AMENDED AND RESTATED
LETTER OF CREDIT
AND REIMBURSEMENT AGREEMENT
Dated as of September 19, 2002
among
SOUTH JERSEY INDUSTRIES, INC.
and
MARINA ENERGY LLC,
as Obligors
and
THE PARTICIPATING BANKS
LISTED ON THE SIGNATURE PAGES HERETO
and
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Fronting Bank and Administrative Agent
Arranged by:
WACHOVIA SECURITIES, INC.,
Sole Lead Arranger and Book Manager
Cover Page
TABLE OF CONTENTS
Table of Contents
ARTICLE I
DEFINITIONS.....................................................5
SECTION 1.01. Certain Defined
Terms..............................5
SECTION 1.02. Computation of Time
Periods.......................18
. 18
SECTION 1.03. Accounting
Terms..................................18
SECTION 1.04. Internal
References...............................18
ARTICLE II AMOUNT AND TERMS OF THE LETTER
OF CREDIT......................18
SECTION 2.01. The Letters of
Credit.............................19
SECTION 2.02. Extension of the Letters of
Credit................19
SECTION 2.03. Commissions and
Fees..............................19
SECTION 2.04. Reimbursement On
Demand...........................20
SECTION 2.05. Tender Advances; Interest
Rates...................20
SECTION 2.06. Additional Interest on LIBOR Rate
Advances........21
SECTION 2.07. Interest Rate
Determination.......................21
SECTION 2.08. Voluntary Conversion of Tender
Advances...........22
SECTION 2.09. Prepayments of
Advances...........................22
SECTION 2.10. Increased
Costs...................................23
SECTION 2.11.
Illegality........................................24
SECTION 2.12. Payments and
Computations.........................24
SECTION 2.13. Non-Business
Days.................................24
SECTION 2.14. Source of
Funds...................................24
SECTION 2.15. Extension of the Stated Expiration
Date...........24
SECTION 2.16. Amendments Upon
Extension.........................25
SECTION 2.17. Evidence of
Debt..................................25
SECTION 2.18. Obligations
Absolute..............................25
SECTION 2.19. Net of Taxes,
Etc.................................26
SECTION 2.20. Participation by Banks in Letters of
Credit.......27
ARTICLE III CONDITIONS
PRECEDENT.........................................31
SECTION 3.01. Conditions Precedent to the Execution and
Delivery of this Agreement........................31
SECTION 3.02. Additional Conditions
Precedent...................33
SECTION 3.03. Conditions Precedent to Each Tender
Advance.......34
SECTION 3.04. Condition Precedent to each
Conversion............34
SECTION 3.05. Reliance on
Certificates..........................34
ARTICLE
IV...............................................................35
Page 1
REPRESENTATIONS AND
WARRANTIES...........................................35
SECTION 4.01. Representations and Warranties of the
Obligors....35
ARTICLE V COVENANTS OF THE
COMPANY.......................................38
SECTION 5.01. Affirmative
Covenants.............................38
SECTION 5.02. Negative
Covenants................................39
SECTION 5.03. Reporting
Requirements............................41
SECTION 5.04. Financial
Covenants...............................43
ARTICLE VI EVENTS OF
DEFAULT.............................................43
SECTION 6.01. Events of
Default.................................43
SECTION 6.02. Upon an Event of
Default..........................45
ARTICLE VII THE PLEDGED
BONDS............................................46
SECTION 7.01.
Pledge............................................46
SECTION 7.02. Interest on the
Bonds.............................46
SECTION 7.03. Rights with respect to Pledged
Bonds..............47
SECTION 7.04. No Disposition of Pledged Bonds by
Obligors.......47
SECTION 7.05. Disposition of Pledged Bonds by
Administrative Agent..............................47
SECTION 7.06. Valid Perfected First
Lien........................47
SECTION 7.07. Release of Pledged
Bonds..........................48
ARTICLE VIII THE ADMINISTRATIVE AGENT AND
FRONTING BANK..................48
SECTION 8.01.
Appointment.......................................48
SECTION 8.02. Delegation of
Duties..............................48
SECTION 8,03. Exculpatory
Provisions............................48
SECTION 8.04. Reliance by Administrative
Agent..................49
SECTION 8.05. Notice of
Default.................................49
SECTION 8.06.
Non-Reliance on Administrative Agent
and Other Banks...................................49
SECTION 8.07.
Indemnification...................................50
SECTION 8.08. Administrative Agent in Its Individual
Capacity...50
SECTION 8.09. Successor Administrative
Agent....................50
SECTION 8.10. Fronting
Bank.....................................51
SECTION 8.11. Notices; Actions Under Related
Documents..........51
ARTICLE IX
MISCELLANEOUS.................................................51
SECTION 9.01. Amendments,
Etc...................................51
SECTION 9.02. Notices,
Etc......................................51
SECTION 9.03. No Waiver;
Remedies...............................53
SECTION 9.04.
Set-off...........................................53
SECTION 9.05.
Indemnification...................................53
SECTION 9.06. Liability of the
Banks............................54
SECTION 9.07. Costs, Expenses and
Taxes.........................55
SECTION 9.08. Binding
Effect....................................55
Page 2
SECTION 9.09. Assignments and
Participation.....................56
SECTION 9.10.
Severability......................................58
SECTION 9.11. Joint and Several
Obligations.....................59
SECTION 9.13.
Headings..........................................59
SECTION 9.14. Submission To Jurisdiction;
Waivers...............59
SECTION 9.15.
Acknowledgments...................................59
SECTION 9.16. Waivers of jury
trial.............................60
SECTION 9.17. Execution in
Counterparts.........................60
EXHIBITS
Exhibit A-1
2001A Letter of
Credit
Exhibit A-2
2001B Letter of
Credit
Exhibit B
Assignment and Acceptance
Exhibit C
Notice of Conversion
Exhibit D
Opinion of Counsel to the Obligors
Exhibit E
Form of Amendment to 2001A Letter of Credit
Exhibit F
Form of Amendment to 2001B Letter of Credit
SCHEDULES
Schedule I
Commitments
Schedule II
Ownership
Page 3
AMENDED AND RESTATED
LETTER OF CREDIT AND
REIMBURSEMENT AGREEMENT
AMENDED AND RESTATED LETTER OF CREDIT AND REIMBURSEMENT
AGREEMENT,
dated as of September 19, 2002 among:
(i) SOUTH
JERSEY INDUSTRIES, INC., a New Jersey corporation
("South Jersey");
(ii)
MARINA ENERGY LLC, a New Jersey limited liability company
("Marina Energy"; and together with South Jersey,
collectively, the "Obligors");
(iii) the
participating banks listed on the signature pages hereto
(the "Banks"); and
(iv)
WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking
association organized and existing under the laws of the
United States of America ("Wachovia"), as Fronting Bank and
Administrative Agent (in such capacities, together with its
successors and permitted assigns in such capacities,
respectively, the "Fronting Bank" and the "Administrative
Agent").
PRELIMINARY STATEMENTS
(1) The New Jersey Economic Development Authority (the "Issuer")
has
issued, pursuant to a Trust Indenture dated
as of September 1, 2001 (as amended
from time to time in accordance with the
terms thereof, the "Indenture"),
between the Issuer and Commerce Bank,
National Association, as trustee,
$20,000,000 aggregate principal amount of
its Thermal Energy Facilities Revenue
Bonds (Marina Energy LLC - 2001 Project),
Series A (the "2001A Bonds") and
$19,000,000 aggregate principal amount of
its Thermal Energy Facilities
Federally Taxable Revenue Bonds (Marina
Energy LLC - 2001 Project), Series B
(the "2001B Bonds" and, collectively with
the 2001A Bonds, the "Bonds");
(2) On the date the 2001A Bonds were initially issued, the
Fronting
Bank, at the request of the Obligors,
issued its irrevocable, transferable,
direct pay letter of credit, in
substantially the form of Exhibit A-1 hereto
(such letter of credit, as it may from time
to time be extended or amended
pursuant to the terms of this Agreement,
being the "2001A Letter of Credit") in
the amount of $20,295,890.41, of which (i)
$20,000,000 supports the payment of
principal of the 2001A Bonds, and (ii)
$295,890.41 supports up to 45 days'
interest on the principal amount of the
Bonds computed at a maximum interest
rate of 12% per annum;
(3) On the date the 2001B Bonds were initially issued, the
Fronting
Bank, at the request of the Obligors,
issued its irrevocable, transferable,
direct pay letter of credit, as amended on
January 17, 2002, in substantially
the form of Exhibit A-2 hereto, which
reflects such amendment (such letter of
credit, as it may from time to time be
extended or amended pursuant to the terms
of this Agreement, being the "2001B Letter
of Credit" and collectively with the
2001A Letter of Credit, the "Letters of
Credit"), in the amount of
$19,351,369.87, of which (i) $19,000,000
shall support the payment of principal
Page 4
of the 2001B Bonds, and (ii) $351,369.87
shall support up to 45 days' interest
on the principal amount of the Bonds
computed at a maximum interest rate of 15%
per annum;
(4) The Letters of Credit were issued in accordance with Letter
of
Credit and Reimbursement Agreement dated as
of September 20, 2001 (the "Existing
Reimbursement Agreement") among the
Obligors, Wachovia and the participating
banks listed therein;
(5) The Obligors have requested that Wachovia extend the term of
the
Letters of Credit and Wachovia and the
Banks have agreed to a two-year extension
of the Letters of Credit under the terms of
this Agreement;
NOW, THEREFORE, in consideration of the premises and in order to
induce
the Fronting Bank to extend the Letters of
Credit and the Banks to participate
therein and to make Demand Loans and Tender
Advances (as defined below) as
provided herein, the parties hereto agree
that the Existing Reimbursement
Agreement is hereby amended and restated as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this Agreement,
the
following terms shall have the following
meanings (such meanings to be equally
applicable to both the singular and plural
forms of the terms defined):
"Administrative Agent" has the meaning assigned to that term in
the
preamble hereto.
"Advance" means any advance of funds by the Fronting Bank or any
Bank
in accordance with the terms of this
Agreement and the Letters of Credit. Each
Bank's participation in a drawing, a Demand
Loan or a Term Advance shall be
considered an "Advance" by such Bank.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling
(including but not limited to all directors
and officers of such Person), controlled
by, or under direct or indirect common
control with such Person. A Person shall be
deemed to control another entity if
such Person possesses, directly or
indirectly, the power to direct or cause the
direction of the management and policies of
such entity, whether through the
ownership of voting securities, by
contract, or otherwise.
"Agreement" means this Amended and Restated Letter of Credit
and
Reimbursement Agreement as it may be
amended, supplemented or otherwise modified
in accordance with the terms hereof at any
time and from time to time.
"Applicable Lending Office" means, with respect to each Bank,
such
Bank's Domestic Lending Office, in the case
of Base Rate Advances, and such
Bank's LIBOR Lending Office, in the case of
LIBOR Rate Advances.
"Applicable Law" means all applicable laws, statutes, treaties,
rules,
codes, ordinances, regulations, permits,
certificates, orders, interpretations,
licenses, and permits of any Governmental
Authority and judgments, decrees,
injunctions, writs, orders or like action
of any court, arbitrator or other
judicial or quasi-judicial tribunal
(including, without limitation, those
pertaining to health, safety, the
environment or otherwise).
