereof
or thereof, the Company agrees to pay the same together with any interest or
penalties thereon and agrees to hold the Agent and the Banks harmless with
respect thereto.
<PAGE> 47
-42-
15.2 EXPENSES. Whether or not the transactions contemplated by this
Agreement shall be consummated, the Company agrees to pay the reasonable
out-of-pocket expenses of the Agent (including the reasonable fees and expenses
of counsel to the Agent and, without limitation, Special Counsel) in connection
with the preparation, reproduction, execution and delivery of this Agreement
and the Notes and the other exhibits annexed hereto (in such case, with respect
to the Special Counsel, in accordance with the letter previously delivered to
the Company by the Special Counsel) and any modifications, waivers, consents or
amendments hereto and thereto, and the Company further agrees to pay the
reasonable out-of-pocket expenses of the Agent and the Banks (including the
reasonable fees and expenses of their respective counsel) incurred in
connection with the interpretation and enforcement of any provision of this
Agreement or collection under the Notes, whether or not suit is instituted.
16. EFFECTIVE DATE. This Agreement shall be effective at such time
(specified in writing by the Agent to the Company and the Banks) (the
"Effective Date") as executed counterparts of this Agreement have been
delivered to the Agent by the Company and each Bank.
<PAGE> 48
-43-
<TABLE>
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed as of the date first written above.
<S> <C>
BOSTON GAS COMPANY
By: /s/ J. F. BODANZA
-----------------------------------
Title:
Domestic Lending Office: THE FIRST NATIONAL BANK OF BOSTON,
Office listed in paragraph 11.1 Individually and as Agent
Eurodollar Lending Office: By: /s/ GEORGE PASSELLA
-----------------------------------
Title:
Office listed in paragraph 11.1
Domestic Lending Office: MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
Office listed in paragraph 11.1
Eurodollar Lending Office: By: /s/ STEVEN KENNEALLY
-----------------------------------
Title: Vice President
Office listed in paragraph 11.1
Domestic Lending Office: NATIONAL WESTMINSTER BANK Plc
Office listed in paragraph 11.1 NEW YORK BRANCH
Eurodollar Lending Office: By: /s/ PETER J. STRINGER
-----------------------------------
Title: Senior Vice President
Office listed in paragraph 11.1
NASSAU BRANCH
By: /s/ PETER J. STRINGER
-----------------------------------
Title: Senior Vice President
</TABLE>
<PAGE> 49
-44-
<TABLE>
<S> <C>
Domestic Lending Office: SHAWMUT BANK, N.A.
Office listed in paragraph 11.1
By: /s/ ROBERT D. LANIGAN
---------------------------------
Eurodollar Lending Office: Title: Vice President
Shawmut Nassau
Navy Line Road
Harrison Building
Nassau, Bahamas
</TABLE>
<PAGE> 50
SCHEDULE A
----------
Morgan Guaranty Trust Company of New York
National Westminster Bank Plc
Shawmut Bank, N.A.
The First National Bank of Boston
<PAGE> 51
EXHIBIT I
FORM OF OPINION OF COUNSEL TO THE COMPANY
__________, 19__
TO THE PARTIES LISTED IN
SCHEDULE A ANNEXED HERETO
Re: Credit Agreement, dated as of December ___, 1993 among Boston Gas
Company, the signatory banks thereto and The First National Bank of
Boston, as Agent (the "Agreement")
-------------------------------------------------------------------
I have acted as counsel to Boston Gas Company, a Massachusetts
corporation (the "Company"), in connection with the authorization, execution
and delivery by the Company of the Agreement.
This opinion is delivered to you pursuant to paragraph 5.4 of the
Agreement and the terms used herein which are defined in the Agreement shall
have the respective meanings set forth in the Agreement, unless otherwise
defined herein.
In connection with this opinion, I have examined and am familiar with
originals or copies authenticated to my satisfaction of the Agreement and the
Notes, as executed and delivered by the Company, together with such corporate
documents and records of the Company, certificates of public officials and
officers of the Company and such other documents as I deemed necessary or
appropriate for the purposes of this opinion.
