<PAGE> 1
File No. 70-7903
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form U-1
Post Effective Amendment No. 5
DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
THE COLUMBIA GAS SYSTEM, INC.
20 Montchanin Road
Wilmington, Delaware 19807
- --------------------------------------------------------------------------------
(Name of Company of Companies Filing This Statement
and Addresses of the Principal Executive Offices)
THE COLUMBIA GAS SYSTEM, INC.
- --------------------------------------------------------------------------------
(Name of Top Registered Holding Company Parent of
Each Applicant or Declarant)
L. J. BAINTER, TREASURER
The Columbia Gas System, Inc.
20 Montchanin Road
Wilmington, Delaware 19807
- --------------------------------------------------------------------------------
(Name and Address of Principal Agent for Service)
<PAGE> 2
PAGE 2
The Declaration as amended is hereby further amended by adding
the following:
Item 1. Description of Proposed Transaction.
(a) Furnish a reasonably detailed and precise description of the
proposed transaction, including a statement of the reasons why
it is desired to consummate the transaction and the
anticipated effect thereof. If the transaction is part of a
general program, describe the program and its relation to the
proposed transaction.
INTRODUCTION:
The Columbia Gas System, Inc. ("Columbia") requests Commission
authorization to further amend and restate its Secured Revolving Credit
Agreement (the "Credit Agreement") dated as of September 23, 1991, as amended.
The Commission authorized the Credit Agreement, which called for a commitment
of $275,000,000, in its Order dated September 20, 1991 ( HCAR No. 35-25380).
The amount of that commitment was subsequently reduced twice and is currently
$100,000,000, (which commitment is available for the making of loans and the
issuance of letters of credit in an aggregate face amount not to exceed $50
million) under the Commission's Order dated June 11, 1993 (HCAR No. 35-25825).
The reduction in the commitment has resulted in fee savings to Columbia and
further savings will be achieved by the proposed conversion of the Credit
Agreement to solely a letter of credit facility (the "Proposed Facility").
<PAGE> 3
PAGE 3
TERMS OF THE PROPOSED LETTER OF CREDIT FACILITY:
Columbia's current cash reserves are sufficient to meet
projected requirements without borrowings under the Credit Agreement. However,
there remains a need to maintain a facility for letters of credit in the amount
of $25,000,000 and Columbia requested Chemical Bank ("Chemical") to submit a
proposal describing the terms, conditions and fees for such a facility.
Chemical provided a term sheet for the Proposed Facility which
would permit the issuance of collateralized standby letters of credit at the
request of Columbia at any time from the effective date of the Proposed
Facility until December 31, 1995, or such later date as may be from time to
time agreed upon by Columbia and Chemical if needed to extend the Proposed
Facility until Columbia's Plan of Reorganization is effective. Columbia
requests the Commission's approval to extend the facility from time to time, as
needed, until Columbia's Plan of Reorganization is effective.
An order of the Bankruptcy Court approving the terms of the
Proposed Facility is expected to be issued prior to the order of this
Commission.
The fees to be charged pursuant to the Proposed Facility would
include the following: a letter of credit fee equal to 1% per annum of the
face amount of each Letter of Credit; a commitment fee equal to 1/2 of 1% per
annum of the average daily unutilized portion of the commitment and an
<PAGE> 4
PAGE 4
amendment fee equal to 1/4 of 1% of the commitment, payable at closing. The
proposed changes to the Credit Agreement will result in fee savings to
Columbia. The Credit Agreement requires payment of a commitment fee of 1/2 of
1% on the unused portion of a $100,000,000 commitment amount and the letter of
credit fees are presently 2% of the face amount of the letters of credit
issued.
Chemical serves as agent for a group of banks under the Credit
Agreement . Under the Proposed Facility, Chemical will provide the entire
commitment and act as the sole issuing bank with respect to the letters of
credit to be issued there under.
ITEM 2. FEES, COMMISSION AND EXPENSES.
(a) State (1) the fees, commissions and expenses paid or
incurred, or to be paid or incurred, directly or indirectly, in connection with
the proposed transaction by the applicant or declarant or any associate company
thereof, and (2) if the proposed transaction involves the sale of securities
at competitive bidding, the fees and expenses to be paid to counsel selected by
applicant or declarant to act for the successful bidder.
<TABLE>
<S> <C>
Services of Columbia Gas System Service
Corporation in connection with the
preparation of the Declaration............... $ 5,000
Services of Simpson, Thacher & Bartlett...... 15,000
------
(estimate)
Total...................................... $ 20,000
======
</TABLE>
(b) If any person to whom fees or commissions have been or
are to be paid in connection with the proposed transaction is an associate
company or an affiliate of any applicant or declarant, or is an affiliate of an
associate company, set forth the facts with respect thereto.
<PAGE> 5
PAGE 5
Columbia Gas System Service Corporation, a wholly-owned
subsidiary of Columbia, is providing certain services at cost, as set forth in
Item 2(a) above.
ITEM 3. APPLICABLE STATUTORY PROVISIONS.
(a) State the sections of the Act and the rules thereunder
believed to be applicable to the proposed transaction. If any section or rule
would be applicable in the absence of a specific exemption, state the basis of
exemption.
To the extent that a letter of credit if drawn and not repaid
(even though fully collateralized) might result in a debt and interest payable
on that debt, the Proposed Facility might be deemed to result in the issuance
of a security subject to Sections 6(a) and 7 of the Act.
ITEM 4. REGULATORY APPROVAL.
(a) State the nature and extent of the jurisdiction of any State
Commission or any Federal Commission (other than the Securities and Exchange
Commission) over the proposed transaction.
Approval of the Bankruptcy Court will be required for the proposed
conversion of the Credit Agreement.
ITEM 5. PROCEDURE.
(a) State the date when Commission action is requested. If the
date is less than 40 days from the date of the original filing, set forth the
reasons for acceleration.
It is respectfully requested that the Commission issue its notice with
respect to the transaction proposed herein no later than August 5, 1994, and
that the Order be issued no later than September 9, 1994.
(b) State (i) whether there should be a recommended decision by a
hearing officer, (ii) whether there should be a recommended decision by any
other responsible officer of the Commission, (iii) whether the Division of
Investment Management
<PAGE> 6
PAGE 6
may assist in the preparation of the Commission's decision, and (iv) whether
there should be a 30-day waiting period between the issuance of the
Commission's order and the date on which it is to become effective.
The applicants hereby specify that with reference to the procedures
considered necessary or appropriate in the proceedings (i) there should not be
a recommended decision by a hearing officer; (ii) there should not be a
recommended decision by any other responsible officer of the Commission; (iii)
the Division of Investment Management may assist in the preparation of the
Commission's decision; and (iv) there should not be a 30-day waiting period
between the issuance of the Commission's Order and the date on which it is to
become effective.
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS.
<TABLE>
<S> <C>
(a) Exhibits
A-3 Term Sheet
A-4 Form of Amended and Restated Revolving Credit Agreement
D-3 Order of the Bankruptcy Court for the District of Delaware (to be filed by
amendment)
G-2 Proposed Notice
F-2 Opinion of Counsel (to be filed by amendment)
(b) Financial Statements
1. The Columbia Gas System, Inc. and Subsidiaries
(a) Consolidated Balance Sheet as of April 30, 1994 (actual and pro forma)
</TABLE>
<PAGE> 7
<TABLE>
<S> <C>
PAGE 7
(b) Consolidated Statement of Capitalization as of April 30, 1994 (actual and pro
forma)
(c) Statement of Consolidated Income for the twelve months ended April 30, 1994
(actual and pro forma)
(d) Consolidated Statements of Common Stock Equity as of April 30, 1994 (actual and
pro forma)
(e) Pro Forma Entries
2. The Columbia Gas System, Inc.
(a) Balance Sheet as of April 30, 1994 (actual and pro forma)
(b) Statement of Capitalization as of April 30, 1994 (actual and pro forma)
(c) Statement of Income for the twelve months ended April 30, 1994 (actual and pro
forma)
(d) Statements of Common Stock Equity for the twelve months ended April 30, 1994
(actual and pro forma)
(e) Pro Forma Entries
</TABLE>
<PAGE> 8
PAGE 8
SIGNATURE
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, the undersigned has duly caused this statement to be
signed on its behalf by the undersigned thereunto duly authorized.
THE COLUMBIA GAS SYSTEM, INC.
Dated: July 25, 1994 By: /s/ L. J. Bainter
------------------ ----------------------------
L. J. Bainter, Treasurer
<PAGE> 9
(b)(1)(a)
THE COLUMBIA GAS SYSTEM, INC. AND SUBSIDIARIES (1 of 2)
CONSOLIDATED BALANCE SHEET (UNAUDITED)
ACTUAL and PRO FORMA
As of April 30, 1994
($000)
<TABLE>
<CAPTION>
CGS Pro Forma CGS
Actual Entries Pro Forma
----------- ---------- -----------
<S> <C> <C> <C>
ASSETS
Property, Plant and Equipment
Gas utility and other plant, at original cost .... 6,380,176 - 6,380,176
Accumulated depreciation and depletion ........... (3,107,864) - (3,107,864)
----------- ---------- -----------
Net Gas Utility and Other Plant .................. 3,272,312 - 3,272,312
----------- ---------- -----------
Oil and gas producing properties, full cost method 1,217,521 - 1,217,521
Accumulated depletion ............................ (613,766) - (613,766)
----------- ---------- -----------
Net Oil and Gas Producing Properties ............. 603,755 - 603,755
----------- ---------- -----------
Net Property, Plant, and Equipment ................. 3,876,067 - 3,876,067
----------- ---------- -----------
Investments and Other Assets
Accounts receivable - noncurrent ................. 222,594 - 222,594
Unconsolidated affiliates ........................ 68,569 - 68,569
Investment in Columbia LNG Corporation ........... 10,500 - 10,500
Other ............................................ 26,134 - 26,134
----------- ---------- -----------
Total Investments and Other Assets ................. 327,797 - 327,797
----------- ---------- -----------
Current Assets
Cash and temporary cash investments .............. 1,672,897 - 1,672,897
Accounts receivable, net ......................... 704,382 - 704,382
Gas inventories .................................. 44,281 - 44,281
Other inventories at average cost ................ 43,227 - 43,227
Prepayments ...................................... 88,138 - 88,138
Other ............................................ 37,483 - 37,483
----------- ---------- -----------
Total Current Assets ............................... 2,590,408 - 2,590,408
----------- ---------- -----------
Deferred Charges ................................... 282,895 - 282,895
----------- ---------- -----------
Total Assets ....................................... 7,077,167 - 7,077,167
=========== ========== ===========
</TABLE>
<PAGE> 10
THE COLUMBIA GAS SYSTEM, INC. AND SUBSIDIARIES (2 of 2)
CONSOLIDATED BALANCE SHEET (UNAUDITED)
ACTUAL and PRO FORMA
As of April 30, 1994
($000)
<TABLE>
<CAPTION>
CGS Pro Forma CGS
Actual Entries Pro Forma
----------- ---------- -----------
<S> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
Capitalization
Common stock equity .............................. 1,374,981 (203) 1,374,778
Long-term debt ................................... 4,536 - 4,536
----------- ---------- -----------
Total Capitalization ............................... 1,379,517 (203) 1,379,314
----------- ---------- -----------
Current Liabilities
Debt obligations ................................. 1,285 - 1,285
Debtor in possession financing ................... - - -
Accounts and drafts payable ...................... 177,635 - 177,635
Accrued taxes .................................... 131,024 (110) 130,914
Accrued interest ................................. (2,436) 313 (2,123)
Estimated rate refunds ........................... 208,134 - 208,134
Estimated supplier obligations ................... 141,577 - 141,577
Deferred income taxes - current .................. 2,100 - 2,100
Other ............................................ 361,594 - 361,594
----------- ---------- -----------
Total Current Liabilities .......................... 1,020,913 203 1,021,116
----------- ---------- -----------
Liabilities Subject to Chapter 11 Proceedings ..... 3,911,732 - 3,911,732
----------- ---------- -----------
Other Liabilities and Deferred Credits
Deferred income taxes, noncurrent ................ 298,398 - 298,398
Deferred investment tax credits .................. 39,521 - 39,521
Postretirement benefits other than pensions ...... 234,182 - 234,182
Other ............................................ 192,904 - 192,904
----------- ---------- -----------
Total Other Liabilities and Deferred Credits ....... 765,005 - 765,005
----------- ---------- -----------
Total Capitalization and Liabilities ............... 7,077,167 - 7,077,167
=========== ========== ===========
</TABLE>
<PAGE> 11
(b)(1)(b)
THE COLUMBIA GAS SYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CAPITALIZATION (UNAUDITED)
ACTUAL and PRO FORMA
As of April 30, 1994
($000)
<TABLE>
<CAPTION>
CGS Pro Forma CGS
Actual Entries Pro Forma
----------- ---------- -----------
<S> <C> <C> <C>
Common Stock Equity
Common Stock, The Columbia Gas System, Inc.,
$10 par value, authorized 100,000,000 shares,
outstanding 50,559,225 shares ................... 505,592 - 505,592
Additional paid in capital ....................... 601,759 - 601,759
Retained earnings ................................ 337,596 (203) 337,393
Unearned employee compensation ................... (69,966) - (69,966)
----------- ---------- -----------
Total Common Stock Equity .......................... 1,374,981 (203) 1,374,778
----------- ---------- -----------
Long-Term Debt
Miscellaneous debt of subsidiaries ............... 1,888 - 1,888
Capitalized lease obligations .................... 2,648 - 2,648
----------- ---------- -----------
Total Long-Term Debt ............................... 4,536 - 4,536
----------- ---------- -----------
Total Capitalization ............................... 1,379,517 (203) 1,379,314
=========== ========== ===========
</TABLE>
<PAGE> 12
(b)(1)(c)
THE COLUMBIA GAS SYSTEM, INC. AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED INCOME (UNAUDITED)
ACTUAL and PRO FORMA
Twelve Months Ended April 30, 1994
($000)
<TABLE>
<CAPTION>
CGS Pro Forma CGS
Actual Entries Pro Forma
----------- ---------- -----------
<S> <C> <C> <C>
Operating Revenues
Gas sales......................................... 2,368,347 - 2,368,347
Transportation ................................... 668,982 - 668,982
Other ............................................ 223,374 - 223,374
----------- ---------- -----------
Total Operating Revenues ........................... 3,260,703 - 3,260,703
----------- ---------- -----------
Operating Expenses
Products purchased .............................. 1,405,452 - 1,405,452
Operation ........................................ 826,707 - 826,707
Maintenance ...................................... 166,880 - 166,880
Depreciation and depletion ....................... 245,511 - 245,511
Other taxes ...................................... 202,857 - 202,857
Write-Down of investment in Columbia LNG Corp. ... 57,472 - 57,472
----------- ---------- -----------
Total Operating Expenses ........................... 2,904,879 - 2,904,879
----------- ---------- -----------
Operating Income ................................... 355,824 - 355,824
----------- ---------- -----------
Other Income (Deductions)
Interest income and other, net ................... (8,858) - (8,858)
Interest expense and related charges.............. (79,020) (313) (79,333)
Reorganization items, net ........................ 13,830 - 13,830
----------- ---------- -----------
Total Other Income (Deductions) .................... (74,048) (313) (74,361)
----------- ---------- -----------
Income before Income Taxes and Cumulative Effect
of Accounting Change ............................. 281,776 (313) 281,463
Income taxes ....................................... 137,027 (110) 136,917
----------- ---------- -----------
Income before Cumulative Effect of Accounting
Change ........................................... 144,749 (203) 144,546
Cumulative Effect of Change in Accounting for
Postemployment Benefits .......................... (5,644) - (5,644)
----------- ---------- -----------
Net Income ......................................... 139,105 (203) 138,902
=========== ========== ===========
</TABLE>
<PAGE> 13
(b)(1)(d)
THE COLUMBIA GAS SYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMMON STOCK EQUITY (UNAUDITED)
ACTUAL and PRO FORMA
Twelve Months Ended April 30, 1994
($000)
<TABLE>
<CAPTION>
CGS Pro Forma CGS
Actual Entries Pro Forma
----------- ---------- -----------
<S> <C> <C> <C>
COMMON STOCK
Balance at May 1, 1993 ............................. 505,592 - 505,592
Common stock issued -
Leveraged employee stock ownership plan (LESOP) .. - - -
Dividend reinvestment plan ....................... - - -
Long-term incentive plan ......................... - - -
Public offering .................................. - - -
----------- ---------- -----------
Balance at April 30, 1994 .......................... 505,592 - 505,592
----------- ---------- -----------
ADDITIONAL PAID IN CAPITAL
Balance at May 1, 1993 ............................. 601,759 - 601,759
Common stock issued -
Leveraged employee stock ownership plan (LESOP) .. - - -
Dividend reinvestment plan ....................... - - -
Long-term incentive plan ......................... - - -
Public offering .................................. - - -
----------- ---------- -----------
Balance at April 30, 1994 .......................... 601,759 - 601,759
----------- ---------- -----------
RETAINED EARNINGS
Balance at May 1, 1993 ............................. 198,491 - 198,491
Net income ......................................... 139,105 (203) 138,902
Common stock dividends ............................. - - -
Other .............................................. - - -
----------- ---------- -----------
Balance at April 30, 1994 .......................... 337,596 (203) 337,393
----------- ---------- -----------
UNEARNED EMPLOYEE COMPENSATION
Balance at May 1, 1993 ............................. (69,966) - (69,966)
Adjustment ......................................... - - -
----------- ---------- -----------
Balance at April 30, 1994 .......................... (69,966) - (69,966)
----------- ---------- -----------
TOTAL COMMON STOCK EQUITY .......................... 1,374,981 (203) 1,374,778
=========== ========== ===========
</TABLE>
<PAGE> 14
UNAUDITED
(b)(1)(e)
THE COLUMBIA GAS SYSTEM, INC. AND SUBSIDIARIES
PRO FORMA ENTRIES
($000)
<TABLE>
<S> <C> <C>
1. Interest expense and related charges 313
Accrued interest 313
To record Letter of Credit Fee equal to 1% of the face
amount of the Letter of Credit Facility and to record
the amendment fee equal to 1/4 of 1% of the commitment.