Page 5
"Applicable Margin" means on any date, the rate per annum set
forth
below, determined by reference to the
Senior Debt Ratings:
<TABLE>
<CAPTION>
--------------------------
---------------------- --------------------------
---------------------------
BASIS FOR PRICING
LEVEL 1
LEVEL 2
LEVEL 3
-------
-------
-------
If Senior Debt Rating If Senior Debt
Ratings is If
Senior Debt Ratings
is at least BBB+ by S&P less than Level 1 but at
less than
Level 2
least Baa1 by Moody's least BBB by
S&P or at
least Baa2 by
Moody's
--------------------------
---------------------- --------------------------
---------------------------
<S>
<C>
<C>
<C>
Applicable Libor Rate
0.875%
1.000%
1.250%
Margin
--------------------------
---------------------- --------------------------
---------------------------
Applicable Unused Fee
0.150%
0.175%
0.225%
--------------------------
---------------------- --------------------------
---------------------------
Applicable Letter of
Credit Fee
0.875%
1.000%
1.250%
--------------------------
---------------------- --------------------------
---------------------------
</TABLE>
Any change in the Applicable Margin will be
effective as of the date on which
S&P or Moody's, as the case may be,
announces the applicable change in the
Senior Debt Ratings. The Obligors shall
notify the Administrative Agent in
writing promptly after becoming aware of
any change in the Senior Debt Ratings.
For purposes of the foregoing, (i) if
either Moody's or S&P shall not have in
effect a Senior Debt Ratings (other than by
reason of the circumstances referred
to in the last sentence of this
definition), then such Rating Agency shall be
deemed to have established a rating less
than BBB, in the case of S&P, and less
than Baa2, in the case of Moody's; (ii) if
the Senior Debt Ratings established
or deemed to have been established by
Moody's and S&P shall fall within
different "Levels" and the ratings
differential is one level, the higher rating
will apply; (iii) if the Senior Debt
Ratings established or deemed to have been
established by Moody's and S&P shall
fall within different "Levels" and the
ratings differential is two levels or more,
the level one above the lowest of
the two ratings will apply; and (iv) if the
rating system of Moody's or S&P
shall change, or if Moody's or S&P
shall cease to be in the business of rating
corporate debt obligations, the Obligors,
the Administrative Agent and the Banks
shall negotiate in good faith to amend this
definition to reflect such changed
rating system or the unavailability of
ratings from Moody's or S&P, and, pending
the effectiveness of any such amendment,
the Senior Debt Ratings shall be
determined by reference to the Senior Debt
Ratings most recently in effect prior
to such change or cessation.
"Applicable Rate" means:
(a) in the case of each Base Rate Advance, a rate per annum
equal at all times to the sum of the Base Rate in effect from time
to
time in effect from time to time; and
(b) in the case of each LIBOR Rate Advance comprising part of
the same Tender Advance, a rate per annum during each Interest
Period
equal at all times to the sum of the LIBOR Rate for such
Interest
Period plus the Applicable Margin in effect from time to time
during
such Interest Period.
"Application" means an application, in the form specified by
the
Administrative Agent from time to time,
requesting the Fronting Bank to amend a
Letter of Credit.
Page 6
"Average
Quarterly Outstanding 2001B Amount" means, with respect to any
quarter, the sum of (A) the face amount of
the issued and outstanding 2001B
Letter of Credit and (B) the aggregate
principal amount of Demand Loans and Term
Advances relating to the 2001B Letter of
Credit, in each case outstanding at the
end of each day for each day of the quarter
in question, and by dividing such
sum by the number of days in such
quarter.
"Bankruptcy Code" means Title 11 of the United States Code, as
now
constituted or hereafter amended.
"Banks" has the meaning assigned to that term in the preamble
hereto,
and includes their respective successors
and permitted assigns.
"Base Rate" means, for any period, a fluctuating interest rate
per
annum as shall be in effect from time to
time, which rate per annum shall at all
times be equal to the higher of (i) the
rate of interest announced publicly by
Administrative Agent in Charlotte, North
Carolina, from time to time, as
Administrative Agent's Prime Rate; and (ii)
1/2 of one percent per annum above
the Federal Funds Rate in effect from time
to time.
"Base Rate Advance" means an Advance that bears interest as
provided in
Section 2.05(b)(i).
"Benefitted Bank" has the meaning assigned to that term in
Section
9.04(b).
"Bonds" has the meaning assigned to that term in the recitals to
this
Agreement.
"Business Day" means a day of the year on which (i) banks are
not
required or authorized to close in
Charlotte, North Carolina or any state in
which the principal office of the Trustee
or the Paying Agent for the Bonds,
(ii) the New York Stock Exchange is not
closed, and (iii) with respect to any
borrowing, payment or rate selection of
LIBOR Advances, banks are not required
or authorized to close in Charlotte, North
Carolina and on which dealings in
Dollars are carried out in the London
interbank market.
"Cancellation Date" has the meaning assigned to that term in
each
Letter of Credit.
"Capital Stock" means, with respect to any Person, any and all
shares,
interests, rights to purchase, warrants,
options, participations or other
equivalents of or interests in (however
designated) equity of such Person,
including any preferred interest, any
limited or general partnership interest
and any limited liability company
membership interest.
"Change in Control" means the occurrence of either of the
following:
(i) any entity, person (within the meaning
of Section 14(d) of the Securities
Exchange Act of 1934, as amended (the
"Exchange Act")) or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of
the Exchange Act) which theretofore
was beneficial owner (as defined in Rule
13d-3 under the Exchange Act) of less
than 20% of South Jersey's then outstanding
common stock either (x) acquires
shares of common stock of South Jersey in a
transaction or series of
transactions that results in such entity,
person or group directly or indirectly
owning beneficially 20% or more of the
outstanding common stock of South Jersey,
Page 7
or (y) acquires, by proxy or otherwise, the
right to vote for the election of
directors, for any merger, combination or
consolidation of the Obligors or any
of its direct or indirect subsidiaries, or,
for any other matter or question,
more than 20% of the then outstanding
voting securities of South Jersey; or (ii)
the election or appointment of persons to
South Jersey's board of directors who
were not directors of South Jersey on the
date hereof, and whose election or
appointment was not approved by a majority
of those persons who were directors
at the beginning of such period, where such
newly elected or appointed directors
constitute 20% or more of the directors of
the board of directors of South
Jersey.
"Closing Date" means September 19, 2002.
"Code" means the Internal Revenue Code of 1986, as amended from
time to
time, and the regulations promulgated and
rulings issued thereunder.
"Commitment" means, with respect to each Bank, such Bank's
2001A
Commitment and the 2001B Commitment.
"Commitments" means the total of the Banks'
2001A Commitments and the 2001B
Commitments.
"Consolidated" means, when used with reference to any accounting
term,
the amount described by such accounting
term, determined on a consolidated basis
in accordance with GAAP, after elimination
of intercompany items.
"Consolidated EBIT" means, with respect to South Jersey and its
Consolidated Subsidiaries, for any period,
an amount equal to: (i) net income
for such period, plus (ii) amounts deducted
in the computation thereof for (a)
interest expense and (b) federal, state and
local income taxes, (iii) gains or
losses from the sale of assets in the
ordinary course of business, and plus or
minus, as the case may be, and (iv)
extraordinary non-cash gains or losses for
such period.
"Consolidated Interest Expense" means, with respect to South Jersey
and
its Consolidated Subsidiaries, for any
period, an amount equal to (i) all
interest in respect of Indebtedness accrued
during such period (whether or not
actually paid during such period), plus
(ii) the net amount payable (or minus
the net amount receivable) under any
hedging agreement with respect to such
Indebtedness accrued during such period
(whether or not actually paid or
received during such period).
"Consolidated Total Capitalization" means the sum of (i)
Indebtedness
of South Jersey and its Consolidated
Subsidiaries, plus (ii) the sum of the
capital stock (excluding treasury stock and
capital stock subscribed for and
unissued) and surplus (including earned
surplus, capital surplus, translation
adjustment and the balance of the current
profit and loss account not
transferred to surplus) accounts of South
Jersey and its Consolidated
Subsidiaries appearing on a consolidated
balance sheet of South Jersey and its
Consolidated Subsidiaries, in each case
prepared as of the date of determination
in accordance with GAAP consistent with
those applied in the preparation of the
financial statements referred to in Section
4.01(e), after eliminating all
intercompany transactions and all amounts
properly attributable to minority
interests, if any, in the stock and surplus
of Subsidiaries.
"Convert",
"Conversion" and "Converted" each refers to a conversion of
a Tender Advance of one Type into a Tender
Advance of another Type pursuant to
Section 2.08 or the selection of a new, or
the renewal of the same, Interest
Period for a LIBOR Rate Advance pursuant to
Section 2.08.
Page 8
"Date of Issuance" means the date of issuance of each Letter of
Credit.
"Default" means any event or condition that would constitute an
Event
of Default but for the requirement that
notice be given or time elapse or both.
"Default Rate" means a per annum rate 2% greater than the rate
which
would otherwise be applicable (or if no
rate is applicable, whether in respect
of interest, fees or other amounts, then
the Base Rate plus 2%).
"Demand Loan" has the meaning specified in Section 2.04(a).
"Disbursement Date" has the meaning specified in Section
2.20(d)(ii).
"Disclosure Documents" means South Jersey's Annual Report on Form
10-K
for the year ended December 31, 2001, its
Quarterly Report on Form 10-Q for the
quarters ended March 31, 2002 and June 30,
2002, and any Current Report on Form
8-K delivered to the Banks at least three
(3) Business Days prior to the date of
this Agreement.
"Dollar" or "$" means dollars in lawful currency of the United
States
of America.
"Domestic Lending Office" means, with respect to any Bank, the
office
of such Bank specified as such opposite its
name on Schedule I hereto or in the
Assignment and Acceptance pursuant to which
it became a Bank, or such other
office of such Bank as such Bank may from
time to time specify to the Obligors
and the Administrative Agent.
"Environmental Laws" means any federal, state or local laws,
ordinances
or codes, rules, orders, or regulations
relating to pollution or protection of
the environment, including, without
limitation, laws relating to hazardous
substances, laws relating to reclamation of
land and waterways and laws relating
to emissions, discharges, releases or
threatened releases of pollutants,
contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes
into the environment (including, without
limitation, ambient air, surface water,
ground water, land surface or subsurface
strata) or otherwise relating to the
manufacture, processing, distribution, use,
treatment, storage, disposal,
transport or handling of pollution,
contaminants, chemicals, or industrial,
toxic or hazardous substances or
wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as
amended from time to time.
"ERISA Affiliate" means any Person which for purposes of Title IV
of
ERISA is a member of an Obligor's
controlled group, or under common control with
the Obligors, within the meaning of Section
414 of the Code, and the regulations
promulgated and rulings issued
thereunder.
"ERISA Event" means (i) the occurrence of a reportable event,
within
the meaning of Section 4043 of ERISA,
unless the 30-day notice requirement with
respect thereto has been waived by the
PBGC; (ii) the provision by the
administrator of any Plan of a notice of
intent to terminate such Plan, pursuant
to Section 4041(a)(2) of ERISA (including
any such notice with respect to a plan
amendment referred to in Section 404l(e) of
ERISA); (iii) the cessation of
Page 9
operations at a facility in the
circumstances described in Section 4062(e) of
ERISA; (iv) the withdrawal by the Obligors
or an ERISA Affiliate from a
Multiemployer Plan during a plan year for
which it was a "substantial employer"
as defined in Section 4001(a)(2) of ERISA;
(v) the failure by the Obligors or
any ERISA Affiliate to make a payment to a
Plan required under Section 302 of
ERISA, which results in a lien pursuant to
Section 302(f) of ERISA; (vi) the
adoption of an amendment to a Plan
requiring the provision of security to such
Plan, pursuant to Section 307 of ERISA; or
(vii) the institution by the PBGC of
proceedings to terminate a Plan, pursuant
to Section 4042 of ERISA, or the
occurrence of any event or condition which
might reasonably constitute grounds
under Section 4042 of ERISA for the
termination of, or the appointment of a
trustee to administer, a Plan by the
PBGC.