Based upon and relying solely upon the foregoing, subject to the
comments and qualifications herein expressed and limited in all respects to the
laws of the Commonwealth of Massachusetts and the United States, I am of the
opinion that:
1. Each of the Company and each Subsidiary (i) is a corporation
duly organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and (ii) has all requisite corporate power and
authority to own its Property and to carry on its business as now conducted.
Each of the Company and each Subsidiary, is in good standing and duly qualified
to do business in each jurisdiction in which the failure to so qualify would
<PAGE> 52
-2-
have a material adverse effect on the financial condition, Property, prospects
or operations of the Company and its Subsidiaries on a Consolidated basis.
2. The Company has full corporate power and authority to enter into,
execute, deliver and carry out the terms of the Agreement and to make the
borrowings contemplated thereby, to execute, deliver and carry out the terms of
the Notes, and to incur the obligations provided for therein and in the
Agreement, all of which have been duly authorized by all proper or necessary
corporate action on its part and are in full compliance with its Charter and
By-Laws. No consent or approval of, or exemption by, shareholders or any
Governmental Body is required to authorize, or is required in connection with
the execution, delivery and performance of, the Agreement and the Notes, or is
required as a condition to the validity or enforceability of the Agreement and
the Notes, except for the approval of the DPU a certified copy of which has
been delivered as required under paragraph 5.6 of the Agreement, which approval
has been duly obtained and which is in full force and effect on the date hereof
and is final and not subject to appeal.
3. The Agreement constitutes, and the Notes, when issued and
delivered pursuant to the Agreement for value received, will constitute, the
valid and legally binding obligations of the Company enforceable against the
Company in accordance with their respective terms, except as such
enforceability may be limited by equitable principles (regardless of whether
such enforceability is considered in a proceeding in an equity or in an action
at law) and by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally.
4. To the best of my knowledge after due inquiry, and except for the
matters set forth in __________ of the Designated Documents, there are no
actions, suits or arbitration proceedings (whether or not purportedly on behalf
of the Company or any Subsidiary) pending or threatened against the Company or
any Subsidiary, or maintained by the Company or any Subsidiary, in law or in
equity before any Governmental Body, which if decided adversely to the Company
or such Subsidiary would result in a material adverse change in the financial
condition, Property or operations of the Company and its Subsidiaries on a
Consolidated basis, after giving effect to reserves reflected in the Financial
Statements or the footnotes thereto. To the best of my knowledge after due
inquiry, there are no proceedings pending or threatened against the Company or
any Subsidiary which call into question the validity or enforceability of the
Agreement or the Notes.
5. To the best of my knowledge after due inquiry, except for the
matters set forth in ___________ of the Designated Documents, neither the
Company nor any Subsidiary is in default under any agreement to which it is a
party or by which it or any of its Property is bound the effect of which would
have a material adverse effect on the financial condition, Property, prospects
or operations of the Company and its Subsidiaries on a Consolidated basis. No
provision of the Charter or By-Laws, and no provision of any existing mortgage,
indenture (including the Indenture), contract, agreement, statute (including,
without
<PAGE> 53
-3-
limitation, any applicable usury or similar law), rule, regulation, judgment,
decree or order binding on the Company or any Subsidiary would in any way
prevent the execution, delivery or carrying out of the terms of the Agreement
and the Notes, and the taking of any such action will not constitute a default
under, or result in the creation or imposition of, or obligation to create, any
Lien not permitted by paragraph 8.2 of the Agreement upon the Property of the
Company or any Subsidiary pursuant to the terms of any such mortgage,
indenture, contract or agreement.
6. Except as set forth in ____________ of the Designated
Documents, neither the Company nor any Subsidiary is in default with respect to
any judgment, order, writ, injunction, decree or decision of any Governmental
Body ap- plicable to the Company or such Subsidiary which default would have a
material adverse effect on the financial condition, property, prospects or
operations of the Company and its Subsidiaries on a Consolidated basis. Except
as set forth in the Designated Documents, each of the Company and each
Subsidiary is complying in all material respects with all applicable material
statutes and regulations of all Govern- mental Bodies, including ERISA, a
violation of which would have a material adverse effect on the financial
condition, Property, prospects or operations of the Company and each Subsidiary
on a Consolidated basis.