2. Accrued taxes 110
Income taxes 110
To record the related tax effects of above transaction
at 35%.
</TABLE>
<PAGE> 15
(b)(2)(a)
THE COLUMBIA GAS SYSTEM, INC. (1 of 2)
BALANCE SHEET (UNAUDITED)
ACTUAL and PRO FORMA
As of April 30, 1994
($000)
<TABLE>
<CAPTION>
CG Pro Forma CG
Actual Entries Pro Forma
---------- ---------- ----------
<S> <C> <C> <C>
ASSETS
Investments and Other Assets
Accounts receivable - noncurrent ................. 24,426 - 24,426
Unconsolidated affiliates ........................ - - -
Investment in Columbia LNG Corporation ........... 12,665 - 12,665
---------- ---------- ----------
Total Investments and Other Assets ................. 37,091 - 37,091
---------- ---------- ----------
Investments in Subsidiaries
Capital stock .................................... 1,160,907 - 1,160,907
Equity in undistributed retained earnings ........ (393,974) - (393,974)
Installment promissory notes receivable .......... 792,574 - 792,574
Other investments ................................ 437,833 - 437,833
Other receivables - TCO .......................... 1,508,443 - 1,508,443
---------- ---------- ----------
Total Investments in Subsidiaries .................. 3,505,783 - 3,505,783
---------- ---------- ----------
Current Assets
Cash and temporary cash investments .............. 288,244 - 288,244
Accounts receivable, net
Customers ...................................... - - -
Affiliated ..................................... 103,228 - 103,228
Other .......................................... 15,259 - 15,259
Prepayments ...................................... 28 - 28
Other ............................................ 1 - 1
---------- ---------- ----------
Total Current Assets ............................... 406,760 - 406,760
---------- ---------- ----------
Deferred Charges ................................... 3,126 - 3,126
---------- ---------- ----------
Total Assets ....................................... 3,952,760 - 3,952,760
========== ========== ==========
</TABLE>
<PAGE> 16
THE COLUMBIA GAS SYSTEM, INC. (2 of 2)
BALANCE SHEET (UNAUDITED)
ACTUAL and PRO FORMA
As of April 30, 1994
($000)
<TABLE>
<CAPTION>
CG Pro Forma CG
Actual Entries Pro Forma
---------- ---------- ----------
<S> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
Capitalization
Common stock equity .............................. 1,374,981 (203) 1,374,778
Long-term debt ................................... - - -
---------- ---------- ----------
Total Capitalization ............................... 1,374,981 (203) 1,374,778
---------- ---------- ----------
Current Liabilities
Debt obligations ................................. - - -
Debtor in possession financing ................... - - -
Accounts and drafts payable ...................... 1,216 - 1,216
Affiliated accounts payable ...................... 7,080 - 7,080
Accrued taxes .................................... 549 (110) 439
Accrued interest ................................. 931 313 1,244
Deferred income taxes - current .................. (1,191) - (1,191)
Other ............................................ 10,677 - 10,677
---------- ---------- ----------
Total Current Liabilities .......................... 19,262 203 19,465
---------- ---------- ----------
Liabilities Subject to Chapter 11 Proceedings ...... 2,382,216 - 2,382,216
---------- ---------- ----------
Other Liabilities and Deferred Credits
Deferred income taxes, noncurrent ................ 170,120 - 170,120
Postretirement benefits other than pensions ...... 6,132 - 6,132
Other ............................................ 49 - 49
---------- ---------- ----------
Total Other Liabilities and Deferred Credits ....... 176,301 - 176,301
---------- ---------- ----------
Total Capitalization and Liabilities ............... 3,952,760 - 3,952,760
========== ========== ==========
</TABLE>
<PAGE> 17
(b)(2)(b)
THE COLUMBIA GAS SYSTEM, INC.
STATEMENT OF CAPITALIZATION (UNAUDITED)
ACTUAL and PRO FORMA
As of April 30, 1994
($000)
<TABLE>
<CAPTION>
CG Pro Forma CG
Actual Entries Pro Forma
---------- ---------- ----------
<S> <C> <C> <C>
Common Stock Equity
Common Stock, $10 par value, authorized
100,000,000 shares, outstanding 50,559,225
shares .......................................... 505,592 - 505,592
Additional paid in capital ....................... 601,759 - 601,759
Retained earnings ................................ 337,596 (203) 337,393
Unearned employee compensation ................... (69,966) - (69,966)
---------- ---------- ----------
Total Common Stock Equity .......................... 1,374,981 (203) 1,374,778
---------- ---------- ----------
Long-Term Debt
Debentures, net of unamortized discount less
premium ......................................... - - -
---------- ---------- ----------
Total Long-Term Debt ............................... - - -
---------- ---------- ----------
Total Capitalization ............................... 1,374,981 (203) 1,374,778
========== ========== ==========
</TABLE>
<PAGE> 18
(b)(2)(c)
THE COLUMBIA GAS SYSTEM, INC.
STATEMENT OF INCOME (UNAUDITED)
ACTUAL and PRO FORMA
Twelve Months Ended April 30, 1994
($000)
<TABLE>
<CAPTION>
CG Pro Forma CG
Actual Entries Pro Forma
---------- ---------- ----------
<S> <C> <C> <C>
Operating Revenues
Gas Sales ........................................ - - -
Transportation ................................... - - -
Other ............................................ - - -
---------- ---------- ----------
Total Operating Revenues ........................... - - -
---------- ---------- ----------
Operating Expenses
Products purchased ............................... - - -
Operation ........................................ 7,295 - 7,295
Maintenance ...................................... - - -
Depreciation and depletion ....................... - - -
Other taxes ...................................... 169 - 169
---------- ---------- ----------
Total Operating Expenses ........................... 7,464 - 7,464
---------- ---------- ----------
Operating Income (Loss) ............................ (7,464) - (7,464)
---------- ---------- ----------
Other Income (Deductions)
Interest income and other, net ................... 222,106 - 222,106
Interest expense and related charges ............. (1,398) (313) (1,711)
Reorganization items, net ........................ (3,161) - (3,161)
---------- ---------- ----------
Total Other Income (Deductions) .................... 217,547 (313) 217,234
---------- ---------- ----------
Income before Income Taxes and Cumulative Effect
of Accounting Change ............................. 210,083 (313) 209,770
Income taxes ....................................... 70,934 (110) 70,824
---------- ---------- ----------
Income before Cumulative Effect of Accounting
Change ........................................... 139,149 (203) 138,946
Cumulative Effect of Accounting for Postemployment
Benefits ......................................... (44) - (44)
---------- ---------- ----------
Net Income ......................................... 139,105 (203) 138,902
========== ========== ==========
</TABLE>
<PAGE> 19
(b)(2)(d)
THE COLUMBIA GAS SYSTEM, INC.
STATEMENTS OF COMMON STOCK EQUITY (UNAUDITED)
ACTUAL and PRO FORMA
Twelve Months Ended April 30, 1994
($000)
<TABLE>
<CAPTION>
CG Pro Forma CG
Actual Entries Pro Forma
---------- ---------- ----------
<S> <C> <C> <C>
COMMON STOCK
Balance at May 1, 1993 ............................. 505,592 - 505,592
Common stock issued -
Subsidiaries ..................................... - - -
Leveraged employee stock ownership plan (LESOP) .. - - -
Dividend reinvestment plan ....................... - - -
Long-term incentive plan ......................... - - -
Public offering .................................. - - -
---------- ---------- ----------
Balance at April 30, 1994 .......................... 505,592 - 505,592
---------- ---------- ----------
ADDITIONAL PAID IN CAPITAL
Balance at May 1, 1993 ............................. 601,759 - 601,759
Common stock issued -
Subsidiaries ..................................... - - -
Leveraged employee stock ownership plan (LESOP) .. - - -
Dividend reinvestment plan ....................... - - -
Long-term incentive plan ......................... - - -
Public offering .................................. - - -
---------- ---------- ----------
Balance at April 30, 1994 .......................... 601,759 - 601,759
---------- ---------- ----------
RETAINED EARNINGS
Balance at May 1, 1993 ............................. 198,491 - 198,491
Net income ......................................... 139,105 (203) 138,902
Common stock dividends -
CG ............................................... - - -
Subsidiaries (to CG) ............................. - - -
Other .............................................. - - -
---------- ---------- ----------
Balance at April 30, 1994 .......................... 337,596 (203) 337,393
---------- ---------- ----------
UNEARNED EMPLOYEE COMPENSATION
Balance at May 1, 1993 ............................. (69,966) - (69,966)
Adjustment ......................................... - - -
---------- ---------- ----------
Balance at April 30, 1994 .......................... (69,966) - (69,966)
---------- ---------- ----------
TOTAL COMMON STOCK EQUITY .......................... 1,374,981 (203) 1,374,778
========== ========== ==========
</TABLE>
<PAGE> 20
UNAUDITED
(b)(2)(e)
THE COLUMBIA GAS SYSTEM, INC.
PRO FORMA ENTRIES
($000)
<TABLE>
<S> <C> <C>
1. Interest expense and related charges 313
Accrued interest 313
To record Letter of Credit Fee equal to 1% of the face
amount of the Letter of Credit Facility and to record
the amendment fee equal to 1/4 of 1% of the commitment.
2. Accrued taxes 110
Income taxes 110
To record the related tax effects of above transaction
at 35%.
</TABLE>
<PAGE> 21
EXHIBIT INDEX
(a) Exhibits
A-3 Term Sheet
A-4 Form of Amended and Restated Revolving Credit Agreement
D-3 Order of Bankruptcy Court for the District of Delaware (to
be filed by amendment)
F-2 Opinion of Counsel (to be filed by amendment)
G-2 Proposed Notice
<PAGE> 1
Exhibit A-3
LETTER OF CREDIT FACILITY
Statement of Terms and Conditions
<TABLE>
<S> <C>
Type of Facility: Committed letter of credit facility
(the "Facility").
Amount: Up to $25,000,000 (the
"Commitment").
Account Party: The Columbia Gas System, Inc. (the
"Company"). Letters of Credit may
be issued for the account of the
Company in support of its own
obligations or obligations of its
subsidiaries (other than Columbia
Gas Transmission Corporation
("TCO")).
Issuing Bank: Chemical. In the event of a
downgrading of Chemical's credit
rating, additional issuing banks may
be appointed as described below.
Availability: Standby letters of credit (the
"Letters of Credit") may be issued
at any time during the period from
the closing date to the earliest of
(i) December 31, 1995 or such later
date as may be from time to time
agreed in writing by the Company and
Chemical (the "Maturity Date"), (ii)
the substantial consummation of a
plan of reorganization of the
Company and (iii) the date on which
the final order of the bankruptcy
court approving the Facility (the
"Final Order") is amended or
modified without the consent of
Chemical. No Letter of Credit may
have an expiry date later than the
Maturity Date.
Downgrade of Chemical Rating; If at any time Moody's Investors
Appointment of Additional Service, Inc. or Standard & Poor's
Issuing Bank: Corporation shall reduce the long-
term indebtedness rating of Chemical
below A3 or A-, as the case may be,
the Company shall have the right to
appoint an additional issuing bank
(which issuing bank shall be
acceptable to Chemical) under the
Facility which shall be entitled to
issue subsequent Letters of Credit
under the Facility. In such event,
Chemical shall take an irrevocable
and unconditional participation of
100% of such issuing bank's
obligations under any Letters of
Credit so issued by such additional
issuing bank.
</TABLE>
<PAGE> 2
<TABLE>
<S> <C>
Fees: Letter of Credit Fee: 1% of the
face amount of each Letter of Credit
per annum, payable quarterly in
advance, plus, in the case of any
Letter of Credit issued by an
issuing bank other than Chemical, a
fronting fee payable to such issuing
bank in an amount to be agreed
between the Company and such issuing
bank. Customary administrative,
issuance, amendment, payment and
negotiation charges will be payable
to the issuing bank for its own
account.
Commitment Fee: 1/2 of 1% of
unutilized portion of the
Commitment, payable on the Closing
Date and quarterly in arrears
thereafter. Such commitment fee
shall accrue from the date of the
closing of the Facility.
Amendment Fee: 1/4 of 1% of the
Commitment, payable at closing.
Rate and Fee Basis: 360 days for actual days elapsed.
Collateral: The obligations under the Facility
shall be secured at all times by a
first priority lien on cash
collateral in an amount equal to at
least 105% of the aggregate face
amount of all outstanding Letters of
Credit.
The obligations owing to Chemical
under the Facility shall also
constitute a superpriority
administrative claim. The Company
shall also agree not to grant or
suffer to exist any claim or lien
against the Company or its assets
that would be pari passu with or
senior to the claim and lien in
favor of Chemical.
Conditions to Availability The availability of the Facility
of Facility: will be conditioned upon, among
other things, satisfaction of the
following conditions precedent:
The Borrower shall have executed and
delivered definitive financing
agreements and related documentation
with respect to the Facility
(including, without limitation, an
amended and restated credit
agreement and an amended and
restated security agreement), in
each case satisfactory in form and
substance to Chemical.
(i) Any loans outstanding under the
Existing Facility shall have been
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
paid, (ii) all Existing Banks shall
have agreed to the termination of
their commitments under the Existing
Facility, and (iii) all Existing
Banks shall have provided evidence
satisfactory to Chemical that all
amounts owing to them under the
Existing Facility have been paid in
full.