"Eurocurrency
Liabilities" has the meaning specified in Regulation D of
the Board of Governors of the Federal
Reserve System, as in effect from time to
time.
"Event of Default" has the meaning assigned to that term in
Section
6.01.
"Existing Reimbursement Agreement" has the meaning assigned to
that
term in the preamble hereto.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate
per annum equal for each day during such
period to 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 for such day (or,
if such day is not a Business Day, for the
next preceding 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 such day on such
transactions received by the Administrative
Agent from three Federal funds
brokers of recognized standing selected by
it.
"Fronting Bank" has the meaning assigned to that term in the
preamble
hereto.
"GAAP" means generally accepted United States accounting principles
as
in effect on the date hereof.
"Governmental Action" means all authorizations, consents,
approvals,
waivers, exceptions, variances, orders,
licenses, exemptions, publications,
filings, notices to and declarations of or
with any Governmental Authority,
other than routine reporting requirements
the failure to comply with which will
not affect the validity or enforceability
of this Agreement or any Related
Documents or have a material adverse effect
on the transactions contemplated by
this Agreement or any Related Document.
"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.
"Hazardous Materials" means any petrochemical or petroleum
products,
any flammable materials, explosives,
radioactive materials, hazardous materials,
hazardous wastes, hazardous or toxic
substances, or related or similar
materials, asbestos or any material
containing asbestos, or any other substance
or material as so defined and regulated by
any Federal, state or local
environmental law, ordinance, rule, or
regulation including, without limitation,
the Comprehensive Environmental Response,
Compensation, and Liability Act of
Page 10
1980, as amended (42 U.S.C. Sections 9601,
et seq.), the Hazardous Materials
Transportation Act, as amended (49 U.S.C.
Sections 1801, et seq.), and the
Resource Conservation and Recovery Act, as
amended (42 U.S.C. Sections 6901, et
seq.), and the regulations adopted and
publications promulgated pursuant
thereto.
"Indebtedness" means, for any Person, all obligations of such
Person
which in accordance with GAAP should be
classified on a balance sheet of such
Person as liabilities of such Person, and
in any event shall include, without
duplication, all (i) indebtedness for
borrowed money, (ii) obligations evidenced
by bonds, debentures, notes or other
similar instruments, (iii) obligations to
pay the deferred purchase price of property
or services, (iv) obligations as
lessee under leases which shall have been
or should be, in accordance with GAAP,
recorded as capital leases, (v) obligations
as lessee under operating leases
which shall have been recorded as
off-balance sheet liabilities, (vi)
reimbursement obligations (contingent or
otherwise) in respect of outstanding
letters of credit, (vii) indebtedness of
the type referred to in clauses (i)
through (v) above secured by (or for which
the holder of such indebtedness has
an existing right, contingent or otherwise,
to be secured by) any lien or
encumbrance on, or security interest in,
property (including, without
limitation, accounts and contract rights)
owned by such Person, even though such
Person has not assumed or become liable for
the payment of such indebtedness,
and (viii) obligations under direct or
indirect guaranties in respect of, and
obligations (contingent or otherwise) to
purchase or otherwise acquire, or
otherwise to assure a creditor against loss
in respect of, indebtedness or
obligations of others of the kinds referred
to in clauses (i) through (vi)
above.
"Indenture" has the meaning assigned to that term in the
preamble
hereto.
"Interest Period" means, for each LIBOR Rate Advance made as part
of
the same Tender Advance, the period
commencing on the date of such LIBOR Rate
Advance or the date of the Conversion of
any Tender Advance into a LIBOR Rate
Advance and ending on the last day of the
period selected by the Obligors
pursuant to the provisions below and,
thereafter, each subsequent period
commencing on the last day of the
immediately preceding Interest Period and
ending on the last day of the period
selected by the Obligors pursuant to the
provisions below. The duration of each such
Interest Period shall be one, two,
three or six months, as the Obligors may,
upon notice received by the
Administrative Agent not later than 11:00
a.m., Charlotte, North Carolina time,
on the third Business Day prior to the
first day of such Interest Period,
select; provided, however, that:
(i) the Obligors may not select any Interest Period that ends
after the Termination Date;
(ii) Interest Periods commencing on the same date for LIBOR
Rate Advances comprising part of the same Tender Advance shall be
of
the same duration;
(iii) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day
of
such Interest Period shall be extended to occur on the next
succeeding
Business Day, provided, that if such extension would cause the last
day
of such Interest Period to occur in the next following calendar
month,
the last day of such Interest Period shall occur on the next
preceding
Business Day;
Page 11
(iv) if any Interest Period begins on a day for which there is
no numerically corresponding day in the calendar month at the end
of
such Interest Period, such Interest Period shall end on the
last
Business Day of such calendar month; and
(v) no more than three (3) Interest Periods may be in effect
at any time.
"Issuer" has the meaning assigned to that term in the preamble
hereto.
"Letters of Credit" has the meaning assigned to that term in
the
preamble hereto.
"Letter of Credit Fee" has the meaning specified in Section
2.03(a).
"LIBOR Lending Office" means, with respect to any Bank, the office
of
such Bank specified as such opposite its
name on Schedule I hereto or in the
Assignment and Acceptance pursuant to which
it became a Bank (or, if no such
office is specified, its Domestic Lending
Office), or such other office of such
Bank as such Bank may from time to time
specify to the Obligors and the
Administrative Agent.
"LIBOR Rate" means with respect to each day during each Interest
Period
pertaining to a LIBOR Rate Advance, the
rate appearing on Page 3750 of the Dow
Jones Markets Service (or on any successor
or substitute page of such Service,
or any successor to or substitute for such
Service, providing rate quotations
comparable to those currently provided on
such page of such Service, as
determined by the Administrative Agent from
time to time for purposes of
providing quotations of interest rates
applicable to Dollar deposits in the
London interbank market) at approximately
11:00 a.m., London time, two Business
Days prior to the commencement of such
Interest Period, as the rate for Dollar
deposits with a maturity comparable to such
Interest Period. In the event that
such rate is not available at such time for
any reason, then the "LIBOR Rate"
with respect to such LIBOR Loan for such
Interest Period shall be the rate per
annum equal to the rate at which the
principal London office of the
Administrative Agent offers to place Dollar
deposits at or about 11:00 a.m.,
London time, two Business Days prior to the
beginning of such Interest Period
with first-class banks in the London
interbank market for delivery on the first
day of such Interest Period for the number
of days comprised therein and in an
amount comparable to the amount of its
LIBOR Rate Advance to be outstanding
during such Interest Period.
"LIBOR Rate Advance" means a Tender Advance that bears interest
as
provided in Section 2.05(b)(ii).
"LIBOR Rate Reserve Percentage" of any Bank for each Interest
Period
for each LIBOR Rate Advance means the
reserve percentage contemplated in Section
2.06 applicable to such Bank during such
Interest Period (or if more than one
such percentage shall be so applicable, the
daily average of such percentages
for those days in such Interest Period
during which any such percentage shall be
so applicable) under Regulation D or other
regulations issued from time to time
by the Board of Governors of the Federal
Reserve System (or any successor) for
determining the maximum reserve requirement
(including, without limitation, any
emergency, supplemental or other marginal
reserve requirement) then applicable
to such Bank with respect to liabilities or
assets consisting of or including
Eurocurrency Liabilities having a term
equal to such Interest Period.
Page 12
"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, a
Person or any of its Subsidiaries shall be
deemed to own, subject to a Lien, any asset
that 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.
"Loan Agreement" means the Loan Agreement dated as of September 1,
2001
between Marina Energy and the Issuer
relating to the Bonds, as the same may be
amended, supplemented or otherwise modified
in accordance with its terms at any
time and from time to time.
"Marina Energy" has the meaning assigned to that term in the
preamble
hereto.
"Material Adverse Change" means (a) a materially adverse change in
the
business, assets, liabilities (actual or
contingent), operations, condition
(financial or otherwise) or prospects of
South Jersey and its Subsidiaries,
taken as a whole or individually, (b) any
material impairment of the ability of
any Obligor to perform any of its
respective Obligations under this Agreement or
any Related Document or (c) any material
impairment of the rights of, or
benefits available to, the Administrative
Agent, the Fronting Bank or the Banks
under this Agreement or any of the Related
Documents.
"Moody's" means Moody's Investors Service, Inc., or any
successor
thereto.
"Multiemployer Plan" means a multiemployer plan, as defined in
Section
4001(a)(3) of ERISA, which is subject to
Title IV of ERISA and to which the
Obligors or any ERISA Affiliate is making
or accruing an obligation to make
contributions, or has within any of the
preceding five plan years made or
accrued an obligation to make
contributions, such plan being maintained pursuant
to one or more collective bargaining
agreements.
"Multiple Employer Plan" means a single employer plan, as defined
in
Section 4001(a)(15) of ERISA, which is
subject to Title IV of ERISA and which
(i) is maintained for employees of the
Obligors or an ERISA Affiliate and at
least one Person other than the Obligors
and its ERISA Affiliates or (ii) was so
maintained and in respect of which the
Obligors or an ERISA Affiliate could have
liability under Section 4064 or 4069 of
ERISA in the event such plan has been or
were to be terminated.
"Notice of Conversion" has the meaning specified in Section
2.08.
"Notice of Extension" has the meaning specified in Section
2.15.
"Obligations" means the Demand Loans, the Tender Advances, fees
relating to the Letters of Credit, any and
all obligations of the Obligors to
reimburse the Banks for any drawings under
the Letters of Credit, and all other
obligations of the Obligors to the Banks
arising under or in relation to this
Agreement and the Letters of Credit.
"Obligors" has the meaning assigned to that term in the
preamble
hereto.
"Official Statement" means the Official Statement, dated on or
about
September 20, 2001, relating to the Bonds,
together with the documents
incorporated therein by reference and any
supplements or amendments thereto.
Page 13
"Paying Agent" means the Person serving as such with respect to
each
series of Bonds in the applicable
Indenture.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor
thereto.
"Percentage" means, for any Bank on any date of determination,
the
percentage obtained by dividing such Bank's
Commitment on such day by the total
of the Commitments on such date.
"Permitted Indebtedness" means any of the following:
(1) Indebtedness under this Agreement;
(2) Indebtedness (other than the type described in clauses (3)
and (4) below) in an aggregate principal amount not to exceed
$86,000,000 (inclusive of the type described in clause (1) above)
at
any time outstanding;
(3) With respect to South Jersey Gas Company and its
Subsidiaries, any Indebtedness so long as before and after the
incurrence of such Indebtedness, South Jersey is in compliance
with
Section 5.04; and
(4) Indebtedness under interest rate protection agreements
covering the interest rate portion of the outstanding Bonds in
a
notional amount not to exceed the face amount of the outstanding
Bonds.