7. The Company is not an "Investment Company" as such term is
defined in the Investment Company Act of 1940, as amended.
8. The Company is not engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying any margin stock within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System, as amended. If used in
accordance with paragraph 2.12 of the Agreement, no part of the proceeds of the
Loans will be used (i) to purchase or carry any such margin stock, (ii) to
extend credit to others for the purpose of purchasing or carrying any margin
stock, (iii) for a purpose which violates the provisions of Regulations G, U
and X of the Board of Governors of the Federal Reserve System, as amended, or
(iv) for a purpose which violates any other law, rule or regulation of any
Governmental Body.
9. The Company and its Subsidiary are "subsidiaries" of a "holding
company" which is exempt under the Public Utility Holding Company Act of
1935, pursuant to orders of the Securi- ties and Exchange Commission, which
orders remain in full force and effect.
10. The Company has obtained all authorizations, approvals or
consents of and made all filings or registrations with all Governmental Bodies
as are necessary to be obtained or made by the Company for the execution,
delivery or performance by the Company of the Agreement and the Notes, and all
such authorizations, approvals and consents are in full force and effect.
11. A Massachusetts court of competent jurisdiction, in a
properly presented case, should uphold and give effect to the provisions in
the Agreement and the Notes expressing
<PAGE> 54
-4-
the contractual choice of the parties thereto that such documents be
construed in accordance with the laws of the Commonwealth of Massachusetts.
Very truly yours,
<PAGE> 55
SCHEDULE A
----------
Morgan Guaranty Trust Company of New York
National Westminster Bank Plc
Shawmut Bank, N.A.
The First National Bank of Boston
<PAGE> 56
<TABLE>
EXHIBIT A
---------
COMMITMENTS
-----------
<CAPTION>
COMMITMENT
BANK COMMITMENT PERCENTAGE
- ---- ---------- ----------
<S> <C> <C>
MORGAN GUARANTY TRUST $20,000,000 22.2222%
COMPANY OF NEW YORK
NATIONAL WESTMINSTER $20,000,000 22.2222%
BANK PLC
SHAWMUT BANK, N.A. $20,000,000 22.2222%
THE FIRST NATIONAL $30,000,000 33.3333%
BANK OF BOSTON
AGGREGATE COMMITMENTS $90,000,000 100%
</TABLE>
<PAGE> 57
<TABLE>
EXHIBIT B
---------
I. Effective Date to but not including the Revolving Credit Termination Date
<CAPTION>
*Debt Rating of *Debt Rating of *Debt Rating of
A or Higher A- or BBB+ BBB or Lower
<S> <C> <C> <C>
Applicable Margin for
Alternative Base Rate Loans 0% 0% 0%
Applicable Margin for
Eurodollar Rate Loans 1/4% 2/5% 1/2%
Percentage for
Facility Fee 1/10% 1/8% 3/20%
</TABLE>
<TABLE>
II. Revolving Credit Termination Date to but not including the Termination Date
<CAPTION>
*Debt Rating of *Debt Rating of *Debt Rating of
A or Higher A- or BBB+ BBB or Lower
<S> <C> <C> <C>
Applicable Margin for
Alternative Base Rate Loans 0% 0% 0%
Applicable Margin for
Eurodollar Rate Loans 3/10% 9/20% 11/20%
Percentage for
Facility Fee 1/10% 1/8% 3/20%
<FN>
*or an equivalent Debt Rating if determined by reference to Moody's Investor Service.
</TABLE>
<PAGE> 58
EXHIBIT C
---------
FORM OF BORROWING REQUEST
-------------------------
__________________, 19__
The First National Bank of Boston
100 Federal Street, 01-08-02
Boston, Massachusetts 02110
Attention: George W. Passela,
Managing Director
Re: Credit Agreement dated as of December __, 1993 by and among
BOSTON GAS COMPANY, the signatory BANKS thereto and THE FIRST
NATIONAL BANK OF BOSTON, as Agent (the "Agreement")
-------------------------------------------------------------
Capitalized terms used herein which are defined in the Agreement shall
have the meanings therein defined.