No litigation, inquiry, injunction
or restraining order (other than the
Company's reorganization proceedings
under the United States Bankruptcy
Code (the "Chapter 11 Case")) shall
be pending, entered or threatened
which, in the opinion of Chemical,
could have a material adverse effect
on (i) the business, assets,
operations, condition (financial or
otherwise) or prospects of the
Company or any of its subsidiaries
(other than TCO), (ii) the ability
of the Company to perform its
obligations under the agreements
relating to the Facility or (iii)
the rights of Chemical (collectively
a "Material Adverse Effect").
(i) The Final Order, in form and
substance satisfactory to Chemical,
shall have been entered, (ii) an
order of the Securities and Exchange
Commission approving the transaction
(the "SEC Approval"), in form and
substance satisfactory to Chemical,
shall have been issued, (iii) all
other governmental and third party
approvals necessary or advisable in
connection with the Facility and the
continuing operations of the Company
and its subsidiaries shall have been
obtained and (iv) all of the
foregoing shall be in full force and
effect.
There shall not have occurred any
change, or development or event
involving a prospective change,
which in the opinion of Chemical
could have a Material Adverse
Effect.
All actions required to create and
perfect a first priority security
interest in all collateral shall
have been duly taken, including,
without limitation, the deposit of
at least 105% of the face amount of
all letters of credit outstanding
under the Existing Facility into the
cash collateral account for the
Facility, and all collateral shall
be free and clear of other liens.
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
Chemical shall have received
satisfactory legal opinions from
counsel to the Borrower.
Chemical and the Existing Banks
shall have received all fees and
expenses required to be paid or
delivered on or before the closing
date.
Chemical shall have received such
other legal opinions, officer's
certificates, corporate documents
and other instruments as are
customary for transactions of this
type or as it may reasonably
request.
Conditions to Issuance of Each The issuance of each Letter of
Letter of Credit: Credit will be conditioned upon (i)
receipt of a letter of credit
request, (ii) receipt of an amount
of cash sufficient so that after
giving effect to the issuance of
such Letter of Credit at least 105%
of the face amount of all Letters of
Credit is on deposit in the cash
collateral account, (iii) the Final
Order and SEC Approval being in full
force and effect and not modified
without Chemical's consent and such
other conditions as are customary
in transactions of this type or are
deemed appropriate by Chemical.
Covenants: The documentation relating to the
Facility shall include covenants
customary for transactions of this
type, including, without limitation:
delivery of financial statements and
other information comparable to the
information required under the
Existing Facility, except that (i)
the Facility shall not require the
delivery of an annual compliance
certificate by the Company's
independent accountants, (ii) the
Facility shall not require the
delivery of third party appraisals
of the Company's assets, (iii) no
monthly financial statements shall
be required to be delivered and (iv)
annual budgets and business plans
shall be delivered as soon as
practicable after they become
available; maintenance of property;
compliance with laws; payment of
obligations and taxes; inspection of
property, books and records;
delivery of information relating to
the Chapter 11 Case; maintenance of
corporate existence; and further
assurances. The Facility shall also
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
include a limitation on certain
actions with respect to the
collateral and the Chapter 11 case
without the consent of Chemical.
Events of Default; Remedies: Events of Default under the Facility
shall include, without limitation,
the following:
Failure to pay repay letter of
credit drawings or failure to repay
other amounts within three business
days;
Failure to observe any covenant
referred to in the last sentence
under the caption "Covenants" above
or failure to observe other
covenants for 20 days;
Any representation or warranty shall
be inaccurate in any material
respect;
Any document executed in connection
with the Facility shall have ceased
to be in full force and effect;
Reversal of the Final Order or the
SEC Approval or any modification
thereof without the consent of
Chemical;
Entry of an order in the Chapter 11
Case dismissing the Chapter 11 Case,
converting the Chapter 11 Case into
a case under Chapter 7 of the
Bankruptcy Code or appointing an
examiner with enlarged powers
(subject to certain provisos as
specified under Existing Facility);
the filing or approval of an
application for, or the existence
of, any lien or claim in the Chapter
11 Case having a priority superior
to or pari passu with that of
Chemical; application for payment
of, or approval to pay, any pre-
petition claim except as expressly
contemplated by the Facility; or
entry of an order approving a
disclosure statement in connection
with a plan of reorganization of the
Company which does not provide for
payment in full of all obligations
to Chemical;
Entry of any judgment as to post-
petition liabilities for payment of
in excess of $10,000,000 in the
aggregate and either (i) enforcement
proceedings shall have commenced or
(ii) enforcement shall not have been
</TABLE>
<PAGE> 6
<TABLE>
<S> <C>
stayed for a period of 15
consecutive days;
Any non-monetary judgement with
respect to post-petition events
shall have been rendered which could
reasonably be expected to (i) have a
Material Adverse Effect or (ii)
cause a material decrease in the
collateral;
Entry of an order granting relief
from the automatic stay in the
Chapter 11 Case to a party to any
pre-petition action which could
reasonably be expected to have a
Material Adverse Effect or draw into
question the validity of the
Facility or the collateral
arrangements contemplated thereby.
Remedies: The Facility shall provide that if
an event of default shall occur,
Chemical may (i) set off amounts in
the Company's accounts with Chemical
and foreclose on the collateral
and/or (ii) upon seven days' prior
notice, exercise other available
remedies and/or (iii) declare all
amounts owing or contingently owing
to be due and payable.
Representations and Warranties: Customary for financings of this
type and others deemed appropriate
by Chemical.
Governing Law: State of New York.
Indemnity: The Company will indemnify, pay and
hold harmless Chemical and its
officers, employees and agents
against any loss, liability, cost or
expense incurred in respect of the
financing contemplated hereby or the
use or proposed use of the proceeds
hereof.
Commitment Termination Date: Definitive financing agreements and
related documentation must have been
entered into prior to September 30,
1994.
</TABLE>
<PAGE> 1
Exhibit A-4
AMENDED AND RESTATED SECURED REVOLVING CREDIT AGREEMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Between
THE COLUMBIA GAS SYSTEM, INC., a Debtor in Possession,
and
CHEMICAL BANK
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dated as of _______ __, 1994
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2 Accounting Terms and Determinations . . . . . . . . . . . 7
Section 1.3 Other Definitional Provisions . . . . . . . . . . . . . . 8
ARTICLE II. AMOUNT AND TERMS OF COMMITMENT . . . . . . . . . . . . . . . 8
Section 2.1 Commitment of the Bank . . . . . . . . . . . . . . . . . 8
Section 2.2 Agreement to Repay Letter of Credit Drawings . . . . . . 9
Section 2.3 Commitment Fee; Letter of Credit Fee; Other
Fees . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.4 Optional Termination or Reduction of Commitment . . . . . 11
Section 2.5 Requirements of Law . . . . . . . . . . . . . . . . . . . 11
Section 2.6 Payments . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.7 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.8 Priority and Liens . . . . . . . . . . . . . . . . . . . 13
Section 2.9 Right of Set-Off . . . . . . . . . . . . . . . . . . . . 14
Section 2.10 Rating Downgrade; Alternative Fronting Banks . . . . . . 14
ARTICLE III. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . 17
Section 3.1 Conditions Precedent to Effectiveness of
Agreement . . . . . . . . . . . . . . . . . . . . . 17
Section 3.2 Conditions Precedent to Each Letter of Credit. . . . . . 19
ARTICLE IV. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . 20
Section 4.1 Organization and Authority . . . . . . . . . . . . . . . 20
Section 4.2 Due Execution . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.3 Effectiveness of Order . . . . . . . . . . . . . . . . . 21
Section 4.4 Information . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.5 Litigation . . . . . . . . . . . . . . . . . . . . . . . 22
Section 4.6 Security Interest . . . . . . . . . . . . . . . . . . . . 22
Section 4.7 Not an Investment Company . . . . . . . . . . . . . . . . 22
Section 4.8 No Conflicting Requirements . . . . . . . . . . . . . . . 22
Section 4.9 Restrictions on the Company . . . . . . . . . . . . . . . 22
Section 4.10 No Defenses . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE V. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.1 Information . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.2 Maintenance of Property; Insurance . . . . . . . . . . . 24
Section 5.3 Compliance with Laws . . . . . . . . . . . . . . . . . . 24
Section 5.4 Inspection of Property; Books and Records . . . . . . . . 24
Section 5.5 Chapter 11 Case . . . . . . . . . . . . . . . . . . . . . 25
Section 5.6 Corporate Existence; No Change in Business . . . . . . . 25
Section 5.7 Further Assurances; Security Interests . . . . . . . . . 25
Section 5.8 Chapter 11 Claims and Liens . . . . . . . . . . . . . . . 26
ARTICLE VI. EVENTS OF DEFAULTS . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE VII. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 28
Section 7.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 7.2 No Waivers . . . . . . . . . . . . . . . . . . . . . . . 28
Section 7.3 Expenses; Documentary Taxes; Indemnification . . . . . . 29
Section 7.4 Amendments and Waivers . . . . . . . . . . . . . . . . . 29
Section 7.5 NEW YORK LAW . . . . . . . . . . . . . . . . . . . . . . 29
Section 7.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . 29
Section 7.7 WAIVER OF TRIAL BY JURY . . . . . . . . . . . . . . . . . 30
Section 7.8 Effectiveness . . . . . . . . . . . . . . . . . . . . . . 30
Section 7.9 Confidentiality . . . . . . . . . . . . . . . . . . . . . 30
EXHIBITS
Exhibit A Form of Security Agreement
Exhibit B Form of Letter of Credit Request
</TABLE>
<PAGE> 3
AMENDED AND RESTATED SECURED REVOLVING CREDIT AGREEMENT
Dated as of _____ __, 1994
AMENDED AND RESTATED SECURED REVOLVING CREDIT AGREEMENT, dated as of
_______ __, 1994, between THE COLUMBIA GAS SYSTEM, INC., a Delaware corporation
(the "Company"), a debtor-in-possession in proceedings under Chapter 11 of the
Bankruptcy Code, and CHEMICAL BANK, a New York banking corporation (the "Bank",
including its successors by merger or otherwise).
INTRODUCTORY STATEMENT
On July 31, 1991 (the "Filing Date") the Company and its wholly-owned
Subsidiary, Columbia Gas Transmission Corporation ("TCO"), filed petitions
with the United States Bankruptcy Court for the District of Delaware,
initiating proceedings in reorganization under Chapter 11 of Title 11 of the
United States Code.
Pursuant to the Secured Revolving Credit Agreement, dated as of
September 23, 1991 (as heretofore amended, supplemented or otherwise modified,
the "Original Agreement"), among the Company, the banks from time to time
parties thereto, and the Bank, as agent for such banks, a senior secured
revolving credit facility in an aggregate principal amount of up to
$275,000,000 was provided by such banks to the Company for the making of
revolving credit loans and for the issuance of Letters of Credit for the
benefit of various insurance companies, state agencies and other entities.
Upon request of the Company, the Banks party to the Original Agreement
have reduced their aggregate commitments under the Original Agreement to
$100,000,000.
To provide security for the obligations of the Company under the
Original Agreement, the Company provided to the Bank, as agent, certain Liens
on certain property of the Company (as more fully described in the Original
Security Agreement referred to herein) and an allowed administrative expense
claim in the Chapter 11 Case pursuant to Section 364(c)(1) of the Bankruptcy
Code having priority, subject to a Carve-Out (as herein defined), over all
administrative expenses of the kind specified in Sections 503(b) and 507(b) of
the Bankruptcy Code.
In order to reduce certain fees currently payable under the Original
Agreement, the Company has requested that the Bank and the other banks party
to the Original Agreement agree to amend the Original Agreement to eliminate
the commitments of all banks party thereto other than the Bank, to release the
Liens on certain collateral under the Original Security Agreement, to reduce
the and to provide that the commitment of the Bank shall be $25,000,000 and
shall be available only for the issuance of Letters of Credit from time to
time.
Subject to the terms and conditions set forth herein, the Bank is
willing to agree to the Company's request.
NOW THEREFORE, the parties hereto hereby agree to amend and restate
the Original Agreement in its entirety as follows:
ARTICLE I. DEFINITIONS
Section 1.1 Definitions. The following terms, as used herein, have
the following meanings:
<PAGE> 4
"Agreement" means this Amended and Restated Secured Revolving Credit
Agreement, as it may be amended, modified or supplemented from time to
time.
"Alternate Base Rate" for any day, means a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of (a)
the Prime Rate in effect on such day, (b) the Base CD Rate in effect on
such day plus 1% and (c) the Federal Funds Effective Rate in effect on such
day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall mean the rate
of interest per annum publicly announced from time to time by the Bank as
its prime rate in effect at its principal office in New York City (the
Prime Rate not being intended to be the lowest rate of interest charged by
Chemical Bank in connection with extensions of credit to debtors); "Base CD
Rate" shall mean the sum of (a) the product of (i) the Three-Month
Secondary CD Rate and (ii) a fraction, the numerator of which is one and
the denominator of which is one minus the C/D Reserve Percentage and (b)
the C/D Assessment Rate; "Three-Month Secondary CD Rate" shall mean, for
any day, the secondary market rate for three-month certificates of deposit
reported as being in effect on such day (or, if such day shall not be a
Business Day, the next preceding Business Day) by the Board through the
public information telephone line of the Federal Reserve Bank of New York
(which rate will, under the current practices of the Board, be published in
Federal Reserve Statistical Release H.15(519) during the week following
such day), or, if such rate shall not be so reported on such day or such
next preceding Business Day, the average of the secondary market quotations
for three-month certificates of deposit of major money center banks in New
York City received at approximately 10:00 A.M., New York City time, on such
day (or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Bank from three New York City negotiable certificate
of deposit dealers of recognized standing selected by it; and "Federal
Funds Effective Rate" shall mean, for any day, the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the
average of the quotations for the day of such transactions received by the
Bank from three federal funds brokers of recognized standing selected by
it. Any change in the Alternate Base Rate due to a change in the Prime
Rate, the Three-Month Secondary CD Rate or the Federal Funds Effective Rate
shall be effective as of the opening of business on the effective day of
such change in the Prime Rate, the Three-Month Secondary CD Rate or the
Federal Funds Effective Rate, respectively.
"Bank" has the meaning set forth in the preamble to this Agreement.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978 as
heretofore and hereafter amended and codified as 11 U.S.C. #101 et seq.
"Bankruptcy Court" means the United States Bankruptcy Court for the
District of Delaware having jurisdiction over the Chapter 11 Case.
"Board" means the Board of Governors of the Federal Reserve System of
the United States.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in New York City are authorized by law to close.
"Carve-Out" has the meaning set forth in Section 2.7(a).
"Cash Collateral Account" has the meaning set forth in the Security
Agreement.
"Chapter 11 Case" means the case of the Company administered under
Case No. 91-803 in the Bankruptcy Court.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute.
<PAGE> 5
"Collateral" means the property of the Company, tangible and
intangible, and the proceeds thereof subject from time to time to the Liens
created by the Final Order and the Security Agreement.
"Commitment" means the commitment of the Bank to issue or participate
in Letters of Credit having an aggregate face amount at any time
outstanding not in excess of the lesser of (a) $25,000,000, (b) the amount
of the commitment approved by the Bankruptcy Court in the Final Order and
(c) the amount of the commitment approved by the Securities and Exchange
Commission in the SEC Order.
"Company" has the meaning set forth in the preamble of this Agreement.
"Default" means any condition or event which with the giving of notice
or lapse of time or both would, unless cured or waived, become an Event of
Default.
"Dollars" or "$" means dollars in lawful currency of the United States
of America.
"Effective Date" has the meaning set forth in Section 3.1.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" has the meaning set forth in Article VI.
"Filing Date" has the meaning set forth in the Introductory Statement
to this Agreement.