"Permitted Liens" means, with respect to any Person, any of the
following:
(1) Liens for taxes, assessments or governmental charges not
delinquent or being contested in good faith and by appropriate
proceedings and for which adequate reserves in accordance with GAAP
are
maintained on such Person's books;
(2) Liens arising out of deposits in connection with workers'
compensation, unemployment insurance, old age pensions or other
social
security or retirement benefits legislation;
(3) deposits or pledges to secure bids, tenders, contracts
(other than contracts for the payment of money), leases,
statutory
obligations, surety and appeal bonds, and other obligations of
like
nature arising in the ordinary course of such Person's
business;
(4) Liens imposed by law, such as mechanics', workers',
materialmen's, carriers' or other like liens (excluding, however,
any
statutory or other Lien in favor of a landlord under a written or
oral
lease) arising in the ordinary course of such Person's business
which
secure the payment of obligations which are not past due or which
are
being diligently contested in good faith by appropriate proceedings
and
for which adequate reserves in accordance with GAAP are maintained
on
such Person's books;
(5) rights of way, zoning restrictions, easements and similar
Page 14
encumbrances affecting such Person's real property which do not
materially interfere with the use of such property;
(6) Liens securing
Indebtedness
not in excess
of
$2,000,000 in the
aggregate of the type
described in clause
(2) of the definition of "Permitted Indebtedness";
(7) with respect to Marina Energy, Liens on the real property
owned by Marina Energy securing the Bonds;
(8) purchase money security interests for the purchase of
equipment to be used in the Borrower's business, encumbering only
the
equipment so purchased, and which secures only the
purchase-money
Indebtedness incurred to acquire the equipment so purchased,
which
Indebtedness qualifies as Permitted Indebtedness and which
Indebtedness
is not in excess of $2,000,000; and
(9) Liens securing Indebtedness of the type described in
clause (3) of "Permitted Indebtedness" above.
"Person" means an individual, partnership, corporation
(including,
without limitation, a business trust),
joint stock company, limited liability
company, trust, unincorporated association,
joint venture or other entity, or a
government or any political subdivision or
agency thereof.
"Plan" means a Single Employer Plan or a Multiple Employer
Plan.
"Pledge Agreement" means the Pledge Agreement dated as of September
1,
2001 between Marina Energy and First Union
National Bank (now known as
Wachovia).
"Pledged Bonds" has the meaning specified in Section 7.01.
"Prime Rate" means a rate per annum equal to the Administrative
Agent's
index or base rate of interest announced
from time to time by the Administrative
Agent (which is not necessarily the lowest
rate charged to any customer),
changing when and as such base rate
changes.
"Purchase Agreement" means the Bond Purchase Agreement dated
September
1, 2001 between the Issuer and the
Underwriter identified therein relating to
the Bonds and any other agreement relating
to the purchase of Bonds.
"Rated Entity" means South Jersey Industries, Inc. or any of
its
subsidiaries which maintain senior
unsecured, non-credit enhanced debt ratings
by both Moody's and S&P. If more than
one such Person exists, the Rated Entity
shall be South Jersey Industries, Inc. or
any of its subsidiaries which
maintains the lowest senior unsecured,
non-credit enhanced debt rating by either
Moody's or S&P.
"Register" has the meaning specified in Section 9.09(c).
"Related Documents" means the Bonds, the Indenture, the Loan
Agreement,
the Purchase Agreement, the Remarketing
Agreement, the Pledge Agreement, the
Tender Agency Agreement and the Official
Statement.
Page 15
"Remarketing Agent" means UBS PaineWebber Inc., its successors
and
assigns, and any other Person serving as
such with respect to any Bonds under
the applicable Remarketing Agreement.
"Remarketing Agreement" means the Remarketing Agreement dated as
of
September 1, 2001, between Marina Energy
and the Remarketing Agent relating to
the Bonds and any agreement or other
arrangement pursuant to which a Remarketing
Agent has agreed to act as such pursuant to
the applicable Indenture for any
Bonds.
"Required Banks" means Banks whose aggregate Percentages aggregate
more
than 50%.
"S&P" means Standard & Poor's Ratings Services, a division
of the
McGraw-Hill Companies, Inc., or any
successor thereto.
"Senior Debt Ratings" means the ratings assigned to the senior
unsecured, non-credit enhanced debt of the
Rated Entity by Moody's and S&P.
"Shared Fees" has the meaning specified in Section 2.20(e).
"Significant Subsidiary" means, with respect to any Person, a
Subsidiary which meets any of the following
conditions:
(i)
such Person's and its other Subsidiaries'
investments in and advances to the
Subsidiary exceed 10% of the total assets of
such Person and its Consolidated
Subsidiaries as of the end of the most
recently completed Fiscal Quarter;
(ii)
such Person's and its other Subsidiaries'
proportionate share of the total assets
(after intercompany
eliminations) of the
Subsidiary exceeds 10% of the total assets
of such Person and its Consolidated
Subsidiaries as of the end of the most
recently completed Fiscal Quarter;
(iii) such
Person's and its other Subsidiaries'
equity in the income from continuing
operations before income taxes,
extraordinary items and cumulative effect of
changes in accounting principles of the
Subsidiary exceeds 10% of such income of
such Person and its Consolidated
Subsidiaries for the most recently completed
Fiscal Quarter; or
(iv)
with respect to South Jersey, such
Subsidiary is Marina Energy or South Jersey
Gas Company.
"Single Employer Plan" means a single employer plan, as defined
in
Section 4001(a)(15) of ERISA, which is
subject to Title IV of ERISA and which
(i) is maintained for employees of the
Obligors or an ERISA Affiliate and no
Page 16
Person other than the Obligors and its
ERISA Affiliates or (ii) was so
maintained and in respect of which the
Obligors or an ERISA Affiliate could have
liability under Section 4069 of ERISA in
the event such plan has been or were to
be terminated.
"Solvent" means, with respect to any Person, that such Person (a)
has
capital sufficient to carry on its business
and transactions and all business
and transactions in which it is about to
engage and is able to pay its debts as
they mature, (b) owns property having a
value, both at fair valuation and at
present fair saleable value, greater than
the amount required to pay its
probable liabilities (including
contingencies), and (c) does not believe that it
will incur debts or liabilities beyond its
ability to pay such debts or
liabilities as they mature.
"South Jersey" has the meaning assigned to that term in the
preamble
hereto.
"Stated Expiration Date" means the Termination Date or such later
date
to which the Termination Date may be
extended from time to time pursuant to the
terms of each Letter of Credit and Section
2.15 of this Agreement by the
Fronting Bank and the Banks in their sole
and absolute discretion.
"Subsidiary" means, with respect to any Person, any corporation
or
unincorporated entity of which more than
50% of the outstanding capital stock
(or comparable interest) having ordinary
voting power (irrespective of whether
at the time capital stock (or comparable
interest) of any other class or classes
of such corporation or entity shall or
might have voting power upon the
occurrence of any contingency) is at the
time directly or indirectly owned by
said Person (whether directly or through
one of more other Subsidiaries). In the
case of an unincorporated entity, a Person
shall be deemed to have more than 50%
of interests having ordinary voting power
only if such Person's vote in respect
of such interests comprises more than 50%
of the total voting power of all such
interests in the unincorporated entity.
"Taxes" has the meaning assigned to that term in Section 2.20.
"Tender Advance" has the meaning assigned to that term in
Section
2.05(a).
"Tender Agent" has the meaning assigned to that term in the
Indenture.
"Tender Agency Agreement" means the Tender Agency Agreement dated
as of
September 1, 2001 between Marina Energy and
the Trustee.
"Tendered Bonds" means Bonds tendered or deemed tendered for
purchase,
the purchase price of which was paid by a
draw under a Letter of Credit.
"Tender Drawing" means any drawing under a Letter of Credit to pay
the
purchase price of Bonds tendered pursuant
to an Indenture.
"Termination Date" means September 19, 2004, or such later date
to
which the Termination Date may be extended
from time to time pursuant to the
terms of Section 2.15 of this Agreement by
the Fronting Bank and the Banks in
their sole and absolute discretion.
"Trustee" means Commerce Bank, National Association, its successors
and
assigns, as trustee for the Bonds and any
Person serving as such under an
Indenture with respect to any additional
Bonds.
Page 17
"2001A Bonds" has the meaning assigned to that term in the recitals
to
this Agreement.
"2001A Commitment" means, as to any Bank, the amount set forth
opposite
such Bank's name on Schedule I hereto (as
such amount may be amended in
connection with an assignment pursuant to
Section 9.09). "2001A Commitments"
means the total of the Banks' 2001A
Commitments hereunder.
"2001A Letter of Credit" has the meaning assigned to that term in
the
recitals to this Agreement.
"2001B Bonds" has the meaning assigned to that term in the recitals
to
this Agreement.
"2001B Commitment" means, as to any Bank, the amount set forth
opposite
such Bank's name on Schedule I hereto (as
such amount may be amended in
connection with an assignment pursuant to
Section 9.09). "2001B Commitments"
means the total of the Banks' 2001B
Commitments hereunder.
"2001B Letter of Credit" has the meaning assigned to that term in
the
recitals to this Agreement.
"Type" means a type of Tender Advance, being either an LIBOR
Rate
Advance or a Base Rate Advance, as
applicable.
"Underwriter" means UBS PaineWebber Inc., its successors and
assigns,
and any other Person serving as such with
respect to any Bonds.
"Unused Fee" has the meaning assigned to that term in Section
2.03(b).
"Wachovia" has the meaning assigned to that term in the
preamble
hereto.
SECTION 1.02. Computation of Time Periods. In this Agreement, in
the
computation of a period of time from a
specified date to a later specified date,
the word "from" means "from and including"
and the words "to" and "until" each
means "to but excluding".
SECTION 1.03. Accounting Terms. All accounting terms not
specifically
defined herein shall be construed in
accordance with GAAP, except as otherwise
stated herein.
SECTION 1.04. Internal References. The words "herein", "hereof'
and
"hereunder" and words of similar import,
when used in this Agreement, shall
refer to this Agreement as a whole and not
to any provision of this Agreement,
and "Article", "Section", "subsection",
"paragraph", "Exhibit", "Schedule" and
respective references are to this Agreement
unless otherwise specified.
References herein or in any Related
Document to any agreement or other document
shall, unless otherwise specified herein or
therein, be deemed to be references
to such agreement or document as it may be
amended, modified or supplemented
after the date hereof from time to time in
accordance with the terms hereof or
of such Related Document, as the case may
be.
Page 18
ARTICLE II
AMOUNT AND TERMS OF THE LETTER OF CREDIT
SECTION 2.01 The Letters of Credit. (a) The Fronting Bank agrees,
on
the terms and conditions hereinafter set
forth, to extend the Letters of Credit
to the Stated Expiration Date by way of an
amendment to each of the Letters of
Credit in the form of Exhibit E and Exhibit
F attached hereto. This Agreement
shall be deemed to apply to the Letters of
Credit from the Date of Issuance.
(b) Upon receipt of an Application by the Obligors and subject to
the
conditions set forth in Section 3.02, the
Fronting Bank will amend the 2001B
Letter of Credit to increase the coverage
under the 2001B Letter of Credit up
to, but not in excess of the lesser of (i)
the Banks' 2001B Commitments and (ii)
the aggregate amount of the issued 2001B
Bonds, upon the issuance of additional
2001B Bonds.