Pursuant to paragraph 2.1 of the Agreement, the Company hereby gives
notice of its intention to effect a Borrowing in the amount of $______ on
__________, 19__.
<TABLE>
Pursuant to paragraph 2.2 of the Agreement, the Company has elected to
have the following portions of such Borrowing be subject to the Type and
Interest Period(s) set forth below:
<CAPTION>
Interest
Type Amount Period
---- ------ ------
<S> <C> <C>
1.
2.
3.
4.
5.
</TABLE>
The Company hereby certifies that on the date hereof and on the
Borrowing Date set forth above, and after giving effect to the Loans to be made
on such Borrowing Date:
(a) The Company is and shall be in compliance with all of the terms,
covenants and conditions of the Agreement.
<PAGE> 59
-2-
(b) There exists and there shall exist no Event of
Default under the Agreement.
(c) The Company represents, warrants and covenants
that the proceeds of such Loans will be used in accordance with
paragraph 2.12 of the Agreement.
(d) The Company represents and warrants that each of
the material representations and warranties contained in the
Agreement is and shall be true and correct in all material
respects with the same force and effect as if made on and as of
the date hereof, except such thereof as specifically refer to
an earlier date.
The Company hereby certifies that on the date hereof the
Debt Rating of the Company is _____________ according to
Standard & Poor's Corporation [in the event no Debt Rating is
available from Standard & Poor's Corporation, according to
Moody's Investor Service].
IN WITNESS WHEREOF, the undersigned has caused this
Borrowing Request and certification to be executed as of the
date and year first above written.
BOSTON GAS COMPANY
By: _______________________
Title: ____________________
<PAGE> 60
EXHIBIT D
---------
FORM OF REVOLVING CREDIT NOTE
-----------------------------
Boston, Massachusetts
______________, 19__
For value received, BOSTON GAS COMPANY, a Massachusetts corporation
("Company"), hereby promises to pay to the order of ______ (the "Bank") at the
offices of THE FIRST NATIONAL BANK OF BOSTON (the "Agent"), 100 Federal Street,
Boston, Massachusetts, in lawful money of the United Sates of America, the
principal amount of each Loan made by the Bank to the Company pursuant to the
Credit Agreement, dated as of December __, 1993, by and among the Company, the
signatory Banks thereto and the Agent (as the same may be amended from time to
time the "Agreement"), on the Revolving Credit Termination Date, together with
interest on the unpaid principal amount of each Loan, from the date of each Loan
until such principal amount is paid in full, at such interest rates, and payable
at such times, as is provided or determined under the Agreement. In no event
shall the interest rate payable hereon exceed the maximum rate of interest
permitted by law. Capitalized terms used herein which are defined in the
Agreement shall have the meanings therein defined.
The principal amount of each Loan made by the Bank to the Company, and
all prepayments made on account of such principal, by the Company shall be
recorded by the Bank on the schedule attached hereto. The aggregate unpaid
principal balance of all Loans made by the Bank and set forth in such schedule
shall be presumptive evidence of the principal balance owing and unpaid on this
Note. The Bank may attach one or more continuations to such schedule as and
when required.
This Note is one of the Notes referred to in the Agreement and is
entitled to the benefits of, and is subject to the terms, set forth in the
Agreement. The principal of this Note is prepayable in the amounts and under
the circumstances, and its maturity is subject to acceleration upon the terms,
set forth in the Agreement. All payments on this Note shall be made in funds
immediately available in Boston, Massachusetts, by 12:00 noon, Boston time, on
the due date for such payment. Except as otherwise expressly provided in the
Agreement, if any payment on this Note becomes due and payable on a day which is
not a Business Day, the maturity thereof shall be extended to the next Business
Day and interest shall be payable at the rate or rates specified in the
Agreement during such extension period.
Presentment for payment, demand, notice of dishonor, protest, notice of
protest and all other demands and notices in connection with the delivery,
performance and enforcement of this Note are hereby waived, except as
specifically otherwise provided in paragraph 9 of the Agreement.