"Final Order" means the order entered by the Bankruptcy Court on
______ ___, 1994 in the Chapter 11 Case approving this Agreement.
"Fronting Bank", with respect to any Letter of Credit, means the
financial institution issuing such Letter of Credit. The Fronting Bank with
respect to Letters of Credit issued hereunder shall be the Bank or, in the
case of any Letter of Credit issued during a Rating Downgrade Period, at
the election of the Company, an alternative financial institution
designated to act in such capacity in accordance with Section 2.9.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"L/C Coverage Requirement" means, at any time, with respect to each
Letter of Credit, an amount equal to 105% of the Stated Amount of such
Letter of Credit.
"Letter of Credit" means an irrevocable standby letter of Credit
issued by the Bank pursuant to the Original Agreement or by a Fronting Bank
pursuant hereto under which the Bank or Fronting Bank, as the case may be,
agrees to make payments in Dollars for the account of the Company or the
joint and several account of the Company and any Subsidiary (other than
TCO), in respect of obligations of the Company or any Subsidiary (other
than TCO).
"Letter of Credit Fee" has the meaning set forth in Section 2.3(b).
"Letter of Credit Outstandings" means, at any time, without
duplication, the sum of (a) the aggregate Stated Amount of all outstanding
Letters of Credit and (b) the aggregate amount of all Unpaid Drawings.
"Letter of Credit Request" has the meaning set forth in Section
2.1(c).
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such
asset. For the purposes of this Agreement, the Company or any Subsidiary
of the
<PAGE> 6
Company shall be deemed to own subject to a Lien any asset which it
has acquired or holds subject to the interest of a vendor or lessor under
any conditional sale agreement, capital lease or other title retention
agreement relating to such asset.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or
prospects of the Company and its Subsidiaries (other than TCO) taken as a
whole, (b) the ability of the Company to perform its obligations under this
Agreement or the Security Agreement or (c) the validity or enforceability
of this Agreement or the Security Agreement or the rights or remedies of
the Bank or any Fronting Bank hereunder or thereunder.
"Maturity Date" means December 31, 1995, or such later date as may be
from time to time agreed by the Company and the Bank.
"Obligations" means the reimbursement obligations in respect of
Letters of Credit, and all other monetary obligations of the Company to the
Bank or any Fronting Bank under this Agreement and the Security Agreement.
"Original Agreement" has the meaning set forth in the Introductory
Statement to this Agreement.
"Original Security Agreement" means the security agreement, dated as
of September 23, 1991, between the Company and the Bank, as agent under the
Original Agreement.
"Permitted Liens" means:
(a) Liens for Post-Petition taxes, assessments, governmental
charges or levies not yet due or which are being contested in good
faith and by appropriate proceedings if adequate reserves with respect
thereto are maintained on the books of the Company or the appropriate
Subsidiary, as the case may be, in accordance with generally accepted
accounting principles; and
(b) statutory Liens of landlords and carriers', warehousemen's,
mechanics', materialmen's, repairmen's or other like Liens arising in
the ordinary course of business which are not overdue or which are
being contested in good faith and by appropriate proceedings in a
manner which will not jeopardize or diminish the interest of the Bank
in any of the Collateral or interfere with the conduct of the business
of the Company or any Subsidiary.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality
thereof.
"Post-Petition" means and refers to any time on or after the Filing
Date.
"Pre-Petition" means and refers to any time prior to the Filing Date.
"PUHCA" means the Public Utility Holding Company Act of 1935, as
amended.
"Rating Downgrade" means any date on which the Bank's deposit rating
is reduced below either A- by Standard & Poor's Rating Group ("S&P") or A3
by Moody's Investors Service, Inc. ("Moody's").
"Rating Downgrade Period" means any period commencing on the date of
the occurrence of a Rating Downgrade and ending on the first date
thereafter on which the Bank's long-term indebtedness ratings are restored
to at least A- by S&P and A3 by Moody's.
"Requirement of Law" as to any Person, means the Certificate of
Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable
<PAGE> 7
to or binding upon such Person or any of its property or to which such
Person or any of its property is subject.
"Responsible Officer" means the chief executive officer or the
president of the Company or, with respect to financial matters, the chief
financial officer, the treasurer or the controller of the Company.
"SEC Order" has the meaning set forth in Section 3.1(d).
"Security Agreement" means the Amended and Restated Security
Agreement, dated as of the date hereof, between the Bank and the Company,
in substantially the form of Exhibit A hereto, as the same may be from time
to time amended, supplemented or otherwise modified.
"Stated Amount" means, with respect to each Letter of Credit, the
remaining maximum amount available to be drawn thereunder, determined
without regard to whether any conditions to drawing could then be met.
"Subsidiary" means, with respect to any Person, any corporation or
other entity of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions are at the time directly or
indirectly owned by such Person. Unless otherwise specified, a reference
to a Subsidiary is a reference to a Subsidiary of the Company.
"TCO" has the meaning set forth in the Introductory Statement.
"Termination Date" shall mean the earliest of (a) the Maturity Date,
(b) the substantial consummation (as such term is defined in Section
1101(2) of the Bankruptcy Code) of a plan of reorganization of the Company
in the Chapter 11 Case and (c) the date upon which the Final Order shall be
amended or modified (other than to correct non-substantive errors) without
the written consent of the Bank, unless such amendment or modification is
as a result of an amendment, waiver or modification of this Agreement or
the Security Agreement approved by the Bank.
"UCC" means the Uniform Commercial Code as from time to time in effect
in the State of New York.
"Unpaid Drawing" has the meaning set forth in Section 2.2(a).
"Wholly Owned" means any Subsidiary of a Person all of the shares of
capital stock or other ownership interests of which (except directors'
qualifying shares) are at the time directly or indirectly owned by such
Person.
Section 1.2 Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial
statements required to be delivered hereunder shall be prepared in accordance
with generally accepted accounting principles as in effect from time to time,
applied on a basis consistent (except for changes concurred in by the
Company's independent public accountants) with the most recent audited
consolidated financial statements of the Company and its consolidated
Subsidiaries delivered pursuant hereto.
The parties hereto agree, however, that in the event that any change
in accounting principles from those used in the preparation of the most recent
financial statements of the Company and its consolidated Subsidiaries
delivered to the Bank on or prior to the date hereof pursuant to the terms of
this Agreement is hereafter occasioned by the promulgation of rules,
regulations, pronouncements and opinions by or required by the Financial
Accounting Standards Board or Accounting Principles Board of the American
Institute of Certified Public Accountants (or successors thereto or agencies
with similar functions) and results in any change in the method of calculation
of financial covenants, standards or terms found in this Agreement, such
financial covenants, standards or terms (other than in respect of financial
statements to be delivered
<PAGE> 8
hereunder) shall be computed without giving effect to such change in
accounting principles.
Section 1.3 Other Definitional Provisions. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in the Security Agreement or any certificate or other
document made or delivered pursuant hereto or thereto.
(b) The words "hereof", "herein" 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 Section,
subsection and Exhibit references are to this Agreement unless otherwise
specified.
(c) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
ARTICLE II. AMOUNT AND TERMS OF COMMITMENT
Section 2.1 Commitment of the Bank. (a) From and including the
Effective Date to but excluding the Termination Date, the Bank agrees, on the
terms and conditions set forth in this Agreement, that it will from time to
time, following receipt of a Letter of Credit Request delivered in accordance
with Section 2.1(c) below, issue, for the account of the Company or the joint
and several accounts of the Company and any Subsidiary (other than TCO), and
in support of obligations of the Company or any Subsidiary (other than TCO),
one or more Letters of Credit in such form and for such purposes as are
customary for, or may otherwise be approved in the sole discretion of, the
Bank; provided, however, that no such Letter of Credit shall be so issued if:
(i) at the time of such issuance, any order, judgment or
decree of any Governmental Authority or arbitrator shall purport by its
terms to enjoin or restrain the Bank from issuing such Letter of Credit or
any Requirement of Law applicable to the Bank or any request or directive
(whether or not having the force of law) from any Governmental Authority
with jurisdiction over the Bank shall prohibit, or request that the Bank
refrain from, the issuance of Letters of Credit generally or such Letter of
Credit in particular or shall impose upon the Bank with respect to such
Letter of Credit any restriction or reserve or capital requirement (for
which the Bank is not otherwise compensated) not in effect on the date
hereof, or any unreimbursed loss, cost or expense which was not applicable
or in effect to the Bank as of the date hereof and which the Bank in good
faith deems material to it;
(ii) after giving effect to any such issuance, the Letter of Credit
Outstandings would exceed the Commitment;
(iii) in the case of a Letter of Credit to be issued in support of
obligations of a Subsidiary, at the time of such issuance, the Company
shall have failed to receive from such Subsidiary, an agreement, in form
and substance satisfactory to the Bank, pursuant to which such Subsidiary
agrees to reimburse the Borrower for the amount of all drawings under the
Letter of Credit, plus all interest and fees in respect thereof; or
(iv) the Letter of Credit would have an expiration date subsequent
to the Maturity Date.
Each Letter of Credit Request and each Letter of Credit shall be
subject to the Uniform Customs and Practice for Documentary Credits [(1983
Revision)], International Chamber of Commerce Publication No. 400 and, to the
extent not inconsistent therewith, the laws of the State of New York and shall
provide for the fees set forth in Section 2.3 hereof.
(b) If on the Termination Date any Letter of Credit shall be
outstanding, then, upon request of the Bank, the Company shall use its
reasonable best efforts to immediately cause all such outstanding Letters of
Credit to be returned undrawn to the Bank.
<PAGE> 9
(c) Whenever the Company wishes a Letter of Credit to be issued, it
shall give the Bank at least two Business Days' prior request therefor. Each
such request shall include the information required by Exhibit B and such
other information as the Bank shall reasonably request and shall be either (i)
in writing and executed by the Company or (ii) transmitted by the Company to
the Bank over a secure electronic data transmission system maintained for such
purpose by the Bank (such request, a "Letter of Credit Request").
(d) The making of each Letter of Credit Request shall be deemed to be
a representation and warranty by the Company that such Letter of Credit will
be issued in accordance with, and will not violate the requirements of,
Section 2.1 and that each of the applicable conditions specified in Article
III has been satisfied.
Section 2.2 Agreement to Repay Letter of Credit Drawings. (a) The
Company agrees to reimburse the Bank, for the account of the applicable
Fronting Bank, on each date on which the Bank notifies the Company of the date
and amount of a draft presented under any Letter of Credit and paid by the
Fronting Bank with respect thereto or otherwise paid in accordance with the
terms of the Letter of Credit Request relating thereto, for the amount of (i)
such draft so paid and (ii) any customary administrative and out-of-pocket
taxes, fees, charges or other costs or expenses incurred by the Fronting Bank
in connection with such payment (each such amount so paid until reimbursed, an
"Unpaid Drawing"). Each such payment shall be made in Dollars and in
immediately available funds to the Bank at its address for notices specified
herein; provided, however, that the Company authorizes the Bank to, and the
Bank agrees that it will, debit the Cash Collateral Account in amounts
sufficient to reimburse the Fronting Bank for any Unpaid Drawings; provided,
further, that the Bank shall not be obligated to withdraw from the Cash
Collateral Account any amount if the balance in the Cash Collateral Account
would, if such withdrawal occurred, be less than the L/C Coverage Requirement
for all outstanding Letters of Credit. Interest shall be payable to the Bank
on any and all amounts remaining unpaid by the Company under this Section 2.2
from 12:00 Noon, New York City time, on the date such amounts become payable
until the third Business Day thereafter at the Alternate Base Rate plus [1]%
and thereafter until payment in full (after as well as before judgment) at a
rate per annum equal to the Alternate Base Rate plus [3]%; it being understood
that if the Bank debits the Cash Collateral Account in amounts sufficient to
reimburse the Fronting Bank for any Unpaid Drawing pursuant to the immediately
preceding sentence, no interest will be paid under this Agreement with respect
to such Unpaid Drawing.
(b) The Company's obligations under this Section 2.2 to reimburse the
Bank with respect to Unpaid Drawings (including, in each case, interest
thereon) shall be absolute and unconditional under any and all circumstances
and irrespective of any set-off, counterclaim or defense to payment which the
Bank or the Company has or has had against any Fronting Bank, the Bank or any
beneficiary or transferee of any Letter of Credit, including, without
limitation, any defense based upon the failure of any drawing under a Letter
of Credit (each a "Drawing") to conform to the terms of the Letter of Credit
or any non-application or misapplication by the beneficiary of the proceeds of
such Drawing; provided, however, that the Company shall not be obligated to
reimburse the Bank for any wrongful payment made by the Fronting Bank under a
Letter of Credit as a result of acts or omissions constituting willful
misconduct or gross negligence on the part of the Fronting Bank.
Section 2.3 Commitment Fee; Letter of Credit Fee; Other Fees. (a)
The Borrower shall pay to the Bank (for its own account) a commitment fee at
the rate of # of 1% per annum (computed on the basis of actual days elapsed
over a year of 360 days) on the average daily unused portion of the
Commitment. The commitment fee shall accrue from and including the Effective
Date to but excluding the date on which the Commitment shall have been
terminated in its entirety pursuant to this Agreement. Such commitment fee
shall be payable in arrears quarterly on the 15th day of each March, June,
September and December, commencing on the first such date after the Effective
Date, and upon the termination of the Commitment.
<PAGE> 10
(b) The Company agrees to pay to the Bank (for its own account) a
letter of credit fee (the "Letter of Credit Fee") with respect to each Letter
of Credit issued pursuant to this Agreement, for the period from the date of
issuance of such Letter of Credit until the date of termination of such Letter
of Credit, payable quarterly in advance, the first such payment to be due on
the date of issuance of such Letter of Credit and each subsequent payment to
be due on the same date every three calendar months thereafter, computed at
the rate of 1% per annum on the Stated Amount of such Letter of Credit during
the period of calculation.
(c) The Company shall pay to the Bank (for its own account), on the
Effective Date, an amendment fee in the amount of # of 1% of the Commitment.
(d) The Company shall pay to the Bank, for the account of the
Fronting Bank with respect to each Letter of Credit, the following fees on the
following dates, each such fee to be payable in the amount or at the rate then
generally being charged by the applicable Fronting Bank: (i) upon issuance of
each Letter of Credit, an issuance fee and a processing fee and (ii) upon each
amendment of each Letter of Credit, an amendment or reissuance fee. In
addition, with respect to each Letter of Credit issued by any Fronting Bank
other than the Bank, the Company shall pay to the Bank, for the account of the
Fronting Bank, a fronting fee with respect to such Letter of Credit, which
fronting fee shall be payable in such amounts and on such dates as shall be
agreed upon by the Company and the Fronting Bank and notified to the Bank
prior to the issuance of such Letter of Credit.
Section 2.4 Optional Termination or Reduction of Commitment. The
Borrower may, upon at least one Business Day's prior written notice to the
Bank, terminate at any time, or proportionately reduce from time to time by an
aggregate amount of $1,000,000 or any larger integral multiple thereof, the
unused portion of the Commitment; provided, however, that the Borrower shall
not at any time reduce the Commitment to an amount less than the aggregate
Letter of Credit Outstandings. If the Commitment is terminated in its
entirety, all accrued commitment fees shall be payable on the effective date
of such termination.
Section 2.5 Requirements of Law. In the event that the Bank or any
Fronting Bank shall have determined that any change in any Requirement of Law
regarding capital adequacy or in the interpretation or application thereof or
compliance by the Bank or such Fronting Bank, as the case may be, with any
request or directive regarding capital adequacy (whether or not having the
force of law) from any Governmental Authority made subsequent to the date
hereof does or shall have the effect of reducing the rate of return on the
Bank's or such Fronting Bank's capital, as the case may be, as a consequence
of its obligations hereunder to a level below that which the Bank or such
Fronting Bank could have achieved but for such change or compliance (taking
into consideration such the Bank's or such Fronting Bank's policies with
respect to capital adequacy) by an amount deemed by the Bank or such Fronting
Bank, as the case may be, to be material, then from time to time, after
submission by the Bank to the Company, or such Fronting Bank to the Bank and
the Company, of a written request therefor (setting forth the basis of such
claim), the Company shall pay to the Bank, for its own account or the account
of such Fronting Bank, as the case may be, such additional amount or amounts
as will compensate the Bank or such Fronting Bank for such reduction.