SECTION 2.02. Extension of the Letters of Credit. (a) The Letters
of
Credit shall be extended on the Closing
Date. After the extension of the Letters
of Credit, the Fronting Bank will promptly
notify the Banks of the extension of
the Letters of Credit or the amendment to
the 2001B Letter of Credit, as the
case may be, and provide them with a copy
of each amendment. (b) The Fronting
Bank shall have no obligation to amend a
Letter of Credit if the amendment to
such Letter of Credit would cause (x) the
sum of (i) the aggregate face amount
of the issued and outstanding Letters of
Credit and (ii) the aggregate principal
amount of Demand Loans and Term Advances
relating to the Letters of Credit then
outstanding to exceed at any time the
Commitments; (y) the sum of (i) the face
amount of the issued and outstanding 2001A
Letter of Credit and (ii) the
aggregate principal amount of Demand Loans
and Term Advances relating to the
2001A Letter of Credit then outstanding to
exceed at any time the 2001A
Commitments; or (z) the sum of (i) the face
amount of the issued and outstanding
2001B Letter of Credit and (ii) the
aggregate principal amount of Demand Loans
and Term Advances relating to the 2001B
Letter of Credit then outstanding to
exceed at any time the 2001B
Commitments.
SECTION 2.03. Commissions and Fees. (a) The Obligors hereby agree
to
pay to the Administrative Agent, for the
ratable account of each Bank, a letter
of credit fee (the "Letter of Credit Fee")
equal to the total aggregate face
amount of the Letters of Credit multiplied
by a rate per annum equal to the
"Applicable Letter of Credit Fee" under the
definition of Applicable Margin from
the date hereof to the Stated Expiration
Date, payable quarterly in arrears on
the first day of each March, June,
September and December, commencing December
1, 2002, and on the Stated Expiration
Date.
(b) The Obligors hereby agree to pay to the Administrative Agent,
for
the ratable account of each Bank, an unused
fee (the "Unused Fee") equal to (i)
the total aggregate amount of the Banks'
2001B Commitments minus (ii) the
Average Quarterly Outstanding 2001B Amount
multiplied by a rate per annum equal
to the "Applicable Unused Fee" under the
definition of Applicable Margin from
the date hereof to the Stated Expiration
Date, payable quarterly in arrears on
the first day of each March, June,
September and December, commencing December
1, 2002, and on the Stated Expiration
Date.
(c) The Obligors
hereby agree to pay all normal costs and expenses of
the Fronting Bank in connection with the
transfer, amendment or other
administration of the Letters of Credit,
including, a drawing fee in an amount
Page 19
equal to $100.00 for each drawing under a
Letter of Credit. Such drawing fee
shall be added to the drawing under such
Letter of Credit and repaid by the
Obligors as part of such drawing; provided,
however, if such drawing fee would
cause the total drawing to exceed the total
aggregate amount of such Letter of
Credit, the drawing fee shall be paid on
the day of such drawing to the
Administrative Agent by wire transfer.
(d) The Obligors hereby agree to pay to the Administrative Agent
and
the Fronting Bank, such other fees as are
specified in the fee letter agreement
dated August 14, 2002, among the Obligors,
Wachovia and Wachovia Securities,
Inc.
SECTION 2.04. Reimbursement On Demand. (a) Except as otherwise
specified in Section 2.05 (and provided
that the conditions precedent specified
therein have been fulfilled), if the
Fronting Bank shall make any payment under
a Letter of Credit in response to a Tender
Drawing, such payment (including,
without limitation, amounts in respect of
any reinstatement of interest on the
Bonds at the election of the Banks
notwithstanding any failure by the Obligors
to reimburse the Banks for any previous
drawing to pay interest on the Bonds)
shall constitute a demand loan (each, a
"Demand Loan") made by the Banks to the
Obligors on the date of such payment by the
Fronting Bank under such Letter of
Credit.
(b) The Obligors agree to pay or cause to have paid to the
Administrative Agent, for the account of
the Banks, after the honoring by the
Fronting Bank of any drawing under the
Letters of Credit giving rise to such
Demand Loan, each such Demand Loan no later
than 3:00 p.m. (Charlotte, North
Carolina time) on the date of its making.
Any such Demand Loan (or any portion
thereof) not so paid on such date shall
bear interest from the date of making of
such Demand Loan until payment in full, at
a fluctuating interest rate per annum
equal to the Base Rate plus 2%. The
principal amount of each Demand Loan and all
interest thereon shall be due and payable
on demand, and if not sooner paid or
demanded, on the Termination Date.
SECTION 2.05. Tender Advances; Interest Rates. (a) If the Fronting
Bank
shall make any payment under a Letter of
Credit in response to a Tender Drawing
and, on the date of such payment, the
conditions precedent set forth in Section
3.03 shall have been fulfilled, that
portion of such payment equal to the
principal amount of the Bonds purchased
with the proceeds of such Tender Drawing
shall be deemed to constitute an advance
made by the Banks to the Obligors on
the date and in the amount of such
principal amount (each such advance being a
"Tender Advance"). Each Tender Advance
shall bear interest, initially at the
Base Rate and shall be deemed to be a Base
Rate Advance, and thereafter at the
Base Rate or the LIBOR Rate, as selected by
the Obligors in accordance with
Section 2.08, and subject to the terms of
Section 2.05(b). The principal amount
thereof and all interest thereon shall be
due and payable in accordance with
Section 2.05(b) below and on the earliest
to occur of (i) the Termination Date,
(ii) the date on which the Pledged Bonds
are redeemed or cancelled, (iii) the
date on which any Pledged Bonds are
remarketed and (iv) the date on which the
applicable Letter of Credit is replaced by
a substitute letter of credit. To the
extent that the Administrative Agent
receives interest payable on account of any
Pledged Bonds such interest received shall
be applied and credited against
accrued and unpaid interest on the Tender
Advances that financed the Tender
Drawing in respect of which such Pledged
Bonds were purchased.
(b) The Obligors shall pay interest on the unpaid principal amount
of
each Tender Advance, at the Obligors'
option, as follows:
Page 20
(i) Base Rate Advances. If such Tender Advance is a Base Rate
Advance, interest thereon shall be payable quarterly in arrears on
the
first day of each March, June, September and December, on the date
of
any Conversion of such Base Rate Advance and on the date such Base
Rate
Advance shall become due and payable or otherwise shall be paid
in
full; provided that at any time an Event of Default shall have
occurred
and be continuing, thereafter each Base Rate Advance shall bear
interest, payable on demand, at the Default Rate; or
(ii) LIBOR Rate Advances. If such Tender Advance is a LIBOR
Rate Advance, interest thereon shall be payable on the last day of
the
Interest Period for such Advance (and, in the case of any
Interest
Period of six months, on the last day of the third month of
such
Interest Period); provided that at any time an Event of Default
shall
have occurred and be continuing, thereafter each LIBOR Rate
Advance
shall bear interest, payable on demand, at the Default Rate.
(c) Notwithstanding any provision to the contrary herein except as
set
forth in Section 2.04(b), the Obligors
shall pay interest on all past-due
amounts of principal and (to the fullest
extent permitted by law) interest,
costs, fees and expenses hereunder, from
the date when such amounts became due
until paid in full, payable on demand, at
the Default Rate in effect from time
to time.
SECTION 2.06 Additional Interest on LIBOR Rate Advances. The
Obligors
shall pay to each Bank, so long as such
Bank shall be required under regulations
of the Board of Governors of the Federal
Reserve System to maintain reserves
with respect to liabilities or assets
consisting of or including Eurocurrency
Liabilities and which are not required on
the date of this Agreement, additional
interest on the unpaid principal amount of
each LIBOR Rate Advance of such Bank,
from the date of such LIBOR Rate Advance
until such principal amount is paid in
full, at an interest rate per annum equal
at all times to the remainder obtained
by subtracting (i) the LIBOR Rate for the
Interest Period for such LIBOR Rate
Advance from (ii) the rate obtained by
dividing such LIBOR Rate by a percentage
equal to 100% minus the LIBOR Rate Reserve
Percentage of such Bank for such
Interest Period, payable on each date on
which interest is payable on such LIBOR
Rate Advance. Such additional interest
shall be determined by such Bank and
notified to the Obligors through the
Administrative Agent.
SECTION 2.07. Interest Rate Determination.
(a) The Administrative Agent shall give prompt notice to the
Obligors
and the Banks of the applicable interest
rate determined by the Administrative
Agent for purposes of Section 2.04 and
2.05.
(b) If, with respect to any LIBOR Rate Advances, (i) the Required
Banks
notify the Administrative Agent that the
LIBOR Rate for any Interest Period for
such LIBOR Rate Advances will not
adequately reflect the cost to such Required
Banks of making, funding or maintaining
their respective LIBOR Rate Advances
for such Interest Period or (ii) the
Required Banks notify the Administrative
Page 21
Agent or the Administrative Agent
determines that adequate and fair means do not
exist for ascertaining the applicable
interest rate on the basis provided for in
the definition of LIBOR Rate, the
Administrative Agent shall forthwith so notify
the Obligors and the Banks, whereupon:
(1) each LIBOR Rate Advance will automatically, on the last day of
the
then existing Interest Period therefor, Convert into a Base
Rate
Advance, and
(2) the obligation of the Banks to make, or to Convert Base
Rate
Advances into, LIBOR Rate Advances shall be suspended until the
Administrative Agent (based on notice from the Required Lenders)
shall
notify the Obligors and the Banks that the circumstances causing
such
suspension no longer exist.
(c) If the Obligors shall fail to (i) select the duration of
any
Interest Period for any LIBOR Rate Advances
in accordance with the provisions
contained in the definition of "Interest
Period" in Section 1.01, (ii) provide
a Notice of Conversion with respect to any
LIBOR Rate Advances on or prior to
11:00 a.m., Charlotte, North Carolina time,
on the third Business Day prior to
the last day of the Interest Period
applicable thereto, in the case of a
Conversion to or in respect of LIBOR Rate
Advances or (iii) satisfy the
conditions set forth in Section 2.08 with
respect to a Conversion, the
Administrative Agent will forthwith so
notify the Obligors and the Banks and
such LIBOR Rate Advances will
automatically, on the last day of the then
existing Interest Period therefor, Convert
into Base Rate Advances.
SECTION 2.08. Voluntary Conversion of Tender Advances. The Obligors
may
on any Business Day, by delivering an
irrevocable Notice of Conversion (a
"Notice of Conversion") in the form of
Exhibit C hereto to the Administrative
Agent not later than 11:00 a.m., Charlotte,
North Carolina time, on the third
Business Day prior to the date of the
proposed Conversion, and subject to the
provisions of Sections 2.07, 2.11 and 3.04,
Convert all Tender Advances of one
Type made simultaneously into Tender
Advances of the other Type; provided,
however, that any Conversion of any LIBOR
Rate Advances into Base Rate Advances
shall be made on, and only on, the last day
of an Interest Period for such LIBOR
Rate Advances.
SECTION 2.09. Prepayments of Advances. (a) The Obligors may, upon
at
least three (3) Business Days' notice, in
the case of LIBOR Rate Advances, and
upon same Business Day notice prior to
11:00 a.m., Charlotte, North Carolina
time, on such Business Day, in the case of
Base Rate Advances, to the
Administrative Agent, prepay without
premium or penalty the outstanding amount
of any Tender Advance in whole or in part
with accrued interest to the date of
such prepayment on the amount prepaid;
provided, however, that (x) each partial
prepayment shall be in an aggregate
principal amount not less than $5,000,000
(or, if lower, the principal amount
outstanding hereunder on the date of such
prepayment) or an integral multiple of
$1,000,000 in excess thereof and (y) in
the case of any such prepayment of a LIBOR
Rate Advance on a day other than the
last day of an Interest Period for such
LIBOR Rate Advance, the Obligors shall
be obligated to reimburse the Banks in
respect thereof pursuant to Section
9.07(b).