<PAGE> 61
-2-
This Note is being delivered in, is intended to be performed in, shall
be construed and enforceable in accordance with, and be governed by the internal
laws of, the Commonwealth of Massachusetts without regard to principles of
conflict of laws.
This Note may be amended only by an instrument in writing executed
pursuant to the provisions of paragraph 13 of the Agreement.
BOSTON GAS COMPANY
By: _____________________________
Title: __________________________
<PAGE> 62
-3-
<TABLE>
REVOLVING CREDIT LOANS
----------------------
<CAPTION>
Interest Amount of Unpaid
Amount of Period of Type of Principal Paid Principal Notation
Loan Loan Loan or Prepaid Balance Made By
<S> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 63
EXHIBIT E
---------
FORM OF TERM NOTE
-----------------
Boston, Massachusetts
______________, 19__
For value received, BOSTON GAS COMPANY, a Massachusetts corporation
("Company"), hereby promises to pay to the order of_____ (the "Bank") at the
offices of THE FIRST NATIONAL BANK OF BOSTON (the "Agent"), 100 Federal Street,
Boston, Massachusetts, in lawful money of the United Sates of America, the
principal amount of _________________ DOLLARS or, if less, the aggregate unpaid
principal amount of all Loans made by the Bank to the Company pursuant to the
Credit Agreement, dated as of December __, 1993, by and among the Company, the
signatory Banks thereto and the Agent (as the same may be amended from time to
time the "Agreement"), on the Termination Date, together with interest on the
unpaid principal amount of each Loan, from the Revolving Credit Termination Date
until such principal amount is paid in full, at such interest rates, and payable
at such times, as is provided or determined under the Agreement. In no event
shall the interest rate payable hereon exceed the maximum rate of interest
permitted by law. Capitalized terms used herein which are defined in the
Agreement shall have the meanings therein defined.
The principal amount of each Loan made by the Bank to the Company, and
all prepayments made on account of such principal, by the Company shall be
recorded by the Bank on the schedule attached hereto. The aggregate unpaid
principal balance of all Loans made by the Bank and set forth in such schedule
shall be presumptive evidence of the principal balance owing and unpaid on this
Note. The Bank may attach one or more continuations to such schedule as and
when required.
This Note is one of the Notes referred to in the Agreement and is
entitled to the benefits of, and is subject to the terms, set forth in the
Agreement. The principal of this Note is prepayable in the amounts and under
the circumstances, and its maturity is subject to acceleration upon the terms,
set forth in the Agreement. All payments on this Note shall be made in funds
immediately available in Boston, Massachusetts, by 12:00 noon, Boston time, on
the due date for such payment. Except as otherwise expressly provided in the
Agreement, if any payment on this Note becomes due and payable on a day which is
not a Business Day, the maturity thereof shall be extended to the next Business
Day and interest shall be payable at the rate or rates specified in the
Agreement during such extension period.
Presentment for payment, demand, notice of dishonor, protest, notice of
protest and all other demands and notices in connection with the delivery,
performance and enforcement of this Note are hereby waived, except as
specifically otherwise provided in paragraph 9 of the Agreement.
<PAGE> 64
-2-
This Note is being delivered in, is intended to be performed in, shall
be construed and enforceable in accordance with, and be governed by the internal
laws of, the Commonwealth of Massachusetts without regard to principles of
conflict of laws.
This Note may be amended only by an instrument in writing executed
pursuant to the provisions of paragraph 13 of the Agreement.