Section 2.6 Payments. All payments to be made by the Company
hereunder, whether on account of any Unpaid Drawing, interest, fees or
otherwise, shall be made without set-off or counterclaim and shall be made
prior to 12:00 Noon, New York City time, on the due date thereof to the Bank,
at the Bank's office specified in Section 7.1, in Dollars and in immediately
available funds. If any payment hereunder becomes due and payable on a day
other than a Business Day, such payment shall be extended to the next
succeeding Business Day, and, with respect to payments of Unpaid Drawings,
interest thereon shall be payable at the then applicable rate during such
extension.
<PAGE> 11
Section 2.7 Taxes. All payments made by the Company under this
Agreement shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding net income taxes and franchise taxes
(imposed in lieu of net income taxes) imposed on the Bank or any Fronting
Bank, as a result of any present or former connection (excluding a connection
arising solely from the Bank or such Fronting Bank having executed, delivered,
performed its obligations or received a payment under, or enforced, this
Agreement or the other agreements or instruments required to be executed in
connection herewith) between the Bank or such Fronting Bank, as the case may
be, and the jurisdiction of the government or taxing authority imposing such
tax or any political subdivision or taxing authority thereof or therein (all
such non-excluded taxes, levies, imposts, duties, charges, fees, deductions
and withholdings being hereinafter called "Taxes"). If any Taxes are required
to be withheld from any amounts payable to the Bank or any Fronting Bank
hereunder, the amounts so payable shall be increased to the extent necessary
to yield to the Bank or such Fronting Bank, as the case may be (after payment
of all Taxes), interest or any such other amounts payable hereunder at the
rates or in the amounts specified in this Agreement. Whenever any Taxes
relating to withholding are payable by the Company in connection with any
Letter of Credit issued hereunder, as promptly as possible thereafter the
Company shall send to the Bank and to the applicable Fronting Bank (if other
than the Bank) a certified copy of an original official receipt received by
the Company showing payment thereof. If the Company fails to pay any Taxes
when due to the appropriate taxing authority or fails to remit to the Bank
(for its own account or the account of the applicable Fronting Bank, as the
case may be) the required receipts or other required documentary evidence, the
Company shall indemnify the Bank and such Fronting Bank for any incremental
taxes, interest or penalties that may become payable by the Bank or such
Fronting Bank, as the case may be, as a result of any such failure. If the
Bank or a Fronting Bank shall become aware that it is entitled to receive a
refund in respect of Taxes in respect of which it has been paid additional
amounts by the Company pursuant to this Section 2.6, it shall promptly notify
the Company and the Bank of the availability of such refund and shall, within
30 days after receipt of a request by the Company, apply for such refund. If
the Bank or a Fronting Bank receives a refund in respect of any Taxes in
respect of which it has been paid additional amounts by the Company pursuant
to this Section 2.6, it shall promptly notify the Company and the Bank of such
refund and shall, within 30 days after receipt of a request by the Company (or
promptly upon receipt, if the Company has requested application for such
refund pursuant hereto), repay such refund to the Company. The Bank and any
Fronting Bank shall use reasonable efforts to file any certificate or document
if the making of such a filing would avoid the need for or reduce the amount
of any such additional amounts which may thereafter accrue and would not be
disadvantageous to the Bank or such Fronting Bank, as the case may be. The
agreements in this Section shall survive the termination of this Agreement and
the payment of all amounts payable hereunder.
Section 2.8 Priority and Liens. (a) The Company hereby covenants,
represents and warrants that pursuant to Section 364(c)(1) of the Bankruptcy
Code, the Obligations shall constitute allowed administrative expense claims
in the Chapter 11 Case having priority over any and all administrative
expenses of the kind specified in Section 503(b) or 507(b) of the Bankruptcy
Code. Notwithstanding anything to the contrary contained herein, all of the
claims referred to in this Section 2.7(a) and granted in the Chapter 11 Case
to the Bank shall be subject in the event of the occurrence of a Default or an
Event of Default, (i) to allowed accrued and unpaid professional fees and
disbursements incurred by the Company and any statutory committee appointed in
the Chapter 11 Case in an amount not to exceed $7,500,000 in the aggregate to
the extent allowed by the Bankruptcy Court (exclusive of compensation
previously awarded, whether or not paid) and (ii) to fees pursuant to 28
U.S.C. # 1930 (collectively, the "Carve-Out").
(b) The Bank agrees that so long as no Event of Default shall have
occurred, the Company shall be permitted to pay administrative expenses of the
kind specified in Section 503(b) of the Bankruptcy Code incurred in the
ordinary course of the Company's business, and compensation and reimbursement
of expenses
<PAGE> 12
allowed and payable under Sections 330 and 331 of the Bankruptcy Code, as
the same may be due and payable, and checks issued therefor shall be honored
upon presentment (to the extent of available funds) and such payments shall not
be applied against the Carve-Out.
(c) The Company hereby covenants, represents and warrants that,
pursuant to Section 364(c)(2) of the Bankruptcy Code, the Obligations shall at
all times be secured by a first priority senior security interest in and Lien
upon all Collateral.
Section 2.9 Right of Set-Off. Subject to the provisions of Article
VI, upon the occurrence and during the continuance of any Event of Default,
the Bank is hereby authorized at any time and from time to time, to the
fullest extent permitted by law and without further order of or application to
the Bankruptcy Court, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by the Bank to or for the credit or the account
of the Company against any and all of the Obligations of the Company now or
hereafter existing under this Agreement and the Security Agreement,
irrespective of whether or not the Bank shall have made any demand under this
Agreement or the Security Agreement and although such Obligations may be
unmatured. The Bank agrees promptly to notify the Company after any such set-
off and application made by the Bank; provided that the failure to give such
notice shall not affect the validity of such set-off and application. The
rights of the Bank under this Section are in addition to other rights and
remedies which the Bank may have upon the occurrence and during the
continuance of any Event of Default.
Section 2.10 Rating Downgrade; Alternative Fronting Banks. (a)
During the continuation of any Rating Downgrade Period, the Borrower may elect
to designate a financial institution other than the Bank (which institution
shall be reasonably acceptable to the Bank) to act as Fronting Bank with
respect to any Letter of Credit requested to be issued during such Rating
Downgrade Period. If the Company so elects to designate an alternative
Fronting Bank with respect to any Letter of Credit, in lieu of the Letter of
Credit Request otherwise required pursuant to Section 2.1, the Company shall,
at least two Business Days prior to the issuance of such Letter of Credit,
deliver to the Bank the following: (i) the identity of such other Fronting
Bank, (ii) a copy of the letter of credit request submitted to such other
Fronting Bank, (iii) evidence satisfactory to the Bank that the conditions set
forth in Section 2.1(a)(ii), (iii) and (iv) have been satisfied with respect
to the issuance of such Letter of Credit by such Fronting Bank and (iv) an
executed agreement of such Fronting Bank indicating that such Fronting Bank
has agreed to become bound by the terms of this Agreement with respect to such
Letter of Credit. Delivery of such documents to the Bank shall be deemed to
constitute a representation and warranty by the Company that the conditions
set forth in Sections 2.1(a)(ii), (iii) and (iv) and Article III have been
satisfied with respect to such Letter of Credit.
(b) If on the Termination Date any Letter of Credit issued by a
Fronting Bank other than the Bank shall be outstanding, then, upon request by
the Bank or such Fronting Bank, the Company shall use its reasonable best
efforts to immediately cause all such outstanding Letters of Credit to be
returned undrawn to such Fronting Bank. Such Fronting Bank shall promptly
notify the Bank upon receipt of any such returned Letter of Credit.
(c) Immediately upon the issuance by any Fronting Bank other than the
Bank of any Letter of Credit, such Fronting Bank shall be deemed to have sold
and transferred to the Bank, and the Bank shall be deemed irrevocably and
unconditionally to have purchased and received from such Fronting Bank,
without recourse or warranty, a participation in such Letter of Credit equal
to 100% of such Fronting Bank's interest in such Letter of Credit, each
drawing made thereunder and the obligations of the Borrower under this
Agreement with respect thereto, and any security therefor.
(d) In the event that any Drawing is made under any Letter of Credit
issued by a Fronting Bank other than the Bank, upon notice by such Fronting
Bank to the Bank of such Drawing and of the amount of the Unpaid Drawing with
respect thereto, the Bank shall promptly and unconditionally pay to the
Fronting Bank the
<PAGE> 13
amount of such Unpaid Drawing in Dollars and in immediately available funds.
If the Fronting Bank so notifies the Bank prior to 11:00 A.M, New York City
time, on any Business Day, the Bank shall make available to such Fronting Bank
the amount of such payment on such Business Day. If and to the extent the Bank
shall not make such amount available to the Fronting Bank on a timely basis, the
Bank agrees to pay to the Fronting Bank forthwith on demand, such amount
(together with interest thereon for each day from such date until the date such
amount is paid to the Fronting Bank at the Federal Funds Effective Rate). The
Bank shall also pay to the Fronting Bank, prior to 3:00 P.M. on the date when
such amounts are due from the Company, all amounts payable by the Company to
such Fronting Bank pursuant to Section 2.3(d). The Bank shall also pay to the
Fronting Bank, within one Business Day of receipt thereof from the Company, all
other amounts received from the Company for the account of such Fronting Bank
pursuant to the terms hereof.
(e) Upon the request of the Bank, each Fronting Bank shall furnish to
the Bank copies of any Letter of Credit to which such Fronting Bank is party
and such other documentation as may reasonably be requested by the Bank.
(f) The obligations of the Bank to make payments to each Fronting
Bank with respect to Letters of Credit issued by such Fronting Bank shall be
irrevocable and not subject to any qualification or exception whatsoever and
shall be made in accordance with the terms and conditions of this Agreement
under all circumstances, including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of this Agreement;
(ii) the existence of any claim, set-off, defense or other
right which the Company may have at any time against a beneficiary named
in a Letter of Credit, any transferee of any Letter of Credit (or any
Person for whom any such transferee may be acting), the Fronting Bank or
any other Person, whether in connection with this Agreement, any Letter
of Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transaction between the Company
and the beneficiary named in any such Letter of Credit);
(iii) any draft, certificate or any other document presented
under the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of this Agreement or the
Final Order; or
(v) the occurrence of any Default or Event of Default.
(g) Each Fronting Bank hereby irrevocably designates and appoints
the Bank as its agent to receive payments on its behalf pursuant to Section
2.2 or 2.3 and to take action with respect to the Collateral and any other
collateral security existing from time to time securing payment of the
Obligations, and to exercise such powers and perform such duties as are
reasonably incidental thereto. The Bank reserves the right, in its sole
discretion in each instance, to exercise or refrain from exercising any rights
or remedies which the Bank may have under the Security Agreement, including,
without limitation, the right to foreclose and sell and otherwise deal with,
or refrain from foreclosing and selling or otherwise dealing with any
Collateral or any other collateral security existing from time to time
securing payment of the Obligations or to enforce, or refrain from enforcing,
the Security Agreement, and no Fronting Bank shall be entitled to exercise any
rights thereunder. The Security Agreement and all Collateral shall be held by
the Bank in its name, but to the extent of any Fronting Bank's interest in the
Letters of Credit in accordance with this Agreement, the Bank agrees that the
Collateral and the Security Agreement shall be held by the Bank as agent for
such Fronting Bank.
<PAGE> 14
(c) The Bank shall not have any duties or responsibilities to any
Fronting Bank, except those expressly set forth in this Section 2.9, or any
fiduciary relationship with any Fronting Bank, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or the Security Agreement. Neither the Bank nor any of
its officers, directors, employees, agents, attorneys-in-fact or affiliates
shall be liable for any action lawfully taken or omitted to be taken by it or
such person under or in connection with this Agreement, the Security Agreement
or any document delivered pursuant hereto or thereto, except that it or such
person shall be liable for its or such person's own gross negligence or
willful misconduct.
(d) Each Fronting Bank severally agrees to indemnify the Bank
against all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind whatsoever
which may at any time be imposed on, incurred by or asserted against the Bank
relating to the gross negligence or willful misconduct, or alleged gross
negligence or willful misconduct, of such Fronting Bank.
ARTICLE III. CONDITIONS PRECEDENT
Section 3.1 Conditions Precedent to Effectiveness of Agreement.
This Agreement shall become effective on the date (the "Effective Date") on
which all of the following conditions are satisfied, whether or not the
Company requests the issuance of a Letter of Credit on such date:
(a) receipt by the Bank of an opinion of ______________, General
Counsel of the Company, in form and substance satisfactory to the Bank
(which opinion may be given in reliance on opinions delivered by local
counsel or special counsel or the provisions of the Final Order);
(b) receipt by the Bank of evidence satisfactory to it that all
conditions precedent to the issuance of a Letter of Credit have been
met, including, without limitation, a certificate signed by the chairman
or president or any vice president and by the chief financial officer or
treasurer or controller of the Company, to the effect set forth in
clauses (c), (d), (e), (f) and (h) of Section 3.2;
(c) receipt by the Bank of (i) a certified copy of the Final
Order which shall have been entered by the Bankruptcy Court on such
notice and with such terms as may be satisfactory to the Bank and the
Company and which shall not have been reversed, modified, amended,
vacated or stayed and (ii) evidence, satisfactory to the Bank, that the
Company has filed with the Securities and Exchange Commission ("SEC") a
declaration, in form and substance satisfactory to the Bank, pursuant to
Section 7(b) of PUHCA, and that the SEC has issued an order, in form and
substance satisfactory to the Bank (the "SEC Order") in response to such
declaration approving this transaction;
(d) the Bank shall be satisfied that, in its judgment, there is
no (i) injunction, stay, decree or order issued by any court or
arbitrator or any governmental body, agency or official or (ii) action,
suit or proceeding pending or threatened against or affecting the
Company before any court or arbitrator or any governmental body, agency
or official in which there is a reasonable possibility of an adverse
decision, in either case, which could reasonably be expected to have a
Material Adverse Effect or which in any manner draws into question the
validity of this Agreement, the Security Agreement, the Final Order or
the SEC Order;
(e) receipt by the Bank of an amount equal to the L/C Coverage
Requirement for all Letters of Credit issued by the Bank under the
Original Agreement and outstanding on such date deposited in the Cash
Collateral Account in accordance with the Security Agreement;
(f) receipt by the Bank of all documents it may reasonably
request, including, but not limited to, Certificates of Incorporation
and good standing certificates and board resolutions, relating to the
existence of
<PAGE> 15
the Company and its Subsidiaries (other than TCO), the corporate
authority for and validity hereof, and any other matters relevant hereto,
all in form and substance reasonably satisfactory to the Bank;
(g) all actions necessary or advisable in order to establish,
protect and perfect the interest of the Bank in the Collateral pursuant
to the Security Agreement which the Bank has requested the Company to
make or take as a condition to the initial extension of credit hereunder
shall have been made or taken (it being understood that the failure to
request a particular action shall be without prejudice to the rights of
the Bank set forth in Section 5.8);
(h) receipt by the Bank of all fees owed hereunder or under the
Original Agreement including, without limitation, all fees payable
pursuant to Section 2.3;
(i) receipt by the Bank from each bank (other than the Bank)
party to the Original Agreement of a letter, in form and substance
satisfactory to the Bank, evidencing that such bank (A) consents to the
termination of its commitment under the Original Agreement, (B)
acknowledges receipt of payment in full of all principal of and interest
on all loans outstanding under the Original Agreement, all interest,
fees and other amounts payable to it in respect of all letters of credit
issued thereunder and all other amounts payable to such bank under the
Original Agreement (including all fees and other amounts payable as a
result of the termination of its Commitment under the Original
Agreement) and (C) in the case of any fronting bank (other than the
Bank) under the Original Agreement, acknowledges that no letters of
credit issued by such fronting bank are outstanding under the Original
Agreement; and
(j) each of this Agreement and the Security Agreement shall have
been duly executed and delivered to the Bank by each party thereto and
shall be in form and substance satisfactory to the Bank.