(b) Prior to or simultaneously with the receipt of proceeds related
to
the remarketing of Bonds purchased pursuant
to one or more Tender Drawings, the
Obligors shall directly, or through the
Remarketing Agent or the Tender Agent on
behalf of the Obligors, repay or prepay (as
the case may be) the
then-outstanding Demand Loans and Tender
Advances (in the order in which they
Page 22
were made) by paying to the Administrative
Agent for the pro rata share of the
Banks an amount equal to the sum of (i) the
aggregate principal amount of the
Bonds remarketed plus (ii) all accrued
interest on the principal amount of
Demand Loans and/or Tender Advances so
repaid or prepaid plus (iii) in the case
of prepayments of LIBOR Rate Advances, any
amount payable to the Banks in
respect thereof pursuant to Section
9.07(b).
(c) On the date of any termination or reduction of the Commitments,
the
Obligors shall pay or prepay for the
ratable accounts of the Banks so much of
the principal amount outstanding under this
Agreement as shall be necessary in
order that the sum of (i) the principal
amount outstanding (after giving effect
to such prepayment) and (ii) the face
amount of the Letters of Credit then
issued and outstanding will not exceed the
amount of the Commitments following
such termination or reduction, together
with (i) accrued interest to the date of
such prepayment on the principal amount
repaid or prepaid and (ii) in the case
of prepayments of LIBOR Rate Advances, any
amount payable to the Banks pursuant
to Section 9.07(b).
(d) On the Termination Date, the Obligors shall pay for the
ratable
accounts of the Banks the principal amount
outstanding under this Agreement,
together with (i) accrued interest to the
date of such payment on the principal
amount repaid and (ii) in the case of
prepayments of LIBOR Rate Advances, any
amount payable to the Banks pursuant to
Section 9.07(b).
SECTION 2.10. Increased Costs. (a) If, due to either (i) the
introduction of or any change (other than
any change by way of imposition or
increase of reserve requirements, in the
case of LIBOR Rate Advances, included
in the LIBOR Rate Reserve Percentage) in or
in the interpretation of any law or
regulation or (ii) the compliance with any
guideline or request from any central
bank or other governmental authority
(whether or not having the force of law),
in any case, promulgated, implemented or
occurring on or after the date hereof,
there shall be any increase in the cost to
any Bank of agreeing to make or
making, funding or maintaining LIBOR Rate
Advances, then the Obligors shall from
time to time, upon demand by such Bank
(with a copy of such demand to the
Administrative Agent), pay to such Bank
additional amounts sufficient to
compensate such Bank for such increased
cost. Each Bank agrees to notify the
Obligors of any such increased costs as
soon as reasonably practicable after
determining that such increased cost is
applicable to LIBOR Rate Advances
hereunder. A certificate as to the amount
of such increased cost, submitted to
the Obligors and the Administrative Agent
by such Bank, shall be conclusive and
binding for all purposes, absent manifest
error.
(b) If the Fronting Bank or any Bank determines that compliance
with
any law or regulation or any guideline or
request from any central bank or other
governmental authority (whether or not
having the force of law), in any case
promulgated, implemented or occurring on or
after the date hereof, affects or
would affect the amount of capital required
or expected to be maintained by the
Fronting Bank or any such Bank or any
corporation controlling the Fronting Bank
or any such Bank and that the amount of
such capital is increased by or based
upon the existence of the Fronting Bank's
or any such Bank's Commitment
hereunder and other Commitments of this
Type, then, upon demand by the Fronting
Bank or any such Bank, as the case may be
(with a copy of such demand to the
Administrative Agent), the Obligors shall
immediately pay to the Fronting Bank
or any such Bank, as the case may be, from
time to time as specified by the
Fronting Bank or such Bank, additional
amounts sufficient to compensate the
Fronting Bank or such Bank, as the case may
be, or such corporation in the light
of such circumstances, for any difference
in the rate of return of the Fronting
Page 23
Bank or any such Bank to the extent that
the Fronting Bank or such Bank, as the
case may be, reasonably determines such
increase in capital to be allocable to
the existence of the Fronting Bank's or
such Bank's Commitment hereunder, as the
case may be. The Fronting Bank and each
Bank agrees to notify the Obligors of
any such additional amount as soon as
reasonably practicable after the Fronting
Bank or any Bank makes such determination.
A certificate as to such amounts
submitted to the Obligors and the
Administrative Agent by the Fronting Bank or
such Bank shall be conclusive and binding
for all purposes, absent manifest
error.
SECTION 2.11. Illegality. Notwithstanding any other provision of
this
Agreement, if any Bank shall notify the
Administrative Agent that the
introduction of or any change in or in the
interpretation of any law or
regulation makes it unlawful, or any
central bank or other governmental
authority asserts that it is unlawful, for
any Bank or its LIBOR Lending Office
to perform its obligations hereunder to
make LIBOR Rate Advances or to fund or
maintain LIBOR Rate Advances hereunder, (i)
the obligation of the Banks to make,
or to Convert Base Rate Advances into,
LIBOR Rate Advances shall be suspended
until the Administrative Agent (based on
notice from the affected Bank) shall
notify the Obligors and the Banks that the
circumstances causing such suspension
no longer exist and (ii) the Obligors shall
pay (x) on the last day of the
applicable Interest Period, or (y) if the
failure to prepay immediately would
cause any Bank to be in violation of such
law or regulation, immediately, in
full all LIBOR Rate Advances of all Banks
then outstanding, together with
interest accrued thereon, unless, in either
case, the Obligors, within five
Business Days of notice from the
Administrative Agent (or such shorter, maximum
period of time, specified by the
Administrative Agent, as may be legally
allowable), Converts all LIBOR Rate
Advances of all Banks then outstanding into
Base Rate Advances in accordance with
Section 2.08.
SECTION 2.12. Payments and Computations. Other than payments
made
pursuant to Section 2.04, the Obligors
shall make each payment hereunder not
later than 12:00 noon (Charlotte, North
Carolina time) on the day when due in
lawful money of the United States of
America to the Administrative Agent at its
address referred to in Section 9.02 in same
day funds. Computations of the Base
Rate (when based on the Federal Funds
Rate), the LIBOR Rate, the Default Rate
(when based on the Federal Funds Rate) and
fees under Section 2.03 shall be made
by the Administrative Agent on the basis of
a year of 360 days for the actual
number of days (including the first day but
excluding the last day) elapsed, and
computations of the Base Rate (when based
on the Prime Rate) and the Default
Rate (when based on the Prime Rate) shall
be made by the Administrative Agent on
the basis of a year of 365 or 366 days, as
the case may be, for the actual
number of days (including the first day but
excluding the last day) elapsed.
SECTION 2.13. Non-Business Days. Except as otherwise specified in
the
definition of "Interest Period", whenever
any payment to be made hereunder shall
be stated to be due on a day that is not a
Business Day such payment shall be
made on the next succeeding Business Day,
and such extension of time shall in
such case be included in the computation of
payment of interest or fees, as the
case may be.
SECTION 2.14. Source of Funds. All payments made by the Fronting
Bank
pursuant to the Letters of Credit shall be
made from funds of the Fronting Bank
and not from funds obtained from any other
Person.
SECTION 2.15. Extension of the Stated Expiration Date. Unless
each
Letter of Credit outstanding pursuant
hereto shall have expired in accordance
with its terms on the Cancellation Date, at
least ninety (90) days before the
Page 24
Stated Expiration Date of any Letter of
Credit, the Obligors may request the
Fronting Bank with the consent of all the
Banks, by notice to the Administrative
Agent in writing (each such request being
irrevocable) to extend the Stated
Expiration Date for such Letter of Credit.
If the Obligors shall make such a
request the Administrative Agent shall
promptly notify the Banks thereof, and if
the Fronting Bank and the Banks, in their
sole discretion, elect to so extend
the Stated Expiration Date for such Letter
of Credit then in effect, the
Administrative Agent shall deliver to the
Obligors a notice (herein referred to
as a "Notice of Extension") designating the
date to which the Stated Expiration
Date for such Letter of Credit will be
extended and the conditions of such
consent (including, without limitation,
conditions relating to legal
documentation and the consent of the
Trustee). If all such conditions are
satisfied and such extension of the Stated
Expiration Date for such Letter of
Credit shall be effective, thereafter all
references in this Agreement to the
Stated Expiration Date for such Letter of
Credit shall be deemed to be
references to the amended date designated
as such in such legal documentation.
Any date to which the Stated Expiration
Date for such Letter of Credit has been
extended in accordance with this Section
2.15 may be extended in like manner.
Failure of the Administrative Agent to
deliver a Notice of Extension as herein
provided within thirty (30) days of a
request by the Obligors to extend such
Stated Expiration Date for such Letter of
Credit shall constitute an election by
the Fronting Bank and the Banks not to
extend the Stated Expiration Date for
such Letter of Credit. In the event the
Stated Expiration Date is extended
beyond the Termination Date, the
Termination Date shall automatically be
extended to the new Stated Expiration
Date.
SECTION 2.16. Amendments Upon Extension. Upon any extension of a
Stated
Expiration Date pursuant to Section 2.15 of
this Agreement, the Fronting Bank
and the Banks reserve the right to
renegotiate any provision hereof.
SECTION 2.17. Evidence of Debt. The Fronting Bank and each Bank
shall
maintain, in accordance with its usual
practice, an account or accounts
evidencing the indebtedness of the Obligors
resulting from each drawing under
the Letters of Credit, from each Demand
Loan and from each Tender Advance made
from time to time hereunder and the amounts
of principal and interest payable
and paid from time to time hereunder. In
any legal action or proceeding in
respect of this Agreement, the entries made
in such account or accounts shall,
in the absence of manifest error, be
conclusive evidence of the existence and
amounts of the Obligations of the Obligors
therein recorded.
SECTION 2.18. Obligations Absolute. The payment obligations of
the
Obligors under this Agreement shall be
unconditional and irrevocable, and shall
be paid strictly in accordance with the
terms of this Agreement under all
circumstances, including, without
limitation, the following circumstances:
(a) any lack of validity or enforceability of the Letters of
Credit, this Agreement, any Related Document or any other agreement
or
instrument relating thereto;
(b) any amendment or waiver of or any consent to departure
from all or any of this Agreement or any Related Document;
(c) the existence of any claim, set-off, defense or other
right which the Obligors may have at any time against the Trustee
or
any other beneficiary, or any transferee, of the Letters of Credit
(or
Page 25
any persons or entities for whom the Trustee, any such beneficiary
or
any such transferee may be acting), the Fronting Bank, or any
other
person or entity, whether in connection with this Agreement,
the
transactions contemplated herein or in the Related Documents, or
any
unrelated transaction;
(d) any statement or any other document presented under the
Letters of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue
or
inaccurate in any respect;
(e) payment by the Fronting Bank under the Letters of Credit
against presentation of a certificate which does not comply with
the
terms of the Letters of Credit; or
(f) any other circumstance or happening whatsoever, including,
without limitation, any other circumstance which might
otherwise
constitute a defense available to or discharge of the Obligors,
whether
or not similar to any of the foregoing.
Nothing in this Section 2.18 is intended to
limit any liability of the Fronting
Bank pursuant to Section 9.06 in respect of
its willful misconduct or gross
negligence.