BOSTON GAS COMPANY
By: _____________________________
Title: __________________________
<PAGE> 65
-3-
<TABLE>
TERM LOAN
---------
<CAPTION>
Amount of Unpaid
Principal Paid Principal Notation
or Prepaid Balance Made By
<S> <C> <C>
</TABLE>
<PAGE> 66
EXHIBIT F
---------
FORM OF COMMITMENT EXTENSION REQUEST
------------------------------------
__________________, 19__
To each of the Banks party
to the Credit Agreement
hereinafter referred to
The First National Bank of Boston
100 Federal Street, 01-08-02
Boston, Massachusetts 02110
Attention: George W. Passela,
Managing Director
Re: Credit Agreement dated as of December , 1993
----------------------------------------------
This Commitment Extension Request is made pursuant to paragraph 2.14 of
the Credit Agreement, dated as of December __, 1993 (as from time to time
amended, modified or supplemented, the "Agreement"), among Boston Gas Company
(the "Company"), the signatory Banks thereto ("Banks") and The First National
Bank of Boston, as Agent (the "Agent"). Terms used herein shall have the
meanings assigned to such terms in the Agreement.
In accordance with paragraph 2.14 of the Agreement, the Company hereby
requests that your Bank consent to an extension of the Revolving Credit
Termination Date to _________, 19__.
Please indicate your Bank's consent to such extension by signing the
enclosed copy of this letter in the space provided below and returning it to the
Agent.
Very truly yours,
BOSTON GAS COMPANY
By: _______________________
Title: ____________________
<PAGE> 67
-2-
CONSENTED TO:
- -------------
[Name of Bank]
By:_________________________
Title:________________________
<PAGE> 68
EXHIBIT G
---------
SUBSIDIARIES
------------
Massachusetts LNG Incorporated, a Massachusetts corporation.
<PAGE> 69
EXHIBIT H
---------
FORM OF OPINION OF SPECIAL COUNSEL
----------------------------------
_______, 19__
TO THE PARTIES LISTED IN
SCHEDULE A ANNEXED HERETO
Re: Credit Agreement dated as of December , 1993 among BOSTON GAS
COMPANY, the signatory BANKS thereto and THE FIRST NATIONAL BANK OF
BOSTON, as Agent (the "Agreement")
-------------------------------------------------------------------
We have acted as the Agent's Special Counsel in connection with the
Agreement. Terms used herein which are defined in the Agreement shall have the
same meanings as therein defined, except as otherwise set forth herein.
We have examined originals or copies of the following documents:
1. The Agreement, executed by each of the parties thereto.
2. The Revolving Credit Notes, executed by the Company and payable to
the order of the respective Banks.
3. The opinion of General Counsel to the Company dated the date
hereof.
4. The other documents furnished by the Company pursuant to paragraph
5 of the Agreement.
As to all matters of fact (including factual conclusions and
characterizations and descriptions of purpose, intention or other state of
mind), we have relied entirely upon (i) the representations of the Company set
forth in paragraph 4 of the Agreement and (ii) certificates delivered to us by
the management of the Company, and have assumed, without independent inquiry,
the accuracy of those representations and certificates. We have assumed the
genuineness of all signatures, the conformity to the originals of all documents
reviewed by us
<PAGE> 70
-2-
as copies, the authenticity and completeness of all original documents
reviewed by us in original or copy form and the legal competence of each
individual executing any document.
We have also relied upon the opinion referred to in item 3 above,
without making any independent investigation with respect thereto.
We understand that all of the foregoing assumptions and limitations are
acceptable to you.
Subject to the limitations set forth below, we have made such
examination of law as we have deemed necessary for the purposes of this
opinion. This opinion is limited solely to the laws of the Commonwealth of
Massachusetts as applied by courts located in the Commonwealth of
Massachusetts, and the federal laws of the United States of America, to the
extent that the same may apply to or govern such transactions.
Based upon the foregoing, we are of the opinion that the documents
listed above furnished pursuant to the provisions of paragraph 5 of the
Agreement are substantially responsive to the requirements of the Agreement.
This opinion is furnished to the addressees hereof and is solely for the
benefit of such addressees and for the benefit of any financial institutions
which become "Banks" pursuant to Section 14.6 of the Agreement subsequent to the
date hereof. This opinion speaks only as of its date and we assume no
responsibility to update it for any change of law or any facts of which we may
become aware. This opinion may not be relied upon by any other person or
entity.
Very truly yours,
<PAGE> 1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report included in this Form 10-K, into the Company's
previously filed Registration Statement File No. 33-53858.
ARTHUR ANDERSEN & CO.
Boston, Massachusetts
March 16, 1994