Section 3.2 Conditions Precedent to Each Letter of Credit. Each
issuance of a Letter of Credit by the Bank shall be subject to the
satisfaction of the following conditions precedent:
(a) receipt by the Bank of a Letter of Credit Request as required
by Section 2.1;
(b) receipt by the Bank of an amount equal to the L/C Coverage
Requirement for such Letter of Credit deposited in the Cash Collateral
Account in accordance with the Security Agreement;
(c) immediately after such issuance of such Letter of Credit, no
Default or Event of Default shall have occurred and be continuing;
(d) the representations and warranties of the Company contained
in this Agreement and the Security Agreement, or otherwise made in
writing in connection herewith and therewith, shall be true and correct
in all material respects on and as of the date of such issuance of such
Letter of Credit with the same effect as if made on and as of such date
(unless stated to relate to a specific earlier date, in which case such
representations and warranties shall be true and correct as of such
earlier date);
(e) each of the Final Order and the SEC Order shall be in full
force and effect and shall not have been modified or amended in any
respect (other than to correct non-substantive errors) without the
written consent of the Bank, unless such amendment or modification is as
a result of an amendment, waiver or modification of this Agreement or
the Security Agreement approved by the Bank, and neither the Final Order
or the SEC Order shall be subject to appeal or shall have been reversed
or vacated;
<PAGE> 16
(f) immediately after giving effect to such issuance of such
Letter of Credit, the Letter of Credit Outstandings shall not exceed the
Commitment;
(g) all corporate and judicial proceedings and all instruments
and agreements in connection with the transactions contemplated by this
Agreement shall be satisfactory in form and substance to the Bank, and
the Bank shall have received all information and copies of all documents
and papers, including records of corporate and judicial proceedings,
which the Bank may have reasonably requested in connection therewith,
such documents and papers where appropriate to be certified by proper
corporate, governmental or judicial authorities; and
(h) all fees payable pursuant hereto on or before the date of
such issuance of such Letter of Credit shall have been paid in full.
Each Letter of Credit Request hereunder shall be deemed to be a representation
and warranty by the Company on the date of such Letter of Credit Request as to
the facts specified in clauses (c), (d), (e), (f) and (h) of this Section 3.2.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to enter into this Agreement and to
issue Letters of Credit hereunder, the Company represents and warrants to the
Bank as follows:
Section 4.1 Organization and Authority. Each of the Company and
each of its Subsidiaries (other than TCO) (a) is a corporation duly organized
and validly existing under the laws of the state of its incorporation and is
duly qualified as a foreign corporation and is in good standing in each
jurisdiction in which the failure to so qualify would have a Material Adverse
Effect, (b) has the requisite corporate power and authority to effect the
transactions contemplated hereby and by the Security Agreement and (c) has all
requisite corporate power and authority and the legal right to own, pledge,
mortgage and operate its properties as contemplated hereunder and under the
Security Agreement, and to conduct its business as now or currently proposed
to be conducted.
Section 4.2 Due Execution. The execution, delivery and
performance by the Company of each of this Agreement and the Security
Agreement are within the corporate powers of the Company, have been duly
authorized by all necessary corporate action, including the consent of
shareholders where required, and do not (a) contravene the charter or by-laws
of the Company, (b) violate any law (including, without limitation, the
Securities Exchange Act of 1934 or PUHCA) or regulation (including, without
limitation, Regulations G, T, U or X of the Board), or any order or decree of
any court or governmental instrumentality, (c) conflict with or result in a
breach of or constitute a default under, any material indenture, mortgage or
deed of trust entered into after the Filing Date or any material lease,
agreement or other instrument entered into after the Filing Date binding on
the Company, any of its Subsidiaries or any of their respective properties,
(d) result in or require the creation or imposition of any Lien other than the
Liens granted pursuant to this Agreement and the Security Agreement or (e)
require the consent, authorization by or approval of or notice to or filing or
registration with any governmental body, agency, authority, or regulatory body
other than the entry of the Final Order and the SEC Order. This Agreement has
been duly executed and delivered by the Company. This Agreement is, and the
Security Agreement, when executed and delivered will be, a legal, valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms.
Section 4.3 Effectiveness of Order. The Final Order is in full
force and effect.
Section 4.4 Information. (a) The consolidated balance sheet of
the Company and its consolidated Subsidiaries as of December 31, 1993 and the
related consolidated statements of income, changes in shareholders' equity and
cash flows
<PAGE> 17
for the fiscal year then ended, reported on by Arthur Andersen & Co. and
set forth in the Company's 1993 Form 10-K, a copy of which has been delivered to
the Bank, and the balance sheet of the Company as of December 31, 1993 and the
related statements of income, changes in shareholders' equity and cash flows for
the fiscal year then ended, fairly present, in conformity with generally
accepted accounting principles, the consolidated financial position of the
Company and its consolidated Subsidiaries and the financial position of the
Company as of such date and their respective results of operations and cash
flows for such fiscal year.
(b) The unaudited consolidated and consolidating balance sheets
of the Company and its consolidated Subsidiaries as of March 31, 1993 and the
related unaudited consolidated statements of income, changes in shareholders'
equity and cash flows for the three months then ended, set forth in the
Company's quarterly report for the fiscal quarter ended March 31, 1994, copies
of which have been delivered to the Bank, fairly present, in conformity with
generally accepted accounting principles applied on a basis consistent with
the financial statements referred to in paragraph (a) of this Section, the
consolidated financial position of the Company and its consolidated
Subsidiaries as of such date and their consolidated results of operations and
cash flows for such three-month period (subject to normal year-end
adjustments).
(c) Other than as disclosed to the Bank in writing prior to the
date hereof, since June 30, 1993 there has been no material adverse change in
the business, financial position, results of operations or prospects of the
Company and its Subsidiaries (other than TCO) taken as a whole.
(d) Neither this Agreement, the Security Agreement, the Original
Agreement nor any agreement, document, certificate or statement furnished to
the Bank by or on behalf of the Company in connection with the transactions
contemplated hereby or thereby or filed in the Bankruptcy Court by or on
behalf of the Company in connection with the Chapter 11 Case, at the time it
was furnished or filed, contained any untrue statement of a material fact or
omitted to state any fact necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading; the
projections contained therein were prepared in good faith and represented at
the time they were furnished, the Company's best estimate of the information
purported to be shown therein, and the Company is not aware of any information
that would lead it to believe that such projections or other information are
misleading in any material respect.
Section 4.5 Litigation. Other the Chapter 11 Case or as
otherwise disclosed to the Bank in writing prior to the date hereof, there is
no (a) injunction, stay, decree or order issued by any court or arbitrator or
any governmental body, agency or official or (b) action, suit or proceeding
pending against, or to the knowledge of the Company threatened against or
affecting, the Company or any of its Subsidiaries before any court or
arbitrator or any governmental body, agency or official which could reasonably
be expected to have a Material Adverse Effect.
Section 4.6 Security Interest. The Final Order and the Security
Agreement will create and grant to the Bank a valid, first priority perfected
and enforceable security interest in and lien upon the Collateral, securing
the Obligations, superior in right to any other Liens, existing or future,
which the Company or any creditors thereof or any other Person, may have
against such Collateral or interests therein, other than Permitted Liens.
Section 4.7 Not an Investment Company. The Company is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
Section 4.8 No Conflicting Requirements. Neither the Company nor
any Subsidiary is in violation or in default under any term or provision of
any charter, by-law, statute, rule, regulation, judgment, decree, order, writ
or injunction applicable to it, such that such violations or defaults in the
aggregate could reasonably be expected to have a Material Adverse Effect.
<PAGE> 18
Section 4.9 Restrictions on the Company. Neither the Company nor
any of its Subsidiaries (other than TCO) is a party to any agreement or
instrument or subject to any legislative or charter or other corporate
restriction or any judgment, order, writ, injunction, decree, rule or
regulation materially and adversely affecting the business, operations,
properties or assets or the financial condition of the Company or its
Subsidiaries (other than TCO), taken as a whole.
Section 4.10 No Defenses. The Company is truly and justly
indebted to the Bank for the Obligations, and does not currently have, and
agrees that it will not at any time hereafter assert, any defense, offset or
counterclaim with respect to the reimbursement of amounts drawn under Letters
of Credit, except as such defense offset or counterclaim relates to the gross
negligence or willful misconduct of the Bank.
ARTICLE V. COVENANTS
The Company agrees that during the period commencing on the
Effective Date and ending on the later of the Termination Date and the date on
which all amounts owing in respect of all Letters of Credit or otherwise
arising hereunder or under the Security Agreement are paid:
Section 5.1 Information. The Company will deliver to the Bank:
(a) as soon as available, and in any event within 90 days after
the end of each fiscal year of the Company, the consolidated and
consolidating balance sheets of the Company and its consolidated
Subsidiaries as of the end of such fiscal year and the related
consolidated and consolidating statements of earnings, changes in
consolidated shareholders' equity and cash flows for such fiscal year,
setting forth in each case in comparative form the figures for the
previous fiscal year, all (except for the consolidating statements)
reported on in a manner acceptable to the Securities and Exchange
Commission by Arthur Andersen & Co or other independent public
accountants of recognized standing;
(b) as soon as available, and in any event within 45 days after
the end of each of the first three quarters of each fiscal year of the
Company, consolidated and consolidating balance sheets of the Company
and its consolidated Subsidiaries as of the end of such quarter and the
related consolidated and consolidating statements of earnings, changes
in consolidated shareholders' equity and consolidated cash flows for
such quarter and for the portion of the Company's fiscal year ended at
the end of such quarter, setting forth in the case of each consolidated
financial statement in comparative form the figures for the
corresponding quarter and the corresponding portion of the Company's
previous fiscal year;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of
the chief financial officer or the chief accounting officer of the
Company stating (i) that the Company is responsible for the preparation
and fair presentation of each balance sheet and the related statements
of earnings, changes in shareholders' equity and cash flows of the
Company in conformance with generally accepted accounting principles,
(ii) that such officer has no reason to believe that such balance sheets
and statements (other than consolidating statements) have not been
prepared in conformance with generally accepted accounting principles
and (iii) whether any Default or Event of Default exists on the date of
such certificate and, if any Default or Event of Default then exists,
setting forth the details thereof and the action which the Company is
taking or proposes to take with respect thereto;
(d) as soon as available, copies of all final annual budgets and
business plans, forecasts and other similar materials prepared by or for
the Company and any of its Subsidiaries;
(e) within five Business Days of any Responsible Officer of the
Company obtaining knowledge of any Default or Event of Default, if such
<PAGE> 19
Default or Event of Default is then continuing, a certificate of a
Responsible Officer of the Company setting forth the details thereof and
the action which the Company is taking or proposes to take with respect
thereto; and
(f) from time to time such additional information regarding the
financial position or business of the Company or any Subsidiary as the
Bank may reasonably request.
Section 5.2 Maintenance of Property; Insurance. The Company will
keep, and will cause each Subsidiary (other than TCO) to keep, all material
property useful and necessary in its business in good working order and
condition, ordinary wear and tear excepted; will maintain, and will cause each
such Subsidiary to maintain (either in the name of the Company or in such
Subsidiary's own name), either with financially sound and reputable insurance
companies or pursuant to a plan of self-insurance established in accordance
with sound and appropriate practices, insurance on all their property in at
least such amounts and against at least such risks as are usually insured
against in the same general area by companies of established repute engaged in
the same or a similar business; and will furnish to the Bank, upon written
request, full information as to the insurance carried.
Section 5.3 Compliance with Laws. (a) The Company will comply,
and cause each Subsidiary (other than TCO) to comply, in all material respects
with all applicable laws, ordinances, rules, regulations, and requirements of
Governmental Authorities (including, without limitation, ERISA and the rules
and regulations thereunder), except where (i) the failure to so comply would
not have a Material Adverse Effect or (ii) the necessity of compliance
therewith is contested in good faith by appropriate proceedings.
(b) The Company will comply with all court orders in the Chapter
11 Case.
Section 5.4 Inspection of Property; Books and Records. The
Company will keep, and will cause each Subsidiary (other than TCO) to keep,
proper books of record and account in which full, true and correct entries in
conformity with generally accepted accounting principles shall be made of all
dealings and transactions in relation to its business and activities; and will
permit, and cause each Subsidiary (other than TCO) to permit, representatives
of the Bank to visit and inspect any of their respective properties, to
examine and make abstracts from any of their respective books and records and
to discuss their respective affairs, finances and accounts with their
respective officers, appropriate employees, independent public accountants,
consultants and financial advisors all at such reasonable times, upon
reasonable notice and as often as may reasonably be desired.
Section 5.5 Chapter 11 Case. The Company will furnish monthly to
the Bank's counsel an index of all pleadings, motions, applications, judicial
information, financial information and other documents filed (and not under
seal) with the Bankruptcy Court by the Company or any other Person or (except
for such materials as the Company and the official committee receiving the
same shall determine in good faith are inappropriate for review by the Bank)
distributed by the Company to any official committee appointed in the Chapter
11 Case. The Company will provide to the Bank's counsel copies of any
documents described in such index promptly upon request by the Bank or the
Bank's counsel.
Section 5.6 Corporate Existence; No Change in Business. The
Company shall continue to, and shall cause each of its Subsidiaries (other
than TCO) to, do or cause to be done all things necessary to preserve, renew
and keep in full force and effect its corporate existence, material rights,
licenses, permits and franchises and comply in all material respects with all
laws and regulations applicable to it. Neither the Company nor any Subsidiary
(other than TCO) will engage in any business which is not directly related to
its business as conducted on the date hereof.
Section 5.7 Further Assurances; Security Interests. (a) Upon
the request of the Bank, the Company shall duly execute and deliver, or cause
to be
<PAGE> 20
duly executed and delivered, at the cost and expense of the Company,
such further instruments as may be necessary or proper, in the reasonable
judgment of the Bank, to provide the Bank a perfected Lien in the Collateral and
to carry out the provisions and purposes of this Agreement and the Security
Agreement.
(b) Upon the reasonable request of the Bank, the Company shall
promptly perform or cause to be performed any and all acts and execute or
cause to be executed any and all mortgages and other documents (including,
without limitation, the execution, amendment or supplementation of any
financing statement and continuation statement or other statement) for filing
under the provisions of the UCC and the rules and regulations thereunder, or
any other statute, rule or regulation of any applicable foreign, federal,
state or local jurisdiction, which are desirable, from time to time, in order
to grant and maintain in favor of the Bank the security interest in the
Collateral contemplated hereby and by the Security Agreement, subject to no
other Liens except as may be expressly permitted hereunder and under the
Security Agreement.
(c) The Company shall promptly undertake to deliver or cause to
be delivered to the Bank from time to time such other documentation, consents,
authorizations, approvals and orders in form and substance satisfactory to the
Bank, as the Bank shall deem reasonably advisable to perfect or maintain the
Lien of the Bank in the Collateral.
Section 5.8 Chapter 11 Claims and Liens. The Company will not
incur, create, assume, suffer or permit to exist or permit any Subsidiary to
incur, create, assume, suffer or permit to exist any claim against the Company
or any Subsidiary in the Chapter 11 Case which would be pari passu with or
senior to the claims of the Bank against the Company nor any Lien which would
be pari passu with or senior to the Liens of the Bank, nor will the Company
apply to the Bankruptcy Court for authority to do so.