SECTION 2.19. Net of Taxes, Etc. (a) All payments made by the
Obligors
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, in the
case of the Administrative Agent, the
Fronting Bank and each Bank, taxes imposed
on its overall net income, and
franchise taxes imposed on it by the
jurisdiction under the laws of which the
Administrative Agent, the Fronting Bank or
such Bank (as the case may be) is
organized or any political subdivision
thereof and, in the case of each Bank,
taxes imposed on its overall net income,
and franchise taxes imposed on it by
the jurisdiction of such Bank's Applicable
Lending Office or any political
subdivision thereof (all such non-excluded
taxes, levies, imposts, deductions,
charges, withholdings and liabilities being
hereinafter referred to as "Taxes").
If any Taxes are required to be withheld
from any amounts payable to the
Administrative Agent, the Fronting Bank or
any Bank hereunder, the amounts so
payable to the Administrative Agent, the
Fronting Bank or such Bank shall be
increased to the extent necessary to yield
to the Administrative Agent, the
Fronting Bank or such Bank (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 are payable
by the Obligors, as promptly as
possible thereafter the Obligors shall send
to the Administrative Agent for its
own account or for the account of the
Fronting Bank or such Bank, as the case
may be, a certified copy of an original
official receipt received by the
Obligors showing payment thereof. If the
Obligors fails to pay any Taxes when
due to the appropriate taxing authority or
fails to remit to the Administrative
Agent the required receipts or other
required documentary evidence, the Obligors
shall indemnify the Administrative Agent,
the Fronting Bank and the Banks for
any incremental taxes, interest or
penalties that may become payable by the
Administrative Agent, the Fronting Bank or
any Bank as a result of any such
failure. The agreements in this Section
shall survive the termination of this
Agreement and the payment of the
obligations hereunder and all other amounts
payable hereunder.
Page 26
(b) Each Bank that is not incorporated under the laws of the
United
States of America or a state thereof agrees
that it will deliver to the Obligors
and the Administrative Agent on or before
the latter of the date hereof and the
date such Bank becomes a Bank (i) two duly
completed copies of United States
Internal Revenue Service Form W-8BEN or
W-8ECI or successor applicable form, as
the case may be. Each such Bank also agrees
to deliver to the Obligors and the
Administrative Agent two further copies of
said Form W-8BEN or W-8ECI, or
successor applicable forms or other manner
of certification, as the case may be,
on or before the date that any such form
previously delivered expires or becomes
obsolete or after the occurrence of any
event requiring a change in the most
recent form previously delivered by it to
the Obligors, and such extensions or
renewals thereof as may reasonably be
requested by the Obligors or the
Administrative Agent, unless in any such
case an event (including, without
limitation, any change in treaty, law or
regulation) has occurred prior to the
date on which any such delivery would
otherwise be required which renders all
such forms inapplicable or which would
prevent such Bank from duly completing
and delivering any such form with respect
to it and such Bank so advises the
Obligors and the Administrative Agent. Such
Bank shall certify that it is
entitled to receive payments under this
Agreement without deduction or
withholding of any United States federal
income taxes and that it is entitled to
an exemption from United States backup
withholding tax.
(c) If any Bank shall request compensation for costs pursuant to
this
Section 2.19, (i) such Bank shall make
reasonable efforts (which shall not
require such Bank to incur a loss or
unreimbursed cost or otherwise suffer any
disadvantage deemed by it to be
significant) to make within thirty (30) days an
assignment of its rights and delegation and
transfer of its obligations
hereunder to another of its offices,
branches or affiliates, if such assignment
would reduce such costs in the future, (ii)
the Obligors may with the consent of
the Required Banks and the Fronting Bank,
which consent shall not be
unreasonably withheld, secure a substitute
bank to replace such Bank which
substitute bank shall, upon execution of a
counterpart of this Agreement and
payment to such Bank of any and all amounts
due under this Agreement, be deemed
to be a Bank hereunder (any such
substitution referred to in clause (ii) shall
be accompanied by an amount equal to any
loss or reasonable expense incurred by
such Bank as a result of such
substitution); provided that this Section 2.19(c)
shall not be construed as limiting the
liability of the Obligors to indemnify or
reimburse such Bank for any costs or
expenses the Obligors is required hereunder
to indemnify or reimburse.
SECTION 2.20. Participation by Banks in Letters of Credit. (a)
The
Fronting Bank irrevocably agrees to grant
and hereby grants, without recourse,
to each Bank, and to induce the Fronting
Bank to issue the Letters of Credit
hereunder, each Bank irrevocably agrees to
accept and purchase and hereby
accepts and purchases, without recourse, on
the terms and conditions hereinafter
stated, for such Bank's own account and
risk an undivided interest equal to such
Bank's Percentage in the Fronting Bank's
obligations and rights under the
Letters of Credit and the amount of each
drawing paid by the Fronting Bank
thereunder.
(b) Upon receipt of written notice of a drawing under a Letter
of
Credit (other than a drawing for a
regularly scheduled payment under the Bonds),
the Fronting Bank shall notify the
Administrative Agent, who in turn shall
notify each Bank promptly by telex,
telecopier or telephone (such telephonic
notice to be confirmed in writing) of such
drawing under the Letter of Credit.
Page 27
In the event that such drawing is actually
paid by the Fronting Bank and the
Fronting Bank has not been reimbursed in
full therefor by the Obligors by 3:00
p.m. (Charlotte, North Carolina time) on
the day such drawing is paid by the
Fronting Bank, the Administrative Agent
shall notify promptly each Bank thereof.
Upon receipt of such notice, each Bank
shall make available to the
Administrative Agent such Bank's Percentage
of the Demand Loans or the Tender
Advance resulting from such drawing, in
immediately available funds, by 12:00
noon (Charlotte, North Carolina time) on
the next succeeding Business Day after
the date of such notice.
(c) Upon receipt by the Administrative Agent of any payment of,
or
whenever the Administrative Agent makes an
application of funds in respect of,
the principal portion of any Obligations in
respect of which a Bank has
fulfilled its obligations hereunder, the
Administrative Agent shall promptly pay
over to such Bank, so long as such Bank is
not in default of any of its
obligations hereunder, in the same funds
which the Administrative Agent receives
in respect thereof, such Bank's Percentage
of the amount of such payment or
application.
(d) (i) Upon receipt by the Administrative Agent of any payment of,
or
whenever the Administrative Agent makes an
application of funds in respect of,
the interest portion of any Obligations as
to which a Bank has fulfilled its
obligations hereunder, the Administrative
Agent shall promptly pay over to such
Bank, so long as such Bank is not in
default of any of such Bank's obligations
hereunder, in the same funds which the
Administrative Agent receives in respect
thereof, such Bank's Percentage of the
amount of such payment or application;
but subject to the provisions of clause
(ii) of this Section 2.20(d).
(ii) If a Bank does not make available to the Administrative
Agent such Bank's Percentage of any Demand
Loan or Tender Advance on any date on
which the related payment is required to be
made hereunder (a "Disbursement
Date"), such Bank shall be required to pay
interest to the Administrative Agent
for the account of the Fronting Bank on its
Percentage of such Demand Loan or
Tender Advance at the Federal Funds Rate
from such Disbursement Date until (but
excluding) the date such amount is received
by the Fronting Bank. If the
Fronting Bank receives a Bank's Percentage
of any Demand Loan or Tender Advance
on the related Disbursement Date or if the
Fronting Bank receives interest on
any late payment from such Bank in
accordance with the provisions of the
preceding sentence and such late payment is
received within five (5) Business
Days of the related Disbursement Date such
Bank shall receive interest on its
pro rata share of such Demand Loan or
Tender Advance in accordance with clause
(i) of this Section 2.20(d) from such
Disbursement Date. If the Fronting Bank
does not receive a Bank's Percentage of any
Demand Loan or Tender Advance on the
Disbursement Date therefor and does not
receive interest on any such late
payment together with such late payment
within five Business Days from such
Disbursement Date from such Bank in
accordance with the provisions of this
paragraph, such Bank shall receive interest
on its Percentage of such Demand
Loan or Tender Advance in accordance with
clause (i) of this Section 2.20(d)
only from the date, if any, on which such
Bank's payment is received by the
Fronting Bank.
(e) Upon receipt by the Administrative Agent of any payment of,
or
whenever the Administrative Agent makes an
application of funds in respect of,
the fees payable pursuant to Section
2.03(a) hereof (the "Shared Fees"), the
Administrative Agent shall promptly pay
over to each Bank, so long as such Bank
is not in default of any of such Bank's
obligations hereunder, in the same funds
which the Administrative Agent receives in
respect thereof, such Bank's pro rata
Page 28
share of the amount of such payment or
application, which share shall be based
on such Bank's Percentage of the Shared
Fees applicable.
(f) Upon receipt by the Administrative Agent of any payment of,
or
whenever the Administrative Agent makes an
application of funds in respect of,
any amount owed to any Bank pursuant to
Section 2.10 or 2.19, the Administrative
Agent shall promptly pay over to such Bank,
so long as such Bank is not in
default of any of such Bank's obligations
hereunder, in the same funds which the
Administrative Agent receives in respect
thereof, the amount of such payment or
application.
(g) Upon receipt by the Fronting Bank from time to time of any
amount
pursuant to the terms of any Related
Document (other than pursuant to the terms
of this Agreement), the Fronting Bank shall
promptly deliver to the
Administrative Agent any such amount. Upon
receipt by the Administrative Agent
of any such amount, the Administrative
Agent shall distribute such amounts as
follows:
First: To the Fronting Bank in an amount equal to any draw under
the
Letters of Credit not reimbursed in full by the Obligors pursuant
to
Section 2.04 hereof on the date of such distribution;
Second: To the Fronting Bank (for its own account), the
Administrative
Agent (for its own account) and the Banks, pro rata, in an amount
equal
to the commissions and fees due and payable hereunder to the
Fronting
Bank, the Administrative Agent and the Banks on the date of
such
distribution;
Third: To the Banks, pro rata, in an amount equal to the interest
due
and payable on any Demand Loan or Tender Advance outstanding
hereunder
on the date of such distribution;
Fourth: To the Banks, pro rata, in an amount equal to the principal
due
and payable to the Banks hereunder on the date of
such distribution;
Fifth: To the Fronting Bank and the Administrative Agent, in an
amount
equal to any amount due and payable to the Fronting Bank and
the
Administrative Agent in their capacities as such pursuant to
Section 9.07 hereof on the date of such distribution;
Sixth: To the Banks, pro rata, in an amount equal to any amount due
and
payable to the Banks pursuant to Section 9.07 hereof on the date
of
such distribution; and
Seventh: To the Fronting Bank (for its own account), the
Administrative
Agent (for its own account) and the Banks, pro rata, for any
other
amounts not described above due and payable hereunder to such
Persons
on the date of such distribution.
(h) If all or any part of any payment made to the Administrative
Agent
with respect to the Obligations and paid
over by the Administrative Agent to any
Bank pursuant to the terms hereof is
thereafter recovered or returned from or by
the Administrative Agent for any reason,
then such Bank shall pay to the
Administrative Agent such Bank's pro rata
share thereof (based upon the amount
such Bank has received in respect thereof)
upon the Administrative Agent's
demand therefor (together with interest
thereon to the extent that the
Administrative Agent is required to pay
interest on the amount so recovered or
returned).