ARTICLE VI. EVENTS OF DEFAULTS
If one or more of the following events (each, an "Event of
Default") shall have occurred and be continuing:
(a) the Company shall fail to pay when due (i) any amount
specified in Section 2.2 or (ii) any other amount required to be paid by
the Company hereunder and any such failure shall remain unremedied for
three Business Days; or
(b) the Company shall fail to observe or perform its covenants
contained in Section 5.1(e) or Section 5.5; or
(c) the Company or any Subsidiary shall fail to observe or
perform any covenant or agreement contained in this Agreement or in the
Security Agreement (other than those covered by clauses (a) or (b)
above) for 20 days after the Company has knowledge of such failure; or
(d) any representation, warranty, certification or statement made
by the Company or any Subsidiary in this Agreement or the Security
Agreement or in any certificate, financial statement or other document
delivered pursuant hereto or thereto shall prove to have been incorrect
in any material respect when made (or deemed made); or
(e) this Agreement or the Security Agreement shall cease to be in
full force and effect and valid, or any security interest or Lien
purported to be created hereby thereby shall cease to be valid and
perfected or the Company or any Subsidiary shall so have asserted; or
(f) the Final Order shall be vacated or reversed or shall be
modified, supplemented or amended in any respect (except as provided in
Section 3.2(e)) or the Company shall apply to the Bankruptcy Court for
authority to do so; or
(g) the Bankruptcy Court shall enter an order (i) dismissing the
Chapter 11 Case, (ii) converting the Chapter 11 Case to a case under
<PAGE> 21
Chapter 7 of the Bankruptcy Code, (iii) appointing a trustee in the
Chapter 11 Case or (iv) appointing an examiner with enlarged powers
(powers beyond those set forth in Sections 1106(a)(3) and (4) of the
Bankruptcy Code) under Section 1106(b) of the Bankruptcy Code; provided,
however, that appointment of an examiner with enlarged powers based upon
a finding of fraud or dishonesty by the Company's management,
incompetence of the Company's management or mismanagement or
irregularities in the management of the Company's affairs shall not be
an Event of Default; or an application shall be filed for the approval
of, or there shall arise, any Lien on the Collateral (other than those
of the Bank hereunder or under the Security Agreement or as otherwise
expressly permitted hereby) in the Chapter 11 Case having a priority
(whether under Section 364 of the Bankruptcy Code or otherwise) superior
to or pari passu with that of the Bank; or an application shall be filed
for the approval of, or there shall arise, any claim in the Chapter 11
Case having a priority (whether under Section 364 of the Bankruptcy Code
or otherwise) pari passu with or superior to that of the Bank; or the
Company shall pay, or apply to the Bankruptcy Court for authority to
pay, any Pre-Petition claim except as expressly contemplated by this
Agreement or otherwise approved in writing by the Bank; or the
Bankruptcy Court shall enter an order approving a disclosure statement
in connection with a plan of reorganization proposed by the Company, any
Subsidiary or any third party, which plan does not provide for payment
in full in cash of the Obligations on the Termination Date; or
(h) any judgments or orders as to a Post-Petition liability or
debt for the payment of money in excess of $10,000,000 in the aggregate
shall be rendered against the Company and either (i) enforcement
proceedings shall have been commenced and be continuing by any creditor
upon such judgment or order or (ii) there shall be any period of 15
consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in
effect; or
(i) any non-monetary judgment or order with respect to a
Post-Petition event shall be rendered against the Company which does or
could reasonably be expected to (i) have a Material Adverse Effect or
(ii) cause a material decrease in the value of the Collateral, and in
each case there shall be any period of 10 consecutive days during which
a stay of enforcement of such judgement or order by reason of a pending
appeal or otherwise, shall not be in effect; or
(j) the Bankruptcy Court shall enter an order granting relief
from the automatic stay applicable under Section 362 of the Bankruptcy
Code to a party to any Pre-Petition action, suit or proceeding against
the Company, which action, suit or proceeding (x) could reasonably be
expected to materially adversely affect the business, consolidated
financial position or consolidated results of operations of the Company
and its consolidated Subsidiaries or (y) draws into question the
validity of this Agreement or the Security Agreement or could materially
adversely affect the ability of the Company or any of its Subsidiaries
to perform any of their obligations hereunder or thereunder;
then, and in every such event and at any time thereafter during the
continuance of such event, without further order of or application to the
Bankruptcy Court, the Bank may take any or all of the following actions, at
the same or different times: (i) set-off amounts in the Company's accounts
deposited with the Bank or otherwise take steps to foreclose upon Collateral
(as set forth in the Security Agreement) and/or (ii) upon seven (7) days'
prior notice to the Company and the official committees in the Chapter 11 Case
exercise such remedies as are provided for elsewhere in this Agreement or may
otherwise be available to it under applicable law or in equity. Upon the
occurrence of any Event of Default described in this Article VI which shall be
continuing, the Bank may, in its sole discretion, but shall not be obligated
to, by notice of default to the Company, declare all amounts owing or
contingently owing hereunder to be forthwith due and payable, and the same
shall thereupon become due and payable without demand, presentment, protest or
further notice of any kind, all of which are hereby expressly waived by the
Company.
<PAGE> 22
ARTICLE VII. MISCELLANEOUS
Section 7.1 Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including bank wire
or telecopy or similar writing) and shall be given to such party: (a) in the
case of the Company or the Bank, at its address or telecopy number set forth
on the signature pages hereof or (b) in the case of the official committees in
the Chapter 11 Case or any party, at such other address or telecopy number as
such party may hereafter specify for such purpose by notice to the Bank and
the Company. Each such notice, request or other communication shall be
effective (i) if given by telecopy, when such telecopy is transmitted to the
telecopy number specified in this Section and such telecopy is electronically
or telephonically confirmed, (ii) if given by mail, 96 hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iii) if given by any other means, when delivered at
the address specified in this Section; provided that notices to the Bank under
Article II shall not be effective until received.
Section 7.2 No Waivers. No failure or delay by the Bank in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and
not exclusive of any rights or remedies provided by law.
Section 7.3 Expenses; Documentary Taxes; Indemnification. (a)
The Company shall pay (i) all reasonable out-of-pocket expenses of the Bank,
including reasonable fees and disbursements of counsel for the Bank in
connection with the negotiation, preparation and administration of this
Agreement and the Security Agreement (including, without limitation, the
recording or filing of any security document and the reasonable out-of-pocket
fees and expenses and allocable internal costs incurred by the Bank in
connection with its audit or review of the Collateral) and any other document
contemplated hereby or thereby, any waiver or consent hereunder or thereunder
or any amendment hereof or thereof or any Default or alleged Default hereunder
or thereunder and (ii) if an Event of Default occurs, all out-of-pocket
expenses incurred by the Bank, including fees and disbursements of counsel, in
connection with such Event of Default and collection and other enforcement
proceedings resulting therefrom. The Company shall indemnify the Bank against
any transfer taxes, filing charges or taxes, documentary taxes, assessments or
charges made by any Governmental Authority by reason of the execution or
delivery of this Agreement, the Security Agreement or any related documents or
the recording or filing of any security document.
(b) The Company agrees to indemnify the Bank and hold the Bank
harmless from and against any and all liabilities, losses, damages, costs and
expenses of any kind (including, without limitation, the reasonable fees and
disbursements of counsel for the Bank) in connection with any claim asserted
against the Bank or investigative, administrative or judicial proceeding,
whether or not the Bank shall be designated a party thereto, which may be
incurred by the Bank relating to or arising out of this Agreement or the
transactions contemplated hereby or in connection with any press release
issued by the Company, or any document filed by the Company with the
Securities and Exchange Commission; provided that the Bank shall not have the
right to be indemnified hereunder for its own gross negligence or willful
misconduct as determined by a court of competent jurisdiction.
Section 7.4 Amendments and Waivers. Any provision of this
Agreement may be amended or waived if, but only if, such amendment or waiver
is in writing and is signed by the Company and the Bank, and if the rights and
duties of any Fronting Bank are adversely affected thereby in any material
respect, by such Fronting Bank).
Section 7.5 NEW YORK LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND BE GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT
PREEMPTED BY FEDERAL LAW.
<PAGE> 23
Section 7.6 Counterparts. This Agreement may be signed in any
number of counterparts (including telecopy counterparts), each of which shall
be an original, with the same effect as if the signature thereto and hereto
were upon the same instrument.
Section 7.7 WAIVER OF TRIAL BY JURY. THE PARTIES TO THIS
AGREEMENT WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
THEREBY.
Section 7.8 Effectiveness. This Agreement shall become effective
on the Effective Date, on which date the Original Agreement shall be amended
and restated in its entirety as set forth herein. Effective on the Effective
Date, the Letter of Credit Fees with respect to Letters of Credit issued by
the Bank under the Original Agreement shall be payable at the rate provided in
this Agreement.
Section 7.9 Confidentiality. The Bank agrees to keep
confidential (and to cause its officers, directors, employees, agents and
representatives to keep confidential) all materials, documents and information
which the Company may furnish to it pursuant hereto or in connection with the
transaction contemplated hereby (collectively, the "Information"), except that
the Bank shall be permitted to disclose Information (a) to its officers,
directors, employees, agents, counsel, advisors and representatives, (b) to
the extent (i) required by any subpoena or similar legal process or compelled
by any court acting in law or in equity or (ii) required by applicable laws or
regulations or requested by any bank regulatory authority, (c) to the extent
such Information (i) becomes publicly available other than as a result of the
Bank's breach of this Agreement, (ii) becomes available to it on a
non-confidential basis from a source other than the Company or (iii) was
available to it on a non-confidential basis prior to disclosure to it by the
Company, (d) to the extent the Company shall have consented to such disclosure
in writing; provided that (x) any Information constituting trade secrets is
protected by an appropriate confidentiality stipulation or order, in any legal
proceeding and (y) the Bank will use its best efforts to give the Company
prior notice in the case of any disclosure of Information made in accordance
with subparagraph (b)(i) of this Section 7.9.
<PAGE> 24
IN WITNESS WHEREOF, the parties hereto have caused this Amended
and Restated Secured Revolving Credit Agreement to be duly executed by their
respective authorized officers as of the day and year first above written.
THE COLUMBIA GAS SYSTEM, INC.
By:
------------------------------------
Name:
Title:
Address for Notices:
20 Montchanin Road
Wilmington, Delaware 19807
Attention: L.J. Bainter
Telephone: (302) 429-5597
Telecopy: (302) 429-5461
CHEMICAL
By:
------------------------------------
Name:
Title:
Address for Notices:
270 Park Avenue
New York, New York 10017
Attention: Thomas James
Telephone: (212) 270-1348
Telecopy: (212) 949-1459
<PAGE> 25
EXHIBIT A
FORM OF
AMENDED AND RESTATED SECURITY AGREEMENT
AMENDED AND RESTATED SECURITY AGREEMENT, dated as of _________,
1994, between THE COLUMBIA GAS SYSTEM, INC., a Delaware corporation and a
debtor-in-possession in proceedings under Chapter 11 of the Bankruptcy Code
(the "Company"), and CHEMICAL BANK, a New York banking corporation (the
"Bank," including any successor thereto, by merger or otherwise).
W I T N E S S E T H :
WHEREAS, pursuant to the Secured Revolving Credit Agreement, dated
as of September 23, 1991 (as heretofore amended and otherwise modified, the
"Original Agreement"), among the Company, the banks from time to time parties
thereto, and the Bank, as agent for such banks, a senior secured revolving
credit facility was provided by such banks to the Company in an aggregate
principal amount of up to $275,000,000 for the making of revolving credit
loans and for the issuance of Letters of Credit for the benefit of various
insurance companies, state agencies and other entities.
Upon the request of the Company, the banks party to the Original
Agreement have reduced their aggregate commitments thereunder to $100,000,000.
WHEREAS, to provide security for the obligations of the Company
under the Original Agreement, the Company provided to the Bank certain Liens
on certain property of the Company as more fully described in the Security
Agreement, dated as of September 23, 1991 (as heretofore amended, supplemented
or otherwise modified, the "Original Security Agreement"), between the Company
and the Bank; and
WHEREAS, in order to reduce certain fees currently payable under
the Original Agreement, the Company has requested that the Original Agreement
be amended to eliminate the commitments of all banks party thereto other than
the Bank, to release certain security under the Original Security Agreement
and to provide that the Commitment of the Bank shall be $25,000,000 and shall
be available only for the issuance of Letters of Credit from time to time.
WHEREAS, pursuant to the Amended and Restated Secured Revolving
Credit Agreement, dated as of the date hereof (as amended, supplemented or
otherwise modified from time to time, the "Restated Agreement"), between the
Company and the Bank, the Bank has agreed to issue letters of credit for the
account of the Company upon the terms and subject to the conditions set forth
therein; and
WHEREAS, it is a condition precedent to the agreement of the Bank
to issue the letters of credit under the Restated Agreement and to release
certain Collateral held under the Original Security Agreement, that the
Company shall have executed and delivered to the Bank this Amended and
Restated Security Agreement;
NOW, THEREFORE, in consideration of the premises and to induce the
Bank to enter into the Restated Agreement and to induce the Bank to issue
letters of credit under the Restated Agreement, the Company hereby agrees with
the Bank, to amend and restate the Original Security Agreement in its entirety
as follows:
1. Defined Terms. Unless otherwise defined herein, terms which
are defined in the Restated Agreement and used herein are so used as so
defined, and the following terms shall have the following meanings:
"Cash Collateral Account" has the meaning assigned to it in
paragraph 3(a) hereof.
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"Cash Equivalents" means (i) debt securities with maturities of 30
days or less from the date of acquisition, issued or fully guaranteed or
insured by the United States Government or any agency thereof, (ii)
banker's acceptances, certificates of deposits and time deposits with
maturities of 30 days or less from the date of acquisition, from the
Bank or any other commercial bank having capital and surplus in excess
of $1,000,000,000, (iii) commercial paper of a domestic issuer rated at
the date of acquisition at least A-1 by Standard & Poor's Corporation or
P-1 by Moody's Investors Service, Inc. and (iv) repurchase agreements in
respect of any of the above with the Bank or any other commercial bank
having capital and surplus in excess of $1,000,000,000.
"Code" means the Uniform Commercial Code from time to time in
effect in the State of New York.
"Collateral" means the Cash Collateral Account and all cash and
Cash Equivalents at any time on deposit therein or maintained pursuant
hereto and all Proceeds of any and all thereof.
"Obligations" means (a) all Obligations (as defined therein) under
the Restated Agreement and (b) all other obligations and liabilities of
the Company to the Bank or any Fronting Bank, whether direct or
indirect, absolute or contingent, due or to become due, or now existing
or hereafter incurred, which may arise under, out of, or in connection
with, the Restated Agreement, the Letters of Credit, each Letter of
Credit Request and any other document made, delivered or given in
connection therewith or herewith, whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses
(including, without limitation, all fees and disbursements of counsel to
the Bank that are required to be paid by the Company pursuant to the
terms of the Restated Agreement or this Security Agreement).
"Proceeds" means all "proceeds" as such term is defined in Section
9-306(1) of the Uniform Commercial Code in effect in the State of New
York on the date hereof and, in any event, shall include, without
limitation, all interest or other income from the cash from time to time
on deposit in the Cash Collateral Account, collections thereon or
distributions with respect thereto.
"Security Agreement" means this Amended and Restated Security
Agreement, as amended, supplemented or otherwise modified from time to
time.
2. Grant of Security Interest in the Collateral. As collateral
security for the prompt and complete payment and performance when due (whether
at the stated maturity, by acceleration or otherwise) of the Obligations, the
Company hereby grants to the Bank a security interest in the Collateral.
3. Establishment and Operation of Cash Collateral Account. (a)
Prior to the execution and delivery of this Security Agreement, there shall be
established with the Bank a collateral account in the name of the Bank (the
"Cash Collateral Account"). The Company shall from time to time deposit funds
into the Cash Collateral Account pursuant to the express provisions of this
Security Agreement requiring or permitting such deposit. At the time of
issuance of each Letter of Credit pursuant to the Restated Agreement, the
Company will deliver to the Bank for deposit in the Cash Collateral Account an
amount necessary to cause, after giving effect to such issuance of such Letter
of Credit, the balance in the Cash Collateral Account to equal the L/C
Coverage Requirement for all outstanding Letters of Credit. The Cash
Collateral Account shall be maintained and operated in accordance with this
Security Agreement.
(b) The Bank shall have sole dominion and control over the Cash
Collateral Account, and the Company shall have no right of withdrawal
therefrom; provided that the Bank shall make the withdrawals therefrom as
required by this Security Agreement; and provided, further, that, so long as
no Default or Event of Default shall have occurred and be continuing, amounts
on deposit in the Cash
<PAGE> 27
Collateral Account shall be invested at the direction of the Company in
cash and Cash Equivalents.
(c) All Cash Equivalents shall be held by the Bank in its own
name subject to the provisions of this Security Agreement. All interest and
other earnings, income and distributions in respect of the Cash Collateral
Account shall be deposited in the Cash Collateral Account and be held and
applied subject to this Security Agreement.
(d) If no Default or Event of Default shall have occurred and be
continuing, the Bank shall, upon written request of the Company, and subject
to paragraph 2(e), withdraw from the Cash Collateral Account and pay to the
Company the amount specified in such request; provided that the amount
remaining on deposit in the Cash Collateral Account after giving effect to
each such payment shall be at least equal to the L/C Coverage Requirement for
all outstanding Letters of Credit.
(e) The Company will pay, on demand, the Bank's reasonable and
customary fees for maintaining the Cash Collateral Account; provided that, in
lieu of the foregoing, the Company may, at its option, authorize the Bank to
withdraw from the Cash Collateral Account from time to time, and retain for
its own account, amounts sufficient to cover such fees; and provided, further,
that the amount remaining on deposit in the Cash Collateral Account after
giving effect to each such withdrawal shall be at least equal to the L/C
Coverage Requirement for all outstanding Letters of Credit.
4. Covenants. The Company covenants and agrees with the Bank
that, from and after the date of this Security Agreement until termination of
this Security Agreement in accordance with paragraph 9 hereof:
(a) At any time and from time to time, upon the written request
of the Bank, and at the sole expense of the Company, the Company will
promptly and duly execute and deliver such further instruments and
documents and take such further actions as the Bank may reasonably
request for the purposes of obtaining or preserving the full benefits of
this Security Agreement and of the rights and powers herein granted. If
any amount payable under or in connection with any of the Collateral
shall be or become evidenced by any promissory note, other instrument or
chattel paper, such note, instrument or chattel paper shall be
immediately delivered to the Bank, duly endorsed in a manner
satisfactory to the Bank, to be held as Collateral pursuant to this
Security Agreement.
(b) The Company will not sell, assign, transfer, exchange, or
otherwise dispose of, or grant any option with respect to, the
Collateral, or create, incur or permit to exist any Lien or option in
favor of, or any claim of any Person with respect to, any of the
Collateral, or any interest therein, except for the Lien provided for by
this Security Agreement. The Company will defend the right, title and
interest of the Bank in and to the Collateral against the claims and
demands of all Persons whomsoever.
(c) The Company agrees to pay, and to save the Bank harmless
from, any and all liabilities with respect to, or resulting from any
delay in paying, any and all stamps, excise, sales or other taxes (other
than any taxes which are determined based upon the income or revenues of
the Bank) which may be payable or determined to be payable with respect
to any of the Collateral or in connection with any of the transactions
contemplated by this Security Agreement; provided that the Bank shall
not have the right to be indemnified hereunder for its own gross
negligence or willful misconduct as determined by a court of competent
jurisdiction.
5. Rights of the Bank. The rights of the Bank hereunder shall
not be conditioned or contingent upon the pursuit by the Bank of any right or
remedy against any other Person which may be or become liable in respect of
all or any part of the Obligations or against any other collateral security
therefor, guarantee thereof or right of offset with respect thereto. The Bank
shall not be liable for any failure to demand, collect or realize upon all or
any part of
<PAGE> 28
the Collateral or for any delay in doing so, nor shall it be under any
obligation to sell or otherwise dispose of any Collateral upon the request of
the Company or any other Person or to take any other action whatsoever with
regard to the Collateral or any part thereof.
6. Remedies. If an Event of Default shall occur and be
continuing, the Bank may exercise, in addition to all other rights and
remedies granted in this Security Agreement and in any other instrument or
agreement securing, evidencing or relating to the Obligations, all rights and
remedies of a secured party under the Code. Without limiting the generality
of the foregoing, the Bank, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon the Company or any other Person
(all and each of which demands, defenses, advertisements and notices are
hereby waived to the extent permitted by the Code and other applicable law),
may in such circumstances forthwith collect, receive, appropriate and realize
upon the Collateral, or any part thereof, and/or may forthwith collect,
receive, appropriate and realize upon the right, title and interest of the
Company in and to the Collateral, or any part thereof, and/or may forthwith
dispose of and deliver the same, or any part thereof, upon such terms and
conditions as it may deem advisable, free of any right or equity of redemption
in the Company, which right or equity is hereby waived or released. The Bank
shall apply any Proceeds from time to time held by it and the net proceeds of
any such collection, recovery, receipt, appropriation, realization or sale,
after deducting all reasonable costs and expenses of every kind incurred
therein or incidental to the care or safekeeping of any of the Collateral or
in any way relating to the Collateral or the rights of the Bank hereunder,
including, without limitation, reasonable attorneys' fees and disbursements,
to the payment in whole or in part of the Obligations, in such order as the
Bank may elect; and only after such application and after the payment by the
Bank of any other amount required by any provision of law, including, without
limitation, Section 9-504(1)(c) of the Code, need the Bank account for the
surplus, if any, to the Company. To the extent permitted by applicable law,
the Company waives all claims, damages and demands it may acquire against the
Bank arising out of the exercise by the Bank of any of its rights hereunder.
If any notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given at
least 10 days before such sale or other disposition.
7. Amendments, etc. with respect to the Obligations. The Company
shall remain obligated hereunder, and the Collateral shall remain subject to
the lien granted hereby, notwithstanding that, without any reservation of
rights against the Company, and without notice to or further assent by the
Company, any demand for payment of any of the Obligations made by the Bank may
be rescinded by the Bank, and any of the Obligations continued, and the
Obligations, or the liability of any other Person upon or for any part
thereof, or any collateral security or guarantee therefor or right of offset
with respect thereto, may, from time to time, in whole or in part, be renewed,
extended, amended, modified, accelerated, compromised, waived, surrendered or
released by the Bank, and the Restated Agreement and any other document in
connection therewith may be amended, modified, supplemented or terminated, in
whole or in part, as the Bank may deem advisable from time to time, and any
guarantee, right of offset or other collateral at any time held by the Bank
for the payment of the Obligations may be sold, exchanged, waived, surrendered
or released. The Bank shall have no obligation to protect, secure, perfect or
insure any other Lien at any time held by it as security for the Obligations
or any property subject thereto. The Company waives any and all notice of the
creation, renewal, extension or accrual of any of the Obligations and notice
of or proof of reliance by the Bank upon this Security Agreement; the
Obligations, and any of them, shall conclusively be deemed to have been
created, contracted or incurred in reliance upon this Security Agreement; and
all dealings between the Company and the Bank shall likewise conclusively be
presumed to have been had or consummated in reliance upon this Security
Agreement. The Company waives presentment, protest, demand for payment and
notice of default or nonpayment to or upon the Company with respect to the
Obligations.
8. Limitation on Duties Regarding Collateral. The Bank's sole
duty with respect to the custody, safekeeping and physical preservation of the
<PAGE> 29
Collateral in its possession, under Section 9-207 of the Code or otherwise,
shall be to deal with it in the same manner as the Bank deals with similar
property for its own account. Neither the Bank nor any of its directors,
officers, employees or agents shall be liable for failure to demand, collect
or realize upon any of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of the Company or otherwise.
9. Release of Collateral. The Bank agrees that upon payment in
full of all of the Obligations, all of the Collateral granted to the Bank
under this Security Agreement shall be released by the Bank and promptly
returned to the Company (without representation, warranty or recourse, express
or implied, other than that the Collateral shall be free of any Liens granted
by the Bank to any third party) and this Security Agreement shall terminate
and be of no further force and effect; provided, however, that this paragraph
9 shall not limit the Bank's ability to debit the Cash Collateral Account in
amounts sufficient to reimburse the Bank for any Unpaid Drawings, as provided
in Section 2.2 of the Restated Agreement.
10. Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest.
11. Severability. Any provision of this Security Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
12. Paragraph Headings. The paragraph headings used in this
Security Agreement are for convenience of reference only and are not to affect
the construction hereof or be taken into consideration in the interpretation
hereof.
13. No Waiver; Cumulative Remedies. The Bank shall not by any
act (except by a written instrument pursuant to paragraph 14 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. No failure to exercise, nor
any delay in exercising, on the part of the Bank, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Bank of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which the Bank
would otherwise have on any future occasion. The rights and remedies herein
provided are cumulative, may be exercised singly or concurrently and are not
exclusive of any rights or remedies provided by law.
14. Waivers and Amendments; Successors and Assigns. None of the
terms or provisions of this Security Agreement may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by
the Company and the Bank, provided that any provision of this Security
Agreement may be waived by the Bank in a letter or agreement executed by the
Bank or by telex or facsimile transmission from the Bank. This Security
Agreement shall be binding upon the successors and assigns of the Company and
the Bank and shall inure to the benefit of the Company, the Bank and their
respective successors and assigns.
15. Notices. Notices by the Bank to the Company may be given by
mail or by facsimile transmission, addressed or transmitted to the Company at
its address or transmission number set forth in the Restated Agreement and
shall be effective (a) in the case of mail, three days after deposit in the
postal system, first class postage pre-paid and (b) in the case of facsimile
notices, when sent. The Company may change its address and transmission
numbers by written notice to the Bank.
<PAGE> 30
16. Effectiveness. This Security Agreement shall become
effective on the Effective Date, on which date the Original Security Agreement
shall be amended and restated in its entirety as set forth herein. On the
Effective Date, except to the extent provided in the Restated Agreement, this
Security Agreement and the Final Order, all prior Liens of the Bank against
the property of the Company shall be released.
17. Counterparts. This Security Agreement may be executed by the
parties hereto in separate counterparts, and each of said counterparts taken
together shall be deemed to constitute one and the same instrument. A set of
the copies of this Security Agreement signed by both parties shall be lodged
with the Company and the Bank.
18. Integration. This Security Agreement and the Restated
Agreement represent the agreements of the Company and the Bank with respect to
the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Bank relative to the subject matter
hereof not expressly set forth or referred to herein or therein.
19. GOVERNING LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS, EXCEPT TO THE EXTENT
PREEMPTED BY FEDERAL LAW.
IN WITNESS WHEREOF, the undersigned have caused this Security
Agreement to be duly executed and delivered as of the date first above
written.
THE COLUMBIA GAS SYSTEM, INC.
By:
------------------------------------
Title:
CHEMICAL BANK
By:
------------------------------------
Title:
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EXHIBIT B
LETTER OF CREDIT REQUEST
No. (1) Dated (2)
--------------------- -------------------
To: Chemical Bank
Dear Sirs:
We hereby request that you issue a Letter of Credit on _______(3)
(the "Date of Issuance") in the aggregate stated amount of _____(4)______
with the legend set forth below indicated on its face.
For purposes of this Letter of Credit Request, unless otherwise
defined, all capitalized terms used herein which are defined in the Amended
and Restated Secured Revolving Credit Agreement, dated as of _________ __,
1994, between The Columbia Gas System, Inc. (the "Company") and Chemical Bank
(the "Bank") shall have the respective meanings provided therein.
The beneficiary of the requested Letter of Credit will be _____(5),
and such Letter of Credit will be in support of _____(6)_____________ and will
have a stated termination date of ____(7)______.
Copies of all documentation with respect to the supported
transaction are attached hereto.
THE COLUMBIA GAS SYSTEM, INC.
By:
------------------------------------
Name:
Title:
- -------------------------
(1) Letter of Credit Request Number.
(2) Date of Letter of Credit Request (at least five Business Days prior to
the Date of Issuance).
(3) Date of Issuance.
(4) Aggregate initial Stated Amount of Letter of Credit.
(5) Name and address of beneficiary.
(6) Description of supported obligations and name of agreement to which it
relates.
(7) Last date upon which drafts may be presented.
<PAGE> 1
EXHIBIT G-2
SECURITIES AND EXCHANGE COMMISSION
(Release No. )
The Columbia Gas System, Inc. Proposed Conversion of Credit Facility to Letter
of Credit Facility.
The Columbia Gas System, inc. ("Columbia") a Delaware
corporation and registered holding company has filed a declaration with this
Commission pursuant to Sections 6(a) and 7 under the Public Utility Holding
Company Act of 1935 (the "Act").
Columbia originally agreed to borrow up to $275,000,000 under
a debtor in possession financing facility (the "Credit Facility"); Commission
Order dated September 20, 1991, HCAR No.35-25380. That commitment was
subsequently reduced twice to $100,000,000 currently (which commitment is
available for the making of loans and the issuance of Letters of Credit in an
aggregate face amount not to exceed $50 million) under the Commission Order
dated June 11, 1993, HCAR No. 35-25825. The Declarant states that its current
cash reserves are sufficient to meet projected requirements without the need for
borrowing under the Credit Facility. However, Columbia acknowledges that there
remains a need to maintain a facility for letters of credit in the amount of
$25,000,000. Columbia requested Chemical Bank ("Chemical") to submit a
proposal for such a facility, describing its terms, conditions and fees (the
"Proposed Facility"). Chemical's proposal would permit the issuance of standby
letters of credit at any time during the period until December 31, 1995, or
such later date as may be from time to time agreed by both Columbia and
Chemical if necessary to extend the Proposed Facility until Columbia's Plan of
Reorganization is effective. An order of the Bankruptcy Court approving the
terms of the proposed letter of credit facility (the "Proposed Facility") is
expected to be issued prior to the order of this Commission.
The fees to be charged under the Proposed Facility would
include a Letter of Credit Fee of 1% per annum of the face amount of each
Letter of Credit, a Commitment Fee of 1/2 of 1% of the unutilized portion of
the commitment and an Amendment Fee of 1/4 of 1% of the commitment, payable at
closing. The Declarant states that these fees represent less cost to Columbia
than those which are payable under the current Credit Facility. Chemical
serves as agent for a group of banks under the Credit Facility. Under the
Proposed Facility, Chemical would provide the entire commitment and act as the
sole issuing bank with respect to the letters of credit issued.
The declaration and any amendments thereto are available for
public inspection through the Commission's Office of Public Reference.
Interested persons wishing to comment or request a hearing should submit their
views in writing by _______________________ to the Secretary, Securities and
Exchange Commission, Washington, D.C. 20549, and serve a copy on the applicants
declarant at the address specified above. Proof of service (by affidavit or,
in case of an attorney-at-law, by certificate) should be filed with the
request. Any request for a hearing shall identify specifically the issues of
fact or law that are disputed. A person who so requests will be notified of
any hearing, if ordered, and will receive a copy of any notice of order issued
in this matter. After said date, the joint application declaration as filed or
as it may be amended, may be permitted to become effective.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Jonathan G. Katz
Secretary