Page 29
(i) Each Bank shall indemnify and hold harmless the Fronting Bank
from
and against any and all liabilities
(including liabilities for penalties),
actions, suits, judgments, demands, costs
and expenses (including, without
limitation, reasonable attorneys' fees and
expenses) resulting from any failure
on such Bank's part to provide, or from any
delay in providing, any payment
required by such Bank under subsection (b)
of this Section 2.20. If any Bank
fails to make any payments under subsection
(b) of this Section 2.20 within five
Business Days of the due date therefor,
then the Fronting Bank may acquire, or
transfer to an assignee, in exchange for
the unpaid sum or sums due from such
Bank, such Bank's unfunded portion of its
Percentage of the Obligations and the
Letters of Credit without, however,
relieving such Bank from any liability for
damages, costs and expenses suffered by the
Fronting Bank as a result of such
failure. The purchaser of any such interest
(including the Fronting Bank) shall
be deemed to have acquired an interest
senior to such Bank's remaining interest
hereunder (if any), and accordingly, such
purchaser shall be entitled to receive
all subsequent payments allocable to such
Bank's interest hereunder which the
Administrative Agent would otherwise have
made to such Bank until such time as
the purchaser shall have obtained recovery
of the amount it paid for its
interest, with interest at the Default
Rate. After any such transfer, such Bank
shall have no further obligations hereunder
(except for any liability for
damages, costs and expenses as aforesaid)
and shall not be entitled to its
Percentage of any fees or commissions
accruing after the effective date of such
transfer.
(j) Each Bank hereby irrevocably authorizes the Fronting Bank to
pay
drawings under the Letters of Credit, and
authorizes the Administrative Agent to
receive from the Obligors payment of all
fees, costs, expenses, charges,
principal and interest and to take such
action on such Bank's behalf hereunder
and the Related Documents and to exercise
such powers and to perform such duties
hereunder and thereunder as are
specifically delegated to or required of the
Administrative Agent by the terms hereof
and thereof, together with such powers
as are reasonably incidental thereto.
(k) Each Bank hereby acknowledges and agrees that such Bank's
obligation to participate in the Letters of
Credit and to make, maintain and
Convert Tender Advances and such Bank's
obligation to pay to the Administrative
Agent on the dates specified herein amounts
equal to such Bank's Percentage of
drawings paid by the Fronting Bank under
the Letters of Credit, the Tender
Advances and the Demand Loans made
hereunder shall be at all times and in all
events absolute, irrevocable and
unconditional obligations, and that such
obligations shall not be affected in any
way by any intervening circumstances
occurring after the payment of any drawing
under the Letters of Credit or the
making of any Tender Advances or Demand
Loans including, without limitation:
(i) the existence of any claim, set-off, defense or other
right that the Obligors may have against the Administrative Agent,
the
Fronting Bank, any Bank or any other party; or
(ii) any certificate or any other document presented under the
Letters of Credit proving to have been forged, fraudulent, invalid
or
insufficient in any respect or any statement therein being untrue
or
inaccurate in any respect except in the case of the gross
negligence or
willful misconduct of the Fronting Bank; or
Page 30
(iii) any other act or omission to act of any kind by the
Fronting Bank, the Administrative Agent or the Obligors or any
Person
providing security or guarantees in connection with this Agreement
or
the Letters of Credit except in the case of the gross negligence
or
willful misconduct of the Fronting Bank; or
(iv) the existence of any Event of Default, Default or other
default hereunder; or
(v) any change of any kind whatsoever in the financial
position or creditworthiness of the Obligors, any guarantor or
any
other Person.
(l) Each Bank agrees to indemnify the Fronting Bank for such
Bank's
Percentage of any and all liabilities,
obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses
or disbursements of any kind and
nature whatsoever which may be imposed on,
incurred by or asserted against it in
any way relating to or arising out of the
Obligations, the Related Documents or
the transactions contemplated hereby or
thereby or the enforcement of any of the
terms thereof (including, without
limitation, reasonable fees and disbursements
of counsel) provided that no Bank shall be
liable for any of the foregoing to
the extent they arise from the Fronting
Bank's gross negligence or willful
misconduct or to the extent the Fronting
Bank has been indemnified or reimbursed
by the Obligors. This indemnity shall
survive the termination of this Agreement.
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.01. Conditions Precedent to the Execution and Delivery
of
this Agreement. The obligation of the
Fronting Bank to execute and deliver this
Agreement and to extend each Letter of
Credit is subject to the conditions
precedent that the Administrative Agent
shall have received on or before the
Closing Date, the following, each dated
such date, in form and substance
satisfactory to the Administrative Agent
and the Banks, with copies for each
Bank:
(a)
Agreements. Counterparts of this Agreement, duly executed by
South Jersey, Marina Energy, the Administrative Agent, the
Fronting Bank and the Banks;
(b)
Secretary's Certificate. Receipt by the Administrative Agent
of (A) a certificate of the secretary or assistant secretary
of each of the Obligors, as applicable, dated the Closing Date
and certifying with respect to each applicable Obligor,
(1) that attached thereto is a true and complete copy of the
articles of incorporation or articles of formation, as
applicable, and all amendments thereto of such Obligor,
certified as of a recent date by the appropriate Governmental
Authority in its jurisdiction of organization, (2) that
attached thereto is a true and complete copy of the operating
Page 31
agreement, by-laws or equivalent document, as applicable, of
such Obligor in effect on the Closing Date and at all times
since a date prior to the date of the resolutions described in
clause (3) below, (3) that attached thereto is a true and
complete copy of resolutions or consents, as applicable, duly
adopted by the respective governing board of such Obligor
authorizing, as applicable, the execution, delivery and
performance of this Agreement and that such resolutions have
not been modified, rescinded or amended and are in full
force and effect, (4) that the organizational documents of
such Obligor have not been amended since the date of the
last amendment thereto shown on the certificate of good
standing attached thereto, (5) as to the incumbency and
specimen signature of each officer of such Obligor executing
this Agreement and any other document delivered in connection
herewith on its behalf and (6) that there has been no change
to the Related Documents since the Date of Issuance; and
(B) a certificate of another officer as to the incumbency and
specimen signature of such secretary or assistant secretary
executing the certificate pursuant to (A) above;
(c) Officer's
Certificate. Receipt by the Administrative Agent of
a certificate from the chief executive officer or chief
financial officer of each Obligor, as applicable, in form and
substance satisfactory to the Administrative Agent, to the
effect that, as of the Closing Date, all representations and
warranties of such Obligor contained in this Agreement and the
other Related Documents are true, correct and complete; that
such Obligor is not in violation of any of the covenants
contained in this Agreement and the other Related Documents;
that, after giving effect to the transactions contemplated by
this Agreement, no Default or Event of Default has occurred
and is continuing; and that such Obligor has satisfied each of
the conditions precedent set forth in this Section 3.01;
(d) Consents.
Receipt by the Administrative Agent of a written
representation from each Obligor that (i) all governmental,
shareholder, member, partner and third party consents and
approvals necessary or, in the reasonable opinion of the
Administrative Agent, desirable, in connection with the
transactions contemplated hereby have been received and are in
full force and effect and (ii) no condition or requirement of
law exists which could reasonably be likely to restrain,
prevent or impose any material adverse condition on the
transactions contemplated hereby;
(e)
Proceedings. A certificate from each of the Obligors
certifying that no action, proceeding, investigation,
regulation or legislation has been instituted, threatened or
proposed before any court, government agency or legislative
body to
enjoin, restrain or prohibit, or to obtain damages in
respect of, or which is related to or arises out of this
Agreement or the other Related Documents or the consummation
of the transactions contemplated hereby or thereby or which,
in the Administrative Agent's reasonable determination, would
prohibit the extension of Letters of Credit or could
reasonably be expected to result in any such prohibition or a
Material Adverse Change;
(f) Financial
Statements. Receipt by the Administrative Agent of
the Disclosure Documents, which demonstrate, in the
Administrative Agent's reasonable judgment, together with all
other information then available to the Administrative Agent,
that each Obligor can repay its debts and satisfy its other
obligations as and when they become due, and can comply with
the financial covenants contained in this Agreement;
(g) Good
Standing Certificates. Receipt by the Administrative
Agent of a certificate of good standing for each Obligor, as
applicable, dated on or immediately prior to the Closing Date,
Page 32
from the Secretary of State of the state of organization of
each Obligor and from all states in which each Obligor is
required to obtain a certificate of good standing or like
certificate due to the nature of its operations in such state;
(h) Fees.
Receipt by the Administrative Agent and the Banks of the
fees set forth or referenced in this Agreement and any other
accrued and unpaid fees, expenses or commissions due hereunder
and under the Existing Reimbursement Agreement (including,
without
limitation, legal fees and expenses of counsel to the
Administrative Agent), and to any other Person such amount as
may be due thereto in connection with the transactions
contemplated hereby, including all taxes, fees and other
charges related to the Related Documents;
(i)
Certificate required by Section 3.02(a). Receipt by the
Administrative Agent of the certificate required under Section
3.02(a).
(j) Opinions.
Opinions of Cozen O'Connor, counsel to the Obligors,
in substantially the form of Exhibit D hereto, and as to such
other matters as the Administrative Agent may reasonably
request addressed to the Administrative Agent, the Fronting
Bank and the Banks; and
(j) Other.
Receipt by the Administrative Agent of all other
opinions, certificates and instruments in connection with the
transactions contemplated by this Agreement satisfactory in
form and substance to the Required Banks.
SECTION 3.02. Additional Conditions Precedent. The obligation
of the Fronting Bank to extend, amend or
modify, including, the extension of the
Letters of Credit on the Closing Date, the
Letters of Credit upon Application
therefor, shall be subject to the further
conditions precedent that on the date
of such amendment, modification or
extension, as the case may be:
(a) The following statements shall be true, and the
Administrative Agent shall have received a certificate signed by
duly
authorized officer of the Obligors, dated such date, stating
that:
(i)
The representations and warranties of the
Obligors contained in Section 4.01 of this
Agreement and in the Related Documents are
true and correct on and as of such date as
though made on and as of such date (except
to the extent such representations and
warranties relate solely to a specified
earlier date, in which case such
representations and warranties were true and
correct on and as of such earlier date);
(ii)
Since December 31, 2001, there has been no
Material Adverse Change; and
(iii) No
event has occurred and is continuing, or
would result from the extension of, or an
Page 33
amendment of, such Letter of Credit, as the
case may be, which constitutes a Default or
an Event of Default; and
(b) With respect to an amendment to the 2001B Letter of Credit
pursuant to Section 2.01(b), a duly executed amendment to the
2001B
Letter of Credit; and
(c) The Administrative Agent shall have received such other
approvals, opinions or documents as the Administrative Agent
may
reasonably request.
SECTION 3.03. Conditions Precedent to Each Tender Advance. The
obligation of the Banks to make each Tender
Advance shall be subject to the
condition precedent that, on the date of
such Tender Advance, the following
statements shall be true:
(a) The representations and warranties contained in Section
4.01 of this Agreement are true and correct on and as of the date
of
such Tender Advance as though made on and as of such date, both
before
and after giving effect to such Tender Advance and to the
application
of the proceeds
thereof;
(b) The Bonds to be purchased with the proceeds of the Tender
Drawing relating to such Tender Advance shall simultaneously be
pledged
in accordance with the Indenture, the Pledge Agreement and Article
VII
hereof;
(c) Since December 31, 2001, there has been no Material
Adverse Change; and
(d) No event has occurred and is continuing, or
